Exhibit 10.27
PLEDGE AND SECURITY AGREEMENT
DATED AS OF FEBRUARY 25, 2004
AMONG
NEWPARK RESOURCES, INC., A DELAWARE CORPORATION,
BATSON-MILL, L.P., A TEXAS LIMITED PARTNERSHIP,
CHESSHER CONSTRUCTION, INC., A TEXAS CORPORATION,
DARCOM INTERNATIONAL, L.P., A TEXAS LIMITED PARTNERSHIP,
DURA-BASE NEVADA, INC., A NEVADA CORPORATION,
EXCALIBAR MINERALS, INC., A TEXAS CORPORATION,
EXCALIBAR MINERALS OF LA., L.L.C.,
A LOUISIANA LIMITED LIABILITY COMPANY,
MALLARD & MALLARD OF LA., INC., A LOUISIANA CORPORATION,
NES PERMIAN BASIN, L.P., A TEXAS LIMITED PARTNERSHIP,
NEWPARK DRILLING FLUIDS, L.L.C., A TEXAS LIMITED LIABILITY COMPANY,
NEWPARK ENVIRONMENTAL SERVICES, L.L.C.,
A LOUISIANA LIMITED LIABILITY COMPANY,
NEWPARK ENVIRONMENTAL MANAGEMENT COMPANY, L.L.C.,
A LOUISIANA LIMITED LIABILITY COMPANY,
NEWPARK ENVIRONMENTAL SERVICES MISSISSIPPI, L.P.,
A MISSISSIPPI LIMITED PARTNERSHIP,
NEWPARK ENVIRONMENTAL SERVICES OF TEXAS, L.P.,
A TEXAS LIMITED PARTNERSHIP,
NEWPARK HOLDINGS, INC., A LOUISIANA CORPORATION,
NEWPARK SHIPHOLDING TEXAS, L.P., A TEXAS LIMITED PARTNERSHIP,
NEWPARK TEXAS L.L.C., A LOUISIANA LIMITED LIABILITY COMPANY,
NID, L.P., A TEXAS LIMITED PARTNERSHIP,
OGS LABORATORY, INC., A TEXAS CORPORATION,
SHAMROCK DRILLING FLUIDS, INC., AN OKLAHOMA CORPORATION,
SOLOCO, L.L.C., A LOUISIANA LIMITED LIABILITY COMPANY,
SOLOCO TEXAS, L.P., A TEXAS LIMITED PARTNERSHIP, and
SUPREME CONTRACTORS, L.L.C., A LOUISIANA LIMITED LIABILITY COMPANY,
AS GRANTORS,
AND
BANK ONE, NA (Main Office Chicago),
AS AGENT
(Newpark) Pledge and Security Agreement
THIS PLEDGE AND SECURITY AGREEMENT (as it may be amended or modified
from time to time, the "Security Agreement") is entered into as of February 25,
2004, by and among Newpark Resources, Inc., a Delaware corporation, as the
Company and as a Borrower, Batson-Mill, L.P., a Texas limited partnership,
Dura-base Nevada, Inc., a Nevada corporation, Chessher Construction, Inc., a
Texas corporation, DarCom International, L.P., a Texas limited partnership,
Excalibar Minerals, Inc., a Texas corporation, Excalibar Minerals of LA.,
L.L.C., a Louisiana limited liability company, Mallard & Mallard of LA., Inc., a
Louisiana corporation, NES Permian Basin, L.P., a Texas limited partnership,
Newpark Drilling Fluids, L.L.C., a Texas limited liability company, Newpark
Environmental Services, L.L.C., a Louisiana limited liability company, Newpark
Environmental Management Company, L.L.C., a Louisiana limited liability company,
Newpark Environmental Services Mississippi, L.P., a Mississippi limited
partnership, Newpark Environmental Services of Texas, L.P., a Texas limited
partnership, Newpark Holdings, Inc., a Louisiana corporation, Newpark
Shipholding Texas, L.P., a Texas limited partnership, Newpark Texas L.L.C., a
Louisiana limited liability company, NID, L.P., a Texas limited partnership, OGS
Laboratory, Inc., a Texas corporation, Shamrock Drilling Fluids, Inc., an
Oklahoma corporation, SOLOCO, L.L.C., a Louisiana limited liability company,
SOLOCO Texas, L.P., a Texas limited partnership, and Supreme Contractors,
L.L.C., a Louisiana limited liability company (each a "Grantor", and
collectively, the "Grantors"), and Bank One, NA, a national banking association
having its principal office in Chicago, Illinois, in its capacity as agent (the
"Agent") for the lenders party to the Credit Agreement referred to below.
PRELIMINARY STATEMENT
The Grantors, the other Loan Parties and the Lenders are entering into
an Amended and Restated Credit Agreement dated as of the date hereof (as it may
be amended or modified from time to time, the "Credit Agreement").
Each Grantor is entering into this Security Agreement in order to
induce the Lenders to enter into and extend credit to the Borrowers under the
Credit Agreement and to secure the Secured Obligations that it has agreed to
guarantee pursuant to Article XV of the Credit Agreement.
ACCORDINGLY, the Grantors and the Agent, on behalf of the Lenders,
hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1. Terms Defined in Credit Agreement. All capitalized terms used
herein and not otherwise defined shall have the meanings assigned to such terms
in the Credit Agreement.
1.2. Terms Defined in UCC. Terms defined in the UCC which are not
otherwise defined in this Security Agreement are used herein as defined in the
UCC.
1.3. Definitions of Certain Terms Used Herein. As used in this
Security Agreement, in addition to the terms defined in the Preliminary
Statement, the following terms shall have the following meanings:
"Accounts" shall have the meaning set forth in Article 9 of the UCC.
NEWPARK PLEDGE AND SECURITY AGREEMENT - PAGE 2
"Article" means a numbered article of this Security Agreement, unless
another document is specifically referenced.
"Assigned Contracts" means, collectively, all of the Grantors' rights
and remedies under, and all moneys and claims for money due or to become due to
the Grantors under those contracts set forth on Exhibit J hereto, and any other
material contracts, and any and all amendments, supplements, extensions, and
renewals thereof including all rights and claims of the Grantors now or
hereafter existing: (a) under any insurance, indemnities, warranties, and
guarantees provided for or arising out of or in connection with any of the
foregoing agreements; (b) for any damages arising out of or for breach or
default under or in connection with any of the foregoing contracts; (c) to all
other amounts from time to time paid or payable under or in connection with any
of the foregoing agreements; or (d) to exercise or enforce any and all
covenants, remedies, powers and privileges thereunder.
"Borrower Representative" shall have the meaning set forth in the
Credit Agreement.
"Chattel Paper" shall have the meaning set forth in Article 9 of the
UCC.
"Collateral" shall have the meaning set forth in Article II.
"Collateral Deposit Account" shall have the meaning set forth in
Section 7.1(a).
"Collateral Report" means any certificate (including any Borrowing Base
Certificate), report or other document delivered by any Grantor to the Agent or
any Lender with respect to the Collateral pursuant to any Loan Document.
"Collection Account" shall have the meaning set forth in Section
7.1(b).
"Commercial Tort Claims" means the existing commercial tort claims of
the Grantors as described on Exhibit K.
"Control" shall have the meaning set forth in Article 8 or, if
applicable, in Section 9-104, 9-105, 9-106 or 9-107 of Article 9 of the UCC.
"Copyrights" means, with respect to any Person, all of such Person's
right, title, and interest in and to the following: (a) all copyrights, rights
and interests in copyrights, works protectable by copyright, copyright
registrations, and copyright applications; (b) all renewals of any of the
foregoing; (c) all income, royalties, damages, and payments now or hereafter due
and/or payable under any of the foregoing, including, without limitation,
damages or payments for past or future infringements for any of the foregoing;
(d) the right to sue for past, present, and future infringements of any of the
foregoing; and (e) all rights corresponding to any of the foregoing throughout
the world.
"Default" means an event described in Section 5.1.
"Deposit Accounts" shall have the meaning set forth in Article 9 of the
UCC.
"Documents" shall have the meaning set forth in Article 9 of the UCC.
NEWPARK PLEDGE AND SECURITY AGREEMENT - PAGE 3
"Equipment" shall have the meaning set forth in Article 9 of the UCC.
"Exhibit" refers to a specific exhibit to this Security Agreement,
unless another document is specifically referenced.
"Fixtures" shall have the meaning set forth in Article 9 of the UCC.
"General Intangibles" shall have the meaning set forth in Article 9 of
the UCC.
"Goods" shall have the meaning set forth in Article 9 of the UCC.
"Instruments" shall have the meaning set forth in Article 9 of the UCC.
"Inventory" shall have the meaning set forth in Article 9 of the UCC.
"Investment Property" shall have the meaning set forth in Article 9 of
the UCC.
"IP Security Agreements" means, individually and collectively, the
Patent Security Agreement and the Trademark Security Agreement.
"Lenders" means the lenders party to the Credit Agreement and their
successors and assigns.
"Letter-of-Credit Rights" shall have the meaning set forth in Article 9
of the UCC.
"Licenses" means, with respect to any Person, all of such Person's
right, title, and interest in and to (a) any and all licensing agreements or
similar arrangements in and to its Patents, Copyrights, or Trademarks, (b) all
income, royalties, damages, claims, and payments now or hereafter due or payable
under and with respect thereto, including, without limitation, damages and
payments for past and future breaches thereof, and (c) all rights to sue for
past, present, and future breaches thereof.
"Lock Boxes" shall have the meaning set forth in Section 7.1(a).
"Lock Box Agreements" shall have the meaning set forth in Section
7.1(a).
"Patents" means, with respect to any Person, all of such Person's
right, title, and interest in and to: (a) any and all patents and patent
applications; (b) all inventions and improvements described and claimed therein;
(c) all reissues, divisions, continuations, renewals, extensions, and
continuations-in-part thereof; (d) all income, royalties, damages, claims, and
payments now or hereafter due or payable under and with respect thereto,
including, without limitation, damages and payments for past and future
infringements thereof; (e) all rights to sue for past, present, and future
infringements thereof; and (f) all rights corresponding to any of the foregoing
throughout the world.
"Patent Security Agreement" means that certain Patent Security
Agreement, dated the date hereof, among certain of the Loan Parties and Agent,
for the lenders party to the Credit Agreement.
"Pledged Collateral" means all Instruments (other than (a) those
certain intercompany notes issued by certain of the Canadian Subsidiaries and
existing as of the Effective Date and (b) any promissory note or series
NEWPARK PLEDGE AND SECURITY AGREEMENT - PAGE 4
of promissory notes issued by any one maker, which individually or in the
aggregate, do not exceed $2,000,000), Securities and other Investment Property
of the Grantors, whether or not physically delivered to the Agent pursuant to
this Security Agreement.
