Common use of Insurance of Collateral Clause in Contracts

Insurance of Collateral. (i) Grantor, at its expense, shall keep the Collateral insured against loss or damage by fire, theft, explosion, sprinklers, and all other hazards and risks, and in such amounts, as ordinarily insured against by other owners in similar businesses conducted in the locations where Grantor’s business is conducted on the date hereof. Grantor shall also maintain liability and other insurance in amounts and of a type that are customary to businesses similar to Grantor’s. (ii) All policies of insurance shall be in such form, with such companies, and in such amounts as reasonably satisfactory to Bank. All policies of property insurance shall contain a lender’s loss payable endorsement, in a form satisfactory to Bank, showing Bank as an additional loss payee, and all liability insurance policies shall show Bank as an additional insured and specify that the insurer must give at least 20 days notice to Bank before canceling its policy for any reason, with the exception of for non-payment of premium. Grantor shall immediately provide Bank with copies of any notices of policy cancellation Grantor receives from an insurer. Upon Bank’s request, Grantor shall deliver to Bank certified copies of the policies of insurance and evidence of the payments of all premiums. If no Event of Default has occurred and is continuing, proceeds payable under any casualty policy will, at Grantor’s option, be payable to Grantor to replace the property subject to the claim or otherwise acquire property useful to the business of Grantor, provided that if such property constituted Collateral, any such replacement property shall be deemed Collateral in which Bank has been granted a first priority security interest, subject to Permitted Liens that are not required to be subordinate to Bank’s Liens. If an Event of Default has occurred and is continuing, all proceeds payable under any such policy, to the extent that such proceeds constitute Collateral, shall, at the option of Bank, be payable to Bank to be applied on account of the Secured Obligations.