Common use of Collection of Insurance Proceeds Clause in Contracts

Collection of Insurance Proceeds. (a) In the event of loss pertaining to the Premises (“Loss”), Borrower shall promptly give written notice to the insurance carrier and Lender. All insurance proceeds shall be paid to Lender and shall be placed in a separate trust account with Lender to be disbursed in accordance with this Agreement. In the event that any insurance company fails to disburse directly and solely to Lender, but disburses instead either solely to Borrower or to Borrower and Lender jointly, Borrower agrees to immediately endorse and transfer such proceeds to Lender. Upon failure of Borrower to endorse and transfer such proceeds to Lender, Lender may execute such endorsements or transfers for and in the name of Borrower and Borrower hereby irrevocably appoints Lender as Borrower’s agent and attorney-in-fact so to do. Provided that no Default or Event of Default has occurred and is continuing hereunder or but for the passage of time or the giving of notice, or both, would have occurred and is continuing, (i) Borrower may adjust, compromise and settle any claim hereunder subject to obtaining the prior written consent of Lender, such consent not to be unreasonably withheld, conditioned or delayed, and (ii) after deducting from said insurance proceeds any expenses incurred in collecting or handling the proceeds and paying same to Lender, Borrower may, at Borrower’s option, direct the net proceeds to be applied either (1) as a credit on the principal of the Note, whether then matured or to mature in the future, or (2) to the repair or restoration of the Premises if Borrower complies with the conditions provided in this paragraph. Until disbursed to pay for the cost of repairing or restoring the Premises, Lender shall have a security interest in the insurance proceeds and other funds at any time held by it pursuant to this paragraph. (b) If Borrower elects to direct the net proceeds to be applied to the repair or restoration of the Premises, Lender shall make the insurance proceeds available to Borrower to pay all or a portion of the costs of repairing or restoring the Premises to as nearly as practicable the condition of the Premises immediately preceding the Loss, provided that such funds shall be made available to Borrower only on compliance with the following conditions: (i) within forty-five (45) days of a Loss, Borrower shall notify Lender of Borrower’s intention to use the insurance proceeds to repair or restore the Premises to as nearly as practicable their condition immediately prior to the Loss; (ii) Lender shall have determined, in its reasonable judgment, that sufficient funds (including the insurance proceeds) are available or committed on terms reasonably satisfactory to Lender to complete and pay for the restoration and repair of the Premises in accordance with all then applicable building code requirements; (iii) funds available to Borrower shall be dedicated and sufficient to pay during the period required to restore or repair the Premises the required payments of principal of and interest on the Note and all unabated operating expenses of the Premises; and (iv) the Contractor shall be reasonably approved by Lender and the contract between Borrower and the Contractor shall be submitted to, and reasonably approved by Lender. Any funds required in addition to the insurance proceeds to complete and pay for the cost of restoring the Premises shall be the first funds applied to pay such costs; thereafter, as such restoration or repair progresses, Lender will make periodic payments from the insurance proceeds to Borrower in accordance with the general procedures of Lender applicable to the disbursement of construction loans, to include, in Lender’s sole discretion, the use of a third-party construction inspector at Borrower’s expense to certify the progress of construction. If no election is made by Borrower within sixty (60) days of the Loss, Lender may apply the insurance proceeds as a credit on the Note or any portion thereof, whether then matured or to mature in the future. (c) Should the Premises or any of Borrower’s Property be materially damaged or destroyed by fire or other casualty, which is not adequately covered by insurance (as reasonably determined by Lender) to effect the full and complete repair or restoration of same, Borrower shall have fourteen (14) days following written notice from Lender of such determination by Lender to establish and fund an account with Lender with adequate reserves (in excess of any insurance proceeds) in Lender’s reasonable discretion to effect the full and complete repair or restoration of the Premises or any of Borrower’s Property.

