Document:

Exhibit 10.19

PROMISSORY NOTE

	
Principal

$8,000,000.00

	
Loan Date

11-20-2012

	
Maturity

11-20-2013

	
Loan No.

40000

	
Call / Coll

C / X

	
Account

72957158

	
Officer

MRD

	
Initials

	
 

	
References in the boxes above are for Lender's use only and do not limit the applicability of this document to any particular loan or item.

Any item above containing "***" has been omitted due to text length limitations.

	
 

	
Borrower:

	
UTG, INC.

	
 

	
Lender:

	
ILLINOIS NATIONAL BANK

	
 

	
5250 SOUTH SIXTH STREET

	
 

	
 

	
MAIN BRANCH

	
 

	
SPRINGFIELD, IL 62703

	
 

	
 

	
322 E. CAPITOL

	
 

	
 

	
 

	
 

	
SPRINGFIELD, IL 62701

	
 

	
 

	
 

	
 

	
 

	
 

Principal Amount:  $8,000,000.00

	
 

Interest Rate:  3.750%

	
 

Date of Note:  November 20, 2012

PROMISE TO PAY.  UTG, INC. ("Borrower") promises to pay to ILLINOIS NATIONAL BANK {"Lender"]. or order, in lawful money of the United States of America, the principal amount of Eight Million & 00/100 Dollars  ($8,000,000,00)  or so much as may be outstanding, together with interest on the unpaid outstanding principal balance of each advance, calculated as described in the "INTEREST CALCULATION METHOD" paragraph using an interest rate of 3.750%.  Interest shall be calculated from the date of each advance until repayment of each advance.  The interest rate may change under the terms and conditions of the "INTEREST AFTER DEFAULT" section.

PAYMENT.  Borrower will pay this loan in one payment of all outstanding principal plus all accrued unpaid interest on November 20, 2013.  In addition, Borrower will pay regular monthly payments of all accrued unpaid interest due as of each payment date, beginning December 20, 2012, with all subsequent interest payments to be due on the same day of each month after that.  Unless otherwise agreed or required by applicable law, payments will be applied first to any accrued unpaid interest; then to principal; then to any unpaid collection costs; and then to any late charges.  Borrower will pay Lender at Lender's address shown above or at such other place as Lender may designate in writing.

INTEREST CALCULATION METHOD.  Interest on this Note is computed on a 365/365 simple Interest basis; that is, by applying the ratio of the interest rate over the number of days in a year (366 during leap years), multiplied by the outstanding principal balance, multiplied by the actual number of days the principal balance is outstanding.  All interest payable under this Note is computed using this method.

PREPAYMENT; MINIMUM INTEREST CHARGE.  In any event, even upon full prepayment of this Note, Borrower understands that Lender is entitled to a minimum interest charge of $50.00.  Other than Borrower's obligation to pay any minimum interest charge, Borrower may pay without penalty all or a portion of the amount owed earlier than it is due.  Early payments will not, unless agreed to by Lender in writing, relieve Borrower of Borrower's obligation to continue to make payments of accrued unpaid interest.  Rather, early payments will reduce the principal balance due.  Borrower agrees not to send Lender payments marked "paid in full", "without recourse", or similar language.  If Borrower sends such a payment, Lender may accept it without losing any of Lender's rights under this Note, and Borrower will remain obligated to pay any further amount owed to Lender.  All written communications concerning disputed amounts, including any check or other payment instrument that indicates that the payment constitutes "payment in full" of the amount owed or that is tendered with other conditions or limitations or as full satisfaction of a disputed amount must be mailed or delivered to:  Illinois National Bank, 322 E. Capitol Springfield, IL 62701.

LATE CHARGE.  If a payment is 10 days or more late, Borrower will be charged 1.000% of the unpaid portion of the regularly scheduled payment or $25.00, whichever is greater.

INTEREST AFTER DEFAULT.  Upon default, including failure to pay upon final maturity, the interest rate on this Note shall be increased by 4.000 percentage points.  However, in no event will the interest rate exceed the maximum interest rate limitations under applicable law.

DEFAULT.  Each of the following shall constitute an event of default ("Event of Default") under this Note:

Payment Default.  Borrower fails to make any payment when due under this Note.

Other Defaults.  Borrower fails to comply with or to perform any other term, obligation, covenant or condition contained in this Note or in any of the related documents or to comply with or to perform any term, obligation, covenant or condition contained in any other agreement between Lender and Borrower.

