This document is a promissory note between ABC and XYZ and shall be dated dd/mm/yyyy. It provides an undertaking repay ABC who shall be called the borrower to repay an amount of %XXX to XYZ who shall be called the lender. This promissory note stands in addition to the loan agreement already in place between the two parties.
1. Principal Loan Amount
As outlined in the loan agreement contained as exhibit A of the annexure to this promissory note, the borrower has borrowed a sum of $ XXXX from the lender and has provided collateral in the form of personal stocks and shares. Details of the collateral are also contained in the annexure of the promissory note. The borrower agrees to repay to the lender this principal amount along with interest as detailed in the following clause.
2. Interest Rate Applicable to the Loan
This promissory note contains an undertaking by the borrower to repay the principal amount taken as a loan from the lender along with an interest component of X% per annum. This shall be calculated on a compounded basis on the reducing balance that exists after each installment is paid.
3. Maturity Date of the Loan
The promissory note will mature 36 months from the date of signing this agreement. By this date all outstanding dues in the form of interest and principal shall be settled. The borrower agrees to make all payments within the due date, which is dd/mm/yyyy.
4. Rights of the Lender in case of Payment Default
This promissory note provides for the following rights of the lender in case the borrower defaults on his payments:
4.1. The promissory note requires that the lender shall send three reminders ten days apart to the borrower demanding payment of the installment amount.
4.2. If after these three reminders, the borrower does not settle the outstanding dues, the lender may either agree on revised terms with the borrower or take steps to convert the collateral into cash as per the terms of this promissory note
4.3. The promissory note provides that any cash proceeds from sale of the collateral assets shall go first towards settling the outstanding dues including interest and any penalties as outlined in the loan agreement.
4.4. Any residue cash remaining after settling the dues to the lender shall be transferred back to the borrower as per the terms of this promissory note.
5. Governing Law
This promissory note falls under the jurisdiction of the state of XXX and shall be governed by the prevailing laws and statutes in place here.
In the event that any condition contained in this promissory note is deemed invalid, unlawful or unenforceable, that clause alone shall be removed from the contract. The remaining healthy conditions of the promissory note shall remain unaffected by this change.
Both the borrower and the lender have read and understood the clauses contained in this promissory note. It shall come into effect from dd/mm/yyyy.