Collection of Insurance Proceeds. (a) In the event of loss pertaining to the Premises (“Loss”), Borrower shall promptly give written notice to the insurance carrier and Lender. All insurance proceeds shall be paid to Lender and shall be placed in a separate trust account with Lender to be disbursed in accordance with this Agreement. In the event that any insurance company fails to disburse directly and solely to Lender, but disburses instead either solely to Borrower or to Borrower and Lender jointly, Borrower Xxxxxxxx agrees to immediately endorse and transfer such proceeds to Lender. Upon failure of Borrower to endorse and transfer such proceeds to Lender, Lender Xxxxxx may execute such endorsements or transfers for and in the name of Borrower Xxxxxxxx and Borrower hereby irrevocably appoints Lender Xxxxxx as BorrowerXxxxxxxx’s agent and attorney-in-fact so to do. Provided that no Default or Event of Default has occurred and is continuing hereunder or but for the passage of time or the giving of notice, or both, would have occurred and is continuing, (i) Borrower may adjust, compromise and settle any claim hereunder subject to obtaining the prior written consent of LenderXxxxxx, such consent not to be unreasonably withheld, conditioned or delayed, and (ii) after deducting from said insurance proceeds any expenses incurred in collecting or handling the proceeds and paying same to Lender, Borrower may, at Borrower’s option, direct the net proceeds to be applied either (1) as a credit on the principal of the Note, whether then matured or to mature in the future, or (2) to the repair or restoration of the Premises if Borrower complies with the conditions provided in this paragraph. Until disbursed to pay for the cost of repairing or restoring the Premises, Lender shall have a security interest in the insurance proceeds and other funds at any time held by it pursuant to this paragraph. (b) If Borrower elects to direct the net proceeds to be applied to the repair or restoration of the Premises, Lender shall make the insurance proceeds available to Borrower to pay all or a portion of the costs of repairing or restoring the Premises to as nearly as practicable the condition of the Premises immediately preceding the Loss, provided that such funds shall be made available to Borrower only on compliance with the following conditions: (i) within forty-five (45) days of a Loss, Borrower shall notify Lender of Borrower’s intention to use the insurance proceeds to repair or restore the Premises to as nearly as practicable their condition immediately prior to the Loss; (ii) Lender shall have determined, in its reasonable judgment, that sufficient funds (including the insurance proceeds) are available or committed on terms reasonably satisfactory to Lender to complete and pay for the restoration and repair of the Premises in accordance with all then applicable building code requirements; (iii) funds available to Borrower shall be dedicated and sufficient to pay during the period required to restore or repair the Premises the required payments of principal of and interest on the Note and all unabated operating expenses of the Premises; and (iv) the Contractor shall be reasonably approved by Lender Xxxxxx and the contract between Borrower and the Contractor shall be submitted to, and reasonably approved by Lender. Any funds required in addition to the insurance proceeds to complete and pay for the cost of restoring the Premises shall be the first funds applied to pay such costs; thereafter, as such restoration or repair progresses, Lender will make periodic payments from the insurance proceeds to Borrower in accordance with the general procedures of Lender applicable to the disbursement of construction loans, to include, in LenderXxxxxx’s sole discretion, the use of a third-party construction inspector at Borrower’s expense to certify the progress of construction. If no election is made by Borrower within sixty (60) days of the Loss, Lender may apply the insurance proceeds as a credit on the Note or any portion thereof, whether then matured or to mature in the future. (c) Should the Premises or any of Borrower’s Property be materially damaged or destroyed by fire or other casualty, which is not adequately covered by insurance (as reasonably determined by Lender) to effect the full and complete repair or restoration of same, Borrower shall have fourteen (14) days following written notice from Lender of such determination by Lender to establish and fund an account with Lender with adequate reserves (in excess of any insurance proceeds) in LenderXxxxxx’s reasonable discretion to effect the full and complete repair or restoration of the Premises or any of Borrower’s Property.