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200110903
<br />SECTION 3.08. Damage and Destruction. (a) Grantor's Obligations. In the
<br />event of any damage to or loss or destruction of the Premises, Grantor shall (i) promptly notify
<br />Beneficiary and Trustee of such event, if such event would give rise to a claim under the
<br />insurance policies required to be maintained by Grantor pursuant to Section 3.05, (ii) take such
<br />steps as shall be necessary to preserve any undamaged portion of the Premises and (iii) except as
<br />otherwise instructed by Beneficiary or as otherwise provided in subsection (d) below, regardless
<br />whether the insurance proceeds, if any, shall be sufficient for the purpose or shall be otherwise
<br />applied by Beneficiary as provided herein, promptly commence and diligently pursue to
<br />completion the restoration, replacement and rebuilding of the Premises to the condition of the
<br />Premises affected thereby immediately prior to such damage, loss or destruction.
<br />(b) Beneficiar's Rights; Application of Proceeds. In the event that any
<br />portion of the Premises is so damaged, destroyed or lost, and such damage, destruction or loss is
<br />covered, in whole or in part, by insurance required by Section 3.05, then (i) if an Event of Default
<br />shall then exist, Beneficiary or Trustee may, but shall not be obligated to, make proof of loss
<br />following the occurrence of the Event of Default, and, in such event, Beneficiary or Trustee is
<br />hereby authorized and empowered by Grantor to settle, adjust or compromise any claims for
<br />damage, destruction or loss thereunder, (ii) subject to subsections (c) and (d) below, each
<br />insurance company concerned is hereby authorized and directed to make payment therefor
<br />directly to Beneficiary, and (iii) subject to subsections (c) and (d) below, Beneficiary shall have
<br />the right to apply the insurance proceeds, first, to reimburse Beneficiary and the holders of the
<br />Secured Obligations for all reasonable costs and expenses, including reasonable adjustors' and
<br />attorneys' fees and disbursements, incurred in connection with the collection of such proceeds,
<br />and, second, the remainder of such proceeds shall be applied, at Beneficiary's option, in payment
<br />(without premium or penalty) of all or any part of the Secured Obligations, in the order and
<br />manner determined by Beneficiary (provided that to the extent that any portion of the Secured
<br />Obligations shall remain outstanding after such application, such unpaid portion of the Secured
<br />Obligations shall continue in full force and effect and Grantor shall not be excused from the
<br />payment thereof), or to the cure of any then current default hereunder, or to the restoration,
<br />replacement or rebuilding, in whole or in part, of the portion of the Premises so damaged,
<br />destroyed or lost, provided that any insurance proceeds held by Beneficiary to be applied to the
<br />restoration, replacement or rebuilding of the Premises shall be so held without payment or
<br />allowance of interest thereon and shall be paid out from time to time upon compliance by
<br />Grantor with such provisions and requirements as may reasonably be imposed by Beneficiary.
<br />Subject to subsection (c) below, in the event that Grantor shall have received or possess all or
<br />any portion of the insurance proceeds, Grantor, upon demand from Beneficiary, shall pay to
<br />Beneficiary an amount equal to the amount so received by Grantor, to be applied as Beneficiary
<br />shall have the right pursuant to this subsection. Notwithstanding anything herein or at law or in
<br />equity to the contrary, no insurance proceeds or payments in lieu thereof paid to Beneficiary shall
<br />be deemed trust funds, and Beneficiary shall be entitled to dispose of such proceeds as provided
<br />in this Section.
<br />(c) Grantor's Rights if No Event of Default; Application of Proceeds.
<br />Notwithstanding the foregoing (but subject to subsection (d) below), so long as no Event of
<br />NYDOCS03/596673.1 10 HALL COUNTY, NEBRASKA
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