"Receivables" means the Accounts, Chattel Paper, Documents, Investment
Property, Instruments and any other rights or claims to receive money which are
General Intangibles or which are otherwise included as Collateral.
"Required Secured Parties" means (a) prior to an acceleration of the
obligations under the Credit Agreement, the Required Lenders, (b) after an
acceleration of the obligations under the Credit Agreement but prior to the date
upon which the Credit Agreement has terminated by its terms and all of the
obligations thereunder have been paid in full, Lenders holding in the aggregate
at least a majority of the total of the Aggregate Credit Exposure, and (c) after
the Credit Agreement has terminated by its terms and all of the obligations
thereunder have been paid in full (whether or not the obligations under the
Credit Agreement were ever accelerated), Lenders holding in the aggregate at
least a majority of the aggregate net early termination payments and all other
amounts then due and unpaid from any Grantor to the Lenders under Rate
Management Transactions, as determined by the Agent in its reasonable
discretion.
"Section" means a numbered section of this Security Agreement, unless
another document is specifically referenced.
"Security" has the meaning set forth in Article 8 of the UCC.
"Stock Rights" means all dividends, instruments or other distributions
and any other right or property which the Grantors shall receive or shall become
entitled to receive for any reason whatsoever with respect to, in substitution
for or in exchange for any Capital Stock constituting Collateral, any right to
receive Capital Stock and any right to receive earnings, in which the Grantors
now have or hereafter acquire any right, issued by an issuer of such Capital
Stock.
"Supporting Obligations" shall have the meaning set forth in Article 9
of the UCC.
"Trademarks" means, with respect to any Person, all of such Person's
right, title, and interest in and to the following: (a) all trademarks
(including service marks), trade names, trade dress, and trade styles and the
registrations and applications for registration thereof and the goodwill of the
business symbolized by the foregoing; (b) all licenses of the foregoing, whether
as licensee or licensor; (c) all renewals of the foregoing; (d) all income,
royalties, damages, and payments now or hereafter due or payable with respect
thereto, including, without limitation, damages, claims, and payments for past
and future infringements thereof; (e) all rights to sue for past, present, and
future infringements of the foregoing, including the right to settle suits
involving claims and demands for royalties owing; and (f) all rights
corresponding to any of the foregoing throughout the world.
"Trademark Security Agreement" means that certain Trademark Security
Agreement, dated the date hereof, among certain of the Loan Parties and Agent,
for the lenders party to the Credit Agreement.
"UCC" means the Uniform Commercial Code, as in effect from time to
time, of the State of Texas or of any other state the laws of which are required
as a result thereof to be applied in connection with the attachment, perfection
or priority of, or remedies with respect to, Agent's or any Lender's Lien on any
Collateral.
NEWPARK PLEDGE AND SECURITY AGREEMENT - PAGE 5
"Unmatured Default" means an event which but for the lapse of time or
the giving of notice, or both, would constitute a Default hereunder.
The foregoing definitions shall be equally applicable to both the
singular and plural forms of the defined terms.
ARTICLE II
GRANT OF SECURITY INTEREST
Each Grantor hereby pledges, assigns and grants to the Agent, on behalf
of and for the ratable benefit of the Lenders, a security interest in all of its
right, title and interest in, to and under all personal property and other
assets, whether now owned by or owing to, or hereafter acquired by or arising in
favor of such Grantor (including under any trade name or derivations thereof),
and whether owned or consigned by or to, or leased from or to, such Grantor, and
regardless of where located (all of which will be collectively referred to as
the "Collateral"), including:
(i) all Accounts;
(ii) all Chattel Paper;
(iii) all Documents;
(iv) all Equipment;
(v) all Fixtures;
(vi) all General Intangibles;
(vii) all Goods;
(viii) all Instruments;
(ix) all Inventory;
(x) all Investment Property;
(xi) all cash or cash equivalents;
(xii) all letters of credit, Letter-of-Credit
Rights and Supporting Obligations;
(xiii) all Deposit Accounts with any bank or other
financial institution;
(xiv) all Commercial Tort Claims;
(xv) all Assigned Contracts; and
(xvi) all accessions to, substitutions for and
replacements, proceeds (including Stock
Rights), insurance proceeds and products of
the foregoing, together with all books and
records, customer lists, credit files,
computer files, programs, printouts and
other computer materials and records related
thereto and any General Intangibles at any
time evidencing or relating to any of the
foregoing;
to secure the prompt and complete payment and performance of the Secured
Obligations.
NEWPARK PLEDGE AND SECURITY AGREEMENT - PAGE 6
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Each Grantor represents and warrants to the Agent and the Lenders that:
3.1. Title, Perfection and Priority. Such Grantor has good and
valid rights in or the power to transfer the Collateral and title to the
Collateral with respect to which it has purported to grant a security interest
hereunder, free and clear of all Liens except for Liens permitted under Section
4.1(e), and has full power and authority to grant to the Agent the security
interest in such Collateral pursuant hereto. When financing statements have been
filed in the appropriate offices against such Grantor in the locations listed on
Exhibit H, the Agent will have a fully perfected first priority security
interest in that Collateral of the Grantor in which a security interest may be
perfected by filing, subject only to Liens permitted under Section 4.1(e).
3.2. Type and Jurisdiction of Organization, Organizational and
Identification Numbers. The type of entity of such Grantor, its state of
organization, the organizational number issued to it by its state of
organization and its federal employer identification number are set forth on
Exhibit A.
3.3. Principal Location. Such Grantor's mailing address and the
location of its place of business (if it has only one) or its chief executive
office (if it has more than one place of business), are disclosed in Exhibit A;
such Grantor has no other places of business except those set forth in Exhibit
A.
3.4. Collateral Locations. All of such Grantor's locations where
Collateral is located are listed on Exhibit A. All of said locations are owned
by such Grantor except for locations (i) which are leased by the Grantor as
lessee and designated in Part VII(b) of Exhibit A and (ii) at which Inventory is
held in a public warehouse or is otherwise held by a bailee or on consignment as
designated in Part VII(c) of Exhibit A.
3.5. Deposit Accounts. All of such Grantor's Deposit Accounts are
listed on Exhibit B.
3.6. Exact Names. Such Grantor's name in which it has executed this
Security Agreement is the exact name as it appears in such Grantor's
organizational documents, as amended, as filed with such Grantor's jurisdiction
of organization.
3.7. Letter-of-Credit Rights and Chattel Paper. Exhibit C lists all
Letter-of-Credit Rights and Chattel Paper of such Grantor. All action by such
Grantor necessary or desirable to protect and perfect the Agent's Lien on each
item listed on Exhibit C (including the delivery of all originals and the
placement of a legend on all Chattel Paper as required hereunder) has been duly
taken. The Agent will have a fully perfected first priority security interest in
the Collateral listed on Exhibit C, subject only to Liens permitted under
Section 4.1(e).
3.8. Accounts and Chattel Paper.
(a) The names of the obligors, amounts owing, due dates
and other information with respect to its Accounts and Chattel Paper are and
will be correctly stated in all records of the Grantor relating thereto and in
all invoices and Collateral Reports with respect thereto furnished to the Agent
by such Grantor from time to time. As of the time when each Account or each item
of Chattel Paper arises, such Grantor shall
NEWPARK PLEDGE AND SECURITY AGREEMENT - PAGE 7
be deemed to have represented and warranted that such Account or Chattel Paper,
as the case may be, and all records relating thereto, are genuine and in all
respects what they purport to be.
(b) With respect to its Accounts, except as specifically
disclosed on the most recent Collateral Report, (i) all Accounts are Eligible
Accounts; (ii) all Accounts represent bona fide sales of Inventory or rendering
of services to Account Debtors in the ordinary course of such Grantor's business
and are not evidenced by a judgment, Instrument or Chattel Paper; (iii) there
are no setoffs, claims or disputes existing or asserted with respect thereto and
such Grantor has not made any agreement with any Account Debtor for any
extension of time for the payment thereof, any compromise or settlement for less
than the full amount thereof, any release of any Account Debtor from liability
therefor, or any deduction therefrom except a discount or allowance allowed by
such Grantor in the ordinary course of its business for prompt payment and
disclosed to the Agent; (iv) to such Grantor's knowledge, there are no facts,
events or occurrences which in any way impair the validity or enforceability
thereof or could reasonably be expected to reduce the amount payable thereunder
as shown on such Grantor's books and records and any invoices, statements and
Collateral Reports with respect thereto; (v) such Grantor has not received any
notice of proceedings or actions which are threatened or pending against any
Account Debtor which might result in any material adverse change in such Account
Debtor's financial condition; and (vi) such Grantor has no knowledge that any
Account Debtor is unable generally to pay its debts as they become due.
(c) In addition, with respect to all of its Accounts, (i)
the amounts shown on all invoices, statements and Collateral Reports with
respect thereto are actually and absolutely owing to such Grantor as indicated
thereon and are not in any way contingent; (ii) no payments have been or shall
be made thereon except payments immediately delivered to a Lock Box or a
Collateral Deposit Account as required pursuant to Section 7.1; and (iii) to
such Grantor's knowledge, all Account Debtors have the capacity to contract.
3.9. Inventory. With respect to any of its Inventory scheduled or
listed on the most recent Collateral Report, (a) such Inventory (other than
Inventory in transit) is located at one of such Grantor's locations set forth on
Exhibit A, (b) no Inventory (other than Inventory in transit) is now, or shall
at any time or times hereafter be stored at any other location except as
permitted by Section 4.1(g), (c) such Grantor has good, indefeasible and
merchantable title to such Inventory and such Inventory is not subject to any
Lien or security interest or document whatsoever except for the Lien granted to
the Agent, for the benefit of the Agent and Lenders, and except for Permitted
Liens, (d) except as specifically disclosed in the most recent Collateral
Report, such Inventory is Eligible Inventory of good and merchantable quality,
free from any defects, (e) such Inventory is not subject to any licensing,
patent, royalty, trademark, trade name or copyright agreements with any third
parties which would require any consent of any third party upon sale or
disposition of that Inventory or the payment of any monies to any third party
upon such sale or other disposition, (f) such Inventory has been produced in
accordance with the Federal Fair Labor Standards Act of 1938, as amended, and
all rules, regulations and orders thereunder and (g) the completion of
manufacture, sale or other disposition of such Inventory by the Agent following
a Default shall not require the consent of any Person and shall not constitute a
breach or default under any contract or agreement to which such Grantor is a
party or to which such property is subject.
