HF 444

as introduced - 87th Legislature (2011 - 2012) Posted on 02/10/2011 10:12am

A bill for an act
relating to secured transactions; enacting amendments to the Uniform
Commercial Code Article 9 adopted by the National Conference of
Commissioners on Uniform State Laws; making conforming changes; amending
Minnesota Statutes 2010, sections 86B.820, subdivisions 10, 11; 168A.01,
subdivisions 18, 19; 336.2A-103; 336.9-102; 336.9-105; 336.9-307; 336.9-311;
336.9-316; 336.9-317; 336.9-326; 336.9-406; 336.9-408; 336.9-502; 336.9-503;
336.9-507; 336.9-515; 336.9-516; 336.9-518; 514.963, subdivision 7; 514.965,
subdivision 7; proposing coding for new law in Minnesota Statutes, chapter 336.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

ARTICLE 1

AMENDMENTS TO THE UNIFORM COMMERCIAL CODE ARTICLE 9

Section 1.

Minnesota Statutes 2010, section 336.9-102, is amended to read:

336.9-102 DEFINITIONS AND INDEX OF DEFINITIONS.

(a) Definitions. In this article:

(1) "Accession" means goods that are physically united with other goods in such a
manner that the identity of the original goods is not lost.

(2) "Account", except as used in "account for", means a right to payment of a
monetary obligation, whether or not earned by performance, (i) for property that has been
or is to be sold, leased, licensed, assigned, or otherwise disposed of, (ii) for services
rendered or to be rendered, (iii) for a policy of insurance issued or to be issued, (iv)
for a secondary obligation incurred or to be incurred, (v) for energy provided or to be
provided, (vi) for the use or hire of a vessel under a charter or other contract, (vii) arising
out of the use of a credit or charge card or information contained on or for use with the
card, or (viii) as winnings in a lottery or other game of chance operated or sponsored
by a state, governmental unit of a state, or person licensed or authorized to operate the
game by a state or governmental unit of a state. The term includes health-care-insurance
receivables. The term does not include (i) rights to payment evidenced by chattel paper or
an instrument, (ii) commercial tort claims, (iii) deposit accounts, (iv) investment property,
(v) letter of credit rights or letters of credit, or (vi) rights to payment for money or funds
advanced or sold, other than rights arising out of the use of a credit or charge card or
information contained on or for use with the card.

(3) "Account debtor" means a person obligated on an account, chattel paper, or
general intangible. The term does not include persons obligated to pay a negotiable
instrument, even if the instrument constitutes part of chattel paper.

(4) "Accounting", except as used in "accounting for", means a record:

(A) authenticated by a secured party;

(B) indicating the aggregate unpaid secured obligations as of a date not more than 35
days earlier or 35 days later than the date of the record; and

(C) identifying the components of the obligations in reasonable detail.

(5) "Agricultural lien" means an interest, other than a security interest, in farm
products:

(A) which secures payment or performance of an obligation for:

(i) goods or services furnished in connection with a debtor's farming operation; or

(ii) rent on real property leased by a debtor in connection with its farming operation;

(B) which is created by statute in favor of a person that:

(i) in the ordinary course of its business furnished goods or services to a debtor in
connection with a debtor's farming operation; or

(ii) leased real property to a debtor in connection with the debtor's farming
operation; and

(C) whose effectiveness does not depend on the person's possession of the personal
property.

(6) "As-extracted collateral" means:

(A) oil, gas, or other minerals that are subject to a security interest that:

(i) is created by a debtor having an interest in the minerals before extraction; and

(ii) attaches to the minerals as extracted; or

(B) accounts arising out of the sale at the wellhead or minehead of oil, gas, or other
minerals in which the debtor had an interest before extraction.

(7) "Authenticate" means:

(A) to sign; or

(B) deleted text begin to execute or otherwise adopt a symbol, or encrypt or similarly process a record
in whole or in part, with the present intent of the authenticating person to identify the
person and adopt or accept a record deleted text end new text begin with present intent to adopt or accept a record, to
attach to or logically associate with the record an electronic sound, symbol, or process new text end .

(8) "Bank" means an organization that is engaged in the business of banking. The
term includes savings banks, savings and loan associations, credit unions, and trust
companies.

(9) "Cash proceeds" means proceeds that are money, checks, deposit accounts,
or the like.

(10) "Certificate of title" means a certificate of title with respect to which a statute
provides for the security interest in question to be indicated on the certificate as a condition
or result of the security interest's obtaining priority over the rights of a lien creditor with
respect to the collateral. new text begin The term includes another record maintained as an alternative
to a certificate of title by the governmental unit that issues certificates of title if a statute
permits the security interest in question to be indicated on the record as a condition or
result of the security interest's obtaining priority over the rights of a lien creditor with
respect to the collateral.
new text end

(11) "Chattel paper" means a record or records that evidence both a monetary
obligation and a security interest in specific goods, a security interest in specific goods
and software used in the goods, a security interest in specific goods and license of
software used in the goods, a lease of specific goods, or a lease of specific goods and
license of software used in the goods. In this paragraph, "monetary obligation" means
a monetary obligation secured by the goods or owed under a lease of the goods and
includes a monetary obligation with respect to software used in the goods. The term
does not include (i) charters or other contracts involving the use or hire of a vessel or
(ii) records that evidence a right to payment arising out of the use of a credit or charge
card or information contained on or for use with the card. If a transaction is evidenced
by records that include an instrument or series of instruments, the group of records taken
together constitutes chattel paper.

(12) "Collateral" means the property subject to a security interest or agricultural
lien. The term includes:

(A) proceeds to which a security interest attaches;

(B) accounts, chattel paper, payment intangibles, and promissory notes that have
been sold; and

(C) goods that are the subject of a consignment.

(13) "Commercial tort claim" means a claim arising in tort with respect to which:

(A) the claimant is an organization; or

(B) the claimant is an individual and the claim:

(i) arose in the course of the claimant's business or profession; and

(ii) does not include damages arising out of personal injury to or the death of
an individual.

(14) "Commodity account" means an account maintained by a commodity
intermediary in which a commodity contract is carried for a commodity customer.

(15) "Commodity contract" means a commodity futures contract, an option on a
commodity futures contract, a commodity option, or another contract if the contract or
option is:

(A) traded on or subject to the rules of a board of trade that has been designated as a
contract market for such a contract pursuant to federal commodities law; or

(B) traded on a foreign commodity board of trade, exchange, or market, and is
carried on the books of a commodity intermediary for a commodity customer.

(16) "Commodity customer" means a person for which a commodity intermediary
carries a commodity contract on its books.

(17) "Commodity intermediary" means a person that:

(A) is registered as a futures commission merchant under federal commodities
law; or

(B) in the ordinary course of its business provides clearance or settlement services
for a board of trade that has been designated as a contract market pursuant to federal
commodities law.

(18) "Communicate" means:

(A) to send a written or other tangible record;

(B) to transmit a record by any means agreed upon by the persons sending and
receiving the record; or

(C) in the case of transmission of a record to or by a filing office, to transmit a record
by any means prescribed by filing office rule.

(19) "Consignee" means a merchant to which goods are delivered in a consignment.

(20) "Consignment" means a transaction, regardless of its form, in which a person
delivers goods to a merchant for the purpose of sale and:

(A) the merchant:

(i) deals in goods of that kind under a name other than the name of the person
making delivery;

(ii) is not an auctioneer; and

(iii) is not generally known by its creditors to be substantially engaged in selling
the goods of others;

(B) with respect to each delivery, the aggregate value of the goods is $1,000 or
more at the time of delivery;

(C) the goods are not consumer goods immediately before delivery; and

(D) the transaction does not create a security interest that secures an obligation.

(21) "Consignor" means a person that delivers goods to a consignee in a consignment.

(22) "Consumer debtor" means a debtor in a consumer transaction.

(23) "Consumer goods" means goods that are used or bought for use primarily for
personal, family, or household purposes.

(24) "Consumer goods transaction" means a consumer transaction in which:

(A) an individual incurs an obligation primarily for personal, family, or household
purposes; and

(B) a security interest in consumer goods secures the obligation.

(25) "Consumer obligor" means an obligor who is an individual and who incurred
the obligation as part of a transaction entered into primarily for personal, family, or
household purposes.

(26) "Consumer transaction" means a transaction in which (i) an individual incurs an
obligation primarily for personal, family, or household purposes, (ii) a security interest
secures the obligation, and (iii) the collateral is held or acquired primarily for personal,
family, or household purposes. The term includes consumer goods transactions.

(27) "Continuation statement" means an amendment of a financing statement which:

(A) identifies, by its file number, the initial financing statement to which it relates;
and

(B) indicates that it is a continuation statement for, or that it is filed to continue the
effectiveness of, the identified financing statement.

(28) "Debtor" means:

(A) a person having an interest, other than a security interest or other lien, in the
collateral, whether or not the person is an obligor;

(B) a seller of accounts, chattel paper, payment intangibles, or promissory notes; or

(C) a consignee.

(29) "Deposit account" means a demand, time, savings, passbook, or similar account
maintained with a bank. The term does not include investment property or accounts
evidenced by an instrument.

(30) "Document" means a document of title or a receipt of the type described
in section 336.7-201(b).

(31) "Electronic chattel paper" means chattel paper evidenced by a record or records
consisting of information stored in an electronic medium.

(32) "Encumbrance" means a right, other than an ownership interest, in real property.
The term includes mortgages and other liens on real property.

(33) "Equipment" means goods other than inventory, farm products, or consumer
goods.

(34) "Farm products" means goods, other than standing timber, with respect to which
the debtor is engaged in a farming operation and which are:

(A) crops grown, growing, or to be grown, including:

(i) crops produced on trees, vines, and bushes; and

(ii) aquatic goods produced in aquacultural operations;

(B) livestock, born or unborn, including aquatic goods produced in aquacultural
operations;

(C) supplies used or produced in a farming operation; or

(D) products of crops or livestock in their unmanufactured states.

(35) "Farming operation" means raising, cultivating, propagating, fattening, grazing,
or any other farming, livestock, or aquacultural operation.

(36) "File number" means the number assigned to an initial financing statement
pursuant to section 336.9-519(a).

(37) "Filing office" means an office designated in section 336.9-501 as the place to
file a financing statement.

(38) "Filing office rule" means a rule adopted pursuant to Laws 2000, chapter 399,
article 1, section 139.

