Article 55 - Preservation and use of Collateral

(1) A Secured Party must use reasonable care in the custody and preservation of Collateral in its possession which, in the case of Chattel Paper or an Instrument includes taking necessary steps to preserve rights against other Persons.
(2) Unless the parties agree otherwise, if Collateral is in the Secured Party's possession:
(A) reasonable expenses, including the cost of insurance and payment of taxes or other charges incurred in obtaining and maintaining possession of the Collateral, are chargeable to the Debtor and are secured by the Collateral;
(B) the risk of loss or damage, except where caused by the negligence of the Secured Party, is on the Debtor to the extent of any deficiency in any insurance coverage;
(C) the Secured Party must keep the Collateral identifiable, but fungible Collateral may be commingled; and
(D) subject to paragraph (1), a Secured Party may use the Collateral
(i) in the manner and to the extent provided in the Security Agreement,
(ii) for the purpose of preserving the Collateral or its value, or
(iii) in accordance with an order of the QFC Court.
(3) Unless the parties agree otherwise, if Collateral is in the Secured Party's possession or control, the Secured Party:
(A) may hold as additional Collateral any Proceeds, other than Money, received from the Collateral;
(B) must apply any Money so received, unless remitted to the Debtor, immediately on its receipt in reduction of the obligation secured;
(C) may create a Security Interest in the Collateral.
(4) Where a Secured Party:
(A) has transferred to it title to Investments or Investment Entitlements under a Title Transfer Financial Collateral Arrangement; or
(B) exercises a Right of Use in respect of Investments or Investment Entitlements

then subject to the terms of the Security Agreement, it thereby incurs an obligation to replace the Collateral originally transferred by transferring to the Debtor equivalent investments not later than the discharge of the secured obligations.