<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: APRIL 22, 1999
----------------------------
Date of earliest event reported: APRIL 16, 1999
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NEWPARK RESOURCES, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 1-2960 72-1123385
- ------------------------------- ----------- -------------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
3850 NORTH CAUSEWAY, SUITE 1770
METAIRIE, LOUISIANA 70002
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (504) 838-8222
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<PAGE>
ITEM 5. OTHER EVENTS.
On April 16, 1999, Newpark Resources, Inc., a Delaware corporation (the
"Company"), sold to SCF-IV, L.P., a Delaware limited partnership managed by SCF
Partners (the "Purchaser"), 150,000 shares of Series A Cumulative Perpetual
Preferred Stock, $0.01 par value per share (the "Series A Preferred Stock"), and
a warrant (the "Warrant") to purchase up to 2,400,000 shares of the Common Stock
of the Company at an exercise price of $8.50 per share, subject to anti-dilution
adjustments. The aggregate purchase price for the Series A Preferred Stock and
the Warrant was $15.0 million, and the net proceeds from the sale have been used
to repay indebtedness. No underwriting discounts, commissions or similar fees
were paid in connection with the sale of the securities.
The Warrant has a term of seven years and, subject to certain exceptions,
may not be transferred or exercised for a period of 18 months following the date
of issuance. If dividends on the Series A Preferred Stock are in arrears by
more than 75 days, the holder of the Warrant will have a one-time right to reset
the exercise price to 120% of the then current market price of the Common Stock
(based on a 30 day average). No transfer of the shares of Series A Preferred
Stock may be made prior to April 15, 2004 other than to the Company.
Cumulative dividends are payable on the Series A Preferred Stock quarterly
in arrears. The initial dividend rate is 5% per annum, based on the stated value
of $100 per share of Series A Preferred Stock. The dividend rate is subject to
adjustment three, five and seven years after the date of issuance. Assuming the
Company's 8 5/8% Senior Subordinated Notes (the "Subordinated Notes") continue
to be outstanding, the dividend rate effective as of the third and fifth years
following the date of issuance will be equal to the then current yield to
maturity on the Subordinated Notes plus 2.5 percentage points. If the
Subordinated Notes no longer are outstanding, and in the case of the final
adjustment, the dividend rate will be determined by reference to comparable
long-term debt of the Company or another energy service company or will be
determined by the agreement of the Company and the holders of a majority of the
shares of Series A Preferred Stock. Dividends accruing during the first three
years following issuance are payable in shares of Common Stock valued at then
current fair market value and thereafter are payable in cash. If the Company
fails to pay any dividends when due, such dividends shall accumulate and accrue
additional dividends at the then existing dividend rate. So long as shares of
the Series A Preferred Stock are outstanding, no dividends may be paid on the
Common Stock and, subject to certain exceptions, no shares of Common Stock may
be purchased or otherwise redeemed by the Company unless all accumulated
dividends on the Series A Preferred Stock have been paid in full.
Upon a liquidation of the Company, the holders of the Series A Preferred
Stock will be entitled to receive $100 per share of Series A Preferred Stock
plus accrued dividends before the holders of Common Stock receive any payment.
The holders of Common Stock will receive all liquidating distributions after the
holders of the Series A Preferred Stock have received this
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amount, unless the Company later issues additional shares of preferred stock
having priority over the Common Stock with respect to liquidating distributions.
Beginning five years after the date of issuance, the Series A Preferred
Stock may be redeemed at the option of the Company, in whole but not in part,
for a redemption price of $100 per share plus accrued dividends. The holders of
a majority of the Series A Preferred Stock also may request, but not require, a
redemption of the Series A Preferred Stock at this redemption price if any
person or group becomes the owner of more than 50% of the outstanding Common
Stock of the Company.
Beginning June 1, 2004, the holders of the Series A Preferred Stock will
have the right to convert the Series A Preferred Stock, in whole but not in
part, into Common Stock at a conversion rate based on the then current fair
market value of the Common Stock or $2.00 per share of Common Stock, whichever
is greater. For purposes of any conversion, each share of Series A Preferred
Stock will have a value equal to its liquidation preference. The Series A
Preferred Stock also will be convertible at this conversion rate at any time
when dividends payable on the Series A Preferred Stock are in arrears in an
aggregate amount equal to five quarterly dividends or, subject to certain
conditions, when any person or group becomes the beneficial owner of 50% or more
of the outstanding Common Stock of the Company.
The Series A Preferred Stock will not have voting rights on ordinary
corporate matters, except as required by Delaware law; however, approval of a
majority of the Series A Preferred Stock will be required before the Company can
effect any changes to the rights of the Series A Preferred Stock that adversely
effect the holders of such shares (including any such change resulting from a
merger or similar transaction) or issue any additional shares of capital stock
having a priority equal or senior to the Series A Preferred Stock with respect
to dividends or distributions upon liquidation. The holders of the Series A
Preferred Stock also will vote separately as a class and the approval of a
majority of the Series A Preferred Stock will be required to approve any merger
or other business combination that would result in a change of control of the
Company on or before April 15, 2004, subject to certain exceptions. The voting
rights of the Series A Preferred Stock may delay, deter or prevent a change in
control of the Company.
The agreement providing for the issuance of the Series A Preferred Stock
includes a covenant obligating the Company, for so long as the Purchaser owns at
least a majority of the Series A Preferred Stock, to use its best efforts to
nominate and elect to the Company's Board of Directors an individual designated
by the Purchaser. In addition, whenever the Company is in arrears in the
payment of dividends on the Series A Preferred Stock in an aggregate amount
equal to three quarterly dividends, the holders of the Series A Preferred Stock,
voting as a separate class, will be entitled to elect one director.
The Purchaser has agreed that, subject to certain exceptions, the Purchaser
and its affiliates will not, at any time prior to April 15, 2004, acquire any
securities of the Company that
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would result in the Purchaser and its affiliates holding more than 15% of the
voting securities of the Company determined on a fully diluted basis. The
Purchaser has been granted demand and piggyback registration rights with respect
to the Common Stock issuable upon exercise of the Warrant (commencing 18 months
after the date of issuance) and upon conversion of the Series A Preferred Stock
(commencing 60 months after the date of issuance).
The sale of the Series A Preferred Stock and the Warrant was made in
reliance on the exemption from registration provided by Section 4(2) of the
Securities Act of 1933, as amended, and Regulation D promulgated thereunder.
The sale was made without general solicitation or advertising, the Purchaser is
a sophisticated investor with access to all relevant information necessary to
evaluate an investment in the securities, and the Purchaser represented to the
Company that the securities were being acquired for investment.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
1. Certificate of Designation of Series A Cumulative Perpetual Preferred Stock
of the Company, dated April 13, 1999.
2. Purchase Agreement, dated April 16, 1999, between the Company and the
Purchaser.
3. Warrant to Purchase 2,400,000 shares of Common Stock, par value $.01 per
share, of the Company.
4. Registration Rights Agreement, dated April 16, 1999, between the Company
and the Purchaser.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed by the undersigned hereunto
duly authorized.
NEWPARK RESOURCES, INC.
Dated: April 22, 1999 By /s/ Matthew w. Hardey
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Matthew W. Hardey, Vice President
and Chief Financial Officer
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EXHIBIT INDEX
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
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1. Certificate of Designation of Series A Cumulative Perpetual Preferred
Stock of the Company, dated April 13, 1999.
2. Purchase Agreement, dated April 16, 1999, between the Company and the
Purchaser.
3. Warrant to Purchase 2,400,000 shares of Common Stock, par value $.01
per share, of the Company.
4. Registration Rights Agreement, dated April 16, 1999, between the
Company and the Purchaser
<PAGE>
CERTIFICATE OF DESIGNATION
OF
SERIES A CUMULATIVE PERPETUAL PREFERRED STOCK
OF
NEWPARK RESOURCES, INC.
Pursuant to Section 151(g) of the Delaware General Corporation Law, NEWPARK
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RESOURCES, INC., a corporation organized and existing under the laws of the
State of Delaware (the "Company"), hereby certifies that the following
resolution was duly adopted by the Board of Directors of the Company on April 7,
1999, pursuant to authority conferred upon the Board of Directors by the
Certificate of Incorporation of the Company, which authorizes the issuance of up
to 1,000,000 shares of preferred stock, $0.01 par value.
RESOLVED, that pursuant to authority expressly granted to and vested in the
Board of Directors of the Company and pursuant to the provisions of the
Certificate of Incorporation, the Board of Directors hereby creates a series of
preferred stock, herein designated and authorized as the Series A Cumulative
Perpetual Preferred Stock, $0.01 par value per share, which shall consist of
150,000 of the 1,000,000 shares of preferred stock which the Company now has
authority to issue, and the Board of Directors hereby fixes the powers,
designations, preferences and relative, participating, optional and other
special rights of the shares of such series, and the qualifications, limitations
and restrictions thereof as follows:
1. Number. The number of shares constituting the Series A Cumulative
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Perpetual Preferred Stock (the "Series A Preferred Stock") shall be 150,000.
2. Definitions. Unless the context otherwise requires, when used herein
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the following terms shall have the meaning indicated.
"Actual Special Redemption Date" is defined in Section 8(C).
------------------------------ ------------
"Affiliate" means with respect to any Person, any other Person directly, or
---------
indirectly through one or more intermediaries, controlling, controlled by or
under common control with such Person. For purposes of this definition, the
term "control" (and correlative terms "controlling," "controlled by" and "under
common control with") means possession of the power, whether by contract, equity
ownership or otherwise, to direct the policies or management of a Person.
"Associate" shall have the meaning ascribed to such term in Rule 12b-2
---------
promulgated under the Exchange Act.
"Beneficially Own" or "Beneficial Ownership" has the meaning set forth in
---------------- --------------------
Rules 13d-3 and 13d-5 of the Exchange Act.
"Board" means the Board of Directors of the Company.
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"Business Combination" means (i) any consolidation or merger of the Company
--------------------
with or into any Person or of any Person with or into the Company, or (ii) any
issuance by the Company of shares of Common Stock or Common Stock Equivalents,
in one or a series of related transactions, in connection with the acquisition
of assets (other than cash) or securities by the Company or a Subsidiary of the
Company (including by way of a merger of a Subsidiary of the Company with or
into a Person), or (iii) the sale, assignment, conveyance, transfer, lease or
other disposition by the Company, in one or a series of related transactions, of
all or substantially all of its assets.
"Business Day" means any day except Saturday, Sunday and any day which
------------
shall be a legal holiday or a day on which banking institutions in Houston,
Texas or New Orleans, Louisiana generally are authorized or required by law or
other governmental actions to close.
"Capital Stock" means (i) with respect to any Person that is a corporation,
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any and all shares, interests, participations or other equivalents (however
designated) of capital or capital stock of such Person and (ii) with respect to
any Person that is not a corporation, any and all partnership or other equity
interests of such Person.
"Certificate" means the Certificate of Incorporation of the Company, as
-----------
amended.
"Certificate of Designation" means this Certificate of Designation of the
--------------------------
Series A Preferred Stock.
"Change of Control" shall mean any event constituting the consummation of
-----------------
any Business Combination except where (i) (A) if the Common Stock or Voting
Stock of the Company is converted into or exchanged for cash, securities or
other property, the shareholders of the Company immediately prior to such
Business Combination own (in substantially the same proportion relative to each
other as such shareholders owned the Common Stock or Voting Stock of the
Company, as the case may be, immediately prior to such consummation) (x) 50.1%
or more of the Voting Stock of the surviving or transferee entity immediately
after such Business Combination, and (y) 50.1% or more of the outstanding common
stock of the surviving or transferee entity immediately after such Business
Combination, or (B) if the Common Stock or Voting Stock of the Company is not
converted into or exchanged for cash, securities or other property, the
shareholders of the Company immediately prior to such Business Combination own
(in substantially the same proportion relative to each other as such
shareholders owned the Common Stock or Voting Stock of the Company, as the case
may be, immediately prior to such consummation) (x) 50.1% or more of the Voting
Stock of the Company immediately after such Business Combination, and (y) 50.1%
or more of the Common Stock immediately after such Business Combination, (ii)
the members of the Board immediately prior to the entering into the agreement
relating to such Business Combination (or if no such agreement is entered into,
then immediately prior to the consummation of such Business Combination)
constitute at least a majority of the Board (in the case of a transaction
described in clause (i)(B) of this definition) or the board of directors of the
surviving or transferee entity (in the case of a transaction described in clause
(i)(A) of this definition) immediately after such Business Combination, with no
agreements or arrangements in place immediately after such consummation that
would result in the members of the Board immediately prior to the entering into
the agreement
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relating to such Business Combination ceasing to constitute at least a majority
of the Board or the board of directors of the surviving or transferee entity, as
applicable and (iii) no Person or Group of Persons immediately after such
Business Combination is the Beneficial Owner of 35% or more of the total
outstanding Common Stock or Voting Stock of the Company (in the case of a
transaction described in clause (i)(B) of this definition) or of the total
outstanding Voting Stock or common stock of the surviving or transferee entity
(in the case of a transaction described in clause (i)(A) of this definition), as
applicable; provided, however, that if a Person or Group of Persons was on the
date one year prior to the consummation of such Business Combination a
Beneficial Owner of 35% or more of the total outstanding Voting Stock of the
Company or Common Stock, then the condition provided for in this clause (iii)
will be deemed to be met as long as such Person or Group of Persons does not
immediately after such consummation Beneficially Own a greater percentage of (in
the case of a transaction described in clause (i)(A) of this definition) the
total outstanding Voting Stock or common stock of the surviving or transferee
entity or (in the case of a transaction described in clause (i)(B) of this
definition) the total outstanding Voting Stock of the Company or the Common
Stock than the percentage of the total outstanding Voting Stock of the Company
or Common Stock that such Person or Group of Persons Beneficially Owned one year
prior to such consummation and no other Person or Group of Persons immediately
after such Business Combination is the Beneficial Owner of 35% or more of (in
the case of a transaction described in clause (i)(A) of this definition) the
total outstanding Voting Stock or common stock of the surviving or transferee
entity or (in the case of a transaction described in clause (i)(B) of this
definition) the total outstanding Voting Stock of the Company or the Common
Stock. In calculating the percentage of the Voting Stock owned where there is
more than one class or series of Voting Stock, the percentage of the Voting
Stock shall be calculated based on the number of votes eligible to be cast in
the election of directors generally. In calculating the percentages of Voting
Stock and Common Stock or common stock, as the case may be, owned for purposes
of this definition, such calculation shall be calculated on a basis assuming the
exercise or conversion in full of all Common Stock Equivalents and on a basis
disregarding all Common Stock Equivalents, and the percentage which results in
the lower percentage owned by the shareholders of the Company shall apply in the
application of clause (i) above.
"Common Stock" means the Company's common stock, par value $.01 per share,
------------
and any Capital Stock for or into which such Common Stock hereafter is
exchanged, converted, reclassified or recapitalized by the Company or pursuant
to a Business Combination to which the Company is a party.
"Common Stock Equivalents" means (without duplication with any other Common
------------------------
Stock or common stock, as the case may be, or Common Stock Equivalents) rights,
warrants, options, convertible securities or exchangeable securities,
exercisable for or convertible or exchangeable into, directly or indirectly,
Common Stock, or common stock, as the case may be, whether at the time of
issuance or upon the passage of time or the occurrence of some future event.
"Company" means Newpark Resources, Inc. a Delaware corporation.
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"Company Subordinated Debt" shall mean (i) in the context of the
-------------------------
determination of the Yield to Maturity as of any Reset Date other than the Final
Reset Date, the Company's 8 5/8% Senior
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Subordinated Notes due 2007, Series B; provided, however, that if the Company's
8 5/8% Senior Subordinated Notes due 2007, Series B are not outstanding as of
the 40th day prior to the applicable Reset Date, then Company Subordinated Debt
shall mean the then largest outstanding issue, with a principal amount of at
least $50 million, of non-convertible subordinated notes issued by the Company
which mature on or after December 15, 2007, if any, which are rated by Standard
& Poor's Ratings Group or Moody's Investors Service, Inc. and which were issued
either in an offering registered under the Securities Act or in a Rule 144A
offering and (ii) in the context of the determination of the Yield to Maturity
as of the Final Reset Date, the largest outstanding issue, with a principal
amount of at least $100 million, of non-convertible subordinated notes issued by
the Company which mature on or after April 15, 2011, if any, which are rated by
Standard & Poor's Ratings Group or Moody's Investors Service, Inc. and which
were issued either in an offering registered under the Securities Act or in a
Rule 144A offering.
"DGCL" means the General Corporation Law of the State of Delaware, as
----
amended, or any successor statute or other legislation.
"Dividend Payment Date" is defined in Section 3(A).
--------------------- ------------
"Dividend Period" is defined in Section 3(A).
--------------- ------------
"Dividend Rate" means a rate equal to (i) prior to the Initial Dividend
-------------
Reset Date, a nominal rate of five percent (5%) per annum payable quarterly and
(ii) on or after the Initial Dividend Reset Date, the Dividend Rate determined
pursuant to Section 4. In determining the amount of dividends per share of
---------
Series A Preferred Stock to be paid pursuant to Section 3(A), such rate shall be
------------
multiplied by the Stated Value, and in determining the amount of dividends per
share of Series A Preferred Stock to be paid pursuant to Section 3(C), such rate
------------
shall be multiplied by the per share amount of the applicable accrued but unpaid
dividends, in each case as adjusted to reflect the payment of dividends on a
quarterly basis.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, or
------------
any successor statute, and the rules and regulations promulgated thereunder.
"Final Dividend Reset Date" means April 15, 2006.
-------------------------
"Group" means a group as contemplated by Section 13(d)(3) of the Exchange
----- ----------------
Act.
"Holder" means a holder of record of the Series A Preferred Stock.
------
"In-the-Money Warrant Value" is defined in Section 8(E).
-------------------------- ------------
"Initial Dividend Reset Date" means April 15, 2002.
---------------------------
"Investment Banking Firm" shall mean a nationally recognized investment
-----------------------
banking firm.
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"Issue Date" means with respect to any shares of Series A Preferred Stock
----------
the original date of issuance of such shares of Series A Preferred Stock.
"Junior Securities" means Capital Stock that, with respect to dividends and
-----------------
distributions upon Liquidation, ranks junior to the Series A Preferred Stock.
"Liquidation" means the voluntary or involuntary liquidation, dissolution
-----------
or winding up of the Company; provided, however, that a consolidation, merger or
share exchange shall not be deemed a Liquidation, nor shall a sale, assignment,
conveyance, transfer, lease or other disposition by the Company of all or
substantially all of its assets, which does not involve a distribution by the
Company of cash or other property to the holders of Common Stock, be deemed to
be a Liquidation.
"Liquidation Preference" is defined in Section 6.
---------------------- ---------
"Majority of the Series A Preferred Stock" means more than 50% of the then
----------------------------------------
outstanding shares of Series A Preferred Stock.
"Market Price" means, with respect to a particular security, on any given
------------
day, the last reported sale price regular way or, in case no such reported sale
takes place on such day, the average of the last closing bid and asked prices
regular way, in either case on the principal national securities exchange on
which the applicable security is listed or admitted to trading, or if not listed
or admitted to trading on any national securities exchange, (i) the closing sale
price for such day reported by the NASDAQ Stock Market if such security is
traded over-the-counter and quoted in the NASDAQ Stock Market, or (ii) if such
security is so traded, but not so quoted, the average of the closing reported
bid and asked prices of such security as reported by the NASDAQ Stock Market or
any comparable system, or (iii) if such security is not listed on the NASDAQ
Stock Market or any comparable system, the average of the closing bid and asked
prices as furnished by two members of the National Association of Securities
Dealers, Inc. selected from time to time by the Company for that purpose. If
such security is not listed and traded in a manner that the quotations referred
to above are available for the period required hereunder, the Market Price, with
respect to the Company Subordinated Debt, shall be deemed to be the fair value
of such security as determined by an Investment Banking Firm selected by the
Company, and the Market Price, with respect to Common Stock and any other
security, shall be deemed to be the fair value per share of such security as
determined in good faith by the Board.
"Notice of Redemption" is defined in Section 7(B).
-------------------- ------------
"Notice of Special Redemption" is defined in Section 8(B).
---------------------------- ------------
"Parity Securities" means Capital Stock that, with respect to dividends or
-----------------
distributions upon Liquidation, is pari passu with the Series A Preferred Stock.
"Person" means an individual or a corporation, partnership, trust,
------
incorporated or unincorporated association, limited liability company, joint
venture, joint stock company, government (or an agency or political subdivision
thereof) or other entity of any kind.
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"Purchase Agreement" means the Purchase Agreement dated as of April 8,
------------------
1999, among the Company and the Purchaser pursuant to which 150,000 shares of
Series A Preferred Stock and certain other securities are to be issued by the
Company, including all schedules and exhibits thereto.
"Purchaser"means SCF-IV, L.P.
---------
"Record Date" is defined in Section 3(A).
----------- ------------
"Redemption Date" is defined in Section 7(B).
--------------- ------------
"Redemption Price" is defined in Section 7(A).
---------------- ------------
"Related Person" shall mean any Person who is, or any Group of Persons who
--------------
are, the Beneficial Owner of 10% or more of the outstanding Common Stock.
"Reset Date" means the Initial Dividend Reset Date, the Second Dividend
----------
Reset Date or the Final Dividend Reset Date, as applicable.
"Second Dividend Reset Date" means April 15, 2004.
--------------------------
"Securities Act" means the Securities Act of 1933, as amended, or any
--------------
successor statute, and the rules and regulations promulgated thereunder.
"Senior Securities" means Capital Stock that, with respect to dividends or
-----------------
distributions upon Liquidation, ranks senior to the Series A Preferred Stock.
"Series A Preferred Stock" means the Series A Cumulative Perpetual
------------------------
Preferred Stock of the Company or successor preferred stock as contemplated by
Section 5(C)(ii)(A)(y).
- ----------------------
"Special Redemption Price" is defined in Section 8(E).
------------------------ ------------
"Stated Value" is an amount equal to $100.00 per share of Series A
------------
Preferred Stock.
"Subsidiary" of a Person means (i) a corporation, a majority of whose stock
----------
with voting power, under ordinary circumstances, to elect directors is at the
time of determination, directly or indirectly, owned by such Person or by one or
more Subsidiaries of such Person, or (ii) any other entity (other than a
corporation) in which such Person or one or more Subsidiaries of such Person,
directly or indirectly, at the date of determination thereof has at least a
majority ownership interest.
"Trading Day" means a day on which the principal market with respect to the
-----------
security in question is regularly scheduled to be open for trading or if there
is no such principal market, then a day on which the New York Stock Exchange is
regularly scheduled to be open for trading.
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"Voting Stock" of a Person means Capital Stock of such Person of the class
------------
or classes pursuant to which the holders thereof have the general voting power
under ordinary circumstances to vote in the election of the board of directors,
managers or trustees of such Person.
"Yield to Maturity" shall mean (i) if Company Subordinated Debt is
-----------------
outstanding as of the 50th day prior to the applicable Reset Date and is not
then scheduled to mature or to be prepaid within the next 180 days, the yield to
maturity, expressed as a per annum percentage, of the Company Subordinated Debt
using as the price of the Company Subordinated Debt the average Market Price
(expressed as a percentage of the principal amount) of the Company Subordinated
Debt for the five Trading Days ending on the twentieth Trading Day immediately
preceding the applicable Reset Date, (ii) if clause (i) is inapplicable, the
yield to maturity, expressed as a per annum percentage, to which the Company and
the Holders of a Majority of the Series A Preferred Stock agree in writing prior
to the 40th day preceding the applicable Reset Date and (iii) otherwise, the
yield to maturity, expressed as a per annum percentage, that an Investment
Banking Firm selected by the Company states in a written opinion to the Company,
with a copy to the Holders, is the yield to maturity as of the 40th day before
the applicable Reset Date of the issue of non-convertible subordinated debt of
an energy service company that in its judgment has a yield to maturity that
approximates the yield to maturity that Company Subordinated Debt would then
bear if such debt were then outstanding (taking into account the terms of
Company Subordinated Debt that would be required as of such Reset Date). If
clause (iii) is applicable and the Company fails to engage an Investment Banking
Firm or for any other reason such written opinion is not delivered to the
Holders within the 20th day preceding the applicable Reset Date, then the
Holders of a Majority of the Series A Preferred Stock may engage an Investment
Banking Firm, at the expense of the Company, to so determine the Yield to
Maturity, and shall cause the written opinion of the Investment Banking Firm to
be delivered to the Company, which determination shall be final and conclusive.
If the Yield to Maturity is determined pursuant to clause (i) above, then the
Company shall deliver a certificate to the Holders prior to the 10th day
preceding the applicable Reset Date providing reasonable detail as to the
calculation of such Yield to Maturity and the Dividend Rate to be applicable
following the next Reset Date. The Yield to Maturity in each case shall be
calculated in accordance with the Securities Industry Association's
recommendations as contained in Spence, Graudenz, and Lynch, Securities
----------
Calculation Methods, Securities Industry Association, New York, 1973.
- -------------------
"Warrants" means the warrants issued and sold pursuant to the Purchase
--------
Agreement.
"Warrant Shares" means shares of Common Stock acquired upon exercise of
--------------
Warrants.
The foregoing definitions will be equally applicable to both the singular
and plural forms of the defined terms.
3. Dividends and Distributions.
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(A) The holders of the Series A Preferred Stock shall be entitled to
receive out of the assets of the Company legally available for that
purpose, dividends at the Dividend Rate, and, except as provided in Section
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3(C), no more, to be paid in accordance with the terms of this Section 3.
---- ---------
Such dividends shall be cumulative from the Issue Date and shall be payable
in arrears, when and as declared by the Board, on March 31, June 30,
September 30 and December 31 of each year (each such date being herein
referred to as a "Dividend Payment Date"), commencing on June 30, 1999.
---------------------
The period from the Issue Date to the next Dividend Payment Date and each
quarterly period between consecutive Dividend Payment Dates shall
hereinafter be referred to as a "Dividend Period." The dividend for any
---------------
Dividend Period for any share of Series A Preferred Stock that is not
outstanding on every day of the Dividend Period shall be prorated based on
the number of days such share was outstanding during the period. Each such
dividend shall be paid to the holders of record of the Series A Preferred
Stock as their names appear on the share register of the Company on the
corresponding Record Date. As used above, the term "Record Date" means,
-----------
with respect to the dividend payable on March 31, June 30, September 30 and
December 31, respectively, of each year, the preceding March 15, June 15,
September 15 and December 15, or such other record date designated by the
Board with respect to the dividend payable on such respective Dividend
Payment Date not exceeding 30 days preceding such Dividend Payment Date.
Dividends on account of arrears for any past Dividend Periods may be
declared and paid at any time, without reference to any Dividend Payment
Date, to holders of record on a date designated by the Board, not exceeding
30 days preceding the payment date thereof, as may be fixed by the Board.
(B) Dividends payable on the Series A Preferred Stock for Dividend
Periods ending on or prior to March 31, 2002 shall be paid in the form of
Common Stock. Dividends payable on the Series A Preferred Stock for
Dividend Periods ending after March 31, 2002 shall be paid in cash. The
number of shares of Common Stock to be issued in circumstances when
dividends are paid with shares of Common Stock will equal the cash amount
of the dividend otherwise payable divided by the average Market Price of
the Common Stock for the five Trading Days immediately preceding the record
date of such dividend (which record date shall not be prior to the date
such dividend is declared); provided, however, that if any adjustment of
the Exercise Price pursuant to Section 13 of the Warrants is effective as
----------
of any date during the period beginning on the first day of such five-day
period and ending on the date on which such shares of Common Stock are
issued, then the number of shares of Common Stock to be issued as a
dividend pursuant to the foregoing provision will be adjusted to the extent
appropriate to reflect such adjustment. The number of shares of Common
Stock to be issued as a dividend shall be rounded to the nearest whole
share after aggregating all shares of Series A Preferred Stock owned by a
Holder.
