_______________________________
_______________________________
_______________________________
Re: __________________________________________________________________
Dear ____________________:
Borrower [*defined in the Reference Line*] is indebted to Lender with respect to the above referenced loans (together, the “Loans”) evidenced, secured and governed by various documents (the “Loan Documents”) including, but not limited to, the above referenced _____________________ and ___________________ (the “Loan Agreements”). The Loans were made to finance ____________________________________________. The Loans are guaranteed by __________________ and ______________________ (together, the “Guarantors”) and are secured by certain deeds of trust filed against the real property comprising the Project [*defined in Reference line above*] (the “Land”) and certain other real and personal property specified in the Loan Documents [*defined in the Reference line above*] (together with the Land, the “Collateral”).
[*Include some or all of the following as appropriate*] The Borrower is in default under the Loan Documents. The Borrower has requested that the Lender consider waiving certain of its rights under the Loan Documents and or forebearing from the exercise of its remedies under same and that Lender enter into negotiations regarding possible modifications to the Loan Documents. Lender has agreed to enter into discussions, provided that the Borrower and Guarantors execute this letter. The Borrower has requested funding from the Loans (the “Requested Advance”), notwithstanding the fact that, under the terms of the Loan Documents, the Borrower has no ability to draw additional funds. The Borrower has informed Lender that absent a funding, contractors entitled to payment for work completed on the Land will file liens against the Land. Lender has agreed to fund the Requested Advance, provided the Borrower and the Guarantors execute this letter.
DUE DILIGENCE INVESTIGATION
Over the course of the next several weeks, Lender will be undertaking a due diligence investigation of the Borrower, its operations, its assets, its financial condition and the Project. Lender’s agreement to make the Requested Advance is conditioned upon (i) Lender obtaining the full cooperation of the Borrower, its officers and employees and the Guarantors in this due diligence undertaking and (ii) Lender determining that the financial condition of the Borrower and the Project do not differ materially from that which has previously been represented to it.
DISCUSSIONS
Lender is willing to have discussions (the “Discussions”), with Borrower and the Guarantors concerning the Loans, the Loan Documents and the Collateral. The Borrower and Guarantors, or Lender may terminate the Discussions at any time for any reason or no reason whatsoever without obligation or liability to any other party. Upon such termination of the Discussions, the respective obligations of the Borrower, Guarantors and Lender to one another shall be only as set forth in the Loan Documents and in accordance with law.
EXPRESSION OF INTENT
No party to this letter will be bound by, and no liabilities will arise from, any statement, oral agreement, draft document, letter or anything else prepared or communicated as part of the Discussions, except for a fully signed and delivered final written agreement between the Borrower, the Guarantors and Lender. Because the Discussions may not result in such a signed and delivered final agreement, neither party should rely upon any such statements, oral agreements, draft documents, letters or other items made or prepared during the Discussions by passing up other attractive and permissible alternatives, or by assuming that the defaults, if any, under the Loan Documents have been waived. Lender has not waived the defaults, if any, existing under the Loan Documents.
NO WAIVER
Lender’s funding of the Requested Advance (to the extent such funding is made), Lender’s past or future failure or delay to exercise any of its remedies at law or under the Loan Documents, and/or Lender’s past or future acceptance of any payments (in whole or in part) with respect to the Loans, do not and shall not (i) waive any existing Potential Defaults or Events of Default (as defined in the Loan Agreements) under any Loan Documents, or (ii) modify, delay, waive, impair, or otherwise limit or prejudice Lender’s rights or remedies (including, but not limited to, its right to receive full payment of interest and principal as well as late charges, delinquent interest, attorneys’ fees and expenses, and other charges to the extent provided in the Loan Documents), except as specifically provided in a final written agreement fully signed and delivered by Lender, Borrower and Guarantors. Provided further, Lender’s funding of the Requested Advance (to the extent such funding is made) or of any other advances in the future if a Potential Default or an Event of Default exists shall not operate as a waiver of any existing or future l Defaults or Events of Default or a waiver of any rights or remedies Lender has or may have under the Loan Agreement or any other Loan Documents or under applicable law. Likewise, the Discussions (whether before or after the date of this letter) and this letter shall not expand Borrower’s and Guarantor’s duties, obligations, and liabilities under the Loan Documents nor shall they limit or prejudice Lender’s rights and remedies under the Loan Documents and or applicable law.
