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200507333 B. Payment of all sums advanced by Beneficiary to protect the Trust Estate, with interest thereon at the rate of sixteen percent (16 %) per annum. The indebtedness described in paragraphs A and B above is referred to as the "Indebtedness." This Second Deed of Trust, any promissory note of Trustor in favor of Beneficiary and any other instrument given to evidence or further secure the payment and performance of any obligation secured hereby are referred to collectively as the "Loan Instruments." Trustor covenants that (i) Trustor holds title to the Trust Estate and has lawful authority to encumber the Trust Estate, (ii) the Trust Estate is free and clear of all liens and encumbrances except for easements, restrictions and covenants of record and the Deed of Trust from Trustor encumbering the Property dated on or about the date hereof (the "First Deed of Trust "), and (iii) Trustor will defend the Trust Estate against the lawful claims of any person. To Protect the Security of this Second Deed of Trust: 1. Payment of Indebtedness. Trustor shall pay when due the principal of, and the interest on, the Indebtedness and all other sums as provided in the Loan Instruments. 2. Taxes. Trustor shall pay each installment of all taxes and special assessments of every kind, now or hereafter levied against the Trust Estate or any part thereof, before delinquency, without notice or demand. 3. Insurance and Repairs. Trustor shall maintain fire and extended coverage insurance insuring the Improvements constituting part of the Trust Estate for such amounts and on such terms reasonably satisfactory to Beneficiary. So long as the Property is secured by a first deed of trust or mortgage, compliance with the insurance requirements of the first deed of trust or mortgage shall be sufficient to satisfy the requirements of this paragraph 3 relating to insurance. Trustor shall promptly repair and replace the Trust Estate or any part thereof so that, except for ordinary wear and tear, the Trust Estate shall not deteriorate. In no event shall the Trustor commit waste on or to the Trust Estate, or commit, suffer or permit any act to be done in or upon the Trust Estate in violation of any law, ordinance or regulation. Trustor shall pay and promptly discharge at Trustor's cost and expense all liens, encumbrances and charges levied, imposed or assessed against the Trust Estate or any part thereof. 4. Actions Affecting Trust Estate. Trustor shall appear in and contest any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee, and shall pay all costs and expenses, including cost of evidence of title and attorneys' fees, in any such action or proceeding in which Beneficiary or Trustee may appear. If Trustor fails to make any payment or to do any act as and in the manner provided in any of the Loan Instruments, Beneficiary and /or Trustee, each in their own discretion, without obligation so to do and without notice to or demand upon Trustor and without releasing Trustor from any obligation, may make or do the same in such manner and to such extent as either may deem necessary to protect the security hereof. Trustor shall, immediately upon demand therefor by Beneficiary, pay all costs and expenses incurred by Beneficiary in connection with the exercise by Beneficiary of the foregoing rights, including without limitation costs of evidence of title, court costs, appraisals, surveys and attorneys' fees. 5. Eminent Domain. If the Trust Estate, or any part thereof or interest therein, be taken or damaged by reason of any public improvement or condemnation proceeding, or in any other manner including deed in lieu thereof ( "Condemnation "), or if Trustor receives any notice or other information regarding such proceeding, Trustor shall give prompt written notice thereof to Beneficiary. Trustor shall be entitled to all compensation, awards and other payments or relief thereof and shall be entitled at its option to commence, appear in and prosecute in its own name any action or proceedings. Trustor shall also be entitled to make any compromise or settlement in connection with such taking or damage. 6. Appointment of Successor Trustee. Beneficiary may, from time to time, by a written instrument executed and acknowledged by Beneficiary, mailed to Trustor and recorded in the County in which the Trust Estate 3718.CV (2/04) 900131 Page 2 of NIFA 7/99 GOTO(000I 300)