UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996 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
(RegistrantOs telephone number)
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 the number of shares outstanding of each of the issuer's
classes of common stock as of the latest practicable date.
Common Stock, $0.01 par value: 14,503,881 shares at November 8, 1996
Page 1 of 18
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NEWPARK RESOURCES, INC.
INDEX TO FORM 10-Q
FOR THE THREE AND NINE MONTH PERIODS ENDED
SEPTEMBER 30, 1996
Item Page
Number Description Number
PART I
<S> <C> <C>
1 Unaudited Consolidated Financial Statements:
Balance Sheets -
September 30, 1996 and December 31, 1995 ..............3
Statements of Income for the Three Month
and Nine Month
Periods Ended September 30, 1996 and 1995..............4
Statements of Cash Flows for the
Nine Month Periods Ended September 30, 1996
and 1995...............................................5
Notes to Consolidated Financial Statements...............6
2 Management's Discussion and Analysis of Financial
Condition and Results of Operations......................10
PART II
6 Exhibits and Reports on Form 8-K...........................17
2
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Part I
Item I - Financial Statements
Newpark Resources, Inc.
Consolidated Balance Sheets
As of September 30, 1996 and December 31, 1995
____________________________________________________________________________________
(Unaudited) September 30, December 31,
(In thousands, except share data) 1996 1995
____________________________________________________________________________________
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 1,564 $ 1,018
Accounts and notes receivable, less allowance
of $887 in 1996 and $768 in 1995 33,001 39,208
Inventories 8,167 11,996
Other current assets 4,312 4,088
_______ _______
Total current assets 47,044 56,310
Property, plant and equipment, at cost, net of
accumulated depreciation 107,461 85,461
Cost in excess of net assets of purchased
businesses, net of accumulated amortization 89,033 4,340
Other assets 23,764 6,636
_______ _______
$ 267,302 $ 152,747
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable $ 517 $ 169
Current maturities of long-term debt 9,305 7,742
Accounts payable 10,403 11,664
Accrued liabilities 12,289 3,462
Current taxes payable 1,000 1,165
_______ _______
Total current liabilities 33,514 24,202
Long-term debt 29,307 46,724
Other non-current liabilities 3,122 285
Deferred taxes payable 7,062 4,018
Commitments and contingencies (See Note 9) 0 0
Shareholders' equity:
Preferred Stock, $.01 par value, 1,000,000 shares
authorized, no shares outstanding 0 0
Common Stock, $.01 par value, 20,000,000 shares
authorized, 14,448,630 shares outstanding in 1996
and 10,634,177 in 1995 143 105
Paid-in capital 250,314 144,553
Retained earnings (deficit) (56,160) (67,140)
_______ _______
Total shareholders' equity 194,297 77,518
_______ _______
$ 267,302 $ 152,747
======= =======
See accompanying Notes to Consolidated Financial Statements.
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3
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Newpark Resources, Inc.
Consolidated Statements of Income
For the Three and Nine Month Periods Ended September 30,
(Unaudited)
Three Months Ended Nine Months End
September 30, September 30,
______________________________________________________________________________________________________
(In thousands, except per share data) 1996 1995 1996 1995
______________________________________________________________________________________________________
<S> <C> <C> <C> <C>
Revenues $ 28,551 $ 24,793 $ 81,497 $ 69,456
Operating costs and expenses:
Cost of services provided 15,924 16,163 50,016 46,345
Operating costs 2,654 2,307 7,160 6,901
________ ________ _________ ________
18,578 18,470 57,176 53,246
General and administrative expenses 719 749 2,168 2,066
Non-recurring expense 2,432 436 2,432 436
Provision for uncollectible accounts
and notes receivable 0 45 6 115
________ ________ _________ ________
Operating income 6,822 5,093 19,715 13,593
Interest income (19) (31) (79) (152)
Interest expense 910 905 2,814 2,794
________ ________ _________ ________
Income from operations
before provision for income taxes 5,931 4,219 16,980 10,951
Provision for income taxes 2,149 1,519 5,998 2,555
________ ________ _________ ________
Net income $ 3,782 $ 2,700 $ 10,982 $ 8,396
======== ======== ========= ========
Weighted average common and common
equivalent shares outstanding:
Primary 13,360 10,321 11,891 10,299
======== ======== ========= ========
Fully Diluted 13,366 10,301 11,946 10,243
======== ======== ========= ========
Net income per common share and
common equivalent share:
Primary $ 0.28 $ 0.26 $ 0.92 $ 0.82
======== ======== ========= ========
Fully Diluted $ 0.28 $ 0.26 $ 0.92 $ 0.82
======== ======== ========= ========
See accompanying Notes to Consolidated Financial Statements.
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4
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<CAPTION>
Newpark Resources, Inc.
Consolidated Statements of Cash Flows
For the Nine Month Periods Ended September 30,
(Unaudited)
___________________________________________________________________________________
(In thousands ) 1996 1995
___________________________________________________________________________________
<S> <C> <C>
Cash flows from operating activities:
Net income $ 10,982 $ 8,396
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 10,329 7,306
Non-recurring expense 2,432 0
Provision for doubtful accounts 6 115
Provision for deferred income taxes 3,165 2,555
Loss on sales of assets 60 85
Change in assets and liabilities, net of
effects of acquisitions and dispositions:
Decrease (increase) in accounts and notes receivable 6,221 (10,925)
Decrease (increase) in inventories 845 (3,136)
Decrease (increase) in other assets 416 (1,276)
(Decrease) increase in accounts payable (2,946) 2,163
Decrease in accrued liabilities and other (6,260) (179)
________ ________
Net cash provided by operating activities 25,250 5,104
________ ________
Cash flows from investing activities:
Capital expenditures (37,479) (17,876)
Disbursements for loans outstanding 0 (221)
Purchase of Campbell Wells assets (70,500) 0
Proceeds from disposal of property, plant and equipment 1,556 487
Purchase of patents (5,700) 0
Purchase of international partners' joint venture
interest (1,170) 0
Payments received on notes receivable 0 120
________ ________
Net cash used in investing activities (113,293) (17,490)
________ ________
Cash flows from financing activities:
Net borrowings on lines of credit 8,603 16,638
Principal payments on notes payable, capital lease
obligations and long-term debt (22,448) (19,564)
Proceeds from issuance of stock 103,500 0
Offering cost on stock issuance (5,434) 0
Proceeds from issuance of debt 2,175 14,296
Proceeds from conversion of stock options 2,193 792
________ ________
Net cash provided by financing activities 88,589 12,162
________ ________
Net decrease in cash and cash equivalents 546 (224)
Cash and cash equivalents at beginning of year 1,018 1,404
________ ________
Cash and cash equivalents at end of the period $ 1,564 $ 1,180
======== ========
</TABLE>
During the nine month period ended September 30, 1996, the Company's
noncash transactions included the acquisition of certain patents in
exchange for $5,840,000 of the Company's common stock and $1,200,000
in cash. In connection with the purchase of these patents the Company
recorded a deferred tax liablity of $900,000. Transfers from inventory
to fixed assets of $3,040,000 were also made during this period. The
company sold $13,251,000 of property, plant and equipment in exchange
for $7,036,000 of long term notes receivable and the assumption of
$7,544,000 in debt obligations.
Included in accounts payable and accrued liabilities at September 30,
1996 were equipment purchases of $1,498,000. Also included are notes
payable for equipment purchases in the amount $2,208,000 at September 30,
1996. A total of $13,831,000 of accrued liabilities were recorded
in conjunction with the purchase of the Campbell Wells assets.