CONFIDENTIALITY; INADMISSIBILITY
The Discussions and all documents prepared in connection therewith shall be confidential and, except for this letter and any final written agreement fully signed and delivered by Lender, Borrower and Guarantors, may not be introduced in any litigation or other proceeding involving Lender, on the one hand, and Borrower and Guarantors on the other hand.
NO DEFENSES
Borrower and Guarantors acknowledge that there is no available credit under the Loan and the Loan Agreement to fund the Requested Advance. Thus, funding of the Requested Advance is not permitted under the Loan Documents and that, such funding results in Borrower’s non-compliance with the terms of the Loan Documents. Therefore, Borrower and Guarantors acknowledge that upon funding of the Requested Advance, they are not and will not be in compliance with certain provisions of the Loan Documents. [*Consider inclusion*] Borrower and Guarantors further agree and stipulate that neither Borrower nor Guarantors have any defenses, affirmative defenses, rights to offset, or counterclaims against exercise of any of the default or other remedies of Lender under the Loan Documents, including but not limited to enforcement of the Note, foreclosure against the Land or other Collateral and/or direct action against the Guarantors, with or without foreclosure.
WAIVERS AND RELEASES BY BORROWER AND GUARANTORS
[*Consider inclusion*] Borrower and Guarantors hereby waive any claims which Borrower or Guarantors may have as of the date hereof against Lender, or any of its officers, directors, agents, employees, attorneys, and other affiliates (collectively, the “Released Parties”) for fraud, misrepresentation, lender misconduct, lender liability, breach of alleged fiduciary duty, usury, breach of funding commitment, undue influence, duress, economic coercion, bad faith, tortious interference with contractual relations, tortious interference with corporate governance or prospective business advantage, breach of contract, deceptive trade practices, libel, slander or conspiracy, or other tort or wrongdoing. Borrower and Guarantors further hereby release and forever discharge the Released Parties of and from any and all claims, causes of action, rights of offset, and rights to damages which either Borrower or Guarantors have or may have ,or may be entitled to assert, against the Released Parties for any reason whatsoever, whether known or unknown, whether liquidated or contingent, and whether existing or arising by reason of any event or action or by reason of any documents executed prior to the date of this letter.
RESERVATION OF RIGHTS
Lender’s funding of the Requested Advance (to the extent such funding is made) shall not constitute an agreement or commitment to make advances under the Loans in the future if any Default or Event of Default continues to exist. Except as expressly stated in this letter, Lender reserves all of the rights, powers and remedies presently available to it under the Loan Documents and applicable law, including the right to refuse to make any other disbursements, the right to accelerate payment of the Loans, or either of them, and the right to foreclose on the collateral pledged to secure the Loans.
GENERAL PROVISIONS
Except as expressly modified, the Loan Documents shall be otherwise unchanged and shall remain in full force and effect. The Borrower and the Guarantors, by their acceptance of the terms of this letter, ratify and reaffirm all of their obligations thereunder.
Not in limitation of any of the foregoing, should any Default or Event of Default other than those existing as of the date of this letter occur after the date hereof and before the funding of the Requested Advance, Lender reserves the right to refuse to make the Requested Advance on the basis of any such future Default or Event of Default.
The terms and provisions of this letter shall automatically terminate on [date], unless Lender has received a copy of this letter accepted by the Borrower and the Guarantors.
If the foregoing accurately sets forth our understanding, please so indicate by signing the enclosed copy of this letter in the place provided below and returning it to the undersigned.
Sincerely,
Lender:
__________________________________________________a
_________________________________________________
By:
Name:
Title:
and
__________________________________________________a
________________________________________________
By:
Name:
Title:
ACCEPTED AND AGREED AS OF THE ABOVE DATE:
Borrower:
_______________________________________________
a
______________________________________________
By:
(a
____________________________________________
Its General Partner
By:
Its:
(title)
Guarantors:
By:
Name:
Title: