When a company and stockholder come to an agreement that provides for a fixed number of shares of common stock by a shareholder to serve as security for payment of a promissory note, a Stock Pledge Agreement documents the pledge. Typically the company involved in the agreement will want to have a “Remedies Upon Default” provision. These remedies could include:

Right to Cure. Here the Pledgor will have the right to cure any default for a certain period of time from the date the Pledgor receives written notice of default.

Remedies Under the UCC. In addition to all other rights and remedies that the Company may have under law, the Company will want to reserve for itself all rights and remedies of a secured party under the Uniform Commercial Code in any jurisdiction where enforcement of this Agreement is sought.

Reclaim of Shares. The Company may want to reserve the right to have transferred into the Company’s name the Subject Shares, in satisfaction of Claims based on a valuation of the Market Average Price per share of common stock of the Company determined as of the date of the event of default.

Ability to Sell Shares. The company will want to reserve the right to sell or otherwise dispose of the Subject Shares or any part thereof, in one or more sales, at a public or private sale, for cash, on credit or otherwise with or without representations or warranties, and upon such terms as shall be acceptable to the Company, subject to any restrictions imposed by applicable state or federal securities laws.

Drafters of stock pledge agreement on the company’s side should consult actual agreements that have these provisions to ensure they have thought of all the possible contingencies.

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