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prior written notice of cancellation, termination or modification thereof to <br />Mortgagee, shall permit Mortgagee to make premium payments to prevent <br />cancellation, and shall provide that no act or negligence of Mortgagoror of any <br />occupant of the Mortgaged Property, and no occupancy or use of the Mortgaged <br />Property for purposes more hazardous than permitted by the terms of the policy, <br />will affect the validity or enforceability of such insurance as against Mortgagee. <br />In the event of loss under such insurance Mortgagor shall give prompt notice to <br />the 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)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 itssole discretion, apply <br />the balance of said proceeds (“Net Proceeds”) to payment of the Obligations 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 $5,000.00and 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 and <br />specifications, appraisal, its other conditions for disbursement of draw requests and <br />inspectionof the work, and such other reasonable conditions as Mortgagee may <br />impose and (iv) any Net Proceeds not so applied to repair and restoration shall be <br />applied to the payment of the Obligations. If an Event of Default occurs prior to <br />full disbursement, anyundisbursed portion of the Net Proceeds and any funds <br />deposited by Mortgagor with Mortgagee may at Mortgagee’s option be applied to <br />the Obligations. <br />1.7Inspection. 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 />533955v3 GAF EL185-57 <br />