3.10. Intellectual Property. Such Grantor does not have any interest
in, or title to, any Patent, Trademark or Copyright except as set forth in
Exhibit D. This Security Agreement is effective to create a valid and continuing
Lien and, upon filing of this Security Agreement with the United States
Copyright Office and the United States Patent and Trademark Office, fully
perfected first priority security interests in favor of the Agent on such
Grantor's Patents, Trademarks and Copyrights, such perfected security interests
are enforceable
NEWPARK PLEDGE AND SECURITY AGREEMENT - PAGE 8
as such as against any and all creditors of and purchasers from the Grantor and,
upon the filing of appropriate financing statements listed on Exhibit H and the
Patent Security Agreement and the Trademark Security Agreement, all action
necessary or desirable to protect and perfect the Agent's Lien on such Grantor's
Patents, Trademarks or Copyrights shall have been duly taken.
3.11. Filing Requirements. None of its Equipment is covered by any
certificate of title, except for automobiles and other motor vehicles used in
the ordinary course of Grantors' business. None of the Collateral owned by it is
of a type for which security interests or liens may be perfected by filing under
any federal statute except for (a) the vehicles described in Exhibit E and (b)
Patents, Trademarks and Copyrights held by such Grantor and described in Exhibit
D. The legal description, county and street address of each property on which
any Fixtures are located is set forth in Exhibit F together with the name and
address of the record owner of each such property.
3.12. No Financing Statements, Security Agreements. No financing
statement or security agreement describing all or any portion of the Collateral
which has not lapsed or been terminated naming such Grantor as debtor has been
filed or is of record in any jurisdiction except (a) for financing statements or
security agreements naming the Agent on behalf of the Lenders as the secured
party and (b) as permitted by Section 4.1(e).
3.13. Pledged Collateral.
(a) Exhibit G sets forth a complete and accurate list of
all Pledged Collateral owned by such Grantor. Such Grantor is the direct, sole
beneficial owner and sole holder of record of the Pledged Collateral listed on
Exhibit G as being owned by it, free and clear of any Liens, except for the
security interest granted to the Agent for the benefit of the Lenders hereunder.
Such Grantor further represents and warrants that (i) all Pledged Collateral
owned by it constituting Capital Stock has been (to the extent such concepts are
relevant with respect to such Pledged Collateral) duly authorized, validly
issued, are fully paid and non-assessable, (ii) with respect to any certificates
delivered to the Agent representing Capital Stock, either such certificates are
Securities as defined in Article 8 of the UCC as a result of actions by the
issuer or otherwise, or, if such certificates are not Securities, such Grantor
has so informed the Agent so that the Agent may take steps to perfect its
security interest therein as a General Intangible, (iii) all such Pledged
Collateral held by a securities intermediary is covered by a control agreement
among such Grantor, the securities intermediary and the Agent pursuant to which
the Agent has Control and (iv) all Pledged Collateral which represents
Indebtedness owed to such Grantor has been duly authorized, authenticated or
issued and delivered by the issuer of such Indebtedness, is the legal, valid and
binding obligation of such issuer and such issuer is not in default thereunder.
(b) In addition, (i) none of the Pledged Collateral owned
by it has been issued or transferred in violation of the securities
registration, securities disclosure or similar laws of any jurisdiction to which
such issuance or transfer may be subject, (ii) there are existing no options,
warrants, calls or commitments of any character whatsoever relating to such
Pledged Collateral or which obligate the issuer of any Capital Stock included in
Pledged Collateral to issue additional Capital Stock, and (iii) no consent,
approval, authorization, or other action by, and no giving of notice, filing
with, any governmental authority or any other Person is required for the pledge
by such Grantor of such Pledged Collateral pursuant to this Security Agreement
or for the execution, delivery and performance of this Security Agreement by
such Grantor, or for the exercise by the Agent of the voting or other rights
provided for in this Security Agreement or for the
NEWPARK PLEDGE AND SECURITY AGREEMENT - PAGE 9
remedies in respect of the Pledged Collateral pursuant to this Security
Agreement, except as may be required in connection with such disposition by laws
affecting the offering and sale of securities generally.
(c) Except as set forth in Exhibit G, such Grantor owns
100% of the issued and outstanding Capital Stock which constitutes Pledged
Collateral and none of the Pledged Collateral which represents Indebtedness owed
to such Grantor is subordinated in right of payment to other Indebtedness or
subject to the terms of an indenture.
ARTICLE IV
COVENANTS
From the date of this Security Agreement, and thereafter until this
Security Agreement is terminated:
4.1. General.
(a) Collateral Records. Such Grantor will maintain
complete and accurate books and records with respect to the Collateral owned by
it, and furnish to the Agent, with sufficient copies for each of the Lenders,
such reports relating to such Collateral as the Agent shall from time to time
request.
(b) Authorization to File Financing Statements;
Ratification. Such Grantor hereby authorizes the Agent to file, and if requested
will deliver to the Agent, all financing statements and other documents and take
such other actions as may from time to time be requested by the Agent in order
to maintain a first perfected security interest in and, if applicable, Control
of, the Collateral owned by such Grantor. Any financing statement filed by the
Agent may be filed in any filing office in any UCC jurisdiction and may (i)
indicate such Grantor's Collateral (1) as all assets of the Grantor or words of
similar effect, regardless of whether any particular asset comprised in the
Collateral falls within the scope of Article 9 of the UCC or such jurisdiction,
or (2) by any other description which reasonably approximates the description
contained in this Security Agreement, and (ii) contain any other information
required by part 5 of Article 9 of the UCC for the sufficiency or filing office
acceptance of any financing statement or amendment, including (A) whether such
Grantor is an organization, the type of organization and any organization
identification number issued to such Grantor, and (B) in the case of a financing
statement filed as a fixture filing or indicating such Grantor's Collateral as
as-extracted collateral or timber to be cut, a sufficient description of real
Property to which the Collateral relates. Such Grantor also agrees to furnish
any such information to the Agent promptly upon request. Such Grantor also
ratifies its authorization for the Agent to have filed in any UCC jurisdiction
any initial financing statements or amendments thereto if filed prior to the
date hereof.
(c) Further Assurances. Such Grantor will, if so
requested by the Agent, furnish to the Agent, as often as the Agent requests,
statements and schedules further identifying and describing the Collateral owned
by it and such other reports and information in connection with its Collateral
as the Agent may reasonably request, all in such detail as the Agent may
specify. Such Grantor also agrees to take any and all actions necessary to
defend title to the Collateral owned by it against all persons and to defend the
security interest of the Agent in its Collateral and the priority thereof
against any Lien not expressly permitted hereunder.
NEWPARK PLEDGE AND SECURITY AGREEMENT - PAGE 10
(d) Disposition of Collateral. Such Grantor will not
sell, lease or otherwise dispose of the Collateral owned by it except for
dispositions specifically permitted pursuant to Section 6.20 of the Credit
Agreement.
(e) Liens. Such Grantor will not create, incur, or suffer
to exist any Lien on the Collateral owned by it except (i) the security interest
created by this Security Agreement, and (ii) other Permitted Liens.
(f) Other Financing Statements. Such Grantor will not
authorize the filing of any financing statement naming it as debtor covering all
or any portion of the Collateral owned by it, except as permitted by Section
4.1(e). Such Grantor acknowledges that it is not authorized to file any
financing statement or amendment or termination statement with respect to any
financing statement without the prior written consent of the Agent, subject to
such Grantor's rights under Section 9-509(d)(2) of the UCC.
(g) Locations. Such Grantor will not (i) maintain any
Collateral owned by it at any location other than those locations listed on
Exhibit A, (ii) otherwise change, or add to, such locations without the Agent's
prior written consent as required by the Credit Agreement (and if the Agent
gives such consent, the Grantor will concurrently therewith obtain a Collateral
Access Agreement for each such location to the extent required by the Credit
Agreement), or (iii) change its principal place of business or chief executive
office from the location identified on Exhibit A, other than as permitted by the
Credit Agreement.
(h) Compliance with Terms. Such Grantor will perform and
comply with all obligations in respect of the Collateral owned by it and all
agreements to which it is a party or by which it is bound relating to such
Collateral.
4.2. Receivables.
(a) Certain Agreements on Receivables. Such Grantor will
not make or agree to make any discount, credit, rebate or other reduction in the
original amount owing on a Receivable or accept in satisfaction of a Receivable
less than the original amount thereof, except that, prior to the occurrence of a
Default, such Grantor may reduce the amount of Accounts arising from the sale of
Inventory in accordance with its present policies and in the ordinary course of
business.
(b) Collection of Receivables. Except as otherwise
provided in this Security Agreement, such Grantor will collect and enforce, at
such Grantor's sole expense, all amounts due or hereafter due to such Grantor
under the Receivables owned by it.
(c) Delivery of Invoices. Such Grantor will deliver to
the Agent immediately upon its request duplicate invoices with respect to each
Account owned by it bearing such language of assignment as the Agent shall
specify.
(d) Disclosure of Counterclaims on Receivables. If (i)
any discount, credit or agreement to make a rebate or to otherwise reduce the
amount owing on any Receivable owned by such Grantor exists or (ii) if, to the
knowledge of such Grantor, any dispute, setoff, claim, counterclaim or defense
exists or has been asserted or threatened with respect to any such Receivable,
such Grantor will promptly disclose such fact to the Agent in writing. Such
Grantor shall send the Agent a copy of each credit memorandum in excess of
$250,000 as soon as issued, and such Grantor shall promptly report each credit
memo and each of the facts required to be
NEWPARK PLEDGE AND SECURITY AGREEMENT - PAGE 11
disclosed to the Agent in accordance with this Section 4.2(d) on the Borrowing
Base Certificates submitted by it.
(e) Electronic Chattel Paper. Such Grantor shall take all
steps necessary to grant the Agent Control of all electronic chattel paper in
accordance with the UCC and all "transferable records" as defined in each of the
Uniform Electronic Transactions Act and the Electronic Signatures in Global and
National Commerce Act.
4.3. Inventory and Equipment.
(a) Maintenance of Goods. Such Grantor will do all things
necessary to maintain, preserve, protect and keep its Inventory and the
Equipment in good repair and working and saleable condition, except for damaged
or defective goods arising in the ordinary course of such Grantor's business and
except for ordinary wear and tear in respect of the Equipment.
