EXHIBIT 2.6
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION ("Agreement") is made and
entered into as of May 28, 1997, by and among NEWPARK RESOURCES, INC., a
Delaware corporation ("Newpark"), XXXX X. XXXXXXXX ("Xxxx"), XXXXX X. XXXXXX
("Xxxxx") and XXXXX X. XXXXXX ("Xxxxx") (Xxxx, Xxxxx and Xxxxx being sometimes
referred to herein collectively as the "Stockholders"), with reference to the
following facts:
A. The Stockholders own beneficially and of record 100% of the
outstanding capital stock (the "Target Shares") of SUPREME CONTRACTORS, INC., a
Louisiana corporation ("Contractors"), and SUPREME CONTRACTORS INTERNATIONAL,
INC., a Delaware corporation ("International") (each a "Company," and, together,
the "Companies"). Each reference to "the Companies" means either or both of
them or, with respect to negative statements, neither nor both of them.
B. The Companies are engaged together in providing construction and
site preparation services to the oil and gas industry in the Gulf Coast region.
C. The parties intend that this Agreement shall constitute a plan of
reorganization (the "Plan") of the type described in Section 368(a)(1)(B) of the
Internal Revenue Code of 1986, as amended (the "Code"). The Plan comprises the
acquisition by Newpark of the Target Shares (including the goodwill of the
Companies associated therewith) from Stockholders solely in exchange for 122,222
(subject to adjustment as provided herein) newly issued shares of voting Common
Stock of Newpark (the "Newpark Shares"). Such transaction is sometimes referred
to herein as the "Exchange."
D. Newpark and the Stockholders believe that it is in their best
interests to adopt the Plan and consummate the Exchange.
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 and the
Stockholders hereby adopt the plan of reorganization herein set forth.
1.2 Exchange of Shares. Subject to the provisions of this
Agreement, on the "Closing Date" (as defined in Section 10) the Stockholders
hereby agree to deliver to Newpark one or more certificates representing all of
the Target Shares, duly endorsed for transfer to Newpark or accompanied by
separate stock powers so endorsed, and Newpark will issue and deliver
certificates representing the Newpark Shares to the Stockholders, in proportion
to their ownership of the Target Shares. No fractional Newpark Shares will be
issued; if fractional shares otherwise would issue, the Stockholders shall
instruct Newpark at least five business days before the Closing Date as to the
rounding of such shares.
1.3 Legend on Newpark Shares. 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."
1.4 Adjustment Based on Closing Value. If the "Closing Value" (as
defined in Section 18) is between $40.50 and $49.50, no adjustment will be made
in the number of Newpark Shares. If the Closing Value falls outside that range,
the number of Newpark Shares will be adjusted as follows: If the Closing Value
is less than $40.50, the number of Newpark Shares to be issued will be
determined by dividing $4,950,000 (90% of $5,500,000) by the Closing Value. If,
for example, the Closing Value is $40.00, the number of Newpark Shares will be
123,750 ($4,950,000 divided by $40.00). If the Closing Value is greater than
$49.50, the number of Newpark Shares to be issued will be determined by dividing
$6,050,000 (110% of $5,500,000) by the Closing Value. If, for example, the
Closing Value is $50.00, the number of Newpark Shares will be 121,000
($6,050,000 divided by $50.00). In no event will the number of Newpark Shares
be less than 107,222 or greater than 137,222.
1.5 Capital Changes. If Newpark shall combine, subdivide or
reclassify its Common Stock, or shall declare any dividend payable in shares of
its Common Stock, or shall take any other action of a similar nature affecting
such shares, as of a record date between the date hereof and the Closing Date,
the number of Newpark Shares to be issued at the Closing Date shall be adjusted
to such extent as may be necessary to prevent dilution or enlargement of the
rights of the Stockholders. Such adjustments shall be made by the regular
independent certified public accountants for Newpark and a written report
thereof, showing the adjustment and the underlying calculations, shall be sent
to each party hereto.
1.6 368(a)(1)(B) Reorganization. Between the date hereof and the
Closing Date, neither Newpark nor the Stockholders or any of their "Affiliates"
(as defined in Section 18) shall (a) knowingly take any action, or knowingly
fail to take any action, that would jeopardize qualification of the Exchange as
a reorganization within the meaning of Section 368(a)(1)(B) of the Code; (b)
enter into any contract, agreement, commitment or arrangement with any such
effect; or (c) cause or permit the Companies to take any such action or fail to
take any such action. Following the Closing Date, Newpark shall use its best
efforts to conduct the business of the Companies and shall cause the Companies
to use their best efforts to conduct their business in a manner that would not
jeopardize the characterization of the Exchange as a reorganization within the
meaning of Section 368(a)(1)(B) of the Code.
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2. Ancillary Agreements.
2.1 Noncompetition Agreements. On the Closing Date, as a necessary
incident of the Exchange, Newpark and the Stockholders will execute and deliver
noncompetition agreements substantially as set forth in Exhibit 2.1 attached to
this Agreement (the "Noncompetition Agreements").
2.2 Registration Rights Agreement. On the Closing Date, Newpark will
execute and deliver an agreement substantially as set forth in Exhibit 2.2
attached to this Agreement (the "Registration Rights Agreement") with each of
the Stockholders.
3. Representations and Warranties of the Stockholders.
A. Except as otherwise specifically set forth in a letter ("the
Disclosure Letter") delivered by the Stockholders to Newpark prior to the
execution hereof, the Stockholders 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
Exchange and issue the Newpark Shares):
3.1 Organization and Good Standing of the Companies.
3.1.1 Each Company is a corporation duly organized, validly
existing and in good standing under the laws of its state of incorporation, 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 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 such Company or the nature of the business
transacted by such Company require such qualification, except where failure to
be so qualified would not have a "Material Adverse Effect" (as defined in
Section 18). The Disclosure Letter includes, for each Company, a list of the
jurisdictions in which it is qualified to do business.
3.1.2 The Stockholders have furnished to Newpark complete and
correct copies of each Company's Certificate of Incorporation or Articles of
Incorporation and Bylaws as in effect on the date hereof.
3.1.3 The Stockholders have heretofore made available to Newpark
for its examination copies of the minute books, stock certificate books and
corporate seal of each Company. The minute books of each Company 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
such Company. The stock certificate books of each Company reflect all issu
ances, transfers and cancellations of capital stock of such Company.
3.2 Capitalization.
3.2.1 The authorized capital stock of Contractors consists of
10,000 shares of common stock, $1.00 par value per share, of which 600 shares of
common stock are issued and
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outstanding as of the date hereof. The authorized capital stock of International
consists of 1,000 shares of common stock, without par value, of which 60 shares
of common stock are issued and outstanding as of the date hereof. All such
issued and outstanding shares are validly issued, fully paid and nonassessable.
The Disclosure Letter includes the names, addresses and social security numbers
of, and the number of the Target Shares owned by, each of the Stockholders.
3.2.2 There are no options, warrants, subscriptions or other
rights outstanding for the purchase of, or any securities convertible into,
capital stock of the Companies. Except as set forth in the Disclosure Letter,
no shares of the Companies are held as treasury stock.
3.3 Equity Interests. The Companies do not have a material equity
interest in any other "Person" (as defined in Section 18).
3.4 No Violation. The execution, delivery and performance of this
Agreement by the Stockholders are not contrary to the Articles of Incorporation,
Certificate of Incorporation or By-Laws of the Companies 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 Companies, the Stockholders or any of them are a party or by which any
of them are bound.