Interest of $3,334,000 and $2,998,000 and income taxes of $2,998,000
and $51,400 were paid during the nine months ending September 30, 1996
and 1995, respectively.
See accompanying Notes to Consolidated Financial Statements.
5
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NEWPARK RESOURCES, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Note 1 In the opinion of management the accompanying
unaudited consolidated financial statements reflect
all adjustments necessary to present fairly the
financial position of Newpark Resources, Inc.
("Newpark" or the "Company") as of September 30,
1996, and the results of operations for the three
and nine month periods ended September 30, 1996 and
1995 and cash flows for the nine month periods ended
September 30, 1996 and 1995. All such adjustments
are of a normal recurring nature. These interim
financial statements should be read in conjunction
with the December 31, 1995 audited financial
statements and related notes filed on Form 10-K at
December 31, 1995.
Note 2 The consolidated financial statements include the
accounts of Newpark and its wholly-owned
subsidiaries. All material intercompany
transactions are eliminated in consolidation.
Note 3 The results of operations for the three and nine
month periods ended September 30, 1996 are not
necessarily indicative of the results to be
expected for the entire year.
Note 4 Primary and fully diluted income per common share is
calculated by dividing net income by the average
shares of common stock of the Company ("Common
Stock") and Common Stock equivalents outstanding
during the period. When dilutive, stock options are
included as share equivalents using the treasury
stock method.
Note 5 Included in accounts and notes receivable at
September 30, 1996 and December 31, 1995 (in
thousands) are:
1996 1995
Trade receivables $22,827 $27,714
Unbilled revenues 7,230 8,600
______ ______
Gross trade receivables 30,057 36,314
Allowance for doubtful
accounts (887) (768)
______ ______
Net trade receivables 29,170 35,546
Notes and other
receivables 3,831 3,662
______ ______
Total $33,001 $39,208
====== ======
Note 6 Inventories at September 30, 1996 and
December 31, 1995 consisted principally of raw
materials.
6
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Note 7 Interest of $57,000 and $149,000 was
capitalized during the three months ended September
30, 1996 and 1995, respectively. For the nine
months ended September 30, 1996 and 1995, interest
of $442,000 and $276,000 was capitalized,
respectively.
Note 8 The Company maintains a $60.0 million bank credit
facility with $25.0 million in the form of a
revolving line of credit commitment and $35.0
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 (8.25% at September 30, 1996)
or the LIBOR rate (5.625% at September 30, 1996)
plus a spread which is determined quarterly based
upon the ratio of the CompanyOs funded debt to cash
flow. The line of credit requires monthly interest
payments and matures on December 31, 1998. At
September 30, 1996, $1.8 million of letters of
credit were issued and outstanding, leaving a net of
$16.4 million available for cash advances under the
line of credit, against which $4.3 million had been
borrowed. The outstanding balance on the term note
at September 30, 1996 was $29.2 million. The term
loan was used to refinance existing debt and
requires monthly interest installments and seventeen
equal quarterly principal payments which commenced
March 31, 1996. The term loan 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 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 September 30, 1996.
In November 1996, an amendment to the credit facility
was approved by the banks, which eliminated the
monthly borrowing base determination, reduced
certain of the restrictive and compliance covenants
contained in the facility, and reduced the frequency
of financial reporting. If this amendment had been
in effect at September 30, 1996, the availability
would have increased from $16.4 million to $23.3
million.
Note 9 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.
7
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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 $1.8 million at
September 30, 1996.
On August 29, 1996, the Company sold the land,
buildings and certain equipment comprising
substantially all of the assets of its former marine
repair operation to the operator of the facility.
These assets had previously been subject to an
operating lease to the same party, and the purchase
was made under the terms of a purchase option
granted in the original lease. The Company has
guaranteed certain of the debt obligations of the
operator, which is limited to a maximum of $10
million and reduces proportionately with debt
repayments made by the operator.
Note 10 On August 12, 1996, the Company acquired from
Campbell Wells, Ltd. ("Campbell") substantially all
of the non-landfarm assets and certain leases
associated with five transfer stations located along
the Gulf Coast and three receiving docks at the
landfarm facilities operated by Campbell for a cash
consideration of $70.5 million. Campbell continues
to operate the landfarms. In addition, on May 22,
1996, the Company was granted a NORM direct
injection disposal license at its Big Hill facility.
As a result of these transactions, the Company has
restructured certain of its operations in order to
achieve certain operational efficiencies. This
restructuring included a reduction in staffing and
the closure or modification of several facilities.
During the quarter ended September 30, 1996, a
charge of $2.4 million was made against earnings for
these costs.
The following table sets forth summary pro forma
financial information for the Company for the nine
months ended September 30, 1996 and 1995. The
summary pro forma information provides financial
information giving effect to the offering of shares
used to fund the acquisition, the acquisition and
the repayment of indebtedness from proceeds provided
by the offering for the periods presented. The pro
forma information is provided for informational
purposes only and is not necessarily indicative of
actual results that would have been achieved had the
offering and the acquisition been consummated at the
beginning of the periods presented, or of future
results. Management expects to achieve net cost
reductions which are not reflected in the pro forma
results. These cost reductions are related to the
consolidation of certain duplicate administrative
and personnel costs.
8
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Nine Month Periods Ended Sept. 30,
(In thousands, except per share data)
1996 1995
______________ ______________
Revenues $98,276 $83,224
======= =======
Net income $12,939 $11,042
======= =======
Primary $ .88 $ .80
======= =======
Fully diluted $ .88 $ .80
======= =======
Note 11 On August 12, 1996, the Company completed a public
offering of common stock to fund the Campbell
acquisition, to provide the additional working
capital needed as a result of the transaction and to
fund future expansion of the Company. A total of
3,450,000 shares were sold in the offering providing
proceeds (net of expenses) of $96.7 million.
9
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ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
General
On August 12, 1996 the Company purchased from Campbell
Wells, Ltd. ("Campbell") its marine-related nonhazardous
oilfield waste ("NOW") collection operations for a purchase
price of $70.5 million. The Campbell acquisition was
financed through a public offering of common stock which
also provided the additional working capital needed as a
result of the transaction, and improved the Company's
capital structure to facilitate future expansion in the
markets served by the Company.
Results of Operations
The following table presents revenue by product line
for the three and nine month periods ended September 30,
1996 and 1995. The product line data has been reclassified
from prior periodsO presentations in order to more
effectively distinguish the Company's proprietary offsite
waste processing and mat rental services from its other
service offerings. These services, which are protected by
patents and company-developed proprietary knowledge, serve
to differentiate the Company's products and services from
those of its competitors and provide a competitive
advantage.
