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EXHIBIT 10.5.15
AGREEMENT REGARDING LETTER OF CREDIT
THIS AGREEMENT is made this 30th day of January, 1997 by Xxxxxxx
Properties Residential, L.P., a Georgia limited partnership ("BORROWER") for
the benefit of Nationwide Life Insurance Company ("NATIONWIDE"), and West Coast
Life Insurance Company ("WEST COAST"; Nationwide and West Coast sometimes being
referred to hereafter collectively as "LENDER")
WHEREAS, Lender has issued its commitment to make a $6,420,000 loan
(the "LOAN") to Borrower to be evidence by a real estate note in the amount of
$5,670,000 in favor of Nationwide and a real estate note in the amount of
$750,000 in favor of West Coast (collectively, the "NOTE");
WHEREAS, the Loan is to be secured by a Deed to Secure Debt and
Security Agreement (the "SECURITY DEED") encumbering certain real property in
Gwinnett County, Georgia;
WHEREAS, in connection with the Loan, Borrower has delivered to
Nationwide that certain Irrevocable Standby letter of Credit No. S11732 (the
"LETTER OF CREDIT") in the amount of $1,140,000.00, issued by First Union
National Bank of Georgia, being dated January 27, 1997 and having an expiration
date of January 30, 1998;
WHEREAS, the purpose of this Agreement is to set forth the terms and
conditions under which the Letter of Credit will be returned to Borrower and
the terms and conditions under which Lender and its successors and assigns
shall be entitled to draw down the proceeds of the Letter of Credit.
AGREEMENT
NOW THEREFORE, in consideration of the Loan, Ten Dollars ($10.00) in
hand paid by Lender to Borrower, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. Borrower and Lender hereby acknowledge and agree that the
recitals set forth above are true and correct. The Loan is evidenced by the
Note and secured by, among other things, the Security Deed. The Note, the
Security Deed and any other documents evidencing or securing the indebtedness
evidenced by the Note are hereinafter referred to as the "LOAN DOCUMENTS."
2. Provided there is then no default or event of default under
any of the Loan Documents, or event or circumstance which with the giving of
notice, passage of time, or both, would constitute a default or event of
default under any of the Loan Documents, and provided that Lender has not
previously drawn on the Letter of Credit as provided in paragraph 3 below, upon
written request Lender will release the Letter of Credit and return the same to
Borrower if at such time the "Net Operating Income" (as hereafter defined)
generated by the "Property" (as hereafter defined) is at least equal to one
hundred ten percent (110%) of the annual debt service payments due under the
terms of the Loan Documents for a period of at least three (3) consecutive
calendar months (the "Shortfall Coverage Test"). For purposes of this
paragraph 2, "Net Operating Income" shall mean the "Rents" (as hereafter
defined) minus the "Operating Expenses" (as hereafter defined). For purposes
of this paragraph 2, the following terms shall have the following meanings:
A. "Rents" means the annualized rents and expense reimbursements
(if any) to be received from tenants of the Property pursuant
to leases approved by Lender (unless Lender's approval of any
such leases is not required in accordance with paragraph 12 of
the Security Instrument) where the tenants are actually paying
rent (i.e., any free rent periods must have expired) and such
tenants are actually in occupancy.
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B. "Operating Expenses" means the greater of (i) the annualized
expenses of operating and maintaining the Property which shall
include, without limitation, a management fee equal to four
percent (4%) of the annualized Rents, or (ii) $494,632. For
purposes of calculating Operating Expenses, property tax
expenses shall be calculated assuming that all improvements to
be built pursuant to plans and specifications delivered to
Lender in connection with the Loan have been completed and
fully assessed and using the most recent tax rate available
(whether certified or not).
C. "Property" means the land described on Exhibit A to
the Security Deed together with all buildings and improvements
constructed thereon or to be constructed thereon pursuant to
plans and specifications delivered to Lender in connection
with the Loan and together with all appurtenances thereto.
Items to be included in the calculation of Rents and Operating Expenses shall
be as reasonably determined by Lender. At any time that request is made for a
release of the Letter of Credit, Borrower shall deliver to Lender such
information as Lender may request with respect thereto including, without
limitation, (i) a current rent roll certified to be true and correct by
Borrower, (ii) if requested by Lender, true and complete copies of all fully
executed leases which are being used to satisfy the criteria for release, (iii)
unconditional certificates of occupancy for any completed buildings if not
previously delivered, (iv) actual operating statements for the Property
identifying all expenses of operating and maintaining the Property.
3. Lender may draw upon the Letter of Credit (a) if within nine
(9) months from the date hereof Borrower has not delivered to Lender evidence
satisfactory to lender that the Shortfall Coverage Test has been satisfied, (b)
if there is a default or event of default under the Loan Documents which is not
cured within any applicable notice and/or cure period, or (c) if Borrower is in
default of its agreements under paragraph 5 below. The drawing of proceeds
shall not constitute an election of remedies hereunder or under the Loan
Documents, all of which remedies are cumulative and the exercise of any one or
more remedies shall be without prejudice as to the right to exercise any other
remedy available under the Loan Documents, at law or in equity.
4. If Lender draws down the proceeds of the Letter of Credit as
provided in paragraph 3, Lender, shall apply such proceeds in such order as
Lender may determine in its sole discretion (a) to the payment of the costs and
expenses, including compensation to Lender, its agents and counsel for
reasonable expenses actually incurred in connection with such draw, and (b) to
the payment of the indebtedness evidenced by the Note or secured by the
Security Deed (including principal, interest and fees). Any such moneys
applied to the payment of the indebtedness evidence by the Note or secured by
the Security Deed shall be applied at par (i.e., there shall be no prepayment
premium associated therewith), shall be applied against payments due under the
Note or the Security Deed in the inverse order of maturity, and shall not
suspend or otherwise affect payments due under the Note or the Security Deed.
5. Borrower and Applicant agree that upon any sale or transfer of
the Loan by Lender, Lender shall deliver the Letter of Credit to the purchaser
or transferee who shall thereupon become vested with all the powers and rights
given to Lender or if the Letter of Credit is not by its terms freely
assignable to any such purchaser or other transferee, then Borrower shall, upon
demand of Lender, obtain (or cause to be obtained) a replacement or renewal
Letter of Credit in the name of such purchaser or other transferee; provided,
however, the rights of each purchaser or transferee to the Letter of Credit
shall be subject to the provisions of this Agreement. Lender shall not
otherwise assign or transfer the Letter of Credit.
6. This Agreement shall be binding upon and shall inure to the
benefit of Borrower and Lender and their respective heirs, legal
representatives, successors and
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assigns. This Agreement shall be interpreted, construed and enforced according
to the laws of the State of Georgia.
IN WITNESS WHEREOF, the parties have caused this instrument to be
executed under seal by persons duly authorized thereunto, as of the day and
year first above written.
NATIONWIDE:
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NATIONWIDE LIFE INSURANCE COMPANY
By: /s/ Xxxxxx X. XxXxxxxxx
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Name: Xxxxxx X. XxXxxxxxx
Title: Vice President
WEST COAST:
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WEST COAST LIFE INSURANCE COMPANY
By: /s/ Xxxxxx X. XxXxxxxxx
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Name: Xxxxxx X. XxXxxxxxx
Title: Vice President
BORROWER:
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Xxxxxxx Properties Residential,
L.P., a Georgia
limited partnership
By: Xxxxxxx Realty Investors,
Inc., its sole General
Partner
By: /s/ Xxxxxxx X. Xxxxxxx
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Name: Xxxxxxx X. Xxxxxxx
Title: President
[CORPORATE SEAL]
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