Common use of Construction Advances Clause in Contracts

Construction Advances. 2.8.1 Each Construction Advance shall be payable to Borrower at such time after completion of those portions of the Project included in such requested Construction Advance and Lender receives all of the following, to the extent required hereby and by Lender: (i) Evidence of all costs incurred by Borrower for the Project consistent with the Budget, including, but not limited to invoices and such back up documentation as reasonably required by Lender for the portion of the Project included in such Construction Advance; (ii) Evidence reasonably satisfactory to Lender that the improvements and the Premises are free of all mechanic’s, materialmen’s and other liens, or L▇▇▇▇▇ has received other assurance against such liens satisfactory to it in its reasonable discretion; provided, however, with respect to any Construction Advance which is not the last Construction Advance, partial lien waivers made through the date of any interim Construction Advances will be acceptable to L▇▇▇▇▇. (iii) Evidence satisfactory to Lender that Borrower have obtained all Project Approvals from, given all notices to, and taken all such other actions with respect to, such governmental authorities as may be required under applicable requirements for the construction of the Project and upon completion, the permanent use and occupancy of the Premises for their intended uses, together with copies of all such Project Approvals. (iv) Notification from L▇▇▇▇▇’s Consultant, if required by L▇▇▇▇▇, in its sole discretion to the effect that: (i) with respect to any Construction Advance which is not the last Construction Advance, the portion of the Project requested to be funded in such Construction Advance has been substantially completed in a good and workmanlike manner in accordance with the Property Improvement Plan and (ii) with respect to the last Construction Advance the Project has been substantially completed in a good and workmanlike manner in accordance with the Property Improvement Plan. (v) With respect to the final Construction Advance, copies of the original certificates of occupancy for the Buildings, and all other applicable certificates, licenses, consents and approvals issued by governmental authorities with respect to the Project and the Buildings except for those that are not required for the temporary occupancy of the Buildings. Borrower shall obtain and provide Lender with copies of the permanent certificates of occupancy when issued. (vi) With respect to the final Construction Advance, final lien waivers (on AIA documents or other form reasonably satisfactory to Lender) from the general contractor and such laborers, subcontractors and materialmen as may be reasonably requested by L▇▇▇▇▇, duly executed and notarized. (vii) With respect to the final Construction Advance, ff requested by L▇▇▇▇▇, copies of the warranties issued by the general contractor to Borrower pursuant to any contract for construction, and of all other warranties issued to Borrower by subcontractors and manufacturers for labor performed and materials supplied in connection with the construction of the improvements (if any). (viii) (v) With respect to the final Construction Advance, a final endorsement is issued by the title insurance company insuring the aggregate of all Advances made by L▇▇▇▇▇ under L▇▇▇▇▇’s Mortgage showing no encumbrances against the Premises other than the Permitted Encumbrances and any additional encumbrances previously consented to in writing by L▇▇▇▇▇. Loan Agreement -9- BankNewport/PHR Cherry Propco, LLC

Construction Advances. 2.8.1 Borrower has submitted to the Lender and the Lender has approved, the Budget and the Construction Schedule attached to this Agreement as Schedules 2.02(ii)(1) and 2.02(ii)(2) respectively. If the Borrower desires to reallocate funds from one budget category to another or modify, amend or supplement the Budget, in either case in excess of $100,000.00 individually or in excess of $500,000.00 when aggregated with all other reallocations or modifications, then Borrower shall notify the Lender of such reallocation or modification of the Budget by submitting to the Lender for the Lender’s approval a Budget Variance Report showing the details of such reallocation, modification, amendment or supplement. The Lender may approve or disapprove of such Budget Variance Report in the Lender’s discretion, but the Lender’s approval shall not be unreasonably withheld. Notwithstanding the foregoing, the Borrower agrees that all cost over runs on the Improvements shall be paid solely by the Borrower. Borrower will be entitled to apply any previously achieved savings in any completed category of the Budget to pay for any such cost over runs. In addition, the Borrower may from time to time request that the contingency fund line item in the Budget be reallocated to pay needed costs of the Improvements. Such