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PART 4. LOAN SECURITY AND GUARANTY <br /> 4.1 Secured Collateral. Collateral securing all advances made on all loan accommodations <br /> described in this Agreement shall be as follows: <br /> a. Third Mortgage. The Borrower grants Lender a Third priority mortgage on the <br /> Property. The legal description of the Property is: <br /> THAT PRT OF LOTS 4 &5 AUD SUB NO 96 DESC AS FOL: COM AT MEAN COR ON W LINE OF SEC 35 SO <br /> COR BEING 620.5 FT S OF W1/4 COR OF SD SEC(SD W LINE TO BE CONSIDERED TO BE A TRUE <br /> MERIDAN),TH S 55 DEG 12MIN E 375.4 FT,TH S 68 DEG 17 MIN E 106 FT,TH N PRLL/W W LINE OF SD <br /> SEC 560.6 FT TO POB,TH CONT N ON SD PRLL LINE 169.4 FT,TH N 24 DEG 21 MIN E 105.6 FT TO S LINE <br /> OF ST HWY NO 10, TH NWLY ALG SD S LINE TO A PT 394 FT SELY OF INTER OF SD S LINE WITH W LINE <br /> OF SD SEC AS MEAS ALG SD S LINE (SD PT BEING HEREAFTER REFERRED TO AS PT A),TH SWLY AT AN <br /> ANG OF 60 DEG 20 MIN FROM A LINE DRAWN PRLL/W NLINE OF GOVT LOT I &PASSING THROUGH PT A <br /> 123 FT+/-TO A PT 308.5 FT E OF W LINE OF SO SEC(AS MEAS PRLL/W N LINE OF SO GOVT LOT),TH S <br /> PRLL/W SD W LINE TO INTER/W A LINE DRAWN W AT RT ANG TO SD PRLL LINE FROM POB,TH E TO POB <br /> EK RDS, SUBJ TO EASE OF REC <br /> b. The Collateral. The Property and the Third Mortgage proceeds are hereinafter <br /> referred to collectively as (the "Collateral".) <br /> 4.2 Ownership and care of Collateral. Borrower and Guarantor covenant that this Agreement <br /> and any security agreement/mortgage taken in connection with this Agreement will vest in <br /> Lender a second priority security interest/mortgage upon the Collateral named, and that the <br /> Collateral is free from all liens, security interests and encumbrances except those listed on <br /> Exhibit B attached hereto and made a part hereof (the "Permitted Encumbrances"). <br /> Borrower warrants it has good marketable title to the Collateral subject to no security <br /> interest or lien except as described herein. <br /> 4.3 Documentation required to maintain valid lien. Borrower and Guarantors covenant that <br /> upon request of Lender they will execute such financing statements, security agreements, <br /> lien documents, and other perfection and security instrumentation as will ensure that Lender <br /> creates and maintains a valid and perfected second security interest/mortgage lien on the <br /> Collateral. <br /> 4.4 Flood and Hazard Insurance Coverag . During the term of the Loan, Borrower shall <br /> maintain the following insurance coverages: <br /> a. Flood Insurance. Based on the Standard Flood Hazard Determination (FEMA Form <br /> 81-93): If any portion of a building that is collateral for the Loan is located in a <br /> special flood hazard area, Borrower must obtain flood insurance for the building <br /> under the NFIP. Insurance coverage must contain a MORTGAGEE CLAUSE (or <br /> substantial equivalent) in favor of Lender and CMDC. This clause must provide that <br /> any action or failure to act by Borrower, the mortgagor or owner of the insured <br /> Property will not invalidate the interest of Lender and CMDC. The policy or <br /> endorsements must provide for at least 10 days prior written notice to Lender and <br /> CMDC of policy cancellation. <br /> b. Real Estate Hazard Insurance coverage on all real estate that is collateral for the <br /> Loan in the amount of the full replacement cost. If full replacement cost insurance in <br /> 4 <br />