3.5 Financial Statements. The balance sheets of each Company as of
December 31, 1994, December 31, 1995 and December 31, 1996, and the related
statements of income, stockholders' equity and cash flows for the years ended
December 31, 1994, December 31, 1995 and December 31, 1996, accompanied by the
reports and opinions of Delhomme & Associates, independent certified public
accountants, and the unaudited consolidated balance sheet of each Company as of
March 31, 1997, and the related statements of income, stockholders' equity and
cash flows for the three month period ended on said date, certified by the
principal financial officer of each 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 such Company in accordance with generally accepted
accounting principles (except for the absence of footnotes from the March 31,
1997, financial statements) consistently applied throughout the periods involved
(except as otherwise noted therein) and present fairly the consolidated
financial position, results of operations and cash flows of each Company for and
as of the end of each of such periods.
3.6 Properties. The Companies have and on the Closing Date will have
good title to the assets and properties shown in the Companies' 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. At the Closing, such title will be free and clear of all liens,
charges, security interests, encumbrances, leases, covenants, conditions and
restrictions other than "Permitted Liens" (as defined in Section 18). The
plants, structures, leasehold improvements, machinery, equipment, furniture and
other tangible assets owned or leased by the Companies 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
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necessary for the operation of the business of the Companies in accordance with
their current methods of operation in all material respects.
3.7 Contracts.
3.7.1 The Disclosure Letter includes a listing with respect to
each Company 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 such Company of an amount or value in excess of
$100,000; (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 $25,000 per year; (g) contracts under
which the performance of any obligation of such Company is guaranteed by a
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 such Company; (i) bank credit, factoring and
loan agreements, indentures, promissory notes and other documents representing
indebtedness in excess of $25,000 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 such Company is a party and which have not
been fully performed, involving consideration having a value in excess of
$100,000 and a remaining period for performance in excess of nine months (all
such items being collectively referred to herein as "Material Contracts"). The
Stockholders have furnished to Newpark true and complete copies of all such
Material Contracts.
3.7.2 All Material Contracts are valid and binding obligations of
the contracting Company listed in the Disclosure Letter and, to the "best of the
knowledge" (as defined in Section 18) of the Stockholders, the other parties
thereto in accordance with their respective terms, subject to the "Bankruptcy
Exception" (as defined in Section 18); 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 such Company
under the terms of any Material Contract; except to the extent specifically
reserved against on the latest balance sheet included in the Companies'
Financial Statements, neither of the Companies is a party to any Material
Contract on which the Stockholders anticipate expenses materially in excess of
revenues or which is otherwise onerous or materially adverse; and the Companies
have not expressly waived any material rights under any Material Contract.
3.8 Outstanding Indebtedness. The Disclosure Letter includes a true
and com plete schedule of all notes payable and other indebtedness in excess of
$25,000 for borrowed
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money owed by the Companies, 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.
3.9 Absence of Undisclosed Liabilities. Except for liabilities and
obligations reflected on the latest balance sheet included in the Companies'
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 Companies do not have, and
none of their 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 Stockholders, the Companies do not
have, and none of their 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 Companies are not in default with respect
to any material term or condition of any indebtedness.
3.10 No Litigation. There are no actions, suits or proceedings
(whether or not purportedly on behalf of the Companies) pending or, to the
knowledge of the Stockholders, threatened against or affecting the Companies, at
law or in equity or before or by any "Government Body" (as defined in Section
18) or before any arbitrator of any kind. To the best of the knowledge of the
Stockholders, the Companies are not in default with respect to any judgment,
order, writ, injunction, decree or award of any Government Body.
3.11 Environmental Matters.
3.11.1 Neither the Companies nor, to the best of the knowledge of
the Stockholders, any previous owner, lessee, tenant, occupant or user of any
real property owned or leased on or prior to the date hereof by the Companies
(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 18) 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 18) in a
manner or to an extent that resulted or is reasonably likely to result in a
Material Adverse Effect. Except as set forth in the Disclosure Letter, to the
best of the knowledge of the Stockholders, 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 previously owned or
leased by the Companies on or prior to the date that fee or leasehold title to
such Property was transferred to a third party by the Companies. Except as set
forth in the Disclosure Letter, to the best of the knowledge of the
Stockholders, 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
Companies.
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3.11.2 While any Property was owned or leased by the Companies,
they 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).
3.11.3 As of the date hereof, to the best of the knowledge of the
Stockholders, 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 Companies or any Property
presently owned or leased by the Companies, (2) claims made or threatened by any
Person or Government Body relating to the Property against the Companies or any
Property presently owned or leased by the Companies 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 Stockholders
on any Property that is currently owned or leased by the Companies that can
reasonably be expected to subject the Companies 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 Stockholders, have been received by or asserted
against the Companies.
3.12 Taxes.
3.12.1 The Companies have filed all income, franchise and other
"Tax Returns" (as defined in Section 18) required to be filed by it by the date
hereof. All "Taxes" (as defined in Section 18) imposed by the United States,
the State of Louisiana and by any other state, municipality, subdivision, or
other taxing authority, which are due and payable by the Companies have been
paid in full or are adequately provided for by reserves reflected on the latest
balance sheet included in the Companies' Financial Statements. International is
an S Corporation under Subchapter S of the Code for federal income Tax purposes
and has maintained its status as an S corporation continuously since inception.
The Stockholders have paid all income Taxes required to be paid by them with
respect to all items of income, net of all deductions, allocable to them for
federal income tax purposes by reason of International's status as an S
Corporation, for each taxable year ended on or before December 31, 1996.
3.12.2 All contributions due from the Companies pursuant to any
unemployment insurance or workers compensation laws and all sales or use Taxes
which are due or payable by the Companies have been paid in full and will be so
paid through the Closing Date. The Companies have 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 their employees under state law and the applicable
provisions of the Code, and the Companies will continue to do so with respect to
all wages paid by them through the Closing Date.
3.12.3 The Stockholders have furnished to Newpark true and
complete copies of the federal income Tax Returns and comparable state Tax
Returns of the Companies covering the years ended December 31, 1993, December
31, 1994 and December 31, 1995, constituting complete and accurate
representations in all material respects of the Tax liabilities
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of the Companies 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.
3.13 Permits and Licenses. The Companies have all licenses,
franchises, permits and other governmental authorizations that are legally
required to enable them to conduct their business in all material respects as
conducted on the date hereof, and the Companies are in compliance in all
material respects with all applicable federal, state and local laws, rules,
regulations and orders relating to their 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 the Stockholders or the Companies, where such violation or default would have
a Material Adverse Effect.
3.14 No Labor Problems. The Companies have not been charged with any
unresolved unfair labor practices. There are no material controversies pending
or threatened between the Companies and any of their employees. The Companies
have 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 Companies have paid all
social security and similar Taxes that are due and payable and are not liable
for any arrears or wages or any Taxes or material penalties for failure to
comply with any of the foregoing.
3.15 Employee Benefit Plans.
3.15.1 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 Companies 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 (including
post-retirement medical), hospitalization, accident, sickness, disability, or
life insurance benefits; and
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(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.
3.15.2 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 Companies are treated as single employer
under Section 414(b), (c), (m) or (o) of the Code.
3.15.3 Identification of Benefit Plans. Except as set forth in the
Disclosure Letter and except for Benefit Plans which have been terminated and
with respect to which neither the Companies nor any ERISA Affiliate has any
liability or obligation, the Companies do not maintain, and have not at any time
established or maintained, nor have at any time been obligated to make
contributions to or under or otherwise participate in any Benefit Plan.