requests shall be subject to the Lender’s written approval in its reasonable discretion, which shall not be unreasonably withheld; however, the Borrower will be entitled to advances from the contingency fund line item in the Budget so long as at all times there are sufficient funds remaining from all sources identified in the sources and uses of funds in the Budget to complete the construction of the Improvements in the discretion of the Lender. During the Construction Period, Borrower may request a Construction Advance to be used to pay or reimburse Borrower for the cost of Improvements by submitting to the Lender and Title Company a draw request set forth on AIA forms G702 and G703 or in another form approved by the Lender and the Title Company (each, a "Draw Request"). Each Draw Request shall be signed by a duly authorized officer of Borrower, shall show the percentage of completion of construction of the Improvements and shall set forth by Budget category and in such detail as may be required by the Lender the amounts expended and/or costs incurred for work done and materials incorporated into the Improvements in accordance with the Budget and Construction Schedule. Each Draw Request will be reviewed by the Construction Inspector and must be submitted to the Lender and Title Company at least five (5) Business Days prior to the requested funding date of the Construction Advance, which must be a Business Day. Each Draw Request will constitute a certification, representation and warranty that the conditions precedent for Construction Advances set forth in this Agreement and the Disbursing Agreement have been satisfied. Construction Advances shall not be made more frequently than twice per month and are subject to the conditions precedent set forth in this Agreement. Each Draw Request shall be limited to amounts equal to (i) the total of costs actually incurred and paid or owing by the Borrower to the date of such Draw Request for work performed, services provided or materials and equipment incorporated in the Improvements as described in the Budget, plus (ii) the cost of materials and equipment not incorporated in the Improvements, but delivered to and suitably stored at the Project site, plus (iii) prepayments for materials and equipment when prepayment is required by the manufacturer or supplier or, with the Lender’s prior written approval, when such prepayment results in a material financial benefit to the Borrower; plus (iv) any other hard or soft costs which are consistent with the Budget approved by the Lender, as modified or supplemented by any Budget Variance Report approved by the Lender, for which a Construction Advance is available under this Agreement and as demonstrated in the Budget; less, (v) prior disbursements for such costs and from the Declining Revolving Credit Loan or the Borrower’s own funds for such costs. Construction Advances will be delivered to the Borrower under the terms of the Disbursing Agreement, the terms and conditions of which are hereby incorporated by reference. Unless otherwise authorized by the Lender, each Construction Advance shall be payable disbursed by wire transfer from the Lender to the Title Company in an account established by the Title Company for the sole purpose of funding the cost of Improvements. All Construction Advances will be considered and deemed received by the Borrower at such time after completion of those portions upon receipt by the Title Company. The Borrower irrevocably assigns to the Lender and grants to the Lender a security interest in, as additional security for the performance of the Project included Obligations, its interest in such requested Construction Advance all funds held by the Title Company pursuant to this Agreement and the Disbursing Agreement, whether or not disbursed, all funds deposited by the Borrower with the Lender receives under this Agreement, all reserves, including deferred payments, deposits, refunds, cost savings, and payments of any kind relating to the construction of the followingImprovements and, to the extent required hereby and by Lender: (i) Evidence of assignable, all costs incurred by Borrower Permits obtained for the Project consistent with the Budget, including, but not limited to invoices and such back up documentation as reasonably required by Lender for the portion of the Project included in such Construction Advance; (ii) Evidence reasonably satisfactory to Lender that the improvements and the Premises are free of all mechanic’s, materialmen’s and other liens, or L▇▇▇▇▇ has received other assurance against such liens satisfactory to it in its reasonable discretion; provided, however, with respect to any Construction Advance which is not the last Construction Advance, partial lien waivers made through the date of any interim Construction Advances will be acceptable to L▇▇▇▇▇. (iii) Evidence satisfactory to Lender that Borrower have obtained all Project Approvals