EXHIBIT 10.6
LETTER OF CREDIT AND SECURITY DEPOSIT AGREEMENT
THIS LETTER OF CREDIT AND SECURITY DEPOSIT AGREEMENT (this "Agreement") is
made as of September 9, 2005, by and between XXXX Realty, LLC, a Michigan
limited liability company ("Borrower"), and PNC Bank, National Association, its
successors and assigns ("Lender").
A. Contemporaneously with this Agreement, Borrower has executed and
delivered its Promissory Note (the "Note") to Lender evidencing Lender's loan to
Borrower in the amount of $100,000,000.00 (the "Loan").
B. The Note is secured by, among other security: (i) the Security
Instruments (as defined in the Note) encumbering certain property located in
Jefferson County, Alabama, Hillsborough County, Florida, Rapides Parish,
Louisiana, Champaign County, Illinois, Hampden County, Massachusetts, Monroe
County, Michigan, Xxxxx County, Michigan, Shelby County, Ohio, Xxxxx County,
Ohio, Xxxxxx County, Ohio, Dallas County, Texas and Xxxxxx County, Texas
(collectively, the "Property"); and (ii) the Other Security Documents (as
defined in the Security Instruments). The Note, the Security Instruments and the
Other Security Documents are hereinafter collectively referred to as the "Loan
Documents".
C. The Property is comprised of 14 separate sites. Thirteen of the sites
are leased by the Borrower, as Landlord, to Plastipak Packaging, Inc.
("Plastipak"), as Tenant and one site is leased by the Borrower, as Landlord to
Clean Tech, Inc. ("CleanTech"), as Tenant (hereinafter collectively the
"Tenants"), pursuant to 14 separate Lease Agreements (collectively the "Leases"
and individually a "Lease").
D. Pursuant to the Leases, Tenants have collectively, in lieu of a cash
security deposit, agreed to deliver to Borrower as Landlord a $1,000,000.00
letter of credit, (the "Tenant Letter of Credit") which Tenant Letter of Credit
has on or prior to the date hereof been transferred to Lender.
E. Lender requires, as a condition of the Loan, that Borrower so transfer
the Tenant Letter of Credit to Lender, designating Lender as Beneficiary, which
Tenant Letter of Credit is to be held, used and released as provided in this
Agreement.
NOW, THEREFORE, in consideration of the foregoing, the covenants and
conditions contained in this Agreement and other good and valuable
consideration, the receipt and legal sufficiency of which are hereby
acknowledged, Borrower and Lender hereby agree as follows:
1. Delivery of Funds. All sums from time to time deposited with Lender
through draws against the Letter of Credit (as defined below) in connection with
this Agreement are hereinafter collectively referred to as the "Funds." The
Funds shall be held, used and released by Lender in accordance with the terms
and conditions of this Agreement. Lender (or a designated representative of
Lender) shall have the sole right to make withdrawals of the Funds.
2. Agreement for Delivery of Letter of Credit and Transfer Form.
(a) Concurrently with the execution of this Agreement, Borrower
shall deliver to Lender the original unconditional, transferable, irrevocable
Tenant Letter of Credit and an executed transfer form directing Comerica Bank to
designate Lender as Beneficiary under the Tenant Letter of Credit along with any
applicable transfer fee due Comerica Bank, a copy of which Tenant Letter of
Credit is attached hereto as Exhibit A. The Tenant Letter of Credit shall, inter
alia (1) be in an amount of at least $1,000,000.00, (2) provide that it shall
automatically renew annually, unless written notice is received by Lender at
least sixty (60) days prior to the then current expiration date; (3) permit a
draw upon presentation of a draft accompanied by a statement signed by an
individual purporting to be an officer of Lender or its assignee stating that
the beneficiary is entitled to draw under the Tenant Letter of Credit because
any Tenant has defaulted under any Lease; (4) permit partial draws; (5) permit a
draw upon presentation of a draft accompanied by a statement signed by an
individual purporting to be an officer of Lender or its assignee stating that
the beneficiary is entitled to draw under the Tenant Letter of Credit because
the Tenant Letter of Credit has not been renewed or extended at least sixty (60)
days prior to its then current expiration date. Borrower hereby acknowledges
that, except as provided in paragraph 2(b) below: (1) the Tenant Letter of
Credit shall at no time be construed to be within the meaning of Funds (although
funds drawn under the Tenant Letter of Credit may be held as provided
hereinafter), and (2) except as set forth in Section 4 hereunder, the proceeds
of the Tenant Letter of Credit shall not be made available at any time to
Borrower.
