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3. Insurance. -9- 2014004 investment in Borrower or Guarantor, as applicable (whether directly or indirectly) is prohibited by law, or (B) the Loan is in violation of law; and none of the funds of Borrower or Guarantor, as applicable, have been derived from any unlawful activity with the result that (y) the investment in Borrower or Guarantor, as applicable (whether directly or indirectly) is prohibited by law, or (z) the Loan is in violation of law. (a) During the time that the Lease is in effect, Borrower shall cause the Mortgaged Property at all times during the entire term of this Security Instrument to be insured by either Borrower or Lessee for the mutual benefit of Borrower and Lender against loss or damage by fire and against loss or damage to the Improvements and Equipment by other risks and hazards covered by a standard causes of loss — special form (formerly known as "all risk" insurance policy (which policy shall not exclude earthquake coverage), as specified in the Lease, together with such other insurance as is required to be maintained by Borrower or Lessee under the Lease; provided, that Lessee may self - insure as and to the extent permitted under the Lease. In the event that the Lease is no longer in effect, the amount of such insurance shall be not less than one hundred percent (100 %) of the full replacement cost of the Improvements, furniture, furnishings, fixtures, equipment and other items (whether personalty or fixtures) included in the Mortgaged Property and owned by Borrower from time to time, without reduction for depreciation, but excluding footings and foundations and parts of the Mortgaged Property to the extent not insurable. The determination of the replacement cost amount shall be adjusted annually to comply with the requirements of the insurer issuing such coverage or, at Lender's election, by reference to such indices, appraisals or information as Lender determines in its reasonable discretion. Full replacement cost, as used herein, means, with respect to the Improvements, the cost of replacing the Improvements without regard to deduction for depreciation, exclusive of the cost of excavations, foundations and footings below the lowest basement floor, and means, with respect to such furniture, furnishings, fixtures, equipment and other items which are part of the Mortgaged Property, the cost of replacing the same, in each case, with inflation guard coverage to reflect the effect of inflation. Each such policy or policies, if so required, shall contain a replacement cost endorsement and either an agreed amount endorsement (to avoid the operation of any co- insurance provisions) or a waiver of any co- insurance provisions, all subject to Lender's reasonable approval. The premiums (the "Insurance Premiums ") for the policies of insurance carried in accordance with this paragraph (the "Policies ") shall be paid annually in advance if paid by Borrower or, if paid by Lessee pursuant to the Lease, at such other times required of Lessee under the Lease. (b) Unless such insurance is being provided by Lessee under the Lease, Borrower, at its sole cost and expense, for the mutual benefit of Borrower and Lender, shall also obtain and maintain during the entire term of this Security Instrument the following Policies: (i) Flood insurance if any part of the Improvements included within the Mortgaged Property are located in an area identified by the Federal Emergency Management Agency as Flood Zone A in an amount equal to at least the then full replacement value of such Improvements.