Promissory Note (Secured, Detailed) Legal Forms and Contracts

The following free Promissory Note Secured is a very thorough document outlining the return payments terms for a loan. Please use the security agreement (detailed) also on this site in combination with this document in order to perfect the transaction. This agreement and contract is being provided as a sample and example for information and research purposes only, however it is a valid legal contract and agreement. Always consult an Attorney or Lawyer. This Agreement can apply in most states including California, New York, Florida, Nevada and others. Help improve this agreement by leaving a comment.

DO NOT DESTROY THIS PROMISSORY NOTE. WHEN PAID IN FULL, THIS NOTE, TOGETHER WITH THE SECURITY INSTRUMENTS SECURING THE SAME, SHOULD BE MARKED ACANCELED@ BY THE LENDER AND DELIVERED TO THE BORROWER AND OTHER PARTIES AS RECEIPT OF ALL AMOUNTS OWING UNDER THIS NOTE.

PROMISSORY NOTE

(Secured)

$__________________ __________________Location
__________________% Interest __________________Date

FOR VALUE RECEIVED, the undersigned, __________________, LLC, a __________________ limited liability company, whose principal office is located at ____________________________________, and its successors and assigns (the “Borrower”), does hereby promise to pay to the order of __________________, LLC, a California limited liability company, and its successors and assigns (the “Lender”), at the address specified herein, in lawful money of the United States of America and in immediately available funds, the principal amount of up to a maximum of __________________ ($__________________), or so much is advanced and remains outstanding on the Maturity Date (as defined below), together with interest from and after the date hereof on the outstanding principal balance at the rate and upon the terms and conditions set forth herein.

THIS NOTE SHALL BE GOVERNED BY THE FOLLOWING TERMS:

1. Term; Maturity. The entire outstanding principal balance, together with all accrued but unpaid interest, shall be due and payable in full ON DEMAND by Lender. If no demand, this Note shall mature and become due and payable in full on __________________ (the Maturity Date), unless Lender and Borrower extend the Maturity Date in writing.

2. Calculation of Interest. The aggregate outstanding principal balance of this Note shall accrue interest at the rate of __________________ PERCENT (__________________%) per annum. Interest shall be calculated on the unpaid principal balance hereof on the basis of the actual number of days elapsed over a year of three hundred sixty-five (365) days and shall accrue interest in arrears until the outstanding principal balance hereof is paid in full. Interest (including any default interest rate set forth in Paragraph 12 hereof, if any is applied) shall accrue and be payable under this Note whether or not Borrower, its successors or assigns, and any guarantors of this Note (if any), should avail themselves of the protection of the United States bankruptcy courts in any manner.

3. Monthly Interest Payments; Payment in Full Upon Maturity. During the term of this Note, Borrower shall be required to make payments of interest only accruing on the outstanding principal balance which shall be due and payable to Lender in monthly installments. Such installments shall commence on the first (1st) day of the calendar month immediately following the date on which the first advance is made hereunder, and continuing thereafter on the first (1st) day of each subsequent calendar month until the Maturity Date, at which time the entire outstanding principal balance hereof, together with all accrued but unpaid interest thereon, shall become due and payable in full to Lender.

4. Advances. Lender has absolutely no obligation to make or to continue to make any advances under this Note. Any advances so made shall be conclusively presumed to have been made to and for the benefit and at the request of Borrower when made in accordance with the oral or written instructions of the Borrower. Lender is authorized (but is not required) to record the date and amount of each loan, and the date and amount of each payment thereon, on this Note or on its own books and records. Such recordation shall constitute prima facia evidence of the information so recorded; provided, however, that the Lender’s failure to make any such recordation shall not affect its rights with respect to any loan or the Borrower’s obligation to pay the principal of and accrued interest on all loans in accordance with this Note.

5. Place of Payment. All payments due under this Note shall be mailed to Lender at its mailing address of ____________________________________, or at such other place or address as the Lender of this Note may specify in writing to Borrower.

6. Security. As a condition to Lender accepting this Note from Borrower, and as security therefor, Borrower acknowledges and agrees that the payment and performance of the Borrower and its obligations under this Note shall be secured by Borrower granting to Lender a general security interest in and to all of its tangible and intangible assets of any kind or nature, including, but not limited to, its inventory used in its business (the Collateral, and as more particularly described in the Security Agreement, defined below). Such security interest shall be evidenced by a separate form of Security Agreement to be executed by Borrower, as Debtor, in favor of Lender, as Secured Party, concurrently with the execution of this Note (the Security Agreement). Lender’s security interest under the Security Agreement shall be perfected by Borrower’s concurrent execution of a UCC-1, National Financing Statement, and Lender’s filing of the same with the California Secretary of State pursuant to the California Uniform Commercial Code.

