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DEED OF TRUST Loan No: 777746 200306779 (Continued) Page no. Application of Proceeds. Truster shall promptly notify Lender of any loss or damage to the Property. Lender may make proof of loss if Truster fails to do so within fifteen (15) days of the casualty. Whether or not Lender's security is impaired, Lender may, at Lender's election, receive and retain the proceeds of any insurance and apply the proceeds to the reduction of the Indebtedness, payment of any lien affecting the Property, or the restoration and repair of the Property. If Lender elects to apply the proceeds to restoration and repair, Truster shall repair or replace the damaged or destroyed Improvements in a manner satisfactory to Lender. Lender shall, upon satisfactory proof of such expenditure, pay or reimburse Truster from the proceeds for the reasonable cost of repair or restoration if Truster Is not in default under this Deed of Trust. Any proceeds which have not been disbursed within 180 days after their receipt and which Lender has not committed to the repair or restoration of the Property shall be used first to pay any amount owing to Lander under this Deed of Trust, then to pay accrued interest, and the remainder, if any, shall be applied to the principal balance of the Indebtedness. If Lender holds any proceeds after payment in full of the Indebtedness, such proceeds shall be paid to Truster as Truster's interests may appear. Compliance with Existing Indebtedness. During the period In which any Existing Indebtedness described below is in effect, compliance with the insurance provisions contained in the instrument evidencing such Existing Indebtedness shall constitute compliance with the insurance provisions under this Deed of Trust to the extant compliance with the terms of this Deed of Trust would constitute a duplication of insurance requirement. If any proceeds from the insurance become payable on loss, the provisions in this Deed of Trost for division of proceeds shall apply only to that portion of the proceeds not payable to the holder of the Existing Indebtedness. LENDER'S EXPENDITURES. If Truster fails (A) to keep the Property free of all taxes, liens, security interests, encumbrances, and other claims, (B) to provide any required insurance on the Property, ICI to make repairs to the Property or to comply with any obligation to maintain Existing Indebtedness in good standing as required below, then Lender may do so. If any action or proceeding is commenced that would materially affect Lender's interests in the Property, then Lender on Truster's behalf may, but is not required to, take any action that Lender believes to be appropriate to protect Lender's interests. All expenses incurred or paid by Lender for such purposes will than bear Interest at the rate charged under the Note from the date incurred or paid by Lender to the date of repayment by Truster. All such expenses will become a part of the Indebtedness and, at Lender's option, will (A) be payable on demand; 161 be added to the balance of the Note and be apportioned among and be payable with any installment payments to become due during either (1) the term of any applicable insurance policy; or 12) the remaining term of the Note: or IC) be treated as a balloon payment which will be due and payable at the Note's maturity. The Deed of Trust also will secure payment of these amounts. The rights provided for in this paragraph shall be in addition to any other rights or any remedies to which Lender may be entitled on account of any default. Any such action by Lender shell not be construed as curing the default so as to bar Lender from any remedy that it otherwise would have had. WARRANTY; DEFENSE OF TITLE. The following provisions relating to ownership of the Property are a part of this Deed of Trust: Title. Truster warrants that (a) Truster holds goad and marketable title of record to the Property in fee simple, free and clear of all liens and encumbrances ether than those set forth in the Real Property description or in the Existing Indebtedness section below or in any title insurance policy, title report, or final title opinion issued In favor of, and accepted by, Lender in connection with this Deed of Trust, and (b) Truster has the full right, power, and authority to execute and deliver this Deed of Trust to Lender. Defense qt Title. Subject to the exception in the paragraph above, Truster warrants and will forever defend the title to the Property against the lawful claims of all persons. In the event any action or proceeding is commenced that questions Truster's title or the Interest of Trustee or Lender under this Deed of Trust, Truster shall defend the action at Truster 'a expense. Truster may be the nominal party in such proceeding, but Lender shall be entitled to participate in the proceeding and to be represented in the proceeding by counsel of Lender 'a own choice. and Truster will deliver, or cause to be delivered, to Lander such instruments as Lender may request from time to time to permit such participation. Compliance With Laws. Truster warrants that the Property and Truster's use of the Property complies with all existing applicable laws, ordinances, and regulations of governmental authorities. Survival of Promises. All promises, agreements, and statements Truster has made in this Deed of Trust shall survive the execution and delivery of this Deed of Trust, shall be continuing in nature and shall remain in full force and effect until such time as Trusters Indebtedness is paid in full. EXISTING INDEBTEDNESS. The following provisions concerning Existing Indebtedness are a part of this Deed of Trust: Existing Lien. The lien of this Dead of Trust securing the Indebtedness may be secondary and inferior to an existing lien. Truster expressly covenants and agrees to pay, or see to the payment of, the Existing Indebtedness and to prevent any default on such indebtedness,, any default under the Instruments evidencing such indebtedness, or any default under any security documents for such indebtedness. No Modification. Truster shall not enter into any agreement with the holder of any mortgage, deed of trust, or other security agreement which has priority over this Deed of Trust by which that agreement is modified, amended, extended, or renewed without the prior written consent of Lender. Truster shell neither request nor accept any future advances under any such security agreement without the prior written consent of Lender. CONDEMNATION. The following provisions relating to condemnation proceedings are a part of this Dead of Trust: Proceedings. If any proceeding in condemnation Ia filed, Truster shall promptly notify Lender in writing, and Truster shall promptly take such steps as may be necessary to defend the action and obtain the award. Truster may be the nominal party in such proceeding, but Lender shall be entitled to participate in the proceeding and to be represented in the proceeding by counsel of its own choice, and Truster will deliver or cause to be delivered to Lender such instruments and documentation as may be requested by Lender from time to time to permit such participation. Application of Net Proceeds. If all or any part of the Property is condemned by eminent domain proceedings or by any proceeding or purchase in lieu of condemnation. Lender may at its election require that all or any Portion of the net procseds of the award be applied to the Indebtedness or the repair or restoration of the Property. The net proceeds of the award shall mean the award after payment of all reasonable costs, expenses, and attorneys' fees incurred by Trustee or Lender in connection with the condemnation.