3.15.4 MEPPA Liability/Post-Retirement Medical Benefits/ Defined
Benefit Plans/Supplemental Retirement Plans. Except as set forth in the
Disclosure Letter, neither the Companies 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. Except as set forth in
the Disclosure Letter, neither the Companies 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.
3.15.5 Documentation. The Stockholders have made available to
Newpark a true and complete copy of the following documents, if applicable, with
respect to each Benefit Plan identified in the Disclosure Letter: (1) all
documents, including any insurance contracts and trust agreements, setting forth
the terms of the Benefit Plan, or if there are no such documents evidencing the
Benefit Plan, a full description of the Benefit Plan, (2) the ERISA summary plan
description and any other summary of plan provisions provided to participants or
beneficiaries for each such Benefit Plan, (3) the annual reports filed for the
most recent three plan years and most recent financial statements or periodic
accounting of related plan assets with respect to each Benefit Plan, (4) each
favorable determination letter, opinion or ruling from the IRS for each Benefit
Plan which is intended to satisfy the requirements of Section 401(a) or Section
501 of the Code or which is dependent on such letter, ruling or opinion to avoid
current federal come tax to the beneficiaries of such Benefit Plan, and in (5)
each opinion or ruling from the Department of Labor or the Pension Benefit
Guaranty Corporation ("PBGC") with respect to such Benefit Plans.
3.15.6 Qualified Status. Each Benefit Plan that is funded through
a trust or insurance contract and is intended to satisfy the requirements of
Section 401(a) of the Code, has at all times satisfied in all material respects,
by its terms and to the best knowledge of the Stockholders in its operation, all
applicable requirements under Section 401(a) and related sections of the Code,
and any such trust has been and, at the Closing Date, shall be exempt from
federal income taxation under Section 501(a) of the Code. All such plans have
been operated to the best
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knowledge of the Stockholders in all material respects in accordance with the
applicable requirements of the Tax Reform Act of 1986 and subsequent applicable
legislation.
3.15.7 Compliance. Each Benefit Plan maintained by the Companies
or any ERISA Affiliate has at all times been maintained, to the best knowledge
of the Stockholders, by its terms and in operation, in accordance with all
applicable laws in all material respects, including ERISA and (to the extent
applicable) Code Section 4980B. Further, there has been no failure to comply
with applicable ERISA or other requirements concerning the filing of reports,
documents and notices with the Secretary of Labor and Secretary of Treasury or
the furnishing of such documents to participants or beneficiaries that could
subject any Benefit Plan, the Companies or any ERISA Affiliate to any material
civil or any criminal sanction or could require any such Person to indemnify any
other Person for such a sanction. There are no claims known to the Stockholders
which are pending or threatened against any Benefit Plan except claims for
benefits made in the ordinary course of the operation of such plans.
3.15.8 Funding. The Companies and each ERISA Affiliate have made
full and timely payment of all amounts required to be contributed under the
terms of each Benefit Plan and applicable law or required to be paid as expenses
under such Benefit Plan including, but not limited to, PBGC premiums and amounts
required to be contributed under Section 412 of the Code, and no excise taxes
are assessable as a result of any nondeductible or other contributions made or
not made to a Benefit Plan. With respect to any Benefit Plan that is subject to
Title IV of ERISA, (i) the present value of all accrued benefits under such
Benefit Plan does not exceed the value of the assets of such Benefit Plan
allocated to such accrued benefits, (ii) no amount is due or owing from the
Companies or any ERISA Affiliate to the PBGC or to any multi-employer plan on
account of any withdrawal therefrom, (iii) no such Benefit Plan has incurred any
"accumulated funding deficiency", as such term is defined in Section 412 of the
Code, whether or not waived, since the effective date of such Section 412, (iv)
since September 2, 1974, no such Benefit Plan has been completely or partially
terminated, nor has any notice of intent to terminate been filed or given, other
than in accordance with ERISA or at a time when such Benefit Plan was not
sufficiently funded, (v) there has been no "reportable event" as such term is
defined in Section 4043(b) of ERISA, (vi) there has been no withdrawal by the
Companies or any ERISA Affiliate that is a "substantial employer" from a Benefit
Plan that is a single employer plan that has two or more contributing sponsors,
at least two of whom are not under common control, as referred to in Section
4063(b) of ERISA, and (vii) there has been no cessation by the Companies or any
ERISA Affiliate of operations at a facility causing more than 20% of a Benefit
Plan's participants to be separated from employment, as referred to in Section
4062(f) of ERISA. There are no liens against the property of the Companies or
any ERISA Affiliate under Section 412(n) of the Code or Sections 302(f) or 4068
of ERISA. The Companies' Financial Statements properly reflect all amounts
required to be accrued as liabilities under each Benefit Plan. To the best
knowledge of the Stockholders, the most recent actuarial valuations of the
Companies' Benefit Plans were based on accurate facts and information, and the
Stockholders have no reason to believe that the conclusions set forth in such
valuations are incorrect.
3.15.9 Liabilities. Neither the Companies nor any ERISA Affiliate
is subject to any material liability, tax or penalty whatsoever to any Person
whomsoever as a result of engaging in a prohibited transaction under ERISA or
the Code, and neither the Companies
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nor any ERISA Affiliate has any knowledge of any circumstances which reasonably
might result in any such material liability, tax or penalty, including but not
limited to a penalty under Section 502 of ERISA, as a result of a breach of and
duty under ERISA or any other applicable law. Other than routine claims for
benefits under the Benefit Plans, there are no pending or threatened
investigations, proceedings, claims, lawsuits, disputes, actions, audits or
controversies involving the Benefit Plans, or the fiduciaries, administrators,
or trustees of any of the Benefit Plans, or the Companies or any ERISA Affiliate
as the employer or sponsor under any Benefit Plan, with any of the Internal
Revenue Service, Department of Labor, Pension Benefit Guaranty Corporation, any
participant in or beneficiary of the Benefit Plans or any other Person
whatsoever. The Stockholders know of no reasonable basis for any such claim,
lawsuit, dispute, action or controversy. Except as set forth in the Disclosure
Letter, the execution and performance of the transactions contemplated by this
Agreement will not create, accelerate or increase any obligations under any
Benefit Plan, including any obligation to make any payment which would not be
deductible as an "excess parachute payment" under Section 280G of the Code.
3.16 Insurance. The Stockholders have furnished to Newpark a complete
list of all insurance policies that the Companies maintain, indicating risks
insured against, carrier, policy number, amount of coverage, premiums and
expiration date.
3.17 Tax-Free Reorganization. None of the Stockholders plans or
intends to sell, exchange or otherwise dispose of a number of the Newpark Shares
that would reduce the Stockholders' ownership of Newpark Shares to a number of
shares having a value, as of the Closing Date, of less than fifty percent (50%)
of the value of all of the formerly outstanding Target Shares as of the same
date.
3.18 Interest in Competitors, Suppliers, etc. Except as set forth in
the Disclosure Letter, none of the Stockholders and no officer or director of
the Companies or any "Family Member" (as defined in Section 18) 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 Companies, or (b) has an existing
contractual relationship with the Companies, including but not limited to
lessors of real or personal property leased to the Companies and entities
against whom rights or options are exercisable by the Companies. On the Closing
Date the Companies will own, free and clear and without payment of any royalty
or fee, all interests in the assets, profits or business of the Companies that
are held by any Affiliate of the Companies, including the Stockholders and their
Family Members.