(39) "Financing statement" means a record or records composed of an initial
financing statement and any filed record relating to the initial financing statement.

(40) "Fixture filing" means the filing of a financing statement covering goods that
are or are to become fixtures and satisfying section 336.9-502(a) and (b). The term
includes the filing of a financing statement covering goods of a transmitting utility which
are or are to become fixtures.

(41) "Fixtures" means goods that have become so related to particular real property
that an interest in them arises under real property law.

(42) "General intangible" means any personal property, including things in action,
other than accounts, chattel paper, commercial tort claims, deposit accounts, documents,
goods, instruments, investment property, letter of credit rights, letters of credit, money,
and oil, gas, or other minerals before extraction. The term includes payment intangibles
and software.

(43) [Reserved.]

(44) "Goods" means all things that are movable when a security interest attaches.
The term includes (i) fixtures, (ii) standing timber that is to be cut and removed under a
conveyance or contract for sale, (iii) the unborn young of animals, (iv) crops grown,
growing, or to be grown, even if the crops are produced on trees, vines, or bushes, and
(v) manufactured homes. The term also includes a computer program embedded in
goods and any supporting information provided in connection with a transaction relating
to the program if the program is associated with the goods in such a manner that it
customarily is considered part of the goods, or by becoming the owner of the goods, a
person acquires a right to use the program in connection with the goods. The term does
not include a computer program embedded in goods that consist solely of the medium in
which the program is embedded. The term also does not include accounts, chattel paper,
commercial tort claims, deposit accounts, documents, general intangibles, instruments,
investment property, letter of credit rights, letters of credit, money, or oil, gas, or other
minerals before extraction.

(45) "Governmental unit" means a subdivision, agency, department, county, parish,
municipality, or other unit of the government of the United States, a state, or a foreign
country. The term includes an organization having a separate corporate existence if the
organization is eligible to issue debt on which interest is exempt from income taxation
under the laws of the United States.

(46) "Health-care-insurance receivable" means an interest in or claim under a policy
of insurance which is a right to payment of a monetary obligation for health-care goods or
services provided.

(47) "Instrument" means a negotiable instrument or any other writing that evidences
a right to the payment of a monetary obligation, is not itself a security agreement or lease,
and is of a type that in ordinary course of business is transferred by delivery with any
necessary endorsement or assignment. The term does not include (i) investment property,
(ii) letters of credit, or (iii) writings that evidence a right to payment arising out of the use
of a credit or charge card or information contained on or for use with the card.

(48) "Inventory" means goods, other than farm products, which:

(A) are leased by a person as lessor;

(B) are held by a person for sale or lease or to be furnished under a contract of
service;

(C) are furnished by a person under a contract of service; or

(D) consist of raw materials, work in process, or materials used or consumed in a
business.

(49) "Investment property" means a security, whether certificated or uncertificated,
security entitlement, securities account, commodity contract, or commodity account.

(50) "Jurisdiction of organization", with respect to a registered organization, means
the jurisdiction under whose law the organization is new text begin formed or new text end organized.

(51) "Letter of credit right" means a right to payment or performance under a letter
of credit, whether or not the beneficiary has demanded or is at the time entitled to demand
payment or performance. The term does not include the right of a beneficiary to demand
payment or performance under a letter of credit.

(52) "Lien creditor" means:

(A) a creditor that has acquired a lien on the property involved by attachment, levy,
or the like;

(B) an assignee for benefit of creditors from the time of assignment;

(C) a trustee in bankruptcy from the date of the filing of the petition; or

(D) a receiver in equity from the time of appointment.

(53) Unless a certificate has been issued, "manufactured home" means a structure,
transportable in one or more sections, which, in the traveling mode, is eight body feet
or more in width or 40 body feet or more in length, or, when erected on site, is 320 or
more square feet, and which is built on a permanent chassis and designed to be used as a
dwelling with or without a permanent foundation when connected to the required utilities,
and includes the plumbing, heating, air-conditioning, and electrical systems contained
therein. The term includes any structure that meets all of the requirements of this paragraph
except the size requirements and with respect to which the manufacturer voluntarily files a
certification required by the United States Secretary of Housing and Urban Development
and complies with the standards established under United States Code, title 42.

A manufactured home within the meaning of this section does not include a
manufactured home for which a certificate of title as defined in section 336.9-102(a)(10)
has been issued.

(54) "Manufactured home transaction" means a secured transaction:

(A) that creates a purchase-money security interest in a manufactured home, other
than a manufactured home held as inventory; or

(B) in which a manufactured home, other than a manufactured home held as
inventory, is the primary collateral.

(55) "Mortgage" means a consensual interest in real property, including fixtures,
which secures payment or performance of an obligation. Mortgage includes an executory
contract for the sale of real property or of an interest in real property that entitles the
purchaser to possession of the real property.

(56) "New debtor" means a person that becomes bound as debtor under section
336.9-203(d) by a security agreement previously entered into by another person.

(57) "New value" means (i) money, (ii) money's worth in property, services, or new
credit, or (iii) release by a transferee of an interest in property previously transferred to the
transferee. The term does not include an obligation substituted for another obligation.

(58) "Noncash proceeds" means proceeds other than cash proceeds.

(59) "Obligor" means a person that, with respect to an obligation secured by a
security interest in or an agricultural lien on the collateral, (i) owes payment or other
performance of the obligation, (ii) has provided property other than the collateral to secure
payment or other performance of the obligation, or (iii) is otherwise accountable in whole
or in part for payment or other performance of the obligation. The term does not include
issuers or nominated persons under a letter of credit.

(60) "Original debtor," except as used in section 336.9-310(c), means a person
that, as debtor, entered into a security agreement to which a new debtor has become
bound under section 336.9-203(d).

(61) "Payment intangible" means a general intangible under which the account
debtor's principal obligation is a monetary obligation.

(62) "Person related to," with respect to an individual, means:

(A) the spouse of the individual;

(B) a brother, brother-in-law, sister, or sister-in-law of the individual;

(C) an ancestor or lineal descendant of the individual or the individual's spouse; or

(D) any other relative, by blood or marriage, of the individual or the individual's
spouse who shares the same home with the individual.

(63) "Person related to," with respect to an organization, means:

(A) a person directly or indirectly controlling, controlled by, or under common
control with the organization;

(B) an officer or director of, or a person performing similar functions with respect
to, the organization;

(C) an officer or director of, or a person performing similar functions with respect to,
a person described in subparagraph (A);

(D) the spouse of an individual described in subparagraph (A), (B), or (C); or

(E) an individual who is related by blood or marriage to an individual described in
subparagraph (A), (B), (C), or (D), and shares the same home with the individual.

(64) "Proceeds," except as used in section 336.9-609(b), means the following
property:

(A) whatever is acquired upon the sale, lease, license, exchange, or other disposition
of collateral;

(B) whatever is collected on, or distributed on account of, collateral;

(C) rights arising out of collateral;

(D) to the extent of the value of collateral, claims arising out of the loss,
nonconformity, or interference with the use of, defects or infringement of rights in,
or damage to, the collateral; or

(E) to the extent of the value of collateral and to the extent payable to the debtor or
the secured party, insurance payable by reason of the loss or nonconformity of, defects
or infringement of rights in, or damage to, the collateral.

(65) "Promissory note" means an instrument that evidences a promise to pay
a monetary obligation, does not evidence an order to pay, and does not contain an
acknowledgment by a bank that the bank has received for deposit a sum of money or funds.

(66) "Proposal" means a record authenticated by a secured party which includes the
terms on which the secured party is willing to accept collateral in full or partial satisfaction
of the obligation it secures pursuant to sections 336.9-620, 336.9-621, and 336.9-622.

(67) "Public-finance transaction" means a secured transaction in connection with
which:

(A) debt securities are issued;

(B) all or a portion of the securities issued have an initial stated maturity of at least
20 years; and

(C) the debtor, obligor, secured party, account debtor or other person obligated
on collateral, assignor or assignee of a secured obligation, or assignor or assignee of a
security interest is a state or a governmental unit of a state.

new text begin (68) "Public organic record" means a record that is available to the public for
inspection and is:
new text end

new text begin (A) a record consisting of the record initially filed with or issued by a state or the
United States to form or organize an organization and any record filed with or issued by
the state or the United States which amends or restates the initial record;
new text end

new text begin (B) an organic record of a business trust consisting of the record initially filed with
a state and any record filed with the state which amends or restates the initial record, if
a statute of the state governing business trusts requires that the record be filed with the
state; or
new text end

new text begin (C) a record consisting of legislation enacted by the legislature of a state or the
Congress of the United States which forms or organizes an organization, any record
amending the legislation, and any record filed with or issued by the state or the United
States which amends or restates the name of the organization.
new text end

deleted text begin (68) deleted text end new text begin (69) new text end "Pursuant to commitment," with respect to an advance made or other value
given by a secured party, means pursuant to the secured party's obligation, whether or not
a subsequent event of default or other event not within the secured party's control has
relieved or may relieve the secured party from its obligation.

deleted text begin (69) deleted text end new text begin (70) new text end "Record," except as used in "for record", "of record", "record or legal title",
and "record owner", means information that is inscribed on a tangible medium or which is
stored in an electronic or other medium and is retrievable in perceivable form.

deleted text begin (70) deleted text end new text begin (71) new text end "Registered organization" means an organization new text begin formed or new text end organized
solely under the law of a single state or the United States deleted text begin and as to which the state or
the United States must maintain a public record showing the organization to have been
organized. deleted text end new text begin by the filing of a public organic record with, the issuance of a public organic
record by, or the enactment of legislation by the state or the United States. The term
includes a business trust that is formed or organized under the law of a single state if a
statute of the state governing business trusts requires that the business trust's organic
record be filed with the state.
new text end

deleted text begin (71) deleted text end new text begin (72) new text end "Secondary obligor" means an obligor to the extent that:

(A) the obligor's obligation is secondary; or

(B) the obligor has a right of recourse with respect to an obligation secured by
collateral against the debtor, another obligor, or property of either.

deleted text begin (72) deleted text end new text begin (73) new text end "Secured party" means:

(A) a person in whose favor a security interest is created or provided for under a
security agreement, whether or not any obligation to be secured is outstanding;

(B) a person that holds an agricultural lien;

(C) a consignor;

(D) a person to which accounts, chattel paper, payment intangibles, or promissory
notes have been sold;