Default in Favor of Third Parties.  Borrower or any Grantor defaults under any loan, extension of credit, security agreement, purchase or sales agreement, or any other agreement, in favor of any other creditor or person that may materially affect any of Borrower's property or Borrower's ability to repay this Note or perform Borrower's obligations under this Note or any of the related documents.

False Statements.  Any warranty, representation or statement made or furnished to Lender by Borrower or on Borrower's behalf under this Note or the related documents is false or misleading in any material respect, either now or at the time made or furnished or becomes false or misleading at any time thereafter.

Insolvency.  The dissolution or termination of Borrower's existence as a going business, the insolvency of Borrower, the appointment of a receiver for any part of Borrower's property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against Borrower.

Creditor or Forfeiture Proceedings.  Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help, repossession or any other method, by any creditor of Borrower or by any governmental agency against any collateral securing the loan.  This includes a garnishment of any of Borrower's accounts, including deposit accounts, with Lender.  However, this Event of Default shall not apply if there is a good faith dispute by Borrower as to the validity or reasonableness of the claim which is the basis of the creditor or forfeiture proceeding and if Borrower gives Lender written notice of the creditor or forfeiture proceeding and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in an amount determined by Lender, in its sole discretion, as being an adequate reserve or bond for the dispute.

Events Affecting Guarantor.  Any of the preceding events occurs with respect to any guarantor, endorser, surety, or accommodation party of any of the indebtedness or any guarantor, endorser, surety, or accommodation party dies or becomes incompetent, or revokes or disputes the validity of, or liability under, any guaranty of the indebtedness evidenced by this Note.

Change In Ownership.  Any change in ownership of twenty-five percent (25%) or more of the common stock of Borrower.

PROMISSORY NOTE

	
Loan No:  40000

	
(Continued)

	
Page 2

Adverse Change.  A material adverse change occurs in Borrower's financial condition, or Lender believes the prospect of payment or performance of this Note is impaired.

Insecurity.  Lender in good faith believes itself insecure.

Cure Provisions.  If any default, other than a default in payment is curable and if Borrower has not been given a notice of a breach of the same provision of this Note within the preceding twelve (12) months, it may be cured if Borrower, after Lender sends written notice to Borrower demanding cure of such default: (1) cures the default within ten (10) days; or (2) if the cure requires more than ten (10) days, immediately initiates steps which Lender deems in Lender's sole discretion to be sufficient to cure the default and thereafter continues and completes all reasonable and necessary steps sufficient to produce compliance as soon as reasonably practical.

LENDER'S RIGHTS.  Upon default, Lender may declare the entire unpaid principal balance under this Note and all accrued unpaid interest immediately due, and then Borrower will pay that amount.

ATTORNEYS' FEES; EXPENSES.  Lender may hire or pay someone else to help collect this Note if Borrower does not pay.  Borrower will pay Lender that amount.  This includes, subject to any limits under applicable law, Lender's attorneys' fees and Lender's legal expenses, whether or not there is a lawsuit, including attorneys' fees, expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), and appeals.  If not prohibited by applicable law, Borrower also will pay any court costs, in addition to all other sums provided by law.

JURY WAIVER.  Lender and Borrower hereby waive the right to any jury trial in any action, proceeding, or counterclaim brought by either Lender or Borrower against the other.

GOVERNING LAW.  This Note will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, the laws of the State of Illinois without regard to its conflicts of law provisions.  This Note has been accepted by Lender in the State of Illinois.

CHOICE OF VENUE.  If there is a lawsuit, Borrower agrees upon Lender's request to submit to the jurisdiction of the courts of SANGAMON County, State of Illinois.

CONFESSION OF JUDGMENT.  Borrower hereby irrevocably authorizes and empowers any attorney-at-law to appear in any court of record and to confess judgment against Borrower for the unpaid amount of this Note as evidenced by an affidavit signed by an officer of Lender setting forth the amount then due, attorneys' fees plus costs of suit, and to release all errors, and waive all rights of appeal.  If a copy of this Note, verified by an affidavit, shall have been filed in the proceeding, it will not be necessary to file the original as a warrant of attorney.  Borrower waives the right to any stay of execution and the benefit of all exemption laws now or hereafter in effect.  No single exercise of the foregoing warrant and power to confess judgment will be deemed to exhaust the power, whether or not any such exercise shall be held by any court to be invalid, voidable, or void; but the power will continue undiminished and may be exercised from time to time as Lender may elect until all amounts owing on this Note have been paid in full.  Borrower hereby waives and releases any and all claims or causes of action which Borrower might have against any attorney acting under the terms of authority which Borrower has granted herein arising out of or connected with the confession of judgment hereunder.

