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B. Borrower agrees and understands that this Loan Agreement constitutes an assurance and <br />undertaking by Borrower that the Development shall be operated on a continuous basis, <br />and all operating expenses shall be paid by Borrower during the life of this Loan <br />Agreement and that Borrower shall maintain the Development in good repair and <br />condition. <br />3. ACCOUNTS AND FUNDS. <br />A. Operating Receipts and Expense Account. Borrower shall maintain a separate bank <br />account for property operations. Said bank account shall be established with a federally <br />insured financial institution, and maintained by Borrower in accordance with the laws of <br />the State of Minnesota. <br />B. Security Deposit Account. Borrower shall collect, deposit, and disburse residents' <br />security deposits in accordance with the terms of their respective leases. Said security <br />deposits shall be placed in a bank account with a federally insured financial institution <br />and maintained by Borrower in accordance with the laws of the State of Minnesota. <br />4. TAXES AND INSURANCE ESCROW. <br />Monthly payments by Borrower to pay for real estate taxes and insurance premiums when due as <br />required by any prior mortgage lender shall be held in escrow by such mortgage lender for the <br />payment thereof. <br />5. MANAGEMENT AND OPERATION REQUIREMENTS. <br />Borrower shall provide for the management of the Development in a manner satisfactory to <br />Lender by a Management Agent, in accordance with the Management Agreement. <br />A. Personnel of Borrower. Borrower or its Management Agent shall investigate, hire, pay <br />supervise, and discharge all managerial and non-managerial personnel. Compensation for <br />the services of such employees shall be considered an operating expense of the <br />Development. Also, the Management Agent shall hire in its own name all managerial <br />and non-managerial personnel necessary for the performance of its duties under this Loan <br />Agreement. <br />B. Inspection Prior to Occupancy. Prior to the occupancy of any rental unit by a tenant, <br />Borrower or its Management Agent and the tenant shall inspect the unit and both shall <br />certify that they have inspected the unit and have determined it to be decent, safe, and <br />sanitary. <br />5 <br />