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(5) Add the Capital Improvement cost, if any, to (4). Round to the nearest half dollar. This is the Adjusted Monthly Rent Formula B. If a Park Owner selects Formula B, the Adjusted Monthly Rents shall be adjusted annually and shall be calculated as set forth below: For 1998: (1) From the Adjusted Monthly Rent(see Exhibits A-1, A-2 and A-3), subtract the Capital Improvement costs (Paragraph VIII), if any. (This is the Monthly Rent) (2) Subtract from(1) the Operating Expenses and the Real Property Taxes paid through September 30, 1996. This equals the 1997 Base Rent. (3) Multiply (2) by the Cost of Living. (This number represents the Owner's "return on investment"; when added to the Base Rent in (2), it yields the Base Rent for 1998.) (4) Calculate the Operating Expenses (that now includes government regulated expenses other than Real Property Taxes) for 9/:30/97 by dividing the Operating Expenses by the product of 12 and the number of spaces in the Park; provided, however that this amount shall not exceed 105%of the 9/30/96 Operating Expenses; to the extent it does, the excess shall be carried over to the next year. (5) Calculate the Real Property Taxes for 9/30/97 by dividing the real Property Taxes by the product of 12 and the number of spaces in the Park; provided, however, that if there has been a change of ownership see California Revenue and Taxation Code, §§60 et sea.), and the Real Property Taxes for 9/30/97 are more than 105% of the 9/30/96 Real Property Taxes, the Real Property Taxes shall be calculated as follows: See Exhibit D-1. (6) Add the amounts in (2), (3), (4) and (5). This equals the Monthly Rent for 1998. (7) Add the Capital Improvements cost, if any, to (6). Round to the nearest half dollar. This is the Adjusted Monthly Rent for 1998. See examples in Exhibits E-1 and E-2. cmoblhamns 7/5/97) 8