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The Third Party Security Agreement is a crucial document in secured lending transactions under Hong Kong law, commonly used when one entity wishes to provide security for the obligations of another entity (typically within the same corporate group or for related business interests). This arrangement is particularly common in corporate group structures where a parent company or sister company provides security for facilities granted to another group member. The document establishes the security interests, details the secured assets, outlines enforcement mechanisms, and ensures compliance with Hong Kong security and registration requirements, including those under the Companies Ordinance and related legislation. It includes comprehensive provisions addressing creation, perfection, and enforcement of security interests, as well as the rights and obligations of the security provider, secured party, and underlying debtor.

1. Parties: Identifies the security provider (third party), the secured party (typically a lender or security trustee), and the primary debtor

2. Background: Sets out the context of the primary facility/debt arrangement and explains why the third party is providing security

3. Definitions and Interpretation: Defines key terms and establishes interpretation principles, including incorporation of any definitions from the primary facility agreement

4. Creation of Security: The operative provisions creating the security interest over the relevant assets

5. Representations and Warranties: Statements of fact and assurances from the security provider regarding their capacity, ownership of assets, and other material matters

6. Undertakings: Positive and negative obligations of the security provider regarding the secured assets and maintenance of the security

7. Powers and Rights of the Secured Party: Details the secured party's rights in relation to the security, including monitoring and preservation rights

8. Enforcement: Specifies when and how the security can be enforced, appointment of receivers, and power of sale

9. Application of Proceeds: Specifies how proceeds from enforcement or disposal will be applied

10. Release of Security: Conditions and process for releasing the security once secured obligations are satisfied

11. Expenses and Indemnities: Provisions for costs, expenses, and indemnification of the secured party

12. Miscellaneous: Standard boilerplate provisions including notices, amendments, assignments, etc.

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