(b) Returned Inventory. If an Account Debtor returns any
Inventory to such Grantor when no Event of Default exists, then such Grantor
shall promptly determine the reason for such return and shall issue a credit
memorandum to the Account Debtor in the appropriate amount. Such Grantor shall
immediately report to the Agent any return involving an amount in excess of
$500,000. Each such report shall indicate the reasons for the returns and the
locations and condition of the returned Inventory. In the event any Account
Debtor returns Inventory to such Grantor when an Event of Default exists, such
Grantor, upon the request of the Agent, shall: (i) hold the returned Inventory
in trust for the Agent; (ii) segregate all returned Inventory from all of its
other property; (iii) dispose of the returned Inventory solely according to the
Agent's written instructions; and (iv) not issue any credits or allowances with
respect thereto without the Agent's prior written consent. All returned
Inventory shall be subject to the Agent's Liens thereon. Whenever any Inventory
is returned, the related Account shall be deemed ineligible to the extent of the
amount owing by the Account Debtor with respect to such returned Inventory and
such returned Inventory shall not be Eligible Inventory.
(c) Inventory Count; Perpetual Inventory System. Such
Grantor will conduct a physical count of its Inventory at least once per Fiscal
Year, and after and during the continuation of an Event of Default, at such
other times as the Agent requests. Such Grantor, at its own expense, shall
deliver to the Agent the results of each physical verification, which such
Grantor has made, or has caused any other Person to make on its behalf, of all
or any portion of its Inventory. Such Grantor will maintain a perpetual
inventory reporting system at all times.
(d) Equipment. Such Grantor shall promptly inform the
Agent of any additions to or deletions from its Equipment which individually
exceed $100,000. Such Grantor shall not permit any Equipment to become a fixture
with respect to real property or to become an accession with respect to other
personal property with respect to which real or personal property the Agent does
not have a Lien. Such Grantor will not, without the Agent's prior written
consent, alter or remove any identifying symbol or number on any of such
Grantor's Equipment constituting Collateral.
4.4. Delivery of Instruments, Securities, Chattel Paper and
Documents. Such Grantor will (a) deliver to the Agent immediately upon execution
of this Security Agreement the originals of all Chattel Paper, Securities and
Instruments constituting Collateral owned by it (if any then exist), (b) hold in
trust for the Agent upon receipt and immediately thereafter deliver to the Agent
any such Chattel Paper, Securities and Instruments constituting Collateral, (c)
upon the Agent's request, deliver to the Agent (and thereafter hold in trust for
the
NEWPARK PLEDGE AND SECURITY AGREEMENT - PAGE 12
Agent upon receipt and immediately deliver to the Agent) any Document evidencing
or constituting Collateral and (d) upon the Agent's request, deliver to the
Agent a duly executed amendment to this Security Agreement, in the form of
Exhibit I hereto (the "Amendment"), pursuant to which such Grantor will pledge
such additional Collateral. Such Grantor hereby authorizes the Agent to attach
each Amendment to this Security Agreement and agrees that all additional
Collateral owned by it set forth in such Amendments shall be considered to be
part of the Collateral.
4.5. Uncertificated Pledged Collateral. Such Grantor will permit
the Agent from time to time to cause the appropriate issuers (and, if held with
a securities intermediary, such securities intermediary) of uncertificated
securities or other types of Pledged Collateral owned by it not represented by
certificates to mark their books and records with the numbers and face amounts
of all such uncertificated securities or other types of Pledged Collateral not
represented by certificates and all rollovers and replacements therefor to
reflect the Lien of the Agent granted pursuant to this Security Agreement. With
respect to any Pledged Collateral owned by it, such Grantor will take any
actions necessary to cause (a) the issuers of uncertificated securities which
are Pledged Collateral and (b) any securities intermediary which is the holder
of any such Pledged Collateral, to cause the Agent to have and retain Control
over such Pledged Collateral. Without limiting the foregoing, such Grantor will,
with respect to any such Pledged Collateral held with a securities intermediary,
cause such securities intermediary to enter into a control agreement with the
Agent, in form and substance satisfactory to the Agent, giving the Agent
Control.
4.6. Pledged Collateral.
(a) Changes in Capital Structure of Issuers. Such Grantor
will not (i) permit or suffer any issuer of Capital Stock constituting Pledged
Collateral owned by it to dissolve, merge, liquidate, retire any of its Capital
Stock or other Instruments or Securities evidencing ownership, reduce its
capital, sell or encumber all or substantially all of its assets (except for
Permitted Liens and sales of assets permitted pursuant to Section 4.1(d)) or
merge or consolidate with any other entity (other than in connection with a
Permitted Acquisition), or (ii) vote any such Pledged Collateral in favor of any
of the foregoing.
(b) Issuance of Additional Securities. Such Grantor will
not permit or suffer the issuer of Capital Stock constituting Pledged Collateral
owned by it to issue additional Capital Stock, any right to receive the same or
any right to receive earnings, except to such Grantor.
(c) Registration of Pledged Collateral. Such Grantor will
permit any registerable Pledged Collateral owned by it to be registered in the
name of the Agent or its nominee at any time at the option of the Required
Secured Parties.
(d) Exercise of Rights in Pledged Collateral.
(i) Without in any way limiting the foregoing
and subject to clause (ii) below, such Grantor shall
have the right to exercise all voting rights or other
rights relating to the Pledged Collateral owned by it
for all purposes not inconsistent with this Security
Agreement, the Credit Agreement or any other Loan
Document; provided however, that no vote or other
right shall be exercised or action taken which would
have the effect of impairing the rights of the Agent
in respect of such Pledged Collateral.
NEWPARK PLEDGE AND SECURITY AGREEMENT - PAGE 13
(ii) Such Grantor will permit the Agent or its
nominee at any time after the occurrence of a
Default, without notice, to exercise all voting
rights or other rights relating to the Pledged
Collateral owned by it, including, without
limitation, exchange, subscription or any other
rights, privileges, or options pertaining to any
Capital Stock or Investment Property constituting
such Pledged Collateral as if it were the absolute
owner thereof.
(iii) Such Grantor shall be entitled to collect
and receive for its own use all cash dividends and
interest paid in respect of the Pledged Collateral
owned by it to the extent not in violation of the
Credit Agreement other than any of the following
distributions and payments (collectively referred to
as the "Excluded Payments"): (A) dividends and
interest paid or payable other than in cash in
respect of such Pledged Collateral, and instruments
and other property received, receivable or otherwise
distributed in respect of, or in exchange for, such
Pledged Collateral; (B) dividends and other
distributions paid or payable in cash in respect of
such Pledged Collateral in connection with a partial
or total liquidation or dissolution or in connection
with a reduction of capital, capital surplus or
paid-in capital of an issuer; and (C) cash paid,
payable or otherwise distributed, in respect of
principal of, or in redemption of, or in exchange
for, such Pledged Collateral; provided however, that
until actually paid, all rights to such distributions
shall remain subject to the Lien created by this
Security Agreement; and
(iv) All Excluded Payments and all other
distributions in respect of any of the Pledged
Collateral owned by such Grantor, whenever paid or
made, shall be delivered to the Agent to hold as
Pledged Collateral and shall, if received by such
Grantor, be received in trust for the benefit of the
Agent, be segregated from the other property or funds
of such Grantor, and be forthwith delivered to the
Agent as Pledged Collateral in the same form as so
received (with any necessary endorsement).
4.7. Intellectual Property.
(a) Such Grantor will use its best efforts to secure all
consents and approvals necessary or appropriate for the assignment to or benefit
of the Agent of any License held by such Grantor and to enforce the security
interests granted hereunder.
(b) Such Grantor shall notify the Agent immediately if it
knows or has reason to know that any application or registration relating to any
Patent, Trademark or Copyright (now or hereafter existing) may become abandoned
or dedicated, or of any adverse determination or development (including the
institution of, or any such determination or development in, any proceeding in
the United States Patent and Trademark Office, the United States Copyright
Office or any court) regarding such Grantor's ownership of any Patent, Trademark
or Copyright, its right to register the same, or to keep and maintain the same.
(c) In no event shall such Grantor, either directly or
through any the Agent, employee, licensee or designee, file an application for
the registration of any Patent, Trademark or Copyright with the United States
Patent and Trademark Office, the United States Copyright Office or any similar
office or agency without giving the Agent prior written notice thereof, and,
upon request of the Agent, such Grantor shall execute and deliver any and all
security agreements as the Agent may request to evidence the Agent's first
NEWPARK PLEDGE AND SECURITY AGREEMENT - PAGE 14
priority security interest on such Patent, Trademark or Copyright, and the
General Intangibles of such Grantor relating thereto or represented thereby.
(d) Such Grantor shall take all actions necessary or
requested by the Agent to maintain and pursue each application, to obtain the
relevant registration and to maintain the registration of each of its Patents,
Trademarks and Copyrights (now or hereafter existing), including the filing of
applications for renewal, affidavits of use, affidavits of noncontestability and
opposition and interference and cancellation proceedings, unless the Agent shall
determine that such Patent, Trademark or Copyright is not material to the
conduct of such Grantor's business.
(e) Such Grantor shall, unless it shall reasonably
determine that such Patent, Trademark or Copyright is in no way material to the
conduct of its business or operations, promptly sue for infringement,
misappropriation or dilution and to recover any and all damages for such
infringement, misappropriation or dilution, and shall take such other actions as
the Agent shall deem appropriate under the circumstances to protect such Patent,
Trademark or Copyright. In the event that such Grantor institutes suit because
any of its Patents, Trademarks or Copyrights constituting Collateral is
infringed upon, or misappropriated or diluted by a third party, such Grantor
shall comply with Section 4.8.
4.8. Commercial Tort Claims. Such Grantor shall promptly, and in
any event within two Business Days after the same is acquired by it, notify the
Agent of any commercial tort claim (as defined in the UCC) acquired by it and,
unless the Agent otherwise consents, such Grantor shall enter into an amendment
to this Security Agreement, in the form of Exhibit I hereto, granting to Agent a
first priority security interest in such commercial tort claim.
4.9. Letter-of-Credit Rights. If such Grantor is or becomes the
beneficiary of a letter of credit, it shall promptly, and in any event within
two Business Days after becoming a beneficiary, notify the Agent thereof and
cause the issuer and/or confirmation bank to (i) consent to the assignment of
any Letter-of-Credit Rights to the Agent and (ii) agree to direct all payments
thereunder to a Deposit Account at the Agent or subject to a Deposit Account
Control Agreement for application to the Secured Obligations, in accordance with
Section 2.18 of the Credit Agreement, all in form and substance reasonably
satisfactory to the Agent.
4.10. Federal, State or Municipal Claims. Such Grantor will promptly
notify the Agent of any Collateral which constitutes a claim against the United
States government or any state or local government or any instrumentality or
agency thereof, the assignment of which claim is restricted by federal, state or
municipal law.
