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Lender (Secured Party):
[Lender’s Name], a [business entity type] organized and existing under the laws of the state of [State], with its principal place of business at [Lender’s Address]. -
Borrower (Debtor):
[Borrower’s Name], a [business entity type] organized and existing under the laws of the state of [State], with its principal place of business or residence at [Borrower’s Address].
Both parties, having the legal capacity to enter into this Agreement, agree as follows:
1. Purpose of Agreement
1.1. The Borrower has executed a Promissory Note in favor of the Lender, agreeing to repay the principal amount of $[Loan Amount], plus interest, under the terms of the Promissory Note dated [Date].
1.2. This Agreement grants the Lender a security interest in certain assets of the Borrower to secure the repayment of the loan and performance of obligations under the Promissory Note.
2. Grant of Security Interest
2.1. Collateral – To secure the repayment of the Promissory Note, the Borrower grants the Lender a first-priority security interest in the following assets (“Collateral”):
- [List of Collateral, such as real property, vehicles, equipment, inventory, accounts receivable, intellectual property, or other assets]
- All proceeds, replacements, substitutions, and products of the Collateral.
2.2. Perfection of Security Interest – The Lender is authorized to file a UCC-1 Financing Statement and take other necessary legal actions to perfect its security interest in the Collateral.
2.3. Use and Maintenance of Collateral – The Borrower agrees to:
- Maintain the Collateral in good condition and not transfer, sell, or otherwise dispose of it without the Lender’s written consent.
- Keep the Collateral insured against loss or damage, naming the Lender as a loss payee where applicable.
3. Borrower’s Representations and Warranties
3.1. The Borrower represents and warrants that:
- It is the legal and rightful owner of the Collateral and has the authority to grant a security interest.
- The Collateral is free from prior liens, claims, or encumbrances, except as disclosed to the Lender.
- The execution of this Agreement does not violate any existing contracts or legal obligations.
4. Repayment Terms
4.1. The Borrower agrees to repay the loan in accordance with the terms of the Promissory Note, which includes:
- Loan Amount: $[Loan Amount]
- Interest Rate: [X]% per annum.
- Payment Schedule: [Monthly/Quarterly/Lump Sum] installments of $[Payment Amount], beginning [First Payment Date].
- Maturity Date: [Loan Maturity Date].
4.2. Late Payments – If any payment is not received within [X] days of the due date, the Borrower agrees to pay a late fee of $[X] and interest on the overdue amount at a rate of [X]% per month.
5. Default and Remedies
5.1. Events of Default – The Borrower shall be in default under this Agreement if:
- It fails to make a required payment when due.
- It sells, transfers, or otherwise disposes of the Collateral without prior consent.
- It allows the Collateral to be seized or encumbered without curing the issue within [X] days.
- It files for bankruptcy, becomes insolvent, or assigns assets for the benefit of creditors.
5.2. Remedies Upon Default – If the Borrower defaults, the Lender may:
- Declare all amounts due under the Promissory Note immediately payable.
- Take possession of and liquidate the Collateral to satisfy the outstanding debt.
- Apply proceeds from the Collateral toward the loan balance, returning any surplus to the Borrower.
- Seek legal or equitable relief, including court orders to enforce the security interest.
6. Governing Law and Dispute Resolution
6.1. Governing Law – This Agreement shall be governed by and construed in accordance with the laws of the state of [State].
6.2. Dispute Resolution – Any disputes shall be resolved through:
- Negotiation between the parties.
- Binding arbitration in [City, State], under the rules of the American Arbitration Association (AAA), if negotiation fails.
- Litigation in the courts of [State], if arbitration is unsuccessful.
7. Miscellaneous Provisions
7.1. Amendments – Any modifications to this Agreement must be in writing and signed by both parties.
7.2. Severability – If any provision of this Agreement is deemed invalid, the remaining provisions shall remain in full force and effect.
7.3. Waiver – Failure to enforce any provision shall not constitute a waiver of future enforcement rights.
7.4. Entire Agreement – This Agreement, together with the Promissory Note, constitutes the complete understanding between the parties and supersedes all prior agreements regarding the secured loan.
8. Notices
All notices under this Agreement shall be in writing and sent to the following addresses via certified mail, email, or in person:
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Lender (Secured Party):
[Lender’s Name]
[Lender’s Address]
[Email Address] -
Borrower (Debtor):
[Borrower’s Name]
[Borrower’s Address]
[Email Address]
9. Signatures
IN WITNESS WHEREOF, the parties have executed this Promissory Note Security Agreement as of the date first written above.
Lender (Secured Party):
By: ___________________________
Title: __________________________
Date: __________________________
Borrower (Debtor):
By: ___________________________
Title: __________________________
Date: __________________________