Montague Law | Free Legal Form Template
[COMPANY NAME], a [STATE] [corporation/limited liability company] (the “Borrower”), for value received, hereby unconditionally promises to pay to the order of [LENDER NAME], a [STATE] [corporation/limited liability company/individual] (the “Lender”), the principal sum of [PRINCIPAL AMOUNT] Dollars ($[AMOUNT]) (the “Principal Amount”), together with all accrued and unpaid interest thereon at the rate and in the manner set forth herein, and all other amounts owing hereunder, on or before [MATURITY DATE] (the “Maturity Date”), unless earlier accelerated in accordance with the terms of this Secured Promissory Note (this “Note”).
This Note is dated as of [DATE] (the “Issuance Date”) and is issued by the Borrower in favor of the Lender pursuant to the terms and conditions set forth herein. This Note evidences a loan (the “Loan”) in the Principal Amount made by the Lender to the Borrower on the Issuance Date. The Borrower acknowledges receipt of the full Principal Amount as of the Issuance Date and confirms that no conditions precedent to the Borrower’s obligations hereunder remain unsatisfied.
As used herein, the term “Obligations” means all obligations of the Borrower to the Lender under this Note, including, without limitation, the obligation to pay the Principal Amount, all accrued and unpaid interest, any default interest, all fees, costs, expenses (including reasonable attorneys’ fees and disbursements), indemnification amounts, and all other sums payable by the Borrower to the Lender under or in connection with this Note. The term “Business Day” means any day other than a Saturday, Sunday, or any day on which commercial banks in the State of [STATE] are authorized or required by law to close.
The outstanding Principal Amount shall bear interest from and including the Issuance Date to but excluding the date of repayment in full at a rate equal to [INTEREST RATE] percent ([RATE]%) per annum (the “Interest Rate”). Interest shall be calculated on the basis of the actual number of days elapsed in a year of three hundred sixty (360) days (or, if required to avoid exceeding the Maximum Lawful Rate (as defined below), three hundred sixty-five (365) days or three hundred sixty-six (366) days, as applicable). Interest shall accrue daily on the outstanding Principal Amount and shall compound [monthly/quarterly] on the [last Business Day/first Business Day] of each [calendar month/calendar quarter] (each such date, a “Compounding Date”), with accrued but unpaid interest on each Compounding Date being added to the outstanding Principal Amount for purposes of calculating interest accruing thereafter.
Upon the occurrence and during the continuance of any Event of Default (as defined in Section 9), the outstanding Principal Amount and, to the extent permitted by applicable law, all accrued and unpaid interest and any other amounts owing hereunder shall bear interest at a rate per annum equal to the lesser of (a) the Interest Rate plus five percent (5.00%) per annum and (b) the maximum rate permitted by applicable law (the “Default Rate”). Interest at the Default Rate shall accrue from the date of such Event of Default until such Event of Default is cured or waived in writing by the Lender or until all Obligations are paid in full, whichever occurs first. Accrual of interest at the Default Rate shall not constitute a waiver by the Lender of any Event of Default or any right or remedy available to the Lender hereunder or at law or in equity.
Notwithstanding any provision of this Note to the contrary, in no event shall the aggregate amount of interest paid or payable under this Note exceed the maximum rate of interest permitted to be charged under applicable law (the “Maximum Lawful Rate”). If at any time the Interest Rate or the Default Rate, as applicable, would exceed the Maximum Lawful Rate, the rate of interest payable hereunder shall automatically be reduced to the Maximum Lawful Rate, and any interest paid in excess of the Maximum Lawful Rate shall be applied first to reduce the outstanding Principal Amount, and any remainder shall be refunded to the Borrower. In determining whether the interest paid or payable under this Note exceeds the Maximum Lawful Rate, the Lender may, to the fullest extent permitted by applicable law, (a) characterize any non-principal payment as an expense, fee, or premium rather than as interest, (b) exclude voluntary prepayments and the effects thereof, and (c) spread the total amount of interest throughout the entire contemplated term of the Obligations so that the interest rate is uniform throughout such term.
The Borrower shall repay the Principal Amount, together with all accrued and unpaid interest and all other amounts owing hereunder, in accordance with the following schedule: [OPTION A: The entire outstanding Principal Amount, together with all accrued and unpaid interest and all other Obligations, shall be due and payable in full on the Maturity Date.] [OPTION B: The Borrower shall make consecutive [monthly/quarterly] installment payments of principal and interest in the amount of $[INSTALLMENT AMOUNT] each, commencing on [FIRST PAYMENT DATE] and continuing on the [same day] of each successive [month/quarter] thereafter (each, a “Scheduled Payment Date”), with the entire remaining outstanding Principal Amount, together with all accrued and unpaid interest and all other Obligations, due and payable in full on the Maturity Date.] If any Scheduled Payment Date or the Maturity Date falls on a day that is not a Business Day, such payment shall be due on the next succeeding Business Day, and interest shall continue to accrue through and including the day immediately preceding such next succeeding Business Day.
All payments of principal and interest under this Note shall be made in lawful money of the United States of America in immediately available funds by wire transfer to such account as the Lender shall designate in writing from time to time, without setoff, deduction, or counterclaim. The Lender’s designation of a wire transfer account shall remain in effect until the Lender provides a superseding designation in writing at least five (5) Business Days prior to the next Scheduled Payment Date. All payments received by the Lender under this Note shall be applied in the following order of priority: first, to the payment of any fees, costs, and expenses (including reasonable attorneys’ fees) then due and payable to the Lender under this Note; second, to the payment of all accrued and unpaid interest (including any interest accruing at the Default Rate); and third, to the reduction of the outstanding Principal Amount. During the continuance of any Event of Default, the Lender may apply payments received in such order and manner as the Lender may determine in its sole discretion.
The Borrower may, upon not less than [ten (10)/thirty (30)] Business Days’ prior written notice to the Lender, voluntarily prepay all or any portion of the outstanding Principal Amount (together with all accrued and unpaid interest on the amount so prepaid through the date of prepayment) at any time without premium or penalty [; provided, however, that any voluntary prepayment made prior to the [first/second] anniversary of the Issuance Date shall be accompanied by a prepayment premium equal to [PREPAYMENT PREMIUM PERCENTAGE] percent ([PERCENTAGE]%) of the amount so prepaid]. Any partial prepayment shall be applied to the scheduled installments of principal in inverse order of maturity (i.e., to the latest maturing installments first) unless otherwise agreed by the Lender in writing. No amount prepaid may be reborrowed.
In addition to any voluntary prepayment, the Borrower shall be required to prepay the outstanding Principal Amount, together with all accrued and unpaid interest and all other Obligations, upon the occurrence of any of the following mandatory prepayment events: (a) any sale, transfer, or other disposition of all or substantially all of the Collateral (as defined in Section 4) or all or substantially all of the assets of the Borrower (other than sales of inventory in the ordinary course of business); (b) any Change of Control (as defined in Section 9(i)); (c) receipt by the Borrower of net cash proceeds from any casualty or condemnation event affecting the Collateral in excess of $[THRESHOLD AMOUNT]; or (d) receipt by the Borrower of net cash proceeds from any issuance of indebtedness (other than Permitted Indebtedness (as defined herein)) in excess of $[THRESHOLD AMOUNT]. Any mandatory prepayment shall be due and payable within five (5) Business Days following the occurrence of the applicable mandatory prepayment event.
