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thirty (30) days' prior written notice of cancellation, termination or <br /> modification thereof to Mortgagee, shall permit Mortgagee to make <br /> premium payments to prevent cancellation, and shall provide that no act or <br /> negligence of Mortgagor or of any occupant-of the Mortgaged Property, <br /> and no occupancy or use of the Mortgaged Property for purposes more <br /> hazardous than permitted by the terms of the policy, will affect the validity <br /> or enforceability of such insurance as against Mortgagee. In the event of <br /> loss under such insurance Mortgagor shall give prompt notice to the <br /> insurance carrier and Mortgagee; Mortgagor shall duly make proof of loss, <br /> and shall immediately furnish to Mortgagee a copy of such proof of loss. <br /> (c) Subject to the rights of the vendor under the Contract for <br /> Deed, Mortgagee is authorized and empowered to settle, collect and <br /> receive all fire and hazard insurance proceeds, to apply such proceeds to <br /> all expenses (including reasonable attorneys' fees) reasonably incurred by <br /> Mortgagee in collecting the same and, at Mortgagee's option and in its <br /> sole discretion, apply the balance of said proceeds ("Net Proceeds") to <br /> payment of the Obligations or make the Net Proceeds available for the <br /> repair and restoration of the Mortgaged Property; provided, however, <br /> Mortgagor may settle claims without Mortgagee's consent if the loss is <br /> less than $5,000.00 and no Event of Default exists at the time of <br /> settlement. Mortgagor shall apply any such proceeds to the repair and <br /> restoration of the Mortgaged Property. So long as no Event of Default <br /> exists, any settlement of a fire and hazard insurance claim of more than <br /> $5,000.00 shall require the consent of Mortgagor, which consent will not <br /> be unreasonably 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 <br /> Mortgagee or a disbursing agent selected by Mortgagee and paid by <br /> Mortgagor, (ii) upon Mortgagee's request prior to disbursement of any Net <br /> Proceeds or thereafter, from time to time, Mortgagor will deposit with <br /> Mortgagee such amounts in excess of remaining Net Proceeds as <br /> Mortgagee reasonably determines is required to complete the repair and <br /> restoration, (iii) the Net Proceeds and any funds deposited by Mortgagor <br /> shall be held and disbursed in accordance with sound construction loan <br /> 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 Obligations. If <br /> 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 Obligations. <br /> -6- <br />