PROPERTY (INCLUDING THE COSTS OF
FORECLOSURE, INSURANCE PREMIUMS, LEGAL SERVICES, BROKERAGE AND SALES
COMMISSIONS, MAINTENANCE, REPAIR, IMPROVEMENT AND LOCAL MANAGEMENT OR PROPERTY),
OTHER THAN EXPENSES WITH RESPECT THERETO OF EMPLOYEES OF THE ADVISOR, TO THE
EXTENT THAT SUCH EXPENSES ARE TO BE BORNE BY THE ADVISOR PURSUANT TO SECTION 11
ABOVE;
(G)
ALL INSURANCE COSTS INCURRED IN CONNECTION WITH THE COMPANY
(INCLUDING OFFICER AND TRUSTEE LIABILITY INSURANCE) OR IN CONNECTION WITH ANY
OFFICER AND TRUSTEE INDEMNITY AGREEMENT TO WHICH THE COMPANY IS A PARTY;
(H)
EXPENSES CONNECTED WITH PAYMENTS OF DIVIDENDS OR INTEREST OR
CONTRIBUTIONS IN CASH OR ANY OTHER FORM MADE OR CAUSED TO BE MADE BY THE
TRUSTEES TO HOLDERS OF SECURITIES OF THE COMPANY;
(I)
ALL EXPENSES CONNECTED WITH COMMUNICATIONS TO HOLDERS OF
SECURITIES OF THE COMPANY AND OTHER BOOKKEEPING AND CLERICAL WORK NECESSARY TO
MAINTAINING RELATIONS WITH HOLDERS OF SECURITIES, INCLUDING THE COST OF PRINTING
AND MAILING CERTIFICATES FOR SECURITIES AND PROXY SOLICITATION MATERIALS AND
REPORTS TO HOLDERS OF THE COMPANY'S SECURITIES;
(J)
LEGAL, ACCOUNTING AND AUDITING FEES AND EXPENSES, OTHER THAN
THOSE DESCRIBED IN SUBSECTION (C) ABOVE; AND
(K)
EXPENSES RELATING TO ANY OFFICE OR OFFICE FACILITIES MAINTAINED BY
THE COMPANY SEPARATE FROM THE OFFICE OF THE ADVISOR.
13.
ANNUAL OPERATING EXPENSES LIMITATION REQUIRING REFUNDS BY THE
ADVISOR. THERE SHALL BE A LIMITATION (THE "LIMITATION") ON OPERATING EXPENSES
(AS DEFINED BELOW) OF THE COMPANY FOR EACH FISCAL YEAR WHICH SHALL BE THE LOWER
OF THE FOLLOWING:
(A)
THE GREATER OF (I) 2% OF THE AVERAGE INVESTED CAPITAL OF THE
COMPANY FOR SUCH FISCAL YEAR; AND (II) 25% OF THE NET INCOME (AS DEFINED BELOW)
OF THE COMPANY FOR SUCH FISCAL YEAR; OR
(B)
THE LOWEST OF ANY APPLICABLE OPERATING EXPENSE LIMITATIONS THAT
MAY BE IMPOSED BY LAW OR REGULATION IN A STATE IN WHICH ANY SECURITIES OF THE
COMPANY ARE OR WILL BE QUALIFIED FOR SALE OR BY A NATIONAL SECURITIES EXCHANGE
ON WHICH ANY SECURITIES OF THE COMPANY ARE OR MAY BE LISTED, AS SUCH LIMITATIONS
MAY BE ALTERED FROM TIME TO TIME.
For purposes of this Agreement, "Operating Expenses" shall be calculated on the
basis of the Company's annual audited financial statements and shall be deemed
to mean the aggregate annual expenses regarded as ordinary operating expenses in
accordance with generally accepted accounting principles (including the Fees),
exclusive of the following:
(I)
THE EXPENSES SET FORTH IN SUBSECTIONS (A) THROUGH (D), INCLUSIVE,
AND (F) OF SECTION 12 HEREOF;
(II)
NON-CASH EXPENDITURES, INCLUDING PROVISIONS FOR DEPRECIATION,
DEPLETION, BAD DEBT RESERVE AND AMORTIZATION;
(III)
LOSSES ON THE DISPOSITION OF ASSETS AND PROVISIONS FOR SUCH
LOSSES;
(IV)
OPTIONS GRANTED TO THE ADVISOR; AND
(V)
OTHER EXTRAORDINARY CHARGES INCLUDING, WITHOUT LIMITATION,
LITIGATION COSTS.
For purposes of this Agreement, "Net Income" for any period shall be calculated
on the basis of the Company's audited financial statements and shall be deemed
to mean total revenues applicable to such period, less the expenses applicable
to such period, including additions to reserves for depreciation or bad debts or
other similar