If any payment of principal or interest under this Note is not received by the Lender within [five (5)/ten (10)] calendar days after the date on which such payment is due (whether on a Scheduled Payment Date, the Maturity Date, upon acceleration, or otherwise), the Borrower shall pay to the Lender a late payment fee equal to the lesser of (a) [five percent (5%)] of the amount of such overdue payment and (b) the maximum amount permitted by applicable law (the “Late Payment Fee”). The Late Payment Fee shall be in addition to, and not in lieu of, (i) any interest accruing at the Default Rate and (ii) any other rights or remedies available to the Lender upon the occurrence of an Event of Default. The Borrower acknowledges that the Late Payment Fee represents a reasonable estimate of the costs and expenses that the Lender will incur as a result of any late payment and is not a penalty.
As security for the prompt and complete payment, performance, and satisfaction of all Obligations, the Borrower hereby grants to the Lender a continuing first-priority security interest in and lien upon all of the following property and assets of the Borrower, whether now owned or hereafter acquired, wherever located, and all products and proceeds thereof (collectively, the “Collateral”): (a) all accounts (as defined in Article 9 of the Uniform Commercial Code as in effect in the State of [STATE] (the “UCC”)); (b) all chattel paper (whether tangible or electronic); (c) all deposit accounts; (d) all documents (as defined in the UCC); (e) all equipment, including all machinery, vehicles, furniture, fixtures, manufacturing equipment, and trade fixtures; (f) all general intangibles, including all intellectual property (patents, patent applications, copyrights, copyright applications, trademarks, trademark applications, trade names, trade secrets, domain names, software, licenses, and royalties), payment intangibles, and contract rights; (g) all goods, including all inventory, equipment, and fixtures; (h) all instruments (including promissory notes); (i) all inventory, including all raw materials, work-in-process, finished goods, and goods held for sale or lease; (j) all investment property, including all securities (certificated and uncertificated), security entitlements, securities accounts, commodity contracts, and commodity accounts; (k) all letter-of-credit rights; (l) all commercial tort claims (to the extent identified in writing and consented to by the Borrower); (m) all supporting obligations; and (n) all books and records pertaining to any of the foregoing.
The security interest granted herein extends to and covers all Collateral of every kind and description, including all accessions to, substitutions for, and replacements of the Collateral, and all products, rents, profits, and proceeds (cash and non-cash) of any and all of the foregoing Collateral, including proceeds of insurance policies insuring the Collateral and all proceeds of proceeds. The security interest granted herein shall attach to all after-acquired Collateral of the types described above and to all proceeds and products thereof immediately upon the Borrower’s acquisition of rights therein, without the necessity of any further action by either party.
The Borrower hereby irrevocably authorizes the Lender, at any time and from time to time, to file in any relevant jurisdiction any financing statements (including UCC-1 financing statements and amendments and continuations thereof) and amendments thereto that (a) indicate the Collateral as “all assets” of the Borrower or words of similar effect, regardless of whether any particular asset described in such financing statement falls within the scope of the UCC, and (b) contain any other information required by the UCC for the sufficiency or filing office acceptance of any financing statement or amendment, including whether the Borrower is an organization, the type of organization, the Borrower’s organizational identification number, and the Borrower’s jurisdiction of organization. The Borrower agrees to furnish any such information to the Lender promptly upon request. The Borrower also ratifies its authorization for the Lender to have filed any like financing statements or amendments thereto filed prior to the Issuance Date.
The Borrower shall, from time to time, at its expense, promptly execute, acknowledge, and deliver such further instruments and documents and take such further actions as the Lender may reasonably request for the purpose of obtaining or preserving the full benefits of this Note and the security interest granted herein, including the filing of any financing statements, amendments, or continuation statements under the UCC or any other applicable law with respect to the security interest granted herein. The Borrower shall cooperate with the Lender in obtaining control (within the meaning of the UCC) over any Collateral consisting of deposit accounts, electronic chattel paper, investment property, or letter-of-credit rights, by executing and delivering control agreements in form and substance satisfactory to the Lender.
The Borrower hereby irrevocably appoints the Lender as the Borrower’s attorney-in-fact, with full authority in the place and stead of the Borrower and in the name of the Borrower or otherwise, from time to time in the Lender’s discretion, to take any action and to execute any instrument that the Lender may deem necessary or advisable to accomplish the purposes of this Note and to perfect and protect the security interest granted herein, including: (a) to file one or more UCC-1 financing statements, amendments thereto, and continuation statements in any jurisdiction; (b) to sign the Borrower’s name on any financing statement, amendment, or continuation statement; (c) to execute any endorsements, assignments, or other instruments of transfer or conveyance; and (d) to do all acts and things necessary to carry out the intent and purpose of this Note. This power of attorney is coupled with an interest and shall be irrevocable until the Obligations are paid in full and this Note is terminated.
The Borrower shall not create, incur, assume, or suffer to exist any lien, security interest, encumbrance, charge, or other claim of any nature upon or with respect to any of the Collateral, except for the following (collectively, “Permitted Liens”): (a) the security interest in favor of the Lender created by this Note; (b) liens for taxes, assessments, or other governmental charges not yet due or that are being contested in good faith by appropriate proceedings and for which adequate reserves have been established in accordance with generally accepted accounting principles (“GAAP”); (c) mechanics’, carriers’, workers’, repairers’, and similar statutory liens arising or incurred in the ordinary course of business for amounts that are not yet due and payable or that are being contested in good faith by appropriate proceedings; (d) pledges and deposits made in the ordinary course of business in compliance with workers’ compensation, unemployment insurance, and other social security laws or regulations; and (e) such other liens as may be expressly set forth on Schedule A attached hereto and incorporated herein by reference, if any.
The Borrower shall maintain the Collateral in good condition and repair (ordinary wear and tear excepted) and shall not cause or permit any waste or unusual or unreasonable depreciation of the Collateral. The Borrower shall defend the Collateral against all claims and demands of all persons at any time claiming any interest therein adverse to the Lender. The Borrower shall keep accurate and complete books and records relating to the Collateral in accordance with GAAP and shall permit the Lender and its representatives to inspect, audit, and make copies of and extracts from such books and records at all reasonable times upon reasonable prior notice.
The Borrower shall, at its own expense, maintain insurance on all tangible Collateral with financially sound and reputable insurance companies in such amounts (with no greater risk retention) and against such risks (including fire, theft, and such other risks as the Lender may reasonably specify) as is customarily maintained by companies of established repute engaged in the same or similar businesses operating in the same or similar locations. All such insurance policies shall (a) name the Lender as loss payee and additional insured, as applicable, pursuant to a lender’s loss payable endorsement in form and substance satisfactory to the Lender, (b) provide that no cancellation, material reduction in amount, or material change in coverage shall be effective until at least thirty (30) days after receipt by the Lender of written notice thereof, and (c) be in form and substance satisfactory to the Lender. The Borrower shall furnish to the Lender, upon request, certificates of insurance and copies of all insurance policies and endorsements. If the Borrower fails to maintain such insurance, the Lender may (but shall not be obligated to) obtain such insurance at the Borrower’s expense, and any premiums paid by the Lender shall be immediately due and payable and shall constitute additional Obligations secured by this Note.
All tangible Collateral shall be kept at the locations identified on Schedule B attached hereto and incorporated herein by reference (each, a “Collateral Location”). The Borrower shall not remove any material portion of the tangible Collateral from the Collateral Locations or change, add, or close any Collateral Location without at least thirty (30) days’ prior written notice to the Lender. The Borrower shall promptly notify the Lender in writing of any change in (a) the Borrower’s legal name, (b) the Borrower’s identity or organizational structure, (c) the Borrower’s jurisdiction of organization, (d) the Borrower’s organizational identification number, or (e) the Borrower’s chief executive office or principal place of business. Any such change shall not take effect until at least thirty (30) days after receipt by the Lender of such written notice and the Lender’s written confirmation that all additional filings and other actions necessary to maintain the perfection and priority of the Lender’s security interest have been completed.
The Borrower hereby represents and warrants to the Lender as of the Issuance Date and as of the date of each payment hereunder (except to the extent that any representation or warranty expressly relates to a specific date, in which case such representation or warranty shall be true and correct as of such specific date) as follows:
(a) Organization and Good Standing. The Borrower is a [corporation/limited liability company] duly organized, validly existing, and in good standing under the laws of the State of [STATE] and has all requisite [corporate/limited liability company] power and authority to own, operate, and lease its properties and assets and to conduct its business as presently conducted. The Borrower is duly qualified to do business and is in good standing in every jurisdiction in which the nature of its business or the ownership or leasing of its properties and assets makes such qualification necessary, except where the failure to be so qualified or in good standing could not reasonably be expected to have a Material Adverse Effect. As used herein, “Material Adverse Effect” means any event, circumstance, development, condition, occurrence, or change that, individually or in the aggregate, has had or could reasonably be expected to have a material adverse effect on (i) the business, assets, liabilities, financial condition, results of operations, or prospects of the Borrower, (ii) the ability of the Borrower to perform its obligations under this Note, (iii) the legality, validity, binding effect, or enforceability of this Note, or (iv) the rights, remedies, and benefits available to the Lender under this Note, including the value, priority, or perfection of the security interest granted herein.
(b) Authority and Due Authorization. The execution, delivery, and performance of this Note by the Borrower have been duly authorized by all necessary [corporate/limited liability company] action on the part of the Borrower, including any required approval of its [board of directors/managers/members]. No other [corporate/limited liability company] proceedings or actions on the part of the Borrower are necessary to authorize the execution, delivery, or performance of this Note.
(c) Enforceability. This Note constitutes the legal, valid, and binding obligation of the Borrower, enforceable against the Borrower in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer, or similar laws affecting the enforcement of creditors’ rights generally and by general principles of equity (regardless of whether such enforceability is considered in a proceeding at law or in equity).
(d) No Conflicts. The execution, delivery, and performance of this Note by the Borrower do not and will not (i) violate, conflict with, or result in a breach or default under any provision of the Borrower’s [certificate of incorporation, bylaws/certificate of formation, operating agreement] or other organizational documents, (ii) violate, conflict with, or result in a breach or default under, or give rise to any right of termination, cancellation, acceleration, or loss of any benefit under, any material contract, agreement, indenture, or instrument to which the Borrower is a party or by which the Borrower or any of its properties or assets is bound, (iii) result in the creation or imposition of any lien, security interest, or other encumbrance upon or with respect to any property or asset of the Borrower (other than the security interest created by this Note), or (iv) violate any statute, law, rule, regulation, order, writ, judgment, injunction, or decree applicable to the Borrower or any of its properties or assets.
(e) Title to Collateral. The Borrower is the sole owner of the Collateral, free and clear of all liens, security interests, encumbrances, claims, and rights of others, except for Permitted Liens. No effective financing statement or other filing covering all or any part of the Collateral is on file in any recording office, except for financing statements filed in favor of the Lender pursuant to this Note and financing statements relating to Permitted Liens.
(f) Financial Statements. All financial statements of the Borrower that have been delivered to the Lender (i) were prepared in accordance with GAAP applied on a consistent basis throughout the periods covered thereby (except as otherwise noted therein) and (ii) fairly present in all material respects the financial condition, results of operations, and cash flows of the Borrower as of the dates thereof and for the periods covered thereby. Since the date of the most recent financial statements delivered to the Lender, there has been no Material Adverse Effect.
(g) Litigation. There is no action, suit, proceeding, investigation, or claim pending or, to the knowledge of the Borrower, threatened against the Borrower or any of its properties or assets (including the Collateral) before any court, arbitrator, or governmental authority that could reasonably be expected to have a Material Adverse Effect or that seeks to enjoin, restrain, or prohibit the consummation of the transactions contemplated by this Note.
(h) Solvency. The Borrower is solvent. The Borrower (i) has capital sufficient to carry on its business and transactions contemplated hereby, (ii) is able to pay its debts as they become due, and (iii) owns property having a value (both at fair valuation and at present fair salable value) greater than the amount required to pay its debts (including contingent, subordinated, unmatured, and unliquidated debts) as they become absolute and matured.
(i) Compliance with Laws; Tax Compliance. The Borrower is in compliance in all material respects with all applicable statutes, laws, rules, regulations, orders, writs, judgments, injunctions, and decrees of any governmental authority. The Borrower has filed all federal, state, local, and foreign tax returns required to be filed and has paid all taxes, assessments, fees, and other governmental charges levied or imposed upon the Borrower or its properties, income, or assets that are due and payable, except for those being contested in good faith by appropriate proceedings and for which adequate reserves have been established in accordance with GAAP.
(j) Collateral Location and Legal Name. The Collateral Locations set forth on Schedule B are the sole locations of all tangible Collateral. The exact legal name of the Borrower as set forth in its organizational documents and as reflected in the records of the Secretary of State (or equivalent office) of the Borrower’s jurisdiction of organization is as set forth on the first page of this Note. The Borrower’s organizational identification number assigned by its jurisdiction of organization is [ORGANIZATIONAL ID NUMBER], and its jurisdiction of organization is [STATE].
The Borrower covenants and agrees that, from the Issuance Date until the Obligations are paid in full and this Note is terminated, the Borrower shall:
(a) Maintenance of Collateral. Maintain all Collateral in good condition and repair (ordinary wear and tear excepted), and make all necessary and proper repairs, renewals, replacements, and improvements thereto. The Borrower shall not use or permit the Collateral to be used in violation of any applicable law, regulation, or policy of insurance. The Borrower shall not cause or permit any waste, impairment, or deterioration of the Collateral or any part thereof.
(b) Taxes and Assessments. Pay and discharge when due all taxes, assessments, and other governmental charges or levies imposed upon the Borrower, its income, or the Collateral, before the same shall become delinquent or in default; provided, however, that the Borrower shall not be required to pay and discharge any such tax, assessment, charge, or levy so long as (i) the validity or amount thereof is being contested in good faith by appropriate proceedings, (ii) the Borrower has set aside on its books adequate reserves in accordance with GAAP with respect thereto, and (iii) the failure to pay or discharge such item could not reasonably be expected to result in a lien on the Collateral (other than a Permitted Lien) or a Material Adverse Effect.