from, given all notices to, and taken all such other actions with respect to, such governmental authorities as may be required under applicable requirements for the lawful construction of the Project and upon completion, the permanent use and occupancy of the Premises for their intended uses, together with copies of all such Project ApprovalsImprovements. (iv) Notification from L▇▇▇▇▇’s Consultant, if required by L▇▇▇▇▇, in its sole discretion to the effect that: (i) with respect to any Construction Advance which is not the last Construction Advance, the portion of the Project requested to be funded in such Construction Advance has been substantially completed in a good and workmanlike manner in accordance with the Property Improvement Plan and (ii) with respect to the last Construction Advance the Project has been substantially completed in a good and workmanlike manner in accordance with the Property Improvement Plan. (v) With respect to the final Construction Advance, copies of the original certificates of occupancy for the Buildings, and all other applicable certificates, licenses, consents and approvals issued by governmental authorities with respect to the Project and the Buildings except for those that are not required for the temporary occupancy of the Buildings. Borrower shall obtain and provide Lender with copies of the permanent certificates of occupancy when issued. (vi) With respect to the final Construction Advance, final lien waivers (on AIA documents or other form reasonably satisfactory to Lender) from the general contractor and such laborers, subcontractors and materialmen as may be reasonably requested by L▇▇▇▇▇, duly executed and notarized. (vii) With respect to the final Construction Advance, ff requested by L▇▇▇▇▇, copies of the warranties issued by the general contractor to Borrower pursuant to any contract for construction, and of all other warranties issued to Borrower by subcontractors and manufacturers for labor performed and materials supplied in connection with the construction of the improvements (if any). (viii) (v) With respect to the final Construction Advance, a final endorsement is issued by the title insurance company insuring the aggregate of all Advances made by L▇▇▇▇▇ under L▇▇▇▇▇’s Mortgage showing no encumbrances against the Premises other than the Permitted Encumbrances and any additional encumbrances previously consented to in writing by L▇▇▇▇▇. Loan Agreement -9- BankNewport/PHR Cherry Propco, LLC

Construction Advances. 2.8.1 Each (a) Subject to the provisions of this Agreement, the Lender will advance and the Borrower will accept the Construction Advances as follows: After Borrower’s expenditure of the Borrower’s Equity, the initial Construction Advance will be made upon the satisfaction of the applicable conditions set forth in Article IV hereof relevant thereto, and all subsequent Construction Advances shall be payable to Borrower at such time after completion of those portions made not more frequently than monthly thereafter, upon the satisfaction of the Project included applicable conditions set forth in such requested Construction Advance and Lender receives all Article V hereof, in amounts which shall be equal to the aggregate of the followingDirect Costs and the Indirect Costs incurred by the Borrower, to in excess of the extent required hereby and Borrower’s Equity, through the end of the period covered by Lenderthe Requisition less: (i) Evidence of all costs incurred by Borrower for the Project consistent with the Budget, including, but not limited to invoices and such back up documentation as reasonably required by Lender for the portion of the Project included in such Construction Advance;The Retainage; and (ii) Evidence reasonably satisfactory The total of the Construction Advances theretofore made by the Lender; and, at the election of the Lender, less any combination of the following further amounts: (iii) The entire amount by which any Direct Costs or Indirect Costs are (or are estimated by the Lender to Lender that be) greater than the improvements and amounts set forth on the Premises are free of all mechanic’s, materialmen’s and other liens, or L▇▇▇▇▇ has received other assurance against Initial Project Cost Statement for such liens satisfactory to it in its reasonable discretioncosts; provided, however, with respect to any Construction Advance which is not that the last Construction Advance, partial lien waivers made through the date of any interim Construction Advances will be acceptable to L▇▇▇▇▇. (iii) Evidence satisfactory to Lender that Borrower have obtained all Initial Project Approvals from, given all notices to, and taken all such other actions with respect to, such governmental authorities as Cost Statement may be required under applicable requirements for the modified by reallocating funds between and among line items to reflect cost savings and/or cost over runs in one or more line items, subject