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					                           Loan workouts—Sample modification agreement.

                                     Sample Modification Agreement

Recording Requested by and When Recorded Mail To

_________

_________

_________, California _________

Attention: _________, Esq.

Modification of Note, Deed of Trust and Other Loan Documents

[NOTICE TO BORROWER: THE DEED OF TRUST REFERRED TO BELOW SECURES PAYMENT
OF A SHARED APPRECIATION LOAN WITHIN THE MEANING OF CALIFORNIA CIVIL CODE
§1917 ET SEQ.]

   This Modification of Note, Deed of Trust and Other Loan Documents (this "Agreement") is executed as
of [Date] _________ between _________, a _________ ("Lender") and _________, a
_________("Borrower"), with reference to the following facts:

       A. Borrower executed that certain Promissory Note dated _________, in the original principal
   amount of $_____(the "Note"), payable to Lender. The Note is secured by, among other documents, (i)
   a Deed of Trust and Security Agreement with Assignment of Rents and Fixture Filing [Dated
   _________] (the "Deed of Trust"), executed by Borrower, as Trustor, to _________, a _________, as
   Trustee, for the benefit of Lender, as Beneficiary, which Deed of Trust was recorded on [Date]
   _________, as Instrument No. _________ of the Official Records of _________ County, California (the
   "Official Records") and (ii) an Assignment of Leases [Dated _________] (the "Assignment of Leases")
   executed by Borrower, as assignor, to Lender, as assignee, which Assignment of Leases was recorded
   on [Date] _________ as Instrument No. _________ of the Official Records. The Deed of Trust
   encumbers a fee [leasehold] estate in certain real property located in _________ County, California,
   more particularly described therein, together with certain other personal property and other property as
   set forth therein (collectively, the "Property").

       B. The Note, the Deed of Trust, the Assignment of Leases, the [Unsecured] Indemnity Agreement
   (the "Indemnity Agreement") executed by Borrower and _________ in favor of Lender dated
   _________, and the other Loan Documents (as such term is defined in the Deed of Trust), are referred
   to in this Agreement as the "Loan Documents."

       C. The parties here now wish to amend and modify the Loan Documents in certain respects.

In consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency
of which is acknowledged here, the parties agree as follows:

    1. Outstanding Balance. As of [Date] _________, the outstanding principal balance on the Note is
$_____. Borrower acknowledges that it has no existing and asserted (and no basis for any unasserted)
claims, counterclaims, defenses, or rights of setoff whatsoever with respect to any payment obligations
under the Note or any other obligations under any of the Loan Documents, and any such claims,
counterclaims, defenses, and rights of setoff are hereby waived and relinquished.
   2. Representations of Borrower.

      (a). Title to the Property. Borrower hereby represents and warrants that (i) Borrower lawfully
   possesses and holds fee simple [leasehold] title to all of the Property which is real property, and the
   Deed of Trust is a first and prior lien on that property; (ii) Borrower owns all of the Property which is
   personal property free and clear of any security agreements, reservations of title and conditional sales
   contracts; and (iii) there is no financing statement affecting any such personal property on file in any
   public office other than financing statements in favor of Lender.

       (b). Environmental Matters. Borrower hereby acknowledges that Lender has made a written request
   to Borrower for information concerning the environmental condition of the Property, including, without
   limitation, (i) the presence, alleged presence, or threatened presence, and (ii) the release, alleged release,
   or threatened release, of Hazardous Materials (as such term is defined in the Indemnity Agreement) on,
   under, in, from, or about the Property. Borrower hereby represents, warrants, and certifies to Lender
   that neither Borrower nor any agent, affiliate, cotenant, partner, or joint venturer of Borrower has actual
   knowledge or notice of the presence, alleged presence, threatened presence, release, alleged release, or
   threatened release of Hazardous Materials on, under, in, from, or about the Property, except as has been
   disclosed to Lender in writing. As used here, the term "release" has the meaning assigned to such term
   in California Code of Civil Procedure §§ 726.5 and 736, as such Sections may be amended from time to
   time.