(E) a trustee, indenture trustee, agent, collateral agent, or other representative in
whose favor a security interest or agricultural lien is created or provided for; or

(F) a person that holds a security interest arising under section 336.2-401, 336.2-505,
336.2-711(3), 336.2A-508(5), 336.4-210, or 336.5-118.

deleted text begin (73) deleted text end new text begin (74) new text end "Security agreement" means an agreement that creates or provides for
a security interest.

deleted text begin (74) deleted text end new text begin (75) new text end "Send," in connection with a record or notification, means:

(A) to deposit in the mail, deliver for transmission, or transmit by any other usual
means of communication, with postage or cost of transmission provided for, addressed to
any address reasonable under the circumstances; or

(B) to cause the record or notification to be received within the time that it would
have been received if properly sent under subparagraph (A).

deleted text begin (75) deleted text end new text begin (76) new text end "Software" means a computer program and any supporting information
provided in connection with a transaction relating to the program. The term does not
include a computer program that is included in the definition of goods.

deleted text begin (76) deleted text end new text begin (77) new text end "State" means a state of the United States, the District of Columbia, Puerto
Rico, the United States Virgin Islands, or any territory or insular possession subject to the
jurisdiction of the United States.

deleted text begin (77) deleted text end new text begin (78) new text end "Supporting obligation" means a letter of credit right or secondary
obligation that supports the payment or performance of an account, chattel paper, a
document, a general intangible, an instrument, or investment property.

deleted text begin (78) deleted text end new text begin (79) new text end "Tangible chattel paper" means chattel paper evidenced by a record or
records consisting of information that is inscribed on a tangible medium.

deleted text begin (79) deleted text end new text begin (80) new text end "Termination statement" means an amendment of a financing statement
which:

(A) identifies, by its file number, the initial financing statement to which it relates;
and

(B) indicates either that it is a termination statement or that the identified financing
statement is no longer effective.

deleted text begin (80) deleted text end new text begin (81) new text end "Transmitting utility" means a person primarily engaged in the business of:

(A) operating a railroad, subway, street railway, or trolley bus;

(B) transmitting communications electrically, electromagnetically, or by light;

(C) transmitting goods by pipeline or sewer; or

(D) transmitting or producing and transmitting electricity, steam, gas, or water.

A person filing a financing statement under this article and under the authority of
sections 336B.01 to 336B.03, 507.327, and 507.328 is a transmitting utility for purposes
of this article.

(b) Definitions in other articles. "Control" as provided in section 336.7-106 and the
following definitions in other articles apply to this article:

	"Applicant"		Section 336.5-102
	"Beneficiary"		Section 336.5-102
	"Broker"		Section 336.8-102
	"Certificated security"		Section 336.8-102
	"Check"		Section 336.3-104
	"Clearing corporation"		Section 336.8-102
	"Contract for sale"		Section 336.2-106
	"Customer"		Section 336.4-104
	"Entitlement holder"		Section 336.8-102
	"Financial asset"		Section 336.8-102
	"Holder in due course"		Section 336.3-302
	"Issuer" (with respect to a letter of credit or letter of credit right)		Section 336.5-102
	"Issuer" (with respect to a security)		Section 336.8-201
	"Issuer" (with respect to documents of title)		Section 336.7-102
	"Lease"		Section 336.2A-103
	"Lease agreement"		Section 336.2A-103
	"Lease contract"		Section 336.2A-103
	"Leasehold interest"		Section 336.2A-103
	"Lessee"		Section 336.2A-103
	"Lessee in ordinary course of business"		Section 336.2A-103
	"Lessor"		Section 336.2A-103
	"Lessor's residual interest"		Section 336.2A-103
	"Letter of credit"		Section 336.5-102
	"Merchant"		Section 336.2-104
	"Negotiable instrument"		Section 336.3-104
	"Nominated person"		Section 336.5-102
	"Note"		Section 336.3-104
	"Proceeds of a letter of credit"		Section 336.5-114
	"Prove"		Section 336.3-103
	"Sale"		Section 336.2-106
	"Securities account"		Section 336.8-501
	"Securities intermediary"		Section 336.8-102
	"Security"		Section 336.8-102
	"Security certificate"		Section 336.8-102
	"Security entitlement"		Section 336.8-102
	"Uncertificated security"		Section 336.8-102

(c) Article 1 definitions and principles. Article 1 contains general definitions and
principles of construction and interpretation applicable throughout this article.

Sec. 2.

Minnesota Statutes 2010, section 336.9-105, is amended to read:

336.9-105 CONTROL OF ELECTRONIC CHATTEL PAPER.

new text begin (a) General rule: control of electronic chattel paper. new text end A secured party has control
of electronic chattel paper if new text begin a system employed for evidencing the transfer of interests in
the chattel paper reliably establishes the secured party as the person to which the chattel
paper was assigned.
new text end

new text begin (b) Specific facts giving control. new text end new text begin A system satisfies subsection (a) if new text end the record or
records comprising the chattel paper are created, stored, and assigned in such a manner
that:

(1) a single authoritative copy of the record or records exists which is unique,
identifiable, and, except as otherwise provided in paragraphs (4), (5), and (6), unalterable;

(2) the authoritative copy identifies the secured party as the assignee of the record
or records;

(3) the authoritative copy is communicated to and maintained by the secured party
or its designated custodian;

(4) copies or deleted text begin revisions deleted text end new text begin amendments new text end that add or change an identified assignee of the
authoritative copy can be made only with the deleted text begin participation deleted text end new text begin consent new text end of the secured party;

(5) each copy of the authoritative copy and any copy of a copy is readily identifiable
as a copy that is not the authoritative copy; and

(6) any deleted text begin revision deleted text end new text begin amendment new text end of the authoritative copy is readily identifiable as deleted text begin an deleted text end
authorized or unauthorized deleted text begin revision deleted text end .

Sec. 3.

Minnesota Statutes 2010, section 336.9-307, is amended to read:

336.9-307 LOCATION OF DEBTOR.

(a) Place of business. In this section, "place of business" means a place where a
debtor conducts its affairs.

(b) Debtor's location: general rules. Except as otherwise provided in this section,
the following rules determine a debtor's location:

(1) A debtor who is an individual is located at the individual's principal residence.

(2) A debtor that is an organization and has only one place of business is located
at its place of business.

(3) A debtor that is an organization and has more than one place of business is
located at its chief executive office.

(c) Limitation of applicability of subsection (b). Subsection (b) applies only if a
debtor's residence, place of business, or chief executive office, as applicable, is located
in a jurisdiction whose law generally requires information concerning the existence of a
nonpossessory security interest to be made generally available in a filing, recording, or
registration system as a condition or result of the security interest's obtaining priority over
the rights of a lien creditor with respect to the collateral. If subsection (b) does not apply,
the debtor is located in the District of Columbia.

(d) Continuation of location: cessation of existence, etc. A person that ceases
to exist, have a residence, or have a place of business continues to be located in the
jurisdiction specified by subsections (b) and (c).

(e) Location of registered organization organized under state law. A registered
organization that is organized under the law of a state is located in that state.

(f) Location of registered organization organized under federal law; bank
branches and agencies. Except as otherwise provided in subsection (i), a registered
organization that is organized under the law of the United States and a branch or agency of
a bank that is not organized under the law of the United States or a state are located:

(1) in the state that the law of the United States designates, if the law designates
a state of location;

(2) in the state that the registered organization, branch, or agency designates, if the
law of the United States authorizes the registered organization, branch, or agency to
designate its state of location new text begin , including by designating its main office, home office, or
other comparable office new text end ; or

(3) in the District of Columbia, if neither paragraph (1) nor paragraph (2) applies.

(g) Continuation of location: change in status of registered organization. A
registered organization continues to be located in the jurisdiction specified by subsection
(e) or (f) notwithstanding:

(1) the suspension, revocation, forfeiture, or lapse of the registered organization's
status as such in its jurisdiction of organization; or

(2) the dissolution, winding up, or cancellation of the existence of the registered
organization.

(h) Location of United States. The United States is located in the District of
Columbia.

(i) Location of foreign bank branch or agency if licensed in only one state. A
branch or agency of a bank that is not organized under the law of the United States or a
state is located in the state in which the branch or agency is licensed, if all branches and
agencies of the bank are licensed in only one state.

(j) Location of foreign air carrier. A foreign air carrier under the Federal Aviation
Act of 1958, as amended, is located at the designated office of the agent upon which
service of process may be made on behalf of the carrier.

(k) Section applies only to this part. This section applies only for purposes of
this part.

Sec. 4.

Minnesota Statutes 2010, section 336.9-311, is amended to read:

336.9-311 PERFECTION OF SECURITY INTERESTS IN PROPERTY
SUBJECT TO CERTAIN STATUTES, REGULATIONS, AND TREATIES.

(a) Security interest subject to other law. Except as otherwise provided in
subsection (d), the filing of a financing statement is not necessary or effective to perfect
a security interest in property subject to:

(1) a statute, regulation, or treaty of the United States whose requirements for a
security interest's obtaining priority over the rights of a lien creditor with respect to the
property preempt section 336.9-310(a);

(2) sections 86B.820 to 86B.920 and 168A.01 to 168A.31; or sections 336B.01 to
336B.03, 507.327, and 507.328; or

(3) a deleted text begin certificate-of-title deleted text end statute of another jurisdiction which provides for a security
interest to be indicated on deleted text begin the deleted text end new text begin a new text end certificate new text begin of title new text end as a condition or result of the security
interest's obtaining priority over the rights of a lien creditor with respect to the property.

(b) Compliance with other law. Compliance with the requirements of a statute,
regulation, or treaty described in subsection (a) for obtaining priority over the rights of a
lien creditor is equivalent to the filing of a financing statement under this article. Except as
otherwise provided in subsection (d) and sections 336.9-313 and 336.9-316(d) and (e) for
goods covered by a certificate of title, a security interest in property subject to a statute,
regulation, or treaty described in subsection (a) may be perfected only by compliance with
those requirements, and a security interest so perfected remains perfected notwithstanding
a change in the use or transfer of possession of the collateral.

(c) Duration and renewal of perfection. Except as otherwise provided in
subsection (d) and section 336.9-316(d) and (e), duration and renewal of perfection of a
security interest perfected by compliance with the requirements prescribed by a statute,
regulation, or treaty described in subsection (a) are governed by the statute, regulation, or
treaty. In other respects, the security interest is subject to this article.

