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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1995 Commission File No. 1-2960
Newpark Resources, Inc.
(Exact name of registrant as specified in its charter)
Delaware 72-1123385
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3850 N. Causeway, Suite 1770
Metairie, Louisiana 70002
(Address of principal executive offices) (Zip Code)
(504) 838-8222
(Registrant's telephone number)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
___________________
Common Stock, $.01 par value
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that
the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulations S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy of
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K [ ].
At March 4, 1996, the aggregate market value of the voting stock
held by non-affiliates of the registrant is $242,707,025. The aggregate
market value has been computed by reference to the price at which the stock
was sold, as reported by The New York Stock Exchange.
As of March 4, 1996, a total of 10,658,453 shares of Common Stock,
$.01 par value, were outstanding.
Documents Incorporated by Reference
Portions of the registrant's Proxy Statement for the upcoming 1996
Annual Meeting of Shareholders are incorporated by reference into Part III
hereof.
Page 1 of 65
Exhibit Index Appears on Page 60
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NEWPARK RESOURCES, INC.
INDEX TO FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995
Item Page
Number Description Number
______ ___________ ______
PART I
______
1 Business 3
2 Properties 29
3 Legal Proceedings 30
4 Submission of Matters to a Vote of Security Holders 31
PART II
_______
5 Market for the Registrant's Common Equity and
Related Stockholder Matters 32
6 Selected Financial Data 33
7 Management's Discussion and Analysis of Financial
Condition and Results of Operations 34
8 Financial Statements and Supplementary Data 41
9 Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 58
PART III
________
10 Directors and Executive Officers of the Registrant 59
11 Executive Compensation 59
12 Security Ownership of Certain Beneficial Owners
and Management 59
13 Certain Relationships and Related Transactions 59
PART IV
_______
14 Exhibits, Financial Statement Schedules, and Reports
on Form 8-K 60
Signatures 64
2
PART I
ITEM 1. Business
The Company
Newpark Resources, Inc. ("Newpark" or the "Company") provides
integrated environmental services to the oil and gas exploration and
production industry in the Gulf Coast area, principally in Louisiana
and Texas. Those services are concentrated in three key product
lines: (i) mat rental servicesDthe use of patented prefabricated
wooden mats as temporary worksites in oilfield and other construction
applications; (ii) processing and disposal of nonhazardous oilfield
waste ("NOW'); and (iii) processing and disposal of NOW which is
contaminated with naturally occurring radioactive material ("NORM").
In its waste disposal operations, the Company utilizes proprietary
technology.
The Company's mat rental services have been provided primarily to
the oil and gas exploration and production industry. The mats provide
temporary worksites in unstable soil conditions typically found along
the Gulf Coast. In addition to the installation and rental of mats,
the Company also provides for the management and treatment of
nonhazardous oilfield waste on the well site, the remediation of waste
pits, and general oilfield services. In 1994, the Company began
marketing these temporary worksites to other industries. Increasing
environmental regulation affecting the construction of pipelines,
electrical distribution systems and highways in and through wetlands
environments has provided a substantial and rapidly growing new
market for these services and have broadened the geographic market
served by the Company to include the coastal areas of the Southeastern
states, particularly Florida and Georgia, in addition to its
traditional Gulf Coast market. The Company believes that heightened
environmental concern in other markets and other countries, such as
that developing in Venezuela, will continue to provide opportunities
for the mat rental business.
In its NOW processing and disposal business, Newpark processes
the majority of the NOW received at its facilities for injection into
geologically secure formations deep underground and creates from the
remainder a reuse product which is used as intermediate daily cover
material or cell liner material at municipal waste landfills. Since
the fourth quarter of 1994, the Company has provided processing and
disposal of NOW waste that is contaminated with NORM, processing the
waste for injection disposal in wells owned by the Company. In
3
addition, the Company provides laboratory and consulting services for
its customers in connection with its NOW and NORM services.
The Company offers these services individually and as an
integrated package. The recent trend toward more strict environmental
regulation of both drilling and production operations conducted by the
Company's customers has resulted in greater synergy between the
Company's mat rental and oilfield general construction services and
its other environmental services. The Company provides a
comprehensive integrated combination of in-situ waste management and
construction services for both the drilling of new sites and the
remediation of existing sites. This integration provides it a
competitive advantage in an era of downsizing by its major customers,
which has made those customers more reliant upon outside suppliers for
many services. By providing a broad array of integrated services,
Newpark reduces the number of contractors necessary to provide these
services, decreasing the customer's administrative workload.
Newpark's offsite waste processing operations utilize a
combination of proprietary preparation technology to blend the waste
into an injectible slurry and specific underground geology into which
injection is effected, and patent applications have been filed to
protect this proprietary methodology. The Company's mat rental
business uses a patented interlocking wooden mat system, patent
protection of which extends to the year 2003. Newpark believes that
the proprietary aspects of these businesses cannot be easily
duplicated, thereby providing a competitive advantage.
In anticipation of increased demand for hardwood lumber used in
construction of its rental mats, the Company purchased a sawmill in
Batson, Texas, in October 1992. Newpark has since doubled the
capacity of the facility, and expects to fully utilize such capacity
in serving its mat rental business.
4
The following table sets forth for the years ended December 31,
1995, 1994, and 1993, respectively, the amount of revenues for each
class of similar products and services.
Year ended December 31,
_______________________
1995 1994 1993
____ ____ ____
(Dollars in thousands)
Revenues:
Offsite waste processing $31,126 $20,738 $11,354
Mat rental 30,775 23,048 21,042
General oilfield services 14,511 13,452 11,358
Wood products sales 12,609 13,105 7,947
Onsite environmental management 7,361 7,689 4,629
Other 1,600 1,600 -
______ ______ ______
Total revenues $97,982 $79,632 $56,330
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Newpark was organized in 1932 as a Nevada corporation and in
April 1991 changed its state of incorporation to Delaware. The
Company's principal executive offices are located at 3850 North
Causeway Boulevard, Suite 1770, Metairie, Louisiana 70002, and its
telephone number is (504) 838-8222.
Development of the Business
Since 1990, the Company has concentrated on expanding and further
integrating its environmental service capabilities. Through
acquisitions in 1990 and 1991, Newpark extended its environmental
services into the Texas Gulf Coast region. In May 1991, the Company
expanded its processing capacity by constructing a new NOW processing
plant in Port Arthur, Texas, replacing a smaller facility. The
Company has further increased plant capacity through subsequent
equipment additions and improvements in process technology and
procedures. Beginning in 1992, the Company accelerated the
development of its deep well injection program and, in November 1993,
opened its first facility for underground disposal of NOW, at Big
Hill, Texas.
Significant developments in 1995 included:
. The Company's license to process NORM waste was amended to
increase the maximum level of radioactive contamination
permitted and to increase the capacity of the facility.
5
. The trend toward a more strict regulation of NOW and NORM waste
continued. NORM regulations were adopted in several states,
most importantly New Mexico and Texas. The NORM regulations
were revised in Louisiana and are under revision in the
state of Mississippi. Draft regulations have been prepared,
but are not yet proposed in Oklahoma.
. The volume of NOW processed by the Company grew by 25% to 2.9
million barrels despite lower drilling activity as measured
by the rig count.
. A second NOW facility, located near Fannett, Texas, was opened
in the third quarter of 1995, and additional wells were
drilled at the Big Hill facility, providing a further
increase in waste disposal capacity.
. The market for the Company's mat rental services in non-
oilfield markets expanded into Florida and Georgia.
. The Company initiated a joint venture to provide its
proprietary mat rental services to the exploration and
production market in Venezuela.
. The effect on the Company's services of a decline in the number
of active drilling rigs was substantially offset by deeper
drilling by the Company's customers.
NOW and NORM are defined as follows:
NOW - Nonhazardous Oilfield Waste or NOW is waste generated in
the exploration or production of oil and gas. These wastes typically
contain levels of oil and grease, salts or chlorides, and heavy metals
in excess of concentration limits defined by state regulators. NOW
also includes soils which have become contaminated by these materials.
In the environment, oil and grease and chlorides disrupt the food
chain and have been determined by regulatory authorities to be harmful
to plant and animal life. Heavy metals are toxic and can become
concentrated in living tissues.
NORM - Naturally Occurring Radioactive Material or NORM is
present throughout the earth's crust at very low levels. Among the
radioactive elements, only Radium 226 and Radium 228 are slightly
soluble in water. Because of their solubility, which can carry them
into living plant and animal tissues, these elements present a hazard.
6
Radium 226 and Radium 228 can be leached out of hydrocarbon bearing
strata deep underground by salt water which is produced with the
hydrocarbons. Radium generally precipitates out of the production
stream as it is drawn to the surface and encounters a pressure or
temperature change in the well tubing or production equipment, forming
a rust-like scale. This scale contains radioactive elements which,
over many years, can become concentrated on tank bottoms or at water
discharge points at production facilities. Thus, NORM waste is NOW
that has become contaminated with these radioactive elements above
concentration levels defined by state regulatory authorities.
Amendment to NORM waste license - During 1994, Newpark became a
licensed NORM contractor in Louisiana and Texas. The Company built a
NORM waste treatment plant adjacent to its NOW treatment plant in Port
Arthur, Texas, at which the Company uses a proprietary process to
slurry the material and reduce the NORM concentration below the level
at which it is regulated as NORM in preparation for underground
injection. Newpark applied for U.S. patents on certain aspects of its
treatment and disposal processes. The facility began operations in
October 1994, and is one of only four commercial offsite facilities in
the United States that is licensed to process and dispose of NORM
waste. The license was modified during 1995 to increase the maximum
permitted concentration of Radium 226 present in the waste received at
the facility from 400 picocuries per gram to 6,000, and the total
concentration of radioactive isotopes from 2,000 picocuries per gram
to 30,000.
Developments related to NOW - The Company processed and
disposed of 2,905,000 barrels of NOW in 1995, of which 2,364,000
barrels were generated from current drilling and production operations
and 541,000 barrels were generated from the remediation of old pits
and production facilities, compared with 2,329,000 barrels in 1994, of
which 1,974,000 were from current drilling and production operations
and 355,000 were from remediation activities. The increase resulted
principally from the further tightening of state and federal
regulations limiting the discharge of waste into inland waterways and
offshore and, to a lesser extent, from changes in the type and mix of
drilling activity.
During 1995, Newpark further expanded its NOW injection facility,
located at Big Hill, Texas, drilling two additional injection wells
and constructing a grinding mill at the site to more efficiently
handle the large quantities of waste resulting from the growing
remediation market. The mill is used to reduce and make uniform the
size of the particles in the waste stream to maintain desired flow
7
characteristics in the Company's injection wells. In September 1995,
the Company opened its second injection site, at Fannett, Texas,
drilling two wells at that facility, and in the fourth quarter,
completed a bulk barge unloading facility adjacent to the original
Port Arthur processing plant. Together with additions to personnel
and equipment at its receiving facilities, this increased its NOW
processing capacity to approximately 500,000 barrels per month.
Services to wetlands construction projects - Many of the
environmental concerns that have affected drilling in the
environmentally sensitive marshes of the Gulf Coast are now beginning
to affect other construction activities in the Gulf Coast and other
geographic areas. Federal and state regulatory agencies have begun to
require increased precautions to prevent construction-related damage
to the environment in wetlands areas throughout the United States.
Newpark believes that its prefabricated mat technology is well-suited
for use in construction projects in wetlands areas. During 1995, the
Company performed projects in connection with pipeline, electrical
utility and highway construction projects in Georgia, Florida, Texas
and Louisiana. The Company anticipates that similar opportunities
will allow it to continue to diversify its geographic base, following
the wetlands activity to construction related markets in other states.
Venezuela joint venture - During the first quarter of 1995, the
Company invested in a joint venture providing mat rental services in
Venezuela in support of oil and gas exploration and production
activities. A total of 7,000 mats were shipped to the market during
the year and, by year end, substantially all were under contract to a
customer. The government of Venezuela has made increasing its output
of oil over the next several years a national priority, and has begun
attracting outside investment partners from among the international
oil companies, many of which are Newpark's customers in the domestic
market. Subsequent to December 31, 1995, the joint venture arranged
shipment of an additional 5,000 mats to Venezuela, and expects that
activity there will continue to increase as further exploration
concessions are granted. Newpark holds a 38.8% interest in the
venture.
Drilling activity - The level of drilling activity in Newpark's
key market declined 4% to an average of 195 rigs running in 1995
compared to 202 during 1994. This mirrored the decline in the U.S.
rig count, which averaged 723 in 1995 compared to 774 in 1994. The
1995 activity level was the second lowest since 1940, after an average
of 717 recorded in 1992. In much of the coastal marsh and inland
waters, termed the "transition zone," the high cost associated with
access to the site and lack of seismic data has been an obstacle to
8
development, and as a result, the area has been less actively drilled
compared to the offshore and land areas. High quality seismic data
has become available only through recent improvements in technology.
The increased use of advanced seismic data and the computer-enhanced
interpretation of that data has enabled Newpark's customers to select
exploratory drilling sites with greater likelihood of success. This
enables them to undertake more expensive projects, such as drilling in
the transition zone along the Gulf Coast region.
Such projects rely heavily on services such as the Company's
integrated environmental services. Deeper wells require the
construction of larger locations to accommodate the drilling equipment
and the equipment for handling drilling fluids and associated wastes;
such locations generally are in service for significantly longer
periods and generate additional mat rental revenues. Deeper wells
also require more chemically complex drilling fluids programs, which
are more difficult and costly to dispose of than the simpler systems
used in shallower wells. The Company believes that, in 1995, deeper
drilling contributed significantly to the increased demand for the
Company's services.
Regulatory Background
The oilfield market for environmental services has increased as
regulations have increased. Louisiana, Texas, and other states have
enacted comprehensive laws and regulations governing the proper
handling of NOW and NORM. This has also heightened the awareness of
both the generators of waste and landowners of the need for proper
treatment and disposal of such waste in both the drilling of new wells
and the remediation of production facilities.
For many years, prior to current regulation, industry practice
was to allow NOW to remain in the environment. Onshore, surface pits
were used for the disposal of NOW; offshore, NOW was discharged
directly into the water. As a result of increasing public concern
over the environment, NOW has in recent years become subject to public
scrutiny and governmental regulation. Operators of exploration and
production facilities, including major and independent oil companies,
have found themselves subject to a multiplicity of laws and
regulations issued by numerous jurisdictions and agencies. These laws
and regulations have imposed strict requirements for ongoing drilling
and production activities in certain geographic areas, as well as for
the remediation of sites contaminated by past disposal practices and,
in many respects, have prohibited the prior disposal practices. In
9
addition, operators have become increasingly concerned about possible
long-term liability for remediation, and landowners have become more
aggressive about land restoration. For these reasons, operators are
increasingly retaining service companies, such as Newpark, to devise
and implement comprehensive waste management techniques to handle
waste on an ongoing basis and to remediate past contamination of oil
and gas properties.
Late in 1992, the Louisiana Department of Environmental Quality
("DEQ") began to promulgate and enforce new, stricter limits on the
level of radium concentration above which NOW became categorized as
NORM. NORM regulations require more stringent worker protection,
handling and storage procedures than those required of NOW under
Louisiana Statewide Executive Order 29-B. Uncertainty in measuring
NORM concentration was created by apparent inconsistencies in the
results produced by alternative testing methodologies allowed in then
current regulations. Early in 1994, DEQ published draft NORM
regulations which, with minor modification, became effective January
20, 1995, as LAC 33:XV.1401-1420, Chapter 14. In Texas, the Railroad
Commission adopted final rules ("Rule 94") effective February 1, 1995.
Adoption of these regulations has resolved the regulatory uncertainty
associated with NORM.
The primary laws that have helped to create the market for
Newpark's environmental services in the Gulf Coast region, and which
apply to Newpark in the conduct of its business, are the Resource
Conservation and Recovery Act of 1976, as amended in 1984 ("RCRA"),
the Comprehensive Environmental Response, Compensation, and Liability
Act, as amended in 1986 ("CERCLA"), the laws and regulations
promulgated by the states of Louisiana, Texas and Alabama, the Federal
Water Pollution Control Act, as amended (the "Clean Water Act"), and
the Federal Oil Pollution Act of 1990 ("OPA"). These laws are
discussed under "Environmental Regulation".
Description of Business
The principal services and products provided by the Company are
classified as follows:
10
Offsite Waste Processing
NOW Waste Processing. Under state regulation, if NOW cannot be
treated for discharge or disposed of on the oil or gas lease location
where it is generated, it must be transported to a licensed NOW
disposal or treatment facility. There are three primary alternatives
for offsite disposal of NOW available to generators in the Gulf Coast:
(i) land-farming, provided by the Company's competitors; (ii)
processing and conversion of the NOW into a reuse product; and (iii)
underground injection (See "Injection Wells"). The Company processes
NOW waste at a facility located at Port Arthur, Texas, which was
opened in 1991. Newpark also operates six other receiving and
transfer facilities located along the Gulf Coast from Venice,
Louisiana, to Corpus Christi, Texas. Waste products are collected at
the transfer facilities from three distinct markets: offshore
exploration and production; land and inland waters exploration and
production; and remediation of existing or inactive well sites and
production facilities. These facilities are supported by a fleet of
42 double-skinned barges certified by the U. S. Coast Guard to
transport NOW. Waste received is transported by barge through the
Gulf Intracoastal Waterway to the Company's processing facility at
Port Arthur, Texas, or trucked to facilities at Fannett or Big Hill,
Texas.
The Company has historically converted the waste stream to a
commercial reuse product meeting the specifications under applicable
federal and state regulations for reuse as a covering material or cell
liner material at sanitary landfills. Under these regulations,
landfills must cover the solid waste deposited daily with earth or
other inert material. The Company's reuse product is deposited at
either the City of Port Arthur Municipal Landfill or the City of
Beaumont Municipal Landfill for use as such cover material pursuant to
contracts with the respective cities. This reuse is conducted under
authorization from the Texas Natural Resources Conservation Commission
and is permitted by the Texas Railroad Commission, under a permit that
was renewed in January 1994, for a three year period. The Company has
also developed alternative uses for the product as roadbase material
or construction fill material.
Currently, only a portion of the waste received by the Company
is processed into a reuse product. Since November 1994, the Company
has disposed of a majority of the waste received at its processing
facility by injection of the waste into disposal wells at its Big Hill
facility and, since the third quarter of 1995, its Fannett Facility.
11
NORM Processing and Disposal. Newpark's entry into the onsite
remediation (1993) and disposal (1994) of NORM waste is discussed
under "Business - Development of the Business." Many alternatives are
available to the generator for the treatment and disposal of NORM.
These include both chemical and mechanical methods designed to achieve
volume reduction, in-situ burial of encapsulated NORM within old well
bores, and soil washing and other techniques of dissolving and
suspending the radium in solution for onsite injection of NORM
liquids. When the application of these techniques are insufficient to
bring the site into compliance with applicable regulations, the NORM
must be transported to a licensed storage or disposal facility.
Newpark's NORM processing facility was licensed in September 1994
and began operations October 21, 1994. The facility receives NORM
waste from production operations and remediation sites, generally by
barge, truck, in drums or other containers. The material, which is
similar to NOW in virtually all respects other than its elevated level
of Radium 226 or Radium 228, is processed to achieve a uniform
particle size and, through the introduction of viscosifiers and
carrying agents, is suspended in a liquid stream suitable for disposal
in Class II injection wells operated by the Company. Such processing
also reduces the concentration of radioactive material to a level at
which the material is no longer regulated as NORM, but reverts to NOW
characteristics. The processed waste meets the criteria for injection
disposal under Texas Railroad Commission Rule 9 and Rule 94 and is
transported by truck to the Company's injection well facility. During
1995, the facility license was modified to increase the level of total
radioactive contamination permitted in the waste received at the
facility from 2,000 picocuries per gram to 30,000, and the level of
Radium 226, upon which most regulation is primarily focused, from 400
to 6,000 picocuries per gram.
During 1995, the Company received 70,000 barrels of NORM
contaminated waste. Much of the growth in the market can be
attributed to increased litigation on the part of landowners concerned
over the past practices of the oil and gas industry which have
resulted in numerous instances of radioactive contamination of the
surface. In some cases, settlement of the litigation has mandated the
remediation of such sites.
Injection Wells. In February 1993, upon receipt of a permit
from the Texas Railroad Commission, the Company began development of a
50 acre injection well facility in the Big Hill Field in Jefferson
County, Texas. Newpark's injection technology is distinguished from
conventional methods in that it utilizes very low pressure, typically
12
under 100 pounds per square inch, to move the waste into the injection
zone. Conventional wells typically use pressures as high as 2,000
pounds per square inch. In the event of a formation failure or
blockage of the face of the injection zone, such pressure can force
waste material beyond the intended zone, posing a hazard to the
environment. The low pressure used by Newpark is inadequate to drive
the injected waste from its intended injection zone.
Three wells were initially installed at this facility and two
additional wells were successfully completed during 1995. Disposal
operations began at this site in November 1993. During 1995, the
Company licensed and constructed a new injection well facility at a
400 acre site near Fannett, Texas, which was placed in service in
September 1995. Because of differences between the geology and
physical size of the two sites, the Fannett site is expected to
provide greater capacity than the Big Hill site.
The injection wells at Big Hill and Fannett receive NOW waste
from the Company's processing facilities at Port Arthur, as well as
from customers in the surrounding area. Newpark anticipates that it
will open additional injection facilities for both NOW and NORM waste
in Louisiana and Texas over the next two to three years. The Company
has identified a number of sites in the Gulf Coast region as suitable
for development of such disposal facilities, has received permits for
one additional site in Texas, and plans to file for additional permit
authority in Louisiana.
The Company believes that its proprietary injection technology
has application to other markets and waste streams, and has begun
preliminary work and analysis to enter the nonhazardous industrial
waste market in the future.
The Company also operates an analytical laboratory in Lafayette,
Louisiana, which supports all phases of its environmental services and
provides independent laboratory services to the oil and gas industry.
These services include analytical laboratory and sampling services,
permit application and maintenance services and environmental site
assessment and audit services.
Mat Rental
In 1988, the Company acquired the right to use, in Louisiana and
Texas, a patented prefabricated interlocking mat system for the
construction of drilling and work sites, which has displaced use of
individual hardwood boards. This system is quicker to install and
13
remove, substantially reducing labor costs. It is also stronger,
easier to repair and maintain, and generates less waste material
during construction and removal than conventional board roads. In
1994, the Company acquired the exclusive right to use this system in
the Continental U.S. for the life of the patent, which expires in
2003. Newpark provides this service to two markets:
Oilfield market: Newpark provides this patented interlocking mat
system to the oil and gas industry to ensure all-weather access to
exploration and production sites in the unstable soil conditions
common along the onshore Gulf of Mexico. These sites are generally
rented to the customer for an initial period of 60 days; after that
time, additional rentals are earned on a monthly basis until the mats
are released by the customer.
Wetlands market: Beginning in 1994, the Company recognized the
development of another market for its patented mat system in providing
access roads and temporary work sites to the pipeline, electrical
utility and highway construction industries. Demand for these
services was spurred by Federal Energy Regulatory Commission orders
requiring compliance with environmental protection rules under the
Clean Water Act in the pipeline construction business. In 1994, the
Company received approximately $2.4 million in revenue from this
source. During 1995, approximately $7.0 million in revenues were
received in this market.
Rerentals. Drilling and work sites are typically rented by the
customer for an initial period of 60 days. Often, the customer
extends the rental term for additional 30 day periods, resulting in
additional revenues to the Company. These rerental revenues provide
high margins because only minimal incremental depreciation and
maintenance costs accrue to each rerental period. Factors which may
increase rerental revenue include: (i) the trend toward increased
activity in the "transition zone" along the Gulf of Mexico, an area in
which the Company's mat system provides the primary means of access;
(ii) a trend toward deeper drilling, taking a longer time to reach the
desired target; and, (iii) the increased frequency of commercial
success, requiring logging, testing, and completion (hook-up),
extending the period during which access to the site is required. In
the opinion of industry analysts, application of advanced
technologies, particularly the use of three- dimensional seismic data,
has contributed to these trends.
14
Onsite Environmental Management
Promulgation and enforcement of increasingly stringent
environmental regulations affecting drilling and production sites has
increased the scope of services required by the oil companies. Often
it is more efficient for the site operator to contract with a single
company that can provide all-weather site access and provide the
required onsite and offsite environmental services on a fully
integrated basis. The Company provides a comprehensive range of
environmental services necessary for its customers' oil and gas
exploration and production activities. These services include:
Site Assessment: Site assessment work begins prior to
installation of mats on a drilling site, and generally begins with a
study of the proposed well site, which includes site photography,
background soil sampling, laboratory analysis and investigation of
flood hazards and other native conditions. The assessment determines
whether the site has previously been contaminated and provides a
baseline for later restoration to pre-drilling condition.
Pit Design, Construction and Drilling Waste Management. Under
its Environmentally Managed Pit ("EMP") Program, the Company
constructs waste pits at drilling sites and monitors the waste stream
produced in drilling operations and the contents and condition of the
pits with the objective of minimizing the amount of waste generated on
the site. Where possible, the Company disposes of waste onsite by
land-farming, through chemical and mechanical treatment of liquid
waste and by annular injection into a suitably permitted underground
formation. Waste water treated onsite may be reused in the drilling
process or, where permitted, discharged into adjacent surface waters.
Regulatory Compliance. Throughout the drilling process, the
Company assists the operator in interfacing with the landowner and
regulatory authorities. The Company also assists the operator in
obtaining necessary permits and in complying with record maintenance
and reporting requirements.
Site Remediation.
NOW (Drilling). At the completion of the drilling process,
under applicable regulations, waste water on the site may be
15
chemically or mechanically treated and discharged into surface waters.
Other waste that may not remain on the surface of the site may be
land-farmed on the site or injected under permit into geologic
formations to minimize the need for offsite disposal. Any waste that
cannot, under regulations, remain onsite is manifested (in Louisiana)
and transported to an authorized facility for processing and disposal
at the direction of the generator or customer (See "Description of
Business- NOW Waste Processing").
NOW (Production). The Company also provides services to
remediate production pits and inactive waste pits including those from
past oil and gas drilling and production operations. The Company
provides the following remediation services: (i) analysis of the
contaminants present in the pit and a determination of whether
remediation is required by applicable state regulation; (ii) treatment
of waste onsite, and where permitted, reintroduction of that material
into the environment, (iii) removal, containerization and
transportation to the Company's processing facility of NOW waste not
treated onsite.
NORM. In January 1994, Newpark became a licensed NORM
contractor, allowing the Company to perform site remediation work at
NORM contaminated facilities in Louisiana and Texas. Because of the
need for increased worker-protective equipment, extensive
decontamination procedures and other regulatory compliance issues at
NORM sites, the cost of providing such services are materially greater
than at NOW facilities, and generates proportionately higher revenues
than similar work at a NOW facility.
Site Closure. The location is restored to its pre-drilling
condition and reseeded with native grasses. Closure also involves
delivery of test results indicating that closure has been completed in
compliance with applicable regulations. This information is important
to the customer because the operator is subject to future regulatory
review and audits. In addition, the information may be required on a
current basis if the operator is subject to a pending regulatory
compliance order.
Wood Product Sales
By the end of 1991, the Company had become aware of increasing
environmental regulation affecting wetlands areas. These regulations
have affected the oil and gas drilling industry as well as pipeline,
electrical distribution and highway projects. In anticipation of
increased demand for hardwood lumber used in providing access to such
16
wetlands sites, the Company purchased a sawmill in Batson, Texas, in
October 1992. The mill's products include lumber, timber, and wood
chips, as well as bark and sawdust. Pulp and paper companies in the
area supply a large proportion of the hardwood logs processed at the
sawmill and, in turn, are the primary customers for wood chips created
in the milling process. During 1993, Newpark invested approximately
$1.0 million in expansion of the sawmill to increase its capacity for
producing wood chips. During 1995, the Company invested an additional
$750,000 to: (i) install a log watering system to maintain the level
of moisture in the wood chips produced, as desired by its customers,
and; (ii) for expanded and improved sawing capacity, which improved
both production and efficiency.
General Oilfield Services
The Company performs general oilfield services throughout the
Gulf Coast area between Corpus Christi, Texas and Pensacola, Florida.
General oilfield services performed by the Company include preparation
of work sites for installations of mats, connecting wells and placing
them in production, laying flow lines and infield pipelines, building
permanent roads, grading, lease maintenance (the maintenance and
repair of producing well sites), cleanup and general roustabout
services. General oilfield services are typically performed under
short-term time and material contracts, which are obtained by direct
negotiation or bid.
The Company manufactures and sells a line of American Petroleum
Institute certified wellheads and valves (flow and pressure control
equipment, principally installed above ground) to oil and gas
exploration and production companies. Most of the Company's wellhead
sales include installation and service for which the Company earns
additional revenues. The Company also repairs and refurbishes
customer-owned wellheads. Newpark has entered into an agreement to
sell this operating unit to an unrelated third party, and expects to
consummate that transaction before mid-1996.
International Expansion
During the first quarter of 1995, the Company initiated
participation in a venture which provides mat rental services to the
oil and gas industry in Venezuela. Revenue from foreign operations
has been immaterial in each of the past three years.
17
Sources and Availability of Raw Materials and Equipment
Newpark believes that its sources of supply for any materials or
equipment used in its businesses are adequate for its needs and that
it is not dependent upon any one supplier. No serious shortages or
delays have been encountered in obtaining any raw materials.
Patents and Licenses
Newpark seeks patents and licenses on new developments whenever
feasible, and has recently applied for U.S. patents on its new NOW and
NORM waste processing and injection disposal system. Newpark has the
exclusive license for the life of the patent (which expires in 2003)
to use, sell and lease the prefabricated mats that it uses in
connection with its site preparation business in the 48 contiguous
states of the United States. The licensor has the right to sell mats
in states where Newpark is not engaged in business, but only after
giving Newpark the opportunity to take advantage of the opportunity
itself. The license is subject to a royalty which Newpark can satisfy
by purchasing specified quantities of mats annually from the licensor.
The utilization of proprietary technology and systems is an
important aspect of the Company's business strategy. For example, the
Company relies on a variety of unpatented proprietary technologies and
know-how in the processing of NOW. Although the Company believes that
this technology and know-how provide it with significant competitive
advantages in the environmental services business, competitive
products and services have been successfully developed and marketed by
others. The Company believes that its reputation in its industry, the
range of services offered, ongoing technical development and know-how,
responsiveness to customers and understanding of regulatory
requirements are of equal or greater competitive significance than its
existing proprietary rights.
Working Capital Practice
Newpark does not have any special working capital practices which
differ significantly from those generally practiced in the oil and gas
or environmental services industries. For additional information on
Newpark's current borrowings see "Management's Discussion and Analysis
18
of Results of Operations and Financial Condition-Liquidity and Capital
Resources," and "Note E. Credit Arrangements and Long-Term Debt," in
the "Notes to Consolidated Financial Statements."
Dependence Upon Limited Number of Customers
The Company's customers are principally major and independent oil
and gas exploration and production companies operating in the Gulf
Coast area, with the vast majority of the Company's customers
concentrated in Louisiana and Texas.
During the year ended December 31, 1995, approximately 30% of the
Company's revenues were derived from 14 major oil companies, and one
other customer accounted for approximately 16% of consolidated
revenues. Given current market conditions and the nature of the
products involved, management does not believe that the loss of this
customer would have a material adverse effect upon the Company.
The Company performs services either pursuant to standard
contracts or under longer term negotiated agreements. As most of the
Company's agreements with its customers are cancelable upon limited
notice, the Company's backlog is not significant. For the year ended
December 31, 1995, approximately half of the revenues of the
environmental services segment were obtained on a bid basis, and half
of its revenues were derived on a negotiated or contractual basis.
Newpark does not derive a significant portion of its revenues
from government contracts of any kind.
Competition
The Company operates in highly competitive industry segments.
The Company believes that the principal competitive factors in its
businesses are reputation, technical proficiency, reliability, quality
and breadth of services offered, managerial experience and price. The
Company believes that it effectively competes on the basis of these
factors, and that its competitive position benefits from its
proprietary position with respect to the patented mat system used in
its site preparation business, its proprietary treatment and disposal
methods for both NOW and NORM waste streams and its ability to provide
its customers with an integrated well site management program
including environmental and general oilfield services.
19
It is often more efficient for the site operator to contract with
a single company that can prepare the well site and provide the
required onsite and offsite environmental services. The Company
believes that its ability to provide a number of services as part of a
comprehensive program enables the Company to price its services
competitively.
The Company believes that there are certain barriers to entry in
the environmental and oilfield services industry in the Gulf Coast
region. These barriers include formalized procedures for customer
acceptance, licenses, and permits, and the need for specially equipped
facilities and trained personnel. Facilities disposing of NOW are
subject to permitting and regulatory requirements which pose a barrier
to entry into the market. The market, however, is very large. Only a
small portion of the total waste generated is taken to a commercial
disposal facility and many other methods exist for dealing with the
waste stream. In the market served by the Company there are over one
hundred permitted commercial facilities, including landfarms,
landfills, and injection facilities authorized to dispose of NOW.
