J. MILLARD TAWES, Governor                        945

(2) A secured party who by agreement is entitled to charge back
uncollected collateral or otherwise to full or limited recourse against
the debtor and who undertakes to collect from the account debtors
or obligors must proceed in a commercially reasonable manner and
may deduct his reasonable expenses of realization from the collec-
tions. If the security agreement secures an indebtedness, the secured
party must account to the debtor for any surplus, and unless other-
wise agreed, the debtor is liable for any deficiency. But, if the under-
lying transaction was a sale of accounts, contract rights, or chattel
paper, the debtor is entitled to any surplus or is liable for any de-
ficiency only if the security agreement so provides.

9—503. Secured Party's Right to Take Possession After Default.—

(1)   Unless otherwise agreed a secured party has on default the
right to take possession of the collateral. In taking possession a
secured party may proceed without judicial process if this can be
done without breach of the peace or may proceed by action. If the
security agreement so provides the secured party may require the
debtor to assemble the collateral and make it available to the secured
party at a place to be designated by the secured party which is rea-
sonably convenient to both parties. Without removal a secured
party may render equipment unusable, and may dispose of collateral
on the debtor's premises under Section 9—504.

(2)  If a secured party elects to proceed by process of law he may
proceed by writ of replevin or otherwise.

9—504. Secured Party's Right to Dispose of Collateral After De-
fault; Effect of Disposition.—

(1)  A secured party after default may sell, lease or otherwise
dispose of any or all of the collateral in its then condition or follow-
ing any commercially reasonable preparation or processing. Any
sale of goods is subject to the Sub-title on Sales (Sub-title 2).
The proceeds of disposition shall be applied in the order following to

(a)  the reasonable expenses of retaking, holding, preparing for
sale, selling and the like and, to the extent provided for in the agree-
ment and not prohibited by law, the reasonable attorneys' fees and
legal expenses incurred by the secured party;

(b)  the satisfaction of indebtedness secured by the security inte-
rest under which the disposition is made;

(c)  the satisfaction of indebtedness secured by any subordinate
security interest in the collateral if written notification of demand
therefor is received before distribution of the proceeds is completed.
If requested by the secured party, the holder of a subordinate security
interest must seasonably furnish reasonable proof of his interest, and
unless he does so, the secured party need not comply with his demand.

(2)  If the security interest secures an indebtedness, the secured
party must account to the debtor for any surplus, and unless other-
wise agreed, the debtor is liable for any deficiency. But if the under-
lying transaction was a sale of accounts, contract rights, or chattel
paper, the debtor is entitled to any surplus or is liable for any defi-
ciency only if the security agreement so provides.