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The Third Party Security Agreement is a vital instrument in Indian secured lending transactions where assets belonging to a party other than the primary debtor are used as security. This document becomes necessary when a third party (such as a parent company, subsidiary, or related entity) provides its assets as security for another entity's obligations. The agreement must comply with Indian security laws, including the Transfer of Property Act, 1882, Registration Act, 1908, and the SARFAESI Act, 2002. It typically contains detailed provisions regarding the secured assets, enforcement mechanisms, representations and warranties, and compliance requirements specific to Indian jurisdiction. The document is particularly important in corporate group structures, project financing, and other complex financing arrangements where cross-collateralization is required.

1. Parties: Identification of all parties: Security Provider (Third Party), Secured Party (Creditor), and Principal Debtor

2. Background: Context of the security arrangement, reference to principal debt/facility agreement, and relationship between parties

3. Definitions and Interpretation: Definitions of key terms, interpretation rules, and reference to defined terms in principal agreement

4. Creation of Security Interest: Express provisions creating the security interest, nature and extent of the security

5. Secured Obligations: Definition and scope of obligations being secured, including principal debt and other secured liabilities

6. Representations and Warranties: Security provider's representations regarding ownership, authority, and status of secured assets

7. Covenants: Positive and negative obligations of the security provider regarding the secured assets

8. Security Provider Undertakings: Specific undertakings regarding maintenance, insurance, and dealing with secured assets

9. Rights and Remedies of Secured Party: Enforcement rights, power of sale, appointment of receiver, etc.

10. Events of Default: Circumstances triggering enforcement rights

11. Protection of Security: Provisions for maintaining and protecting the security interest

12. Power of Attorney: Appointment of secured party as security provider's attorney for specific purposes

13. Expenses and Indemnity: Cost allocation and indemnification provisions

14. Notices: Communication procedures between parties

15. Governing Law and Jurisdiction: Choice of law and jurisdiction provisions

16. Miscellaneous: Standard boilerplate provisions including severability, amendments, etc.