It Is Ok To Be Noteless

In the days leading up to the closing of a credit facility, it is not uncommon for the administrative agent to ask each lender a simple question, "do you need a note?" For many lenders, the response is in the affirmative, but such an answer sometimes seems to be given out of instinct and without a thorough contemplation of the potential headaches that are being obtained. An understanding that the note may need to be amended, must be retained for future return to the borrowers, and may impose taxes that could change the direction of future responses. 

In most instances, the form of note is a minimally negotiated exhibit to the credit agreement that contains a few key elements - a recitation of the amount of the loans made, a reference to the credit agreement, the fact that the note requires the payment of principal, interest and fees, a waiver of demand or presentment for payment (if the lender's counsel is astute), and a signature by the borrower. A so-called grid