3.19 Indebtedness with Insiders. Except as set forth in the
Disclosure Letter, and except for accrued salaries for one payroll period,
vacation pay and business expense reimbursements, the Companies are not, and, on
the Closing Date, will not be, indebted to any of the stockholders, directors or
officers of the Companies or any Affiliate of any such Person. None of such
Persons is or will be on the Closing Date indebted to the Companies.
11
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.
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 Companies. The Companies own or have the right to use all
Intangible Assets now used in the conduct of their business. Such Intangible
Assets include all of the proprietary products and formulations developed by
each Company or used by it in its business. The Companies are not obligated to
pay any royalty or other fee to any licensor or other third party with respect
to any Intangible Assets. The Stockholders have no knowledge of any claim
received by the Companies alleging any conflict between any aspect of the
business of the Companies and any Intangible Assets claimed to be owned by
others which, if determined adversely to the Companies, would have a Material
Adverse Effect. Neither the Stockholders nor any other officer or director of
the Companies, and no Person that is an Affiliate of any such Person, has any
interest in any Intangibles Assets which are presently used by the Companies or
which infringe upon, conflict with or relate to improvements or modifications of
any Intangible Assets presently used by the Companies.
3.22 Purchases and Sales. Since December 31, 1996, the Companies have
not placed any orders for materials, merchandise or supplies in exceptional or
unusual quantities based upon past operating practices and have 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 Companies nor the
Stockholders (or any Affiliate of the Stockholders) has incurred any liability
to any broker, finder or agent for any brokerage fees, finder's fees or
commissions for which the Companies 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 Companies uniquely,
the Companies have 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 a single transaction or $100,000 in the aggregate, except borrowings
under their bank lines of credit in the ordinary course of business, or incurred
or become subject to any obligation or liability (absolute or contingent) in
excess of $25,000 in a single transaction or $100,000 in the aggregate, except
obligations and liabilities incurred in the ordinary course of business;
12
3.24.3 mortgaged, pledged, hypothecated or otherwise encumbered
any of their 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
Companies 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 their capital stock, whether or not similar to the foregoing,
except as described in Section 4.5;
3.24.5 made any payment of principal or interest on any
indebtedness owed to any past or present stockholder of the Companies or any
Affiliate of any such Person;
3.24.6 sold or agreed to sell any of their assets, properties or
rights having an aggregate value in excess or $100,000 or canceled or agreed to
cancel any debts or claims exceeding $100,000 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 their 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 their properties;
3.24.10 assigned or agreed to assign any of their Intangible
Assets having a value in excess of $100,000;
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 the Companies are 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.
3.25 No Material Misstatements or Omissions. No representation or
warranty by the Stockholders in this Agreement, and no document, statement,
certificate, exhibit or schedule furnished or to be furnished to Newpark
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
13
to make the statements or facts therein, in the light of the circumstances under
which they were made, not misleading.
B. Except as otherwise set forth in the Disclosure Letter, each
Stockholder represents and warrants with respect to himself, severally but not
jointly, the following (the truth and accuracy of each of which shall constitute
a condition precedent to Newpark's obligations to consummate the Exchange and
issue the Newpark Shares):
3.26 Investment Representations. Either such Stockholder is an
"accredited investor", as that term is defined in Rule 501 of the "Rules and
Regulations" (as defined in Section 18) or such Stockholder, either alone or
with such Stockholder's 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 the Newpark Shares. Such Stockholder is acquiring
his Newpark Shares in the Exchange for investment and not with a view to the
sale thereof other than in compliance with the requirements of the "Securities
Act" (as defined in Section 18) and applicable Blue Sky laws. At the request of
Newpark, each Stockholder will furnish to Newpark evidence reasonably
satisfactory to Newpark that the foregoing representations are true.
3.27 Enforceability. This Agreement has been duly and validly executed
by such Stockholder, and this Agreement constitutes a legal, valid, and binding
obligation of such Stockholder, enforceable against him in accordance with its
terms, subject to the Bankruptcy Exception. Such Stockholder has the requisite
power to enter into this Agreement and perform his obligations hereunder
(including without limitation to sell and deliver his Target 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 the Stockholder to sell and deliver his Target 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 Stockholders, threatened in any court or arbitration forum or by or
before any Government Body involving the Companies or such Stockholder relating
to or affecting any of the transactions contemplated by this Agreement.
3.29 Title to Shares. Each Stockholder is the holder of record and
owns beneficially that number of Target Shares set forth opposite his name in
the Disclosure Letter. At the Closing, each Stockholder will own the Target
Shares set forth in the Disclosure Letter free and clear of all liens, security
interests, encumbrances and restrictions, other than restrictions contemplated
by this Agreement. Except as set forth in the Disclosure Letter, no Stockholder
is a party to any voting trust, proxy or other agreement with respect to the
voting of any of such Target Shares.
4. Additional Obligations and Covenants of the Stockholders.
Except as otherwise provided in the Disclosure Letter, the
Stockholders hereby jointly and severally covenant and agree with Newpark as
follows (the fulfillment of each such
14
covenant and agreement is a condition precedent to Newpark's obligations to
consummate the Exchange and issue the Newpark Shares):
4.1 Conduct of Business. Between the date hereof and the Closing
Date, the Stockholders will and will cause the Companies to comply with the
following:
4.1.1 The business of the Companies shall be conducted diligently
and only in the ordinary course, and the Stockholders will use reasonable
efforts to preserve the organization of the Companies intact, to keep available
to the Companies their present key employees and to maintain the Companies'
relationships with their suppliers, customers and others. The Companies will
not, without Newpark's prior written approval, increase the rate of compensation
payable or to become payable to any of their officers, employees, consultants or
agents over the rate being paid to them at the date hereof, except for normal
merit or cost of living increases to employees other than officers of the
Companies.
4.1.2 Without Newpark's prior written approval, no amendment will
be made to any Benefit Plan, no commitment will be made to amend any Benefit
Plan and no commitment will be made to continue any Benefit Plan or to adopt any
new compensatory plan, fund or program for the benefit of any employees of the
Companies or any ERISA Affiliate.
4.1.3 The Companies will not, without Newpark's prior written
approval, enter into any Material Contract other than in the ordinary course of
business or enter 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.
4.1.4 The Companies will not, without Newpark's prior written
approval, sell or dispose of any of their material properties or assets except
for sales at fair value in the ordinary course of business.
4.1.5 The Companies will not, without Newpark's prior written
approval, acquire or enter into any agreement to acquire, by merger,
consolidation, purchase of stock or assets or otherwise, any business or entity.
4.1.6 The Companies will use reasonable diligence to maintain
their properties in their condition as of the date of this Agreement, ordinary
wear and tear excepted.
4.1.7 The Companies will continue to carry their existing
insurance policies subject only to variations in amounts required by the
ordinary operations of their business. At the request of Newpark and at its
sole expense, the amount and scope of said insurance shall be increased by such
amounts and extended to provide coverage against such risks as Newpark shall
specify.
4.2 Access and Information. Subject to the execution by Newpark of a
confidentiality agreement in form and substance reasonably satisfactory to the
Stockholders, the Stockholders will afford to Newpark and Newpark's counsel,
accountants and other representatives
15
reasonable access, throughout the period from the date hereof to the Closing
Date, to all of the Companies' properties, books, contracts, commitments, and
records and shall furnish Newpark during such period with all information that
Newpark reasonably may request, including copies and/or extracts of pertinent
records, documents and contracts. The Stockholders will furnish to Newpark
copies of the Companies' state and federal income Tax Returns for the year ended
December 31, 1996, as soon they are available; the representations and
warranties contained in Paragraph 3.12.3 above will apply to such Tax Returns.
