Unsecured Promissory Note

UNSECURED PROMISSORY NOTE

(Governed by UCC Article 3 - Negotiable Instruments)

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. Interest and Usury Compliance
V. Representations and Warranties
VI. Covenants
VII. Events of Default and Remedies
VIII. Risk Allocation
IX. Dispute Resolution
X. General Provisions
XI. Execution Block

I. DOCUMENT HEADER

1.1 Maker (Borrower)

1.2 Payee (Lender)

1.3 Loan Terms Summary

II. DEFINITIONS

For purposes of this Note, the following capitalized terms shall have the meanings set forth below:

"Applicable Law" means all federal, state, and local laws, statutes, regulations, and ordinances applicable to this Note, including without limitation UCC Article 3 as enacted in the Governing Law State, applicable usury statutes, and, if applicable, the Truth in Lending Act (15 U.S.C. § 1601 et seq.) and Regulation Z (12 C.F.R. Part 1026).

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

"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.

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

"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 for this type of transaction.

"Note" means this Unsecured Promissory Note.

"Obligations" means all present and future debts, liabilities, and obligations of Maker to Holder under this Note, including principal, interest, fees, costs, and expenses.

"Payee" means the lender identified in Section 1.2.

"Principal Amount" means $[AMOUNT], subject to adjustments for advances or 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.

3.2 Unsecured Obligation

THIS NOTE IS UNSECURED. No collateral has been pledged to secure the obligations hereunder. Payee shall have the rights of a general unsecured creditor with respect to the Obligations.

3.3 Payment Schedule

Select applicable payment structure:

☐ Single Payment at Maturity: The entire Principal Amount plus all accrued and unpaid interest shall be due and payable in full on the Maturity Date.

☐ Equal Installment Payments: Maker shall pay [NUMBER] consecutive installments of $[AMOUNT] each, consisting of principal and interest, beginning on [DATE] and continuing on the same day of each [MONTH/QUARTER] thereafter until the Maturity Date, when all remaining amounts shall be due.

☐ Interest-Only with Principal at Maturity: Maker shall pay accrued interest only in [MONTHLY/QUARTERLY] installments of $[AMOUNT], with the entire Principal Amount due on the Maturity Date.

☐ Custom Schedule: Payments shall be made as set forth in Exhibit A attached hereto.

3.4 Prepayment

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

☐ Prepayment with Premium: Prepayment is permitted subject to a prepayment premium of [PERCENTAGE]% of the amount prepaid if prepayment occurs within [NUMBER] months of the Issue Date.

☐ Prepayment Restricted: Prepayment is not permitted without Payee's prior written consent.

Any partial prepayment shall be applied first to accrued interest, then to principal, unless Holder directs otherwise.

3.5 Application of Payments

All payments shall be applied in the following order unless otherwise required by Applicable Law:

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

3.6 Payment Method

All payments shall be made by:
☐ Wire transfer to: [BANK NAME, ACCOUNT NUMBER, ROUTING NUMBER]
☐ ACH transfer to: [ACCOUNT INFORMATION]
☐ Check payable to: [PAYEE NAME] at [ADDRESS]
☐ Other: [SPECIFY]

IV. INTEREST AND USURY COMPLIANCE

4.1 Interest Rate

Interest shall accrue on the outstanding Principal Amount at the Interest Rate from the Issue Date until paid in full.

4.2 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)

4.3 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 until all amounts are paid or the default is cured.

4.4 Usury Savings Clause

IMPORTANT - COMPLIANCE WITH STATE USURY LAWS

Notwithstanding any provision of this Note to the contrary:

(a) Maximum Rate Limitation: In no event shall the total interest paid or payable under this Note exceed the Maximum Lawful Rate permitted under Applicable Law. If any interest payment would exceed the Maximum Lawful Rate, such payment shall automatically be reduced to the Maximum Lawful Rate.

(b) Excess Interest Credit: If Holder receives interest in excess of the Maximum Lawful Rate, such excess shall be credited against the outstanding Principal Amount or, if the Principal Amount has been paid in full, refunded to Maker.

(c) Spreading: In determining whether interest exceeds the Maximum Lawful Rate, total interest shall be spread over the full term of the loan to the extent permitted by Applicable Law.

(d) Intent: It is the intent of the parties that this Note comply with all Applicable Laws regarding interest and usury. All provisions shall be interpreted and construed to effectuate this intent.

4.5 Truth in Lending Act Notice

☐ Consumer Loan - TILA Disclosures Required: This loan is subject to the Truth in Lending Act (15 U.S.C. § 1601 et seq.) and Regulation Z (12 C.F.R. Part 1026). Required disclosures have been provided to Maker in a separate TILA Disclosure Statement.

☐ Business Purpose Loan - TILA Exempt: Maker represents that the proceeds of this Note will be used primarily for business, commercial, investment, or agricultural purposes and not primarily for personal, family, or household purposes. This loan is exempt from TILA/Regulation Z disclosure requirements pursuant to 12 C.F.R. § 1026.3(a).

V. REPRESENTATIONS AND WARRANTIES

Maker represents and warrants to Payee as of the Issue Date and as of each payment date:

5.1 Authority and Capacity

☐ If Individual: Maker is at least 18 years of age, of sound mind, and has full legal capacity to execute, deliver, and perform this Note.

☐ If Entity: Maker is duly organized, validly existing, and in good standing under the laws of its jurisdiction of formation and has full power and authority to execute, deliver, and perform this Note. The execution, delivery, and performance of this Note have been duly authorized by all necessary action.

5.2 Enforceability

This Note constitutes a legal, valid, and binding obligation of Maker, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, and similar laws affecting creditors' rights generally.

5.3 No Conflicts

The execution, delivery, and performance of this Note does not and will not:
(a) Violate any Applicable Law;
(b) Conflict with or result in a breach of Maker's organizational documents (if entity);
(c) Conflict with or result in a breach or default under any agreement to which Maker is a party.

5.4 Accuracy of Information

All information provided to Payee in connection with this Note and the loan evidenced hereby is true, accurate, and complete in all material respects.

5.5 Solvency

Maker is solvent and will not be rendered insolvent by the execution and performance of this Note.

5.6 Litigation

There is no pending or threatened litigation, arbitration, or governmental proceeding that could materially adversely affect Maker's ability to perform under this Note.

5.7 Use of Proceeds

☐ Business Purpose: The proceeds of this Note will be used primarily for business, commercial, investment, or agricultural purposes.

☐ Consumer Purpose: The proceeds of this Note will be used primarily for personal, family, or household purposes.

[Describe intended use: [PURPOSE]]

VI. COVENANTS

Maker covenants and agrees that until all Obligations under this Note are paid and performed in full:

6.1 Affirmative Covenants

Maker shall:

(a) Payments: Make all payments when due under this Note;

(b) Compliance: Comply with all Applicable Laws in connection with its business;

(c) Books and Records: Maintain complete and accurate books and records;

(d) Financial Information: Upon Payee's reasonable request, provide:

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

(e) Notice of Material Events: Promptly notify Payee in writing of:

• Any Event of Default or event that could become an Event of Default
• Any material adverse change in Maker's financial condition
• Any litigation or governmental action that could materially affect Maker;

(f) Preservation of Existence: Maintain its legal existence and good standing (if entity).

6.2 Negative Covenants

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

(a) No Change of Control: Effect any merger, consolidation, or sale of substantially all assets, or permit any change in ownership of more than [PERCENTAGE]% of its equity interests;

(b) No Material Indebtedness: Incur additional indebtedness exceeding $[AMOUNT] that would be senior to or pari passu with this Note without notice to Payee;

(c) No Distributions: Make any distributions or dividends (if entity) that would materially impair Maker's ability to perform under this Note.

VII. EVENTS OF DEFAULT AND REMEDIES

7.1 Events of Default

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

(a) Payment Default: Failure to pay any principal, interest, or other amount when due under this Note, and such failure continues for [NUMBER] days after the due date;

(b) Representation Default: Any representation or warranty made by Maker proves to be false or misleading in any material respect when made;

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

(d) Insolvency: Maker:
(i) Becomes insolvent or admits inability to pay debts as they become due;
(ii) Makes a general assignment for the benefit of creditors;
(iii) Files a voluntary petition in bankruptcy or has an involuntary petition filed against it that is not dismissed within [60] days;
(iv) Has a receiver, trustee, or custodian appointed for any substantial part of its property;

(e) Judgment: A judgment or judgments for the payment of money in excess of $[AMOUNT] are rendered against Maker and remain unsatisfied and unstayed for [NUMBER] days;

(f) Material Adverse Change: A material adverse change in Maker's financial condition or ability to perform under this Note;

(g) Cross-Default: Default under any other indebtedness of Maker to Payee or under any other material indebtedness exceeding $[AMOUNT].

7.2 Acceleration

Upon the occurrence of an Event of Default, Payee may, at its option and without further notice or demand (except as required by Applicable Law), declare the entire unpaid Principal Amount, together with all accrued interest and other Obligations, immediately due and payable.

Automatic Acceleration: Upon the occurrence of an Event of Default described in Section 7.1(d), all Obligations shall automatically become immediately due and payable without any notice or action by Payee.

7.3 Remedies

Upon an Event of Default, Payee shall have all remedies available at law or in equity, including without limitation:

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

(b) Judgment: Obtaining a judgment against Maker for amounts owed;

(c) Garnishment: Garnishing wages or accounts (to the extent permitted by law);

(d) Set-off: Exercising any right of set-off against deposits or other property of Maker held by Payee;

(e) Other Remedies: Pursuing any other remedies available under Applicable Law.

7.4 No Waiver; Cumulative Remedies

(a) No failure or delay by Payee in exercising any right or remedy shall constitute a waiver thereof.

(b) No single or partial exercise of any right or remedy shall preclude any other or further exercise thereof or the exercise of any other right or remedy.

(c) All rights and remedies are cumulative and not exclusive.

VIII. RISK ALLOCATION

8.1 Indemnification

Maker shall indemnify, defend, and hold harmless Payee and its officers, directors, employees, agents, successors, and assigns from and against any and all claims, losses, damages, liabilities, costs, and expenses (including reasonable attorneys' fees) arising out of or related to:

(a) Any breach of Maker's representations, warranties, or covenants under this Note;
(b) Any violation of Applicable Law by Maker;
(c) The enforcement of this Note.

This indemnification shall survive payment of the Note.

8.2 Limitation of Liability

Payee's aggregate liability under or in connection with this Note shall not exceed the Principal Amount outstanding at the time any claim arises.

8.3 Consequential Damages Waiver

TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, NEITHER PARTY SHALL BE LIABLE FOR ANY INDIRECT, INCIDENTAL, SPECIAL, CONSEQUENTIAL, EXEMPLARY, OR PUNITIVE DAMAGES ARISING OUT OF OR RELATED TO THIS NOTE, REGARDLESS OF WHETHER SUCH DAMAGES WERE FORESEEABLE OR WHETHER A PARTY WAS ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

8.4 Unsecured Creditor Status

ACKNOWLEDGMENT: Maker acknowledges and Payee understands that this is an unsecured obligation. In the event of Maker's bankruptcy or insolvency:

(a) Payee will be an unsecured creditor with no priority over other unsecured creditors;
(b) Payee will be subordinate to all secured creditors;
(c) Payee may not recover the full amount owed under this Note;
(d) Payee has no right to seize or sell any specific property of Maker.

IX. DISPUTE RESOLUTION

9.1 Governing Law

This Note shall be governed by and construed in accordance with the laws of the State of [GOVERNING LAW STATE], without regard to its conflicts of laws principles. The parties acknowledge that UCC Article 3 as enacted in [GOVERNING LAW STATE] applies to this Note.

