Installment Promissory Note

INSTALLMENT PROMISSORY NOTE

(Regular Periodic Payments - UCC Article 3)

Principal Amount: $[PRINCIPAL AMOUNT]
Issue Date: [DATE]
Maturity Date: [DATE]
Note Number: [UNIQUE IDENTIFIER]

TABLE OF CONTENTS

I. Document Header
II. Definitions
III. Promise to Pay
IV. Payment Schedule
V. Interest and Usury Compliance
VI. Security (If Applicable)
VII. Representations and Warranties
VIII. Covenants
IX. Events of Default and Remedies
X. Risk Allocation
XI. Dispute Resolution
XII. General Provisions
XIII. Execution Block
Exhibit A: Amortization Schedule

I. DOCUMENT HEADER

1.1 Maker (Borrower)

1.2 Payee (Lender)

1.3 Loan Terms Summary

II. DEFINITIONS

"Applicable Law" means all federal, state, and local laws applicable to this Note, including UCC Article 3 as enacted in the Governing Law State, applicable usury statutes, and, if applicable, TILA and Regulation Z.

"Business Day" means any day other than a Saturday, Sunday, or day on which banks in the Governing Law State are authorized or required to close.

"Default Rate" means the Interest Rate plus [PERCENTAGE]% per annum, subject to the Maximum Lawful Rate.

"Event of Default" has the meaning set forth in Section IX.

"Governing Law State" means the State of [STATE].

"Holder" means Payee or any subsequent holder in due course of this Note pursuant to UCC § 3-302.

"Installment" means each scheduled payment of principal and/or interest due under this Note.

"Installment Due Date" means each date on which an Installment is due, as set forth in Section IV.

"Interest Rate" means [PERCENTAGE]% per annum.

"Late Charge" has the meaning set forth in Section IV.

"Maker" means the borrower identified in Section 1.1.

"Maturity Date" means [DATE], or such earlier date as all amounts may become due pursuant to acceleration.

"Maximum Lawful Rate" means the maximum rate of interest permitted under Applicable Law.

"Note" means this Installment Promissory Note.

"Obligations" means all present and future debts and obligations of Maker to Holder under this Note.

"Payee" means the lender identified in Section 1.2.

"Principal Amount" or "Principal" means $[AMOUNT], subject to reduction by payments.

"UCC" means the Uniform Commercial Code as enacted in the Governing Law State.

III. PROMISE TO PAY

3.1 Unconditional Promise

FOR VALUE RECEIVED, Maker unconditionally promises to pay to the order of Payee, at [PAYMENT ADDRESS] or such other place as Holder may designate in writing, the Principal Amount of:

[DOLLAR AMOUNT WRITTEN OUT] AND [XX]/100 DOLLARS ($[NUMERICAL AMOUNT])

together with interest thereon as provided herein, in lawful money of the United States, in [NUMBER] installments as described in Section IV.

3.2 Nature of Installment Obligation

(a) Amortization: This Note provides for regular periodic payments that include both principal and interest, fully amortizing the loan over the term (unless otherwise specified).

(b) Definite Time: This Note is payable at a definite time, with the final payment due on the Maturity Date.

IV. PAYMENT SCHEDULE

4.1 Installment Payments

Maker shall pay consecutive [MONTHLY/BI-WEEKLY/QUARTERLY] installments as follows:

Payment Structure (Select One):

☐ Fully Amortizing Payments: Maker shall pay [NUMBER] equal installments of $[AMOUNT] each, consisting of principal and interest calculated to fully amortize the loan over the term.

☐ Fixed Principal Plus Interest: Maker shall pay [NUMBER] installments, each consisting of:

• Fixed principal: $[AMOUNT] per installment
• Plus accrued interest on outstanding principal
• Total payment varies as principal decreases

☐ Graduated Payments: Maker shall pay installments that increase over time as set forth in the Amortization Schedule (Exhibit A).

4.2 Payment Dates

4.3 Regular Payment Amount

Each regular Installment shall be in the amount of $[AMOUNT], except:

(a) The final Installment shall be in the amount necessary to pay all remaining principal and accrued interest;

(b) If payments are adjusted pursuant to Section 4.7 (Variable Rate Adjustment), if applicable.

4.4 Application of Payments

Unless otherwise required by Applicable Law, each Installment shall be applied in the following order:

1. First, to any late charges, fees, and costs due;
2. Second, to accrued and unpaid interest;
3. Third, to outstanding principal;
4. Fourth, to any other Obligations.

