Agmt 2006 Mercy Housing California XXXIII (4)

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the amount by which Gross Revenue (defined below) exceeds Annual Operating Expenses (defined below) for the Project. Surplus Cash shall also include net cash proceeds realized from any refinancing of the Project, less fees and closing costs reasonably incurred in connection with such refinancing, repayment of the loan being refinanced, and any Agency-approved uses of the net cash proceeds ofthe refinancing. 3.5.1.2 "Gross Revenue" shall mean for each calendar year during the term hereof, all revenue, income, receipts and other consideration actually received by Tenant from the operation and leasing ofthe Project. Gross Revenue shall include, but not be limited to: all rents, fees and charges paid by tenants; Section 8 payments or other rental subsidy payments received for the dwelling units; deposits forfeited by tenants; all cancellation fees, price index adjustments and any other rental adjustments to leases or rental agreements; proceeds from vending and laundry room machines; the proceeds of business interruption or similar insurance not paid to senior lenders; the proceeds of casualty insurance not used to rebuild the Improvements and not paid to senior lenders; condemnation awards for a taking of part or all of the Property or the Improvements for a temporary period; and the fair market value of any goods or services provided to Tenant in consideration for the leasing or other use of any part ofthe Project. Gross Revenue shall include any release of funds from replacement and other reserve accounts to Tenant other than for costs associated with the Project. Gross Revenue shall not include tenants' security deposits, loan proceeds, capital contributions or similar advances, but shall include operating subsidy payments paid by the Agency pursuant to the Loan Agreement. 3.5.1.3 "Annual Operating Expenses" shall mean for each calendar year during term hereof, the following costs reasonably and actually incurred for the operation and maintenance of the Project to the extent that they are consistent with an annual independent audit performed by a certified public accountant using generally accepted accounting principles: property taxes and assessments; debt service currently due and payable on a non-optional basis (excluding debt service due from residual receipts or surplus cash of the Project) on loans which have been approved by the Agency and which are secured by deeds of trust senior in priority to the Leasehold Deed of Trust executed by Tenant for the benefit of Agency ("Approved Senior Loans") or which Agency has approved pursuant to Section 9.5 of the DDA; property management fees and reimbursements in amounts in accordance with industry standards for similar developments; premiums for property damage and liability insurance; utility service costs not paid for directly or indirectly by tenants; maintenance and repair costs; fees for licenses and permits required for the operation of the Project; organizational costs (e.g., annual franchise tax payments) and costs associated with accounting, tax preparation and legal fees of Tenant incurred in the ordinary course of business; expenses for security services; advertising and marketing costs; payment of deductibles in connection with casualty insurance claims not paid from reserves; tenant services; the amount of uninsured losses actually replaced, repaired or restored and not paid from reserves; cash deposits into operating reserves in an amount reasonably approved by Agency or required by the holder of any Approved Senior Loan, but in no event more than three percent (3%) of Annual Operating Expenses (excluding developer fees, asset management fees, and partnership management fees), and only if the accumulated operating reserve does not exceed six months' gross Project rent; cash deposits into reserves for capital replacements in an amount no more than $350 per unit per year; partnership management fees payable to Tenant as general partner in an amount not to exceed the sum of Fifteen Thousand ($15,000) per year during the first fifteen (15) years following issuance of a certificate 833368-4 5