9.2 Forum Selection

Any action or proceeding arising out of or related to this Note shall be brought exclusively in the state or federal courts located in [COUNTY], [GOVERNING LAW STATE], and each party irrevocably:

(a) Submits to the personal jurisdiction of such courts;
(b) Waives any objection based on improper venue or inconvenient forum;
(c) Agrees that service of process may be made by certified mail to the address set forth herein.

9.3 Waiver of Jury Trial

JURY TRIAL WAIVER: TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY HEREBY KNOWINGLY, VOLUNTARILY, AND IRREVOCABLY WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATED TO THIS NOTE, WHETHER BASED ON CONTRACT, TORT, OR ANY OTHER THEORY.

9.4 Arbitration (Optional)

☐ Check if Arbitration Applies: Any dispute, claim, or controversy arising out of or relating to this Note shall be determined by binding arbitration administered by [AAA/JAMS/OTHER] in accordance with its [Commercial/Consumer] Arbitration Rules then in effect.

Arbitration Terms:

• Location: [CITY, STATE]
• Number of Arbitrators: [ONE/THREE]
• Language: English
• Judgment on the award may be entered in any court of competent jurisdiction

X. GENERAL PROVISIONS

10.1 Notices

All notices shall be in writing and deemed given when:
(a) Delivered personally;
(b) One (1) Business Day after deposit with a nationally recognized overnight courier;
(c) Three (3) Business Days after deposit in the U.S. mail, certified mail, return receipt requested.

Notices shall be sent to the addresses set forth in Section I.

10.2 Amendments and Waivers

This Note may not be amended, modified, or supplemented except by a written instrument signed by both Maker and Payee.

10.3 Successors and Assigns

(a) This Note shall be binding upon and inure to the benefit of the parties and their respective heirs, executors, administrators, legal representatives, successors, and permitted assigns.

(b) Maker may not assign this Note without Payee's prior written consent.

(c) Payee may freely assign or negotiate this Note. Any holder in due course (UCC § 3-302) shall take free of personal defenses.

10.4 Severability

If any provision is held invalid, the remaining provisions shall continue in full force and effect.

10.5 Entire Agreement

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

10.6 Time of the Essence

Time is of the essence with respect to all dates and deadlines set forth in this Note.

10.7 Joint and Several Liability

If more than one person executes this Note as Maker, their obligations shall be joint and several.

10.8 Waiver of Presentment

Maker waives presentment for payment, demand, notice of dishonor, protest, and all other notices, to the extent permitted by Applicable Law.

10.9 Attorneys' Fees

If any action is brought to enforce this Note, the prevailing party shall be entitled to recover reasonable attorneys' fees and costs.

10.10 Counterparts and Electronic Signatures

This Note may be executed in counterparts. Electronic signatures shall be deemed original signatures pursuant to 15 U.S.C. § 7001 et seq.

XI. EXECUTION BLOCK

IN WITNESS WHEREOF, Maker has executed this Unsecured 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:

If Individual:

Signature: _________________________________

Printed Name: [PAYEE NAME]

Date: ___________

If Entity:

[ENTITY NAME]

By: _________________________________

Name: [AUTHORIZED SIGNATORY NAME]

Title: [TITLE]

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]

COMPLIANCE CHECKLIST

☐ Interest rate complies with applicable state usury laws
☐ If consumer loan: TILA/Regulation Z disclosures provided
☐ Payment schedule clearly documented
☐ Governing law state identified and verified
☐ Copy of Note provided to Maker
☐ Maker's creditworthiness evaluated (recommended for unsecured loan)
☐ Consider requiring personal guaranty for entity borrowers
☐ Legal counsel review completed

LEGAL CITATIONS REFERENCE

UCC Article 3 - Negotiable Instruments

• § 3-104: Definition of negotiable instrument
• § 3-106: Unconditional promise or order
• § 3-108: Payable on demand or at definite time
• § 3-302: Holder in due course
• § 3-305: Defenses and claims in recoupment

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.

State Usury Laws

[INSERT APPLICABLE STATE STATUTE AND RATE]

Prepared for professional use. Verify all statutory citations and usury limits against current law before execution. This template does not constitute legal advice.