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Exhibit
10.35
FHLMC Loan No. 940993244
Twin Lakes Apartments
REPLACEMENT RESERVE AGREEMENT
(REVISION DATE 7-17-07)
This REPLACEMENT RESERVE AGREEMENT ("
Agreement ") is made and entered into, to be effective as
of September 14, 2007, by and between U. S. REALTY PARTNERS
LIMITED PARTNERSHIP , a Delaware limited partnership ("
Borrower "), and CAPMARK BANK , a Utah industrial
bank (" Lender ") and its successors and assigns.
W I T N E S S E T H :
WHEREAS, Lender has agreed to make and Borrower
has agreed to accept the Loan, which is to be evidenced by the
Note and secured by the Security Instrument encumbering the Land
and the Improvements. The Land is described on Exhibit
"A" attached to this Agreement; and
WHEREAS, as a condition of making the Loan,
Lender is requiring Borrower to establish the Replacement
Reserve Fund for the funding of Capital Replacements throughout
the Loan term.
NOW, THEREFORE, for and in consideration of the
Loan, the mutual promises and covenants herein contained, and
other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Lender and
Borrower agree as follows:
1.
Definitions . The following terms
used in this Agreement shall have the meanings set forth below
in this Section 1. Any term used in this Agreement and not
defined shall have the meaning given to that term in the
Security Instrument.
(a)
"Capital Replacement" means the replacement of
those items listed on Exhibit "B" of this Agreement and
such other replacements of equipment, major components or
capital systems related to the Improvements as may be approved
in writing or required by Lender.
(b)
"Disbursement Period" means the interval between
disbursements from the Replacement Reserve Fund, which interval
shall be no shorter than once a quarter.
(c)
"Improvements" means the buildings, Personal
Property and improvements situated upon the Land, currently
constituting a multifamily apartment project known as Twin Lakes
Apartments.
(d)
"Initial Deposit" means the amount of Zero
Dollars ($0.00) made as of the date of this Agreement.
(e)
"Inspection Fee" means a fee for performing any
inspection required by this Agreement in an amount not to exceed
Three Hundred and 00/100 Dollars ($300.00) per inspection.
(f)
"Investment Fee" means a one time fee for
establishing the Replacement Reserve Fund in the amount of Fifty
and 00/100 Dollars ($50.00).
(g)
"Loan" means the loan from Lender to Borrower in
the original principal amount of One Million One Hundred Ten
Thousand and 00/100 Dollars ($1,110,000.00), as evidenced by the
Note and secured by the Security Instrument.
(h)
"Minimum Disbursement Request Amount" means Two
Thousand Five Hundred and 00/100 Dollars ($2,500.00).
(i)
"Monthly Deposit" means the amount of Five
Thousand Twenty-Two and 00/100 Dollars ($5,022.00) per month to
be deposited into the Replacement Reserve Fund in accordance
with this Agreement.
(j)
"Property" means the Land and Improvements.
(k)
"Replacement Reserve Deposit" means the Initial
Deposit, the Monthly Deposit and/or the Revised Monthly Deposit,
as appropriate.
(l)
"Replacement Reserve Fund" means the account
established pursuant to this Agreement to defray the costs of
Capital Replacements.
(m)
"Revised Monthly Deposit" means the adjusted
amount per month that Lender determines Borrower must deposit in
the Replacement Reserve Fund following any adjustment
determination by Lender pursuant to Section 2(a)(iii),
below.
(n)
"Security Instrument" means the mortgage, deed
of trust, deed to secure debt, or other similar security
instrument encumbering the Property and securing Borrower's
performance of its Loan obligations.
2.
Replacement Reserve Fund .
(a)
Establishment; Funding .
(i)
Upon the closing of the Loan, the parties shall
establish the Replacement Reserve Fund and, if required by
Lender, Borrower shall pay the Initial Deposit to Lender for
deposit into the Replacement Reserve Fund.
(ii)
Commencing on the date the first installment of
principal and/or interest is due under the Note and continuing
on the same day of each successive month until the Loan is paid
in full, Borrower shall pay the Monthly Deposit to Lender for
deposit into the Replacement Reserve Fund, together with its
regular monthly payments of principal and interest as required
by the Note and Security Instrument.
(iii)
Lender reserves the right to adjust the amount
of the Monthly Deposit based on Lender's assessment of the
physical condition of the Property. Lender will not make
such an adjustment prior to the date that is 120 months
after the first installment due date, nor more frequently than
every 10 years thereafter during the term of the Loan.
