Common use of Construction Advances Clause in Contracts

Construction Advances. Provided that Borrower is otherwise not in violation of any term or provision of the Loan Documents, Borrower shall be entitled to receive Advances for the construction of the New Improvements, up to twice monthly, in accordance with the following procedures and subject to the satisfaction of the following conditions: (a) The Borrower shall deliver to Lender a fully executed Disbursement Agreement and an Application for Advance that has been prepared in accordance with the Disbursement Agreement. The Application for Advance shall have appended thereto all mechanics and materialmen’s lien waivers and copies of all invoices for which payment is being sought, all in accordance with the Disbursement Agreement; (b) The Application for Advance shall request an Advance that does not exceed ninety percent (90%) of the total value of all invoices for which payment is being sought (provided, however, that no retainage will be required or withheld for (i) materials, (ii) payments to subcontractors whose work has been completed and who have furnished a final lien waiver and release, or (iii) fees and other amounts due and owing to (a) the Contractor under the Construction Contract, (b) Campus Crest Group, LLC under that certain Development Agreement by and between Borrower and Campus Crest Group, LLC, dated as of the date hereof and (c) The Grove Student Properties, LLC under that certain Property Management Agreement by and between Borrower and The Grove Student Properties, LLC, dated as of the date hereof). (c) Lender shall have three (3) business days after receipt of an Application for Advance within which to conduct inspections and/or have the Project Inspector to satisfy itself that the work covered by the Application for Advance has been or is being accomplished in a satisfactory manner. Lender shall deliver written objections to any Application for Advance within said three (3) business day period or Lender shall be deemed to have approved such Application. If all conditions precedent to the requested construction Advance have been complied with to the reasonable satisfaction of Lender and the Title Company, Lender shall advance the amount set forth in such Application for Advance, at its discretion, either directly to Borrower or through the Title Company within said three (3) day period. Each construction Advance made pursuant to an Application for Advance for payment of any other items set forth in the Approved Budget shall be advanced to Borrower or through the Title Company, at Lender’s discretion. The payment by Lender and/or the Title Company of any Application for Advance shall not constitute an approval or acceptance of the work or materials by the Lender, and Borrower hereby agrees that Lender shall be relieved from any liability or responsibility relating to: (1) the quality of the work, the quantity of the work, the rate of progress in completion of the work, or the sufficiency of materials or labor being supplied in connection therewith; and (2) any errors, omissions, inconsistencies or other defects of any nature in the Plans. So long as there exists no Event of Default or any other condition which could diminish or otherwise jeopardize the coverage provided to Lender under the Title Insurance for the full amount of the Loan, the Lender shall make Advances directly to the Borrower. (d) Any and each construction Advance of the proceeds of the Loan shall be made only in accordance with the terms and conditions of the Approved Budget (subject to the provisions of this Loan Agreement) and the Construction Contract, and subject to the terms and conditions of this Agreement. All expenses of making any Advance through the Title Company shall be borne by Borrower. (e) There shall then exist no Event of Default. (f) The representations and warranties made in this Loan Agreement shall be true and correct in all material respects on and as of the date of each Advance, with the same effect as if made on that date. (g) Borrower will procure and deliver to Lender releases or waivers of mechanic’s and materialmen’s liens and receipted bills with respect to the preceding month’s disbursement showing payment of all parties who have furnished materials or services or performed labor of any kind in connection with the construction of any of the New Improvements. (h) The Title Insurance shall be endorsed and down-dated so as to extend title insurance coverage in an amount equal to each subsequent Advance with no additional title exceptions noted thereon which Lender might deem objectionable. (i) There shall be delivered to Lender evidence satisfactory to Lender that (i) prior to the receipt of any Advance, Borrower shall have expended from its own funds not derived from the proceeds of any loan, at least twenty (20%) percent of the cost to complete the Project and (2) the unadvanced Loan proceeds will be sufficient to pay for the completion of all New Improvements by the Completion Date in full accordance with the Plans. Such evidence may include a certificate signed by the Project Inspector. To the extent that Loan proceeds are inadequate, Lender must be satisfied that Borrower has otherwise arranged, by the funding of a Borrower’s Deposit or otherwise, for the providing of funds necessary to complete the New Improvements by the Completion Date in accordance with the Plans. The Loan must at all times be “in balance,” meaning that the total amount of the Loan not yet advanced, plus retainage and agreed reserves, shall equal or exceed the estimated cost of completion of construction of the New Improvements. (j) The work covered by each Application for Advance and all work preliminary thereto, shall have been performed to the reasonable satisfaction of Lender and the Project Inspector; (k) Lender shall have received a certified copy of Borrower’s Articles of Organization and Operating Agreement, together with a certified copy of a resolution of Borrower authorizing a loan transaction and the execution and delivery of the Loan Documents; (l) Lender shall have received the Note fully executed by Borrower; (m) Lender shall have received the Mortgage and Assignment of Rents, duly recorded in the real property recorder’s office of the appropriate county or counties, with all filing fees therefor paid, all prior to the commencement of any construction or site development on any part of the Property or the placing of any equipment, supplies or material on the Property; (n) Lender shall have received a paid Title Insurance Policy, which shall be endorsed and down-dated so as to extend title insurance coverage in an amount equal to each subsequent Advance with no additional title exceptions noted thereon which Lender might deem objectionable; (o) Lender shall have received the Survey; (p) Lender shall have received the fully executed Pledge and Security Agreement; (q) Lender shall have received a building permit or other land disturbance permit issued by the City of ▇▇▇▇▇▇ that is effective as of the date construction commences on the New Improvements and that remains effective throughout the Premises’ construction and development process; (r) Lender shall have received the Appraisal which shall show the value of the Premises to equal or exceed $2,200,000 “as is”, $21,700,00 “as completed” and $23,200,000 “as stabilized”; (s) Lender shall have received the Approved Budget; (t) Lender shall have received the Zoning Classification Letter; (u) Lender shall have received the Plans; (v) Lender shall have received evidence that all utility connections necessary to the construction of the New Improvements are (or will be) available at the boundaries of the Property; (w) Lender shall have received a flood hazard letter, in form satisfactory to Lender, completed by Borrower’s surveyor, certifying that no part of the Premises lies within a flood hazard or flood prone area or, alternatively, a certificate of flood insurance in accordance herewith; (x) Lender shall have received certificates of insurance evidencing the placement of insurance and the coverages in the amounts described herein; (y) Lender shall have received title instruments evidencing the vesting of title to the Property in Borrower; (z) Lender shall have received a completed Application for Advance; (aa) Lender shall have received Title Company affidavits and endorsements (as reasonably required); (bb) Lender shall have received Financing Statements, in a form deemed acceptable to Lender; (cc) Lender shall have received a guaranteed maximum price construction contract from the Contractor in form and substance reasonably acceptable to Lender; (dd) Lender shall have received the fully executed Unconditional Guaranty; (ee) [RESERVED]; (ff) Lender shall have received a $160,000 financing fee payable to Lender related to the Loan; (gg) [RESERVED]; (hh) [RESERVED]; (ii) Lender shall have received a copy of a certificate evidencing a commercial general liability policy in form and substance reasonably acceptable to Lender and issued by an insurance company that is reasonably acceptable to Lender, that notes Lender as an additional insured party thereunder; (jj) Lender shall have received a copy of a certificate evidencing builders’ risk insurance policy in form and substance reasonably acceptable to Lender and issued by an insurance company that is reasonably acceptable to Lender, that notes Lender as a mortgagee and loss payee thereunder; (kk) [RESERVED]; (ll) Lender shall have received any and all other documents that Lender may reasonably require;