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<br />Page | 24 <br />4894-6811-3695v.2 0017787-000542 <br />4894-6811-3695v.2 0017787-000542 <br />accepted accounting principles consistently applied or constitute qualifying aesthetic improvements. <br />Permitted Capital Expenditures shall not include costs for any necessary repairs to remedy any <br />broken or damaged Improvements, all of which costs shall be separately funded by Tenant. <br />5.6.4. All specific purposes and costs for which Tenant desires to utilize amounts <br />from the Capital Improvement Fund shall be at Tenant’s reasonable discretion and subject to Lessor's <br />written approval as provided for in Section 5.6.9, below. Tenant shall furnish to the Lessor <br />applicable invoices, evidence of payment and other back-up materials concerning the use of amounts <br />from the Capital Improvement Fund. <br />5.6.5. The Capital Improvement Fund shall be held in an account established with a <br />Lender acceptable to the Lessor, into which deposits shall be made by Tenant pursuant to Section <br />5.6.8, below. <br />5.6.6. Tenant shall have the right to partly or fully satisfy the Capital Improvement <br />Fund obligations of this Section 5.6 with capital improvement reserves (or replacement reserves) <br />required by Tenant's Leasehold Mortgagees or the Limited Partner, as long as such capital <br />improvement reserves or replacement reserves are in all material respects administered and utilized <br />in accordance, and otherwise comply, with the terms, provisions and requirements of this Section 5.6. <br />5.6.7. In the event of default by Tenant and the early termination of this Lease, the <br />Lessor shall have full access to the Capital Improvement Fund, provided the Tenant’s Leasehold <br />Mortgagee does not use it within a reasonable time for the purposes stated in this Section 5.6; <br />provided, however, that Lessor’s rights under this Section 5.6.7 are hereby made subject and <br />subordinate to the lien of each Leasehold Mortgage. <br />5.6.8. Commencing on the fifteenth (15th) day of the month during which the fifth <br />(5th) anniversary of the Commencement Date occurs, and continuing on or before the fifteenth (15th) <br />day of each month thereafter until five (5) years prior to the expiration of the Term, Tenant shall <br />make a monthly depositan annual contribution to the Capital Improvement Fund in an amount equal <br />to one three-hundred dollars ($300) per unit per year for 66 of the units and five hundred dollars <br />($500) per unit per year for the 20 MHSA units, with a ten-percent (110%) of total rent collected by <br />Tenant from sub-tenants for the previous month escalator applied every five (5) years commencing <br />on the date set forth in this Section 5.6.8. All interest and earnings on the Capital Improvement Fund <br />shall be added to the Capital Improvement Fund, but shall not be treated as a credit against the <br />Capital Improvement Fund deposits required to be made by Tenant pursuant to this Section 5.6. <br />5.6.9. Disbursements shall be made from the Capital Improvement Fund only for <br />costs which satisfy the requirements of this Section 5.6. For the purpose of obtaining the Lessor's <br />prior approval of any Capital Improvement Fund disbursements, Tenant shall submit to the Lessor on <br />an annual calendar year basis a capital expenditure plan for the upcoming year which details the <br />amount and purpose of anticipated Capital Improvement Fund expenditures (“Capital Improvement <br />Plan”). Lessor shall approve or disapprove such Capital Improvement Plan within thirty (30) days <br />of receipt, which approval shall not be unreasonably withheld, conditioned or delayed. Any <br />expenditure set forth in the approved Capital Improvement Plan shall be considered pre-approved by <br />Lessor (but only up to the amount of such expenditure set forth in the Capital Improvement Plan) for <br />the duration of the upcoming year. Tenant shall have the right during the course of each year to <br />submit to the Lessor for the Lessor's approval revisions to the then current Capital Improvement <br />Plan, or individual expenditures not noted on the previously submitted Capital Improvement Plan. <br />Commented [ST18]: Capitalized reserve requirement <br />should match what is actually anticipated to be deposited <br />monthly. I’m anticipating $347/unit per year with a 10% <br />escalator every 5 years. <br /> <br />EXHIBIT 11