FOR THE PAYMENT OF
INTEREST ON THE NOTE.
IN THE EVENT THE PROPERTY, IN ANY MONTH, ACHIEVES A
POSITIVE NOI, THEN SUCH MONTHLY NOI SHALL BE APPLIED TO COVER THE MONTHLY
PAYMENT UNDER THE NOTE PRIOR TO THE USE OF ANY ADVANCES FROM THE INTEREST
RESERVE LINE ITEM OF THE PROJECT BUDGET, AND LENDER IS HEREBY AUTHORIZED TO
APPLY ANY FUNDS IN THE OPERATING ACCOUNT TO COVER THE MONTHLY PAYMENT.
EITHER
UPON BORROWER'S DELIVERY OF A REQUEST FOR AN ADVANCE FROM THE INTEREST RESERVE
OR, IF SUCH REQUEST IS NOT TIMELY DELIVERED BY BORROWER, THEN UPON LENDER'S
DETERMINATION, IN ITS DISCRETION, THAT NOI HELD IN THE OPERATING ACCOUNT IS
INSUFFICIENT TO COVER THE MONTHLY PAYMENT, THEN, PROVIDED THAT NO EVENT OF
DEFAULT SHALL HAVE OCCURRED AND BE CONTINUING, LENDER SHALL DISBURSE TO ITSELF
FROM THE INTEREST RESERVE AN AMOUNT SUFFICIENT TO PAY ALL SUCH ACCRUED BUT
UNPAID INTEREST.
BORROWER HEREBY ACKNOWLEDGES THAT LENDER IS AUTHORIZED TO
CHARGE INTEREST MONTHLY AGAINST THE INTEREST RESERVE LINE ITEM OF THE PROJECT
BUDGET, IRRESPECTIVE OF WHETHER BORROWER HAS MADE A REQUEST FOR SUCH ADVANCE.
NOTHING CONTAINED IN THIS SECTION SHALL RELIEVE BORROWER OF THE ABSOLUTE AND
UNCONDITIONAL OBLIGATION TO PAY ACCRUED INTEREST ON NOTE AS PROVIDED HEREIN AND
IN THE NOTE AND OTHER LOAN DOCUMENTS.
IF THE FUNDS UNDER THE INTEREST RESERVE
ARE INSUFFICIENT OR ARE OTHERWISE UNAVAILABLE FOR DISBURSEMENT (AS THE RESULT OF
POSITIVE NOI FOR SUCH MONTH OR AN EVENT OF DEFAULT), THEN BORROWER SHALL PAY OR
CAUSE TO BE PAID, DIRECTLY TO LENDER THE ACCRUED INTEREST THEN DUE AND PAYABLE
FROM BORROWER'S FUNDS AND NOT FROM THE PROCEEDS OF THE LOAN.
ARTICLE VI
PROJECT BUDGET, BORROWER'S EQUITY,
LOAN BALANCING, AND CHANGE ORDERS
SECTION 6.1
PROJECT COSTS AND PROJECT BUDGET.
(A)
PROJECT COSTS.
THE PROCEEDS OF THE LOAN SHALL BE USED SOLELY FOR
THE COSTS OF ACQUIRING THE PROPERTY AND THE PAYMENT OF PROJECT COSTS IN
ACCORDANCE WITH THE PROJECT BUDGET.
BORROWER SHALL HOLD ALL ADVANCES IN TRUST
TO BE SPENT FOR THE PROJECT COSTS FOR WHICH SUCH ADVANCE WAS MADE.
FOR THE
PURPOSES OF THIS AGREEMENT, "PROJECT COSTS" SHALL MEAN ALL HARD COSTS AND SOFT
COSTS OF THE PROJECT WHICH HAVE BEEN OR WILL BE INCURRED IN CONNECTION WITH THIS
AGREEMENT AND CONSISTENT WITH THE PROJECT BUDGET, AS APPROVED BY LENDER IN ITS
SOLE DISCRETION.
BORROWER SHALL PAY ALL PROJECT COSTS AS THEY BECOME DUE AND
OWING, NOTWITHSTANDING THAT LENDER
17
may not be obligated to make an Advance hereunder or that the amount of any
particular Advance may be insufficient to pay such costs and Borrower shall pay
from its own funds any deficiency as Borrower's Additional Equity hereunder.
(B)
PROJECT BUDGET.
THE PROJECT BUDGET IS ATTACHED AS EXHIBIT B.
BORROWER MUST OBTAIN LENDER'S PRIOR WRITTEN APPROVAL BEFORE ANY MODIFICATIONS OR
AMENDMENTS ARE MADE TO THE PROJECT BUDGET.
THE AMOUNT WHICH LENDER SHALL BE
OBLIGATED TO DISBURSE FOR ANY ITEM OF PROJECT COSTS SHALL NOT BE IN EXCESS OF
THE AMOUNT SHOWN FOR THAT ITEM ON THE PROJECT BUDGET.