4.3 Efforts to Satisfy Conditions. The Stockholders agree to use
reasonable efforts to satisfy or cause to be satisfied all of the conditions
precedent to Newpark's obligations under this Agreement, to the extent that
their action or inaction can control or influence the satisfaction of such
conditions. Without limiting the generality of the foregoing the Stockholders
will and will cause the Companies to refrain from all negotiations and
transactions, the con summation of which would be inconsistent with the
transactions contemplated by this Agreement, including, without limitation, any
transaction providing for the sale of any capital stock of the Companies, any
merger or other business combination involving the Companies, the acquisition of
a substantial equity interest in the Companies by a third party or the sale of a
substantial portion of the assets of the Companies.
4.4 Corporate Matters. Between the date hereof and the Closing Date,
the Stockholders will cause the Companies not to, without Newpark's prior
written approval: (a) amend their Articles of Incorporation, Certificate of
Incorporation or Bylaws; (b) issue any shares of its capital stock; (c) issue or
create any warrants, obligations, subscriptions, options, convertible securities
or other commitments under which any additional shares of their capital stock of
any class might be directly or indirectly authorized, issued or transferred from
treasury; or (d) enter into any agreement requiring them to do any of the
foregoing prohibited acts.
4.5 No Distributions to Stockholders. Between the date hereof and
the Closing Date, the Stockholders will cause the Companies not to, without
Newpark's prior written approval: (a) declare, set aside or pay any dividend or
make any distribution in respect of their capital stock, except that
International may make a distribution (the "Distribution") to the Stockholders
on or before the Closing Date, payable after the Closing Date, in an amount
equal to 39.6% of each Stockholders' prorata share of the net profits of the
International from January 1, 1997 through April 30, 1997 (the "Short Period
Income Taxes"); (b) directly or indirectly purchase, redeem or otherwise acquire
any shares of their capital stock for consideration; (c) pay or distribute any
cash or property to any Stockholder as a loan or in payment of principal of or
interest on any indebtedness to any Stockholder; or (d) enter into any agreement
requiring it to do any of the foregoing prohibited acts.
4.6 Capital Expenditures. Between the date hereof and the Closing
Date, the Stockholders will cause the Companies not to, without Newpark's prior
written approval, make any commitment for capital expenditures in excess of an
aggregate of $100,000.
4.7 Indebtedness. Between the date hereof and the Closing Date, the
Stockholders will cause the Companies not to, without Newpark's prior written
approval: (a) create, incur or assume any long-term debt (including capital
leases that individually involve
16
annual payments in excess of $100,000) or, except in the ordinary course of
business under existing lines of credit, create, incur or assume any short-term
debt for borrowed money in excess of $25,000 in a single transaction or $100,000
in the aggregate; (b) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the obligations of
any other Person (except in the ordinary course of business and consistent with
past practice); (c) make any loans or advances to any Person except in the
ordinary course of business and consistent with past practice; or (d) make any
capital contributions to, or investments in, any Person except in the ordinary
course of business and consistent with past practice.
5. 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
Stockholders' obligations to consummate the Exchange):
5.1 Organization and Good Standing.
5.1.1 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.
5.1.2 Newpark has furnished to the Stockholders complete and
correct copies of Newpark's Certificate of Incorporation and Bylaws as in effect
on the date hereof.
5.2 Capital Stock. The authorized capital stock of Newpark consists
of 20,000,000 shares of Common Stock, $.01 par value, of which 15,175,438 shares
were issued and outstanding on March 24, 1997, and 1,000,000 shares of Preferred
Stock, $.01 par value, of which no shares are issued and outstanding. Newpark's
Board of Directors and stockholders have approved amendments to Newpark's
Certificate of Incorporation to increase the number of authorized shares of
Common Stock to 80,000,000 and to effect a two-for-one split of the Common
Stock, both to take effect on May 30, 1997.
5.3 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.
17
5.4 Authority. The execution and delivery of this Agreement by
Newpark and the consummation of the transactions contemplated hereby have been
duly authorized by the Board of Directors of Newpark. This Agreement has been
duly executed and delivered to the Stockholders and no vote of the stockholders
of Newpark or further corporate action is necessary on the part of Newpark to
make this Agreement valid and binding upon Newpark in accordance with its terms,
subject to the Bankruptcy Exception. The execution, delivery and performance of
this Agreement by Newpark are not contrary to the Certificate of Incorporation
or Bylaws of Newpark 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 contract or agreement to which Newpark is a party or by which Newpark is
bound.
5.5 Newpark Reports. Newpark has delivered to the Stockholders
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" (as defined in Section 18) 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.
5.6 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.
5.7 No Litigation. Except as disclosed in the Newpark Reports or
omitted therefrom in accordance with the Rules and Regulations: (a) there are no
actions, suits or proceedings (whether or not purportedly on behalf of Newpark
or any Newpark Subsidiary) pending or, to the "knowledge of Newpark" (as defined
in Section 18), threatened against or affecting Newpark or any Newpark
Subsidiary, at law or in equity or before or by any
18
Government Body or before any arbitrator of any kind; and (b) to the best of the
knowledge of Newpark, neither Newpark nor any Newpark Subsidiary is in default
with respect to any judgment, order, writ, injunction, decree, award of any
court, arbitrator or Government Body.
5.8 Newpark Benefit Plans. Newpark has made available to the
Stockholders a true and complete copy of the ERISA summary plan description and
any other summary of plan provisions provided to participants or beneficiaries,
if applicable, for each Benefit Plan (as defined in Section 3.15.1, substituting
"Newpark" for "the Companies") maintained by Newpark.
5.9 Environmental Matters. Newpark and the Newpark Subsidiaries have
complied in all material respects with all Hazardous Materials Laws applicable
to their properties and business. Neither Newpark nor, to the best of Newpark's
knowledge, any Newpark Subsidiary has received any complaint, order or similar
notice that it is not in compliance with any Hazardous Materials Laws or that
any Government Body is investigating its compliance with any Hazardous Materials
Laws, except as disclosed in the Newpark Reports or omitted therefrom in
accordance with the Rules and Regulations and except for routine inspections and
investigations in connection with applications by Newpark and the Newpark
Subsidiaries for additional permits or authorizations. Newpark has no knowledge
of any material violation of any Hazardous Materials Laws on or about its
properties or the properties of any Newpark Subsidiary.
5.10 Absence of Certain Changes. Since December 31, 1996, 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, which, in the aggregate, have a Material Adverse
Effect.
5.11 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 such qualifications as may be required
under state securities or Blue Sky laws relating to the Newpark Shares.
5.12 No Material Misstatements or Omissions. No representation or
warranty by Newpark in this Agreement, and no document, statement, certificate,
exhibit or schedule furnished or to be furnished to the Stockholders 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 therein not misleading.
6. Additional Obligations and Covenants of Newpark.
Newpark hereby covenants and agrees with the Stockholders as follows
(the fulfillment of each such covenant and agreement is a condition precedent to
the Stockholders' obligations to consummate the Exchange):
19
6.1 Efforts. Newpark agrees to use reasonable efforts to satisfy or
cause to be satisfied all of the conditions precedent to the Stockholders'
obligations under this Agreement, to the extent that its action or inaction can
control or influence the satisfaction of such conditions.
6.2 Additional Information. Newpark will make available to each
Stockholder the opportunity to ask questions and receive answers concerning the
terms and conditions of the Exchange and to obtain any additional information
that Newpark is required to furnish under Regulation D of the Rules and
Regulations.
