PIP Reserve. (i) A portion of the Loan equal to the sum of Twenty-Six Million One Hundred Ninety-Two Thousand Nine Hundred Seventy-Seven and No/100 Dollars ($26,192,977.00) (the “PIP Reserve”) shall not be funded on the Closing Date and the Borrowers may request one or more additional advances of principal up to, but not in excess of, in the aggregate, the maximum amount of the PIP Reserve as set forth in this Section 3.2(a) to pay the costs of the Property Improvements. For the period commencing on the Closing Date and expiring on the Completion Date, the PIP Reserve shall be utilized only for work on Property Improvements on the Portfolio in accordance with the Property Improvement Plan and Budget. So long as no Default or Event of Default shall have occurred and be continuing and the Debt Yield, after giving effect to the requested advance from the PIP Reserve, is not less than ten and one-half of one percent (10.5%), funds shall be advanced from the PIP Reserve within ten (10) Business Days after written request therefore, but not more frequently than monthly in accordance with and subject to the draw procedures set forth in Exhibit B hereto, as applicable. With respect to each advance from the PIP Reserve, Borrowers shall pay the actual reasonable fees and out-of-pocket expenses of Agent’s Construction Consultant. (ii) Other than advances from the First PIP Bucket, Agent shall make no advances from the PIP Reserve without, with respect to the Property Improvements to be completed in any PIP Bucket, copies of (x) all general contracts, architects agreements and Material Subcontracts required to complete the Property Improvements, which shall be subject to the review and approval of Agent in its Permitted Discretion and (y) all purchase orders and quotations for all FF&E required for the completion of the Property Improvements (such documentation collectively referred to as the “PIP Backup”). Advances from the PIP Reserve shall be subject to the following availability: (A) Prior to receipt of the Second Bucket PIP Backup, Agent shall permit Borrowers to request advances from the PIP Reserve, which shall be subject to this Section 3.2(a) and the draw procedures on Exhibit B in an amount not to exceed $2,500,000 (the “First PIP Bucket”). (B) Borrower shall provide PIP Backup for Property Improvements totaling not less than $10,500,000 (inclusive of the First PIP Bucket) (the “Second Bucket PIP Backup”), together with PIP Backup for the Property Improvements funded in the First PIP Bucket, to the extent not already received. Upon approval of the Second Bucket PIP Backup (which approval shall be given or withheld in Agent’s Permitted Discretion within 10 Business Days of receipt), Agent shall permit Borrowers to request advances from the PIP Reserve which shall be subject to this Section 3.2(a) and the draw procedures on Exhibit B for Property Improvements in the amounts reflected in the PIP Backup for the Property Improvements funded in the First PIP Bucket and approved pursuant to the Second Bucket PIP Backup, which shall not exceed $10,500,000 (inclusive of the First PIP Bucket) (the “Second PIP Bucket”). (C) Borrower shall provide PIP Backup for Property Improvements totaling not less than $18,500,000 (inclusive of the First PIP Bucket and the Second PIP Bucket) (such PIP Backup for Property Improvements not reflected in the PIP Backup for the First PIP Bucket or the Second Bucket PIP Backup being “Third Bucket PIP Backup”). Upon approval of the Third Bucket PIP Backup (which approval shall be given or withheld in Agent’s Permitted Discretion within 10 Business Days of receipt), Agent shall permit Borrowers to request advances from the PIP Reserve which shall be subject to this Section 3.2(a) and the draw procedures on Exhibit B for Property Improvements in the amounts approved pursuant to the Third Bucket PIP Backup, which shall not exceed $18,500,000 (inclusive of the First PIP Bucket and the Second PIP Bucket) (the “Third PIP Bucket”). (D) Borrower shall provide PIP Backup for all remaining Property Improvements set forth in the Property Improvement Plan and Budget (the “Final Bucket PIP Backup”). Upon approval of the Final Bucket PIP Backup (which approval shall be given or withheld in Agent’s Permitted Discretion within 10 Business Days of receipt), Agent shall permit Borrowers to request advances from the PIP Reserve which shall be subject to this Section 3.2(a) and the draw procedures on Exhibit B for Property Improvements in the amounts approved pursuant to the PIP Backup, which shall not exceed $26,192,977.00 (inclusive of the First PIP Bucket, the Second PIP Bucket and the Third PIP Bucket) (the “Final PIP Bucket”). (iii) Borrowers may increase or decrease any line item of any Property’s Property Improvement Plan and Budget, and may do so by increasing or decreasing, as applicable, any other line item from such Property’s or any other Property’s Property Improvement Plan and Budget, so long as such adjustments (A) when taken individually, do not change any line item by an amount greater than ten percent (10%) of the amount first approved by Agent for such line item in the Property Improvement Plan and Budget for such Property and (B) when taken in the aggregate, are (I) with respect to any Tranche A Property, no greater than the lesser of fifteen percent (15%) of the Property Improvement Plan and Budget for such Property and $250,000 and (II) with respect to any Tranche B Property, no greater than the lesser of fifteen percent (15%) of the Property Improvement Plan and Budget for such Property and $500,000. Any adjustments in excess of the limitations set forth in this Section 3.2(a)(iii) may only be made with Agent’s prior written approval, which may be given or withheld in its Permitted Discretion. (iv) Borrowers shall (A) commence and diligently pursue the completion of the Property Improvements required by the Property Improvement Plan and Budget in a timely manner in accordance with the requirements set forth herein and
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PIP Reserve. (i) A portion of the Loan equal to the sum of Twenty-Six Million One Hundred Ninety-Two Thousand Nine Hundred Seventy-Seven and No/100 Dollars ($26,192,977.00) (the “PIP Reserve”) shall not be funded on the Closing Date and the Borrowers may request one or more additional advances of principal up to, but not in excess of, in the aggregate, the maximum amount of the PIP Reserve as set forth in this Section 3.2(a) to pay the costs of the Property Improvements. For the period commencing on the Closing Date and expiring on the Completion Date, the PIP Reserve shall be utilized only for work on Property Improvements on the Portfolio in accordance with the Property Improvement Plan and Budget. So long as no Default or Event of Default shall have occurred and be continuing and the Debt Yield, after giving effect to the requested advance from the PIP Reserve, is not less than ten and one-half of one percent (10.5%), funds shall be advanced from the PIP Reserve within ten (10) Business Days after written request therefore, but not more frequently than monthly in accordance with and subject to the draw procedures set forth in Exhibit B hereto, as applicable. With respect to each advance from the PIP Reserve, Borrowers shall pay the actual reasonable fees and out-of-pocket expenses of Agent’s Construction Consultant.