For additional information concerning the markets that Newpark
serves and the effects of competition, see "Description of Business"
and "Management's Discussion and Analysis of Results of Operations and
Financial Condition."
Environmental Disclosures
Newpark has sought to comply with all applicable regulatory
requirements concerning environmental quality. The Company has made,
and expects to continue to make, the necessary capital expenditures
for environmental protection at its facilities, but does not expect
that these will become material in the foreseeable future. No
material capital expenditures for environmental protection were made
during 1995.
Newpark derives a significant portion of its revenue from
providing environmental services to its customers. These services
have become necessary in order for these customers to comply with
regulations governing the discharge of materials into the environment.
Substantially all of Newpark's capital expenditures made during 1994
and 1995, and those planned for 1996, are directly or indirectly the
result of such regulation.
20
Employees
At February 16, 1996, Newpark employed approximately 565 full and
part-time personnel, none of which are represented by unions. Newpark
considers its relations with its employees to be satisfactory.
Environmental Regulation
The Company's business is affected both directly and indirectly
by governmental regulations relating to the oil and gas industry in
general, as well as environmental, health and safety regulations that
have specific application to the Company's business. The Company,
through the routine course of providing its services, handles and
profiles hazardous regulated material for its customers. Newpark also
handles, processes and disposes of nonhazardous regulated materials.
This section discusses various federal and state pollution control and
health and safety programs that are administered and enforced by
regulatory agencies, including, without limitation, the U. S.
Environmental Protection Agency ("EPA"), the U.S. Coast Guard, the
Department of the Interior's Office of Surface Mining, the U.S. Army
Corps of Engineers, the Texas Natural Resource Conservation
Commission, the Texas Department of Health, the Texas Railroad
Commission, the Louisiana Department of Environmental Quality and the
Louisiana Department of Natural Resources. These programs are
applicable or potentially applicable to the Company's current
operations. Although the Company intends to make capital expenditures
to expand its environmental services capabilities, the Company
believes that it is not presently required to make material capital
expenditures to remain in compliance with federal, state and local
provisions relating to the protection of the environment.
RCRA. The Resource Conservation and Recovery Act of 1976, as
amended in 1984, ("RCRA"), is the principal federal statute governing
hazardous waste generation, treatment, storage and disposal. RCRA and
EPA-approved state hazardous waste management programs govern the
handling of "hazardous wastes". Under RCRA, liability and stringent
operating requirements are imposed on a person who is either a
"generator" or "transporter" of hazardous waste or an "owner" or
"operator" of a hazardous waste treatment, storage or disposal
facility. The EPA and the states have issued regulations pursuant to
RCRA for hazardous waste generators, transporters and owners and
operators of hazardous waste treatment, storage or disposal
facilities. These regulations impose detailed operating, inspection,
training and emergency preparedness and response standards and
requirements for closure, continuing financial responsibility,
21
manifesting of waste, record-keeping and reporting, as well as
treatment standards for any hazardous waste intended for land
disposal.
The Company's primary operations involve NOW, which is exempt
from classification as a RCRA-regulated hazardous waste. However,
extensive state regulatory programs govern the management of such
waste. In addition, in performing other services for its customers,
the Company is subject to both federal (RCRA) and state solid or
hazardous waste management regulations as contractor to the generator
of such waste.
Proposals have been made to rescind the exemption of NOW from
regulation as hazardous waste under RCRA. Repeal or modification of
this exemption by administrative, legislative or judicial process
could require the Company to change significantly its method of doing
business. There is no assurance that the Company would have the
capital resources available to do so, or that it would be able to
adapt its operations.
Subtitle I of RCRA regulates underground storage tanks in which
liquid petroleum or hazardous substances are stored. States have
similar regulations, many of which are more stringent in some respects
than federal programs. The implementing regulations require that each
owner or operator of an underground tank notify a designated state
agency of the existence of such underground tank, specifying the age,
size, type, location and use of each such tank. The regulations also
impose design, construction and installation requirements for new
tanks, tank testing and inspection requirements, leak detection,
prevention, reporting and cleanup requirements, as well as tank
closure and removal requirements.
The Company has a number of underground storage tanks that are
subject to the requirements of RCRA and applicable state programs.
Violators of any of the federal or state regulations may be subject to
enforcement orders or significant penalties by the EPA or the
applicable state agency. The Company is not aware of any instances in
which it has incurred liability under RCRA. Cleanup costs or costs
associated with changes in environmental laws or regulations could be
substantial and could have a material adverse effect on the Company.
CERCLA. The Comprehensive Environmental Response, Compensation
and Liability Act, as amended in 1986, ("CERCLA"), provides for
immediate response and removal actions coordinated by the EPA for
22
releases of hazardous substances into the environment and authorizes
the government, or private parties, to respond to the release or
threatened release of hazardous substances. The government may also
order persons responsible for the release to perform any necessary
cleanup. Liability extends to the present owners and operators of
waste disposal facilities from which a release occurs, persons who
owned or operated such facilities at the time the hazardous substances
were released, persons who arranged for disposal or treatment of
hazardous substances and waste transporters who selected such
facilities for treatment or disposal of hazardous substances. CERCLA
has been interpreted to create strict, joint and several liability for
the costs of removal and remediation, other necessary response costs
and damages for injury to natural resources.
Among other things, CERCLA requires the EPA to establish a
National Priorities List ("NPL") of sites at which hazardous
substances have been or are threatened to be released and that require
investigation or cleanup. The NPL is constantly expanding. In
addition, the states in which the Company conducts operations have
enacted similar laws and keep similar lists of sites which may be in
need of remediation.
Although Newpark primarily handles oilfield waste classified as
NOW under relevant laws, this waste typically contains constituents
designated by the EPA as hazardous substances under RCRA, despite the
current exemption of NOW from hazardous substance classification.
Where the Company's operations result in the release of hazardous
substances, including releases at sites owned by other entities where
the Company performs its services, the Company could incur CERCLA
liability. Previously owned businesses also may have disposed or
arranged for disposal of hazardous substances that could result in the
imposition of CERCLA liability on the Company in the future. In
particular, divisions and subsidiaries previously owned by the Company
were involved in extensive mining operations at facilities in Utah and
Nevada. In addition, divisions and subsidiaries previously owned by
the Company were involved in waste generation and management
activities in numerous states. These activities involved substances
that may be classified as RCRA hazardous substances. Any of those
sites or activities potentially could be the subject of future CERCLA
damage claims.
With the exception of the sites discussed in "Legal Proceedings -
Environmental Proceedings" below, the Company is not aware of any
instances in which it has incurred liability under CERCLA.
Nonetheless, the identification of additional sites at which clean-up
23
action is required could subject the Company to liabilities which
could have a material adverse effect on the Company.
The Clean Water Act. The Clean Water Act regulates the discharge
of pollutants, including NOW, into waters. The Clean Water Act
establishes a system of standards, permits and enforcement procedures
for the discharge of pollutants from industrial and municipal waste
water sources. The law sets treatment standards for industries and
waste water treatment plants and provides federal grants to assist
municipalities in complying with the new standards. In addition to
requiring permits for industrial and municipal discharges directly
into waters of the United States, the Clean Water Act also requires
pretreatment of industrial waste water before discharge into municipal
systems. The Clean Water Act gives the EPA the authority to set
pretreatment limits for direct and indirect industrial discharges.
In addition, the Clean Water Act prohibits certain discharges of
oil or hazardous substances and authorizes the federal government to
remove or arrange for removal of such oil or hazardous substances. The
Clean Water Act also requires the adoption of the National Contingency
Plan to cover removal of such materials. Under the Clean Water Act,
the owner or operator of a vessel or facility may be liable for
penalties and costs incurred by the federal government in responding
to a discharge of oil or hazardous substances.
The Company treats and discharges waste waters at certain of its
facilities. These activities are subject to the requirements of the
Clean Water Act and federal and state enforcement of these
regulations.
The EPA Region 6 Outer Continental Shelf ("OCS") permit covering
oil and gas operations in federal waters in the Gulf (seaward of the
Louisiana and Texas territorial seas) was reissued in November, 1992
and modified in December, 1993. This permit includes stricter limits
for oil and grease concentrations in produced waters to be discharged.
These limits are based on the Best Available Treatment ("BAT")
requirements contained in the Oil and Gas Offshore Subcategory
national guidelines which were published March 3, 1993. Additional
requirements include toxicity testing and bioaccumulation monitoring
studies of proposed discharges.
24
EPA Region 6, which includes the Company's market, continues to
issue new and amended National Pollution Discharge Elimination System
("NPDES") general permits further limiting or restricting
substantially all discharges of produced water from the Oil and Gas
Extraction Point Source Category into Waters of the United States.
These permits include:
1) Onshore subcategory permits for Texas, Louisiana, Oklahoma and
New Mexico issued in February, 1991 (56 Fed. Reg. 7698). This permit
completely prohibits the discharge of drilling fluids, drill cuttings,
produced water or sand, and various other oilfield wastes generated by
onshore operations into waters of the U.S. This provision has the
effect of requiring that most oilfield wastes follow established state
disposal programs.
2) Permits for produced water and produced sand discharges into
coastal waters of Louisiana and Texas issued on January 9, 1995 (60
Fed. Reg. 2387). Coastal means "any water landward of the territorial
seas... or any wetlands adjacent to such waters". All such discharges
must cease by January 1, 1997.
3) The Outer Continental Shelf (OCS) permit for the western Gulf of
Mexico, covering oil and gas operations in federal waters (seaward of
the Louisiana and Texas territorial seas) was reissued in November
1992 and modified in December 1993. It is expected to be combined
with an OCS general permit covering new sources at its next revision.
4) Permits for the territorial seas of Louisiana and Texas were
scheduled to be proposed in the spring of 1995. The most recent
information from the EPA indicates the permits should be proposed in
the spring of 1996. The territorial seas part of the Offshore
Subcategory begins at the line of ordinary low water along the part of
the coast which is in direct contact with the open sea, and extends
out three nautical miles. These permits will cover both existing
sources and new sources. All discharges in state waters must comply
with any more stringent requirements contained in Louisiana Water
Quality Regulations, LAC 33.IX.7.708.
The combined effect of all these regulations will closely
approach a "zero discharge standard" affecting all waters except those
of the OCS. The Company and many industry participants believe that
these permits may ultimately lead to a total prohibition of overboard
discharge in the Gulf of Mexico.
25
The Clean Air Act. The Clean Air Act provides for federal, state
and local regulation of emissions of air pollutants into the
atmosphere. Any modification or construction of a facility with
regulated air emissions must be a permitted or authorized activity.
The Clean Air Act provides for administrative and judicial enforcement
against owners and operators of regulated facilities, including
substantial penalties. In 1990, the Clean Air Act was reauthorized
and amended, substantially increasing the scope and stringency of the
Clean Air Act's regulations. The Clean Air Act has very little impact
on the Company's operations.
Oil Pollution Act of 1990. The Oil Pollution Act of 1990
contains liability provisions for cleanup costs, natural resource
damages and property damages as well as substantial penalty
provisions. The OPA also requires double hulls on all new oil tankers
and barges operating in waters subject to the jurisdiction of the
United States. All marine vessels operated by the Company already
meet this requirement.
State Regulation. In 1986, the Louisiana Department of Natural
Resources promulgated Order 29-B. Order 29-B contains extensive rules
governing pit closure and the generation, treatment, storage,
transportation and disposal of NOW. Under Order 29-B, onsite disposal
of NOW is limited and is subject to stringent guidelines. If these
guidelines cannot be met, NOW must be transported and disposed of
offsite in accordance with the provisions of Order 29-B. Moreover,
under Order 29-B, most, if not all, active waste pits must be closed
or modified to meet regulatory standards; those pits that continue to
be allowed may be used only for a limited time. A material number of
these pits may contain sufficient concentrations of NORM to become
subject to regulation by the DEQ. Rule 8 of the Texas Railroad
Commission also contains detailed requirements for the management and
disposal of NOW and Rule 94 governs the management and disposal of
NORM. In addition, the Texas Legislature recently enacted a law that
has established an Oilfield Cleanup Fund to be administered by the
Texas Railroad Commission to plug abandoned wells if the Commission
deems it necessary to prevent pollution, and to control or clean up
certain oil and gas wastes that cause or are likely to cause pollution
of surface or subsurface water.
The Railroad Commission of Texas Rule 91 (16 TAC 3.91) became
effective November 1, 1993. This rule regulates the cleanup of spills
of crude oil and gas exploration and production activities including
transportation by pipeline. In general, contaminated soils must be
remediated to oil and grease content of less than 1%.
26
Many states maintain licensing and permitting procedures for the
construction and operation of facilities that emit pollutants into the
air. In Texas, the Texas Natural Resource Conservation Commission
(the "TNRCC") requires companies that emit pollutants into the air to
apply for an air permit or to satisfy the conditions for an exemption.
The Company has obtained certain air permits and believes that it is
exempt from obtaining other air permits at its facilities including
its Port Arthur, Texas, NOW processing facility. The Company met with
the TNRCC and filed for an exemption in the fall of 1991. A
subsequent renewal letter was filed in 1995. Based upon its feedback
from the TNRCC, the Company expects that it will continue to remain
exempt. However, should it not remain exempt, the Company believes
that any remedial actions that the TNRCC may require with regard to
non-exempt air emissions would not have a material adverse effect on
the financial position or operation of the Company.
Other Environmental Laws. Newpark may be subject to other
federal and state environmental protection laws, including without
limitation, the Toxic Substances Control Act, the Surface Mining
Control and Reclamation Act ("SMCRA") and the Super Fund Amendments
and Reauthorization Act, including the Emergency Planning and
Community Right-To-Know-Act. In particular, SMCRA established a
nationwide program to regulate surface mining and reclamation, and the
surface effects of underground mining. It sets strict reclamation
standards and a mandatory enforcement system. While the Company does
not currently conduct mining activities, SMCRA reclamation
responsibility and corresponding state regulatory programs could apply
to any of the facilities in which the Company participated in mining
activities in the past.In addition, the Company is subject to the
Occupation Safety and Health Act that imposes requirements for
employee safety and health and applicable state provisions adopting
worker health and safety requirements. Moreover, it is possible that
other developments, such as increasingly stricter environmental,
safety and health laws, and regulations and enforcement policies
thereunder, could result in substantial additional regulation of the
Company and could subject to further scrutiny the Company's handling,
manufacture, use or disposal of substances or pollutants. The Company
cannot predict the extent to which its operations may be affected by
future enforcement policies as applied to existing laws or by the
enactment of new statutes and regulations.
27
Risk Management
The Company's business exposes it to substantial risks. For
example, the Company's environmental services routinely involve the
handling, storage and disposal of nonhazardous regulated materials and
waste, and in some cases, handling of hazardous regulated materials
and waste for its customers which are generators of such waste. The
Company could be held liable for improper cleanup and disposal, which
liability could be based upon statute, negligence, strict liability,
contract or otherwise. As is common in the oil and gas industry, the
Company often is required to indemnify its customers or other third-
parties against certain risks related to the services performed by the
Company, including damages stemming from environmental contamination.
The Company has implemented various procedures designed to ensure
compliance with applicable regulations and reduce the risk of damage
or loss. These include specified handling procedures and guidelines
for regulated waste, ongoing training and monitoring of employees and
maintenance of its insurance coverage.
The Company carries a broad range of insurance coverages that
management considers adequate for the protection of its assets and
operations. This coverage includes general liability, comprehensive
property damage, workers' compensation and other coverage customary in
its industries; however, this insurance is subject to coverage limits.
The Company could be materially adversely affected by a claim that is
not covered or only partially covered by insurance. There is no
assurance that insurance will continue to be available to the Company,
that the possible types of liabilities that may be incurred by the
Company will be covered by its insurance, that the Company's insurance
carriers will meet their obligations or that the dollar amount of such
liabilities will not exceed the Company's policy limits.
28
ITEM 2. Properties
Lease of Principal Facilities
With few exceptions, the Company leases its principal facilities
and certain equipment.
Newpark's corporate offices in Metairie, Louisiana, are occupied
at an annual rental of approximately $127,000 under a lease expiring
in December 1997.
Its NOW processing facility in Port Arthur, Texas, is occupied at
a current annual rental of $168,000 under a lease of which the Company
entered, during 1995, the first of three 4-year renewal options. The
facility, which is located on 2.9 acres near the Intracoastal
Waterway, was constructed by the landowner to the Company's
specifications beginning late in 1990 and began operations in mid
1991.
The Company's NORM processing facility is also located in Port
Arthur, Texas on 3.0 acres of leased land adjacent to the NOW
facility. Annual property rentals are currently $37,000. The lease
expires in July of 1997 and has two 5-year renewal options available.
The Company constructed the processing facility during 1994.
The Company owns two injection disposal sites in Jefferson
County, Texas, one on 50 acres of land and the other on 400 acres.
Seven wells are currently operational at these sites.
The Company maintains a fleet of forty-two barges of which
twenty-one are owned by the Company, fifteen are on daily rental
agreements, six are under 10-year lease terms, and four are under 7-
year terms. The barges are used to transport waste to processing
stations and are certified for this purpose by the U. S. Coast Guard.
Annual rentals under the barge leases totaled approximately $1,500,000
during 1995.
Additional facilities are held under short-term leases with
annual rentals aggregating approximately $800,000 during 1995. The
Company believes that its facilities are suitable for their respective
uses and adequate for current needs.
The Company owns property leased to others and used as a marine
repair facility occupying approximately 23 acres on an island in the
Houston Ship Channel. In December 1993, the property was leased to a
third party that also obtained the option to purchase the facility as
part of the lease agreement. Early in 1994, the Company entered into
a new financing of the property.
The Company also owns 80 acres occupied as a sawmill facility
near Batson, Texas. The Company believes this facility is adequate
for current production needs.
29
ITEM 3. Legal Proceedings
Newpark and its subsidiaries are involved in litigation and other
claims or assessments on matters arising in the normal course of
business. In the opinion of management, any recovery or liability in
these matters should not have a material effect on Newpark's
consolidated financial statements.
Environmental Proceedings
In the ordinary course of conducting its business, the Company
becomes involved in judicial and administrative proceedings involving
governmental authorities at the federal, state and local levels, as
well as private party actions. Pending proceedings that may involve
liability for violation of environmental matters are described below.
The Company believes that none of these matters involves material
exposure. There is no assurance, however, that such exposure does not
exist or will not arise in other matters relating to the Company's
past or present operations.
The Company was identified by the EPA as a minor or "de minimus"
contributor of waste to a disposal site requiring cleanup under
CERCLA, as amended in 1986. That facility, the French Limited site,
located in Southeast Texas, is currently undergoing a voluntary
cleanup by those parties identified as waste contributors. Five
related private party suits have been filed against the Company and
the other potentially responsible parties at the French Limited site.
The Company has settled its potential liability in four of those
suits. Management does not anticipate that the outcome of the
remaining suit will have a material adverse impact upon the Company,
and anticipates either a nominal settlement or dismissal from the
action.
The Company has been identified by the EPA as a potentially
responsible party in two other CERCLA actions, based on its
contribution of oilfield waste to three disposal sites. In the first
case, the Company was the largest volume contributor of waste to the
Disposal Services, Inc. Clay Point site, located in southern
Mississippi. The Company has resolved its liability by its voluntary
participation in a consent decree with the EPA, and payment of
$158,900 in 1992 as its pro rata share of the removal costs. Two
other facilities operated by the same company, the Lee Street and
Woolmarket sites, are not subject to any enforcement action by a
federal regulatory agency, and the EPA has specifically declined
pursuing an action for remediation of these two facilities. However,
the Mississippi Department of Environmental Quality is overseeing a
continued, voluntary cleanup at the three sites.
In the second CERCLA action, the Company has taken the position
that it has been incorrectly identified by the EPA as a potentially
responsible Ode minimus' party for the cleanup of an abandoned
oilfield site in Louisiana referred to as the PAB site. The Company
settled its potential liability on a "de minimus" buy-out.
30
The Company has been identified as one of 600 contributors of
material to the MAR Services facility, a state voluntary cleanup
site. Because the Company delivered only processed solid meeting the
requirements of Louisiana Statewide Executive Order 29-B to the site,
it does not believe it has material financial liability for the site
cleanup cost. The Louisiana Department of Environmental Quality is
overseeing voluntary cleanup at the site.
Recourse against its insurers under general liability insurance
policies for reimbursement of cost and expense in the foregoing CERCLA
actions is uncertain as a result of conflicting court decisions in
similar cases. In addition, certain insurance policies under which
coverage may be afforded contain self-insurance levels that may exceed
the Company's ultimate liability.
The Company believes that any liability incurred in the foregoing
matters will not have a material adverse effect on the Company's
consolidated financial statements. However, a material adverse
outcome in any of the foregoing matters could have an adverse effect
on the Company.
ITEM 4. Submission of Matters to a Vote of Shareholders
None
31
PART II
ITEM 5. Market for the Registrant's Common Equity and Related
Stockholder Matters
Newpark's common stock traded on The Nasdaq Stock Market under the
symbol "NPRS" through December 5, 1995, and commenced trading on the
New York Stock Exchange on December 6, 1995 under the symbol "NR".
The following table sets forth the range of the high and low sales
prices for the periods indicated.
Period High Low
1994
1st Quarter $14.50 $ 8.25
2nd Quarter $16.75 $13.50
3rd Quarter $19.75 $15.75
4th Quarter $25.00 $18.25
1995
1st Quarter $26.00 $14.75
2nd Quarter $24.25 $20.25
3rd Quarter $23.25 $17.00
4th Quarter $22.86 $15.50
At December 31, 1995, the Company had 4,230 stockholders of
record. Newpark paid a 5% stock dividend on the Common Stock on
December 30, 1995 to shareholders of record on November 30, 1995.
32
ITEM 6. SELECTED FINANCIAL DATA
selected consolidated financial information
The following tables set forth selected consolidated financial
information with respect to Newpark for the five years ended
December 31, 1995. The selected consolidated financial information
for the five years ended December 31, 1995 is derived from the audited
consolidated financial statements of Newpark. Information with
respect to this item can also be found in "Management's Discussion and
Analysis of Results of Operations and Financial Condition" and "Notes
to Consolidated Financial Statements."
For information regarding dispositions, see "Note B. Discontinued
Operations," in the "Notes to Consolidated Financial Statements."
Years Ended December 31,
____________________________________________________________
1995 1994 1993 1992 1991
____________________________________________________________
(Dollars in thousands, except Per Share data)
Consolidated Statements of Income
Data:
Revenues $ 97,982 $ 79,632 $ 56,330 $ 49,457 $ 44,635
Cost of services provided 64,467 56,259 42,581 36,860 34,703
Operating costs 9,414 7,277 6,557 5,519 3,799
General and administrative expenses 2,658 3,231 2,129 1,963 1,305
Provision for uncollectible accounts
and notes receivable 463 974 671 154 94
________ ________ ________ __________ __________
Operating income from continuing
operations 20,980 11,891 4,392 4,961 4,734
Interest income (183) (78) - (18) (47)
Interest expense 3,740 2,660 1,274 847 1,562
Non-recurring expense 436 - - - -
Financial restructure costs - - - - 155
________ ________ ________ __________ __________
Income from continuing operations
before provision for income taxes 16,987 9,309 3,118 4,132 3,064
Provision (benefit) for income taxes 4,751 (85) (1,670) 51 73
________ ________ ________ __________ __________
Income from continuing operations 12,236 9,394 4,788 4,081 2,991
Income (loss) from discontinued
operations - - (2,366) 1,205 877
________ ________ ________ __________ __________
Income before extraordinary items 12,236 9,394 2,422 5,286 3,868
Extraordinary items - - - - 1,365
________ ________ ________ __________ __________
Net income $ 12,236 $ 9,394 $ 2,422 $ 5,286 $ 2,503
======== ======== ======== ========== ==========
Income (loss):
Continuing operations $ 1.16 $ .90 $ .49 $ .43 $ .46
Discontinued operations - - (.24) .12 .13
Extraordinary items - - - - (.21)
________ ________ ________ __________ __________
Net income per common share $ 1.16 $ .90 $ .25 $ .55 $ .38
======== ======== ======== ========== ==========
Weighted average shares outstanding 10,568 10,422 9,690 9,564 6,521
======== ======== ======== ========== ==========
December 31,
_____________________________________________________________________________________________
(In thousands) 1995 1994 1993 1992 1991
_____________________________________________________________________________________________
Consolidated Balance Sheet Data:
Working capital $ 32,108 $ 13,585 $ 5,361 $ 4,900 $ 12,121
Total assets 152,747 110,756 90,316 75,478 53,454
Short-term debt 7,911 10,032 14,928 12,212 1,377
Long-term debt 46,724 28,892 12,446 10,432 3,774
Shareholders' equity 77,518 63,699 53,353 45,658 40,239
33
ITEM 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations
The following discussion of the Company's financial condition,
results of operations, liquidity and capital resources should be read
in conjunction with the "Consolidated Financial Statements" and the
"Notes to Consolidated Financial Statements" included elsewhere in
this report.
Overview
Since 1990, Newpark has concentrated on expanding and further
integrating its environmental service capabilities. The Company has
made several acquisitions to extend its integrated environmental
services into the Texas Gulf Coast region. During 1991, the Company
completed a NOW processing plant and in 1993 opened its first
injection well facility for underground disposal of NOW. During 1994,
Newpark obtained a permit to process NORM waste for disposal and thus
became a participant in the NORM disposal business.
In 1994, the Company began to offer temporary worksite
installation and mat rental services utilizing its proprietary
prefabricated mat system outside of the oil and gas industry in
connection with pipeline construction, electrical power distribution
and highway construction projects, in environmentally sensitive
"wetlands" and other areas where unstable soil conditions exist.
The Baker-Hughes Rotary Rig Count has historically been viewed as
the most significant single indicator of oil and gas drilling activity
in the domestic market. In 1993, the United States rig count averaged
754 rigs in operation, and increased to 774 in 1994. In 1995, the rig
count averaged 723, the second lowest on record since the advent of
the indicator in the early 1940's.
Newpark's key market area includes the (i) South Louisiana Land,
(ii) Texas Railroad Commission Districts 2 and 3, (iii) Louisiana and
Texas Inland Waters and (iv) the Offshore Gulf of Mexico rig count
measurement areas. The rig count trend in the Company's primary
market has tracked these national trends as set forth in the table
below:
1995 1994 1993 1Q95 2Q95 3Q95 4Q95
____ ____ ____ ____ ____ ____ ____
U.S. Rig Count 723 774 754 705 677 745 765
Newpark's key market 195 202 176 191 187 201 199
Newpark's key market
to total 27.0% 26.1% 23.3% 27.1% 27.6% 27.0% 26.0%
Management believes that the improved natural gas drilling
activity, as evidenced by the rig count in its key market, was an
important factor which allowed a trend of increasing prices in its
site preparation and mat rerental business to continue through 1994.
The upward trend in pricing abated with the decline in the rig count
within the Company's key market during 1995.
34
Despite this decline in rig activity, the volume of waste
received by Newpark increased at a compound rate of 44% from 1993 to
1995, primarily due to: (i) the recovery of the remediation market
following implementation of NORM regulations; and, (ii) new, more
stringent regulations governing the discharge of drilling and
production waste in the coastal and inland waters and in the offshore
Gulf of Mexico. Since 1993, the total volume of waste in Newpark's
key market has grown at a compound rate of 24% for the same reasons.
The Company's financial statements do not include any provision
for possible contingent liabilities, such as liability for violation
of environmental laws or other risks noted under "Business - Risk
Management." To the best of the Company's knowledge, it has conducted
its business in compliance with applicable laws and, except as noted
under "Legal Proceedings," is not involved in any material litigation
with respect to violations of such laws.
Results of Operations
The following table represents revenue by product line, for each
of the three years ended December 31, 1995, 1994 and 1993. The
product line data has been reclassified from prior years' presentation
in order to more effectively distinguish the offsite waste processing
and mat rental services, in which the Company maintains certain
proprietary advantages, from its other service offerings.
Years Ended December 31,
(Dollars in thousands)
1995 1994 1993
______________ _______________ _______________
Revenues by product line:
Offsite waste processing 31,126 31.8% $ 20,738 26.0% $ 11,354 20.2%
Mat rental services 30,775 31.4 23,048 28.9 21,042 37.4
General oilfield services 14,511 14.8 13,452 16.9 11,358 20.1
Wood product sales 12,609 12.9 13,105 16.5 7,947 14.1
Onsite environmental
management 7,361 7.5 7,689 9.7 4,629 8.2
Other 1,600 1.6 1,600 2.0 - -
_______ _____ ________ _____ ________ _____
Total revenues $97,982 100.0% $ 79,632 100.0% $ 56,330 100.0%
======= ===== ======== ===== ======== =====
35
Year Ended December 31, 1995 Compared to Year Ended December 31, 1994
Revenues
Total revenues increased to $98.0 million in 1995 from $79.6
million in 1994, an increase of $18.4 million or 23.0%. The components
of the increase by product line are as follows: (i) offsite waste
processing revenues increased $10.4 million, as NOW revenue increased
$5.5 million, due almost exclusively to additional volume, and NORM
processing revenue increased to $6.0 million on approximately 70,000
barrels in 1995 from $1.2 million and 15,000 barrels in 1994; (ii) mat
rental revenue increased $7.7 million, or 34% due to two factors: (a)
increased volume installed at similar pricing compared to the prior
year, and, (b) an increase in revenues from extended rerentals of
$3.6 million resulting from the longer use of sites, consistent with
the trend toward deeper drilling. The size of the average location
installed in 1995 grew 17% from the prior year, primarily the result
of the trend toward deeper drilling in more remote locations,
requiring larger sites to accommodate increased equipment and supplies
on the site; (iii) general oilfield service revenue increased $1.1
million or 7.9%. The increase resulted primarily from the increased
level of site preparation work incident to the rental of mats in the
oilfield segment of that business; (iv) onsite environmental
management service revenue declined approximately $300,000 or 4% with
the reduced level of current drilling-related projects more than
offsetting increased activity in the remediation of old sites; and (v)
revenue from wood product sales decreased approximately $500,000 due
in part to production inefficiency during the start-up of a new
processing line and the inclusion of a large non-recurring order in
prior year revenue.
Operating Income from Continuing Operations
Operating income from continuing operations increased by $9.1
million or 76.4% to total $21.0 million in the 1995 period compared to
$11.9 million in the prior year, representing an improvement in
operating margin to 21.4% in 1995 compared to 14.9% in 1994.
Primary components of the increase included: (i) approximately
$2.9 million related to the effect of volume increases in both NOW and
NORM processing; (ii) $3.6 million from increased mat rerentals, and,
(iii) $1.3 million resulting from the increase in the volume of mats
rented, to approximately 220 million board feet compared to 157
million in 1994, at similar margins, and, (iv) an approximate $200,000
increase in operating profit on better gross margin mix from wood
product sales.
The decline of $573,000 in general and administrative expenses
reflects, primarily, the impact of approximately $600,000 of prior
year charges for legal costs incurred in an appeal of an expropriation
matter. Additionally, the provision for uncollectible accounts was
$511,000 less in the 1995 period as compared to the 1994 period.
36
Interest Expense
Interest expense increased to $3.7 million in 1995 from $2.7
million in 1994. The increase is a result of an increase in
borrowings, proceeds of which were used to fund continued additions to
productive capacity, including the Company's waste processing
facilities, its prefabricated board road mats, and additions to
inventory, primarily at the sawmill facility.
Non-recurring Expense
Results for the current period include $436,000 of non-recurring
cost associated with a proposed merger which was not completed.
Provision for Income Taxes
During 1995, the Company recorded an income tax provision of $4.8
million equal to 28% of pre-tax income. While the Company's net
operating loss carryforwards remain to be used for income tax return
purposes, for financial reporting purposes, substantially all of the
remaining net operating loss and tax credit carryforwards applicable
to federal taxes were recognized in the first half of the year, which
reduced the effective tax rate for that portion of the year. During
1994, the Company recorded a tax benefit of $85,000 as a result of the
availability of net operating loss carryforwards.
Net Income
Net income increased by $2.8 million or 30% to $12.2 million in
1995 compared to $9.4 million in 1994.