RIGHT OF SETOFF.  To the extent permitted by applicable law, Lender reserves a right of setoff in all Borrower's accounts with Lender (whether checking, savings, or some other account).  This includes all accounts Borrower holds jointly with someone else and all accounts Borrower may open in the future.  However, this does not include any IRA or Keogh accounts, or any trust accounts for which setoff would be prohibited by law.  Borrower authorizes Lender, to the extent permitted by applicable law, to charge or setoff all sums owing on the indebtedness against any and all such accounts, and, at Lender's option, to administratively freeze all such accounts to allow Lender to protect Lender's charge and setoff rights provided in this paragraph.

COLLATERAL.  Borrower acknowledges this Note is secured by Commercial Pledge Agreement covering 400,000 shares of Universal Guaranty Life Insurance Company, Certificate 111.

LINE OF CREDIT.  This Note evidences a revolving line of credit.  Advances under this Note, as well as directions for payment from Borrower's accounts, may be requested orally or in writing by Borrower or by an authorized person.  Lender may, but need not, require that all oral requests be confirmed in writing.  Borrower agrees to be liable for all sums either: (A) advanced in accordance with the instructions of an authorized person or (B) credited to any of Borrower's accounts with Lender.  The unpaid principal balance owing on this Note at any time may be evidenced by endorsements on this Note or by Lender's internal records, including daily computer print-outs.

SECURITY INTEREST IN DEPOSIT ACCOUNTS.  Borrower grants to Lender a contractual security interest in, and hereby assigns, conveys, delivers, pledges, and transfers to Lender all Borrower's right, title and interest in and to, Borrower's deposit accounts with Lender (whether checking, savings, or some other account), including without limitation all deposit accounts held jointly with someone else and all deposit accounts Borrower may open in the future, excluding however all IRA and Keogh accounts, and all trust accounts for which the grant of a security interest would be prohibited by law.  Borrower authorizes Lender, to the extent permitted by applicable law, to charge or setoff all sums owing on this Note against any and all such deposit accounts.

DISHONORED ITEM FEE.  Borrower will pay a fee to Lender of $25.00 if Borrower makes a payment on Borrower's loan and the check or preauthorized charge with which Borrower pays is later dishonored.  If your payment is returned unpaid, you authorize Illinois National Bank to make a one-time electronic fund transfer from your account to collect a fee of $25.00.

SUCCESSOR INTERESTS.  The terms of this Note shall be binding upon Borrower, and upon Borrower's heirs, personal representatives, successors and assigns, and shall inure to the benefit of Lender and its successors and assigns.

GENERAL PROVISIONS.  If any part of this Note cannot be enforced, this fact will not affect the rest of the Note.  Lender may delay or forgo enforcing any of its rights or remedies under this Note without losing them.  Borrower and any other person who signs, guarantees or endorses this Note, to the extent allowed by law, waive presentment, demand for payment, and notice of dishonor.  Upon any change in the terms of this Note, and unless otherwise expressly stated in writing, no party who signs this Note, whether as maker, guarantor, accommodation maker or endorser, shall be released from liability.  All such parties agree that Lender may renew or extend (repeatedly and for any length of time) this loan or release any party or guarantor or collateral; or impair, fail to realize upon or perfect Lender's security interest in the collateral; and take any other action deemed necessary by Lender without the consent of or notice to anyone.  All such parties also agree that Lender may modify this loan without the consent of or notice to anyone other than the party with whom the modification is made.  The obligations under this Note are Joint and several.

PROMISSORY NOTE

	
Loan No:  40000

	
(Continued)

	
Page 3

PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS NOTE.  BORROWER AGREES TO THE TERMS OF THE NOTE.

BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY NOTE.

	
BORROWER:

 

 

UTG, INC.

	
 

	
 

	
 

	
 

	
 

	
 

By:

	
 

/s/ James P. Rousey

	
 

	
 

By:

	
 

/s/ Theodore C. Miller

	
 

	
 

	
JAMES P. ROUSEY, President of UTG, INC.

	
 

	
 

	
THEODORE C. MILLER, CFO/Secretary of UTG, INC.Exhibit 10.21

	
    HPG Acquisition LLC

	
    First National Bank of Tennessee

	
 

	
 

	
    TCTB Management Group, LLC

	
    Livingston – West Main

	
    Loan Number

	
203200774-00001

	
    MDTC, LP

	
    1115 West Main Street

	
    Date

	
03/04/2013

	
    303 W Wall St Suite 2300

	
    Livingston, Tennessee 38570

	
    Maturity Date

	
03/04/2018

	
    Midland TX 79701-5101

	
 

	
    Loan Amount $

	
12,000,000.00

	
 

	
 

	
    Renewal Of

	
 

	
BORROWER'S NAME AND ADDRESS

    "I" includes each borrower above, jointly and severally

	
LENDER'S NAME AND ADDRESS

    "You" means the lender, its successors and assigns.