   3. Modification of Loan Documents. The Loan Documents are modified as follows:

       (a). The Note is modified as follows:

       (b). The Deed of Trust is modified as follows:

       (c). The Assignment of Leases is modified as follows:

       (d). The Indemnity Agreement is modified as follows:

[Consider including the following sections 4, 5 and 6 for loans made before 1992.]

    4. Additional Rights of Lender. Lender shall have the following rights in addition to its other rights set
forth in the Deed of Trust and in the other Loan Documents, and Lender may, without notice to or demand
upon Borrower, without releasing Borrower from any obligation under any of the Loan Documents and in
addition to and without waiving its other rights under the Deed of Trust and the other Loan Documents, do
the following:

       (a). Waiver of Security. In accordance with California Code of Civil Procedure §726.5, as that
   Section may be amended from time to time, Lender may waive the security of the Deed of Trust and the
   other Loan Documents for any parcel of Property that is real property that is "environmentally
   impaired" or is an "affected parcel" (as those terms are defined in that Section), and as to any Property
   which is personal property attached to such parcel, and thereafter exercise against Borrower, to the
   extent permitted by such Section 726.5, the rights and remedies of an unsecured creditor, including
   reduction of Lender's claim against Borrower to judgment, and any other rights and remedies permitted
   by law. Borrower waives the provisions of Section 726.5(c), as that Section may be amended from time
   to time, and acknowledges and agrees that this waiver was signed by Borrower for good and valuable
   consideration, as Borrower's informed and voluntary act, after the occurrence of a default under the
   Loan Documents. Borrower shall pay all expenses, costs, and other amounts incurred by Lender in
   connection with any proceeding under California Code of Civil Procedure Section 726.5.
           (i). Borrower and Lender acknowledge that pursuant to California Code of Civil Procedure
       §726.5, Lender's rights under that Section are limited to instances in which Borrower or any
       affiliate, agent, cotenant, partner, or joint venturer of Borrower either (A) caused, contributed to,
       permitted, or acquiesced in the release (as defined in that Section 726.5) or threatened release of
       toxic or hazardous waste or waste products, or (B) had actual knowledge or notice of such release or
       threatened release before the execution and delivery of this Agreement and failed to disclose such
       release or threatened release to Lender in writing after Lender's written request for information
       concerning the environmental condition of the Property, unless Lender otherwise obtained actual
       knowledge of such release or threatened release before the execution and delivery of this
       Agreement.

       (b). Environmental Claims. In accordance with California Code of Civil Procedure §736, as that
   Section may be amended from time to time, Lender may bring an action for breach of contract against
   Borrower for breach of any "environmental provision" (as that term is defined in that Section 736) made
   by Borrower here, in the Indemnity Agreement, or any other Loan Document, for the recovery of
   damages (including attorneys' fees and costs) and/or for the enforcement of the environmental provision
   (including without limitation to recover all costs and expenses incurred by Lender in connection with
   any Remedial Work (as that term is defined in the Indemnity Agreement and in the Deed of Trust))
   without foreclosing the Deed of Trust judicially or nonjudicially or accepting a deed or assignment in
   lieu of foreclosure. Borrower agrees to pay to Lender, upon Lender's demand, all expenses, costs, and
   other amounts incurred by Lender in connection with any such action under that Section 736.

       (c). Environmental Inspections. Lender shall have all rights of a lender under California Code of
   Civil Procedure Section 2929.5, as that Section may be amended from time to time. Borrower agrees to
   cooperate with Lender to facilitate those inspections. Borrower agrees to pay to Lender, upon Lender's
   demand, all expenses, costs, or other amounts incurred by Lender in performing any inspection and/or
   testing for the purposes set forth in that Section 2929.5.

      (d). Right to Appointment of a Receiver. Lender shall have all rights of a lender under California
   Code of Civil Procedure §564, as that Section may be amended from time to time. Borrower agrees to
   pay to Lender, upon Lender's demand, all expenses, costs, and other amounts incurred by Lender in
   connection with any appointment of a receiver under that Section 564.

