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The Collateral Trust Agreement is a vital document used in secured financing transactions where multiple secured parties require a trustee to hold and manage collateral on their behalf. This arrangement is particularly common in syndicated lending, project finance, and other complex financing structures in Hong Kong and the wider Asia-Pacific region. The agreement complies with Hong Kong trust laws and financial regulations, addressing key aspects such as trust creation, collateral perfection, trustee duties, secured party rights, and enforcement mechanisms. It becomes especially relevant in transactions involving multiple lenders or bondholders, cross-border elements, or complex security packages. The document provides detailed provisions for collateral administration, priority arrangements, distribution of proceeds, and trustee liability protection, ensuring efficient management of security interests while maintaining compliance with local legal requirements.

1. Parties: Identifies the key parties including the trustee, settlor/grantor, secured parties, and any other relevant parties

2. Background: Sets out the context of the agreement, including the underlying secured obligations and purpose of the trust arrangement

3. Definitions and Interpretation: Defines key terms used throughout the agreement and establishes interpretation rules

4. Declaration of Trust: Establishes the trust, defines the trust property, and sets out the trust purpose

5. Trustee Appointment and Powers: Details the appointment of the trustee and their powers in managing the trust property

6. Trust Property: Describes the nature of collateral that may be held in trust and how it is to be delivered and held

7. Secured Obligations: Defines the obligations being secured by the collateral trust arrangement

8. Administration of Trust Property: Sets out procedures for managing, investing, and maintaining the trust property

9. Rights and Obligations of Secured Parties: Details the rights of secured parties and their obligations regarding the trust arrangement

10. Events of Default: Defines events triggering enforcement rights and consequences

11. Enforcement: Procedures for enforcing security interests and distributing proceeds

12. Payments and Distributions: Rules for handling payments and distributing proceeds among secured parties

13. Trustee Remuneration and Expenses: Details trustee compensation and reimbursement of expenses

14. Liability and Indemnification: Limits on trustee liability and indemnification provisions

15. Resignation and Replacement of Trustee: Procedures for trustee resignation, removal, and appointment of successor

16. Amendments and Waivers: Procedures for modifying the agreement and waiving provisions

17. Termination: Circumstances and procedures for terminating the trust

18. Governing Law and Jurisdiction: Specifies Hong Kong law as governing law and jurisdiction for disputes

19. Miscellaneous: Standard boilerplate provisions including notices, severability, and counterparts