(C) If, on any Dividend Payment Date, the Company fails to pay
dividends, then until the dividends that were scheduled to be paid on such
date are paid, such dividends shall cumulate and shall accrue additional
dividends to and including the date of payment thereof at the Dividend Rate
then in effect, compounded on a quarterly basis. Unpaid dividends for any
period less than a full Dividend Period shall cumulate on a day-to-day
basis and shall be computed on the basis of a 360-day year. Except as
otherwise provided in this Section
-------
-8-
<PAGE>
3 or in Section 5(B) or 10, no right shall accrue to the Holders by reason of
- - ------------ --
the fact that dividends on the Series A Preferred Stock are not declared or paid
for any Dividend Period.
(D) So long as any shares of the Series A Preferred Stock shall be
outstanding, (i) the Company shall not declare or pay any dividend
whatsoever, whether in cash, property or otherwise, set aside any cash or
property for the payment of dividends, or make any other distribution on
any Junior Securities (except a dividend or distribution payable in shares
of Junior Securities), (ii) the Company shall not declare or pay any
dividend whatsoever, whether in cash, property or otherwise, set aside any
cash or property for the payment of dividends, or make any other
distribution on any Parity Securities (except a dividend or distribution
payable in shares of Junior Securities), and (iii) the Company shall not
and shall cause its Subsidiaries not to repurchase, redeem or otherwise
acquire or set aside any cash or property for the repurchase or redemption
of any Junior Securities or Parity Securities (other than the acquisition
of Junior Securities from employees of the Company or any of its
Subsidiaries or the acquisition of Junior Securities from a Person in
connection with the settlement of disputes with such Person or its
shareholders or other equity holders relating to a prior acquisition by the
Company or any of its Subsidiaries of assets or securities from such Person
or where the consideration payable by the Company consists solely of Junior
Securities), unless in each such case all dividends to which the Holders of
the Series A Preferred Stock shall have been entitled to receive for all
previous Dividend Periods shall have been paid or declared and a sum of
money, or shares of Common Stock, as applicable, sufficient for the payment
thereof shall have been set apart.
4. Dividend Reset Procedures.
-------------------------
(A) From and after the Initial Dividend Reset Date and continuing
until the Second Dividend Reset Date, the Dividend Rate shall be the sum of
(i) the Yield to Maturity determined for the Initial Dividend Reset Date
and (ii) 2.5%.
(B) From and after the Second Dividend Reset Date and continuing until
the Final Dividend Reset Date, the Dividend Rate shall be the sum of (i)
the Yield to Maturity determined for the Second Dividend Reset Date and
(ii) 2.5%.
(C) From and after the Final Reset Date, the Dividend Rate shall be
the sum of (i) the Yield to Maturity determined for the Final Reset Date
and (ii) 4.5%.
5. Voting Rights. The Holders shall have the following voting rights
-------------
with respect to the Series A Preferred Stock:
(A) Each share of Series A Preferred Stock shall entitle the holder
thereof to the voting rights specified in Sections 5(B) and 5(C) and no
------------- ----
other voting rights except as required by law.
(B) Whenever, at any time or times, dividends payable on the Series A
Preferred Stock shall be in arrears in an aggregate amount equivalent to
three (3) quarterly dividends (determined without regard to any dividends
payable pursuant to Section 3(C)), there shall
------------
-9-
<PAGE>
be vested in the Holders, voting as a separate class and with one vote for
each share, the right to elect a director of the Company. Such right of the
Holders to vote for the election of a director may be exercised at any
annual meeting or at any special meeting called for such purpose, or at any
adjournment thereof, until all arrearages in dividends on the outstanding
shares of Series A Preferred Stock shall have been paid in full, or
declared and funds, or shares or Common Stock, as applicable, sufficient
for the payment thereof deposited in trust or otherwise made available and
when so paid or provided for, then all rights of the Holders under this
Section 5(B) shall cease. So long as such right to vote continues, the
------------
Secretary of the Company may call, and upon written request of the Holders
of ten percent (10%) or more of the outstanding Series A Preferred Stock
addressed to him at the principal office of the Company shall call, a
special meeting of the Holders for the election of such director as
provided herein. Such meeting shall be held within fifty (50) days after
delivery of such request to such Secretary, at the place and upon the
notice provided by law and in the Bylaws of the Company for the holding of
meetings of its shareholders. If at any such meeting or any adjournment
thereof the Holders of at least a majority of the then outstanding shares
of Series A Preferred Stock then entitled to vote in such election shall be
present or represented by proxy, then, by vote of the Holders of at least
the majority of all such shares of Series A Preferred Stock present or
represented in such meeting, the then authorized number of directors of the
Company shall be increased by one (unless a vacancy then exists on the
Board) and the Holders of such shares of Series A Preferred Stock shall be
entitled to elect such additional director (or fill such vacancy). The
Director so elected shall serve until the next annual meeting of the
Company's shareholders for the election of directors or until his successor
shall be elected and shall qualify; provided, however, that whenever all
arrearages in dividends on all outstanding shares of Series A Preferred
Stock shall have been paid, or declared and funds, or shares or Common
Stock, as applicable, sufficient for the payment thereof deposited in trust
or otherwise made available, the term of office of the person so elected as
director shall forthwith terminate, and, if the size of the Board shall
have been increased as provided herein, the number of the whole Board shall
be reduced accordingly. If the director so elected by the Holders shall
cease to serve as director before his term shall expire, the Holders may,
at a special meeting of such Holders called as provided above, elect a
successor to hold office for the unexpired term of such director.
(C) The consent of the Holders of at least a Majority of the Series A
Preferred Stock, voting separately as a single class with one vote per
share, in person or by proxy, either in writing without a meeting or at an
annual or a special meeting of such Holders called for the purpose, shall
be necessary to:
(i) amend, alter or repeal, by way of merger or otherwise, any
of the provisions of the Certificate, including the Certificate of
Designation, so as to
(A) affect adversely any of the rights, preferences or
privileges of Holders, or
(B) authorize or create any shares of Parity Securities or
Senior Securities (or amend the provisions of any existing class
of Capital Stock to
-10-
<PAGE>
make such class of Capital Stock a class of Parity Securities or
Senior Securities), or
(ii) authorize the consummation of or consummate any Business
Combination unless either clause (A) or clause (B) below is satisfied:
(A) the consummation of the Business Combination will
not result in a Change of Control or the Business
Combination will be consummated after April 15, 2004, and in
each case:
(y) if, but only if, the Company is not the surviving
or continuing corporation in the Business Combination or the
Company becomes a Subsidiary of another corporation in such
Business Combination and the holders of Common Stock become
entitled to receive Capital Stock in such other corporation,
the Holders of the Series A Preferred Stock shall have the
right to receive or continue to hold in the surviving or
continuing corporation in such Business Combination the same
number of shares of preferred stock with the same rights,
preferences and privileges, as correspond to the Series A
Preferred Stock held immediately prior to such Business
Combination (provided, however, that if the Company or the
surviving corporation becomes a Subsidiary of another
corporation in such Business Combination and the holders of
Common Stock became entitled to receive Capital Stock in
such other corporation, then the holders of the Series A
Preferred Stock shall be entitled to receive such shares of
preferred stock with the same rights, preferences and
privileges in such other corporation), and
(z) if, but only if, the Company is not the surviving
or continuing corporation in the Business Combination or the
Company becomes a Subsidiary of another corporation in such
Business Combination and the holders of Common Stock become
entitled to receive Capital Stock in such other corporation,
such surviving or other corporation, as the case may be, has
immediately after the consummation of such Business
Combination no Senior Securities or Parity Securities (other
than the same number of shares with the same rights,
preferences and privileges as correspond to any shares of
Senior Securities or Parity Securities of the Company
outstanding immediately prior to the consummation of the
Business Combination), or
(B)(w) the consummation of the Business Combination
will occur on or before April 15, 2004 and will result in a
Change of Control, and
-11-
<PAGE>
(x) the Board has elected, by a duly adopted
resolution, to utilize the provisions of this Section
-------
5(C)(ii)(B) in lieu of obtaining a separate vote of the
-----------
Holders to authorize the consummation of the Business
Combination, and
(y) the consummation of such Business Combination has
been approved by the holders of 75% or more of the
outstanding shares of Common Stock unless such Business
Combination would involve (i) the merger or consolidation of
the Company or a Subsidiary of the Company with a Related
Person or any other Person which is an Affiliate or
Associate of a Related Person, (ii) the sale or other
disposition of all or substantially all of the assets of the
Company to a Related Person or any Affiliate or Associate of
a Related Person or (iii) any other Business Combination
with a Related Person or an Affiliate or Associate of a
Related Person, in which event the Business Combination has
been approved by the holders of 75% or more of the
outstanding Common Stock not owned, directly or indirectly,
by such Related Person or any Affiliate or Associate of such
Related Person, and
(z) concurrently with, and as a condition to, the
consummation of the Business Combination all of the Series A
Preferred Stock is redeemed pursuant to the provisions of
Section 8(A); or
------------
(iii) issue any shares of Parity Securities or Senior
Securities.
(D) Anything in Section 5(C) to the contrary notwithstanding, (i) the
------------
consent of the Holders of at least a Majority of the Series A Preferred
Stock, voting separately as a single class with one vote per share, shall
be required to authorize the consummation on or before April 15, 2004 of
any Business Combination that will result in a Change of Control unless the
Board has made the election referred to in Section 5(C)(ii)(B)(x), and (ii)
----------------------
no separate vote or consent of the Series A Preferred Stock shall be
required in connection with the authorization or issuance of, or an
increase in the total number of authorized shares of, any class of Junior
Securities or an increase in the number of shares of undesignated Preferred
Stock that the Company is authorized to issue.
6. Liquidation Preference. In the event of any Liquidation, after
----------------------
payment or provision for payment by the Company of the debts and other
liabilities of the Company and the liquidation preference of any Senior
Securities that rank senior to the Series A Preferred Stock with respect to
distributions upon Liquidation, each Holder shall be entitled to receive an
amount in cash for each share of the then outstanding Series A Preferred Stock
held by such Holder equal to the Stated Value per share plus an amount equal to
all accrued but unpaid dividends thereon, whether or not earnings are available
in respect of such dividends or such dividends have been declared, to and
including the date full payment is tendered, deposited in trust or otherwise
made available to the Holders with respect to such Liquidation and no more (such
amount being referred to herein as the "Liquidation
-----------
-12-
<PAGE>
Preference") before any distribution shall be made to the holders of any Junior
- ----------
Securities (and any Senior Securities or Parity Securities that, with respect to
distributions upon Liquidation, rank junior to the Series A Preferred Stock)
upon the Liquidation of the Company. In case the assets of the Company available
for payment to the Holders are insufficient to pay the full Liquidation
Preference on all outstanding shares of the Series A Preferred Stock and all
outstanding shares of Parity Securities and Senior Securities that, with respect
to distributions upon Liquidation, are pari passu with the Series A Preferred
Stock in the amounts to which the holders of such shares are entitled, then the
entire assets of the Company available for payment to the Holders and to the
holders of such Parity Securities and Senior Securities shall be distributed
ratably among the Holders of the Series A Preferred Stock and the holders of
such Parity Securities and Senior Securities, based upon the aggregate amount
due on such shares upon Liquidation. Written notice of any Liquidation of the
Company, stating a payment date and the place where the distributable amounts
shall be payable, shall be given by mail, postage prepaid, not less than ten
days prior to the payment date stated therein, to the Holders of record of the
Series A Preferred Stock, if any, at their respective addresses as the same
shall appear on the books of the Company.
7. Ordinary Redemption.
-------------------
(A) Except as provided in this Section 7 or Section 8, the Series A
--------- ---------
Preferred Stock may not be redeemed by the Company prior to April 15, 2004.
On or after April 15, 2004 or earlier if in accordance with Section 7(D),
------------
the Series A Preferred Stock may be redeemed by the Company at any time so
long as funds are legally available therefor, in whole but not in part, in
the manner provided for in this Section 7, at a redemption price per share
---------
equal to the Stated Value plus accrued but unpaid dividends to and
including the date the redemption price is paid, tendered or otherwise made
available to the Holders, payable in same day funds (the "Redemption
----------
Price").
(B) Notice of redemption (the "Notice of Redemption") of the Series A
--------------------
Preferred Stock shall be sent by or on behalf of the Company, by first
class mail, postage prepaid, to the Holders of record of the Series A
Preferred Stock at their respective addresses as they shall appear on the
records of the Company, not less than ten (10) days nor more than sixty
(60) days prior to the date fixed for redemption (the "Redemption Date")
---------------
(1) notifying such holders of the election of the Company to redeem such
shares, the Redemption Date and the Redemption Price, and (2) stating the
place or places at which the Series A Preferred Stock shall, upon
presentation and surrender of the certificates evidencing such shares, be
redeemed. The right of the Holders to receive the payment of the
Redemption Price shall be conditioned upon the presentation and surrender
for cancellation of the certificates evidencing their shares of Series A
Preferred Stock.
(C) If Notice of Redemption shall have been given as hereinbefore
provided, each Holder shall be entitled to all preferences, relative and
other rights accorded by this Certificate of Designation (including the
right to receive dividends, but excluding the conversion rights provided
for in Section 10, which shall, subject to the further provisions of this
----------
Section 7(C), terminate as of the date of mailing of the Notice of
------------
Redemption unless such conversion rights had been exercised prior to the
date of mailing of the Notice of
-13-
<PAGE>
Redemption, in which case such rights shall continue to the extent so
exercised) and the DGCL until and including the Redemption Date. If the
Company shall default in making, tendering or otherwise making available
payment of the Redemption Price on the Redemption Date, then each Holder
shall be entitled to all preferences, relative and other rights accorded by
this Certificate of Designation (including the right to receive dividends
and the conversion rights provided for in Section 10) and the DGCL until
----------
and including the date (the "Actual Redemption Date") when the Company
----------------------
actually makes, tenders or otherwise makes available payment of the
Redemption Price to the Holders. From and after the Redemption Date or, if
the Company shall default in making payment or provision for payment as
aforesaid on the Redemption Date, the Actual Redemption Date, whether or
not the certificates for the shares of Series A Preferred Stock are
surrendered for payment of the Redemption Price, the Series A Preferred
Stock shall no longer be deemed to be outstanding, and all rights of the
Holders shall cease and terminate, except the right of the Holders, upon
surrender of certificates therefor, to receipt of amounts to be paid
hereunder.
(D) If any Person or Group becomes the Beneficial Owner of 50% or more
of the total outstanding Voting Stock of the Company or of Common Stock,
then, at any time at least ninety (90) days after the date of such
occurrence, the Holders of a Majority of the Series A Preferred Stock may
give written notice to the Company requesting redemption of all Series A
Preferred Stock at the Redemption Price. If, within sixty (60) days after
receiving such notice from the Holders of a Majority of the Series A
Preferred Stock, the Company has not given Notice of Redemption of all of
the Series A Preferred Stock in accordance with Section 7(B), the Company
------------
shall be deemed to have elected to permit the Holders of the Series A
Preferred Stock to effect an Optional Conversion pursuant to Section 10,
----------
and the Company shall not be obligated to redeem the Series A Preferred
Stock under this Section 7(D).
------------
8. Special Redemptions.
-------------------
(A) If the consent of the Holders of a Majority of the Series A
Preferred Stock is not obtained in connection with a Business Combination
that will result in a Change of Control on or before April 15, 2004 and the
Company has elected to proceed with such Business Combination by complying
with the conditions set forth in Section 5(C)(ii)(B), then, subject to the
-------------------
satisfaction of such conditions, upon, and as a condition to the
consummation of the Business Combination, the Company shall redeem
effective with, and subject to, such consummation, all of the Series A
Preferred Stock at the Special Redemption Price per share, payable in same
day funds on the day that the Business Combination is consummated.
(B) Notice of redemption (the "Notice of Special Redemption") of the
----------------------------
Series A Preferred Stock pursuant to Section 8(A) shall be sent by or on
------------
behalf of the Company, by first class mail, postage prepaid, to the Holders
of record of the Series A Preferred Stock at their respective addresses as
they shall appear on the records of the Company, not less than ten (10)
days nor more than ninety (90) days prior to the date fixed for redemption
(the "Special Redemption Date") which shall be the date of consummation of
-----------------------
the Business
-14-
<PAGE>
Combination. The Notice of Special Redemption shall (1) notify such holders
of the election of the Company to redeem such shares, the Special
Redemption Date and the Special Redemption Price, and (2) state the place
or places at which the Series A Preferred Stock shall, upon presentation
and surrender of the certificates evidencing such shares, be redeemed. The
right of the Holders to receive the payment of the Special Redemption Price
shall be conditioned upon the presentation and surrender for cancellation
of the certificates evidencing their shares of Series A Preferred Stock.
(C) If Notice of Special Redemption shall have been given as
hereinbefore provided, each Holder shall be entitled to all preferences,
relative and other rights accorded by this Certificate of Designation
(including the right to receive dividends, but excluding the conversion
rights provided for in Section 10, which shall, subject to the further
----------
provisions of this Section 8(C), terminate as of the date of mailing of the
------------
Notice of Special Redemption unless such conversion rights had been
exercised prior to such date of mailing in which case such rights shall
continue to the extent so exercised) and the DGCL until and including the
Special Redemption Date. If the Company shall default in making, tendering
or otherwise making available payment of the Special Redemption Price on
the Special Redemption Date, then each Holder shall be entitled to all
preferences, relative and other rights accorded by this Certificate of
Designation (including the right to receive dividends and the conversion
rights provided for in Section 10) and the DGCL until and including the
----------
date (the "Actual Special Redemption Date") when the Company actually
-------------------------------
makes, tenders or otherwise makes available payment of the Special
Redemption Price to the Holders. From and after the Special Redemption
Date or, if the Company shall default in making payment or provision for
payment as aforesaid on the Special Redemption Date, the Actual Special
Redemption Date, whether or not the certificates for the shares of Series A
Preferred Stock are surrendered for payment of the Special Redemption
Price, the Series A Preferred Stock shall no longer be deemed to be
outstanding, and all rights of the Holders shall cease and terminate
(including, without limitation, the right to receive payment for accrued
but unpaid dividends), except the right of the Holders, upon surrender of
certificates therefor, to receipt of the Special Redemption Price.
(D) If a Notice of Special Redemption has been given pursuant to
Section 8(A), and the agreement relating to the proposed Business
------------
Combination to which it relates has been terminated or the Company
otherwise has elected not to proceed with the proposed Business
Combination, then the Notice of Special Redemption may be rescinded by the
Company.
(E) "Special Redemption Price" shall mean the quotient of (i)
$30,000,000 less (A) the aggregate amount of dividends with respect to the
Series A Preferred Stock paid to the Holders after the Issue Date and prior
to the Special Redemption Date or the Actual Special Redemption Date, as
the case may be (such applicable date is hereinafter referred to as the
"Date of Redemption") (valuing any dividends paid in the form of shares of
Common Stock based on the Market Price of a share of Common Stock on the
Trading Day next preceding the date of payment of the applicable dividend)
less (B) the aggregate consideration received by the Purchaser prior to the
Date of Redemption from the sale or other disposition of any or all of the
Warrants and any Warrant Shares less (C) the In-the-
-15-
<PAGE>
Money Warrant Value of all Warrants owned by the Purchaser immediately
prior to the Date of Redemption less (D) the product of the number of
Warrant Shares owned by Purchaser immediately prior to the Date of
Redemption multiplied by the Market Price of a share of Common Stock on the
Trading Day next preceding the Date of Redemption, divided by (ii) 150,000;
provided, however, that the Special Redemption Price shall not be less than
the Stated Value plus accrued but unpaid dividends to and including the
Date of Redemption. The "In-the-Money Warrant Value" shall mean (a) the
aggregate product of (x) the number of shares of Common Stock acquirable
upon exercise of the Warrants owned by Purchaser immediately prior to the
Date of Redemption multiplied by (y) the Market Price of a share of Common
Stock on the Trading Day next preceding the Date of Redemption less (b) the
aggregate exercise price for all Warrants owned by Purchaser immediately
prior to the Date of Redemption. In connection with a Special Redemption,
the Purchaser shall provide the Company with a certificate providing the
information requested by the Company that is reasonably necessary to
calculate the Special Redemption Price. Anything herein to the contrary
notwithstanding, the Company shall not be deemed to be in default in making
payment or provision for payment of the Special Redemption Price if its
failure to make such payment or provision for payment is a result of
Purchaser's failure to provide the information contemplated by the
preceding sentence, and the right of the Holders to receive payment of the
Special Redemption Price shall be deferred until two Business Days
following the Company's receipt of such information.
9. Status of Redeemed Shares; Limitations on Series A Preferred Stock.
------------------------------------------------------------------
The Company shall return to the status of unauthorized and undesignated shares
of Preferred Stock each share of Series A Preferred Stock which it shall redeem
or for any other reason acquire, and such shares thereafter may have such
characteristics and designations as the Board may determine (subject to Section
-------
5), provided, however, no share of Series A Preferred Stock which shall be
- -
redeemed or otherwise acquired by the Company shall thereafter be reissued, sold
or transferred by the Company as Series A Preferred Stock. The Company will not
issue any further shares of Series A Preferred Stock.
10. Optional Conversion.
-------------------
(A) Subject to the provisions of Section 7 and Section 8, shares of
--------- ---------
Series A Preferred Stock are convertible into Common Stock at the Optional
Conversion Rate per share of Series A Preferred Stock, at the option of the
Holders thereof ("Optional Conversion") (i) at any time after June 1, 2004,
(ii) at any time dividends payable on the Series A Preferred Stock are in
arrears in an aggregate amount equivalent to five quarterly dividends
(determined without regard to any dividends payable pursuant to Section
-------
3(C)), and (iii) at any time after the Company is deemed to have elected
----
pursuant to Section 7(D) to permit the Holders to effect an Optional
------------
Conversion. The right of the Holders to effect an Optional Conversion based
on an arrearage in dividends shall immediately terminate (except to the
extent Holders have previously delivered written notice of conversion to
the Company) when all arrearages in dividends have been paid in full or
declared and funds, or shares of Common Stock, as applicable, sufficient
for the payment thereof deposited in trust or otherwise made available to
the Holders. Optional Conversion of shares of Series A Preferred Stock may
be effected by
-16-
<PAGE>
delivering certificates evidencing such shares of Series A Preferred Stock,
together with a duly executed written notice of conversion and, if required
by the Company, a proper assignment of such certificates to the Company's
principal executive offices or to the office of the transfer agent for the
shares of Series A Preferred Stock or to any other office or agency
maintained by the Company for that purpose. Each Optional Conversion shall
be deemed to have been effected immediately before the close of business on
the date on which the certificates evidencing such shares of Series A
Preferred Stock and the related notice of conversion are received by the
Company. The Optional Conversion shall be at the Optional Conversion Rate
in effect on such date. Anything herein to the contrary notwithstanding,
shares of Series A Preferred Stock may not be converted unless all then
outstanding shares of Series A Preferred Stock are converted at the same
time even if the shares of Series A Preferred Stock are held by more than
one Holder. If the Holders of a Majority of the Series A Preferred Stock
elect to effect an Optional Conversion, then all outstanding shares of
Series A Preferred Stock held by other Holders shall be deemed to be
converted at the same time.
(B) The Optional Conversion Rate per share of Series A Preferred Stock
shall be the number of shares of Common Stock equal to the quotient of (i)
the Stated Value plus all accrued but unpaid dividends to and including the
effective date of the Optional Conversion on one share of the Series A
Preferred Stock divided by (ii) the higher of (x) the average of the Market
Price of the Common Stock for the five Trading Days immediately preceding
the effective date of the Optional Conversion; provided, however, that if
any adjustment of the Exercise Price pursuant to Section 13 of the Warrants
----------
is effective during such five-day period, then the average of the Market
Price of the Common Stock for such five-day period will be adjusted to the
extent appropriate to reflect such adjustment or (y) $2.00 (such amount
shall be adjusted in a manner similar to the adjustment to the Exercise
Price under the Warrants with respect to events occurring after the Issue
Date that are subject to Section 13(B) of the Warrants). As of the
-------------
effective date of the Optional Conversion, the Holder shall be deemed to
have been issued the shares of Common Stock the Holder is entitled to
receive upon such conversion, and the Holder shall be treated for all
purposes as the record holder of such shares of Common Stock on such date,
which shares shall, upon issuance, be fully paid and non-assessable and
free from liens other than liens created by or imposed upon the Holder.
(C) The Company will at all times reserve and keep available, out of
its authorized but unissued shares of Common Stock, the maximum number of
shares of Common Stock into which all shares of Series A Preferred Stock
may become convertible pursuant to this Section 10.
----------
(D) The Company will procure, at its sole expense, the listing of the
Common Stock issuable upon conversion of the Series A Preferred Stock,
subject to issuance or notice of issuance, on all stock exchanges on which
the Common Stock is then listed. The Company will pay any and all
documentary stamp or similar issue or transfer taxes that may be payable in
respect of the issuance or delivery of shares of Common Stock on conversion
of shares of the Series A Preferred Stock. The Company shall not, however,
be required to
-17-
<PAGE>
pay any tax which may be payable in respect of any transfer involving the
issue and delivery of shares of Common Stock in a name other than that in
which the shares of Series A Preferred Stock so converted were registered,
and no such issue and delivery shall be made unless and until the person
requesting such issue has paid to the Company the amount of any such tax,
or has established, to the satisfaction of the Company, that such tax has
been paid.
(E) No fractional shares or scrip representing fractional shares shall
be issued upon the conversion of the Series A Preferred Stock. If any such
conversion would otherwise require the issuance of a fractional share, an
amount equal to such fraction multiplied by the current Market Price per
share of Common Stock on the date of conversion shall be paid to the Holder
in cash by the Company. If more than one share of Series A Preferred Stock
shall be surrendered for conversion at one time by or for the same Holder,
the number of full shares of Common Stock issuable upon conversion thereof
shall be computed on the basis of the aggregate number of shares of Series
A Preferred Stock so surrendered.
(F) The Holders of a Majority of the Series A Preferred Stock may give
written notice to the Company at any time terminating the right of the
Holders to effect an Optional Conversion.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.
-18-
<PAGE>
IN WITNESS WHEREOF, this Certificate of Designation has been signed on
behalf of the Company by its President and attested to by its Secretary, all as
of the 13th day of April, 1999.
NEWPARK RESOURCES, INC.
By: /s/ James D. Cole
-------------------------------
President
Attest:
By: /s/ Edah Keating
------------------------
Secretary
-19-
<PAGE>
PURCHASE AGREEMENT
BY AND AMONG
NEWPARK RESOURCES, INC.
AND
SCF-IV, L.P.