6.3 Issuance and Listing of Stock. Newpark has reserved for
issuance, and, as and when required by the provisions of this Agreement, will
issue the Newpark Shares, and the Newpark Shares, when so issued, will be
validly issued, fully paid and nonassessable. Newpark will use its best efforts
to list the Newpark Shares on the New York Stock Exchange.
6.4 Exemption for Issuance of Newpark Shares. Newpark will use all
reasonable efforts to qualify the issuance of the Newpark Shares in connection
with the Exchange under Rule 506 of the Rules and Regulations and, if necessary,
to qualify the issuance thereof pursuant to all applicable state securities or
Blue Sky laws.
6.5 Continuing Employees. Each employee of the Companies who
continues immediately after the Closing Date as an employee of the Companies,
Newpark, or any of its subsidiaries ("Continuing Employee") shall be treated
under Newpark's compensation, benefit plans and employment policies and
practices on a basis which Newpark deems no less favorable than an employee of
Newpark who performs comparable duties and responsibilities for Newpark on an
equally satisfactory basis. Each Continuing Employee shall receive service
credit for all purposes (including, but not limited to, vesting, eligibility and
benefit accrual) under Newpark's "Benefit Plans" (as defined in Section 3.15.1,
substituting "Newpark" for "the Companies") and under any Benefit Plan adopted
in the future for service completed with the Companies as if such service had
been completed with Newpark except that (a) no such employee shall receive such
past service credit under a future Benefit Plan except on the same basis that
Newpark's employees also receive past service credit under such plan, and (b) no
such past service credit will be provided under a plan if the Internal Revenue
Service determines that such credit would adversely affect the tax qualified
status of such plan under Section 401 of the Code.
6.6 Stockholder Guarantees. Subject to consummation of the Exchange,
Newpark agrees that, after the Closing Date, it will cause the Companies to
discharge in accordance with its terms all indebtedness of the Companies as to
which the Stockholders have executed personal guarantees, as disclosed in the
Disclosure Letter.
7. Conditions to Each Party's Obligations.
The respective obligations of each party to consummate the Exchange
under this Agreement shall be subject to the satisfaction on or before the
Closing Date of each of the following conditions except to the extent the
parties may waive any of such conditions in writing:
20
7.1 Securities Laws. All applicable Blue Sky and state securities
laws shall have been complied with in connection with the issuance of the
Newpark Shares, and no stop order suspending the qualification or registration
of the Newpark Shares under the Blue Sky laws of any jurisdiction shall have
been issued and no proceeding for that purpose shall have been initiated or
shall be threatened by the authorities of any such jurisdiction.
7.2 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 or
the operation of the business of the Company following the Closing Date 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 Date.
7.3 Injunction. At the Closing Date 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 Exchange 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.
7.4 Tax Opinion. The Stockholders and Newpark shall each have
received a written opinion of Xxxxx, Xxxxx & Xxxxxx LLP, in form reasonably
satisfactory to the Stockholders and Newpark (the "Tax Opinion"), to the effect
that (a) the Exchange will constitute a reorganization within the meaning of
Section 368(a)(1)(B) of the Code, (b) the exchange of the Target Shares for
Newpark Shares will not give rise to gain or loss to the Stockholders, (c) the
basis of Newpark Shares received in the Exchange by a Stockholder will be the
same as the basis of such Stockholder in Target Shares which were exchanged for
such Newpark Shares, and (d) the holding period for Newpark Shares received in
the Exchange by a Stockholder will include the holding period of such
Stockholder in Target Shares which were exchanged for such Newpark Shares. In
connection with such tax opinion, Xxxxx, Xxxxx & Xxxxxx LLP shall be entitled to
make factual assumptions as are customary in similar tax opinions, and such
factual assumptions shall be confirmed by certificates signed by the
Stockholders and by responsible officers of the Companies and Newpark.
7.5 Listing of Newpark Shares. The Newpark Shares shall have been
listed on the New York Stock Exchange, subject to official notice of issuance.
8. Conditions Precedent to Obligations of Newpark.
The obligations of Newpark to consummate the Exchange and issue the
Newpark Shares are subject to the satisfaction of each of the additional
following conditions at or prior to the Closing, unless waived in writing by
Newpark:
8.1 Investigation of the Companies. Newpark shall have made an
investigation of the business, properties (tangible and intangible), products,
customers, plants, contracts and
21
financial condition of the Companies and shall have been satisfied with the
results of such investigation. This condition shall be deemed satisfied unless
Newpark notifies the Stockholders in writing within thirty (30) days of the date
hereof that it is dissatisfied with the results of such investigation.
8.2 Accuracy of Warranties and Representations. The
representations and warranties of the Stockholders herein shall be true and
correct in all material respects on and as of the Closing Date, with the same
force and effect, except as to transactions permitted herein or to which Newpark
may have consented in writing and changes occurring in the ordinary course of
business after the date of this Agreement and not materially adversely affecting
the Companies, or their properties, prospects, or financial condition, as though
such representations and warranties had been made on and as of the Closing Date,
and the Stockholders shall have performed in all material respects all covenants
required by this Agreement to be performed by them at or prior to the Closing.
8.3 No Material Adverse Change. There shall have been no changes
after the date of this Agreement in the results of operations, assets,
liabilities, financial condition or affairs of the Companies which in their
total effect have been materially adverse to the Companies.
8.4 Stockholders' Certificate. The Stockholders shall have delivered
to Newpark a certificate, dated the Closing Date, executed by each of the
Stockholders, individually, stating that, to the best knowledge of each, (a) all
the representations and warranties of the Stockholders contained in this
Agreement are true and accurate, (b) all of the conditions precedent to the obli
gations of Newpark hereunder have been fulfilled and (c) the Companies and the
Stockholders have duly performed all obligations and covenants to be performed
by them hereunder.
8.5 Material Contracts. The Companies 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 Date.
8.6 Opinion of the Stockholders' Counsel. Newpark shall have
received an opinion of Beyt & Beyt, dated the Closing Date, substantially in the
form attached hereto as Exhibit 8.6.
8.7 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
Stockholders certified copies of such corporate records of the Companies and
copies of such other documents as such counsel may reasonably have requested for
such purpose.
22
9. Conditions Precedent to Obligation of the Stockholders.
The obligations of the Stockholders to consummate the Exchange are
subject to the satisfaction of each of the following additional conditions at or
prior to the Closing, unless waived in writing by the Stockholders:
9.1 Accuracy of Warranties and Representations. The representations
and warranties of Newpark contained in this Agreement shall be true and correct
in all material respects on and as of the Closing Date, with the same force and
effect as though such representations and warranties had been made on and as of
the Closing Date, and Newpark 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.
9.2 Authorization of Exchange. 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.
9.3 No Material Adverse Change. There shall have been no changes
since December 31, 1996, in the results of operations, financial condition,
liquidity, assets, properties or business of Newpark and its subsidiaries, taken
as a whole.
9.4 Officers' Certificate of Newpark. Newpark shall have delivered
to the Stockholders a certificate dated the Closing Date, signed by the
President and Chief Financial Officer of Newpark and stating that, to the best
knowledge of each, (a) all the representations and warranties of Newpark
contained in this Agreement are true and accurate, (b) all of the conditions
precedent to the obligations of the Stockholders hereunder have been fulfilled
and (c) Newpark has duly performed all obligations and covenants to be performed
by it hereunder.
9.5 Opinion of Newpark's Counsel. The Stockholders shall have
received an opinion of Xxxxx, Xxxxx & Xxxxxx LLP, dated the Closing Date,
substantially in the form attached hereto as Exhibit 9.5.
