Exhibit 10.35
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (the "Agreement"), dated this 9th day of February,
2001, by and between Tremont Corporation, a Delaware Corporation (hereinafter
called "Pledgor"), whose principal office is at 0000 Xxxxxxxx, Xxxxx 0000,
Xxxxxx, Xxxxxxxx 00000 and NL Environmental Management Services, Inc., a New
Jersey Corporation (the "Secured Party"), in its capacity as the holder of the
Note (as defined below).
Section 1. Security Interest. For value received, Pledgor hereby grants to
Secured Party, upon the terms and conditions of this Agreement, a security
interest in and to any and all present or future rights of Pledgor in and to all
of the following rights, interests and property (all of the following being
herein sometimes called the "Pledged Shares"):
10,215,541 shares of NYSE-traded NL Industries, Inc. ("NL") common
stock, par value of $1.25 per share.
As used in this Agreement, the "Collateral" shall include the Pledged Shares
together with any and all products and proceeds of the Pledged Shares,
including, without limitation, all dividends, cash, instruments, subscriptions,
warrants and any other rights and options and other property from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of the Pledged Shares.
Section 2. Loan Agreement. This Agreement is being executed and delivered
pursuant to the terms, conditions and requirements of that certain revolving
note, dated as of February 9, 2001 ("Revolving Note"), pursuant to which Secured
Party has loaned monies to Tremont Corporation ("Tremont"). The security
interests herein granted ("Security Interests") shall secure full payment and
performance of: (a) that certain Revolving Note of even date herewith in the
principal amount of $13,400,000, made by Tremont and payable to the order of
Secured Party (such note and any notes given in modification, renewal, extension
or substitution thereof being herein sometimes collectively referred to as the
"Notes" and individually as the "Note"); and (b) the due and punctual observance
and performance of each and every agreement, covenant and condition on Pledgor's
part to be observed or performed under this Agreement or the Note (all of which
debts, duties, liabilities and obligations hereinbefore described and covered by
this Agreement and the Note are hereinafter referred to as the "Obligation").
Section 3. Priority. Pledgor represents and warrants that the Security
Interests are first and prior security interests in and to all of the
Collateral, subject to the following liens thereon or security interests therein
in existence prior to the Pledgor's acquisition of the Collateral:
[NONE]
Section 4. Title to Collateral. Pledgor represents and warrants to Secured
Party that: (a) Pledgor is the owner of the Collateral; (b) no dispute, right of
offset, counterclaim, or defense to the Security Interests exists with respect
to all or any part of the Collateral; and (c) Pledgor will defend the Collateral
against the claims and demands of all persons other than any subordinate claims
or liens acknowledged by Secured Party.
Section 5. Pledgor's Obligations. So long as the Note is outstanding,
Pledgor covenants and agrees with Secured Party: (a) not to permit any material
part of the Collateral to be levied upon under any legal process; (b) not to
dispose of any of the Collateral without the prior written consent of Secured
Party; (c) to comply with all applicable federal, state and local statutes,
laws, rules and regulations, the noncompliance with which could have a material
and adverse effect on the value of the Collateral; and (d) to pay all taxes
accruing after the Closing Date which constitute, or may constitute, a lien
against the Collateral, prior to the date when penalties or interest would
attach to such taxes; provided, that Pledgor may contest any such tax claim if
done diligently and in good faith.
Section 6. Event of Default. As used herein, the term default shall
include any or all of the following:
(a) The assignment, voluntary or involuntary conveyance of legal or
beneficial interest, mortgage, pledge or grant of a security interest in
any of the Collateral; or
(b) The filing or issuance of a notice of any lien, warrant for
distraint or notice of levy for taxes or assessment against the Collateral
(except for those which are being contested in good faith and for which
adequate reserves have been created); or
(c) Nonpayment of any installment of principal or interest under the
Notes; or
(d) The adjudication of Tremont as bankrupt, or the taking of any
voluntary action by Tremont or any involuntary action against Tremont
seeking an adjudication of Tremont as bankrupt, or seeking relief by or
against Tremont under any provision of the Bankruptcy Code; or
(e) Pledgor failing to comply with any other covenant contained in
the Notes or this Agreement; or
(f) Pledgor's default in any payment (regardless of amount) of
principal of or interest on any other indebtedness for borrowed money; or
(g) Pledgor's default in the observance or performance of any other
agreement or condition relating to any such other indebtedness for
borrowed money or contained in any instrument evidencing, securing or
relating thereto or any other event shall occur or condition exist, the
effect of which default or other event or condition is to cause, or to
permit the holder of the indebtedness to cause, such other indebtedness
for borrowed money to become due prior to its stated maturity.
An "Event of Default" shall be deemed to have occurred immediately upon any
default described in clause (d) or (g) above, if any default described in
clauses (c) or (f) above is not cured within 5 days, and if any default
described in clauses (a), (b), or (e) is not cured within 30 days after written
notice from Secured Party to Pledgor.
