This Guaranty of Pledges to Secure Debt agreement is made between a guarantor, a
creditor, and a borrower whereby the borrower agrees to pledge to the creditor its
shares owned in a company, and the guarantor agrees to act as a guarantor in respect
to the pledge for the amount of the debt owed by the borrower. This document in its
draft form contains standard clauses commonly used in these types of agreements;
however, additional language may be added to allow for customization and to ensure
the specific terms of the parties’ agreement are addressed.
GUARANTY OF PLEDGES TO SECURE DEBT
THIS GUARANTY OF PLEDGES TO SECURED DEBT dated the ___ day of ________,
2_____. [Instruction: Insert date.]
GUARANTOR: _____ [Instruction: Insert guarantor’s name.]
the "Guarantor"
CREDITOR: _____ [Instruction: Insert creditor’s name.]
the “Creditor”
DEBTOR: _____ [Instruction: Insert borrower’s name.]
the "Borrower"
DEBT: $_____ [Instruction: Insert principal amount borrowed.]
the "Principal Sum"
WHEREAS the Borrower and the Creditor entered into a Pledge Agreement dated the
____ day of _____________, 2____ [Instruction: Insert Pledge Agreement date.] (the “Pledge
Agreement”) whereby the Borrower agreed to pledge to the Creditor all of the __________
(_____) [Instruction: Insert written number of shares, followed by a numerical
representation of same.] shares owned by the Borrower in the capital stock of
_________________ (the “Company”) as security for the repayment of the Principal Sum
borrowed by the Borrower from the Creditor;
AND WHEREAS as a condition of the Creditor lending the Principal Sum to the
Borrower, the Guarantor shall enter into this Guaranty of Pledges to secure the Principal Sum
owing by the Borrower to the Creditor;
NOW THEREFORE in consideration of and with mutual covenants set forth herein, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby acknowledge
and agree as follows:
LIMIT OF LIABILITY:
The Guarantor will have no liability hereunder except in the event of a failure by the Guarantor
or the Borrower, as the case may be, in which case the Guarantor’s liability hereunder shall be
unlimited up to the Outstanding Balance and the other amounts and obligations provided for in
this Guaranty and the Creditor shall have full recourse against all assets of the Guarantor with
respect to the Outstanding Balance and the other amounts and obligations provided for in this
Guaranty.
In consideration of the Creditor agreeing to make a loan to the Borrower of the Principal Sum,
the Guarantor covenants with the Creditor as follows:
1. DEBT AND SECURITY
In this Guaranty, "Loan Security" means all of the ________ (_____) [Instruction:
Insert written number of shares, followed by numerical representation of same.]
shares now owned or hereafter acquired by the Borrower in the capital stock of the
Company as security for the payment of the Principal Sum and all agreements amending,
extending or renewing those security instruments. The Guarantor acknowledgess having
read all of the agreements and security instruments regarding the Principal Sum and Loan
Security (the “Loan Security Documents”) held by the Creditor as of the date of this
Guaranty.
2. GUARANTY
The Guarantor unconditionally guarantees performance by the Borrower of all promises
under the Loan Security Documents and payment by the Borrower of the Principal Sum,
protective disbursements, interest and other amounts the Borrower has promised to pay
under the Loan Security Documents (the foregoing amounts collectively are called the
“Outstanding Balance”). The Guarantor also promises to pay to the Creditor all legal
fees and disbursements, on an attorney and client basis, incurred by the Creditor in
reference to any suit upon this Guaranty, plus interest on such fees and disbursements and
on the Outstanding Balance at the rate provided under the Loan Security and/or Loan
Security Documents calculated and compounded monthly from the date the Creditor
demands payment under this Guaranty.
3. GUARANTY IS CONDITIONAL
(a) The Guarantor is a shareholder of the Borro