SERIES A CUMULATIVE PERPETUAL PREFERRED STOCK
WARRANTS FOR COMMON STOCK
APRIL 8, 1999
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<S> <C>
ARTICLE I.DEFINITIONS
Section 1.1 Definitions............................................. 1
Section 1.2 References and Titles................................... 5
ARTICLE II.PURCHASE OF THE SECURITIES
Section 2.1 Purchase of the Securities.............................. 5
ARTICLE III.REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 3.1 Organization, Standing and Power........................ 6
Section 3.2 Material Subsidiaries................................... 6
Section 3.3 Capital Structure....................................... 6
Section 3.4 Authority; No Violations; Approvals..................... 8
Section 3.5 SEC Documents........................................... 9
Section 3.6 Absence of Certain Changes or Events.................... 10
Section 3.7 No Undisclosed Material Liabilities..................... 11
Section 3.8 No Default.............................................. 11
Section 3.9 Compliance with Applicable Laws......................... 12
Section 3.10 Litigation.............................................. 12
Section 3.11 Title to Properties..................................... 13
Section 3.12 Certain Agreements...................................... 13
Section 3.13 Status of Securities.................................... 13
Section 3.14 Intellectual Property................................... 13
Section 3.15 Environmental Matters................................... 14
Section 3.16 Insurance............................................... 14
Section 3.17 No Brokers or Finders................................... 14
Section 3.18 Vote.................................................... 15
ARTICLE IV.REPRESENTATIONS AND WARRANTIES OF PURCHASER
Section 4.1 Organization, Standing and Power........................ 16
Section 4.2 Authority; Approvals.................................... 16
Section 4.3 Investment Intent....................................... 17
Section 4.4 Transfer Restrictions................................... 17
Section 4.5 Purchaser Status........................................ 19
Section 4.6 Access to Information; Investigation.................... 19
Section 4.7 No Brokers or Finders................................... 19
ARTICLE V.COVENANTS
Section 5.1 Affirmative Covenants of the Company.................... 20
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
Section 5.2 Negative Covenants of the Company....................... 20
Section 5.3 Approvals............................................... 20
Section 5.4 HSR Act Notification.................................... 20
Section 5.5 Notification of Certain Matters......................... 21
Section 5.6 Board of Directors...................................... 21
Section 5.7 Registration Rights Agreement........................... 21
Section 5.8 Confidentiality......................................... 21
Section 5.9 Standstill.............................................. 22
Section 5.10 Indemnification......................................... 23
Section 5.11 Restrictive Actions..................................... 23
ARTICLE VI.CONDITIONS PRECEDENT TO CLOSING
Section 6.1 Conditions Precedent to Each Party's Obligation......... 23
Section 6.2 Conditions Precedent to Obligation of Purchaser......... 24
Section 6.3 Conditions Precedent to Obligations of Company.......... 24
ARTICLE VII.CLOSING
Section 7.1 Closing................................................. 25
Section 7.2 Actions to Occur at the Closing......................... 25
ARTICLE VIII.TERMINATION
Section 8.1 Termination............................................. 26
Section 8.2 Effect of Termination................................... 27
ARTICLE IX.RECOVERY OF FEES
Section 9.1 Recovery of Fees........................................ 27
ARTICLE X.MISCELLANEOUS
Section 10.1 Survival of Provisions.................................. 27
Section 10.2 No Waiver; Modification in Writing...................... 27
Section 10.3 Specific Performance.................................... 28
Section 10.4 Severability............................................ 28
Section 10.5 Fees and Expenses....................................... 28
Section 10.6 Parties in Interest..................................... 28
Section 10.7 Notices................................................. 28
Section 10.8 Counterparts............................................ 29
Section 10.9 Entire Agreement........................................ 29
Section 10.10 Governing Law........................................... 29
Section 10.11 Public Announcements.................................... 29
Section 10.12 Assignment.............................................. 30
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
Section 10.13 Headings................................................ 30
</TABLE>
-iii-
<PAGE>
Exhibit 6.2(c) Opinions to be Provided by Ervin, Cohen & Jessup LLP at
Closing
Exhibit 6.2(e) Form of Certificate of Designation
Exhibit 6.3(c) Opinions to be Provided by Vinson & Elkins, L.L.P. at
Closing
Exhibit 7.2(b)(ii) Form of Warrants
Exhibit 7.2(b)(iii) Form of Registration Rights Agreement
-iv-
<PAGE>
PURCHASE AGREEMENT
PURCHASE AGREEMENT, dated as of April 8, 1999, by and among Newpark
Resources, Inc., a Delaware corporation (together with its successors, if any,
the "Company"), and SCF-IV, L.P., a Delaware limited partnership, (the
-------
"Purchaser").
- ----------
In consideration of the mutual covenants and agreements set forth herein
and for good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
-----------
Section 1.1 Definitions. As used in this Agreement, and unless the
-----------
context requires a different meaning, the following terms have the meanings
indicated:
"Affiliate" means, with respect to any Person, any other Person directly,
---------
or indirectly through one or more intermediaries, controlling, controlled by or
under common control with such Person. For purposes of this definition and this
Agreement, the term "control" (and correlative terms "controlling," "controlled
------- ----------- ----------
by" and "under common control with") means possession of the power, whether by
- -- -------------------------
contract, equity ownership or otherwise, to direct the policies or management of
a Person.
"Agreement" means this Purchase Agreement, as the same may be amended,
---------
supplemented or modified from time to time in accordance with the terms hereof.
"Approval" means any approval, authorization, grant of authority, consent,
--------
order, qualification, permit, license, variance, exemption, franchise,
concession, certificate, filing or registration or any waiver of the foregoing,
or any notice, statement or other communication required to be filed with,
delivered to or obtained from any Governmental Entity.
"Authorized Preferred Stock" has the meaning set forth in Section 3.3(a).
-------------------------- --------------
"Board" means the Board of Directors of the Company.
-----
"Business Day" means any day except Saturday, Sunday and any day which
------------
shall be a legal holiday or a day on which banking institutions in Houston,
Texas or New Orleans, Louisiana generally are authorized or required by law or
other government actions to close.
"Bylaws" mean the Company's bylaws, as amended from time to time.
------
"Capital Stock" means (i) with respect to any Person that is a corporation,
-------------
any and all shares, interests, participations or other equivalents (however
designated) of capital or capital stock of such Person and (ii) with respect to
any Person that is not a corporation, any and all partnership or other equity
interests of such Person.
<PAGE>
"Certificate of Designation" shall mean the Certificate of Designation in
--------------------------
the form attached hereto as Exhibit 6.2(e).
--------------
"Certificate of Incorporation" means the Company's Certificate of
----------------------------
Incorporation, as amended from time to time.
"Closing" has the meaning set forth in Section 7.1.
------- -----------
"Closing Date" has the meaning set forth in Section 7.1.
------------ -----------
"Code" means the Internal Revenue Code of 1986, as amended, and the rules
----
and regulations thereunder as in effect on the date hereof.
"Common Stock" means the Company's common stock, par value $.01 per share,
------------
and any Capital Stock for or into which such Common Stock hereafter is
exchanged, converted, reclassified or recapitalized by the Company or pursuant
to a business combination to which the Company is a party.
"Company" has the meaning set forth in the introductory paragraph hereof.
-------
"Company Disclosure Schedule" has the meaning set forth in Article III.
---------------------------
"Company 1998 Form 10-K" means the Report on Form 10-K filed by the Company
----------------------
with the SEC for the year ended December 31, 1998.
"Company Options" has the meaning set forth in Section 3.3(c).
--------------- --------------
"Company SEC Documents" has the meaning set forth in Section 3.5.
--------------------- -----------
"Contracts" means all agreements, contracts, or other binding commitments,
---------
arrangements or plans, written or oral (including any amendments and other
modifications thereto), to which the Company or any of its Subsidiaries is a
party or is otherwise bound.
"Cure Period" has the meaning set forth in Section 8.1(b)(i).
----------- -----------------
"Environmental Laws" has the meaning set forth in Section 3.15.
------------------ ------------
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
------------
the rules and regulations of the SEC promulgated thereunder.
"GAAP" has the meaning set forth in Section 3.5(b).
---- --------------
-2-
<PAGE>
"Governmental Entity" means any agency, bureau, commission, court,
-------------------
authority, department, official, political subdivision, tribunal or other
instrumentality of any government, whether (i) regulatory, administrative or
otherwise, (ii) federal, state or local, or (iii) domestic or foreign.
"Hazardous Materials" has the meaning set forth in Section 3.15.
------------------- ------------
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
-------
as amended.
"Intellectual Property" has the meaning set forth in Section 3.14.
--------------------- ------------
"Knowledge" of any Person means the actual knowledge of such Person's
---------
executive officers obtained without investigation other than through the
exercise of each such Person's normal duties.
"Law" means any constitutional provision, statute or other law, ordinance,
---
rule, regulation or interpretation of any thereof having the force of law and
any Order of any Governmental Entity (including Environmental Laws) now in
effect.
"Lien" means any mortgage, lien, pledge, encumbrance, easement, charge or
----
security interest of any kind (including any agreement to give any of the
foregoing, any conditional sale or other title retention agreement or any lease
in the nature thereof).
"Litigation" has the meaning set forth in Section 3.10.
---------- ------------
"Material Adverse Effect" or "Material Adverse Change" means any effect,
----------------------- -----------------------
change, event or occurrence that is materially adverse to the business,
operations, properties, condition (financial or otherwise), results of
operations, assets, liabilities or prospects of the Company and its Subsidiaries
taken as a whole.
"Material Contracts" means any contract required to be filed as an exhibit
------------------
to a Report on Form 10-K filed by the Company with the SEC.
"Material Subsidiary" means any Subsidiary of the Company that had revenues
-------------------
of more than $1,000,000 for the year ended December 31, 1998 or that had assets
or liabilities (including contingent liabilities) of a value or amount in excess
of $1,000,000 as of the date of this Agreement.
"Order" means any decree, injunction, judgment, settlement, order, ruling,
-----
assessment or writ of a court.
"Person" means an individual or a corporation, partnership, trust,
------
incorporated or unincorporated association, limited liability company, joint
venture, joint stock company, government (or an agency or political subdivision
thereof) or other entity of any kind.
"PS" means the Company's Series A Cumulative Perpetual Preferred Stock,
--
$.01 par value per share.
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<PAGE>
"Purchase Price" has the meaning set forth in Section 2.1(b).
-------------- --------------
"Purchaser" has the meaning set forth in the introductory paragraph hereto.
---------
"Purchaser's Expenses" means all reasonable out-of-pocket fees, costs and
--------------------
expenses incurred by Purchaser in connection with its due diligence efforts or
the transactions contemplated by this Agreement and the other Transaction
Documents, including fees, costs and expenses of its accountants, counsel and
other similar advisors.
"Registration Rights Agreement" means the Registration Rights Agreement in
-----------------------------
the form of Exhibit 7.2(b)(iii).
-------------------
"SEC" means the Securities and Exchange Commission.
---
"Securities" means the Shares and the Warrants.
----------
"Securities Act" means the Securities Act of 1933, as amended, and the
--------------
rules and regulations of the SEC promulgated thereunder.
"Shares" means the 150,000 shares of PS purchased by Purchaser pursuant to
------
this Agreement, and any Capital Stock for or into which such Shares hereafter
are exchanged, converted, reclassified or recapitalized by the Company or
pursuant to a business combination to which the Company is a party.
"Stock Plans" means the Company's stock option, stock incentive or other
-----------
similar plans.
"Subsidiary" means, (i) a corporation, a majority of whose stock with
----------
voting power, under ordinary circumstances, to elect directors is at the time,
directly or indirectly, owned by the Company, by a Subsidiary of the Company or
by the Company and another Subsidiary, or (ii) any other Person (other than a
corporation) in which the Company, a Subsidiary or the Company and a Subsidiary,
directly or indirectly, at the date of determination thereof has at least a
majority ownership interest.
"Transaction Documents" means this Agreement, the Certificate of
---------------------
Designation, the Warrants and the Registration Rights Agreement.
"Transfer" has the meaning set forth in Section 4.4.
-------- -----------
"Underlying Shares" means the shares of Common Stock issuable upon exercise
-----------------
of the Warrants in accordance with the terms thereof, any shares of Common Stock
issued in payment of accrued dividends on the Shares, and any shares of Common
Stock issued upon conversion of the Shares.
"Voting Stock" of a Person means Capital Stock of such Person of the class
------------
or classes pursuant to which the holders thereof have the general voting power
under ordinary circumstances
-4-
<PAGE>
to vote in the election of the board of directors, managers or trustees of such
Person; provided that if such Person has more than one class or series of Voting
Stock, any calculation as to a percentage of such Voting Stock shall be made
with respect to the percentage of votes entitled to be cast in respect of such
Voting Stock in such circumstances.
"Warrants" means the warrants to purchase initially 2,400,000 shares of
--------
Common Stock, at an exercise price of $8.50 per share (as may be adjusted from
time to time as set forth therein), in substantially the form of Exhibit
-------
7.2(b)(ii).
- ----------
Section 1.2 References and Titles. All references in this Agreement to
---------------------
Exhibits, Schedules, Articles, Sections, subsections, and other subdivisions
refer to the corresponding Exhibits, Schedules, Articles, Sections, subsections,
and other subdivisions of this Agreement unless expressly provided otherwise.
Titles appearing at the beginning of any Articles, Sections, subsections, or
other subdivisions of this Agreement are for convenience only, do not constitute
any part of such Articles, Sections, subsections or other subdivisions, and
shall be disregarded in construing the language contained therein. The words
"this Agreement," "herein," "hereby," "hereunder," and "hereof," and words of
-------------- ------ ------ --------- ------
similar import, refer to this Agreement as a whole and not to any particular
subdivision unless expressly so limited. The words "this Section," "this
------------ ----
subsection," and words of similar import, refer only to the Sections or
- ----------
subsections hereof in which such words occur. The word "including" (in its
various forms) means "including without limitation." Pronouns in masculine,
----------------------------
feminine, or neuter genders shall be construed to state and include any other
gender and words, terms, and titles (including terms defined herein) in the
singular form shall be construed to include the plural and vice versa, unless
the context otherwise expressly requires. Unless the context otherwise
requires, all defined terms contained herein shall include the singular and
plural forms of such defined terms. All references in this Agreement to "the
Company and its Subsidiaries" or to "the Company and its Material Subsidiaries"
means the Company and its Subsidiaries or the Company and its Material
Subsidiaries, as the case may be, taken as a whole.
ARTICLE II.
PURCHASE OF THE SECURITIES
--------------------------
Section 2.1 Purchase of the Securities.
--------------------------
(a) Subject to the terms and conditions herein set forth, the Company will
sell to Purchaser, and Purchaser will purchase from the Company, the Securities.
(b) The aggregate purchase price payable for the Securities shall be $15
million (the "Purchase Price"). The Purchase Price shall be allocated between
--------------
the Shares and the Warrants as agreed to between the parties in writing at or
prior to Closing.
(c) Delivery of the Securities shall be made at Closing by delivery to
Purchaser, against payment of the Purchase Price therefor as provided herein, of
(i) one or more share certificates, registered in the name of Purchaser,
representing an aggregate of 150,000 shares of PS and (ii) the Warrants, all to
be purchased at Closing by Purchaser hereunder.
-5-
<PAGE>
(d) Payment of the Purchase Price for the Securities to be purchased
hereunder shall be made by or on behalf of Purchaser by wire transfer of
immediately available funds to an account of the Company (the number for which
account shall have been furnished to Purchaser at least two Business Days prior
to the Closing Date).
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
---------------------------------------------
The Company represents and warrants to Purchaser as follows (in each case
as qualified by matters reflected on the disclosure schedule dated as of the
date of this Agreement by reference to the Section of this Agreement so
qualified and delivered by the Company to Purchaser on or prior to the date of
this Agreement (the "Company Disclosure Schedule") and made a part hereof by
---------------------------
reference):
Section 3.1 Organization, Standing and Power. Each of the Company and
--------------------------------
each of its Material Subsidiaries is a corporation or other entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is incorporated or organized and has the requisite
corporate or other such entity power and authority to own its properties and
carry on its business as now being conducted. Each of the Company and each of
its Material Subsidiaries is duly qualified or licensed to do business and is in
good standing in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification or licensing
necessary, other than in such jurisdictions where the failure to be so qualified
or licensed or to be in good standing, individually or in the aggregate, has not
had and could not reasonably be expected to have a Material Adverse Effect. The
Company has delivered to Purchaser prior to the execution of this Agreement
complete and correct copies of its Certificate of Incorporation and Bylaws and,
in the case of the Material Subsidiaries, made available similar organizational
documents, in each case, as in effect on the date of this Agreement.
Section 3.2 Material Subsidiaries. Except as set forth in the Company
---------------------
1998 Form 10-K, all the outstanding shares of share capital (or other voting or
equity securities or interests, as applicable) of each Material Subsidiary of
the Company have been validly issued and are fully paid and nonassessable (with
respect to corporate Subsidiaries) and, except as set forth in Schedule 3.2, are
------------
owned directly or indirectly by the Company, free and clear of all Liens.
Section 3.3 Capital Structure.
-----------------
(a) The authorized Capital Stock of the Company consists of 100,000,000
shares of Common Stock and 1,000,000 shares of preferred stock, $.01 par value,
which may be divided into and issued in one or more series upon the creation
thereof by the Board (the "Authorized Preferred Stock"), of which, as of April
--------------------------
8, 1999, (A) 68,884,951 shares of Common Stock are issued and outstanding, (B)
6,823,769 shares of Common Stock have been authorized and reserved for issuance
under the Stock Plans, (C) 0 shares of Common Stock are held by the Company in
its treasury and (D) no shares of Common Stock are held by any of the Company's
Subsidiaries. Except as described in this Section 3.3, the Company has no
-----------
authorized, issued or outstanding shares of Capital Stock as of the date of this
Agreement.
-6-
<PAGE>
(b) Except as limited by applicable bankruptcy, insolvency, reorganization,
moratorium and other similar laws of general applicability relating to or
affecting creditors' rights, there are no restrictions or limitations,
contractual or otherwise, binding upon the Company or any of its Subsidiaries or
to which the Company or any of its Subsidiaries is subject that prohibit or
limit the enforceability of the terms and provisions of the Certificate of
Designation or, except as provided for in the Warrants, will prohibit or limit
the right of a holder of Warrants to exercise Warrants for shares of Common
Stock; and the exercise of any Warrants for shares of Common Stock will not
violate or result in or constitute a default under any existing loan or credit
agreement, note, bond, mortgage, indenture, lease, permit, concession,
franchise, license or any other contract, agreement, arrangement or
understanding to which the Company or any of its Subsidiaries is a party or by
which they or any of their properties or assets are bound other than any such
violations or defaults that, individually or in the aggregate, have not had and
could not reasonably be expected to have a Material Adverse Effect;
(c) There are no outstanding warrants, share or stock options, share or
stock appreciation rights or other rights to receive or purchase any Capital
Stock of the Company or any of its Subsidiaries granted under the Stock Plans or
otherwise except as set forth in the Company 1998 Form 10-K or Schedule 3.3(c)
---------------
of the Company Disclosure Schedule (such warrants, share or stock options, share
or stock appreciation rights or other rights disclosed thereon, collectively,
the "Company Options"). Except for the Company Options and except as provided
---------------
in the Transaction Documents, there are no outstanding securities, options,
warrants, calls, rights, commitments, agreements, arrangements or undertakings
of any kind to which the Company or any of its Subsidiaries is a party or by
which any of them is bound obligating the Company or any of its Subsidiaries to
issue, deliver or sell, or cause to be issued, delivered or sold, any Capital
Stock of the Company or of any of its Material Subsidiaries or obligating the
Company or any of its Subsidiaries to issue, grant, extend or enter into any
such security, option, warrant, call, right, commitment, agreement, arrangement
or undertaking. There are no outstanding obligations of the Company or any of
its Subsidiaries (contingent or otherwise) to repurchase, redeem or otherwise
acquire any Capital Stock of the Company or any of its Material Subsidiaries or
any security exchangeable for or convertible into such Capital Stock.
(d) All outstanding shares of Capital Stock of the Company and its Material
Subsidiaries are, and all shares which may be issued upon exercise of the
Warrants, conversion of the Shares or as a dividend on the Shares, will be, when
issued in accordance with the terms of the Warrants and upon delivery of the
exercise price, payable with respect thereto or in accordance with the terms of
the Shares, as the case may be, duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive or similar rights.
(e) Except as contemplated hereby or in the other Transaction Documents or
as set forth in the Company 1998 Form 10-K or Schedule 3.3(e), there are not any
---------------
registration rights agreements, shareholder agreements, voting agreements or
trusts, proxies or other agreements or contractual obligations to which the
Company or any Subsidiary is a party or bound with respect to the registration
with any Government Entity of any Capital Stock of the Company or any of its
Material Subsidiaries, or the voting or disposition of any Capital Stock of the
Company or any of its Material Subsidiaries and, to the Company's Knowledge,
there are no other shareholder agreements, voting
-7-
<PAGE>
agreements or trusts, proxies or other agreements or contractual obligations
among the shareholders of the Company with respect to the voting or disposition
of any Capital Stock of the Company or any of its Material Subsidiaries.
Section 3.4 Authority; No Violations; Approvals.
-----------------------------------
(a) The Board has approved this Agreement, the other Transaction Documents
and the transactions contemplated hereby and thereby, and declared this
Agreement, the other Transaction Documents and the transactions contemplated
hereby and thereby to be in the best interests of the Company. The Board has
approved the sale of the Securities and, upon any exercise of the Warrants or
conversion of the Shares, the issuance of the Underlying Shares to Purchaser
hereunder. The Company has all requisite corporate power and authority to enter
into this Agreement and each of the other Transaction Documents and to
consummate each of the transactions and perform each of the obligations
contemplated hereby and thereby. The execution and delivery of this Agreement
and each of the other Transaction Documents and the consummation of each of the
transactions and the performance of each of the obligations contemplated hereby
and thereby have been duly authorized by all necessary corporate action on the
part of the Company. This Agreement has been, and, subject to the completion of
the Closing, at the Closing the Warrants and the Registration Rights Agreement
will be, duly executed and delivered by the Company, and the Certificate of
Designation has been duly adopted by the Board of Directors in accordance with
applicable Law. The Certificate of Designation (upon the filing of the same
with the Delaware Secretary of State) and, assuming this Agreement and each of
the other Transaction Documents to which Purchaser is a party constitute the
valid and binding obligations of Purchaser, this Agreement and each of the
Warrants and the Registration Rights Agreement, constitutes a valid and binding
obligation of the Company enforceable in accordance with its terms, subject, as
to enforceability, to bankruptcy, insolvency, reorganization, moratorium and
other similar laws of general applicability relating to or affecting creditors'
rights and to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(b) The execution and delivery of this Agreement and each of the Warrants
and the Registration Rights Agreement, and the adoption of the Certificate of
Designation, does not, and the consummation of the transactions contemplated
hereby and thereby and compliance with the provisions hereof and thereof will
not, conflict with, require the consent of any other Person to or result in any
violation of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration of
any material obligation or to the loss of any material benefit under, or give
rise to a right of purchase under, result in the creation of any Lien upon any
of the material properties or assets of the Company or its Material Subsidiaries
under, or otherwise result in a material detriment to the Company or its
Material Subsidiaries under, any provision of (A) the Certificate of
Incorporation or Bylaws or any provision of the comparable organizational
documents of any of the Company's Material Subsidiaries, (B) any loan or credit
agreement, note, bond, mortgage, indenture, lease, instrument, permit,
concession, franchise, license or other contract or agreement, arrangement or
understanding to which the Company or any of its Material Subsidiaries is a
party or otherwise is bound or by which any of them or their respective
properties are bound or any existing Approval applicable to the Company or any
of its Material Subsidiaries, (C) any joint venture or other ownership
arrangement to which the Company or any
-8-
<PAGE>
of its Material Subsidiaries is a party or otherwise is bound or by which any of
them or their respective properties are bound or (D) assuming the Approvals
referred to in Section 3.4(c) are duly and timely obtained or made, any Law or
--------------
Order applicable to the Company or any of its Subsidiaries or any of their
respective properties or assets, other than, in the case of clause (B) (other
than with respect to any material loan or credit agreement, note, bond, mortgage
or indenture or any Material Contract), (C) or (D), any such conflicts, failures
to obtain consents, violations, defaults, rights, losses, Liens or detriments,
that, individually or in the aggregate, (x) have not had and could not
reasonably be expected to have a Material Adverse Effect, (y) have not impaired
and could not reasonably be expected to impair the ability of the Company to
perform its obligations under any of the Transaction Documents in any material
respect, and (z) have not and could not reasonably be expected to delay in any
material respect or prevent the consummation of any of the transactions, or
performance of any of the obligations of the Company contemplated by any of the
Transaction Documents.
(c) No Approval from any Governmental Entity is required by or with respect
to the Company or any of its Subsidiaries in connection with the execution and
delivery of this Agreement or any other Transaction Document by the Company or
the consummation by the Company of the transactions contemplated hereby or
thereby, except for: (A) the possible filing of a notification report by the
Company under the HSR Act and the expiration or termination of the applicable
waiting period with respect thereto in connection with the issuance of
Underlying Shares (but not in order to consummate the Closing), (B) the filing
of the Certificate of Designation in accordance with the requirements of Section
103 of the Delaware General Corporation Law and (C) any such Approvals the
failure of which to be made or obtained (1) has not had and could not reasonably
be expected to have a Material Adverse Effect, (2) has not impaired and could
not reasonably be expected to impair the ability of the Company to perform its
obligations under any of the Transaction Documents in any material respect and
(3) have not and could not reasonably be expected to delay in any material
respect or prevent the consummation of any of the transactions contemplated by
any of the Transaction Documents.
Section 3.5 SEC Documents.
-------------
(a) The Company has made available to Purchaser a true and complete copy of
each report, schedule, registration statement and definitive proxy statement
filed by the Company with the SEC since December 31, 1997 (the "Company SEC
-----------
Documents"), including the Company 1998 Form 10-K, which are all the documents
- ---------
(other than preliminary materials) that the Company was required to file with
the SEC since December 31, 1997. As of their respective dates, the Company SEC
Documents complied in all material respects with the requirements of the
Securities Act, or the Exchange Act, as the case may be, and the rules and
regulations of the SEC thereunder applicable to such Company SEC Documents, and
none of the Company SEC Documents contained as of their respective dates any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.
(b) The financial statements of the Company included in the Company SEC
Documents, including the notes and schedules thereto, at the time filed complied
as to form in all material
-9-
<PAGE>
respects with the rules and regulations of the SEC with respect thereto, were
prepared in accordance with United States generally accepted accounting
principles ("GAAP") applied on a consistent basis during the periods involved
----
(except as may be indicated in the notes thereto or, in the case of the
unaudited statements, as permitted by Rule 10-01 of Regulation S-X of the SEC)
and fairly present the consolidated financial position of the Company and its
consolidated Subsidiaries as of their respective dates and the consolidated
results of operations and the consolidated cash flows of the Company and its
consolidated Subsidiaries for the periods presented therein in accordance with
applicable requirements of GAAP (subject, in the case of the unaudited
statements, to normal, recurring adjustments, none of which are material)
applied on a consistent basis during the periods presented (except as may be
indicated in the notes thereto or, in the case of the unaudited statements, as
permitted by Rule 10-01 of Regulation S-X promulgated under the Securities Act).
Section 3.6 Absence of Certain Changes or Events.
------------------------------------
(a) Except as disclosed in the Company SEC Documents filed prior to the
date of this Agreement, or except as contemplated by this Agreement, since
December 31, 1998, the Company and its Material Subsidiaries have conducted
their business only in the ordinary course of business consistent with past
practice, and there has not been: (i) any declaration, setting aside or payment
of any dividend or other distribution (whether in cash, stock or property) with
respect to any Capital Stock of the Company; (ii) any split, combination,
reclassification or amendment of any term of any outstanding Capital Stock or
other security of the Company or any of its Material Subsidiaries or (other than
issuance of Common Stock upon the exercise of any Company Options) any issuance
or the authorization of the issuance of any securities of the Company or any of
its Material Subsidiaries, other than in connection with the transactions
contemplated hereby; (iii) any repurchase, redemption or other acquisition by
the Company or any Subsidiary of the Company of any outstanding Capital Stock or
other securities of the Company or any Material Subsidiary of the Company,
except as contemplated by the Stock Plans; (iv) (A) any grant by the Company or
any of its Subsidiaries to any officer of the Company or any of its Material
Subsidiaries of any increase in compensation, except for increases in the
ordinary course of business consistent with past practice or as required under
employment or other agreements or benefit arrangements in effect as of December
31, 1998, or (B) any grant by the Company or any of its Subsidiaries to any such
officer of any increase in severance or termination pay, except as was required
or provided for under any employment, severance, termination or other agreements
or benefit arrangements in effect as of December 31, 1998; (v) except as
required by a change in GAAP, any material change in accounting methods,
principles or practices by the Company or any of its Material Subsidiaries, (vi)
any material casualties affecting the Company and its Material Subsidiaries, or
any material loss, damage or destruction to any of their properties or assets,
whether covered by insurance or not.