4.11. No Interference. Such Grantor agrees that it will not
interfere with any right, power and remedy of the Agent provided for in this
Security Agreement or now or hereafter existing at law or in equity or by
statute or otherwise, or the exercise or beginning of the exercise by the Agent
of any one or more of such rights, powers or remedies.
4.12. Assigned Contracts. Such Grantor will use its best efforts to
secure all consents and approvals necessary or appropriate for the assignment to
or for the benefit of the Agent of any Assigned Contract held by such Grantor
and to enforce the security interests granted hereunder. Such Grantor shall
fully perform all of its obligations under each of its Assigned Contracts, and
shall enforce all of its rights and remedies thereunder, in each case, as it
deems appropriate in its business judgment; provided however, that such Grantor
shall not take any action or fail to take any action with respect to its
Assigned Contracts which would cause the termination of
NEWPARK PLEDGE AND SECURITY AGREEMENT - PAGE 15
an Assigned Contract. Without limiting the generality of the foregoing, such
Grantor shall take all action necessary or appropriate to permit, and shall not
take any action which would have any materially adverse effect upon, the full
enforcement of all indemnification rights under its Assigned Contracts. Such
Grantor shall notify the Agent and the Lenders in writing, promptly after such
Grantor becomes aware thereof, of any event or fact which could give rise to a
material claim by it for indemnification under any of its Assigned Contracts,
and shall diligently pursue such right and report to the Agent on all further
developments with respect thereto. Such Grantor shall deposit into a Deposit
Account at the Agent or subject to a Deposit Account Control Agreement for
application to the Secured Obligations, in accordance with Section 2.18 of the
Credit Agreement, all amounts received by such Grantor as indemnification or
otherwise pursuant to its Assigned Contracts. If such Grantor shall fail after
the Agent's demand to pursue diligently any right under its Assigned Contracts,
or if a Default then exists, the Agent may, and at the direction of the Required
Secured Parties shall, directly enforce such right in its own or such Grantor's
name and may enter into such settlements or other agreements with respect
thereto as the Agent or the Required Secured Parties, as applicable, shall
determine. In any suit, proceeding or action brought by the Agent for the
benefit of the Lenders under any Assigned Contract for any sum owing thereunder
or to enforce any provision thereof, such Grantor shall indemnify and hold the
Agent and Lenders harmless from and against all expense, loss or damage suffered
by reason of any defense, setoff, counterclaims, recoupment, or reduction of
liability whatsoever of the obligor thereunder arising out of a breach by such
Grantor of any obligation thereunder or arising out of any other agreement,
indebtedness or liability at any time owing from such Grantor to or in favor of
such obligor or its successors. All such obligations of such Grantor shall be
and remain enforceable only against such Grantor and shall not be enforceable
against the Agent or the Lenders. Notwithstanding any provision hereof to the
contrary, such Grantor shall at all times remain liable to observe and perform
all of its duties and obligations under its Assigned Contracts, and the Agent's
or any Lender's exercise of any of their respective rights with respect to the
Collateral shall not release such Grantor from any of such duties and
obligations. Neither the Agent nor any Lender shall be obligated to perform or
fulfill any of such Grantor's duties or obligations under its Assigned Contracts
or to make any payment thereunder, or to make any inquiry as to the nature or
sufficiency of any payment or property received by it thereunder or the
sufficiency of performance by any party thereunder, or to present or file any
claim, or to take any action to collect or enforce any performance, any payment
of any amounts, or any delivery of any property.
ARTICLE V
DEFAULTS AND REMEDIES
5.1. Defaults. The occurrence of any one or more of the following
events shall constitute a Default hereunder:
(a) Any representation or warranty made by or on behalf
of any Grantor under or in connection with this Security Agreement shall be
materially false as of the date on which made.
(b) The breach by any Grantor of any of the terms or
provisions of Article IV or Article VII.
(c) The breach by any Grantor (other than a breach which
constitutes a Default under any other Section of this Article V) of any of the
terms or provisions of this Security Agreement which is not remedied within ten
days after such breach.
NEWPARK PLEDGE AND SECURITY AGREEMENT - PAGE 16
(d) The occurrence of any "Default" under, and as defined
in, the Credit Agreement.
(e) Any Capital Stock which is included within the
Collateral shall at any time constitute a Security or the issuer of any such
Capital Stock shall take any action to have such interests treated as a Security
unless (i) all certificates or other documents constituting such Security have
been delivered to the Agent and such Security is properly defined as such under
Article 8 of the UCC of the applicable jurisdiction, whether as a result of
actions by the issuer thereof or otherwise, or (ii) the Agent has entered into a
control agreement with the issuer of such Security or with a securities
intermediary relating to such Security and such Security is defined as such
under Article 8 of the UCC of the applicable jurisdiction, whether as a result
of actions by the issuer thereof or otherwise.
5.2. Remedies.
(a) Upon the occurrence of a Default, the Agent may,
exercise any or all of the following rights and remedies:
(i) those rights and remedies provided in this
Security Agreement, the IP Security Documents, the
Credit Agreement, or any other Loan Document;
provided that, this Section 5.2(a) shall not be
understood to limit any rights or remedies available
to the Agent and the Lenders prior to a Default;
(ii) those rights and remedies available to a
secured party under the UCC (whether or not the UCC
applies to the affected Collateral) or under any
other applicable law (including, without limitation,
any law governing the exercise of a bank's right of
setoff or bankers' lien) when a debtor is in default
under a security agreement;
(iii) give notice of sole control or any other
instruction under any Deposit Account Control
Agreement or and other control agreement with any
securities intermediary and take any action therein
with respect to such Collateral;
(iv) without notice (except as specifically
provided in Section 8.1 or elsewhere herein), demand
or advertisement of any kind to any Grantor or any
other Person, enter the premises of any Grantor where
any Collateral is located (through self-help and
without judicial process) to collect, receive,
assemble, process, appropriate, sell, lease, assign,
grant an option or options to purchase or otherwise
dispose of, deliver, or realize upon, the Collateral
or any part thereof in one or more parcels at public
or private sale or sales (which sales may be
adjourned or continued from time to time with or
without notice and may take place at any Grantor's
premises or elsewhere), for cash, on credit or for
future delivery without assumption of any credit
risk, and upon such other terms as the Agent may deem
commercially reasonable; and
(v) concurrently with written notice to the
applicable Grantor, transfer and register in its name
or in the name of its nominee the whole or any part
of the Pledged Collateral, to exchange certificates
or instruments representing or evidencing Pledged
Collateral for certificates or instruments of smaller
or larger denominations, to exercise the voting and
all other rights as a holder with respect thereto, to
collect and receive all cash dividends, interest,
principal and other distributions made thereon and to
NEWPARK PLEDGE AND SECURITY AGREEMENT - PAGE 17
otherwise act with respect to the Pledged Collateral
as though the Agent was the outright owner thereof.
(b) The Agent, on behalf of the Lenders, may comply with
any applicable state or federal law requirements in connection with a
disposition of the Collateral and compliance will not be considered to adversely
affect the commercial reasonableness of any sale of the Collateral.
(c) The Agent shall have the right upon any such public
sale or sales and, to the extent permitted by law, upon any such private sale or
sales, to purchase for the benefit of the Agent and the Lenders, the whole or
any part of the Collateral so sold, free of any right of equity redemption,
which equity redemption each Grantor hereby expressly releases.
(d) Until the Agent is able to effect a sale, lease, or
other disposition of Collateral, the Agent shall have the right to hold or use
Collateral, or any part thereof, to the extent that it deems appropriate for the
purpose of preserving Collateral or its value or for any other purpose deemed
appropriate by the Agent. The Agent may, if it so elects, seek the appointment
of a receiver or keeper to take possession of Collateral and to enforce any of
the Agent's remedies (for the benefit of the Agent and Lenders), with respect to
such appointment without prior notice or hearing as to such appointment.
(e) If, after the Credit Agreement has terminated by its
terms and all of the Obligations have been paid in full, there remain Rate
Management Obligations outstanding, the Required Secured Parties may exercise
the remedies provided in this Section 5.2 upon the occurrence of any event which
would allow or require the termination or acceleration of any Rate Management
Obligations pursuant to the terms of the agreement governing any Rate Management
Transaction.
(f) Notwithstanding the foregoing, neither the Agent nor
the Lenders shall be required to (i) make any demand upon, or pursue or exhaust
any of their rights or remedies against, any Grantor, any other obligor,
guarantor, pledgor or any other Person with respect to the payment of the
Secured Obligations or to pursue or exhaust any of their rights or remedies with
respect to any Collateral therefor or any direct or indirect guarantee thereof,
(ii) marshal the Collateral or any guarantee of the Secured Obligations or to
resort to the Collateral or any such guarantee in any particular order, or (iii)
effect a public sale of any Collateral.
(g) Each Grantor recognizes that the Agent may be unable
to effect a public sale of any or all the Pledged Collateral and may be
compelled to resort to one or more private sales thereof in accordance with
clause (a) above. Each Grantor also acknowledges that any private sale may
result in prices and other terms less favorable to the seller than if such sale
were a public sale and, notwithstanding such circumstances, agrees that any such
private sale shall not be deemed to have been made in a commercially
unreasonable manner solely by virtue of such sale being private. The Agent shall
be under no obligation to delay a sale of any of the Pledged Collateral for the
period of time necessary to permit any Grantor or the issuer of the Pledged
Collateral to register such securities for public sale under the Securities Act
of 1933, as amended, or under applicable state securities laws, even if the
applicable Grantor and the issuer would agree to do so.
5.3. Grantor's Obligations Upon Default. Upon the request of the
Agent after the occurrence of a Default, each Grantor will:
(a) assemble and make available to the Agent the
Collateral and all books and records relating thereto at any place or places
specified by the Agent, whether at a Grantor's premises or elsewhere;
NEWPARK PLEDGE AND SECURITY AGREEMENT - PAGE 18
(b) permit the Agent, by the Agent's representatives and
agents, to enter any premises where all or any part of the Collateral, or the
books and records relating thereto, or both, are located, to take possession of
all or any part of the Collateral or the books and records relating thereto, or
both, to remove all or any part of the Collateral or the books and records
relating thereto, or both, and to conduct sales of the Collateral;
(c) prepare and file, or cause an issuer of Pledged
Collateral to prepare and file, with the Securities and Exchange Commission or
any other applicable government agency, registration statements, a prospectus
and such other documentation in connection with the Pledged Collateral as the
Agent may request, all in form and substance satisfactory to the Agent, and
furnish to the Agent, or cause an issuer of Pledged Collateral to furnish to the
Agent, any information regarding the Pledged Collateral in such detail as the
Agent may specify;
(d) take, or cause an issuer of Pledged Collateral to
take, any and all actions necessary to register or qualify the Pledged
Collateral to enable the Agent to consummate a public sale or other disposition
of the Pledged Collateral; and
(e) at its own expense, cause independent certified
public accountants engaged by each Grantor to prepare and deliver to the Agent
and each Lender, at any time, and from time to time, promptly upon the Agent's
request, the following reports with respect to the applicable Grantor: (i) a
reconciliation of all Accounts; (ii) an aging of all Accounts; (iii) trial
balances; and (iv) a test verification of such Accounts.
