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insurance policies then in force shall pass to the purchaser at the foreclosure sale. <br /> Mortgagee agrees that the insurance required by this Mortgage may be provided <br /> by a tenant of the Mortgaged Property or an affiliate of Mortgagor. <br /> (b) The policies of all such insurance shall have mortgagee and loss <br /> payable provisions in favor of Mortgagee and Franklin Bank. All such insurance <br /> shall be in form acceptable to Mortgagee, shall provide for at least 30 days' prior <br /> written notice of cancellation, termination or modification thereof to Mortgagee, <br /> shall permit Mortgagee to make premium payments to prevent cancellation, and <br /> shall provide that no act or negligence of Mortgagor or of any occupant of the <br /> Mortgaged Property, and no occupancy or use of the Mortgaged Property for <br /> purposes more hazardous than permitted by the terms of the policy, will affect the <br /> validity or enforceability of such insurance as against Mortgagee. In the event of <br /> loss under such insurance Mortgagor shall give prompt notice to the insurance <br /> 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 /> (c) Mortgagee is authorized and empowered to settle, collect and <br /> receive all fire and hazard insurance proceeds, to apply such proceeds to all <br /> expenses (including reasonable attorneys' fees) reasonably incurred by Mortgagee <br /> in collecting the same and, at Mortgagee's option and in its sole discretion, apply <br /> the balance of said proceeds ("Net Proceeds") to payment of the Indebtedness or <br /> make the Net Proceeds available for the repair and restoration of the Mortgaged <br /> Property; provided, however, Mortgagor may settle claims without Mortgagee's <br /> consent if the loss is less than $5,000.00 and no Event of Default exists at the time <br /> of settlement. Mortgagor shall apply any such proceeds to the repair and <br /> restoration of the Mortgaged Property. So long as no Event of Default exists, any <br /> settlement of a fire and hazard insurance claim of more than $5,000.00 shall <br /> require the consent of Mortgagor, which consent will not be unreasonably <br /> withheld. <br /> (d) If Mortgagee elects to apply the Net Proceeds to repair and <br /> restoration of the Mortgaged Property (i) the Net Proceeds shall be held by <br /> Mortgagee and at Mortgagee's election may be disbursed either by Mortgagee or a <br /> disbursing agent selected by Mortgagee and paid by Mortgagor, (ii) upon <br /> Mortgagee's request prior to disbursement of any Net Proceeds or thereafter, from <br /> time to time, Mortgagor will deposit with Mortgagee such amounts in excess of <br /> remaining Net Proceeds as Mortgagee reasonably determines is required to <br /> complete the repair and restoration, (iii)the Net Proceeds and any funds deposited <br /> by Mortgagor shall be held and disbursed in accordance with sound construction <br /> loan disbursement practices, including, but not limited to, approval of the plans <br /> and specifications, appraisal, other conditions for disbursement of draw requests <br /> and inspection of the work, and such other reasonable conditions as Mortgagee <br /> may impose and (iv) any Net Proceeds not so applied to repair and restoration <br /> shall be applied to the payment of the Indebtedness. If an Event of Default occurs <br /> prior to full disbursement, any undisbursed portion of the Net Proceeds and any <br /> 385595v3 JSB ELI 85-12 <br /> -6- <br />