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<CAPTION>
Three Month Periods Ended Sept. 30,
(Dollars in thousands)
1996 1995
_______________ ______________
<S> <C> <C> <C> <C>
Revenues by product line:
Offsite waste processing $11,555 40.5% $ 7,229 29.2%
Mat rental services 7,004 24.5 7,531 30.4
General oilfield services 3,618 12.7 3,647 14.7
Wood product sales 3,621 12.7 3,039 12.2
Onsite environmental
management 2,413 8.4 2,947 11.9
Other 340 1.2 400 1.6
_______ _____ ______ _____
Total revenues $28,551 100.0% $24,793 100.0%
======= ===== ====== =====
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<TABLE>
<CAPTION>
Nine Month Periods Ended Sept. 30,
(Dollars in thousands)
1996 1995
_______________ ______________
<S> <C> <C> <C> <C>
Revenues by product line:
Offsite waste processing $28,946 35.5% $22,144 31.9%
Mat rental services 20,612 25.3 21,527 31.0
General oilfield services 12,916 15.8 10,585 15.2
Wood product sales 11,223 13.8 8,449 12.2
Onsite environmental
management 6,440 7.9 5,551 8.0
Other 1,360 1.7 1,200 1.7
_______ _____ _______ _____
Total revenues $81,497 100.0% $69,456 100.0%
======= ===== ======= =====
</TABLE>
10
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Three Month Period Ended September 30, 1996 Compared to Three
Month Period ended September 30, 1995
Revenues
Total revenues increased to $28.6 million in the 1996
period from $24.8 million in the 1995 period, an increase of
$3.8 million or 15.3%. Two major factors were responsible
for the change. Offsite waste processing revenue increased
$4.3 million as a result of improved NOW and NORM disposal
volume, and revenues from wood product sales increased $.6
million due to production capacity added in 1995. Partially
offsetting these revenue increases was a $.5 million
decrease in mat rental revenues caused by decreased volumes,
and a $.5 million decrease in onsite environmental
management. Both of these decreases are attributed to a
shift of drilling in the South Louisiana land market towards
the Austin Chalk formation, an uplands area which uses less
of the Company's mat rental services for temporary site
access. The popularity of drilling in the Austin Chalk
formation has moved a majority of the rigs in that market
outside of the Company's primary service area.
NOW disposal and related services revenue increased
$3.8 million to $9.4 million in the recent quarter compared
to $5.6 million in the 1995 period. The revenue increase
related to increased volumes which are primarily
attributable to the Campbell acquisition, and an improvement
in average pricing to $8.72 per barrel in 1996 as compared
to $8.01 in the comparable 1995 period. NOW disposal
volumes increased to 1,036,000 barrels compared to 690,000
barrels in the year-ago quarter.
During the 1996 quarter, the Company processed and
disposed of 25,900 barrels of NORM, earning revenue of $2.2
million, compared to 11,917 barrels and revenue of $1.6
million in the 1995 quarter. The average disposal charge
paid by the customer of $85.00 in the 1996 quarter as
compared to $136.70 in the 1995 quarter, reflects the
fundamental change in the nature of the business resulting
from the new disposal license, which was issued on May 21,
1996, and under which operations commenced at the Big Hill
facility on June 1, 1996. The new license facilitates the
direct injection disposal of NORM waste, at significantly
lower cost per barrel. As a result of this, the Company
reduced its listed charges for disposal and introduced
volume pricing. The lower revenue per barrel in the quarter
is the effect of these lower prices and discounts.
Operating Income
Operating income increased by $1.7 million or 34% to
total $6.8 million in the 1996 period compared to $5.1
million in the prior period, representing an improvement in
operating margin to 23.9% in the 1996 period compared to
20.5% in the 1995 period. The primary component of the
increase was derived from offsite waste processing
operations.
11
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General and administrative expenses remained relatively
unchanged decreasing as a proportion of revenue to 2.5% in
the 1996 period from 3.0% in the 1995 period, and decreasing
in absolute amount by $30,000.
During the 1996 quarter, the Company recorded a non-
recurring restructure charge in the amount of $2.4 million.
A total of approximately $1.8 million was related to the
restructuring of certain of the Company's NOW processing
operations and staffing changes to facilitate the
integration of its operations with those recently acquired
from Campbell. The Company recognized an additional $.6
million of non-recurring costs associated with the
termination of processing operations at its original NORM
facility at Port Arthur, Texas and the partial closure of
the site.
The non-recurring expense of $.4 million reflected in
the 1995 quarter was related to a proposed acquisition which
was terminated in August, 1995. The majority of these
expenses were legal, accounting and investment advisory
fees.
Interest Expense
Interest expense was substantially unchanged at
approximately $.9 million for both periods, although average
outstanding borrowings increased approximately 9.7% from the
prior period. This resulted from decreased net interest
cost under the current credit agreement, which became
effective as of June 29, 1995.
Provision for Income Taxes
For the 1996 and 1995 periods, the Company recorded
income tax provisions of $2.1 million and $1.5 million
respectively, equal to 36% of pre-tax income in both
periods.
Nine Month Period Ended September 30, 1996 Compared to Nine
Month Period ended September 30, 1995
Revenues
Total revenues increased to $81.5 million for the nine
months ended September 30, 1996 compared to $69.5 million
for the same period of 1995, an increase of $12 million or
17.3%. The major components of the increase by product line
were: (i) increased offsite waste processing revenue of $6.8
million derived primarily from increased NOW and NORM
disposal volume; (ii) an increase of $2.3 million in general
oilfield service revenues derived from an increase in the
level of drilling location site preparation work in the
uplands region of the Gulf Coast and other onsite work;
(iii) increased wood product sales of $2.8 million as a
result of increased mill capacity added in 1995; and, (iv)
$.9 million increase in onsite environmental management
revenue due to increased site remediation operations.
Partially offsetting these revenue increases was a $.9
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million decrease in mat rental revenues caused by lower
drilling activity in the Company's traditional land market
area.
NOW disposal and related revenue increased $4.4 million
to $22.1 million for the nine months ended September 30,
1996 compared to $17.7 million for the first nine months of
1995. The revenue increase related to increased volumes
which are primarily attributable to the Campbell acquisition
and from remediation services provided for a major oil
company customer. The volume of NOW waste barrels disposed
of in 1996 increased to 2,393,000 barrels compared to
2,054,000 barrels in 1995 and average revenue per barrel
increased to $8.67 per barrel in 1996 from $8.32 per barrel
in 1995.
NORM processing volume increased to 118,600 barrels,
generating $6.9 million in revenue for the nine months ended
September 30, 1996 from 31,000 barrels, and revenue of $4.5
million in the same period of 1995. While the volume of
NORM contaminated waste processing increased, the average
revenue per barrel of waste processed dropped to $58.00 per
barrel from $145.00 per barrel. The change in average
prices reflects the lower level of radium contamination in
waste received from site remediation projects, which
represent the largest portion of volumes for the first six
months of the 1996 period, and price reductions, made
possible by cost reductions facilitated by the direct
injection disposal license granted to the Company on May 22,
1996.
Operating Income
Operating income for the nine months ended September
30, 1996 rose to $19.7 million from $13.6 million for the
same period in 1995, representing an increase of 45%.
Operating margin improved to 24.2% in 1996 as compared to
19.6% in 1995. The improved operations can primarily be
attributed to the growth in waste processing operations.
General and administrative expenses increased by
$102,000 for the nine months ended September 30, 1996 as
compared to 1995, but decreased as a percentage of revenue
to 2.7% compared to 3.0%.
During the nine months ended September 30, 1996, the
Company recorded a nonrecurring restructure charge in the
amount of $2.4 million. A total of approximately $1.8
million was related to the restructuring of certain of the
Company's NOW processing operations and staffing changes to
facilitate the integration of its operations with those
recently acquired from Campbell. The Company recognized an
additional $.6 million of non-recurring costs associated
with the termination of processing operations at its
original NORM facility at Port Arthur, Texas and the partial
closure of the site.
Non-recurring expenses of $.4 million recorded in 1995
were related to a proposed acquisition which was terminated
in August, 1995. The majority of these expenses were legal,
accounting and investment advisory fees.
