Common use of Capital Expenditure Reserves Clause in Contracts

Capital Expenditure Reserves. (a) The Base Purchase Price was agreed upon between Seller and Acquiror on the assumption that none of the Real Property Assets is in need of significant deferred maintenance expenditures, and that the annual capital expenditure requirement of $450 per unit, which will be set forth in and calculated pursuant to the Agreement Regarding Leases, is sufficient to provide for anticipated future capital expenditures to maintain each of the Real Property Assets in their current condition. If, during the course of the Due Diligence Review in respect of any Real Property Asset, Acquiror determines, pursuant to third party reports received by Acquiror (each, an "Acquiror Cap Ex Report"), that the anticipated costs to perform deferred maintenance and previously unidentified future capital expenditures reasonably necessary to be performed during the twelve (12) month period following the Closing Date will exceed the amount of the capital expenditure requirement for such period as set forth in and calculated pursuant to the form of Agreement Regarding Leases (the amount of such excess, with reference to any Real Property Asset, being hereinafter referred to as the "Cap Ex Reserve Shortfall"), then Acquiror shall provide to Seller not later than five (5) Business Days after the Due Diligence Expiration Date a written statement specifying the Cap Ex Reserve Shortfall, if any, for each of the Real Property Assets, including copies of all Acquiror Cap Ex Reports supporting such determination. Acquiror shall provide copies of each Acquiror Cap Ex Report as promptly as practicable after such report shall have been received by Acquiror. If Acquiror does not timely notify Seller of any Cap Ex Reserve Shortfall in respect of a Real Property Asset as provided above, Acquiror shall be deemed to have agreed that the amount of the Cap Ex Reserve Shortfall in respect of such Real Property Asset is zero. (b) For a period of ten (10) Business Days after the receipt of the statement delivered by Acquiror in accordance with Section 2.09(a), Seller shall have the right to review the statement and to obtain its own third party reports relating to any specified Cap Ex Reserve Shortfall (each such report, a "Seller Cap Ex Report"). Seller shall provide copies of each Seller Cap Ex Report as promptly as practicable after such report shall have been received by Seller. If Seller objects to any Cap Ex Reserve Shortfall specified in Acquiror' statement in respect of any Real Property Asset and determines, pursuant to a Seller Cap Ex Report, that the amount of such Cap Ex Reserve Shortfall is overstated by more than five percent (5%), then Seller shall provide to Acquiror not later than five (5) Business Days after the expiration of such review period a written statement specifying the amount of such overstatement for each of the Real Property Assets, including copies of all Seller Cap Ex Reports supporting such determination. If Seller does not notify Acquiror in writing of any objection within such review period, Seller shall be deemed to have agreed to the amount of each Cap Ex Reserve Shortfall specified in Acquiror's statement. (c) Seller and Acquiror shall negotiate in good faith to attempt to resolve any such objection that is timely made by Seller, provided that if such parties are unable to agree upon the amount of the Cap Ex Reserve Shortfall for any Real Property Asset within ten (10) Business Days after the date of the written statement sent by Seller specifying an overstatement, Seller and Acquiror shall cause the preparers of the applicable Acquiror Cap Ex Report and the applicable Seller Cap Ex Report to select an independent third party to provide a capital expenditure report for such Real Property Asset and the amount of the Cap Ex Reserve Shortfall specified in such independent report shall be final and binding on Acquiror and Seller for the purposes of this Section 2.09. The fees and expenses of any such independent third party shall be a Transaction Cost. (d) Upon Seller and Acquiror having agreed or deemed to have agreed upon the amount of the Cap Ex Reserve Shortfall (or such amount having been determined in accordance with Section 2.09(c)), Seller may, at its sole option: (i) decrease the Base Purchase Price by the amount of the Cap Ex Reserve Shortfall so agreed or determined; (ii) deposit into escrow (with a third party mutually acceptable to Seller and Acquiror pursuant to escrow instructions in form and substance reasonably acceptable to Seller and Acquiror) on the Closing Date the amount of the Cap Ex Reserve Shortfall so agreed or determined for disbursement to Acquiror (and its Affiliates) from time to time after the Closing Date to pay for the deferred maintenance and capital items specifically identified in the applicable third party reports; or (iii) direct Acquiror to perform (or to cause third parties to perform) the deferred maintenance work and the capital items specifically identified in the applicable third party reports, in which case the Allocable Portions of the applicable Acquired Real Property Assets shall be increased in the aggregate by the aggregate amount of the Cap Ex Reserve Shortfall so agreed or determined (such increase to be allocated by Acquiror among the applicable Acquired Real Property Assets in such manner as Acquiror shall reasonably determine).

Capital Expenditure Reserves. (a) The Base Purchase Price was agreed upon between Seller and Acquiror on the assumption that none of the Real Property Assets is in need of significant deferred maintenance expenditures, and that the annual capital expenditure requirement of $450 400 per unit, which will be set forth in and calculated pursuant to the Agreement Regarding Leases, is sufficient to provide for anticipated future capital expenditures to maintain each of the Real Property Assets in their current condition. If, during the course of the Due Diligence Review in respect of any Real Property Asset, Acquiror determines, pursuant to third party reports received by Acquiror (each, an "Acquiror Cap Ex Report"), that the anticipated costs to perform deferred maintenance and previously unidentified future capital expenditures reasonably necessary to be performed during the twelve (12) month period following the each Closing Date will exceed the amount of the capital expenditure requirement for such period as set forth in and calculated pursuant to the form of Agreement Regarding Leases (the amount of such excess, with reference to any Real Property Asset, being hereinafter referred to as the "Cap Ex Reserve Shortfall"), then Acquiror shall provide to Seller not later than five (5) Business Days after the Due Diligence Expiration Date a written statement specifying the Cap Ex Reserve Shortfall, if any, for each of the Real Property Assets, including copies of all Acquiror Cap Ex Reports supporting such determination. Acquiror shall provide copies of each Acquiror Cap Ex Report as promptly as practicable after such report shall have been received by Acquiror. If Acquiror does not timely notify Seller of any Cap Ex Reserve Shortfall in respect of a Real Property Asset as provided above, Acquiror shall be deemed to have agreed that the amount of the Cap Ex Reserve Shortfall in respect of such Real Property Asset is zero. (b) For a period of ten (10) Business Days after the receipt of the statement delivered by Acquiror in accordance with Section 2.09(a), Seller shall have the right to review the statement and to obtain its own third party reports relating to any specified Cap Ex Reserve Shortfall (each such report, a "Seller Cap Ex Report"). Seller shall provide copies of each Seller Cap Ex Report as promptly as practicable after such report shall have been received by Seller. If Seller objects to any Cap Ex Reserve Shortfall specified in Acquiror' 's statement in respect of any Real Property Asset and determines, pursuant to a Seller Cap Ex Report, that the amount of such Cap Ex Reserve Shortfall is overstated by more than five percent (5%), then Seller shall provide to Acquiror not later than five (5) Business Days after the expiration of such review period a written statement specifying the amount of such overstatement for each of the Real Property Assets, including copies of all Seller Cap Ex Reports supporting such determination. If Seller does not notify Acquiror in writing of any objection within such review period, Seller shall be deemed to have agreed to the amount of each Cap Ex Reserve Shortfall specified in Acquiror's statement. (c) Seller and Acquiror shall negotiate in good faith to attempt to resolve any such objection that is timely made by Seller, provided that if such parties are unable to agree upon the amount of the Cap Ex Reserve Shortfall for any Real Property Asset within ten (10) Business Days after the date of the written statement sent by Seller specifying an overstatement, Seller and Acquiror shall cause the preparers of the applicable Acquiror Cap Ex Report and the applicable Seller Cap Ex Report to select an independent third party to provide a capital expenditure report for such Real Property Asset and the amount of the Cap Ex Reserve Shortfall specified in such independent report shall be final and binding on Acquiror and Seller for the purposes of this Section 2.09. The fees and expenses of any such independent third party shall be a Transaction Cost. (d) Upon Seller and Acquiror having agreed or deemed to have agreed upon the amount of the Cap Ex Reserve Shortfall (or such amount having been determined in accordance with Section 2.09(c)), Seller may, at its sole option: (i) decrease the Base Purchase Price by the amount of the Cap Ex Reserve Shortfall so agreed or determined; (ii) deposit into escrow (with a third party mutually acceptable to Seller and Acquiror pursuant to escrow instructions in form and substance reasonably acceptable to Seller and Acquiror) on the each Closing Date the amount of the Cap Ex Reserve Shortfall so agreed or determined for disbursement to Acquiror (and its Affiliates) from time to time after the applicable Closing Date to pay for the deferred maintenance and capital items specifically identified in the applicable third party reports; or (iii) direct Acquiror to perform (or to cause third parties to perform) the deferred maintenance work and the capital items specifically identified in the applicable third party reports, in which case the Allocable Portions of the applicable Acquired Real Property Assets shall be increased in the aggregate by the aggregate amount of the Cap Ex Reserve Shortfall so agreed or determined (such increase to be allocated by Acquiror among the applicable Acquired Real Property Assets in such manner as Acquiror shall reasonably determine).