(c) Financial Reporting. Deliver to the Lender: (i) within [thirty (30)] days after the end of each fiscal quarter of the Borrower, unaudited financial statements (including a balance sheet, income statement, and statement of cash flows) for such fiscal quarter and for the year-to-date period then ended, certified by the Borrower’s chief financial officer as presenting fairly in all material respects the financial condition and results of operations of the Borrower; (ii) within [ninety (90)] days after the end of each fiscal year of the Borrower, audited annual financial statements (including a balance sheet, income statement, statement of cash flows, and statement of changes in equity) for such fiscal year, prepared in accordance with GAAP and audited by an independent certified public accounting firm of recognized standing acceptable to the Lender; and (iii) promptly upon the Lender’s reasonable request, such other financial information, reports, and data with respect to the Borrower and the Collateral as the Lender may reasonably request from time to time, including accounts receivable agings, inventory reports, and accounts payable schedules.
(d) Insurance. Maintain insurance on the Collateral in accordance with the requirements of Section 5 of this Note. The Borrower shall promptly provide the Lender with evidence of renewal or replacement of any insurance policy at least fifteen (15) days prior to the expiration of such policy.
(e) Inspection Rights. Permit the Lender and its authorized representatives, upon reasonable prior notice (except that no prior notice shall be required during the continuance of an Event of Default), to visit and inspect the Collateral and any of the Borrower’s properties, examine and make copies of and abstracts from the Borrower’s books and records, and discuss the affairs, finances, accounts, and condition of the Borrower and the Collateral with any of the Borrower’s officers, directors, employees, agents, or independent certified public accountants. The Borrower shall bear the cost of any such inspection conducted during the continuance of an Event of Default.
(f) Books and Records. Keep adequate and proper books of record and account in accordance with GAAP in which complete, true, and correct entries shall be made of all dealings and transactions in relation to its business, activities, and the Collateral.
(g) Compliance with Laws. Comply in all material respects with the requirements of all applicable statutes, laws, rules, regulations, orders, writs, judgments, injunctions, and decrees of any governmental authority, non-compliance with which could reasonably be expected to have a Material Adverse Effect.
(h) Corporate Existence. Maintain its [corporate/limited liability company] existence and its good standing in its jurisdiction of organization and in each other jurisdiction in which the failure to maintain such qualification could reasonably be expected to have a Material Adverse Effect. The Borrower shall maintain all rights, privileges, permits, licenses, and franchises necessary or desirable in the normal conduct of its business.
(i) Notice of Events. Promptly (and in any event within five (5) Business Days) notify the Lender in writing of (i) the occurrence of any Event of Default or any event that, with the giving of notice or lapse of time or both, would constitute an Event of Default, (ii) the occurrence of any Material Adverse Effect, (iii) any material litigation, investigation, or proceeding affecting the Borrower or the Collateral, (iv) any material loss, damage, or destruction to any Collateral (whether or not insured), and (v) any change in the Borrower’s legal name, jurisdiction of organization, organizational structure, or organizational identification number.
(j) Defense of Collateral. Defend the Collateral against all claims, demands, and actions of third parties and appear in and defend any action or proceeding that may affect the Lender’s security interest in or the Borrower’s title to the Collateral.
(k) Deposit Accounts. Maintain its primary operating accounts and all deposit accounts in which proceeds of Collateral are deposited at [the Lender/financial institutions approved in writing by the Lender] and, upon the Lender’s request, execute and cause such financial institutions to execute deposit account control agreements in form and substance satisfactory to the Lender.
The Borrower covenants and agrees that, from the Issuance Date until the Obligations are paid in full and this Note is terminated, the Borrower shall not, without the prior written consent of the Lender:
(a) Liens. Create, incur, assume, or suffer to exist any lien, security interest, encumbrance, or other charge or claim upon or with respect to any of the Collateral, other than Permitted Liens. The Borrower shall promptly notify the Lender of the existence of any lien on the Collateral not permitted by this Section and shall take all actions necessary to discharge and release such lien within fifteen (15) days after the Borrower becomes aware of such lien.
(b) Dispositions. Sell, lease, license, transfer, assign, convey, or otherwise dispose of any of the Collateral or any interest therein, except for (i) sales of inventory in the ordinary course of business, (ii) dispositions of obsolete or worn-out equipment in the ordinary course of business so long as the proceeds thereof are used to acquire replacement equipment or are applied to the Obligations, and (iii) other dispositions of Collateral having an aggregate fair market value not exceeding $[THRESHOLD AMOUNT] in any fiscal year (collectively, “Permitted Dispositions”).
(c) Collateral Location Changes. Move any tangible Collateral from the Collateral Locations or change, add, or close any Collateral Location without providing at least thirty (30) days’ prior written notice to the Lender and taking all actions necessary to maintain the perfection and priority of the Lender’s security interest in such Collateral at its new location, including the filing of any additional UCC financing statements.
(d) Name and Jurisdiction Changes. Change the Borrower’s legal name, identity, organizational structure, jurisdiction of organization, or organizational identification number without providing at least thirty (30) days’ prior written notice to the Lender and obtaining the Lender’s prior written consent (which consent shall not be unreasonably withheld, conditioned, or delayed), and without taking all actions necessary to maintain the perfection and priority of the Lender’s security interest in the Collateral.
(e) Fundamental Changes. Merge with or into, or consolidate with, any other person or entity, or permit any other person or entity to merge with or into the Borrower, or undergo any Change of Control, or liquidate, wind up, or dissolve itself (or suffer any liquidation, winding up, or dissolution), or convey, sell, lease, transfer, or otherwise dispose of all or substantially all of its assets to any person or entity.
(f) Additional Indebtedness. Create, incur, assume, guarantee, or otherwise become or remain directly or indirectly liable with respect to any indebtedness for borrowed money other than (i) the Obligations under this Note, (ii) indebtedness existing on the Issuance Date and disclosed in writing to the Lender (“Existing Indebtedness”), and (iii) purchase money indebtedness and capital leases in an aggregate outstanding principal amount not exceeding $[THRESHOLD AMOUNT] at any time (collectively, “Permitted Indebtedness”).
(g) Restricted Payments. Declare or pay any dividends, purchase, redeem, retire, or otherwise acquire for value any equity interests in the Borrower, or make any distribution of cash, property, or assets to equity holders of the Borrower, or make any payment on account of, or set apart assets for, a sinking or other analogous fund for the purchase, redemption, defeasance, retirement, or other acquisition of any equity interests of the Borrower, whether now or hereafter outstanding, or make any other distribution in respect thereof, either directly or indirectly, whether in cash or property or in obligations of the Borrower (each, a “Restricted Payment”), so long as any Obligations remain outstanding.
(h) Affiliate Transactions. Enter into or be a party to any transaction or arrangement with any affiliate of the Borrower (including any management, consulting, or services agreement), except (i) transactions on terms and conditions at least as favorable to the Borrower as would be obtainable by the Borrower at the time in a comparable arm’s-length transaction with a person or entity other than an affiliate and (ii) reasonable and customary compensation, benefits, and indemnification arrangements for officers, directors, managers, and employees of the Borrower in the ordinary course of business.
(i) Change of Business. Materially change the nature of its business from the business conducted by the Borrower as of the Issuance Date.
Each of the following shall constitute an “Event of Default” under this Note:
(a) Payment Default. The Borrower fails to pay (i) the Principal Amount or any installment thereof when due, whether on a Scheduled Payment Date, the Maturity Date, upon acceleration, upon mandatory prepayment, or otherwise, and such failure continues for a period of three (3) Business Days after the date on which such payment was due; or (ii) any interest, fee, or other amount payable under this Note when due, and such failure continues for a period of five (5) Business Days after written notice thereof from the Lender to the Borrower.
(b) Covenant Default. The Borrower fails to observe or perform any covenant, condition, or agreement contained in this Note (other than a payment obligation addressed in clause (a) above or a covenant contained in any of Sections 8(a), 8(b), 8(e), 8(f), 8(g), or 8(i), for which no cure period is provided), and such failure continues for a period of thirty (30) days after the earlier of (i) the date on which the Borrower obtains knowledge of such failure and (ii) written notice thereof from the Lender to the Borrower; provided that if such failure is capable of cure but cannot reasonably be cured within such thirty (30)-day period, and if the Borrower has commenced to cure such failure within such period and thereafter diligently pursues such cure, such cure period shall be extended for an additional thirty (30) days (for a maximum aggregate cure period of sixty (60) days).
(c) Representation or Warranty Default. Any representation or warranty made by the Borrower in this Note or in any certificate, statement, report, or other document delivered pursuant to this Note shall prove to have been incorrect in any material respect when made or deemed made.
(d) Voluntary Bankruptcy. The Borrower (i) commences a voluntary case or other proceeding seeking liquidation, reorganization, arrangement, adjustment, winding-up, dissolution, composition, or other relief with respect to itself or its debts under any bankruptcy, insolvency, or other similar law now or hereafter in effect, or seeking the appointment of a trustee, receiver, liquidator, custodian, or other similar official, or (ii) consents to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other proceeding commenced against it, or (iii) makes a general assignment for the benefit of creditors, or (iv) admits in writing its inability to pay its debts as they become due, or (v) takes any corporate action to authorize any of the foregoing.
(e) Involuntary Bankruptcy. An involuntary case or other proceeding is commenced against the Borrower seeking liquidation, reorganization, arrangement, adjustment, winding-up, dissolution, composition, or other relief with respect to the Borrower or its debts under any bankruptcy, insolvency, or other similar law now or hereafter in effect, or seeking the appointment of a trustee, receiver, liquidator, custodian, or other similar official, and (i) such involuntary case or other proceeding is not dismissed within sixty (60) days after commencement, or (ii) an order or decree approving or ordering any of the foregoing is entered.
(f) Material Adverse Effect. Any event, circumstance, or condition occurs that constitutes a Material Adverse Effect.
(g) Cross-Default. The Borrower (i) defaults in the payment when due (subject to any applicable grace period) of any principal of or interest on any other indebtedness for borrowed money in an aggregate outstanding principal amount in excess of $[CROSS-DEFAULT THRESHOLD] (“Material Indebtedness”), or (ii) defaults in the observance or performance of any other agreement or condition relating to any Material Indebtedness or contained in any instrument or agreement evidencing, securing, or relating thereto, or any other event occurs, the effect of which default or other event is to cause, or to permit the holder or holders (or a trustee or agent on behalf of such holders) of such Material Indebtedness to cause, such Material Indebtedness to become due prior to its stated maturity.
(h) Judgments. One or more final, non-appealable judgments or orders for the payment of money in an aggregate amount in excess of $[JUDGMENT THRESHOLD] (to the extent not covered by independent third-party insurance as to which the insurer has been notified of the potential claim and does not dispute coverage) shall be rendered against the Borrower and the same shall remain unsatisfied, unvacated, unbonded, or unstayed for a period of sixty (60) days after the entry thereof.
(i) Change of Control. Any “Change of Control” occurs. As used herein, “Change of Control” means (i) any person or group of persons (within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended) acquires, directly or indirectly, beneficial ownership of more than [fifty percent (50%)] of the outstanding voting equity interests of the Borrower, (ii) the Borrower merges with or into, or consolidates with, any other person or entity (other than a merger in which the Borrower is the surviving entity and no Change of Control would otherwise occur), or (iii) the sale, lease, transfer, or other disposition of all or substantially all of the assets of the Borrower to any person or entity.
(j) Loss of Collateral. Any material loss, theft, damage, or destruction of any Collateral having an aggregate fair market value in excess of $[COLLATERAL LOSS THRESHOLD] occurs and is not covered by insurance or replaced within thirty (30) days thereof.
(k) Attachment or Levy. Any attachment, execution, levy, or similar process is issued or levied against any material portion of the Collateral and is not released, vacated, or fully bonded within thirty (30) days thereafter.
(l) Death of Guarantor. If any guarantor of the Obligations is an individual, the death or legal incapacity of such guarantor, unless a replacement guaranty satisfactory to the Lender is delivered within thirty (30) days after such event.
(m) Invalidity of Security Interest. The security interest created by this Note shall, at any time, cease to be a valid, perfected, first-priority security interest in any material portion of the Collateral (except as a result of the Lender’s gross negligence or willful misconduct), or the Borrower or any third party shall so assert in writing.
Upon the occurrence and during the continuance of any Event of Default, the Lender may, at its option and without demand, presentment, or notice of any kind (all of which are hereby expressly waived by the Borrower, except as otherwise required by applicable law that cannot be waived), exercise any one or more of the following remedies:
(a) Acceleration. Declare all or any portion of the outstanding Principal Amount, together with all accrued and unpaid interest thereon (including interest at the Default Rate), all fees, and all other Obligations to be immediately due and payable, whereupon the same shall become immediately due and payable without further notice or demand of any kind; provided, however, that upon the occurrence of any Event of Default described in Section 9(d) or Section 9(e) (bankruptcy events), all Obligations shall automatically become immediately due and payable without any declaration, notice, or other act on the part of the Lender.
(b) UCC Remedies. Exercise all rights and remedies available to a secured party under Article 9 of the UCC (whether or not the UCC applies to the affected Collateral) and under any other applicable law, including the right to (i) take possession of the Collateral, without demand and without legal process, and for such purpose the Borrower hereby grants to the Lender an irrevocable license to enter any premises where the Collateral may be located and to remove the Collateral therefrom, (ii) require the Borrower to assemble the Collateral at a place designated by the Lender that is reasonably convenient to both parties, (iii) sell, lease, or otherwise dispose of all or any part of the Collateral, in its then condition or after any commercially reasonable preparation or processing, at public or private sale, in one or more parcels, at such time or times, at such place or places, and on such terms as the Lender may determine, all without any obligation to prepare or process the Collateral for sale, and (iv) collect, receive, appropriate, and realize upon any or all of the Collateral.
(c) Receiver. Apply to any court of competent jurisdiction for the appointment of a receiver or trustee for all or any portion of the Collateral, and the Borrower hereby consents to any such appointment. The Borrower shall pay all costs and expenses incurred by or on behalf of any such receiver or trustee, including such receiver’s or trustee’s reasonable fees, agents’ expenses, and attorneys’ fees.
(d) Application of Proceeds. Apply the proceeds of any sale, collection, or other realization of the Collateral (including any Collateral consisting of cash) in the following order of priority: first, to the payment of all costs and expenses of the Lender in connection with such sale, collection, or realization, including reasonable attorneys’ fees, court costs, and expenses of sale (including auctioneer’s fees and commissions); second, to the payment of all accrued and unpaid interest (including interest at the Default Rate); third, to the payment of the outstanding Principal Amount; fourth, to the payment of all other Obligations then due and owing; and fifth, any surplus to the Borrower or to whomever may be lawfully entitled thereto. The Borrower shall remain liable for any deficiency remaining after the application of proceeds as set forth herein.
(e) Deficiency Judgment. To the fullest extent permitted by applicable law, if the proceeds of any sale, collection, or other realization of the Collateral are insufficient to satisfy all Obligations in full, the Borrower shall be liable for such deficiency, and the Lender may pursue and obtain a deficiency judgment against the Borrower for the amount of such deficiency, together with interest thereon at the Default Rate and all costs and expenses of collection (including reasonable attorneys’ fees).
(f) Cure on Borrower’s Behalf. Cure any default by the Borrower under any agreement or obligation relating to the Collateral and add all costs and expenses incurred in connection therewith (including reasonable attorneys’ fees) to the Obligations, and such amounts shall be payable on demand and shall bear interest at the Default Rate from the date of payment by the Lender until repaid. The Lender shall have no obligation to cure any such default.
(g) Set-Off. Set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held, and any other indebtedness at any time owing, by the Lender or any affiliate of the Lender to or for the credit or account of the Borrower against any or all of the Obligations, irrespective of whether the Lender shall have made demand under this Note and although such Obligations may be contingent or unmatured.
(h) Cumulative Remedies. All rights and remedies of the Lender under this Note are cumulative and not exclusive of any other rights or remedies that the Lender may have, whether under this Note, at law, in equity, or otherwise. The exercise of any one right or remedy shall not preclude the exercise of any other right or remedy. No failure or delay by the Lender in exercising any right or remedy shall operate as a waiver thereof, nor shall any single or partial exercise of any right or remedy preclude any other or further exercise thereof or the exercise of any other right or remedy.
The Borrower hereby waives, to the fullest extent permitted by applicable law: (a) presentment for payment and demand of payment; (b) notice of intention to accelerate and notice of acceleration; (c) protest and notice of dishonor and notice of nonpayment or nonperformance; (d) notice of the existence, creation, or incurring of any new or additional obligation by the Borrower to the Lender; (e) all diligence in collection or protection of or realization upon the Obligations or any part thereof, any obligation hereunder, or any security for or guaranty of any of the foregoing; (f) any defense based upon an election of remedies by the Lender that destroys or otherwise impairs any subrogation right of the Borrower; and (g) any and all rights under any statute of limitations or other time-limiting provisions as a defense to any action to enforce the Lender’s security interest or to collect any of the Obligations.
No failure or delay on the part of the Lender in exercising any power, right, privilege, or remedy under this Note, and no course of dealing between the Borrower and the Lender, shall operate as a waiver of any power, right, privilege, or remedy, nor shall any single or partial exercise of any power, right, privilege, or remedy preclude any other or further exercise thereof or the exercise of any other power, right, privilege, or remedy. No waiver by the Lender of any default or Event of Default shall be effective unless in a writing signed by the Lender, and any such waiver shall be effective only in the specific instance and for the specific purpose for which it is given. No waiver of any Event of Default shall extend to any subsequent or other Event of Default, whether or not similar, or impair any right consequent thereon.
THE BORROWER HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS NOTE, THE SECURITY INTEREST GRANTED HEREIN, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN), OR ACTIONS OF ANY PARTY HERETO. THE BORROWER ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION OF THIS NOTE) AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE LENDER TO MAKE THE LOAN AND ACCEPT THIS NOTE.
As used in this Section, “Senior Debt” means all indebtedness, liabilities, and obligations of the Borrower to any holder of senior indebtedness (each, a “Senior Creditor”) as identified and described in Schedule C attached hereto, whether now existing or hereafter arising, including all principal, interest (including post-petition interest), premiums, fees, indemnifications, reimbursements, damages, and other amounts payable thereunder or in connection therewith, as such indebtedness may be amended, restated, supplemented, or otherwise modified from time to time.
The Obligations are and shall be expressly subordinate and junior in right of payment and priority to all Senior Debt to the extent and in the manner set forth in this Section. In the event of any insolvency, bankruptcy, receivership, liquidation, reorganization, arrangement, composition, or similar proceeding relating to the Borrower or its property (a “Proceeding”), or any assignment for the benefit of creditors or any marshalling of the assets and liabilities of the Borrower, all Senior Debt shall first be paid in full in cash before any payment or distribution of any kind (whether in cash, property, securities, or otherwise) shall be made on account of the Obligations. The Lender agrees that, in any such Proceeding, it will file any claim, proof of claim, or other instrument of similar character necessary to enforce the Obligations and will hold in trust for and pay over to the applicable Senior Creditor any payment or distribution received by the Lender on account of the Obligations until the Senior Debt is paid in full in cash (the “Turnover Obligation”).
Upon the occurrence and during the continuance of any default or event of default under any agreement governing Senior Debt (a “Senior Default”), after the Lender receives written notice of such Senior Default from the Borrower or any Senior Creditor (a “Blockage Notice”), no payment of any kind shall be made on account of the Obligations for a period (the “Standstill Period”) commencing on the date the Blockage Notice is received by the Lender and ending on the earliest of (a) one hundred eighty (180) days after the date of receipt of such Blockage Notice, (b) the date on which such Senior Default is cured or waived in writing by the applicable Senior Creditor, or (c) the date on which the Senior Debt to which such Senior Default relates is paid in full in cash; provided, however, that not more than one Standstill Period may be imposed during any period of three hundred sixty-five (365) consecutive days.
Notwithstanding the foregoing, so long as no Senior Default has occurred and is continuing with respect to which the Lender has received a Blockage Notice and the applicable Standstill Period has not expired, the Borrower may make, and the Lender may receive, regularly scheduled payments of principal and interest under this Note in accordance with the terms hereof.
The Lender agrees to execute and deliver to any Senior Creditor such subordination agreements, intercreditor agreements, and other instruments as any Senior Creditor may reasonably request to effectuate the subordination provisions of this Section, in each case in form and substance reasonably satisfactory to the Lender and such Senior Creditor.
The Borrower shall indemnify, defend, and hold harmless the Lender and its affiliates, and their respective officers, directors, managers, members, partners, employees, agents, advisors, and representatives (each, an “Indemnified Party”), from and against any and all losses, claims, damages, liabilities, penalties, fines, costs, and expenses (including reasonable and documented attorneys’ fees, court costs, expert witness fees, and costs of investigation and litigation) (collectively, “Losses”) that any Indemnified Party may incur or suffer, arising out of, resulting from, or in any way relating to: (a) the execution, delivery, enforcement, performance, or administration of this Note or the Loan, including any modification, amendment, or waiver thereof; (b) the security interest granted herein or the perfection, priority, or enforcement thereof; (c) any actual or alleged breach by the Borrower of any representation, warranty, covenant, or other provision of this Note; (d) any actual or prospective claim, litigation, investigation, or proceeding relating to any of the foregoing, whether based on contract, tort, or any other theory, whether brought by a third party or by the Borrower; (e) any environmental liability or claim related to the Collateral; and (f) any action taken or omitted to be taken by the Lender in connection with the Collateral, the exercise of any right or remedy hereunder, or the enforcement of this Note.
