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<br />insurance carrier and Mortgagee; Mortgagor shall duly make proof of loss, and shall <br />immediately furnish to Mortgagee a copy of such proof of loss. <br /> <br /> Subject to the rights of the mortgagee under the First Lien Mortgage <br />(c) <br />which has priority over this Mortgage, Mortgagee is authorized and empowered to settle, <br />collect and receive all fire and hazard insurance proceeds, to apply such proceeds to all <br />expenses (including reasonable attorneys’ fees) reasonably incurred by Mortgagee in <br />collecting the same and, at Mortgagee’s option and in its sole discretion, apply the <br />balance of said proceeds (“Net Proceeds”) to payment of the Obligations or make the Net <br />Proceeds available for the repair and restoration of the Mortgaged Property; provided, <br />however, Mortgagor may settle claims without Mortgagee’s consent if the loss is less <br />than $5,000.00 and no Event of Default exists at the time of settlement. Mortgagor shall <br />apply any such proceeds to the repair and restoration of the Mortgaged Property. So long <br />as no Event of Default exists, any settlement of a fire and hazard insurance claim of more <br />than $5,000.00 shall require the consent of Mortgagor, which consent will not be <br />unreasonably withheld. <br /> <br /> If Mortgagee elects to apply the Net Proceeds to repair and restoration of <br />(d) <br />the Mortgaged Property (i) the Net Proceeds shall be held by Mortgagee and at <br />Mortgagee’s election may be disbursed either by Mortgagee or a disbursing agent <br />selected by Mortgagee and paid by Mortgagor, (ii) upon Mortgagee’s request prior to <br />disbursement of any Net Proceeds or thereafter, from time to time, Mortgagor will <br />deposit with Mortgagee such amounts in excess of remaining Net Proceeds as Mortgagee <br />reasonably determines is required to complete the repair and restoration, (iii) the Net <br />Proceeds and any funds deposited by Mortgagor shall be held and disbursed in <br />accordance with sound construction loan disbursement practices, including, but not <br />limited to, approval of the plans and specifications, appraisal, its other conditions for <br />disbursement of draw requests and inspection of the work, and such other reasonable <br />conditions as Mortgagee may impose and (iv) any Net Proceeds not so applied to repair <br />and restoration shall be applied to the payment of the Obligations. If an Event of Default <br />occurs prior to full disbursement, any undisbursed portion of the Net Proceeds and any <br />funds deposited by Mortgagor with Mortgagee may at Mortgagee’s option be applied to <br />the Obligations. <br /> <br /> <br />1.7.Inspection. Mortgagee, or its agents, shall have the right to enter upon the <br />Mortgaged Property during ordinary business hours for the purposes of inspecting the Mortgaged <br />Property or any part thereof. Mortgagee shall have no duty, however, to make such inspection. <br />Mortgagee, or its agents, shall also have the right during ordinary business hours to examine the <br />books and records of Mortgagor pertaining to the Mortgaged Property and to make extracts <br />therefrom and copies thereof. The parties agree that Mortgagee’s right to inspect the books and <br />records of Mortgagor, as described in this provision, relates solely to the Mortgaged Property. <br /> <br /> <br />1.8.Protection of Mortgagee’s Security. If Mortgagor fails to perform any of the <br />covenants and agreements contained in this Mortgage and such failure shall continue beyond any <br />applicable notice and cure period contained in Article Two hereof or if any action or proceeding <br />is commenced which does or may adversely affect the Mortgaged Property or the interest of <br />6 <br />464431v2 EL185-33 <br />