4.5 Payment Method

All payments shall be made by:
☐ Wire transfer to: [BANK NAME, ROUTING NUMBER, ACCOUNT NUMBER]
☐ ACH automatic debit from: [ACCOUNT INFORMATION]
☐ Check payable to: [PAYEE NAME] at [ADDRESS]
☐ Online payment portal: [WEBSITE/INSTRUCTIONS]
☐ Other: [SPECIFY]

4.6 Late Charges

If any Installment is not received within [NUMBER] days after its due date, Maker shall pay a late charge equal to:

☐ [PERCENTAGE]% of the overdue Installment amount
☐ $[FIXED AMOUNT]
☐ The lesser of [PERCENTAGE]% or $[MAXIMUM AMOUNT]

("Late Charge")

4.7 Variable Rate Adjustment (If Applicable)

☐ Fixed Rate: The Interest Rate is fixed for the term of this Note.

☐ Variable Rate: The Interest Rate shall adjust as follows:

• Index: [PRIME RATE/SOFR/OTHER]
• Margin: [PERCENTAGE]% above Index
• Adjustment Frequency: [MONTHLY/QUARTERLY/ANNUALLY]
• Rate Cap: [PERCENTAGE]% per annum maximum
• Rate Floor: [PERCENTAGE]% per annum minimum
• Payment Adjustment: Upon rate adjustment, the Installment amount shall be recalculated to fully amortize the remaining balance over the remaining term.

4.8 Prepayment

☐ Prepayment Permitted Without Penalty: Maker may prepay all or any portion of the outstanding Principal at any time without premium or penalty.

☐ Prepayment with Penalty: Prepayment is permitted subject to:

• Prepayment penalty of [PERCENTAGE]% if prepaid within [MONTHS] of Issue Date
• No penalty after [DATE]

☐ Prepayment Restricted: Prepayment requires Holder's prior written consent.

Application of Prepayment: Unless Maker specifies otherwise in writing at the time of prepayment, any partial prepayment shall be applied:
☐ To reduce the principal balance, with Installment amounts remaining the same and the loan term shortened
☐ To reduce future Installment amounts, with the loan term remaining the same
☐ At Holder's discretion

4.9 Final Payment

On the Maturity Date, the entire remaining unpaid Principal balance, together with all accrued and unpaid interest and any other amounts due, shall be due and payable in full.

V. INTEREST AND USURY COMPLIANCE

5.1 Interest Rate

Interest shall accrue on the outstanding Principal at the Interest Rate of [PERCENTAGE]% per annum from the Issue Date until paid in full.

5.2 Computation Method

Interest shall be computed on the basis of:
☐ A 360-day year of twelve 30-day months (30/360)
☐ A 365-day year based on actual days elapsed (Actual/365)
☐ A 360-day year based on actual days elapsed (Actual/360)

5.3 Default Interest

Upon the occurrence and during the continuance of an Event of Default, interest shall accrue on all outstanding Obligations at the Default Rate of [PERCENTAGE]% per annum (subject to the Maximum Lawful Rate) until all amounts are paid or the default is cured.

5.4 Usury Savings Clause

COMPLIANCE WITH STATE USURY LAWS

(a) Maximum Rate: In no event shall the total interest exceed the Maximum Lawful Rate permitted under Applicable Law.

(b) Automatic Reduction: Any interest exceeding the Maximum Lawful Rate shall automatically be reduced to the Maximum Lawful Rate.

(c) Credit or Refund: Excess interest received shall be credited against Principal or, if Principal is paid, refunded to Maker.

(d) Spreading: Total interest shall be spread over the full term to determine compliance with the Maximum Lawful Rate.

5.5 Truth in Lending Act Disclosures

☐ Business Purpose Loan - TILA Exempt: Maker represents that the proceeds will be used primarily for business, commercial, investment, or agricultural purposes. This loan is exempt from TILA/Regulation Z pursuant to 12 C.F.R. § 1026.3(a).

☐ Consumer Loan - TILA Applies: Required TILA disclosures have been provided separately, including:

• Annual Percentage Rate (APR): [PERCENTAGE]%
• Finance Charge: $[AMOUNT]
• Amount Financed: $[AMOUNT]
• Total of Payments: $[AMOUNT]

VI. SECURITY (IF APPLICABLE)

6.1 Security Status

☐ UNSECURED: This Note is unsecured.

☐ SECURED: This Note is secured by:

Collateral Description:
[DESCRIBE COLLATERAL - equipment, vehicles, inventory, accounts, real property, etc.]

