|
Exhibit
10.1 4
PROPERTY RESERVES AGREEMENT
755505
THIS PROPERTY RESERVES AGREEMENT (as the same may from time to time
hereafter be modified, supplemented or amended, this "
Agreement ") is made as of January 19, 2007 by VMS NATIONAL
PROPERTIES, an Illinois general partnership (" Borrower
"), and PRINCIPAL LIFE INSURANCE COMPANY, an Iowa corporation ("
Lender ").
RECITALS
Lender has agreed to make a loan (the " Loan ") in the
original principal amount of Twenty-three Million Three
Hundred Thousand and 00/100 Dollars ($23,300,000.00) (the " Loan
Amount ") to Borrower as set forth in the Loan Documents,
executed by and between Lender and Borrower; and
The Loan is evidenced by Borrower's Secured Promissory Note made
payable and delivered to Lender (as may be modified, amended,
supplemented, extended or consolidated in writing, and any note(s)
issued in exchange therefor or in replacement thereof, the "
Note ") and further evidenced and secured by, among other
things, a " Mortgage " (it being agreed that Mortgage as
hereinafter used shall be construed to mean "mortgage" or "deed of
trust" or "trust deed" or "deed to secure debt" as the context so
requires) on certain real estate, together with all existing
improvements constructed thereon, said Premises being more
particularly described in said Mortgage.
NOW THEREFORE, in consideration of the making of the Loan, the
mutual promises and agreements contained herein and other good and
valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, Lender and Borrower, intending to be legally
bound, agree as follows:
1.
Property Reserves .
Borrower has agreed to deposit with Lender a letter of credit(s)
(if more than one, collectively if the context so requires the "
Letter of Credit ") as detailed below to be held by Lender
to reimburse Borrower for the costs of certain capital improvements
to the Premises as described in Schedule 1 hereto and such other
capital improvements to the Premises that Lender determines, in its
sole discretion, provide a material benefit/improvement to the
Premises upon completion thereof (i.e. roof
replacement/repair, new decks, rehabilitation of individual units)
(" Capital Improvements "). The Letter of
Credit and any renewal or replacement thereof and any proceeds
therefrom shall be held by Lender as additional security for the
Loan and are hereafter referred to as the " Property
Reserves ". The term " Escrow Release " as used
herein shall refer to a disbursement of funds and/or a reduction of
a Letter of Credit as applicable.
a.
On the Closing Date, Borrower shall deliver an acceptable Letter of
Credit in the amount of $855,624.00 to cover the cost of Capital
Improvements.
-2-
2.
Borrower shall deliver to Lender not later than 30 days prior to
the expiration date of any Letter of Credit and any renewal or
replacement Letter of Credit, a renewal or replacement
unconditional, irrevocable bank Letter of Credit identical in terms
and amount and issued by a United States bank acceptable to Lender.
If Borrower shall fail to deliver any renewal or replacement
Letter of Credit in accordance with the foregoing requirements,
Lender may, in its discretion, draw upon any Letter of Credit then
in its possession and hold such proceeds in accordance with the
terms hereof.
Lender
reserves the right to periodically review the financial condition
of the issuing bank for any Letter of Credit and any renewal or
replacement Letter of Credit and if Lender determines that the
issuing bank no longer satisfies the criteria set forth above,
Lender may require a replacement Letter of Credit in form and
substance and from a United States bank acceptable to Lender.
3.
Standard Disbursement Requirements . The following
shall be defined as " Standard Disbursement Requirements
":
(i)
copies of unconditional lien waivers for work completed which is
the subject of the Escrow Release request;
(ii)
a title search in form and substance reasonably acceptable to
Lender and if such search discloses conditions unacceptable to
Lender or Lender deems it reasonably necessary, then such
endorsements or other assurances reasonably satisfactory to Lender
from the title insurance company insuring the continued first lien
priority of the Mortgage;
(iii)
to the extent Lender deems reasonably necessary and to the extent
that same are available and appropriate for the work which is the
subject of the Escrow Release request, any or all of the following
at Lender's discretion: (A) all permits, bonds, licenses and
approvals, whether necessary for commencement, performance,
completion, occupancy, use or otherwise required by any applicable
laws for the stage of work so completed; (B) a copy of the
construction contract and any change orders and addenda thereto;
(C) a statement from an architect, contractor or engineering
consultant, in Lender's reasonable discretion, as to the extent and
cost of the work so completed; and/or (D) other evidence as
reasonably determined by Lender showing that Borrower has completed
and performed the portion of the work which is the subject of the
Escrow Release request; and
(iv)
Lender having inspected, or having expressly waived in writing such
inspection, and approved the completed portion of the work which is
the subject of the Escrow Release request. Lender shall not
require said inspection more than once per calendar year.
-3-
4.
Capital Improvements .
a.
Except as hereinafter provided and so long as no Event of Default
has occurred and is continuing under the Loan Documents, Lender
shall allow Escrow Release(s) in the amounts hereinafter specified
in accordance with the following terms and conditions:
(i)
Escrow Release(s) shall be for an amount equal to the actual
costs
| 
