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Share Pledge Agreement for the United States

Share Pledge Agreement Template for United States

A Share Pledge Agreement is a legal document used in the United States to create a security interest over shares in favor of a lender or other secured party. The agreement is governed primarily by the Uniform Commercial Code (UCC) and relevant state laws, providing the mechanism for the pledge of shares as collateral for a loan or other obligation. It details the terms of the pledge, including enforcement rights, voting rights, and dividend arrangements.

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What is a Share Pledge Agreement?

A Share Pledge Agreement serves as a crucial security document in U.S. financing transactions, enabling shareholders to use their shares as collateral for loans or other obligations. The agreement must comply with UCC requirements and relevant state laws to create an enforceable security interest. It typically includes detailed provisions on the pledge mechanism, perfection requirements, voting rights, dividends, and enforcement procedures. Share Pledge Agreements are commonly used in corporate financing, acquisition financing, and other secured lending transactions where shares represent valuable collateral.

What sections should be included in a Share Pledge Agreement?

1. Parties: Identification of pledgor and pledgee

2. Background: Context of the pledge arrangement and underlying obligations

3. Definitions: Key terms used throughout the agreement including defined terms from UCC Articles 8 and 9

4. Pledge and Security Interest: Core provisions creating the security interest in the shares, including perfection requirements

5. Representations and Warranties: Statements about ownership, authority to pledge, and compliance with securities laws

6. Covenants: Ongoing obligations of the pledgor including maintenance of security interest and regulatory compliance

7. Events of Default: Circumstances triggering enforcement rights and remedies

8. Enforcement Rights: Pledgee's rights upon default including UCC remedies and securities law compliance

9. Governing Law: Applicable law and jurisdiction provisions

What sections are optional to include in a Share Pledge Agreement?

1. Voting Rights: Provisions governing exercise of voting rights prior to and following an event of default

2. Dividend Rights: Treatment of dividends and other distributions on pledged shares

3. Further Assurance: Additional actions required to perfect and maintain security interest

4. Regulatory Compliance: Specific provisions addressing securities law, banking regulations, or antitrust requirements

What schedules should be included in a Share Pledge Agreement?

1. Schedule of Pledged Shares: Detailed listing of pledged shares including certificate numbers and ownership information

2. Form of Stock Transfer Form: Template for share transfer documentation compliant with applicable regulations

3. Form of Notice to Company: Template notice informing company of pledge and requesting registration

4. Powers of Attorney: Forms authorizing pledgee to exercise voting or other rights upon default

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

United States

Publisher

Genie AI

Document Type

Agreement Contract

Cost

Free to use
Clauses



























Industries

Uniform Commercial Code (UCC): Primary framework governing secured transactions, particularly Article 8 (Investment Securities) and Article 9 (Secured Transactions), which are crucial for perfection and enforcement of security interests in shares

Securities Laws: Federal regulations including Securities Act of 1933, Securities Exchange Act of 1934, and state 'Blue Sky' Laws, particularly relevant for pledges involving shares of public companies

Federal Reserve Regulations: Includes Regulation U (for margin stock) and Regulation T (for broker-dealer involvement), governing the use of securities as collateral

Corporate Laws: State-specific corporate laws, particularly Delaware General Corporation Law for Delaware-incorporated companies, governing corporate structure and share transfers

Bankruptcy Code: Federal law governing bankruptcy proceedings and its implications on pledged shares and security interests during bankruptcy

Internal Revenue Code: Federal tax regulations governing the tax implications of share pledges and any subsequent transfers of shares under the pledge agreement

State Security Interest Laws: State-specific requirements for perfection and enforcement of security interests in shares, complementing federal regulations

Bank Holding Company Act: Federal legislation particularly relevant when the pledge involves shares of banks or financial institutions

Stock Exchange Rules: Requirements and restrictions imposed by relevant stock exchanges for pledges involving listed securities

Company Governance Documents: Internal company documents including bylaws and shareholder agreements that may affect or restrict share pledges

Antitrust Regulations: Federal and state competition laws that may be relevant if the pledge arrangement could lead to control or concentration issues

Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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