13
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Interest Expense
Interest expense was approximately $2.8 million for
1996 and 1995, despite average outstanding borrowings
increasing by approximately 5.1%. This resulted from
decreased net interest cost under the current credit
agreement, which became effective as of June 29, 1995, and
interest capitalization related to construction in progress
in the current period.
Provision for Income Taxes
During the nine months ended September 30, 1996 the tax
provision of $6.0 million represented an effective tax rate
of 35.3% as compared to $2.6 million equal to 23.3% in 1995.
The 1995 tax provision reflects the benefit realized from
federal tax carryforwards which were fully utilized in 1995.
Liquidity and Capital Resources
The Company's working capital position decreased by
$18.6 million during the nine months ended September 30,
1996. Key working capital data is provided below:
<TABLE>
<CAPTION>
Sept. 30, 1996 December 31, 1995
_______________ _________________
<S> <C> <C>
Working Capital (000's) $13,530 $32,108
Current Ratio 1.4 2.3
</TABLE>
Since December 31, 1995 the Company's working capital
and current ratio have declined significantly. The primary
reasons for this change include reduced levels of inventory
and accounts receivable, and the increase in accrued
liabilities provided for obligations assumed in conjunction
with the recent Campbell acquisition and other investment
transactions.
On August 12, 1996, the Company completed the sale of
3,450,000 shares of its common stock, providing net proceeds
of $98.1 million. A total of $70.5 million was used to
complete the acquisition of the marine-related nonhazardous
oilfield waste NOW collection operations of Campbell Wells,
Ltd. The remaining proceeds were used to repay $19.0
million of borrowings under the Company's credit facility
and provide working capital of $8.6 million. The Company
has no plans to sell additional equity securities at this
time.
During 1996, the Company's operating activities
generated $25.2 million of cash flow. Net proceeds of the
recent equity offering in excess of the Campbell asset
purchase amount, coupled with the $25.2 million generated by
operations and net new borrowings (since the offering) of
$4.3 million were used to fund the Company's investing
activities. The majority of the funds used in investing
activities were utilized for the purchase of board road mats
and the expansion of waste disposal facilities, which is
reflected in the increase in property, plant and equipment.
In addition, the Company purchased its joint venture
14
<PAGE>
partners' interest in international mat operations and
purchased additional patent rights for use in the Company's
proprietary business operations, which is reflected in the
increase of other assets.
During the nine months ended September 30, 1996 the
Company entered into two non-cash acquisitions of additional
patent and other rights for use in the Company's proprietary
business operations. The acquisition of these items is
reflected in the increase in other assets and the increase
in shareholders' equity coupled with the increase in
deferred taxes payable.
The Company also sold the facility and certain
equipment to the operator of the Company's former marine
service business. These assets were being leased by the
operator and were subject to debt obligations, which were
assumed by the purchaser at closing. In addition to the
extinguishment of these debt obligations, Newpark received
$1.2 million in cash in the transaction.
On June 29, 1995, Newpark entered into a new credit
agreement with a group of three banks, providing a total of
up to $50 million of term financing consisting of a $25
million term loan to be amortized over five years and a $25
million revolving line of credit. At NewparkOs 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 Newpark's funded debt to
cash flow. The credit agreement requires that Newpark
maintain certain specified financial ratios and comply with
other usual and customary requirements. Newpark was in
compliance with all of the convenants in the credit
agreement at September 30, 1996.
The term loan was used to refinance existing debt and
is being amortized over a five year term. In March 1996,
the term loan was increased to $35 million, and the $10
million increase was used initially to reduce borrowings on
the revolving line of credit portion of the facility. In
June 1996, the Company increased its borrowing through the
credit agreement in the form of a 60-day term loan in the
amount of $2.0 million which was repaid out of proceeds from
the offering. The funds were used to acquire board road
mats.
The revolving line of credit matures December 31, 1998.
At September 30, 1996 availability of borrowings under the
line of credit was tied to the level of Newpark's accounts
receivable and certain inventory. At September 30, 1996,
$1.8 million of letters of credit were issued and
outstanding under the line and an additional $4.3 million
had been borrowed and was outstanding thereunder.
In November 1996, an amendment to the credit facility
was approved which will: (i) eliminate the requirement of
periodic borrowing base calculations; (ii) eliminate monthly
financial reporting requirements; (iii) relax certain
restrictions on guarantees and outside indebtedness; and,
(iv) increase availability of borrowings under the facility.
This amendment has the
15
<PAGE>
affect of increasing the availability to the full $25
million. If this amendment had been in affect at September
30, 1996 it would have increased the availability (net of
letters of credit) from $16.4 million to $23.3 million.
Potential sources of additional funds, if required by
the Company, would include additional borrowings. The
Company presently has no commitments for credit facilities
beyond its existing 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.
16
<PAGE>
PART II
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.23 Guaranty dated August 29, 1996 by the
registrant in favor of Heller
Financial Leasing, Inc., filed herewith.
27. Financial Data Schedule
(b) Reports on Form 8-K
During the quarter ended September 30, 1996, the
registrant filed a current report on Form 8-K dated
August 12, 1996 to report on Items 2 and 7.
17
<PAGE>
NEWPARK RESOURCES, INC.
SIGNATURES
Pursuant to the requirements 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.
Date: November 12, 1996
NEWPARK RESOURCES, INC.
By:/s/Matthew W. Hardey
Matthew W. Hardey, Vice President
and Chief Financial Officer
18
GUARANTY
GUARANTY dated as of this 29th day of August,
1996, by NEWPARK RESOURCES, INC., a Delaware
corporation ("Guarantor"), for the benefit of
HELLER FINANCIAL LEASING, INC., a Delaware
corporation ("Heller").
RECITALS:
WHEREAS, Newpark Shipbuilding and Repair,
Inc., a Texas corporation ("Borrower"), has
entered into a certain Credit Agreement of even
date herewith (as the same may hereafter be
amended, supplemented or otherwise modified from
time to time, the "Credit Agreement") with Heller;
and
WHEREAS, Borrower has received, and may
hereafter receive, loans and other financial
accommodations from Heller under the Credit
Agreement, as a result of which it has incurred,
and expects simultaneously with the delivery of
this Agreement to, and will hereafter, incur,
"Obligations" (as that term is defined in the
Credit Agreement) to Heller; and
WHEREAS, Newpark Shipholding Texas, L.P., a
wholly owned Subsidiary of Guarantor
("Shipholding"), has entered into a certain
Agreement for Purchase and Sale of Assets dated as
of August 29, 1996, pursuant to which Shipholding
will sell to Borrower, and Borrower will purchase
from Shipholding, certain real and personal
property; and
WHEREAS, Borrower intends to use the proceeds
of the loans extended by Heller to Borrower under
the Credit Agreement to finance a portion of the
purchase price of certain assets, including,
without limitation, certain of the assets acquired
from Shipholding; and
WHEREAS, Borrower will not be able to
purchase the assets from Shipholding but for the
extension of the loans by Heller to Borrower; and
WHEREAS, Guarantor acknowledges that, as the
owner, directly and indirectly, of all of the
equity interests in Shipholding, it will receive
substantial direct and indirect benefits by reason
of the making of loans to Borrower as provided in
the Credit Agreement; and
WHEREAS, one of the conditions precedent to
the obligation of Heller to extend loans to
Borrower is the execution by Guarantor of this
Guaranty and the performance by Guarantor of its
obligations hereunder;
NOW, THEREFORE, in consideration of the
premises and in order to induce Heller to make the
loans under the Credit Agreement and for other
good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged,
Guarantor hereby agrees with Heller, as follows:
1. Incorporation of Recitals; Defined
Terms. The foregoing recitals are incorporated
herein by this reference. Terms that are
capitalized but which are not defined herein shall
have the meanings ascribed to such terms in the
Credit Agreement.
