EXHIBIT 10.5
TPI SECURITY AGREEMENT
SECURITY AGREEMENT dated as of April 12, 1999 (as amended, modified or
supplemented from time to time, this "Agreement"), between TENNECO PACKING,
INC., a Delaware corporation (the "ASSIGNOR") and ▇▇▇▇▇▇ GUARANTY TRUST COMPANY
OF NEW YORK, as Collateral Agent (the "COLLATERAL AGENT"), for the benefit of
the Lender Creditors (as defined below). Except as otherwise defined, terms
used herein and defined in the Credit Agreement (as defined below) shall be used
herein as therein defined.
W I T N E S S E T H :
WHEREAS, Assignor, various financial institutions from time party
thereto (the "LENDERS"), ▇.▇. ▇▇▇▇▇▇ Securities Inc. and BT Alex. ▇▇▇▇▇
Incorporated, as Co-Lead Arrangers (the "CO-LEAD ARRANGERS"), Bankers Trust
Company, as Syndication Agent (the "SYNDICATION AGENT"), and ▇▇▇▇▇▇ Guaranty
Trust Company of New York, as Administrative Agent (the "ADMINISTRATIVE AGENT",
and together with the Lenders, the Co-Lead Arrangers, the Syndication Agent,
each Issuing Bank, the Pledgee and the Collateral Agent, the "LENDER CREDITORS")
have entered into the Credit Agreement (the "Credit Agreement"), providing for
the making of Term Loans to TPI as contemplated therein;
WHEREAS, it is a condition precedent to the making of Term Loans to
the Assignor that the Assignor shall have executed and delivered to the
Collateral Agent this Agreement; and
WHEREAS, the Assignor will obtain benefits from the incurrence of Term
Loans and, accordingly, desires to execute this Agreement in order to satisfy
the conditions precedent described in the preceding paragraph and to induce the
Lenders to make Loans to TPI;
NOW, THEREFORE, in consideration of the benefits accruing to the
Assignor, the receipt and sufficiency of which are hereby acknowledged, the
Assignor hereby makes the following representations and warranties to the
Collateral Agent and hereby covenants and agrees with the Collateral Agent as
follows:
SECTION 1. SECURITY INTERESTS.
1.01 GRANT OF SECURITY INTERESTS. As security for the prompt and
complete payment and performance when due of all of the Obligations (as defined
below), the Assignor does hereby assign and transfer unto the Collateral Agent,
and does hereby pledge and grant to the Collateral Agent for the benefit of the
Lender Creditors, a continuing security interest of first
priority in, all of the right, title and interest of such Assignor in, to and
under all of the following, whether now existing or hereafter from time to
time acquired:
(i) each and every Specified Mortgaged Property (as defined
below);
(ii) a continuing possessory lien and security interest in all of
the Assignor's right, title and interest in and to the Restricted Account
(as hereinafter defined) together with all deposits made from time to time
therein and all investments from time to time therein and/or made with the
funds therein and all cash and non-cash proceeds of any of the foregoing,
from the date this Agreement until the termination thereof pursuant to the
terms hereof (the "CASH COLLATERAL"); and
(iii) all Proceeds and products of any and all of the foregoing (all
of the above, collectively, the "COLLATERAL").
SECTION 2. ESTABLISHMENT OF RESTRICTED ACCOUNT; ETC.
2.01 ESTABLISHMENT. The Assignor has established with the
Collateral Agent a non-interest bearing account (Ref. TPI Restricted Account)
(the "RESTRICTED ACCOUNT"). Only Cash Collateral will be deposited and shall
remain in the Restricted Account until such Cash Collateral is released from
the Restricted Account in accordance with this Agreement. The Restricted
Account shall be under the sole dominion and control of the Collateral Agent,
with the Collateral Agent having the right to make withdrawals from the
balance of the Restricted Account from time to time therein in accordance
with the terms of this Agreement. All Cash Collateral delivered to or held
by or on behalf of the Collateral Agent pursuant hereto shall be held in the
Restricted Account in accordance with the provisions hereof.
2.02 DEPOSITS TO RESTRICTED ACCOUNT; ETC. (a) As provided in
Section 1.04 of the Credit Agreement, the Administrative Agent shall deposit the
proceeds of the Term Loans in the Restricted Account. The Collateral Agent
shall hold such cash deposited in the Restricted Account and apply any such
amounts as provided in clauses (b) or (c) below, as applicable.