to verification by Lender’s Construction Consultant that such statement as modified is sufficient to complete construction of the Project and upon completion, the permanent use and occupancy of the Premises for their intended uses, together with copies of all such Project Approvals.Improvements; and/or (iv) Notification from L▇▇▇▇▇’s ConsultantAny costs covered by the Requisition not approved, if required certified or verified as provided in Section 2.06 below, any Indirect Costs covered by L▇▇▇▇▇a previous Requisition for which proof of payment has not been received by the Lender, in its sole discretion to and/or any Direct Costs covered by a previous Requisition for which payment receipts have not been received by the effect that: (i) with respect to any Construction Advance which is not Consultant and/or the last Construction Advance, the portion of the Project requested to be funded in such Construction Advance has been substantially completed in a good and workmanlike manner in accordance with the Property Improvement Plan and (ii) with respect to the last Construction Advance the Project has been substantially completed in a good and workmanlike manner in accordance with the Property Improvement Plan.Lender; and/or (v) With respect Any real estate taxes, mechanics’ liens, security interests, claims or other charges against the Premises or the Improvements and any interest, fees or other costs which the Borrower has failed to pay in accordance with this Agreement, the Note or the Security Documents following written notice thereof given by the Lender to the final Construction Advance, copies of the original certificates of occupancy for the Buildings, and all other applicable certificates, licenses, consents and approvals issued by governmental authorities with respect to the Project and the Buildings except for those that are not required for the temporary occupancy of the Buildings. Borrower shall obtain and provide Lender with copies of the permanent certificates of occupancy when issuedBorrower. (vib) With respect to The Borrower’s Share shall be payable by the final Construction Advance, final lien waivers Borrower out of its own funds (on AIA documents or other form reasonably satisfactory to Lender) from the general contractor and such laborers, subcontractors and materialmen as may be reasonably requested by L▇▇▇▇▇, duly executed and notarized. (vii) With respect to the final Construction Advance, ff requested by L▇▇▇▇▇, copies not out of the warranties issued by the general contractor to Borrower pursuant to any contract for construction, and of all other warranties issued to Borrower by subcontractors and manufacturers for labor performed and materials supplied in connection with the construction proceeds of the improvements (if anyLoan). (viii) (v) With respect to the final Construction Advance, a final endorsement is issued by the title insurance company insuring the aggregate of all Advances made by L▇▇▇▇▇ under L▇▇▇▇▇’s Mortgage showing no encumbrances against the Premises other than the Permitted Encumbrances and any additional encumbrances previously consented to in writing by L▇▇▇▇▇. Loan Agreement -9- BankNewport/PHR Cherry Propco, LLC

Construction Advances. 2.8.1 Each Construction Advance (including the initial Construction Advance) shall be payable subject to Borrower at such time after completion of those portions satisfaction of the Project included in such requested Construction Advance and Lender receives all of the following, to the extent required hereby and by Lenderfollowing conditions: (ia) Evidence of all costs incurred by Borrower for the Project consistent with the Budget, including, but not limited At least ten (10) Business Days prior to invoices and such back up documentation as reasonably required by Lender for the portion of the Project included in such Construction Advance; (ii) Evidence reasonably satisfactory to Lender that the improvements and the Premises are free of all mechanic’s, materialmen’s and other liens, or L▇▇▇▇▇ has received other assurance against such liens satisfactory to it in its reasonable discretion; provided, however, with respect to any Construction Advance which is not the last Construction Advance, partial lien waivers made through the date of any interim Construction Advances will be Advance, the Borrower shall have delivered to Administrative Agent the following documentation (collectively referred to herein as the “Application”): (i) a completed and executed Disbursement Request, (ii) completed and executed American Institute of Architects (AIA) Forms G702 and G703 (or other forms acceptable to L▇▇▇▇▇. (iiiAdministrative Agent) Evidence satisfactory to Lender that Borrower have obtained all Project Approvals from, given all notices to, and taken all lien waivers and such other actions with respect to, such governmental authorities waivers and affidavits as may be required under applicable requirements