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What is Loan Modification Agreement?
Loan Modification Agreement A Loan Modification Agreement amends the terms of an existing loan, specifying modifications to interest rates, repayment schedules, and loan conditions.
Sample template:
LOAN MODIFICATION AGREEMENT
This Loan Modification Agreement (the "Agreement") is entered into this ____ day of __________, 20____ (the "Effective Date"), by and between Pinnacle Financial Services, a [state] corporation ("Lender"), having its principal place of business at [address], and Summit Industries LLC, a [state] limited liability company ("Borrower"), having its principal place of business at [address].
1. RECITALS
1.1. Prior Loan Agreement
On or about the ___ day of __________, 20____, Borrower and Lender entered into a Loan Agreement (the "Prior Loan Agreement"), pursuant to which Lender agreed to make a loan of $________ (the "Original Loan") to Borrower, subject to the terms and conditions set forth therein.
1.2. Default
Borrower has notified Lender of a default or potential default in the payment of the Original Loan and has requested that the Prior Loan Agreement be modified in order to avoid or cure the default or potential default, as applicable, and Lender has agreed to modify the Prior Loan Agreement subject to the terms and conditions set forth in this Agreement.
2. DEFINITIONS
2.1. Definitions
In addition to the terms defined elsewhere in this Agreement, capitalized terms used herein shall have the meanings given to such terms in the Prior Loan Agreement, as amended by this Agreement or, if not defined therein, as set forth below.
3. MODIFICATION OF PRIOR LOAN AGREEMENT
3.1. Modification of Original Loan Terms
Subject to the terms and conditions of this Agreement, the Prior Loan Agreement is hereby amended and modified as follows:
a. The outstanding principal balance of the Original Loan is amended to be $________ (the "Amended Principal").
b. The interest rate on the Original Loan is hereby modified from ________% per annum to ________% per annum (the "Amended Interest Rate").
c. The repayment schedule of the Original Loan is hereby modified from ____________________ to ____________________ (the "Amended Repayment Schedule").
d. Any other applicable terms or conditions of the Prior Loan Agreement are amended as follows: ________________________________________________________________.
3.2. Integrated Agreement
The Prior Loan Agreement, as modified by this Agreement, together with any exhibits, schedules, or other attachments, contain the entire understanding of the parties concerning the Original Loan, and supersede all prior negotiations, agreements, commitments, and writings on the subject. To the extent of any conflict between the terms of this Agreement and the terms of the Prior Loan Agreement, the terms of this Agreement shall govern and control.
4. CONTINUING VALIDITY
4.1. Ratification of Prior Loan Agreement
Except to the extent specifically modified hereby, the terms and conditions of the Prior Loan Agreement, any documents executed in connection therewith, and any liens or other security interests granted to Lender in connection therewith, shall remain in full force and effect and are hereby ratified and confirmed by Borrower.
4.2. No Waiver of Default
Nothing contained in this Agreement shall be deemed to be a waiver by Lender of any default or potential default by Borrower under the Prior Loan Agreement, as modified hereby, except to the extent expressly provided otherwise in writing by Lender.
5. REPRESENTATIONS AND WARRANTIES
5.1. Capacity and Authority
Borrower represents and warrants to Lender that:
a. Borrower has the authority and capacity to enter into this Agreement and to perform all of its obligations hereunder.
b. The execution, delivery, and performance of this Agreement by Borrower have been duly authorized by all necessary action on the part of Borrower, and no further consent or authorization is required.
c. The execution, delivery, and performance of this Agreement by Borrower will not violate or breach any law, regulation, contract, or other legal obligation binding on Borrower.
6. CONDITIONS PRECEDENT TO MODIFICATION
6.1. Execution and Delivery of Documents
This Agreement shall be effective, and the modifications set forth herein shall become binding upon Lender and Borrower, as of the date hereof, upon execution and delivery of this Agreement by each of the parties to the other.
6.2. Other Conditions
Borrower shall have satisfied any other conditions set forth in this Agreement or reasonably required by Lender in connection herewith.
7. MISCELLANEOUS
7.1. Governing Law
This Agreement shall be governed by, and construed in accordance with, the laws of the United States of America and the laws of the State of [state], without regard to principles of conflict of laws that would require the application of the laws of any other jurisdiction.
7.2. Amendment; Waiver
No amendment or waiver of any term, provision, or condition of this Agreement or the Prior Loan Agreement shall be effective unless in writing and signed by the party against whom enforcement is sought.
7.3. Counterparts
This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Loan Modification Agreement to be executed as of the Effective Date.
Pinnacle Financial Services Summit Industries LLC
By: ________________________ By: ________________________
Name: ______________________ Name: ______________________
Title: _____________________ Title: ______________________
Sections of a Loan Modification Agreement
In this Loan Modification Agreement, you will see the following sections:
- Recitals
- Definitions
- Modification of Prior Loan Agreement
- Continuing Validity
- Representations and Warranties
- Conditions Precedent to Modification
- Miscellaneous
Going indepth - Analysis of each section:
- Recitals : This section provides the background information about the original loan agreement and the reason for the modification. It's like the introduction to a story, setting the stage for the rest of the agreement.
- Definitions : This section clarifies the meanings of specific terms used in the agreement. Think of it as a dictionary for the agreement, helping to ensure everyone is on the same page when it comes to understanding the language used.
- Modification of Prior Loan Agreement : This section outlines the specific changes being made to the original loan agreement, such as changes to the principal balance, interest rate, and repayment schedule. It's like a list of updates to the original agreement, making it clear what's different.
- Continuing Validity : This section confirms that the original loan agreement, except for the modifications, remains in full force and effect. It's like saying, "Everything else in the original agreement still applies, except for the changes we just made."
- Representations and Warranties : This section contains statements made by the borrower to assure the lender that they have the authority and capacity to enter into the modification agreement. It's like the borrower saying, "I promise I'm allowed to make these changes and I can fulfill my obligations."
- Conditions Precedent to Modification : This section outlines the conditions that must be met before the modifications take effect, such as signing and delivering the agreement. It's like a checklist of things that need to be done before the changes are officially in place.
- Miscellaneous : This section covers various additional terms, such as the governing law, amendment process, and how the agreement can be executed. It's like a catch-all for any other important details that don't fit neatly into the other sections.
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