Common use of Capital Improvements Reserve Clause in Contracts

Capital Improvements Reserve. On or before September __, 2009, Borrower shall deposit $282,000 into the Capital Improvements Account for the purpose of establishing and maintaining a reserve (the “Capital Improvements Reserve”) for the completion of the Required Capital Improvements as required by this Agreement. Subject to Section 5.12(C), the funds contained in the Capital Improvements Reserve shall be utilized by Borrower solely for the Required Capital Improvements. So long as no Default or Event of Default exists at the time of any requested distribution of funds from the Capital Improvements Reserve, Lender shall make funds in the Capital Improvements Reserve available to Borrower subject to satisfaction of each of the following terms and conditions: (a) all Capital Improvements Reserve funds released by Lender to Borrower shall be used to pay for or reimburse Borrower for the reasonable expenses actually incurred and paid by Borrower for Required Capital Improvements; (b) Borrower shall have given Lender a Request for Release satisfactory to Lender; (c) disbursements from the Capital Improvements Reserve shall not be made more frequently than once per Loan Month; (d) each request for a disbursement shall be in an amount of not less than $10,000.00; and (e) upon request of Lender, Borrower shall also provide Lender with additional evidence reasonably satisfactory to Lender that Borrower is the owner or lessee of any capital improvements or equipment for which reimbursement is sought, free of any Liens (other than the first priority security interest in favor of Lender). Lender shall make each disbursement of the Capital Improvements Reserve funds within fifteen (15) days after satisfaction of all the conditions to that disbursement. If an Event of Default exists, Lender may apply the Capital Improvements Reserve funds, together with any interest accrued thereon, to Borrower’s Obligations in such order and priority as Lender may determine. Lender shall not make any disbursements from the Capital Expenditure Reserve to or for the benefit of Borrower until (i) Lender has approved the expenditures proposed by Borrower, (ii) all conditions to such disbursement have been satisfied and (iii) Borrower has provided Lender with all invoices, receipts, lien waivers and other documentation reasonably requested by Lender. If at any time Lender determines, in its reasonable discretion, that the amount in the Capital Improvements Reserve is insufficient for Borrower to complete the requested Required Capital Improvements, then Borrower shall deposit any deficiency, based on Lender’s reasonable estimate, within fifteen (15) days following Lender’s written demand. If there are any funds remaining in the Capital Improvements Reserve on the date on which the Required Capital Improvements have been completed to Lender’s satisfaction (the “Completion Date”), then Lender shall promptly return such remaining funds to Borrower. If Borrower has prepaid the Loan pursuant to Section 2.4(C) before the Completion Date, then Lender shall promptly return any amount remaining in the Capital Improvements Reserve to Borrower.

Capital Improvements Reserve. On or before September __, 2009Commencing one month after the Conversion Date, Borrower shall be required to deposit into a custodial account held with Lender, or other national bank as approved by Lender, in the amount of $282,000 into 10,417 per month from Project EBITDA (or other amount available after the required deposit has been made to the Debt Service Reserve), up to a maximum of $125,000.00 (the “Reserve Cap”). If at any time the Capital Improvements Account Reserve falls below the Reserve Cap, the Borrower shall replace such deficiency through monthly deposits as required above until the Capital Improvements Reserve is fully replenished up to the Reserve Cap. At Lender’s option, following the Conversion Date, disbursements from the Capital Improvements Reserve wxxx be disbursed to Borrower (or paid directly by Lender) for capital improvements, including but not limited to repairs, replacements and other capital improvements to the Project plant and equipment. Lender shall have no obligation to disburse from the Capital Improvements Reserve (i) if an Event of Default has occurred and is continuing hereunder, or (ii) for any other purpose or to any other person other than for which the Capital Improvements Reserve was established; provided that if an Event of establishing and maintaining Default has occurred, the Lender may disburse from the Capital Improvements Reserve in its sole discretion to the repayment of the Loan or to any of the Project Costs as it may determine in its discretion. Borrower hereby grants to Lender a reserve (first security interest in the “Capital Improvements Reserve”) for the completion of the Required Capital Improvements as required by this Agreement. Subject to Section 5.12(C), the funds contained Amounts held in the Capital Improvements Reserve shall be utilized by Borrower solely disbursed from time to time as required in increments as needed to satisfy the item for the Required Capital Improvements. So long as no Default or Event of Default exists at the time of any requested distribution of funds from the Capital Improvements Reserve, Lender shall make funds in which the Capital Improvements Reserve available to Borrower subject to satisfaction of each of the following terms and conditions: (a) all Capital Improvements Reserve funds released by Lender to Borrower has been established. Such requests shall be used to pay for or reimburse Borrower for the reasonable expenses actually incurred and paid by Borrower for Required Capital Improvements; (b) Borrower shall have given Lender a Request for Release satisfactory to Lender; (c) disbursements from the Capital Improvements Reserve shall made not be made more frequently often than once per Loan Month; (d) each request for a disbursement shall be in an amount of not less than $10,000.00; and (e) upon request of Lender, Borrower shall also provide Lender with additional evidence reasonably satisfactory to Lender that Borrower is the owner or lessee of any capital improvements or equipment for which reimbursement is sought, free of any Liens (other than the first priority security interest in favor of Lender). Lender shall make each disbursement of the Capital Improvements Reserve funds within fifteen (15) days after satisfaction of all the conditions to that disbursement. If an Event of Default exists, Lender may apply the Capital Improvements Reserve funds, together with any interest accrued thereon, to Borrower’s Obligations in such order and priority as Lender may determine. Lender shall not make any disbursements from the Capital Expenditure Reserve to or for the benefit of Borrower until (i) Lender has approved the expenditures proposed by Borrower, (ii) all conditions to such disbursement have been satisfied and (iii) Borrower has provided Lender with all invoices, receipts, lien waivers and other documentation reasonably requested by Lender. If at any time Lender determinesmonthly, in its reasonable discretionwriting, that addressed to the Lender certifying the amount in the Capital Improvements Reserve is insufficient for Borrower to complete the requested Required Capital Improvements, then Borrower shall deposit any deficiency, based on Lender’s reasonable estimate, within fifteen (15) days following Lender’s written demand. If there are any funds remaining in the Capital Improvements Reserve on the date on which the Required Capital Improvements have been completed to Lender’s satisfaction (the “Completion Date”), then Lender shall promptly return such remaining funds to Borrower. If Borrower has prepaid the Loan pursuant to Section 2.4(C) before the Completion Date, then Lender shall promptly return any amount remaining in the Capital Improvements Reserve to Borrower.be disbursed and accompanied by:

Capital Improvements Reserve. CAPITAL IMPROVEMENTS RESERVE. On or before September __, 2009the date hereof and by the fifteenth (15th) day of each January hereafter, Borrower or Operating Lessee shall deposit $282,000 into the Capital Improvements Account for the purpose of establishing and maintaining a reserve with Lender the greater of (a) $352,400 ($400 times the number of units in the Projects subject to reduction of and as the number of units is reduced), or (b) such higher amount as may be recommended by Lender's consulting engineer (the “Capital Improvements Reserve”"CAPITAL IMPROVEMENTS RESERVE") for replacing or correcting damages or defects (as opposed to normal repairs and recurring expenses) to any Project, including but not limited to, roofing, foundation work, exterior painting, parking lot and structures, kitchen appliances, carpeting, furnishings, fixtures, equipment, vehicles, office equipment, landscaping, heating, ventilating and air-conditioning systems, plumbing, electrical and mechanical systems ("CAPITAL EXPENDITURES") as specified in a Capital Expenditures Budget (as hereinafter defined) or otherwise approved in advance by Lender; however, the completion amount of the Required Capital Improvements as required by this Agreement. Subject to Section 5.12(C), the funds contained in initial deposit into the Capital Improvements Reserve shall be utilized reduced by the amount of funds expended for capital improvements to the Projects approved by Lender in calendar year 2002. The Capital Improvements Reserve will be held by Lender in an interest-bearing reserve account controlled by Lender. The Capital Improvements Reserve shall be advanced by Lender to Borrower solely or Operating Lessee for Capital Expenditures. Operating Lessee grants to Lender a security interest in the Required Capital ImprovementsImprovements Reserve. So long as no Default or While an Event of Default exists at the time or a Potential Default exists, Lender shall not be obligated to advance to Borrower or Operating Lessee any portion of any requested distribution of funds from the Capital Improvements Reserve, Lender shall make funds in the Capital Improvements Reserve available to Borrower subject to satisfaction of each of the following terms and conditions: (a) all Capital Improvements Reserve funds released by Lender to Borrower shall be used to pay for or reimburse Borrower for the reasonable expenses actually incurred and paid by Borrower for Required Capital Improvements; (b) Borrower shall have given Lender a Request for Release satisfactory to Lender; (c) disbursements from the Capital Improvements Reserve shall not be made more frequently than once per Loan Month; (d) each request for a disbursement shall be in an amount of not less than $10,000.00; and (e) upon request of Lender, Borrower shall also provide Lender with additional evidence reasonably satisfactory to Lender that Borrower is the owner or lessee of any capital improvements or equipment for which reimbursement is sought, free of any Liens (other than the first priority security interest in favor of Lender). Lender shall make each disbursement of the Capital Improvements Reserve funds within fifteen (15) days after satisfaction of all the conditions to that disbursement. If while an Event of Default exists, Lender may apply the Capital Improvements Reserve fundsshall be entitled, together with any interest accrued thereonwithout notice to Borrower or Operating Lessee, to Borrower’s Obligations in such order and priority as Lender may determine. Lender shall not make any disbursements from the Capital Expenditure Reserve to or for the benefit of Borrower until (i) Lender has approved the expenditures proposed by Borrower, (ii) all conditions to such disbursement have been satisfied and (iii) Borrower has provided Lender with all invoices, receipts, lien waivers and other documentation reasonably requested by Lender. If at any time Lender determines, in its reasonable discretion, that the amount in the Capital Improvements Reserve is insufficient for Borrower to complete the requested Required Capital Improvements, then Borrower shall deposit any deficiency, based on Lender’s reasonable estimate, within fifteen (15) days following Lender’s written demand. If there are apply any funds remaining in the Capital Improvements Reserve on the date on which the Required Capital Improvements have been completed to Lender’s satisfaction (the “Completion Date”), then Lender shall promptly return such remaining funds to Borrower. If Borrower has prepaid the Loan pursuant to Section 2.4(C) before the Completion Date, then Lender shall promptly return any amount remaining in the Capital Improvements Reserve to satisfy Borrower's obligations under the Loan Documents. Within thirty (30) days after the beginning of any calendar year Borrower or Operating Lessee shall submit to Lender a budget for Capital Expenditures for that calendar year (the "CAPITAL EXPENDITURES BUDGET"). The Capital Expenditures Budget shall be based on the previous year's experience and an assessment of anticipated future needs, and shall be subject to Lender's approval. The Capital Improvements Reserve shall be advanced in accordance with the conditions for advances under Schedule 2.1, Part C, and Lender's customary procedures for improvements advances.

Capital Improvements Reserve. On or before September __January 15, 20092012, and by the fifteenth (15th) day of each January thereafter, Borrower shall deposit $282,000 into the Capital Improvements Account for the purpose of establishing and maintaining a reserve with Lender (the “Capital Improvements Reserve”) an amount equal to the positive difference between (1) the greater of (a) the product obtained by multiplying the greater of $0.15 by the existing number of rentable square feet in the Project and (b) the annual capital reserve amount determined by Lender from time to time, and (2) the sum of all expenditures by Borrower for capital improvements and replacements to the completion of Project during the Required Capital Improvements as required preceding calendar year which were approved in advance by this Agreement. Subject to Section 5.12(C), the funds contained in Lender and not paid with disbursements from the Capital Improvements Reserve (provided that for the calendar year in which the Closing Date occurs, such amount shall be utilized by Borrower solely for pro-rated to reflect the Required Capital Improvementsportion of the calendar year during which the Loans are outstanding). So long as no Default or Event of Default exists at the time of any requested distribution of funds from the Capital Improvements Reserve, Lender shall make funds in the The Capital Improvements Reserve available to Borrower subject to satisfaction of each of the following terms will be held by Lender without interest and conditions: (a) all may be commingled with Lender’s own funds. The Capital Improvements Improvement Reserve funds released shall be advanced by Lender to Borrower shall be used for capital improvements and capital repairs to pay for or reimburse Borrower for the reasonable expenses actually incurred and paid Project, as approved by Borrower for Required Capital Improvements; (b) Borrower shall have given Lender a Request for Release satisfactory to Lender; (c) disbursements from however, funds in the Capital Improvements Reserve shall not be made more frequently than once per Loan Month; (d) each request available for a disbursement shall be in an amount financing any of not less than $10,000.00; and (e) upon request of Lender, the improvements for which capital improvements advances are contemplated by the Budget. Borrower shall also provide Lender with additional evidence reasonably satisfactory grants to Lender that Borrower is the owner or lessee of any capital improvements or equipment for which reimbursement is sought, free of any Liens (other than the first priority a security interest in favor the Capital Improvements Reserve. While an Event of Lender). Default or a Potential Default exists, Lender shall make each disbursement not be obligated to advance to Borrower any portion of the Capital Improvements Reserve funds within fifteen (15) days after satisfaction of all the conditions to that disbursement. If Reserve, and while an Event of Default exists, Lender may apply the Capital Improvements Reserve fundsshall be entitled, together with any interest accrued thereonwithout notice to Borrower, to Borrower’s Obligations in such order and priority as Lender may determine. Lender shall not make any disbursements from the Capital Expenditure Reserve to or for the benefit of Borrower until (i) Lender has approved the expenditures proposed by Borrower, (ii) all conditions to such disbursement have been satisfied and (iii) Borrower has provided Lender with all invoices, receipts, lien waivers and other documentation reasonably requested by Lender. If at any time Lender determines, in its reasonable discretion, that the amount in the Capital Improvements Reserve is insufficient for Borrower to complete the requested Required Capital Improvements, then Borrower shall deposit any deficiency, based on Lender’s reasonable estimate, within fifteen (15) days following Lender’s written demand. If there are apply any funds remaining in the Capital Improvements Reserve on the date on which the Required Capital Improvements have been completed to Lender’s satisfaction (the “Completion Date”), then Lender shall promptly return such remaining funds to Borrower. If Borrower has prepaid the Loan pursuant to Section 2.4(C) before the Completion Date, then Lender shall promptly return any amount remaining in the Capital Improvements Reserve to satisfy Borrower.’s obligations under the Loan Documents. Borrower and Lender shall meet annually on a date selected by Lender to establish monthly, quarterly, and annual budgets for capital expenditures for the Project for the succeeding calendar year (the “Capital Expenditures Budget”). The Capital Expenditures Budget shall be based on the previous year’s experience and an assessment of anticipated future needs, and shall be subject to Lender’s approval. Each advance of the Capital Improvements Reserve shall be subject to Lender’s receipt, review, approval and/or confirmation of the following, each in form and content satisfactory to Lender in its sole discretion:

Capital Improvements Reserve. On or before September __January 15, 20091997 and by the fifteenth (15th) day of each January thereafter, Borrower shall deposit $282,000 into a reserve with Lender (the Capital Improvements Account "CAPITAL IMPROVEMENTS RESERVE") an amount equal to the positive difference between (1) three percent (3%) of Operating Revenues for the purpose immediately preceding calendar year, and (2) the sum of establishing and maintaining a reserve (the “Capital Improvements Reserve”) for the completion of the Required Capital Improvements as required by this Agreement. Subject to Section 5.12(C), the funds contained in the Capital Improvements Reserve shall be utilized all expenditures by Borrower solely for capital improvements and replacements to the Required Projects during the preceding calendar year which were specified in a Capital Improvements. So long Expenditures Budget (as no Default hereinafter defined) or Event of Default exists at the time of any requested distribution of funds otherwise approved in advance by Lender and not paid with disbursements from the Capital Improvements Reserve, Lender shall make funds in the . The Capital Improvements Reserve available to Borrower subject to satisfaction of each of the following terms will be held by Lender without interest and conditions: (a) all may be commingled with Lender's own funds. The Capital Improvements Improvement Reserve funds released shall be advanced by Lender to Borrower shall be used for capital improvements and capital repairs to pay for or reimburse Borrower for the reasonable expenses actually incurred and paid Projects, as approved by Borrower for Required Capital Improvements; (b) Borrower shall have given Lender a Request for Release satisfactory to Lender; (c) disbursements from however, funds in the Capital Improvements Reserve shall not be made more frequently than once per Loan Month; (d) each request available for a disbursement shall be in an amount financing any of not less than $10,000.00; and (e) upon request of Lender, the improvements for which capital improvements advances are contemplated by the Budget. Borrower shall also provide Lender with additional evidence reasonably satisfactory grants to Lender that Borrower is the owner or lessee of any capital improvements or equipment for which reimbursement is sought, free of any Liens (other than the first priority a security interest in favor the Capital Improvements Reserve. While an Event of Lender). Default or a Potential Default exists, Lender shall make each disbursement not be obligated to advance to Borrower any portion of the Capital Improvements Reserve funds within fifteen (15) days after satisfaction of all the conditions to that disbursement. If Reserve, and while an Event of Default exists, Lender may apply the Capital Improvements Reserve fundsshall be entitled, together with any interest accrued thereonwithout notice to Borrower, to Borrower’s Obligations in such order and priority as Lender may determine. Lender shall not make any disbursements from the Capital Expenditure Reserve to or for the benefit of Borrower until (i) Lender has approved the expenditures proposed by Borrower, (ii) all conditions to such disbursement have been satisfied and (iii) Borrower has provided Lender with all invoices, receipts, lien waivers and other documentation reasonably requested by Lender. If at any time Lender determines, in its reasonable discretion, that the amount in the Capital Improvements Reserve is insufficient for Borrower to complete the requested Required Capital Improvements, then Borrower shall deposit any deficiency, based on Lender’s reasonable estimate, within fifteen (15) days following Lender’s written demand. If there are apply any funds remaining in the Capital Improvements Reserve on the date on which the Required Capital Improvements have been completed to Lender’s satisfaction (the “Completion Date”), then Lender shall promptly return such remaining funds to Borrower. If Borrower has prepaid the Loan pursuant to Section 2.4(C) before the Completion Date, then Lender shall promptly return any amount remaining in the Capital Improvements Reserve to satisfy Borrower.'s obligations under the Loan Documents. Borrower and Lender shall meet annually on a date selected by Lender to establish monthly, quarterly, and annual budgets for capital expenditures for the Projects for the succeeding calendar year (the "CAPITAL EXPENDITURES BUDGET"). The Capital Expenditures Budget shall be based on the previous year's experience and an assessment of anticipated future needs, and shall be subject to Lender's approval. The Capital Improvements Reserve shall be advanced in accordance with the conditions for improvements advances under Schedule 2.1. Schedule 2.4(2) - 1 66 LIST OF DEFINED TERMS

Capital Improvements Reserve. On or before September __, 2009Commencing one month after the Conversion Date, Borrower shall be required to deposit into a custodial account held with Lender, or other national bank as approved by Lender, in the amount of $282,000 into 10,417 per month from Project EBITDA (or other amount available after the required deposit has been made to the Debt Service Reserve), up to a maximum of $125,000.00 (the “Reserve Cap”). If at any time the Capital Improvements Account Reserve falls below the Reserve Cap, the Borrower shall replace such deficiency through monthly deposits as required above until the Capital Improvements Reserve is fully replenished up to the Reserve Cap. At Lender’s option, following the Conversion Date, disbursements from the Capital Improvements Reserve will be disbursed to Borrower (or paid directly by Lender) for capital improvements, including but not limited to repairs, replacements and other capital improvements to the Project plant and equipment. Lender shall have no obligation to disburse from the Capital Improvements Reserve (i) if an Event of Default has occurred and is continuing hereunder, or (ii) for any other purpose or to any other person other than for which the Capital Improvements Reserve was established; provided that if an Event of establishing and maintaining Default has occurred, the Lender may disburse from the Capital Improvements Reserve in its sole discretion to the repayment of the Loan or to any of the Project Costs as it may determine in its discretion. Borrower hereby grants to Lender a reserve (first security interest in the “Capital Improvements Reserve”) for the completion of the Required Capital Improvements as required by this Agreement. Subject to Section 5.12(C), the funds contained Amounts held in the Capital Improvements Reserve shall be utilized by Borrower solely disbursed from time to time as required in increments as needed to satisfy the item for the Required Capital Improvements. So long as no Default or Event of Default exists at the time of any requested distribution of funds from the Capital Improvements Reserve, Lender shall make funds in which the Capital Improvements Reserve available to Borrower subject to satisfaction of each of the following terms and conditions: (a) all Capital Improvements Reserve funds released by Lender to Borrower has been established. Such requests shall be used to pay for or reimburse Borrower for the reasonable expenses actually incurred and paid by Borrower for Required Capital Improvements; (b) Borrower shall have given Lender a Request for Release satisfactory to Lender; (c) disbursements from the Capital Improvements Reserve shall made not be made more frequently often than once per Loan Month; (d) each request for a disbursement shall be in an amount of not less than $10,000.00; and (e) upon request of Lender, Borrower shall also provide Lender with additional evidence reasonably satisfactory to Lender that Borrower is the owner or lessee of any capital improvements or equipment for which reimbursement is sought, free of any Liens (other than the first priority security interest in favor of Lender). Lender shall make each disbursement of the Capital Improvements Reserve funds within fifteen (15) days after satisfaction of all the conditions to that disbursement. If an Event of Default exists, Lender may apply the Capital Improvements Reserve funds, together with any interest accrued thereon, to Borrower’s Obligations in such order and priority as Lender may determine. Lender shall not make any disbursements from the Capital Expenditure Reserve to or for the benefit of Borrower until (i) Lender has approved the expenditures proposed by Borrower, (ii) all conditions to such disbursement have been satisfied and (iii) Borrower has provided Lender with all invoices, receipts, lien waivers and other documentation reasonably requested by Lender. If at any time Lender determinesmonthly, in its reasonable discretionwriting, that addressed to the Lender certifying the amount in the Capital Improvements Reserve is insufficient for Borrower to complete the requested Required Capital Improvements, then Borrower shall deposit any deficiency, based on Lender’s reasonable estimate, within fifteen (15) days following Lender’s written demand. If there are any funds remaining in the Capital Improvements Reserve on the date on which the Required Capital Improvements have been completed to Lender’s satisfaction (the “Completion Date”), then Lender shall promptly return such remaining funds to Borrower. If Borrower has prepaid the Loan pursuant to Section 2.4(C) before the Completion Date, then Lender shall promptly return any amount remaining in the Capital Improvements Reserve to Borrower.be disbursed and accompanied by: