Deed - 2539 Grant Ave, - File D-1443, 43441

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1.3 SECURITY. As security for repayment of the Note, Borrower shall execute the Deed of Trust in favor of Lender as beneficiary pursuant to which Lender shall be provided a lien against Borrower's interest in the Property. The Deed of Trust shall be dated as of the Effective Date, shall be substantially in the form attached hereto as Exhibit C. and shall be recorded in the Official Records of Alameda County (`Official Records"). The Deed of Trust may be subordinated to only such liens and encumbrances as Lender shall approve in writing. Notwithstanding the foregoing. the Deed of Trust may be subordinated to a deed of trust or other security filing arising from the refinancing of any loan(s) secured by a deed of trust senior to the Deed of Trust, as long as the principal amount secured as a result of such refinanced loans does not exceed two million five hundred thousand dollars (S2,500,000). 1.4 PREPAYMENT; ACCELERATION. (a) Prepayment. Borrower may, without premium or penalty, at any time and from time to time, prepay all or any portion of the outstanding principal balance due on the Loan under this Agreement provided that each such payment is accompanied by accrued interest on the amount of principal prepaid calculated to the date of such payment. Prepayments shall be applied first to any unpaid late charges and other costs and fees then due, then to accrued but unpaid interest, and then to principal. (b) Due on Transfer. Unless Lender agrees otherwise in writing, the entire unpaid principal balance and all interest and other sums accrued on the Loan under this Agreement shall be due and payable upon the Transfer. absent the prior written consent of Lender, of all or any part or interest in the Property. "Transfer" shall include any assignment. sale, or other conveyance of the Property, but shall exclude encumbrances junior to the Deed of Trust and leases of the Property. ARTICLE II USE AND DISBURSEMENT OF PROCEEDS 2.1 USE OF PROCEEDS. The proceeds of the Loan ("Loan Proceeds") shall be used solely to repay Borrower the Litigation Costs. Borrower and Lender acknowledge and agree that the Lender has already paid; or will pay. the full amount of the Litigation Costs, and that no portion of the Loan Proceeds shall be disbursed to Borrower, and that Borrower will have no direct possession or control over the Loan Proceeds. 2.2 CONDITIONS PRECEDENT TO DISBURSEMENT OF PROCEEDS. Lender's obligation to fund the Loan is conditioned upon the satisfaction of all of the following conditions. - (a) Borrowers execution and delivery to Lender of this Agreement, the Note. and the Deed of Trust: 5