Share Security Agreement for the United States

Share Security Agreement Template for United States

A Share Security Agreement is a legal document used in the United States that creates and evidences a security interest in shares or other securities. It establishes the terms under which shares are pledged as collateral for a loan or other obligation, including the rights and obligations of both the secured party and the pledgor. The agreement is governed by U.S. federal securities laws and state-specific UCC provisions, particularly Articles 8 and 9.

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What is a Share Security Agreement?

A Share Security Agreement is commonly used when shares need to be pledged as collateral for loans or other obligations. The agreement details the specific shares being pledged, the secured obligations, the pledgor's representations about share ownership, and the secured party's rights upon default. Under U.S. law, these agreements must comply with federal securities regulations and state-specific UCC requirements. The document is particularly important in financing transactions, corporate restructurings, and investment arrangements where share-based security is required.

What sections should be included in a Share Security Agreement?

1. Parties: Identification of secured party and pledgor

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

3. Definitions: Key terms used throughout the agreement including secured obligations, collateral, and enforcement events

4. Grant of Security Interest: Core provision creating the security interest in shares, including description of secured shares and obligations

5. Representations and Warranties: Pledgor's statements about ownership, authority, and absence of encumbrances on shares

6. Covenants: Ongoing obligations of the pledgor including maintenance of security and information rights

7. Events of Default: Circumstances triggering enforcement rights under the agreement

8. Remedies: Secured party's rights upon default including power of sale and appointment of receiver

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

1. Voting Rights: Provisions governing the exercise of voting rights attached to secured shares before and after default

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

3. Additional Security: Provisions for taking additional collateral or security interests

4. Further Assurance: Obligations to execute additional documents or take further steps to perfect security

What schedules should be included in a Share Security Agreement?

1. Schedule of Secured Shares: Detailed list of shares subject to the security interest including certificate numbers

2. Form of Notice to Company: Template notice to be sent to the company regarding the creation of security interest

3. Form of Stock Transfer Form: Blank stock transfer forms to be held in escrow

4. Corporate Authorizations: Copies of relevant board and shareholder resolutions authorizing the security

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

Security Agreement

Cost

Free to use
Relevant legal definitions
Clauses
Industries

Uniform Commercial Code (UCC): Primary legislation governing secured transactions, particularly Article 8 (Investment Securities) and Article 9 (Secured Transactions), including filing requirements and perfection rules

Federal Securities Laws: Including Securities Act of 1933, Securities Exchange Act of 1934, state-specific Blue Sky laws, and SEC regulations regarding transfer restrictions

Corporate Laws: State-specific corporate statutes (e.g., Delaware General Corporation Law), applicable to the jurisdiction where the company is incorporated, including corporate bylaws and charter documents

Federal Banking Laws: Federal Reserve regulations and banking regulations regarding collateral, if the transaction involves banking institutions

Bankruptcy Code: Federal provisions affecting security interests, automatic stay provisions, and priority rules in case of bankruptcy

Tax Laws: Internal Revenue Code implications and state tax considerations affecting the security agreement

State-Specific Security Interest Laws: State UCC variations, state-specific filing requirements, and recording requirements for security interests

Corporate Authority Requirements: Board approval requirements, shareholder approval requirements, and corporate governance document compliance

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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