EXHIBIT 2.21
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION ("Agreement") is made and
entered into as of July 24, 1997, by and among (a) NEWPARK RESOURCES, INC., a
Delaware corporation ("Newpark"), (b) NEWPARK DRILLING FLUIDS, INC., a Texas
corporation formerly known as Xxxxxx Xxxxx Xxxxxx Drilling Fluids Management,
Inc. and a wholly-owned subsidiary of Newpark ("Fluids"), (c) ADVANCED CHEMICAL
TECHNOLOGIES, INC., a Texas corporation (the "Company"), and (d) XXXX X. XXXXXXX
and S. XXX XXXXXXX (each a "Stockholder" and, together, the "Stockholders"),
with reference to the following facts:
A. The Stockholders own beneficially and of record 100% of the
outstanding capital stock (the "Company Shares") of the Company.
B. The Company provides drilling fluids and related products and
services to the oil and gas industry.
C. The parties intend that this Agreement shall constitute a plan of
reorganization (the "Plan") of the type described in Section 368(a)(1)(A) and
Section 368(a)(2)(D) of the Internal Revenue Code of 1986, as amended (the
"Code") and that the Plan will qualify for "pooling of interests" accounting
treatment under generally accepted accounting principles. The Plan comprises
(a) the merger (the "Merger") of the Company into Fluids, with Fluids continuing
as the surviving corporation, pursuant to this Agreement and the Agreement of
Merger in the form attached hereto as Exhibit "A" (the "Agreement of Merger"),
on the terms contained herein and in accordance with the applicable provisions
of the Texas Business Corporation Act (the "BCA"), and (b) the conversion of all
the outstanding shares of capital stock of the Company into 60,000 newly issued
shares of voting Common Stock of Newpark (the "Newpark Shares"). The
consummation of the Plan in accordance with the terms of this Agreement and the
Agreement of Merger is sometimes referred to herein as the "Closing."
D. Newpark and the Stockholders believe that it is in their best
interests to adopt the Plan and consummate the Plan.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties agree as follows:
1. Plan of Reorganization.
1.1 Adoption of Plan. Newpark, Fluids, the Company and the
Stockholders hereby adopt the plan of reorganization herein set forth.
1.2 Merger of the Company into Fluids. Subject to the provisions
of this Agreement and the BCA, at the "Effective Time" (as defined in paragraph
1.3), the Company shall be merged with and into Fluids, and the separate
corporate existence of the Company shall cease. Fluids shall be the surviving
corporation in the Merger (hereinafter sometimes called the "Surviving
Corporation") and shall continue its corporate existence under the laws of the
State of Texas. The Merger shall have the effects set forth in Article 5.06 of
the BCA.
1.3 Effective Time. If all of the conditions precedent to the
parties' obligations to consummate the Merger under this Agreement are satisfied
or waived and this Agreement has not been terminated, the parties shall cause
the Agreement of Merger to be duly executed and filed with the Secretary of
State of Texas. The Merger shall become effective as of the time the Agreement
of Merger is accepted for filing and officially filed. The date and time when
the Merger becomes effective is referred to herein as the "Effective Time".
This Agreement and the Agreement of Merger are hereinafter collectively referred
to as the "Merger Agreements".
1.4 Conversion of Shares. As of the Effective Time, by virtue of
the Merger and without any action on the part of any holder thereof:
1.4.1 The shares of Common Stock of Fluids which are issued
and outstanding immediately prior to the Effective Time shall not be changed or
converted as a result of the Merger, but shall remain outstanding as shares of
the Surviving Corporation.
1.4.2 All of the outstanding shares of capital stock of the
Company issued and outstanding immediately prior to the Effective Time (i.e.,
the Company Shares) shall be converted (in the aggregate) into the right to
receive 60,000 shares of Newpark Common Stock (i.e., the Newpark Shares). Each
Stockholder will receive the number of Newpark Shares determined by dividing
60,000 by the total number of Company Shares outstanding and multiplying the
resulting quotient by the number of Company Shares held by such Stockholder. No
fractional shares shall be issued; if fractional shares otherwise would issue,
the Stockholders shall instruct Newpark at least five business days before the
Closing as to the rounding of such shares.
1.5 Surrender of Shares.
1.5.1 The Stockholders, as the holders of all of the
Company Shares, upon the surrender to Newpark of the certificate or certificates
which, immediately prior to the Effective Time, represented the Company Shares,
shall be entitled to receive in exchange therefor certificates representing the
number of shares of Newpark Common Stock into which the shares of capital stock
of the Company theretofore represented by the certificate or certificates so
surrendered shall have been converted pursuant to the provisions of paragraph
1.4.2.
1.5.2 Until surrendered and exchanged as herein provided,
each outstanding certificate which, prior to the Effective Time, represented
capital stock of the Company shall represent for all purposes only the right to
receive the consideration provided in paragraph 1.4.2. Certificates representing
the Newpark Shares shall be delivered to the Stockholders as soon as practicable
following the Effective Time.
1.6 Securities Act Legend on Newpark Shares. Each Stockholder
hereby agrees that he will not offer to sell, transfer or otherwise dispose of
any of the Newpark Shares issued to him in the Merger, except in accordance with
the applicable provisions of the "Securities Act" and the "Rules and
Regulations" (as such terms are defined in Section 15). Certificates
representing the Newpark Shares initially will bear the following legend:
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"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."
1.7 Pooling of Interests Restriction. Each Stockholder hereby
agrees that he will not offer to sell, transfer or otherwise dispose of any of
the Newpark Shares issued to him pursuant to the Merger until such time as
financial results covering at least 30 days of combined operations of Newpark,
Fluids and the Company have been published within the meaning of Section 201.01
of the Commission's Codification of Financial Reporting Policies.
2. Noncompetition Agreements. At the Closing, as a necessary
incident of the Plan, Newpark and the Stockholders will execute and deliver
noncompetition agreements substantially as set forth in Exhibit 2 attached to
this Agreement, all of which together are referred to herein as the
"Noncompetition Agreements."
3. Representations and Warranties of the Company and the
Stockholders.
A. Except as otherwise specifically set forth in a letter ("the
Disclosure Letter") delivered by the Company and the Stockholders to Newpark
prior to the execution hereof, the Company and 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 Plan and issue the Newpark Shares):
3.1 Organization and Good Standing of the Company.
3.1.1 The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Texas, has full
corporate power and authority to carry on its business as now conducted by it
and is entitled to own or lease and operate its properties and assets now owned
or leased and operated by it. The Company is duly qualified and in good standing
as a foreign corporation in each jurisdiction where the character or location of
the assets owned by the Company or the nature of the business transacted by the
Company require such qualification, except where failure to be so qualified
would not have a "Material Adverse Effect" (as defined in Section 15). The
Disclosure Letter includes a list of the jurisdictions in which the Company is
qualified to do business.
3.1.2 The Company has have furnished to Newpark complete
and correct copies of the Company's Articles of Incorporation and Bylaws as in
effect on the date hereof.
3.1.3 The Company has heretofore made available to Newpark
for its examination copies of the minute books, stock certificate books and
corporate seal of the Company. Said minute books are accurate in all material
respects and reflect all resolutions adopted and all material actions expressly
authorized or ratified by the stockholders and directors of the Company. The
stock certificate books reflect all issuances, transfers and cancellations of
capital stock of the Company.
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3.2 Capitalization.
3.2.1 The authorized capital stock of the Company consists
of 100,000 shares of common stock, $1.00 par value per share, of which 6,163
shares, i.e., the Company Shares, 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 Company Shares owned by, each
of the Stockholders.
3.2.2 There are no options, warrants, subscriptions or
other rights outstanding for the purchase of, and all securities convertible
into, capital stock of the Company. No shares of the Company are held as
treasury stock.
3.3 Authority. The Company has the full corporate power and
authority to execute and deliver the Merger Agreements, to perform the
obligations and covenants set forth therein and to consummate the Merger and the
other transactions contemplated thereby. The execution and delivery of the
Merger Agreements by the Company and the consummation of the transactions
contemplated thereby have been duly authorized by the Board of Directors of the
Company and by the Stockholders in their capacity as the stockholders of the
Company, and no further corporate action is necessary on the part of the Company
to make the Merger Agreements binding upon the Company in accordance with their
terms. This Agreement has been duly executed and delivered by the Company and
the Stockholders and constitutes the valid and binding agreement of each of
them, enforceable against them in accordance with its terms, and, when the
Agreement of Merger has been duly executed and delivered, it will constitute the
valid and binding Agreement of the Company, enforceable against the Company in
accordance with its terms, in each case subject to the "Bankruptcy Exception"
(as defined in Section 15).
3.4 Equity Interests. The Company does not have a material
equity interest in any other "Person" (as defined in Section 15).
3.5 No Violation. The execution, delivery and performance of
this Agreement by the Company and the Stockholders are not contrary to the
Articles of Incorporation or Bylaws of the Company and will not result in a
violation or breach of any term or provision or constitute a default or give any
party a right to accelerate the due date of any indebtedness under any
indenture, mortgage, deed of trust or other material contract or agreement to
which the Company, the Stockholders or any of them are a party or by which any
of them are bound.
3.6 Financial Statements. The unaudited balance sheets of the
Company as of December 31, 1994, December 31, 1995 and December 31, 1996, and
the related unaudited statements of income, stockholders' equity and cash flows
for the years ended December 31, 1994, December 31, 1995 and December 31, 1996,
and the unaudited balance sheet of the Company as of April 30, 1997, and the
related statements of income, stockholders' equity and cash flows for the four
month period ended on said date, in each case certified by the principal
financial officer of the Company, subject to year-end audit adjustments, copies
of which have heretofore been delivered to Newpark (collectively the "Company
Financial Statements"), were prepared in accordance with the books and records
of the Company in accordance with generally accepted
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accounting principles (except for the absence of footnotes from the
April 30, 1997, financial statements) consistently applied throughout the
periods involved (except as otherwise noted therein) and present fairly the
financial position, results of operations and cash flows of the Company for and
as of the end of each of such periods.
3.7 Properties. The Company has good title to the assets and
properties shown in the Company Financial Statements or acquired since the date
of the latest balance sheet included therein, except as since sold or otherwise
disposed of in the ordinary course of business. Such title is free and clear of
all liens, charges, security interests, encumbrances, leases, covenants,
conditions and restrictions other than "Permitted Liens," as defined in Section
15. The plants, structures, leasehold improvements, machinery, equipment,
furniture and other tangible assets owned or leased by the Company are in good
operating condition and repair, subject only to ordinary wear and tear, taking
into account the respective ages of the assets involved, and constitute all the
fixed tangible assets necessary for the operation of the business of the Company
in accordance with its current methods of operation in all material respects.
3.8 Contracts.
3.8.1 The Disclosure Letter includes a listing of all oral
or written (a) contracts, commitments, sales orders or purchase orders, whether
or not entered into in the ordinary course of business, which involve future
payments, performance of services or delivery of goods and/or materials, to or
by the Company of an amount or value in excess of $25,000; (b) bonus, incentive
compensation, pension, profit sharing, stock option, group insurance, medical
reimbursement or employee welfare or benefit plans of any nature whatsoever; (c)
collective bargaining agreements or other contracts or commitments to or with
labor unions or other employee groups; (d) leases, contracts or commitments
affecting ownership of, title to, use of or any material interest in real
estate; (e) employment contracts and other contracts, agreements, or commitments
to or with individual employees, consultants or agents extending for a period of
more than six months from the date hereof or providing for earlier termination
only upon payment of a penalty or the equivalent thereof; (f) equipment leases
providing (in any one lease or group of related leases) for payments in excess
of $10,000 per year; (g) contracts under which the performance of any obligation
of the Company is guaranteed by 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 the
Company; (i) bank credit, factoring and loan agreements, indentures, promissory
notes and other documents representing indebtedness for borrowed money; (j)
patent licensing agreements and all other agreements with respect to patents,
patent applications, trademarks, service marks, trade names, technical
assistance, special processes, know-how, copyright or other like items; and (k)
other contracts and agreements to which the Company is a party and which have
not been fully performed, involving consideration having a value in excess of
$25,000 or a remaining period for performance in excess of nine months (all such
items being collectively referred to herein as "Material Contracts"). The
Company has furnished to Newpark true and complete copies of all such Material
Contracts.
3.8.2 All Material Contracts are valid and binding
obligations of the Company and, to the "best of the knowledge of the Company"
(as defined in Section 15), the
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other parties thereto in accordance with their respective terms, subject to the
Bankruptcy Exception; there have been no amendments to or modifications to any
Material Contract (except as set forth in the copies furnished to Newpark); no
event has occurred which is, or, following any grace period or required notice,
would become a material default by the Company under the terms of any Material
Contract; except to the extent specifically reserved against on the latest
balance sheet included in the Company Financial Statements, the Company is not a
party to any Material Contract on which the Company or either or both of the
Stockholders anticipate expenses materially in excess of revenues or which is
otherwise onerous or materially adverse; and the Company has not expressly
waived any material rights under any Material Contract.
3.9 Outstanding Indebtedness. The Disclosure Letter includes a
true and com plete schedule of all notes payable and other indebtedness for
borrowed money owed by the Company, including a description of the material
terms thereof and a description of all properties or assets pledged, mortgaged
or otherwise hypothecated (voluntarily or involuntarily) as security therefor.
3.10 Absence of Undisclosed Liabilities. Except as disclosed in
the Disclosure Letter and except for liabilities and obligations reflected on
the latest balance sheet included in the Company Financial Statements or arising
in the ordinary course of business since the date of such balance sheet, none of
which latter items, individually or in the aggregate, have a Materially Adverse
Effect: (a) the Company does not have, and none of its properties are subject
to, any debts, liabilities or obligations of any nature, whether accrued,
absolute, contingent or otherwise, which are of a type which are required to be
shown or reflected on financial statements prepared in a manner consistent with
generally accepted accounting principles; and (b) to the best of the knowledge
of the Company, the Company does not have, and none of its properties are
subject to, any material debts, liabilities or obligations of any nature,
whether accrued, absolute, contingent or otherwise, whether or not of a type
which are required to be shown or reflected on financial statements prepared in
a manner consistent with generally accepted accounting principles. The Company
is not in default with respect to any material term or condition of any
indebtedness.
3.11 No Litigation. Except as disclosed in the Disclosure
Letter, there are no actions, suits or proceedings (whether or not purportedly
on behalf of the Company) pending or, to the knowledge of the Company,
threatened against or affecting the Company, at law or in equity or before or by
any "Government Body" (as defined in Section 15) or before any arbitrator of any
kind. To the best of the knowledge of the Company, the Company is not in default
with respect to any judgment, order, writ, injunction, decree, award of any
Government Body.
3.12 Environmental Matters.
3.12.1 Neither the Company nor, to the best of the
knowledge of the Company, any previous owner, lessee, tenant, occupant or user
of any real property owned or leased on or prior to the date hereof by the
Company (such real property and any and all buildings and other improvements
thereon being herein referred to as the "Property") used, generated,
manufactured, treated, handled, refined, processed, released, discharged, stored
or disposed of any "Hazardous Materials" (as defined in Section 15) on, under,
in or about the
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Property, or transported any Hazardous Materials to or from the Property in
violation of any "Hazardous Materials Laws" (as defined in Section 15) in a
manner or to an extent that resulted or is reasonably likely to result in a
Material Adverse Effect. To the best of the knowledge of the Company, no
underground tanks or underground deposits or Hazardous Materials the existence
of which would have a Material Adverse Effect existed on, under, in or about any
Property previously owned or leased by the Company on or prior to the date that
fee or leasehold title to such Property was transferred to a third party by the
Company. To the best of the knowledge of the Company, no underground tanks or
underground deposits or Hazardous Materials the existence of which would have a
Material Adverse Effect exist on, under, in or about any Property that is
currently owned or leased by the Company.
3.12.2 While any Property was owned or leased by the
Company, it did not violate to an extent that would have a Material Adverse
Effect any applicable federal, state and local laws, ordinances or regulations,
now or previously in effect, relating to environmental conditions, industrial
hygiene or Hazardous Materials on, under, in or about such Property (including
without limitation the Hazardous Materials Laws).
3.12.3 As of the date hereof, to the best of the knowledge
of the Company, there are no (1) enforcement, clean-up, removal, mitigation or
other governmental or regulatory actions instituted, contemplated or threatened
pursuant to any Hazardous Materials Laws against the Company or any Property
presently owned or leased by the Company, (2) claims made or threatened by any
Person or Government Body relating to the Property against the Company or any
Property presently owned or leased by the Company or relating to damage,
contribution, cost recovery, compensation, loss or injury resulting from any
Hazardous Materials or (3) any occurrence or condition known to the Company or
Stockholders on any Property that is currently owned or leased by the Company
that can reasonably be expected to subject the Company or such Property to any
material restrictions on occupancy, transferability or use of any Property under
any Hazardous Materials Laws. The Disclosure Letter includes a list of all
complaints, notices of violation and claims relating to Hazardous Materials Laws
which, to the knowledge of the Company, have been received by or asserted
against the Company.
3.13 Taxes.
3.13.1 The Company has filed all income, franchise and
other "Tax Returns" (as defined in Section 15) required to be filed by it by the
date hereof. All "Taxes" (as defined in Section 15) imposed by the United
States, the State of Texas and by any other state, municipality, subdivision, or
other taxing authority, which are due and payable by the Company have been paid
in full or are adequately provided for by reserves reflected on the latest
balance sheet included in the Company Financial Statements.
3.13.2 All contributions due from the Company pursuant to
any unemployment insurance or workers compensation laws and all sales or use
Taxes which are due or payable by the Company have been paid in full. The
Company has withheld and paid to, or will cause to be paid to, the appropriate
taxing authorities all amounts required to be withheld from the wages of its
employees under state law and the applicable provisions of the Code.
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3.13.3 The Company has furnished to Newpark true and
complete copies of the federal income Tax Returns and comparable state Tax
Returns of the Company covering the years ended December 31, 1994, December 31,
1995 and December 31, 1996, constituting complete and accurate representations
in all material respects of the Tax liabilities of the Company for the relevant
periods stated therein and accurately setting forth all relevant material items,
including the Tax bases of all assets, where required to be set forth in such
Tax Returns.
3.14 Permits and Licenses. The Company has all licenses,
franchises, permits and other governmental authorizations that are legally
required to enable it to conduct its business in all material respects as
conducted on the date hereof, and the Company is in compliance in all material
respects with all applicable federal, state and local laws, rules, regulations
and orders relating to its business, except where failure to have any such
license, franchise, permit or authorization or failure to comply with any such
laws, rules, regulations and orders would not have a Material Adverse Effect.
The execution and performance of this Agreement and the consummation of the
transactions contemplated hereby will not cause the termination or suspension of
any license, franchise, permit or governmental authorization or violate any
provision of or constitute a default under any law, rule or regulation, order,
writ, injunction or decree of any Government Body applicable to the Stockholders
or the Company, where such violation or default would have a Material Adverse
Effect.
3.15 No Labor Problems. The Company has not been charged with
any unresolved unfair labor practices and there are no material controversies
pending or threatened between the Company and any of its employees. The Company
has complied in all material respects with all laws relating to wages, hours,
collective bargaining and similar employment matters the noncompliance with
which would have a Material Adverse Effect, and the Company has paid all social
security and similar Taxes that are due and payable and is not liable for any
arrears or wages or any Taxes or material penalties for failure to comply with
any of the foregoing.
3.16 Employee Benefit Plans.
3.16.1 Definition of Benefit Plans. For purposes of this
Section 3.15, the term "Benefit Plan" means any plan, program, arrangement,
practice or contract which provides benefits or compensation to or on behalf of
employees or former employees of the Company or any "ERISA Affiliate" (as
hereinafter defined), whether formal or informal, whether or not written,
including but not limited to the following:
(a) Arrangements - any bonus, incentive
compensation, stock option, deferred compensation, commission, severance, golden
parachute or other compensation plan, rabbi trust, program, contract,
arrangement or practice;
(b) ERISA Plans - any "employee benefit plan" (as
defined in Section 3(3) of ERISA), including, but not limited to, any "multi-
employer plan" (as defined in Section 3(37) and Section 4001(a)(3) of ERISA),
defined benefit pension plan, profit sharing plan, money purchase pension plan,
401(k) plan, savings or thrift plan, stock bonus plan, employee stock ownership
plan, or any plan, fund, program, arrangement or practice providing for medical
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(including post-retirement medical), hospitalization, accident, sickness,
disability, or life insurance benefits; and
(c) Other Employee Fringe Benefits - any stock
purchase, vacation, scholarship, day care, prepaid legal services, severance pay
or other fringe benefit plan, program, arrangement, contract or practice.
3.16.2 ERISA Affiliate. For purposes of this Section 3.15,
the term "ERISA Affiliate" means each trade or business (whether or not
incorporated) which together with the Company is treated as single employer
under Section 414(b), (c), (m) or (o) of the Code.
3.16.3 Identification of Benefit Plans. The Company does
not maintain, and has not at any time established or maintained, nor has at any
time been obligated to make contributions to or under or otherwise participate
in any Benefit Plan.
3.16.4 MEPPA Liability/Post-Retirement Medical Benefits/
Defined Benefit Plans/Supplemental Retirement Plans. Neither the Company nor any
ERISA Affiliate maintains, or has at any time established or maintained, or has
at any time been obligated to make contributions to or under any multi-employer
plan. Neither the Company nor any ERISA Affiliate maintains, or has at any time
established or maintained, or has at any time been obligated to make
contributions to or under (i) any plan which provides post-retirement medical or
health benefits, (ii) any organization described in Sections 501(c)(9) or
501(c)(20) of the Code, (iii) any defined benefit pension plan subject to Title
IV of ERISA or (iv) any plan which provides retirement benefits in excess of the
limitations of Section 415 of the Code.
3.16.5 Liabilities. The execution and performance of the
transactions contemplated by this Agreement will not create, accelerate or
increase any obligation to make any payment which, as an "excess parachute
payment" under Section 280G of the Code, would not be deductible.
3.17 Insurance. The Company has furnished to Newpark a complete
list of all insurance policies that the Company maintains, indicating risks
insured against, carrier, policy number, amount of coverage, premiums and
expiration date.
3.18 Interest in Competitors, Suppliers, etc. Except as set
forth in the Disclosure Letter, none of the Stockholders and no officer or
director of the Company or any Family Member of any such Person owns, directly
or indirectly, individually or collectively, any interest in any corporation,
partnership, proprietorship, firm or association which (a) is a competitor,
customer or supplier of the Company, or (b) has an existing contractual
relationship with the Company, including but not limited to lessors of real or
personal property leased to the Company and entities against whom rights or
options are exercisable by the Company. The Company owns, free and clear and
without payment of any royalty or fee, all interests in the assets, profits or
business of the Company that have previously been held by any Affiliate of the
Company, including the Stockholders and their Family Members.
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3.19 Indebtedness with Insiders. Except for accrued salaries for
one payroll period, vacation pay and business expense reimbursements, the
Company is not indebted to any of the stockholders, directors or officers of the
Company or any Affiliate of any such Person. None of such Persons is indebted to
the Company.
3.20 Consents. No authorizations, approvals or consents of any
Government Body are required for consummation of the transactions contemplated
by this Agreement or the subsequent operation of the business of the Company,
except for the filing of the Agreement of Merger as required by the BCA.
3.21 Patents, Trademarks and Other Intangibles. The Disclosure
Letter includes a list of all material patents, patent applications, trade
names, trademark registrations and applications therefor, copyrights, licenses,
franchises and other assets of like kind ("Intangible Assets") and all interests
in Intangible Assets which are owned in whole or in part by or registered in the
name of the Company. The Company owns or has the right to use all Intangible
Assets now used in the conduct of its business. Such Intangible Assets include
all of the proprietary products and formulations developed by the Company or
used by it in its business. The Company is not obligated to pay any royalty or
other fee to any licensor or other third party with respect to any Intangible
Assets. Neither the Company nor any of the Stockholders has knowledge of any
claim received by the Company alleging any conflict between any aspect of the
business of the Company and any Intangible Assets claimed to be owned by others
which, if determined adversely to the Company, would have a Material Adverse
Effect. None of the Stockholders, no other officer or director of the Company,
and no Person that is an Affiliate of any such Person has any interest in any
Intangibles Assets which are presently used by the Company or which infringe
upon, conflict with or relate to improvements or modifications of any Intangible
Assets presently used by the Company.
3.22 Purchases and Sales. Since December 31, 1996, the Company
has not placed any orders for materials, merchandise or supplies in exceptional
or unusual quantities based upon past operating practices and has not entered
into contracts with customers under conditions relating to price, terms of
payment, time of performance or like matters materially different from the
conditions regularly and usually specified in contracts for similar engagements
from customers similarly situated.
3.23 Brokerage and Finder's Fees. Neither the Company nor 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 Company could be liable with respect to the
transactions contemplated by this Agreement.
3.24 Absence of Certain Changes. Since December 31, 1996, except
for matters of a general economic nature which do not affect the Company
uniquely, the Company has not:
3.24.1 suffered any Material Adverse Effect;
3.24.2 borrowed or agreed to borrow any funds in excess of
$25,000 in the aggregate or incurred or become subject to any obligation or
liability (absolute or contingent) in
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excess of $25,000 in the aggregate, except obligations and liabilities incurred
in the ordinary course of business;
3.24.3 mortgaged, pledged, hypothecated or otherwise
encumbered any of its properties or assets except for Permitted Liens;
3.24.4 made or agreed to make any distribution of any
funds or assets of any kind whatsoever to any past or present stockholder of the
Company or any Affiliate of any such Person, whether by way of dividend,
redemption or purchase of capital stock, or any other type of distribution on or
with respect to its capital stock, whether or not similar to the foregoing;
3.24.5 made any payment of principal or interest on any
indebtedness owed to any past or present stockholder of the Company or any
Affiliate of any such Person;
3.24.6 sold or agreed to sell any of its assets,
properties or rights having an aggregate value in excess or $10,000 or canceled
or agreed to cancel any debts or claims exceeding $10,000 in the aggregate,
except for fair value in the ordinary course of business;
3.24.7 entered or agreed to enter into any agreement or
arrangement granting any preferential right to purchase a material part of its
assets, properties or rights;
3.24.8 increased the rate of compensation of or paid or
accrued bonuses to or for any of its officers, employees, consultants or agents,
except for normal merit or cost of living increases;
3.24.9 suffered any damage, destruction or loss in excess
of an aggregate of $100,000, whether or not covered by insurance, adversely
affecting any of its properties;
3.24.10 assigned or agreed to assign any of its Intangible
Assets;
3.24.11 suffered any adverse amendment or termination of
any Material Contract (or any contract that would have been a Material Contract
if not amended or terminated) to which it is a party;
3.24.12 paid any commissions or similar fees to brokers or
finders for arranging the transactions contemplated by this Agreement or any
similar proposed transaction with any other party; or
3.24.13 entered into any other material transaction other
than in the ordinary course of business.
3.25 No Material Misstatements or Omissions. No representation
or warranty by the Company or the Stockholders in this Agreement, and no
document, statement, certificate, exhibit or schedule furnished or to be
furnished to Newpark or Fluids 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
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therein or necessary in order to make the statements or facts contained herein
or therein, in the light of the circumstances under which they were made, not
misleading.
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
Merger 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 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 Newpark Common Stock. Such Stockholder is acquiring his Newpark Shares in
the Merger for investment and not with a view to the sale thereof other than in
compliance with the requirements of the Securities Act and applicable Blue Sky
laws. At the request of Newpark, each Stockholder will furnish to Newpark
evidence reasonably satisfactory to Newpark that the foregoing representations
are true. Such Stockholder acknowledges that Newpark has made available to him
the opportunity to ask questions and receive answers concerning the terms and
conditions of the Plan and to obtain any additional information that Newpark is
required to furnish under Regulation D of the Rules and Regulations.
3.27 No Joinder. Such Stockholder has the requisite power to
enter into this Agreement and perform his obligations hereunder (including
without limitation to sell and deliver his Company Shares), and no other
Person's joinder as a party hereto is necessary therefor pursuant to any
community property laws or otherwise, and there is no restriction on the power
of the Stockholder to sell and deliver his Company Shares pursuant to any trust,
estate planning or other similar document or any prenuptial or post-nuptial
agreement or arrangement.
3.28 No Litigation. There are no actions pending or, to the
knowledge of the Company, threatened in any court or arbitration forum or by or
before any Government Body involving the Company or such Stockholder relating to
or affecting any of the transactions contemplated by this Agreement.
3.29 Title to Shares. Such Stockholder is the holder of record
and owns beneficially that number of Company Shares set forth opposite his name
in the Disclosure Letter and owns such Company Shares free and clear of all
liens, security interests, encumbrances and restrictions, other than
restrictions contemplated by this Agreement. Such Stockholder is not a party to
any voting trust, proxy or other agreement with respect to the voting of any of
his Company Shares.
4. Representations and Warranties of Newpark. Newpark hereby
represents and warrants the following (the truth and accuracy of each of which
shall constitute a condition precedent to the Company's and the Stockholders'
obligations to consummate the Plan):
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4.1 Organization and Good Standing.
4.1.1 Newpark is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. Newpark
has corporate power and authority to carry on its business as presently
conducted and is qualified to do business in every jurisdiction in which the
character and location of the assets owned by it or the nature of the business
transacted by it or both require qualification and failure to be so qualified
would have a Material Adverse Effect.
4.1.2 Fluids is a corporation duly organized, validly
existing and in good standing under the laws of the State of Texas. Fluids has
corporate power and authority to carry on its business as presently conducted
and is qualified to do business in every jurisdiction in which the character and
location of the assets owned by it or the nature of the business transacted by
it or both require qualification and failure to be so qualified would have a
Material Adverse Effect.
4.1.3 Newpark has furnished to the Stockholders complete
and correct copies of Newpark's Certificate of Incorporation and Bylaws as in
effect on the date hereof and Fluids' Articles of Incorporation and Bylaws as in
effect on the date hereof.
4.2 Capital Stock. The authorized capital stock of Newpark
consists of 80,000,000 shares of Common Stock, $.01 par value, of which
31,367,874 shares were issued and outstanding on June 30, 1997, and 1,000,000
shares of Preferred Stock, $.01 par value, of which no shares are issued and
outstanding. The authorized capital stock of Fluids consists of 1,000,000 shares
of Class A voting common stock, of which 1,000 shares are issued and outstanding
and held by Newpark on the date hereof.
4.3 Newpark Subsidiaries. Each subsidiary of Newpark that is a
"significant subsidiary," as defined in Rule 1-02(w) of Regulation S-X of the
Rules and Regulations (each a "Newpark Subsidiary" and collectively the "Newpark
Subsidiaries), is duly organized and in good standing under the laws of the
jurisdiction in which it was incorporated or organized, has full corporate power
and authority to carry on its business as now conducted by it and is entitled to
own or lease and operate its properties and assets now owned or leased and
operated by it. Each Newpark Subsidiary is duly qualified and in good standing
as a foreign corporation or other entity in each jurisdiction where the
character or location of the assets owned by it or the nature of the business
transacted by it require such qualification, except where failure to be so
qualified would not have a Material Adverse Effect.
4.4 Authority. The execution and delivery of this Agreement by
Newpark and the consummation of the transactions contemplated hereby have been
duly authorized by the Boards of Directors of Newpark and Fluids and by Newpark
in its capacity as the sole stockholder of Fluids. This Agreement has been duly
executed and delivered to the Company and the Stockholders, and no vote of the
stockholders of Newpark or further corporate action is necessary on the part of
Newpark or Fluids to make this Agreement valid and binding upon Newpark and
Fluids in accordance with its terms, subject to the Bankruptcy Exception. The
execution, delivery and performance of this Agreement by Newpark and Fluids (a)
are not contrary to the Certificate
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of Incorporation or Bylaws of Newpark, (b) are not contrary to the Articles of
Incorporation of Bylaws of Fluids and (c) will not result in a violation or
breach of any term or provision or constitute a default or give any party a
right to accelerate the due date of any indebtedness under any indenture,
mortgage, deed of trust or other contract or agreement to which Newpark or
Fluids is a party or by which Newpark is bound.
4.5 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
after the date hereof are called the "Newpark Reports" herein. The Newpark
Reports have been or will be duly and timely filed with the Commission and are
or will be when filed in compliance with the Rules and Regulations. As of their
respective dates, none of the Newpark Reports contained or will contain any
untrue statement of a material fact or omitted or will omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading.
4.6 Newpark Financial Statements. The financial statements
contained in the Newpark Reports (the "Newpark Financial Statements") filed on
or before the date hereof have been prepared in accordance with the books and
records of Newpark and its subsidiaries and in accordance with generally
accepted accounting principles consistently applied during the periods
indicated, all as more particularly set forth in such financial statements and
the Notes thereto. Each of the balance sheets included in the Newpark Financial
Statements presents fairly as of its date the consolidated financial condition
and assets and liabilities of Newpark and its subsidiaries. Except as and to the
extent reflected or reserved against in such balance sheets (including the Notes
thereto), Newpark (including its subsidiaries) did not have, as of the dates of
such balance sheets, any material liabilities or obligations (absolute or
contingent) of a nature customarily reflected in a balance sheet or the notes
thereto prepared in accordance with generally accepted accounting principles.
The consolidated statements of earnings and stockholders' equity and
consolidated statements of changes in financial position included in the Newpark
Financial Statements present fairly the results of operations and changes in
financial position of Newpark and its subsidiaries for the periods indicated.
4.7 Absence of Certain Changes. Since March 31, 1997, there has
not been any material adverse change in the results of operations, financial
condition, liquidity, assets, properties or business of Newpark and its
subsidiaries, taken as a whole.
4.8 Issuance and Listing of Stock. Newpark has reserved for
issuance the Newpark Shares, and the Newpark Shares, when issued in accordance
with this Agreement, will be validly issued, fully paid and nonassessable.
4.9 Consents. No authorizations, approvals or consents of any
governmental department, commission, bureau, agency or other public body or
authority are required for consummation by Newpark of the transactions
contemplated by this Agreement, except for the
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filing of the Agreement of Merger as required by the BCA and such qualifications
as may be required under state securities or Blue Sky laws relating to the
Newpark Shares.
4.10 No Material Misstatements or Omissions. No representation
or warranty by Newpark or Fluids in this Agreement, and no document, statement,
certificate, exhibit or schedule furnished or to be furnished to the Company or
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 herein or
therein, in the light of the circumstances under which they were made, not
misleading.
5. Conditions to Each Party's Obligations.
The respective obligations of each party to consummate the Plan
under this Agreement shall be subject to the satisfaction on or before the date
hereof of each of the following conditions except to the extent the parties may
waive any of such conditions in writing:
5.1 Government Body Consents. All consents, authorizations,
orders and approvals of (or filings or registrations with) any Government Body
required in connection with the execution, delivery and performance of this
Agreement, including Merger and the issuance of the Newpark Shares, or the
operation of the business of the Company following the Merger shall have been
obtained or made, except where the failure to have obtained or made any such
consent, authorization, order, approval, filing or registration would not have a
Material Adverse Effect following the Closing.
5.2 Injunction. There shall be no effective injunction, writ or
preliminary restraining order or any order of any nature issued by a court or
governmental agency of competent jurisdiction to the effect that the Plan may
not be consummated as herein provided, no proceeding or lawsuit shall have been
commenced by any Government Body for the purpose of obtaining any such
injunction, writ or preliminary restraining order and no written notice shall
have been received from any Government Body indicating an intent to restrain,
prevent, materially delay or restructure the transactions contemplated by this
Agreement.
5.3 Listing of Newpark Shares. The Newpark Shares shall have
been listed on the New York Stock Exchange, subject to official notice of
issuance.
6. Conditions Precedent to Obligations of Newpark and SBM. The
obligations of Newpark and SBM to consummate the Plan and issue the Newpark
Shares are subject to the satisfaction of each of the additional following
conditions at or prior to the date hereof, unless waived in writing by Newpark:
6.1 Accuracy of Warranties and Representations. The
representations and warranties of the Company and the Stockholders herein shall
be true and correct in all material respects, and the Company and the
Stockholders shall perform or shall have performed in all material respects all
covenants required by this Agreement to be performed by them at or prior to the
Closing.
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6.2 No Material Adverse Change. There shall have been no
changes after December 31, 1996, in the results of operations, assets,
liabilities, financial condition or affairs of the Company which in their total
effect have a Materially Adverse Effect on the Company.
6.3 Material Contracts. The Company shall have received
consents to assignment of all Material Contracts or written waivers of the
provisions of any Material Contracts requiring the consents of third parties as
set forth in the Disclosure Letter, except where the failure to have obtained
any such consent or written waiver would not have a Material Adverse Effect
following the Closing.
6.4 Other Legal Matters. All legal matters in connection with
this Agreement and the transactions contemplated hereby shall have been approved
by counsel for Newpark, and there shall have been furnished to such counsel by
the Company certified copies of such corporate records of the Company and copies
of such other documents as such counsel may reasonably have requested for such
purpose.
6.5 Opinion of the Company's and the Stockholders' Counsel.
Newpark shall have received an opinion of Xxxxxxxxxx & xxxXxxx, counsel to the
Company and the Stockholders, dated the date of the Closing, substantially in
the form attached hereto as Exhibit 6.5.
6.6 Director Resignations. All of the directors of the Company
shall have resigned.
7. Conditions Precedent to Obligation of the Company and the
Stockholders. The obligations of the Company and the Stockholders to consummate
the Merger are subject to the satisfaction of each of the following additional
conditions at or prior to the date hereof, unless waived in writing by the
Company and the Stockholders:
7.1 Accuracy of Warranties and Representations. The
representations and warranties of Newpark contained in this Agreement shall be
true and correct in all material respects, and Newpark shall perform or shall
have performed in all material respects all of the covenants required by this
Agreement to be performed by it on or before the Closing.
7.2 Authorization of Plan. All corporate action necessary by
Newpark to authorize the execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby shall have been
duly and validly taken.
7.3 No Material Adverse Change. There shall have been no
changes since March 31, 1997, in the results of operations, financial condition,
liquidity, assets, properties or business of Newpark and its subsidiaries, taken
as a whole, which, in their total effect, have a Material Adverse Effect on
Newpark and its subsidiaries.
7.4 Opinion of Newpark's Counsel. The Company and the
Stockholders shall have received an opinion of Xxxxx, Xxxxx & Xxxxxx LLP,
counsel to Newpark, dated the date of the Closing, substantially in the form
attached hereto as Exhibit 7.4.
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7.5 Other Legal Matters. All legal matters in connection with
this Agreement and the transactions contemplated hereby shall have been approved
by counsel for the Company and 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 Merger
Agreements) and copies of such other documents as such counsel may reasonably
have requested for such purpose.
8. Survival of Representations. All representations and warranties
made by the Company or Fluids under or in connection with this Agreement shall
terminate at the Effective Time and shall be of no further force or effect
thereafter. All representations, warranties and indemnifications made by
Stockholders or Newpark under or in connection with this Agreement shall survive
the consummation of the Merger until the later of (a) one year after the Closing
or (b) the date when Newpark's independent accountants issue an audit report on
their audit of the financial statements containing combined operations of
Newpark and the Company for the period ending December 31, 1997. No party shall
be entitled to recover against any other party for any misrepresentation or
breach of warranty except to the extent that written notice of any such claim
has been delivered to the party against whom recovery is sought within the
applicable period setting forth in reasonable detail and specifying the nature
of the claim being asserted. The provisions of this Section and Section 10.3.3
apply only to claims arising under this Agreement and do not affect any other
claims that any party may have at any time against any other party, including
but not limited to claims that may arise under Hazardous Material Laws.
9. Post-Closing Covenants.
9.1 Cooperation and Assistance. Upon request, each of the
parties hereto shall cooperate with the other to the extent reasonably
requested, at the requesting party's expense, in furnishing information,
testimony and other assistance in connection with any actions, proceedings,
arrangements or disputes involving the Company, the Stockholders, Newpark or
Fluids which are based upon contracts, arrangements or acts of the Stockholders
or the Company or both which were in effect or occurred on or prior to the
Closing.
9.2 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
Company which relate to periods prior to the Closing. Newpark shall retain such
business records for a period of five (5) years following the Closing Date,
after which time Newpark may destroy or otherwise dispose of such business
records without the Stockholders' consent.
9.3 Tax Matters.
9.3.1 Control of Tax Proceedings. Whenever any taxing
authority proposes any adjustment, questions the treatment of any item, asserts
a claim, makes an assessment, or otherwise disputes the amount of any Taxes for
any period or portion thereof ending on or before the date hereof, which
adjustment, question, claim, assessment or dispute could, if pursued
successfully, result in or give rise to a claim against the Stockholders under
this
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Agreement (a "Tax Claim"), Newpark shall promptly inform the Stockholders in
writing of such Tax Claim. The provisions of Section 10 shall apply to the
handling of any Tax Claim.
9.3.2 Current Tax Returns. The Stockholders shall be
responsible for the preparation of all Tax Returns of the Company for all
taxable periods that end or ended on or before the date hereof and are not
required to be filed (taking into account all extensions) on or before the date
hereof. Newpark will make available to the Stockholders, without charge, the
services of its personnel and the personnel of the Company to assist the
Stockholders in the preparation of such Tax Returns. Such Tax Returns shall be
reasonably satisfactory to Newpark in form and substance. Provided such Tax
Returns are delivered to Newpark, in form and substance reasonably satisfactory
to Newpark, at least five business days before the due dates thereof (taking
into account any and all extensions), Newpark will cause the Company to timely
file such Tax Returns and to pay the amounts of any Taxes shown as due thereon.
9.3.3 Refunds and Credits. Any refunds of Taxes and
credits against Taxes (together in each case with any interest received or
credited on or with respect to such refund or credit) attributable to any
taxable period or portion thereof ending on or before the date hereof shall be
for the account of the Company; provided, however, that, to the extent that any
such refund, credit or interest thereon exceeds the amount of such refund,
credit or interest, if any, accrued on the books of the Company as of the
Effective Time, the Stockholders shall receive credit in an amount equal to the
amount of such excess against any liability they may have under Section 10.
9.3.4 Cooperation. Newpark and the Stockholders shall
cooperate in good faith with each other in a timely manner in the preparation
and filing of any Tax Returns of the Company and the handling of any Tax Claims
and other Tax matters to which this Agreement relates, other than Tax Claims and
Tax matters solely involving Newpark and its Subsidiaries other than the
Company. Each party shall execute and deliver such powers of attorney and make
available such other documents and such personnel as are necessary to carry out
the intent of this Section 9.3.4. Each party agrees to promptly notify the other
parties of any such Tax Claim that does not result in Tax liability but can be
reasonably expected to affect any Tax Returns of any of the other parties.
9.3.5 Retention of Records. Newpark shall (i) retain
records, documents, accounting data and other information (including computer
data) necessary for the preparation and filing of all Tax Returns of the Company
and the handling of any Tax Claims and other Tax matters to which this Agreement
relates, and (ii) give to 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 preparation and review of such Tax Returns and the handling of any Tax
Claims and other Tax matters to which this Agreement relates, to the extent
necessary in connection with any Taxes to which this Agreement relates or any
obligation or liability of a party under this Agreement.
9.4 Stockholder Guarantees. Subject to consummation of the
Merger, Newpark agrees that it will cause the Company to discharge in accordance
with its terms all indebtedness
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of the Company as to which the Stockholders have executed personal guarantees,
as disclosed in the Disclosure Letter.
10. Indemnifications.
10.1 Indemnification by the Stockholders. Subject to the
provisions of Sections 8 and 10.3, the Stockholders, jointly and severally,
hereby agree to indemnify, defend, protect and hold harmless Newpark against all
damages, losses, liabilities, costs and expenses (including reasonable
attorneys' fees) resulting from (i) any breach of any warranty or representation
made by the Company or the Stockholders under or in connection with this
Agreement, (ii) the presence on, under, in or about the Property of any
Hazardous Materials as of the Effective Time or the noncompliance by the Company
with any Hazardous Materials Laws on or before the Effective Time, whether or
not disclosed in the Disclosure Letter and (iii) the creation, maintenance or
termination of any Benefit Plan, whether or not disclosed in the Disclosure
Letter. 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 Company, whether by right of indemnification, contribution or
otherwise.
10.2 Indemnification by Newpark. Subject to the provisions of
Sections 8 and 10.3, Newpark hereby agrees to indemnify, defend, protect and
hold harmless 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
Stockholders, and the Company shall have no interest therein.
10.3 Indemnification Procedures and Limitations. The following
provisions shall apply to all indemnification and hold harmless provisions of
this Agreement:
10.3.1 No party shall be required to indemnify another
pursuant hereto unless the party seeking indemnification (the "Indemnitee")
shall, with reasonable promptness, provide the other party (the "Indemnitor")
with copies of any claims or other documents received and shall otherwise make
available to the Indemnitor all material relevant information. The Indemnitor
shall have the right to defend any such claim at its expense, with counsel of
its choosing, and the Indemnitee shall have the right, at its expense, using
counsel of its choosing, to join in the defense of any such claim. The
Indemnitee's failure to give prompt notice or to provide copies of documents or
to furnish relevant data shall not constitute a defense in whole or in part to
any claim by the Indemnitee against the Indemnitor except to the extent that
such failure by the Indemnitee shall result in a material prejudice to the
Indemnitor.
10.3.2 Except as hereinafter provided, neither party shall
settle or compromise any such claim unless it shall first obtain the written
consent of the other, which shall not be unreasonably withheld. The foregoing
notwithstanding, if suit shall have been instituted against the Indemnitee and
the Indemnitor shall have failed, after the lapse of a reasonable time after
written notice to it of such suit, to take action to defend the same, the
Indemnitee shall have the right to defend the claim (without limiting the right
of the Indemnitor to participate in the defense) and to charge the Indemnitor
with the reasonable cost of any such defense, including
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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.
10.3.3 Except as herein provided, 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 of
$10,000. Except as herein provided, the liability of any of the Stockholders for
any breach of warranty or representation hereunder shall not exceed the lesser
of (i) $1,000,000 or (ii) value of the Newpark Shares for which his Company
Shares are exchanged in the Merger, for which purpose they shall be valued at
their Closing Value. To the fullest extent permitted by law, 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.
Notwithstanding the foregoing, the limitations contained in the first two
sentence of this Section shall not apply to the indemnification obligations of
the Stockholders under clause (iii) of Section 10.1 and 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 or for breach of
any covenants or agreements made herein by such party.
10.3.4 In determining the amount of any damage, loss,
liability, cost or expense suffered by Newpark which gives rise to liability of
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 Stockholders.
10.4 Dispute Resolution; Arbitration. The parties desire to
finally resolve any and all issues and disputes arising out of or related to
this Agreement or its alleged breach as promptly as practicable and, in any
event, within the survival period specified in Section 8. Newpark and 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 Houston, Texas, in accordance with the Commercial Arbitration Rules of
the American Arbitration Association. The decision of the arbitrator or
arbitrators shall be final, conclusive and binding on all parties. The
arbitrators shall prepare an award in writing which reflects the final decision
of the arbitrators and a copy of such award shall be delivered to each party to
the arbitration. Judicial confirmation of the decision of the arbitrators shall
be sought only in the Judicial District Court of Xxxxxx County, Houston
Division.
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11. Destruction of Assets. All risk of loss with respect to the
assets and business of the Company shall be borne by the Company until the
Closing to the extent set forth in this Section 11. If on the date hereof any
assets of the Company shall have suffered loss or damage on account of fire,
flood, accident, act of war, civil commotion, or any other cause or event beyond
the reasonable power and control of the Company (whether or not similar to the
foregoing) to an extent which materially affects the value to Newpark of the
Company Shares, Newpark shall have the right at its election to complete the
Merger (in which event, as Newpark's sole and exclusive remedy with respect to
the consequences of such loss or damage, all claims of the Company with respect
to such loss or damage and all insurance proceeds arising therefrom shall be for
the account of the Company), or, if it does not so elect, it shall have the
right, which shall be in lieu of any other right or remedy whatsoever, to
terminate this Agreement. In the latter event, all parties shall be released
from liability hereunder.
12. Termination. In addition to any party's right to terminate this
Agreement if any condition precedent to its obligations is not satisfied at or
before the Closing, either Newpark or the Company and 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 Company) shall be pending against either party on the date hereof
wherein an unfavorable judgment, decree or order would prevent or make unlawful
the carrying out of the transactions contemplated by this Agreement; or (b)
without prejudice to other rights and remedies which either party may have, if a
material default shall be made by the other of them in the observance or in the
due and timely performance of its covenants and agreements herein contained, or
if there shall have been a material breach of the warranties and representations
herein contained.
13. Notices. Any and all notices, demands, requests or other
communications hereunder shall be in writing and shall be deemed duly given when
personally delivered to or transmitted by overnight express delivery or by
facsimile to and received by the party to whom such notice is intended, or in
lieu of such personal delivery or overnight express delivery or facsimile
transmission, 48 hours after deposit in the United States mail, first-class,
certified or registered, postage prepaid, return receipt requested, addressed to
the applicable party at the address provided below. The parties may change
their respective addresses for the purpose of this Section 13 by giving notice
of such change to the other party in the manner which is provided in this
Section 13.
The Company: Advanced Chemical Technologies, Inc.
000 Xxxxx Xxx Xxxxxxx Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000-0000
Facsimile No.: (000) 000-0000
The Stockholders: Xx. Xxxx X. Xxxxxxx
0000 Xxxxxxxx
Xxxxxxxxxx, Xxxxx 00000
Mr. S. Xxx Xxxxxxx
0000 Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000x
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Copy to: Xxxx Xxxxxxx xxxXxxx, Esq.
Xxxxxxxxxx & xxxXxxx
000 Xxxxx Xxx Xxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 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
Copy to: Xxxxxxx X. Xxxxxxx, Esq.
Xxxxx, Xxxxx & Xxxxxx LLP
0000 Xxxxxxxx Xxxxxxxxx, 0xx Xxxxx
Xxxxxxx Xxxxx, XX 00000
Facsimile No.: (000) 000-0000
14. Assignment. Rights hereunder shall not be assignable and duties
hereunder shall not be delegable by the Company, Stockholders, Newpark or Fluids
without the prior written consent of the other; consent may be withheld for any
reason or without reason; provided, however, Newpark may, in its sole
discretion, assign any or all of its rights under this Agreement to any of its
Affiliates; provided, further, however, that no such assignment shall relieve
Newpark of any obligation or liability hereunder. Nothing contained in or
implied from this Agreement is intended to confer any rights or remedies upon
any Person other than the parties hereto and their successors in interest and
permitted assignees, unless expressly stated herein to the contrary.
15. Certain Definitions. As used herein, the following terms (whether
used in the singular or the plural) have the following meanings:
"Affiliate" or "affiliate" means, with respect to any Person, any
other Person directly or indirectly controlling, controlled by or under common
control with such Person and, without limiting the generality of the foregoing,
includes (a) any director or officer of such Person or of any Affiliate of such
Person, (b) any such director's or officer's Family Members, (c) any group,
acting in concert, of one or more of such directors, officers or Family Members,
and (d) any Person controlled by any such director, officer, Family Member or
group which beneficially owns or holds 25% or more of any class of equity
securities or profits interest. The term "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of an entity, whether through the ownership of voting
securities, by contract or otherwise.
"Bankruptcy Exception" means the limitation on enforceability
imposed by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws of general application relating to or affecting the enforcement of
the rights of creditors or by equitable principles, whether enforcement is
sought in equity or at law.
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"Closing Value" means the average of the closing prices of
Newpark's Common Stock on the New York Stock Exchange, as reported in The Wall
Street Journal, for the five trading days immediately preceding the third
trading day prior to the date of this Agreement.
"Commission" means the U.S. Securities and Exchange Commission.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Family Member" means, in the case of a Person who is an
individual, any parent, spouse or lineal descendant (including legally adopted
descendants) of such Person, or the spouse of any such descendant.
"Government Body" means any domestic or foreign federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality, or other body exercising or entitled to exercise any
administrative, executive, judicial, legislative, police, regulatory or taxing
authority or power of any nature.
"Hazardous Material Laws" means any and all federal, state and
local laws in effect at or before the date hereof that relate to or impose
liability or standards of conduct concerning the environment, as now or
hereafter in effect and as have been or hereafter may be amended or
reauthorized, including without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act (42 U.S.C. (S) 9601, et seq.), the
Hazardous Materials Transportation Act (42 U.S.C. (S) 1802, et seq.), the
Resource Conservation and Recovery Act (42 U.S.C. (S) 6901, et seq.), the
Federal Water Pollution Control Act (33 U.S.C. (S) 1251, et seq.), the Toxic
Substances Control Act (14 U.S.C. (S) 2601, et seq.), the Clean Air Act (42
U.S.C., (S) 7901 et seq.), the National Environmental Policy Act (42 U.S.C. (S)
4231, et seq.), the Refuse Act (33 U.S.C. (S) 407, et seq.), the Safe Drinking
Water Act (42 U.S.C. (S) 300(f), et seq.), and all rules, regulations, codes,
ordinances and guidance documents promulgated or published thereunder, and the
provisions of any licenses, permits, orders and decrees issued pursuant to any
of the foregoing.
"Hazardous Materials," means any flammable explosives,
radioactive materials, asbestos, compounds known as polychlorinated byphenyls,
chemicals now known to cause cancer or reproductive toxicity, pollutants,
contaminants, hazardous wastes, toxic substances or related materials,
including, without limitation, any substances defined as or included in the
definition of "hazardous substances," "hazardous wastes," "hazardous materials,"
or "toxic substances" under the Hazardous Materials Laws.
"Knowledge of the Company" (and similar terms such as "to the
best of the knowledge of the Company") means the actual knowledge of the
Stockholders or any other executive officer of the Company.
"Material Adverse Effect" means a material adverse effect on the
financial condition, results of operations, business or prospects of the entity
referred to (i.e., the Company or Newpark) and its subsidiaries (i.e., the
Newpark Subsidiaries), taken as a whole.
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"Permitted Lien(s)" means (a) all liens and encumbrances
disclosed in the Disclosure Letter, (b) landlords', mechanics', carriers',
workers' and similar statutory liens arising in the ordinary course of business
for sums not delinquent, for which adequate reserves or other appropriate
provisions have been made in the Company Financial Statements, (c) deed
restrictions and similar exceptions to clear title not incurred in connection
with indebtedness that do not materially impair the existing use or materially
detract from the value of the assets or property subject thereto, and (d) liens
for current taxes not delinquent, for which adequate reserves or other
appropriate provisions have been made in the Company Financial Statements.
"Person" or "person" means an individual, a corporation, a
partnership, an association, a trust or any other entity or organization,
including a Government Body.
"Rules and Regulations" means the rules and regulations adopted
by the Commission under the Securities Act and the Exchange Act.
"Securities Act" means the Securities Act of 1933, as amended.
"Tax" (including with correlative meaning, the terms "Taxes" and
"Taxable") means any income, gross receipts, ad valorem, premium, excise, value-
added, sales, use, transfer, franchise, license, severance, stamp, occupation,
service, lease, withholding, employment, payroll, premium, property or windfall
profits tax, alternative or add-on-minimum tax, or other tax, fee or assessment,
together with any interest and any penalty, addition to tax or additional amount
imposed by any governmental authority responsible for the imposition of any such
tax.
"Tax Return" means any return, report, statement, information
statement and the like required to be filed with any authority with respect to
Taxes.
16. Disclaimer Concerning Tax Consequences. Although the parties
intend that the Plan will be a tax-free reorganization, no party makes any
express or implied warranty to any other party as to the Tax consequences of the
Plan, and all such warranties are hereby expressly disclaimed.
17. Applicable Law; Jurisdiction. The provisions of this Agreement
and all rights and obligations hereunder and under all documents, instruments
and agreements executed under or in connection with this Agreement shall be
governed and construed in accordance with the internal laws of the State of
Texas applicable to contracts made and to be wholly performed within said State.
18. Remedies Not Exclusive. Except as provided in Section 11, (a) no
remedy conferred by any of the specific provisions of this Agreement is intended
to be exclusive of any other remedy, (b) each and every remedy shall be
cumulative and shall be in addition to every other remedy given hereunder or now
or hereafter existing at law, in equity, or otherwise and (c) the election of
any one or more remedies by either party hereto shall not constitute a waiver of
the right to pursue other available remedies.
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19. Accountants' and Attorneys' Fees. Newpark, the Company and the
Stockholders shall each pay their own accountants' and attorneys' fees related
to the consummation of the Plan. In any litigation or arbitration relating to
this Agreement, including litigation or arbitration with respect to any
instrument, document or agreement made under or in connection with this
Agreement, the prevailing party shall be entitled to recover its costs and
reasonable attorneys' fees.
20. Payment of Expenses. Whether or not the Plan is consummated,
Newpark will pay and be responsible for all costs and expenses incurred by
Newpark in connection with this Agreement and the transactions contemplated
hereby, and the Company will pay and be responsible for all costs and expenses
incurred by the Company and the Stockholders in connection with this Agreement
and the transactions contemplated hereby.
21. Successors and Assigns. All covenants, representations,
warranties and agreements of the parties contained herein shall be binding upon
and inure to the benefit of the parties, their respective heirs, personal
representatives and permitted successors and assigns.
22. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
23. Headings; Severability. Captions and section headings used herein
are for convenience only and are not a part of this Agreement and shall not be
used in construing it. The provisions of this Agreement are severable, and, if
any one or more provisions may be determined to be judicially unenforceable, in
whole or in part, the remaining provisions, and any partially unenforceable
provisions, to the extent enforceable, shall nevertheless be binding and
enforceable upon the parties hereto.
24. Amendments. No provision or term of this Agreement or any
agreement contemplated herein between the parties hereto may be supplemented,
amended, modified, waived or terminated except in a writing duly executed by the
party to be charged.
25. Waivers. At any time prior to the Closing, the parties hereto,
may, to the extent legally permitted: (i) extend the time for the performance of
any of the obligations or other acts or any other party; (ii) waive any
inaccuracies in the representations or warranties of any other party contained
in this Agreement or in any document or certificate delivered pursuant hereto;
(iii) waive compliance or performance by any other party with any of the
covenants, agreements or obligations of such party contained herein; and (iv)
waive the satisfaction of any condition that is precedent to the performance by
the party so waiving of any of its obligations hereunder. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in an instrument in writing signed on behalf of such party. A waiver
by one party of the performance of any covenant, agreement, obligation,
condition, representation or warranty shall not be construed as a waiver of any
other covenant, agreement, obligation, condition, representation or warranty. A
waiver by any party of the performance of any act shall not constitute a waiver
of the performance of any other act or an identical act required to be performed
at a later time.
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26. Entire Agreement. The Disclosure Letter and all schedules,
exhibits and financial statements provided for herein are a part of this
Agreement. This Agreement and the other agreements and documents provided for in
this Agreement comprise the entire agreement of the parties and supersede all
earlier understandings of the parties with respect to the subject matter hereof.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the date first above written.
THE COMPANY: NEWPARK:
Advanced Chemical Technologies, Inc. Newpark Resources, Inc.
By: /s/ Xxxx X. Xxxxxxx By: /s/ Xxxxxxx X. Xxxxxx
________________________________ _________________________________
Xxxx X. Xxxxxxx, Chairman of the Xxxxxxx X. Xxxxxx, Chief
Board and President Financial Officer
THE STOCKHOLDERS: FLUIDS
Newpark Drilling Fluids, Inc.
/s/ Xxxx X. Xxxxxxx
___________________________________
Xxxx X. Xxxxxxx
By: /s/ Xxxxxxx X. Xxxxxx
_________________________________
/s/ S. Xxx Xxxxxxx Xxxxxxx X. Xxxxxx, Vice President
___________________________________
S. Xxx Xxxxxxx
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