	
 

For value received, I promise to pay to you, or your order, at your address listed above the PRINICPAL sum of __TWELVE MILLION DOLLARS AND                     

ZERO CENTS__________________________________________________________________ Dollars $ _12,000,000.00_____________________________       

x Single Advance: I will receive all of this principal sum on 03/04/2013______.  No additional advances are contemplated under this note.

o Multiple Advance: The principal sum shown above is the maximum amount of principal I can borrow under this note.  On ______________________________

_________ I will receive the amount of $ _________________________ and future principal advances are contemplated.

Conditions:  The conditions for future advances are  ________________________________________________________________________________

________________________________________________________________________________________________________________________

________________________________________________________________________________________________________________________

o Open End Credit: You and I agree that I may borrow up to the maximum principal sum more than one time.  This feature is subject to all other conditions and 

expires on ________________________________________.

o Closed End Credit: You and I agree that I may borrow (subject to all other conditions) up to the maximum principal sum only one time.

INTEREST: I agree to pay interest on the outstanding principal balance from ___03/04/2013___________________ at the rate of __4.000000_ %

per year until _the final payment or maturity date of this note____________.

o Variable Rate: This rate may then change as stated below.

o Index Rate : The future rate will be __N/A_____________________ the following index rate: _______________________________________________

N/A_____________________________________________________________________________________________________________________

N/A_____________________________________________________________________________________________________________________

o No Index: The future rate will not be subject to any internal or external index.  It will be entirely in your control.

o Frequency and Timing: The rate on this note may change as often as __N/A____________________________________________________________.

A change in the interest rate will take effect N/A_______________________________________________________________________________.

o Limitations: During the term of this loan, the applicable annual interest rate will not be more than ______________________ % or less than

____________________ %.  The rate may not change more than _____________________ % each ______________________________________.

Effect of Variable Rate: A change in the interest rate will have the following effect on the payments:

o The amount of each scheduled payment will change.                           o The amount of the final payment will change.

o N/A___________________________________________________________________________________________________________________.

ACCURAL METHOD: Interest will be calculated on a _Actual/360______________________ basis.

POST MATURITY RATE: I agree to pay interest on the unpaid balance of this note owing after maturity, and until paid in full, as stated below:

o on the same fixed or variable rate basis in effect before maturity (as indicated above).

x at a rate equal to _4% in excess of the interest rate stated above that applied before maturity________________________________________________.

x LATE CHARGE: If a payment is made more than _15_____ days after it is due, I agree to pay a late charge of __5% of the payment_____________________.

x ADDITIONAL CHARGES: In addition to interest, I agree to pay the following charges which    o are    x are not included in the principal amount

above: _Loan, recording, attorney, release, flood determinations and title ins premium_______________________________________________________.

PAYMENTS: I agree to pay this note as follows:

x Interest: I agree to pay accrued interest __24 Monthly Payment(s) varying from $37,333.33 to $41,333.34 beginning 04-04-2013__________________________

________________________________________________________________________________________________________________________

o Principal: I agree to pay the principal _____________________________________________________________________________________________

_________________________________________________________________________________________________________________________

x Installments: I agree to pay this note in ___36_____ payments.  The first payment will be in the amount of $ _78,608.77_______________________________

and will be due __04/04/2015__________________________________.  A payment of $ _78,608.77_________ will be due _________________________

__Monthly_________________________________________________________________________ thereafter.  The final payment of the entire

unpaid balance of principal and interest will be due __03/04/2018__________________________________________________.

o Unpaid Interest: Any accrued interest not paid when due (whether due by reason of a schedule of payments or due because of Lender's demand)

will become part of the principal thereafter, and will bear interest at the interest rate in effect from time to time as provided for in this agreement.

PURPOSE: The purpose of this loan is _Refinance commercial real estate____________________________________________________________________.

ADDITIONAL TERMS:

    This loan has a demand feature, however, if no demand is made, the loan is payable according to the terms specified under "Payments" above.

    The bank has the right to engage a re-appraisal of the property securing this loan from time to time at borrower's expense.

