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extent such deposits are forfeited to the Borrower under the tenant's lease). Gross Revenues also <br />includes any casualty insurance proceeds in excess of those used to restore the Property and any <br />rental interruption insurance proceeds. Any credit consideration shall be included in Gross <br />Revenues at the time cash proceeds (principal and/or other) are received. Borrower shall <br />establish and maintain accounts for the Gross Revenues (the "'Project Accounts") that are <br />segregated from revenues and income received by Borrower from all other projects. Gross <br />Revenues shall also include all interest earned on the Project Accounts. <br />"Operating Expenses" shall mean the sum of the following: <br />(i) payments of principal and interest and all other charges relating to the Senior <br />Loan(s); <br />(ii) a property management fee equal to 6.50% of gross rents; <br />(iii) Owner Administration Fee of 5% of gross rents; <br />(iv) Deposits into required reserves; <br />(v) all other actual, reasonable cash operating costs and expenses, calculated on an <br />annual basis, that are directly attributable to managing and operating the Property, including, <br />without limiting the generality of the foregoing, the following: costs and expenses for real and <br />personal property taxes, special assessments or similar charges; water, fuel, electricity and other <br />utilities; heating, ventilation and air conditioning expenses; labor; supplies; tools; equipment; <br />insurance; advertising and marketing; accounting and legal fees; brokerage commissions and <br />other leasing expenses; reasonable reserves for all anticipated expenses as approved by the City; <br />and other such items constituting operation, maintenance and repair costs actually paid by the <br />Borrower, subject to the following conditions: <br />(a) Depreciation and amortization expenses shall not be considered <br />Operating Expenses, except as otherwise provided herein. <br />(b) All furniture, fixtures, machinery and equipment expenditures with <br />an individual cost of $1,000 or more and a useful life of more than one year, shall be amortized <br />over a period determined in accordance with generally accepted accounting principles (except to <br />the extent purchased with reserve funds which have otherwise been included as an Operating <br />Expense). Such amortization shall assume equal annual installments of principal and interest <br />with an interest factor at the actual rate not to exceed the reference rate of the Bank of America <br />plus two percent (2%) if such furniture, fixtures, machinery and equipment are financed, or said <br />reference rate plus two percent (2%) if paid for in cash by Borrower. All furniture, fixtures, <br />machinery and equipment with an individual cost of less than $200 or a useful life of less than <br />one year shall be treated as expense items. <br />(c) Any expenses, compensation or fees paid to any affiliate of Borrower <br />shall only be included as Operating Expenses to the extent they are not in excess of the <br />3 <br />