Security Documents:
☐ Security Agreement dated [DATE]
☐ UCC-1 Financing Statement filed with [SECRETARY OF STATE]
☐ Deed of Trust/Mortgage recorded in [COUNTY]
☐ Other: [DESCRIBE]

6.2 Cross-Collateralization

☐ Not Applicable
☐ Applicable: The Collateral also secures the following other obligations: [DESCRIBE]

VII. REPRESENTATIONS AND WARRANTIES

Maker represents and warrants to Payee as of the Issue Date and as of each Installment Due Date:

7.1 Authority

Maker has full power and authority to execute and perform this Note.

7.2 Enforceability

This Note constitutes a legal, valid, and binding obligation of Maker.

7.3 No Conflicts

Execution and performance of this Note does not violate any law or agreement binding on Maker.

7.4 Accuracy

All information provided to Payee is true, accurate, and complete in all material respects.

7.5 Solvency

Maker is solvent and will not be rendered insolvent by this Note.

7.6 Use of Proceeds

☐ Business Purpose: Proceeds will be used primarily for business, commercial, investment, or agricultural purposes.
☐ Consumer Purpose: Proceeds will be used primarily for personal, family, or household purposes.

[Intended Use: [PURPOSE]]

VIII. COVENANTS

8.1 Affirmative Covenants

Maker shall:

(a) Payments: Make all Installments when due;

(b) Financial Information: Upon Holder's reasonable request, provide:

• Annual financial statements within [NUMBER] days after fiscal year end
• Tax returns upon request
• Other financial information reasonably requested;

(c) Notice: Promptly notify Holder of:

• Any Event of Default or potential Event of Default
• Any material adverse change in financial condition
• Any change in address or contact information;

(d) Compliance: Comply with all Applicable Laws;

(e) Collateral (if secured): Maintain, insure, and preserve Collateral per the Security Agreement.

8.2 Negative Covenants

Maker shall not, without Holder's prior written consent:

(a) Transfer substantially all assets or effect a change of control;
(b) Incur additional indebtedness exceeding $[AMOUNT];
(c) Grant additional liens on Collateral (if secured).

IX. EVENTS OF DEFAULT AND REMEDIES

9.1 Events of Default

Each of the following constitutes an "Event of Default":

(a) Payment Default: Failure to pay any Installment or other amount within [NUMBER] days after due date;

(b) Representation Default: Any representation or warranty proves materially false;

(c) Covenant Default: Breach of any covenant that remains uncured for [NUMBER] days after written notice;

(d) Insolvency:

• Bankruptcy filing (voluntary or involuntary not dismissed within 60 days)
• Insolvency or admission of inability to pay debts
• Assignment for benefit of creditors
• Appointment of receiver or trustee;

(e) Judgment: Unsatisfied judgment exceeding $[AMOUNT] for [NUMBER] days;

(f) Material Adverse Change: Material adverse change in Maker's financial condition;

(g) Cross-Default: Default under any other obligation to Holder or material indebtedness exceeding $[AMOUNT];

(h) Collateral Impairment (if secured): Material loss, damage, or impairment of Collateral.

9.2 Acceleration

Upon an Event of Default, Holder may, at its option:

(a) Declare the entire unpaid Principal, together with all accrued interest and other Obligations, immediately due and payable;

(b) Proceed to enforce any and all remedies available.

Automatic Acceleration: Upon an Event of Default under Section 9.1(d), all Obligations shall automatically become immediately due and payable.

9.3 Remedies

Upon an Event of Default, Holder may:

(a) Collection: Commence legal proceedings to collect amounts due;

(b) Judgment: Obtain judgment against Maker;

(c) Default Interest: Apply the Default Rate;

(d) Secured Remedies (if applicable): Exercise all remedies under UCC Article 9 and the Security Agreement, including:

• Taking possession of Collateral
• Disposing of Collateral at public or private sale
• Collecting accounts receivable directly;

(e) Attorneys' Fees: Recover reasonable attorneys' fees and costs of collection;

(f) Other Remedies: Exercise any other remedies available at law or in equity.

9.4 Notice of Disposition (If Secured)

If Holder disposes of Collateral, Holder shall provide at least [TEN (10)] days' prior written notice, which the parties agree is commercially reasonable under UCC § 9-612.

9.5 Deficiency

Maker shall remain liable for any deficiency remaining after application of Collateral proceeds (if secured) or other recoveries.

9.6 No Waiver; Cumulative Remedies

(a) No failure or delay in exercising any right constitutes a waiver;
(b) All remedies are cumulative and not exclusive.

X. RISK ALLOCATION

10.1 Indemnification

Maker shall indemnify, defend, and hold harmless Holder from any claims, losses, damages, liabilities, and expenses arising from:

(a) Breach of Maker's representations, warranties, or covenants;
(b) Violation of Applicable Law by Maker;
(c) Enforcement of this Note.

