Opinion ID: 535587
Heading Depth: 2
Heading Rank: 1

Heading: The Arrangements for the Loan

Text: 3 Towers and Cadillac entered into a loan commitment agreement reflected in a January 11, 1988 letter signed by both parties (Commitment Letter or Loan Commitment), pursuant to which Cadillac was to grant Towers a $1.4 million loan on which Hoffenberg, Towers's president, would be guarantor. The Commitment Letter provided, in part, (1) that [n]ot less than thirty (30) days before the closing date, Towers would provide Cadillac with, inter alia, (a) [a]n appraisal report (the appraisal) prepared at the request of [Cadillac] for [Cadillac's] use, by a duly qualified marine appraiser, and satisfactory to [Cadillac]; (b) an inspection report regarding the vessel's seaworthiness and general condition (the survey); (c) financial statements for Towers and any guarantors of the loan; and (d) such other documents and information as Cadillac might reasonably request; (2) that Towers would provide proof of its corporate existence, including a certified copy of its certificate of incorporation and bylaws, and an opinion letter from its counsel confirming, inter alia, that Towers would be legally bound by the various documents evidencing the loan when they were properly executed; and (3) that Towers was to pay Cadillac a 2% loan commitment fee, i.e., $28,000, of which $5,000 was payable upon Towers's acceptance of the Commitment Letter and $23,000 was payable at the loan closing. The Commitment Letter provided that the loan commitment would expire if the closing did not occur on or before March 15, 1988, and that [w]hether or not the Loan is closed, all expenses of [Cadillac] in connection with the Loan, including ... the fees of [Cadillac's] attorneys, shall be paid by [Towers]. 4 In February 1988, Towers and Cadillac entered into an additional agreement (Escrow Agreement), pursuant to which Cadillac paid $1.4 million into an escrow account to be maintained by Towers's attorneys at a commercial bank. This agreement, which was set forth on the letterhead of Towers's attorneys, annexed and incorporated the Commitment Letter. In the Escrow Agreement, Cadillac agree[d] that at such time as Towers satisfie[d] all of the terms and conditions of the Loan Commitment, Cadillac would instruct the escrow agent to release the escrowed funds to Towers; if Cadillac gave no such instructions on or before May 31, 1988, the escrow agent was required to return the funds, with all earned interest, to Cadillac. These provisions adjourned the loan closing deadline to May 31, 1988. 5 The Escrow Agreement also provided that any waivers or modifications of the parties' obligations were to be in writing: 6 9. Except as otherwise specifically provided for hereunder, no party to this Escrow Agreement shall be deemed to have waived any of its rights hereunder or under any other agreement, instrument or paper signed by any of them with respect to the subject matter hereof, unless such waiver is in writing and signed by the party waiving said right. Except as otherwise specifically provided for hereunder, no delay or omission by any party to this Escrow Agreement in exercising any right with respect to the subject matter hereof shall operate as a waiver of such right or of any such other right.... 7 .... 8 12. This Escrow Agreement may not be changed, modified, extended, terminated, or discharged orally, but only by an agreement in writing, signed by all of the parties to this Escrow Agreement. 9 On March 30, 1988, Cadillac authorized the escrow agent to advance to Towers $225,000 of the funds held in escrow. In exchange, Towers executed a promissory note (the Note) for that amount plus interest, and it agreed to pay Cadillac the remaining $23,000 of the loan commitment fee, originally due at the closing, immediately. The Note provided that if the loan closing did not occur on or before May 31, this Note, including all accrued interest and principal evidenced hereby, shall be immediately due and payable in full on May 31, 1988. The Note also provided that 10 [u]pon default in the payment of all or any portion of the principal and/or interest when due hereunder, [Towers] agrees to pay all costs of collection, including reasonable attorneys' fees, court costs, costs of appeal, and other costs incurred by [Cadillac] under such circumstances, in case the principal of the Note or any interest thereon is not paid at the Due Date hereunder, whether or not suit is commenced for such purpose. 11 By a Guaranty also dated March 30, 1988, Hoffenberg personally guaranteed Towers's performance of the terms and conditions of the Note, and he 12 agree[d] to indemnify [Cadillac] and hold it harmless from and against any and all reasonable losses, expenses and damages, including court costs, attorney's fees and disbursements, incurred by [Cadillac] in connection with the enforcement of its rights under this Guaranty, or as a result of the assertion of any and all claims for the return of moneys paid under the Note ....