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�- disbursement practices, including, but not limited to, approval of the plans <br /> and specifications, appraisal, its other conditions for disbursement of draw <br /> requests and inspection of the work, and such other reasonable conditions <br /> as Mortgagee may impose and (iv) any Net Proceeds not so applied to <br /> repair and restoration shall be applied to the payment of the Indebtedness. <br /> If an Event of Default occurs prior to full disbursement, any undisbursed <br /> portion of the Net Proceeds and any funds deposited by Mortgagor with <br /> Mortgagee may at Mortgagee's option be applied to the Indebtedness. <br /> 1.7 Inpection. 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 <br /> Mortgaged Property or any part thereof. Mortgagee shall have no duty, however, to <br /> make such inspection. Mortgagee,or its agents, shall also have the right during ordinary <br /> business hours to examine the books and records of Mortgagor pertaining to the <br /> Mortgaged Property and to make extracts therefrom and copies thereof. The parties agree <br /> that Mortgagee's right to inspect the books and records of Mortgagor,as described in this <br /> provision,relates solely to the Mortgaged Property. <br /> 1.8 Protection of Mortgagee's Security. If Mortgagor fails to perform any of <br /> the covenants and agreements contained in this Mortgage and such failure shall continue <br /> beyond any applicable notice and cure period contained in Article Two hereof or if any <br /> action or proceeding is commenced which does or may adversely affect the Mortgaged <br /> Property or the interest of Mortgagor or Mortgagee therein, or the title of Mortgagor <br /> thereto, then Mortgagee, at Mortgagee's option, may perform such covenants and <br /> agreements, defend against such action or proceeding, or otherwise act as Mortgagee <br /> deems necessary to protect its interest. In the event that,after damage to or destruction of <br /> the Mortgaged Property or condemnation of a portion of the Mortgaged Property or a sale <br /> under threat thereof, the proceeds are used to restore the Mortgaged Property, and the <br /> insurance, sale or condemnation proceeds which are paid to Mortgagee are not sufficient <br /> to pay for such restoration, Mortgagee may nevertheless effect the restoration. Any <br /> amounts disbursed or costs incurred by Mortgagee pursuant to this Section, including <br /> interest and reasonable attorney's fees, shall become additional Indebtedness of <br /> Mortgagor secured by this Mortgage. All amounts disbursed or costs incurred by <br /> Mortgagee pursuant to this paragraph shall be payable upon demand, and shall bear <br /> interest from the date of disbursement or incurrence at the rate set forth in the Note unless <br /> payment of interest at such rate would be contrary to law, in which event such amounts <br /> shall bear interest at the highest rate permitted by law. Mortgagee shall, at its option, be <br /> subrogated to any encumbrance,lien,claim or demand,and to all the rights and securities <br /> for the payment thereof, paid or discharged with the principal sum secured hereby or by <br /> Mortgagee under the provisions hereof, and any such subrogation rights shall be <br /> additional and cumulative security for this Mortgage. Nothing contained in this Section <br /> shall require Mortgagee to incur any expense or do any act hereunder, and Mortgagee <br /> shall not be liable to Mortgagor for any damages or claims arising out of action taken by <br /> Mortgagee pursuant to this paragraph. <br /> 1.9 Lisuardous Materials. Mortgagor hereby represents and warrants to <br /> Mortgagee that the Mortgaged Property has not at any time been used for storage, <br /> -7- <br />