Upon written notice from Lender or Loan Servicer, Borrower
shall begin paying the Revised Monthly Deposit on the first
monthly payment date that is at least 30 days after the
date of Lender's or Loan Servicer's notice. If Lender or
Loan Servicer does not provide Borrower with written notice of a
Revised Monthly Deposit, Borrower shall continue to pay the
Monthly Deposit or the Revised Monthly Deposit then in
effect.
(iv)
In the event the Borrower entered into a Repair
Escrow Agreement with Lender in connection with the Loan,
Borrower acknowledges that a transfer of funds into the
Replacement Reserve Fund made pursuant to Section 17 of such
Repair Escrow Agreement shall not alter or reduce the amount of
any Monthly Deposits due under the terms of this Agreement.
(b)
Investment of Deposits . Borrower
and Lender agree that Lender shall hold all moneys deposited
into the Replacement Reserve Fund in an interest bearing
account, and any interest earned on such moneys shall be added
to the principal balance of the Replacement Reserve Fund and
disbursed in accordance with the provisions of this Agreement.
Borrower acknowledges and agrees that it shall not have
the right to direct Lender as to any specific investment of
moneys in the Replacement Reserve Fund. Lender shall not
be responsible for any losses resulting from investment of
moneys in the Replacement Reserve Fund or for obtaining any
specific level or percentage of earnings on such investment.
Lender shall be entitled to deduct the Investment Fee from
the Replacement Reserve Fund for establishing the Replacement
Reserve Fund.
(c)
Use . Subject to the pledge and
security interest and other rights of Lender set forth in this
Agreement, the Replacement Reserve Fund shall be maintained for
the payment of the costs of the Capital Replacements identified
on Exhibit "B" .
(d)
Deferral of Deposits .
Notwithstanding subsections 2(a) through (c)
above, Lender defers its right to require Borrower to make the
Replacement Reserve Deposit. However, Lender reserves the
right to require that Borrower begin making the Replacement
Reserve Deposit beginning on the installment due date that is
120 months after the first installment due date under the
Loan, or on any installment due date thereafter if Lender
reasonably determines that the physical condition of the
Property warrants that Borrower begin making such deposit.
Lender's determination to require such deposit shall not
depend on the existence of any of the events set forth in
subsection (e) below.
(e)
Reinstatement of Deposits .
Notwithstanding subsection 2(d) above, Lender reserves the
right to require at any time, upon written notice to Borrower,
that Borrower begin making the Replacement Reserve Deposit if
Lender reasonably determines that any of the following events
have occurred:
(i)
Borrower’s default under the Note,
Security Instrument, or any other document delivered in
connection with the Loan, or
(ii)
the occurrence of a Transfer which is prohibited
under the terms of the Security Instrument or which requires
Lender’s consent, or
(iii)
Borrower’s failure to maintain the
Property in a satisfactory manner and/or in accordance with the
requirements of the Security Instrument.
3.
Performance of Capital Replacements;
Disbursements .
(a)
Requests for Disbursement . Lender
shall disburse funds from the Replacement Reserve Fund, in its
sole discretion, as follows:
(i)
Borrower's Request . If Borrower
determines, at any time or from time to time, that a Capital
Replacement is necessary or desirable, Borrower shall perform
such Capital Replacement and request from Lender, in writing,
reimbursement for such Capital Replacement. Borrower's
request for reimbursement shall include (A) a detailed
description of the Capital Replacement performed, together with
evidence, satisfactory to Lender, that the cost of such Capital
Replacement has been paid and (B) lien waivers from each
contractor and material supplier supplying labor or materials
for such Capital Replacement, if required by Lender.
(ii)
Lender's Request . If Lender shall
reasonably determine at any time or from time to time, that a
Capital Replacement is necessary for the proper maintenance of
the Property, it shall so notify Borrower, in writing,
requesting that Borrower obtain and submit to Lender bids for
all labor and materials required in connection with such Capital
Replacement. Borrower shall submit such bids and a time
schedule for completing each Capital Replacement to Lender
within thirty (30) days after Borrower's receipt of Lender's
written notice. Borrower shall perform such Capital
Replacement and request from Lender, in writing, reimbursement
for such Capital Replacement. Borrower's request for
reimbursement shall include (A) a detailed description of the
Capital Replacement performed, together with evidence,
satisfactory to Lender, that the cost of such Capital
Replacement has been paid and (B) lien waivers from each
contractor and material supplier supplying labor or materials
for such Capital Replacement, if required by Lender.
(b)
Conditions Precedent . Disbursement
from the Replacement Reserve Fund shall be made no more
frequently than once every Disbursement Period and, except for
the final disbursement, no
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