(b) Upon the receipt by the Collateral Agent of an officer's
certificate of the Assignor stating that the Contribution Effective Time has
occurred or will occur contemporaneously with the application of the Cash
Collateral as provided in this clause (b) the amount on deposit in the
Restricted Account will be released and disbursed as indicated below in the
order indicated:
(i) to the persons listed on Annex A hereto in the amounts listed
for each such Person; and
(ii) after the application pursuant to clause (i) above, the
balance of the Cash Collateral shall be released and paid to the Assignor
free and clear of the Lien created by this Agreement.
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Notwithstanding the foregoing, in no event will Cash Collateral be released
pursuant to this clause (b) until all amounts in the Sub Debt Restricted
Account have been released and applied to the repayment of the Indebtedness
to be Refinanced and any balance remaining thereafter shall have been
released and paid to the Assignor.
(c) In the event that (x) the certificate referred to in clause
(b) is not received by 5:00 p.m. (New York time) on the Initial Borrowing Date
or (y) an Event of Default occurs prior to the Contribution Effective Time, all
Cash Collateral will be withdrawn from the Restricted Account and applied to the
repayment of the Obligations.
2.03 INVESTMENT OF FUNDS DEPOSITED IN THE RESTRICTED ACCOUNT.
Amounts on deposit in the Restricted Account will not be invested or otherwise
bear interest.
SECTION 3. FURTHER ASSURANCES.
(a) The Assignor will, at any time and from time to time, at its own
expense, if the Obligations are not paid in full on the Initial Borrowing Date
promptly execute and deliver all further agreements, instruments and other
documents and take all further action that may be necessary or that the
Collateral Agent may reasonably request in order to perfect and protect the
security interest purported to be created hereby or otherwise to enable the
Collateral Agent to exercise and enforce its rights and remedies hereunder.
(b) In furtherance and not in limitation of the foregoing, in the
event that (x) the Contribution Effective Time does not occur by 5:00 P.M. (New
York time) on the Initial Borrowing Date and (y) the Obligations are not paid in
full at such time, the Assignor shall execute and deliver mortgages or deeds of
trust (collectively, the "SPECIFIED MORTGAGES"), covering the Specified
Mortgaged Property such Specified Mortgages to be substantially in the form of
the Mortgages prepared in connection with the Credit Agreement. The Specified
Mortgages or instruments related thereto shall be duly recorded or filed in such
manner and in such places as are required by law to establish, perfect, preserve
and protect the Liens in favor of the Collateral Agent required to be granted
pursuant to the Specified Mortgages and all taxes, fees and other charges
payable in connection therewith shall be paid in full by the Assignor. All such
action shall be completed within 10 days of the Initial Borrowing Date.
SECTION 4. TRANSFERS AND OTHER LIENS.
The Assignor will not, without the written consent of the Collateral
Agent, (i) sell, assign (by operation of law or otherwise) or otherwise dispose
of any interest in the Collateral (except as pursuant to the Contribution
Agreement) or (ii) create or suffer to exist any Lien, security interest or
other charge or encumbrance upon or with respect to any Collateral except for
the security interest purported to be created hereby.
SECTION 5. ATTORNEY-IN-FACT.
The Assignor hereby appoints the Collateral Agent attorney-in-fact,
with full authority in the place and stead of the Assignor and in the name of
the Assignor or otherwise,
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from time to time if the Obligations are not paid in full on the Initial
Borrowing Date in the Collateral Agent's discretion to execute any instrument
and to take any other action which the Collateral Agent may in good faith
reasonably deem necessary or advisable to accomplish the purposes of this
Agreement or to facilitate the assignment or other transfer by the Collateral
Agent of any or all of its rights hereunder. Such appointment of the
Collateral Agent as attorney-in-fact is irrevocable and coupled with an
interest and shall terminate on the Termination Date.
SECTION 6. PERFORMANCE BY THE COLLATERAL AGENT.
If the Assignor fails to perform any agreement or obligation contained
herein, the Collateral Agent itself may perform or cause performance of such
agreement or obligation, and the reasonable expenses of the Collateral Agent
incurred in connection therewith shall be payable by the Assignor.
SECTION 7. RESPONSIBILITY OF THE SECURED CREDITOR.
Other than the exercise of reasonable care to assure the safe custody
of the Collateral while held hereunder, the Collateral Agent shall have no duty
or liability to preserve rights pertaining thereto and shall be relieved of all
responsibility for the Collateral upon surrendering it or tendering surrender of
it to the Assignor. The Collateral Agent shall be deemed to have exercised
reasonable care in the custody and preservation of the Collateral in its
possession if the Collateral is accorded treatment substantially equal to that
which the Collateral Agent accords its own property. Without limiting the
generality of the foregoing, neither the Collateral Agent nor any of its
directors, officers, agents or employees shall be liable (i) for any failure to
invest or reinvest any cash in the Restricted Account or (ii) for any action
taken or omitted to be taken by the Collateral Agent (x) in good faith in
accordance with the advice of counsel with respect to any question as to the
construction of any provision hereof or any action to be taken by the Collateral
Agent hereunder or (y) in accordance with any instructions or other notice which
the Collateral Agent believes in good faith to be properly given by the Assignor
hereunder.