2. Guaranty of Payment. Guarantor hereby
unconditionally and irrevocably guaranties to
Heller the punctual payment when due, whether at
stated maturity or by acceleration or otherwise,
of eighty and sixty-five one hundredths percent
(80.65%) of the principal balance of the Loans
outstanding from time to time under the Credit
Agreement; provided, however, in no event shall
Guarantor's aggregate liability pursuant to the
foregoing exceed Ten Million and No/100ths Dollars
($10,000,000). Guarantor agrees that this
Guaranty is a present and continuing guaranty of
payment and not of collectibility, and that Heller
shall not be required to prosecute collection,
enforcement or other remedies against Borrower,
any other guarantor of the Obligations or any
other Person, or to enforce or resort to any of
the Collateral or other rights or remedies
pertaining thereto, before calling on Guarantor
for payment. Guarantor agrees that if, for any
reason, Borrower or any other guarantor of the
Obligations shall fail or be unable to pay,
punctually and fully, any of the outstanding
principal of the Loans, Guarantor shall pay the
outstanding principal of the Loans, or any portion
thereof demanded by Heller (in each case subject
to the limitation set forth above) to Heller
immediately upon demand. In the event payment of
any amount due and payable under this Guaranty is
not made by Guarantor immediately after demand
therefor, Guarantor agrees to pay to Heller
interest on such amount owed by Guarantor
hereunder at the default rate of interest set
forth in the Credit Agreement. Guarantor agrees
that one or more successive actions may be brought
against Guarantor, as often as Heller deems
advisable, until all of the Obligations are paid
and performed in full.
3. Continuing Guaranty. Guarantor agrees
that the obligations of Guarantor pursuant to
Section 2 above and any other provision of any of
the Loan Documents to which Guarantor is a party
shall be primary obligations, shall not be subject
to any counterclaim, set-off, abatement, deferment
or defense (other than payment or performance)
based upon any claim that Guarantor may have
against Heller, Borrower, any other guarantor of
the Obligations or any other Person, and shall
remain in full force and effect without regard to,
and shall not be released, discharged or affected
in any way by any circumstance or condition
(whether or not Guarantor shall have any knowledge
thereof), including without limitation:
(a) any lack of validity or
enforceability of any of the Loan Documents;
(b) any termination, amendment,
modification or other change in any of the
Loan Documents;
(c) any furnishing, exchange,
substitution or release of any Collateral, or
any failure to perfect any Lien in any of the
Collateral;
(d) any failure, omission or delay on
the part of Borrower, Guarantor, any other
guarantor of the Obligations, or Heller to
conform or comply with any term of any of the
Loan Documents or any failure of Heller to
give notice of any Default or Event of
Default;
(e) any waiver, compromise, release,
settlement or extension of time of payment or
performance or observance of any of the
obligations or agreements contained in any of
the Loan Documents;
(f) any action or inaction by Heller
under or in respect of any of the Loan
Documents, any failure, lack of diligence,
omission or delay on the part of Heller to
enforce, assert or exercise any right, power
or remedy conferred on it in any of the Loan
Documents, or any other action or inaction on
the part of Heller;
(g) any dissolution of Borrower,
Guarantor or any guarantor or any voluntary
or involuntary bankruptcy, insolvency,
reorganization, arrangement, readjustment,
assignment for the benefit of creditors,
composition, receivership, liquidation,
marshalling of assets and liabilities or
similar events or proceedings with respect to
Borrower, Guarantor or any other guarantor of
the Obligations, as applicable, or any of
their respective property or creditors, or
any action taken by any trustee or receiver
or by any court in any such proceeding;
(h) any merger or consolidation of
Borrower, Guarantor or any other guarantor of
the Obligations into or with any Person, or
any sale, lease or transfer of any of the
assets of Borrower, Guarantor or any other
guarantor of the Obligations to any other
Person;
(i) any change in the ownership of the
capital stock or other equity securities of
Guarantor, Borrower or any other guarantor of
the Obligations or any change in the
relationship between Borrower, Guarantor or
any other guarantor of the Obligations, or
any termination of any such relationship;
(j) any release or discharge by
operation of law of Borrower, Guarantor or
any other guarantor of the Obligations from
any obligation or agreement contained in any
of the Loan Documents; or
(k) any other occurrence, circumstance,
happening or event, whether similar or
dissimilar to the foregoing and whether
foreseen or unforeseen, which otherwise might
constitute a legal or equitable defense or
discharge of the liabilities of a guarantor
or surety or which otherwise might limit
recourse against Borrower or Guarantor.
4. Waivers. Guarantor unconditionally
waives, to the extent permitted by law, (i) notice
of any of the matters referred to in Section 3
above, (ii) all notices which may be required by
statute, rule of law or otherwise, now or
hereafter in effect, to preserve intact any rights
against Guarantor, including, without limitation,
any demand, presentment and protest, proof of
notice of non-payment under any of the Loan
Documents and notice of any Default or any Event
of Default or any failure on the part of Borrower,
Guarantor or any other guarantor of the
Obligations to perform or comply with any
covenant, agreement, term or condition of any of
the Loan Documents, (iii) any right to the
enforcement, assertion or exercise against
Borrower, Guarantor or any other guarantor of the
Obligations of any right or remedy conferred under
any of the Loan Documents, (iv) any requirement of
diligence on the part of any Person, (v) any
requirement to exhaust any remedies or to mitigate
the damages resulting from any default under any
of the Loan Documents, and (vi) any notice of any
sale, transfer or other disposition of any right,
title or interest of Heller under any of the Loan
Documents.
5. Representations and Warranties.
Guarantor represents and warrants to Heller as
follows:
(a) Organization and Qualification.
Guarantor is a corporation duly organized,
validly existing and in good standing under
the laws of the State of Delaware, has all
requisite corporate power and authority to
own its property and to carry on its business
as now conducted and as proposed to be
conducted, and is in good standing and
authorized to do business in each
jurisdiction in which the nature of its
business requires it to be so qualified,
except in jurisdictions in which the failure
to be so authorized and in good standing
could not reasonably be expected to have a
Material Adverse Effect.
(b) Power and Authority. Guarantor has
the corporate power and authority to enter
into, execute, deliver and carry out the
terms of this Guaranty and the other Loan
Documents to which it is a party and to incur
the obligations provided for herein and
therein, all of which have been duly
authorized by all proper and necessary action
and are not prohibited by the organizational
instruments of Guarantor.
(c) Binding Obligation. This Guaranty
and the other Loan Documents to which
Guarantor is a party, have been duly executed
and delivered by, and constitute the valid
and legally binding obligations of,
Guarantor, enforceable against Guarantor in
accordance with their respective terms,
subject to bankruptcy, insolvency,
moratorium, reorganization and other similar
laws affecting creditor's rights.
