EXHIBIT 2.18
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION ("Agreement") is made and
entered into as of July 24, 1997, by and among NEWPARK RESOURCES, INC., a
Delaware corporation ("Newpark"), XXXXXX XXXXX XXXXXX DRILLING FLUIDS
MANAGEMENT, INC., a Texas corporation and a wholly-owned subsidiary of Newpark
("SBM"), XXXXXXX, INC., a Texas corporation (the "Company"), and X. X. XXXXXXX
("Stockholder"), with reference to the following facts:
A. Stockholder owns beneficially and of record 100% of the
outstanding capital stock (the "Company Shares") of the Company.
B. The Company provides drilling fluids and related products and
services to the oil and gas industry.
C. The parties intend that this Agreement shall constitute a plan of
reorganization (the "Plan") of the type described in Section 368(a)(1)(A) and
Section 368(a)(2)(D) of the Internal Revenue Code of 1986, as amended (the
"Code") and that the Plan will qualify for "pooling of interests" accounting
treatment under generally accepted accounting principles. The Plan comprises
(a) the merger (the "Merger") of the Company into SBM, with SBM continuing as
the surviving corporation, pursuant to this Agreement and the Agreement of
Merger in the form attached hereto as Exhibit "A" (the "Agreement of Merger"),
on the terms contained herein and in accordance with the applicable provisions
of the Texas Business Corporation Act (the "BCA"), and (b) the conversion of all
the outstanding shares of capital stock of the Company into 70,000 newly issued
shares of voting Common Stock of Newpark (the "Newpark Shares"). The
consummation of the Plan in accordance with the terms of this Agreement and the
Agreement of Merger is sometimes referred to herein as the "Closing."
D. Newpark, SBM, the Company and Stockholder believe that it is in
their best interests to adopt and consummate the Plan.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties agree as follows:
1. Plan of Reorganization.
1.1 Adoption of Plan. Newpark, SBM, the Company and Stockholder
hereby adopt the plan of reorganization herein set forth.
1.2 Merger of the Company into SBM. Subject to the provisions of
this Agreement and the BCA, at the "Effective Time" (as defined in paragraph
1.3), the Company shall be merged with and into SBM, and the separate corporate
existence of the Company shall cease. SBM shall be the surviving corporation in
the Merger (hereinafter sometimes called the "Surviving Corporation") and shall
continue its corporate existence under the laws of the State of Texas. The
Merger shall have the effects set forth in Article 5.06 of the BCA. In
connection with the Merger, the Articles of Incorporation of SBM shall be
amended to change the name of the Surviving Corporation to "Newpark Drilling
Fluids, Inc."
1.3 Effective Time. If all of the conditions precedent to the
parties' obligations to consummate the Merger under this Agreement are satisfied
or waived and this Agreement has not been terminated, the parties shall cause
the Agreement of Merger to be duly executed and filed with the Secretary of
State of Texas. The Merger shall become effective as of the time the Agreement
of Merger is accepted for filing and officially filed. The date and time when
the Merger becomes effective is referred to herein as the "Effective Time".
This Agreement and the Agreement of Merger are hereinafter collectively referred
to as the "Merger Agreements".
1.4 Conversion of Shares. As of the Effective Time, by virtue of the
Merger and without any action on the part of any holder thereof:
1.4.1 The shares of Common Stock of SBM which are issued and
outstanding immediately prior to the Effective Time shall not be changed or
converted as a result of the Merger, but shall remain outstanding as shares of
the Surviving Corporation.
1.4.2 All of the outstanding shares of capital stock of the Company
issued and outstanding immediately prior to the Effective Time (i.e., the
Company Shares) shall be converted (in the aggregate) into the right to receive
70,000 shares of Newpark Common Stock (i.e., the Newpark Shares).
1.5 Surrender of Shares.
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1.5.1 Stockholder, as the holder of all of the Company Shares, upon
the surrender to Newpark of the certificate or certificates which, immediately
prior to the Effective Time, represented the Company Shares, shall be entitled
to receive in exchange therefor certificates representing the number of shares
of Newpark Common Stock into which the shares of capital stock of the Company
theretofore represented by the certificate or certificates so surrendered shall
have been converted pursuant to the provisions of paragraph 1.4.2.
1.5.2 Until surrendered and exchanged as herein provided, each
outstanding certificate which, prior to the Effective Time, represented capital
stock of the Company shall represent for all purposes only the right to receive
the consideration provided in paragraph 1.4.2. Certificates representing the
Newpark Shares shall be delivered to Stockholder as soon as practicable
following the Effective Time.
1.6 Securities Act Legend on Newpark Shares. Stockholder hereby
agrees that he will not offer to sell, transfer or otherwise dispose of any of
the Newpark Shares issued to him in the Merger, except in accordance with the
applicable provisions of the "Securities Act" and the "Rules and Regulations"
(as such terms are defined in Section 15). Certificates representing the
Newpark Shares initially will bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF UNLESS REGISTERED UNDER SAID ACT OR UNLESS AN EXEMPTION FROM
SUCH REGISTRATION IS AVAILABLE IN THE OPINION OF COUNSEL FOR THE ISSUER."
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1.7 Pooling of Interests Restriction. Stockholder hereby agrees
that he will not offer to sell, transfer or otherwise dispose of any of the
Newpark Shares issued to him pursuant to the Merger until such time as financial
results covering at least 30 days of combined operations of Newpark, SBM and the
Company have been published within the meaning of Section 201.01 of the
Commission's Codification of Financial Reporting Policies.
2. Noncompetition Agreement. At the Closing, as a necessary incident of
the Plan, Newpark and Stockholder will execute and deliver a noncompetition
agreement substantially as set forth in Exhibit 2 attached to this Agreement
(the "Noncompetition Agreement").
3. Representations and Warranties of the Company and Stockholder.
A. Except as otherwise specifically set forth in a letter ("the
Disclosure Letter") delivered by the Company and Stockholder to Newpark prior to
the execution hereof, the Company and Stockholder hereby jointly and severally
warrant and represent the following (the truth and accuracy of each of which
shall constitute a condition precedent to Newpark's obligations to consummate
the Plan and issue the Newpark Shares):
3.1 Organization and Good Standing of the Company.
3.1.1 The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Texas, has full
corporate power and authority to carry on its business as now conducted by it
and is entitled to own or lease and operate its properties and assets now owned
or leased and operated by it. The Company is duly qualified and in good
standing as a foreign corporation in each jurisdiction where the character or
location of the assets owned by the Company or the nature of the business
transacted by the Company require such qualification, except where failure to be
so qualified would not have a "Material Adverse Effect" (as defined in Section
15). The Disclosure Letter includes a list of the jurisdictions in which the
Company is qualified to do business.
3.1.2 The Company has furnished to Newpark complete and correct
copies of the Company's Articles of Incorporation and Bylaws as in effect on the
date hereof.
3.1.3 The Company has heretofore made available to Newpark for its
examination copies of the minute books, stock certificate books and corporate
seal of the Company. Said minute books are accurate in all material respects
and reflect all resolutions adopted and all material actions expressly
authorized or ratified by the stockholders and directors of the Company. The
stock certificate books reflect all issuances, transfers and cancellations of
capital stock of the Company.
3.2 Capitalization.
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3.2.1 The authorized capital stock of the Company consists of
1,000,000 shares of capital stock, $1.00 par value per share, of which 2,500
shares, i.e., the Company Shares, are issued and outstanding as of the date
hereof. All such issued and outstanding shares
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are validly issued, fully paid and nonassessable. The Disclosure Letter
includes the address and social security number of Stockholder.
3.2.2 There are no options, warrants, subscriptions or other
rights outstanding for the purchase of, and all securities convertible into,
capital stock of the Company. No shares of the Company are held as treasury
stock.