(b) The Tenant Letter of Credit shall be for an initial period of not less
than one (1) year and shall automatically renew annually, unless written notice
is received by Lender, at least sixty (60) days prior to the expiration of the
Tenant Letter of Credit, without any requirement of notice or demand by Lender
until the Lease Expiration Date. Upon Lender's receipt of the sixty (60) day
notice that the Tenant Letter of Credit will not be automatically renewed,
Lender shall provide a copy of same to Borrower, at which time Borrower and
Tenant shall have fifteen (15) business days from Lender's receipt of said
notice to provide a replacement Tenant Letter of Credit in form and content
acceptable to Lender and subject to the same terms and conditions herein
relating to the initial Tenant Letter of Credit issued. In the event Borrower
and/or Tenant fail to provide an acceptable replacement Tenant Letter of Credit
as set forth above, Lender shall have the unconditional right to draw against
the entire amount of the Tenant Letter of Credit prior to the expiration
thereof, the proceeds of which shall be held by Lender as Funds. The failure of
(i) the issuing financial institution to honor a draw request of Lender which
complies with the draw requirements of the Tenant Letter of Credit, or (ii) the
Borrower and/or Tenant to provide an acceptable Tenant Letter of Credit shall
constitute an Event of Default (as such term is defined in Section 6 hereunder).
The initial Tenant Letter of Credit and any replacement Tenant Letter of Credit
shall be deemed as the "Tenant Letter of Credit" unless the context otherwise
indicates. Upon any transfer of the Tenant Letter of Credit from Lender and/or
any successor in interest of Lender to any assignee or transferee, Borrower
shall pay within three (3) days from demand any transfer fee
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imposed by the issuing bank and shall execute any and all documents necessary to
effectuate such transfer.
The Tenant Letter of Credit shall be maintained in full force and effect
throughout the term of the Loan and shall be maintained by Borrower in
accordance with the terms of the Leases. Lender agrees that the Tenant Letter of
Credit shall be drawn by Lender only upon compliance with the conditions set
forth in the Leases for application of security deposits.
3. Security Interest; Deposit of Funds. In order to secure Borrower's
repayment of the Note and performance of all other covenants and conditions
required on the part of Borrower to be observed or performed hereunder and under
the other Loan Documents, Borrower hereby pledges to and grants to Lender a
continuing security interest in all proceeds and Funds derived from any Lender
draw against the Tenant Letter of Credit. Until expended or applied as above
provided, the Tenant Letter of Credit and all proceeds and Funds derived thereby
and therefrom shall constitute additional security for the Indebtedness (as
defined in the Security Instruments). The Funds shall not constitute a trust
fund and may be commingled with other monies held by Lender. Unless otherwise
required by applicable law, no earnings or interest on the Funds shall be
payable to Borrower even if Lender or its servicer is paid a fee and/or receives
interest or other income in connection with the deposit or placement of such
fund.
4. Satisfaction of Loan and Return of Tenant Letter of Credit. Subject to
Borrower's compliance with the following terms and conditions, as determined by
Lender in its sole discretion, Lender shall deliver the Funds and the Tenant
Letter of Credit, to the extent it then exists, to Borrower, with instructions
to the issuing bank that Borrower be named as Beneficiary, or transfer the
remaining Funds to Borrower:
(a) Borrower shall have provided a written request to Lender for the
delivery and transfer of the Tenant Letter of Credit to Borrower, or
the transfer of the remaining Funds to Borrower; and
(b) Borrower has repaid the Debt (as defined in the Note) and all amounts
due and owing under the Loan Documents in full.
4A. Draw Upon Tenant Default under the Lease. Upon either (i) Borrower
providing written notice to Lender that a default has occurred under any Lease
entitling a draw upon the Tenant Letter of Credit, or (ii) upon Lender
determining that a default has occurred under any Lease entitling a draw upon
the Tenant Letter of Credit; Lender shall request a draw under the Tenant Letter
of Credit on behalf of Borrower and shall hold the proceeds thereof in escrow
hereunder as additional security for the entire term of the Loan. Upon the
occurrence of an Event of Default under the Loan Documents, Lender may utilize
the proceeds from the Tenant Letter of Credit in accordance with the terms of
Section 6 hereunder.
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5. Restriction on Disbursement. Lender shall have no duty or obligation to
disburse the Funds except in accordance with this Agreement and only upon
satisfaction of all obligations of Borrower in connection therewith.