(d) Inapplicability to certain inventory. During any period in which collateral
subject to a statute specified in subsection (a)(2) is inventory held for sale or lease by a
person or leased by that person as lessor and that person is in the business of selling
goods of that kind, this section does not apply to a security interest in that collateral
created by that person.

Sec. 5.

Minnesota Statutes 2010, section 336.9-316, is amended to read:

336.9-316 deleted text begin CONTINUED PERFECTION OF SECURITY INTEREST
FOLLOWING deleted text end new text begin EFFECT OF new text end CHANGE IN GOVERNING LAW.

(a) General rule: effect on perfection of change in governing law. A security
interest perfected pursuant to the law of the jurisdiction designated in section 336.9-301(1)
or 336.9-305(c) remains perfected until the earliest of:

(1) the time perfection would have ceased under the law of that jurisdiction;

(2) the expiration of four months after a change of the debtor's location to another
jurisdiction; or

(3) the expiration of one year after a transfer of collateral to a person that thereby
becomes a debtor and is located in another jurisdiction.

(b) Security interest perfected or unperfected under law of new jurisdiction.
If a security interest described in subsection (a) becomes perfected under the law of the
other jurisdiction before the earliest time or event described in that subsection, it remains
perfected thereafter. If the security interest does not become perfected under the law of the
other jurisdiction before the earliest time or event, it becomes unperfected and is deemed
never to have been perfected as against a purchaser of the collateral for value.

(c) Possessory security interest in collateral moved to new jurisdiction. A
possessory security interest in collateral, other than goods covered by a certificate of title
and as-extracted collateral consisting of goods, remains continuously perfected if:

(1) the collateral is located in one jurisdiction and subject to a security interest
perfected under the law of that jurisdiction;

(2) thereafter the collateral is brought into another jurisdiction; and

(3) upon entry into the other jurisdiction, the security interest is perfected under
the law of the other jurisdiction.

(d) Goods covered by certificate of title from this state. Except as otherwise
provided in subsection (e), a security interest in goods covered by a certificate of title
which is perfected by any method under the law of another jurisdiction when the goods
become covered by a certificate of title from this state remains perfected until the security
interest would have become unperfected under the law of the other jurisdiction had the
goods not become so covered.

(e) When subsection (d) security interest becomes unperfected against
purchasers. A security interest described in subsection (d) becomes unperfected as
against a purchaser of the goods for value and is deemed never to have been perfected as
against a purchaser of the goods for value if the applicable requirements for perfection
under section 336.9-311(b) or 336.9-313 are not satisfied before the earlier of:

(1) the time the security interest would have become unperfected under the law of
the other jurisdiction had the goods not become covered by a certificate of title from
this state; or

(2) the expiration of four months after the goods had become so covered.

(f) Change in jurisdiction of bank, issuer, nominated person, securities
intermediary, or commodity intermediary. A security interest in deposit accounts, letter
of credit rights, or investment property which is perfected under the law of the bank's
jurisdiction, the issuer's jurisdiction, a nominated person's jurisdiction, the securities
intermediary's jurisdiction, or the commodity intermediary's jurisdiction, as applicable,
remains perfected until the earlier of:

(1) the time the security interest would have become unperfected under the law of
that jurisdiction; or

(2) the expiration of four months after a change of the applicable jurisdiction to
another jurisdiction.

(g) Subsection (f) security interest perfected or unperfected under law of new
jurisdiction. If a security interest described in subsection (f) becomes perfected under
the law of the other jurisdiction before the earlier of the time or the end of the period
described in that subsection, it remains perfected thereafter. If the security interest does
not become perfected under the law of the other jurisdiction before the earlier of that
time or the end of that period, it becomes unperfected and is deemed never to have been
perfected as against a purchaser of the collateral for value.

new text begin (h) Effect on filed financing statement of change in governing law. new text end new text begin The following
rules apply to collateral to which a security interest attaches within four months after the
debtor changes its location to another jurisdiction:
new text end

new text begin (1) A financing statement filed before the change pursuant to the law of the
jurisdiction designated in section 336.9-301(1) or 336.9-305(c) is effective to perfect a
security interest in the collateral if the financing statement would have been effective to
perfect a security interest in the collateral had the debtor not changed its location.
new text end

new text begin (2) If a security interest perfected by a financing statement that is effective under
paragraph (1) becomes perfected under the law of the other jurisdiction before the earlier
of the time the financing statement would have become ineffective under the law of the
jurisdiction designated in section 336.9-301(1) or 336.9-305(c) or the expiration of
the four-month period, it remains perfected thereafter. If the security interest does not
become perfected under the law of the other jurisdiction before the earlier time or event, it
becomes unperfected and is deemed never to have been perfected as against a purchaser of
the collateral for value.
new text end

new text begin (i) Effect of change in governing law on financing statement filed against
original debtor. If a financing statement naming an original debtor is filed pursuant to the
law of the jurisdiction designated in section 336.9-301(1) or 336.9-305(c) and the new
debtor is located in another jurisdiction, the following rules apply:
new text end

new text begin (1) The financing statement is effective to perfect a security interest in collateral
acquired by the new debtor before, and within four months after, the new debtor becomes
bound under section 336.9-203(d), if the financing statement would have been effective
to perfect a security interest in the collateral had the collateral been acquired by the
original debtor.
new text end

new text begin (2) A security interest perfected by the financing statement and which becomes
perfected under the law of the other jurisdiction before the earlier of the time the financing
statement would have become ineffective under the law of the jurisdiction designated in
section 336.9-301(1) or 336.9-305(c) or the expiration of the four-month period remains
perfected thereafter. A security interest that is perfected by the financing statement but
which does not become perfected under the law of the other jurisdiction before the earlier
time or event becomes unperfected and is deemed never to have been perfected as against
a purchaser of the collateral for value.
new text end

Sec. 6.

Minnesota Statutes 2010, section 336.9-317, is amended to read:

336.9-317 INTERESTS THAT TAKE PRIORITY OVER OR TAKE FREE OF
SECURITY INTEREST OR AGRICULTURAL LIEN.

(a) Conflicting security interests and rights of lien creditors. A security interest
or agricultural lien is subordinate to the rights of:

(1) a person entitled to priority under section 336.9-322; and

(2) except as otherwise provided in subsection (e), a person that becomes a lien
creditor before the earlier of the time:

(A) the security interest or agricultural lien is perfected; or

(B) one of the conditions specified in section 336.9-203(b)(3) is met and a financing
statement covering the collateral is filed.

(b) Buyers that receive delivery. Except as otherwise provided in subsection (e), a
buyer, other than a secured party, of tangible chattel paper, tangible documents, goods,
instruments, or a deleted text begin security certificate deleted text end new text begin certificated security new text end takes free of a security interest or
agricultural lien if the buyer gives value and receives delivery of the collateral without
knowledge of the security interest or agricultural lien and before it is perfected.

(c) Lessees that receive delivery. Except as otherwise provided in subsection (e),
a lessee of goods takes free of a security interest or agricultural lien if the lessee gives
value and receives delivery of the collateral without knowledge of the security interest or
agricultural lien and before it is perfected.

(d) Licensees and buyers of certain collateral. A licensee of a general intangible
or a buyer, other than a secured party, of deleted text begin accounts, electronic chattel paper, electronic
documents, general intangibles, or investment property deleted text end new text begin collateral new text end other than new text begin tangible
chattel paper, tangible documents, goods, instruments, or new text end a certificated security takes
free of a security interest if the licensee or buyer gives value without knowledge of the
security interest and before it is perfected.

(e) Purchase-money security interest. Except as otherwise provided in sections
336.9-320 and 336.9-321, if a person files a financing statement with respect to a
purchase-money security interest before or within 20 days after the debtor receives
delivery of the collateral, the security interest takes priority over the rights of a buyer,
lessee, or lien creditor which arise between the time the security interest attaches and the
time of filing.

Sec. 7.

Minnesota Statutes 2010, section 336.9-326, is amended to read:

336.9-326 PRIORITY OF SECURITY INTERESTS CREATED BY NEW
DEBTOR.

(a) Subordination of security interest created by new debtor. Subject to
subsection (b), a security interest new text begin that is new text end created by a new debtor deleted text begin which is deleted text end new text begin in collateral in
which the new debtor has or acquires rights and is new text end perfected new text begin solely new text end by a filed financing
statement that deleted text begin is effective solely under section 336.9-508 in collateral in which a new
debtor has or acquires rights deleted text end new text begin would be ineffective to perfect the security interest but for the
application of section 336.9-316(i)(1) or 336.9-508 new text end is subordinate to a security interest
in the same collateral which is perfected other than by new text begin such new text end a filed financing statement
deleted text begin that is effective solely under section 336.9-508 deleted text end .

(b) Priority under other provisions; multiple original debtors. The other
provisions of this part determine the priority among conflicting security interests in the
same collateral perfected by filed financing statements deleted text begin that are effective solely under
section 336.9-508 deleted text end new text begin described in subsection (a) new text end . However, if the security agreements to
which a new debtor became bound as debtor were not entered into by the same original
debtor, the conflicting security interests rank according to priority in time of the new
debtor's having become bound.

Sec. 8.

Minnesota Statutes 2010, section 336.9-406, is amended to read:

336.9-406 DISCHARGE OF ACCOUNT DEBTOR; NOTIFICATION
OF ASSIGNMENT; IDENTIFICATION AND PROOF OF ASSIGNMENT;
RESTRICTIONS ON ASSIGNMENT OF ACCOUNTS, CHATTEL PAPER,
PAYMENT INTANGIBLES, AND PROMISSORY NOTES INEFFECTIVE.

(a) Discharge of account debtor; effect of notification. Subject to subsections (b)
through (i), an account debtor on an account, chattel paper, or a payment intangible may
discharge its obligation by paying the assignor until, but not after, the account debtor
receives a notification, authenticated by the assignor or the assignee, that the amount due
or to become due has been assigned and that payment is to be made to the assignee. After
receipt of the notification, the account debtor may discharge its obligation by paying the
assignee and may not discharge the obligation by paying the assignor.

