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4. PROPERTY DAMAGE INSURANCE 4.1 Maintenance of Insurance. Mortgagor shall procure and maintain insurance coverage with respect to the Mortgagar's interest in the Property as required under the Agreement. 4.4 Application of Proceeds. Proceeds of any insurance shall be paid by the Mortgagor to the Mortgagee to the extent needed to prepay any Certificates pursuant to the Agreement in the event the Property is damaged or destroyed and the Mortgagor elects not to repair and restore the Property. 4.2 Association of Unit Owners. Pursuant to the submission of the Property to condominium ownership, the insurance required pursuant to this Section 4 may be carried by the association of unit owners on Mortgagor's behalf, and the proceeds of such insurance may be paid to the association of unit owners for the purpose of repairing or reconstructing the Property. If not so used by the association, such proceeds shall be paid to the Mortgagor to the extent needed to prepay any Certificates in accordance with the terms of the Agreement. 5. WARRANTIES OF MORTGAGOR 5.1 Title. Mortgagar warrants that it holds an undivided percent interest in the Property as a tenant in common, free of all encumbrances other than those set forth in the attached Exhibit B(the "Permitted Encumbrances"). 5.2 Defense of Title. Subject to the exceptions in the paragraph above, Mortgagor warrants and will forever defend its undivided interest in the Property against the lawful claims of all persons. In the event any action or proceeding is commenced that questions Mortgagor's undivided interest in the Property or the interest of Mortgagee under this Mortgage, Mortgagor shall defend the action at its expense. 6. CONDEMNATION 6.1 A~plication of Net Proceeds. The Net Proceeds (as defined in the Agreement) resulting from any condemnation of the Property or any portion thereof shall be paid by the Mortgagor to the Mortgagee to the extent needed to prepay any Certificates pursuant to the Agreement as a result of such condemnation. 6.2 Proceedin~s. If any proceedings in condemnation are filed, Mortgagor shall promptly take such steps as may be necessary to defend the action and obtain the award. 7. TRANSFER BY MORTGAGOR MORTGAGE PAGE 4