Jones grew impatient and decided to contact his co-worker Bill for his opinion on the software program, and advice on a financing plan. At this point Bill informed Jones that he should be weary of launching a software program created while employed at Sprint because of the strict company policy regarding ownership of products developed using Sprint resources. But, Jones told Bill that it was fully developed on his own time and money. That afternoon Jones received a call from Bank informing him that his loan had been approved. Jones stopped by the Bank in the morning where he signed a form labeled: “Loan Agreement.” The loan agreement was signed by Jones and provides: “Paul Jones grants Bank a security interest in all of Jones’ computer software and any proceeds resulting therefrom to secure the $20,000 loan advanced by Bank.” Following the agreement Jones quit his job at Sprint and devoted his entire time promoting Cook-it-2.

After one year of failed attempts, Jones admitted defeat. Cook-it-2 just didn’t enjoy the success he envisioned and he was forced to file for bankruptcy. At this time Bank filed a proof of claim with the bankruptcy clerk asserting it was entitled to any proceeds Cook-it-2 generated from sales as well as the proceeds from the sale of the rights in the program. Which statement is correct?

a. Bank has a valid security interest in both software program and any proceeds Jones acquired from the selling licenses of Cook-It-2.

b. Bank has a valid security interest in the software program, but Bank may not have a security interest in any of the proceeds Jones acquired from selling licenses of Cook-It-2.

c. Bank's security interest will not be recognized in bankruptcy because Bank did not file a financing statement covering the software.

d. Bank never had a valid security interest in the software, because Jones did not prove ownership of his rights before signing the agreement and the collateral was not sufficiently identified.