(b) Except as disclosed in the Company's consolidated financial statements
included in the Company 1998 Form 10-K, and the notes thereto, and except for
matters relating to general economic conditions and conditions which affect the
oilfield services industry generally, since December 31, 1998, there has not
been any event, circumstance or fact that (x) has had or could reasonably be
expected to have a Material Adverse Effect, (y) has impaired or could reasonably
be expected to impair the ability of the Company to perform its obligations
under any of the Transaction Documents in any material respect, or (z) could
reasonably be expected to delay in any material
-10-
<PAGE>
respect or prevent the consummation of any of the transactions contemplated by
any of the Transaction Documents.
Section 3.7 No Undisclosed Material Liabilities. Except as disclosed in
-----------------------------------
Schedule 3.7 of the Company Disclosure Schedule or the Company's financial
- ------------
statements included in the Company 1998 Form 10-K, and the notes thereto, there
are no liabilities or obligations of the Company or any of its Subsidiaries of
any kind whatsoever, whether accrued, contingent, absolute, determined,
determinable or otherwise, other than: (i) liabilities adequately provided for
on the balance sheet of the Company dated as of December 31, 1998 (including the
notes thereto) contained in the Company 1998 Form 10-K; (ii) liabilities
incurred in the ordinary course of business consistent with past practice since
December 31, 1998, which liabilities, individually or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect; (iii) liabilities
arising under the Transaction Documents; and (iv) liabilities not required by
GAAP to be recognized or disclosed on a consolidated balance sheet of the
Company and its consolidated Subsidiaries or in the notes thereto, which
liabilities, individually or in the aggregate, could not reasonably be expected
to have a Material Adverse Effect.
Section 3.8 No Default. Neither the Company nor any of its Subsidiaries
----------
is in default or violation (and no event has occurred which, with notice or the
lapse of time or both, would constitute a default or violation) of any term,
condition or provision of (i) the Certificate of Incorporation or Bylaws of the
Company or the comparable organizational documents of any of its Material
Subsidiaries, (ii) any loan or credit agreement, note, bond, mortgage,
indenture, lease, instrument, permit, concession, franchise, license or any
other contract, agreement, arrangement or understanding to which the Company or
any of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries or any of their respective properties or assets is bound, or (iii)
any Order or Law applicable to the Company or any of its Subsidiaries, except in
the case of clause (ii) and (iii), for violations or defaults that, individually
or in the aggregate, (x) have not had and could not reasonably be expected to
have a Material Adverse Effect, (y) have not impaired and could not reasonably
be expected to impair the ability of the Company to perform its obligations
under any of the Transaction Documents in any material respect, and (z) have not
and could not reasonably be expected to delay in any material respect or prevent
the consummation of any of the transactions contemplated by any of the
Transaction Documents. The Company and its Subsidiaries (i) are not in breach
of or default under any covenant, including financial covenants, under
agreements relating to money borrowed in excess of $5 million where such breach
or default would (or would, with the passage of time or giving of notice, or
both) entitle any other party to any such agreement to accelerate the time of
repayment of any indebtedness of the Company or its Subsidiaries thereunder, and
(ii) do not believe that it is reasonably likely that they will be in breach of
or default under any such covenant under any such agreement as of the next date
on which they are required to be in compliance with any such covenants.
Section 3.9 Compliance with Applicable Laws.
-------------------------------
(a) The Company and each of its Subsidiaries has in effect all Approvals
of all Governmental Entities necessary for the lawful conduct of their
respective businesses, and there has occurred no default or violation (and no
event has occurred which, with notice or the lapse of time
-11-
<PAGE>
or both, would constitute a default or violation) under any such Approval,
except for failures to obtain, or for defaults or violations under, Approvals
which failures, defaults or violations, individually or in the aggregate, (i)
have not had and could not reasonably be expected to have a Material Adverse
Effect, (ii) have not impaired and could not reasonably be expected to impair
the ability of the Company to perform its obligations under any of the
Transaction Documents in any material respect, and (iii) could not reasonably be
expected to delay in any material respect or prevent the consummation of any of
the transactions contemplated by any of the Transaction Documents.
(b) Except as otherwise disclosed in the Company SEC Documents, the Company
and its Subsidiaries are in compliance with all applicable Laws and Orders,
except for possible noncompliance which, individually or in the aggregate, (i)
has not had and could not reasonably be expected to have a Material Adverse
Effect, (ii) has not impaired and could not reasonably be expected to impair the
ability of the Company to perform its obligations under any of the Transaction
Documents in any material respect, and (iii) could not reasonably be expected to
delay in any material respect or prevent the consummation of any of the
transactions contemplated by any of the Transaction Documents.
(c) No investigation or review by any Governmental Entity with respect to
the Company, any of its Subsidiaries or the transactions contemplated by this
Agreement and the other Transaction Documents is pending or, to the Knowledge of
the Company, threatened, nor has any Governmental Entity notified the Company or
any of its Subsidiaries in writing or, to the Company's Knowledge, otherwise of
any intention to conduct the same, other than those the outcome of which,
individually or in the aggregate, (i) have not had and could not reasonably be
expected to have a Material Adverse Effect, (ii) have not impaired and could not
reasonably be expected to impair the ability of the Company to perform its
obligations under any of the Transaction Documents in any material respect, or
(iii) could not reasonably be expected to delay in any material respect or
prevent the consummation of any of the transactions contemplated by any of the
Transaction Documents.
Section 3.10 Litigation. Except as disclosed in the Company SEC
----------
Documents or Schedule 3.10 of the Company Disclosure Schedule, there is no suit,
-------------
action, proceeding or indemnification claim, at law or in equity, pending before
any Governmental Entity or arbitrator, or, to the Knowledge of the Company,
threatened, against or affecting the Company, any Subsidiary of the Company or
any of its Material Contracts ("Litigation"), and neither the Company nor any
----------
Subsidiary is a party to any Litigation, that, with respect to each matter, (i)
has had or could reasonably be expected to have a Material Adverse Effect, (ii)
has impaired or reasonably could be expected to impair the ability of the
Company to perform its obligations under any of the Transaction Documents in any
material respect, or (iii) reasonably could be expected to delay in any material
respect or prevent the consummation of any of the transactions contemplated by
any of the Transaction Documents, nor is there any Order of any Governmental
Entity or arbitrator outstanding against or binding upon the Company or any
Subsidiary of the Company or any of its Material Contracts which (i) has had or
could reasonably be expected to have a Material Adverse Effect, (ii) has
impaired or reasonably could be expected to impair the ability of the Company to
perform its obligations under any of the Transaction Documents in any material
respect, or (iii) reasonably
-12-
<PAGE>
could be expected to delay in any material respect or prevent the consummation
of any of the transactions contemplated by any of the Transaction Documents.
Section 3.11 Title to Properties. Except as set forth in the Company SEC
-------------------
Documents and Schedule 3.2, the Company or its Subsidiaries own, of record (to
------------
the extent applicable) and beneficially, or have a valid leasehold interest in,
all material personal property and real property, in each case, as reflected on
the latest balance sheet included in the Company SEC Documents as being owned or
leased by it or any of its Subsidiaries or as thereafter acquired by it or any
of its Subsidiaries (except to the extent that any such properties have
thereafter been disposed of in the ordinary course of business), free and clear
of any liens or other similar encumbrances that are material to the business of
the Company and its Subsidiaries.
Section 3.12 Certain Agreements.
------------------
(a) Except as included in the list of exhibits to the Company 1998 Form 10-
K or Schedule 3.12(a) of the Company Disclosure Schedule, there are no, whether
----------------
in oral or written form, Material Contracts. Each Material Contract is in full
force and effect.
(b) The Company or the relevant Subsidiary and, to the Company's Knowledge,
each other party to the Material Contracts has performed in all material
respects the obligations required to be performed by it under the Material
Contracts and is not (with or without lapse of time or the giving of notice, or
both) in breach or default thereunder in any material respect. No party to any
Material Contract has given written notice of any action to terminate, cancel,
rescind or procure a judicial reformation thereof.
Section 3.13 Status of Securities. The issuance and sale of the
--------------------
Securities and the reservation and issuance of the Underlying Shares have been
duly authorized by all necessary corporate action on the part of the Company
(except that there has been no reservation of any shares of Common Stock that
may be issued in payment of accrued dividends on the Shares), and the Shares,
when delivered to Purchaser at the Closing against payment therefor as provided
herein, will be validly issued, fully paid and non-assessable and the issuance
and sale of the Securities and the issuance of the Underlying Shares are not and
will not be subject to preemptive rights of any Person.
Section 3.14 Intellectual Property. The Company and the Subsidiaries
---------------------
own, possess or license, or, to the Company's Knowledge can acquire on
reasonable terms, adequate patents, patent rights, licenses, inventions,
copyrights, know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or procedures),
trademarks, service marks, trade names or other intellectual property
(collectively, "Intellectual Property") necessary to carry on the business of
the Company and the Material Subsidiaries in all material respects as now
operated by them, and neither the Company nor any of the Subsidiaries has
received any written notice or, to the Knowledge of the Company, is otherwise
aware of any infringement of or conflict with asserted rights of others with
respect to any Intellectual Property (including Intellectual Property which is
licensed) or of any facts or circumstances which would render any Intellectual
Property invalid or inadequate to protect the interest of the Company or any of
the Subsidiaries therein, and which infringement or conflict (if the subject of
any unfavorable decision,
-13-
<PAGE>
ruling or finding) or invalidity or inadequacy, singly or in the aggregate,
could reasonably be expected to result in a Material Adverse Effect. To the
Company's Knowledge, the Company will not suffer any Material Adverse Effect
with respect to Year 2000 non-compliance.
Section 3.15 Environmental Matters. Except for such matters as could
---------------------
not, singly or in the aggregate, reasonably be expected to result in a Material
Adverse Effect or as disclosed on Schedule 3.15, (A) neither the Company nor any
-------------
of the Subsidiaries is in violation of any federal, state, local or foreign
statute, law, rule, regulation, ordinance, code, policy or rule of common law or
any judicial or administrative interpretation thereof, including any judicial or
administrative order, consent, decree or judgment, relating to pollution or
protection of human health, the environment (including, without limitation,
ambient air, surface water, groundwater, land surface or subsurface strata) or
wildlife, including, without limitation, laws and regulations relating to the
release or threatened release of chemicals, pollutants, contaminants, wastes,
toxic substances, hazardous substances, petroleum or petroleum products
(collectively, "Hazardous Materials") or to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials (collectively, "Environmental Laws"), (B) the Company and
the Subsidiaries have all permits, authorizations and approvals required under
any applicable Environmental Laws and are each in compliance with their
requirements, (C) there are no pending or, to the Company's Knowledge,
threatened administrative, regulatory or judicial actions, suits, demands,
demand letters, claims, liens, notices of noncompliance or violation,
investigation or proceedings relating to any Environmental Law against the
Company or any of the Subsidiaries and (D) to the Company's Knowledge there are
no events or circumstances that might reasonably be expected to form the basis
of an order for clean-up or remediation, or an action, suit or proceeding by any
private party or governmental body or agency, against or affecting the Company
or any of the Subsidiaries relating to Hazardous Materials or Environmental
Laws.
Section 3.16 Insurance. The Company has made available to Purchaser a
---------
listing of all insurance policies maintained by the Company and its Material
Subsidiaries, indicating risks insured against, carrier, amount of coverage and
expiration date, and, to the Company's Knowledge, all such insurance is in full
force and effect.
Section 3.17 No Brokers or Finders. No agent, broker, finder or
---------------------
investment or commercial banker, or other Person or firm engaged by or acting on
behalf of the Company or its Subsidiaries in connection with the negotiation,
execution or performance of this Agreement is or will be entitled to any
brokerage or finder's or similar fee or other commission as a result of this
Agreement, the other Transaction Documents or the transactions contemplated
hereby or thereby, other than any such fees or commissions that have been
disclosed to Purchaser and as to which the Company shall have full
responsibility.
Section 3.18 Vote. There are no approvals required of the holders of any
----
class or series of shares or stock of the Company necessary to approve this
Agreement or any other Transaction Documents and the transactions contemplated
hereby or thereby.
Section 3.19 Absence of Labor Dispute. No labor dispute with the
------------------------
employees of the Company or any of the Subsidiaries exists or, to the Company's
Knowledge is imminent, and, to the
-14-
<PAGE>
Company's Knowledge, there is no existing or imminent labor disturbance by the
employees of any of its or any of the Subsidiaries' principal suppliers,
manufacturers, customers or contractors, which, in either case, could reasonably
be expected to result in a Material Adverse Effect.
Section 3.20 Tax Returns. Except as set forth on Schedule 3.20, all
----------- -------------
United States federal income tax returns of the Company and the Subsidiaries
required by law to be filed (taking into account all extensions) have been filed
and all federal income taxes shown by such returns or otherwise assessed, which
are due and payable, have been paid, except for such taxes and assessments, if
any, as are being contested in good faith and by adequate proceedings and as to
which adequate reserves have been provided. The Company and the Subsidiaries
have filed all other tax returns that are required to have been filed by them
pursuant to applicable foreign, federal, state, local or other law except
insofar as the failure to file such returns could not reasonably be expected to
result in a Material Adverse Effect, and have paid all taxes shown by such
returns or pursuant to any assessment received by the Company and the
Subsidiaries, which are due and payable, except for such taxes or assessments,
if any, as are being contested in good faith and by appropriate proceedings and
as to which adequate reserves have been provided or where the amount due, in the
aggregate, is not material to the business of the Company and its Material
Subsidiaries. The charges, accruals and reserves on the books of the Company in
respect of all federal, state, local and foreign tax liabilities of the Company
and each Subsidiary for any years not finally determined are adequate to meet
any assessments or reassessments for additional income tax that is reasonably
expected to be payable for any years not finally determined, except to the
extent of any inadequacy that could not reasonably be expected to result in a
Material Adverse Effect.
Section 3.21 ERISA. The Company and each of the Subsidiaries is in
-----
compliance in all material respects with the applicable provisions of ERISA, and
no "reportable event", as such term is defined in Section 403 of ERISA, has
occurred with respect to any plan of the Company or the Subsidiaries.
Section 3.22 Related Party Transactions. No relationship, direct or
--------------------------
indirect, exists between or among any of the Company, the Subsidiaries or any
affiliate of the Company, on the one hand, and any director, officer,
stockholder, customer or supplier of any of them, on the other hand, which would
be required by the Exchange Act or by the rules and regulations enacted
thereunder to be described in the Company's proxy statement for the election of
directors in 1999 which is not described in the Company SEC Documents of the
Company Disclosure Schedule.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
-------------------------------------------
Purchaser represents and warrants to the Company as follows:
Section 4.1 Organization, Standing and Power. Purchaser is a limited
--------------------------------
partnership duly organized, validly existing, and in good standing under the
laws of Delaware and has all requisite partnership power and authority to own,
lease, and operate its properties and to carry on its business as now being
conducted and to execute and deliver this Agreement and the other Transaction
-15-
<PAGE>
Documents to which Purchaser is a party and consummate each of the transactions
and perform each of the obligations contemplated hereby and thereby.
Section 4.2 Authority; Approvals.
--------------------
(a) (i) The execution and delivery by Purchaser of this Agreement and the
other Transaction Documents to which it is a party, the purchase of the
Securities to be purchased by it and the consummation of each of the
transactions and the performance of each of the obligations contemplated hereby
and thereby have been duly and properly authorized by all necessary partnership
action on the part of Purchaser and (ii) this Agreement has been and the other
Transaction Documents to which Purchaser is a party will be (on or prior to the
Closing), duly executed and delivered by it and, assuming the accuracy of the
representations and warranties of the Company in Section 3.4 hereof, constitute
-----------
the valid and legally binding obligations of Purchaser, enforceable against it
in accordance with their respective terms, subject, as to enforceability, to
bankruptcy, insolvency, reorganization, moratorium and other similar laws of
general applicability relating to or affecting creditors' rights and to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
(b) The execution and delivery by Purchaser of this Agreement and the other
Transaction Documents to which it is a party, the purchase of the Securities to
be purchased by it and the consummation of each of the transactions and the
performance of each of the obligations contemplated hereby and thereby (i) does
not conflict with or violate (whether with or without notice or a lapse of time
or both), require the consent of any Person to or otherwise result in a material
detriment to Purchaser under, (1) its organizational documents or (2) any
agreements to which it is a party or, assuming the Approvals referred to in
Section 4.2(c) are duly and timely made or obtained, any Law or Order applicable
- --------------
to it, in each case in a manner that could reasonably be expected to materially
hinder or impair the completion of any of the transactions contemplated hereby
or have a material adverse effect on the business, properties, condition
(financial or otherwise), liabilities or prospects of Purchaser; or (ii) does
not impose any penalty or other onerous condition on Purchaser that could
reasonably be expected to materially hinder or impact the completion of any of
the transactions contemplated hereby.
(c) No Approval from any Governmental Entity is required by or with respect
to Purchaser in connection with the execution and delivery by Purchaser of this
Agreement or any other Transaction Document to which it is a party or the
consummation by Purchaser of the transactions contemplated hereby or thereby,
except for: (A) the possible requirement of the filing of a notification report
by Purchaser under the HSR Act, and the expiration or termination of the
applicable waiting period with respect thereto in connection with the
acquisition of Underlying Shares (but not in order to consummate the Closing)
and (B) any such Approval the failure of which to be made or obtained (1) has
not impaired and could not reasonably be expected to impair the ability of
Purchaser to perform its obligations under any of the Transaction Documents in
any material respect and (2) could not reasonably be expected to delay in any
material respect or prevent the consummation of any of the transactions
contemplated by any of the Transaction Documents.
-16-
<PAGE>
Section 4.3 Investment Intent. The Securities to be acquired by
-----------------
Purchaser hereunder and any Underlying Shares to be acquired upon the exercise,
conversion or exchange of such Securities are being, or, in the case of the
Underlying Shares, will be, acquired for its own account for investment and with
no intention of distributing or reselling such Securities or Underlying Shares
or any part thereof or interest therein in any transaction which would be in
violation of the securities Laws of the United States of America or any
applicable state or any foreign country or jurisdiction.
Section 4.4 Transfer Restrictions.
--------------------
(a) Purchaser acknowledges and agrees that (i) no Transfer of the Shares
may be made prior to April 15, 2004 (other than to the Company), (ii) the
foregoing restriction on Transfer is reasonable in light of the nature of the
transactions contemplated by this Agreement and Purchaser's investment goals in
connection with its acquisition of the Securities, and (iii) the Company would
not have entered into this Agreement but for the agreement of Purchaser set
forth in this Section 4.4(a).
--------------
(b) If Purchaser should decide to dispose of any of the Securities to be
purchased by it or any Underlying Shares, Purchaser understands and agrees that
it may do so only pursuant to an effective registration statement under the
Securities Act (and registration or qualification under all applicable state and
foreign securities Laws) or pursuant to an exemption from registration under the
Securities Act and such state and foreign securities Laws. In connection with
any offer, resale, pledge or other transfer (individually and collectively, a
"Transfer") of any Securities or Underlying Shares other than pursuant to an
--------
effective registration statement, (i) the transferor shall have notified the
Company of the proposed Transfer and shall have furnished the Company with a
statement in reasonable detail of the circumstances surrounding the proposed
Transfer, and (ii) the Company may require that the transferor of such
Securities or Underlying Shares provide to the Company an opinion of counsel
which opinion shall be reasonably satisfactory in form and substance to the
Company, to the effect that such Transfer is being made pursuant to an exemption
from, or in a transaction not subject to, the registration requirements of the
Securities Act and any applicable state or foreign securities Laws. In the
discretion of the Company, the Company may condition any Transfer of any
Securities or Underlying Shares (other than pursuant to an effective
registration statement, pursuant to Rule 144 promulgated under the Securities
Act or pursuant to a distribution by Purchaser to its partners such that such
partners upon receipt of such securities will be eligible to sell such
securities pursuant to Rule 144(k) promulgated under the Securities Act,
provided that, in the case of any such distribution, Purchaser shall have
provided to the Company an opinion of counsel, reasonably satisfactory in form
and substance to the Company, to such effect) upon the transferee's delivery to
the Company of a written agreement, in form and substance satisfactory to the
Company, whereby the transferee (i) makes such representations and warranties to
and for the benefit of the Company as are comparable to the representations and
warranties of Purchaser set forth in Article IV of this Agreement, as and to the
extent applicable to the proposed Transfer, and (ii) agrees to be bound by the
transfer restriction set forth in this Section 4.4. Purchaser agrees to the
-----------
imprinting, so long as appropriate, of substantially the following legend on
certificates representing the Securities and any Underlying Shares:
-17-
<PAGE>
THE SECURITIES (THE "SECURITIES") EVIDENCED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR ANY STATE OR FOREIGN SECURITIES LAWS AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS
ACQUISITION HEREOF, THE HOLDER AGREES THAT IT WILL NOT OFFER, RESELL,
PLEDGE OR OTHERWISE TRANSFER (INDIVIDUALLY AND COLLECTIVELY, A "TRANSFER")
THE SECURITIES EVIDENCED HEREBY, EXCEPT (A) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT (AND REGISTRATION OR
QUALIFICATION UNDER ALL APPLICABLE STATE AND FOREIGN SECURITIES LAWS), OR
(B) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT AND
ALL APPLICABLE STATE AND FOREIGN SECURITIES LAWS. IF THE PROPOSED TRANSFER
IS TO BE MADE OTHER THAN PURSUANT TO CLAUSE (A) ABOVE, THE HOLDER MUST,
PRIOR TO SUCH TRANSFER, FURNISH TO THE COMPANY AND THE TRANSFER AGENT SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS THEY MAY REASONABLY
REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT OR ANY STATE OR FOREIGN SECURITIES LAW.
IN ADDITION, THE SECURITIES MAY ONLY BE TRANSFERRED IN COMPLIANCE WITH
SECTION 4.4 OF THE PURCHASE AGREEMENT PURSUANT TO WHICH THEY WERE ISSUED.
-----------
COPIES OF SUCH PURCHASE AGREEMENT MAY BE OBTAINED UPON WRITTEN REQUEST TO
THE SECRETARY OF THE COMPANY.
Purchaser also agrees to the imprinting, so long as appropriate, of
substantially the following legend on certificates representing the Shares:
THE SHARES EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED OTHER THAN TO THE COMPANY
PRIOR TO APRIL 15, 2004.
The legends set forth above relating to securities Law matters may be
removed if and when the Securities or Underlying Shares, as the case may be,
represented by such certificate are disposed of pursuant to an effective
registration statement under the Securities Act or the Company receives an
opinion of counsel, reasonably satisfactory to the Company, that such legends
may be removed. The Share certificates, Warrants and certificates for Underlying
Shares shall also bear any additional legends required by applicable federal,
state or foreign securities Laws, which legends (together with the legends set
forth above relating to securities Law matters) may be removed when, in the
opinion of counsel to the Company, the same are no longer required under the
applicable requirements of such securities Laws. Purchaser agrees that, in
connection with any Transfer of Securities by it pursuant to an effective
registration statement under the Securities Act, it will comply with all
prospectus delivery requirements of the Securities Act and will affect all
Transfers thereunder in accordance with such registration statement and all
requirements of applicable federal, state and foreign securities Laws. The
Company makes no representation, warranty or agreement as to the
-18-
<PAGE>
availability of any exemption from registration under the Securities
Act or any state or foreign securities Laws with respect to any resale
of Securities or Underlying Shares. The Company is authorized to
notify its transfer agent of the status of any Securities or
Underlying Shares bearing any of the foregoing legend(s) and to take
such other action as shall be reasonable and proper to prevent any
violation of the Securities Act, any state or foreign securities Laws
or any other restrictions on Transfer set forth herein.
(c) The provisions of this Section 4.4 shall not be construed to limit any
-----------
of the obligations of Purchaser under the Warrants.
Section 4.5 Purchaser Status. Purchaser represents and warrants to, and
----------------
covenants and agrees with the Company that (i) at the time it was offered the
Securities, it was, (ii) at the date hereof, it is, and (iii) at the Closing
Date, it will be, an accredited investor as defined in Rule 501(a) under the
Securities Act, and has such knowledge, sophistication and experience in
business and financial matters so as to be capable of evaluating the Company and
the merits and risks of an investment in the Securities and the Underlying
Shares, and is able to bear the economic risk of such investment for an
indefinite period of time.
Section 4.6 Access to Information; Investigation. Purchaser represents
------------------------------------
and acknowledges that it (a) has had access to and the opportunity to review the
Company's properties, assets, financial statements, contracts and other books
and records and has made such investigation with respect thereto as it deems
necessary to enter into the transactions contemplated hereby, (b) has been
afforded the opportunity to ask appropriate representatives of the Company
questions concerning the business, assets, financial condition and prospects of
the Company and has been furnished, to its Knowledge, with all requested
information, and (c) has been solely responsible for its own due diligence
investigation of the Company and its management and business, for its own
analysis of the merits and risks of an investment in the Securities, and for its
own analysis of the terms of the investment in the Securities. Anything herein
to the contrary notwithstanding, the provisions of this Section 4.6 shall not in
-----------
any way limit any of the representations and warranties of the Company set forth
in this Agreement or in any Schedule delivered pursuant hereto by the Company or
its authorized representatives or the rights of Purchaser with respect to any
breach of any such representations and warranties.
Section 4.7 No Brokers or Finders. No agent, broker, finder or
---------------------
investment or commercial banker, or other Person or firm engaged by or acting on
behalf of Purchaser in connection with the negotiation, execution or performance
of this Agreement is or will be entitled to any brokerage or finder's or similar
fee or other commission as a result of this Agreement, the other Transaction
Documents or the transactions contemplated hereby or thereby, other than any
such fees or commissions that have been disclosed to the Company and as to which
Purchaser shall have full responsibility.
ARTICLE V.
COVENANTS
---------
-19-
<PAGE>
Section 5.1 Affirmative Covenants of the Company. The Company hereby
------------------------------------
covenants and agrees that, until the earlier of the Closing or the termination
of this Agreement, unless consented to in writing by Purchaser (such consent not
to be unreasonably withheld), the Company will and will cause each of its
Material Subsidiaries to operate its business in the usual and ordinary course
consistent with past practices except as contemplated by this Agreement.
Section 5.2 Negative Covenants of the Company.
---------------------------------
(a) Except as expressly contemplated by this Agreement or otherwise
consented to in writing by Purchaser, from the date of this Agreement until
earlier of the Closing or the termination of this Agreement, the Company shall
not do, and shall, to the extent applicable, not permit any of its Material
Subsidiaries to do, any of the following:
(i) adopt or propose to adopt any amendments to the Company's
Certificate of Incorporation or Bylaws; other than transactions between the
Company and one or more of its Subsidiaries or among one or more of its
Subsidiaries, adopt resolutions authorizing a liquidation, dissolution,
merger, consolidation, restructuring, recapitalization, or other
reorganization of the Company or any Material Subsidiary; or make any other
changes in the Company's capital structure;
(ii) declare or pay any dividend or make any other distribution
(whether in cash, stock or property) with respect to its Capital Stock (or
other voting or equity securities or interests, as applicable), other than
dividends paid by any Subsidiary to the Company or another Subsidiary, or
take any other action that if taken after the issuance of the Warrants
would result in an adjustment to the number of shares acquirable upon
exercise of the Warrants; or
(iii) agree in writing or otherwise to do any of the foregoing.
Section 5.3 Approvals. The Company and Purchaser each agree to
---------
cooperate and use all commercially reasonable efforts to obtain (and will
promptly prepare all registrations, filings and applications, requests and
notices preliminary to) all Approvals that may be necessary or which may be
reasonably requested by the Company or Purchaser to consummate the transactions
contemplated by this Agreement and the other Transaction Documents.
Section 5.4 HSR Act Notification. If after the Closing and until the
--------------------
later of (i) the date the Shares are no longer outstanding and (ii) the earlier
to occur of the date on which the Warrants are fully exercised and the date on
which all outstanding Warrants are no longer exercisable, filings are required
under the HSR Act so that Purchaser may acquire the Underlying Shares or
otherwise acquire securities pursuant to the Transaction Documents, the Company
will upon the written request of Purchaser, and Purchaser will upon the written
request of the Company, (i) file or cause to be filed, as promptly as
practicable after the receipt of such notice and in no event later than fifteen
Business Days after the receipt of such notice, with the Federal Trade
Commission and the United States Department of Justice, all reports and other
documents required to be filed by such party under the HSR Act concerning the
transactions contemplated in such notice, (ii) promptly comply with or
-20-
<PAGE>
cause to be complied with any requests by the Federal Trade Commission
or the United States Department of Justice for additional information
so that the waiting period applicable thereto under the HSR Act shall
expire as soon as practicable, and (iii) cooperate with the other
parties in requesting early termination of any applicable waiting
period under the HSR Act. The Company will reimburse Purchaser for any
filing fees in connection with such filings by Purchaser.
Section 5.5 Notification of Certain Matters. The Company shall give
-------------------------------
prompt notice to Purchaser, and Purchaser shall give prompt notice to the
Company, of (a) the occurrence, or failure to occur, of any event that causes
any representation or warranty contained in any Transaction Document to be
untrue or inaccurate in any material respect at any time from the date of this
Agreement to the Closing Date and (b) any failure of the Company or Purchaser to
comply with or satisfy, in any material respect, any covenant, condition or
agreement to be complied with or satisfied by it under any Transaction Document
at any time from the date of this Agreement to the Closing Date.
Section 5.6 Board of Directors. The Company shall use its reasonable
------------------
best efforts to cause promptly following the Closing (a) the Board to be
increased by one (unless there is an existing vacancy on the Board) and (b) an
individual identified by Purchaser to the Company to be elected as a director of
the Company. As long as Purchaser owns a majority of the Shares, at any meeting
of the shareholders of the Company held for the purpose of electing directors of
the Company, Purchaser shall be entitled to nominate one individual for election
to the Board (unless the term of the director previously nominated by the
Purchaser pursuant to this Section 5.6 would continue after such election) and
-----------
the Company shall use its reasonable best efforts to cause to be elected to the
Board such individual. If the director nominated by the Purchaser shall resign
or otherwise cease serving as director, then Purchaser may designate a
replacement, and the Company shall use its reasonable best efforts to ensure
that such designated replacement shall serve on the Board in the place of such
former director until the next scheduled meeting of shareholders held for the
purpose of electing directors.
Section 5.7 Registration Rights Agreement. The Company agrees to enter
-----------------------------
into a Registration Rights Agreement in substantially the form attached hereto
as Exhibit 7.2(b)(iii).
-------------------
Section 5.8 Confidentiality. Purchaser shall, and shall cause its
---------------
representatives to, hold confidential all information relating to the Company or
its Subsidiaries it has received prior to the Closing from the Company or any of
its representatives, or information, if any, it receives after the Closing from
the Company or any of its representatives as a result of or in connection with
Purchaser's ownership of the Securities or Purchaser's right to nominate and/or
elect any of the directors of the Company (including, without limitation,
information provided to any such director); provided, however, that the
foregoing shall not apply to (a) information that is or becomes generally
available to the public other than as a result of a disclosure by a Purchaser or
any of its representatives in violation of this Section 5.8, (b) information
-----------
that is or becomes available to Purchaser or any of its representatives on a
nonconfidential basis from a source other than the Company or its
representatives, provided that such source is not known by Purchaser to be bound
by a confidentiality agreement with or other obligation of secrecy to the
Company or any other party, and (c) information that is required to be disclosed
by Purchaser or any of its representatives as a
-21-
<PAGE>
result of any applicable Law; provided further, however, that in the event
information is required to be disclosed pursuant to clause (c), the Person
proposing such disclosure shall provide the Company to the extent practicable an
opportunity, reasonably in advance of any such disclosure, to review and comment
on the form and content of such proposed disclosure. The provisions of this
Section 5.8 shall terminate on the first anniversary of the termination of the
- -----------
provisions of Section 5.6.
-----------
Section 5.9 Standstill.
----------
(a) Purchaser will not, and will not permit any of its Affiliates to,
acquire or agree to acquire, directly or indirectly, by purchase or otherwise
(including by joining a "group" within the meaning of Section 13(d)(3) of the
Exchange Act), any of the Voting Stock of the Company, any securities directly
or indirectly convertible into or exchangeable for Voting Stock of the Company,
any direct or indirect rights, warrants or options to acquire any voting Stock
of the Company or any right to vote Voting Stock of the Company if, after giving
effect to such purchase or other acquisition, Purchaser and its Affiliates
together would hold in the aggregate, or have the right to vote, more than 15%
of the Voting Stock of the Company determined on a fully diluted basis.
(b) For purposes of Section 5.9(a), (i) all calculations of the fully
--------------
diluted voting power of the Voting Stock of the Company shall assume the
conversion or exchange of all outstanding securities convertible into or
exchangeable for such Voting Stock and the exercise of all outstanding rights,
warrants and options to acquire such Voting Stock, regardless of whether such
rights of conversion, exchange, purchase or acquisition are then exercisable,
and (ii) any voting rights of the Shares and any shares of Common Stock issuable
or issued upon the conversion of the Shares or issued in payment of dividends on
the Shares shall be disregarded and excluded from any determination of the
amount of Voting Stock owned by Purchaser and its Affiliates.
(c) Purchaser agrees that it will not form, or encourage the formation of,
a "group" within the meaning of Section 13(d)(3) of the Exchange Act, to effect
or acquire control of the Company.
(d) Purchaser agrees that with respect to any election of directors by the
holders of Common Stock, it will (i) vote all shares of Common Stock then owned
by it either, at Purchaser's election, (x) in the same proportion as the votes
cast by all other holders of Common Stock or (y) in the manner recommended by
the Company's then Board of Directors and (ii) as long as the Company is not in
breach of Section 5.6, not solicit proxies in opposition to the slate of
-----------
nominees proposed by the Company's then Board of Directors.
(e) The provisions of this Section 5.9 shall terminate and be of no further
-----------
force or effect upon the earlier of (i) April 15, 2004 and (ii) a Change of
Control (as such term is defined in the Certificate of Designation).
Section 5.10 Indemnification. The Company agrees to indemnify the
---------------
Purchaser and hold the Purchaser harmless from and against any and all
liabilities, losses, damages, costs and expenses of any kind (including, without
limitation, the reasonable fees and disbursements of Purchaser's counsel in
connection with any investigative, administrative or judicial proceeding), which
may be incurred by Purchaser as a result of any claims made against Purchaser by
any Governmental Entity or shareholder of the Company that relate to or arise
out of this Agreement or the Securities,
-22-
<PAGE>
provided that Purchaser shall not have the right to be indemnified hereunder for
(or be relieved of any liability for) its own gross negligence or willful
misconduct as determined by a court of competent jurisdiction or any conduct
constituting a breach of or default under this Agreement or any other
Transaction Document, and provided further, that notwithstanding anything to the
contrary above, it is expressly understood between the parties hereto that the
Company pursuant to this Section 5.10 shall not be responsible for or assume any
------------
of the investment risk associated with the Securities or have any liability or
responsibility for any lost profits of Purchaser.
Section 5.11 Restrictive Actions. The Company agrees it will not adopt
-------------------
or amend a shareholders rights plan, or take similar action, that would have the
effect of restricting to a greater extent than the provisions of Section 5.9 (to
-----------
be determined without giving effect to Section 5.9(e)), the ability of Purchaser
--------------
and its Affiliates to acquire, directly or indirectly, Voting Stock of the
Company.
ARTICLE VI.
CONDITIONS PRECEDENT TO CLOSING
-------------------------------
Section 6.1 Conditions Precedent to Each Party's Obligation. The
-----------------------------------------------
respective obligations of Purchaser and the Company to effect the transactions
contemplated hereby are subject to the satisfaction on or prior to the Closing
Date of the following conditions:
(a) Approvals. All Approvals of, or expirations of waiting periods imposed
---------
by, any Governmental Entity necessary for the consummation of the transactions
contemplated by this Agreement shall have been filed, occurred, or been
obtained, as applicable.
(b) No Injunctions or Restraints. No temporary restraining order,
----------------------------
preliminary or permanent injunction, or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the transactions contemplated hereby shall be in effect.
(c) No Action. No action shall have been taken nor any statute, rule, or
---------
regulation shall have been enacted by any Governmental Entity that makes the
consummation of the transactions contemplated hereby illegal.
(d) No Adverse Action or Decision. There shall be no action, suit,
-----------------------------
investigation or proceeding, pending or threatened, against or affecting
Purchaser or the Company or any of its Subsidiaries or any of their respective
properties or rights, or any of their Affiliates, officers or directors, before
any court, arbitrator or administrative or governmental body which (i) seeks to
restrain, enjoin or prevent the consummation of or otherwise affect the
transactions contemplated by this Agreement or the other Transaction Documents
or (ii) questions the validity or legality of any such transaction or seeks to
recover damages or to obtain other relief in connection with any such
transaction.
(e) Consents Under Agreements. There shall have been obtained all consents
-------------------------
or approvals required to be obtained by the Company or any of its Subsidiaries
with respect to the
-23-
<PAGE>
consummation of each of the transactions contemplated by this Agreement the
failure of which to obtain reasonably could be expected to result in a Material
Adverse Effect, and each such consent or approval shall be unconditional.
Section 6.2 Conditions Precedent to Obligation of Purchaser. The
-----------------------------------------------
obligation of Purchaser to effect the transactions contemplated by this
Agreement is subject to the satisfaction of the following conditions unless
waived, in whole or in part, by Purchaser:
(a) Representations and Warranties. The representations and warranties of
------------------------------
the Company set forth in this Agreement shall be true and correct in all
respects (provided that, for purposes of this Section 6.2(a), any representation
--------------
or warranty of the Company contained herein that is qualified by a materiality
standard or a Material Adverse Effect qualification shall be read without regard
to any such qualifications as if such qualifications were not contained therein)
as of the date of this Agreement and as of the Closing Date as though made on
and as of the Closing Date except for such failures which, individually or in
the aggregate, have not had and could not reasonably be expected to have a
Material Adverse Effect, and Purchaser shall have received a certificate to the
foregoing effect signed on behalf of the Company by the chief executive officer
or by the chief financial officer of the Company.
(b) Performance of Obligations. The Company shall have performed in all
--------------------------
material respects all obligations required to be performed by it under this
Agreement prior to the Closing Date, and Purchaser shall have received a
certificate to such effect signed on behalf of the Company by the chief
executive officer or by the chief financial officer of the Company.
(c) Legal Opinions. Purchaser shall have received from Ervin, Cohen &
--------------
Jessup LLP an opinion dated the Closing Date, with respect to the matters set
forth in Exhibit 6.2(e).
--------------
(d) Closing Deliveries. All documents, instruments, certificates or other
------------------
items required to be delivered by the Company pursuant to Section 7.2(b) shall
--------------
have been delivered.
(e) Certificate of Designation. The Certificate of Designation, in the
--------------------------
form attached as Exhibit 6.2(e), shall have been filed with the Delaware
--------------
Secretary of State.
Section 6.3 Conditions Precedent to Obligations of Company. The
----------------------------------------------
obligation of the Company to effect the transactions contemplated by this
Agreement is subject to the satisfaction of the following conditions unless
waived, in whole or in part, by the Company:
(a) Representations and Warranties. The representations and warranties of
------------------------------
Purchaser set forth in this Agreement shall be true and correct in all respects
(provided that, for purposes of this Section 6.3(a), any representation or
--------------
warranty of Purchaser contained herein that is qualified by a materiality
standard shall be read without regard to any such qualifications as if such
qualifications were not contained therein) as of the date of this Agreement and
as of the Closing Date as though made on and as of the Closing Date except for
such failures which, individually or in the aggregate, have not had and could
not reasonably be expected to have a material adverse effect on Purchaser,
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<PAGE>
and the Company shall have received a certificate to the foregoing effect signed
on behalf of Purchaser by its general partner.
(b) Performance of Obligations of Purchaser. Purchaser shall have
---------------------------------------
performed in all material respects the obligations required to be performed by
it under this Agreement prior to the Closing Date, and the Company shall have
received a certificate to such effect signed on behalf of Purchaser by its
general partner.
(c) Legal Opinions. The Company shall have received from Vinson & Elkins
--------------
L.L.P. an opinion dated the Closing Date, with respect to the matters set forth
in of Exhibit 6.3(c).
--------------
(d) Closing Deliveries. All documents, instruments, certificates or other
------------------
items required to be delivered by Purchaser pursuant to Section 7.2(a) shall
--------------
have been delivered.
ARTICLE VII.
CLOSING
-------
Section 7.1 Closing. Subject to the satisfaction or waiver of the
-------
conditions set forth in Article VI, the purchase and sale of the Securities to
be purchased by Purchaser hereunder (the "Closing") will take place at the
-------
offices of Vinson & Elkins L.L.P., 1001 Fannin, Houston, Texas, 77002, at 10:00
a.m., local time, on the third Business Day following the satisfaction or waiver
(subject to applicable Law) of each of the conditions to the obligations of the
parties to effect the transactions to occur at such Closing as set forth in
Article VI, or on such other date as mutually agreed to by the parties hereto.
The date on which the Closing occurs is herein referred to as the "Closing
-------
Date". All closing transactions at the Closing shall be deemed to have occurred
- ----
simultaneously.
Section 7.2 Actions to Occur at the Closing.
-------------------------------
(a) At the Closing, Purchaser shall deliver to the Company the following:
(i) Purchase Price. An amount equal to the Purchase Price for the
--------------
Securities in accordance with Article II.
(ii) Certificates. The certificates described in Sections 6.3(a) and
------------ ---------------
6.3(b).
------
(iii) Registration Rights Agreement. The Registration Rights
-----------------------------
Agreement, duly executed by Purchaser.
(iv) Legal Opinion. The opinion of counsel referred to in Section
------------- -------
6.3(c).
------
(b) At the Closing, the Company shall deliver to Purchaser the following:
(i) Share Certificates. Certificates representing the Shares.
------------------
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<PAGE>
(ii) Warrants. The Warrants, the form of which is attached hereto as
--------
Exhibit 7.2(b)(ii).
------------------
(iii) Registration Rights Agreement. The Registration Rights
-----------------------------
Agreement, duly executed by the Company, the form of which is attached
hereto as Exhibit 7.2(b)(iii).
-------------------
(iv) Certificates. The certificates described in Sections 6.2(a) and
------------ ---------------
6.2(b).
------
(v) Consents Under Agreements. The original of each consent or
-------------------------
approval, if any, pursuant to Section 6.1(e).
--------------
(vi) Legal Opinions. The opinion of counsel referred to in Section
-------------- -------
6.2(d).
------
ARTICLE VIII.
TERMINATION
-----------
Section 8.1 Termination. This Agreement may be terminated prior to the
-----------
Closing:
(a) by mutual consent of Purchaser and the Company;
(b) by either Purchaser or the Company:
(i) in the event of a breach by the other party of any
representation, warranty, covenant or agreement contained in this Agreement
which (A) would give rise to the failure of a condition set forth in
Section 6.2 or 6.3, and (B) cannot be cured or, if curable, has not been
----------- ---
cured within 20 days (the "Cure Period") following receipt by the breaching
-----------
party of written notice of such breach;
(ii) if a court of competent jurisdiction or other Governmental
Entity shall have issued an order, decree, or ruling or taken any other
action (which order, decree, or ruling Purchaser and the Company shall use
all commercially reasonable efforts to lift), in each case permanently
restraining, enjoining, or otherwise prohibiting the transactions
contemplated by this Agreement, and such order, decree, ruling, or other
action shall have become final and nonappealable; provided, however, that
the right to terminate this Agreement under this clause (ii) shall not be
available to any party whose breach of this Agreement has been the cause
of, or resulted in, such order, decree, ruling or other action; or
(iii) if the Closing shall not have occurred by April 30, 1999,
provided, however, that the right to terminate this Agreement under this
clause (iii) shall not be available to any party whose breach of this
Agreement has been the cause of, or resulted in, the failure of the Closing
to occur on or before such date.
Section 8.2 Effect of Termination. In the event of the termination of
---------------------
this Agreement, written notice thereof shall forthwith be given to the other
party specifying the provision hereof pursuant to which such termination is
made, and this Agreement shall forthwith become null and void, except for
Sections 5.8 and 5.10 and liability of a party arising out of a willful breach
- ------------ ----
of, or
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<PAGE>
willful misrepresentation under, this Agreement prior to such termination (but
in no event shall any party hereto be entitled to recover punitive or exemplary
damages).
ARTICLE IX.
RECOVERY OF FEES
----------------
Section 9.1 Recovery of Fees.
----------------
Any party who shall obtain a final judgment in a court of competent
jurisdiction for the payment of damages by another party for a breach of this
Agreement or any other Transaction Document shall be entitled to recover
reasonable attorneys' fees and court costs incurred in connection with the
obtaining of such judgment.
ARTICLE X.
MISCELLANEOUS
-------------
Section 10.1 Survival of Provisions.
----------------------
(a) The representations and warranties of the Company and Purchaser made
herein and the covenants of the Company and Purchaser to be complied with on or
prior to the Closing Date shall remain operative and in full force and effect
pursuant to their terms, regardless of (x) any investigation made by or on
behalf of Purchaser or the Company, as the case may be, or (y) acceptance of any
of the Securities and payment by Purchaser therefor, until the later of the
first anniversary of the Closing or April 15, 2000; provided that the
representations and warranties contained in Sections 3.1 (insofar as it applies
------------
to the Company), 3.3, 3.4(a), 3.13, 4.1 and 4.2(a) shall survive until the
--- ------ ---- --- ------
eighth anniversary of the Closing and the representations and warranties
contained in Sections 4.3, 4.4 and 4.5 shall survive through the period of the
------------ --- ---
applicable statute of limitations; and provided, further, that such
representations and warranties shall survive as to any claim or demand made
prior to their termination date until such claim or demand is fully paid or
otherwise resolved by the parties hereto in writing or otherwise.
(b) The covenants and agreements of the Company and Purchaser contained in
this Agreement that, by their terms, are to be performed or complied with after
the Closing Date will survive until the period specified herein with respect to
such covenant or agreement (or for the period during which the same remain
applicable to the parties in accordance with their terms); and provided,
further, that such covenants and agreements shall survive as to any claim or
demand made prior to their termination date until such claim or demand is fully
paid or otherwise resolved by the parties hereto in writing or otherwise.
Section 10.2 No Waiver; Modification in Writing. No failure or delay on
----------------------------------
the part of the Company or Purchaser in exercising any right, power or remedy
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right, power or remedy preclude any other or further
exercise thereof or the exercise of any other right, power or remedy. The
provisions of this
-27-
<PAGE>
Agreement, including the provisions of this sentence, may not be amended,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given without the written consent of the Company
and Purchaser. Any waiver of any provision of this Agreement, shall be effective
only in the specific instance and for the specific purpose for which made or
given. Except where notice is specifically required by this Agreement, no notice
to or demand on any party hereto in any case shall entitle the other party to
any other or further notice or demand in similar or other circumstances.
Section 10.3 Specific Performance. The parties recognize that in the
--------------------
event the Company or Purchaser should refuse to perform under the provisions of
this Agreement or any other Transaction Document, monetary damages alone will
not be adequate. Purchaser or the Company, as the case may be, shall therefore
be entitled, in addition to any other remedies which may be available, including
money damages, to obtain specific performance of the terms of this Agreement. In
the event of any action to enforce this Agreement or any other Transaction
Document specifically, the Company and Purchaser hereby waive the defense that
there is an adequate remedy at law.
Section 10.4 Severability. If any term or other provision of this
------------
Agreement is invalid, illegal, or incapable of being enforced by any rule of
applicable law, or public policy, all other conditions and provisions of this
Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated herein are not
affected in any manner materially adverse to any party. Upon such determination
that any term or other provision is invalid, illegal, or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in a mutually acceptable manner in order that the transactions
contemplated herein are consummated as originally contemplated to the fullest
extent possible.
Section 10.5 Fees and Expenses. Within 30 days after the Closing, the
-----------------
Company shall pay to Purchaser an amount equal to Purchaser's Expenses through
the Closing Date (provided the amount and nature of such costs and expenses in
reasonable detail shall have been furnished to the Company at least within 25
days after the Closing Date).
Section 10.6 Parties in Interest. This Agreement shall be binding upon
-------------------
and, except as provided below, inure solely to the benefit of each party hereto
and their permitted successors and assigns, and nothing in this Agreement,
express or implied, is intended to confer upon any other Person any rights or
remedies of any nature whatsoever under or by reason of this Agreement.
Section 10.7 Notices. All notices and other communications hereunder
-------
shall be in writing and shall be deemed given if delivered personally or by
facsimile or mailed by registered, certified mail (return receipt requested) or
Federal Express or other recognized overnight courier to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
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<PAGE>
(a) If to Purchaser, to:
SCF-IV, L.P.
600 Travis, Suite 6600
Houston, Texas 77002
Attention: David C. Baldwin
Facsimile: 713-227-7850
(b) If to the Company, to:
Newpark Resources Inc.
3850 North Causeway, Suite 1700
Metairie, Louisiana 70002
Attention: James D. Cole
Facsimile: 504-833-9506
Any of the above addresses may be changed at any time by notice given as
provided above; provided, however, that any such notice of change of address
shall be effective only upon receipt. All notices, requests or instructions
given in accordance herewith shall be deemed received on the date of delivery,
if hand delivered, on the date of receipt, if telecopied, three Business Days
after the date of mailing, if mailed by registered or certified mail, return
receipt requested, and one Business Day after the date of sending, if sent by
Federal Express or other recognized overnight courier.
Section 10.8 Counterparts. This Agreement may be executed and delivered
------------
(including by facsimile transmission) in one or more counterparts, all of which
shall be considered one and the same agreement and shall become effective when
one or more counterparts have been signed by each of the parties and delivered
to the other parties, it being understood that all parties need not sign the
same counterpart.
Section 10.9 Entire Agreement. This Agreement (which term shall be
----------------
deemed to include the Exhibits and Schedules hereto and the other certificates,
documents and instruments delivered hereunder) and the other Transaction
Documents constitute the entire agreement of the parties hereto with respect to
the subject matter hereof and thereof and supersede all prior agreements,
letters of intent and understandings, both written and oral, among the parties
with respect to the subject matter hereof and thereof. There are no
representations or warranties, agreements, or covenants of the parties with
respect to the subject matter hereof and thereof other than those expressly set
forth in this Agreement and the other Transaction Documents.
Section 10.10 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
-------------
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING
EFFECT TO ANY CONFLICTS OF LAW PROVISIONS.
Section 10.11 Public Announcements. The Company and Purchaser shall
--------------------
consult with each other before issuing any press release or otherwise making any
public statements with respect to this Agreement or the transactions
contemplated hereby, except for statements required by Law or by any
-29-
<PAGE>
listing agreements with or rules of any national securities exchange or the
National Association of Securities Dealers, Inc., or made in disclosures
reasonably determined as required to be filed pursuant to the Securities Act or
the Exchange Act.
Section 10.12 Assignment. Neither this Agreement nor any of the rights,
----------
interests, or obligations hereunder shall be assigned by any of the parties
hereto, whether by operation of Law or otherwise.
Section 10.13 Headings. The headings of this Agreement are for
--------
convenience of reference only and are not part of the substance of this
Agreement.
[The remainder of this page is intentionally left blank.]
-30-
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed by its duly authorized officer as of the date first written above.
NEWPARK RESOURCES, INC.
By: /s/ Matthew W. Hardey
----------------------
Name: Matthew W. Hardey
Title: Vice President and Chief Financial Officer
SCF-IV, L.P.
By SCF-IV, G.P., Limited Partnership,
its General Partner
By: L.E. Simmons & Associates, Incorporated,
its General Partner
By: /s/ David C. Baldwin
---------------------
<PAGE>
1. The Company has been duly incorporated and is a validly existing
corporation in good standing under the laws of the State of Delaware.
2. Each of the Transaction Documents, and the performance of the Company
thereunder, has been duly authorized by all necessary corporate action on the
part of the Company, and each of the Transaction Documents has been duly
executed and delivered by the Company.
3. The Certificate of Designation has been duly adopted by the Board of
Directors and duly filed with the Secretary of State of the State of Delaware in
accordance with the DGCL.
4. The powers, preferences and relative, participating, optional and
other special rights and the qualifications, limitations and restrictions of the
Series A Preferred Stock are as stated in the Certificate of Designation.
<PAGE>
1. The Purchaser is a duly formed and validly existing partnership in
good standing under the laws of the State of Delaware.
2. Each of the Purchase Agreement and the Registration Rights Agreement,
and the performance of the Purchaser thereunder, has been duly authorized by all
necessary partnership action on the part of the Purchaser, and the Purchase
Agreement and the Registration Rights Agreement have been duly executed and
delivered by the Purchaser.
<PAGE>
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS. THEY HAVE BEEN ACQUIRED SOLELY FOR INVESTMENT
AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF IN VIOLATION OF ANY APPLICABLE SECURITIES
LAWS. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED,
HYPOTHECATED OR OTHERWISE DISTRIBUTED IN THE ABSENCE OF (i) AN
EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF
COUNSEL, SATISFACTORY IN FORM AND SUBSTANCE TO THE COMPANY THAT
SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT AND
ANY APPLICABLE STATE SECURITIES LAWS AND (ii) COMPLIANCE WITH
SECTION 8 OF THIS WARRANT AND SECTION 4.4 OF THE PURCHASE
--------- -----------
AGREEMENT PURSUANT TO WHICH THEY WERE ISSUED. COPIES OF SUCH
PURCHASE AGREEMENT MAY BE OBTAINED UPON WRITTEN REQUEST TO THE
SECRETARY OF THE COMPANY.
WARRANT
No. 1 April 16, 1999
TO PURCHASE 2,400,000 SHARES OF COMMON STOCK,
PAR VALUE $.01 PER SHARE,
OF NEWPARK RESOURCES, INC.
1. Definitions. Unless the context otherwise requires, when used herein the
-----------
following terms shall have the meaning indicated.
"Affiliate" means with respect to any Person, any other Person directly, or
---------
indirectly through one or more intermediaries, controlling, controlled by
or under common control with such Person. For purposes of this definition,
the term "control" (and correlative terms "controlling," "controlled by"
and "under common control with") means possession of the power, whether by
contract, equity ownership or otherwise, to direct the policies or
management of a Person.
"Beneficially Own" or "Beneficial Ownership" has the meaning set forth in
---------------- --------------------
Rules 13d-3 and 13d-5 of the Exchange Act.
"Board" means the Board of Directors of the Company.
-----
<PAGE>
"Business Combination"means (i) any consolidation or merger of the Company
--------------------
with or into any Person or any Person with or into the Company, or (ii) any
issuance by the Company of shares of Common Stock or Common Stock
Equivalents, in one or a series of related transactions, in connection
with the acquisition of assets (other than cash) or securities by the
Company or a Subsidiary of the Company (including by way of a merger of a
Subsidiary of the Company with or into a Person), or (iii) the sale,
assignment, conveyance, transfer, lease or other disposition by the
Company, in one or a series of related transactions, of all or
substantially all of its assets followed by a liquidation of the Company.
"Business Day" means any day except Saturday, Sunday and any day which
------------
shall be a legal holiday or a day on which banking institutions in Houston,
Texas or New Orleans, Louisiana generally are authorized or required by law
or other governmental actions to close.
"Capital Stock" means (i) with respect to any Person that is a corporation,
-------------
any and all shares, interests, participations or other equivalents (however
designated) of capital or capital stock of such Person and (ii) with
respect to any Person that is not a corporation, any and all partnership or
other equity interests of such Person.
"Certificate of Designation" means the Certificate of Designation relating
--------------------------
to the Preferred Stock filed with the Secretary of State of the State of
Delaware on April 14, 1999.
"Change of Control" shall mean any event constituting the consummation of
-----------------
any Business Combination except where (i) (A) if the Common Stock or Voting
Stock of the Company is converted into or exchanged for cash, securities or
other property, the shareholders of the Company immediately prior to such
Business Combination own (in substantially the same proportion relative to
each other as such shareholders owned the Common Stock or Voting Stock of
the Company, as the case may be, immediately prior to such consummation)
(x) 50.1% or more of the Voting Stock of the surviving or transferee entity
immediately after such Business Combination, and (y) 50.1% or more of the
outstanding common stock of the surviving or transferee entity immediately
after such Business Combination, or (B) if the Common Stock or Voting Stock
of the Company is not converted into or exchanged for cash, securities or
other property, the shareholders of the Company immediately prior to such
Business Combination own (in substantially the same proportion relative to
each other as such shareholders owned the Common Stock or Voting Stock of
the Company, as the case may be, immediately prior to such consummation)
(x) 50.1% or more of the Voting Stock of the Company immediately after such
Business Combination, and (y) 50.1% or more of the Common Stock immediately
after such Business Combination, (ii) the members of the Board immediately
prior to the entering into the agreement relating to such Business
Combination (or if no such agreement is entered into, then immediately
prior to the consummation of such Business Combination) constitute at least
a majority of the Board (in the case of a transaction described in clause
(i)(B) of this definition) or the board of directors of the surviving or
transferee entity (in the case of a transaction described in clause (i)(A)
of this definition) immediately after such
-2-
<PAGE>
Business Combination, with no agreements or arrangements in place
immediately after such consummation that would result in the
members of the Board immediately prior to the entering into the
agreement relating to such Business Combination ceasing to
constitute at least a majority of the Board or the board of
directors of the surviving or transferee entity, as applicable
and (iii) no Person or Group of Persons immediately after such
Business Combination is the Beneficial Owner of 35% or more of
the total outstanding Common Stock or Voting Stock of the Company
(in the case of a transaction described in clause (i)(B) of this
definition) or of the total outstanding Voting Stock or common
stock of the surviving or transferee entity (in the case of a
transaction described in clause (i)(A) of this definition), as
applicable; provided, however, that if a Person or Group of
Persons was on the date one year prior to the consummation of
such Business Combination a Beneficial Owner of 35% or more of
the total outstanding Voting Stock of the Company or Common
Stock, then the condition provided for in this clause (iii) will
be deemed to be met as long as such Person or Group of Persons
does not immediately after such consummation Beneficially Own a
greater percentage of (in the case of a transaction described in
clause (i)(A) of this definition) the total outstanding Voting
Stock or common stock of the surviving or transferee entity or
(in the case of a transaction described in clause (i)(B) of this
definition) the total outstanding Voting Stock of the Company or
the Common Stock than the percentage of the total outstanding
Voting Stock of the Company or Common Stock that such Person or
Group of Persons Beneficially Owned one year prior to such
consummation and no other Person or Group of Persons immediately
after such Business Combination is the Beneficial Owner of 35% or
more of (in the case of a transaction described in clause (i)(A)
of this definition) the total outstanding Voting Stock or common
stock of the surviving or transferee entity or (in the case of a
transaction described in clause (i)(B) of this definition) the
total outstanding Voting Stock of the Company or the Common
Stock. In calculating the percentage of the Voting Stock owned
where there is more than one class or series of Voting Stock, the
percentage of the Voting Stock shall be calculated based on the
number of votes eligible to be cast in the election of directors
generally. In calculating the percentages of Voting Stock and
Common Stock or common stock, as the case may be, owned for
purposes of this definition, such calculation shall be calculated
on a basis assuming the exercise or conversion in full of all
Common Stock Equivalents and on a basis disregarding all Common
Stock Equivalents, and the percentage which results in the lower
percentage owned by the shareholders of the Company shall apply
in the application of clause (i) above.
"Common Stock" means the Company's common stock, par value $.01 per share,
------------
and any Capital Stock for or into which such Common Stock hereafter is
exchanged, converted, reclassified or recapitalized by the Company or
pursuant to a Business Combination to which the Company is a party.
"Common Stock Equivalents" means (without duplication with any other Common
------------------------
Stock or common stock, as the case may be, or Common Stock Equivalents)
rights, warrants, options, convertible securities or exchangeable
securities, exercisable for or convertible or exchangeable into, directly
or indirectly, Common Stock, or common stock, as the case may be, whether
at the time of issuance or upon the passage of time or the occurrence of
some future event, including the Warrants.
"Company" means Newpark Resources, Inc., a Delaware corporation.
-------
-3-
<PAGE>
"DGCL" means the General Corporation Law of the State of Delaware, as
----
amended, or any successor statute or other legislation.
"Early Exercise Event" means the occurrence of any of the following: (i) an
--------------------
agreement providing for a Business Combination that will result in a Change
of Control is approved by the Board, (ii) a Tender Offer for the Common
Stock is approved or recommended by the Board or (iii) prior to the second
day preceding the expiration of a Tender Offer for Common Stock which is
not approved or recommended by the Board, the Company does not have in
effect a typical shareholders' rights plan with a threshold of 20% or less
or such shareholders rights plan ceases to be in effect prior to the
expiration of such Tender Offer or the application of such shareholders
rights plan is waived with respect to any Person making such Tender Offer.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, or
------------
any successor statute, and the rules and regulations promulgated
thereunder.
"Excluded Stock" means shares of Common Stock issued by the Company (or
--------------
that would otherwise be deemed issued pursuant to Section 13(A)(ii)) (i)
-----------------
pursuant to a transaction described in Section 13(B), Section 13(C) or
------------- -------------
Section 13(D) or upon conversion of shares of Capital Stock (but not the
-------------
issuance of such Capital Stock which will be subject to the provisions of
Section 13(A)(ii)) or (ii) to directors, officers, employees, consultants
-----------------
and advisors of the Company and/or its Subsidiaries pursuant to employee
benefit plans (as such term is defined for purposes of Form S-8 under the
Securities Act) approved by the Board.
"Exercise Price" has the meaning given to it in Section 2.
-------------- ---------
"Expiration Time" has the meaning given to it in Section 3.
--------------- ---------
"Group" means a group as contemplated by Section 13(d)(3) of the Exchange
-----
Act.
"Market Price" means, with respect to a particular security, on any given
------------
day, the last reported sale price regular way or, in case no such reported
sale takes place on such day, the average of the last closing bid and asked
prices regular way, in either case on the principal national securities
exchange on which the applicable security is listed or admitted to trading,
or if not listed or admitted to trading on any national securities
exchange, (i) the closing sale price for such day reported by the NASDAQ
Stock Market if such security is traded over-the-counter and quoted in the
NASDAQ Stock Market, or (ii) if such security is so traded, but not so
quoted, the average of the closing reported bid and asked prices of such
security as reported by the NASDAQ Stock Market or any comparable system,
or (iii) if such security is not listed on the NASDAQ Stock Market or any
comparable system, the average of the closing bid and asked prices as
furnished by two members of the National Association of Securities Dealers,
Inc. selected from time to time by the Company for that purpose. If such
security is not listed and traded in a manner that the quotations referred
to above are available for the period required hereunder, the Market Price
per share of Common Stock
-4-
<PAGE>
shall be deemed to be the fair value per share of such security
as determined in good faith by the Board of Directors of the
Company.
"Ordinary Cash Dividends" means any cash dividend or distribution which,
-----------------------
when combined on a per share of Common Stock basis with the per share
amounts of all other cash dividends and cash distributions paid on the
Common Stock during the 365-day period ending on the date of declaration of
such dividend or distribution (as adjusted to appropriately reflect any of
the events referred to in Section 13 and excluding cash dividends or
----------
distributions that resulted in an adjustment to the Exercise Price), does
not exceed 5% of the Market Price of a share of Common Stock on the trading
day immediately preceding the date of declaration of such dividend or
distribution.
"Person" means an individual or a corporation, partnership, trust,
------
incorporated or unincorporated association, limited liability company,
joint venture, joint stock company, government (or an agency or political
subdivision thereof) or other entity of any kind.
"Preferred Stock" means the Series A Cumulative Perpetual Preferred Stock
---------------
of the Company or successor preferred stock as contemplated by Section
5(C)(ii)(A)(y) of the Certificate of Designation.
"Purchase Agreement" means the Purchase Agreement, dated as of April 8,
------------------
1999, among the Company and the purchaser named therein, including all
schedules and exhibits thereto.
"Securities Act" means the Securities Act of 1933, as amended, or any
--------------
successor statute, and the rules and regulations promulgated thereunder.
"Shares" is defined in Section 2.
------
"Stated Value" is an amount equal to $100.00 per share of Preferred Stock.
------------
"Subsidiary" of a Person means (i) a corporation, a majority of whose stock
----------
with voting power, under ordinary circumstances, to elect directors is at
the time of determination, directly or indirectly, owned by such Person or
by one or more Subsidiaries of such Person, or (ii) any other entity (other
than a corporation) in which such Person or one or more Subsidiaries of
such Person, directly or indirectly, at the date of determination thereof
has at least a majority ownership interest.
"Tender Offer" means any transaction to which Regulation 14D of the
------------
Exchange Act applies.
"Voting Stock" of a Person means Capital Stock of such Person of the class
------------
or classes pursuant to which the holders thereof have the general voting
power under ordinary circumstances to vote in the election of the board of
directors, managers or trustees of such Person.
"Warrantholder" has the meaning given to it in Section 2.
------------- ---------
-5-
<PAGE>
"Warrants" means this Warrant.
--------
2. Number of Shares; Exercise Price. This certifies that, for value received,
--------------------------------
SCF-IV, L.P. or its registered assigns (the "Warrantholder") is entitled,
-------------
upon the terms and subject to the conditions hereinafter set forth, to
acquire from the Company, in whole or in part, an aggregate of 2,400,000
fully paid and nonassessable shares of Common Stock, par value $0.01 per
share, (the "Shares") of the Company, at a purchase price of $8.50 per
------
Share (the "Exercise Price"). The number of Shares and the Exercise Price
--------------
are subject to adjustment as provided herein, and all references to
"Shares", "Common Stock" and "Exercise Price" herein shall be deemed to
include any such adjustment or series of adjustments.
3. Exercise of Warrant; Term. The right to purchase the Shares represented by
-------------------------
this Warrant is exercisable, in whole or in part by the Warrantholder, at
any time or from time to time after the earlier of October 15, 2000 and the
occurrence of an Early Exercise Event but in no event later than 11:59 p.m.
Central Time, on April 15, 2006 (the "Expiration Time"), by (a) the
---------------
surrender of this Warrant and Notice of Exercise annexed hereto, duly
completed and executed on behalf of the Warrantholder, at the principal
executive offices of the Company (or such other office or agency of the
Company in the United States as it may designate by notice in writing to
the Warrantholder at the address of the Warrantholder appearing on the
books of the Company), and (b) payment of the Exercise Price for the Shares
thereby purchased at the election of the Warrantholder in one of the
following manners:
(i) by tendering in cash or by certified or cashier's
check or wire transfer payable to the order of the Company;
or
(ii) by having the Company withhold shares of Common Stock issuable
upon exercise of the Warrant equal in value to the aggregate Exercise
Price as to which this Warrant is so exercised based on the average
Market Price of the Common Stock for the five trading day period
ending on and including the trading day immediately prior to the date
on which this Warrant and the Notice of Exercise are delivered to the
Company (the "Notice of Exercise Date") unless an event resulting in
an adjustment to the Exercise Price has occurred during such five day
period, in which case, for purposes of computing the five day average,
the Market Price of the Common Stock for the trading days prior to the
effectiveness of such event shall be adjusted in the same manner as
the Exercise Price; or
(iii) by tendering to the Company that number of shares of Preferred
Stock rounded to the nearest whole share equal to the aggregate
Exercise Price as to which this Warrant is so exercised divided by the
sum of (1) the Stated Value of the Preferred Stock plus (2) any
accrued but unpaid dividends thereon; provided, however, that shares
of Preferred Stock may not be tendered pursuant to this Section 3(iii)
prior to April 15, 2004; provided, further, however, that after April
15, 2002 and prior to April 15, 2004, shares of Preferred Stock may be
so tendered with the consent of the Company, which consent may be
given or withheld in the sole
-6-
<PAGE>
discretion of the Company. On or after April 15, 2004, any
and all shares of Preferred Stock may be tendered.
Upon the surrender of this Warrant as herein provided and the issuance of a
certificate or certificates for Shares as provided in Section 4, the
surrendered Warrant shall be deemed cancelled. The Company, in its
discretion, may condition any exercise of this Warrant on the
Warrantholder's confirmation of the representations and warranties of the
"Purchaser" as set forth in Sections 4.3, 4.4(b), 4.5 and 4.6 (to the
------------ ------ --- ---
extent the Company has provided the access and opportunity referred to in
such Section 4.6) of the Purchase Agreement, with appropriate
-----------
modifications, as and to the extent the same may be applicable to the
Warrant exercise; provided, however, that such condition shall not affect
the effective date of such exercise of the Warrant. If the Warrantholder
does not exercise this Warrant in its entirety, the Warrantholder will be
entitled to receive from the Company within a reasonable time, not
exceeding three (3) Business Days, a new Warrant in substantially identical
form for the purchase of that number of Shares equal to the difference
between the number of Shares subject to this Warrant immediately prior to
such exercise and the number of Shares as to which this Warrant is so
exercised.
4. Issuance of Shares; Authorization; Listing. Certificates for Shares issued
------------------------------------------
upon exercise of this Warrant will be issued and registered in the name of
the Warrantholder, or subject to compliance with the provisions of Section
-------
8, in such other name or names as the Warrantholder may designate and will
-
be delivered to such named Person or Persons within a reasonable time, not
to exceed three (3) Business Days after the date on which this Warrant has
been duly exercised in accordance with the terms of this Warrant. The
Company hereby represents and warrants that any Shares issued upon the
exercise of this Warrant in accordance with the provisions of Section 3
---------
will, upon such exercise, be duly and validly authorized and issued, fully
paid and nonassessable and free from all taxes, liens and charges (other
than liens or charges created by or imposed upon the Warrantholder or taxes
in respect of any transfer occurring contemporaneously therewith). The
Company agrees that, to the extent permitted by law, the Shares so issued
will be deemed to have been issued to the Warrantholder as of the close of
business on the date on which this Warrant and payment of the Exercise
Price are delivered to the Company in accordance with the terms of this
Warrant, notwithstanding that the stock transfer books of the Company may
then be closed or certificates representing such Shares may not be actually
delivered on such date. The Company will at all times reserve and keep
available, out of its authorized but unissued Common Stock, solely for the
purpose of providing for the exercise of this Warrant, the aggregate number
of shares of Common Stock issuable upon exercise of this Warrant. The
Company will procure, at its sole expense, the listing of the Shares and
other securities issuable upon exercise of this Warrant, subject to
issuance or notice of issuance on all stock exchanges on which the Common
Stock or such other securities are then listed. The Company will take all
action as may be reasonably necessary to ensure that the Shares may be
issued without violation of any applicable law or regulation or of any
requirement of any securities exchange on which the Shares are listed or
traded, subject to the compliance of the Warrantholder with the conditions
set forth in the penultimate sentence of Section 3 and any other applicable
---------
provisions of this Warrant.
-7-
<PAGE>
5. No Fractional Shares or Scrip. No fractional Shares or scrip representing
-----------------------------
fractional Shares shall be issued upon any exercise of this Warrant. In
lieu of any fractional Share to which the Warrantholder would otherwise be
entitled, the Warrantholder shall be entitled to receive a cash payment
based upon the Market Price of the Common Stock less the Exercise Price for
such fractional share.
6. No Rights as Shareholders; Transfer Books. This Warrant does not entitle
-----------------------------------------
the Warrantholder to any voting rights or other rights as a shareholder of
the Company prior to the date of exercise hereof. The Company will at no
time close its transfer books on any Business Day against transfer of this
Warrant in any manner which interferes with the timely exercise of this
Warrant.
7. Charges, Taxes and Expenses. Issuance of certificates for shares upon the
---------------------------
exercise of this Warrant shall be made without charge to the Warrantholder
for any issue or transfer tax or other incidental expense in respect of the
issuance of such certificates, all of which taxes and expenses shall be
paid by the Company; provided, however, whenever any such certificates
shall be registered in a name or names other than the name of the
Warrantholder or such holder's nominee, all stock transfer taxes shall be
paid by the Warrantholder.
8. Transfer/Assignment.
-------------------
(A) Restrictions on Transfer. The Warrantholder agrees not to make
------------------------
any disposition of all or any portion of this Warrant or the Shares unless
and until:
(i) there is then in effect a registration statement under the
Securities Act covering such proposed disposition (and such disposition is
registered or qualified under all applicable state securities laws) and
such disposition is made in accordance with such registration statement and
all requirements of applicable federal and state securities laws;
(ii) (a) the Warrantholder shall have notified the Company of
the proposed disposition and shall have furnished the Company with a
statement in reasonable detail of the circumstances surrounding the
proposed disposition, and (b) if requested by the Company, the
Warrantholder shall have furnished the Company with an opinion of counsel,
satisfactory in form and substance to the Company, that such disposition
will not require registration or qualification under the Securities Act or
any state securities laws; or
(iii) Shares are sold pursuant to Rule 144 promulgated under
the Securities Act.
In the discretion of the Company, the Company may condition any transfer of
all or any portion of this Warrant or Shares (other than a disposition
satisfying the conditions set forth in Section 8(A)(i) or 8(A)(iii) or a
distribution by SCF-IV, L.P. of Shares to its partners such that such
partners upon receipt of such Shares will be eligible to sell such Shares
pursuant
-8-
<PAGE>
to Rule 144(k) promulgated under the Securities Act, provided
that, in the case of any such distribution, SCF-IV, L.P. shall
have provided to the Company an opinion of counsel, reasonably
satisfactory in form and substance to the Company, to such
effect) upon the transferee's delivery to the Company of a
written agreement, in form and substance satisfactory to the
Company, whereby the transferee (i) makes such representations
and warranties to and for the benefit of the Company as are
comparable to the representations and warranties of the
"Purchaser" set forth in Article IV of the Purchase Agreement, as
and to the extent applicable to the proposed disposition, and
(ii) agrees to be bound by the transfer restrictions set forth in
this Section 8.
(B) Mechanics of Permitted Transfers. Subject to compliance with
--------------------------------
Section 8(A), this Warrant and all rights hereunder are transferable, in
------------
whole or in part, upon the books of the Company by the registered holder
hereof in person or by duly authorized attorney, and a new warrant shall be
made and delivered by the Company, of the same tenor and date as this
Warrant but registered in the name of the transferee, upon surrender of
this Warrant, duly endorsed, to the office or agency of the Company
described in Section 3; provided, however, that in no event shall this
---------
Warrant be transferred prior to the earlier of October 15, 2000 or the
Early Exercise Event. SCF-IV, L.P. acknowledges and agrees that the
foregoing restriction on transfer is reasonable in light of the nature of
the transactions contemplated by the Purchase Agreement and its investment
goals in connection with its acquisition of the securities issued pursuant
thereto. All expenses, taxes (other than stock transfer taxes) and other
charges payable in connection with the preparation, execution and delivery
of the new warrants pursuant to this Section 8 shall be paid by the
---------
Company. The restrictions imposed by Section 8(A) shall terminate as to
------------
the Warrant and/or Shares, as the case may be, (i) when such security has
been effectively registered under the Securities Act and disposed of in
accordance with the registration statement covering such security and all
requirements of applicable federal and state securities laws, (ii) when, in
the opinion of counsel for the Company, such restrictions are no longer
required in order to achieve compliance with the Securities Act and
applicable state securities laws or (iii) when Shares have been sold
pursuant to Rule 144 or Shares have been distributed by SCF-IV, L.P. to its
partners in the manner referred to in the last sentence of Section 8(A).
------------
(C) Legends. This Warrant (and any new or replacement warrants) and
-------
certificates for the Shares, and any securities issued in respect thereof
or exchange therefor, shall bear a legend substantially similar to the
legend on the first page of this Warrant and any legend required by any
state securities laws to the extent such laws are applicable to the
securities represented by the warrants or certificates in question. The
Company is authorized to notify its transfer agent of the status of any
securities bearing the foregoing legend(s) and to take such other action as
shall be reasonable and proper to prevent any violation of the Securities
Act or any state securities laws.
9. Exchange and Registry of Warrant. This Warrant is exchangeable, upon the
--------------------------------
surrender hereof, properly endorsed, by the Warrantholder at the office or
agency of the Company described in Section 3, for a new warrant or warrants
---------
of like tenor and date representing the right to purchase in the aggregate
a like number of Shares. The Company shall maintain at the office
-9-
<PAGE>
or agency described in Section 3 a registry showing the name and address of
---------
the Warrantholder as the registered holder of this Warrant. This Warrant
may be surrendered for exchange or exercise, in accordance with its terms,
at such office of the Company, and the Company shall be entitled to rely in
all respects, prior to written notice to the contrary, upon such registry.
10. Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by the
-------------------------------------------------
Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant, and in the case of any such
loss, theft or destruction, of an indemnity letter (reasonably satisfactory
to the Company) by an institutional Warrantholder, or in other cases,
indemnity or security reasonably satisfactory to it, and in the case of
such mutilation, upon surrender and cancellation of this Warrant, the
Company will make and deliver a new warrant or warrants of like tenor and
date, in lieu of this Warrant.
11. Saturdays, Sundays, Holidays, etc. If the last or appointed day for the
---------------------------------
taking of any action or the expiration of any right required or granted
herein shall not be a Business Day, then such action may be taken or such
right may be exercised on the next succeeding day that is a Business Day.
12. Rule 144 Information. The Company covenants that it will file the reports
--------------------
required to be filed by it under the Securities Act and the Exchange Act
and the rules and regulations promulgated thereunder (or, if the Company is
not required to file such reports, it will, upon the request of any
Warrantholder, make publicly available such information), all to the extent
required from time to time to enable such holder to sell the Shares without
registration under the Securities Act within the limitation of the
exemptions provided by (i) Rule 144 under the Securities Act, as such Rule
may be amended from time to time, or (ii) any similar rule or regulation
hereafter adopted by the Securities and Exchange Commission. Upon the
request of any Warrantholder, the Company will deliver to such
Warrantholder a written statement that it has complied with such
requirements.
13. Adjustments and Other Rights. The Exercise Price and the number of Shares
----------------------------
issuable upon exercise of this Warrant shall be subject to adjustment from
time to time as follows:
(A) Common Stock Issued at Less than Exercise Price. If the Company
-----------------------------------------------
issues or sells any Common Stock other than Excluded Stock for cash for a
consideration per share less than the then Exercise Price, the number of
shares of Common Stock issuable upon the exercise of this Warrant shall be
increased to the number obtained by multiplying (x) the number of shares
issuable upon the exercise of this Warrant immediately prior to such
issuance or sale by (y) a fraction, (1) the numerator of which shall be the
sum of the number of shares of Common Stock outstanding immediately after
such issuance or sale plus the number of shares issuable upon the exercise
of this Warrant immediately prior to such issuance or sale and (2) the
denominator of which is the total number of shares of Common Stock
outstanding immediately prior to such issuance or sale plus the number of
shares issuable upon the exercise of this Warrant immediately prior to such
issuance. Anything herein to the contrary notwithstanding, an adjustment
of the number of Shares issuable upon
-10-
<PAGE>
exercise of this Warrant pursuant to this Section 13(A) shall not result in
-------------
any adjustment of the Exercise Price. For the purposes of any adjustment of
the number of Shares issuable upon exercise of this Warrant pursuant to
this Section 13(A), the following provisions shall be applicable:
-------------
(i) In the case of the issuance of Common Stock for cash, the
amount of the consideration received by the Company shall be deemed to
be the amount of the cash proceeds received by the Company for such
Common Stock before deducting therefrom any discounts, commissions or
other expenses allowed, paid or incurred by the Company for any
underwriting or otherwise in connection with the issuance and sale
thereof.
(ii) In the case of the issuance after the date of this Agreement
of (a) options, warrants or other rights to purchase or acquire Common
Stock (whether or not at the time exercisable) or (b) securities by
their terms convertible into or exchangeable for Common Stock (whether
or not at the time so convertible or exchangeable) or options,
warrants or rights to purchase such convertible or exchangeable
securities (whether or not at the time exercisable):
(1) the aggregate maximum number of shares of Common Stock
deliverable upon exercise of such options, warrants or
other rights to purchase or acquire Common Stock shall
be deemed to have been issued at the time such options,
warrants or rights are issued and for a consideration
equal to the consideration (determined in the manner
provided in Section 13(A)(i)), if any, received by the
----------------
Company upon the issuance of such options, warrants or
rights plus the minimum purchase price provided in such
options, warrants or rights for the Common Stock
covered thereby;
(2) the aggregate maximum number of shares of Common Stock
deliverable upon conversion of or in exchange for any
such convertible or exchangeable securities, or upon
the exercise of options, warrants or other rights to
purchase or acquire such convertible or exchangeable
securities and the subsequent conversion or exchange
thereof, shall be deemed to have been issued at the
time such securities were issued or such options,
warrants or rights were issued and for a consideration
equal to the consideration, if any, received by the
Company for any such securities and related options,
warrants or rights (excluding any cash received on
account of accrued interest or accrued dividends), plus
the additional consideration (determined in the manner
provided in Section 13(A)(i)), if any, to be received
----------------
by the Company upon the conversion or exchange of such
securities, or upon the
-11-
<PAGE>
exercise of any related options, warrants or rights to
purchase or acquire such convertible or exchangeable
securities and the subsequent conversion or exchange
thereof;
(3) on any change in the number of shares of Common Stock
deliverable upon exercise of any such options, warrants
or rights or conversion or exchange of such convertible
or exchangeable securities, but excluding changes
resulting from the anti-dilution provisions thereof (to
the extent comparable to the anti-dilution provisions
contained herein), the number of Shares issuable upon
exercise of this Warrant as then in effect shall
forthwith be readjusted to such number of Shares as
would have been obtained had an adjustment been made
upon the issuance of such options, warrants or rights
not exercised prior to such change, or of such
convertible or exchangeable securities not converted or
exchanged prior to such change, upon the basis of such
change;
(4) on the expiration or cancellation of any such options,
warrants or rights (without exercise), the termination
of the right to convert or exchange such convertible or
exchangeable securities (without exercise), or the
expiration or cancellation of any options, warrants or
rights (without exercise) to purchase or acquire such
convertible or exchangeable securities, if the number
of Shares issuable upon exercise of this Warrant shall
have been adjusted upon the issuance thereof, the
number of Shares issuable upon exercise of this Warrant
shall forthwith be readjusted to such number of Shares
as would have been obtained had an adjustment been made
upon the issuance of such options, warrants, rights or
such convertible or exchangeable securities or such
options, warrants or rights to purchase or acquire such
convertible or exchangeable securities on the basis of
the issuance of only the number of shares of Common
Stock actually issued upon the exercise of such
options, warrants or rights, or upon the conversion or
exchange of such convertible or exchangeable
securities, or upon the exercise of such options,
warrants or rights related to such convertible or
exchangeable securities and the subsequent conversion
or exchange thereof; and
(5) if the number of Shares issuable upon exercise of this
Warrant shall have been adjusted upon the issuance of
any such options, warrants, rights or convertible or
exchangeable securities or options, warrants or rights
related to such convertible or exchangeable securities,
no further adjustment
-12-
<PAGE>
of the number of Shares issuable upon exercise of this
Warrant shall be made for the actual issuance of Common
Stock upon the exercise, conversion or exchange
thereof; provided, however, that no decrease in the
number of Shares issuable upon exercise of this Warrant
shall be made pursuant to subclauses (1) or (2) of this
Section 13(A)(ii).