   5. Personal Obligations of Borrower. Lender shall have the rights specified in Section 4 of this
Agreement notwithstanding any limitations on the liability of Borrower contained here or in any other Loan
Documents, including without limitation Section [_________] of the Deed of Trust, Section [_________]
of the Note, or Section [_________] of the Assignment of Leases. In particular, without limiting the
generality of the foregoing, Lender may, to the extent permitted under California Code of Civil Procedure
§726.5, as that Section may be amended from time to time, exercise against Borrower the rights and
remedies of an unsecured creditor, in which case Borrower promises to pay to Lender, on demand by
Lender following such exercise, all amounts owed to Lender under any Loan Document, and Borrower
agrees that it will be personally liable for the payment of all such sums.

    6. Indemnity Agreement and Environmental Provisions. Before the reconveyance of the lien of the
Deed of Trust, or the extinguishment of the lien by foreclosure or action in lieu thereof, the Indemnity
Agreement shall be secured by the Deed of Trust, and the Deed of Trust is hereby modified to secure the
Indemnity Agreement; provided that the Indemnity Agreement shall survive such reconveyance or
extinguishment and thereafter be unsecured. Notwithstanding the foregoing or any provisions in the
Indemnity Agreement, the Deed of Trust or the other Loan Documents restricting the right to bring certain
claims with respect to environmental provisions until after the Deed of Trust has been reconveyed or
extinguished by foreclosure or action in lieu thereof, pursuant to California Code of Civil Procedure §736,
as that Section may be amended from time to time, before such reconveyance or extinguishment Lender
may enforce the Indemnity Agreement or any "environmental provision" (as that term is defined in that
Section 736) of the Deed of Trust or the other Loan Documents without foreclosing the Deed of Trust
judicially or nonjudicially or accepting a deed or assignment in lieu of foreclosure. Notwithstanding any
provision in any Loan Document to the contrary, the Indemnity Agreement shall be a Loan Document for
all purposes under the Note, the Deed of Trust, the Assignment of Leases, and each of the other Loan
Documents.

   7. Conforming Modifications. Each of the Note, the Deed of Trust, and the other Loan Documents is
hereby modified to provide that all references there to the "Note," the "Deed of Trust" or any other "Loan
Document" shall be deemed to refer to the Note, the Deed of Trust, and any such other Loan Document as
amended here. The Deed of Trust is modified to provide that the Deed of Trust secures the Note, as
amended here, in addition to and not in limitation of all other indebtedness and obligations stated in the
Deed of Trust to be secured. It is the intention of the parties that this Agreement shall be deemed to form a
part of the Note and a part of the Deed of Trust and shall always be construed as amending the Note and the
Deed of Trust; except as specifically supplemented and amended here, the Note and the Deed of Trust shall
each remain unaffected and unchanged by reason of this Agreement in that the Deed of Trust as amended
shall remain one deed of trust with one power of sale.

   8. Release of Claims.

       (a). Release of All Claims. Borrower, on behalf of itself, its general partners, its affiliates and its and
   their successors and assigns (collectively, the "Releasing Parties"), releases and forever discharges
   Lender and all of its subsidiaries, affiliates, divisions, officers, directors, employees, agents, attorneys,
   advisors, successors, and assigns (collectively, the "Releasing Parties") from any and all claims,
   demands, debts, liabilities, contracts, obligations, accounts, torts, causes of action, or claims for relief of
   whatever kind or nature, whether known or unknown, whether suspected or unsuspected, that the
   Releasing Parties may have or which may hereafter be asserted or accrue against Released Parties, or
   any of them, resulting from or in any way relating to any act or omission done or committed by
   Released Parties, or any of them, before the date here.

       (b). Release Includes Unknown Claims. The releases contained in paragraph (a) above and in this
   paragraph (b) apply to all claims that the Releasing Parties have or which may arise against the
   Released Parties, or any of them, as a result of acts or omissions occurring before the date here, whether
   or not known or suspected by the parties. Borrower expressly acknowledges that although it may be that
   ordinarily a general release does not extend to claims which the releasing party does not know or
   suspect to exist in his or her favor, which if known by him or her must have materially affected his or
   her settlement with the party released, it has carefully considered and taken into account in determining
   to enter into this Agreement the possible existence of such unknown losses or claims.

           (i). Without limiting the generality of the foregoing, Borrower expressly waives any and all
       rights conferred upon it by any statute or rule of law which provides that a release does not extend to
       claims which the claimant does not know or suspect to exist in his or her favor at the time of
       executing the release, which if known by him or her must have materially affected his or her
       settlement with the released party, including, without limitation, the following provision of
       California Code of Civil Procedure §1542:

       "A general release does not extend to claims which the creditor does not know or suspect to exist in
   his [or her] favor at the time of executing the release, which if known by him [or her] must have
   materially affected his [or her] settlement with the debtor."

       (c). Complete Defense. This release by Releasing Parties shall constitute a complete defense to any
   claim, cause of action, defense, contract, liability, indebtedness, or obligation released pursuant to this
   release. Nothing in this release shall be construed as (or shall be admissible in any legal action or
   proceeding as) an admission by Lender or any other Released Party that any defense, indebtedness,
   obligation, liability, claim, or cause of action exists which is within the scope of those released here.

    9. No Rights Conferred on Others. Nothing contained in this Agreement or the Loan Documents shall
be construed as giving any person, other than the parties here, any right, remedy, or claim under or in
respect of this Agreement or the Loan Documents except for the rights granted to the Released Parties in
Section 8 here.

    10. Confirmation of Obligations. Except to the extent modified by this Agreement, Borrower confirms
each of the covenants, agreements, and obligations of Borrower set forth in the Loan Documents. Borrower
acknowledges and agrees that, if and to the extent that Lender has not previously required strict compliance
with the performance by Borrower of those covenants, agreements, and obligations, such action or inaction
shall not constitute a waiver of, or otherwise affect in any manner, Lender's rights and remedies under the
Loan Documents, as amended here, including the right to require performance of those covenants,
agreements, and obligations strictly in accordance with the terms and provisions there. Lender reserves all
rights which it has against any guarantor or endorser of the Note.

   11. Waiver of Certain Rights. In consideration of Lender's agreements here, to the fullest extent
permitted by law, Borrower expressly waives and agrees not to assert Cal Civ Proc Code §§580a, 580b,
580d, or 726, or all of them, as each may be amended and modified from time to time, as a defense to its
obligations under the Note and the other Loan Documents.

    12. Non-Impairment. Except as expressly provided in this Agreement, nothing contained in this
Agreement shall (a) alter or affect any provision, condition, or covenant contained in the Note, the Deed of
Trust, or the other Loan Documents or affect or impair any rights, powers, or remedies under it, it being the
intent here that the provisions of the Note, the Deed of Trust, and the other Loan Documents shall continue
in full force and effect except as expressly modified here, or (b) be deemed or construed to be an
impairment of the lien of the Deed of Trust, and the lien of the Deed of Trust shall remain a first lien
encumbering the property covered by the Deed of Trust.

   13. Counterparts. This Agreement may be executed in any number of counterparts, each of which when
executed and delivered to Lender will be deemed to be an original, and all of which, taken together, will be
deemed to be one and the same instrument.

    14. Prior Agreements. The Loan Documents, including this Agreement (a) integrate all the terms and
conditions mentioned in or incidental to the Loan Documents; (b) supersede all oral negotiations and prior
and other writings with respect to the subject matter thereof; and (c) are intended by the parties as the final
expression of the agreement with respect to the terms and conditions set forth in the Loan Documents and
as the complete and exclusive statement of the terms agreed to by the parties. If there is any conflict
between the terms, conditions, and provisions of this Agreement and those of any of the Loan Documents,
the terms, conditions, and provisions of this Agreement shall prevail.

   15. Legend. Lender may place an appropriate legend on the Note indicating the existence of this
Agreement.

    16. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of
the State of California. If any court of competent jurisdiction determines any provision of this Agreement
or any of the Loan Documents to be invalid, illegal, or unenforceable, that portion shall be deemed severed
from the rest, which shall remain in full force and effect as though the invalid, illegal, or unenforceable
portion had never been a part hereof or of the Loan Documents.

   In witness, the parties have executed this Agreement as of the date first set forth above.
  _________,

a _________,

By _________

 a _________

By _________

Its _________

  _________,

a _________,

By _________

 a _________

By _________

By _________

				
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