Promissory Note Template Word

PROMISSORY NOTE AND DEBT INSTRUMENT

Document ID: PN-DEBT-2024-INST-001 Effective Date: [Effective Date] Version: 1.0.4-L Governing Jurisdiction: [State/Province, Country]

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STATUTORY & LEGAL COMPLIANCE NOTICE

IMPORTANT: THIS IS A LEGALLY BINDING FINANCIAL INSTRUMENT. BEFORE EXECUTING THIS DOCUMENT, THE PARTIES ARE STRONGLY ADVISED TO CONSULT WITH INDEPENDENT LEGAL COUNSEL AND FINANCIAL ADVISORS.

USURY LIMITATIONS: THE PARTIES HEREBY ACKNOWLEDGE THAT INTEREST RATES PRESCRIBED HEREIN ARE SUBJECT TO JURISDICTIONAL USURY LAWS. IF ANY INTEREST RATE OR FEE SPECIFIED IN THIS AGREEMENT EXCEEDS THE MAXIMUM PERMITTED BY LAW, SUCH INTEREST OR FEE SHALL AUTOMATICALLY BE REDUCED TO THE MAXIMUM RATE PERMITTED IN THE GOVERNING JURISDICTION WITHOUT VOIDING THIS INSTRUMENT.

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1. PARTIES & RECITALS

THIS PROMISSORY NOTE (the “Note”) is entered into as of the [Effective Date] (the "Effective Date") by and between:

THE BORROWER: [Borrower Full Legal Name], a [Legal Entity Type, e.g., Individual/Corporation], with a principal address located at [Principal Address] (hereinafter referred to as the "Borrower").

THE LENDER: [Lender Full Legal Name], a [Legal Entity Type, e.g., Individual/Corporation], with a principal address located at [Principal Address] (hereinafter referred to as the "Lender").

RECITALS: WHEREAS, the Borrower desires to borrow from the Lender the principal sum of [Amount in USD, e.g., $50,000.00] (the "Principal Amount"); and WHEREAS, the Lender is willing to provide such loan to the Borrower under the terms and conditions set forth in this Note.

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2. PROMISE TO PAY AND COMPENSATION TERMS

2.1 Promise to Pay. For value received, the Borrower hereby unconditionally promises to pay to the order of the Lender, at the Lender’s principal address or such other place as the Lender may designate in writing, the Principal Amount of [Amount in USD], together with interest accrued on the unpaid principal balance at the rate of [Interest Rate, e.g., 5%] per annum, calculated on a [360/365]-day year.

2.2 Payment Schedule and Milestones. The Borrower shall satisfy the debt according to the following schedule:

• Installment Payments: [Insert Amount, e.g., $1,000.00] shall be paid on the [Day, e.g., 1st] of every month commencing on [Start Date] and continuing until [End Date/Maturity Date].
• Maturity Date: The entire remaining unpaid balance of the Principal Amount and any accrued interest shall be due and payable in full on [Maturity Date].

2.3 Late Interest and Fees. In the event any payment remains unpaid for more than [Number, e.g., 5] days after its due date, the Borrower shall pay a late fee of [Amount or Percentage, e.g., $50.00]. Furthermore, any overdue amount shall bear interest at a "Default Rate" of [Default Rate, e.g., 12%] per annum or the maximum rate allowed by law, whichever is lower.

2.4 Invoicing. If required by the Borrower’s internal accounting, the Lender may provide monthly statements or invoices; however, the absence of an invoice shall not relieve the Borrower of the obligation to make timely payments under this Note.

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3. SCOPE OF SERVICES / ENGAGEMENT

3.1 Relationship of the Parties. This Note may be issued in conjunction with a broader business engagement. The Borrower hereby acknowledges that the obligation to repay the Principal Amount is absolute and is not contingent upon the performance of any external services or the completion of any separate project, unless specifically amended in writing.

3.2 Performance Standards. To the extent that the proceeds of this Note are utilized for a specific business engagement, the Borrower represents that the funds will be used exclusively for the business purposes described in [Reference Document/Project Name].

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4. INTELLECTUAL PROPERTY OWNERSHIP & WORK MADE FOR HIRE

4.1 Ownership. If this Note is issued as consideration for the acquisition of intellectual property (IP), the Lender hereby confirms that upon full payment of the Principal Amount and all accrued interest, all rights, titles, and interests in and to any work product or IP associated with the underlying transaction shall vest in the Borrower.

4.2 Work Made for Hire. To the extent applicable by law, any deliverables produced in connection with the funding provided by this Note shall be considered "work made for hire" for the benefit of the Borrower. In the event such deliverables do not qualify as work made for hire, the Lender hereby assigns all rights to the Borrower, effective upon the total discharge of this Note.

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5. TERM AND TERMINATION

5.1 Term. This Note shall remain in full force and effect until the Principal Amount, interest, and all other charges due hereunder have been paid in full.

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

• (a) Failure to pay any amount due within [Number] days of the due date;
• (b) The insolvency or bankruptcy of the Borrower;
• (c) A breach of any representation or warranty made herein.

5.3 Cure Period. In the event of a non-monetary breach, the Borrower shall have [Number, e.g., 15] days from receipt of written notice to cure such breach. No cure period applies to the failure to make payments.

5.4 Acceleration. Upon the occurrence of an Event of Default that is not cured within the specified timeframe, the Lender may, at its sole option, declare the entire unpaid Principal Amount and accrued interest immediately due and payable.

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6. MUTUAL CONFIDENTIALITY & NON-DISCLOSURE

The Parties agree to maintain the strict confidentiality of the financial terms of this Note. Neither Party shall disclose the terms of this Note to any third party, except to their respective legal and financial advisors, or as required by law or regulatory authority. This obligation of confidentiality shall survive the termination or satisfaction of this Note for a period of [Number, e.g., 3] years.

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7. REPRESENTATIONS & WARRANTIES

7.1 Borrower Representations. The Borrower represents and warrants that:

• (a) It has the full legal capacity and authority to execute and deliver this Note;
• (b) This Note constitutes a valid and binding obligation, enforceable against the Borrower in accordance with its terms;
• (c) The execution of this Note does not violate any existing agreement or law.

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8. LIMITATION OF LIABILITY & INDEMNIFICATION

8.1 Limitation of Liability. To the maximum extent permitted by law, neither Party shall be liable to the other for any indirect, consequential, or punitive damages arising out of this Note. The Lender's total liability for any claims related to this instrument shall not exceed the total interest paid by the Borrower hereunder.

8.2 Indemnification. The Borrower agrees to indemnify, defend, and hold harmless the Lender from and against any and all claims, losses, or expenses (including reasonable attorney fees) arising out of the Borrower’s use of the loan proceeds or any breach of the warranties contained herein.

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9. DISPUTE RESOLUTION & ARBITRATION

Any dispute, controversy, or claim arising out of or relating to this Note shall be settled by binding arbitration in accordance with the rules of the [Arbitration Association, e.g., American Arbitration Association]. The seat of arbitration shall be [City, State]. The prevailing party shall be entitled to recover its reasonable attorney fees and costs.

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10. GOVERNING LAW & JURISDICTION

This Note shall be governed by and construed in accordance with the laws of the State/Province of [Jurisdiction Name], without regard to its conflict of law principles. The Parties hereby submit to the exclusive jurisdiction of the courts located in [County/City, State].

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11. MISCELLANEOUS

11.1 Severability. If any provision of this Note is held to be invalid or unenforceable, the remaining provisions shall continue in full force and effect.

11.2 Entire Agreement. This Note constitutes the entire agreement between the Parties and supersedes all prior negotiations, representations, or agreements, whether written or oral.

11.3 Counterparts. This Note may be executed in counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument.

11.4 Prepayment. The Borrower reserves the right to prepay the Principal Amount, in whole or in part, at any time without penalty or premium.

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12. EXECUTION & FORMAL SIGNATURE BLOCKS

IN WITNESS WHEREOF, the Parties have executed this Promissory Note as of the Effective Date first written above.

FOR THE BORROWER:

Signature: _____________________________________ Printed Name: [Authorized Signatory Name] Title: [Title / Role] Company: [Borrower Full Legal Name] Date: [Date]

FOR THE LENDER:

Signature: _____________________________________ Printed Name: [Authorized Signatory Name] Title: [Title / Role] Company: [Lender Full Legal Name] Date: [Date]

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STEP-BY-STEP EXECUTION & FILING GUIDE

1. Preparation: Open this document in Microsoft Word or Google Docs. Use the Find and Replace function (Ctrl+H) to locate all bracketed fields (e.g., [Effective Date], [Amount in USD]) and input the specific deal data.
2. Verification of Authority: Ensure the individual signing for a legal entity has the documented authority (e.g., Corporate Resolution or Operating Agreement) to bind the company to financial debt.
3. Usury Check: Verify that the interest rate entered in Section 2.1 does not exceed the legal limit in your specific state or province.
4. Digital Execution:
   • Upload the finalized PDF to DocuSign, Adobe Sign, or a similar e-signature platform.
   • Assign signature tags to the designated blocks in Section 12.
   • Distribute to all parties for execution.
5. Notarization (Optional but Recommended): For high-value notes, it is advisable to have signatures witnessed by a Notary Public to prevent future claims of forgery or lack of capacity.
6. Record Retention: Once fully executed, the Lender must retain the "Original" (if physical) or the "Authoritative Copy" (if digital) in a secure, fireproof location. The Borrower should be provided with a complete copy for their financial records.
7. Filing: If this Note is secured by collateral (e.g., equipment or IP), a UCC-1 Financing Statement should be filed with the Secretary of State to perfect the security interest.