(d) No Conflict. The execution,
delivery and performance by Guarantor of this
Guaranty and each of the other Loan Documents
to which it is a party and the consummation
by Guarantor of the transactions contemplated
hereby and thereby do not and will not: (1)
violate any provision of law applicable to
Guarantor, the certificate of incorporation
or bylaws of Guarantor, or any order,
judgment or decree of any court or other
agency of government binding on Guarantor;
(2) conflict with, result in a breach of or
constitute (with due notice or lapse of time
or both) a default under any Contractual
Obligation of Guarantor; (3) result in or
require the creation or imposition of any
material Lien upon any of the properties or
assets of Guarantor; or (4) require any
approval or consent of any Person under any
Contractual Obligation of Guarantor which has
not been obtained, except, with respect to
each of clauses (1) and (2), such violations,
conflicts, breaches and defaults which could
not reasonably be expected to have, either
individually or in the aggregate, a Material
Adverse Effect.
(e) Governmental Consents. The
execution, delivery and performance by
Guarantor of this Guaranty and each of the
other Loan Documents to which it is a party,
and the consummation by Guarantor of the
transactions contemplated hereby and thereby
do not and will not require any registration
with, consent or approval of, or notice to,
or other action to, with or by, any federal,
state or other governmental authority or
regulatory body except filings required in
connection with the perfection of security
interests granted pursuant to the Loan
Documents, and other filings, authorizations,
consents and approvals, all of which have
been made or obtained or the absence of which
would not have a Material Adverse Effect.
(f) Litigation; Adverse Facts. There
are no judgments outstanding against
Guarantor or affecting any of its property
nor is there any action, charge, claim,
demand, suit, proceeding, petition,
governmental investigation or arbitration now
pending or, to the best knowledge of
Guarantor after due inquiry, threatened
against or affecting Guarantor and/or any of
its property which, if adversely determined,
would result in a Material Adverse Effect or
which relate to and affect the consummation
of the transactions contemplated by the Loan
Documents to which Guarantor is a party.
Guarantor has not received any opinion or
memorandum or legal advice from legal counsel
to the effect that it is exposed to any
liability or disadvantage which could
reasonably be expected to result in any
Material Adverse Effect.
(g) Payment of Taxes. All material tax
returns and reports required to be filed by
Guarantor have been timely filed, and all
taxes, assessments, fees and other
governmental charges upon Guarantor and upon
its properties, assets, income and franchises
which are shown on such returns as due and
payable have been paid when due and payable,
except where being contested in good faith by
appropriate proceedings diligently prosecuted
for which reserves have been established in
accordance with GAAP.
(h) Burdensome Obligations; Solvency.
After giving effect to the transactions
contemplated by this Guaranty and the other
Loan Documents to which Guarantor is a party,
Guarantor (i) will not be a party to or be
bound by any franchise, agreement, deed,
lease or other instrument, or be subject to
any restriction, which is so unusual or
burdensome, so as to cause, in the
foreseeable future, a Material Adverse
Effect, (ii) does not intend to incur, and
does not believe that it will incur, debts
beyond its ability to pay such debts as they
become due, (iii) owns and will own assets,
the fair saleable value of which are (I)
greater than the total amount of its
liabilities (including contingent
liabilities) and (II) greater than the amount
that will be required to pay the probable
liabilities of its then existing debts as
they become absolute and matured considering
all financing alternatives and potential
asset sales reasonably available to it , and
(iv) has and will have capital that is not
unreasonably small in relation to its
business as presently conducted and as
proposed to be conducted. Guarantor does not
presently anticipate that future expenditures
needed to meet the provisions of federal or
state statutes, orders, rules or regulations
will be so burdensome so as to have a
Material Adverse Effect.
6. Subordination. Guarantor agrees that
any and all present and future debts and
obligations of Borrower to Guarantor hereby are
subordinated to the claims of Heller.
7. Reinstatement. The obligations of
Guarantor pursuant to this Guaranty shall continue
to be effective or automatically be reinstated, as
the case may be, if at any time payment of any of
the Obligations is rescinded or otherwise must be
restored or returned by Heller upon the
insolvency, bankruptcy, dissolution, liquidation
or reorganization of Guarantor, Borrower or any
other guarantor of the Obligations or otherwise,
all as though such payment had not been made.
8. Successors and Assigns. This Guaranty
shall inure to the benefit of Heller, its
successors and assigns. This Guaranty shall be
binding on Guarantor, its successors and assigns,
and shall continue in full force and effect until
all of the Obligations are paid and performed in
full.
9. No Waiver of Rights. No delay or
failure on the part of Heller to exercise any
right, power or privilege under this Guaranty or
any of the other Loan Documents shall operate as a
waiver thereof, and no single or partial exercise
of any right, power or privilege shall preclude
any other or further exercise thereof or the
exercise of any other power or right, or be deemed
to establish a custom or course of dealing or
performance between the parties hereto. The
rights and remedies herein provided are cumulative
and not exclusive of any rights or remedies
provided by law. No notice to or demand on
Guarantor in any case shall entitle Guarantor to
any other or further notice or demand in the same,
similar or other circumstance.
10. Modification. The terms of this
Guaranty may be waived, discharged, or terminated
only by an instrument in writing signed by the
party against which enforcement of the change,
waiver, discharge or termination is sought. No
amendment, modification, waiver or other change of
any of the terms of this Guaranty shall be
effective without the prior written consent of
Heller.
11. Costs and Expenses. Guarantor agrees to
pay on demand all reasonable costs and expenses
incurred by or on behalf of Heller (including,
without limitation, attorneys' fees and expenses)
in enforcing the obligations of Guarantor under
this Guaranty.
12. Joinder. Guarantor agrees that any
action to enforce this Guaranty may be brought
against Guarantor without any reimbursement or
joinder of Borrower or any other guarantor of the
Obligations in such action.
13. Covenants.
(a) Financial Statements. Guarantor
will maintain, and cause each of its Subsidiaries
to maintain, a system of accounting established
and administered in accordance with sound business
practices to permit preparation of financial
statements in conformity with GAAP. Guarantor
will deliver to Heller the financial statements
and other reports described below.
(I) For so long as Guarantor is a
reporting company under the Securities Exchange
Act of 1934, as amended, Guarantor shall deliver
to Heller, all financial statements, reports and
proxy statements sent or made available to its
security holders and copies of all regular and
periodic reports and all registration statements
and prospectuses, if any, filed by Guarantor with
any securities exchange or with the Securities
Exchange Commission.
(II) If Guarantor is not such a
reporting company:
(A) Interim Financials. As soon
as available and in any event within sixty (60)
days after the end of each quarter and, if
requested by Heller, within thirty-five (35) days
after the end of each month, Guarantor will
deliver the consolidated and consolidating balance
sheet of Guarantor (showing intercompany
eliminations), as at the end of such period and
the related consolidated and consolidating
statements of income (showing intercompany
eliminations), stockholders' equity and cash flow
for such period and for the period from the
beginning of the then current fiscal year to the
end of such period.