(b) When notification ineffective. Subject to subsection (h), notification is
ineffective under subsection (a):

(1) if it does not reasonably identify the rights assigned;

(2) to the extent that an agreement between an account debtor and a seller of a
payment intangible limits the account debtor's duty to pay a person other than the seller
and the limitation is effective under law other than this article; or

(3) at the option of an account debtor, if the notification notifies the account debtor
to make less than the full amount of any installment or other periodic payment to the
assignee, even if:

(A) only a portion of the account, chattel paper, or payment intangible has been
assigned to that assignee;

(B) a portion has been assigned to another assignee; or

(C) the account debtor knows that the assignment to that assignee is limited.

(c) Proof of assignment. Subject to subsection (h), if requested by the account
debtor, an assignee shall seasonably furnish reasonable proof that the assignment has been
made. Unless the assignee complies, the account debtor may discharge its obligation
by paying the assignor, even if the account debtor has received a notification under
subsection (a).

(d) Term restricting assignment generally ineffective. Except as otherwise
provided in subsection (e) and sections 336.2A-303 and 336.9-407, and subject to
subsection (h), a term in an agreement between an account debtor and an assignor or in a
promissory note is ineffective to the extent that it:

(1) prohibits, restricts, or requires the consent of the account debtor or person
obligated on the promissory note to the assignment or transfer of, or the creation,
attachment, perfection, or enforcement of a security interest in, the account, chattel paper,
payment intangible, or promissory note; or

(2) provides that the assignment or transfer or the creation, attachment, perfection, or
enforcement of the security interest may give rise to a default, breach, right of recoupment,
claim, defense, termination, right of termination, or remedy under the account, chattel
paper, payment intangible, or promissory note.

(e) Inapplicability of subsection (d) to certain sales. Subsection (d) does not apply
to the sale of a payment intangible or promissory note new text begin , other than a sale pursuant to a
disposition under section 336.9-610 or an acceptance of collateral under section 336.9-620 new text end .

(f) Legal restrictions on assignment generally ineffective. Except as otherwise
provided in sections 336.2A-303 and 336.9-407, and subject to subsections (h) and (i),
a rule of law, statute, or regulation, that prohibits, restricts, or requires the consent of a
government, governmental body or official, or account debtor to the assignment or transfer
of, or creation of a security interest in, an account or chattel paper is ineffective to the
extent that the rule of law, statute, or regulation:

(1) prohibits, restricts, or requires the consent of the government, governmental body
or official, or account debtor to the assignment or transfer of, or the creation, attachment,
perfection, or enforcement of a security interest in, the account or chattel paper; or

(2) provides that the assignment or transfer or the creation, attachment, perfection, or
enforcement of the security interest may give rise to a default, breach, right of recoupment,
claim, defense, termination, right of termination, or remedy under the account or chattel
paper.

(g) Subsection (b)(3) not waivable. Subject to subsection (h), an account debtor
may not waive or vary its option under subsection (b)(3).

(h) Rule for individual under other law. This section is subject to law other than
this article which establishes a different rule for an account debtor who is an individual
and who incurred the obligation primarily for personal, family, or household purposes.

(i) Inapplicability to health-care-insurance receivable. This section does not
apply to an assignment of a health-care-insurance receivable.

Sec. 9.

Minnesota Statutes 2010, section 336.9-408, is amended to read:

336.9-408 RESTRICTIONS ON ASSIGNMENT OF PROMISSORY NOTES,
HEALTH-CARE-INSURANCE RECEIVABLES, AND CERTAIN GENERAL
INTANGIBLES INEFFECTIVE.

(a) Term restricting assignment generally ineffective. Except as otherwise
provided in subsection (b), a term in a promissory note or in an agreement between an
account debtor and a debtor which relates to a health-care-insurance receivable or a
general intangible, including a contract, permit, license, or franchise, and which term
prohibits, restricts, or requires the consent of the person obligated on the promissory
note or the account debtor to, the assignment or transfer of, or creation, attachment, or
perfection of a security interest in, the promissory note, health-care-insurance receivable,
or general intangible, is ineffective to the extent that the term:

(1) would impair the creation, attachment, or perfection of a security interest; or

(2) provides that the assignment or transfer or the creation, attachment, or perfection
of the security interest may give rise to a default, breach, right of recoupment, claim,
defense, termination, right of termination, or remedy under the promissory note,
health-care-insurance receivable, or general intangible.

(b) Applicability of subsection (a) to sales of certain rights to payment.
Subsection (a) applies to a security interest in a payment intangible or promissory note
only if the security interest arises out of a sale of the payment intangible or promissory
note new text begin , other than a sale pursuant to a disposition under section 336.9-610 or an acceptance
of collateral under section 336.9-620 new text end .

(c) Legal restrictions on assignment generally ineffective. A rule of law,
statute, or regulation, that prohibits, restricts, or requires the consent of a government,
governmental body or official, person obligated on a promissory note, or account debtor
to the assignment or transfer of, or creation of a security interest in, a promissory note,
health-care-insurance receivable, or general intangible, including a contract, permit,
license, or franchise between an account debtor and a debtor, is ineffective to the extent
that the rule of law, statute, or regulation:

(1) would impair the creation, attachment, or perfection of a security interest; or

(2) provides that the assignment or transfer or the creation, attachment, or perfection
of the security interest may give rise to a default, breach, right of recoupment, claim,
defense, termination, right of termination, or remedy under the promissory note,
health-care-insurance receivable, or general intangible.

(d) Limitation on ineffectiveness under subsections (a) and (c). To the extent
that a term in a promissory note or in an agreement between an account debtor and a
debtor which relates to a health-care-insurance receivable or general intangible or a rule of
law, statute, or regulation described in subsection (c) would be effective under law other
than this article but is ineffective under subsection (a) or (c), the creation, attachment, or
perfection of a security interest in the promissory note, health-care-insurance receivable,
or general intangible:

(1) is not enforceable against the person obligated on the promissory note or the
account debtor;

(2) does not impose a duty or obligation on the person obligated on the promissory
note or the account debtor;

(3) does not require the person obligated on the promissory note or the account
debtor to recognize the security interest, pay or render performance to the secured party, or
accept payment or performance from the secured party;

(4) does not entitle the secured party to use or assign the debtor's rights under the
promissory note, health-care-insurance receivable, or general intangible, including any
related information or materials furnished to the debtor in the transaction giving rise to the
promissory note, health-care-insurance receivable, or general intangible;

(5) does not entitle the secured party to use, assign, possess, or have access to any
trade secrets or confidential information of the person obligated on the promissory note or
the account debtor; and

(6) does not entitle the secured party to enforce the security interest in the promissory
note, health-care-insurance receivable, or general intangible.

Sec. 10.

Minnesota Statutes 2010, section 336.9-502, is amended to read:

336.9-502 CONTENTS OF FINANCING STATEMENT; RECORD OF
MORTGAGE AS FINANCING STATEMENT; TIME OF FILING FINANCING
STATEMENT.

(a) Sufficiency of financing statement. Subject to subsection (b), a financing
statement is sufficient only if it:

(1) provides the name of the debtor;

(2) provides the name of the secured party or a representative of the secured party;
and

(3) indicates the collateral covered by the financing statement.

(b) Real property-related financing statements. Except as otherwise provided
in section 336.9-501(b), to be sufficient, a financing statement that covers as-extracted
collateral or timber to be cut, or which is filed as a fixture filing and covers goods that are
or are to become fixtures, must satisfy subsection (a) and also:

(1) indicate that it covers this type of collateral;

(2) indicate that it is to be filed for record in the real property records;

(3) provide a description of the real property to which the collateral is related
sufficient to give constructive notice of a mortgage under the law of this state if the
description were contained in a record of the mortgage of the real property; and

(4) if the debtor does not have an interest of record in the real property, provide the
name of a record owner.

(c) Record of mortgage as financing statement. A record of a mortgage is
effective, from the date of recording, as a financing statement filed as a fixture filing or as
a financing statement covering as-extracted collateral or timber to be cut only if:

(1) the record indicates the goods or accounts that it covers;

(2) the goods are or are to become fixtures related to the real property described in
the record or the collateral is related to the real property described in the record and is
as-extracted collateral or timber to be cut;

(3) the record satisfies the requirements for a financing statement in this section
deleted text begin other than an indication deleted text end new text begin , but:
new text end

new text begin (A) the record need not indicate new text end that it is to be filed in the real property records; and

new text begin (B) the record sufficiently provides the name of a debtor who is an individual if it
provides the individual name of the debtor or the surname and first personal name of the
debtor, even if the debtor is an individual to whom section 336.9-503(a)(4) applies; and
new text end

(4) the record is recorded in the office of the county recorder or registrar of titles in
the county where the real property is located.

(d) Filing before security agreement or attachment. A financing statement may
be filed before a security agreement is made or a security interest otherwise attaches.

Sec. 11.

Minnesota Statutes 2010, section 336.9-503, is amended to read:

336.9-503 NAME OF DEBTOR AND SECURED PARTY.

(a) Sufficiency of debtor's name. A financing statement sufficiently provides the
name of the debtor:

(1) new text begin except as otherwise provided in paragraph (3), new text end if the debtor is a registered
organization new text begin or the collateral is held in a trust that is a registered organization new text end , only if the
financing statement provides the name deleted text begin of the debtor indicated deleted text end new text begin that is stated to be the
registered organization's name new text end on the public new text begin organic new text end record deleted text begin of deleted text end new text begin most recently filed with
or issued or enacted by new text end the deleted text begin debtor's deleted text end new text begin registered organization's new text end jurisdiction of organization
which deleted text begin shows the debtor to have been organized deleted text end new text begin purports to state, amend, or restate the
registered organization's name new text end ;

(2) new text begin subject to subsection (f), new text end if the deleted text begin debtor is a decedent's estate deleted text end new text begin collateral is being
administered by the personal representative of a decedent new text end , only if the financing statement
provides new text begin , as the name of the debtor, new text end the name of the decedent and new text begin , in a separate part of the
financing statement, new text end indicates that the deleted text begin debtor is an estate deleted text end new text begin collateral is being administered
by a personal representative new text end ;

