Reserves.
3.4.1
RESERVE DEPOSITS.
IF AND TO THE EXTENT REQUIRED UNDER THE PROVISIONS OF
SECTION 3.4.2 BELOW, BORROWER SHALL, FROM AND AFTER THE DATE (AND IF) BORROWER
IS REQUIRED TO DO SO UNDER THE PROVISIONS OF SECTION 3.4.2 BELOW, PAY TO LENDER
$19,741 (THE "MONTHLY CAPITAL RESERVE DEPOSIT AMOUNT") ON EACH PAYMENT DATE
(SUCH DEPOSITS, THE "MONTHLY CAPITAL RESERVE DEPOSITS").
LENDER WILL TRANSFER
SUCH AMOUNTS INTO A SUBACCOUNT (THE "CAPITAL RESERVE SUBACCOUNT").
ADDITIONALLY, UPON THIRTY (30) DAYS' PRIOR NOTICE TO BORROWER, LENDER MAY
REASSESS THE AMOUNT OF THE MONTHLY PAYMENT REQUIRED UNDER THIS SECTION 3.4 FROM
TIME TO TIME IN ITS REASONABLE DISCRETION (BASED UPON ITS THEN CURRENT
UNDERWRITING STANDARDS).
PROVIDED THAT NO EVENT OF DEFAULT HAS OCCURRED AND IS
CONTINUING, LENDER SHALL DISBURSE FUNDS HELD IN THE CAPITAL RESERVE SUBACCOUNT
TO BORROWER, WITHIN FIFTEEN (15) DAYS AFTER THE DELIVERY BY BORROWER TO LENDER
OF A REQUEST THEREFOR (BUT NOT MORE OFTEN THAN ONCE PER MONTH), IN MINIMUM
AMOUNTS OF AT LEAST $5,000 PROVIDED THAT (I) SUCH DISBURSEMENT IS FOR AN
APPROVED CAPITAL EXPENSE; (II) LENDER SHALL HAVE (IF IT DESIRES) VERIFIED (BY AN
INSPECTION CONDUCTED AT BORROWER'S EXPENSE (WITH RESPECT TO ANY DISBURSEMENT IN
EXCESS OF $50,000)) PERFORMANCE OF THE WORK ASSOCIATED WITH SUCH APPROVED
CAPITAL EXPENSE; AND (III) THE REQUEST FOR DISBURSEMENT IS ACCOMPANIED BY (A) AN
OFFICER'S CERTIFICATE CERTIFYING (1) THAT SUCH FUNDS WILL BE USED TO PAY OR
REIMBURSE BORROWER FOR APPROVED CAPITAL EXPENSES AND A DESCRIPTION THEREOF,
(2) THAT ALL OUTSTANDING TRADE PAYABLES (OTHER THAN THOSE NOT YET DUE AND
PAYABLE OR THOSE TO BE PAID FROM THE REQUESTED DISBURSEMENT OR THOSE
CONSTITUTING PERMITTED INDEBTEDNESS) HAVE BEEN PAID IN FULL, (3) THAT THE SAME
HAS NOT BEEN THE SUBJECT OF A PREVIOUS DISBURSEMENT, AND (4) THAT ALL PREVIOUS
DISBURSEMENTS HAVE BEEN USED TO PAY THE PREVIOUSLY IDENTIFIED APPROVED CAPITAL
EXPENSES, AND (B) LIEN WAIVERS
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OR OTHER EVIDENCE OF PAYMENT SATISFACTORY TO LENDER, (C) WITH RESPECT TO ANY
DISBURSEMENT THAT EXCEEDS $50,000, AT LENDER'S OPTION, A TITLE SEARCH FOR THE
PROPERTY INDICATING THAT THE PROPERTY IS FREE FROM ALL LIENS, CLAIMS AND OTHER
ENCUMBRANCES NOT PREVIOUSLY APPROVED BY LENDER AND (D) SUCH OTHER EVIDENCE AS
LENDER SHALL REASONABLY REQUEST THAT THE APPROVED CAPITAL EXPENSES AT THE
PROPERTY TO BE FUNDED BY THE REQUESTED DISBURSEMENT HAVE BEEN COMPLETED AND ARE
PAID FOR OR WILL BE PAID UPON SUCH DISBURSEMENT TO BORROWER.
ANY SUCH
DISBURSEMENT OF MORE THAN $10,000 TO PAY (RATHER THAN REIMBURSE) APPROVED
CAPITAL EXPENSES MAY, AT LENDER'S OPTION, BE MADE BY JOINT CHECK PAYABLE TO
BORROWER AND THE PAYEE ON SUCH APPROVED CAPITAL EXPENSES.
3.4.2
GUARANTY IN LIEU OF RESERVE.
(A)
In lieu of a requirement for monthly deposits by Borrower into the Capital
Reserve Subaccount, Guarantor, pursuant to the Guaranty, has (among other
obligations thereunder) guaranteed payment and performance in full of all
Capital Expenses and work relating thereto and agreed to pay to Lender, upon
Lender's demand following the occurrence and during the continuance of an Event
of Default, an amount