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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A Stock Pledge Agreement documents the pledge of a fixed number of shares of common stock by a shareholder as security for payment of a promissory note. The security interest continues as long as the note is outstanding. The secured party is authorized to take conveyance of the shares in the event of default under the note. During the period of time the pledge is outstanding, the party pledging the shares as security under the note continues to exercise the voting rights incidental to the shares. After the pledge is made, the voting rights transfer in full to the pledgee.

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The online legal document provider, RealDealDocs.com has released a number of Stock Pledge Agreements for the top companies in America including many Fortune 500 companies. These are the actual legal documents drafted by the nation’s top law firms.

The Tenet Healthcare Corporation stock pledge agreement sets the terms for the exchange of old 6-year notes for new ones. The Beijing Tibet Health Consulting Company stock pledge agreement details the terms for the business transaction including a corresponding consulting services agreement. Both of these Stock Pledge Agreements are available in their entirety on the RealDealDocs.com website.

A Stock Pledge Agreement is a legal document documenting the pledge of a fixed number of shares of common stock by a shareholder as security for payment of a promissory note.

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RealDealDocs.com is a division of Practice Technologies, Inc. the creators of SmartRules.com. SmartRules provides step by step guides to local rules and civil procedure for state courts & federal courts throughout the country.

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