(3) if the deleted text begin debtor is a trust or a trustee acting with respect to property held in
trust, only if the financing statement deleted text end new text begin collateral is held in a trust that is not a registered
organization, only if the financing statement new text end :

deleted text begin (A) provides the name specified for the trust in its organic documents or, if no name
is specified, provides the name of the settlor and additional information sufficient to
distinguish the debtor from other trusts having one or more of the same settlors; and
deleted text end

deleted text begin (B) indicates, in the debtor's name or otherwise, that the debtor is a trust or is a
trustee acting with respect to property held in trust; and
deleted text end

new text begin (A) provides, as the name of the debtor:
new text end

new text begin (i) if the organic record of the trust specifies a name for the trust, the name specified;
or
new text end

new text begin (ii) if the organic record of the trust does not specify a name for the trust, the name
of the settlor or testator; and
new text end

new text begin (B) in a separate part of the financing statement:
new text end

new text begin (i) if the name is provided in accordance with subparagraph (A)(i), indicates that
the collateral is held in a trust; or
new text end

new text begin (ii) if the name is provided in accordance with subparagraph (A)(ii), provides
additional information sufficient to distinguish the trust from other trusts having one or
more of the same settlors or the same testator and indicates that the collateral is held in a
trust, unless the additional information so indicates;
new text end

new text begin (4) subject to subsection (g), if the debtor is an individual to whom this state has
issued a driver's license or state identification card that has not expired, only if the
financing statement provides the name of the individual which is indicated on the driver's
license or state identification card;
new text end

new text begin (5) if the debtor is an individual to whom paragraph (4) does not apply, only if the
financing statement provides the individual name of the debtor or the surname and first
personal name of the debtor; and
new text end

deleted text begin (4) deleted text end new text begin (6) new text end in other cases:

(A) if the debtor has a name, only if deleted text begin it deleted text end new text begin the financing statement new text end provides the deleted text begin individual
or deleted text end organizational name of the debtor; and

(B) if the debtor does not have a name, only if it provides the names of the partners,
members, associates, or other persons comprising the debtor new text begin , in a manner that each name
provided would be sufficient if the person named were the debtor new text end .

(b) Additional debtor-related information. A financing statement that provides
the name of the debtor in accordance with subsection (a) is not rendered ineffective by
the absence of:

(1) a trade name or other name of the debtor; or

(2) unless required under subsection deleted text begin (a)(4)(B) deleted text end new text begin (a)(6)(B) new text end , names of partners,
members, associates, or other persons comprising the debtor.

(c) Debtor's trade name insufficient. A financing statement that provides only the
debtor's trade name does not sufficiently provide the name of the debtor.

(d) Representative capacity. Failure to indicate the representative capacity of a
secured party or representative of a secured party does not affect the sufficiency of a
financing statement.

(e) Multiple debtors and secured parties. A financing statement may provide the
name of more than one debtor and the name of more than one secured party.

new text begin (f) Name of decedent. The name of the decedent indicated on the order appointing
the personal representative of the decedent issued by the court having jurisdiction over the
collateral is sufficient as the "name of the decedent" under subsection (a)(2).
new text end

new text begin (g) Multiple driver's licenses or state identification cards. If this state has
issued to an individual more than one driver's license or state identification card of a
kind described in subsection (a)(4), the one that was issued most recently is the one to
which subsection (a)(4) refers.
new text end

new text begin (h) Definition. In this section, the "name of the settlor or testator" means:
new text end

new text begin (1) if the settlor is a registered organization, the name that is stated to be the settlor's
name on the public organic record most recently filed with or issued or enacted by the
settlor's jurisdiction of organization which purports to state, amend, or restate the settlor's
name; or
new text end

new text begin (2) in other cases, the name of the settlor or testator indicated in the trust's organic
record.
new text end

Sec. 12.

Minnesota Statutes 2010, section 336.9-507, is amended to read:

336.9-507 EFFECT OF CERTAIN EVENTS ON EFFECTIVENESS OF
FINANCING STATEMENT.

(a) Disposition. A filed financing statement remains effective with respect to
collateral that is sold, exchanged, leased, licensed, or otherwise disposed of and in which a
security interest or agricultural lien continues, even if the secured party knows of or
consents to the disposition.

(b) Information becoming seriously misleading. Except as otherwise provided in
subsection (c) and section 336.9-508, a financing statement is not rendered ineffective if,
after the financing statement is filed, the information provided in the financing statement
becomes seriously misleading under section 336.9-506.

(c) Change in debtor's name. If deleted text begin a debtor so changes its deleted text end new text begin the new text end name that a filed
financing statement new text begin provides for a debtor new text end becomes new text begin insufficient as the name of the debtor
under section 336.9-503(a) so that the financing statement becomes new text end seriously misleading
under section 336.9-506:

(1) the financing statement is effective to perfect a security interest in collateral
acquired by the debtor before, or within four months after, the deleted text begin change deleted text end new text begin filed financing
statement becomes seriously misleading new text end ; and

(2) the financing statement is not effective to perfect a security interest in collateral
acquired by the debtor more than four months after the deleted text begin change deleted text end new text begin filed financing statement
becomes seriously misleading new text end , unless an amendment to the financing statement which
renders the financing statement not seriously misleading is filed within four months after
the deleted text begin change deleted text end new text begin financing statement became seriously misleading new text end .

Sec. 13.

Minnesota Statutes 2010, section 336.9-515, is amended to read:

336.9-515 DURATION AND EFFECTIVENESS OF FINANCING
STATEMENT; EFFECT OF LAPSED FINANCING STATEMENT.

(a) Five-year effectiveness. Except as otherwise provided in subsections (b), (e),
(f), and (g), a filed financing statement is effective for a period of five years after the
date of filing.

(b) Public finance or manufactured home transaction. Except as otherwise
provided in subsections (e), (f), and (g), an initial financing statement filed in connection
with a public finance transaction or manufactured home transaction is effective for a
period of 30 years after the date of filing if it indicates that it is filed in connection with a
public finance transaction or manufactured home transaction.

(c) Lapse and continuation of financing statement. The effectiveness of a filed
financing statement lapses on the expiration of the period of its effectiveness unless
before the lapse a continuation statement is filed pursuant to subsection (d). Upon lapse,
a financing statement ceases to be effective and any security interest or agricultural lien
that was perfected by the financing statement becomes unperfected, unless the security
interest is perfected otherwise. If the security interest or agricultural lien becomes
unperfected upon lapse, it is deemed never to have been perfected as against a purchaser
of the collateral for value.

(d) When continuation statement may be filed. A continuation statement may
be filed only within six months before the expiration of the five-year period specified in
subsection (a) or the 30-year period specified in subsection (b), whichever is applicable.

(e) Effect of filing continuation statement. Except as otherwise provided in section
336.9-510, upon timely filing of a continuation statement, the effectiveness of the initial
financing statement continues for a period of five years commencing on the day on which
the financing statement would have become ineffective in the absence of the filing. Upon
the expiration of the five-year period, the financing statement lapses in the same manner as
provided in subsection (c), unless, before the lapse, another continuation statement is filed
pursuant to subsection (d). Succeeding continuation statements may be filed in the same
manner to continue the effectiveness of the initial financing statement.

(f) Transmitting utility financing statement. If a debtor is a transmitting utility
and a filed new text begin initial new text end financing statement so indicates, the financing statement is effective until
a termination statement is filed.

(g) Record of mortgage as financing statement. A record of a mortgage that
is effective as a financing statement filed as a fixture filing under section 336.9-502(c)
remains effective as a financing statement filed as a fixture filing until the mortgage
is released or satisfied of record or its effectiveness otherwise terminates as to the real
property.

Sec. 14.

Minnesota Statutes 2010, section 336.9-516, is amended to read:

336.9-516 WHAT CONSTITUTES FILING; EFFECTIVENESS OF FILING.

(a) What constitutes filing. Except as otherwise provided in subsection (b),
communication of a record to a filing office and tender of the filing fee or acceptance of
the record by the filing office constitutes filing.

(b) Refusal to accept record; filing does not occur. Filing does not occur with
respect to a record that a filing office refuses to accept because:

(1) the record is not communicated by a method or medium of communication
authorized by the filing office. For purposes of filing office authorization, transmission of
records using the Extensible Markup Language (XML) format is authorized by the filing
office after the later of July 1, 2007, or the determination of the secretary of state that the
central filing system is capable of receiving and processing these records;

(2) an amount equal to or greater than the applicable filing fee is not tendered;

(3) the filing office is unable to index the record because:

(A) in the case of an initial financing statement, the record does not provide a name
for the debtor;

(B) in the case of an amendment or deleted text begin correction deleted text end new text begin information new text end statement, the record:

(i) does not identify the initial financing statement as required by section 336.9-512
or 336.9-518, as applicable; or

(ii) identifies an initial financing statement whose effectiveness has lapsed under
section 336.9-515;

(C) in the case of an initial financing statement that provides the name of a debtor
identified as an individual or an amendment that provides a name of a debtor identified as
an individual which was not previously provided in the financing statement to which the
record relates, the record does not identify the debtor's deleted text begin last name deleted text end new text begin surname new text end ; or

(D) in the case of a record filed or recorded in the filing office described in section
336.9-501(a)(1), the record does not provide a sufficient description of the real property
to which it relates;

(4) in the case of an initial financing statement or an amendment that adds a secured
party of record, the record does not provide a name and mailing address for the secured
party of record;

(5) in the case of an initial financing statement or an amendment that provides a
name of a debtor which was not previously provided in the financing statement to which
the amendment relates, the record does not:

(A) provide a mailing address for the debtor; new text begin or
new text end

(B) indicate whether the new text begin name provided as the name of the new text end debtor is new text begin the name of new text end an
individual or an organization; deleted text begin or
deleted text end

deleted text begin (C) if the financing statement indicates that the debtor is an organization, provide:
deleted text end

deleted text begin (i) a type of organization for the debtor;
deleted text end

deleted text begin (ii) a jurisdiction of organization for the debtor; or
deleted text end

deleted text begin (iii) an organizational identification number for the debtor or indicate that the debtor
has none;
deleted text end

(6) in the case of an assignment reflected in an initial financing statement under
section 336.9-514(a) or an amendment filed under section 336.9-514(b), the record does
not provide a name and mailing address for the assignee; or

(7) in the case of a continuation statement, the record is not filed within the
six-month period prescribed by section 336.9-515(d).

(c) Rules applicable to subsection (b). For purposes of subsection (b):

(1) a record does not provide information if the filing office is unable to read or
decipher the information; and

(2) a record that does not indicate that it is an amendment or identify an initial
financing statement to which it relates, as required by section 336.9-512, 336.9-514, or
336.9-518, is an initial financing statement.