(B) Year-End Financials. As soon
as available and in any event within ninety (90)
days after the end of each Fiscal Year, Guarantor
will deliver: (1) the consolidated balance sheet
of Guarantor as at the end of such year and the
related consolidated statements of income,
stockholders' equity and cash flow for such fiscal
year; (2) a schedule of the outstanding
Indebtedness for borrowed money of Guarantor and
its Subsidiaries describing in reasonable detail
each such debt issue or loan outstanding and the
principal amount and amount of accrued and unpaid
interest with respect to each such debt issue or
loan; (3) a report with respect to the financial
statements from Grant Thornton or a Big Six
Accounting Firm selected by Guarantor, or other
firm of independent certified public accountants
acceptable to Heller, which report shall be
without Qualification and shall state that (a)
such consolidated financial statements present
fairly the consolidated financial position of
Guarantor and its Subsidiaries as at the dates
indicated and the results of their operations and
cash flow for the periods indicated in conformity
with GAAP applied on a basis consistent with prior
years and (b) that the examination by such
accountants in connection with such consolidated
financial statements has been made in accordance
with generally accepted auditing standards; and
(4) copies of the consolidating financial
statements of Guarantor and its Subsidiaries,
including (a) consolidating balance sheets of
Guarantor and its Subsidiaries as at the end of
such Fiscal Year showing intercompany eliminations
and (b) related consolidating statements of
earnings of Guarantor and its Subsidiaries showing
intercompany eliminations. As used in this
subsection 13(a)(II)(B), "Qualification" means,
with respect to any certificate covering financial
statements, a qualification to such certificate
(such as a "subject to" or "except for" statement
or emphasis paragraph therein) (a) resulting from
a limitation on the scope of examination of such
financial statements or the underlying data, (b)
as to the capability of the Person whose financial
statements are certified to continue operations as
a going concern, or (c) which could be eliminated
by changes in financial statements or notes
thereto covered by such certificate (such as by
the creation of or increase in a reserve or a
decrease in the carrying value of assets) and
which if so eliminated by the making of any such
change and after giving effect thereto would
occasion a Default or an Event of Default;
provided that, without limitation, neither of the
following shall constitute a Qualification: (x) a
consistency exception relating to a change in
accounting principles with which the independent
public accountants for the Person whose financial
statements are being certified have concurred, or
(y) a qualification relating to the outcome or
disposition of threatened litigation, pending
litigation being contested in good faith, pending
or threatened claims or other contingencies, the
impact of which litigation, claims or
contingencies cannot be determined with sufficient
certainty to permit quantification in such
financial statements.
(b) Restriction of Fundamental Changes.
Guarantor will not: (a) enter into any transaction
of merger or consolidation unless (i) Guarantor is
the surviving entity or (ii) the surviving entity
(x) assumes all of the obligations of Guarantor
hereunder pursuant to an assumption agreement
reasonably satisfactory to Heller and (y) has
creditworthiness and financial position equivalent
to or better than Guarantor's as of June 30, 1996;
or (b) liquidate, wind-up or dissolve itself (or
suffer any liquidation or dissolution) unless (i)
there is in connection with such event a successor
entity to Guarantor and (ii) such successor (x)
assumes all of the obligations of Guarantor
hereunder pursuant to an assumption agreement
reasonably satisfactory to Heller and (y) has
creditworthiness and financial position equivalent
to or better than Guarantor's as of June 30, 1996;
or (c) convey, sell, transfer or otherwise dispose
of, in one transaction or a series of
transactions, (i) all or a material portion of the
business or assets of Guarantor and its
Subsidiaries, taken as a whole or, or (ii) the
capital stock of or other equity interests in any
of its Subsidiaries which represent all or a
material portion of the business or assets of
Guarantor and its Subsidiaries, taken as a whole,
unless (x) the purchaser or transferee assumes all
of the obligations of Guarantor hereunder pursuant
to an assumption agreement reasonably satisfactory
to Heller and (y) has creditworthiness and
financial position equivalent to or better than
Guarantor's as of June 30, 1996. The term
"material portion" as used in the foregoing
clauses (c)(i) and (ii) means any portion which
would materially impair Heller's ability to
collect under this Guaranty or could reasonably be
expected to result in a Material Adverse Effect.
14. Severability. If any provision of this
Guaranty is deemed to be invalid by reason of the
operation of any law, or by reason of the
interpretation placed thereon by any court or
other governmental authority, this Guaranty shall
be construed as not containing such provision and
the invalidity of such provision shall not affect
the validity of any other provision hereof, and
any and all other provisions hereof which
otherwise are lawful and valid shall remain in
full force and effect.
15. Notices.
Unless otherwise specifically provided
herein, any notice or other communication required
or permitted to be given shall be in writing
addressed to the respective party as set forth
below and may be personally served, telecopied,
telexed or sent by overnight courier service or
United States mail and shall be deemed to have
been given: (a) if delivered in person, when
delivered; (b) if delivered by telecopy or telex,
on the date of transmission if transmitted on a
Business Day before 4:00 p.m. (Chicago time) or,
if not, on the next succeeding Business Day; (c)
if delivered by overnight courier, two days after
delivery to such courier properly addressed; or
(d) if by U.S. Mail, four Business Days after
depositing in the United States mail, with postage
prepaid and properly addressed.
Notices shall be addressed as follows:
If to Guarantor: Newpark Resources, Inc.
3850 North Causeway Blvd., Suite 1770
Metairie, LA 70002-1752
Attn: Matthew Hardey
Telecopy: (504) 833-9506
With a copy to: Ervin Cohen & Jessup
9401 Wilshire Boulevard
Beverly Hills, California 90212
Attn: Bertram K. Massing, Esq.
Telecopy: (310) 859-2325
If to Heller: Heller Financial Leasing, Inc.
900 Circle 75 Parkway, N.W.
Suite 1800
Atlanta, Georgia 30339
Attn: Credit Manager
Commercial Equipment Finance Division
Telecopy: (770) 980-6090
With a copy to: Heller Financial Leasing, Inc.
900 Circle 75 Parkway, N.W.
Suite 1800
Atlanta, Georgia 30339
Attn: Elizabeth A. Edelman, Esq.
Telecopy: (770) 980-6215
or to such other address as the party
addressed shall have previously designated by
written notice to the serving party, given in
accordance with this Section 15. A notice
not given as provided above shall, if it is
in writing, be deemed given if and when
actually received by the party to whom given.
16. APPLICABLE LAW.
THIS GUARANTY SHALL BE GOVERNED BY, AND
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, THE INTERNAL LAWS OF THE STATE OF
ILLINOIS, WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES.
17. CONSENT TO JURISDICTION AND SERVICE
OF PROCESS.
GUARANTOR HEREBY CONSENTS TO THE
JURISDICTION OF ANY STATE OR FEDERAL COURT
LOCATED WITHIN THE COUNTY OF COOK, STATE OF
ILLINOIS AND IRREVOCABLY AGREES THAT, SUBJECT
TO HELLER'S ELECTION, ALL ACTIONS OR
PROCEEDINGS ARISING OUT OF OR RELATING TO
THIS GUARANTY OR THE OTHER LOAN DOCUMENTS
SHALL BE LITIGATED IN SUCH COURTS. GUARANTOR
ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS
PROPERTIES, GENERALLY AND UNCONDITIONALLY,
THE NONEXCLUSIVE JURISDICTION OF THE
AFORESAID COURTS AND WAIVES ANY DEFENSE OF
FORUM NON CONVENIENS, AND IRREVOCABLY AGREES
TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY
IN CONNECTION WITH THIS GUARANTY, SUCH OTHER
LOAN DOCUMENT OR SUCH OBLIGATION. GUARANTOR
DESIGNATES AND APPOINTS CT CORPORATION SYSTEM
AND SUCH OTHER PERSONS AS MAY HEREAFTER BE
SELECTED BY GUARANTOR WHICH IRREVOCABLY AGREE
IN WRITING TO SO SERVE AS ITS AGENT TO
RECEIVE ON ITS BEHALF SERVICE OF ALL PROCESS
IN ANY SUCH PROCEEDINGS IN ANY SUCH COURT,
SUCH SERVICE BEING HEREBY ACKNOWLEDGED BY
GUARANTOR TO BE EFFECTIVE AND BINDING SERVICE
IN EVERY RESPECT. A COPY OF ANY SUCH PROCESS
SO SERVED SHALL BE MAILED BY REGISTERED MAIL
TO GUARANTOR AT ITS ADDRESS PROVIDED IN
SECTION 15 EXCEPT THAT UNLESS OTHERWISE
PROVIDED BY APPLICABLE LAW, ANY FAILURE TO
MAIL SUCH COPY SHALL NOT AFFECT THE VALIDITY
OF SERVICE OF PROCESS. IF ANY AGENT
APPOINTED BY GUARANTOR REFUSES TO ACCEPT
SERVICE, GUARANTOR HEREBY AGREES THAT SERVICE
UPON IT BY MAIL SHALL CONSTITUTE SUFFICIENT
NOTICE. NOTHING HEREIN SHALL AFFECT THE RIGHT
TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF
HELLER TO BRING PROCEEDINGS AGAINST GUARANTOR
IN THE COURTS OF ANY OTHER JURISDICTION.