SECURITY

SECURITY INTEREST: I give you a security interest in all of the Property described below that I own or have sufficient rights in which to transfer an interest, now or in the future, whichever the Property is or will be located, and all proceeds and products of the Property.  "Property" includes all parts, accessories, repairs, replacements, improvements, and accessions to the Property; any original evidence of title or ownership; and all obligations that support the payment or performance of the Property.  "Proceeds" includes anything acquired upon the sale, lease, license, exchange, or other disposition of the Property; any rights and claims arising from the Property; and any collections and distributions on account of the Property.

o Accounts and Other Rights to Payment: All rights to payment, whether or not earned by performance, including, but not limited to, payment for property or services sold, leased, rented, licensed, or assigned. This includes any rights and interests (including all liens) which I have by law or agreement against any account debtor or obligor.

o Inventory: All inventory held for ultimate sale or lease, or which has been or will be supplied under contracts of service, or which are raw materials, work in process, or materials used or consumed in my business.

o Equipment: All equipment including, but not limited to, machinery, vehicles, furniture, fixtures, manufacturing equipment, farm machinery and equipment, shop equipment, office and record keeping equipment, parts, and tools.  The Property includes any equipment described in a list or schedule I give to you, but such a list is not necessary to create a valid security interest in all of my equipment.

o Instruments and Chattel Paper: All instruments, including negotiable instruments and promissory notes and any other writings or records that evidence the right to payment of a monetary obligation, and tangible and electronic chattel paper.

o General Intangibles: All general intangibles including, but not limited to, tax refunds, patents and applications for patents, copyrights, trademarks, trade secrets, goodwill, trade names, customer lists, permits and franchises, payment intangibles, computer programs and all supporting information provided in connection with a transaction relating to computer programs, and the right to use my name.

o Documents: All documents of title including, but not limited to, bills of lading, dock warrants and receipts, and warehouse receipts.

o Farm Products and Supplies: All farm products including, but not limited to, all poultry and livestock and their young, along with their produce, products, and replacements; all crops, annual or perennial, and all products of the crops; and all feed, seed, fertilizer, medicines, and other supplies used or produced in my farming operations.

o Government Payments and Programs: All payments, accounts, general intangibles, and benefits including, but not limited to, payments in kind, deficiency payments, letters of entitlement, warehouse receipts, storage payments, emergency assistance and diversion payments, production flexibility contracts, and conservation reserve payments under any preexisting, current, or future federal or state government program.

o Investment Property: All investment property including, but not limited to, certificated securities, uncertificated securities, securities entitlements, securities accounts, commodity contracts, commodity accounts, and financial assets.

o Deposit Accounts: All deposit accounts including, but not limited to, demand, time, savings, passbook, and similar accounts.

x Specific Property Description: The Property includes, but is not limited by, the following:

Deed of Trust, Absolute Assignment of Rents, Security Agreement and Financing Statements

Dated 03/04/2013 – Buildings and Real Estate known as 303 W Wall Street,

310 W Wall Street & 306 W Wall Street, Midland, Texas 79701

If this agreement covers timber to be cut, enter real estate description and record owner information: ______________________________________

__________________________________________________________________________________________________________________________

__________________________________________________________________________________________________________________________

__________________________________________________________________________________________________________________________

The Property will be used for a    o personal  x business  o agricultural  o ____________________________________________________ purpose.

Borrower/Owner State of organization/registration (if applicable) ____________________________________________________________________

ADDITIONAL TERMS OF THE SECURITY AGREEMENT

GENERALLY – This agreement secures this note and any other debt I have with you, now or later.  However, it will not secure other debts if you fail with respect to such other debts, to make any required disclosure about this security agreement or if you fail to give any required notice of the right of rescission.  If property described in this agreement is located in another state, this agreement may also, in some circumstances, be governed by the law of the state in which the Property is located.

NAME AND LOCATION – My name indicated on page 1 is my exact legal name.  If I am an individual, my address is my principal residence.  If I am not an individual, may address is the location of my chief executive offices or sole place of business.  If I am in entity organized and registered under state law, my address is located in the state in which I am registered, unless otherwise indicated on page 2.  I will provide verification of registration and location upon your request.  I will provide you with at least 30 days notice prior to any change in my name, address, or state of organization or registration.

OWNERSHIP AND DUTIES TOWARD PROPERTY – I represent that I own all of the Property, or to the extent this is a purchase money security interest I will acquire ownership of the Property with the proceeds of the loan.  I will defend it against any other claim.  Your claim to the Property is ahead of the claims of any other creditor.  I agree to do whatever you require to protect your security interest and to keep your claim in the Property ahead of the claims of other creditors.  I will not do anything to harm your position.  I will not use the Property for a purpose that will violate any laws or subject the Property to forfeiture or seizure.

