Pledge of Shares of Stock in Security Agreement
Security Agreement made on the (date), between (Name of Debtor) of (street
address, city, state, zip code), referred to herein as Debtor, and (Name of Secured
Party), a corporation organized and existing under the laws of the state of (name of
state), with its principal office located at (street address, city, state, zip code),
hereinafter called Secured Party.
1. Creation of Security Interest in Stock
In consideration of and as security for the due and punctual payment by Debtor of
all loans by Creditor to Debtor under that certain Loan Agreement, dated (date), between
Debtor and Creditor, and the loan by Creditor to Debtor evidenced by that certain
Promissory Note (the Note) more fully identified in Exhibit A to the Loan Agreement,
and to secure the performance by Debtor of its obligations under the above-mentioned
Loan Agreement, Debtor pledges and assigns to Creditor the shares of stock described
in Exhibit B attached hereto and made a part hereof, represented by certificates of
stock numbered as set forth in said Exhibit B, hereinafter called the shares, which
have been delivered to Creditor, and Debtor pledges and assigns the shares to
Creditor and grants it a security interest in the shares pursuant to (cite appropriate
section of Article 9 of State’s Uniform Commercial Code).
2. Representations and Warranties
Debtor represents and warrants that Debtor owns the shares pledged, that the
shares are not subject to any lien, pledge, charge, encumbrance, security interest, or a
right or auction on the part of any third person to purchase or require such shares or
any part of them.
3. Creditor’s Rights
Creditor shall have, with respect to the shares, the rights and obligations of a
secured party under (cite appropriate section of Article 9 of State’s Uniform Commercial
Upon default, as defined in the Loan Agreement, Debtor shall have the right to
transfer the shares of stock to its own name or to the name of its nominee; to sell,
assign or deliver as much of the shares of stock as may be necessary to repay the
unpaid obligation together with the expenses incurred in connection with such sale,
assignment or delivery, as the Creditor may choose. At any sale of the shares of stock,
whether private or public, Creditor may purchase and pay for the shares or any part of
the shares by cancelling a principal amount of the note or notes issued in accordance
with the Loan Agreement that is equal to the purchase price. Prior to conducting such
sale, Creditor agrees to notify Debtor at least (number) days before the date of the sale.
Creditor may sell the shares of stock or any portion of them covered by this Agreement
without first resorting to any other property of the Debtor. Debtor waives any right of
redemption with respect to the shares of stock sold.
5. Application of Proceeds
The proceeds from the sale of the shares of stock or any part of the same, on
default, shall be applied by the Creditor as follows:
A. First, to the payment of the costs and expenses of collection incurred by
the Creditor, including, but not limited to, costs of any public or private sale,
attorney's fees and all other reasonable expenses.
B. Second, to the payment of the entire amount of the principal and interests
due and owed on the note or notes.
C. Any remaining proceeds from the sale will be delivered to Debtor.
6. Collection of Dividends and Interest
During the term of this Agreement and while the shares of stock are held by
Creditor, Creditor shall be entitled to receive and collect all dividends, interest
payments, and other amounts that may be, or become, due on any of the sha