5.4. Grant of Intellectual Property License. For the purpose of
enabling the Agent to exercise the rights and remedies under this Article V and
under the IP Security Documents, at such time as the Agent shall be lawfully
entitled to exercise such rights and remedies, each Grantor hereby (a) grants to
the Agent, for the benefit of the Agent and the Lenders, an irrevocable,
nonexclusive license (exercisable without payment of royalty or other
compensation to any Grantor) to use, license or sublicense any Intellectual
Property Rights now owned or hereafter acquired by such Grantor, and wherever
the same may be located, and including in such license access to all media in
which any of the licensed items may be recorded or stored and to all computer
software and programs used for the compilation or printout thereof and (b)
irrevocably agrees that the Agent may sell any of such Grantor's Inventory
directly to any person, including without limitation persons who have previously
purchased the Grantor's Inventory from such Grantor and in connection with any
such sale or other enforcement of the Agent's rights under this Security
Agreement, may sell Inventory which bears any Trademark owned by or licensed to
such Grantor and any Inventory that is covered by any Copyright owned by or
licensed to such Grantor and the Agent may finish any work in process and affix
any Trademark owned by or licensed to such Grantor and sell such Inventory as
provided herein.
ARTICLE VI
ACCOUNT VERIFICATION; ATTORNEY IN FACT; PROXY
6.1. Account Verification. The Agent may at any time, in the
Agent's own name, in the name of a nominee of the Agent, or in the name of any
Grantor communicate (by mail, telephone, facsimile or otherwise) with the
Account Debtors of any such Grantor, parties to contracts with any such Grantor
and obligors in respect of Instruments of any such Grantor to verify with such
Persons, to the Agent's satisfaction, the
NEWPARK PLEDGE AND SECURITY AGREEMENT - PAGE 19
existence, amount, terms of, and any other matter relating to, Accounts,
Instruments, Chattel Paper, payment intangibles and/or other Receivables.
6.2. Authorization for Secured Party to Take Certain Action.
(a) Each Grantor irrevocably authorizes the Agent at any
time and from time to time in the sole discretion of the Agent and appoints the
Agent as its attorney in fact (i) to execute on behalf of such Grantor as debtor
and to file financing statements necessary or desirable in the Agent's sole
discretion to perfect and to maintain the perfection and priority of the Agent's
security interest in the Collateral, (ii) to endorse and collect any cash
proceeds of the Collateral, (iii) to file a carbon, photographic or other
reproduction of this Security Agreement or any financing statement with respect
to the Collateral as a financing statement and to file any other financing
statement or amendment of a financing statement (which does not add new
collateral or add a debtor) in such offices as the Agent in its sole discretion
deems necessary or desirable to perfect and to maintain the perfection and
priority of the Agent's security interest in the Collateral, (iv) to contact and
enter into one or more agreements with the issuers of uncertificated securities
which are Pledged Collateral or with securities intermediaries holding Pledged
Collateral as may be necessary or advisable to give the Agent Control over such
Pledged Collateral, (v) to apply the proceeds of any Collateral received by the
Agent to the Secured Obligations as provided in Section 7.3, (vi) to discharge
past due taxes, assessments, charges, fees or Liens on the Collateral (except
for such Liens as are specifically permitted hereunder), (vii) to contact
Account Debtors for any reason, (viii) to demand payment or enforce payment of
the Receivables in the name of the Agent or such Grantor and to endorse any and
all checks, drafts, and other instruments for the payment of money relating to
the Receivables, (ix) to sign such Grantor's name on any invoice or bill of
lading relating to the Receivables, drafts against any Account Debtor of such
Grantor, assignments and verifications of Receivables, (x) to exercise all of
such Grantor's rights and remedies with respect to the collection of the
Receivables and any other Collateral, (xi) to settle, adjust, compromise, extend
or renew the Receivables, (xii) to settle, adjust or compromise any legal
proceedings brought to collect Receivables, (xiii) to prepare, file and sign
such Grantor's name on a proof of claim in bankruptcy or similar document
against any Account Debtor of such Grantor, (xiv) to prepare, file and sign such
Grantor's name on any notice of Lien, assignment or satisfaction of Lien or
similar document in connection with the Receivables, (xv) to change the address
for delivery of mail addressed to such Grantor to such address as the Agent may
designate and to receive, open and dispose of all mail addressed to such
Grantor, and (xvi) to do all other acts and things necessary to carry out this
Security Agreement; and such Grantor agrees to reimburse the Agent on demand for
any payment made or any expense incurred by the Agent in connection with any of
the foregoing; provided that, this authorization shall not relieve such Grantor
of any of its obligations under this Security Agreement, the IP Security
Documents or under the Credit Agreement.
(b) All acts of said attorney or designee are hereby
ratified and approved. The powers conferred on the Agent, for the benefit of the
Agent and Lenders, under this Section 6.2 are solely to protect the Agent's
interests in the Collateral and shall not impose any duty upon the Agent or any
Lender to exercise any such powers.
6.3. Proxy. EACH GRANTOR HEREBY IRREVOCABLY CONSTITUTES AND
APPOINTS THE AGENT AS ITS PROXY AND ATTORNEY-IN-FACT (AS SET FORTH IN SECTION
6.2 ABOVE) WITH RESPECT TO ITS PLEDGED COLLATERAL, INCLUDING THE RIGHT TO VOTE
SUCH PLEDGED COLLATERAL, WITH FULL POWER OF SUBSTITUTION TO DO SO. IN ADDITION
TO THE RIGHT TO VOTE ANY SUCH PLEDGED COLLATERAL, THE APPOINTMENT OF THE AGENT
AS PROXY AND ATTORNEY-IN-FACT SHALL INCLUDE THE RIGHT TO EXERCISE ALL OTHER
RIGHTS, POWERS, PRIVILEGES AND REMEDIES TO WHICH A HOLDER OF SUCH PLEDGED
NEWPARK PLEDGE AND SECURITY AGREEMENT - PAGE 20
COLLATERAL WOULD BE ENTITLED (INCLUDING GIVING OR WITHHOLDING WRITTEN CONSENTS
OF SHAREHOLDERS, CALLING SPECIAL MEETINGS OF SHAREHOLDERS AND VOTING AT SUCH
MEETINGS). SUCH PROXY SHALL BE EFFECTIVE, AUTOMATICALLY AND WITHOUT THE
NECESSITY OF ANY ACTION (INCLUDING ANY TRANSFER OF ANY SUCH PLEDGED COLLATERAL
ON THE RECORD BOOKS OF THE ISSUER THEREOF) BY ANY PERSON (INCLUDING THE ISSUER
OF SUCH PLEDGED COLLATERAL OR ANY OFFICER OR THE AGENT THEREOF), UPON THE
OCCURRENCE OF A DEFAULT.
6.4. Nature of Appointment; Limitation of Duty. THE APPOINTMENT OF
THE AGENT AS PROXY AND ATTORNEY-IN-FACT IN THIS ARTICLE VI IS COUPLED WITH AN
INTEREST AND SHALL BE IRREVOCABLE UNTIL THE DATE ON WHICH THIS SECURITY
AGREEMENT IS TERMINATED IN ACCORDANCE WITH SECTION 8.15. NOTWITHSTANDING
ANYTHING CONTAINED HEREIN, NEITHER THE AGENT, NOR ANY LENDER, NOR OR ANY OF
THEIR RESPECTIVE AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR
REPRESENTATIVES SHALL HAVE ANY DUTY TO EXERCISE ANY RIGHT OR POWER GRANTED
HEREUNDER OR OTHERWISE OR TO PRESERVE THE SAME AND SHALL NOT BE LIABLE FOR ANY
FAILURE TO DO SO OR FOR ANY DELAY IN DOING SO, EXCEPT IN RESPECT OF DAMAGES
ATTRIBUTABLE SOLELY TO THEIR OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT AS
FINALLY DETERMINED BY A COURT OF COMPETENT JURISDICTION; PROVIDED THAT, IN NO
EVENT SHALL THEY BE LIABLE FOR ANY PUNITIVE, EXEMPLARY, INDIRECT OR
CONSEQUENTIAL DAMAGES.
ARTICLE VII
COLLECTION AND APPLICATION OF COLLATERAL PROCEEDS; DEPOSIT ACCOUNTS
7.1. Collection of Receivables.
(a) On or before the Closing Date, each Grantor shall (a)
execute and deliver to the Agent Deposit Account Control Agreements for each
Deposit Account maintained by such Grantor into which all cash, checks or other
similar payments relating to or constituting payments made in respect of
Receivables will be deposited (a "Collateral Deposit Account"), which Collateral
Deposit Accounts are identified as such on Exhibit B, and (b) establish lock box
service (the "Lock Boxes") with the bank(s) set forth in Exhibit B, which lock
boxes shall be subject to irrevocable lockbox agreements in the form provided by
or otherwise acceptable to the Agent and shall be accompanied by an
acknowledgment by the bank where the Lock Box is located of the Lien of the
Agent granted hereunder and of irrevocable instructions to wire all amounts
collected therein to the Collection Account (a "Lock Box Agreement"). After the
Closing Date, each Grantor will comply with the terms of Section 7.2.
(b) Each Grantor shall direct all of its Account Debtors
to forward payments directly to Lock Boxes subject to Lock Box Agreements. The
Agent shall have sole access to the Lock Boxes at all times and each Grantor
shall take all actions necessary to grant the Agent such sole access. At no time
shall any Grantor remove any item from a Lock Box or from a Collateral Deposit
Account without the Agent's prior written consent. If any Grantor should refuse
or neglect to notify any Account Debtor to forward payments directly to a Lock
Box subject to a Lock Box Agreement after notice from the Agent, the Agent shall
be entitled to make such notification directly to Account Debtor. If
notwithstanding the foregoing instructions, any Grantor receives any proceeds of
any Receivables, such Grantor shall receive such payments as the Agent's
trustee, and shall immediately deposit all cash, checks or other similar
payments related to or constituting payments made in
NEWPARK PLEDGE AND SECURITY AGREEMENT - PAGE 21
respect of Receivables received by it to a Collateral Deposit Account. All funds
deposited into any Lock Box subject to a Lock Box Agreement or a Collateral
Deposit Account will be swept on a daily basis into a collection account
maintained by the Borrower Representative with the Agent (the "Collection
Account"). The Agent shall hold and apply funds received into the Collection
Account as provided by the terms of Section 7.3.