3.3 Authority. The Company has the full corporate power and
authority to execute and deliver the Merger Agreements, to perform the
obligations and covenants set forth therein and to consummate the Merger and the
other transactions contemplated thereby. The execution and delivery of the
Merger Agreements by the Company and the consummation of the transactions
contemplated thereby have been duly authorized by the Board of Directors of the
Company and by Stockholder in his capacity as the sole stockholder of the
Company, and no further corporate action is necessary on the part of the Company
to make the Merger Agreements binding upon the Company in accordance with their
terms. This Agreement has been duly executed and delivered by the Company and
Stockholder and constitutes the valid and binding agreement of each of them,
enforceable against them in accordance with its terms, and, when the Agreement
of Merger has been duly executed and delivered, it will constitute the valid and
binding Agreement of the Company, enforceable against the Company in accordance
with its terms, in each case subject to the "Bankruptcy Exception" (as defined
in Section 15).
3.4 Equity Interests. The Company does not have a material equity
interest in any other "Person" (as defined in Section 15).
3.5 No Violation. The execution, delivery and performance of this
Agreement by the Company and Stockholder are not contrary to the Articles of
Incorporation or Bylaws of the Company and will not result in a violation or
breach of any term or provision or constitute a default or give any party a
right to accelerate the due date of any indebtedness under any indenture,
mortgage, deed of trust or other material contract or agreement to which the
Company, Stockholder or both are a party or by which either or both of them are
bound.
3.6 Financial Statements. The unaudited balance sheets of the
Company as of December 31, 1994, December 31, 1995 and December 31, 1996, and
the related unaudited statements of income, stockholders' equity and cash flows
for the years ended December 31, 1994, December 31, 1995 and December 31, 1996,
and the unaudited balance sheet of the Company as of April 30, 1997, and the
related statements of income, stockholders' equity and cash flows for the four
month period ended on said date, in each case certified by the principal
financial officer of the Company, subject to year-end audit adjustments, copies
of which have heretofore been delivered to Newpark (collectively the "Company
Financial Statements"), were prepared in accordance with the books and records
of the Company in accordance with generally accepted accounting principles
(except for the absence of footnotes from the April 30, 1997, financial
statements) consistently applied throughout the periods involved (except as
otherwise noted therein) and present fairly the financial position, results of
operations and cash flows of the Company for and as of the end of each of such
periods.
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3.7 Properties. The Company has good title to the assets and
properties shown in the Company Financial Statements or acquired since the date
of the latest balance sheet included therein, except as since sold or otherwise
disposed of in the ordinary course of business. Such title is free and clear of
all liens, charges, security interests, encumbrances, leases, covenants,
conditions and restrictions other than "Permitted Liens" (as defined in Section
15). The plants, structures, leasehold improvements, machinery, equipment,
furniture and other tangible assets owned or leased by the Company are in good
operating condition and repair, subject only to ordinary wear and tear, taking
into account the respective ages of the assets involved, and constitute all the
fixed tangible assets necessary for the operation of the business of the Company
in accordance with its current methods of operation in all material respects.
3.8 Contracts.
3.8.1 The Disclosure Letter includes a listing of all oral or
written (a) contracts, commitments, sales orders or purchase orders, whether or
not entered into in the ordinary course of business, which involve future
payments, performance of services or delivery of goods and/or materials, to or
by the Company of an amount or value in excess of $25,000; (b) bonus, incentive
compensation, pension, profit sharing, stock option, group insurance, medical
reimbursement or employee welfare or benefit plans of any nature whatsoever; (c)
collective bargaining agreements or other contracts or commitments to or with
labor unions or other employee groups; (d) leases, contracts or commitments
affecting ownership of, title to, use of or any material interest in real
estate; (e) employment contracts and other contracts, agreements, or commitments
to or with individual employees, consultants or agents extending for a period of
more than six months from the date hereof or providing for earlier termination
only upon payment of a penalty or the equivalent thereof; (f) equipment leases
providing (in any one lease or group of related leases) for payments in excess
of $10,000 per year; (g) contracts under which the performance of any obligation
of the Company is guaranteed by Stockholder or other third party, including
performance bonding arrangements; (h) contracts or commitments providing for
payments based in any manner upon the revenues, purchases or profits of the
Company; (i) bank credit, factoring and loan agreements, indentures, promissory
notes and other documents representing indebtedness for borrowed money; (j)
patent licensing agreements and all other agreements with respect to patents,
patent applications, trademarks, service marks, trade names, technical
assistance, special processes, know-how, copyright or other like items; and (k)
other contracts and agreements to which the Company is a party and which have
not been fully performed, involving consideration having a value in excess of
$25,000 or a remaining period for performance in excess of nine months (all such
items being collectively referred to herein as "Material Contracts"). The
Company has furnished to Newpark true and complete copies of all such Material
Contracts.
3.8.2 All Material Contracts are valid and binding obligations of
the Company and, to the "best of the knowledge of the Company" (as defined in
Section 15), the other parties thereto in accordance with their respective
terms, subject to the Bankruptcy Exception; there have been no amendments to or
modifications to any Material Contract (except as set forth in the copies
furnished to Newpark); no event has occurred which is, or, following any grace
period or required notice, would become a material default by the Company under
the terms of any Material Contract; except to the extent specifically reserved
against on the latest
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balance sheet included in the Company Financial Statements, the Company is not a
party to any Material Contract on which the Company or Stockholder anticipates
expenses materially in excess of revenues or which is otherwise onerous or
materially adverse; and the Company has not expressly waived any material rights
under any Material Contract.
3.9 Outstanding Indebtedness. The Disclosure Letter includes a true
and complete schedule of all notes payable and other indebtedness for borrowed
money owed by the Company, including a description of the material terms thereof
and a description of all properties or assets pledged, mortgaged or otherwise
hypothecated (voluntarily or involuntarily) as security therefor.
3.10 Absence of Undisclosed Liabilities. Except as disclosed in the
Disclosure Letter and except for liabilities and obligations reflected on the
latest balance sheet included in the Company Financial Statements or arising in
the ordinary course of business since the date of such balance sheet, none of
which latter items, individually or in the aggregate, have a Materially Adverse
Effect: (a) the Company does not have, and none of its properties are subject
to, any debts, liabilities or obligations of any nature, whether accrued,
absolute, contingent or otherwise, which are of a type which are required to be
shown or reflected on financial statements prepared in a manner consistent with
generally accepted accounting principles; and (b) to the best of the knowledge
of the Company, the Company does not have, and none of its properties are
subject to, any material debts, liabilities or obligations of any nature,
whether accrued, absolute, contingent or otherwise, whether or not of a type
which are required to be shown or reflected on financial statements prepared in
a manner consistent with generally accepted accounting principles. The Company
is not in default with respect to any material term or condition of any
indebtedness.
3.11 No Litigation. Except as disclosed in the Disclosure Letter,
there are no actions, suits or proceedings (whether or not purportedly on behalf
of the Company) pending or, to the knowledge of the Company, threatened against
or affecting the Company, at law or in equity or before or by any "Government
Body" (as defined in Section 15) or before any arbitrator of any kind. To the
best of the knowledge of the Company, the Company is not in default with respect
to any judgment, order, writ, injunction, decree, award of any Government Body.
3.12 Environmental Matters.
3.12.1 Neither the Company nor, to the best of the knowledge of the
Company, any previous owner, lessee, tenant, occupant or user of any real
property owned or leased on or prior to the date hereof by the Company (such
real property and any and all buildings and other improvements thereon being
herein referred to as the "Property") used, generated, manufactured, treated,
handled, refined, processed, released, discharged, stored or disposed of any
"Hazardous Materials" (as defined in Section 15) on, under, in or about the
Property, or transported any Hazardous Materials to or from the Property in
violation of any "Hazardous Materials Laws" (as defined in Section 15) in a
manner or to an extent that resulted or is reasonably likely to result in a
Material Adverse Effect. To the best of the knowledge of the Company, no
underground tanks or underground deposits or Hazardous Materials the existence
of which would have a Material Adverse Effect existed on, under, in or about any
Property
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previously owned or leased by the Company on or prior to the date that fee or
leasehold title to such Property was transferred to a third party by the
Company. To the best of the knowledge of the Company, no underground tanks or
underground deposits or Hazardous Materials the existence of which would have a
Material Adverse Effect exist on, under, in or about any Property that is
currently owned or leased by the Company.
3.12.2 While any Property was owned or leased by the Company, it
did not violate to an extent that would have a Material Adverse Effect any
applicable federal, state and local laws, ordinances or regulations, now or
previously in effect, relating to environmental conditions, industrial hygiene
or Hazardous Materials on, under, in or about such Property (including without
limitation the Hazardous Materials Laws).
