Security Interest Agreement

• Secured Party (Lender/Investor):
  [Secured Party’s Name], a [business entity type] organized and existing under the laws of the state of [State], with its principal place of business located at [Secured Party’s Address].

• Debtor (Borrower/Grantor):
  [Debtor’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 [Debtor’s Address].

Both parties, having the legal capacity to enter into this Agreement, agree as follows:

1. Grant of Security Interest

1.1. Security Interest – The Debtor grants the Secured Party a first-priority security interest in the following assets (“Collateral”) as security for repayment of the obligations outlined in this Agreement:

• [List of Collateral, including personal property, business equipment, inventory, intellectual property, real estate, financial accounts, stocks, or other secured assets].

1.2. Secured Obligations – The security interest secures the following obligations:

• [Describe the financial obligation, such as a loan, promissory note, line of credit, outstanding debt, or contractual liability].
• [Repayment terms, interest rates, and maturity dates, if applicable].

1.3. Perfection of Security Interest – The Secured Party is authorized to:

• File a UCC-1 Financing Statement and other necessary documents to perfect the security interest.
• Take any other legal steps required to maintain a valid and enforceable interest in the Collateral.

1.4. Title & Ownership – The Debtor shall remain the owner of the Collateral, subject to the security interest granted under this Agreement.

2. Representations and Warranties of Debtor

2.1. The Debtor represents and warrants that:

• It is the sole legal owner of the Collateral and has full authority to pledge it.
• The Collateral is free from prior liens, claims, or encumbrances, except as disclosed to the Secured Party.
• The execution of this Agreement does not violate any contracts, agreements, or legal obligations of the Debtor.

3. Debtor’s Covenants

3.1. The Debtor agrees to:

• Maintain the Collateral in good condition and not transfer, sell, or dispose of it without prior written consent from the Secured Party.
• Keep the Collateral insured, with the Secured Party listed as a loss payee if applicable.
• Notify the Secured Party of any changes affecting the Collateral, including damage, theft, or legal disputes.
• Provide the Secured Party with access to inspect the Collateral upon reasonable notice.

4. Default and Remedies

4.1. Events of Default – The Debtor shall be in default under this Agreement if:

• It fails to make any required payment when due.
• It sells, transfers, or otherwise disposes of the Collateral without the Secured Party’s consent.
• It files for bankruptcy, becomes insolvent, or ceases business operations.
• It fails to comply with any term or obligation set forth in this Agreement.

4.2. Remedies Upon Default – If the Debtor defaults, the Secured Party may:

• Declare all Secured Obligations immediately due and payable.
• Take possession of the Collateral without court action, if permitted by law.
• Sell, lease, or otherwise dispose of the Collateral in accordance with applicable laws.
• Seek legal action to enforce security rights and recover outstanding debts.

4.3. Application of Proceeds – Any funds received from the sale or disposition of the Collateral shall be applied in the following order:

1. Payment of reasonable expenses incurred by the Secured Party.
2. Repayment of the outstanding Secured Obligations.
3. Return of any surplus to the Debtor, if applicable.

5. Insurance & Risk Management

5.1. Insurance Requirement – The Debtor shall maintain comprehensive insurance coverage on the Collateral, naming the Secured Party as an additional insured or lienholder if applicable.

5.2. Loss or Damage – The Debtor assumes all risks of loss or damage to the Collateral, unless otherwise specified in this Agreement.

6. Governing Law and Jurisdiction

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).
• 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 constitutes the complete understanding between the parties and supersedes all prior agreements related to the security interest.

8. Notices

All notices under this Agreement shall be in writing and sent to the following addresses via certified mail, email, or in person:

• Secured Party:
  [Secured Party’s Name]
  [Secured Party’s Address]
  [Email Address]

• Debtor:
  [Debtor’s Name]
  [Debtor’s Address]
  [Email Address]

9. Signatures

IN WITNESS WHEREOF, the parties have executed this Security Interest Agreement as of the date first written above.

Secured Party (Lender/Investor):
By: ___________________________
Title: __________________________
Date: __________________________

Debtor (Borrower/Grantor):
By: ___________________________
Title: __________________________
Date: __________________________