Year Ended December 31, 1994 Compared to Year Ended December 31, 1993
Revenues
Total revenues increased from $56.3 million in 1993 to $79.6
million in 1994, an increase of $23.3 million or 41.4%. Components of
the increase by product line included: (i) a $9.4 million increase in
offsite waste processing, composed of (a) an increase of $8.2 million
the result of a 72.5% increase in the number of barrels of NOW waste
received, which grew to 2.3 million in 1994 from 1.3 million in 1993;
and (b) $1.2 million from NORM processing which began in the fourth
quarter of 1994; (ii) an increase of $5.2 million of wood product
sales revenue due to an increase in the total tonnage of products sold
at similar pricing; (iii) a $3.0 million increase in onsite
environmental management revenue reflecting the recovery of this
market during 1994 once definitive NORM regulations were effected in
both Louisiana and Texas. A total of 355,000 barrels of remediation
waste was handled in 1994 compared to only 22,000 in 1993; (iv) a
$2.0 million increase in mat rental revenue, the net effect of a 29%
increase in average pricing to approximately $93 per thousand board
feet installed and a 4% decline in total volume to 157 million board
37
feet in 1994 compared to 164 million board feet in 1993; and, (v) an
increase of approximately $2.1 million in general oilfield service
revenue, which primarily reflects the increased site construction
services related to the increased volume of mats installed on
customer's sites. Other revenue included $1.6 million in 1994 from
the lease of the facility formerly operated as a marine repair yard in
Houston, Texas.
Operating Income from Continuing Operations
Operating income from continuing operations increased $7.5
million from $4.4 million or 7.8% of revenue in 1993 to $11.9 million
or 14.9% of revenue in the current period. Factors contributing to the
increase included: (i) a $3.1 million increase in operating income
from offsite waste processing, of which approximately $600,000 relates
to receipt of 14,711 barrels of NORM waste, solely during the fourth
quarter of 1994, with the remainder attributable to increased volume
and substantially unchanged profit contribution per barrel of NOW
processed; (ii) $2.7 million from increased mat rental revenue, (iii)
a $2.5 million increase resulting from the increase in the volume of
mats rented; and, (iv) a profit of approximately $800,000 (before
related interest expense) from the lease of the Company's former
marine repair facility; net of (v) a $258,000 decrease in operating
income from wood products sales due to higher inventory costs relative
to 1993; (vi) a $1.1 million increase in general and administrative
expenses and (vii) a $300,000 increase in the provision for
uncollectible accounts and notes receivable.
General and administrative expenses as a proportion of revenue
rose to 4.1% in 1994 from 3.8% in 1993, while rising in total by $1.1
million to $3.2 million in 1994 from $2.1 million in 1993. The
principal items associated with the increase included a charge for
legal costs of approximately $600,000 incurred due to the appeal of an
expropriation matter and a $130,000 provision for additional franchise
taxes, as a result of a recently completed audit.
Interest Expense
Interest expense increased $1.4 million to $2.7 million in 1994
compared to $1.3 million in 1993, as the Company added approximately
$17.5 million in net borrowings to finance new and existing
facilities and equipment during 1994.
Income from Continuing Operations
Income from continuing operations increased 96.2% or $4.6 million
to $9.4 million in the 1994 period from $4.8 million in the 1993
period.
Provision for Income Taxes
During 1994, the Company recorded a net deferred tax benefit of
$200,000 as a result of recognizing the future benefit of the income
tax carryforwards available to offset the estimated future earnings
(See "Note F. Income Taxes", in the "Notes to Consolidated Financial
38
Statements"). The net deferred tax benefit was partially offset by
current tax expense of $115,000.
Net Income
Net income increased to $9.4 million in 1994 from $2.4 million in
1993, an increase of $7.0 million or 288% equal to 29.9% of
incremental revenues.
Liquidity and Capital Resources
The Company's working capital position increased by $18.5 million
during the year ended December 31, 1995. Key working capital data is
provided below:
Year Ended December 31,
______________________
1995 1994
____ ____
Working Capital (000's) $32,108 $13,585
Current Ratio 2.3 1.8
During 1995, the Company's working capital needs were met
primarily from operating cash flow.
Throughout 1995, the company invested heavily to provide future
capacity within key product lines. These improvements included
addition of two additional injection wells and a grinding mill at the
Big Hill plant, construction of a new injection facility which
includes two injection wells at the Fannett site, construction of a
bulk waste unloading facility adjacent to the existing Port Arthur
plants, and additions to its inventory of rental mats in the domestic
market and in the expansion into Venezuela. As a result of these
asset additions, long term debt increased to $46.7 million at year
end, representing 36.3% of total long-term capital. A total of $43.4
million of the debt was funded within a $50 million commitment which
was completed during the second quarter of the year.
On June 29, 1995, the Company entered into a new credit agreement
with a group of three banks, providing a total of up to $50 million of
term financing. This facility included the refinancing of $25 million
of existing debt amortized over a five year term. At the Company's
option, these borrowings bear interest at either a specified prime
rate or LIBOR rate, plus a spread which is determined quarterly based
upon the ratio of the Company's funded debt to cash flow.
In addition, up to $25 million is available under a revolving
line of credit which matures December 31, 1998. Availability under
this facility is tied to the level of the Company's accounts
receivable and certain inventory. Advances under the line bear
interest, at the Company's option, at either a specified prime rate
or the LIBOR rate, plus a spread calculated quarterly based upon the
ratio of the Company's funded debt to cash flow; interest is payable
monthly. At December 31, 1995, $6.3 million of letters of credit were
issued and outstanding within the facility and $18.4 million had been
39
borrowed. The credit agreement requires that the Company maintain
certain specified financial ratios and comply with other usual and
customary requirements. The Company was in compliance with the
agreement at December 31, 1995.
Subsequent to December 31, 1995, the banks providing the credit
facility approved an increase of $10 million in the term note portion
of the facility, which will be used initially to reduce borrowings on
the revolving line of credit of the credit facility.
Potential sources of additional funds, if required by the
Company, would include additional borrowings and the sale of equity
securities. The Company presently has no commitments beyond its bank
lines of credit by which it could obtain additional funds for current
operations; however, it regularly evaluates potential borrowing
arrangements which may be utilized to fund future expansion plans.
Inflation has not materially impacted the Company's revenues or
income.
Deferred Tax Asset
The Company accounts for income taxes in accordance with Statement
of Financial Accounting Standards ("SFAS") No. 109, "Accounting for
Income Taxes." This standard requires, among other things,
recognition of future tax benefits measured by enacted tax rates,
attributable to deductible temporary differences between the financial
statement and income tax basis of assets and liabilities and to tax
net operating loss and credit carryforwards to the extent that
realization of such benefits is more likely than not. The Company has
provided a valuation allowance ($236,000 at December 31, 1995) for
deferred tax assets which cannot be realized through future reversals
of existing taxable temporary differences. Management believes that
remaining deferred tax assets ($10,450,000 at December 31, 1995) are
realizable through reversals of existing taxable temporary
differences. Management will continue to assess the adequacy of the
valuation allowance on a quarterly basis.
40
Item 8. Financial Statements and Supplementary Data
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
Newpark Resources, Inc.
We have audited the accompanying consolidated balance sheets of
Newpark Resources, Inc. and subsidiaries as of December 31, 1995 and
1994, and the related consolidated statements of income, shareholders'
equity, and cash flows for each of the three years in the period ended
December 31, 1995. Our audits also included the financial statement
schedule for the years ended December 31, 1995, 1994 and 1993 listed
in the Index at Item 14. These financial statements and financial
statement schedule are the responsibility of the Company's management.
Our responsibility is to express an opinion on the financial
statements and financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly,
in all material respects, the financial position of Newpark Resources,
Inc. and subsidiaries at December 31, 1995 and 1994, and the results
of their operations and their cash flows for each of the three years
in the period ended December 31, 1995 in conformity with generally
accepted accounting principles. Also, in our opinion, such financial
statement schedule for the years ended December 31, 1995, 1994 and
1993, when considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly in all material respects
the information set forth therein.
DELOITTE & TOUCHE LLP
New Orleans, Louisiana
March 1, 1996
41
Newpark Resources, Inc.
Consolidated Balance Sheets
December 31
_______________________________________________________________________________
(In thousands, except share data) 1995 1994
_______________________________________________________________________________
ASSETS
Current assets:
Cash and cash equivalents $ 1,018 $ 1,404
Accounts and notes receivable, less
allowance of $768 in 1995 and
$455 in 1994 39,208 21,450
Inventories 11,996 7,099
Other current assets 4,088 1,544
_______ _______
Total current assets 56,310 31,497
Property, plant and equipment, at cost,
net of accumulated depreciation 85,461 67,630
Cost in excess of net assets of purchased
businesses, net of accumulated amortization 4,340 4,403
Deferred tax assets - 2,271
Investment in joint venture 1,094 -
Other assets 5,542 4,955
_______ _______
$ 152,747 $ 110,756
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable $ 169 $ 1,796
Current maturities of long-term debt 7,742 8,236
Accounts payable 11,664 5,022
Accrued liabilities 3,462 2,858
Current taxes payable 1,165 -
_______ _______
Total current liabilities 24,202 17,912
Long-term debt 46,724 28,892
Other non-current liabilities 285 253
Deferred taxes payable 4,018 -
Commitments and contingencies (Note J.) - -
Shareholders' equity:
Preferred Stock, $.01 par value,
1,000,000 shares authorized, no
shares outstanding - -
Common Stock, $.01 par value,
20,000,000 shares authorized,
10,634,177 shares outstanding
in 1995 and 10,485,074 in 1994 105 99
Paid-in capital 144,553 134,252
Retained earnings (deficit) (67,140) (70,652)
_______ _______
Total shareholders' equity 77,518 63,699
_______ _______
$ 152,747 $ 110,756
======= =======
See accompanying Notes to Consolidated Financial Statements.
42
Newpark Resources, Inc.
Consolidated Statements of Income
Years Ended December 31
_________________________________________________________________________________________________
(In thousands, except per share data) 1995 1994 1993
_________________________________________________________________________________________________
Revenues $ 97,982 $ 79,632 $ 56,330
Operating costs and expenses:
Cost of services provided 64,467 56,259 42,581
Operating costs 9,414 7,277 6,557
_______ _______ _______
73,881 63,536 49,138
General and administrative expenses 2,658 3,231 2,129
Provision for uncollectible accounts
and notes receivable 463 974 671
_______ _______ _______
Operating income from continuing
operations 20,980 11,891 4,392
Interest income (183) (78) -
Interest expense 3,740 2,660 1,274
Non-recurring expense 436 - -
_______ _______ _______
Income from continuing operations
before provision for income taxes 16,987 9,309 3,118
Provision (benefit) for income taxes 4,751 (85) (1,670)
_______ _______ _______
Income from continuing operations 12,236 9,394 4,788
Loss from discontinued operations - - (2,366)
_______ _______ _______
Net income $ 12,236 $ 9,394 $ 2,422
======= ======= =======
Weighted average shares outstanding 10,568 10,422 9,690
======= ======= =======
Income (loss) per common share:
Continuing operations $ 1.16 $ 0.90 $ 0.49
Discontinued operations - - (0.24)
_______ _______ _______
Net income $ 1.16 $ 0.90 $ 0.25
======= ======= =======
See accompanying Notes to Consolidated Financial Statements.
43
Newpark Resources, Inc.
Consolidated Statements of Shareholders' Equity
Years Ended December 31, 1993, 1994 and 1995
_________________________________________________________________________________________________________________
Retained
Common Paid-In Earnings
(In thousands) Stock Capital (Deficit) Total
_________________________________________________________________________________________________________________
Balance, January 1, 1993 $ 91 $ 128,035 $ (82,468) $ 45,658
Employee stock options - 136 - 136
Stock sale 7 5,130 - 5,137
Net income - - 2,422 2,422
____________________________________________________________________________
Balance, December 31, 1993 98 133,301 (80,046) 53,353
Employee stock options 1 950 - 951
Other - 1 - 1
Net income - - 9,394 9,394
____________________________________________________________________________
Balance, December 31, 1994 99 134,252 (70,652) 63,699
Employee stock options 1 1,582 - 1,583
Stock dividend 5 8,719 (8,724) -
Net income - - 12,236 12,236
____________________________________________________________________________
Balance, December 31, 1995 $ 105 $ 144,553 $ (67,140) $ 77,518
============================================================================
See accompanying Notes to Consolidated Financial Statements.
44
Newpark Resources, Inc.
Consolidated Statements of Cash Flows
Years Ended December 31
________________________________________________________________________________________________________________________
(In thousands) 1995 1994 1993
________________________________________________________________________________________________________________________
Cash flows from operating activities:
Net income $ 12,236 $ 9,394 $ 2,422
Adjustments to reconcile net income
to net cash provided by
continuing operations:
Depreciation and amortization 9,967 7,370 5,929
Provision for doubtful accounts 463 974 671
Provision (benefit) from deferred
income taxes 3,217 (200) (1,700)
Loss (gain) on sales of assets 80 (9) (237)
Change in assets and liabilities
net of effects of acquisitions:
Increase in accounts and notes
receivable (17,129) (3,723) (2,513)
(Increase) decrease in inventories (4,897) 739 (3,418)
Increase in other assets (1,536) (1,839) (211)
Increase (decrease) in accounts payable 2,577 (677) 282
Increase (decrease) in accrued
liabilities and other 2,096 (937) 1,413
________ _________ _________
Net cash provided by operating
activities 7,074 11,092 2,638
________ _________ _________
Cash flows from investing activities:
Capital expenditures (23,989) (23,149) (9,690)
Disposal of property, plant and equipment 564 97 124
Investment in joint venture (1,094) - -
Payments received on notes receivable 249 30 144
Advances on notes receivable (227) (1,000) -
Proceeds from sale of net assets of
discontinued operations - 661 -
Other - - (79)
Decrease in net assets of discontinued
operations - - 722
________ _________ _________
Net cash used in investing activities (24,497) (23,361) (8,779)
________ _________ _________
Cash flows from financing activities:
Net borrowings on lines of credit 20,796 492 1,720
Principal payments on notes payable,
capital lease obligations and
long-term debt (20,170) (10,109) (4,825)
Proceeds from issuance of debt 14,828 21,167 9,728
Proceeds from conversion of stock options 1,266 897 136
Other 317 55 -
________ _________ _________
Net cash provided by financing
activities 17,037 12,502 6,759
________ _________ _________
Net (decrease) increase in cash and cash
equivalents (386) 233 618
Cash and cash equivalents at beginning of year 1,404 1,171 553
________ _________ _________
Cash and cash equivalents at end of year $ 1,018 $ 1,404 $ 1,171
======== ========= =========
See accompanying Notes to Consolidated Financial Statements.
45
NEWPARK RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. Summary of Significant Accounting Policies
Organization and Principles of consolidation. Newpark Resources,
Inc. ("Newpark" or the "Company") provides comprehensive environmental
management and oilfield construction services to the oil and gas
industry in the Gulf Coast region, principally Louisiana and Texas.
The consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiaries. All material intercompany
transactions are eliminated in consolidation.
Use of Estimates. The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, the disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Cash equivalents. All highly liquid investments with a remaining
maturity of three months or less at the date of acquisition are
classified as cash equivalents.
Fair Value Disclosures. Statement of Financial Accounting Standards
("SFAS") No. 107, "Disclosures about Fair Value of Financial
Instruments", requires the disclosure of the fair value of all
significant financial instruments. The estimated fair value amounts
have been developed based on available market information and
appropriate valuation methodologies. However, considerable judgment
is required in developing the estimates of fair value. Therefore,
such estimates are not necessarily indicative of the amounts that
could be realized in a current market exchange. After such analysis,
management believes the carrying values of the Company's significant
financial instruments (consisting of cash and cash equivalents,
receivables, payables and long-term debt) approximate fair values at
December 31, 1995.
Inventories. Inventories are stated at the lower of cost
(principally average and first-in, first-out) or market. The cost of
lumber and related supplies for board roads is amortized on the
straight-line method over their estimated useful life of approximately
one year.
Depreciation and amortization. Depreciation of property, plant and
equipment, including interlocking board road mats, is provided for
financial reporting purposes on the straight-line method over the
estimated useful lives of the individual assets which range from three
to thirty years. For income tax purposes, accelerated methods of
depreciation are used.
During the year ended December 31, 1993, the Company made a change
in the estimated service lives of its board road mats from five years
to seven years. The new lives were adopted to recognize the longer
service life provided by the mats. The effect of the change for the
46
year ended December 31, 1993 was to increase income from continuing
operations $1,175,000 ($0.12 per share).
The cost in excess of net assets of purchased businesses ("excess
cost") is being amortized on a straight-line basis over forty years,
except for $2,211,000 relating to acquisitions prior to 1971 that is
not being amortized. Management of the Company periodically reviews
the carrying value of the excess cost in relation to the current and
expected operating results of the businesses which benefit therefrom
in order to assess whether there has been a permanent impairment of
the excess cost of the net purchased assets. Accumulated amortization
on excess cost was $437,000 and $374,000 at December 31, 1995 and
1994, respectively.
Revenue recognition. Revenues from certain contracts, which are
typically of short duration, are reported as income on a percentage-
of-completion method. Contract revenues are recognized in the
proportion that costs incurred bear to the estimated total costs of
the contract. When an ultimate loss is anticipated on a contract, the
entire estimated loss is recorded. Included in accounts receivable
are unbilled revenues in the amounts of $8,600,000 and $2,674,000 at
December 31, 1995 and 1994, respectively, all of which are due within
a one year period.
Income Taxes. Income taxes are provided using the liability method
in accordance with SFAS No. 109, "Accounting for Income Taxes." Under
this method, deferred income taxes are recorded based upon differences
between the financial reporting and income tax basis of assets and
liabilities and are measured using the enacted income tax rates and
laws that will be in effect when the differences are expected to
reverse.
Non-recurring Expense. Results for the current period include
$436,000 of non-recurring cost associated with a proposed merger which
was not completed.
Interest Capitalization. For the years ended December 31, 1995,
1994 and 1993 the Company incurred interest cost of $4,198,000,
$2,805,000, and $1,359,000 of which $458,000, $145,000, and $85,000
was capitalized, respectively, on qualifying construction projects.
Income per share. Income per share amounts are based on the
weighted average number of shares outstanding during the respective
year and exclude the negligible dilutive effect of shares issuable in
connection with all stock plans. All per share and weighted average
share amounts have been restated to give retroactive effect to a 5%
stock dividend declared and paid during 1995.
New Accounting Standards. During 1995, SFAS No. 121 "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed of" was issued. SFAS No. 121 establishes accounting
standards for recording the impairment of long-lived assets, certain
identifiable intangibles, goodwill, and assets to be disposed of. The
Company is required to adopt SFAS No. 121 effective for fiscal 1996.
47
During 1995, SFAS No. 123 "Accounting for Stock-Based
Compensation" was also issued. SFAS No. 123, which the Company is
required to adopt effective for fiscal 1996, provides guidance
relating to the recognition, measurement and disclosure of stock-based
compensation.
Management believes that the implementation of SFAS No.'s 121 and
123 will not have a material impact on the Company's consolidated
financial statements.
Reclassifications. Certain reclassifications of prior year amounts
have been made to conform to the current year presentation.
B. Discontinued Operations
On December 30, 1993, the operations of the Company's marine
service subsidiary were sold to an unrelated third party for their
estimated net book value of $1,135,000 of which $661,000 was received
in cash during 1994 and a short term note was issued for the
remainder. The Company leased the facility and certain equipment to
the new operator through June 30, 1996, with an option to purchase
these assets at specified times during the lease term. The new
operator has notified the Company of their intent to exercise the
purchase option before the expiration of the lease term. The Company
also agreed to make available certain short-term financing of up to
$1.6 million through June 30, 1996, with annual interest at 7%;
secured by, among other items, certain assets of the third party and
the personal guarantee of one of its principals. Advances related to
this financing arrangement amounted to $1.6 million at December 31,
1995 and $1.4 million at December 31, 1994. Revenue of the marine
repair business was $16,251,000 for the year ended December 31, 1993.
C. Inventories
The Company's inventories at December 31, 1995 and 1994 are
summarized as follows:
______________________________________________________________________
(In thousands) 1995 1994
______________________________________________________________________
Raw materials and supplies
(including logs and board road lumber) $11,641 $ 6,752
Finished goods 355 347
_______ _______
$11,996 $ 7,099
======================================================================
48
D. Property, Plant and Equipment
The Company's investment in property, plant and equipment at
December 31, 1995 and 1994 is summarized as follows:
______________________________________________________________________
(In thousands) 1995 1994
______________________________________________________________________
Land $ 5,072 $ 4,273
Buildings and improvements 30,172 19,554
Machinery and equipment 90,448 77,353
Other 2,537 2,208
______ ______
128,229 103,388
Less accumulated depreciation (42,768) (35,758)
_______ _______
$85,461 $67,630
======================================================================
As further discussed in Note B., the former marine repair facility
is currently held for lease and included in the above table. The cost
of this facility totaled $19.9 million at December 31, 1995 and 1994,
with related accumulated depreciation at $6.3 million and $5.6
million, respectively. The principal components of the cost of this
facility include land of $3.1 million, buildings and improvements of
$9.8 million, and machinery and equipment of $6.4 million. Rentals
received during 1995 and 1994 amounted to $1.6 million annually.
49
E. Credit Arrangements and Long-Term Debt
Credit arrangements and long-term debt consisted of the following
at December 31, 1995 and 1994:
______________________________________________________________________
(In thousands) 1995 1994
______________________________________________________________________
Bank - line of credit $18,378 $ 8,767
Bank - term note 25,000 -
Assets subject to lease, financed through
2001 with an interest rate of 10.1% 8,075 8,558
Interim construction credit agreement 482 -
Acquisition financing due in 1996 with an
interest rate of 8% 327 743
Bank - inventory line of credit - 1,796
Term financing of board road mats - 8,730
Term financing of barges - 2,814
Other, principally installment notes secured
by machinery and equipment, payable through
2000 with interest at 3.3% to 13.5% 2,373 7,516
______ ______
54,635 38,924
Less: current maturities of long-term debt (7,911) (8,236)
current maturities of lines of credit - (1,796)
______ ______
Long-term portion $46,724 $28,892
======================================================================
The Company maintains a $50.0 million bank credit facility with
$25.0 million in the form of a revolving line of credit commitment and
the remaining $25.0 million in a term note. The line of credit is
secured by a pledge of accounts receivable and certain inventory. It
bears interest at either a specified prime rate (8.5% at December 31,
1995) or the LIBOR rate (5.63% at December 31, 1995) plus a spread
which is determined quarterly based upon the ratio of the Company's
funded debt to cash flow. The average interest rate for the year
ended December 31, 1995 was 8.56%. The line of credit requires
monthly interest payments and matures on December 31, 1998. At
December 31, 1995, $6.3 million of letters of credit were issued and
outstanding and $18.4 million had been borrowed. The term note was
used to refinance existing debt and requires monthly interest
installments and seventeen equal quarterly principal payments
commencing March 31, 1996. The term note bears interest at the
Company's option of either a specified prime rate or LIBOR rate, plus
a spread which is determined quarterly based upon the ratio of the
Company's funded debt to cash flow. The average interest rate for the
year ended December 31, 1995 was 8.40%. The credit facility requires
that the Company maintain certain specified financial ratios and
comply with other usual and customary requirements. The Company was
in compliance with the agreement at December 31, 1995.
50
Subsequent to December 31, 1995, the banks providing the credit
facility approved an increase of $10 million in the term note portion
of the facility, which will be used initially to reduce borrowings on
the revolving line of credit of the credit facility.
On December 1, 1995, the Company entered into an interim
construction credit agreement in an aggregate amount not to exceed
$1,840,000 for the construction of an office building for two of its
subsidiaries. The outstanding balance of this credit agreement was
$482,000 at December 31, 1995. The agreement provides for an interest
rate of 8.75% during construction. At the completion of construction,
the interim construction credit agreement will be converted to a term
loan. The term loan will require monthly principal and interest
payments to fully amortize the amount over 10 years. The term note
will bear a fixed interest rate of 2.25% per annum in excess of the
treasury rate in effect on the date the term loan is signed.
Maturities of Long-Term Debt are $7,911,000 in 1996, $7,438,000 in
1997, $26,067,000 in 1998, $7,638,000 in 1999, $4,941,000 in 2000 and
$640,000 thereafter.
F. Income Taxes
The provision for income taxes charged to continuing operations
(income taxes related to discontinued operations for 1993 were not
segregated as the amounts were immaterial) is almost exclusively U. S.
Federal tax as follows:
Year Ended December 31,
______________________________________________________________________
(In thousands) 1995 1994 1993
______________________________________________________________________
Current tax expense $ 1,534 $ 115 $ 30
Deferred tax expense (benefit) 3,217 (200) (1,700)
______ _____ ______
Total provision (benefit) $ 4,751 $ (85) $(1,670)
======================================================================
The deferred tax expense (benefit) includes a decrease in the
valuation allowance for deferred tax assets of $1,700,000, $3,129,000,
and $2,407,000 for 1995, 1994 and 1993, respectively.
The effective income tax rate is reconciled to the statutory federal
income tax rate as follows:
Year Ended December 31,
______________________________________________________________________
1995 1994 1993
______________________________________________________________________
Income tax expense at statutory rate 34.0% 34.0% 34.0%
Non-deductible portion of business expenses 1.4 (2.5) 1.6
Tax benefit of NOL utilization (10.0) (33.6) (90.1)
Other 2.6 1.2 0.9
______________________
Total income tax expense (benefit) 28.0% (0.9%) (53.6%)
======================================================================
51
For federal income tax return purposes, the Company has net
operating loss carryforwards ("NOLs") of $22,835,000 (net of amounts
disallowed pursuant to IRC Section 382) that, if not used, will expire
in 1998 through 2009. The Company also has $1,592,000 of alternative
minimum tax credit carryforwards available to offset future regular
income taxes subject to certain limitations. Substantially all of
these carryforwards have been recognized for financial reporting
purposes.
Temporary differences and carryforwards which give rise to a
significant portion of deferred tax assets and liabilities at December
31, 1995 and 1994 are as follows:
______________________________________________________________________
(In thousands) 1995 1994
______________________________________________________________________
Deferred tax assets:
Net operating losses $ 8,696 $ 9,893
Alternative minimum tax credits 1,592 295
All other 398 444
_______ _______
Total deferred tax assets 10,686 10,632
Valuation allowance (236) (967)
_______ _______
Net deferred tax assets $ 10,450 $ 9,665
_______ _______
Deferred tax liabilities:
Depreciation $ 8,767 $ 6,244
Amortization 1,823 1,074
All other 1,177 447
_______ ________
Total deferred tax liabilities 11,767 7,765
_______ ________
Total net deferred tax (liabilities)
assets $ (1,317) $ 1,900
======================================================================
Under SFAS No. 109 a valuation allowance must be established to
offset a deferred tax asset if, based on the weight of available
evidence, it is more likely than not that some portion or all of the
deferred tax asset will not be realized. At December 31, 1994, the
Company evaluated the available evidence and believed that it was more
likely than not that a portion of the deferred tax asset would not be
realized. A valuation allowance was recorded in the financial
statements to offset NOLs which the Company believed would not be
utilized. At December 31, 1994, the Company recorded a net deferred
tax asset of $1,900,000, of which $2,271,000 was recorded in non-
current assets and $371,000 was recorded in current accrued
liabilities, the realization of which was dependent on the Company's
ability to generate taxable income in future periods. The Company
believed that its estimate of future earnings based on contracts in
place, the overall improved gas market, and its prior earnings trend
supported the recorded net deferred tax asset.
52
At December 31, 1995, the deferred tax liabilities of the
consolidated group exceeded the deferred tax assets, therefore a
deferred tax benefit was recorded for the full amount of the remaining
federal NOLs. The valuation allowance recorded at December 31, 1995
relates to certain state NOLs which have not to date been recognized
for financial reporting purposes. At December 31, 1995, the Company
has recorded a net deferred tax liability of $1,317,000, of which
$2,701,000 has been recorded in other current assets and $4,018,000
has been recorded as long-term deferred taxes payable.
G. Preferred Stock
The Company has been authorized to issue up to 1,000,000
shares of Preferred Stock, $.01 par value, none of which are
issued or outstanding at December 31, 1995.
H. Common Stock and Stock Options
Changes in outstanding Common Stock for the three years
ended December 31, 1995, 1994, and 1993 were as follows:
______________________________________________________________________
(In Thousands of Shares) 1995 1994 1993
______________________________________________________________________
Outstanding, beginning of year 9,986 9,858 9,130
Shares issued in exchange for
extinguishment of debt - - 700
Dividend shares issued 505 - -
Shares issued upon exercise of Options 143 128 28
_____ _____ _____
Outstanding, end of year 10,634 9,986 9,858
======================================================================
The Amended and Restated Newpark Resources, Inc. 1988 Incentive
Stock Option Plan (the "1988 Plan") was adopted by the Board of
Directors on June 22, 1988 and thereafter was approved by the
shareholders. The 1988 Plan was amended and restated by the Board of
Directors and shareholders in 1992 to increase the number of shares of
Common Stock issuable thereunder from 100,000 to 450,000; was further
amended by the Board of Directors and shareholders in 1994 to increase
the number of shares of Common Stock issuable thereunder from 450,000
to 650,000, and was further amended by the Board of Directors and
shareholders in 1995 to increase the number of shares of Common Stock
issuable thereunder from 650,000 to one million shares. An option may
not be granted for an exercise price less than the fair market value
on the date of grant and may have a term of up to ten years.
53
Stock option transactions for the 1988 Plan for the three years
ended December 31, 1995, 1994 and 1993 are summarized below:
______________________________________________________________________
Years Ended December 31, 1995 1994 1993
______________________________________________________________________
Outstanding, beginning of year 374,981 303,149 215,191
Options granted 387,000 191,000 117,500
Dividend options granted 32,610 - -
Options exercised (87,667) (119,168) (27,542)
Options canceled (22,166) - (2,000)
_______ _______ _______
Outstanding, end of year 684,758 374,981 303,149
======= ======= =======
Option price per share:
Outstanding, end-of-year $3.80-$18.88 $3.00-$18.75 $3.00-$9.25
======================================================================
At December 31, 1995 and 1994, the total number of outstanding
exercisable options were 145,979 and 54,144, respectively.
The 1992 Directors' Stock Option Plan (the "1992 Directors' Plan")
was adopted on October 21, 1992 by the Compensation Committee and,
thereafter, was approved by the shareholders in 1993.
The purpose of the 1992 Directors' Plan was to provide two
directors ("Optionees") additional compensation for their services to
Newpark and to promote an increased incentive and personal interest in
the welfare of Newpark by such directors. The Optionees were each
granted a stock option to purchase 50,000 shares of Common Stock at an
exercise price of $8.75 per share, the fair market value of the Common
Stock on the date of grant for a term of ten years. No additional
options may be granted under the Directors" Plan. At December 31,
1995, 50,000 options had been exercised under this plan.
The 1993 Non-Employee Directors' Stock Option Plan (the "1993 Non-
Employee Directors' Plan") was adopted on September 1, 1993 by the
Board of Directors and, thereafter, was approved by the shareholders
in 1994.
The 1993 Non-Employee Directors' Plan is intended to allow each
non-employee director of Newpark to purchase 15,000 shares of Common
Stock. Non-employee directors are not eligible to participate in any
other stock option or similar plan currently maintained by Newpark.
The purpose of the 1993 Non-Employee Directors' Plan is to promote an
increased incentive and personal interest in the welfare of Newpark by
those individuals who are primarily responsible for shaping the long-
range plans of Newpark, to assist Newpark in attracting and retaining
on the Board persons of exceptional competence and to provide
additional incentives to serve as a director of Newpark.
Upon the adoption of the 1993 Non-Employee Directors' Plan, the
five non-employee directors were each granted a stock option to
purchase 15,000 shares of Common Stock at an exercise price of $9.00
per share, the fair market value of the Common Stock on the date of
grant. In addition, each new Non-Employee Director, on the date of
54
his or her election to the Board of Directors automatically will be
granted a stock option to purchase 15,000 shares of Common Stock at an
exercise price equal to the fair market value of the Common Stock on
the date of grant. The determination of fair market value of the
Common Stock is based on market quotations. On November 2, 1995, the
Board of Directors adopted, subject to shareholder approval,
amendments to the Non-Employee Directors' Plan to increase the maximum
number of shares issuable thereunder from 150,000 to 200,000 and to
provide for the automatic grant at five year intervals of additional
stock options to purchase 10,000 shares of Common Stock to each non-
employee director who continues to serve on the Board. At December
31, 1995, 15,000 options had been exercised.
On November 2, 1995, the Board of Directors adopted, subject to
shareholder approval, the Newpark Resources, Inc. 1995 Incentive Stock
Option Plan (the "1995 Plan"), pursuant to which the Compensation
Committee may grant incentive stock options and nonstatutory stock
options to designated employees of Newpark. Initially, a maximum of
500,000 shares of Common Stock may be issued under the 1995 Plan, with
such maximum number increasing on the last business day of each fiscal
year of Newpark, commencing with the last business day of the fiscal
year ending December 31, 1996, by a number equal to 1.25% of the
number of shares of Common Stock issued and outstanding on the close
of business on such date, with a maximum number of shares of Common
Stock that may be issued upon exercise of options granted under the
1995 Plan being limited to 1,250,000.
I. Supplemental Cash Flow Information
During 1994, the Company's noncash transactions included the
consummation of the sale of the operations of the Company's marine
repair business for $661,000 in cash and a $400,000 note receivable.
During 1993, the Company's noncash transactions included the
issuance of 700,000 shares of the Company's common stock for
extinguishment of certain notes payable issued in connection with the
assets purchased from Quality Mill, Inc. and accrued liabilities
incurred with the purchase of other fixed assets. Additionally, the
Company sold property with a book value of $250,000 in exchange for
$100,000 in cash and a $400,000 note receivable.
Included in accounts payable and accrued liabilities at December
31, 1995, 1994 and 1993, were equipment purchases of $4,141,000,
$774,000, and $933,000 respectively. Also included are notes payable
for equipment purchases in the amount of $257,000 and $635,000 for
1995 and 1993, respectively.
Interest of $4,235,000, $2,713,000, and $1,912,000 was paid in
1995, 1994 and 1993, respectively. Income taxes of $51,000, $90,200,
and $82,000 were paid in 1995, 1994 and 1993, respectively.
55
J. Commitments and Contingencies
Newpark and its subsidiaries are involved in litigation and other
claims or assessments on matters arising in the normal course of
business. In the opinion of management, any recovery or liability in
these matters will not have a material adverse effect on Newpark's
consolidated financial statements.
During 1992, the State of Texas assessed additional sales taxes
for the years 1988-1991. The Company has filed a petition for
redetermination with the Comptroller of Public Accounts. The Company
believes that the ultimate resolution of this matter will not have a
material adverse effect on the consolidated financial statements.
In the normal course of business, in conjunction with its
insurance programs, the Company has established letters of credit in
favor of certain insurance companies in the amount of $2,825,000 at
December 31, 1995 and December 31, 1994. At December 31, 1995, the
Company had outstanding guaranty obligations totaling $469,000 in
connection with facility closure bonds issued by an insurance company.
Since May 1988, the Company has held the exclusive right to use a
patented prefabricated mat system with respect to the oil and gas
exploration and production industry within the State of Louisiana. On
June 20, 1994, the Company entered into a new license agreement by
which it obtained the exclusive right to use the same patented
prefabricated mat system, without industry restriction, throughout the
continental United States. The license agreement requires, among
other things, that the company purchase a minimum of 20,000 mats
annually through 2003. The Company has met this annual mat purchase
requirement since the inception of the agreement. Any purchases in
excess of that level may be applied to future annual requirements.
The Company's annual commitment to maintain the agreement in force is
currently estimated to be $4,600,000.
At December 31, 1995, the Company had outstanding a letter of
credit in the amount of $3,816,000 issued to a state regulatory agency
to assure funding for future site closure obligations at its NORM
processing facility.
The Company leases various manufacturing facilities, warehouses,
office space, machinery and equipment and transportation equipment
under operating leases with remaining terms ranging from one to ten
years with various renewal options. Substantially all leases require
payment of taxes, insurance and maintenance costs in addition to
rental payments. Total rental expenses of continuing operations for
all operating leases were $5,210,000, $4,049,000, and $4,226,000,
1995, 1994 and 1993, respectively.
Future minimum payments under noncancelable operating leases, with
initial or remaining terms in excess of one year are: $1,683,000 in
1996, $1,192,000 in 1997, $924,000 in 1998, $859,000 in 1999, $781,000
in 2000, and $562,000 thereafter.
Capital lease commitments are not significant.
56
K. Business and Credit Concentration
During 1995, one customer accounted for approximately
16%, $15,890,000, of total revenue. In 1993 and 1994, the Company did
not derive ten percent or more of its revenues from sales to any
single customer.
Export sales are not significant.
L. Concentrations of Credit Risk
Financial instruments which potentially subject the Company to
significant concentrations of credit risk consist principally of cash
investments and trade accounts and notes receivable.
The Company maintains cash and cash equivalents with various
financial institutions. These financial institutions are located
throughout the Company's trade area and company policy is designed to
limit exposure to any one institution. The Company performs periodic
evaluations of the relative credit standing of these financial
institutions which are considered in the Company's investment
strategy.
Concentrations of credit risk with respect to trade accounts and
notes receivable are limited due to the large number of entities
comprising the Company's customer base, and for notes receivable, the
required collateral. The Company maintains an allowance for losses
based upon the expected collectibility of accounts and notes
receivable.
M. Supplemental Selected Quarterly Financial Data (Unaudited)
Quarter Ended
______________________________________________________________________
Mar 31 Jun 30 Sep 30 Dec 31
(In thousands, except per share amounts)
_____________________________________________________________
Fiscal Year 1995
Revenues $22,209 $22,454 $24,793 $28,526
Operating income 3,711 4,789 5,529 6,951
Net income 2,490 3,206 2,700 3,840
Net income per share 0.24 0.30 0.26 0.36
Fiscal Year 1994
Revenues $17,146 $19,396 $21,169 $21,921
Operating income 2,288 2,843 3,165 3,595
Net income 1,740 2,273 2,436 2,945
Net income per share 0.17 0.22 0.23 0.28
57
ITEM 9. Changes In and Disagreements With Accountants on Accounting
and Financial Disclosure
None
58
PART III
ITEM 10. Directors and Officers of the Registrant
The information required by this Item is incorporated by reference
to the registrantOs Proxy Statement to be filed pursuant to Regulation
14A under the Securities Act of 1934 in connection with the CompanyOs
1996 Annual Meeting of Shareholders.
ITEM 11. Executive Compensation
The information required by this Item is incorporated by reference
to the registrantOs Proxy Statement to be filed pursuant to Regulation
14A under the Securities Act of 1934 in connection with the CompanyOs
1996 Annual Meeting of Shareholders.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
The information required by this Item is incorporated by reference
to the registrantOs Proxy Statement to be filed pursuant to Regulation
14A under the Securities Act of 1934 in connection with the Company's
1996 Annual Meeting of Shareholders.
ITEM 13. Certain Relationships and Related Transactions
The information required by this Item is incorporated by reference
to the registrantOs Proxy Statement to be filed pursuant to Regulation
14A under the Securities Act of 1934 in connection with the Company's
1996 Annual Meeting of Shareholders.
59
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form
8-K
(a) 1. Financial Statements
Reports of Independent Auditors
Consolidated Balance Sheets as of December 31, 1995 and 1994
Consolidated Statements of Income for the years ended
December 31, 1995, 1994 and 1993
Consolidated Statements of Shareholders' Equity for the years
ended December 31, 1995, 1994 and 1993
Consolidated Statements of Cash Flows for the years
ended December 31, 1995, 1994 and 1993
Notes to Consolidated Financial Statements
2. Financial Statement Schedules
The following financial statement schedule is included:
Schedule II - Valuation and Qualifying Accounts
All other schedules for which provision is made in the
applicable accounting regulations of the Securities and Exchange
Commission are not required under the related instructions or
are inapplicable, and therefore have been omitted.
3. Exhibits
3.1 Certificate of Incorporation
3.1.1 Certificate of Amendment to Certificate of
Incorporation**
3.2 Bylaws
10.1 Employment Agreement, dated as of October 23, 1990,
between the registrant and James D. Cole. *
10.2 Lease Agreement, dated as of May 17, 1990, by and
between Harold F. Bean Jr. and Newpark Environmental
Services, Inc. ("NESI").
60
10.3 Building Lease Agreement, dated April 10, 1992, between
the registrant and The Traveler' Insurance Company.
10.4 Building Lease Agreement, dated May 14, 1992, between
State Farm Life Insurance Company, and SOLOCO, Inc.
10.5 Operating Agreement, dated June 30, 1993, between
Goldrus Environmental Services, Inc. and NESI.
10.6 1992 Directors' Stock Option Plan. *
10.7 1993 Non-Employee Directors' Stock Option Plan. *
10.7.1 Amendment to the 1993 Non-Employee Directors' Stock
Option Plan.**
10.8 Amended and Restated 1988 Incentive Stock Option Plan.
*
10.8.1 1995 Incentive Stock Option Plan**
10.9 Loan Agreements, dated December 30, 1993, between
the registrant and SFA Industries, Inc.
10.10 Continuing Guaranty, dated December 30, 1993, between
the registrant and Sam Eakin.
10.11 Pledge Agreement, dated December 30, 1993, between
the registrant and SFA Industries, Inc.
10.12 Security Agreement, dated December 30, 1993, between
the registrant and SFA Industries, Inc.
10.13 Lease and Security Agreement, dated December 30, 1993,
between the registrant and SFA Industries, Inc.
10.14 Guaranty of Lease, dated December 30, 1993, between
the registrant and SFA Industries, Inc.
10.15 Equipment Lease Agreement, dated March 11, 1994, among
Republic Financial Corporation ("RFC"), the registrant
and Newpark Shipholding, Inc.
10.16 Guaranty, dated March 11, 1994, by the registrant in favor
of RFC.
10.17 First Note, dated March 11, 1994, by the registrant in
favor of RFC.
61
10.18 Special Guaranty, dated March 11, 1994, by the registrant
in favor of Lockwood National Bank of Houston.
10.19 Exclusive License Agreement, dated June 20, 1994, between
SOLOCO, Inc. and Quality Mat Company.
10.20 Lease Agreement, dated as of July 29, 1994, by and between
Harold F. Bean Jr. and NESI.
10.21 Credit Agreement by and among Newpark Resources, Inc.,
SOLOCO, Inc., Newpark Environmental Services, Inc.,
SOLOCO Texas, L. P., Batson Mill, L.P., Newpark
Environmental Water Services, Inc., Newpark Shipholding
Texas, L.P., Mallard and Mallard of La., Inc., SOLOCO,
L. L. C., Newpark Texas, L. L. C., Newpark Holdings,
Inc., Hibernia National Bank, Bank One Texas, N. A.,
and Premier Bank, National Association.
10.21.1Second Amendment and Supplement to the Credit Agreement,
dated March 5, 1996 to Credit Agreement by and among
Newpark Resources, Inc., SOLOCO, L. L. C., Newpark
Environmental Services, L. L. C., Newpark Shipholding
Texas, L.P., SOLOCO Texas, L. P., Batson Mill, L. P.,
Newpark Environmental Water Services, Inc., Mallard and
Mallard of La., Inc., Newpark Texas, L. L. C., Newpark
Holdings, Inc., Hibernia National Bank, Bank One Texas,
N. A., and Premier Bank, National Association. **
10.22 Credit Agreement, dated December 1, 1995, between
SOLOCO, Inc., and Hibernia National Bank**
21.1 Subsidiaries of the Registrant **
23.1 Consent of Deloitte & Touche **
24.1 Powers of Attorney **
________________________________
* Management Compensation Plan or Agreement.
** Filed herewith.
Previously filed in the exhibits to the registrant's
Quarterly Report on Form 10-Q for the quarter ended
March 31, 1991, and incorporated by reference herein.
Previously filed in the exhibits to the registrant's
Registration Statement on Form S-1 (File No. 33-40716)
filed on June 21, 1991, and incorporated by reference
herein.
62
Previously filed in the exhibits to the registrant's
Registration Statement on Form S-8 (File No. 33-67284)
filed on August 12, 1993, and incorporated by reference
herein.
Previously filed in the exhibits to the registrant's
Registration Statement on Form S-8 (File No. 33-83680)
filed on August 12, 1993, and incorporated by reference
herein.
Previously filed in the exhibits to the registrant's
Current Report on Form 8-K, dated January 14, 1994, and
incorporated by reference herein.
Previously filed in the exhibits to the registrant's
Current Report on Form 8-K, dated March 25, 1994, and
incorporated by reference herein.
Previously filed in the exhibits to the registrant's
Annual Report on Form 10-K for the year ended December
31, 1994, and incorporated by reference herein.
Previously filed in the exhibits to the registrant's
Current Report on Form 8-K, dated July 18, 1995, and
incorporated by reference herein.
Previously filed as Exhibit B to the registrant's
Definitive Proxy Materials relating to its Annual Meeting
of Shareholders held on June 28, 1995 and incorporated by
reference herein.
(b) Reports on Form 8-K
The registrant did not file a report on Form 8-K during
the fourth quarter of 1995.
63
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
Dated: March 8, 1996
NEWPARK RESOURCES, INC.
By: /s/ James D. Cole
James D. Cole, President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant in the capacities and on the date indicated.
Signatures Title Date
/s/ James D. Cole President and Chief Executive March 8, 1996
James D. Cole Officer and Director
/s/ Matthew W. Hardey Vice President of Finance and March 8, 1996
Matthew W. Hardey Chief Financial Officer
/s/ Kathleen D. Lacoste Controller March 8, 1996
Kathleen D. Lacoste
/s/ Philip S. Sassower* Chairman of the Board March 8, 1996
Philip S. Sassower and Director
/s/ Wm. Thomas Ballantine Director March 8, 1996
Wm. Thomas Ballantine
/s/ W. W. Goodson* Director March 8, 1996
W. W. Goodson
/s/David P. Hunt* Director March 8, 1996
David P. Hunt
/s/ Dr. Alan Kaufman* Director March 8, 1996
Dr. Alan Kaufman
/s/ James H. Stone* Director March 8, 1996
James H. Stone
By /s/ James D. Cole
* James D. Cole
Attorney-in-Fact
64
Newpark Resources, Inc. SCHEDULE II
Valuation and Qualifying Accounts
Years Ended December 31, 1995, 1994 and 1993
(In thousands of dollars)
Additions
Balance Charged Balance
at to at
Beginning Costs and Other Other End of
of Year Expenses Additions Deductions Year
_________ _________ _________ __________ _______
1995
Allowance for
doubtful accounts $ 455 $ 463 $ 13 (a) $ (163)(b) $ 768
========= ========= ========== ========= =========
Valuation allowance for
deferred tax assets $ 967 - $ 969 (d) $ (1,700)(c) $ 236
========= ========= ========== ========= =========
1994
Allowance for
doubtful accounts $ 354 $ 974 $ 44 (a) $ (917)(b) $ 455
========= ========= ========== ========= =========
Valuation allowance for
deferred tax assets $ 4,096 - - $ (3,129)(c) $ 967
========= ========= ========== ========= =========
1993
Allowance for
doubtful accounts $ 352 $ 671 - $ (669)(b) $ 354
========= ========= ========== ========= =========
Valuation allowance for
deferred tax assets $ 6,503 - - $ (2,407)(c) $ 4,096
========= ========= ========== ========= =========
(a) Recovery of amounts previously written off and other adjustments.
(b) Write-offs.
(c) Change in valuation allowance reflecting the future benefit of net operating losses.
(d) Initial set-up of valuation allowance.
65
EXHIBIT 3.1.1
CERTIFICATE OF AMENDMENT OF
CERTIFICATE OF INCORPORATION OF
NEWPARK RESOURCES, INC.
MATTHEW W. HARDEY AND EDAH KEATING, hereby certify that:
1. They are the Chief Financial Officer and the
Secretary, respectively, of NEWPARK RESOURCES, INC., a
Delaware corporation (the "Corporation").
2. The Corporation filed its original Certificate of
Incorporation with the Delaware Secretary of State on June 3,
1988 (the "Certificate of Incorporation").
3. Paragraph A of Article FOURTH of the Certificate of
Incorporation of the Corporation is amended in its entirety to
read as follows:
"FOURTH:A.The corporation is authorized to issue two
classes of shares to be designated, respectively, "Preferred
Stock" and "Common Stock". The total number of shares which
this corporation shall have authority to issue is Twenty-One
Million (21,000,000), of which One Million (1,000,000) shares
shall be Preferred Stock and Twenty Million (20,000,000) shall
be Common Stock. The Preferred Stock and the Common Stock
shall each have a par value of $.01 per share."
4. The foregoing Certificate of Amendment of
Certificate of Incorporation has been duly approved and
adopted by the Board of Directors of the Corporation pursuant
to Section 242 of the Delaware General Corporation Law and has
been duly approved and adopted by the stockholders of the
Corporation, pursuant to Section 242 of the Delaware General
Corporation Law, at the 1995 annual meeting of stockholders of
the Corporation.
Dated: July 3, 1995
___________________________________
MATTHEW W. HARDEY, Chief
Financial Officer
___________________________________
EDAH KEATING, Secretary
EXHIBIT 10.7.1
AMENDMENT NO. 1 TO
NEWPARK RESOURCES, INC.
1993 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
WHEREAS, the Corporation has a 1993 Non-Employee Directors'
Stock Option Plan (the "Plan") under which each "Non-Employee
Director" (as defined in the Plan) has received or, upon being
elected, will receive a stock option ("Stock Option") exercisable
for the purchase of 15,000 shares of Common Stock of the
Corporation; and
WHEREAS the Board of Directors has determined to amend the
Plan to provide for the granting of additional Stock Options each
time a Non-Employee Director completes an additional five years
of service.
NOW, THEREFORE, BE IT RESOLVED that, subject to stockholder
approval, as provided below, the Board of Directors hereby adopts
the following amendment (the "First Amendment") to the Plan:
A. Paragraph 4 of the Plan is hereby amended in its
entirety to read as follows:
"4. Grants.
4.1 Each Non-Employee Director serving on
the Board on the date the Board adopted this Plan
(September 1, 1993) was granted a Stock Option to
purchase 15,000 shares of Common Stock automatically on
that date. Each Non-Employee Director who is first
elected a director after this Plan was adopted by the
Board shall be granted an option to purchase 15,000
shares of Common Stock automatically on the date of
such election. Subject to the provisions of paragraph
11, the number of shares of Common Stock issued and
issuable upon the exercise of Stock Options granted
under this Plan shall not exceed 200,000."
4.2 Subject to stockholder approval of the
First Amendment: (i) each Non-Employee Director who has
been a director continuously for at least five years on
the date the First Amendment is approved by the Board
(the "First Amendment Effective Date"), shall be
granted a Stock Option to purchase 10,000 shares of
Common Stock automatically on the First Amendment
Effective Date, and, provided such Non-Employee
Director continues to be a Non-Employee Director, shall
be granted a Stock Option to purchase 10,000 additional
shares of Common Stock automatically at the expiration
of each five year period thereafter during such Non-
Employee Director's continuous service; and (ii) each
director who completes five continuous years as a Non-
Employee Director after the First Amendment Effective
Date shall be granted a Stock Option to purchase 10,000
shares of Common Stock automatically on the day
following the completion of such five year period, and,
provided such Non-Employee Director continues to be
a Non-Employee Director, shall be granted a Stock Option to
purchase 10,000 additional shares of Common Stock automatically
at the expiration of each five year period thereafter during such
Non-Employee Director's continuous service. Except as otherwise
provided herein, the period of continuous service for any Non-
Employee Director shall be deemed to include continuous periods
prior to the adoption of the Plan in which the director was not
an employee of Newpark or any of its Subsidiaries or any parent
corporation."
B. Paragraph 6 of the Plan is hereby amended in its
entirety to read as follows:
"6. Option Period.
The term of each Stock Option shall commence on
the Date of Grant of the Stock Option and shall be ten
years. Subject to the other provisions of the Plan,
(i) each initial Stock Option granted pursuant to
paragraph 4.1 shall be exercisable during its term as
to 20% of the Option Shares during the twelve months
beginning on the first anniversary of the Date of
Grant; 20% of the Option Shares during the twelve
months beginning on the second anniversary of the Date
of Grant; 20% during the twelve months beginning on the
third anniversary of the Date of Grant; 20% during the
twelve months beginning on the fourth anniversary of
the Date of Grant; and 20% during the twelve months
beginning on the fifth anniversary of the Date of
Grant; and (ii) each stock option granted pursuant to
paragraph 4.2 shall be exercisable during its term as
to one-third of the Option Shares during the six months
beginning six months and one day following the date of
grant; one-third of the Options Shares during the
twelve-months beginning on the first anniversary of the
date of grant; and one-third of the Option Shares
during the twelve months beginning on the second
anniversary of the date of grant; provided, however,
that the initial Stock Option granted to each Non-
Employee Director serving on the Board on the date this
Plan was adopted by the Board (as now described in
paragraph 4.1) shall be exercisable from time to time
after the actual Date of Grant as to the number of
Option Shares determined in accordance with the
foregoing schedule as if the Date of Grant were the
date such Non-Employee Director first became a
director; provided, further, however, that no stock
option granted granted pursuant to paragraph 4.2 shall
be exercisable until the expiration of six months and
one day following stockholder approval of the First
Amendment. If an optionee shall not in any period
purchase all of the Option Shares which the optionee is
entitled to purchase in such period, the optionee may
purchase all or any part of such Option Shares at any
time after the end of such period and prior to the
expiration of the Option. Notwithstanding the
foregoing, subject to the provisions of paragraph 11.3,
Stock Options granted under this Plan shall not be
exercisable until at least six months and one day after
the actual Date of Grant."
C. Except as hereby amended, the Plan is and shall
remain in full force and effect in accordance with its
terms. Subject to stockholder approval of this First
Amendment, all references in the Plan to "the Plan" or
"this Plan," or words of similar import shall refer to
the Plan as amended by the First Amendment.
D. No Stock Option granted in accordance with
paragraph 4.2 of the Plan shall be exercisable unless
and until, on or before November 2, 1996, holders of a
majority of the Common Stock of the Corporation present
or represented at a meeting at which the First
Amendment is presented for approval (and provided a
quorum is present or represented at the meeting), shall
have approved the First Amendment. If stockholder
approval is not timely obtained, the First Amendment
and all such Stock Options shall be null and void.
61870.1
EXHIBIT 10.8.1
NEWPARK RESOURCES, INC.
1995 INCENTIVE STOCK OPTION PLAN
1. Purpose.
This Amended and Restated Newpark Resources, Inc., 1995
Incentive Stock Option Plan (the "Plan") is intended to allow
designated employees, executive officers and other corporate and
divisional officers (all of whom are sometimes collectively referred to
herein as "Employees") of Newpark Resources, Inc., a Delaware
corporation ("Newpark"), and Subsidiaries which it may have from time
to time (Newpark and such Subsidiaries being together referred to
herein as the "Company") to receive certain options ("Stock Options")
to purchase Newpark's common stock, $.01 par value ("Common Stock"), as
herein provided. "Subsidiary" shall mean each corporation which is a
"subsidiary corporation" of Newpark, within the definition contained in
Section 424(f) of the Internal Revenue Code of 1986, as amended (the
"Code"). The purpose of the Plan is to provide Employees with
additional incentives to make significant and extraordinary
contributions to the long-term performance and growth of the Company
and to attract and retain Employees of exceptional ability.
2. Administration.
1.b The Plan shall be administered by the Compensation
Committee (the "Committee") of the Board of Directors of Newpark (the
"Board"). Each member of the Committee shall be a "disinterested
person" as that term is defined in Rule 16b-3 promulgated by the
Securities and Exchange Commission (the "Commission") pursuant to the
Securities Exchange Act of 1934 (the "Exchange Act"), but no action of
the Committee shall be invalid if this requirement is not met. The
Committee shall select one of its members as Chairman and shall act by
vote of a majority of a quorum or by unanimous written consent. A
majority of its members shall constitute a quorum. The Committee shall
be governed by the provisions of Newpark's By-Laws and of Delaware law
applicable to the Board, except as otherwise provided herein or
determined by the Board.
2.b The Committee shall have full and complete authority,
in its discretion, but subject to the express provisions of the Plan:
to approve the Employees nominated by the management of the Company to
be granted Stock Options; to determine the number of Stock Options to
be granted to an Employee; to determine the time or times at which
Stock Options shall be granted; to establish the terms and conditions
upon which Stock Options may be exercised; to remove or adjust any
restrictions and conditions upon Stock Options; to specify, at the time
of grant, provisions relating to the exercisability of Stock Options
and to accelerate or otherwise modify the exercisability of any Stock
Options; and to adopt such rules and regulations and to make all other
determinations deemed necessary or desirable for the administration of
the Plan. All interpretations and constructions of the Plan by the
Committee, and all of its actions hereunder, shall be binding and
conclusive on all persons for all purposes.
3.b The Company hereby agrees to indemnify and hold
harmless each Committee member and each employee of the Company, and
the estate and heirs of such Committee member or employee, against all
claims, liabilities, expenses, penalties, damages or other pecuniary
losses, including legal fees, which such Committee member or employee
or his or her estate or heirs may suffer as a result of his or her
responsibilities, obligations or duties in connection with the Plan, to
the extent that insurance, if any, does not cover the payment of such
items.
3. Eligibility and Participation.
Employees eligible under the Plan shall be approved by the
Committee from those Employees who, in the opinion of the management of
the Company, are in positions which enable them to make significant and
extraordinary contributions to the long-term performance and growth of
the Company. In selecting Employees to whom Stock Options may be
granted, consideration shall be given to factors such as employment
position, duties and responsibilities, ability, productivity, length of
service, morale, interest in the Company and recommendations of super-
visors. No member of the Committee shall be eligible to participate
under the Plan or under any other Company plan if such participation
would contravene the standard of paragraph 2.1 above relating to "dis-
interested persons".
4. Grants.
The Committee may grant Stock Options in such amounts, at
such times, and to such Employees nominated by the management of the
Company as the Committee, in its discretion, may determine; provided,
however, that, subject to adjustment as provided in paragraph 11, the
maximum number of shares of Common Stock for which Stock Options may be
granted to any one Employee during any one calendar year shall be
100,000. Stock Options granted under the Plan shall constitute
"incentive stock options" within the meaning of Section 422 of the
Code, if so designated by the Committee on the date of grant. The
Committee shall also have the discretion to grant Stock Options which
do not constitute incentive stock options and any such Stock Options
shall be designated non-statutory stock options by the Committee on the
date of grant. The aggregate fair market value (determined as of the
time an incentive stock option is granted) of the Common Stock with
respect to which incentive stock options are exercisable for the first
time by any Employee during any one calendar year (under all plans of
the Company and any parent or subsidiary of the Company) may not exceed
the maximum amount permitted under Section 422 of the Code (currently
$100,000.00). Non-statutory stock options shall not be subject to the
limitations relating to incentive stock options contained in the pre-
ceding sentence. Subject to the provisions of paragraph 11 hereof, the
number of shares of Common Stock issued and issuable pursuant to the
exercise of Stock Options granted hereunder shall not exceed 500,000;
provided, however, that on the last business day of each fiscal year of
the Company, commencing with the last business day of the fiscal year
ending December 31, 1996, such maximum number shall be increased by a
number equal to 1.25% of the number of shares of Common Stock issued
and outstanding on the close of business on such day; provided,
further, that in no event shall the aggregate number of shares issued
and issuable pursuant to the exercise of Stock Options granted
hereunder exceed 1,250,000. Each Stock Option shall be evidenced by a
written agreement (the "Option Agreement") in a form approved by the
Committee, which shall be executed on behalf of the Company and by the
Employee to whom the Stock Option is granted. If a Stock Option
expires, terminates or is cancelled for any reason without having been
exercised in full, the shares of Common Stock not purchased thereunder
shall again be available for purposes of the Plan.
5. Purchase Price.
The purchase price (the "Exercise Price") of shares of
Common Stock subject to each Stock Option ("Option Shares") shall equal
the fair market value ("Fair Market Value") of such shares on the date
of grant of such Stock Option. Notwithstanding the foregoing, the
Exercise Price of Option Shares subject to an incentive stock option
granted to an Employee who at the time of grant owns stock possessing
more than 10% of the total combined voting power of all classes of
stock of the Company or of any parent or Subsidiary shall be at least
equal to 110% of the Fair Market Value of such shares on the date of
grant of such Stock Option. The Fair Market Value of a share of Common
Stock on any date shall be equal to the closing price of the Common
Stock for the last preceding day on which Newpark's shares were traded,
and the method for determining the closing price shall be determined by
the Committee.
6. Option Period.
The Stock Option period (the "Term") shall commence on the
date of grant of the Stock Option and shall be ten years or such
shorter period as is determined by the Committee. Notwithstanding the
foregoing, the Term of an incentive stock option granted to an Employee
who at the time of grant owns stock possessing more than 10% of the
total combined voting power of all classes of stock of the Company or
of any parent or subsidiary shall not exceed five years. Each Stock
Option shall provide that it is exercisable over its term in such
periodic installments as the Committee in its sole discretion may
determine. Such provisions need not be uniform. Notwithstanding the
foregoing, but subject to the provisions of paragraphs 2.2 and 11.3,
Stock Options granted to Employees who are subject to the reporting
requirements of Section 16(a) of the Exchange Act ("Section 16
Reporting Persons") shall not be exercisable until at least six months
and one day from the date the Stock Option is granted, or, if later,
from the date of stockholder approval of the Plan. If an Employee
shall not in any period purchase all of the Option Shares which the
Employee is entitled to purchase in such period, the Employee may
purchase all or any part of such Option Shares at any time prior to the
expiration of the Stock Option.
7. Exercise of Options.
1.b Each Stock Option may be exercised in whole or in part
(but not as to fractional shares) by delivering it for surrender or
endorsement to the Company, attention of the Corporate Secretary, at
the principal office of the Company, together with payment of the
Exercise Price and an executed Notice and Agreement of Exercise in the
form prescribed by paragraph 7.2. Payment may be made in cash, by
cashier's or certified check or by surrender of previously owned shares
of the Company's Common Stock valued pursuant to paragraph 5 (if the
Committee authorizes payment in stock).
2.b Exercise of each Stock Option is conditioned upon the
agreement of the Employee to the terms and conditions of this Plan and
of such Stock Option as evidenced by the Employee's execution and
delivery of a Notice and Agreement of Exercise in a form to be
determined by the Committee in its discretion. Such Notice and
Agreement of Exercise shall set forth the agreement of the Employee
that: (a) no Option Shares will be sold or otherwise distributed in
violation of the Securities Act of 1933 (the "Securities Act") or any
other applicable federal or state securities laws, (b) each Option
Share certificate may be imprinted with legends reflecting any
applicable federal and state securities law restrictions and
conditions, (c) the Company may comply with said securities law
restrictions and issue "stop transfer" instructions to its Transfer
Agent and Registrar without liability, (d) if the Employee is a Section
16 Reporting Person, the Employee will furnish to the Company a copy of
each Form 4 or Form 5 filed by said Employee and will timely file all
reports required under federal securities laws, and (e) the Employee
will report all sales of Option Shares to the Company in writing on a
form prescribed by the Company.
3.b No Stock Option shall be exercisable unless and until
any applicable registration or qualification requirements of federal
and state securities laws, and all other legal requirements, have been
fully complied with. The Company will use reasonable efforts to
maintain the effectiveness of a Registration Statement under the
Securities Act for the issuance of Stock Options and shares acquired
thereunder, but there may be times when no such Registration Statement
will be currently effective. The exercise of Stock Options may be
temporarily suspended without liability to the Company during times
when no such Registration Statement is currently effective, or during
times when, in the reasonable opinion of the Committee, such suspension
is necessary to preclude violation of any requirements of applicable
law or regulatory bodies having jurisdiction over the Company. If any
Stock Option would expire for any reason except the end of its term
during such a suspension, then if the exercise of such Stock Option is
duly tendered before its expiration, such Stock Option shall be
exercisable and exercised (unless the attempted exercise is withdrawn)
as of the first day after the end of such suspension. The Company
shall have no obligation to file any Registration Statement covering
resales of Option Shares.
8. Continuous Employment.
Except as provided in paragraph 10 below, an Employee may
not exercise a Stock Option unless from the date of grant to the date
of exercise such Employee remains continuously in the employ of the
Company. For purposes of this paragraph 8, the period of continuous
employment of an Employee with the Company shall be deemed to include
(without extending the term of the Stock Option) any period during
which such Employee is on leave of absence with the consent of the
Company, provided that such leave of absence shall not exceed three (3)
months and that such Employee returns to the employ of the Company at
the expiration of such leave of absence. If such Employee fails to
return to the employ of the Company at the expiration of such leave of
absence, such Employee's employment with the Company shall be deemed
terminated as of the date such leave of absence commenced. The
continuous employment of an Employee with the Company shall also be
deemed to include any period during which such Employee is a member of
the Armed Forces of the United States, provided that such Employee
returns to the employ of the Company within ninety (90) days (or such
longer period as may be prescribed by law) from the date such Employee
first becomes entitled to discharge. If an Employee does not return to
the employ of the Company within ninety (90) days (or such longer
period as may be prescribed by law) from the date such Employee first
becomes entitled to discharge, such Employee's employment with the
Company shall be deemed to have terminated as of the date such
Employee's military service ended.
9. Restrictions on Transfer.
Incentive stock options granted under this Plan shall be
transferable only by will or the laws of descent and distribution. The
Committee shall have discretion to grant non-statutory stock options
that are not subject to the restrictions on transfer relating to incen-
tive stock options contained in the preceding sentence; provided,
however, that non-statutory stock options granted to a Section 16
Reporting Person shall be subject to such restrictions on transfer as
may be required to qualify for the exemption provided for in Section
16b-3 of the Exchange Act or otherwise imposed by the Committee in its
sole and absolute discretion. No interest of any Employee under the
Plan shall be subject to attachment, execution, garnishment, sequest-
ration, the laws of bankruptcy or any other legal or equitable process.
Each Stock Option granted under this Plan shall be exercisable during
an Employee's lifetime only by such Employee and, in the case of non-
statutory stock options, such Employee's permitted transferees.