I will keep books, records and accounts about the Property and my business in general.  I will let you examine these records at any reasonable time.  I will prepare any report or accounting you request, which deals with the Property.

I will keep the Property in my possession and will keep it in good repair and use it only for the purpose(s) described on page 1 of this agreement.  I will not change this specified use without your express written permission.  I represent that I am the original owner of the Property and, if I am not, that I have provided you with a list of prior owners of the Property.

I will keep the Property at my address listed on page 1 of this agreement, unless we agree I may keep it at another location.  If the Property is to be used in another state, I will give you a list of those states.  I will not try to sell the Property unless it is inventory or I receive your written permission to do so. If I sell the Property I will have the payment made payable to the order of you and me.

You may demand immediate payment of the debts(s) if the debtor is not a natural person and without your prior written consent; (1) a beneficial interest in the debtor is sold or transferred, or (2) there is a change in either the identity or number of members of a partnership, or (3) there is a change in ownership of more than 25 percent of the voting stock of a corporation.

I will pay all taxes and charges on the Property as they become due.  You have the right of reasonable access in order to inspect the property.  I will immediately inform you of any loss or damage to the Property.

If I fail to perform any of my duties under this security agreement, or any mortgage, deed of trust, lien or other security interest, you may without notice to me perform the duties or cause them to be performed.  Your right to perform for me shall not create an obligation to perform and your failure to perform will not preclude you from exercising any of your other rights under the law or this security agreement.

PURCHASE MONEY SECURITY INTEREST – For the sole purpose of determining the extent of a purchase money security interest arising under this security agreement: (a) payments on any nonpurchase money loan also secured by this agreement will not be deemed to apply to the Purchase Money Loan, and (b) payments on the Purchase Money Loan will be deemed to apply first to the nonpurchase money portion of the loan, if any, and then to the purchase money obligations in the order in which the items of collateral were acquired or if acquired at the same time, in the order selected by you.  No security interest will be terminated by application of this formula.  "Purchase Money Loan" means any loan the proceeds of which, in whole or in part, are used to acquire any collateral securing the loan and all extensions, renewals, consolidations and refinancing of such loan.

PAYMENTS BY LENDER – You are authorized to pay, on my behalf, charges I am or may become obligated to pay to preserve or protect the secured property (such as property insurance premiums).  You may treat those payments as advances and add them to the unpaid principal under the note secured by this agreement or you may demand immediate payment of the amount advanced.

INSURANCE – I agree to buy insurance on the Property against the risks and for the amounts you require and to furnish you continuing proof of coverage.  I will have the insurance company name you as loss payee on any such policy.  You may require added security if you agree that insurance proceeds may be used to repair or replace the Property.  I will buy insurance from a firm licensed to do business in the state where you are located.  The firm will be reasonably acceptable to you.  The insurance will last until the Property is released from this agreement.  If I fail to buy or maintain the insurance (or fail to name you as loss payee) you may purchase it yourself.

WARRANTIES AND REPRESENTATIONS – If this agreement includes accounts, I will not settle any account for less than its full value without your written permission.  I will collect all accounts until you tell me otherwise.  I will keep the proceeds from all the accounts and any goods which are returned to me or which I take back in trust for you.  I will not mix them with any other property of mine.  I will deliver them to you at your request.  If you ask me to pay you the full price on any returned items or items retaken by myself, I will do so.  You may exercise my rights with respect to obligations of any account debtors, or other persons obligated on the Property, to pay or perform, and you may enforce any security interest that secures such obligations.

If this agreement covers inventory, I will not dispose of it except in my ordinary course of business at the fair market value for the Property, or at a minimum price established between you and me.

  

Any person who signs within this box does so to give you a security interest in the Property described on this page.  This person does not promise to pay the note.  "I" as used in this security agreement will include the borrower and any person who signs within this box.

Date ________________________

Signed ____________________________________________________

 

If this agreement covers farm products I will provide you, at your request, a written list of the buyers, commission merchants or selling agent to or through whom I may sell my farm products.  In addition to those parties named on this written list, I authorize you to notify at your sole discretion any additional parties regarding your security interest in my farm products.  I remain subject to all applicable penalties for selling my farm products in violation of my agreement with you and the Food Security Act.  In this paragraph the terms farm products, buyers, commission merchants and selling agents have the meanings given to them in the Federal Food Security Act of 1985.

If this agreement covers chattel paper or instruments, either as original collateral or proceeds of the Property, I will note your interest on the fact of the chattel paper or instruments.