3.12.3 As of the date hereof, to the best of the knowledge of the
Company, there are no (1) enforcement, clean-up, removal, mitigation or other
governmental or regulatory actions instituted, contemplated or threatened
pursuant to any Hazardous Materials Laws against the Company or any Property
presently owned or leased by the Company, (2) claims made or threatened by any
Person or Government Body relating to the Property against the Company or any
Property presently owned or leased by the Company or relating to damage,
contribution, cost recovery, compensation, loss or injury resulting from any
Hazardous Materials or (3) any occurrence or condition known to the Company or
Stockholder on any Property that is currently owned or leased by the Company
that can reasonably be expected to subject the Company or such Property to any
material restrictions on occupancy, transferability or use of any Property under
any Hazardous Materials Laws. The Disclosure Letter includes a list of all
complaints, notices of violation and claims relating to Hazardous Materials Laws
which, to the knowledge of the Company, have been received by or asserted
against the Company.
3.13 Taxes.
3.13.1 The Company has filed all income, franchise and other "Tax
Returns" (as defined in Section 15) required to be filed by it by the date
hereof. All "Taxes" (as defined in Section 15) imposed by the United States,
the State of Texas and by any other state, municipality, subdivision, or other
taxing authority, which are due and payable by the Company have been paid in
full or are adequately provided for by reserves reflected on the latest balance
sheet included in the Company Financial Statements. The Company is an S
Corporation under Subchapter S of the Code for federal income Tax purposes. To
the knowledge of the Company, Stockholder has paid all income Taxes required to
be paid by him with respect to all items of income, net of all deductions,
allocable to him for federal income tax purposes by reason of the Company's
status as an S Corporation, for each taxable year ended on or before December
31, 1996.
3.13.2 All contributions due from the Company pursuant to any
unemployment insurance or workers compensation laws and all sales or use Taxes
which are due or payable by the Company have been paid in full. The Company has
withheld and paid to, or will cause to be paid to, the appropriate taxing
authorities all amounts required to be withheld from the wages of its employees
under state law and the applicable provisions of the Code.
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3.13.3 The Company has furnished to Newpark true and complete copies
of the federal income Tax Returns and comparable state Tax Returns of the
Company covering the years ended December 31, 1994, December 31, 1995 and
December 31, 1996, constituting complete and accurate representations in all
material respects of the Tax liabilities of the Company for the relevant periods
stated therein and accurately setting forth all relevant material items,
including the Tax bases of all assets, where required to be set forth in such
Tax Returns.
3.14 Permits and Licenses. The Company has all licenses, franchises,
permits and other governmental authorizations that are legally required to
enable it to conduct its business in all material respects as conducted on the
date hereof, and the Company is in compliance in all material respects with all
applicable federal, state and local laws, rules, regulations and orders relating
to its business, except where failure to have any such license, franchise,
permit or authorization or failure to comply with any such laws, rules,
regulations and orders would not have a Material Adverse Effect. The execution
and performance of this Agreement and the consummation of the transactions
contemplated hereby will not cause the termination or suspension of any license,
franchise, permit or governmental authorization or violate any provision of or
constitute a default under any law, rule or regulation, order, writ, injunction
or decree of any Government Body applicable to Stockholder or the Company, where
such violation or default would have a Material Adverse Effect.
3.15 No Labor Problems. The Company has not been charged with any
unresolved unfair labor practices and there are no material controversies
pending or threatened between the Company and any of its employees. The Company
has complied in all material respects with all laws relating to wages, hours,
collective bargaining and similar employment matters the noncompliance with
which would have a Material Adverse Effect, and the Company has paid all social
security and similar Taxes that are due and payable and is not liable for any
arrears or wages or any Taxes or material penalties for failure to comply with
any of the foregoing.
3.16 Employee Benefit Plans.
3.16.1 Definition of Benefit Plans. For purposes of this Section
3.15, the term "Benefit Plan" means any plan, program, arrangement, practice or
contract which provides benefits or compensation to or on behalf of employees or
former employees of the Company or any "ERISA Affiliate" (as hereinafter
defined), whether formal or informal, whether or not written, including but not
limited to the following:
(a) Arrangements - any bonus, incentive compensation, stock option,
deferred compensation, commission, severance, golden parachute or other
compensation plan, rabbi trust, program, contract, arrangement or practice;
(b) ERISA Plans - any "employee benefit plan" (as defined in Section
3(3) of ERISA), including, but not limited to, any "multi-employer plan" (as
defined in Section 3(37) and Section 4001(a)(3) of ERISA), defined benefit
pension plan, profit sharing plan, money purchase pension plan, 401(k) plan,
savings or thrift plan, stock bonus plan, employee stock ownership plan, or any
plan, fund, program, arrangement or practice providing for medical
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(including post-retirement medical), hospitalization, accident, sickness,
disability, or life insurance benefits; and
(c) Other Employee Fringe Benefits - any stock purchase, vacation,
scholarship, day care, prepaid legal services, severance pay or other fringe
benefit plan, program, arrangement, contract or practice.
3.16.2 ERISA Affiliate. For purposes of this Section 3.15, the
term "ERISA Affiliate" means each trade or business (whether or not
incorporated) which together with the Company is treated as single employer
under Section 414(b), (c), (m) or (o) of the Code.
3.16.3 Identification of Benefit Plans. The Company does not
maintain, and has not at any time established or maintained, nor has at any time
been obligated to make contributions to or under or otherwise participate in any
Benefit Plan.
3.16.4 MEPPA Liability/Post-Retirement Medical Benefits/ Defined
Benefit Plans/Supplemental Retirement Plans. Neither the Company nor any ERISA
Affiliate maintains, or has at any time established or maintained, or has at any
time been obligated to make contributions to or under any multi-employer plan.
Neither the Company nor any ERISA Affiliate maintains, or has at any time
established or maintained, or has at any time been obligated to make
contributions to or under (i) any plan which provides post-retirement medical or
health benefits, (ii) any organization described in Sections 501(c)(9) or
501(c)(20) of the Code, (iii) any defined benefit pension plan subject to Title
IV of ERISA or (iv) any plan which provides retirement benefits in excess of the
limitations of Section 415 of the Code.
3.16.5 Liabilities. The execution and performance of the
transactions contemplated by this Agreement will not create, accelerate or
increase any obligation to make any payment which, as an "excess parachute
payment" under Section 280G of the Code, would not be deductible.
3.17 Insurance. The Company has furnished to Newpark a complete list
of all insurance policies that the Company maintains, indicating risks insured
against, carrier, policy number, amount of coverage, premiums and expiration
date.
3.18 Interest in Competitors, Suppliers, etc. Except as set forth
in the Disclosure Letter, neither Stockholder nor any officer or director of the
Company or any Family Member of any such Person owns, directly or indirectly,
individually or collectively, any interest in any corporation, partnership,
proprietorship, firm or association which (a) is a competitor, customer or
supplier of the Company, or (b) has an existing contractual relationship with
the Company, including but not limited to lessors of real or personal property
leased to the Company and entities against whom rights or options are
exercisable by the Company. The Company owns, free and clear and without
payment of any royalty or fee, all interests in the assets, profits or business
of the Company that have previously been held by any Affiliate of the Company,
including Stockholder and his Family Members.
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3.19 Indebtedness with Insiders. Except for accrued salaries for one
payroll period, vacation pay and business expense reimbursements, the Company is
not indebted to any of the stockholders, directors or officers of the Company or
any Affiliate of any such Person. None of such Persons is indebted to the
Company.
3.20 Consents. No authorizations, approvals or consents of any
Government Body are required for consummation of the transactions contemplated
by this Agreement or the subsequent operation of the business of the Company,
except for the filing of the Agreement of Merger as required by the BCA.