7. Prepayment. Borrower shall have the right at any time and from time to time to prepay the outstanding principal balance of this Note, in whole or in part, without premium or penalty, provided that each such prepayment shall include all interest then accrued but unpaid on the Note. Any partial prepayment of the outstanding principal balance shall in no way release, discharge or affect the obligation of the Borrower to continue to make monthly payments in the amounts and on the days set forth in Paragraph 3 hereof until this Note is paid in full.

8. Late Charge. If any payment of interest and/or principal is not received by the Lender after ten (10) days after its due date set forth herein, Borrower agrees to pay Lender a late charge equal to the greater of ONE HUNDRED DOLLARS ($100.00) or FIVE PERCENT (5%) of the late payment. As it would be impractical or extremely difficult to fix Lender’s actual damages for any such installment not paid when due, this late charge shall be deemed to be Lender’s damage for any late payment, but shall not limit Lender’s right to compel prompt performance or exercise other remedies available to Lender.

9. Covenants and Agreements of Borrower. Until this Note has been paid in full as provided herein, Borrower hereby covenants and agrees with Lender as follows:

(a) Borrower will at all times take or cause to be taken all such action as may from time to time be necessary to maintain, preserve, and renew its existence as a limited liability company in good standing under the laws of the State of __________________.

(b) Borrower agrees to perform, keep and observe all of the terms, conditions, covenants, agreements, warranties or representations contained in this Note, the Security Agreement and in any other agreement regarding the Collateral to which it is bound as though fully set forth herein and agreed to hereby.

(c) Borrower will pay and discharge, as the same become due and payable, all taxes, assessments and governmental and other charges lawfully levied and imposed upon the properties, earnings and business of the Borrower; provided, however, that nothing contained in this subparagraph shall require the Borrower to pay any such tax, assessment or charge so long as the Borrower in good faith shall contest the validity thereof and shall set aside on its books such reserves, if any, as shall be deemed adequate in the opinion of the board of directors of the Borrower with respect to any such tax, assessment or charge so contested.

(d) Without the prior written consent of the Lender, the Borrower will not liquidate or dissolve or institute proceedings for the liquidation or dissolution of the Borrower; merge with or consolidate into any other limited liability company, corporation or other entity, foreign or domestic; or sell or otherwise dispose of all or substantially all of its assets.

(e) Without the prior written consent of the Lender, which the Lender will not unreasonably withhold having due regard for all of the debts and obligations owed by the Borrower to the Lender, the Borrower shall not grant to any other party a security interest in or otherwise create a mortgage or lien upon any of the Collateral.

(f) Other than in the ordinary course of its business, Borrower will not sell, convey, encumber, transfer, or assign, transfer or otherwise dispose of all or any part of the Collateral which secures this Note without first obtaining the written consent of Lender to such sale, conveyance, encumbrance, transfer, assignment or other disposition; and in the event Borrower sells, conveys, encumbers, transfers or assigns, or otherwise disposes of all or any part of its interest in any of the Collateral which secures this Note, upon the prior written consent of the Lender to such event, Borrower shall assign, or cause to be assigned, sufficient proceeds therefrom to the Lender to pay this Note and shall execute such instructions as may be necessary to cause such proceeds to be released to Lender from any escrow in which they are held.

(g) Borrower will keep at all times true and complete books of account and financial records in accordance with generally accepted accounting principles. The Lender and its attorneys, accountants and other representatives shall be entitled to review and make extracts or copies of any and all of such books and records at all reasonable times and for any purpose reasonably related to the Lender’s interest under this Note.

10. Default by Borrower. Any one or more of the following shall constitute an Aevent of default@ by Borrower under the terms of this Note:

(a) If Borrower fails to pay any payment, whether at Maturity or otherwise, of principal and/or interest upon the due date thereof, if such default continues and remains uncured for a period of ten (10) days;

(b) If Borrower defaults in the performance or observance of any of the covenants, conditions or agreements set forth in this Note or the Security Agreement, and if such default continues and remains uncured for any curative period provided for therein; or

(c) If Borrower institutes proceedings to be adjudicated a voluntary bankruptcy; consents to the filing of a bankruptcy proceeding against it; files or consents to filing of a petition or answer or consent seeking reorganization under the federal bankruptcy laws or any other similar applicable federal or state law; consents to the appointment of a receiver or liquidator or trustee or assignee in bankruptcy or insolvency of the Borrower or a substantial part of its property; assigns for the benefit of creditors made by the Borrower; admits in writing of its inability to pay its debts generally as they become due; or takes any action in furtherance of any of the aforesaid purposes.