(ii) Other than advances from the First PIP Bucket, Agent shall make no advances from the PIP Reserve without, with respect to the Property Improvements to be completed in any PIP Bucket, copies of (x) all general contracts, architects agreements and Material Subcontracts required to complete the Property Improvements, which shall be subject to the review and approval of Agent in its Permitted Discretion and (y) all purchase orders and quotations for all FF&E required for the completion of the Property Improvements (such documentation collectively referred to as the “PIP Backup”). Advances from the PIP Reserve shall be subject to the following availability:
(A) Prior to receipt of the Second Bucket PIP Backup, Agent shall permit Borrowers to request advances from the PIP Reserve, which shall be subject to this Section 3.2(a) and the draw procedures on Exhibit B in an amount not to exceed $2,500,000 (the “First PIP Bucket”).
(B) Borrower shall provide PIP Backup for Property Improvements totaling not less than $10,500,000 (inclusive of the First PIP Bucket) (the “Second Bucket PIP Backup”), together with PIP Backup for the Property Improvements funded in the First PIP Bucket, to the extent not already received. Upon approval of the Second Bucket PIP Backup (which approval shall be given or withheld in Agent’s Permitted Discretion within 10 Business Days of receipt), Agent shall permit Borrowers to request advances from the PIP Reserve which shall be subject to this Section 3.2(a) and the draw procedures on Exhibit B for Property Improvements in the amounts reflected in the PIP Backup for the Property Improvements funded in the First PIP Bucket and approved pursuant to the Second Bucket PIP Backup, which shall not exceed $10,500,000 (inclusive of the First PIP Bucket) (the “Second PIP Bucket”).
(C) Borrower shall provide PIP Backup for Property Improvements totaling not less than $18,500,000 (inclusive of the First PIP Bucket and the Second PIP Bucket) (such PIP Backup for Property Improvements not reflected in the PIP Backup for the First PIP Bucket or the Second Bucket PIP Backup being “Third Bucket PIP Backup”). Upon approval of the Third Bucket PIP Backup (which approval shall be given or withheld in Agent’s Permitted Discretion within 10 Business Days of receipt), Agent shall permit Borrowers to request advances from the PIP Reserve which shall be subject to this Section 3.2(a) and the draw procedures on Exhibit B for Property Improvements in the amounts approved pursuant to the Third Bucket PIP Backup, which shall not exceed $18,500,000 (inclusive of the First PIP Bucket and the Second PIP Bucket) (the “Third PIP Bucket”).
(D) Borrower shall provide PIP Backup for all remaining Property Improvements set forth in the Property Improvement Plan and Budget (the “Final Bucket PIP Backup”). Upon approval of the Final Bucket PIP Backup (which approval shall be given or withheld in Agent’s Permitted Discretion within 10 Business Days of receipt), Agent shall permit Borrowers to request advances from the PIP Reserve which shall be subject to this Section 3.2(a) and the draw procedures on Exhibit B for Property Improvements in the amounts approved pursuant to the PIP Backup, which shall not exceed $26,192,977.00 (inclusive of the First PIP Bucket, the Second PIP Bucket and the Third PIP Bucket) (the “Final PIP Bucket”).
(iii) Borrowers may increase or decrease any line item of any Property’s Property Improvement Plan and Budget, and may do so by increasing or decreasing, as applicable, any other line item from such Property’s or any other Property’s Property Improvement Plan and Budget, so long as such adjustments (A) when taken individually, do not change any line item by an amount greater than ten percent (10%) of the amount first approved by Agent for such line item in the Property Improvement Plan and Budget for such Property and (B) when taken in the aggregate, are
(I) with respect to any Tranche A Property, no greater than the lesser of fifteen percent (15%) of the Property Improvement Plan and Budget for such Property and $250,000 and
(II) with respect to any Tranche B Property, no greater than the lesser of fifteen percent (15%) of the Property Improvement Plan and Budget for such Property and $500,000. Any adjustments in excess of the limitations set forth in this Section 3.2(a)(iii) may only be made with Agent’s prior written approval, which may be given or withheld in its Permitted Discretion.
(iv) Borrowers shall (A) commence and diligently pursue the completion of the Property Improvements required by the Property Improvement Plan and Budget in a timely manner in accordance with the requirements set forth herein and
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