The foregoing indemnification shall not apply to the extent that any Losses are determined by a court of competent jurisdiction in a final, non-appealable judgment to have resulted from the gross negligence or willful misconduct of the applicable Indemnified Party. The Borrower shall not be liable for any special, indirect, consequential, or punitive damages in connection with this indemnification; provided, however, that nothing in this sentence shall limit the Borrower’s obligation to indemnify an Indemnified Party against Losses (including special, indirect, consequential, or punitive damages) asserted against such Indemnified Party by a third party.
The obligations of the Borrower under this Section shall survive the repayment of all Obligations, the termination of this Note, and the release or discharge of the security interest granted herein.
All notices, requests, demands, consents, and other communications required or permitted to be given hereunder shall be in writing and shall be deemed duly given or made: (a) if delivered by hand or by nationally recognized overnight courier service, when received; (b) if sent by registered or certified mail, return receipt requested, postage prepaid, five (5) Business Days after deposit in the United States mail; or (c) if sent by electronic mail (with confirmation of receipt and a copy sent by another method specified in this Section within two (2) Business Days), when transmitted; in each case, addressed or directed to the applicable party at the address or electronic mail address set forth below (or at such other address or electronic mail address as such party may designate by notice given in accordance with this Section):
If to the Borrower: [BORROWER NAME], [ADDRESS LINE 1], [ADDRESS LINE 2], [CITY], [STATE] [ZIP CODE], Attention: [CONTACT NAME], [TITLE], Email: [EMAIL ADDRESS].
If to the Lender: [LENDER NAME], [ADDRESS LINE 1], [ADDRESS LINE 2], [CITY], [STATE] [ZIP CODE], Attention: [CONTACT NAME], [TITLE], Email: [EMAIL ADDRESS].
Either party may change its address for purposes of this Section by giving written notice of such change to the other party in accordance with the provisions of this Section. Notice of any change of address shall be effective only upon receipt.
This Note and the rights and obligations of the parties hereunder, and all matters arising out of or relating to this Note, whether sounding in contract, tort, or statute, shall be governed by, and construed and enforced in accordance with, the internal laws of the State of [STATE] (including Sections 5-1401 and 5-1402 of the General Obligations Law of the State of [STATE], if applicable), without giving effect to any choice or conflict of law provision or rule (whether of the State of [STATE] or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of [STATE]; provided, however, that the perfection and priority of the security interest granted herein, and the remedies of the Lender with respect to the Collateral, shall be governed by the UCC as in effect in the applicable jurisdiction.
Each party hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of the state and federal courts located in [COUNTY], [STATE] (the “Selected Courts”) for any action, suit, or proceeding arising out of or relating to this Note or any transaction contemplated hereby or the enforcement of any rights hereunder, and each party hereby irrevocably and unconditionally agrees that all claims in respect of any such action, suit, or proceeding shall be heard and determined in the Selected Courts.
Each party hereby irrevocably and unconditionally waives, to the fullest extent permitted by applicable law, (a) any objection that it may now or hereafter have to the laying of venue of any action, suit, or proceeding arising out of or relating to this Note in the Selected Courts and (b) the defense of an inconvenient forum to the maintenance of any such action, suit, or proceeding in the Selected Courts. Each party hereby irrevocably consents to the service of process in any action, suit, or proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, to such party at the address set forth in Section 14 hereof (or at such other address as such party may designate in accordance with Section 14). Nothing in this Section shall affect the right of the Lender to serve process in any other manner permitted by applicable law or to commence legal proceedings or otherwise proceed against the Borrower in any other jurisdiction.
EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, SUIT, PROCEEDING, OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT, STRICT LIABILITY, OR ANY OTHER THEORY) ARISING OUT OF, CONNECTED WITH, OR RELATING TO THIS NOTE, THE OBLIGATIONS, THE COLLATERAL, THE SECURITY INTEREST GRANTED HEREIN, THE TRANSACTIONS CONTEMPLATED HEREBY, OR THE ACTIONS OF THE LENDER IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE, OR ENFORCEMENT HEREOF.
EACH PARTY HERETO CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT, OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (B) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) EACH PARTY MAKES THIS WAIVER VOLUNTARILY, KNOWINGLY, AND WITHOUT DURESS OR COERCION, AND (D) EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS NOTE BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
(a) Entire Agreement. This Note (together with all Schedules and Exhibits attached hereto) constitutes the entire agreement between the Borrower and the Lender with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements, representations, warranties, and understandings, whether written or oral, relating to such subject matter.
(b) Amendments and Waivers. No amendment, modification, supplement, termination, consent, or waiver of any provision of this Note, and no consent to any departure by the Borrower from the terms hereof, shall be effective unless in a writing signed by the Lender (and, in the case of an amendment, modification, or supplement, also signed by the Borrower). Any amendment, modification, supplement, waiver, or consent shall be effective only in the specific instance and for the specific purpose for which it is given.
(c) Severability. If any provision of this Note is held to be invalid, illegal, or unenforceable in any jurisdiction, such invalidity, illegality, or unenforceability shall not affect any other provision of this Note or invalidate or render unenforceable such provision in any other jurisdiction. Upon a determination that any provision is invalid, illegal, or unenforceable, the parties shall negotiate in good faith to modify this Note so as to give effect to the original intent of the parties to the greatest extent permitted by applicable law.
(d) No Waiver by Course of Dealing. No course of dealing between the Borrower and the Lender, and no delay or failure on the part of the Lender in exercising any right, power, or privilege hereunder, shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power, or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, power, or privilege.
(e) Successors and Assigns. This Note shall be binding upon the Borrower and its successors and assigns and shall inure to the benefit of the Lender and its successors and assigns. The Borrower may not assign or transfer any of its rights or obligations under this Note without the prior written consent of the Lender. The Lender may assign, transfer, or negotiate this Note and the security interest granted herein, in whole or in part, to any person or entity without notice to or the consent of the Borrower, and in such event each subsequent holder of this Note shall have all of the rights and remedies of the Lender hereunder.
(f) Counterparts; Electronic Signatures. This Note may be executed in any number of counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. Delivery of an executed counterpart by electronic transmission (including by facsimile, portable document format (.pdf), or any electronic signature complying with the U.S. federal ESIGN Act of 2000 or the Uniform Electronic Transactions Act, as applicable) shall be equally effective as delivery of a manually executed counterpart.
(g) Time is of the Essence. Time is of the essence with respect to all dates, deadlines, and time periods set forth in this Note.
(h) Headings. The headings of the sections and subsections of this Note are inserted for convenience of reference only and shall not affect the meaning, interpretation, or construction of this Note.
(i) Construction. The parties have participated jointly in the negotiation and drafting of this Note, and in the event an ambiguity or question of intent or interpretation arises, this Note shall be construed as if drafted jointly by the parties, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provision of this Note. The words “include,” “includes,” and “including” shall be deemed to be followed by the phrase “without limitation.” Unless the context otherwise requires, references to Sections and Schedules are to Sections of and Schedules to this Note.