REMEDIES – I will be in default on this security agreement if I am in default on any note this agreement secures or if I fail to keep any promise contained in the terms of this agreement.  If I default, you have all of the rights and remedies provided in the note and under the Uniform Commercial Code.  You may require me to make the secured property available to you at a place which is reasonably convenient.  You may take possession of the secured property and sell it as provided by law.  The proceeds will be applied first to your expenses and then to the debt.  I agree that 10 days written notice sent to my last known address by first class mail will be reasonable notice under the Uniform Commercial Code.  My current address is on page 1.

PERFECTION OF SECURITY INTEREST – I authorize you to file a financing statement covering the Property.  I will comply with, facilitate, and otherwise assist you in connection with obtaining possession of or control over the Property for purposes of perfecting your security interest under the Uniform Commercial Code.

ADDITIONAL TERMS OF THE NOTE

DEFINITIONS – As used on pages 1 and 2, "x" means the terms that apply to this loan.  "I," "me" or "my" means each Borrower who signs this note and each other person or legal entity (including guarantors, endorsers, and sureties) who agrees to pay this note (together referred to as "us").  "You" or "your" means the Lender and its successors and assigns.

APPLICABLE LAW – The law of the state of Tennessee will govern this agreement.  Any term of this agreement which is contrary to applicable law will not be effective, unless the law permits you and me to agree to such a variation.  If any provision of this agreement cannot be enforced according to its terms, this fact will not affect the enforceability of the remainder of this agreement.  No modification of this agreement may be made without your express written consent.  Time is of the essence in this agreement.

PAYMENTS – Each payment I make on this note will first reduce the amount I owe you for charges which are neither interest nor principal.  The remainder of each payment will then reduce accrued unpaid interest, and then unpaid principal.  If you and I agree to a different application of payments, we will describe our agreement on this note.  I may prepay a part of, or the entire balance of this loan without penalty, unless we specify to the contrary on this note.  Any partial prepayment will not excuse or reduce any later scheduled payment until this note is paid in full (unless, when I make the prepayment, you and I agree in writing to the contrary).

INTEREST – Interest accrues on the principal remaining unpaid from time to time, until paid in full.  If I receive the principal in more than one advance, each advance will start to earn interest only when I receive the advance.  The interest rate in effect on this note as any given time will apply to the entire principal sum outstanding at that time.  You and I may provide in this agreement for accrued interest not paid when due to be added to principal.  Notwithstanding anything to the contrary, I do not agree to pay and you do not intend to charge any rate of interest that is higher than the maximum rate of interest you could charge under applicable law for the extension of credit that is agreed to in this note (either before or after maturity).  If any notice of interest accrual is sent and is in error, we mutually agree to correct it, and if you actually collect more interest than allowed by law and this agreement, you agree to refund it to me.

INDEX RATE – The index will serve only as a device for setting the interest rate on this note.  You do not guarantee by selecting this index, or the margin, that the interest rate on this note will be the same rate you charge on any other loans or class of loans you make to me or other borrowers.

POST MATURITY RATE – For purposes of deciding when the "Post Maturity Rate" (shown on page 1) applies, the term "maturity" means the date of the last scheduled payment indicated on page 1 of this note or the date you accelerate payment on the note, whichever is earlier.

SINGLE ADVANCE LOANS – If this is a single advance loan, you and I expect that you will make only one advance of principal.  However, you may add other amounts to the principal if you make any payments described in the "PAYMENTS BY LENDER" paragraph on page 2, or if we have agreed that accrued interest not paid when due may be added to principal.

MULTIPLE ADVANCE LOANS – If this is a multiple advance loan, you and I expect that you will make more than one advance of principal.  If this is closed end credit, repaying a part of the principal will not entitle me to additional credit.

SET-OFF – I agree that you may set off any amount due and payable under this note against any right I have to receive money from you.

"Right to receive money from you" means:

	
(1)

	
any deposit account balance I have with you;

	
(2)

	
any money owed to me on an item presented to you or in your possession for collection or exchange; and

	
(3)

	
any repurchase agreement of other nondeposit obligation.

"Any amount due and payable under this note" means the total amount of which you are entitled to demand payment under the terms of this note at the time you set off.  This total includes any balance the due date for which you properly accelerate under this note.

If my right to receive money from you is also owned by someone who has not agreed to pay this note, your right of set-off will apply to my interest in the obligation and to any other amounts I could withdraw on my sole request or endorsement.  Your right of set-off does not apply to an account or other obligation where my rights are only as a representative.  It also does not apply to any Individual Retirement Account or other tax-deferred retirement account.

