Common use of Possession of the Collateral Clause in Contracts

Possession of the Collateral. 1. The collateral under this Contract shall be possessed and managed by the Mortgagor with due diligence. The Mortgagee is entitled to supervise and examine the possession and management of the collateral. 2. During the valid period of this Contract, the Mortgagor should not transfer, donate, sell, lease, re-security or dispose by other means of the collateral without the written approval by the Mortgagee. The proceeds from the transfer, donation, sale, lease, re-security or disposal by other means of the collateral with the written approval by the Mortgagee shall be used to settle the indebtedness under the Loan Contracts or be deposited in a third party designated by the Mortgagor and the Mortgagee. 3. In case of loss, damage or confiscation of the collateral, the Mortgagor shall take all necessary efforts to minimize the loss and inform the Mortgagee in writing immediately. The insurance compensation or other compensation received by the Mortgagor under such circumstance shall be used with priority to settle the indebtedness under the Loan Contracts. 4. In case of devaluation of the collateral, the Mortgagee is entitled to demand the Mortgagor to recover the value of the collateral or to provide other means of security. In case of failure of the Mortgagor to do so, the Mortgagee is entitled to declare the indebtedness under the Loan Contracts become mature immediately and demand the Debtor to perform its obligations or realize the security immediately.