(j) Relationship of Parties. The relationship between the Lender and the Borrower is solely that of creditor and debtor. Nothing contained in this Note shall be deemed to create any partnership, joint venture, agency, or other relationship between the parties other than the creditor-debtor relationship expressly set forth herein.
(k) Expenses. The Borrower shall pay all reasonable and documented out-of-pocket costs and expenses incurred by the Lender in connection with the preparation, negotiation, execution, delivery, and administration of this Note and the perfection and protection of the security interest granted herein (including UCC search fees, filing fees, and the reasonable fees and disbursements of the Lender’s counsel). The Borrower shall also pay all costs and expenses incurred by the Lender in connection with the enforcement or protection of its rights under this Note and with respect to the Collateral, including all court costs, and the reasonable fees and disbursements of the Lender’s counsel (whether or not litigation is commenced).
(l) Usury Savings Clause. Notwithstanding any provision of this Note to the contrary, in no event shall the Borrower be obligated to pay, and in no event shall any amounts payable hereunder (including interest, fees, and other charges) exceed, the maximum amount permitted to be charged under applicable law. If any amount collected or to be collected from the Borrower in connection with this Note exceeds the Maximum Lawful Rate, such excess shall be deemed the result of a mathematical error and shall be credited against the outstanding Principal Amount (or, if the Principal Amount has been paid in full, refunded to the Borrower). In the event that, upon final payment of this Note, the total amount of interest paid or accrued under the terms of this Note is less than the total amount of interest that would have been paid or accrued if the interest rate(s) otherwise specified herein had at all times been in effect, then the Borrower shall, to the extent permitted by applicable law, pay to the Lender an amount equal to the excess of (i) the lesser of (A) the amount of interest that would have accrued if the Maximum Lawful Rate had at all times been in effect and (B) the amount of interest that would have accrued if the interest rate(s) otherwise specified herein had at all times been in effect, over (ii) the amount of interest actually paid or accrued under this Note.
[The following provisions apply if a personal guaranty is required in connection with this Note:]
In consideration of the Lender making the Loan to the Borrower, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, [GUARANTOR NAME], an individual residing at [GUARANTOR ADDRESS] (the “Guarantor”), hereby absolutely, unconditionally, and irrevocably guarantees to the Lender the full and punctual payment, performance, and satisfaction of all Obligations of the Borrower under this Note, including all principal, interest (including interest at the Default Rate), fees, costs, expenses, indemnification amounts, and all other amounts payable by the Borrower hereunder, whether now existing or hereafter arising, direct or indirect, absolute or contingent, joint or several, matured or unmatured, liquidated or unliquidated (collectively, the “Guaranteed Obligations”). This is a guaranty of payment and performance, not of collection, and the Lender shall not be required to pursue any rights or remedies against the Borrower or any other person or entity, or to exhaust any security or collateral, before proceeding against the Guarantor under this Section.
The Guarantor hereby represents and warrants to the Lender that: (a) the Guarantor has full legal capacity and authority to execute and deliver this guaranty and to perform the Guarantor’s obligations hereunder; (b) this guaranty constitutes the legal, valid, and binding obligation of the Guarantor, enforceable against the Guarantor in accordance with its terms (subject to applicable bankruptcy, insolvency, and similar laws affecting creditors’ rights generally and to general principles of equity); (c) the execution, delivery, and performance of this guaranty do not and will not violate any law, regulation, order, judgment, or agreement binding on the Guarantor; (d) no consent of any other person or entity is required in connection with this guaranty; and (e) the Guarantor is solvent and will not be rendered insolvent by the execution, delivery, or performance of this guaranty.
The Guarantor hereby waives, to the fullest extent permitted by applicable law: (a) notice of acceptance of this guaranty; (b) notice of the existence, creation, or incurring of any Guaranteed Obligations; (c) presentment, demand, notice of dishonor, protest, and all other notices whatsoever; (d) all diligence in collection or protection of or realization upon the Guaranteed Obligations or any part thereof, any obligation hereunder, or any security for or guaranty of any of the foregoing; (e) any defense based upon the adequacy of consideration for this guaranty; (f) all rights of subrogation, contribution, reimbursement, and indemnification against the Borrower and all rights of recourse to any security or collateral for the Obligations, in each case until the Guaranteed Obligations are paid in full in cash; (g) any defense based upon any right of set-off or counterclaim against the Lender; (h) any defense based upon any statute or rule of law providing that the obligation of a surety must be neither larger in amount nor in other respects more burdensome than that of the principal; (i) any duty on the part of the Lender to disclose to the Guarantor any matter, fact, or thing relating to the business, condition (financial or otherwise), operations, performance, or prospects of the Borrower now known or hereafter known by the Lender; (j) the benefit of any right to require the Lender to proceed against the Borrower or any other person before proceeding against the Guarantor; (k) the benefit of any right to require the Lender to pursue any other remedy in the Lender’s power before proceeding against the Guarantor; (l) the benefit of marshalling of assets or other rights in respect of the Collateral or any other security for the Obligations; and (m) any and all other suretyship defenses and rights of every nature available under applicable law.
The obligations of the Guarantor hereunder shall not be released, diminished, impaired, or affected by, and shall remain in full force and effect notwithstanding: (a) any modification, amendment, supplement, or restatement of this Note or the Obligations (including any increase in the Principal Amount, extension of the Maturity Date, or change in the Interest Rate); (b) any release, discharge, substitution, exchange, or non-perfection of the Collateral or any other security for the Obligations; (c) any release or discharge of the Borrower or any other guarantor from the Obligations (except to the extent the Obligations are paid in full in cash); (d) any bankruptcy, insolvency, reorganization, arrangement, adjustment, composition, liquidation, or similar proceeding affecting the Borrower; (e) any lack of validity or enforceability of this Note or any other agreement; (f) any impossibility or illegality of performance by the Borrower; (g) any change in the corporate structure, ownership, or control of the Borrower; (h) any act or omission of the Lender that directly or indirectly results in or aids the discharge of the Borrower or the Obligations by operation of law or otherwise; or (i) any other circumstance (including any statute of limitations) or any existence of or reliance on any representation by the Lender that might otherwise constitute a defense available to, or a discharge of, the Borrower or the Guarantor.
The liability of the Guarantor under this Section is joint and several with the Borrower and any other guarantor of the Obligations. If more than one person executes this guaranty as Guarantor, the obligations of each such person hereunder are joint and several with those of every other such person.
IN WITNESS WHEREOF, the Borrower has executed and delivered this Note, and the Guarantor (if applicable) has executed and delivered the guaranty provisions herein, as of the date first written above.
BORROWER: [COMPANY NAME]. By: ____________________________. Name: [AUTHORIZED SIGNATORY NAME]. Title: [TITLE]. Date: [DATE].
LENDER: [LENDER NAME]. By: ____________________________. Name: [AUTHORIZED SIGNATORY NAME]. Title: [TITLE]. Date: [DATE].
GUARANTOR (if applicable): ____________________________. Name: [GUARANTOR NAME]. Date: [DATE].
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