18. WAIVER OF JURY TRIAL.
GUARANTOR HEREBY WAIVES ITS RIGHT TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THIS GUARANTY,
ANY OF THE LOAN DOCUMENTS, OR ANY DEALINGS
BETWEEN GUARANTOR AND HELLER RELATING TO THE
SUBJECT MATTER OF THE TRANSACTIONS
CONTEMPLATED BY THE LOAN DOCUMENTS.
GUARANTOR ALSO WAIVES ANY BOND OR SURETY OR
SECURITY UPON SUCH BOND WHICH MIGHT, BUT FOR
THIS WAIVER, BE REQUIRED OF HELLER. THE
SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-
ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY
BE FILED IN ANY COURT AND THAT RELATE TO THE
SUBJECT MATTER OF THIS TRANSACTION, INCLUDING
WITHOUT LIMITATION, CONTRACT CLAIMS, TORT
CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER
COMMON LAW AND STATUTORY CLAIMS. GUARANTOR
ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL
INDUCEMENT TO ENTER INTO A BUSINESS
RELATIONSHIP, THAT HELLER HAS ALREADY RELIED
ON THE WAIVER IN ENTERING INTO THE OTHER LOAN
DOCUMENTS TO WHICH THEY ARE A PARTY AND THAT
EACH WILL CONTINUE TO RELY ON THE WAIVER IN
THEIR RELATED FUTURE DEALINGS. GUARANTOR
FURTHER WARRANTS AND REPRESENTS THAT IT HAS
REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL,
AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES
ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION
WITH LEGAL COUNSEL. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE
MODIFIED EITHER ORALLY OR IN WRITING, AND THE
WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS GUARANTY, THE LOAN
DOCUMENTS, OR TO ANY OTHER DOCUMENTS OR
AGREEMENTS RELATING TO THE LOANS. IN THE
EVENT OF LITIGATION, THIS GUARANTY MAY BE
FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
COURT.
19. WAIVER OF RIGHTS AGAINST BORROWER.
UNTIL THE PAYMENT IN FULL OF THE OBLIGATIONS,
NOTWITHSTANDING ANYTHING TO THE CONTRARY
WHICH MAY BE CONTAINED HEREIN, GUARANTOR
HEREBY UNCONDITIONALLY AND IRREVOCABLY AGREES
THAT GUARANTOR (I) WILL NOT ASSERT AGAINST
BORROWER ANY RIGHT OR CLAIM, AT LAW OR IN
EQUITY, TO INDEMNIFICATION, REIMBURSEMENT,
CONTRIBUTION, RESTITUTION OR PAYMENT FOR OR
WITH RESPECT TO ANY AND ALL AMOUNTS GUARANTOR
MAY PAY OR BE OBLIGATED TO PAY TO HELLER,
INCLUDING, WITHOUT LIMITATION, THE
OBLIGATIONS, AND ANY AND ALL OTHER
OBLIGATIONS WHICH GUARANTOR MAY PERFORM,
SATISFY OR DISCHARGE, UNDER OR WITH RESPECT
TO THIS GUARANTY, AND (II) WILL NOT ASSIGN OR
OTHERWISE TRANSFER ANY SUCH RIGHT OR CLAIMS
TO ANY OTHER PERSON. UNTIL THE PAYMENT IN
FULL OF THE OBLIGATIONS, GUARANTOR FURTHER
UNCONDITIONALLY AND IRREVOCABLY AGREES THAT
GUARANTOR SHALL HAVE NO RIGHT OF SUBROGATION,
AND WAIVES ANY RIGHT TO ENFORCE ANY REMEDY
WHICH HELLER NOW HAVE OR HEREAFTER MAY HAVE
AGAINST BORROWER AND WAIVES ANY DEFENSE BASED
UPON AN ELECTION OF REMEDIES BY HELLER, WHICH
DESTROYS OR OTHERWISE IMPAIRS ANY SUBROGATION
RIGHTS OF GUARANTOR AND/OR THE RIGHT OF
GUARANTOR TO PROCEED AGAINST BORROWER FOR
REIMBURSEMENT.
20. Board Representation. Pursuant to
that certain Shareholder Agreement of even
date herewith (the "Shareholder Agreement")
among First Wave, certain other shareholders
of Borrower, Borrower and Guarantor, all of
the shareholders of Borrower have agreed to
vote their stock to nominate and elect one
person designated by Guarantor to the board
of directors of Borrower. In addition,
pursuant to the Shareholder Agreement, the
articles of incorporation and by-laws of
Borrower are being amended to provide, among
other things, that the unanimous consent of
the board of directors is required for
certain material actions. To secure the
shareholders agreement to nominate and elect
to the board of directors an individual
designated by Guarantor, the shareholders
have granted a proxy to Guarantor for such
purpose. Guarantor covenants and agrees that
it will not modify, amend or waive, or permit
the modification, amendment or waiver of, the
Shareholder Agreement or the articles of
incorporation or by-laws of Borrower without
the prior written consent of Heller.
Pursuant to subsection 8.1(T) of the
Credit Agreement, an Event of Default shall
occur at such time as a Resources Designated
Director (as defined in the Shareholder
Agreement) is not a member of the Board of
Directors of Borrower. Notwithstanding such
provision and provided no other Event of
Default has occurred, solely for purposes of
this Guaranty, Heller will not demand payment
of Guarantor hereunder solely due to an Event
of Default under said subsection 8.1(T) (a)
for thirty (30) days after the occurrence of
a vacancy if such vacancy occurs due to the
death of the Resources Designated Director or
such person's resignation as an officer of
Resources, or otherwise solely as a result of
events occurring with respect to Guarantor
which are unrelated to Borrower or the
business or operations thereof, or (b) for
fifteen (15) days after the occurrence of a
vacancy for any other reason. If such
vacancy is filled within the applicable
designated time period, the Event of Default
under subsection 8.1(T) of the Credit
Agreement shall be deemed cured.
[Remainder of page intentionally left blank]
IN WITNESS WHEREOF, Guarantor has executed
this Guaranty as of the date first above written.
NEWPARK RESOURCES, INC., a
Delaware corporation
By: __________________________
Title:________________________
Witness:
_____________________
Witness Address:
____________________
____________________
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