(d) Refusal to accept record; record effective as filed record. A record that is
communicated to the filing office with tender of the filing fee, but which the filing office
refuses to accept for a reason other than one set forth in subsection (b), is effective as a
filed record except as against a purchaser of the collateral which gives value in reasonable
reliance upon the absence of the record from the files.

Sec. 15.

Minnesota Statutes 2010, section 336.9-518, is amended to read:

336.9-518 CLAIM CONCERNING INACCURATE OR WRONGFULLY
FILED RECORD.

(a) deleted text begin Correction deleted text end Statement new text begin with respect to record indexed under person's name new text end .
A person may file in the filing office deleted text begin a correction deleted text end new text begin an information new text end statement with respect to
a record indexed there under the person's name if the person believes that the record is
inaccurate or was wrongfully filed.

(b) deleted text begin Sufficiency deleted text end new text begin Contents new text end of deleted text begin correction deleted text end statement new text begin under subsection (a) new text end . deleted text begin A
correction deleted text end new text begin An information new text end statement new text begin under subsection (a) new text end must:

(1) identify the record to which it relates by the file number assigned to the initial
financing statement to which the record relates;

(2) indicate that it is deleted text begin a correction deleted text end new text begin an information new text end statement; and

(3) provide the basis for the person's belief that the record is inaccurate and indicate
the manner in which the person believes the record should be amended to cure any
inaccuracy or provide the basis for the person's belief that the record was wrongfully filed.

new text begin (c) Statement by secured party of record. A person may file in the filing office an
information statement with respect to a record filed there if the person is a secured party of
record with respect to the financing statement to which the record relates and believes that
the person that filed the record was not entitled to do so under section 336.9-509(d).
new text end

new text begin (d) Contents of statement under subsection (c). An information statement under
subsection (c) must:
new text end

new text begin (1) identify the record to which it relates by the file number assigned to the initial
financing statement to which the record relates;
new text end

new text begin (2) indicate that it is an information statement; and
new text end

new text begin (3) provide the basis for the person's belief that the person that filed the record was
not entitled to do so under section 336.9-509(d).
new text end

deleted text begin (c) deleted text end new text begin (e) new text end Record not affected by deleted text begin correction deleted text end new text begin information new text end statement. The filing of deleted text begin a
correction deleted text end new text begin an information new text end statement does not affect the effectiveness of an initial financing
statement or other filed record.

PART 8
TRANSITION PROVISIONS FOR 2010 AMENDMENTS

Sec. 16.

new text begin [336.9-801] EFFECTIVE DATE.
new text end

new text begin This act takes effect on July 1, 2013.
new text end

Sec. 17.

new text begin [336.9-802] SAVINGS CLAUSE.
new text end

new text begin (a) Pre-effective date transactions or liens. new text end new text begin Except as otherwise provided in this
section, this act applies to a transaction or lien within its scope, even if the transaction or
lien was entered into or created before this act takes effect.
new text end

new text begin (b) Pre-effective date proceedings. This act does not affect an action, case, or
proceeding commenced before this act takes effect.
new text end

Sec. 18.

new text begin [336.9-803] SECURITY INTEREST PERFECTED BEFORE
EFFECTIVE DATE.
new text end

new text begin (a) Continuing perfection: perfection requirements satisfied. A security interest
that is a perfected security interest immediately before this act takes effect is a perfected
security interest under article 9 as amended by this act if, when this act takes effect, the
applicable requirements for attachment and perfection under article 9 as amended by
this act are satisfied without further action.
new text end

new text begin (b) Continuing perfection: perfection requirements not satisfied. Except as
otherwise provided in section 336.9-805, if, immediately before this act takes effect,
a security interest is a perfected security interest, but the applicable requirements for
perfection under article 9 as amended by this act are not satisfied when this act takes
effect, the security interest remains perfected thereafter only if the applicable requirements
for perfection under article 9 as amended by this act are satisfied within one year after
this act takes effect.
new text end

Sec. 19.

new text begin [336.9-804] SECURITY INTEREST UNPERFECTED BEFORE
EFFECTIVE DATE.
new text end

new text begin A security interest that is an unperfected security interest immediately before this act
takes effect becomes a perfected security interest:
new text end

new text begin (1) without further action, when this act takes effect if the applicable requirements
for perfection under article 9 as amended by this act are satisfied before or at that time; or
new text end

new text begin (2) when the applicable requirements for perfection are satisfied if the requirements
are satisfied after that time.
new text end

Sec. 20.

new text begin [336.9-805] EFFECTIVENESS OF ACTION TAKEN BEFORE
EFFECTIVE DATE.
new text end

new text begin (a) Pre-effective date filing effective. The filing of a financing statement before
this act takes effect is effective to perfect a security interest to the extent the filing would
satisfy the applicable requirements for perfection under article 9 as amended by this act.
new text end

new text begin (b) When pre-effective date filing becomes ineffective. This act does not render
ineffective an effective financing statement that, before this act takes effect, is filed and
satisfies the applicable requirements for perfection under the law of the jurisdiction
governing perfection as provided in article 9 as it existed before amendment. However,
except as otherwise provided in subsections (c) and (d) and section 336.9-806, the
financing statement ceases to be effective:
new text end

new text begin (1) if the financing statement is filed in this state, at the time the financing statement
would have ceased to be effective had this act not taken effect; or
new text end

new text begin (2) if the financing statement is filed in another jurisdiction, at the earlier of:
new text end

new text begin (A) the time the financing statement would have ceased to be effective under the
law of that jurisdiction; or
new text end

new text begin (B) June 30, 2018.
new text end

new text begin (c) Continuation statement. The filing of a continuation statement after this act
takes effect does not continue the effectiveness of a financing statement filed before this
act takes effect. However, upon the timely filing of a continuation statement after this act
takes effect and in accordance with the law of the jurisdiction governing perfection as
provided in article 9 as amended by this act, the effectiveness of a financing statement
filed in the same office in that jurisdiction before this act takes effect continues for the
period provided by the law of that jurisdiction.
new text end

new text begin (d) Application of subsection (b)(2)(B) to transmitting utility financing
statement. Subsection (b)(2)(B) applies to a financing statement that, before this act takes
effect, is filed against a transmitting utility and satisfies the applicable requirements for
perfection under the law of the jurisdiction governing perfection as provided in article 9
as it existed before amendment, only to the extent that article 9 as amended by this act
provides that the law of a jurisdiction other than the jurisdiction in which the financing
statement is filed governs perfection of a security interest in collateral covered by the
financing statement.
new text end

new text begin (e) Application of Part 5. A financing statement that includes a financing statement
filed before this act takes effect and a continuation statement filed after this act takes effect
is effective only to the extent that it satisfies the requirements of part 5 as amended by this
act for an initial financing statement. A financing statement that indicates that the debtor
is a decedent's estate indicates that the collateral is being administered by a personal
representative within the meaning of section 336.9-503(a)(2) as amended by this act.
A financing statement that indicates that the debtor is a trust or is a trustee acting with
respect to property held in trust indicates that the collateral is held in a trust within the
meaning of section 336.9-503(a)(3) as amended by this act.
new text end

Sec. 21.

new text begin [336.9-806] WHEN INITIAL FINANCING STATEMENT SUFFICES
TO CONTINUE EFFECTIVENESS OF FINANCING STATEMENT.
new text end

new text begin (a) Initial financing statement in lieu of continuation statement. new text end new text begin The filing of
an initial financing statement in the office specified in section 336.9-501 continues the
effectiveness of a financing statement filed before this act takes effect if:
new text end

new text begin (1) the filing of an initial financing statement in that office would be effective to
perfect a security interest under article 9 as amended by this act;
new text end

new text begin (2) the pre-effective date financing statement was filed in an office in another
state; and
new text end

new text begin (3) the initial financing statement satisfies subsection (c).
new text end

new text begin (b) Period of continued effectiveness. The filing of an initial financing statement
under subsection (a) continues the effectiveness of the pre-effective date financing
statement:
new text end

new text begin (1) if the initial financing statement is filed before this act takes effect, for the
period provided in unamended section 336.9-515 with respect to an initial financing
statement; and
new text end

new text begin (2) if the initial financing statement is filed after this act takes effect, for the period
provided in section 336.9-515 as amended by this act with respect to an initial financing
statement.
new text end

new text begin (c) Requirements for initial financing statement under subsection (a). To be
effective for purposes of subsection (a), an initial financing statement must:
new text end

new text begin (1) satisfy the requirements of part 5 as amended by this act for an initial financing
statement;
new text end

new text begin (2) identify the pre-effective date financing statement by indicating the office in
which the financing statement was filed and providing the dates of filing and file numbers,
if any, of the financing statement and of the most recent continuation statement filed
with respect to the financing statement; and
new text end

new text begin (3) indicate that the pre-effective date financing statement remains effective.
new text end

Sec. 22.

new text begin [336.9-807] AMENDMENT OF PRE-EFFECTIVE DATE FINANCING
STATEMENT.
new text end

new text begin (a) Pre-effective date financing statement. In this section, "pre-effective date
financing statement" means a financing statement filed before this act takes effect.
new text end

new text begin (b) Applicable law. After this act takes effect, a person may add or delete collateral
covered by, continue or terminate the effectiveness of, or otherwise amend the information
provided in, a pre-effective date financing statement only in accordance with the law of the
jurisdiction governing perfection as provided in article 9 as amended by this act. However,
the effectiveness of a pre-effective date financing statement also may be terminated in
accordance with the law of the jurisdiction in which the financing statement is filed.
new text end

new text begin (c) Method of amending: general rule. Except as otherwise provided in subsection
(d), if the law of this state governs perfection of a security interest, the information in a
pre-effective date financing statement may be amended after this act takes effect only if:
new text end

new text begin (1) the pre-effective date financing statement and an amendment are filed in the
office specified in section 336.9-501;
new text end

new text begin (2) an amendment is filed in the office specified in section 336.9-501 concurrently
with, or after the filing in that office of, an initial financing statement that satisfies section
336.9-806(c); or
new text end

new text begin (3) an initial financing statement that provides the information as amended and
satisfies section 336.9-806(c) is filed in the office specified in section 336.9-501.
new text end

new text begin (d) Method of amending: continuation. If the law of this state governs perfection
of a security interest, the effectiveness of a pre-effective date financing statement may be
continued only under section 336.9-805(c) and (e), or 336.9-806.
new text end

new text begin (e) Method of amending: additional termination rule. Whether or not the law of
this state governs perfection of a security interest, the effectiveness of a pre-effective date
financing statement filed in this state may be terminated after this act takes effect by filing
a termination statement in the office in which the pre-effective date financing statement is
filed, unless an initial financing statement that satisfies section 336.9-806(c) has been filed
in the office specified by the law of the jurisdiction governing perfection as provided in
article 9 as amended by this act as the office in which to file a financing statement.
new text end

Sec. 23.

new text begin [336.9-808] PERSON ENTITLED TO FILE INITIAL FINANCING
STATEMENT OR CONTINUATION STATEMENT.
new text end

new text begin A person may file an initial financing statement or a continuation statement under
this part if:
new text end

new text begin (1) the secured party of record authorizes the filing; and
new text end

new text begin (2) the filing is necessary under this part:
new text end

new text begin (A) to continue the effectiveness of a financing statement filed before this act takes
effect; or
new text end

new text begin (B) to perfect or continue the perfection of a security interest.
new text end

Sec. 24.

new text begin [336.9-809] PRIORITY.
new text end

new text begin This act determines the priority of conflicting claims to collateral. However, if the
relative priorities of the claims were established before this act takes effect, article 9 as it
existed before amendment determines priority.
new text end

ARTICLE 2

CONFORMING CHANGES

Section 1.

