Bilateral Security Agreement

• Party A (Secured Party):
  [Party A’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 [Party A’s Address].

• Party B (Secured Party):
  [Party B’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 [Party B’s Address].

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

1. Purpose and Scope

1.1. This Agreement establishes a mutual security arrangement whereby both parties pledge certain assets as collateral to secure their respective obligations to one another.

1.2. Each party grants the other a security interest in the respective collateral listed in Section 2 to ensure compliance with the obligations outlined in this Agreement.

2. Collateral and Security Interest

2.1. Party A’s Collateral:

• [Describe assets pledged by Party A, including cash deposits, property, inventory, securities, equipment, or other assets]

2.2. Party B’s Collateral:

• [Describe assets pledged by Party B, including cash deposits, property, inventory, securities, equipment, or other assets]

2.3. Both parties agree that the security interests created by this Agreement shall be perfected, and necessary documentation (such as UCC-1 Financing Statements, lien filings, or title notations) may be completed as required by law.

3. Secured Obligations

3.1. The obligations secured under this Agreement include:

• Payment of [Loan Amount] from Party A to Party B, and vice versa (if applicable).
• Compliance with contractual duties under [Specify related agreement, such as service contracts, financial transactions, or joint ventures].
• Any other outstanding debts, liabilities, or performance obligations agreed upon by both parties.

4. Representations and Warranties

4.1. Each party represents and warrants that:

• It has the legal authority to pledge the collateral specified.
• The pledged collateral is free of liens, claims, or encumbrances, except those disclosed.
• The execution and performance of this Agreement do not violate any other contractual or legal obligations.

5. Covenants and Obligations

5.1. Each party agrees to:

• Maintain the collateral in good condition and prevent depreciation in value.
• Notify the other party of any changes in ownership, encumbrance, or loss of collateral.
• Allow inspections of the pledged assets upon reasonable notice.

5.2. Neither party shall:

• Sell, lease, or transfer the collateral without prior written consent from the other party.
• Use the collateral for illegal or unauthorized purposes.

6. Default and Remedies

6.1. Events of Default:

A party shall be in default if:

• It fails to meet its payment or performance obligations.
• It files for bankruptcy, insolvency, or liquidation.
• It attempts to sell or transfer the pledged collateral without consent.
• It breaches any other material provision of this Agreement.

6.2. Remedies Upon Default:

Upon default, the non-defaulting party may:

• Declare all obligations immediately due and payable.
• Take possession of and liquidate the defaulting party’s collateral to recover losses.
• Pursue any legal remedies available under the Uniform Commercial Code (UCC) or other applicable laws.

7. Insurance and Risk Mitigation

7.1. Each party shall maintain adequate insurance on any pledged collateral, naming the other party as a loss payee where applicable.

7.2. Each party shall bear the risk of loss for its respective pledged collateral unless otherwise agreed in writing.

8. Governing Law and Dispute Resolution

8.1. This Agreement shall be governed by and construed in accordance with the laws of the state of [State].

8.2. Any disputes arising from this Agreement shall first be resolved through good faith negotiations. If unresolved, the dispute shall be submitted to binding arbitration under the rules of the American Arbitration Association, to be conducted in [City, State].

9. Miscellaneous Provisions

9.1. Amendments – Any changes to this Agreement must be in writing and signed by both parties.

9.2. Severability – If any provision is deemed invalid, the remaining provisions shall remain in full force and effect.

9.3. Waiver – Failure to enforce any provision shall not constitute a waiver of future enforcement rights.

9.4. Entire Agreement – This Agreement constitutes the entire understanding between the parties and supersedes all prior agreements related to this subject.

10. Notices

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

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

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

11. Signatures

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

Party A (Secured Party):
By: ___________________________
Title: __________________________
Date: __________________________

Party B (Secured Party):
By: ___________________________
Title: __________________________
Date: __________________________