-2-
Section 7. Remedies. Upon the occurrence and during the continuation of an
Event of Default as defined herein, in addition to any and all other rights and
remedies which Secured Party may then have hereunder or under the Note, under
the Uniform Commercial Code of the State of New Jersey or of any other pertinent
jurisdiction (the "Code"), or otherwise, Secured Party may, at its option: (a)
reduce its claim to judgment or foreclosure or otherwise enforce the Security
Interests, in whole or in part, by any available judicial procedure; (b) sell,
or otherwise dispose of, at the office of Secured Party, or elsewhere, all or
any part of the Collateral, and any such sale or other disposition may be as a
unit or in parcels, by public or private proceedings, and by way of one or more
contracts (it being agreed that the sale of any part of the Collateral shall not
exhaust the Secured Party's power of sale, but sales may be made from time to
time, and at any time, until all of the Collateral has been sold or until the
Obligation has been paid and performed in full); (c) at its discretion, retain
the Collateral in satisfaction of the Obligation whenever the circumstances are
such that Secured Party is entitled to do so under the Code or otherwise; and
(d) exercise any and all other rights, remedies and privileges he may have under
the Note and the other documents defining the Obligation.
Section 8. Application of Proceeds by Secured Party. Any and all proceeds
ever received by Secured Party from any sale or other disposition of the
Collateral, or any part thereof, or the exercise of any other remedy pursuant
hereto shall be applied by Secured Party to the Obligation in such order and
manner as Secured Party, in its sole discretion, may deem appropriate,
notwithstanding any directions or instructions to the contrary by Pledgor;
provided that the proceeds and/or accounts shall be applied toward satisfaction
of the Obligation. Any proceeds received by Secured Party under this Agreement
in excess of those necessary to fully and completely satisfy the Obligation
shall be distributed to Pledgor.
Section 9. Notice of Sale. Reasonable notification of the time and place
of any public sale of the Collateral, or reasonable notification of the time
after which any private sale or other intended disposition of the Collateral is
to be made, shall be sent to Pledgor and to any other persons entitled under the
Code to notice; provided, that if any of the Collateral threatens to decline
speedily in value or is of a type customarily sold on a recognized market,
Secured Party may sell, pledge, assign or otherwise dispose of the Collateral
without notification, advertisement or other notice of any kind. It is agreed
that notice sent or given not less than ten (10) calendar days prior to the
taking of the action to which the notice relates is reasonable notification and
notice for the purposes of this paragraph.
Section 10. Right to Vote Collateral; Receipt of Dividends, Etc.
(a) Unless an Event of Default shall have occurred and be continuing, the
Pledgor shall have the right, from time to time, to vote and to give consents,
ratifications and waivers with respect to the Collateral, and the Secured Party
shall, upon receiving a written request from the Pledgor, which request shall be
deemed to be a representation and warranty by the Pledgor that no Event of
Default has occurred and is continuing, deliver to the Pledgor or, as specified
in such request, such proxies, powers of attorney, consents, ratifications and
waivers in respect of any Collateral which are registered in the name of the
Secured Party or a nominee as shall be specified in such request and be in form
and substance satisfactory to the Secured Party.
-3-
(b) If an Event of Default shall have occurred and be continuing, all
rights of the Pledgor to exercise the voting and other consensual rights which
it would otherwise be entitled to exercise pursuant to Section 10 (a) above
shall end upon five days' notice from the Secured Party to the Pledgor and
thereafter the Secured Party shall have the right to the extent permitted by
law, and the Pledgor shall take all such action as may be necessary or
appropriate to give effect to such right, to vote and to give consents,
ratifications and waivers, and take any other action with respect to all
Collateral with the same force and effect as if the Secured Party were the
absolute and sole owner thereof.
(c) Unless an Event of Default shall have occurred and be continuing, the
Pledgor shall be entitled to receive all regular quarterly cash dividends. Any
other dividends or distributions or proceeds therefrom on account of the
Collateral shall, if received by the Pledgor, be received in trust for the
benefit of the Secured Party, be segregated from the other property or funds of
the Pledgor, and be forthwith delivered to the Secured Party as collateral in
the same form as so received (with any necessary endorsement).
Section 11. Delivery of Notices. Any notice or demand required to be given
hereunder shall be in writing and shall be deemed to have been duly given and
received, if given by hand, when a writing containing such notice is received by
the person to whom addressed or, if given by mail, two (2) business days after a
certified or registered letter containing such notice, with postage prepaid, is
deposited in the United States mails, addressed to:
If to Secured Party:
NL Environmental Management Services, Inc.
00000 Xxxxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx XX 00000
Attn: Vice President and Secretary
If to Pledgor:
Tremont Corporation
0000 Xxxxxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attn: General Counsel
Any such address may be changed from time to time by serving notice to the other
party as above provided. A business day shall mean a day of the week which is
not a Saturday or Sunday or a holiday recognized by national banking
associations.
Section 12. Binding Effect. This Agreement shall be binding upon Pledgor,
its successors and assigns, and shall inure to the benefit of Secured Party, its
heirs, successors, assigns, executors, administrators, and personal or legal
representatives.
-4-
Section 13. Governing Law. This Agreement shall be construed in accordance
with and governed by the laws of the state of New Jersey.
Section 14. Severability. In the event that any one or more of the
provisions contained in this Agreement are held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Agreement.
-5-
EXECUTED as of the day and year first herein set forth.
SECURED PARTY:
NL Environmental Management Services, Inc.
By: /s/ Xxxxxx X. Xxxxx
---------------------------------
Xxxxxx X. Xxxxx
Title: Assistant Treasurer
---------------------------------
PLEDGOR:
Tremont Corporation
By: /s/ Xxxxxx X. Xxxxxxxxx
---------------------------------
Xxxxxx X. Xxxxxxxxx
Title: Vice President
---------------------------------
-6-