Minnesota Statutes 2010, section 86B.820, subdivision 10, is amended to
read:

Subd. 10.

Secured party.

"Secured party" means a secured party as defined in
section 336.9-102(a) deleted text begin (72) deleted text end new text begin (73) new text end , having a security interest in a watercraft and includes a
lienholder.

Sec. 2.

Minnesota Statutes 2010, section 86B.820, subdivision 11, is amended to read:

Subd. 11.

Security agreement.

"Security agreement" has the meaning given it
in section 336.9-102(a) deleted text begin (73) deleted text end new text begin (74) new text end .

Sec. 3.

Minnesota Statutes 2010, section 168A.01, subdivision 18, is amended to read:

Subd. 18.

Secured party.

"Secured party" means a secured party as defined in
section 336.9-102(a) deleted text begin (72) deleted text end new text begin (73) new text end having a security interest in a vehicle.

Sec. 4.

Minnesota Statutes 2010, section 168A.01, subdivision 19, is amended to read:

Subd. 19.

Security agreement.

"Security agreement" means a security agreement
as defined in section 336.9-102(a) deleted text begin (73) deleted text end new text begin (74) new text end .

Sec. 5.

Minnesota Statutes 2010, section 336.2A-103, is amended to read:

336.2A-103 DEFINITIONS AND INDEX OF DEFINITIONS.

(1) In this article unless the context otherwise requires:

(a) "Buyer in ordinary course of business" means a person who in good faith and
without knowledge that the sale is in violation of the ownership rights or security interest
or leasehold interest of a third party in the goods, buys in ordinary course from a person in
the business of selling goods of that kind but does not include a pawnbroker. "Buying"
may be for cash or by exchange of other property or on secured or unsecured credit and
includes acquiring goods or documents of title under a preexisting contract for sale but
does not include a transfer in bulk or as security for or in total or partial satisfaction of
a money debt.

(b) "Cancellation" occurs when either party puts an end to the lease contract for
default by the other party.

(c) "Commercial unit" means a unit of goods that by commercial usage is a single
whole for purposes of lease and division of which materially impairs its character or value
on the market or in use. A commercial unit may be a single article, as a machine, or a set
of articles, as a suite of furniture or a line of machinery, or a quantity, as a gross or carload,
or any other unit treated in use or in the relevant market as a single whole.

(d) "Conforming" goods or performance under a lease contract means goods or
performance that are in accordance with the obligations under the lease contract.

(e) "Consumer lease" means a lease that a lessor regularly engaged in the business
of leasing or selling makes to a lessee who is an individual and who takes under the
lease primarily for a personal, family, or household purpose, if the total payments to be
made under the lease contract, excluding payments for options to renew or buy, do not
exceed $25,000.

(f) "Fault" means wrongful act, omission, breach, or default.

(g) "Finance lease" means a lease in which

(1) the lessor does not select, manufacture, or supply the goods,

(2) the lessor acquires the goods or the right to possession and use of the goods
in connection with the lease, and

(3) either

(i) the lessee receives a copy of the contract evidencing the lessor's purchase of the
goods or a disclaimer statement on or before signing the lease contract, or

(ii) the lessee's approval of the contract evidencing the lessor's purchase of the goods
or a disclaimer statement is a condition to effectiveness of the lease contract.

"Disclaimer statement" means a written statement that is part of or separate from
the lease contract that discloses all warranties and other rights provided to the lessee by
the lessor and supplier in connection with the lease contract and informs the lessee in a
conspicuous manner that there are no warranties or other rights provided to the lessee by
the lessor and supplier other than those disclosed in the statement.

(h) "Goods" means all things that are movable at the time of identification to the
lease contract, or are fixtures (section 336.2A-309), but the term does not include money,
documents, instruments, accounts, chattel paper, general intangibles, or minerals or the
like, including oil and gas, before extraction. The term also includes the unborn young of
animals.

(i) "Installment lease contract" means a lease contract that authorizes or requires the
delivery of goods in separate lots to be separately accepted, even though the lease contract
contains a clause "each delivery is a separate lease" or its equivalent.

(j) "Lease" means a transfer of the right to possession and use of goods for a term
in return for consideration, but a sale, including a sale on approval or a sale or return,
or retention or creation of a security interest is not a lease. Unless the context clearly
indicates otherwise, the term includes a sublease.

(k) "Lease agreement" means the bargain, with respect to the lease, of the lessor and
the lessee in fact as found in their language or by implication from other circumstances
including course of dealing or usage of trade or course of performance as provided in
this article. Unless the context clearly indicates otherwise, the term includes a sublease
agreement.

(l) "Lease contract" means the total legal obligation that results from the lease
agreement as affected by this article and any other applicable rules of law. Unless the
context clearly indicates otherwise, the term includes a sublease contract.

(m) "Leasehold interest" means the interest of the lessor or the lessee under a lease
contract.

(n) "Lessee" means a person who acquires the right to possession and use of goods
under a lease. Unless the context clearly indicates otherwise, the term includes a sublessee.

(o) "Lessee in ordinary course of business" means a person who in good faith
and without knowledge that the lease is in violation of the ownership rights or security
interest or leasehold interest of a third party in the goods leases in ordinary course from a
person in the business of selling or leasing goods of that kind but does not include a
pawnbroker. "Leasing" may be for cash or by exchange of other property or on secured or
unsecured credit and includes acquiring goods or documents of title under a preexisting
lease contract but does not include a transfer in bulk or as security for or in total or partial
satisfaction of a money debt.

(p) "Lessor" means a person who transfers the right to possession and use of goods
under a lease. Unless the context clearly indicates otherwise, the term includes a sublessor.

(q) "Lessor's residual interest" means the lessor's interest in the goods after
expiration, termination, or cancellation of the lease contract.

(r) "Lien" means a charge against or interest in goods to secure payment of a debt or
performance of an obligation, but the term does not include a security interest.

(s) "Lot" means a parcel or a single article that is the subject matter of a separate
lease or delivery, whether or not it is sufficient to perform the lease contract.

(t) "Merchant lessee" means a lessee that is a merchant with respect to goods of the
kind subject to the lease.

(u) "Present value" means the amount as of a date certain of one or more sums
payable in the future, discounted to the date certain. The discount is determined by the
interest rate specified by the parties if the rate was not manifestly unreasonable at the time
the transaction was entered into; otherwise, the discount is determined by a commercially
reasonable rate that takes into account the facts and circumstances of each case at the time
the transaction was entered into.

(v) "Purchase" includes taking by sale, lease, mortgage, security interest, pledge,
gift, or any other voluntary transaction creating an interest in goods.

(w) "Sublease" means a lease of goods the right to possession and use of which was
acquired by the lessor as a lessee under an existing lease.

(x) "Supplier" means a person from whom a lessor buys or leases goods to be leased
under a finance lease.

(y) "Supply contract" means a contract under which a lessor buys or leases goods to
be leased.

(z) "Termination" occurs when either party pursuant to a power created by agreement
or law puts an end to the lease contract otherwise than for default.

(2) Other definitions applying to this article and the sections in which they appear are:

"Accessions." Section 336.2A-310(1).

"Construction mortgage." Section 336.2A-309(1)(d).

"Encumbrance." Section 336.2A-309(1)(e).

"Fixtures." Section 336.2A-309(1)(a).

"Fixture filing." Section 336.2A-309(1)(b).

"Purchase money lease." Section 336.2A-309(1)(c).

(3) The following definitions in other articles apply to this article:

"Account." Section 336.9-102(a)(2).

"Between merchants." Section 336.2-104(3).

"Buyer." Section 336.2-103(1)(a).

"Chattel paper." Section 336.9-102(a)(11).

"Consumer goods." Section 336.9-102(a)(23).

"Document." Section 336.9-102(a)(30).

"Entrusting." Section 336.2-403(3).

"General intangible." Section 336.9-102(a)(42).

"Instrument." Section 336.9-102(a)(47).

"Merchant." Section 336.2-104(1).

"Mortgage." Section 336.9-102(a)(55).

"Pursuant to commitment." Section 336.9-102(a) deleted text begin (68) deleted text end new text begin (69) new text end .

"Receipt." Section 336.2-103(1)(c).

"Sale." Section 336.2-106(1).

"Sale on approval." Section 336.2-326.

"Sale or return." Section 336.2-326.

"Seller." Section 336.2-103(1)(d).

(4) In addition, sections 336.1-101 to 336.1-310 contain general definitions and
principles of construction and interpretation applicable throughout this article.

Sec. 6.

Minnesota Statutes 2010, section 514.963, subdivision 7, is amended to read:

Subd. 7.

Lender.

"Lender" means a secured party as defined in section
336.9-102(a) deleted text begin (72) deleted text end new text begin (73) new text end , holding a perfected security interest in the farm products of the
obligor.

Sec. 7.

Minnesota Statutes 2010, section 514.965, subdivision 7, is amended to read:

Subd. 7.

Lender.

"Lender" means a secured party as defined in section
336.9-102(a) deleted text begin (72) deleted text end new text begin (73) new text end holding a perfected security interest in the farm products of the
obligor.