-----------------
(B) Stock Splits, Subdivisions, Reclassifications or Combinations. If
-------------------------------------------------------------
the Company shall (1) declare a dividend or make a distribution on its
Common Stock in shares of Common Stock, (2) subdivide or reclassify the
outstanding shares of Common Stock into a greater number of shares, or (3)
combine or reclassify the outstanding Common Stock into a smaller number of
shares, the number of Shares issuable upon exercise of this Warrant at the
time of the record date for such dividend or distribution or the effective
date of such subdivision, combination or reclassification shall be
proportionately adjusted so that the Warrantholder after such date shall be
entitled to purchase the number of shares of Common Stock which such holder
would have owned or been entitled to receive after such date had this
Warrant been exercised immediately prior to such date; successive
adjustments in the number of shares issuable upon exercise of this Warrant
shall be made whenever any event specified above shall occur. In such event
the Exercise Price in effect at the time of the record date for such
dividend or distribution or the effective date of such subdivision,
combination or reclassification shall be adjusted to the number obtained by
dividing (i) the product of (a) the number of Shares issuable upon the
exercise of this Warrant before such adjustment and (b) the Exercise Price
in effect immediately prior to the issuance giving rise to this adjustment
by (ii) the new number of shares issuable upon exercise of the Warrant
determined pursuant to the immediately preceding sentence. In the case of
any adjustment made pursuant to this Section 13(B) as of the record date
-------------
for any dividend or distribution, if such dividend is not paid or such
distribution is not made, the Exercise Price and the number of Shares
issuable upon exercise of this Warrant, as then in effect, shall be
readjusted, effective as of the date when the Board determines not to pay
such dividend or make such distribution, as the case may be, to the
Exercise Price that would then be in effect and the number of Shares that
would then be issuable upon exercise of this Warrant if such record date
had not been fixed.
(C) Other Distributions. In case the Company shall fix a record date
-------------------
for the making of a distribution to all holders of shares of its Common
Stock (i) of shares of any class other than its Common Stock or (ii) of
evidence of indebtedness of the Company or any Subsidiary or (iii) of
assets (excluding Ordinary Cash Dividends, and dividends or distributions
referred to in Section 13(B)), or (iv) of rights or warrants (other than in
-------------
connection with the adoption or implementation of a typical shareholders
rights plan as long as, but only as long as, such rights plan is not
triggered), in each such case the Exercise Price in effect immediately
prior thereto shall be reduced immediately thereafter to the price
determined by multiplying the Exercise Price in effect immediately prior to
such record date by a fraction (i) the numerator of which shall be an
amount equal to the difference resulting from (1) the number of shares of
Common Stock outstanding on such record date multiplied by the Market Price
per share of Common Stock on such record date, less (2) the fair market
-13-
<PAGE>
value (as reasonably determined by the Board) of said shares or evidences
of indebtedness or assets or rights or warrants to be so distributed, and
(ii) the denominator of which shall be equal to the number of shares of
Common Stock outstanding on such record date multiplied by the Market Price
per share of Common Stock on such record date; such adjustment shall be
made successively whenever such a record date is fixed. In such event, the
number of shares of Common Stock issuable upon the exercise of this Warrant
shall be increased to the number obtained by dividing (i) the product of
(a) the number of Shares issuable upon the exercise of this Warrant before
such adjustment, and (b) the Exercise Price in effect immediately prior to
the issuance giving rise to this adjustment by (ii) the new Exercise Price
determined in accordance with the immediately preceding sentence. In the
event that such distribution is not so made, the Exercise Price and the
number of Shares issuable upon exercise of this Warrant then in effect
shall be readjusted, effective as of the date when the Board determines not
to distribute such shares, evidences of indebtedness, assets, rights or
warrants, as the case may be, to the Exercise Price that would then be in
effect and the number of Shares that would then be issuable upon exercise
of this Warrant if such record date had not been fixed.
(D) Business Combinations. If any Business Combination other than a
---------------------
Business Combination referred to in clause (ii) of the definition thereof
or reclassification of Common Stock (other than a reclassification of
Common Stock referred to in Section 13(B)) is effected in such a way that
holders of Common Stock are entitled to receive shares of stock, other
securities or property (including cash) as a result of their Common Stock
ownership, the Warrantholder, upon exercise of this Warrant after the date
of such Business Combination or reclassification, shall be entitled to
receive the number of shares of stock or other securities or property
(including cash) to which the shares of Common Stock issuable upon exercise
of this Warrant immediately prior to such Business Combination or
reclassification would have been entitled upon such Business Combination or
reclassification; and in any such case, if necessary, the provisions set
forth herein with respect to the rights and interests thereafter of the
Warrantholder shall be appropriately adjusted so as to be applicable, as
nearly as may reasonably be, to any shares of stock or other securities or
property thereafter deliverable on the exercise of this Warrant. In
determining the kind and amount of stock, securities or the property
receivable upon consummation of such Business Combination, if the holders
of Common Stock have the right to elect the kind or amount of consideration
receivable upon consummation of such Business Combination, then the
Warrantholder shall have the right to make a similar election upon exercise
of this Warrant with respect to the number of shares of stock or other
securities or property which the Warrantholder will receive upon exercise
of this Warrant.
(E) Failure to Pay Dividends. If the Company fails to pay any
------------------------
dividend scheduled to be paid on the Preferred Stock and such failure
continues beyond the 75th day following the date of such scheduled payment,
then the Warrantholder may elect by giving written notice of such election
to the Company at any time prior to the tenth day following the payment by
the Company of all then accrued but unpaid dividends on the Preferred Stock
to reset the Exercise Price to the price determined by multiplying (i) 1.2
by (ii) the average of the daily high and low trading prices for the Common
Stock for each of the days on which
-14-
<PAGE>
the Common Stock was traded (based on reports published by the Wall Street
Journal) during the 30 consecutive calendar days ending on the day
immediately preceding the date that the Company receives such election
notice from the Warrantholder. Only one adjustment may be made to the
Exercise Price pursuant to the provisions of this Section 13(E); provided,
-------------
however, subsequent adjustments to such adjusted Exercise Price and to the
number of shares acquirable upon exercise of this Warrant shall be made as
contemplated by the other paragraphs of this Section 13.
----------
(F) Rounding of Calculations; Minimum Adjustments. All calculations
---------------------------------------------
under this Section 13 shall be made to the nearest one-tenth (1/10/th/) of
----------
a cent or to the nearest one-hundredth (1/100/th/) of a share, as the case
may be. Any provision of this Section 13 to the contrary notwithstanding,
----------
no adjustment in the Exercise Price or the number of Shares into which this
Warrant is exercisable shall be made (unless the only adjustment is to the
number of Shares for which this Warrant may be exercised, in which case the
adjustment shall be made) if the amount of such adjustment to the Exercise
Price would be less than $0.01, but any such amount shall be carried
forward and an adjustment with respect thereto shall be made at the time of
and together with any subsequent adjustment which, together with such
amount and any other amount or amounts so carried forward, shall aggregate
$0.01 or more.
(G) Timing of Issuance of Additional Common Stock Upon Certain
----------------------------------------------------------
Adjustments. In any case in which the provisions of this Section 13 shall
----------- ----------
require that an adjustment shall become effective immediately after a
record date for an event, the Company may defer until the occurrence of
such event (i) issuing to the Warrantholder of this Warrant exercised after
such record date and before the occurrence of such event the additional
shares of Common Stock issuable upon such exercise by reason of the
adjustment required by such event over and above the shares of Common Stock
issuable upon such exercise before giving effect to such adjustment (based
upon the Exercise Price in effect before the adjustment) and (ii) paying to
such Warrantholder any amount of cash in lieu of a fractional share of
Common Stock; provided, however, that the Company upon request shall
deliver to such Warrantholder a due bill or other appropriate instrument
evidencing such Warrantholder's right to receive such additional shares,
and such cash, upon the occurrence of the event requiring such adjustment.
(H) Statement Regarding Adjustments. Whenever the Exercise Price or
-------------------------------
the number of Shares into which this Warrant is exercisable shall be
adjusted as provided in Section 13, the Company shall forthwith file, at
----------
the principal office of the Company a statement showing in reasonable
detail the facts requiring such adjustment and the Exercise Price that
shall be in effect and the number of Shares into which this Warrant shall
be exercisable after such adjustment and the Company shall also cause a
copy of such statement to be sent by mail, first class postage prepaid, to
each Warrantholder at the address appearing in the Company's records.
(I) Notices. In the event that the Company shall propose to take any
-------
action of the type described in Section 13(C), or (D) (but only if such
------------- ---
action would result in an adjustment in the Exercise Price or the number of
Shares into which this Warrant is
-15-
<PAGE>
exercisable or a change in the type of securities or property to be
delivered upon exercise of this Warrant), the Company shall give notice to
the Warrantholder, in the manner set forth in Section 13(H), which notice
-------------
shall specify the record date, if any, with respect to any such action and
the approximate date on which such action is to take place. Such notice
shall also set forth the facts with respect thereto as shall be reasonably
necessary to indicate the effect on the Exercise Price and the number, kind
or class of shares or other securities or property which shall be
deliverable upon exercise of this Warrant. In the case of any action which
would require the fixing of a record date, such notice shall be given at
least 10 days prior to the date so fixed, and in case of all other action,
such notice shall be given at least 15 days prior to the taking of such
proposed action. Failure to give such notice, or any defect therein, shall
not affect the legality or validity of any such action.
(J) No Impairment. The Company will not, by amendment of its
-------------
Certificate of Incorporation or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or
any other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms to be observed or performed hereunder by
the Company, but will at all times in good faith assist in the carrying out
of all the provisions of this Warrant and in taking of all such action as
may be necessary or appropriate in order to protect the rights of the
Warrantholder set forth herein.
14. Governing Law. Subject to the provisions of Section 8 and of Section 4 of
------------- --------- ---------
the Purchase Agreement, the rights and obligations of the Company and the
Warrantholder hereunder shall be binding upon and inure to the benefit of
their respective successors and assigns. This Warrant shall constitute a
contract under the laws of Delaware and for all purposes shall be construed
in accordance with and governed by the laws of Delaware, without giving
effect to the conflict of laws principles.
15. Attorneys' Fees. In any litigation, arbitration or court proceeding between
---------------
the Company and the Warrantholder as the holder of this Warrant relating
hereto, the prevailing party shall be entitled to reasonable attorneys'
fees and expenses incurred in enforcing this Warrant.
16. Amendments. This Warrant may be amended and the observance of any term of
----------
this Warrant may be waived only with the written consent of the Company and
Warrantholders then owning Warrants entitled to purchase a majority of the
Shares then acquirable upon exercise of all outstanding Warrants.
17. Notice. All notices hereunder shall be in writing and shall be effective
------
(a) on the day on which delivered if delivered personally or transmitted by
telex or telegram or telecopier with evidence of receipt, (b) one Business
Day after the date on which the same is delivered to a nationally
recognized overnight courier service with evidence of receipt, or (c) five
Business Days after the date on which the same is deposited, postage
prepaid, in the U.S. mail, sent by certified or registered mail, return
receipt requested, and addressed to the party to be notified at the address
indicated in the Purchase Agreement for the Company, or at the address for
the Warrantholder set forth in the registry maintained by the Company
pursuant to Section 9, or at such other address and/or telecopy or telex
---------
number and/or to the attention
-16-
<PAGE>
of such other person as the Company or the Warrantholder may designate by
ten-day advance written notice.
18. Prohibited Actions. The Company agrees that it will not take any action
------------------
which would entitle the Warrantholder to an adjustment to the number of
shares issuable upon exercise of this Warrant if the total number of shares
of Common Stock issuable after such action upon exercise of this Warrant,
together with all shares of Common Stock then outstanding and all shares of
Common Stock then issuable upon the exercise of all outstanding options,
warrants, conversion and other rights or otherwise reserved for issuance,
would exceed the total number of shares of Common Stock then authorized by
its Certificate of Incorporation.
19. Entire Agreement. This Warrant and the forms attached hereto contain the
----------------
entire agreement between the parties with respect to the subject matter
hereof and supersede all prior and contemporaneous arrangements or
undertakings with respect thereto.
-17-
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by a
duly authorized officer.
Dated: April 16, 1999
NEWPARK RESOURCES, INC.
/s/ Matthew W. Hardey
---------------------
Name: Matthew W. Hardey
Title: Vice President and Chief Financial Officer
-18-
<PAGE>
[FORM OF NOTICE OF EXERCISE]
Date:
TO: Newpark Resources, Inc.
RE: Election to Subscribe for and Purchase Common Stock
1. [_] The undersigned, pursuant to the provisions set forth in the attached
Warrant, hereby agrees to subscribe for and purchase the number of
shares of the Common Stock set forth below covered by such Warrant.
The undersigned, in accordance with Section 3 of the Warrant, hereby
---------
agrees to pay the aggregate Exercise Price for such shares of Common
Stock in the manner set forth below.
Number of Shares of Common Stock: ___________
Method of Payment of Exercise Price (check one box only):
[_] in accordance with Section 3(b)(i) of the Warrant; or
---------------
[_] in accordance with Section 3(b)(ii) of the Warrant; or
----------------
[_] in accordance with Section 3(b)(iii) of the Warrant.
-----------------
2. [_] The attached Warrant is not being exercised in full. A new warrant
evidencing the remaining shares of Common Stock covered by such
Warrant should be issued in the name set forth below. If the new
warrant is being transferred, an opinion of counsel is attached hereto
with respect to the transfer of such warrant.
3. [_] The undersigned acknowledges that the shares of Common Stock issuable
upon exercise of the Warrant are subject to the restrictions on
transfer set forth in Section 8 of the Warrant and, by its signature
---------
below, agrees to be bound by and to comply with such restrictions.
Name and Address of Person to be Issued New Warrant:
_____________________________________________
_____________________________________________
_____________________________________________
Capitalized terms used herein shall have the meaning set forth in the attached
Warrant.
Holder:
By:
Name:
Title:
-19-
<PAGE>
================================================================================
REGISTRATION RIGHTS AGREEMENT
by and among
NEWPARK RESOURCES, INC.
and
SCF-IV, L.P.
Dated as of April 16, 1999
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
1. DEFINITIONS
2. SECURITIES SUBJECT TO THIS AGREEMENT
(a) Registrable Securities......................................................................... 2
(b) Holders of Registrable Securities.............................................................. 3
3. DEMAND REGISTRATION
(a) Requests for Registration...................................................................... 3
(b) Number of Registrations........................................................................ 3
(c) Effective Registration Expenses................................................................ 3
(d) No Rights of Company or Other Securityholders to Piggyback on Demand Registrations............. 4
(e) Priority on Demand Registrations............................................................... 4
(f) Selection of Underwriters...................................................................... 5
(g) Other Registration Rights Agreements........................................................... 5
4. PIGGYBACK REGISTRATIONS
(a) Right to Piggyback............................................................................. 5
(b) Piggyback Expenses............................................................................. 6
(c) Priority on Primary Registrations.............................................................. 6
(d) Priority on Secondary Registrations............................................................ 6
(e) Selection of Underwriters...................................................................... 7
5. REGISTRATION ON FORM S-3
6. DEFERRAL OF FILING; SUSPENSION OF SHELF REGISTRATION STATEMENT
(a) Deferral of Filing............................................................................. 7
(b) Suspension of Shelf Registration Statement..................................................... 8
7. REGISTRATION PROCEDURES
8. REGISTRATION EXPENSES
9. INDEMNIFICATION; CONTRIBUTION
(a) Indemnification by Company..................................................................... 11
(b) Indemnification by Holder of Registrable Securities............................................ 12
(c) Conduct of Indemnification Proceedings......................................................... 12
(d) Contribution................................................................................... 13
10. RULE 144
</TABLE>
-ii-
<PAGE>
<TABLE>
<S> <C>
11. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS; MARKET STAND-OFF AGREEMENT
(a) Participation in Underwritten Registration...................................................... 14
(b) Market Stand-Off Agreement...................................................................... 14
12. MISCELLANEOUS
(a) Right to Suspend................................................................................ 14
(b) Remedies........................................................................................ 15
(c) Amendments and Waivers.......................................................................... 15
(d) Registrable Securities Held by the Company or its Affiliates.................................... 15
(e) Notices......................................................................................... 15
(f) Successors and Assigns.......................................................................... 15
(g) Counterparts.................................................................................... 15
(h) Headings........................................................................................ 15
(i) Governing Law; Jurisdiction..................................................................... 16
(j) Severability.................................................................................... 16
(k) Entire Agreement................................................................................ 16
(l) Attorney's Fees................................................................................. 16
</TABLE>
-iii-
<PAGE>
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and entered
into this 16th day of April, 1999, by and among Newpark Resources, Inc., a
Delaware corporation (the "Company") and SCF-IV, L.P., a Delaware limited
partnership (the "Purchaser").
RECITALS:
This Agreement is made pursuant to the Purchase Agreement, dated April 8,
1999, between the Company and the Purchaser (the "Purchase Agreement"). In
order to induce the Purchaser to enter into the Purchase Agreement, the Company
has agreed to provide the registration rights set forth in this Agreement. The
execution of this Agreement is a condition to the closing under the Purchase
Agreement.
AGREEMENT:
The parties hereby agree as follows:
1. DEFINITIONS.
(a) As used in this Agreement, the following terms will have the following
meanings:
"Common Stock" means shares of the Company's Common Stock.
"Demand Registration" has the meaning set forth in Section 3(a).
"Early Exercise Event" has the meaning given to it in the Warrants.
"Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time.
"Majority" means 51% or more.
"Person" means any individual, partnership, corporation, limited liability
company, trust or unincorporated organization, or a government or agency or
political subdivision thereof or any other entity of any kind.
"Piggyback Registration" has the meaning set forth in Section 4(a).
"Preferred Stock" means shares of the Company's Series A Cumulative
Perpetual Preferred Stock.
"Registration Expenses" has the meaning set forth in Section 8(a).
"Registration Notice" has the meaning set forth in Section 5.
<PAGE>
"Registrable Securities" means (i) the Shares and (ii) the Warrant Shares
and any other securities issued with respect to the Shares or the Warrant Shares
by way of conversion, dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization; provided, however, a Registrable Security shall cease to be a
Registrable Security to the extent so provided in Section 2(a).
"Securities Act" means the Securities Act of 1933, as amended from time to
time.
"SEC" means the Securities and Exchange Commission.
"Shares" means the shares of Preferred Stock issued and sold pursuant to
the Purchase Agreement, and any Capital Stock for or into which such Shares
hereafter are exchanged, converted, reclassified or recapitalized by the Company
or pursuant to a business combination to which the Company is a party.
"Underwritten registration" or "underwritten offering" means any
registration in which securities of the Company are sold pursuant to a firm
commitment underwriting.
"Warrants" means the warrants issued and sold pursuant to the Purchase
Agreement.
"Warrant Shares" means the shares of Common Stock or other securities
issuable upon exercise of the Warrants.
(b) All undefined capitalized terms used herein shall have the meaning set
forth in the Purchase Agreement.
2. SECURITIES SUBJECT TO THIS AGREEMENT.
(a) Registrable Securities. The securities entitled to the benefits of
this Agreement are the Registrable Securities but, with respect to any
particular Registrable Security, only so long as such security continues to be a
Registrable Security. A Registrable Security shall cease to be a Registrable
Security when (i) it has been effectively registered under the Securities Act
and disposed of in accordance with the registration statement covering it, (ii)
it has been sold pursuant to Rule 144 (or any similar provisions then in force)
under the Securities Act, or (iii) it has otherwise been transferred or
exchanged and a new certificate or other evidence of ownership for it not
bearing the legend set forth in Section 4.4 of the Purchase Agreement (or other
legend of similar import) has been delivered (not subject to any stop transfer
order) by or on behalf of the Company and no other restriction on transfer
exists or an opinion of counsel to the Company, reasonably satisfactory to the
holder of such Registrable Security, shall have been delivered to such holder,
or an opinion of counsel to the holder of such Registrable Security, reasonably
satisfactory to the Company, shall have been delivered to the Company, in either
case to the effect that (x) the subsequent disposition of such Registrable
Security may be made pursuant to Rule 144(k) promulgated under the Securities
Act (or any successor provision) or (y) as to any particular disposition
proposed to be made by such holder, the entire number of Registrable Securities
proposed to be sold by such holder may be sold, in the manner proposed by such
holder, without registration under the Securities Act, whether
-2-
<PAGE>
pursuant to Rule 144 or otherwise, within a period ending not more than 90 days
after the date of such opinion.
(b) Holders of Registrable Securities. A Person is deemed to be a holder
of Registrable Securities whenever such Person owns Registrable Securities or
has the currently exercisable right to acquire such Registrable Securities
whether or not such acquisition has actually been effected.
3. DEMAND REGISTRATION.
(a) Requests for Registration. Subject to the provisions of Section 2(a)
and Section 3(b), any holder or holders of the then outstanding Registrable
Securities may request at any time a registration by the Company under the
Securities Act of all or part of his Registrable Securities (a "Demand
Registration"); provided, however, a Demand Registration with respect to the
Warrant Shares may not be made prior to September 30, 2000 or an Early Exercise
Event, whichever occurs first, and a Demand Registration with respect to the
Shares may not be made prior to the fifth anniversary of this Agreement. Within
ten days after receipt of such request, the Company will serve written notice by
overnight carrier of such registration request to all holders of Registrable
Securities and will, subject to the provisions of Section 2(a) and Section 3(b),
include in such registration all Registrable Securities with respect to which
the Company has received written requests for inclusion therein within 15 days
after distribution to the applicable holder of the Company's notice. All
requests made pursuant to this Section 3(a) will specify the amount of
Registrable Securities to be registered and will also specify the intended
method of disposition thereof; provided, however, that such method of
disposition will be limited to an underwritten offering if requested by the
holders of a Majority of the Registrable Securities requested to be included in
such registration.
(b) Number of Registrations. The holders of Registrable Securities will be
entitled to request an aggregate of two Demand Registrations. A registration
initiated as a Demand Registration will not constitute a Demand Registration (i)
unless such registration has been declared effective by the SEC and remains
effective for the period set forth in Section 7(a)(iii); and (ii) if after such
registration has been declared effective by the SEC it is subject to any stop
order, injunction or other adverse order or action of the SEC or other
governmental authority.
(c) Effective Registration Expenses. Except as provided in Section 3(d),
in any registration initiated as a Demand Registration, the Company will pay all
Registration Expenses, whether or not the registration has been declared
effective; provided, however, the Company shall not be required to pay for any
such Registration Expenses if the request for registration is subsequently
withdrawn at any time by the initiating holder(s) of Registrable Securities (in
which case such holders shall bear such expenses), unless all the holders of
Registrable Securities agree to forfeit their right to one Demand Registration
Statement; and provided further, that, if at the time of such withdrawal, there
has been a material adverse change in the condition, business or prospects of
the Company from that disclosed in the Company's filings under the Exchange Act
at the time of the request for registration and the Company did not at the time
of the request notify the initiating holder(s) that such change had occurred or
that in its good faith judgment such change was likely
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to occur, then such holder(s) shall not be required to pay any of the
Registration Expenses and shall not forfeit their right to a Demand
Registration.
(d) No Rights of Company or Other Securityholders to Piggyback on Demand
Registrations. Neither the Company nor any of its securityholders (other than
the holders of Registrable Securities in such capacity) has any right to include
any of the Company's securities in a registration statement initiated as a
Demand Registration under this Section 3, unless (i) such securities are of the
same class as the Registrable Securities being registered, (ii) if such Demand
Registration is for an offering other than an underwritten offering, the holders
of a Majority of the Registrable Securities being registered in such
registration consent to such inclusion in writing, which consent shall not be
unreasonably withheld, (iii) if such Demand Registration is an underwritten
offering, the managing underwriters agree that some or all of such securities
can be included without adversely affecting such offering or offering price and
(iv) if such Demand Registration is an underwritten offering the Company, or the
selling securityholders, as applicable, agree to sell their securities on the
same terms and conditions as apply to Registrable Securities and the holders of
such Registrable Securities. If any securityholders of the Company (other than
the holders of Registrable Securities in such capacity) register securities of
the Company in a Demand Registration (in accordance with the provisions of this
Section 3(d)), such securityholders will pay the fees and expenses of counsel to
such securityholders and their pro rata share of the Registration Expenses if
such pro rata share of the Registration Expenses for such registration are not
paid by the Company for any reason.
(e) Priority on Demand Registrations. If a Demand Registration is an
underwritten offering and the managing underwriters advise the Company and the
selling holders of the Registrable Securities in writing that in their opinion
the number of Registrable Securities requested to be included exceeds the number
of securities which can be sold in such offering without adversely affecting the
proposed offering or the offering price, the Company will include in such
registration the number of Registrable Securities which in the opinion of such
underwriters can be sold without adversely affecting the proposed offering or
the offering price, and such securities will be allocated pro rata among the
holders of Registrable Securities on the basis of the number of the Registrable
Securities requested to be included in such registration by their respective
holders. If securities (other than Registrable Securities) are proposed to be
included by the Company or its other securityholders in a Demand Registration
which is an underwritten offering (subject to and in accordance with the
provisions of Section 3(d)) and the managing underwriters advise the Company and
the selling holders of Registrable Securities in writing that some but not all
of said other securities can be sold without adversely affecting the proposed
offering or the offering price in such underwritten offering, in addition to all
of the Registrable Securities being registered, those securities which are
permitted to be included will be allocated (i) first, to the Company and (ii)
second, to the securityholders of such securities, allocated among them in such
proportions as such securityholders and the Company may agree. The Company and
any such securityholders may withdraw their securities from a Demand
Registration; provided, however, if the Demand Registration is an underwritten
offering, they may do so only on the reasonable and customary terms agreed upon
by the managing underwriters for such offering.
(f) Selection of Underwriters. If any Demand Registration is an
underwritten offering, or a best efforts underwritten offering, the investment
banker or investment bankers and manager
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or managers that will administer the offering will be selected by the holders of
a Majority of the Registrable Securities requested to be included in such
offering; provided, however, such investment bankers and managers must be
reasonably satisfactory to the Company.
(g) Other Registration Rights Agreements. Without the prior written
consent of the holders of a Majority of the Registrable Securities, the Company
will neither enter into any new registration rights agreements that conflict
with the terms of this Agreement nor permit the exercise of any other
registration rights in a manner that conflicts with the terms of the
registration rights granted hereunder.