3.21 Patents, Trademarks and Other Intangibles. The Disclosure Letter
includes a list of all material patents, patent applications, trade names,
trademark registrations and applications therefor, copyrights, licenses,
franchises and other assets of like kind ("Intangible Assets") and all interests
in Intangible Assets which are owned in whole or in part by or registered in the
name of the Company. The Company owns or has the right to use all Intangible
Assets now used in the conduct of its business. Such Intangible Assets include
all of the proprietary products and formulations developed by the Company or
used by it in its business. The Company is not obligated to pay any royalty or
other fee to any licensor or other third party with respect to any Intangible
Assets. Neither the Company nor Stockholder has knowledge of any claim received
by the Company alleging any conflict between any aspect of the business of the
Company and any Intangible Assets claimed to be owned by others which, if
determined adversely to the Company, would have a Material Adverse Effect.
Neither Stockholder nor any other officer or director of the Company, and no
Person that is an Affiliate of any such Person has any interest in any
Intangibles Assets which are presently used by the Company or which infringe
upon, conflict with or relate to improvements or modifications of any Intangible
Assets presently used by the Company.
3.22 Purchases and Sales. Since December 31, 1996, the Company has
not placed any orders for materials, merchandise or supplies in exceptional or
unusual quantities based upon past operating practices and has not entered into
contracts with customers under conditions relating to price, terms of payment,
time of performance or like matters materially different from the conditions
regularly and usually specified in contracts for similar engagements from
customers similarly situated.
3.23 Brokerage and Finder's Fees. Neither the Company nor Stockholder
(or any Affiliate of Stockholder) has incurred any liability to any broker,
finder or agent for any brokerage fees, finder's fees or commissions for which
the Company could be liable with respect to the transactions contemplated by
this Agreement.
3.24 Absence of Certain Changes. Since December 31, 1996, except for
matters of a general economic nature which do not affect the Company uniquely,
the Company has not:
3.24.1 suffered any Material Adverse Effect;
3.24.2 borrowed or agreed to borrow any funds in excess of $25,000
in the aggregate or incurred or become subject to any obligation or liability
(absolute or contingent) in
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excess of $25,000 in the aggregate, except obligations and liabilities incurred
in the ordinary course of business;
3.24.3 mortgaged, pledged, hypothecated or otherwise encumbered any
of its properties or assets except for Permitted Liens;
3.24.4 made or agreed to make any distribution of any funds or
assets of any kind whatsoever to any past or present stockholder of the Company
or any Affiliate of any such Person, whether by way of dividend, redemption or
purchase of capital stock, or any other type of distribution on or with respect
to its capital stock, whether or not similar to the foregoing, except dividends
in an amount equal to 39% of the income, net of deductions, that is allocable to
him as a result of the Company's status as an S Corporation for 1996 and for the
period from January 1, 1997 to and including the day before the date hereof (the
"Short Period Income Taxes");
3.24.5 made any payment of principal or interest on any
indebtedness owed to any past or present stockholder of the Company or any
Affiliate of any such Person;
3.24.6 sold or agreed to sell any of its assets, properties or
rights having an aggregate value in excess or $10,000 or canceled or agreed to
cancel any debts or claims exceeding $10,000 in the aggregate, except for fair
value in the ordinary course of business;
3.24.7 entered or agreed to enter into any agreement or arrangement
granting any preferential right to purchase a material part of its assets,
properties or rights;
3.24.8 increased the rate of compensation of or paid or accrued
bonuses to or for any of its officers, employees, consultants or agents, except
for normal merit or cost of living increases;
3.24.9 suffered any damage, destruction or loss in excess of an
aggregate of $100,000, whether or not covered by insurance, adversely affecting
any of its properties;
3.24.10 assigned or agreed to assign any of its Intangible Assets;
3.24.11 suffered any adverse amendment or termination of any Material
Contract (or any contract that would have been a Material Contract if not
amended or terminated) to which it is a party;
3.24.12 paid any commissions or similar fees to brokers or finders
for arranging the transactions contemplated by this Agreement or any similar
proposed transaction with any other party; or
3.24.13 entered into any other material transaction other than
in the ordinary course of business.
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3.25 No Material Misstatements or Omissions. No representation or
warranty by the Company or Stockholder in this Agreement, and no document,
statement, certificate, exhibit or schedule furnished or to be furnished to
Newpark or SBM pursuant hereto, or in connection with the transactions
contemplated hereby, contains or will contain any untrue statement of a material
fact or omits or will omit to state a material fact required to be stated
therein or necessary in order to make the statements or facts contained herein
or therein, in the light of the circumstances under which they were made, not
misleading.
3.26 Investment Representations. Either Stockholder is an
"accredited investor", as that term is defined in Rule 501 of the Rules and
Regulations or Stockholder, either alone or with his qualified "purchaser
representative" (as defined in Rule 501 of the Rules and Regulations), has such
knowledge and experience in financial and business matters that he is capable of
evaluating the risks and merits of an investment in Newpark Common Stock.
Stockholder is acquiring his Newpark Shares in the Merger for investment and not
with a view to the sale thereof other than in compliance with the requirements
of the Securities Act and applicable Blue Sky laws. At the request of Newpark,
Stockholder will furnish to Newpark evidence reasonably satisfactory to Newpark
that the foregoing representations are true. Stockholder acknowledges that
Newpark has made available to him the opportunity to ask questions and receive
answers concerning the terms and conditions of the Plan and to obtain any
additional information that Newpark is required to furnish under Regulation D of
the Rules and Regulations.
3.27 No Joinder. Stockholder has the requisite power to enter into
this Agreement and perform his obligations hereunder (including without
limitation to sell and deliver his Company Shares), and no other Person's
joinder as a party hereto is necessary therefor pursuant to any community
property laws or otherwise, and there is no restriction on the power of
Stockholder to sell and deliver his Company Shares pursuant to any trust, estate
planning or other similar document or any prenuptial or post-nuptial agreement
or arrangement.
3.28 No Litigation. There are no actions pending or, to the knowledge
of the Company, threatened in any court or arbitration forum or by or before any
Government Body involving the Company or Stockholder relating to or affecting
any of the transactions contemplated by this Agreement.
3.29 Title to Shares. Stockholder is the holder of record and owns
beneficially all of the Company Shares, free and clear of all liens, security
interests, encumbrances and restrictions, other than restrictions contemplated
by this Agreement. Stockholder is not a party to any voting trust, proxy or
other agreement with respect to the voting of any of his Company Shares.
4. Representations and Warranties of Newpark. Newpark hereby represents
and warrants the following (the truth and accuracy of each of which shall
constitute a condition precedent to the Company's and Stockholder's obligations
to consummate the Plan):
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4.1 Organization and Good Standing.
4.1.1 Newpark is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. Newpark has
corporate power and authority to carry on its business as presently conducted
and is qualified to do business in every jurisdiction in which the character and
location of the assets owned by it or the nature of the business transacted by
it or both require qualification and failure to be so qualified would have a
Material Adverse Effect.
4.1.2 SBM is a corporation duly organized, validly existing and in
good standing under the laws of the State of Texas. SBM has corporate power and
authority to carry on its business as presently conducted and is qualified to do
business in every jurisdiction in which the character and location of the assets
owned by it or the nature of the business transacted by it or both require
qualification and failure to be so qualified would have a Material Adverse
Effect.
4.1.3 Newpark has furnished to Stockholder complete and correct
copies of Newpark's Certificate of Incorporation and Bylaws as in effect on the
date hereof and SBM's Articles of Incorporation and Bylaws as in effect on the
date hereof.
4.2 Capital Stock. The authorized capital stock of Newpark consists
of 80,000,000 shares of Common Stock, $.01 par value, of which 31,367,874 shares
were issued and outstanding on June 30, 1997, and 1,000,000 shares of Preferred
Stock, $.01 par value, of which no shares are issued and outstanding. The
authorized capital stock of SBM consists of 1,000,000 shares of Class A voting
common stock, of which 1,000 shares are issued and outstanding and held by
Newpark on the date hereof.
4.3 Newpark Subsidiaries. Each subsidiary of Newpark that is a
"significant subsidiary," as defined in Rule 1-02(w) of Regulation S-X of the
Rules and Regulations (each a "Newpark Subsidiary" and collectively the "Newpark
Subsidiaries), is duly organized and in good standing under the laws of the
jurisdiction in which it was incorporated or organized, has full corporate power
and authority to carry on its business as now conducted by it and is entitled to
own or lease and operate its properties and assets now owned or leased and
operated by it. Each Newpark Subsidiary is duly qualified and in good standing
as a foreign corporation or other entity in each jurisdiction where the
character or location of the assets owned by it or the nature of the business
transacted by it require such qualification, except where failure to be so
qualified would not have a Material Adverse Effect.