9.6 Other Legal Matters. All legal matters in connection with this
Agreement and the transactions contemplated hereby shall have been approved by
counsel for the Stockholders, 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 Exchange Agreements) and
copies of such other documents as such counsel may reasonably have requested for
such purpose.
10. Closing.
The closing ("Closing") of the transactions covered by this Agreement
shall take place at 10:00 a.m., on May 29, 1997, at the offices of Newpark, 0000
Xxxxx Xxxxxxxx, Xxxxx 0000, Xxxxxxxx, XX 00000. If the conditions specified in
this Agreement have not been fulfilled by that date, any party may postpone the
Closing for the minimum reasonably necessary period or periods, in any event not
exceeding an aggregate of 45 days, by written notice to the other
23
parties. Any party exercising such right shall deliver written notice to the
other parties specifying in reasonable detail the condition which has not been
fulfilled, and the other parties will have the right to cure or correct the
matter within the 45-day period. The term "Closing Date" herein shall mean the
last date fixed by mutual agreement or otherwise under this Section.
11. Survival of Representations.
Except as otherwise provided herein, all representations, warranties
and indemnifications made by the Stockholders or Newpark under or in connection
with this Agreement (including any representations and warranties set forth in
the certificates delivered pursuant to Sections 8.4 and 9.4) shall survive the
Closing until 24 months after the Closing Date. The representations and
warranties of the Stockholders set forth in Paragraphs 3.11, 3.12, 3.15 and 3.29
shall survive until the expiration of the applicable statute of limitations.
Neither party shall be entitled to recover against the other 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 13.3.3 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" (as defined in Section 18).
12. Post-Closing Covenants.
12.1 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 Stockholders and Newpark which are based upon contracts,
arrangements or acts of the Stockholders or the Companies or both which were in
effect or occurred on or prior to the Closing.
12.2 Access to Records. The Stockholders 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
Companies which relate to periods prior to the Closing. Newpark shall retain
such business records for a period of five (5) years following the Closing Date,
after which time Newpark may destroy or otherwise dispose of such business
records without the Stockholders' consent.
12.3 Tax Matters.
12.3.1 Control of Tax Proceedings. Whenever any taxing authority
asserts a claim, makes an assessment, or otherwise disputes the amount of Taxes
for any period prior to the Closing Date Newpark shall promptly inform the
Stockholders. The provisions of Section 13 shall apply to the defense of any
such claim, assessment or dispute.
12.3.2 Current Tax Returns. The Stockholders shall be responsible
for the preparation and filing of all Tax Returns for all taxable periods that
end or ended on or before
24
the Closing Date. Newpark will make available to the Stockholders, without
charge, the services of its personnel and the personnel of the Companies to
assist the Stockholders in the preparation of such Tax Returns. Such Tax
Returns shall be reasonably satisfactory to Newpark in form and substance. The
Stockholders shall each pay their prorata portion of the Short Period Income
Taxes.
12.3.3 Refunds and Credits. Subject to the provisions of Section
12.3.2 above, any refunds and credits of federal income Taxes paid by
Contractors attributable to any taxable year ending on or before the Closing
Date shall be for the account of Contractors, and any refunds and credits of
federal income Taxes paid by the Stockholders with respect to International that
is attributable to any taxable year ending on or before the Closing Date shall
be for the account of the Stockholders; any refunds and credits of other Taxes
attributable to any taxable year ending on or before the Closing Date for either
Contractors or International shall be for the account of such Company; to the
extent that any such refund of Taxes that is for the account of a Company
exceeds the amount, if any, accrued on the books of such Company with respect to
the period for which the refund is received, the Stockholders shall receive
credit against any liability they may have under Section 13.
12.3.4 Cooperation. Newpark and the Stockholders shall cooperate
with each other in a timely manner in the preparation and filing of any Tax
Returns, payment of any Taxes in accordance with this Agreement, and the conduct
of any audit or other proceeding. Each party shall execute and deliver such
powers of attorney and make available such other documents as are necessary to
carry out the intent of this Section 12.3.4. Each party agrees to notify the
other party of any audit adjustments that do not result in Tax liability but can
be reasonably expected to affect Tax Returns of the other party.
12.3.5 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 or the audit of such
returns, and (ii) give to the Stockholders 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 review or audit of such returns to the extent relevant to an obligation or
liability of a party under this Agreement.
13. Indemnifications.
13.1 Indemnification by the Stockholders. Subject to the provisions
of Sections 11 and 13.3, the Stockholders, jointly and severally, hereby agree
to indemnify, defend, protect and hold harmless Newpark against:
(a) all damages, losses, liabilities, costs and expenses (including
reasonable attorneys' fees) resulting from any and all breaches of warranty or
representation made by them under or in connection with this Agreement; and
(b) all damages, losses, liabilities, costs and expenses (including
reasonable attorneys' fees) resulting from the claims listed in Item 3.10 of the
Disclosure Schedule, all claims
25
for personal injury or workers' compensation benefits that were asserted against
the Companies before the Closing Date and are not listed in the Disclosure
Letter and all claims for personal injury or workers' compensation benefits that
are asserted against the Company on or after the Closing Date for occurrences
and conditions attributable to any period prior to the Closing Date, but only to
the extent that such damages, losses, liabilities, costs and expenses paid after
May 15, 1997, exceed $200,000.
Such indemnification shall be solely the responsibility of the Stockholders, and
they shall not have any right to recover any portion of their liability from the
Companies, whether by right of indemnification, contribution or otherwise.
13.2 Indemnification by Newpark. Subject to the provisions of
Sections 11 and 13.3, Newpark hereby agrees to indemnify, defend, protect and
hold harmless the Stockholders 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 the
Stockholders, and the Companies shall have no interest therein.
13.3 Indemnification Procedures and Limitations. The following
provisions shall apply to all indemnification and hold harmless provisions of
this Agreement:
13.3.1 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.
13.3.2 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
consulting the Indemnitor, to settle or compromise such claim on any terms
reasonably approved by the Indemnitee.
13.3.3 Neither Newpark nor the Stockholders 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 them hereunder exceeds an aggregate
26
of $50,000. This $50,000 floor does not apply to the Stockholders' liability
under Paragraph 13.1(b). In no event shall the liability of any of the
Stockholders for any breach of warranty or representation hereunder exceed the
value of the Newpark Shares for which his Target Shares are exchanged in the
Exchange, for which purpose they shall be valued at their Closing Value. To the
fullest extent permitted by law, Stockholders shall satisfy their 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 any of the Stockholders or Newpark of any liability he or
it may have for any intentional breach of representation or warranty.
13.3.4 In determining the amount of any damage, loss, liability,
cost or expense suffered by Newpark which gives rise to liability of the
Stockholders 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 the Stockholders.
13.4 Dispute Resolution; Arbitration.
13.4.1 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. Newpark and the Stockholders 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 Lafayette,
Louisiana, in accordance with the provisions of this Agreement and, to the
extent not inconsistent with such provisions, the Commercial Arbitration Rules
of the American Arbitration Association. To the extent lawful, the arbitrators,
in their discretion, may shorten any time periods or notice periods specified by
law, in the interest of timely completing arbitration and issuing their award.