SECTION 8. REMEDIES UPON DEFAULT.
If any Event of Default shall occur and be continuing:
(a) The Collateral Agent may (i) exercise in respect of the
Collateral, in addition to other rights and remedies provided for herein or
otherwise available to it, all of the rights and remedies of a secured party on
default under the Uniform Commercial Code then in effect in the State of New
York, (ii) withdraw any funds, if any, from the Restricted Account, and (iii)
without notice except as specified below, sell any or all of the Collateral in
one or more parcels at any public or private sale, at any exchange, broker's
board or at any of the Collateral Agent's offices or elsewhere, for cash, on
credit or for future delivery, and at such price or prices and upon such other
terms as the Collateral Agent may deem commercially reasonable. The Assignor
agrees that, to the extent notice of sale shall be required by law, at least 10
Business Days' notice to the Assignor of the time and place of any public sale
or the time after which any private sale or other disposition is to be made
shall constitute reasonable notification. The
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Collateral Agent shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given. The Collateral Agent may
adjourn any public or private sale from time to time (by announcement, in the
case of any public sale, at the time and place fixed therefor), and such sale
may, without further notice, be made at the time and place to which it was so
adjourned.
(b) Notwithstanding the foregoing provisions of this Section 8,
the Collateral Agent may elect, by notice to the Assignor, to retain any and all
of the Collateral, to collect or cause the collection of the proceeds thereof
and to hold any and all of such Collateral as continuing collateral for, and to
apply at such times and in such manner as the Collateral Agent may elect any and
all of such Collateral to pay the Obligations; provided that the Collateral is
valued at fair market value for purposes of determining the amount by which the
Obligations shall be reduced in consideration of the retention of such
Collateral. The Assignor hereby waives, to the fullest extent permitted by law,
any and all rights it may have to require the Collateral Agent to sell or
otherwise dispose of any or all of the Collateral.
SECTION 9. APPLICATION OF PROCEEDS.
(a) All moneys collected by the Collateral Agent upon any sale or
other disposition of any Collateral after the occurrence of an Event of Default,
together with all other moneys received by the Collateral Agent hereunder,
shall be applied as follows:
(i) first, to the payment of all amounts owing the Collateral
Agent of the type described in clauses (ii) and (iii) of the definition of
Obligations.
(ii) second, to the extent moneys remain after the application
pursuant to the preceding clause (i), an amount equal to the outstanding
Obligations shall be paid to the Collateral Agent on account of such
Obligations on a pro rata basis; and
(iii) third, to the extent moneys remain after the application
pursuant to the preceding clauses (i) and (ii), and following the
termination of this Agreement pursuant to Section 12, any surplus then
remaining shall be paid to the Assignor, subject, however, to the rights of
the holder of any then existing Lien of which the Collateral Agent has
actual notice (without investigation).
(b) For purposes of applying payments received in accordance with
this Section 9, the Collateral Agent shall be entitled to make a good faith
determination of the outstanding Obligations owed to the Collateral Agent,
PROVIDED that the Obligations paid on or prior to the Termination Time shall
include only principal and any interest on the Term Loans and not any costs,
premiums or penalties except as expressly provided herein and in the TPI
Guaranty.
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SECTION 10. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
ASSIGNOR.
The Assignor represents and warrants that on the date of the
deposit by the Assignor of any Collateral in the Restricted Account, it will
be the legal, record and beneficial owner of, and will have good and
marketable title to, the Collateral, subject to no Lien, other than the Lien
created by this Agreement. The Assignor covenants and agrees that it will
defend the Collateral Agent's right, title and security interest in and to
the Collateral and the proceeds thereof against the claims and demands of all
other Persons whomsoever; and the Assignor covenants and agrees that it will
have like title to and right to pledge any other property at any time
hereafter pledged to the Collateral Agent as Collateral hereunder and will
likewise defend the right thereto and security interest therein of the
Collateral Agent.
SECTION 11. INDEMNITY.