7.2. Covenant Regarding New Deposit Accounts; Lock Boxes. Before
opening or replacing any Collateral Deposit Account, other Deposit Account, or
establishing a new Lock Box, each Grantor shall (a) obtain the Agent's consent
in writing to the opening of such Deposit Account or Lock Box, and (b) cause
each bank or financial institution in which it seeks to open (i) a Deposit
Account, to enter into a Deposit Account Control Agreement with the Agent in
order to give the Agent Control of such Deposit Account, or (ii) a Lock Box, to
enter into a Lock Box Agreement with the Agent in order to give the Agent
Control of the Lock Box. In the case of Deposit Accounts or Lock Boxes
maintained with Lenders, the terms of such letter shall be subject to the
provisions of the Credit Agreement regarding setoffs.
7.3. Application of Proceeds; Deficiency. All amounts deposited in
the Collection Account shall be deemed received by the Agent in accordance with
Section 2.17 of the Credit Agreement and shall, after having been credited in
immediately available funds to the Collection Account, be applied (and
allocated) by Agent in accordance with Section 2.18 of the Credit Agreement. In
no event shall any amount be so applied unless and until such amount shall have
been credited in immediately available funds to the Collection Account. The
Agent shall require all other cash proceeds of the Collateral, which are not
required to be applied to the Obligations pursuant to Section 2.15 of the Credit
Agreement, to be deposited in a special non-interest bearing cash collateral
account with the Agent and held there as security for the Secured Obligations.
No Grantor shall have any control whatsoever over said cash collateral account.
Any such proceeds of the Collateral shall be applied in the order set forth in
Section 2.18 of the Credit Agreement unless a court of competent jurisdiction
shall otherwise direct. The balance, if any, after all of the Secured
Obligations have been satisfied, shall be deposited by the Agent into the
Borrower Representative's general operating account with the Agent. The Grantors
shall remain liable for any deficiency if the proceeds of any sale or
disposition of the Collateral are insufficient to pay all Secured Obligations,
including any attorneys' fees and other expenses incurred by Agent or any Lender
to collect such deficiency.
ARTICLE VIII
GENERAL PROVISIONS
8.1. Waivers. Each Grantor hereby waives notice of the time and
place of any public sale or the time after which any private sale or other
disposition of all or any part of the Collateral may be made. To the extent such
notice may not be waived under applicable law, any notice made shall be deemed
reasonable if sent to the Grantors, addressed as set forth in Article IX, at
least ten days prior to (i) the date of any such public sale or (ii) the time
after which any such private sale or other disposition may be made. To the
maximum extent permitted by applicable law, each Grantor waives all claims,
damages, and demands against the Agent or any Lender arising out of the
repossession, retention or sale of the Collateral, except such as arise solely
out of the gross negligence or willful misconduct of the Agent or such Lender as
finally determined by a court of competent jurisdiction. To the extent it may
lawfully do so, each Grantor absolutely and irrevocably waives and relinquishes
the benefit and advantage of, and covenants not to assert against the Agent or
any Lender, any valuation, stay, appraisal, extension, moratorium, redemption or
similar laws and any and all rights or defenses it may have as a surety now or
hereafter existing which, but for this provision, might be applicable to the
sale of any Collateral made under the judgment, order or decree of any court, or
privately under the power of sale
NEWPARK PLEDGE AND SECURITY AGREEMENT - PAGE 22
conferred by this Security Agreement, the IP Security Documents or otherwise.
Except as otherwise specifically provided herein, each Grantor hereby waives
presentment, demand, protest or any notice (to the maximum extent permitted by
applicable law) of any kind in connection with this Security Agreement, the IP
Security Documents or any Collateral.
8.2. Limitation on Agent's and Lenders' Duty with Respect to the
Collateral. The Agent shall have no obligation to clean-up or otherwise prepare
the Collateral for sale. The Agent and each Lender shall use reasonable care
with respect to the Collateral in its possession or under its control. Neither
the Agent nor any Lender shall have any other duty as to any Collateral in its
possession or control or in the possession or control of any agent or nominee of
the Agent or such Lender, or any income thereon or as to the preservation of
rights against prior parties or any other rights pertaining thereto. To the
extent that applicable law imposes duties on the Agent to exercise remedies in a
commercially reasonable manner, each Grantor acknowledges and agrees that it is
commercially reasonable for the Agent (i) to fail to incur expenses deemed
significant by the Agent to prepare Collateral for disposition or otherwise to
transform raw material or work in process into finished goods or other finished
products for disposition, (ii) to fail to obtain third party consents for access
to Collateral to be disposed of, or to obtain or, if not required by other law,
to fail to obtain governmental or third party consents for the collection or
disposition of Collateral to be collected or disposed of, (iii) to fail to
exercise collection remedies against Account Debtors or other Persons obligated
on Collateral or to remove Liens on or any adverse claims against Collateral,
(iv) to exercise collection remedies against Account Debtors and other Persons
obligated on Collateral directly or through the use of collection agencies and
other collection specialists, (v) to advertise dispositions of Collateral
through publications or media of general circulation, whether or not the
Collateral is of a specialized nature, (vi) to contact other Persons, whether or
not in the same business as such Grantor, for expressions of interest in
acquiring all or any portion of such Collateral, (vii) to hire one or more
professional auctioneers to assist in the disposition of Collateral, whether or
not the Collateral is of a specialized nature, (viii) to dispose of Collateral
by utilizing internet sites that provide for the auction of assets of the types
included in the Collateral or that have the reasonable capacity of doing so, or
that match buyers and sellers of assets, (ix) to dispose of assets in wholesale
rather than retail markets, (x) to disclaim disposition warranties, such as
title, possession or quiet enjoyment, (xi) to purchase insurance or credit
enhancements to insure the Agent against risks of loss, collection or
disposition of Collateral or to provide to the Agent a guaranteed return from
the collection or disposition of Collateral, or (xii) to the extent deemed
appropriate by the Agent, to obtain the services of other brokers, investment
bankers, consultants and other professionals to assist the Agent in the
collection or disposition of any of the Collateral. Each Grantor acknowledges
that the purpose of this Section 8.2 is to provide non-exhaustive indications of
what actions or omissions by the Agent would be commercially reasonable in the
Agent's exercise of remedies against the Collateral and that other actions or
omissions by the Agent shall not be deemed commercially unreasonable solely on
account of not being indicated in this Section 8.2. Without limitation upon the
foregoing, nothing contained in this Section 8.2 shall be construed to grant any
rights to any Grantor or to impose any duties on the Agent that would not have
been granted or imposed by this Security Agreement or by applicable law in the
absence of this Section 8.2.
8.3. Compromises and Collection of Collateral. The Grantors and the
Agent recognize that setoffs, counterclaims, defenses and other claims may be
asserted by obligors with respect to certain of the Receivables, that certain of
the Receivables may be or become uncollectible in whole or in part and that the
expense and probability of success in litigating a disputed Receivable may
exceed the amount that reasonably may be expected to be recovered with respect
to a Receivable. In view of the foregoing, each Grantor agrees that the Agent
may at any time and from time to time, if a Default has occurred and is
continuing, compromise with the obligor on any Receivable, accept in full
payment of any Receivable such amount as the Agent in its sole
NEWPARK PLEDGE AND SECURITY AGREEMENT - PAGE 23
discretion shall determine or abandon any Receivable, and any such action by the
Agent shall be commercially reasonable so long as the Agent acts in good faith
based on information known to it at the time it takes any such action.
8.4. Secured Party Performance of Debtor Obligations. Without
having any obligation to do so, the Agent may perform or pay any obligation
which any Grantor has agreed to perform or pay in this Security Agreement and
the Grantors shall reimburse the Agent for any amounts paid by the Agent
pursuant to this Section 8.4. The Grantors' obligation to reimburse the Agent
pursuant to the preceding sentence shall be a Secured Obligation payable on
demand.
8.5. Specific Performance of Certain Covenants. Each Grantor
acknowledges and agrees that a breach of any of the covenants contained in
Sections 4.1(d), 4.1(e), 4.4, 4.5, 4.6, 4.7, 4.8, 4.9, 4.10, 4.12, 5.3, or 8.7
or in Article VII will cause irreparable injury to the Agent and the Lenders,
that the Agent and Lenders have no adequate remedy at law in respect of such
breaches and therefore agrees, without limiting the right of the Agent or the
Lenders to seek and obtain specific performance of other obligations of the
Grantors contained in this Security Agreement, that the covenants of the
Grantors contained in the Sections referred to in this Section 8.5 shall be
specifically enforceable against the Grantors.
8.6. Use and Possession of Certain Premises. Upon the occurrence of
a Default, the Agent shall be entitled to occupy and use any premises owned or
leased by any Grantor where any of the Collateral or any records relating to the
Collateral are located until the Secured Obligations are paid or the Collateral
is removed therefrom, whichever first occurs, without any obligation to pay any
Grantor for such use and occupancy.
8.7. Dispositions Not Authorized. No Grantor is authorized to sell
or otherwise dispose of the Collateral except as set forth in Section 4.1(d) and
notwithstanding any course of dealing between any Grantor and the Agent or other
conduct of the Agent, no authorization to sell or otherwise dispose of the
Collateral (except as set forth in Section 4.1(d)) shall be binding upon the
Agent or the Lenders unless such authorization is in writing signed by the Agent
with the consent or at the direction of the Required Secured Parties.
8.8. No Waiver; Amendments; Cumulative Remedies. No delay or
omission of the Agent or any Lender to exercise any right or remedy granted
under this Security Agreement shall impair such right or remedy or be construed
to be a waiver of any Default or an acquiescence therein, and any single or
partial exercise of any such right or remedy shall not preclude any other or
further exercise thereof or the exercise of any other right or remedy. No
waiver, amendment or other variation of the terms, conditions or provisions of
this Security Agreement whatsoever shall be valid unless in writing signed by
the Agent with the concurrence or at the direction of the Lenders required under
Section 8.3 of the Credit Agreement and then only to the extent in such writing
specifically set forth. All rights and remedies contained in this Security
Agreement or by law afforded shall be cumulative and all shall be available to
the Agent and the Lenders until the Secured Obligations have been paid in full.