4.4 Authority. The execution and delivery of this Agreement by
Newpark and the consummation of the transactions contemplated hereby have been
duly authorized by the Boards of Directors of Newpark and SBM and by Newpark in
its capacity as the sole stockholder of SBM. This Agreement has been duly
executed and delivered to the Company and Stockholder and no vote of the
stockholders of Newpark or further corporate action is necessary on the part of
Newpark or SBM to make this Agreement valid and binding upon Newpark and SBM in
accordance with its terms, subject to the Bankruptcy Exception. The execution,
delivery and performance of this Agreement by Newpark and SBM (a) are not
contrary to the Certificate
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of Incorporation or Bylaws of Newpark, (b) are not contrary to the Articles of
Incorporation or Bylaws of SBM and (c) will not result in a violation or breach
of any term or provision or constitute a default or give any party a right to
accelerate the due date of any indebtedness under any indenture, mortgage, deed
of trust or other contract or agreement to which Newpark or SBM is a party or by
which Newpark or SBM is bound.
4.5 Newpark Reports. Newpark has delivered to Stockholder copies of
Newpark's Annual Reports on Form 10-K for the years ended December 31, 1994,
1995 and 1996 (as amended), Newpark's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1997, and Newpark's definitive Proxy Statement dated
April 4, 1997, for its Annual Meeting of Stockholders held on May 14, 1997. All
of said documents and all periodic reports filed by Newpark with the Commission
after the date hereof are called the "Newpark Reports" herein. The Newpark
Reports have been or will be duly and timely filed with the Commission and are
or will be when filed in compliance with the Rules and Regulations. As of their
respective dates, none of the Newpark Reports contained or will contain any
untrue statement of a material fact or omitted or will omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading.
4.6 Newpark Financial Statements. The financial statements
contained in the Newpark Reports (the "Newpark Financial Statements") filed on
or before the date hereof have been prepared in accordance with the books and
records of Newpark and its subsidiaries and in accordance with generally
accepted accounting principles consistently applied during the periods
indicated, all as more particularly set forth in such financial statements and
the Notes thereto. Each of the balance sheets included in the Newpark Financial
Statements presents fairly as of its date the consolidated financial condition
and assets and liabilities of Newpark and its subsidiaries. Except as and to
the extent reflected or reserved against in such balance sheets (including the
Notes thereto), Newpark (including its subsidiaries) did not have, as of the
dates of such balance sheets, any material liabilities or obligations (absolute
or contingent) of a nature customarily reflected in a balance sheet or the notes
thereto prepared in accordance with generally accepted accounting principles.
The consolidated statements of earnings and stockholders' equity and
consolidated statements of changes in financial position included in the Newpark
Financial Statements present fairly the results of operations and changes in
financial position of Newpark and its subsidiaries for the periods indicated.
4.7 Absence of Certain Changes. Since March 31, 1997, there has not
been any material adverse change in the results of operations, financial
condition, liquidity, assets, properties or business of Newpark and its
subsidiaries, taken as a whole.
4.8 Issuance and Listing of Stock. Newpark has reserved for issuance
the Newpark Shares, and the Newpark Shares, when issued in accordance with this
Agreement, will be validly issued, fully paid and nonassessable.
4.9 Consents. No authorizations, approvals or consents of any
governmental department, commission, bureau, agency or other public body or
authority are required for consummation by Newpark of the transactions
contemplated by this Agreement, except for the
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filing of the Agreement of Merger as required by the BCA and such qualifications
as may be required under state securities or Blue Sky laws relating to the
Newpark Shares.
4.10 No Material Misstatements or Omissions. No representation or
warranty by Newpark or SBM in this Agreement, and no document, statement,
certificate, exhibit or schedule furnished or to be furnished to the Company or
Stockholder pursuant hereto, or in connection with the transactions contemplated
hereby, contains or will contain any untrue statement of a material fact, or
omits or will omit to state a material fact required to be stated therein or
necessary to make the statements or facts contained herein or therein, in the
light of the circumstances under which they were made, not misleading.
5. Conditions to Each Party's Obligations. The respective obligations of
each party to consummate the Plan under this Agreement shall be subject to the
satisfaction on or before the date hereof of each of the following conditions
except to the extent the parties may waive any of such conditions in writing:
5.1 Government Body Consents. All consents, authorizations, orders
and approvals of (or filings or registrations with) any Government Body required
in connection with the execution, delivery and performance of this Agreement,
including the Merger and the issuance of the Newpark Shares, or the operation of
the business of the Company following the Merger shall have been obtained or
made, except where the failure to have obtained or made any such consent,
authorization, order, approval, filing or registration would not have a Material
Adverse Effect following the Closing.
5.2 Injunction. There shall be no effective injunction, writ or
preliminary restraining order or any order of any nature issued by a court or
governmental agency of competent jurisdiction to the effect that the Plan may
not be consummated as herein provided, no proceeding or lawsuit shall have been
commenced by any Government Body for the purpose of obtaining any such
injunction, writ or preliminary restraining order and no written notice shall
have been received from any Government Body indicating an intent to restrain,
prevent, materially delay or restructure the transactions contemplated by this
Agreement.
5.3 Listing of Newpark Shares. The Newpark Shares shall have been
listed on the New York Stock Exchange, subject to official notice of issuance.
6. Conditions Precedent to Obligations of Newpark and SBM. The
obligations of Newpark and SBM to consummate the Plan and issue the Newpark
Shares are subject to the satisfaction of each of the additional following
conditions at or prior to the date hereof, unless waived in writing by Newpark:
6.1 Accuracy of Warranties and Representations. The
representations and warranties of the Company and Stockholder herein shall be
true and correct in all material respects, and the Company and Stockholder shall
perform or shall have performed in all material respects all covenants required
by this Agreement to be performed by them at or prior to the Closing.
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6.2 No Material Adverse Change. There shall have been no changes
after December 31, 1996, in the results of operations, assets, liabilities,
financial condition or affairs of the Company which in their total effect have a
Materially Adverse Effect on the Company.
6.3 Material Contracts. The Company shall have received consents to
assignment of all Material Contracts or written waivers of the provisions of any
Material Contracts requiring the consents of third parties as set forth in the
Disclosure Letter, except where the failure to have obtained any such consent or
written waiver would not have a Material Adverse Effect following the Closing.
6.4 Other Legal Matters. All legal matters in connection with this
Agreement and the transactions contemplated hereby shall have been approved by
counsel for Newpark, and there shall have been furnished to such counsel by the
Company certified copies of such corporate records of the Company and copies of
such other documents as such counsel may reasonably have requested for such
purpose.
6.5 Opinion of the Company's and Stockholder's Counsel. Newpark
shall have received an opinion of Xxxxxxxxxx & xxxXxxx, counsel to the Company
and Stockholder, dated the date of the Closing, substantially in the form
attached hereto as Exhibit 6.5.
6.6 Merger of Chem-Energy Management, Inc.. Chem-Energy Management,
Inc., a Texas corporation, shall have been merged with and into the Company.
7. Conditions Precedent to Obligation of the Company and Stockholder.
The obligations of the Company and Stockholder to consummate the Plan are
subject to the satisfaction of each of the following additional conditions at or
prior to the date hereof, unless waived in writing by the Company and
Stockholder:
7.1 Accuracy of Warranties and Representations. The representations
and warranties of Newpark contained in this Agreement shall be true and correct
in all material respects, and Newpark shall perform or shall have performed in
all material respects all of the covenants required by this Agreement to be
performed by it on or before the Closing.
7.2 Authorization of Plan. All corporate action necessary by Newpark
to authorize the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby shall have been duly and
validly taken.
7.3 No Material Adverse Change. There shall have been no changes
since March 31, 1997, in the results of operations, financial condition,
liquidity, assets, properties or business of Newpark and its subsidiaries, taken
as a whole, which, in their total effect, have a Material Adverse Effect on
Newpark and its subsidiaries.