11. Lender’s Remedies for Default. In the event of a default described in Paragraph 10 above, and after any applicable notice and/or curative period specified therein, at the option of Lender, and upon written demand, the Lender may do or cause to be done any one or more of the following:

(a) Declare the entire outstanding balance hereof, including all fees and costs (if any), principal and accrued but unpaid interest thereon, immediately due and payable in full; and/or

(b) Exercise any other of its rights or remedies available to Lender under the terms of the Security Agreement, as well as all other rights and remedies Lender shall have as a secured party under the Uniform Commercial Code.

Each of the options, rights and remedies provided herein or available at law or in equity which may be exercised by Lender, may be exercised separately or concurrently with any one or more other options, rights or remedies. Failure to exercise any option, right or remedy shall not constitute a waiver of the right of the Lender to exercise such option, right or remedy in the event of or with respect to any prior, subsequent or concurrent transaction or occurrence of the same or a different kind or character.

12. Increase in Interest Rate. From and after the maturity of this Note, whether on the Maturity Date or as a result of an acceleration of the principal and interest by reason of an event of default under this Note, subject to the provisions of Paragraph 13 below, the entire outstanding principal balance hereunder and all accrued but unpaid interest thereon shall automatically bear interest (in place of the interest rate specified above) at the rate of FIFTEEN PERCENT (15%) per annum.

13. Conformity With Usury Laws. Notwithstanding anything to the contrary contained herein, the amount of interest payable under the terms of this Note shall in no event exceed the maximum amount of interest permitted to be charged by law. Any interest so paid by the Borrower in excess of the maximum amount of interest permitted by law shall be deemed to have been payments of principal.

14. Attorneys’ Fees and Costs. If any action or proceeding, including arbitration, is commenced to collect this Note or any part thereof at law, in equity, in bankruptcy or otherwise, or if Borrower’s obligations hereunder or any part thereof are placed in the hands of attorneys for collection, the court or arbitrator in such action or proceeding shall award Lender, or any other holder of this Note, in addition to any other relief granted, (i) the actual reasonable attorneys’ which the prevailing party has paid or is obligated to pay; and (ii) all costs and expenses, not merely recoverable costs, which the prevailing party has paid or is obligated to pay. The court or arbitrator may reduce such actual reasonable attorneys’ fees, costs and expenses only to the extent that the court or arbitrator determines that such amounts were unnecessarily incurred. In addition, the parties agree that if any dispute between the parties results in a judgment in favor of either party, such party shall be entitled to recover from the other all reasonable attorneys’ fees and costs incurred by it in enforcing such judgment. This provision is intended to be severable from any other provision of this Note and is not to be deemed merged in the judgment.

15. Time is of the Essence. TIME IS EXPRESSLY DECLARED TO BE OF THE ESSENCE of each obligation of the Borrower hereunder and in all matters concerning this Note, including all acts or things to be done or performed in connection herewith, and specifically of every provision of this Note in which time is an element.

16. No Waiver; Extension of Time for Repayment. The Lender of this Note may extend the time for payment, postpone the enforcement hereof or grant any other indulgences without affecting or diminishing the Lender’s right to recourse against the Borrower or any endorsers, sureties or guarantors, which right is expressly reserved.

17. Binding Effect; Assignability. The terms and provisions hereof shall inure to the benefit of and be binding upon the Borrower and Lender and their respective heirs, legatees, personal and legal representatives, executors, administrators, successors and assigns; provided, however, the Borrower’s obligations hereunder are nontransferable and non-assignable without the prior written consent of the Lender. Any person who assumes the obligations under this Note shall also be obligated to keep of the promises made in this Note. Lender may enforce its rights under this Note against each person individually or against all of them together, meaning that any one of them may be required to pay all of the amounts owed under this Note.

18. Severability. In the event any one or more of the provisions contained in this Note, or any application thereof shall be invalid or rendered unenforceable in any effect, the validity, legality and enforceability of the remaining provisions contained herein and the application thereof shall not in any way be affected or impaired thereby.

19. Governing Law. This Note and the rights and obligations of the parties hereunder shall be governed by and construed in accordance with the laws of the State of __________________ without giving effect to any conflict of law provision.

IN WITNESS WHEREOF, the Borrower has caused this Promissory Note (Secured) to be executed and delivered by a duly authorized officer as of the day and year first above written, which Note, when executive, shall constitute a binding obligation of the Borrower.

BORROWER:

__________________, LLC
A __________________Limited Liability Company

By:
__________________, Its __________________

EIN or SSN _________________
Taxpayer Identification Number or Social Security #