8.9. Limitation by Law; Severability of Provisions. All rights,
remedies and powers provided in this Security Agreement may be exercised only to
the extent that the exercise thereof does not violate any applicable provision
of law, and all the provisions of this Security Agreement are intended to be
subject to all applicable mandatory provisions of law that may be controlling
and to be limited to the extent necessary so that they shall not render this
Security Agreement invalid, unenforceable or not entitled to be recorded or
registered, in whole or in part. Any provision in any this Security Agreement
that is held to be inoperative, unenforceable, or invalid in any jurisdiction
shall, as to that jurisdiction, be inoperative, unenforceable, or invalid
without
NEWPARK PLEDGE AND SECURITY AGREEMENT - PAGE 24
affecting the remaining provisions in that jurisdiction or the operation,
enforceability, or validity of that provision in any other jurisdiction, and to
this end the provisions of this Security Agreement are declared to be severable.
8.10. Reinstatement. This Security Agreement shall remain in full
force and effect and continue to be effective should any petition be filed by or
against any Grantor for liquidation or reorganization, should any Grantor become
insolvent or make an assignment for the benefit of any creditor or creditors or
should a receiver or trustee be appointed for all or any significant part of any
Grantor's assets, and shall continue to be effective or be reinstated, as the
case may be, if at any time payment and performance of the Secured Obligations,
or any part thereof, is, pursuant to applicable law, rescinded or reduced in
amount, or must otherwise be restored or returned by any obligee of the Secured
Obligations, whether as a "voidable preference," "fraudulent conveyance," or
otherwise, all as though such payment or performance had not been made. In the
event that any payment, or any part thereof, is rescinded, reduced, restored or
returned, the Secured Obligations shall be reinstated and deemed reduced only by
such amount paid and not so rescinded, reduced, restored or returned.
8.11. Benefit of Agreement. The terms and provisions of this
Security Agreement shall be binding upon and inure to the benefit of the
Grantors, the Agent and the Lenders and their respective successors and assigns
(including all persons who become bound as a debtor to this Security Agreement),
except that no Grantor shall have the right to assign its rights or delegate its
obligations under this Security Agreement or any interest herein, without the
prior written consent of the Agent. No sales of participations, assignments,
transfers, or other dispositions of any agreement governing the Secured
Obligations or any portion thereof or interest therein shall in any manner
impair the Lien granted to the Agent, for the benefit of the Agent and the
Lenders, hereunder.
8.12. Survival of Representations. All representations and
warranties of the Grantors contained in this Security Agreement shall survive
the execution and delivery of this Security Agreement.
8.13. Taxes and Expenses. Any taxes (including income taxes) payable
or ruled payable by Federal or State authority in respect of this Security
Agreement shall be paid by the Grantors, together with interest and penalties,
if any. The Grantors shall reimburse the Agent for any and all out-of-pocket
expenses and internal charges (including reasonable attorneys', auditors' and
accountants' fees and reasonable time charges of attorneys, paralegals, auditors
and accountants who may be employees of the Agent) paid or incurred by the Agent
in connection with the preparation, execution, delivery, administration,
collection and enforcement of this Security Agreement and in the audit,
analysis, administration, collection, preservation or sale of the Collateral
(including the expenses and charges associated with any periodic or special
audit of the Collateral). Any and all costs and expenses incurred by the
Grantors in the performance of actions required pursuant to the terms hereof
shall be borne solely by the Grantors.
8.14. Headings. The title of and section headings in this Security
Agreement are for convenience of reference only, and shall not govern the
interpretation of any of the terms and provisions of this Security Agreement.
8.15. Termination. This Security Agreement shall continue in effect
(notwithstanding the fact that from time to time there may be no Secured
Obligations outstanding) until (i) the Credit Agreement has terminated pursuant
to its express terms and (ii) all of the Secured Obligations have been
indefeasibly paid and performed in full (or with respect to any outstanding
Facility LCs, a cash deposit or Supporting Letter of Credit
NEWPARK PLEDGE AND SECURITY AGREEMENT - PAGE 25
has been delivered to the Agent as required by the Credit Agreement) and no
commitments of the Agent or the Lenders which would give rise to any Secured
Obligations are outstanding.
8.16. Entire Agreement. This Security Agreement embodies the entire
agreement and understanding between the Grantors and the Agent relating to the
Collateral and supersedes all prior agreements and understandings between the
Grantors and the Agent relating to the Collateral.
8.17. CHOICE OF LAW. THIS SECURITY AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS (AND NOT THE LAW OF
CONFLICTS) OF THE STATE OF TEXAS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE
TO NATIONAL BANKS.
8.18. CONSENT TO JURISDICTION. EACH GRANTOR HEREBY IRREVOCABLY
SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY U.S. FEDERAL OR TEXAS STATE
COURT SITTING IN DALLAS, TEXAS IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS SECURITY AGREEMENT, THE IP SECURITY DOCUMENTS OR ANY OTHER LOAN
DOCUMENT AND EACH GRANTOR HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT
OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND
IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF
ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT
IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE AGENT OR
ANY LENDER TO BRING PROCEEDINGS AGAINST ANY GRANTOR IN THE COURTS OF ANY OTHER
JURISDICTION. ANY JUDICIAL PROCEEDING BY ANY GRANTOR AGAINST THE AGENT OR ANY
LENDER OR ANY AFFILIATE OF THE AGENT OR ANY LENDER INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH
THIS SECURITY AGREEMENT, THE IP SECURITY DOCUMENTS OR ANY OTHER LOAN DOCUMENT
SHALL BE BROUGHT ONLY IN A COURT IN DALLAS, TEXAS.
8.19. WAIVER OF JURY TRIAL. EACH GRANTOR, THE AGENT AND EACH LENDER
HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY
WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS SECURITY AGREEMENT OR ANY
OTHER LOAN DOCUMENT OR THE RELATIONSHIP ESTABLISHED THEREUNDER.
8.20. Indemnity. Each Grantor hereby agrees to indemnify the Agent
and the Lenders, and their respective successors, assigns, agents and employees,
from and against any and all liabilities, damages, penalties, suits, costs, and
expenses of any kind and nature (including, without limitation, all expenses of
litigation or preparation therefor whether or not the Agent or any Lender is a
party thereto) imposed on, incurred by or asserted against the Agent or the
Lenders, or their respective successors, assigns, agents and employees, in any
way relating to or arising out of this Security Agreement, or the manufacture,
purchase, acceptance, rejection, ownership, delivery, lease, possession, use,
operation, condition, sale, return or other disposition of any Collateral
(including, without limitation, latent and other defects, whether or not
discoverable by the Agent or the Lenders or any Grantor, and any claim for
Patent, Trademark or Copyright infringement).
NEWPARK PLEDGE AND SECURITY AGREEMENT - PAGE 26
8.21. Counterparts. This Security Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one
agreement, and any of the parties hereto may execute this Security Agreement by
signing any such counterpart.
8.22. Section Titles. The Section titles contained in this Security
Agreement are and shall be without substantive meaning or content of any kind
whatsoever and are not part of the agreement between the parties hereto.
8.23. Amendment and Restatement. This Security Agreement, together
with the IP Security Agreements, are given in amendment, consolidation,
restatement, renewal and extension (but not in novation, extinguishment or
satisfaction) of all security agreements, pledge agreements, assignments and
similar agreements delivered pursuant to the Prior Loan Agreements (including
all without limitation all "Collateral Documents," as defined in, and executed
pursuant to the Amended Loan Agreement).
ARTICLE IX
NOTICES
9.1. Sending Notices. Any notice required or permitted to be given
under this Security Agreement shall be sent by United States mail, telecopier,
personal delivery or nationally established overnight courier service, and shall
be deemed received (a) when received, if sent by hand or overnight courier
service, or mailed by certified or registered mail notices or (b) when sent, if
sent by telecopier (except that, if not given during normal business hours for
the recipient, shall be deemed to have been given at the opening of business on
the next Business Day for the recipient), in each case addressed to the Grantors
at the notice address set forth on Exhibit A, and to the Agent and the Lenders
at the addresses set forth in the Credit Agreement.
9.2. Change in Address for Notices. Each of the Grantors, the Agent
and the Lenders may change the address for service of notice upon it by a notice
in writing to the other parties.
ARTICLE X
THE AGENT
Bank One, NA has been appointed Agent for the Lenders hereunder
pursuant to Article X of the Credit Agreement. It is expressly understood and
agreed by the parties to this Security Agreement that any authority conferred
upon the Agent hereunder is subject to the terms of the delegation of authority
made by the Lenders to the Agent pursuant to the Credit Agreement, and that the
Agent has agreed to act (and any successor Agent shall act) as such hereunder
only on the express conditions contained in such Article X. Any successor Agent
appointed pursuant to Article X of the Credit Agreement shall be entitled to all
the rights, interests and benefits of the Agent hereunder.
[Signature Page Follows]
NEWPARK PLEDGE AND SECURITY AGREEMENT - PAGE 27
IN WITNESS WHEREOF, the Grantors and the Agent have executed this
Security Agreement as of the date first above written.
GRANTORS:
NEWPARK RESOURCES, INC.,
DURA-BASE NEVADA, INC.,
EXCALIBAR MINERALS, INC.,
EXCALIBUR MINERALS OF LA., L.L.C.,
NEWPARK DRILLING FLUIDS, L.L.C.,
NEWPARK ENVIRONMENTAL SERVICES, L.L.C.,
NEWPARK ENVIRONMENTAL MANAGEMENT COMPANY, L.L.C.,
NEWPARK HOLDINGS, INC.,
NEWPARK TEXAS L.L.C.,
OGS LABORATORY, INC.,
SOLOCO, L.L.C.,
SUPREME CONTRACTORS, L.L.C.
CHESSHER CONSTRUCTION, INC.,
MALLARD & MALLARD OF LA., INC., AND
SHAMROCK DRILLING FLUIDS, INC.
By: /s/ John R. Dardenne
----------------------------------------------
Print Name: John R. Dardenne
Title: Treasurer
NEWPARK PLEDGE AND SECURITY AGREEMENT
BATSON-MILL, L.P.,
NES PERMIAN BASIN, L.P.,
NEWPARK ENVIRONMENTAL SERVICES OF TEXAS, L.P.,
NID, L.P.,
SOLOCO TEXAS, L.P.
DARCOM INTERNATIONAL, L.P.,
NEWPARK ENVIRONMENTAL SERVICES
MISSISSIPPI, L.P., AND
NEWPARK SHIPHOLDING TEXAS, L.P.
By: Newpark Holdings, Inc., the general partner
of such entity
By: /s/ John R. Dardenne
----------------------------------------------
Name: John R. Dardenne
Title: Treasurer
AGENT:
BANK ONE, NA, as Agent
By: /s/ C.C. Prudhomme III
----------------------------------------------
Print Name: C.C. Prudhomme III
Title: Director
NEWPARK PLEDGE AND SECURITY AGREEMENT