Opinion ID: 3062188
Heading Depth: 3
Heading Rank: 1

Heading: The “loan” instruments

Text: The boilerplate “UNSECURED PROMISSORY NOTE” (the “Instrument”), which governed the majority of the transactions between Novus and its “lenders” (the “holders”), stated in relevant part that Novus “promise[d] to [re]pay” the principal amount (Novus required a minimum “loan” of $100,000) after a term of six months, plus monthly interest of between three and five percent, depending upon whether the holder chose monthly payments or a lump sum at maturity. Id. at 246. The Instrument also stated the following: It is expressly understood between the parties that the Borrower shall be using proceeds from the Note for further investments and it may not be financially prudent because of the market conditions to pay the principal at the end of the Note term. Therefore, Borrower shall have the option to extend the term of the Note for a period of 6 months as long as the monthly interest payments on the unpaid principal are made on a timely basis. 5 Id. (emphasis added). Finally, the Instrument stated on its face that it was not a security, and it bore features such as acceleration conditions, a waiver-of-presentment clause, a non-assignment clause, an attorney-fee-collection clause.4