Pledge of Stock
How To Use
This review list is provided to inform you about this document in question and assist you in its preparation. Pledges of stock can be used by creditors to get more collateral from debtors behind in their obligations. This is an interim step that creditors can use to protect their interests without unduly upsetting a debtor. From the debtor’s point of view, they are usually better off liquidating part of their stock in order to pay the creditor rather than go through all of this. Once the debtor gives up the stock, then the creditor assumes control over its liquidation should the debtor continue to be in default or go into default.
- Make multiple copies. Give one to each signatory. As a creditor, be sure to get the actual stock certificate(s) and get the proper paperwork in order in case you need to liquidate them.
Pledge of Stock
_____________________________, referred to as OWNER, and _____________________________, referred to as CREDITOR, agree:
OWNER is indebted to CREDITOR in the sum of $____________ (________________________________________________________ & _____/100 dollars); to secure repayment of the debt, OWNER pledges to CREDITOR ________ shares of ________ stock of ______________________.
OWNER agrees to execute all necessary documents to perfect the pledge.
So long as OWNER is indebted to CREDITOR, the CREDITOR shall have the right to vote the shares.
CREDITOR shall be entitled to any dividends, and CREDITOR shall credit the debt with the amount of the dividends collected. CREDITOR may optionally reinvest the dividends, and any shares so purchased shall be subject to the pledge.
If OWNER is current in the obligation underlying this pledge, CREDITOR will release portions of the pledged stock as follows: $____________ (________________________________________________________ & _____/100 dollars) per share.
A copy or copies of the stock certificate or certificates are attached.