A Collateral Pledge Agreement is an agreement between two parties whereby the
debtor grants to the other party a pledge of collateral that is to be held in trust until the
debtor performs or fulfills all of its obligations to the other party. Typically, the collateral
is held in trust by a third party. This agreement contains standard clauses, such as for
the disposition of proceeds of sale of collateral and an attorneys’ fee provision, but this
document can be customized to best fit the needs of the drafting parties.
COLLATERAL PLEDGE AGREEMENT
THIS COLLATERAL PLEDGE AGREEMENT (hereinafter referred to as the
“Agreement”) is entered into as of the ____________day of __________,_______ by and
between ____________("Debtor") and ___________________("Secured Party");
R E C I T A L S:
A. Debtor is indebted to the Secured Party pursuant to a ________________
Agreement of even date herewith (the "Indebtedness"); and
B. Debtor desires to grant to the Secured Party a security interest in certain collateral
(the “Pledged Collateral”) to secure the Indebtedness;
NOW, THEREFORE, the parties agree as follows:
1.00 PLEDGE OF COLLATERAL
1.01 As collateral security for the repayment of the Indebtedness together with all
interest, costs, charges and expenses accruing thereon owing by the Debtor to the Secured Party
pursuant to the _________________ Agreement, the Debtor hereby acknowledges that it has
pledged in favour of the Secured Party the Pledged Collateral and hereby acknowledges that it
has delivered possession of the Pledged Collateral to _________________, in trust, for the
benefit of the Secured Party.
1.02 The Debtor hereby acknowledges that the Secured Party shall have the right to
deal with the Pledged Collateral in accordance with the provisions of this Agreement and shall
be entitled to receive the entire proceeds realized from the sale of any of the Pledged Collateral
pursuant to this Agreement.
1.03 The Debtor does hereby covenant, warrant and represent to the Secured Party that
it is the legal and beneficial owner of the Pledged Collateral, free and clear of all mortgages,
charges, liens and other encumbrances whatsoever and that it has the power, authority and right
to enter into this Agreement and to pledge the Pledged Collateral in accordance with the
provisions hereof and the provisions of the ________________Agreement. The Debtor
covenants and agrees that the pledge of the Pledged Collateral by it/him/her does not constitute a
breach, default, contravention, infraction or infringement of any law, regulation, ruling, order or
proceeding to which it is subject or which would prevent, limit, restrict or prohibit its right to
pledge the Pledged Collateral.
1.04 Upon payment in full of all of the Indebtedness of the Debtor to the Secured Party
pursuant to the _________________ Agreement the Secured Party shall return and re-assign the
Pledged Collateral to the Debtor and release the Debtor from the pledge created hereunder.
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1.05 In the event that the Debtor is in default of any of its obligations to the Secured
Party hereunder or pursuant to the ___________________ Agreement, including its obligations
to make payments on account of principal or interest or both on the dates or at the times as
specified therein or within ______________ (____) days thereof, then in each such instance, in
addition to and not in substitution for any other rights the Secured Party may have, whether
pursuant to this Agreement, the ______________ Agreement or otherwise, the Secured Party
may at its sole option sell the Pledged Collateral at its then current price on a best efforts basis,
as shall be necessary to raise proceeds of sale equal to the amount of the payment of principal or
interest or both then in arrears, together with all costs and expenses associated with such sale
incurred by the Secured Party including sales commissions and legal expenses.
1.06 If the Secured Party sells any of the Pledged Collateral, the proceeds shall be
applied firstly toward the payment of any of the Secured Party's costs and expenses associated
with such sale, secondly toward the payment of any interest then in arrears pursuant to the
_______________ Agreement, and thirdly toward the payment of the principal sum owing by the
Debtor to the Secured Party pursuant to the ____________________ Agreement. To the extent
the amount so realized exceeds the Indebtedness, interest, costs and expenses, such excess shall
forthwith be paid to the Debtor.
2.00 GENERAL
2.01 Disposition of Proceeds of Sale of Collateral. The Secured Party may retain from
the proceeds of any sale of the Collateral an amount sufficient to pay any and all amounts due the
Secured Party under the Agreement or this Pledge Agreement, together with all costs and
expenses of preparing for, promoting, conducting and closing the sale, including reasonable
attorneys' fees. The Secured Party shall then pay any balance of the proceeds to Debtor, except
as otherwise provided by law, subject to the rights of the holder of any then existing lien of
which the Secured Party has notice.
2.02 Changes in or Additions to Collateral. In the event that during the term of this
Agreement any substituted or addition