7.4 Opinion of Newpark's Counsel. The Company and Stockholder shall
have received an opinion of Xxxxx, Xxxxx & Xxxxxx LLP, dated the date of the
Closing, substantially in the form attached hereto as Exhibit 7.4.
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7.5 Other Legal Matters. All legal matters in connection with this
Agreement and the transactions contemplated hereby shall have been approved by
counsel for the Company and Stockholder, and there shall have been furnished to
such counsel by Newpark certified copies of such corporate records of Newpark
(including Board of Directors resolutions approving the Merger Agreements) and
copies of such other documents as such counsel may reasonably have requested for
such purpose.
8. Survival of Representations. All representations and warranties made
by the Company or SBM under or in connection with this Agreement shall terminate
at the Effective Time and shall be of no further force or effect thereafter.
All representations, warranties and indemnifications made by Stockholder or
Newpark under or in connection with this Agreement shall survive the
consummation of the Merger until the later of (a) one year after the Closing or
(b) the date when Newpark's independent accountants issue an audit report on
their audit of the financial statements containing combined operations of
Newpark and the Company for the period ending December 31, 1997. No party shall
be entitled to recover against any other party for any misrepresentation or
breach of warranty except to the extent that written notice of any such claim
has been delivered to the party against whom recovery is sought within the
applicable period setting forth in reasonable detail and specifying the nature
of the claim being asserted. The provisions of this Section and Section 10.3.3
apply only to claims arising under this Agreement and do not affect any other
claims that any party may have at any time against any other party, including
but not limited to claims that may arise under Hazardous Material Laws.
9. Post-Closing Covenants.
9.1 Cooperation and Assistance. Upon request, each of the parties
hereto shall cooperate with the other to the extent reasonably requested, at the
requesting party's expense, in furnishing information, testimony and other
assistance in connection with any actions, proceedings, arrangements or disputes
involving the Company, Stockholder, Newpark or SBM which are based upon
contracts, arrangements or acts of Stockholder or the Company or both which were
in effect or occurred on or prior to the Closing.
9.2 Access to Records. Stockholder shall be entitled, after the
Closing, upon reasonable notice and during the regular business hours of
Newpark, to have access to and to make copies of the business records of the
Company which relate to periods prior to the Closing. Newpark shall retain such
business records for a period of five (5) years following the Closing, after
which time Newpark may destroy or otherwise dispose of such business records
without Stockholder's consent.
9.3 Tax Matters.
9.3.1 Control of Tax Proceedings. Whenever any taxing authority
proposes any adjustment, questions the treatment of any item, asserts a claim,
makes an assessment, or otherwise disputes the amount of any Taxes for any
period or portion thereof ending on or before the date hereof, which adjustment,
question, claim, assessment or dispute could, if pursued successfully, result in
or give rise to a claim against Stockholder under this
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Agreement (a "Tax Claim"), Newpark shall promptly inform Stockholder in writing
of such Tax Claim. The provisions of Section 10 shall apply to the handling of
any Tax Claim.
9.3.2 Current Tax Returns. Stockholder shall be responsible for
the preparation of all Tax Returns of the Company for all taxable periods that
end or ended on or before the date hereof and are not required to be filed
(taking into account all extensions) on or before the date hereof. Newpark will
make available to Stockholder, without charge, the services of its personnel and
the personnel of the Company to assist Stockholder in the preparation of such
Tax Returns. Such Tax Returns shall be reasonably satisfactory to Newpark in
form and substance. Stockholder shall pay the Short Period Income Taxes.
9.3.3 Refunds and Credits. Subject to the provisions of Section
9.3.2, any refunds and credits (together in each case with any interest received
or credited on or with respect to such refund or credit) of federal income Taxes
attributable to any taxable period ending on or before the date hereof shall be
for the account of Stockholder, and any refunds and credits (together in each
case with any interest received or credited on or with respect to such refund or
credit) of other Taxes attributable to any taxable period ending on or before
the date hereof shall be for the account of the Company; provided, however,
that, to the extent that any such refund of Taxes other than federal income
Taxes exceeds the amount or such refund, credit or interest, if any, accrued on
the books of the Company as of the date hereof, Stockholder shall receive credit
in an amount equal to the amount of such excess against any liability he may
have under Section 10.
9.3.4 Cooperation. Newpark and Stockholder shall cooperate in
good faith with each other in a timely manner in the preparation and filing of
any Tax Returns of the Company and the handling of any Tax Claims and other Tax
matters to which this Agreement relates, other than Tax Claims and Tax matters
solely involving Newpark and its Subsidiaries other than the Company. Each
party shall execute and deliver such powers of attorney and make available such
other documents and such personnel as are necessary to carry out the intent of
this Section 9.3.4. Each party agrees to promptly notify the other parties of
any such Tax Claim that does not result in Tax liability but can be reasonably
expected to affect any Tax Returns of any of the other parties.
9.3.5 Retention of Records. Newpark shall (i) retain records,
documents, accounting data and other information (including computer data)
necessary for the preparation and filing of all Tax Returns of the Company and
the handling of any Tax Claims and other Tax matters to which this Agreement
relates, and (ii) give to Stockholder reasonable access to such records,
documents, accounting data and other information (including computer data) and
to its personnel (insuring their cooperation) and premises, for the purpose of
the preparation and review of such Tax Returns and the handling of any Tax
Claims and other Tax matters to which this Agreement relates, to the extent
necessary in connection with any Taxes to which this Agreement relates or any
obligation or liability of a party under this Agreement.
9.4 Stockholder Guarantees. Subject to consummation of the Merger,
Newpark agrees that it will cause the Company to discharge in accordance with
its terms all indebtedness
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of the Company as to which Stockholder has executed personal guarantees, as
disclosed in the Disclosure Letter.
10. Indemnifications.
10.1 Indemnification by Stockholder. Subject to the provisions of
Sections 8 and 10.3, Stockholder hereby agrees to indemnify, defend, protect and
hold harmless Newpark against all damages, losses, liabilities, costs and
expenses (including reasonable attorneys' fees) resulting from (i) any breach of
any warranty or representation made by the Company and Stockholder under or in
connection with this Agreement and (ii) the presence on, under, in or about the
Property of any Hazardous Materials as of the Effective Time or the
noncompliance by the Company with any Hazardous Materials Laws on or before the
Effective Time, whether or not disclosed in the Disclosure Letter. Such
indemnification shall be solely the responsibility of Stockholder, and he shall
not have any right to recover any portion of his liability from the Company,
whether by right of indemnification, contribution or otherwise.
10.2 Indemnification by Newpark. Subject to the provisions of
Sections 8 and 10.3, Newpark hereby agrees to indemnify, defend, protect and
hold harmless Stockholder against all damages, losses, liabilities, costs and
expenses (including reasonable attorneys' fees) resulting from any breach of any
warranty or representation made by Newpark under or in connection with this
Agreement. The rights to such indemnification shall accrue solely to
Stockholder, and the Company shall have no interest therein.
10.3 Indemnification Procedures and Limitations. The following
provisions shall apply to all indemnification and hold harmless provisions of
this Agreement:
10.3.1 No party shall be required to indemnify another pursuant
hereto unless the party seeking indemnification (the "Indemnitee") shall, with
reasonable promptness, provide the other party (the "Indemnitor") with copies of
any claims or other documents received and shall otherwise make available to the
Indemnitor all material relevant information. The Indemnitor shall have the
right to defend any such claim at its expense, with counsel of its choosing, and
the Indemnitee shall have the right, at its expense, using counsel of its
choosing, to join in the defense of any such claim. The Indemnitee's failure to
give prompt notice or to provide copies of documents or to furnish relevant data
shall not constitute a defense in whole or in part to any claim by the
Indemnitee against the Indemnitor except to the extent that such failure by the
Indemnitee shall result in a material prejudice to the Indemnitor.
10.3.2 Except as hereinafter provided, neither party shall settle
or compromise any such claim unless it shall first obtain the written consent of
the other, which shall not be unreasonably withheld. The foregoing
notwithstanding, if suit shall have been instituted against the Indemnitee and
the Indemnitor shall have failed, after the lapse of a reasonable time after
written notice to it of such suit, to take action to defend the same, the
Indemnitee shall have the right to defend the claim (without limiting the right
of the Indemnitor to participate in the defense) and to charge the Indemnitor
with the reasonable cost of any such defense, including reasonable attorneys'
fees, and the Indemnitee shall have the right, after notifying but without
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consulting the Indemnitor, to settle or compromise such claim on any terms
reasonably approved by the Indemnitee.