10.2 Limitation of Liability

Holder's aggregate liability shall not exceed the outstanding Principal Amount.

10.3 Consequential Damages Waiver

NEITHER PARTY SHALL BE LIABLE FOR INDIRECT, INCIDENTAL, SPECIAL, CONSEQUENTIAL, OR PUNITIVE DAMAGES.

XI. DISPUTE RESOLUTION

11.1 Governing Law

This Note shall be governed by the laws of the State of [GOVERNING LAW STATE], without regard to conflicts of laws principles. UCC Article 3 as enacted in [GOVERNING LAW STATE] applies.

11.2 Forum Selection

Any action shall be brought exclusively in the state or federal courts located in [COUNTY], [GOVERNING LAW STATE].

11.3 Waiver of Jury Trial

JURY TRIAL WAIVER: EACH PARTY WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY ACTION ARISING OUT OF THIS NOTE.

11.4 Arbitration (Optional)

☐ Check if Arbitration Applies: Disputes shall be resolved by binding arbitration administered by [AAA/JAMS] in [CITY, STATE].

XII. GENERAL PROVISIONS

12.1 Notices

All notices shall be in writing and deemed given when delivered personally, one (1) Business Day after overnight courier deposit, or three (3) Business Days after mailing certified mail, to the addresses in Section I.

12.2 Amendments

This Note may only be amended by written instrument signed by both parties.

12.3 Successors and Assigns

This Note binds Maker and its successors. Maker may not assign without consent. Holder may freely assign or negotiate this Note.

12.4 Severability

Invalid provisions shall be modified to the minimum extent necessary; remaining provisions continue in force.

12.5 Entire Agreement

This Note constitutes the entire agreement between the parties regarding the subject matter hereof.

12.6 Time of the Essence

Time is of the essence with respect to all payment obligations.

12.7 Waiver of Presentment

Maker waives presentment, demand, notice of dishonor, protest, and all other notices.

12.8 Joint and Several

If multiple Makers, their obligations are joint and several.

12.9 Attorneys' Fees

The prevailing party in any action shall recover reasonable attorneys' fees.

12.10 Electronic Signatures

Electronic signatures are valid pursuant to 15 U.S.C. § 7001 et seq.

XIII. EXECUTION BLOCK

IN WITNESS WHEREOF, Maker has executed this Installment Promissory Note as of the Issue Date first written above.

MAKER:

If Individual:

Signature: _________________________________

Printed Name: [MAKER NAME]

Date: ___________

If Entity:

[ENTITY NAME]

By: _________________________________

Name: [AUTHORIZED SIGNATORY NAME]

Title: [TITLE]

Date: ___________

ACKNOWLEDGED BY PAYEE:

Signature: _________________________________

Printed Name: [PAYEE NAME]

Title: [TITLE] (if entity)

Date: ___________

NOTARY ACKNOWLEDGMENT (If Required)

STATE OF [STATE]
COUNTY OF [COUNTY]

On this _____ day of ______________, 20___, before me, the undersigned Notary Public, personally appeared _________________________, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument, and acknowledged to me that he/she/they executed the same.

WITNESS my hand and official seal.

Signature: _________________________________
Notary Public
My Commission Expires: ___________

[NOTARY SEAL]

EXHIBIT A: AMORTIZATION SCHEDULE

Totals:

• Total of Payments: $[AMOUNT]
• Total Principal: $[AMOUNT]
• Total Interest: $[AMOUNT]

COMPLIANCE CHECKLIST

☐ Interest rate complies with state usury laws
☐ Amortization schedule prepared and attached
☐ If consumer loan: TILA disclosures provided (APR, Finance Charge, Amount Financed, Total of Payments)
☐ Late charge complies with state limits
☐ If secured: Security Agreement executed and UCC-1 filed
☐ Payment method established
☐ Governing law state identified
☐ Legal counsel review completed

LEGAL CITATIONS REFERENCE

UCC Article 3 - Negotiable Instruments

• § 3-104: Definition of negotiable instrument
• § 3-108(b): Payable at a definite time
• § 3-302: Holder in due course
• § 3-602: Payment

UCC Article 9 - Secured Transactions (If Secured)

• § 9-203: Attachment
• § 9-310: Perfection by filing
• § 9-609: Possession after default
• § 9-610: Disposition of collateral

Federal Law

• Truth in Lending Act: 15 U.S.C. § 1601 et seq.
• Regulation Z: 12 C.F.R. Part 1026
• E-SIGN Act: 15 U.S.C. § 7001 et seq.

Prepared for professional use. Verify all statutory citations, usury limits, and TILA requirements before execution.