You will not be liable for the dishonor of any check when the dishonor occurs because you set off this debt against any of my accounts.  I agree to hold you harmless from any such claims arising as a result of your exercise of your right to set-off.

DEFAULT – I will be in default if any one or more of the following occur:  (1) I fail to make a payment on time or in the amount due; (2) I fail to keep the Property insured, if required; (3) I fail to pay, or keep any promise, on any debt or agreement I have with you; (4) any other creditor of mine attempt to collect any debt I owe him through court proceedings; (5) I die, am declared incompetent, make an assignment for the benefit of creditors, or become insolvent (either because my liabilities exceed my assets or I am unable to pay my debts as they become due); (6) I make any written statement or provide any financial information that is untrue or inaccurate at the time it was provided; (7) I do or fail to do something which causes you to believe you will have difficulty collecting the amount I owe you; (8) any collateral securing this note is used in a manner or for a purpose which threatens confiscation by a legal authority; (9) I change my name or assume an additional name without first notifying you before making such a change; (10) I fail to plant, cultivate and harvest crops in due season if I am a producer of crops; (11) any loan proceeds are used for a purpose that will contribute to excessive erosion of highly erodible land or to the conversion of wetlands to produce an agricultural commodity, as further explained in 7 C.F.R. Part 1940, Subpart G, Exhibit M.

REMEDIES – If I am in default on this note you have, but are not limited to, the following remedies:

	
(1)

	
You may demand immediate payment of  all I owe you under this note (principal, accrued unpaid interest and other accrued unpaid charges).

	
(2)

	
You may set off this debt against any right I have to the payment of money from you, subject to the terms of the "SET-OFF" paragraph herein.

	
(3)

	
You may demand security, additional security, or additional parties to be obligated to pay this note as a condition for not using any other remedy.

	
(4)

	
You may refuse to make advances to me or allow purchases on credit by me.

	
(5)

	
You may use any remedy you have under state or federal law.

	
(6)

	
You may make use of any remedy given to you in any agreement securing this note.

By selecting any one or more of these remedies you do not give up your right to use later any other remedy.  By waiving your right to declare an event to be a default, you do not waive your right to consider later the event a default if it continues or happens again.

COLLECTION COSTS AND ATTORNEY'S FEES – I agree to pay all costs of collection, replevin or any other or similar type of cost if I am in default.  In addition, if you hire an attorney to collect this note, I also agree to pay any fee you incur with such attorney plus court costs (except where prohibited by law).  To the extent permitted by the United States Bankruptcy Code, I also agree to pay the reasonable attorney's fees and costs you incur to collect this debt as awarded by any court exercising jurisdiction under the Bankruptcy Code.

WAIVER – I give up my rights to require you to do certain things.  I will not require you to:

	
(1)

	
demand payment of amounts due (presentment);

	
(2)

	
obtain official certification of nonpayment (protest); or

	
(3)

	
give notice that amounts due have not been paid (notice of dishonor).

I waive any defenses I have based on suretyship or impairment of collateral.

OBLIGATIONS INDEPENDENT – I understand that I must pay this note even if someone else has also agreed to pay it (by, for example, signing this form or a separate guarantee or endorsement).  You may sue me alone, or anyone else who is obligated on this note, or any number of us together, to collect this note.  You may without notice release any party to this agreement without releasing any other party.  If you give up any of your rights, with or without notice, it will not affect my duty to pay this note.  Any extension of new credit to any of us, or renewal of this note by all or less than all of us will not release me from my duty to pay it.  (Of course, you are entitled to only one payment in full.)  I agree that you may at your option extend this note or the debt represented by this note, or any portion of the note or debt, from time to time without limit or notice and for any term without affecting my liability for payment of the note.  I will not assign my obligation under this agreement without your prior written approval.

FINANCIAL INFORMATION – I agree to provide you, upon request, any financial statement or information you may deem necessary.  I warrant that the financial statements and information I provide to you are or will be accurate, correct and complete.

 

  

	
SIGNATURES: I AGREE TO THE TERMS OF THIS AGREEMENT (INCLUDING THOSE ON PAGES 1 AND 2).  I have received a copy on today's date.

 

 

 

	
HPG Acquisition, LLC

 

/s/ Jon M Morgan

	
 

	
TCTB Management Group, LLC

 

/s/ Jon M Morgan

	
By:  Jon M Morgan     Managing Member

 

 

	
 

	
By:  Jon M Morgan     Managing Member

 

 

	
 

 

SIGNATURE FOR LENDER:___________________________________________________________________________________

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