10.3.3 Neither Newpark nor Stockholder shall have any liability for
breach of warranty or representation hereunder except to the extent that the
amount of all valid claims for breach of warranty or representation against it
or him hereunder exceeds an aggregate of $10,000. In no event shall the
liability of Stockholder for any breach of warranty or representation hereunder
exceed the lesser of (i) $1,000,000 or (ii) the value of the Newpark Shares for
which his Company Shares are exchanged in the Merger, for which purpose they
shall be valued at their Closing Value. To the fullest extent permitted by law,
Stockholder shall satisfy his liability hereunder by delivering to Newpark some
or all of such Newpark Shares, valued at their Closing Value, and Newpark shall
satisfy its liability by issuing additional Newpark Shares valued at their
Closing Value. Nothing contained herein shall relieve Stockholder or Newpark of
any liability he or it may have for any intentional breach of representation or
warranty or for breach of any covenants or agreements made herein by such party.
10.3.4 In determining the amount of any damage, loss, liability,
cost or expense suffered by Newpark which gives rise to liability of Stockholder
hereunder, there shall be taken into account the amount of any Tax benefits
actually realized by Newpark and its subsidiaries attributable to such damage,
loss, liability, cost or expense or derived therefrom in the same or any past or
subsequent taxable period, also taking into account the Tax treatment of the
receipt by Newpark of any payment from Stockholder.
10.4 Dispute Resolution; Arbitration. The parties desire to finally
resolve any and all issues and disputes arising out of or related to this
Agreement or its alleged breach as promptly as practicable and, in any event,
within the survival period specified in Section 8. Newpark and Stockholder
shall first attempt diligently to resolve any such issue or dispute. They may,
if they desire, attempt to mediate the dispute and shall, if they choose, do so
in accordance with the Commercial Mediation Rules of the American Arbitration
Association ("AAA"), either as written or as modified by mutual agreement. A
written agreement to undertake mediation may be made at any time. If
arbitration proceedings have been instituted, they shall be stayed until the
mediation process is terminated. Any dispute arising out of or related to this
Agreement or its alleged breach that cannot be resolved by mutual agreement
(including mutually agreed mediation) shall be resolved exclusively by final and
binding arbitration, conducted as expeditiously as possible in the City of
Houston, Texas, in accordance with the Commercial Arbitration Rules of the
American Arbitration Association. The decision of the arbitrator or arbitrators
shall be final, conclusive and binding on all parties. The arbitrators shall
prepare an award in writing which reflects the final decision of the arbitrators
and a copy of such award shall be delivered to each party to the arbitration.
Judicial confirmation of the decision of the arbitrators shall be sought only in
the Judicial District Court of Xxxxxx County, Houston Division.
11. Destruction of Assets. All risk of loss with respect to the assets
and business of the Company shall be borne by the Company until the Closing to
the extent set forth in this Section 11. If on the date hereof any assets of
the Company shall have suffered loss or damage on account of fire, flood,
accident, act of war, civil commotion, or any other cause or event beyond the
reasonable power and control of the Company (whether or not similar to the
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foregoing) to an extent which materially affects the value to Newpark of the
Company Shares, Newpark shall have the right at its election to complete the
Merger (in which event, as Newpark's sole and exclusive remedy with respect to
the consequences of such loss or damage, all claims of the Company with respect
to such loss or damage and all insurance proceeds arising therefrom shall be for
the account of the Company), or, if it does not so elect, it shall have the
right, which shall be in lieu of any other right or remedy whatsoever, to
terminate this Agreement. In the latter event, all parties shall be released
from liability hereunder.
12. Termination. In addition to any party's right to terminate this
Agreement if any condition precedent to its obligations is not satisfied at or
before the Closing, either Newpark or the Company and Stockholder may forthwith
terminate this Agreement: (a) subject to clause (b) below, without liability to
the other of them if a bona fide action or proceeding (by and at the sole
instance of a party or parties not an Affiliate or Affiliates of Newpark or the
Company) shall be pending against either party on the date hereof wherein an
unfavorable judgment, decree or order would prevent or make unlawful the
carrying out of the transactions contemplated by this Agreement; or (b) without
prejudice to other rights and remedies which either party may have, if a
material default shall be made by the other of them in the observance or in the
due and timely performance of its covenants and agreements herein contained, or
if there shall have been a material breach of the warranties and representations
herein contained.
13. Notices. Any and all notices, demands, requests or other
communications hereunder shall be in writing and shall be deemed duly given when
personally delivered to or transmitted by overnight express delivery or by
facsimile to and received by the party to whom such notice is intended, or in
lieu of such personal delivery or overnight express delivery or facsimile
transmission, 48 hours after deposit in the United States mail, first-class,
certified or registered, postage prepaid, return receipt requested, addressed to
the applicable party at the address provided below. The parties may change
their respective addresses for the purpose of this Section 13 by giving notice
of such change to the other party in the manner which is provided in this
Section 13.
The Company: Xxxxxxx, Inc.
000 Xxxxx Xxxxxxx
Xxxxxxx, Xxxxx 00000
Facsimile No.: (000) 000-0000
Stockholder: Xx. X. X. Xxxxxxx
0000 Xxxxxxxx Xxxxx
Xxxxxxxx Xxxx, Xxxxx 00000
Copy to: Xxxx Xxxxxxx xxxXxxx, Esq.
Xxxxxxxxxx & xxxXxxx
000 Xxxxx Xxx Xxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Facsimile No.: (000) 000-0000
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Newpark: c/o Newpark Resources, Inc.
0000 Xxxxx Xxxxxxxx, Xxxxx 0000
Xxxxxxxx, XX 00000
Attention: Secretary
Facsimile No.: (000) 000-0000
Copy to: Xxxxxxx X. Xxxxxxx, Esq.
Xxxxx, Xxxxx & Xxxxxx LLP
0000 Xxxxxxxx Xxxxxxxxx, 0xx Xxxxx
Xxxxxxx Xxxxx, XX 00000
Facsimile No.: (000) 000-0000
14. Assignment. Rights hereunder shall not be assignable and duties
hereunder shall not be delegable by the Company, Stockholder, Newpark or SBM
without the prior written consent of the other; consent may be withheld for any
reason or without reason; provided, however, Newpark may, in its sole
discretion, assign any or all of its rights under this Agreement to any of its
Affiliates; provided, further, however, that no such assignment shall relieve
Newpark of any obligation or liability hereunder. Nothing contained in or
implied from this Agreement is intended to confer any rights or remedies upon
any Person other than the parties hereto and their successors in interest and
permitted assignees, unless expressly stated herein to the contrary.
15. Certain Definitions. As used herein, the following terms (whether
used in the singular or the plural) have the following meanings:
"Affiliate" or "affiliate" means, with respect to any Person, any
other Person directly or indirectly controlling, controlled by or under common
control with such Person and, without limiting the generality of the foregoing,
includes (a) any director or officer of such Person or of any Affiliate of such
Person, (b) any such director's or officer's Family Members, (c) any group,
acting in concert, of one or more of such directors, officers or Family Members,
and (d) any Person controlled by any such director, officer, Family Member or
group which beneficially owns or holds 25% or more of any class of equity
securities or profits interest. The term "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of an entity, whether through the ownership of voting
securities, by contract or otherwise.
"Bankruptcy Exception" means the limitation on enforceability imposed
by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
of general application relating to or affecting the enforcement of the rights of
creditors or by equitable principles, whether enforcement is sought in equity or
at law.
"Closing Value" means the average of the closing prices of Newpark's
Common Stock on the New York Stock Exchange, as reported in The Wall Street
Journal, for the five trading days immediately preceding the third trading day
prior to the date of this Agreement.
"Commission" means the U.S. Securities and Exchange Commission.
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"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Family Member" means, in the case of a Person who is an individual,
any parent, spouse or lineal descendant (including legally adopted descendants)
of such Person, or the spouse of any such descendant.
