EXHIBIT 2.14
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION ("Agreement") is made and
entered into as of June 3, 1997, by and among NEWPARK RESOURCES, INC., a
Delaware corporation ("Newpark"), NEWPARK HOLDINGS, INC., a Louisiana
corporation ("Holdings"), NEWPARK TEXAS L.L.C., a Louisiana limited liability
company ("Newpark Texas") (Newpark, Holdings and Newpark Texas being sometimes
referred to herein collectively as "Buyers"), FMI WHOLESALE DRILLING FLUIDS,
INC., a Texas corporation ("FMI"), GENERAL SUPPLY CO., an Oklahoma corporation
("Supply"), AMERICAN POLYMER, INC., an Oklahoma corporation ("American"), and
XXXXX XXXXXXX ("Xxxxxxx") (Supply, American and Xxxxxxx being sometimes referred
to herein collectively as the "Limited Partners" and, together with FMI, the
"Partners"), with reference to the following facts:
A. FMI owns beneficially and of record 100% of the general
partnership interests (the "General Partner Interest") in FMI WHOLESALE DRILLING
FLUIDS, U.S.A., L.P., a Texas limited partnership (the "Company"), and the
Limited Partners own beneficially and of record 100% of the outstanding limited
partnership interests (the "Limited Partner Interests") in the Company. The
General Partner Interest and the Limited Partner Interests being hereinafter
collectively referred to as the Interests.
B. The Company is a regional Gulf Coast drilling mud company
specializing in the distribution and sale of oil based drilling fluid components
to the oil industry.
C. The parties believe that it is in their best interests to provide
for the acquisition by Holdings of the General Partner Interest from FMI and the
acquisition by Newpark Texas of the Limited Partner Interests from the Limited
Partners solely in exchange for an aggregate of 35,556 newly issued shares of
voting Common Stock of Newpark (the "Newpark Shares"). Such transaction is
sometimes referred to herein as the "Exchange."
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties agree as follows:
1. Transfer and Exchange of Interests.
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1.1 Exchange of Interests. Subject to the provisions of this
Agreement, on the "Closing Date" (as defined in Section 10) (i) FMI hereby
agrees to sell, transfer and assign to Holdings good and marketable title in and
to the General Partner Interest and (ii) the Limited Partners hereby agree to
sell, transfer and assign to Newpark Texas good and marketable title in and to
the Limited Partner Interests, and Newpark will issue and deliver certificates
representing the Newpark Shares to the Partners, in proportion to their
ownership of the Interests. No fractional Newpark Shares will be issued; if
fractional shares otherwise would issue, the Partners shall instruct Newpark at
least five business days before the Closing Date as to the rounding of such
shares.
1.2 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."
1.3 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 Partners. 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.
1.4 Concurrent Transaction. Concurrently with the execution and
delivery of this Agreement, Newpark, certain of the Partners and other
interested parties are executing and delivering an agreement (the "Related
Agreement") pursuant to which Newpark intends to acquire (the "Related
Acquisition") on the Closing Date, solely in exchange for 186,666 newly issued
shares of voting Common Stock of Newpark, 100% of the outstanding equity
interests in CHEMICAL TECHNOLOGIES, INC., a Texas corporation. The consummation
of the Related Acquisition on or before the Closing Date is a condition
precedent to each party's obligations under this Agreement unless waived in
writing by such party.
2. Ancillary Agreements.
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On the Closing Date, as a necessary incident of the Exchange, Newpark
and the Partners will execute and deliver (i) noncompetition agreements
substantially as set forth in Exhibit 2.1 attached to this Agreement and (ii) a
Registration Rights Agreement substantially as set forth in Exhibit 2.2 attached
to this Agreement.
3. Representations and Warranties of the Partners.
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A. Except as otherwise specifically set forth in a letter ("the
Disclosure Letter") delivered by FMI to Buyers prior to the execution hereof,
FMI hereby warrants and represents the following (the truth and accuracy of each
of which shall constitute a condition precedent to Buyers' obligations to
consummate the Exchange and issue the Newpark Shares):
3.1 Organization and Good Standing.
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3.1.1 FMI is a corporation duly organized, validly existing and in
good standing under the laws of the State of Texas and 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.
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3.1.2 The Company is a limited partnership duly formed and validly
existing under the laws of the State of Texas and has full partnership 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 in good standing 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 18). The Disclosure Letter includes a list of the
jurisdictions in which the Company is qualified to do business.
3.1.3 FMI has furnished to Newpark a complete and correct copy of
the Company's Agreement of Limited Partnership as in effect on the date hereof
(the "Partnership Agreement").
3.1.4 FMI has heretofore made available to Newpark for its
examination copies of the records of all the proceeding of the Partners. Said
records are accurate in all material respects and reflect all resolutions
adopted and all material actions expressly authorized or ratified by the
partners of the Company.
3.2 Capitalization.
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3.2.1 The Partners are the owners of 100% of the Partnership
Interests, and the Disclosure Letter includes the names, addresses and social
security numbers of, and the percentage interest in the Company owned by, each
of the Partners. All of the Partnership Interests have been validly issued.
3.2.2 Except as set forth in the Disclosure Letter, the Company
has not issued and is not subject to any securities or other instruments
representing an interest in the capital, net profits or net losses of the
Company, and there are no options, warrants, subscriptions or other rights
outstanding for the purchase of, or any securities convertible into, any
securities or other instruments representing an interest in the capital, net
profits or net losses of the Company.
3.3 Equity Interests. The Company does 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 Partners are not contrary to the Partnership Agreement 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 Partners or any of them are a party or by which any of
them are bound.
3.5 Financial Statements. The unaudited balance sheets of the Company as of
December 31, 1996, January 31, 1997, February 28, 1997, March 31, 1997, and
April 30, 1997, and the related unaudited statements of income, partner equity
and cash flows for the seven
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months ended December 31, 1996, the months ended January 31, 1997, February 28,
1997, March 31, 1997, and April 30, 1997, and for the period from January 1,
1997, to the end of each such month, 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 and in
accordance with generally accepted accounting principles 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 as of the end of and for each of such periods.
3.6 Properties. The Company has and on the Closing Date will have, 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. 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 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.
3.7 Contracts.
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3.7.1 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 $50,000; (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; (d) leases, con tracts 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 $50,000 per year;
(g) contracts under which the performance of any obligation of the Company is
guaranteed by a Partner 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 in excess of $50,000 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 the Company is a party and which have not been
fully performed, involving consideration having a value in excess of $50,000 and
a remaining period for performance in
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excess of nine months (all such items being collectively referred to herein as
"Material Contracts"). FMI has 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 Company and, to the "best of the knowledge" (as defined in Section 18) of
FMI, 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 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 FMI anticipates expenses materially in excess of revenues or
which is otherwise onerous or materially adverse; and the Company has not
expressly waived any material rights under any Material Contract.
3.8 Outstanding Indebtedness. The Disclosure Letter includes a true and com
plete schedule of all notes payable and other indebtedness in excess of $10,000
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.
3.9 Absence of Undisclosed Liabilities. 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 FMI, 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.
3.10 No Litigation. There are no actions, suits or proceedings (whether or
not purportedly on behalf of the Company) pending or, to the knowledge of FMI,
threatened against or affecting the Company, 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 FMI, the Company is not in default with
respect to any judgment, order, writ, injunction, decree or award of any
Government Body.
3.11 Environmental Matters.
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3.11.1 Neither the Company nor, to the best of the knowledge of
FMI, any previous owner, lessee, tenant, occupant or user of any real property
owned or leased on or prior
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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 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. To the best of the
knowledge of FMI, 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
FMI, 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.
3.11.2 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).
3.11.3 As of the date hereof, to the best of the knowledge of FMI,
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 FMI 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 FMI, have been received by or asserted against the Company.
3.12 Taxes.
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3.12.1 Except as set forth in the Disclosure Letter, the Company
has 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 Texas and by any other
state, municipality, subdivision, or other taxing authority, which are due and
payable by the Company have been paid in full or are adequately provided for by
reserves reflected on the latest balance sheet included in the Company Financial
Statements. The Company is a partnership for federal income Tax purposes and
has maintained its status as a partnership continuously since inception.
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3.12.2 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 and will be so
paid through the Closing Date. 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 Internal Revenue Code of 1986, as amended (the "Code"), and
the Company will continue to do so with respect to all wages paid by it through
the Closing Date.
3.12.3 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 all taxable periods ended since the inception of the Company
and 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.
3.13 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 Partners or the Company,
where such violation or default would have a Material Adverse Effect.
3.14 No Labor Problems. The Company has not been charged with any
unresolved unfair labor practices. 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 is not liable for
any arrears, wages or material penalties for failure to comply with any of the
foregoing.
3.15 Employee Benefit Plans.
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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 Company or any "ERISA Affiliate" (as hereinafter
defined), whether formal or informal, whether or not written, including but not
limited to the following:
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(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
(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 Company is 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 Company nor any ERISA Affiliate has any
liability or obligation, 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.
3.15.4 MEPPA Liability/Post-Retirement Medical Benefits/ Defined
Benefit Plans/Supplemental Retirement Plans. Except as set forth in the
Disclosure Letter, 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. Except as set forth in the
Disclosure Letter, 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.
3.15.5 Documentation. FMI has 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
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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 FMI 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 knowledge of FMI 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 Company or
any ERISA Affiliate has at all times been maintained, to the best knowledge of
FMI, 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 Company 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 FMI 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 Company and each ERISA Affiliate has 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
Company 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
Company 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 Company or any
ERISA Affiliate of operations at a facility causing more than 20% of a
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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
Company or any ERISA Affiliate under Section 412(n) of the Code or Sections
302(f) or 4068 of ERISA. The Company Financial Statements properly reflect all
amounts required to be accrued as liabilities under each Benefit Plan. To the
best knowledge of FMI, the most recent actuarial valuations of the Company's
Benefit Plans were based on accurate facts and information, and FMI has no
reason to believe that the conclusions set forth in such valuations are
incorrect.
3.15.9 Liabilities. Neither the Company 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 Company 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
Company or any ERISA Affiliate as the employer or sponsor under any Benefit
Plan, with any of the Internal Revenue Service, Department of Labor, PBGC, any
participant in or beneficiary of the Benefit Plans or any other Person
whatsoever. FMI knows 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. FMI 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.
3.17 Interest in Competitors, Suppliers, etc. Except as set forth in the
Disclosure Letter, none of the Partners, and no officer or director of the
Company 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 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. On the Closing Date the
Company will own, free and clear and without payment of any royalty or fee, all
interests in the assets, profits or business of the Company that are held by any
"Affiliate" (as defined in Section 18) of the Company, including the Partners
and their Family Members.
3.18 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 Company is not, and, on the Closing Date,
will not be, indebted to any of
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the Partners, directors or officers of the Company or any Affiliate of any such
Person. None of such Persons is or will be on the Closing Date indebted to the
Company.
3.19 Consents. No authorizations, approvals or consents of any Government
Body are required for consummation of the transactions contemplated by this
Agreement.
3.20 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. FMI has no knowledge of any claim received by the Company alleging any
conflict between any aspect of the business of the Company and any Intangible
Assets claimed to be owned by others which, if determined adversely to the
Company, would have a Material Adverse Effect. Neither FMI nor any other Partner
or Affiliate 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.
3.21 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.
3.22 Brokerage and Finder's Fees. Neither the Company nor the Partners (or
any Affiliate of the Partners) 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.
3.23 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:
3.23.1 suffered any Material Adverse Effect;
3.23.2 borrowed or agreed to borrow any funds in excess of $10,000 in
a single transaction or $25,000 in the aggregate, except borrowings under its
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;
-11-
3.23.3 mortgaged, pledged, hypothecated or otherwise encumbered any of
its properties or assets except for Permitted Liens;
3.23.4 made or agreed to make any distribution of any funds or assets
of any kind whatsoever to any past or present partner of the Company or any
Affiliate of any such Person, except as described in Section 4.5;
3.23.5 made any payment of principal or interest on any indebtedness
owed to any past or present partner of the Company or any Affiliate of any such
Person;
3.23.6 sold or agreed to sell any of its 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;
3.23.7 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;
3.23.8 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;
3.23.9 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;
3.23.10 assigned or agreed to assign any of its Intangible Assets
having a value in excess of $100,000;
3.23.11 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;
3.23.12 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
3.23.13 entered into any other material transaction other than in the
ordinary course of business.
B. Except as otherwise set forth in the Disclosure Letter, each Partner
represents and warrants with respect to itself or himself, as the case may be,
severally but not jointly, the following (the truth and accuracy of each of
which shall constitute a condition precedent to Buyers' obligations to
consummate the Exchange and issue the Newpark Shares):
3.24 Investment Representations. Either such Partner is an "accredited
investor", as that term is defined in Rule 501 of the "Rules and Regulations"
(as defined in Section 18) or such Partner, either alone or with such Partner's
qualified "purchaser representative" (as defined
-12-
in Rule 501 of the Rules and Regulations), has such knowledge and experience in
financial and business matters that such Partner is capable of evaluating the
risks and merits of an investment in the Newpark Shares. Such Partner is
acquiring the 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 Partner will furnish to Newpark evidence reasonably
satisfactory to Newpark that the foregoing representations are true.
3.25 Authority of Corporate Partners. The execution and delivery of this
Agreement by a Partner that is a corporation (a "Corporate Partner") and the
consummation of the transactions contemplated hereby have been duly authorized
by the Board of Directors and the stockholders of such Corporate Partner. This
Agreement has been duly executed and delivered to Newpark and no further
corporate action is necessary on the part of such Corporate Partner to make this
Agreement valid and binding upon such Corporate Partner in accordance with its
terms, subject to the Bankruptcy Exception. The execution, delivery and
performance of this Agreement by the Corporate Partner are not contrary to the
Articles of Incorporation or Bylaws of such Corporate Partner 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
such Corporate Partner is a party or by which such Corporate Partner is bound.
3.26 Authority of Individual Partners. This Agreement has been duly and
validly executed by each Partner that is an individual, and this Agreement
constitutes a legal, valid, and binding obligation of such Partner, enforceable
against him in accordance with its terms, subject to the Bankruptcy Exception.
Such Partner has the requisite power to enter into this Agreement and perform
his obligations hereunder (including without limitation to sell and deliver such
Partner's Interest), 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 such Partner to sell and deliver his
Interest pursuant to any trust, estate planning or other similar document or any
prenuptial or post-nuptial agreement or arrangement.
3.27 No Litigation. There are no actions pending or, to the knowledge of
such Partner, threatened in any court or arbitration forum or by or before any
Government Body involving the Company or such Partner relating to or affecting
any of the transactions contemplated by this Agreement.
3.28 Title to Interest. Such Partner is the holder of record and owns
beneficially the Interest in the Company set forth opposite such Partner's name
in the Disclosure Letter. At the Closing, such Partner will own the Interest 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 Partner is a party
to any voting trust, proxy or other agreement with respect to the voting of any
of such Interest.
3.29 No Material Misstatements or Omissions. No representation or warranty
by the Partners 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
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contemplated hereby, contains or will contain any untrue statement of a material
fact or omits or will omit to state a material fact required to be stated
therein or necessary in order to make the statements or facts therein, in the
light of the circumstances under which they were made, not misleading.
4. Additional Obligations and Covenants of the Partners.
----------------------------------------------------
Except as otherwise provided in the Disclosure Letter, the Partners
hereby jointly and severally covenant and agree with Buyers as follows (the
fulfillment of each such covenant and agreement is a condition precedent to
Buyers' obligations to consummate the Exchange and issue the Newpark Shares):
4.1 Conduct of Business. Between the date hereof and the Closing
Date, the Partners will and will cause the Company to comply with the following:
4.1.1 The business of the Company shall be conducted diligently
and only in the ordinary course, and the Partners will use reasonable efforts to
preserve the organization of the Company intact, to keep available to the
Company its present key employees and to maintain the relationships of the
Company with its suppliers, customers and others. The Company will not, without
Newpark's prior written approval, increase the rate of compensation payable or
to become payable to any of its 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 Company.
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 Company or any ERISA Affiliate.
4.1.3 The Company 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 Company will not, without Newpark's prior written
approval, sell or dispose of any of its material properties or assets except for
sales at fair value in the ordinary course of business.
4.1.5 The Company 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 Company will use reasonable diligence to maintain its
properties in their condition as of the date of this Agreement, ordinary wear
and tear excepted.
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4.1.7 The Company will continue to carry its existing insurance
policies subject only to variations in amounts required by the ordinary
operations of its 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 FMI,
FMI will afford to Newpark and Newpark's counsel, accountants and other
representatives reasonable access, throughout the period from the date hereof to
the Closing Date, to all of the Company's 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.
4.3 Efforts to Satisfy Conditions. The Partners agree to use
reasonable efforts to satisfy or cause to be satisfied all of the conditions
precedent to Buyers' 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 Partners will and will
cause the Company to refrain from all negotiations and transactions, the
consummation of which would be inconsistent with the transactions contemplated
by this Agreement, including, without limitation, any transaction providing for
the sale or acquisition of any interest in the capital, net profits or net
losses of the Company, any business combination involving the Company or the
sale of a substantial portion of the assets of the Company.
4.4 Partnership Matters. Between the date hereof and the Closing
Date, the Partners will cause the Company not to, without Newpark's prior
written approval: (a) amend the Partnership Agreement; (b) issue any interest in
the capital, net profits or net losses of the Company; (c) issue or create any
warrants, obligations, subscriptions, options, convertible securities or other
commitments under which any interest in its capital, net profits or net losses
might be directly or indirectly authorized, issued or transferred; or (d) enter
into any agreement requiring it to do any of the foregoing prohibited acts.
4.5 No Distributions to Partners. Between the date hereof and the
Closing Date, the Partners will cause the Company not to, without Newpark's
prior written approval: (a) declare, set aside or pay any distribution in
respect of any of the Interests, except that the Company may authorize a
distribution (the "Tax Distribution") to the Partners on or before the Closing
Date, payable after the Closing Date, in an amount equal to 39.6% of each
Partner's prorated share of the net profits of the Company from January 1, 1997
through the Closing Date (the "Short Period Income Taxes"); (b) directly or
indirectly purchase, redeem or otherwise acquire any shares of the Interests for
consideration; (c) pay or distribute any cash or property to any Partner as a
loan or in payment of principal of or interest on any indebtedness to any
Partner; 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 Partners will cause the Company not to, without Newpark's prior
written approval, make any commitment for capital expenditures in excess of an
aggregate of $10,000.
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4.7 Indebtedness. Between the date hereof and the Closing Date, the
Partners will cause the Company not to, without Newpark's prior written
approval: (a) create, incur or assume any long-term debt (including capital
leases that individually involve annual payments in excess of $50,000) 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 $10,000 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
Partners' 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 Company and the Partners
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 80,000,000 shares of Common Stock, $.01 par value, of which 30,414,618 shares
were issued and outstanding on May 8, 1997 (as adjusted for a two-for-one stock
split effective May 30, 1997), and 1,000,000 shares of Preferred Stock, $.01 par
value, of which no shares are issued and outstanding.
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
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business transacted by it require such qualification, except where failure to be
so qualified would not have a Material Adverse Effect.
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 Partners 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 Partners 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
-17-
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 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
Partners 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 Company") 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.
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 Partners 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 Partners as follows (the
fulfillment of each such covenant and agreement is a condition precedent to the
Partners' obligations to consummate the Exchange):
-18-
6.1 Efforts. Newpark agrees to use reasonable efforts to satisfy or
cause to be satisfied all of the conditions precedent to the Partners'
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
Partner 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 Company who continues
immediately after the Closing Date as an employee of the Company, 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 Company") and under any Benefit Plan adopted in the future for service
completed with the Company 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 Supply Indebtedness. Subject to consummation of the Exchange,
Newpark agrees that, after the Closing Date, it will cause the Company to repay
the indebtedness of the Company to Supply as described 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:
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
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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 Related Acquisition Consummated. The Related Acquisition shall
have been consummated.
7.3 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.
7.4 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.
7.5 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 Buyers.
---------------------------------------------
The obligations of Buyers 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
Buyers:
8.1 Investigation of the Company. Newpark shall have made an
investigation of the business, properties (tangible and intangible), products,
customers, plants, contracts and financial condition of the Company and shall
have been satisfied with the results of such investigation. This condition
shall be deemed satisfied unless Newpark notifies the Partners 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 Partners 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
Company, or its properties, prospects, or financial condition, as though such
representations and warranties had been made on and as of the Closing Date, and
the Partners shall have performed in all
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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 Company which in their total
effect have a Material Adverse Effect on the Company.
8.4 Partners' Certificate. The Partners shall have delivered to
Buyers a certificate, dated the Closing Date, executed by each of the Partners,
individually, stating that, to the best knowledge of each, (a) all the
representations and warranties of the Partners contained in this Agreement are
true and accurate, (b) all of the conditions precedent to the obligations of
Buyers hereunder have been fulfilled and (c) the Company and the Partners have
duly performed all obligations and covenants to be performed by them hereunder.
8.5 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
Date.
8.6 Opinion of the Partners' Counsel. Newpark shall have received an
opinion of Xxxxxxxxxx & xxxXxxx, 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
Partners certified copies of such records of the Company and copies of such
other documents as such counsel may reasonably have requested for such purpose.
9. Conditions Precedent to Obligation of the Partners.
--------------------------------------------------
The obligations of the Partners 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 Partners:
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.
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9.3 No Material Adverse Change. There shall have been no changes
since December 31, 1996, in the results of operations, assets, liabilities,
financial condition or affairs of Newpark and its subsidiaries, taken as a
whole, which, in their total effect, have a Material Adverse Effect on Newpark
and its subsidiaries.
9.4 Officers' Certificate of Newpark. Newpark shall have delivered
to the Partners 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 Partners 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 Partners 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 Partners, 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 June 4, 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 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 Partners 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 Partners set forth in Paragraphs 3.11, 3.12, 3.15 and 3.28
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
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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 Partners and Buyers which are based upon contracts, arrangements
or acts of the Partners or the Company or both which were in effect or occurred
on or prior to the Closing.
12.2 Access to Records. The Partners 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 Partners' consent.
12.3 Tax Matters.
-----------
12.3.1 Control of Tax Proceedings. Whenever any taxing authority
asserts a claim, makes an assessment, or otherwise questions or disputes the
amount of Taxes of the Company for any period prior to the Closing Date, Newpark
shall promptly inform the Partners in writing of such fact. The provisions of
Section 13 shall apply to the defense of any such claim, assessment or dispute.
12.3.2 Current Tax Returns. The Partners shall be responsible for
the preparation and filing of all Tax Returns for all taxable periods that end
or ended on or before the Closing Date and which have not been filed or are not
required to be filed by the Closing Date. The Company shall pay any and all
Taxes due with respect to such returns. Buyers will make available to the
Partners, without charge, the services of its personnel and the personnel of the
Company to assist the Partners in the preparation of such Tax Returns. Such Tax
Returns shall be reasonably satisfactory to Newpark in form and substance. The
Partners shall pay their pro rata 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 attributable to
any taxable year ending on or before the Closing Date shall be for the account
of the Partners, and any refunds and credit of other Taxes attributable to any
taxable year ending on or before the Closing Date shall be for the account of
the Company; to the extent that any such refund of Taxes other than federal
income Taxes exceeds the amount, if any, accrued on the books of the Company
with respect to the period for which the refund is received, the Partners shall
receive credit against any liability they may have under Section 13.
-23-
12.3.4 Cooperation. Buyers and the Partners shall cooperate with
each other in a timely manner in the preparation and filing of any Tax Returns
and the conduct of any audit or any other inquiry or proceeding with respect to
any Tax Return. 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
adjustments that do not result in Tax liability but can be reasonably expected
to affect any Tax Return 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 Partners 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 Partners. Subject to the provisions of
Sections 11 and 13.3, the Partners, jointly and severally (but severally with
respect to their individual representations and warranties set forth in
paragraphs 3.24, 3.25, 3.26, 3.27, 3.28 and 3.29), hereby agree to indemnify,
defend, protect and hold harmless Buyers against all damages, losses,
liabilities, costs and expenses (including reasonable attorneys' fees) resulting
from any and all breaches of any warranty or representation made by them in this
Agreement or any schedule or agreement delivered pursuant to this Agreement.
Such indemnification shall be solely the responsibility of the Partners, 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.
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 Partners against all damages, losses, liabilities, costs and
expenses (including reasonable attorneys' fees) resulting from any breach of any
warranty or representation made by Newpark in this Agreement or any schedule or
agreement delivered pursuant to this Agreement. The rights to such
indemnification shall accrue solely to the Partners, and the Company 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
-24-
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 Partners 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 $50,000. In no event shall the
liability of any of the Partners for any breach of warranty or representation
hereunder exceed the value of the Newpark Shares for which such Partner's
Interests are exchanged in the Exchange, for which purpose they shall be valued
at their "Closing Value" (as defined in Section 18). To the fullest extent
permitted by law, and to the extent that such Partner continues to own any of
the Newpark Shares, each Partner shall satisfy such Partner's 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 Partners 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
Partners 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 Partners.
13.3.5 The rights and obligations of the parties under this
Article 13 shall be the exclusive rights and obligations of the parties with
respect to any breach of any representation or warranty in this Agreement and
shall be in lieu of any other rights or remedies to which the party entitled to
indemnification hereunder would otherwise be entitled as a result of such breach
under this Agreement.
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. Buyers and the Partners shall first attempt
diligently to resolve any such issue or dispute. They
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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 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 Partners, as one party, or Buyers, as the other
party, 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, 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 Judicial District Court
of Xxxxxx County, Houston Division, 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 Houston 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
-26-
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 Texas, 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
Judicial District Court of Xxxxxx County, Houston Division.
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 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
Company shall be borne by the Partners until the Closing to the extent set forth
in this Section 14. If on the Closing Date 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 Buyers of the Interests, Buyers shall have the
right at their election to complete the acquisition (in which event, as Buyers'
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 they do not so elect, they 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
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Agreement relating to the postponement of the Closing Date, either Buyers or the
Partners 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 Buyers or the Partners) 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.
Partners: c/o FMI Wholesale Drilling Fluids, Inc.
Xxxxxxx 000 Xxxx
Xxxxxx, Xxxxx 00000
Facsimile No.: (___) ___-____
With a copy to:
Xxxx Xxxxxxx xxxXxxx, Esq.
Xxxxxxxxxx & xxxXxxx
000 Xxxxx Xxx Xxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Facsimile No.: (000) 000-0000
Buyers: c/o Newpark Resources, Inc.
0000 Xxxxx Xxxxxxxx, Xxxxx 0000
Xxxxxxxx, XX 00000
Attention: Secretary
Facsimile No.: (000) 000-0000
With a copy to:
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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 Partners or Buyers 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, without limiting the generality of the foregoing,
includes (a) any director or officer of such Person or of any Affiliate of such
Person, (b) any such director's or officer's Family Members, (c) any group,
acting in concert, of one or more of such directors, officers or Family Members,
and (d) any Person controlled by any such director, officer, Family Member or
group which beneficially owns or holds 25% or more of any class of equity
securities or profits interest. The term "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of an entity, whether through the ownership of voting
securities, by contract or otherwise.
"Bankruptcy Exception" means the limitation on enforceability imposed
by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
of general application relating to or affecting the enforcement of the rights of
creditors or by equitable principles, whether enforcement is sought in equity or
at law.
"Closing Value" means the average of the closing prices of Newpark's
Common Stock on the New York Stock Exchange, as reported in The Wall Street
Journal, for the five trading days immediately preceding the third trading day
prior to the 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.
-29-
"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 of
"hazardous substances," "hazardous wastes," "hazardous materials," or "toxic
substances" under the Hazardous Materials Laws.
"Knowledge of FMI" (and similar terms such as "to the best of the
knowledge of FMI") means the actual knowledge of any executive officer of the
Company, FMI, General Supply Co. and Fluids Management, Inc., including, without
limitation, Xxxx XxXxxxxx and Xxxxx Xxxxxxx.
"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 Company or Newpark) and its subsidiaries (i.e., the
Newpark Subsidiaries), taken as a whole.
"Permitted Lien(s)" means (a) all liens and encumbrances disclosed in
the Disclosure Letter, (b) landlords', mechanics', carriers', workers' and
similar statutory liens arising in the ordinary course of business for sums not
delinquent, for which adequate reserves or other appropriate provisions have
been made in the Company Financial Statements, (c) deed restrictions and similar
exceptions to clear title not incurred in connection with indebtedness that do
not materially impair the existing use or materially detract from the value of
the assets or property 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.
-30-
"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 Texas applicable to contracts made and to
be wholly performed within said State.
20. Remedies Not Exclusive.
----------------------
Except as provided in Sections 13 and 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, Buyers will pay and be
responsible for all costs and expenses incurred by Buyers in connection with
this Agreement and the transactions contemplated hereby, and the Partners will
pay and be responsible for all costs and
-31-
expenses incurred by the Company and the Partners 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.
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.
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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.
BUYERS: THE PARTNERS:
Newpark Resources, Inc. FMI Wholesale Drilling Fluids, Inc.
By:/s/ Xxxxx X. Xxxx By:/s/ Xxxx XxXxxxxxx
----------------------------- -------------------------------
Name: Xxxxx X. Xxxx Xxxx XxXxxxxxx, President
Title: President
Newpark Holdings, Inc. General Supply Co.
By:/s/ Xxxxxxx X. Xxxxxx By:/s/ Xxxx XxXxxxxxx
----------------------------- -------------------------------
Name: Xxxxxxx X. Xxxxxx Xxxx XxXxxxxxx, President
Title: Vice President of Finance
Newpark Texas L.L.C. American Polymer, Inc.
By:/s/ Xxxxxxx X. Xxxxxx By:/s/ Xxxx XxXxxxxxx
------------------------------ -------------------------------
Name: Xxxxxxx X. Xxxxxx Xxxx XxXxxxxxx, President
Title: Vice President of Finance
/s/ Xxxxx Xxxxxxx
-----------------------------------
Xxxxx Xxxxxxx
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