13.4.2 The Stockholders, as one party, or Newpark may initiate
arbitration of a dispute by giving the other party written notice of
arbitration, which shall specify with reasonable detail (a) the issue in
dispute, (b) the claims asserted and (c) the remedy sought by the party invoking
arbitration. The arbitration shall be conducted before a single neutral
arbitrator if the parties are able to agree on one arbitrator. If they are
unable so to agree and do not agree otherwise, arbitration shall be conducted by
a panel of three neutral arbitrators. None of the arbitrators shall be
affiliated in any way with either of the parties or have any direct or indirect
financial interest in the outcome of the arbitration. If the parties fail to
reach agreement upon a single arbitrator within 5 business days following
receipt by one party of the other party's notice of arbitration, the initiating
party shall submit in writing to the other party the name of a neutral
arbitrator selected by the initiating party. Within 5 business days after such
name is submitted,
27
the other party shall submit to the initiating party in writing the name of a
neutral arbitrator selected by such other party and may submit an answering
statement. Within 10 days after appointment of the second arbitrator, the two
arbitrators appointed by the parties shall select a third neutral arbitrator;
the three arbitrators so selected shall finally resolve the dispute. If the two
arbitrators appointed by the parties fail before the end of said 10 day period
to agree on a third arbitrator, the 15th Judicial District Court, Parish of
Lafayette, State of Louisiana, shall, upon the filing of a petition by any of
the parties hereto select the third arbitrator from a list of five individuals
obtained by the Court from the New Orleans office of the American Arbitration
Association. If the non-initiating party shall fail to appoint an arbitrator
within 10 days after the name of the arbitrator selected by the initiating party
is submitted, the arbitrator appointed by the initiating party shall be
empowered to proceed to arbitrate and determine the matter in controversy as the
sole arbitrator. All references to "the arbitrators" in the following Sections
shall be deemed to refer to the sole arbitrator, if there is only one
arbitrator. The arbitrators shall, at the earliest possible date, set dates for
a hearing and establish any pre-hearing conferences or procedural schedules that
the arbitrators deem appropriate. The arbitrators may authorize depositions and
issue subpoenas and make other decisions provided for in Section 13.4.3 below.
All decisions of the arbitrators shall be by a majority of the arbitrators,
unless the parties agree otherwise.
13.4.3 It is the mutual intention of the parties that discovery,
if any, shall be limited in nature and scope and, to the extent possible, shall
be handled informally and by agreement. Any dispute regarding discovery shall be
submitted promptly to the arbitrators and shall be resolved by them. If
necessary, any decision of the arbitrators respecting discovery may be enforced
by any court of competent jurisdiction in the same manner as a final award under
this Section, including an order for specific performance.
13.4.4 The arbitrators shall diligently, expeditiously and in
good faith decide the matter under consideration in accordance with the laws of
the State of Louisiana, excluding its choice of law rules. If there is only one
arbitrator, his decision shall be final, conclusive and binding on all parties;
if there are three arbitrators, the agreed decision of any two of them 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 15th
Judicial District Court, Parish of Lafayette, State of Louisiana.
13.4.5 The arbitrators' compensation shall be agreed upon by the
parties and the arbitrators. The terms of compensation for each of the
arbitrators shall be identical. The parties shall share equally the cost of the
arbitration proceedings, including the fees and expenses of the arbitrators and
the cost of the stenographic record, provided that the arbitrators shall have
discretion to charge such costs to the parties in such different proportions as
they determine to be appropriate.
13.4.6 If any other provision of this Agreement should be or
become invalid or unenforceable by force of law, the provisions of this Section
13.4 shall not be affected but shall remain in full force and effect. Any
obligation to arbitrate which is established by this
28
Section shall remain in full force and effect. Any obligation to arbitrate
which is established by this Section shall not be extinguished upon the
termination or expiration of this Agreement but shall survive that event.
14. Destruction of Assets.
All risk of loss with respect to the assets and business of the
Companies shall be borne by the Stockholders until the Closing to the extent set
forth in this Section 14. If on the Closing Date any assets of the Companies
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 Companies (whether or not similar to the foregoing) to an
extent which materially affects the value to Newpark of the Target Shares,
Newpark shall have the right at its election to complete the acquisition (in
which event, as Newpark's sole and exclusive remedy with respect to the
consequences of such loss or damage, all claims of the Companies with respect to
such loss or damage and all insurance proceeds arising therefrom shall be for
the account of the Companies), 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.
15. Termination.
In addition to any party's right to terminate this Agreement if any
condition precedent to its obligations is not satisfied on the Closing Date,
subject to the provisions of this Agreement relating to the postponement of the
Closing Date, either Newpark or the Stockholders 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 Stockholders) shall
be pending against either party on the Closing Date 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.
16. 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 16 by giving notice of such
change to the other party in the manner which is provided in this Section 16.
29
Stockholders: Xx. Xxxx X. Xxxxxxxx
Xx. Xxxxx X. Xxxxxx
Xx. Xxxxx X. Xxxxxx
c/o Supreme Contractors, Inc.
000 Xxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
With a copy to:
Xxxxxxx Xxxx, Esq.
Beyt & Beyt, a Professional Corporation
000 X. Xxxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Newpark: c/o Newpark Resources, Inc.
0000 Xxxxx Xxxxxxxx, Xxxxx 0000
Xxxxxxxx, XX 00000
Attention: Secretary
Facsimile No.: (000) 000-0000
With a copy to:
Xxxxxxx X. Xxxxxxx, Esq.
Xxxxx, Xxxxx & Xxxxxx LLP
0000 Xxxxxxxx Xxxxxxxxx, 0xx Xxxxx
Xxxxxxx Xxxxx, XX 00000
Facsimile No.: (000) 000-0000
17. Assignment.
Rights hereunder shall not be assignable and duties hereunder shall
not be delegable by the Stockholders or Newpark without the prior written
consent of the other; consent may be withheld for any reason or without reason.
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.
18. 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,
30
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 ending three trading days prior to the
Closing Date.
"Commission" means the U.S. Securities and Exchange Commission.
"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 Closing Date 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
31
of "hazardous substances," "hazardous wastes," "hazardous materials," or "toxic
substances" under the Hazardous Materials Laws.
"Knowledge of the Stockholders" (and similar terms such as "to the
best of the knowledge of the Stockholders") means the actual knowledge of the
Stockholders or any other executive officer of the Companies.
"Knowledge of Newpark" (and similar terms such as "to the best of the
knowledge of Newpark") means the actual knowledge of any executive officer of
Newpark.
"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 Companies 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 Companies' 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 subject thereto, and (d) liens for current taxes
not delinquent, for which adequate reserves or other appropriate provisions have
been made in the Companies' 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 Government Body 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.
19. 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 Louisiana applicable to contracts made
and to be wholly performed within said State.
32
20. Remedies Not Exclusive.
Except as provided in Section 14, (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.
21. Attorneys' Fees.
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.
22. Payment of Expenses. Whether or not the Exchange 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 Stockholders will pay and be responsible for all costs and
expenses incurred by the Companies and the Stockholders in connection with this
Agreement and the transactions contemplated hereby.
23. 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.
24. 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.
25. 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.
26. 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.
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27. Waivers.
At any time prior to the Closing Date, 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.
28. 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.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first above written.
NEWPARK: STOCKHOLDERS:
NEWPARK RESOURCES, INC.
By: /s/ Xxxxx X. Xxxx /s/ Xxxx X. Xxxxxxxx
------------------------------ ------------------------------
Name: Xxxxx X. Xxxx Xxxx X. Xxxxxxxx
Title: President and Chief
Financial Officer
/s/ Xxxxx X. Xxxxxx
------------------------------
Xxxxx X. Xxxxxx
/s/ Xxxxx X. Xxxxxx
-------------------------------
Xxxxx X. Xxxxxx
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