11.01 INDEMNITY. (a) The Assignor agrees to indemnify, reimburse
and hold the Secured Creditor and its successors, assigns, employees, agents
and servants (hereinafter in this Section 11.1 referred to individually as
"INDEMNITEE," and collectively as "INDEMNITEES") harmless from any and all
liabilities, obligations, damages, injuries, penalties, claims, demands,
actions, suits, judgments and any and all costs and expenses (including
reasonable attorneys' fees and expenses) (for the purposes of this Section
11.1 the foregoing are collectively called "EXPENSES") of whatsoever kind and
nature imposed on, asserted against or incurred by any of the Indemnitees in
any way relating to or arising out of the security interests credited in the
Specified Properties in any way relating to or arising out of this Agreement
or the enforcement, or the preservation of any rights with respect thereto;
PROVIDED that no Indemnitee shall be indemnified pursuant to this Section
11.1(a) for losses, damages or liabilities to the extent caused by the gross
negligence or willful misconduct of such Indemnitee. The Assignor agrees
that upon written notice by any Indemnitee of the assertion of such a
liability, obligation, damage, injury, penalty, claim, demand, action,
judgment or suit, the Assignor shall assume full responsibility for the
defense thereof. Each Indemnitee agrees to use its best efforts to promptly
notify the Assignor of any such assertion of which such Indemnitee has
knowledge.
(b) Without limiting the application of Section 11.1(a), if the
Obligations are not paid in full on the Initial Borrowing Date the Assignor
agrees to pay, or reimburse the Collateral Agent for any and all fees, costs
and expenses of whatever kind or nature incurred in connection with the
creation, preservation or protection of the Collateral Agent's Liens on, and
security interest in, the Collateral, including, without limitation, all fees
and taxes in connection with the recording or filing of instruments and
documents in public offices, payment or discharge of any taxes or Liens upon
or in respect of the Collateral, premiums for insurance with respect to the
Collateral and all other fees, costs and expenses in connection with
protecting, maintaining or preserving the Collateral and the Collateral
Agent's interest therein, whether through judicial proceedings or otherwise,
or in defending or prosecuting any actions, suits or proceedings arising out
of or relating to the Collateral.
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(c) If and to the extent that the obligations of the Assignor
under this Section 11.1 are unenforceable for any reason, the Assignor hereby
agrees to make the maximum contribution to the payment and satisfaction of such
obligations which is permissible under applicable law.
11.02 INDEMNITY OBLIGATIONS SECURED BY COLLATERAL. Any amounts paid
by any Indemnitee as to which such Indemnitee has the right to reimbursement
shall constitute Obligations secured by the Collateral.
SECTION 12. DEFINITIONS.
The following terms shall have the meanings herein specified. Such
definitions shall be equally applicable to the singular and plural forms of the
terms defined.
"ADMINISTRATIVE AGENT" shall have the meaning provided in the recitals
hereto.
"AGREEMENT" shall have the meaning provided in the preamble to this
Agreement.
"ASSIGNOR" shall have the meaning provided in the preamble to this
Agreement.
"CASH COLLATERAL" shall have the meaning provided in Section 1.01(ii).
"COLLATERAL" shall have the meaning provided in Section 1.01 of this
Agreement.
"COLLATERAL AGENT" shall have the meaning provided in the preamble to
this Agreement.
"CONTRIBUTION AGREEMENT" shall have the meaning provided in the Credit
Agreement.
"CONTRIBUTION EFFECTIVE TIME" shall have the meaning provided in the
Credit Agreement.
"CREDIT AGREEMENT" shall have the meaning provided in the recitals to
this Agreement.
"EVENT OF DEFAULT" shall mean any Event of Default under, and as
defined in, the Credit Agreement.
"INDEMNITEE" shall have the meaning provided in Section 11.01 of this
Agreement.
"LENDER CREDITORS" shall have the meaning provided in the recitals to
this Agreement.
"LENDERS" shall have the meaning provided in the recitals to this
Agreement.
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"LIENS" shall mean any security interest, mortgage, pledge, lien,
claim, charge, encumbrance, title retention agreement, lessor's interest in a
financing lease or analogous instrument, in, of, or on the Assignor's
property other than, in the case of the Specified Properties, "Permitted
Encumbrances "as defined in, or disclosed under, the Contribution Agreement.
