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Collateral Note

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Collateral Note Powered By Docstoc
					A collateral note is a promissory note secured by the pledge of specific assets. The
pledging of assets as collateral provides a security interest to the lender. This
agreement sets forth standard terms, such a payment terms and acceleration of debt
upon default. As drafted, this document may require the debtor to deposit additional
collateral if the value of the collateral security declines to less than a stated value. This
document can be further customized to fits the needs of the drafting parties.
                                 COLLATERAL NOTE

This Collateral Note (the “Note”) is made and effective this ___ day of ____________, 20__

By and Between:

Name ________________________________

Address___________________________________

(the “Promisor”)

And:

Name ________________________________

Address___________________________________

(the “Promisee”), collectively referred to herein as the “Parties”.

The Parties hereby agree as follows:


1. Promise to Pay

For value received on [Insert date], the undersigned Promisor hereby unconditionally promises
to pay to the order of Promisee the principal sum of ______________________ Dollars
($________) together with interest accrued at the rate of __________ percent (___%) per year.


2. Security

Promisor has deposited with Promisee as collateral security for the payment of this debt [Insert a
description of the collateral] (the “Collateral”), having a market value on the date of this Note of
_______________ Dollars ($ ______).


3. Creditor's Right to Demand Further Collateral

In the event that the market value of the collateral security should decline in value to less than
$ _______ prior to the full repayment of the Note, Promisee may demand that Debtor deposit
additional collateral so that the total market value of the collateral at all times is a minimum of
$__________.



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4. Payment Terms

The Principal sum, inclusive of interest, shall be paid in _____________ (____) installments of
_____________________Dollars, $_________, to be paid [monthly or yearly] on the ________
day of each [month/year] (the “Payment Date”), starting on the _______ day of
_________,20____ and thereafter until the Principal amount and accrued interest is paid in full.
Any payment that is not received by Promisee within ten (10) days of the Payment Date shall be
considered late and Promisee may charge a late fee of ($______ or _______ percent (____%) of
the payment amount for every day late until paid).


5. Application of Payments

All payments and any prepayments shall first be applied to outstanding late fees, then to interest
and the balance to the Principal amount.


6. Prepayment

The Promisor may prepay this Note in full or in part at any time, prior to maturity, without
premium or penalty.


7. Acceleration of Debt upon Default

In the event that Promisor should fail to make any payment due under this Note within
_____________ (____) days of its due or if the Promisor fails to deliver additional collateral
when demanded by Promisee in accordance with Paragraph 3 of this Note, the Note shall become
immediately due and the Promisee can demand immediate payment of the entire outstanding
Principal amount and accrued interest.


8. Promisee's Right to Sell Collateral

Should Promisor fail to pay this Note at the time it becomes due and payable in accordance with
Paragraph 4, Promisee may sell the Collateral, whole or in part, in an open market or through a
broker, at a public or private sale, and without additional notice to Promisor.
The proceeds derived from a sale of the collateral shall first be applied to the costs and expenses
of selling the collateral and collecting the proceeds, including legal fees and broker's
commission. The remaining proceeds shall then be used to pay Promisee the sum due and
payable on this Note. Should there be any balance remaining after this Note has been paid, the
balance shall be turned over to Promisor.




© Copyright 2011 Docstoc Inc.                                                             3
9. Collection Fees

In the event that Promisor fails to make the payments as agreed upon herein, and Promisee
undertakes any action to collect any payment due hereunder, Promisor agrees to pay on demand
all reasonable legal fees, collection and enforcement charges incurred by Promisee, to the extent
permissible by law, in addition to other amounts due.

10. Transfer

The Promisee may transfer this Note to another holder without notice to the Promisor and the
Promisor agrees to remain 
				
DOCUMENT INFO
Description: A collateral note is a promissory note secured by the pledge of specific assets. The pledging of assets as collateral provides a security interest to the lender. This agreement sets forth standard terms, such a payment terms and acceleration of debt upon default. As drafted, this document may require the debtor to deposit additional collateral if the value of the collateral security declines to less than a stated value. This document can be further customized to fits the needs of the drafting parties.