by the Title Insurer in order to issue the endorsement described in clause (d) below from Contractor and each subcontractor seeking payment for work performed, and (iii) copies of invoices, cancelled checks, contracts, bills, change orders, and other statements and information as may be requested by Administrative Agent; (b) All Improvements to and including the construction stage represented in the current Application shall have been completed in substantial accordance with the Plans, and the Borrower is in all material respects meeting the dates set forth in the Construction Completion Schedule and completion of the Project and upon completion, anticipated on or before the permanent use and occupancy of the Premises for their intended uses, together with copies of all such Project Approvals.Acceptance Date; (ivc) Notification from L▇▇▇▇▇’s Consultant, if required by L▇▇▇▇▇, in its sole discretion to the effect that: Administrative Agent or Consultant shall have reviewed each Disbursement Request and shall have determined (which determination shall not be unreasonably withheld or delayed) that (i) with respect to any Construction Advance which such Disbursement Request is not the last Construction Advance, the portion of the Project requested to be funded approved for payment and that all work described in or covered by such Construction Advance Disbursement Request has been substantially completed in a good and workmanlike manner performed in accordance with the Property Improvement Plan Plans, and (ii) all materials covered by the Disbursement Request have been incorporated into the Improvements or adequately stored and insured on or off the Land in the manner required by this Rider; (d) Administrative Agent shall have received, at the Borrower’s expense, an endorsement to the Title Policy insuring the priority of the lien of the Mortgage on the Real Property with respect to such disbursement and indicating that no intervening liens exist against the last Project; (e) Upon request, the Borrower shall deliver a foundation survey to Administrative Agent after the footings and foundation of the Improvements are in place, which survey shall show the location of the foundations of the Improvements on the Land with relation to the boundary lines of the Land and all easements and set-back lines and shall be prepared by a registered engineer who shall certify that such foundation is in compliance with all required set-back or building restriction liens; and at any time a survey is required from the Borrower, as aforesaid, the Contractor shall certify on each such survey that the construction completed to date as shown on such survey disclosed no violations, encroachments, or variations of set-back or other restrictions other than those which Administrative Agent may waive in writing; and (f) The Borrower shall have paid to Administrative Agent or any Lender any and all fees then due and payable in cash to Administrative Agent or such Lender and any and all costs then due and payable in cash incurred by Administrative Agent and Lenders up to the date of such Construction Advance the Project has been substantially completed in a good and workmanlike manner in accordance with the Property Improvement Plan. (v) With respect to the final Construction Advance, copies of the original certificates of occupancy for the Buildings, and all other applicable certificates, licenses, consents and approvals issued by governmental authorities with respect to the Project and the Buildings except for those that are not required for Borrower hereby authorizes Administrative Agent to increase the temporary occupancy of the Buildings. Borrower shall obtain Disbursement Request by such amounts to effectuate payment to Administrative Agent and provide Lender with copies of the permanent certificates of occupancy when issued. (vi) With respect to the final Construction Advance, final lien waivers (on AIA documents or other form reasonably satisfactory to Lender) from the general contractor and such laborers, subcontractors and materialmen as may be reasonably requested by L▇▇▇▇▇, duly executed and notarized. (vii) With respect to the final Construction Advance, ff requested by L▇▇▇▇▇, copies of the warranties issued by the general contractor to Borrower pursuant to any contract for construction, and of all other warranties issued to Borrower by subcontractors and manufacturers for labor performed and materials supplied in connection with the construction of the improvements (if anyLenders). (viii) (v) With respect to the final Construction Advance, a final endorsement is issued by the title insurance company insuring the aggregate of all Advances made by L▇▇▇▇▇ under L▇▇▇▇▇’s Mortgage showing no encumbrances against the Premises other than the Permitted Encumbrances and any additional encumbrances previously consented to in writing by L▇▇▇▇▇. Loan Agreement -9- BankNewport/PHR Cherry Propco, LLC