"Government Body" means any domestic or foreign federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality, or other body exercising or entitled to exercise any
administrative, executive, judicial, legislative, police, regulatory or taxing
authority or power of any nature.
"Hazardous Material Laws" means any and all federal, state and local
laws in effect at or before the date hereof that relate to or impose liability
or standards of conduct concerning the environment, as now or hereafter in
effect and as have been or hereafter may be amended or reauthorized, including
without limitation, the Comprehensive Environmental Response, Compensation and
Liability Act (42 U.S.C. (S) 9601, et seq.), the Hazardous Materials
Transportation Act (42 U.S.C. (S) 1802, et seq.), the Resource Conservation and
Recovery Act (42 U.S.C. (S) 6901, et seq.), the Federal Water Pollution Control
Act (33 U.S.C. (S) 1251, et seq.), the Toxic Substances Control Act (14 U.S.C.
(S) 2601, et seq.), the Clean Air Act (42 U.S.C., (S) 7901 et seq.), the
National Environmental Policy Act (42 U.S.C. (S) 4231, et seq.), the Refuse Act
(33 U.S.C. (S) 407, et seq.), the Safe Drinking Water Act (42 U.S.C. (S) 300(f),
et seq.), and all rules, regulations, codes, ordinances and guidance documents
promulgated or published thereunder, and the provisions of any licenses,
permits, orders and decrees issued pursuant to any of the foregoing.
"Hazardous Materials," means any flammable explosives, radioactive
materials, asbestos, compounds known as polychlorinated byphenyls, chemicals now
known to cause cancer or reproductive toxicity, pollutants, contaminants,
hazardous wastes, toxic substances or related materials, including, without
limitation, any substances defined as or included in the definition of
"hazardous substances," "hazardous wastes," "hazardous materials," or "toxic
substances" under the Hazardous Materials Laws.
"Knowledge of the Company" (and similar terms such as "to the best of
the knowledge of the Company") means the actual knowledge of Stockholder or any
other executive officer of the Company.
"Material Adverse Effect" means a material adverse effect on the
financial condition, results of operations, business or prospects of the entity
referred to (i.e., the Company or Newpark) and its subsidiaries (i.e., the
Newpark Subsidiaries), taken as a whole.
"Permitted Lien(s)" means (a) all liens and encumbrances disclosed in
the Disclosure Letter, (b) landlords', mechanics', carriers', workers' and
similar statutory liens arising in the ordinary course of business for sums not
delinquent, for which adequate reserves or other appropriate provisions have
been made in the Company Financial Statements, (c) deed restrictions and similar
exceptions to clear title not incurred in connection with indebtedness that do
not materially impair the existing use or materially detract from the value of
the assets or property
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subject thereto, and (d) liens for current taxes not delinquent, for which
adequate reserves or other appropriate provisions have been made in the Company
Financial Statements.
"Person" or "person" means an individual, a corporation, a
partnership, an association, a trust or any other entity or organization,
including a Government Body.
"Rules and Regulations" means the rules and regulations adopted by the
Commission under the Securities Act and the Exchange Act.
"Securities Act" means the Securities Act of 1933, as amended.
"Tax" (including with correlative meaning, the terms "Taxes" and
"Taxable") means any income, gross receipts, ad valorem, premium, excise, value-
added, sales, use, transfer, franchise, license, severance, stamp, occupation,
service, lease, withholding, employment, payroll, premium, property or windfall
profits tax, alternative or add-on-minimum tax, or other tax, fee or assessment,
together with any interest and any penalty, addition to tax or additional amount
imposed by any governmental authority responsible for the imposition of any such
tax.
"Tax Return" means any return, report, statement, information
statement and the like required to be filed with any authority with respect to
Taxes.
16. Disclaimer Concerning Tax Consequences. Although the parties intend
that the Plan will be a tax-free reorganization, no party makes any express or
implied warranty to any other party as to the Tax consequences of the Plan, and
all such warranties are hereby expressly disclaimed.
17. Applicable Law; Jurisdiction. The provisions of this Agreement and
all rights and obligations hereunder and under all documents, instruments and
agreements executed under or in connection with this Agreement shall be governed
and construed in accordance with the internal laws of the State of Texas
applicable to contracts made and to be wholly performed within said State.
18. Remedies Not Exclusive. Except as provided in Section 11, (a) no
remedy conferred by any of the specific provisions of this Agreement is intended
to be exclusive of any other remedy, (b) each and every remedy shall be
cumulative and shall be in addition to every other remedy given hereunder or now
or hereafter existing at law, in equity, or otherwise and (c) the election of
any one or more remedies by either party hereto shall not constitute a waiver of
the right to pursue other available remedies.
19. Accountants' and Attorneys' Fees. Newpark, the Company and
Stockholder shall each pay their own accountants' and attorneys' fees related to
the consummation of the Plan. In any litigation or arbitration relating to this
Agreement, including litigation or arbitration with respect to any instrument,
document or agreement made under or in connection with this Agreement, the
prevailing party shall be entitled to recover its costs and reasonable
attorneys' fees.
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20. Payment of Expenses. Whether or not the Merger is consummated,
Newpark will pay and be responsible for all costs and expenses incurred by
Newpark in connection with this Agreement and the transactions contemplated
hereby, and the Company will pay and be responsible for all costs and expenses
incurred by the Company and Stockholder in connection with this Agreement and
the transactions contemplated hereby.
21. Successors and Assigns. All covenants, representations, warranties
and agreements of the parties contained herein shall be binding upon and inure
to the benefit of the parties, their respective heirs, personal representatives
and permitted successors and assigns.
22. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
23. Headings; Severability. Captions and section headings used herein are
for convenience only and are not a part of this Agreement and shall not be used
in construing it. The provisions of this Agreement are severable, and, if any
one or more provisions may be determined to be judicially unenforceable, in
whole or in part, the remaining provisions, and any partially unenforceable
provisions, to the extent enforceable, shall nevertheless be binding and
enforceable upon the parties hereto.
24. Amendments. No provision or term of this Agreement or any agreement
contemplated herein between the parties hereto may be supplemented, amended,
modified, waived or terminated except in a writing duly executed by the party to
be charged.
25. Waivers. At any time prior to the Closing, the parties hereto, may,
to the extent legally permitted: (i) extend the time for the performance of any
of the obligations or other acts or any other party; (ii) waive any inaccuracies
in the representations or warranties of any other party contained in this
Agreement or in any document or certificate delivered pursuant hereto; (iii)
waive compliance or performance by any other party with any of the covenants,
agreements or obligations of such party contained herein; and (iv) waive the
satisfaction of any condition that is precedent to the performance by the party
so waiving of any of its obligations hereunder. Any agreement on the part of a
party hereto to any such extension or waiver shall be valid only if set forth in
an instrument in writing signed on behalf of such party. A waiver by one party
of the performance of any covenant, agreement, obligation, condition,
representation or warranty shall not be construed as a waiver of any other
covenant, agreement, obligation, condition, representation or warranty. A
waiver by any party of the performance of any act shall not constitute a waiver
of the performance of any other act or an identical act required to be performed
at a later time.
26. Entire Agreement. The Disclosure Letter and all schedules, exhibits
and financial statements provided for herein are a part of this Agreement. This
Agreement and the other agreements and documents provided for in this Agreement
comprise the entire agreement of the parties and supersede all earlier
understandings of the parties with respect to the subject matter hereof.
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first above written.
THE COMPANY: NEWPARK:
XXXXXXX, INC. NEWPARK RESOURCES, INC.
By:/s/ X. X. Xxxxxxx By:/s/ Xxxxxxx X. Xxxxxx
----------------------------- ----------------------------------
X. X. Xxxxxxx, President Xxxxxxx X. Xxxxxx, Chief Financial
Officer
STOCKHOLDER: SBM:
XXXXXX BILBO XXXXXX DRILLING FLUIDS
MANAGEMENT, INC.
/s/ X. X. Xxxxxxx
--------------------------------
X. X. XXXXXXX
By:/s/ Xxxxxxx X. Xxxxxx
--------------------------------------
Xxxxxxx X. Xxxxxx, Vice President
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