4. PIGGYBACK REGISTRATIONS.
(a) Right to Piggyback. Subject to the further provisions of this Section
4, whenever the Company proposes to register any securities under the Securities
Act in connection with the public offering of such securities solely for cash
(other than a registration relating to the sale of securities to participants in
an employee benefit plan or a registration on any form that does not include
substantially the same information as would be required to be included in a
registration statement covering the sale of the Registrable Securities), other
than pursuant to a Demand Registration under Section 3 (a "Piggyback
Registration"), the Company will give written notice to all holders of
Registrable Securities of its intention to effect such a registration not later
than the earlier to occur of (i) the tenth day following receipt by the Company
of notice of exercise of other demand registration rights or (ii) 30 days prior
to the anticipated filing date; provided, however, the Company shall not be
required to give such notice or to include any Registrable Securities in a
Piggyback Registration prior to the earlier of September 30, 2000 or an Early
Exercise Event, in the case of the Warrant Shares or any other Registrable
Security other than Shares, or prior to March 31, 2004, in the case of the
Shares; and provided further, the Company shall not be required to include any
Registrable Securities in a Piggyback Registration unless the Registrable
Securities to be so included are of the same class as the other securities to be
included in such registration. Subject to the provisions of Sections 4(c) and
(d), the Company will include in such Piggyback Registration all Registrable
Securities with respect to which the Company has received written requests for
inclusion therein within ten business days after the receipt by the applicable
holder of Registrable Securities of the Company's notice. The holders of
Registrable Securities will be permitted to withdraw all or any part of such
holder's Registrable Securities from a Piggyback Registration at any time prior
to the date such Piggyback Registration becomes effective with the SEC;
provided, however, if the Piggyback Registration is an underwritten offering,
the holders of Registrable Securities may do so only on the reasonable and
customary terms agreed upon by the managing underwriters for such offering. If
a Piggyback Registration is an underwritten offering effected under (i) Section
4(c), all Persons whose securities are included in the Piggyback Registration
will be obligated to sell their securities on the same terms and conditions as
apply to the securities being issued and sold by the Company or (ii) Section
4(d), all Persons whose securities are included in the Piggyback Registration
will be obligated to sell their securities on the same terms and conditions as
apply to the securities being sold by the Person or Persons who initiated the
Piggyback Registration under Section 4(d). The foregoing notwithstanding, if,
at any time after giving written notice of a Piggyback Registration but prior to
the effective date of the registration statement filed in connection therewith,
the Company shall determine for any reason not to register such securities, the
Company
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may, at its election, give written notice of such determination to the holders
of Registrable Securities and thereupon shall be relieved of its obligation to
register any Registrable Securities in such registration.
(b) Piggyback Expenses. The Registration Expenses of the holders of
Registrable Securities included in a Piggyback Registration will be paid by the
Company.
(c) Priority on Primary Registrations. If a Piggyback Registration is an
underwritten registration on behalf of the Company, and the managing
underwriters advise the Company in writing that in their opinion the total
number of securities requested to be included in such registration exceeds the
number of securities which can be sold in such offering without adversely
affecting the offering or the offering price, the Company will include in such
registration: (i) first, all securities the Company proposes to sell, (ii)
second, to the extent that additional securities can, in the opinion of such
underwriters, be included in such registration without adversely affecting the
offering or the offering price, up to the full number of securities requested to
be included in such registration by holders of Registrable Securities and other
holders of securities entitled to include securities in such Piggyback
Registration, allocated pro rata among such holders on the basis of the number
of securities requested to be included therein by each such holder and (iii)
third, any additional securities that may be included in such registration, in
the opinion of such underwriters, without adversely affecting the offering or
the offering price, as may be agreed upon by the Company and any other
securityholders.
(d) Priority on Secondary Registrations. If a Piggyback Registration is an
underwritten secondary registration on behalf of holders of the Company's
securities pursuant to the exercise of such holders' demand registration rights,
and the managing underwriters advise the Company in writing that in their
opinion the number of securities requested to be included in such registration
exceeds the number of securities which can be sold in such offering without
adversely affecting the offering or the offering price, the Company will include
in such registration (i) first, the number of securities proposed to be included
therein on behalf of the holders of the Company's securities exercising demand
registration rights, allocated among the holders of such securities in such
proportions as the Company and such holders may agree, (ii) second, up to the
full number of securities the Company proposes to sell, (iii) third, to the
extent that additional securities can, in the opinion of such underwriters, be
included in such registration without adversely affecting the offering or the
offering price, up to the full number of securities requested to be included in
such registration by the holders of Registrable Securities and other holders of
securities entitled to include securities in such Piggyback Registration,
allocated pro rata among such holders on the basis of the number of securities
requested to be included therein by each such holder and (iv) fourth, any
additional securities that may be included in such registration, in the opinion
of such underwriters, without adversely affecting the offering or the offering
price, as may be agreed upon by the Company and any other securityholders.
(e) Selection of Underwriters. If any Piggyback Registration is an
underwritten offering, as between the Company and the holders of the Registrable
Securities, the Company will have the sole right to select the investment banker
or investment bankers and manager or managers to administer the offering.
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<PAGE>
5. REGISTRATION ON FORM S-3.
As one of its Demand Registration rights provided in Section 3, a holder of
Registrable Securities shall be entitled to request by a notice in writing to
the Company ("Registration Notice") that the Company register for resale all or
a portion of its Registrable Securities on Form S-3 (or any similar short form
registration) if the Company and the transaction then qualify for the use of
such short form registration. On receipt of the Registration Notice, the Company
will notify all of the holders of Registrable Securities entitled to notice of a
proposed registration pursuant to Section 3(a) of such request. Upon receipt by
the Company of the Registration Notice, the Company will, subject to Section 6
and Section 12(a) use its reasonable best efforts to file a registration
statement on Form S-3 (or any similar short form registration) in accordance
with the terms of this Section 5 and Section 7 as soon as practicable after
receipt of such Registration Notice. The Company will, subject to Sections 6 and
12(a), use its reasonable best efforts to maintain the effectiveness of the
registration statement until the first anniversary of the effectiveness of such
registration statement or such earlier date when all the Registrable Securities
covered by such registration statement are sold. All Registration Expenses
shall be borne by the Company. A holder of Registrable Securities that are
covered by a registration statement pursuant to this Section 5 will give the
Company at least 48 hours written notice prior to any resales by such holder
thereunder.
6. DEFERRAL OF FILING; SUSPENSION OF SHELF REGISTRATION STATEMENT.
(a) Deferral of Filing. Anything herein to the contrary notwithstanding,
the Company may defer the filing of any registration statement otherwise
required to be filed by it pursuant to Section 3 or Section 5 if (i) the Company
notifies each requesting holder that it is in good faith contemplating filing a
registration statement for an underwritten offering of Common Stock within 60
days of its receipt for the demand for registration (which shall not affect any
of the other rights of the holders of Registrable Securities hereunder,
including, without limitation, the rights of such holders under Section 4) or
(ii) the Company notifies each requesting holder that the Company has
determined, in its reasonable judgment, that the requested registration and
offering would materially interfere with a financing, acquisition, corporate
reorganization or other material transaction involving the Company or that
appropriate financial statements will not be available when registration is
requested. In the case of clause (i) of this Section 6(a), the Company shall
use its reasonable best efforts, as soon as practicable, upon the first to occur
of the abandonment of such contemplated registration statement or the expiration
of such 60 day period, to register the Registerable Securities which it
otherwise would be obligated to register pursuant to Section 3 or Section 5,
unless the demand for registration is withdrawn or the Company has filed the
contemplated registration statement. In the case of clause (ii) of this Section
6(a), the Company may delay the filing of the registration statement otherwise
required by Section 3 or Section 5 for a reasonable period of time not to exceed
60 days. If the Company shall so defer the filing of a registration statement,
the requesting holder may, within 20 days after its receipt of written notice of
the deferral, withdraw its request for registration by giving written notice to
the Company (and, in the event of such withdrawal, such request shall not be
counted for purposes of determining the number of requests for registration to
which the holders of Registrable Securities are entitled hereunder). In
addition to the foregoing deferral rights, the Company shall not be required to
file
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any registration statement pursuant to Section 3 or Section 5 (i) within 90 days
after the effectiveness of a registration statement relating to a Demand
Registration or (ii) within 90 days after the effectiveness of a registration
statement referred to in Section 4.
(b) Suspension of Shelf Registration Statement. In addition, if the
Company receives notice of a proposed sale under a shelf registration statement
filed pursuant to Section 5, the Company may give notice to the holder
requesting such sale that such sale under such shelf registration statement must
be deferred and not made for a reasonable period of time (not to exceed 60 days)
after the date of receipt by the Company of such notice of proposed sale if, at
the time the Company receives such notice, the Company is engaged in
confidential negotiations or other confidential business activities, disclosure
of which would be required to be made in the prospectus included in such shelf
registration statement (but would not be required if such sale were not made) in
order to prevent such prospectus from containing any untrue statement of a
material fact or omitting to state any material fact necessary to make the
statements therein not misleading and the Company has determined in its
reasonable judgment that such disclosure would be materially detrimental to the
Company. Each holder of Registrable Securities agrees that, upon receipt of any
such notice from the Company pursuant to this Section 6(b), such holder shall
forthwith discontinue the disposition of Registrable Securities pursuant to
such shelf registration statement for the period of time contemplated by this
Section 6(b). A deferral of such proposed sale pursuant to this Section 6(b)
shall be lifted, and the sale may be forthwith made if the negotiations or other
activities are disclosed or terminated.
7. REGISTRATION PROCEDURES.
(a) Whenever the holders of Registrable Securities have requested that any
Registrable Securities be registered in accordance with the terms and conditions
of this Agreement, the Company will use its reasonable best efforts to effect
the registration and to permit the sale of such Registrable Securities in
accordance with the intended method of disposition thereof, and pursuant thereto
the Company will as expeditiously as possible:
(i) prepare and file with the SEC, subject to the availability of all
required consents of independent accountants (which the Company agrees to
use all reasonable efforts to obtain), not later than 45 days after receipt
of a request to file a registration statement with respect to such
Registrable Securities, a registration statement with respect to such
Registrable Securities, and use its reasonable best efforts to cause such
registration statement to become effective; provided, however, before
filing a registration statement or prospectus or any amendments or
supplements thereto, the Company will furnish to the counsel selected by
the holders of the Registrable Securities being registered in such
registration statement copies of all such documents proposed to be filed,
which documents will be subject to the review of such counsel; the Company
may assume, for the purpose of the foregoing proviso, that the holders and
their counsel have approved any such documents if the Company has not
received a contrary notice from the holders or their counsel within five
days after the delivery of the documents to such counsel (or, with respect
to any version of or amendment or supplement to any document after the
first draft furnished to such counsel, such shorter period as the Company
may reasonably request when it furnishes such document to such
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<PAGE>
counsel, if a longer delay would result in prejudice to the proposed
offering); each such registration statement will be on a form for which the
Company then qualifies, which is available for the sale of the Registrable
Securities in accordance with the intended method of disposition thereof
and which is reasonably satisfactory to the holders of a Majority of the
Registrable Securities being registered (or the managing underwriters in
the case of a firm or best efforts underwriting offering);
(ii) notify each seller of Registrable Securities of any stop order
issued by the SEC and take all reasonable actions required to prevent the
entry of such stop order or to remove it at the earliest possible time if
entered;
(iii) prepare and file with the SEC such amendments and supplements
to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective
for a period of not less than 90 days, or such shorter period as may be
required if all Registrable Securities covered by such registration
statement are sold prior to the expiration of such 90-day period (except in
connection with an underwritten offering, in which case such registration
statement shall be kept effective as long as the underwriters reasonably
request in the underwriting agreement), and comply with the provisions of
the Securities Act with respect to the disposition of all securities
covered by such registration statement during such period in accordance
with the intended methods of disposition by the sellers thereof set forth
in such registration statement;
(iv) furnish to each seller of Registrable Securities such number of
copies of such registration statement, each amendment and supplement
thereto (in each case including all exhibits thereto), the prospectus
included in such registration statement (including each preliminary
prospectus) and such other documents as such seller may reasonably request
in order to facilitate the disposition of the Registrable Securities owned
by such seller;
(v) use its reasonable best efforts to register or qualify such
Registrable Securities under such other securities or blue sky laws of such
jurisdictions within the United States as any seller reasonably requests
and do any and all other acts and things which may be reasonably necessary
or advisable to enable such seller to consummate the disposition in such
jurisdictions of the Registrable Securities owned by such seller; provided,
however, that the Company will not be required to (i) qualify generally to
do business in any jurisdiction where it would not otherwise be required to
qualify but for this Section 7(a)(v), (ii) subject itself to taxation in
any such jurisdiction or (iii) consent to general service of process in any
such jurisdiction;
(vi) use its reasonable best efforts to cause the Registrable
Securities covered by such registration statement to be registered with or
approved by such other governmental agencies or authorities within the
United States as may be necessary to enable the seller or sellers thereof
to consummate the disposition of such Registrable Securities;
(vii) notify each seller of such Registrable Securities, at any time
when a prospectus relating thereto is required to be delivered under the
Securities Act, of the
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happening of any event of which the Company is aware as a result of which
the prospectus included in such registration statement or any document
incorporated therein by reference contains an untrue statement of a
material fact or omits to state any material fact necessary to make the
statements therein not misleading, and prepare and file promptly with the
SEC a supplement or amendment to such prospectus or any such document
incorporated therein by reference so that, as thereafter delivered to the
purchasers of such Registrable Securities, such prospectus will not contain
an untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein not misleading;
(viii) cause all such Registrable Securities to be listed on each
securities exchange on which similar securities issued by the Company are
then listed;
(ix) provide a transfer agent and registrar for all Registrable
Securities and a CUSIP number for all such Registrable Securities, in each
case not later than the effective date of such registration statement;
(x) enter into such customary agreements (including an underwriting
agreement in customary form with customary lock-up provisions not to exceed
90 days) and take all such other actions in connection therewith as the
holders of a Majority of the Registrable Securities being registered or the
managing underwriters, if any, reasonably request in order to expedite or
facilitate the disposition of such Registrable Securities;
(xi) make available for inspection by any seller of Registrable
Securities, any underwriter participating in any disposition pursuant to
such registration statement, and any attorney, accountant or other agent
retained by any such seller or underwriter, all financial and other
records, pertinent corporate documents and properties of the Company, and
cause the Company's officers, directors and employees to supply all
information reasonably requested by any such seller, underwriter, attorney,
accountant or agent in connection with such registration statement, in each
case upon receipt of an appropriate confidentiality agreement;
(xii) in the case of an underwritten offering, obtain a cold comfort
letter from the Company's independent public accountants in customary form
and covering such matters of the type customarily covered by cold comfort
letters, as the managing underwriters reasonably request; and
(xiii) otherwise use its reasonable best efforts to comply with all
applicable rules and regulations of the SEC, and make available to its
security holders, as soon as reasonably practicable, an earnings statement
covering the period of at least twelve months, but not more than eighteen
months, beginning with the first month after the effective date of the
Registration Statement, which earnings statement will satisfy the
provisions of Section 11(a) of the Securities Act.
(b) The Company may require each seller of Registrable Securities as to
which any registration is being effected to furnish to the Company such
information regarding the seller and
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the distribution of such securities as the Company may from time to time
reasonably request and to timely complete and execute all questionnaires, powers
of attorney, indemnities, hold-back agreements, underwriting agreements and
other documents reasonably requested by the Company.
8. REGISTRATION EXPENSES.
(a) All expenses incident to the Company's performance of or compliance
with this Agreement, including without limitation all registration and filing
fees, fees and expenses of compliance with securities or blue sky laws
(including reasonable fees and disbursements of counsel for the underwriters in
connection with blue sky qualifications of the Registrable Securities), printing
expenses, messenger, telephone and delivery expenses, and fees and disbursements
of counsel for the Company and of the Company's independent certified public
accountants (including the expenses of any special audit or "cold comfort"
letters required by or incident to such performance), fees and expenses of
underwriters customarily paid by issuers of securities (including liability
insurance if the Company so desires), the reasonable fees and expenses of any
special experts retained by the Company or at the request of the managing
underwriters in connection with such registration and fees and expenses of other
Persons retained by the Company, but excluding underwriting discounts and
commissions, fees, discounts and commissions of brokers and dealers, transfer
taxes, if any, relating to any sale of Registrable Securities and the fees and
disbursements of counsel for the holders of Registrable Securities, will be
borne by the Company (all such expenses being herein called "Registration
Expenses").
(b) Any fees or expenses incurred by any of the parties other than
Registration Expenses, including fees and disbursements of attorneys and
accountants other than as included in the definition of Registration Expenses,
shall be borne by the party that incurred them.
9. INDEMNIFICATION; CONTRIBUTION.
(a) Indemnification by Company. In the event of the registration of any of
the Registrable Securities pursuant to this Agreement, the Company agrees to
indemnify to the full extent permitted by law, each holder of Registrable
Securities, its officers, directors and constituent partners and each Person who
controls such holder (within the meaning of the Securities Act and the Exchange
Act) against all losses, claims, damages, liabilities and expenses (or actions
in respect thereof) arising out of or based upon any untrue or alleged untrue
statement of a material fact contained in any registration statement, prospectus
or preliminary prospectus relating to the registration of such Registrable
Securities or any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except insofar as the same are contained in any information
furnished in writing to the Company by or on behalf of such holder or other
indemnified Person expressly for use therein or caused by such holder's failure
to deliver a copy of the registration statement or prospectus or any amendments
or supplements thereto after the Company has furnished such holder with a
sufficient number of copies of the same. Subject to the provisions of Section
9(c), the Company will reimburse each holder of Registrable Securities, its
officers, directors, constituent partners and controlling Persons for any
reasonable legal and other expenses as incurred in connection with investigating
or defending any such losses, claims, damages, liabilities, expenses or actions
for which such Person is entitled to
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indemnification hereunder. In connection with a firm commitment or best efforts
underwritten offering, the Company will indemnify the underwriters or agents,
their officers, directors, constituent partners and each Person who controls
such underwriters (within the meaning of the Securities Act and the Exchange
Act) or agents to the same extent as provided above (or such greater extent as
may be customarily required by the managing underwriters) with respect to the
indemnification of the holders of Registrable Securities.
(b) Indemnification by Holder of Registrable Securities. In connection
with any registration statement in which a holder of Registrable Securities is
participating, each such holder will furnish to the Company in writing such
information and affidavits as the Company reasonably requests for use in
connection with any such registration statement or prospectus and agrees to
indemnify, to the full extent permitted by law, the Company, its directors and
officers, each Person who controls the Company (within the meaning of the
Securities Act and the Exchange Act) and all other prospective sellers and their
respective directors, officers and controlling Persons (within the meaning of
the Securities Act and the Exchange Act) against any losses, claims, damages,
liabilities and expenses (or actions in respect thereof) arising out of or based
upon any untrue or alleged untrue statement of a material fact or any omission
or alleged omission of a material fact required to be stated in the registration
statement or prospectus or any amendment thereof or supplement thereto or
necessary to make the statements therein not misleading, to the extent, but only
to the extent, that such untrue statement or omission is contained in any
written information or affidavit furnished by or on behalf of such holder
specifically for such registration statement or prospectus and then only to the
extent of the total proceeds received by such holder of Registrable Securities.
Subject to the provisions of Section 9(c), the holders of Registrable Securities
will reimburse, to the extent of the total proceeds received by the holders of
Registrable Securities, the Company, its officers, directors and controlling
Persons and all other prospective sellers and their respective directors,
officers and controlling Persons for any reasonable legal and other expenses as
incurred in connection with investigation or defending any such losses, claims,
damages, liabilities, expenses or actions.
(c) Conduct of Indemnification Proceedings. Any Person entitled to
indemnification hereunder will (i) give prompt notice to the indemnifying party
of any claim with respect to which it seeks indemnification (but omission of
such notice shall not relieve the indemnifying party from liability hereunder
except to the extent such indemnifying party is actually prejudiced by such
failure to give notice) and (ii) unless in such indemnified party's reasonable
judgment a conflict of interest may exist between such indemnified and
indemnifying parties with respect to such claim, permit such indemnifying party
to assume the defense of such claim with counsel reasonably satisfactory to the
indemnified party. If such defense is not assumed by the indemnifying party,
the indemnifying party will not be subject to any liability for any settlement
made without its consent (but such consent will not be unreasonably withheld).
No indemnifying party will consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such indemnified party of an unconditional release
from all liability in respect to such claim or litigation. An indemnifying
party who is not entitled to, or elects not to, assume the defense of a claim
will not be obligated to pay the fees and expenses of more than one counsel for
all parties indemnified by such indemnifying party with respect to such claim.
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(d) Contribution. If the indemnification provided for in Section 9(a) or
Section 9(b) is unavailable or insufficient to hold harmless each of the
indemnified parties against any losses, claims, damages, liabilities and
expenses (or actions in respect thereof) to which such persons may become
subject under the Securities Act, then the indemnifying party shall, in lieu of
indemnifying each party entitled to indemnification hereunder, contribute to the
amount paid or payable by such party as a result of such losses, claims,
damages, liabilities or expenses in such proportion as is appropriate to reflect
the relative fault of the indemnifying party on the one hand and such
indemnified persons on the other in connection with the statements or omissions
or alleged statements or omissions that resulted in such losses, claims,
damages, liabilities or expenses. The relative fault of such persons shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact, or omission or alleged omission to state a
material fact, relates to information supplied by or concerning the indemnifying
party on the one hand, or by such indemnified person on the other, and such
person's relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The parties hereto agree that it
would not be just and equitable if contribution pursuant to this Section 9(d)
were determined by pro rata allocation or by any other allocation that does not
take into account the equitable considerations referred to in this Section 9(d).
No person guilty of fraudulent misrepresentation within the meaning of the Act
shall be entitled to contribution from any person that is not guilty of such
fraudulent misrepresentation.
10. RULE 144.
The Company covenants that it will file the reports required to be filed by
it under the Securities Act and the Exchange Act and the rules and regulations
adopted by the SEC thereunder (or, if the Company is not required to file such
reports, it will, upon the request of any holder of Registrable Securities, make
publicly available such information), all to the extent required from time to
time to enable such holder to sell Registrable Securities without registration
under the Securities Act within the limitation of the exemptions provided by (i)
Rule 144 under the Securities Act, as such Rule may be amended from time to
time, or (ii) any similar rule or regulation hereafter adopted by the SEC. Upon
the request of any holder of Registrable Securities, the Company will deliver to
such holder a written statement that it has complied with such requirements.
11. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS; MARKET STAND-OFF AGREEMENT.
(a) Participation in Underwritten Registration. No Person may participate
in any underwritten registration hereunder unless such Person (i) agrees to sell
such Person's securities on the basis provided in any underwriting arrangements
approved by the Persons entitled hereunder to approve such arrangements and (ii)
completes and executes all customary questionnaires, powers of attorney,
underwriting agreements and other documents required under the terms of such
underwriting arrangements.
(b) Market Stand-Off Agreement. Each holder of Registrable Securities
agrees that it shall not, to the extent requested by the Company and an
underwriter of Common Stock (or other securities of the Company), sell or
otherwise transfer or dispose of (other than to transferees who agree to be
similarly bound) any Registrable Securities during the 90 day period following
the
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effective date of a registration statement of the Company filed under the
Securities Act (or such shorter period as the executive officers and directors
of the Company are so bound); provided, however, the holders of Registrable
Securities shall be so bound only if the executive officers and directors of the
Company and all other holders of 3% or more of the outstanding Common Stock who
could be entitled to request that shares of Common Stock be included in a
registration statement filed pursuant to Sections 3, 4 or 5 hereof shall have
entered into similar agreements. In order to enforce the foregoing covenant, the
Company may impose stop-transfer instructions with respect to the Registrable
Securities until the end of such 90 day period.
12. MISCELLANEOUS.
(a) Right to Suspend. The Company may, by notice in writing to each holder
of Registrable Securities, require the holder of Registrable Securities to
suspend use of any prospectus included in a registration statement filed
hereunder if the Company reasonably determines that it contains an untrue
statement of a material fact or omits to state any material fact necessary to
make the statements therein not misleading or that any transaction in which the
Company is engaged or proposes to engage, or any event that has occurred or is
expected to occur, would require an amendment to such registration statement or
a supplement to such prospectus (including any such amendment or supplement made
through incorporation by reference to a report filed under Section 13 of the
Exchange Act). Each holder of Registrable Securities agrees that, upon receipt
of any notice from the Company of the happening of any event of the kind
described in this Section 12(a), such holder will forthwith discontinue
disposition of Registrable Securities pursuant to the registration statement
covering such Registrable Securities until such holder's receipt of the copies
of a properly supplemented or amended prospectus, and, if so directed by the
Company, such holder will deliver to the Company all copies, other than
permanent file copies, then in such holder's possession, of the most recent
prospectus covering such Registrable Securities at the time of receipt of such
notice. In the event the Company gives any such notice, the time period
mentioned in Section 7(a)(iii), if applicable, will be extended by the number of
days during the period from and including the date of the giving of such notice
to and including the date when each seller of Registrable Securities covered by
such registration statement has received the copies of such supplemented or
amended prospectus. The Company agrees to use its reasonable best efforts to
cause any suspension of use of any prospectus pursuant to this paragraph to be
as short a period of time as possible.
(b) Remedies. Each holder of Registrable Securities, in addition to being
entitled to exercise all rights granted by law, including recovery of damages,
will be entitled to specific performance of its rights under this Agreement.
(c) Amendments and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given unless the Company has obtained the
written consent of at least a Majority of the outstanding Registrable
Securities.
(d) Registrable Securities Held by the Company or its Affiliates. Whenever
the consent or approval of holders of all or any specified percentage of
Registrable Securities is required
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hereunder, Registrable Securities held by the Company or any of its affiliates
(other than Purchaser or any of its affiliates if it is such an affiliate) will
not be counted in determining whether such consent or approval was given by such
holders.
(e) Notices. All notices hereunder shall be in writing and shall be
effective (a) on the day on which delivered if delivered personally or
transmitted by telex or telegram or telecopier with evidence of receipt, (b) one
business day after the date on which the same is delivered to a nationally
recognized overnight courier service with evidence of receipt, or (c) five
business days after the date on which the same is deposited, postage prepaid, in
the U.S. mail, sent by certified or registered mail, return receipt requested,
and addressed to the party to be notified at the address indicated below for the
Company, or at the address for the holder of the Registrable Securities set
forth in a registry maintained by the Company, or at such other address and/or
telecopy or telex number and/or to the attention of such other person as the
Company or the holder of the Registrable Securities may designate by ten-day
advance written notice.
(f) Successors and Assigns. Subject to compliance with any conditions to
or restrictions on the transfer of any Registrable Securities, this Agreement
will inure to the benefit of and be binding upon the successors and assigns of
each of the parties, including without limitation and without the need for an
express assignment, subsequent holders of Registrable Securities (other than any
such holders who acquire Registrable Securities in a transaction described in
clause (i), (ii) or (iii) of Section 2(a)).
(g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed will be deemed to be an original and all of which taken
together will constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of
reference only and will not limit or otherwise affect the meaning hereof.
(i) Governing Law; Jurisdiction. This Agreement will be governed by and
construed in accordance with the laws of the State of Delaware, without giving
effect to conflict of law principles. Any holder of Registrable Securities may
bring any action or proceeding to enforce or arising out of this Agreement or in
the instruments and agreements annexed hereto in any court of competent
jurisdiction.
(j) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein will not be affected or impaired thereby.
(k) Entire Agreement. This Agreement is intended by the parties as a final
expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted by the Company with respect to
the securities sold pursuant
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to the Purchase Agreement. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
(l) Attorney's Fees. In any action or proceeding brought to enforce any
provision of this Agreement, or where any provision hereof or thereof is validly
asserted as a defense, the successful party will be entitled to recover
reasonable attorney's fees in addition to any other available remedy.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
NEWPARK RESOURCES, INC.
Company Address:
3850 N. Causeway Blvd. /s/ Matthew W. Hardey
---------------------
Suite 1770 Name: Matthew W. Hardey
Metairie, Louisiana 70002 Title: Vice President and Chief
Financial Officer
SCF-IV, L.P.
By SCF-IV, G.P., Limited Partnership,
its General Partner
By: L.E. Simmons & Associates, Incorporated,
its General Partner
By: /s/ David C. Baldwin
--------------------
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