SECURED PROMISSORY NOTE
State of ________
Effective Date: ________
Principal Amount: $________
FOR VALUE RECEIVED, the undersigned borrower (the “Borrower”), ________, whose principal address is:
________
hereby unconditionally promises to pay to the order of the lender (the “Lender”), ________, whose principal address is set forth below (or at such other place as the Lender may from time to time designate in writing):
________
the principal sum of $________ (________ Dollars) (the “Principal Amount”), together with interest accruing from ________ on the unpaid Principal Amount at the rate of ________% per annum (“Interest”), computed on the basis of a 365-day year for the actual number of days elapsed. The Borrower and the Lender are each a “Party” and collectively the “Parties.”
§ I. REPAYMENT TERMS
1. The Borrower shall pay to the Lender installment payments in the amount of $________ (________ Dollars), payable annually on ________ of each year, commencing on ________.
2. The Borrower shall continue to make payments in accordance with the foregoing schedule until ________ (the “Due Date”), on which date the Borrower shall pay a balloon payment of $________ (________ Dollars), constituting the entire remaining balance of the Principal Amount together with all accrued and unpaid Interest then due on this Note.
3. THE BORROWER ACKNOWLEDGES AND UNDERSTANDS THAT THE SCHEDULED INSTALLMENT PAYMENTS SET FORTH ABOVE MAY NOT FULLY AMORTIZE THE PRINCIPAL BALANCE OF THIS NOTE, AND THAT, ACCORDINGLY, A BALLOON PAYMENT MAY BE DUE AND PAYABLE ON THE DUE DATE.
4. Any Principal Amount and accrued Interest remaining unpaid after the Due Date shall thereafter accrue interest at a rate of ________% per annum until paid in full, subject to the maximum lawful rate permitted under applicable law as set forth in Section 21 below.
5. All payments on this Note shall be applied first to accrued and unpaid Interest, and the remainder, if any, to the outstanding Principal Amount.
6. All payments shall be made in lawful money of the United States of America. If any payment becomes due on a day that is not a business day, such payment shall be due on the next succeeding business day.
§ II. LATE FEES
7. If the Lender has not received the full amount of any installment payment within ________ (________) calendar days after the date such payment is due, the Lender may assess a late charge of $________ (________ Dollars) for each day such payment remains outstanding, until the Borrower makes the required payment or the Lender agrees in writing to cease charging such fee. Any late charge assessed hereunder shall not exceed the maximum amount permitted under applicable law.
§ III. SECURITY
8. As security for the payment and performance of all obligations under this Note, the Borrower grants to the Lender a security interest in the following property, together with all proceeds, products, accessions, and replacements thereof (the “Collateral”):
________
9. This security interest is granted pursuant to and shall be governed by Article 9 of the Uniform Commercial Code as enacted in the State of ________. The Borrower authorizes the Lender to file any financing statements and continuation statements (including UCC-1 filings) and to take any other action the Lender deems necessary or desirable to create, perfect, and maintain its security interest in the Collateral. Where the Collateral is subject to a certificate of title, the Borrower agrees to cause the Lender to be listed as lienholder on such certificate of title, regardless of whether the Lender elects to perfect its security interest by such means.
10. Until the Principal Amount and all accrued Interest are paid in full, the Borrower shall: (a) keep the Collateral free from all liens, claims, and encumbrances other than the security interest granted herein; (b) maintain the Collateral in good condition and repair; (c) not sell, transfer, or dispose of the Collateral without the Lender’s prior written consent; and (d) maintain commercially reasonable insurance on the Collateral, naming the Lender as loss payee where applicable.
11. Upon an Event of Default, the Lender shall have all rights and remedies of a secured party under the Uniform Commercial Code and applicable law, including the right to take possession of and dispose of the Collateral in a commercially reasonable manner. The Lender shall not be required to proceed against or exhaust the Collateral before enforcing this Note, and may proceed directly against the Borrower for payment.
§ IV. EVENTS OF DEFAULT
12. Each of the following shall constitute an event of default under this Note (an “Event of Default”), and upon the occurrence of any such event, the entire unpaid Principal Amount together with all accrued Interest and other sums due hereunder shall, at the option of the Lender, become immediately due and payable without notice or demand:
a. the Borrower’s failure to pay the Principal Amount or any accrued Interest when due;
b. the Borrower’s insolvency or inability to pay debts as they become due;
c. the Borrower’s death, incompetency, liquidation, or dissolution;
d. the Borrower’s making of a general assignment for the benefit of creditors;
e. the filing of any bankruptcy or insolvency proceeding by or against the Borrower;
f. the application for or appointment of a receiver, trustee, or custodian for the Borrower or any of the Borrower’s property;
g. any material misrepresentation made by the Borrower to the Lender for the purpose of obtaining this Note; or
h. the sale, transfer, or encumbrance of the Collateral in violation of this Note.
13. Upon an Event of Default, the Lender shall be entitled to recover all costs of collection, including reasonable attorneys’ fees and court costs, to the extent permitted by applicable law.
§ V. PREPAYMENT
14. The Borrower may prepay this Note, in whole or in part, at any time before the Due Date without penalty or premium. Any partial prepayment shall be applied first to accrued Interest and the remainder to the outstanding Principal Amount, and shall not relieve the Borrower of the obligation to continue making the scheduled payments until this Note is paid in full.
15. The Borrower may, but shall not be required to, provide the Lender with written notice of its intent to prepay any portion of the outstanding balance of this Note.
§ VI. WAIVERS
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§ VII. MISCELLANEOUS
17. The Lender may assign this Note upon written notice to the Borrower. In the event of such assignment, the assignee may designate a new method of payment if desired. The Borrower may not assign or delegate any of its rights or obligations under this Note without the Lender’s prior written consent.
18. No modification, amendment, or waiver of any provision of this Note shall be valid unless in writing and signed by both Parties.
19. This Note shall be governed by and construed in accordance with the laws of the State of ________ and any applicable federal law, without regard to its conflict-of-laws principles. The Borrower irrevocably consents to the exclusive jurisdiction and venue of the state and federal courts located in ________ County, State of ________, and agrees that this choice of law, venue, and jurisdiction provision is mandatory and not permissive in nature.
20. This Note shall inure to the benefit of and be binding upon the respective successors, assigns, heirs, executors, and administrators of the Parties.
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22. Headings in this Note are for convenience only and shall not be construed to limit or otherwise affect the terms of this Note.
23. If any provision of this Note is held to be invalid, illegal, or unenforceable for any reason, that provision shall be deemed struck and the remainder of this Note shall be enforced as if the struck provision had never been included.
24. This Note constitutes the entire agreement between the Parties with respect to the subject matter hereof and supersedes all prior negotiations, understandings, and agreements, whether written or oral.
IN WITNESS WHEREOF, the Borrower has executed and delivered this Secured Promissory Note as of the Effective Date first written above, and intends to be legally bound hereby.
_________________________
________, Borrower
Date: ________
ACKNOWLEDGED AND ACCEPTED:
_________________________
________, Lender
Date: ________
WITNESS / NOTARY ACKNOWLEDGMENT
State of ________
County of ________
On this ________, before me, the undersigned notary public, personally appeared ________, who is personally known to me or proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument, and acknowledged that he/she executed the same for the purposes therein contained.
_________________________
Notary Public
My commission expires: ________