6. Default by Borrower. Upon the occurrence and during the continuation of
an Event of Default (as defined in the Security Instruments) and further
provided that a default has occurred under any of the Leases entitling Lender to
draw upon the Tenant Letter of Credit, Lender shall have the right, but not the
obligation, to disburse and apply the Funds and/or proceeds of the Tenant Letter
of Credit to the satisfaction of any of Borrower's obligations hereunder or
under any of the Loan Documents. No further direction or authorization from
Borrower shall be necessary to warrant such direct disbursement by Lender and
all such disbursements shall satisfy the obligation of Lender hereunder.
7. Performance under Note. In no event shall any term or provision of this
Agreement modify, alter or amend the obligations of Borrower under the Note, nor
shall any term or provision of this Agreement modify or amend the Note.
8. Term; Termination. Upon the payment in full of all sums payable to
Lender under the Loan Documents, Lender shall deliver the then existing Funds to
Borrower. Notwithstanding the foregoing but subject to the terms of section 6
hereof, upon the occurrence of an Event of Default, Lender may terminate this
Agreement and retain all Funds then being held pursuant to this Agreement and
apply such Funds in such order and in such amounts as Lender shall elect, in its
sole and absolute discretion, to payment of the Debt evidenced by the Note and
the Loan Documents.
9. Remedies Cumulative. No right or remedy conferred upon or reserved to
Lender under this Agreement is intended to be exclusive of any other right or
remedy, and each and every such right and remedy shall be cumulative and
concurrent and may be enforced separately, successively or together, and may be
exercised from time to time as often as may be deemed necessary by Lender.
10. Miscellaneous.
(a) Any capitalized term utilized herein shall have the meaning as
specified in the Security Instruments, unless such term is otherwise
specifically defined herein.
(b) Except as otherwise expressly provided herein, in any instance
where the consent or approval of Lender is required or may be given or
where any determination, judgment or decision is to be rendered by Lender
under this Agreement, such approval and consent shall be given or withheld
in Lender's sole and absolute discretion.
(c) All notices hereunder shall be given in accordance with the
provisions of the Security Instruments.
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(d) This Agreement shall be binding upon Borrower and its heirs,
devisees, representatives, successors and assigns, including successors in
interest of Borrower in and to all or any part of the Property, and shall
inure to the benefit of and may be enforced by and binding upon Lender and
its heirs, successors, legal representatives, substitutes and assigns.
Borrower shall not assign any of its rights or obligations under this
Agreement.
(e) This Agreement is intended solely for the benefit of Lender, its
successors and assigns, and no other third party shall have any right or
interest in this Agreement, nor any right to enforce this Agreement against
any party hereto.
(f) This Agreement may not be modified, amended, waived, extended,
changed, discharged or terminated orally or by any act or failure to act on
the part of Borrower and Lender, but only by an agreement in writing signed
by the party against whom the enforcement of any modification, amendment,
waiver, extension, change, discharge or termination is sought.
(g) Nothing herein or in the Loan Documents is intended to create, nor
creates, nor shall be deemed to create, a joint venture, partnership,
tenancy-in-common, or joint tenancy relationship between Borrower and
Lender, nor to grant Lender any interest in the Property other than that of
creditor or mortgagee.
(h) This Agreement contains the complete and entire understanding of
the parties with respect to the subject matter thereof. If any provisions
of this Agreement shall conflict with any provisions of the other Loan
Documents regarding the Funds the provisions contained in this Agreement
shall control.
(i) The invalidity, illegality, or unenforceability of any provision
of this Agreement pursuant to judicial decree shall not affect the
validity, legality or enforceability of any other provisions of this
Agreement which can be effected with such invalid, illegal or unenforceable
provision, all of which shall remain in full force and effect.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED ACCORDING TO THE
LAWS, FROM TIME TO TIME IN EFFECT, IN THE STATE OF MICHIGAN AND THE LAWS OF
THE UNITED STATES OF AMERICA.
IN WITNESS WHEREOF, Borrower and Lender have executed this Agreement as of
the date first above written.
Witness "Borrower"
XXXX Realty, LLC,
a Michigan limited liability company
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By: XXXX Management, Inc.,
a Michigan corporation,
its Manager
/s/ Xxxxx X. Xxxxxxxxx By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------------- ------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Vice President and Treasurer
Taxpayer Id. No.: 00-0000000
PNC BANK:
PNC BANK, NATIONAL ASSOCIATION
/s/ Xxxxxxxxx Xxxx By: /s/ Xxxxxxxxx Xxxxxx
------------------------------------- ------------------------------------
Xxxxxxxxx Xxxxxx, Vice-President
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EXHIBIT A
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