10. Termination of Employment.
1.b Upon an Employee's Retirement, Disability or death, (a)
all Stock Options to the extent then presently exercisable shall remain
in full force and effect and may be exercised pursuant to the provi-
sions thereof, including expiration at the end of the fixed term
thereof, and (b) unless otherwise provided by the Committee, all Stock
Options to the extent not then presently exercisable by such Employee
shall terminate as of the date of such termination of employment and
shall not be exercisable thereafter.
2.b Upon the termination of the employment of an Employee
with the Company for any reason other than the reasons set forth in
paragraph 10.1 hereof, unless otherwise provided by the Committee, (a)
all Stock Options to the extent then presently exercisable by such
Employee shall remain exercisable only for a period of ninety (90) days
after the date of such termination of employment (except that the
ninety (90) day period shall be extended to twelve (12) months if the
Employee shall die during such ninety (90) day period), and may be
exercised pursuant to the provisions thereof, including expiration at
the end of the fixed term thereof, and (b) all Stock Options to the
extent not then presently exercisable by such Employee shall terminate
as of the date of such termination of employment and shall not be
exercisable thereafter.
3.b For purposes of this Plan:
(a) "Retirement" shall mean an Employee's retirement
from the employ of the Company on or after the date on which such
Employee attains the age of sixty-five (65) years; and
(b) "Disability" shall mean total and permanent
incapacity of an Employee, due to physical impairment or legally
established mental incompetence, to perform the usual duties of such
Employee's employment with the Company, which disability shall be
determined: (i) on medical evidence by a licensed physician designated
by the Committee, or (ii) on evidence that the Employee has become
entitled to receive primary benefits as a disabled employee under the
Social Security Act in effect on the date of such disability.
11. Adjustments Upon Change in Capitalization.
1.b The number and class of shares subject to each out-
standing Stock Option, the Exercise Price thereof (but not the total
price) and the maximum number of Stock Options that may be granted
under the Plan shall be proportionately adjusted in the event of any
increase or decrease in the number of the issued shares of Common Stock
which results from a split-up or consolidation of shares, payment of a
stock dividend or dividends exceeding a total of two and one-half
percent (2.5%) for which the record dates occur in any one fiscal year,
a recapitalization (other than the conversion of convertible securities
according to their terms), a combination of shares or other like
capital adjustment, so that upon exercise of the Stock Option, the
Employee shall receive the number and class of shares such Employee
would have received had such Employee been the holder of the number of
shares of Common Stock for which the Stock Option is being exercised
upon the date of such change or increase or decrease in the number of
issued shares of the Company.
2.b Upon a reorganization, merger or consolidation of the
Company with one or more corporations as a result of which Newpark is
not the surviving corporation or in which Newpark survives as a wholly-
owned subsidiary of another corporation, or upon a sale of all or
substantially all of the property of the Company to another
corporation, or any dividend or distribution to shareholders of more
than ten percent (10%) of the Company's assets, adequate adjustment or
other provisions shall be made by the Company or other party to such
transaction so that there shall remain and/or be substituted for the
Option Shares provided for herein, the shares, securities or assets
which would have been issuable or payable in respect of or in exchange
for such Option Shares then remaining, as if the Employee had been the
owner of such Option Shares as of the applicable date. Any securities
so substituted shall be subject to similar successive adjustments.
3.b In the sole discretion of the Committee, Stock Options
may include provisions, on terms (which need not be uniform) authorized
by the Committee in its sole discretion, that accelerate the Employees'
rights to exercise Stock Options upon a sale of substantially all of
the Company's assets, the dissolution of Newpark or upon a change in
the controlling shareholder interest in Newpark resulting from a tender
offer, reorganization, merger or consolidation or from any other
transaction or occurrence, whether or not similar to the foregoing
(each, a "Change in Control").
12. Withholding Taxes.
The Company shall have the right at the time of exercise of
any Stock Option to make adequate provision for any federal, state,
local or foreign taxes which it believes are or may be required by law
to be withheld with respect to such exercise ("Tax Liability"), to
ensure the payment of any such Tax Liability. The Company may provide
for the payment of any Tax Liability by any of the following means or a
combination of such means, as determined by the Committee in its sole
and absolute discretion in the particular case: (i) by requiring the
Employee to tender a cash payment to the Company, (ii) by withholding
from the Employee's salary, (iii) by withholding from the Option Shares
which would otherwise be issuable upon exercise of the Stock Option
that number of Option Shares having an aggregate fair market value
(determined in the manner prescribed by paragraph 5) as of the date the
withholding tax obligation arises that is equal to the Employee's Tax
Liability or (iv) by any other method deemed appropriate by the
Committee. Satisfaction of the Tax Liability of a Section 16 Reporting
Person may be made by the method of payment specified in clause (iii)
above upon satisfaction of such additional conditions as the Committee
shall deem in its sole and absolute discretion as appropriate in order
for such withholding of Option Shares to qualify for the exemption
provided for in Section 16b-3 of the Exchange Act.
13. Relationship to Other Employee Benefit Plans.
Stock Options granted hereunder shall not be deemed to be
salary or other compensation to any Employee for purposes of any
pension, thrift, profit-sharing, stock purchase or any other employee
benefit plan now maintained or hereafter adopted by the Company.
14. Amendments and Termination.
The Board of Directors may at any time suspend, amend or
terminate this Plan. No amendment or modification of this Plan may be
adopted, except subject to shareholder approval, which would: (a)
materially increase the benefits accruing to Employees under this Plan,
(b) materially increase the number of securities which may be issued
under this Plan (except for adjustments pursuant to paragraph 11
hereof) or (c) materially modify the requirements as to eligibility for
participation in the Plan.
15. Successors in Interest.
The provisions of this Plan and the actions of the Committee
shall be binding upon all heirs, successors and assigns of the Company
and of Employees.
16. Other Documents.
All documents prepared, executed or delivered in connection
with this Plan shall be, in substance and form, as established and
modified by the Committee or by persons under its direction and
supervision; provided, however, that all such documents shall be
subject in every respect to the provisions of this Plan, and in the
event of any conflict between the terms of any such document and this
Plan, the provisions of this Plan shall prevail. All Stock Options
granted under the Plan shall be evidenced by written agreements
executed by the Company and the Employees to whom the Stock Options
have been granted. Each agreement shall specify whether a Stock Option
is an incentive stock option or a non-statutory stock option.
17. No Obligation to Continue Employment.
This Plan and grants hereunder shall not impose any
obligation on the Company to continue to employ any Employee.
Moreover, no provision of this Plan or any document executed or
delivered pursuant to this Plan shall be deemed modified in any way by
any employment contract between an Employee (or other employee) and the
Company.
18. Misconduct of an Employee.
Notwithstanding any other provision of this Plan, if an
Employee commits fraud or dishonesty toward the Company or wrongfully
uses or discloses any trade secret, confidential data or other
information proprietary to the Company, or intentionally takes any
other action materially inimical to the best interests of the Company,
as determined by the Committee, in its sole and absolute discretion,
such Employee shall forfeit all rights and benefits under this Plan.
19. Term of Plan.
This Plan was adopted by the Board effective November 2,
1995. No Stock Options may be granted under this Plan after November
2, 2005.
20. Governing Law.
This Plan shall be construed in accordance with, and
governed by, the laws of the State of Delaware.
21. Stockholder Approval.
No Stock Option shall be exercisable unless and until the
stockholders of the Company have approved this Plan and all other legal
requirements have been fully complied with.
22. Privileges of Stock Ownership.
The holder of a Stock Option shall not be entitled to the
privileges of stock ownership as to any shares of the Company common
stock not actually issued to such holder.
IN WITNESS WHEREOF, this Plan has been executed effective as of
the 2nd day of November, 1995.
NEWPARK RESOURCES, INC.
By
James D. Cole, President
EXHIBIT 10.21.1
SECOND AMENDMENT AND SUPPLEMENT
TO CREDIT AGREEMENT
This Second Amendment and Supplement to Credit Agreement
(herein called the "Second Amendment") is dated and effective as
of March 5, 1996, by and among NEWPARK RESOURCES, INC., a
Delaware corporation (the "Borrower"), SOLOCO L.L.C., a Louisiana
limited liability company and the successor by merger to SOLOCO,
Inc. ("SOLOCO L.L.C."), NEWPARK SHIPHOLDING TEXAS, L.P., a Texas
limited partnership ("Newpark Shipholding"), SOLOCO TEXAS, L.P.,
a Texas limited partnership ("SOLOCO Texas"), BATSON-MILL, L.P.,
a Texas limited partnership ("Batson"), MALLARD & MALLARD OF LA.,
INC., a Louisiana corporation ("Mallard"), NEWPARK TEXAS, L.L.C.,
a Louisiana limited liability company ("Newpark Texas"), NEWPARK
HOLDINGS, INC., a Louisiana corporation ("Holdings"), NEWPARK
ENVIRONMENTAL SERVICES, L.L.C., a Louisiana limited liability
company and the successor by merger to Newpark Environmental
Services, Inc. ("Environmental L.L.C."), and NEWPARK
ENVIRONMENTAL SERVICES, L.P., a Texas limited partnership
("Environmental L.P."; SOLOCO L.L.C., Newpark Shipholding, SOLOCO
Texas, Batson, Mallard, Newpark Texas, Holdings, Environmental
L.L.C. and Environmental L.P. are herein collectively called the
"Guarantors"), and HIBERNIA NATIONAL BANK ("Hibernia"), BANK ONE
TEXAS, N.A. ("Bank One"), and PREMIER BANK, NATIONAL ASSOCIATION
("Premier") (Hibernia, Bank One, and Premier are hereinafter
referred to individually as "Bank" and collectively as the
"Banks"), and PREMIER BANK, NATIONAL ASSOCIATION as agent for the
Banks (hereinafter in such capacity referred to as the "Agent").
RECITALS:
1. The Borrower, the Guarantors (except Environmental
L.L.C. and Environmental L.P.), Newpark Environmental Services,
Inc., Newpark Environmental Water Services, Inc., SOLOCO, Inc.,
the Banks, and the Agent are parties to that certain Credit
Agreement dated as of June 29, 1995, as amended and modified by
letter agreements thereto dated October 9, 1995 and January 8,
1996 (the said letter agreements are herein referred to as the
"First Amendment"). The Credit Agreement, as amended by the
First Amendment, is herein referred to as the Credit Agreement.
2. The Credit Agreement provides for (i) a revolving Line
of Credit in the aggregate principal amount of $25,000,000.00,
subject however, to a Line of Credit Borrowing Base limit of
$22,500,000.00 less issued and outstanding letters of credit, and
(ii) a Term Loan in the aggregate principal amount of
$25,000,000.00.
3. Subsequent to the execution of the Credit Agreement,
the following mergers and transfer of operations and assets
occurred: SOLOCO, Inc. was merged into SOLOCO L.L.C.; Newpark
Environmental Water Services, Inc. was merged into Newpark
Environmental Services, Inc.; Newpark Environmental Services,
Inc. was then merged into Environmental L.L.C.; and the Texas
operations and assets of Environmental L.L.C. were contributed to
Environmental L.P.
4. Each of SOLOCO, Inc., Newpark Environmental Services,
Inc., and Newpark Environmental Water Services, Inc. were
Guarantors under the Credit Agreement.
5. The Borrower and the Guarantors have requested that the
Banks (i) increase the Term Loan from $25,000,000.00 to
$35,000,000.00 and (ii) revise the Line of Credit Borrowing Base
so that the Line of Credit Borrowing Base equals Eligible
Receivables times eighty percent (80%) plus Batson's inventory of
lumber and logs on which the Banks have a first ranking security
interest times fifty percent (50%), up to the maximum amount of
$25,000,000.00 less the sum of the face amount of all outstanding
letters of credit issued under the Line of Credit Borrowing Base;
provided, however, the aggregate amount of all advances under the
Line of Credit based upon Batson's inventory of lumber and logs
times fifty percent (50%) shall not exceed $4,000,000.00.
6. The Banks are willing to accommodate the aforesaid
requests, subject to the following conditions and requirements:
(i) the execution of this Second Amendment for the purpose of
evidencing (a) the Term Loan increase of $10,000,000.00 and the
revision to the calculation of the Line of Credit Borrowing Base,
(b) a revision of Section 8.06 of the Credit Agreement to reflect
the revised calculation of the Line of Credit Borrowing Base,
(c) an additional limitation on advances and borrowings under the
Line of Credit to reflect that no more than twenty percent (20%)
of the outstanding balance at any particular time under the Line
of Credit can be dependent on Eligible Receivables owed by a
single account debtor, and (d) all other necessary or
contemplated changes; (ii) the execution by the Borrower of
additional Term Notes in the aggregate amount of $10,000,000.00;
(iii) the execution by the Borrower and the Guarantors of new
Continuing Guaranty agreements in favor of the Agent for the pro
rata benefit of the Banks in the amount of $60,000,000.00 plus
interest, costs, and attorney's fees; (iv) the execution of UCC-3
financing statement amendments to evidence the mergers and
transfer of operations and assets mentioned above; (v) the
execution of Security Agreements and Financing Statements by each
of Environmental L.L.C. and Environmental L.P. in favor of the
Agent for the pro rata benefit of the Banks, and affecting all
accounts, general intangibles, inventory, equipment, and deposit
accounts; (vi) the execution by the Borrower, SOLOCO Texas,
Mallard, SOLOCO L.L.C., and Batson of amendments to the Security
Agreements dated June 29, 1995 executed by each of the aforesaid
parties in favor of the Agent for the pro rata benefit of the
Banks, to make it clear that the indebtedness arising under or
pursuant to the Credit Agreement, as amended by this Second
Amendment, continues to be secured by the Security Agreements;
and (vii) payment of a facility fee in the amount of .375% of
$12,500,000.00, by the Borrower to the Agent for the pro rata
benefit of Premier and Hibernia.
7. Under the Credit Agreement the present Ratable Share of
each of the Banks in the Line of Credit and Term Loan is as
follows: Premier - 40%; Hibernia - 30%; and Bank One - 30%.
8. Subsequent to the execution of the Credit Agreement,
Premier became part of the Banc One Corporation family of banks.
9. Premier and Bank One have agreed that Premier will
purchase from Bank One and Bank One will sell, assign, and
transfer to Premier: (i) Bank One's obligation to make loans and
advances under the Line of Credit, the existing indebtedness of
the Borrower to Bank One under Bank One's Revolving Note dated
June 29, 1995 in the face amount of $7,500,000.00, and Bank One's
unfunded liabilities associated with outstanding letters of
credit issued under the Credit Agreement, to be effective upon
execution of this Second Amendment; and (ii) the indebtedness of
the Borrower to Bank One under Bank One's Term Note dated June
29, 1995 in the face amount of $7,500,000.00, to be effective on
December 20, 1996.
10. The Term Loan increase of $10,000,000.00 will be funded
70% by Premier and 30% by Hibernia.
11. Upon the execution of this Second Amendment, the
Ratable Share of each of the Banks in the Line of Credit and Term
Loan (as increased) will be: Premier - 57-1/2%; Bank One - 12-
1/2%; and Hibernia - 30%. On December 20, 1996, the effective
date of the transaction between Premier and Bank One discussed in
part (ii) of RECITAL 9 above, Bank One will no longer be a party
to the Credit Agreement, and the Ratable Share of Premier and
Hibernia in the Line of Credit and Term Loan (as increased) will
be: Premier - 70%; and Hibernia - 30%.
12. All capitalized terms used herein are used as defined
in the Credit Agreement, except as otherwise expressly provided
in this Second Amendment.
NOW THEREFORE, in consideration of the premises, the parties
hereto do hereby amend and supplement the Credit Agreement, and
agree and obligate themselves as follows:
A. RATABLE SHARE REVISION. The second and third
sentences in the second paragraph on page 1 of the Credit
Agreement are hereby deleted and replaced with the following:
Notwithstanding any provision herein
contained to the contrary, the Banks'
agreement is limited to the Ratable Share of
each Bank in the Line of Credit and the Term
Loan. The term "Ratable Share" shall mean:
(i) from June 29, 1995 through March 4, 1996,
in the case of Premier, 40%, in the case of
Hibernia, 30%, and in the case of Bank One,
30%; (ii) from March 5, 1996 through December
19, 1996, in the case of Premier, 57-1/2%, in
the case of Hibernia, 30%, and in the case of
Bank One, 12-1/2%; and (iii) effective
December 20, 1996, in the case of Premier,
70%, and in the case of Hibernia, 30%. In
addition, the parties hereto agree that as of
March 5, 1996, the Line of Credit Ratable
Share is as follows: Premier - 70%, Hibernia
- 30%, and Bank One - 0%. The Borrower and
the Guarantors hereby acknowledge and consent
to the transactions described in RECITAL 9
above, and agree that Bank One is no longer a
party to the Line of Credit and that as of
December 20, 1996, Bank One shall no longer
be a party to this Agreement.
B. LINE OF CREDIT REVISIONS. Section 1.01 of the
Credit Agreement is hereby deleted in its entirety and replaced
with the following:
1.01 Revolving Line of Credit
Commitment. Subject to the terms and
conditions of this Agreement, Premier and
Hibernia agree to continue the establishment
in favor of the Borrower of a revolving line
of credit in the aggregate principal amount
of $25,000,000.00 (herein called the "Line of
Credit"), and the Borrower may request credit
advances under the Line of Credit and make
borrowing and re-borrowings thereunder;
provided, however, (a) direct advances to the
Borrower shall be limited to a maximum
aggregate principal amount equal to the Line
of Credit and (b) the aggregate principal
amount outstanding under the Line of Credit
shall never exceed at any time the lesser of
(i) the Line of Credit Borrowing Base or (ii)
$25,000,000.00. The Line of Credit shall
terminate on December 31, 1998 and no further
advances shall be made to the Borrower after
such termination date. The commitment of
Premier and Hibernia to extend funds to the
Borrower under the Line of Credit is limited
to each of their Line of Credit Ratable Share
of $25,000,000.00. In addition, the Line of
Credit shall remain subject to a sublimit of
$6,500,000.00 as provided in Section 1.07
below.
Section 1.02 of the Credit Agreement also is amended
and supplemented to reflect that the references to Bank or Banks
therein shall henceforth mean Premier and Hibernia. In addition,
the Borrower and the Guarantors acknowledge that the Revolving
Note dated June 25, 1995 by the Borrower in the amount of
$7,500,000.00 payable to the order of Bank One is now owned and
held by Premier.
Section 1.03 of the Credit Agreement is hereby deleted
in its entirety and replaced with the following:
1.03. Borrowing Base. The Line of
Credit is subject to a borrowing base
(hereinafter referred to as the "Line of
Credit Borrowing Base"), calculated according
to the following formula: The Line of Credit
Borrowing Base equals Eligible Receivables
times eighty percent (80%) plus Batson's
inventory of lumber and logs on which the
Banks have a first ranking security interest
times fifty percent (50%), up to the maximum
amount of $25,000,000.00 less the sum of the
face amounts of all outstanding letters of
credit issued under the Line of Credit
Borrowing Base; provided, however, (i) the
aggregate amount of all advances under the
Line of Credit based upon Batson's inventory
of lumber and logs times fifty percent (50%)
shall not exceed $4,000,000.00 and (ii) no
more than twenty percent (20%) of the
outstanding principal balance under the Line
of Credit can be dependent on Eligible
Receivables owed by a single account debtor.
The term "Eligible Receivables" is herein
defined as the Accounts Receivable of the
Borrower, Environmental L.L.C., Mallard,
SOLOCO Texas, Batson, Environmental L.P., and
SOLOCO, L.L.C. (collectively the "Accounts
Grantors"), aged less than ninety (90) days
from the respective invoice dates thereof
less any related company accounts, potential
offsets, foreign accounts, discounts offered
and finance charges reasonably set aside by
the Agent; provided, however, Eligible
Receivables shall not include (i) the entire
current balance of those Accounts Receivable
not classified as Major Accounts in which
twenty percent (20%) of the aggregate of the
account balances owed by a particular account
debtor is aged ninety (90) days or more from
the date of invoice, and (ii) that portion of
any Major Account which is aged 90 days or
more from the date of invoice. Any Accounts
Receivable rendered ineligible due to the 20%
rule stated in (i) above shall render all
Accounts Receivable from that particular
account debtor ineligible. The term
"Accounts Receivable" is herein defined as
the accounts of Accounts Grantors now and
hereafter existing which are approved by the
Agent. The term "Major Accounts" is herein
defined as those accounts owed to any of the
Accounts Grantors by account debtors that are
major oil and industrial companies determined
in the sole discretion of Premier and
Hibernia to be Major Accounts based on the
credit quality of the account debtors. The
Agent will notify the Borrower in writing of
the periodic determination of Major Accounts.
The Agent reserves the right to exclude
accounts that are not Eligible Receivables.
If the Agent excludes any such account or
accounts, the Agent will provide the Borrower
with written notice thereof 30 days prior to
exclusion of the account or accounts. Any
credit balances arising from accounts that
are not Eligible Receivables will be excluded
from the Line of Credit Borrowing Base. The
initial determination of Major Accounts is
attached hereto as Exhibit A.
Section 1.08 of the Credit Agreement is hereby amended
and supplemented to reflect that the outstanding letter of credit
issued by Premier to Gray & Company, as of December 31, 1995, is
in the amount of $2,000,000.00.
Sections 1.04, 1.05, 1.06, 1.10, 1.11, 1.12, and 1.13
of the Credit Agreement are hereby amended and supplemented to
reflect that all references therein to Bank or Banks shall
henceforth mean Hibernia and Premier.
C. TERM LOAN REVISIONS. Section 2.01 of the Credit
Agreement is hereby deleted in its entirety and replaced with the
following:
2.01. Term Loan Commitment.
(a) Subject to the terms and conditions
of the Credit Agreement, each of the
Banks extended a term loan to the
Borrower in the aggregate principal
amount of $25,000,000.00 (the "Original
Term Loan"). The Original Term Loan by
each Bank was limited to each Bank's
original Ratable Share of
$25,000,000.00. The purpose of the
Original Term Loan was to refinance
existing indebtedness of the Borrower,
including indebtedness owed to Premier.
The indebtedness to be refinanced by the
Original Term Loan and, as necessary,
the Line of Credit, is described in
Exhibit E attached to the Credit
Agreement.
(b) Subject to the terms and conditions of the
Credit Agreement, as amended by the Second
Amendment, Premier and Hibernia have agreed to
extend an additional term loan to the Borrower in
the aggregate principal amount of $10,000,000.00
(the "Additional Term Loan"). Hibernia's portion
of the Additional Term Loan is $3,000,000.00 or
30% and Premier's portion is $7,000,000,00 or 70%.
The proceeds of the Additional Term are to be used
by the Borrower to pay down the outstanding
balance owed under the Line of Credit.
(c) All references in the Credit Agreement to the
Term Loan shall henceforth be deemed references to
both the Original Term Loan and the Additional
Term Loan.
Section 2.02 of the Credit Agreement is hereby deleted
in its entirety and replaced with the following:
2.02 Term Notes. Each Bank's Ratable
Share of the Original Term Loan is evidenced
by a Term Note of the Borrower dated June 29,
1995, in the principal face amount of such
Bank's Ratable Share of $25,000,000.00,
payable to the order of such Bank. In
addition, the Additional Term Loan shall be
evidenced by two separate promissory notes of
the Borrower. One such note shall be in the
principal amount of $7,000,000.00 payable to
the order of Premier and the other note shall
be in the principal amount of $3,000,000.00
payable to the order of Hibernia. Each of
the notes evidencing a portion of the
Original Term Loan and Additional Term Loan
will be or are payable in monthly interest
installments and seventeen equal quarterly
principal payments commencing March 31, 1996
and continuing each quarter thereafter with a
final eighteenth quarterly principal
installment on June 30, 2000, at which time
the final quarterly principal payment shall
be due, together with all accrued and unpaid
interest (singly, a "Term Note"; collectively
the "Term Notes"). Notwithstanding the
foregoing, the Borrower understands and
agrees that the Term Notes shall be due and
payable on December 31, 1998 if the Line of
Credit is not renewed on or before such date
by Premier and Hibernia. The quarterly
principal payments will be in an amount
necessary to amortize the principal amount
thereof over a five year period commencing
June 29, 1995. The interest rate applicable
to the Term Notes shall be at the option of
the Borrower, either the Prime Rate or the
LIBOR Rate plus 2.25%, as such term is
defined in Section 3.01 below, subject to any
applicable rate adjustment as provided in
Section 3.02(e) below. All references in the
Credit Agreement to a Term Note or the Term
Notes shall henceforth be deemed references
to a note or the notes evidencing both the
Original Term Loan and the Additional Term
Loan.
Section 2.03 of the Credit Agreement is hereby amended
and supplemented to include the payment of a facility fee in the
amount of .375% of the $12,500,000.00 payable by the Borrower to
the Agent for the pro rata benefit of Premier and Hibernia.
D. REVISIONS TO SECURITY INTERESTS; GUARANTEES.
The Borrower and the Guarantors do hereby confirm all
prior grants of mortgages and security interests granted by them
as described in Section 4.01 of the Credit Agreement. To
evidence the agreement of the parties concerning the execution of
new Continuing Guaranty agreements, amendments to Security
Agreements, and the execution of a Security Agreement and
Financing Statement by each of Environmental L.L.C. and
Environmental L.P., subparagraphs (a) and (b) of Section 4.01 the
Credit Agreement are hereby deleted and replaced with the
following:
(a). Security Agreement and Financing
Statement executed on and dated
June 29, 1995 by each of the
Borrower, SOLOCO, Inc., Newpark
Environmental Services, Inc.,
Newpark Environmental Water
Services, Inc., SOLOCO Texas,
Mallard, SOLOCO L.L.C., and Batson
in favor of the Agent for the pro
rata benefit of the Banks affecting
all accounts, general intangibles,
equipment, and inventory of the
said parties, whether now or
hereafter existing, together with
all proceeds therefrom, as amended
by First Amendment to Security
Agreement dated March 5, 1996 by
each of the Borrower and the
Account Grantors; Security
Agreement and Financing Statement
by each of Environmental L.L.C. and
Environmental L.P. in favor of the
Agent for the pro rata benefit of
the Banks affecting all accounts,
general intangibles, equipment, and
inventory, whether now or hereafter
existing, together with all
proceeds therefrom; which foregoing
documents shall constitute a first
ranking lien and security interest
affecting the aforesaid collateral
except with respect to existing
liens securing indebtedness set
forth on Exhibit "G" or liens
permitted by the Banks;
(b). Continuing Guaranty agreements in
the amount of $60,000,000.00 (plus
interest, costs, and attorney's
fees) by each of the Borrower and
the Guarantors in favor of the
Agent for the pro rata benefit of
the Banks;
The Guarantors confirm the acknowledgment contained in
Section 4.02 of the Credit Agreement.
E. REVISION TO REPRESENTATIONS AND WARRANTIES.
Section 5.14 of the Credit Agreement is hereby deleted and
replaced with the following:
5.14. Generation of Accounts. As of March 5,
1996, the only subsidiaries and affiliates of the
Borrower generating accounts are SOLOCO Texas, SOLOCO
L.L.C., Batson, Environmental L.L.C. and Environmental
L.P.
F. REVISION TO REPRESENTATIONS AND WARRANTIES BY THE
GUARANTORS. Section 6.06 of the Credit Agreement is hereby
deleted and replaced with the following:
6.06 Chief Executive Offices; Employer
Identification Numbers. The chief executive office and
employer identification number of each Guarantor is as
shown on the revised Exhibit H attached to the Second
Amendment.
G. REVISION TO FINANCIAL COVENANTS. Section 8.06 of
the Credit Agreement is hereby deleted and replaced with the
following:
8.06 Debt Service Ratio. The Borrower shall
maintain a minimum total consolidated net income plus
depreciation, amortization and interest expense
(adjusted cash flow calculated on the trailing four
quarters) of 1.25 times total annual debt service
(total of all principal and interest payments due in
one year). For purposes of this calculation annual
debt service will also include the principal and
interest payments necessary to repay $23,000,000.00
(total available to be drawn under the Line of Credit
Borrowing Base less the $2,000,000.00 outstanding
letter of credit to Gray & Company) over a five year
period at the LIBOR Rate plus 2.00% (or the applicable
rate in accordance with the rate adjustment grid
attached hereto as Exhibit F). This covenant shall be
monitored and measured quarterly by the Agent for
compliance.
H. AFFIRMATION OF CREDIT AGREEMENT BY ENVIRONMENTAL
L.L.C. AND ENVIRONMENTAL L.P. Environmental L.L.C. and
Environmental L.P. do hereby acknowledge all obligations,
covenants, agreements, and duties imposed on the Guarantors by
the Credit Agreement, as amended by this Second Amendment. The
said obligations, covenants, agreements, and duties are
applicable to Environmental L.L.C. and Environmental L.P., as
Guarantors. All references in the Credit Agreement to the
Guarantors shall henceforth be deemed a reference to the
Guarantors as defined in the preamble to this Second Amendment.
I. REVISED BORROWING BASE AND COMPLIANCE
CERTIFICATES. Revised Borrowing Base and Compliance Certificates
are attached hereto as Revised Exhibits B and I.
J. MISCELLANEOUS PROVISIONS.
1. The Borrower agrees that nothing contained in
this Second Amendment shall constitute a novation.
2. In consideration of the Bank's execution of
this Second Amendment, the Borrower and the Guarantors do hereby
irrevocably waive any and all claims and/or defenses to payment
on the indebtedness owed by any of them to the Banks that may
exist as of the date of execution of this Second Amendment.
3. The Credit Agreement, as amended and
supplemented by this Second Amendment, is hereby ratified and
confirmed.
4. THE INTERNAL LAWS OF THE STATE OF LOUISIANA
AND OF THE UNITED STATES OF AMERICA SHALL GOVERN THE RIGHTS AND
DUTIES OF THE PARTIES HERETO AND THE VALIDITY, CONSTRUCTION,
ENFORCEMENT, AND INTERPRETATION OF THE CREDIT AGREEMENT, THE
SECOND AMENDMENT, AND ALL LOAN PAPERS EXECUTED IN CONNECTION
THEREWITH EXCEPT TO THE EXTENT OTHERWISE SPECIFIED IN THE CREDIT
AGREEMENT, AS AMENDED BY THIS SECOND AMENDMENT, OR IN ANY OF THE
RELATED LOAN PAPERS.
5. THE CREDIT AGREEMENT AND THIS SECOND
AMENDMENT ARE CREDIT OR LOAN AGREEMENTS AS DESCRIBED IN LA. R.S.
6: Section 1121, ET. SEQ. THERE ARE NO ORAL AGREEMENTS
BETWEEN THE BANKS AND THE BORROWER.
6. THE CREDIT AGREEMENT, AS AMENDED BY THIS
SECOND AMENDMENT, SETS FORTH THE ENTIRE AGREEMENT OF THE PARTIES
WITH RESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDES ALL
PRIOR WRITTEN AND ORAL UNDERSTANDINGS BETWEEN THE BORROWER AND
THE GUARANTORS ON ONE HAND, AND THE BANKS AND/OR THE AGENT ON THE
OTHER HAND, WITH RESPECT TO THE MATTERS HEREIN SET FORTH. THE
CREDIT AGREEMENT, AS AMENDED BY THIS SECOND AMENDMENT, MAY NOT BE
MODIFIED OR AMENDED EXCEPT BY A WRITING SIGNED AND DELIVERED BY
THE BORROWER, THE GUARANTORS, THE BANKS, AND THE AGENT. THERE
ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
7. IN THE EVENT IT IS NECESSARY FOR THE AGENT
AND/OR THE BANK TO RESORT TO JUDICIAL ACTION TO ENFORCE ITS/THEIR
RIGHTS HEREUNDER, THEN THE BORROWER AND GUARANTORS HEREBY AGREE
THAT TO THE EXTENT PERMITTED BY APPLICABLE LAW ANY SUCH JUDICIAL
ACTION, INCLUDING ANY OPPOSITION TO SUCH ACTION, RECONVENTIONAL
DEMANDS, AND CROSS CLAIMS, SHALL BE TRIED BEFORE A JUDGE WITHOUT
A JURY, ALL PARTIES HERETO HEREBY WAIVING THEIR RIGHT TO A JURY
TRIAL.
BORROWER:
NEWPARK RESOURCES, INC.
BY:_____________________________
MATTHEW W. HARDEY, VICE
PRESIDENT OF FINANCE AND CHIEF
FINANCIAL OFFICER
GUARANTORS:
NEWPARK ENVIRONMENTAL SERVICES,
L.L.C.
By:____________________________
MATTHEW W. HARDEY, TREASURER
NEWPARK SHIPHOLDING TEXAS, L.P.
By: Newpark Holdings, Inc., as
General Partner
By:____________________________
MATTHEW W. HARDEY,
VICE PRESIDENT
SOLOCO TEXAS, L.P.
By: Newpark Holdings, Inc., as
General Partner
By:____________________________
MATTHEW W. HARDEY,
VICE PRESIDENT
BATSON-MILL, L.P.
By: Newpark Holdings, Inc., as
General Partner
By:____________________________
MATTHEW W. HARDEY,
VICE PRESIDENT
NEWPARK ENVIRONMENTAL SERVICES,
L.P.
By: Newpark Holdings, Inc., as
General Partner
By:______________________________
MATTHEW W. HARDEY,
VICE PRESIDENT
MALLARD & MALLARD OF LA., INC.
By:____________________________
MATTHEW W. HARDEY, TREASURER
SOLOCO, L.L.C.
By:____________________________
MATTHEW W. HARDEY, TREASURER
NEWPARK TEXAS, L.L.C.
By:____________________________
MATTHEW W. HARDEY,
VICE PRESIDENT
NEWPARK HOLDINGS, INC.
By:____________________________
MATTHEW W. HARDEY,
VICE PRESIDENT
BANKS:
HIBERNIA NATIONAL BANK
By:____________________________
Title:______________________
BANK ONE TEXAS, N.A.
By:____________________________
Title:______________________
PREMIER BANK,
NATIONAL ASSOCIATION
By:____________________________
Title: Vice President
AGENT:
PREMIER BANK,
NATIONAL ASSOCIATION
By:____________________________
Title: Vice-President
REVISED EXHIBIT B
Borrowing Base Certificate
Borrower: Newpark Resources, Inc.
Date: ______________
A. Eligible Accounts Receivable as $
Described in the Credit Agreement Between Banks,
the Agent and Newpark Resources, Inc., Dated June 29,
1995, as amended
B. Advance Rate x.80
C. Accounts Receivable Portion of
Borrowing Base (80% of "A") $
D. Eligible Batson-Mill inventory $
E. Advance Rate x.50
F. Inventory Portion of Borrowing Base (not to exceed
$4,000,000.00) $
G. Total Collateral Base Available ("C" + "F",
but not to exceed $25,000,000.00) $
H. LESS: Outstanding Letters of Credit included in
borrowing base $
I. LESS: Existing Line Balance $
J. Excess Net Collateral Base $
K. LESS: Requested Draw Amount $
I hereby certify that I am authorized to submit this Line
of Credit request and Borrowing Base Certificate on behalf
of Newpark Resources, Inc. and that the above information
is accurate and conforms to the terms and conditions set
forth in the Credit Agreement dated June 29, 1995, as
amended, and is based upon the Accounts Receivable Aging
dated __________. The Requested Draw Amount is to be a
__________ Prime Rate Loan or a _________ LIBOR Loan. If a
LIBOR Loan, the requested Rate Period is _____ 30 days,
_____ 60 days, or _____ 90 days.
I further certify that as of the date hereof, no condition,
event, or act which, with or without notice or lapse of
time or both, would constitute an event of default under
the Restated Credit Agreement. Also, the best of our
knowledge, Newpark Resources, Inc. and the Guarantors
(as defined in the Credit Agreement) have complied with
all provisions of the Credit Agreement, as amended.
________________________________
As Authorized Agent for Newpark
Resources, Inc.
REVISED EXHIBIT I
Compliance Certificate
(Date)
Premier Bank, National Association
P. O. Box 3248
Lafayette, Louisiana 70502
Attention: Mrs. Rose M. Miller
Re: Compliance Certificate
Dear Mrs. Miller:
This compliance certificate is submitted pursuant to Section 7.11 of
that certain Credit Agreement dated as of June 29, 1995, as amended by letter
agreements dated October 9, 1995 and January 8, 1996, and by Second Amendment
and Supplement to Credit Agreement dated as of March 5, 1996 (the "Credit
Agreement"), by and among the undersigned, Newpark Environmental Services,
L.L.C., Newpark Environmental Services, L.P., Mallard & Mallard of La., Inc.,
Newpark Shipholding Texas, L.P., SOLOCO Texas, L.P., Batson-Mill, L.P., SOLOCO
L.L.C., Newpark Texas, L.L.C., Newpark Holdings, Inc., Hibernia National Bank,
Bank One Texas, N.A., and Premier Bank, National Association (individually,
and as Agent for the said Banks).
Under the appropriate sections of the Credit Agreement, we certify that,
to the best of our knowledge and belief, no condition, event, or act which,
with or without notice or lapse of time or both, would constitute an event of
default under the terms of the Credit Agreement, has occurred during the 3
month period ending ______________ (the "Reporting Period"). Also, to the
best of our knowledge, the undersigned the Guarantors (as defined in the
Credit Agreement) have complied with all provisions of the Credit Agreement.
Additionally, the undersigned submits the following financial
information for the Reporting Period in accordance with the covenants
contained in Section 8 of the Credit Agreement.
Current Ratio (Section 8.01)
Consolidated Current Assets.............................$_______________
Consolidated Current Liabilities........................$_______________
Current Ratio ..........................................$_______________
Minimum Current Ratio-Allowed........................... 1.20X
Debt Worth Ratio (Section 8.02)
Total Consolidated Liabilities .........................$_______________
Total Consolidated Tangible Net Worth ..................$_______________
Ratio ..................................................$_______________
Total Consolidated Liabilities to Total
Consolidated Tangible Net Worth Allowed .............. 1.0X
Minimum Tangible Net Worth (Section 8.03)
Consolidated Tangible Net Worth ........................$_______________
Annual Net Income for year ending
_________________ ....................................$_______________
75% of Annual Net Income ...............................$_______________
Minimum Tangible Net Worth Required
($58,796,000.00 + 75% of Annual Net Income............$_______________
Book Value of Fixed Assets (Section 8.05)
Book Value of Fixed Assets of Borrower
and Guarantors .......................................$_______________
(excluding assets subject to outside
financing)
Outstanding Amount under Term Notes ....................$_______________
Minimum Book Value Required ............................$1.75 X
Outstanding Term
Note Amount
Sale of Assets (Section 8.05)
Asset Sale for replacement purposes..................... yes no
Amount .................................................$_______________
Permitted Amount .......................................$ 250,000.00
Applied to Debt ........................................ yes no
Debt Service Ratio (Section 8.06)
Total Consolidated Net Income Plus Depreciation
Plus Amortization and Interest Expense................$_______________
Total Annual Debt Service ..............................$_______________
Ratio Required ......................................... 1.25 X 1.0
(see Section 8.06
for calculation)
Sincerely,
NEWPARK RESOURCES, INC.
By:___________________________
Title:_____________________
Date:______________________
REVISED EXHIBIT H
Chief Executive Office and
Employer Identification Numbers
of Guarantors
Mallard & Mallard of La., Inc.
EIN 74-2062791
3850 N. Causeway Boulevard
Suite 1770
Metairie, LA 70002
Newpark Environmental Services, L.L.C.
EIN 72-0770718
3850 N. Causeway Boulevard
Suite 1770
Metairie, LA 70002
Newpark Environmental Services, L.P.
EIN 72-1312748
3850 N. Causeway Boulevard
Suite 1770
Metairie, LA 70002
Newpark Holdings, Inc.
EIN 72-1286594
3850 N. Causeway Boulevard
Suite 1770
Metairie, LA 70002
Newpark Texas, L.L.C.
EIN 72-1286789
3850 N. Causeway Boulevard
Suite 1770
Metairie, LA 70002
SOLOCO, L.L.C.
EIN 72-1286785
3850 N. Causeway Boulevard
Suite 1770
Metairie, LA 70002
Batson-Mill, L.P.
EIN 72-1284721
3850 N. Causeway Boulevard
Suite 1770
Metairie, LA 70002
Newpark Shipholding Texas, L.P.
EIN 72-1286763
3850 N. Causeway Boulevard
Suite 1770
Metairie, LA 70002
SOLOCO Texas, L.P.
EIN 72-1284720
3850 N. Causeway Boulevard
Suite 1770
Metairie, LA 70002
EXHIBIT 10.22
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of December 1,
1995, between SOLOCO, INC., a Louisiana corporation (the
"Borrower"), and HIBERNIA NATIONAL BANK, a national banking
association (the "Bank").
W I T N E S S E T H:
WHEREAS, the Borrower has applied to the Bank for
a multiple advance loan in an aggregate amount not to exceed
One Million Eight Hundred Forty Thousand and No/100 Dollars
($1,840,000.00), convertible to a term loan not to exceed a
term of ten years; and
WHEREAS, the Bank agrees to provide such credit
facilities to Borrower subject to the terms and conditions
set forth hereinbelow.
NOW, THEREFORE, in consideration of the premises,
and the mutual agreements contained herein, the Borrower and
the Bank do hereby agree as follows:
ARTICLE I.
DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the
following terms have the following meanings:
1.1.1 "Affiliate" shall mean any Person which, directly
or indirectly, is in control of, is controlled by, or is under
common control with, another Person. For purposes of this
definition, a Person shall be deemed to be "controlled by"
another Person if the other Person possesses, directly or
indirectly, power either to (i) vote 10% or more of the
securities having ordinary voting power for the election of
directors of such Person or (ii) vote or hold 10% or more of
the partnership interest of such Person or (iii) direct or
cause the direction of the management and policies of such
Person whether by contract or otherwise.
1.1.2 "Agreement" shall mean this Credit Agreement,
as amended, supplemented, or modified from time to time.
1.1.3 "Building" shall have the meaning ascribed to
that term in the Purchase Agreement.
1.1.4 "Business Day" shall mean a day other than a
Saturday, Sunday or other day on which commercial banks in
New Orleans, Louisiana are authorized or required by law to
close.
1.1.5 "Charges" shall mean all Federal, state,
county, city, municipal, local, foreign or other
governmental taxes at the time due and payable, levies,
assessments, charges, liens, claims or encumbrances upon or
relating to (i) the Mortgaged Property, (ii) the
Obligations, (iii)Ethe Borrower's employees, payroll, income
or gross receipts, (iv)Ethe Borrower's ownership or use of
any of its assets, or (v)Eany other aspect of Borrower's
business.
1.1.6 "Closing Date" shall mean the date of the
Borrower's execution and delivery of the Note to the Bank.
1.1.7 "Code" shall mean the Louisiana Commercial
Laws, La. R.S. 10:9-101 et seq., as in effect from time to
time.
1.1.8 "Collateral" shall mean that portion of the
Mortgaged Property which consists of personal property.
1.1.9 "Construction Documents" shall mean,
collectively, (i) that certain Standard Form of Agreement
between Owner and Contractor dated as of August 21, 1995, by
and between Developer and J. B. Mouton and Sons, Inc., (ii)
that certain Standard Form of Agreement between Owner and
Architect dated as of June 30, 1995, by and between
Developer and Guidry Beazley Ostteen, a Professional
Corporation, (iii) that certain Contract for Professional
Engineering Services dated as of July 26, 1995, by and
between Developer and Randall J. Hebert & Associates, Inc.,
Consulting Engineers, and (iv) that certain Contract dated
as of August 21, 1995, by and between Developer and Archie
Thibodeaux Construction Co., Inc., as each of the foregoing
agreements may from time to time be amended and in effect,
together with any and all payment and performance bonds
securing the obligations of the parties with whom Developer
has contracted under the foregoing agreements.
1.1.10 "Contractual Obligation" shall mean as to any
Person, any provision of any security issued by such Person
or of any agreement, instrument or undertaking to which such
Person is a party or by which it or any of its property is
bound.
1.1.11 "Current Assets" shall mean, at any date, the
aggregate amount of all assets of Guarantor that would be
classified as current assets at such date in accordance with
GAAP consistent with those applied in the preparation of the
financial statements referred to in Section 5.1 hereof.
1.1.12 "Current Liabilities" shall mean, at any date,
the liabilities (including proper accruals) of Guarantor
that would be classified as current liabilities in
accordance with GAAP consistent with those applied in the
preparation of the financial statements referred to in
Section 5.1 hereof.
1.1.13 "Debt" shall mean at any date, Indebtedness of
a Person as at such date.
1.1.14 "Debt Service Coverage Ratio" shall mean, with
respect to Guarantor for any period, the sum of (a) Net
Income for such period, (b) depreciation and other non-cash
charges to the extent charged against Net Income, (c)
interest expense and (d) estimated taxes, divided by the sum
of interest expense of Guarantor on all of its Indebtedness
for such period plus the amount of current maturities of
long term indebtedness of Guarantor (determined in
accordance with GAAP) for such period.
1.1.15 "Default" shall mean the occurrence of any
event which but for the passage of time or giving of notice,
or both, would constitute an Event of Default hereunder.
1.1.16 "Developer" shall mean Town Center
Development, L.L.C., a Louisiana limited liability company.
1.1.17 "Environmental Complaint" shall mean any
written complaint, order, citation, letter, notice or other
communication, from any Person affecting or relating to:
(a) the Borrower; or
(b) the Mortgaged Property or any part thereof
or any interest therein; or
(c) any activity or operation at any time
conducted by the Borrower or any other
Person on or in connection with the
Mortgaged Property or any part thereof or
any interest therein,
with regard to the occurrence or presence of or exposure to
or possible or threatened or alleged occurrence or presence
of or exposure to Environmental Discharges, Hazardous
Materials or any other environmental, health or safety
matter which is the subject of any Relevant Environmental
Law, including, without limitation,
(1) existence of any contamination or possible
or threatened contamination;
(2) remediation of any Hazardous Materials or
Environmental Discharge in connection with
the the Mortgaged Property or any part
thereof; and
(3) any violation or alleged violation of any
Relevant Environmental Law.
1.1.18 "Environmental Discharge" shall mean any
discharge or release of pollutants or effluents or emissions
of any kind in violation of any Relevant Environmental Law.
1.1.19 "ERISA" shall mean the Employee Retirement
Income Security Act of 1974, as amended from time to time.
1.1.20 "Event of Default" shall mean any of the
events specified in Article VII.
1.1.21 "GAAP" shall mean generally accepted
accounting principles in the United States of America in
effect from time to time.
1.1.22 "Governmental Authority" shall mean any nation
or government, any state or other political subdivision
thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or
pertaining to government.
1.1.23 "Guarantee Obligation" shall mean as to any
Person, any obligation of such Person guaranteeing or in
effect guaranteeing any Indebtedness, leases, dividends or
other obligations (the "primary obligations") of any other
Person (the "primary obligor") in any manner, whether
directly or indirectly, including, without limitation, any
obligation of such Person, whether or not contingent (a) to
purchase any such primary obligation or any property
constituting direct or indirect security therefor, (b) to
advance or supply funds (i) for the purchase or payment of
any such primary obligation or (ii) to maintain working
capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the
primary obligor, (c) to purchase property, securities or
services primarily for the purpose of assuring the owner of
any such primary obligation of the ability of the primary
obligor to make payment of such primary obligation or (d)
otherwise to assure or hold harmless the owner of any such
primary obligation against loss in respect thereof;
provided, however, that the term Guarantee Obligation shall
not include endorsements of instruments for deposit or
collection in the ordinary course of business. The amount
of any Guarantee Obligation shall be deemed to be an amount
equal to the stated or determinable amount of the primary
obligation in respect of which the guarantor may be liable
pursuant to the terms of the instrument embodying such
Guarantee Obligation, unless such primary obligation and the
maximum amount for which such Person may be liable are not
stated or determinable, in which case the amount of such
Guarantee Obligation shall be such Person's maximum
reasonably anticipated liability in respect thereof as
determined by the Borrower in good faith.
1.1.24 "Guaranty" shall mean that certain in solido
Commercial Guaranty dated December 1, 1995, executed by the
Guarantor in favor of the Bank, guaranteeing payment in full
of the Obligations.
1.1.25 "Guarantor" shall mean Newpark Resources,
Inc., a Delaware corporation, together with its successors
and assigns.
1.1.26 "Hazardous Materials" shall mean asbestos and
any toxic or hazardous substances, wastes or contaminants,
medical wastes, infectious wastes, polychlorinated
biphenyls, paint containing lead and urea formaldehyde foam
insulation, as any of those terms is defined from time to
time in or for the purposes of any Relevant Environmental
Laws.
1.1.27 "Improvements" shall have the meaning ascribed
to that term in the Purchase Agreement.
1.1.28 "Indebtedness" shall mean for a Person at a
particular date, the sum (without duplication) at such date
of (a) all indebtedness of such Person for borrowed money or
for the deferred purchase price of property or services or
which is evidenced by a note, bond, debenture or similar
instrument, (b) all obligations of such Person under
financing leases, (c) all obligations of such Person in
respect of letters of credit, acceptances, or similar
obligations issued or created for the account of such
Person, and (d) all liabilities secured by a Lien on any
property owned by such Person even though such Person has
not assumed or otherwise become liable for the payment
thereof (provided, in the event such liability secured by
such a Lien is non-recourse to such Person, the amount of
Indebtedness determined hereunder attributed to such
liability shall be limited to the value of such property).
1.1.29 "Land" shall have the meaning ascribed to that
term in the Purchase Agreement.
1.1.30 "Lien" shall mean any mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance,
lien (statutory or other), or preference, priority or other
security agreement or preferential arrangement of any kind
or nature whatsoever (including, without limitation, any
conditional sale or other title retention agreement, any
financing lease having substantially the same economic
effect as any of the foregoing, and the filing of any
financing statement under the Code or comparable law of any
jurisdiction in respect of any of the foregoing).
1.1.31 "Loan Documents" shall mean collectively this
Agreement, the Note and the Security Documents.
1.1.32 "Loan" or "Loans" shall refer to the advance
or advances made by the Bank to the Borrower pursuant to the
terms of this Agreement.
1.1.33 "Material Adverse Effect" shall mean a
material adverse effect on (i) the business, assets,
operations, prospects or financial or other condition of the
Borrower or of Guarantor, (ii) the Borrower's ability to pay
the Loan and all of its other Debt in accordance with the
terms thereof, (iii) the Mortgaged Property, or (iv) the
Bank's Liens on the Mortgaged Property or the priority of
any such Liens. In the determination of whether a Material
Adverse Effect exists, all factors will be considered, such
as insurance coverage.
1.1.34 "Mortgage" shall mean that certain Multiple
Indebtedness Mortgage by Borrower in favor of Bank dated
December 1, 1995, affecting that property acquired by
Borrower pursuant to that certain Act of Credit Sale and
Vendor's Lien by Developer to and in favor of Borrower dated
August 21, 1995, recorded under entry no. 95-27651 of the
records of Lafayette Parish, Louisiana more fully described
therein, securing payment of the Note and all other
obligations of the Borrower to the Bank, as the same may be
amended, supplemented or modified from time to time,
together with related financing statements executed by
Borrower as debtor in favor of Bank as secured party
executed in connection therewith.
1.1.35 "Mortgaged Property" shall mean, collectively,
all land and improvements situated upon the real estate
affected by the Mortgage, and all related interests of the
Borrower in and to such property which are affected by the
Mortgage.
1.1.36 "Net Income" shall mean, for any period, the
aggregate net income (or net loss) of Guarantor for such
period calculated in accordance with GAAP.
1.1.37 "Note" shall mean the master promissory note
of the Borrower dated of even date herewith, payable to the
order of the Bank in the principal sum of $1,840,000.00,
which note shall evidence the Loans, as said promissory note
may be amended, renewed or extended from time to time,
including, without limitation, any promissory note issued by
the Borrower to Bank upon the conversion of the Loans to a
term loan in accordance with Section 2.12 hereof.
1.1.38 "Obligations" shall mean the unpaid principal
of and interest on (including interest accruing on or after
the filing of any petition in bankruptcy or the commencement
of any insolvency, reorganization or like proceeding,
related to the Borrower, whether or not a claim for post
filing or post petition interest is allowed in such
proceeding) the Note and all other obligations and
liabilities of the Borrower to the Bank, whether direct or
indirect, absolute or contingent, due or to become due, now
existing or hereafter incurred, which may arise under, out
of, or in connection with this agreement, the Note, the
other Loan Documents, or any other document made, delivered
or given in connection therewith, whether on account of
principal, interest, fees, indemnities, costs, expenses
(including, without limitation, all reasonable fees and
disbursements of counsel to the Bank) or otherwise.
1.1.39 "Permitted Liens" shall mean:
(a) Liens for current taxes, assessments or
other governmental charges which are not delinquent or
remain payable without penalty, or the validity or amount of
which is being contested in good faith by appropriate
proceedings and for which adequate reserves or other
appropriate provisions are maintained on the books of
Borrower in accordance with GAAP, provided, that no
Mortgaged Property of Borrower has been seized, levied,
attached, sequestered, foreclosed upon or garnished by
reason of such Lien;
(b) non-consensual Liens imposed by
operation of law such as landlord liens for rent not yet due
and payable and those for vendors, materialmen, mechanics,
warehousemen, carriers, employees, workmen and repairmen,
for current wages or accounts payable not yet delinquent and
arising in the ordinary course of business which are being
contested in good faith by appropriate proceedings and for
which adequate reserves or other appropriate provisions are
maintained on the books of Borrower in accordance with GAAP,
provided, that no Mortgaged Property of Borrower has been
seized, levied, attached, sequestered, foreclosed upon or
garnished by reason of such Lien.
(c) deposits for workers' compensation and
unemployment insurance;
(d) deposits to secure the performance of
bids, trade contracts, leases, statutory obligations, surety
and appeal bonds, performance bonds and other obligations of
like nature incurred in the ordinary course of business;
(e) Liens granted pursuant to the terms of
the Security Documents;
(f) Purchase money security interests for
equipment acquired by Borrower in the ordinary course of
business; and
(g) the Lien evidenced that certain Act of
Credit Sale and Vendor's Lien by Developer in favor of
Borrower dated August 21, 1995, recorded under entry
no.E95-27651 of the records of Lafayette Parish, Louisiana,
but only to the extent that such Lien has been subordinated
to the Mortgage upon terms and conditions satisfactory to
Bank.
1.1.40 "Person" shall mean an individual,
partnership, corporation, limited liability company,
business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Authority or other
entity of whatever nature.
1.1.41 "Plan" shall mean at a particular time, any
employee benefit plan which is covered by ERISA.
1.1.42 "Plans" shall mean the final architectural and
engineering drawings and specifications, including any
revisions, amendments and addenda required to complete the
construction of the Building and Improvements, including
off-site and on-site work.
1.1.43 "Presence" shall mean when used in connection
with any Environmental Discharge or Hazardous Materials, the
presence, generation, manufacture, installation, treatment,
use, storage, handling, repair, encapsulation, disposal,
transportation, spill, discharge and release.
1.1.44 "Prime Rate" shall mean, as of a particular
date, the prime rate most recently officially announced by
Citibank, N.A. Without notice to Borrower or any other
Person, the Prime Rate shall change automatically from time
to time as and in the amount by which said prime rate shall
fluctuate, with each such change to be effective as of the
date of each change in such prime rate. The Prime Rate is a
reference rate and does not necessarily represent the lowest
or best rate actually charged to any customer.
1.1.45 "Purchase Agreement" shall mean that certain
Purchase Agreement by and between Borrower and Developer
dated as of July 20, 1995, as the same may be amended or
modified from time to time.
1.1.46 "Relevant Environmental Laws" shall mean all
Requirements of Law from time to time applicable to the
Borrower's interest in the Mortgaged Property or any part
thereof or any interest therein imposing liability or
standards of conduct concerning, or otherwise relating to:
(a) the presence of or exposure to or
remediation of Hazardous Materials;
(b) the occurrence or remediation of any
Environmental Discharge or any other
environmental, health or safety matter;
(c) any requirement or the determination of any
requirement for remediation of the presence
or occurrence of any Hazardous Materials or
Environmental Discharge in connection with
any transfer of the Mortgaged Property or
any part thereof or any interest therein;
and
(d) effects on the environment of the Mortgaged
Property or any part thereof or of any
activity heretofore, now or hereafter
conducted on the Mortgaged Property or any
part thereof.
1.1.47 "Request for Advance" shall mean the
Borrower's written request for a Loan issued to Bank in
accordance with Sections 2.10 and 2.11 hereof.
1.1.48 "Requirement of Law" shall mean as to any
Person, the certificate of Incorporation and By-Laws or
other organizational or governing documents of such Person,
and any law, treaty, rule or regulation or determination of
an arbitrator or a court or other Governmental Authority, in
each case applicable to or binding upon such Person or any
of its property or to which such Person or any of its
property is subject including, without limitation, any
Relevant Environmental Laws.
1.1.49 "Security Agreements" shall mean,
collectively, (ii) that certain Commercial Security
Agreement by Borrower in favor of Bank dated December 1,
1995, affecting all of Borrower's rights in and to the
Purchase Agreement, together with an appropriate financing
statement evidencing the security interest granted to Bank
thereunder, and (ii) that certain security agreement and/or
collateral assignment of the Construction Documents to be
executed by Developer in favor of Bank, together with any
and all financing statements by Developer which Bank may
require to evidence such security interest and/or collateral
assignment of the Construction Documents.
1.1.50 "Security Documents" shall mean the Guaranty,
the Security Agreements and the Mortgage, each as amended,
supplemented, or modified from time to time.
1.1.51 "Solvent" shall mean, when used with respect
to any Person on a particular day, that on such date (i) the
fair value of the property of such Person is greater than
the total amount of liabilities, including without
limitation, contingent liabilities, of such Person, (ii) the
present fair salable value of the assets of such Person is
not less than the amount that will be required to pay the
probable liability of such Person on its debts as they
become absolute and matured, (iii) such Person is able to
realize upon its assets and pay its debts and other
liabilities, contingent obligations and other commitments as
they mature in the ordinary course of business, (iv) such
Person does not intend to, and does not believe that it
will, incur debts or liabilities beyond such Person's
ability to pay as such debts and liabilities mature, and (v)
such Person is not engaged in business or a transaction, and
is not a about to engage in business or a transaction, for
which such Person's property would constitute unreasonably
small capital after giving due consideration to the
prevailing practice in the industry in which such Person is
engaged. In computing the amount of contingent liabilities
at any time, it is intended that such liabilities will be
computed at the amount which, in light of all of the facts
and circumstances existing at such time, represents the
amount that can be reasonably expected to become an actual
or matured liability.
1.1.52 "Subsidiary" shall mean as to any Person, a
corporation of which shares of stock having ordinary voting
power (other than stock having such power only by reason of
the happening of a contingency) to elect a majority of the
board of directors or other managers of such corporation are
at the time owned, or the management of which is otherwise
controlled, directly or indirectly through one or more
intermediaries, or both, by such Person.
1.1.53 "Tangible Net Worth" shall mean, with respect
to Guarantor as of the date of determination thereof, all
amounts which would, in conformity with generally accepted
accounting principles, be included under shareholders'
equity on a balance sheet of Guarantor at such date;
provided, however, such amounts are to be net of amounts
carried on the books of Guarantor for (i) treasury stock,
(ii) any cost of investments in excess of net assets
acquired at any time of acquisition by such person or entity
and (iii) patent applications, copyrights, trademarks, trade
names, experimental or organizational expenses and other
like intangibles.
1.1.54 "Termination Date" shall mean the earlier to
occur of (i)EJune 1, 1996, or (ii)Ethe earlier date of
termination of the Bank's obligation to make Loans
hereunder.
1.1.55 "Treasury Rate" shall mean the effective yield
on United States Treasury Notes maturing ten (10) years
after the date of the term note described in Section 2.12
hereof, as reflected in the Wall Street Journal published on
the date of such term note.
1.1.56 "Working Capital" shall mean, with respect to
Guarantor as of the date of determination of same, an amount
equal to Current Assets minus Current Liabilities, all
determined in accordance with GAAP.
1.2 Other Definitional Provisions. (a) Unless
otherwise specified therein, all terms defined in this
Agreement shall have the defined meanings when used in the
Note or any certificate or other document made or delivered
pursuant hereto.
(b) As used herein and in the Note, in any
certificate or other document made or delivered pursuant
hereto, accounting terms related to the Borrower and not
defined in Section 1.1 and accounting terms properly defined
in Section 1.1, to the extent not defined, shall have the
respective meanings given to them under GAAP.
(c) The words "hereof", "herein" and
"hereunder" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not
to any particular provision of this Agreement, and section,
subsection, schedule and exhibit references are to this
Agreement unless otherwise specified.
(d) The meanings given to terms defined
herein shall be equally applicable to both the singular and
plural forms of such terms.
ARTICLE II
LOANS
2.1 The Loans. Subject to the terms and conditions
of this Agreement, the Bank agrees, from the date hereof
through and including the Termination Date, to make Loans
from time to time to Borrower in an aggregate amount not to
exceed the principal sum of $1,840,000.00.
2.2 Use of the Loans. The proceeds of the Loan
shall be used solely to fund the obligations of the Borrower
under the Purchase Agreement, pursuant to which the Borrower
has acquired the Land and non-exclusive right-of-way
described therein, and pursuant to which it will acquire the
Building and Improvements described in said Purchase
Agreement.
2.3 The Note. The Borrower's obligation to repay
the Loans made by the Bank shall be evidenced by the Note.
2.4 Interest. The Note shall bear interest at the
Prime Rate from time to time in effect, adjusted daily;
provided, however, that upon the occurrence of an Event of
Default hereunder, Bank shall have the right to
prospectively increase the rate of interest to the default
rate specified in the Note (the "Default Rate").
2.5 Prepayments. At any time prior to the
Termination Date, the Borrower may, at its option at any
time, prepay all or part of the Loans, provided any
prepayment shall be applied to accrued interest first, then
principal in the reverse order of maturity. In the event
that Borrower fails to convert the Loans to a term loan in
accordance with the requirements of Section 2.12 hereof on
the Termination Date, or is unable to meet the requirements
for the conversion of the Loans to a term loan in accordance
with the requirements of Section 4.3 hereof on the
Termination Date, then in addition to the payment of all
outstanding principal and accrued interest on the
Termination Date, Borrower shall pay to Bank a prepayment
fee in the amount of $36,800.00 on the Termination Date.
2.6 Commitment Fee. The Borrower shall pay to the
Bank a Commitment Fee for the Loans (and for Bank's
commitment to convert the Loans to a term loan in accordance
with Section 2.12 hereof) in the amount of $5,000.00, which
Commitment Fee shall be due and payable upon the Termination
Date. The Commitment Fee shall be due and payable upon the
Termination regardless of whether the Loans are converted to
a term loan, and shall be payable in addition to the
prepayment fee described in Section 2.5 hereof in the event
the Loans are not converted to a Term Loan.
2.7 Computation of Interest. Interest in respect of
the Loan shall be calculated on the actual days elapsed on
the basis of a year of 360 days.
2.8 Payments; Late Charge. The Note shall be
payable in five (5) installments of accrued and unpaid
interest due and outstanding on the Note commencing on
January 1, 1996, and continuing on the first day of each
month thereafter until the Termination Date, at which time
all accrued and unpaid interest and all outstanding
principal shall be due and payable in full. All payments
(including prepayments) to be made by the Borrower on
account of principal, interest and fees shall be made to the
Bank, at the Bank's main office set forth in Section 8.2, in
lawful money of the United States of America and in
immediately available funds. If any payment hereunder
becomes due and payable on a day other than a Business Day,
such payment shall be extended to the next succeeding
Business Day, and, with respect to payments of principal and
interest thereon shall be payable at the then applicable
rate during such extension. A five percent (5%) late charge
shall be assessed (against the amount of any late payment)
if a monthly payment under the Note is not received by the
Bank within ten (10) calendar days of the payment due date.
A late payment fee shall not be charged if a payment is late
due to the fault of the Bank (it being understood and
agreed, however, that Borrower shall have the burden of
proof in establishing that it made any such payment on
time).
2.9 Loan Advances. The Bank agrees to make Loans to
the Borrower from time to time on any Business Day from the
date hereof through the Termination Date in accordance with
the provisions of this ArticleEII up to an aggregate amount
of $1,840,000.00. This is not a revolving credit facility,
and no further Loans shall be made after the total amount of
the Loans equals $1,840,000.00. The Bank or the Bank's copy
of any cashier's check representing all or any part of the
proceeds or a disbursement shall be deemed prima facie
evidence of the Indebtedness of the Borrower to the Bank on
such Loan.
2.10 Borrowing Procedure. (a) The proceeds of the
Loans shall be advanced by the Bank as construction of the
Building and Improvements progresses and as payments become
due to Developer under the Purchase Agreement, provided,
however, that (i) the Borrower shall submit a Request for
Advance to the Bank at least 5 Business Days prior to the
proposed funding date specifying the total amount of the
proposed Loan and the proposed date on which said Advance is
to be made; (ii) each Request for Advance shall be in
substantially the form prescribed by the Bank and shall
identify the intended use of such proceeds thereof;
(iii) each advance shall be funded in an amount equal to
the amounts then due by Borrower to Developer under the
Purchase Agreement, all to the extent that Borrower's
written Request for Advance is accompanied by an architect's
inspection report (on AIA form G702) delivered to and
addressed to Bank which evidences the percentage
completion of the Building and Improvements required for
such payment obligation of Borrower under the Purchase
Agreement. All advances shall be made by cashier's checks
payable to the order of Borrower and sent by Bank via
overnight express courier to Borrower in the care of Town
Center Development, L.L.C., 1001 Pinhook Road, Petroleum
Center, Building 3, Suite 103, Attention: Mr. Cecil D.
Trahan. The parties hereto agree that this advance
procedure shall not be amended without the prior written
consent of Developer.
2.11 Requests for Advances. (a) Each Request for
Advance shall be submitted to the Bank in duplicate and
shall be accompanied by, in addition to the items listed
above in Section 2.10 hereof, the following:
(i) Lien Waivers. Waivers of liens and
receipts for payment by Developer
from L. B Mouton and sons and
Archie Thibodeaux Construction Co.
2.12 Commitment to Convert Loans to a Term Loan.
Subject to the terms and conditions of this Agreement
(including specifically the prior satisfaction of all
conditions precedent set forth in Section 4.3 hereof), Bank
agrees, at any time on or prior to the Termination Date, to
convert that portion of the outstanding Loans up to an
amount equal to the lesser of (i) $1,840,000.00, or (ii) 80%
of the appraised value of the Land, Building and
Improvements as shown by an MAI appraisal of the Land,
Building and Improvements provided to Bank in connection
with its initial Loan advance, as the same may be revised by
such appraiser upon the completion of the Building and
Improvements, to a term loan which shall be payable over a
term of up to ten (10) years from the date of such term
loan, and which shall be payable in monthly installments of
interest in the amount of all accrued and unpaid interest
plus additional monthly installments of principal in an
amount necessary to fully amortize the amount of such term
loan over the term of such term loan on a straight-line
amortization basis. Upon the conversion of the Loans to a
term loan, Bank shall have no further commitment to lend
hereunder. The term loan shall be evidenced by a promissory
note made by Borrower payable to the order of Bank in the
amount of such term loan in form and substance which is
satisfactory to Bank, shall be secured by the Security
Documents, and shall be governed by the terms and conditions
of this Agreement. Such term note shall bear interest at a
fixed rate equal to 2.25% per annum in excess of the
Treasury Rate in effect on the date of such term loan is
made and the term note is signed. Any determination of the
Treasury Rate by Bank, in the absence of manifest error,
shall be binding and conclusive. If, with respect to the
Treasury Rate, Bank shall determine that the sale of
Treasury Securities by the United States Government has been
suspended, or if Treasury Securities are no longer being
offered for sale, or if the yield for such Treasury
Securities are no longer printed in the Wall Street Journal,
or for any other reason Bank is not able to obtain a
quotation from the Federal Reserve for the sale of such
Treasury Securities, then Bank shall forthwith give notice
thereof to Borrower and advise Bank of a new index for
determining the interest rate to be charged on such term
note which, in the good faith judgment of Bank, shall be
substantially equivalent to the Treasury Rate. No
prepayments of the term note shall be allowed during the
first three years of the term of the term note; thereafter,
a prepayment penalty equal to the following percentages of
the principal balance of the term note from time to time
prepaid by Borrower shall be assessed by Bank:
Year Prepayment Penalty
4 4%
5 3%
6 2%
7 1%
Years 8, 9 and 10 0%
Notwithstanding the foregoing, in no event shall the
prepayment penalty exceed 1% at the time of any prepayment
if upon the date of any such prepayment the effective yield
on United States Treasury Notes maturing ten (10) years
after the date of such prepayment, as reflected in the Wall
Street Journal published on the date of such prepayment,
exceeds the Treasury Rate in effect under the term note.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
The Borrower hereby represents and warrants to Bank as
follows:
Financial Condition.
3.1
(a) All balance sheets and other financial statements
of the Borrower and the Guarantor furnished to the Bank
prior to the date of this Agreement present fairly the
financial positions of the Borrower and the Guarantor as at
the dates thereof, and present fairly the results of
operations and changes in financial position of the Borrower
and of the Guarantor for the periods then ended.
(b) There has been no material adverse change in the
business, assets, operations, prospects or financial or
other condition of the Borrower or of the Guarantor since
the date of the financial statements referred to in Section
3.1(a) above.
3.2 Existence; Compliance with Law. The Borrower (a)
has the power and authority, and the legal right, to own and
operate its property (including the Mortgaged Property) and
to conduct the business in which it is currently engaged,
(b) is in compliance with all Requirements of Law except to
the extent that the failure to comply therewith would not,
in the aggregate, have a Material Adverse Effect, and (c)
has all licenses and permits, and is in compliance with all
Requirements of Law, required to own and operate the
Mortgaged Property and to otherwise operate its business as
presently conducted.
3.3 Power; Authorization; Enforceable Obligations.
The Borrower and the Guarantor each has the power and
authority, and the legal right, to make, deliver and perform
the Loan Documents to which it is a party. The Borrower has
the power and authority and the legal right to borrow
hereunder, and has taken all necessary action to authorize
the borrowings on the terms and conditions of this Agreement
and the Note and to authorize the execution, delivery and
performance of the Loan Documents to which it is a party.
No consent or authorization of, filing with or other act by
or in respect of any Governmental Authority is required in
connection with the borrowings hereunder or with the
execution, delivery, performance, validity or enforceability
of the Loan Documents. This Agreement has been, and each
other Loan Document to which he is a party will be, duly
executed and delivered on behalf of the Borrower. This
Agreement constitutes, and each other Loan Document to which
it is a party when executed and delivered will constitute, a
legal, valid and binding obligation of each of the Borrower
and the Guarantor enforceable against each of them in
accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and by general
equitable principles.
3.4 Corporate Status. The Borrower is a corporation
duly organized, legally existing, and in good standing under
the law of the State of Louisiana, and is duly qualified to
do business in all other jurisdictions where the property it
owns or the business it conducts makes such qualification
necessary.
3.5 No Legal Bar. The execution, delivery and
performance of the Loan Documents by the Borrower, the
borrowings hereunder and the use of the proceeds thereof,
will not violate any Requirement of Law or any Contractual
Obligation of the Borrower, and, except as contemplated in
the Loan Documents, will not result in, or require, the
creation or imposition of any Lien on any of the Borrower's
respective properties or revenues pursuant to any
Requirement of Law or Contractual Obligation, in each case
that would have a Material Adverse Effect.
3.6 No Material Litigation. No litigation,
investigation or proceeding of or before any arbitrator or
Governmental Authority is pending or threatened by or
against the Borrower or the Guarantor or against any of
their respective properties or revenues (a) with respect to
any of the Loan Documents or any of the transactions
contemplated hereby or thereby, or (b) which would have a
Material Adverse Effect.
3.7 No Default. Neither the Borrower nor the
Guarantor is in default under or with respect to any
Contractual Obligation in any respect which would have a
Material Adverse Effect. No Default or Event of Default has
occurred and is continuing.
3.8 Ownership of Property; Liens. The Borrower has
good record and marketable title in full ownership to the
Mortgaged Property, and good title to all its other
property, and none of such Mortgaged Property is subject to
any Lien except for Permitted Liens.
3.9 Security Documents. The provisions of the
Security Documents are effective to create in favor of the
Bank a legal, valid and enforceable Lien in all right, title
and interest of the Borrower in the Mortgaged Property and
all other property affected thereby. Each Security Document
constitutes (upon proper filing, if applicable) a perfected
first Lien on all right, title and interest of the Borrower
(or other grantor thereof) in the collateral described
therein, subject only to Permitted Liens.
3.10 Taxes. The Borrower has filed or caused to be
filed all tax returns which to the knowledge of the Borrower
are required to be filed and has paid all taxes shown to be
due and payable on said returns or on any assessments made
against it or any of its property and all other taxes, fees
or other charges imposed on it or any of its property by any
Governmental Authority other than those that are not
material, that are not yet delinquent, or that are being
contested in good faith by appropriate proceedings and for
which adequate reserves or security have been provided; and
no tax lien has been filed and, no claim is being asserted
with respect to any such tax, fee or other charge, other
than those claims that are being contested in good faith by
appropriate proceedings and for which adequate reserves or
security have been provided.
3.11 ERISA. The Borrower is in compliance in all
material respects with the applicable provisions of ERISA,
and no "reportable event," as such term is defined in
Section 4043 of ERISA, has occurred with respect to any Plan
of the Borrower.
3.12 Construction. The Borrower hereby represents
and warrants to the Bank (i)Ethat the Plans are in final
form and are satisfactory to the Borrower and its contractor
(if applicable), and to the extent required by applicable
law, to all applicable governmental authorities; (ii)Ethe
Plans, together with the anticipated use of the Mortgaged
Property, do not violate any zoning ordinance or restrictive
covenant applicable to the Mortgaged Property; (iii)Ethe
Borrower has obtained (or has caused others to obtain) all
permits and approvals necessary to construct the
Improvements from all applicable governmental authorities;
(iv)Ethe Developer has not begun any work on the
Improvements, delivered any materials to the Mortgaged
Property or in any way commenced the construction of the
Improvements unless the Bank has received title insurance
insuring the Mortgage over any construction liens or other
liens arising under the Louisiana Private Works Act, La.
R.S. 9:4801, et seq., and (v)Ethe Purchase Agreement and the
Construction Documents remain in full force and effect, with
no amendments thereto which have not been provided to Bank,
and no default exists under the Purchase Agreement and the
Construction Documents.
3.13 No Burdensome Restrictions. No Requirement of
Law or Contractual Obligation of the Borrower has a Material
Adverse Effect.
3.14 Accuracy and Completeness of Information. All
information, reports and other papers and data with respect
to the Borrower or the Guarantor furnished to the Bank by
the Borrower or the Guarantor, or on behalf of any of them,
were, at the time the same were so furnished, complete and
correct in all material respects, or have been subsequently
supplemented by other information, reports or other papers
or data, to the extent necessary to give the Bank a true and
accurate knowledge of the subject matter in all material
respects. No fact is known to the Borrower which materially
and adversely affects or in the future may (so far as the
Borrower can reasonably foresee) materially and adversely
affect the business, assets or liabilities, financial
condition, results of operations or business prospects of
the Borrower or of the Guarantor, which has not been set
forth in the financial statements referred to in Section
3.1(a). No document furnished or statement made in writing
to the Bank by the Borrower or any of the Guarantor in
connection with the negotiation, preparation or execution of
this Agreement contains any untrue statement of a material
fact, or omits to state any such material fact necessary in
order to make the statements contained therein not
misleading.
3.15 Use of Proceeds; Margin Stock. The proceeds of
the Loan will be used by the Borrower solely for the
purposes specified in Section 2.2. None of such proceeds
will be used for the purpose of purchasing or carrying any
"margin stock" as defined in Regulation U, Regulation X or
Regulation G of the Board of Governors of the Federal
Reserve System.
3.16 Principal Office, Etc. The principal office,
chief executive office and principal place of business of
the Borrower is set forth in Section 8.2 hereof. The
Borrower maintains his principal records and books at such
address. The tax identification number of the Borrower is
72-0536201.
3.17 Hazardous Materials. (a)ETo the Borrower's
knowledge and belief:
(1) There are and have been no Hazardous
Materials at, upon, under or within or
discharged or emitted from the Mortgaged
Property or any part thereof, including,
where applicable and without limitation, the
air, soil, surface and ground water and
aquifers of the Mortgaged Property or any
part thereof;
(2) No Hazardous Materials have flowed, blown or
otherwise become present at the Mortgaged
Property from other premises;
(3) No Environmental Discharges have occurred
at, upon, under, within or from the
Mortgaged Property or any part thereof; and
(4) No Hazardous Materials have been removed
from the Mortgaged Property or any part
thereof.
(b) No Environmental Complaint has been given or made
or filed with respect to the Borrower or the Mortgaged
Property or any part thereof or any interest therein.
(c) There are and have been no violations of any
Relevant Environmental Laws at the Mortgaged Property or any
part thereof or any interest therein.
(d) All transfers of the Mortgaged Property or any
part thereof or any interest therein have been made in
compliance with all Relevant Environmental Laws.
(e) No consent orders or decrees under Relevant
Environmental Laws have been entered with respect to the
Mortgaged Property or any activities heretofore or now
conducted at the Mortgaged Property or any part thereof or
any interest therein.
3.18 Additional Representations. Neither the
Borrower nor the Guarantor is (i) a defendant in any suit or
legal action, (ii) has any judgments, garnishments or
attachments pending against any of them, or (iii) has ever
been adjudicated a bankrupt. Each of the Borrower and the
Guarantor is, and after consummation of this Agreement, and
after giving effect to all Obligations incurred and Liens
created by the Borrower in connection herewith will be,
Solvent.
ARTICLE IV.
CONDITIONS PRECEDENT
4.1 Conditions of Initial Loan. The agreement of the
Bank to make the initial Loan advance hereunder is subject to
the satisfaction, immediately prior to or concurrently with the
making of such Loan advance, the following conditions
precedent:
(a) Agreement; Note. The Bank shall have
received (i) this Agreement, executed and
delivered by the Borrower or the duly
authorized agent of the Borrower, and (ii)
the Note of the Borrower conforming to the
requirements hereof and executed by the
Borrower or the duly authorized agent of
the Borrower.
(b) Certain Other Loan Documents. The Bank
shall have received the Mortgage, the
Guaranty and the Security Agreements duly
executed and delivered by the Borrower,
the Guarantor and the Developer or the
duly authorized agents of the Borrower,
the Guarantor and the Developer, together
with resolutions or unanimous consents of
the boards of directors of the Borrower
and of the Guarantor and of the members of
Developer which authorize the Borrower and
the Developer to enter into the
transactions contemplated by this
Agreement with the Bank, and to execute
and deliver to the Bank all documents
reasonably required by the Bank in
connection herewith, and the Bank shall
have received the Guaranty, duly executed
by the Guarantor.
(c) Representations and Warranties. The
representations and warranties contained
in Article III hereof and in each of the
Loan Documents shall be true and correct
in all respects on the date of making of
such Loan, with the same force and effect
as though made on and as of that date.
(d) No Defaults. As of the date of making
such Loan, there shall exist no Event of
Default, or default which but for the
passage of time or giving of notice, would
constitute an Event of Default.
(e) Environmental Matters. The Bank shall
have received a PhaseEI Environmental
Inspection satisfactory to the Bank, all
of which shall be reasonably satisfactory
in form, substance and scope to the Bank,
and the cost of the Phase I Environmental
Inspection shall have been paid by the
Borrower to the Bank.
(f) Title Insurance Policy. The Bank shall
have received a Mortgagee's Title Policy
in the amount of $1,840,000.00, insuring
that the Mortgage creates a valid first
Lien on the Mortgaged Property free and
clear of all defects, encumbrances and
Liens (except for Permitted Liens), naming
the Bank as the insured thereunder, in the
form of ALTA Loan Policy-1970 or such
other similar form acceptable to the Bank,
containing endorsements for lien
protection, hazardous waste liens, REM,
future advance, survey, zoning and such
other endorsements as the Bank may
request, and the Bank shall have also
received evidence that all premiums with
respect to such policy has been paid.
(g) Survey. The Bank and the title insurance
company issuing the title policy (the
"Title Insurance Company") shall have
received a survey satisfactory to them of
the Mortgaged Property certified to the
Bank and the Title Insurance Company in a
manner satisfactory to them, by an
independent professional licensed land
surveyor satisfactory to the Bank and the
Title Insurance Company, which shall be
made in accordance with the minimum
standards established by the State of
Louisiana for the preparation of land
surveys and for land surveyors, and shall
include a survey certificate executed by
the surveyor.
(h) Fees. The Bank shall have received the
all fees owed to Bank hereunder at such
time.
(i) Insurances. The Bank shall have received
original or certified true copies of paid
insurance policies in compliance with
Section 5.5 hereof.
(j) Release of and/or Subordination of Liens.
The Bank shall have received evidence
satisfactory to it that any and all Liens
affecting the Mortgaged Property or the
Collateral (if applicable) other than
Permitted Liens shall have been released
or subordinated to Bank's Liens.
(k) Filings and Recordings. All filings,
registrations and recordings shall have
been properly filed, registered or
recorded in each recording jurisdiction in
order to create and perfect the Lien in
favor of the Bank with respect to the
Mortgage and the Security Agreement.
(l) Appraisal. The Bank shall have received,
at the Borrower's expense, an appraisal of
the Land, Building and Improvements based
upon the Plans, prepared by an MAI
appraiser approved by Bank, which
evidences a market value of not less than
$2,300,000.00.
(p) Site Inspection Affidavit. The Bank shall
have received an affidavit from a licensed
architect, surveyor or civil engineer that
no work has begun and no materials have
been delivered to the Mortgaged Property
as of the Closing Date (unless Bank has
received a mortgagee's policy of title
insurance insuring the Mortgaged Property
over construction liens).
(q) Building Permit. Appropriate building
permits and such other licenses and
permits prerequisite to authorize
construction of the Improvements in
accordance with the Plans.
(r) Plans. Final architectural and
engineering drawings and specifications,
including any revisions, amendments and
addenda, required to complete the
construction of the Building and the
Improvements.
(s) Contracts. If required by Bank, copies of
all contracts, subcontracts and material
supply agreements which relate to the
construction of the Building and the
Improvements, in form and substance
satisfactory to the Bank.
(t) Zoning Certificate. Proof satisfactory to
Bank that the Land is zoned to permit
construction of the Building and
Improvements in accordance with the plans
and use of the Building and Improvements
for their intended purpose.
(u) Execution of Co-Obligee Riders to Bonds.
Evidence that Bank has been made a co-
obligee with the Developer under the
payment and performance bonds provided by
the parties with whom Developer has
contracted under the Construction
Documents.
(v) Consents to Assignments of Construction
Documents. The Bank shall have received
consents to the assignment of the
Construction Documents under the Security
Agreement to be executed by Developer, in
form and substance satisfactory to the
Bank.
(w) Good Standing Certificates. The Bank
shall have received Certificates of Good
Standing of the Borrower and of Guarantor
issued by the Louisiana Secretary of State
(and from the Secretary of State of
Delaware, with respect to Guarantor).
(x) Corporate Certificates. The Bank shall
have received a certificate of the
secretaries of each of the Borrower and
the Guarantor (i) setting forth the
resolutions of their respective Boards of
Directors in form and substance
satisfactory to the Bank with respect to
the authorization of all Loan Documents to
which each of them is a party, and all
agreements and instruments contemplated to
be executed in connection herewith; (ii)
attaching copies of the Articles of
Incorporation and By-laws of each of them;
(iii) stating the federal tax
identification number of each of them; and
(iv) setting forth the officers authorized
to sign such instruments on behalf of each
of them.
(y) Opinions. The Bank shall have received
favorable opinions of counsel for the
Borrower and the Guarantor in form and
substance satisfactory to the Bank and the
Bank's counsel, which opinion will
address, without limitation, the perfected
status of Bank's Liens on the Mortgaged
Property and the collateral affected by
the Security Agreements, the binding
nature and enforceable nature Loan
Documents to which each of them is a
party, and the due authorization and
corporate power of each of them and their
representatives to execute and deliver the
Loan Documents to which each of them is a
party.
4.2 Each Additional Advance. The obligation of
the Bank to make additional Loan is subject to the
satisfaction of each of the following conditions:
(a) Each of the representations and warranties
of the Borrower contained in this
Agreement and of the Guarantor in the
Guaranty shall be true and correct on and
as of the date of such subsequent advance.
(b) At the time of each subsequent advance, no
Default or Event of Default shall have
occurred and be continuing.
(c) There shall have occurred no material
adverse changes, either individually or in
the aggregate, in the assets, liabilities,
financial conditions, business operations,
affairs or circumstances of the Borrower
or of the Guarantor from those reflected
in the most recent financial statements
furnished to the Bank prior to the date of
such Loan, except to the extent that such
changes are permitted by this Agreement.
(d) Bank shall have received a Request for
Advance from the Borrower, together with
all documents to be submitted therewith
under the provisions of SectionE2.10
and/or Section 2.11 hereof.
4.3 Conditions Precedent to Conversion of the Loans
to a Term Loan. The obligation of the Bank to convert the
Loans to a term loan in accordance with the provisions of
Section 2.12 hereof is subject to the satisfaction of each
of the following conditions:
(a) Bank shall have received the executed term
note of the Borrower required by Section
2.12 hereof, resolutions of the Board of
Directors of Borrower authorizing the
execution and delivery of such term note,
and opinions of counsel to Borrower
regarding the due authorization of the
officer of Borrower executing such note and
the binding nature and enforceability of
such promissory note as to Borrower.
(b) Each of the representations and warranties
of the Borrower contained in this Agreement
and of the Guarantor in the Guaranty shall
be true and correct on and as of the date of
such term loan.
(c) At the date of such term loan, no Default or
Event of Default shall have occurred and be
continuing.
(d) There shall have occurred no material
adverse changes, either individually or in
the aggregate, in the assets, liabilities,
financial conditions, business operations,
affairs or circumstances of the Borrower or
of the Guarantor from those reflected in the
most recent financial statements furnished
to the Bank prior to the date of such Loan,
except to the extent that such changes are
permitted by this Agreement.
(e) Bank shall have received a certificate of
occupancy issued by the appropriate
governmental authority consenting to the use
and occupancy of the Building and
Improvements.
(f) Bank shall have received a clear lien and
privilege certificate issued by the Clerk of
Court of Lafayette Parish, Louisiana.
(g) Bank shall have received evidence that
Borrower has obtained a multi-peril hazard
insurance policy for the Building and the
Improvements as required by this Agreement
or as otherwise required by the Bank.
(h) Bank shall have received a final report of
the architect in form and substance
satisfactory to the Bank stating that the
Building and Improvements have been
completed under the Construction Documents
in accordance with the plans and
specifications for the project.
(i) Bank shall have received an update of the
MAI appraisal provided to it prior to the
initial Loan hereunder, based upon the
Building and Improvements as completed, and
the market value of the Land, at such time.
ARTICLE V.
AFFIRMATIVE COVENANTS
The Borrower hereby agrees that, so long as any
Loan remains outstanding and unpaid or any other amount is
owing to the Bank hereunder, the Borrower (or Guarantor,
with respect to the financial ratios described in Sections
5.10 through 5.14 hereof) shall:
5.1 Financial Statements. Furnish, or cause to be
furnished, to the Bank:
(a) as soon as available, and in any event
within 90 days after the end of each
fiscal year of the Guarantor, a copy
of the audited financial statements
(consisting of at least a balance sheet
and related statements of income,
retained earnings and changes in
financial condition) of the Guarantor
prepared by a certified public
accountant acceptable to Bank in
conformity with generally accepted
accounting principles applied on a
basis consistent with that of the
preceding fiscal year, and certified
by a proper financial officer of the
Guarantor; and
(b) as soon as available, and in any event
within forty-five (45) days of the end of
each fiscal quarter of each fiscal year of
the Guarantor during the term hereof,
interim financial statements of the
Guarantor prepared and certified by a
proper financial officer of the Guarantor
prepared similarly to the annual
statements referred to in clause (a) above
(subject to normal year-end adjustments)
and consisting of at least a balance sheet
as at the close of such period and profit
and loss statement for the quarter then
ended and for the period from the
beginning of such fiscal year to the close
of such period.
The Borrower covenants and agrees that all financial
statements described above shall be complete and correct in
all material respects and shall be prepared in reasonable
detail and in accordance with procedures applied
consistently throughout the periods reflected therein.
5.2 Certificates; Other Information. Furnish to
Bank:
(a) concurrently with the delivery of the
financial statements referred to in
subsection 5.1(a), a certificate of
the Borrower stating that in making the
examination necessary to certify the
correctness thereof no knowledge was
obtained of any Default or Event of Default
except as specified in such certificate;
(b) promptly, such additional financial and
other information as the Bank may from
time to time reasonably request.
5.3 Performance of Contractual Obligations.
Perform in all material respects all of its Contractual
Obligations under the terms of any agreement to which it is
bound or to which it is a party, and pay, discharge or
otherwise satisfy at or before maturity or before they
become delinquent, as the case may be, all its obligations
of whatever nature, except when the amount or validity
thereof is currently being contested in good faith by
appropriate proceedings and reserves with respect thereto
have been provided on the books of the Borrower in amounts
satisfactory to Bank.
5.4 Conduct of Business and Maintenance of
Existence. Continue its existence and good standing in each
jurisdiction in which it is required to be qualified,
continue to engage in business of the same general type as
now conducted by it and take all reasonable action to
maintain all rights, privileges and franchises necessary or
desirable in the normal conduct of his business; comply with
all Contractual Obligations and Requirements of Law except
to the extent that failure to comply therewith would not, in
the aggregate, have a Material Adverse Effect.
5.5 Insurance. Maintain, or cause to be
maintained, with financially sound and reputable insurance
companies licensed to do business in the State of Louisiana,
the following insurances:
(a) Builder's risk and/or multi-peril hazard
insurance, covering against loss by fire,
theft, vandalism, malicious mischief,
explosion, windstorm, collapse and
extended coverage, for 100% replacement
cost, with an endorsement naming the Bank
as mortgage loss payee;
(b) If the Mortgaged Property is located
within either flood zone "A" or "B," flood
insurance in the amount equal to the
replacement costs of the improvements or
the maximum amount of flood insurance
available, whichever is lesser, with an
endorsement naming the Bank as mortgage
loss payee;
(c) comprehensive general liability naming the
Bank as additional insured, with a minimum
$5,000,000.00 combined single limit bodily
injury/property damage liability; and
(d) worker's compensation and general
liability insurance for all contractors.
Each policy shall contain a 30-day written notice to the
Bank in the event of cancellation, non-renewal or material
change.
5.6 Inspection of Property; Books and Records;
Discussions. Keep proper books of records and account in
which full, true and correct entries shall be made of all
dealings and transactions in relation to its business and
activities; and permit representatives of the Bank to visit
and inspect any of its properties and examine and make
abstracts from any of its books and records at any
reasonable time during normal business hours, and as often
as may reasonably be desired, and to discuss the business,
operations, properties and financial and other condition of
the Borrower with officers and employees of the Borrower and
with the Persons conducting the annual review thereof.
5.7 Maintenance of Liens of the Security
Documents. Promptly, upon the reasonable request of the
Bank, at the Borrower's expense, execute, acknowledge and
deliver, or cause the execution, acknowledgement and
delivery of, and thereafter register, file or record, or
cause to be registered, filed or recorded, in an appropriate
governmental office, any document or instrument supplemental
to or confirmatory of the Security Documents or otherwise
deemed by the Bank necessary or desirable for the continued
validity, perfection and priority of the Liens on the
collateral covered thereby.
5.8 Notices. Promptly give notice to the Bank:
(a) of the occurrence of any Default or Event
of Default;
(b) of any (i) default or event of default
under any Contractual Obligation of the
Borrower, or (ii) litigation,
investigation or proceeding which may
exist at any time between the Borrower and
any Governmental Authority, which in the
case of either clause (i) or (ii) above,
if not cured or if adversely determined,
as the case may be, would have a Material
Adverse Effect;
(c) of any litigation or proceeding affecting
the Borrower in which the amount involved
is $100,000.00 or more and not covered by
insurance or in which injunctive or
similar relief is sought;
(d) of any Environmental Complaint affecting
the Borrower, any Mortgaged Property or
any part thereof or the operations of the
Borrower or any other Person on or in
connection with any Mortgaged Property or
any part thereof and any notice from any
Person of (i)Eany violation or alleged
violation of any Relevant Environmental
Law relating to any Mortgaged Property or
any part thereof or any activity at any
time conducted on the Mortgaged Property
or (ii) the occurrence of any release,
spill or discharge in a quantity that is
reportable under any Relevant
Environmental Law or (iii) the
commencement of any clean-up pursuant to
or in accordance with any Relevant
Environmental Law of any Hazardous Waste
on or about the Mortgaged Property or any
part thereof;
(e) of (i) the incurrence of any Lien on, or
claim asserted against any of the
collateral security in the Security
Documents or (ii) the occurrence of any
other event which could reasonably be
expected to have a Material Adverse
Effect;
(f) of any default by any party under the
terms of the Purchase Agreement or the
Construction Documents; and
(g) of a material adverse change in the
business, operations, property or
financial or other condition of the
Borrower or of the Guarantor.
Each notice pursuant to this Section 5.8 shall be
accompanied by a statement of the Borrower setting forth
details of the occurrence referred to therein and stating
what action the Borrower proposes to take with respect
thereto.
5.9 Hazardous Materials.
(a) Do the following:
(1) comply and cause the Mortgaged
Property and every part thereof
and every interest therein and
all operations and activities
conducted thereon to comply with
any and all Relevant Environmental
Laws, the noncompliance with which
could give rise to any remedial
obligation with any Relevant
Environmental Laws or could have
a Material Adverse Effect;
(2) take prompt action to remedy or
remediation, whether or not under
order or agreement to do so, the
occurrence or presence or alleged or
possible or threatened occurrence or
presence of any Environmental
Discharges and Hazardous Materials
to the extent such action is
required under any Relevant
Environmental Laws; and
(3) pay immediately when due the costs
of any such compliance and
remediation; and
(4) keep the Mortgaged Property free of
any Lien imposed as a result of any
Environmental Complaint or pursuant
to any Relevant Environmental Laws.
(b) Handle and dispose of all Hazardous
Materials as may, from time to time, be located on the
Mortgaged Property, in compliance with all Relevant
Environmental Laws and in a commercially reasonable manner.
(c) Defend, indemnify and hold the Bank
harmless from and against all liability, penalties, loss,
costs, damage, claims, causes of action and expense,
including, without limitation,
(1) consequential, punitive and exemplary
damages and injunctive or similar
relief;
(2) reasonable attorneys' fees and
disbursements and costs;
(3) reasonable fees, expenses and
disbursements of expert witnesses,
consultants, advisers and other
Persons employed or engaged by or on
behalf of the Bank in connection with
any claim or response or other matter
which is the subject of this
indemnity; and
(4) costs and expenses incurred in
connection with any remediation,
whether or not under order or
agreement, of any Hazardous Materials
or Environmental Discharges on or
about the Mortgaged Property or any
part thereof;
which the Bank may suffer or sustain by reason of or arising
from or in connection with:
(1) the imposition or recording of a Lien
relating to Relevant Environmental
Laws against the Mortgaged Property or
any part thereof or any interest
therein by any Governmental Authority;
(2) any representation or warranty
contained herein relating to Relevant
Environmental Laws being incomplete
or untrue or incorrect or misleading
in any respect on or as of the date
the same is made or deemed made;
(3) any breach or failure of performance
by the Borrower of any covenant
contained in this Section;
(4) claims, including, without limitation,
any claim for consequential, punitive
or exemplary damages or injunctive or
similar relief, of any Person with
respect to violation or alleged
violations of Relevant Environmental
Laws relating to the Mortgaged
Property or any part thereof or any
interest therein or any operation or
activity conducted thereon;
(5) any Environmental Complaint and any
claims alleged or asserted therein;
and
(6) costs and expenses incurred by the
Bank in connection with:
i) removal of any Lien of the kind
described in clause (1) of this
Section;
ii) any remedy or remediation,
whether or not under order or
agreement, of the occurrence or
presence of or exposure to or
alleged or possible or threatened
occurrence or presence of or
exposure to Environmental
Discharges or Hazardous
Materials;
iii) compliance, whether or not under
order or agreement, with any
Relevant Environmental Laws; and
iv) satisfaction or settlement of any
claims alleged or asserted in any
Environmental Complaint.
The obligations and indemnification in this paragraph shall
survive payment and performance of the obligations secured
by the Security Documents and release of the Liens of the
Security Documents, shall be without limitation of time and
shall be binding upon the Borrower's successors and assigns;
provided, however, the indemnity contained herein shall not
be applicable to any contamination or Environmental
Discharge that originates (or which results from releases or
discharges of Hazardous Materials) prior to the Borrower's
acquisition or occupancy of the Mortgaged Property or that
originates (or which results from releases or discharges of
Hazardous Materials) after the Bank has foreclosed upon the
Mortgaged Property.
5.10 Taxes. Promptly pay all taxes, assessments
and other charges payable by the Borrower when due, the
failure to pay which would have a Material Adverse Effect,
other than those not yet delinquent or that are being
contested in good faith by appropriate proceedings and for
which adequate reserves or security have been provided.
5.11 Debt Service Coverage Ratio. Guarantor shall
maintain a Debt Service Coverage Ratio of not less than 1.25
to 1.00 for each twelve-month period ending as of the close
of each fiscal quarter of Guarantor during the term of this
Agreement.
5.12 Tangible Net Worth. Guarantor shall maintain
a Tangible Net Worth of not less than $58,000,000.00 as of
the close of each fiscal quarter of Guarantor during the
term of this Agreement.
5.13 Ratio of Liabilities to Tangible Net Worth.
Guarantor shall maintain a ratio of total Liabilities to
Tangible Net Worth of less than 1.25 to 1.00 as of the close
of each fiscal quarter of Guarantor during the term of this
Agreement.
5.14 Working Capital. Guarantor shall at all times
during the term of this Agreement maintain Working Capital
of not less than $5,000,000.00.
5.15 Updated Appraisals. The Borrower shall
provide Bank with updated appraisals of the Mortgaged
Property upon the demand of Bank, which Bank reserves the
right to require not more than once every three (3) years.
ARTICLE VI.
NEGATIVE COVENANTS
The Borrower hereby agrees that, so long as the
the Notes remain outstanding and unpaid or any other amount
is owing to the Bank hereunder, the Borrower shall not,
directly or indirectly:
6.1 Limitation on Liens. Create, incur, assume or
suffer to exist any Lien upon the Mortgaged Property, except
for Permitted Liens.
6.2 Limitations of Fundamental Changes. Convey,
sell, lease, assign, transfer or otherwise dispose of, all
or substantially all of its property, business or assets, or
make any material change in the present method of conducting
business.
6.3 Transactions with Affiliates. Enter into any
transaction, including, without limitation, any purchase,
sale, lease or exchange of property or the rendering of any
service, with any Affiliate unless such transactions are
otherwise permitted under this Agreement, are in the
ordinary course of the Borrower's business and are upon fair
and reasonable terms no less favorable to the Borrower than
it would obtain in a comparable arm's length transaction
with a Person not an Affiliate. For purposes hereof,
consolidated wholly-owned subsidiaries of Guarantor shall
not be considered Affiliates of Borrower.
6.4 Hazardous Materials.
(a) Use or permit or suffer use of the
Mortgaged Property, or any part thereof or any interest
therein or conduct any activity or operations thereon in any
manner which:
(1) would involve or result in occurrence
or presence of or exposure to
Hazardous Materials or toxic
substances at, upon, under, across or
within the Facilities or the Mortgaged
Property or any part thereof, unless
strictly in compliance with Relevant
Environmental Laws, the noncompliance
with which could give rise to any
remedial obligation under any
Relevant Environmental Laws or could
have a Material Adverse Effect;
(2) would violate, or support a cause of
action or claim for injunctive relief
under, any Relevant Environmental
Laws; or
(3) would or might result in the
occurrence of any Environmental
Discharge or other emission in such an
amount that a permit would be required
under any Requirement of Law, unless
such permit has been obtained and is
in full force and effect and such
Environmental Discharge or emission is
in accordance with such permit.
(b) Transfer or permit or suffer any
transfer of the Mortgaged Property or any part thereof or
any interest therein or of the interest of any tenant or
lessee under any lease or of any Person entitled to operate
or manage such property, unless such transfer is made in
strict compliance with all Relevant Environmental Laws.
6.5 Ownership. Transfer any interest in the
Mortgaged Property.
6.6 Principal Office, Etc. Change its name,
principal office, chief executive office or principal place
of business, or his taxpayer identification number, without
giving the Bank at least sixty (60) days prior written
notice of such change, and shall have taken such action as
the Bank deems necessary to continue the perfection of the
Liens securing payment of the Obligations.
6.7 Amendments to Purchase Agreement. Enter into
or agree to enter into any material modification of the
Purchase Agreement without the prior written consent of the
Bank.
ARTICLE VII.
EVENTS OF DEFAULT
Upon the occurrence of any of the following
events:
(a) The Borrower shall fail to pay any
principal or interest on the Note
when due in accordance with the terms
thereof, or any other Obligations when
due, and such failure shall continue
unremedied for ten (10) consecutive
days after such due date;
(b) Any representation or warranty contained
herein or any representation or warranty
made or deemed made by the Borrower
hereunder or by the Borrower or either of
the Developer or the Guarantor in the
other Loan Documents to which they are a
party or which is contained in any
certificate, document or financial or
other statement furnished at any time
under or in connection with this Agreement
or any such other Loan Document shall
prove to have been incorrect in any
material respect on or as of the date made
or deemed made; or
(c) The Borrower shall default in the
observance or performance of any covenant,
or agreement contained herein and such
default shall continue unremedied for
thirty (30) consecutive days after receipt
by the Borrower via certified mail of a
notice to cure said default; or
(d) The Borrower shall default in the
observance or performance of any covenant
or agreement contained in any Loan
Document to which it is a party, and such
default shall continue unremedied for
thirty (30) consecutive days after receipt
by the Borrower via certified mail of a
notice to cure said default; or
(e) (i) Any of the Security Documents shall
cease, for any reason, to be in full force
and effect, or the Borrower shall so
assert or (ii) the security interests
created by the Security Documents shall
cease to be enforceable and of the same
effect and priority purported to be
created thereby; or
(f) The occurrence of an Event of Default
under any of the Loan Documents; or
(g) The Borrower or the Guarantor shall (i)
default in any payment of principal of or
interest of any Indebtedness or in the
payment of any Guarantee Obligation, in
either case where the principal amount
thereof exceeds $100,000.00, beyond the
period of grace, if any, provided in the
instrument or agreement under which such
Indebtedness or Guarantee Obligation was
created; or (ii) default in the observance
or performance of any other agreement or
condition relating to any such
Indebtedness or Guarantee Obligation or
contained in any instrument or agreement
evidencing, securing or relating thereto,
or any other event shall occur or
condition exist, the effect of which
default or other event or condition is to
cause, or to permit the holder or holders
of such Indebtedness or beneficiary or
beneficiaries of such Guarantee Obligation
(or a trustee or agent on behalf of such
holder or holders or beneficiary or
beneficiaries) (in either case where the
principal amount thereof exceeds
$100,000.00) to cause, with the giving of
notice if required, such Indebtedness to
become due prior to its stated maturity or
such Guarantee Obligation to become
payable; or
(h) The Borrower or the Guarantor shall
commence any case, proceeding or other
action (A)Eunder any existing or future
law of any jurisdiction, domestic or
foreign, relating to bankruptcy,
insolvency, reorganization or relief of
debtors, seeking to have an order for
relief entered with respect to it, or
seeking to adjudicate it a bankrupt or
insolvent, or seeking reorganization,
arrangement, adjustment, winding-up,
liquidation, dissolution, composition or
other relief with respect to it or its
debts, or (B) seeking appointment of a
receiver, trustee, custodian or other
similar official for it or for all or any
substantial part of its assets, or the
Borrower or the Guarantor shall make a
general assignment for the benefit of its
creditors; or (ii) there shall be
commenced against the Borrower or the
Guarantor, in any case, proceeding or
other action of a nature referred to in
clause (i) above which (A) results in the
entry of an order for relief or any such
adjudication or appointment or (B)Eremains
undismissed, undischarged or unbonded for
a period of 60 days; or (iii) there shall
be commenced against the Borrower or the
Guarantor, any case, proceeding or other
action seeking issuance of a warrant of
attachment, execution, distraint or
similar process against all or any
substantial part of its assets which
results in the entry of an order for any
such relief which shall not have been
vacated, discharged, or stayed or bonded
pending appeal within 60 days from the
entry thereof; or (iv) the Borrower or the
Guarantor shall take any action in
furtherance of, or indicating its consent
to, approval of, or acquiescence in, any
of the acts set forth in clause (i), (ii),
or (iii) above; or (v) the Borrower or the
Guarantor shall generally not, or shall be
unable to, or shall admit in writing its
inability to, pay its debts as they become
due; or
(i) One or more judgments or decrees shall be
entered against the Borrower or the
Guarantor involving in the aggregate a
liability (not paid or fully covered by
insurance) of $100,000.00 or more, and all
such judgments or decrees shall not have
been vacated, discharged, stayed or bonded
pending appeal within 30 days from the
entry thereof; or
(j) The occurrence of any of the following
with respect to the Borrower or the
Guarantor: death (if an individual), or
dissolution or cessation of business (if a
partnership, limited liability company,
corporation or other organization); or
(k) The occurrence of any event which results
in a Material Adverse Change; or
(l) The occurrence of any material default
under the Purchase Agreement or the
Construction Documents;
then, and in any such event, (A) if such event is an Event
of Default specified in Section (h) above, automatically the
Bank shall have no further obligation to make Loans to the
Borrower hereunder or to convert such Loans to a term loan,
and all amounts owing under this Agreement and the Note
shall immediately become due and payable, and (B) if such
event is any other Event of Default, any or all of the
following actions may be taken: (i) the Bank may, by notice
of default to the Borrower, immediately cease making any
Loans to the Borrower, and declare the Loans hereunder (with
accrued interest thereon) and all other amounts owing under
this Agreement and the Note to be due and payable forthwith,
whereupon the same shall immediately become due and payable;
(ii) the Bank may, but shall have no obligation to, perform
any covenant or agreement of Borrower hereunder or under any
of the Security Documents and any amounts expended by Bank
shall constitute additional amounts secured by the Security
Documents; and (iii) the Bank may exercise all rights and
remedies granted it under the Loan Documents. Presentment,
demand, and protest are hereby expressly waived by the
Borrower. Notwithstanding anything contained herein to the
contrary, in the event the Borrower shall have received a
notice of default under subsections (c) and/or (d) three (3)
times in any calendar year, an Event of Default hereunder
may thereafter occur in such calendar year under any of
subsections (c) or (d) without the requirement of any
passage of time or giving of notice.
ARTICLE VIII.
MISCELLANEOUS
8.1 Amendments and Waivers. Neither this
Agreement, the Note or any other Loan Document, nor any
terms hereof of thereof may be changed, waived, discharged
or terminated unless such change, waiver, discharge or
termination is in writing signed by the Borrower and the
Bank.
8.2 Notices. All notices, requests and demands to
or upon the respective parties hereto to be effective shall
be in writing (including by telegraph or telefax), and,
unless otherwise expressly provided herein, shall be deemed
to have been duly given or made when delivered by hand, or
five days after being deposited in the mail, postage
prepaid, or, in the case of telegraphic notice, when
delivered to the telegraph company, or, in the case of
telefax notice, when sent, addressed as follows in the case
of the Borrower and the Bank or to such other address as may
be hereafter notified by the respective parties hereto:
The Borrower:
SOLOCO, Inc.
3850 N. Causeway Blvd.
Suite 1770
Metairie, LA 70002
Fax: (504) 838-9506
with a copy to:
Newpark Resources, Inc.
3850 N. Causeway Blvd., Suite 1770
Metairie, LA 70002
Attn: Mr. Matthew W. Hardey
Fax: (504) 838-9506
The Bank:
Hibernia National Bank
313 Carondelet Street
P.O. Box 61540
New Orleans, LA 70161
Attn: Mr. S. John Castellano
Fax: (504) 533-2060
8.3 No Waiver; Cumulative Remedies. No failure to
exercise and no delay in exercising, on the part of the
Bank, any right, remedy, power or privilege hereunder or
under the Loan Documents, shall operate as a waiver thereof;
nor shall any single or partial exercise of any right,
remedy, power or privilege hereunder or thereunder preclude
any other or further exercise thereof or the exercise of any
other right, remedy, power or privilege. The rights,
remedies, powers and privileges herein provided or provided
in the Loan Documents are cumulative and not exclusive of
any rights, remedies, powers and privileges provided by law.
8.4 Survival of Representations and Warranties.
All representations and warranties made hereunder, in the
other Loan Documents and in any document, certificate or
statement delivered pursuant hereto or in connection
herewith shall survive the execution and delivery of this
Agreement and the Notes.
8.5 Payment of Expenses and Taxes. The Borrower
agrees (a) to pay or reimburse the Bank for all its out-of-
pocket costs and expenses incurred in connection with the
development, preparation and execution of, and any
amendment, supplement or modification to, this Agreement,
the Note and the other Loan Documents and any other
documents prepared in connection herewith or therewith, and
the consummation of the transactions contemplated hereby and
thereby, including, without limitation, inspection fees,
title insurance premiums, legal fees, brokerage fees,
appraisal fees and travel expenses, (b) to pay or reimburse
the Bank for all its costs and expenses incurred in
connection with the enforcement or preservation of any
rights under this Agreement, the Note and the other Loan
Documents, including, without limitation, reasonable fees
and disbursements of counsel to the Bank and (c) to pay,
indemnify, and hold the Bank harmless from, any and all
recording and filing fees and any and all liabilities with
respect to, or resulting from any delay in paying, stamp,
excise and other taxes, if any, which may be payable or
determined to be payable in connection with the execution
and delivery of, or consummation of any of the transactions
contemplated by, or any amendment, supplement or
modification of, or any waiver or consent under or in
respect of, this Agreement, the Note and any such other
documents, and (d) to pay, indemnify, and hold the Bank
harmless from and against any and all other liabilities,
obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or
nature whatsoever with respect to the execution, delivery,
enforcement, performance and administration of this
Agreement, the Note and any other Loan Documents (all the
foregoing, collectively, the "indemnified liabilities").
The agreements in this subsection shall survive repayment of
the Notes and all other amounts payable hereunder.
8.6 Security Interest and Right of Set-Off.
Borrower hereby grants Bank a continuing security interest
in, as well as the right to set-off the Obligations of
Borrower against, all funds which Borrower may maintain on
deposit with Bank (with the exception of funds deposited in
Borrower's accounts in trust for third parties of funds
deposited in pension accounts, IRA's, Keogh accounts an All
Saver Certificates), and Bank shall have a Lien upon and a
security interest in all property of Borrower in Bank's
possession or control which shall secure all such
Obligations.
8.7 Invalid Provisions. If any provision of the
Loan Document is held to be invalid, illegal or
unenforceable under present or future laws during the terms
of this Agreement, such provision shall be fully severable;
such Loan Document shall be construed and enforced as if
such invalid, illegal or unenforceable provision had never
comprised a part of such Loan Document; and the remaining
provisions of such Loan Document shall remain in full force
and effect and shall not be affected by the invalid, illegal
or unenforceable provision or by its severance from such
Loan Document.
8.8 Further Assurances. At any time and from time
to time upon the written request of the Bank, and at the
sole expense of the Borrower, the Borrower shall promptly
and duly execute and deliver such further instruments and
documents and take such further action as the Bank may
reasonably request for the purpose of obtaining or
preserving the full benefits of this Agreement and the Loan
Documents and of the rights and powers herein and therein
granted.
8.9 Inspections. Borrower hereby authorizes the
Bank, or any agent, officer, employee or representative of
the Bank to enter upon the Mortgaged Property to make
inspections of the Building, Improvements, materials, plans
and specifications, shop drawings, workmanship and
construction of the Building and Improvements Improvements
or to enter into possession of the Mortgaged Property upon
any Default or Event of Default and perform any work
necessary or desirable to complete the Improvements and to
take all other action in connection therewith. The sole
purpose of such inspections is to obtain information and to
afford the Bank the opportunity to:
(a) verify whether any Loans the Bank is
obligated to make under this Agreement are
due, and the correct amount of such
advances;
(b) determine whether there has been or may be
any Default or Event of Default of the
Obligations of Borrower under this
Agreement; and
(c) take any necessary or appropriate action
to protect and preserve the Bank's
security for the Loans.
None of the aforesaid actions by the Bank, or any agent,
officer, employee or representative of the Bank, shall be or
may be construed in such a manner as to impose any duty or
obligation whatsoever on the Bank, or any agent, officer,
employee or representative of the Bank, to protect or
represent any owner, borrower, contractor, surety, or any
other person whatsoever and shall not be considered or
construed as having made any warranty whatsoever, whether
express or implied, as to the adequacy, quality of fitness
or purpose of any physical conditions, materials,
workmanship, plans, specifications, drawings or other
requirements pertaining to the construction of the Building
and Improvements, or whether any such physical conditions,
materials or workmanship comply with any plans,
specifications, drawings, ordinances, statutes, or other
governmental requirements pertaining to the property. Bank
shall have no liability, obligation or responsibility
whatsoever with respect to the construction of the Building
and Improvements except to advance the Loans pursuant to
this Agreement. Bank shall not be obligated to inspect the
Mortgaged Property or the construction of the Mortgaged
Property, nor be liable for the performance or Default of
Event of Default of Borrower, any architect, contractor,
subcontractor or materialmen, or any other party, or for any
failure to construct, complete, protect, or insure the
Building and Improvements, or for the payment of costs of
labor, materials, or services supplied for the Improvements,
or for the performance of any obligation of Borrower
whatsoever. Nothing, including without limitation, any
advance or acceptance of any document or instrument, shall
be construed as a representation or warranty, express or
implied, to any party by Bank.
8.10 Final Agreement. This Agreement, the Note and
the other Loan Documents embody the entire and final
agreement between the parties with respect to the
transactions contemplated hereby, and may not be
contradicted by evidence of prior, contemporaneous or
subsequent oral agreements of the parties and supersedes all
prior agreements and understandings, if any, related to the
subject matter hereof and thereof. There are no oral
agreements between the parties.
8.11 Successors and Assigns. This Agreement shall
be binding upon and inure to the benefit of the Borrower,
the Bank, all future holders of the Notes and their
respective successors and assigns.
8.12 GOVERNING LAW. THIS AGREEMENT AND THE NOTE
AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS
AGREEMENT AND THE NOTE SHALL BE GOVERNED BY, AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
LOUISIANA. BORROWER AND BANK HEREBY WAIVE THE RIGHT TO ANY
JURY TRIAL IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT
BY EITHER OF THEM AGAINST THE OTHER.
IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be duly executed and delivered in
New Orleans, Louisiana by their proper and duly authorized
officers as of the day and year first above written.
SOLOCO, INC.
By:_________________________
Title:______________________
HIBERNIA NATIONAL BANK
By:_________________________
Title:______________________
EXHIBIT 21.1
NEWPARK CORPORATIONS, LIMITED LIABILITY COMPANIES
AND LIMITED PARTNERSHIPS
ADDRESS,ST INCORP., ID NO. ,NO. SHS. DIRS/PRES.
Entity St.of Sub. Emp. No.
______ Incorp of ID No. Shs. Dir. Pres.
______ __ ______ ____ ____ _____
B.F.C. Oil Company Louisiana Newpark 72-0868239 1,000 Cole James D. Cole
3850 N. Causeway Blvd., Ste. 1770 12/15/78 Dormant Ballantine
Metairie, LA 70002 Hardey
Chessher Construction, Inc. Texas Newpark 72-1286764 500 Cole James D. Cole
3850 No.Causeway, Suite 1770 1/4/95 Ballantine
Metairie, LA 70002 Hardey
Consolidated Mayflower Mines, Utah Newpark 87-0320149 55,000 Cole James D. Cole
3850 N. Causeway Blvd., Ste. 1770 7/21/75 Dormant Ballantine
Metairie, LA 70002 Hardey
Florida Mat Rental, Inc. Florida SOLOCO 72-1277728 100 Cole Ronald Latiol
3850 N. Causeway Blvd., Ste. 1770 8/24/94 Dormant Ballantine
Metairie, LA 70002 Latiolais
George R. Brown Services, Inc. Texas Newpark 72-1286782 3,000 Cole James D. Cole
3850 N. Causeway Blvd., Ste. 1770 1/4/95 Ballantine
Metairie, LA 70002 Hardey
Mallard & Mallard, Inc. Texas Newpark 72-1286782 500 Cole James D. Cole
3850 N. Causeway Blvd., Ste. 1770 7/5/95 Ballantine
Metairie, LA 70002 Hardey
Mallard & Mallard of LA, Inc. Louisiana Newpark 74-2062791 3,000 Cole Ronald Latiol
3850 N. Causeway Blvd., Ste. 1770 7/5/79 Dormant Ballantine
Metairie, LA 70002 Latiolais
Newpark Environmental Louisiana Newpark 72-0770718 10,000 Cole Charles Joube
Services L.L.C. 12/22/95 Ballantine
P. O. Box 31480 Joubert
Lafayette, LA 70593-1480
(Continued)
Entity St.of Sub. Emp. No.
______ Incorp of ID No. Shs. Dir. Pres.
______ __ ______ ____ ____ _____
Newpark Holdings,Inc. LA Newpark 72-1286594 100 Cole James D. Cole
3850 N.Causeway Blvd., Suite 1770 12/22/94 Ballantine
Metairie, LA 70002 Hardey
Newpark Texas, L.L.C. LA Newpark 72-1286789 99 Cole James D. Cole
3850 N.Causeway Blvd., Suite 1770 12/22/94 NP Holdings 1 Ballantine
Metairie, LA 70002 Hardey
Newpark Wellhead Services, Inc LA Newpark 72-1286763 1,000 Cole James D. Cole
3850 N.Causeway Blvd.,Suite 1770 1/24/95 Ballantine
Metairie, LA 70002 Hardey
SOLOCO, L.L.C. LA Newpark 72-1286785 99 Cole James D. Cole
3850 N.Causeway Blvd., Suite 1770 12/22/94 NP Holdings 1 Ballantine
Metairie, LA 70002 72-0536201 Latiolais
LIMITED PARTNERSHIPS-TEXAS
BATSON-MILL, L.P. TEXAS NP Holdings 72-1284721 1% Ed Doss
3850 N.Causeway Blvd., Suite 1770 NP Texas LLC 99% Manager
Metairie, LA 70002
NEWPARK ENVIRONMENTAL
SERVICES, L.P. TEXAS NP Holdings 72-1312748 1%
NP Texas LLC 99%
NEWPARK SHIPHOLDING TEXAS, L.P TEXAS NP Holdings 72-1286763 1%
3850 N.Causeway Blvd., Suite 1770 NP Texas LLC 99%
Metairie, LA 70002
SOLOCO TEXAS, L.P TEXAS NP Holdings 72-1284720 1%
3850 N.Causeway Blvd., Suite 1770 NP Texas LLC 99%
Metairie, LA 70002
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration
Statements No. 33-83680, 33-67284, 33-54060, 33-22291 and 33-
62643 of Newpark Resources, Inc. on Form S-8 of our report dated
March 1, 1996, appearing in this Annual Report on Form 10-K of
Newpark Resources, Inc. for the year ended December 31, 1995.
DELOITTE & TOUCHE LLP
New Orleans, Louisiana
March 11, 1996
EXHIBIT 24.1
POWER OF ATTORNEY
WITH RESPECT TO THE ANNUAL REPORT ON FORM 10-K
OF NEWPARK RESOURCES, INC.
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a Director
of NEWPARK RESOURCES, INC., does hereby constitute and appoint James
D. Cole and/or Matthew W. Hardey, his true and lawful attorney and
agent to do any and all acts and things and execute, in the name of
the undersigned (whether on behalf of Newpark Resources, Inc., or as a
Director of Newpark Resources, Inc., or by attesting the seal of
Newpark Resources, Inc., or otherwise), any and all instruments which
said attorney and agent may deem necessary or advisable in order to
enable Newpark Resources, Inc. to comply with the Securities Exchange
Act of 1934 and any requirements of the Securities and Exchange
Commission in respect thereof, in connection with the filing of the
Annual Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 on Form 10-K for the fiscal year ended December
31, 1995, including specifically but without limitation thereto, power
and authority to sign the name of the undersigned (whether on behalf
of Newpark Resources, Inc., or as a Director of Newpark Resources,
Inc., or by attesting to the seal of Newpark Resources, Inc., or
otherwise) to the Annual Report on Form 10-K to be filed with the
Securities and Exchange Commission, or any of the exhibits filed
therewith, or any amendment or application for amendment of the Annual
Report on Form 10-K, or any of the exhibits filed therewith, and to
attest the seal of Newpark Resources, Inc. thereon and to file the
same with the Securities and Exchange Commission; and the undersigned
does hereby ratify and confirm all that said attorneys and agents,
each of them, shall do or cause to be done by virtue hereof. Any one
of said attorneys and agents shall have, and may exercise, all the
powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has signed his name hereto on
the date set forth opposite his name.
Dated: February 28, 1996 /s/Philip S. Sassower
Philip S. Sassower, Director
WITNESSES
/s/ Edah Keating
/s/ Sandra B. Robert
EXHIBIT 24.1
POWER OF ATTORNEY
WITH RESPECT TO THE ANNUAL REPORT ON FORM 10-K
OF NEWPARK RESOURCES, INC.
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a Director
of NEWPARK RESOURCES, INC., does hereby constitute and appoint James
D. Cole and/or Matthew W. Hardey, his true and lawful attorney and
agent to do any and all acts and things and execute, in the name of
the undersigned (whether on behalf of Newpark Resources, Inc., or as a
Director of Newpark Resources, Inc., or by attesting the seal of
Newpark Resources, Inc., or otherwise), any and all instruments which
said attorney and agent may deem necessary or advisable in order to
enable Newpark Resources, Inc. to comply with the Securities Exchange
Act of 1934 and any requirements of the Securities and Exchange
Commission in respect thereof, in connection with the filing of the
Annual Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 on Form 10-K for the fiscal year ended December
31, 1995, including specifically but without limitation thereto, power
and authority to sign the name of the undersigned (whether on behalf
of Newpark Resources, Inc., or as a Director of Newpark Resources,
Inc., or by attesting to the seal of Newpark Resources, Inc., or
otherwise) to the Annual Report on Form 10-K to be filed with the
Securities and Exchange Commission, or any of the exhibits filed
therewith, or any amendment or application for amendment of the Annual
Report on Form 10-K, or any of the exhibits filed therewith, and to
attest the seal of Newpark Resources, Inc. thereon and to file the
same with the Securities and Exchange Commission; and the undersigned
does hereby ratify and confirm all that said attorneys and agents,
each of them, shall do or cause to be done by virtue hereof. Any one
of said attorneys and agents shall have, and may exercise, all the
powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has signed his name hereto on
the date set forth opposite his name.
Dated: February 28, 1996 /s/David P. Hunt
David P. Hunt, Director
WITNESSES
/s/ Edah Keating
/s/ Sandra B. Robert
EXHIBIT 24.1
POWER OF ATTORNEY
WITH RESPECT TO THE ANNUAL REPORT ON FORM 10-K
OF NEWPARK RESOURCES, INC.
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a Director
of NEWPARK RESOURCES, INC., does hereby constitute and appoint James
D. Cole and/or Matthew W. Hardey, his true and lawful attorney and
agent to do any and all acts and things and execute, in the name of
the undersigned (whether on behalf of Newpark Resources, Inc., or as a
Director of Newpark Resources, Inc., or by attesting the seal of
Newpark Resources, Inc., or otherwise), any and all instruments which
said attorney and agent may deem necessary or advisable in order to
enable Newpark Resources, Inc. to comply with the Securities Exchange
Act of 1934 and any requirements of the Securities and Exchange
Commission in respect thereof, in connection with the filing of the
Annual Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 on Form 10-K for the fiscal year ended December
31, 1995, including specifically but without limitation thereto, power
and authority to sign the name of the undersigned (whether on behalf
of Newpark Resources, Inc., or as a Director of Newpark Resources,
Inc., or by attesting to the seal of Newpark Resources, Inc., or
otherwise) to the Annual Report on Form 10-K to be filed with the
Securities and Exchange Commission, or any of the exhibits filed
therewith, or any amendment or application for amendment of the Annual
Report on Form 10-K, or any of the exhibits filed therewith, and to
attest the seal of Newpark Resources, Inc. thereon and to file the
same with the Securities and Exchange Commission; and the undersigned
does hereby ratify and confirm all that said attorneys and agents,
each of them, shall do or cause to be done by virtue hereof. Any one
of said attorneys and agents shall have, and may exercise, all the
powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has signed his name hereto on
the date set forth opposite his name.
Dated: February 28, 1996 /s/James H. Stone
James H. Stone, Director
WITNESSES
/s/ Edah Keating
/s/ Sandra B. Robert
EXHIBIT 24.1
POWER OF ATTORNEY
WITH RESPECT TO THE ANNUAL REPORT ON FORM 10-K
OF NEWPARK RESOURCES, INC.
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a Director
of NEWPARK RESOURCES, INC., does hereby constitute and appoint James
D. Cole and/or Matthew W. Hardey, his true and lawful attorney and
agent to do any and all acts and things and execute, in the name of
the undersigned (whether on behalf of Newpark Resources, Inc., or as a
Director of Newpark Resources, Inc., or by attesting the seal of
Newpark Resources, Inc., or otherwise), any and all instruments which
said attorney and agent may deem necessary or advisable in order to
enable Newpark Resources, Inc. to comply with the Securities Exchange
Act of 1934 and any requirements of the Securities and Exchange
Commission in respect thereof, in connection with the filing of the
Annual Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 on Form 10-K for the fiscal year ended December
31, 1995, including specifically but without limitation thereto, power
and authority to sign the name of the undersigned (whether on behalf
of Newpark Resources, Inc., or as a Director of Newpark Resources,
Inc., or by attesting to the seal of Newpark Resources, Inc., or
otherwise) to the Annual Report on Form 10-K to be filed with the
Securities and Exchange Commission, or any of the exhibits filed
therewith, or any amendment or application for amendment of the Annual
Report on Form 10-K, or any of the exhibits filed therewith, and to
attest the seal of Newpark Resources, Inc. thereon and to file the
same with the Securities and Exchange Commission; and the undersigned
does hereby ratify and confirm all that said attorneys and agents,
each of them, shall do or cause to be done by virtue hereof. Any one
of said attorneys and agents shall have, and may exercise, all the
powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has signed his name hereto on
the date set forth opposite his name.
Dated: February 28, 1996 /s/Alan J. Kaufman
Alan J. Kaufman, Director
WITNESSES
/s/ Edah Keating
/s/ Sandra B. Robert
EXHIBIT 24.1
POWER OF ATTORNEY
WITH RESPECT TO THE ANNUAL REPORT ON FORM 10-K
OF NEWPARK RESOURCES, INC.
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a Director
of NEWPARK RESOURCES, INC., does hereby constitute and appoint James
D. Cole and/or Matthew W. Hardey, his true and lawful attorney and
agent to do any and all acts and things and execute, in the name of
the undersigned (whether on behalf of Newpark Resources, Inc., or as a
Director of Newpark Resources, Inc., or by attesting the seal of
Newpark Resources, Inc., or otherwise), any and all instruments which
said attorney and agent may deem necessary or advisable in order to
enable Newpark Resources, Inc. to comply with the Securities Exchange
Act of 1934 and any requirements of the Securities and Exchange
Commission in respect thereof, in connection with the filing of the
Annual Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 on Form 10-K for the fiscal year ended December
31, 1995, including specifically but without limitation thereto, power
and authority to sign the name of the undersigned (whether on behalf
of Newpark Resources, Inc., or as a Director of Newpark Resources,
Inc., or by attesting to the seal of Newpark Resources, Inc., or
otherwise) to the Annual Report on Form 10-K to be filed with the
Securities and Exchange Commission, or any of the exhibits filed
therewith, or any amendment or application for amendment of the Annual
Report on Form 10-K, or any of the exhibits filed therewith, and to
attest the seal of Newpark Resources, Inc. thereon and to file the
same with the Securities and Exchange Commission; and the undersigned
does hereby ratify and confirm all that said attorneys and agents,
each of them, shall do or cause to be done by virtue hereof. Any one
of said attorneys and agents shall have, and may exercise, all the
powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has signed his name hereto on
the date set forth opposite his name.
Dated: February 28, 1996 /s/William W. Goodson
William W. Goodson, Director
WITNESSES
/s/ Edah Keating
/s/ Sandra B. Robert
EXHIBIT 24.1
POWER OF ATTORNEY
WITH RESPECT TO THE ANNUAL REPORT ON FORM 10-K
OF NEWPARK RESOURCES, INC.
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a Director
of NEWPARK RESOURCES, INC., does hereby constitute and appoint James
D. Cole and/or Matthew W. Hardey, his true and lawful attorney and
agent to do any and all acts and things and execute, in the name of
the undersigned (whether on behalf of Newpark Resources, Inc., or as a
Director of Newpark Resources, Inc., or by attesting the seal of
Newpark Resources, Inc., or otherwise), any and all instruments which
said attorney and agent may deem necessary or advisable in order to
enable Newpark Resources, Inc. to comply with the Securities Exchange
Act of 1934 and any requirements of the Securities and Exchange
Commission in respect thereof, in connection with the filing of the
Annual Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 on Form 10-K for the fiscal year ended December
31, 1995, including specifically but without limitation thereto, power
and authority to sign the name of the undersigned (whether on behalf
of Newpark Resources, Inc., or as a Director of Newpark Resources,
Inc., or by attesting to the seal of Newpark Resources, Inc., or
otherwise) to the Annual Report on Form 10-K to be filed with the
Securities and Exchange Commission, or any of the exhibits filed
therewith, or any amendment or application for amendment of the Annual
Report on Form 10-K, or any of the exhibits filed therewith, and to
attest the seal of Newpark Resources, Inc. thereon and to file the
same with the Securities and Exchange Commission; and the undersigned
does hereby ratify and confirm all that said attorneys and agents,
each of them, shall do or cause to be done by virtue hereof. Any one
of said attorneys and agents shall have, and may exercise, all the
powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has signed his name hereto on
the date set forth opposite his name.
Dated: February 28, 1996 /s/William Thomas Ballantine
Wm. Thomas Ballantine, Director
WITNESSES
/s/ Edah Keating
/s/ Sandra B. Robert
5
1,000
12-MOS
DEC-31-1995
DEC-31-1995
1,018
0
39,976
(768)
11,996
56,310
128,229
(42,768)
152,747
(24,202)
0
(105)
0
0
67,140
(152,747)
97,982
97,982
73,881
73,881
2,658
463
3,740
16,987
4,751
12,236
0
0
0
12,236
1.16
0.00
