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~rrower(s): PROMISSORY NOTE City of San Marcos Revolving Loan Fund Address: San Marcos, Hays County, TX 78666 Loan Amount: $ Lender: City of San Marcos, 630 E. Hopkins, San Marcos, Hays County, TX 78666 1. Borrower's Promise to Pay. In return for the benefits and financial assistance Borrower has received from the Revolving Loan Fund Program (the "Program") of the Lender, Borrower promises to pay $. (the "Loan Amount"), as provided herein, to the order of the Lender. The Lender is a Texas municipal corporation, exercising governmental functions and powers and organized and existing under the Constitution and laws of the State of Texas and the Charter of the City of San Marcos. Borrower understands that the Lender may transfer this Note. The Lender or anyone ~vho takes this Note by transfer and who is entitled to receive payments under this Note is called the "Note Holder". Borrower understands that this note is secured by personal guaranties. 2. Use of Loan Amount. Borrower agrees to use the Loan Amount only as outlined in my application for funds to the City and as outlined in the Contract for Revolving Loan Funds executed of even date. 3. Interest. Borrower understands that as long as Borrower complies with this Note, the Contract for Revolving Loan Funds that there will be no interest payable on the Loan Amount. 4. Breach. In the event that Borrower breaches any provision of this Note, or the Contract for Revolving Loan Funds, ~rrower understands that the remaining portion of the Loan Amount, plus interest on that portion will begin to accrue at annual rate of 5%, simple interest. This interest will cause my payments to be increased for the remainder of the loan term. Borrower understands that this may not be the only consequence of Borrower's breach of any provision of this Note. 5. Payments. A. Time and Place of Payments 1. A ._month deferral of the first payment of this note has been granted by the City. Payment on this note will begin on ,2004. 2. The remaining portion of the Loan Amount, will be due and payable on the first day of , 3. Borrower agrees to make all payments due at the Finance Department, City of San Marcos, 630 E. Hopkins, San Marcos, Hays County, TX 78666, or at a different place if required by the Note Holder. B. Loan Charges. Ifa law applies to this Note and sets maximum loan charges, so that the interest or other loan charges collected or to be collected in connection with this loan exceed the permitted limits; then: I) any such loan charge shall be reduced by the amount necessary to reduce the charge to the permitted limit; and 2) any sums already collected from Borrower which exceeded the permitted limits will be refunded to Borrower. The Note Holder may choose to make this refund by reducing the principal Borrower owes under this Note or by making a direct payment to Borrower. If a refund reduces principal, the reduction will be treated as a partial prepayment. C. Borrower's Failure to Pay As Required. 1. Late Charge for Overdue Payments. If the Note Holder has not received the full amount when due, Bon'ower will pay a late charge to the Note Holder. The anaount of the charge will five percent (5%) of the loan payment due that m'~nth. If Borrower misses more than one monthly payment, late charges will accrue for each payment missed. 2. Default. If Borrower does not pay the full amount on the date it is due or if Borrower commit a violation of the ~ntract for Revolving Loan Funds, Borrower will be in default. 3. Notice of Default. If Borrower is in default, the Note Holder may send Borrower a written notice requiring Borrower to pay immediately the full amount of principal due which has not been paid. The due date for the payment must be at least 30 days after the date on which the notice is delivered or mailed to Borrower. C:\Documems and Settings\¢ostley_linda~vly Documents\RLF~prora note.doc I