DIY Legal Forms

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Collateral Note (Comprehensive)

01. Promise to Pay. For value received, on [date], I (Debtor) promise to pay to the order of [name] (Creditor) the sum of ---------- dollars ($----------) with interest at ---------- percent (----------%) per annum. This Note is payable at the [Bank] located at [address].

02. Deposit of Collateral. Debtor has deposited with Creditor as collateral security for the payment of this debt [number] shares of the common stock of [name], having a market value on the date of this instrument of ---------- dollars ($----------) per share. Debtor has also delivered to Creditor stock powers signed by Debtor in blank.

03. Creditor's Right to Demand Further Collateral. If the total market value of the collateral security should decline to less than ---------- dollars ($----------), Creditor may demand that Debtor deposit additional collateral so that the total market value of the collateral at all times is at least ---------- dollars ($----------).

04. Transfer Of Rights. This Collateral Note shall be binding on any successors of the parties.

05. Further Assurances. In connection with this Collateral Note and the transactions contemplated hereby, each party to this Collateral Note will execute and deliver any additional documents and perform any additional acts that may be necessary or appropriate to effectuate and perform its obligations under this Collateral Note and the transactions contemplated hereby.

06. Arbitration. Any disputes pertaining said Collateral Note being affairs that cannot be settled amicably shall be submitted to an arbitrator under the Rules of the Australian Arbitration Association or like organisation in the City of [city], whose award may be reduced to judgment in any court of competent jurisdiction.

07. Amendment. This Collateral Note may be modified or amended, if the amendment is made in writing and is signed by both parties.

08. Severability. If any provision of this Collateral Note shall be held to be invalid or unenforceable for any reason, the remaining provisions shall continue to be valid and enforceable. If a court finds that any provision of this Collateral Note is invalid or unenforceable, but that by limiting such provision it would become valid or enforceable, then such provision shall be deemed to be written, construed, and enforced as so limited.

09. Waiver Of Contractual Right. The failure of either party to enforce any provision of this Collateral Note shall not be construed as a waiver or limitation of that party's right to subsequently enforce and compel strict compliance with every provision of this Collateral Note.

10. No Representation. Neither party has made any representations nor promises, other than those contained in this Collateral Note or in some further writing signed by the party making the representation or promise.

11. Interpretation. This Collateral Note will in all events be construed as a whole, according to its fair meaning, and not strictly for or against a party merely because that party (or the party's legal counsel) drafted the Collateral Note. The headings, captions, and titles in this legal Collateral Note are merely for reference and do not define, limit, extend, or describe the scope of this Collateral Note or any provision herein. Unless the context requires otherwise, (a) the gender (or lack of gender) of all words used in this Collateral Note includes the masculine, feminine, and neuter, and (b) the word including means including without limitation.

13. Invalid Provisions. If any provision of this Collateral Note is held to be illegal, invalid, or unenforceable under any present or future law, then that provision will be fully severable. This Collateral Note will be construed and enforced as if the illegal, invalid, or unenforceable provision had never comprised a part of this Collateral Note, and the remaining provisions of this Collateral Note will remain in full force and effect and will not be affected by the illegal, invalid, or unenforceable provision or by its severance from this Collateral Note. Furthermore, in lieu of each such illegal, invalid, or unenforceable provision, there will be added automatically, as a part of this Collateral Note, a provision as similar in terms to such illegal, invalid, or unenforceable provision as may be possible and be legal, valid and enforceable.

14. Acceleration of Maturity of Note Upon Debtor's Failure to Comply With Demand for Additional Collateral. Should Debtor fail to deliver additional collateral when demanded by Creditor in accordance with Paragraph 3 of this Note, this Note shall become immediately due and payable.

15. Creditor's Right to Sell Collateral. Should Debtor fail to pay this Note at maturity or at the time it becomes due and payable in accordance with Paragraph 4, Creditor may sell all or any part of the collateral without notice to Debtor.

16. Manner in Which Collateral Can Be Sold. Creditor can sell all or any part of the collateral on an open market through a broker or at public or private sale. Creditor may purchase the collateral at such sale, free of any claims that Debtor may have on it.

17. Disposition of Proceeds of Sale of Collateral. The proceeds derived from a sale of the collateral shall be distributed as follows:

(a) Costs and Expenses. The proceeds shall first be applied to the costs and expenses of selling the collateral and collecting the proceeds, including legal fees and broker's commission.

(b) Amount Due on Note. The remaining proceeds shall then be used to pay Creditor the sum due and payable on this Note.

(c) Surplus to Debtor. Should there be any balance remaining after this Note has been paid, the balance shall be turned over to Debtor.






*** If Required By State Law ***

STATE OF _________________

COUNTY OF ________________

SWORN TO AND SUBSCRIBED BEFORE ME, this the ____ day of ______________, 20____.


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