"OBLIGATIONS" shall mean (i) the full and prompt payment when due
(whether at the stated maturity, by acceleration or otherwise) of all
obligations (including obligations which, but for the automatic stay under
Section 362(a) of the Bankruptcy Code, would become due) and liabilities
(including, without limitation, indemnities, fees and interest thereon) of the
Assignor owing to the Lender Creditors, now existing or hereafter incurred
under, arising out of or in connection with any Credit Document to which the
Assignor is a party and the due performance and compliance by the Assignor with
the terms, conditions and agreements of each such Credit Document; (ii) the full
and prompt payment when due (whether at the stated maturity, by acceleration or
otherwise) of all obligations including any and all sums advanced by the
Collateral Agent in order to preserve the Collateral or preserve its security
interest in the Collateral; (iii) in the event of any proceeding for the
collection or enforcement of any indebtedness, obligations, or liabilities of
the Assignor referred to in clauses (i) and (ii) after an Event of Default shall
have occurred and be continuing, the reasonable expenses of re-taking, holding,
preparing for sale or lease, selling or otherwise disposing of or realizing on
the Collateral, or of any exercise by the Collateral Agent of its rights
hereunder, together with reasonable attorneys' fees and court costs; and (iv)
all amounts paid by any Indemnitee as to which such Indemnitee has the right to
reimbursement under Section 11.01 of this Agreement.
"PROCEEDS" shall have the meaning provided in the Uniform Commercial
Code as in effect in the State of New York on the date hereof or under other
relevant law and, in any event, shall include, but not be limited to, (i) any
and all proceeds of any insurance, indemnity, warranty or guaranty payable to
the Collateral Agent or the Assignor from time to time with respect to any of
the Collateral, (ii) any and all payments (in any form whatsoever) made or due
and payable to the Assignor from time to time in connection with any
requisition, confiscation, condemnation, seizure or forfeiture of all or any
part of the Collateral by any governmental authority (or any person acting under
color of governmental authority) and (iii) any and all other amounts from time
to time paid or payable under or in connection with any of the Collateral.
"RESTRICTED ACCOUNT" shall have the meaning provided in Section 2.01.
"SPECIFIED MORTGAGE" shall have the meaning provided in Section 3(b).
"SPECIFIED MORTGAGED PROPERTY" shall mean the real property interests
listed on Annex B hereto.
"SUB DEBT RESTRICTED ACCOUNT" shall have the meaning provided in the
Credit Agreement.
"TERMINATION DATE" shall have the meaning provided in Section 13 of
this Agreement.
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SECTION 13. TERMINATION; RELEASE; PARTIAL RELEASE.
(a) On the earlier to occur of (x) the Contribution Effective
Time and (y) that date upon which all Term Loans advanced to the Assignor
have been repaid in full together with all interest thereon but not including
any costs, premiums or penalties (such earlier time, the "TERMINATION TIME"),
this Agreement shall automatically terminate and be released without further
action by any party and there shall be no further liability of Assignor
hereunder, and the Collateral Agent, at the request and expense of the
Assignor, will execute and deliver to the Assignor a proper instrument or
instruments acknowledging the satisfaction and termination of this Agreement,
and will duly assign, transfer and deliver to the Assignor (without recourse
and without any representation or warranty) such of the Collateral as may
remain in the possession of the Collateral Agent held by the Collateral Agent
pursuant to this Agreement.
(b) Collateral shall be released from the Restricted Account from
time to time in accordance with the provisions of Section 2.02(b).
SECTION 14. NOTICES, ETC.
Except as otherwise expressly provided herein, all notices and other
communications provided for hereunder shall be delivered and become effective in
accordance with Section 13.03 of the Credit Agreement.
SECTION 15. MISCELLANEOUS.
This Agreement shall be binding upon the Assignor and its successors
and assigns (although the Assignor may not assign its rights or obligations
under this Agreement) and shall inure to the benefit of and be enforceable by
the Collateral Agent and its successors and assigns. The headings in this
Agreement are for reference only and shall not limit or define the meaning
hereof. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF
NEW YORK. This Agreement may be executed in any number of counterparts, each of
which shall be an original, but all of which shall constitute one instrument.
This Agreement shall become effective on the date on which each of the parties
shall have executed and delivered a copy hereof. In the event that any
provision of this Agreement shall prove to be invalid or unenforceable, such
provision shall be deemed to be severable from the other provisions of this
Agreement which shall remain binding on all parties hereto.
SECTION 16. WAIVER; AMENDMENT.
None of the terms and conditions of this Agreement may be changed,
waived, modified or varied in any manner whatsoever unless in writing duly
signed by the Assignor and the Collateral Agent (with the consent of the
Required Lenders (or all the Lenders if required by Section 13.12 of the
Credit Agreement)).
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IN WITNESS WHEREOF, the Assignor and the Collateral Agent have caused
this Agreement to be executed by their duly elected officers duly authorized as
of the date first above written.
TENNECO PACKAGING, INC.
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
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Title: Vice President and Assistant Secretary
▇▇▇▇▇▇ GUARANTY TRUST COMPANY
OF NEW YORK, as Collateral Agent
By /s/ Unn ▇▇▇▇▇▇▇
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Title: Vice President