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UNITED STATES
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 (date of earliest event reported): June 24, 1999
----------------------
TUBOSCOPE INC.
-------------------------------------
(Exact name of Registrant as specified in its charter)
Delaware 0-18312 76-0252850
- ----------------------------- ------------------ --------------------
(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.
2835 Holmes Road
Houston, Texas 77051
(Address of principal executive offices)
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Registrant's telephone number, including area code: (713) 799-5100
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Item 5: Other Events.
On June 24, 1999, Newpark Resources, Inc., a Delaware corporation
("Newpark"), and Tuboscope Inc., a Delaware corporation ("Tuboscope"), agreed to
merge Newpark with and into Tuboscope (the "Merger"). The terms of the Merger
are set forth in an Agreement and Plan of Merger (the "Merger Agreement"), dated
as of June 24, 1999, between Tuboscope and Newpark.
In the Merger, each share of Newpark's common stock will be converted into
0.65 share of Tuboscope common stock. Tuboscope and Newpark issued a joint
press release announcing the execution of the Merger Agreement on June 24, 1999,
a copy of which is filed as Exhibit 99.1 hereto and which is incorporated herein
by reference.
The Merger is intended to constitute a tax-free reorganization under the
Internal Revenue Code of 1986, as amended, and be accounted for as a purchase.
Consummation of the Merger is subject to various conditions, including:
(i) receipt of necessary approvals by the stockholders of each of Tuboscope and
Newpark; (ii) the expiration or termination of applicable waiting periods under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the receipt of
requisite regulatory approvals from foreign and domestic regulatory authorities;
and (iii) registration of the shares of Tuboscope common stock to be issued in
connection with the Merger under the Securities Act of 1933, as amended, and the
listing of such shares on the New York Stock Exchange.
In connection with the Merger Agreement, SCF-IV, L.P., a Delaware limited
partnership ("SCF") and holder of 150,000 shares of Newpark's Series A
Cumulative Perpetual Preferred Stock, entered into an agreement with Newpark and
Tuboscope pursuant to which SCF agreed to vote all of the shares of preferred
stock owned by it in favor of the Merger (the "SCF Agreement").
The foregoing summary of the Merger Agreement and the SCF Agreement is
qualified in its entirety by reference to the text of the Merger Agreement and
the SCF Agreement, copies of which are filed as Exhibits 2.1 and 99.2 hereto,
respectively, and which are incorporated herein by reference.
Item 7. Financial Statements and Exhibits.
(a) - (b) Not Applicable.
(c) Exhibits
2.1 Agreement and Plan of Merger, dated as of June 24,
1999, among Tuboscope Inc. and Newpark Resources,
Inc.
99.1 Text of joint press release, dated June 24, 1999,
issued by Tuboscope Inc. and Newpark Resources, Inc.
99.2 Agreement, dated as of June 24, 1999, among Newport
Resources, Inc., Tuboscope Inc. and SCF-IV, L.P.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed by the
undersigned hereunto duly authorized.
TUBOSCOPE INC.
Dated: June 29, 1999 By: /s/ James F. Maroney, III
---------------------------------------
James F. Maroney, III
Vice President, Secretary and General
Counsel
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EXHIBIT INDEX
Exhibit Number Description of Exhibit
- -------------- ----------------------
2.1 Agreement and Plan of Merger, dated as of June 24, 1999,
among Tuboscope Inc. and Newpark Resources, Inc.
99.1 Text of joint press release, dated June 24, 1999, issued by
Tuboscope Inc. and Newpark Resources, Inc.
99.2 Agreement, dated as of June 24, 1999, among Newport
Resources, Inc., Tuboscope Inc. and SCF-IV, L.P.
3
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EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
among
Tuboscope Inc.
and
Newpark Resources, Inc.
June 24, 1999
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TABLE OF CONTENTS
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Page
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ARTICLE I. THE MERGER.............................................................. 1
Section 1.01. The Merger...................................................... 1
Section 1.02. Effective Time of the Merger.................................... 1
Section 1.03. Closing......................................................... 2
Section 1.04. Effects of the Merger........................................... 2
Section 1.05. Directors....................................................... 2
ARTICLE II. CONVERSION OF SECURITIES............................................... 2
Section 2.01. Conversion of Capital Stock..................................... 2
Section 2.02. Exchange of Certificates........................................ 3
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF NEWPARK............................. 6
Section 3.01. Organization of Newpark......................................... 6
Section 3.02. Newpark Capital Structure....................................... 7
Section 3.03. Authority; No Conflict; Required Filings and Consents........... 8
Section 3.04. SEC Filings; Financial Statements............................... 9
Section 3.05. No Undisclosed Liabilities...................................... 9
Section 3.06. Absence of Certain Changes or Events............................ 9
Section 3.07. Taxes........................................................... 10
Section 3.08. Properties...................................................... 11
Section 3.09. Intellectual Property........................................... 11
Section 3.10. Agreements, Contracts and Commitments........................... 12
Section 3.11. Litigation...................................................... 12
Section 3.12. Environmental Matters........................................... 12
Section 3.13. Employee Benefit Plans.......................................... 13
Section 3.14. Compliance With Laws............................................ 14
Section 3.15. Registration Statement; Proxy Statement/Prospectus.............. 14
Section 3.16. Labor Matters................................................... 14
Section 3.17. Insurance....................................................... 15
Section 3.18. No Existing Discussions......................................... 15
Section 3.19. Opinion of Financial Advisor.................................... 15
Section 3.20. Anti-Takeover Laws.............................................. 15
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF TUBOSCOPE............................ 15
Section 4.01. Organization of Tuboscope....................................... 16
Section 4.02. Tuboscope Capital Structure..................................... 16
Section 4.03. Authority; No Conflict; Required Filings and Consents........... 17
Section 4.04. SEC Filings; Financial Statements............................... 18
Section 4.05. No Undisclosed Liabilities...................................... 18
Section 4.06. Absence of Certain Changes or Events............................ 19
Section 4.07. Taxes........................................................... 19
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Section 4.08. Properties...................................................... 20
Section 4.09. Intellectual Property........................................... 20
Section 4.10. Agreements, Contracts and Commitments........................... 20
Section 4.11. Litigation...................................................... 21
Section 4.12. Environmental Matters........................................... 21
Section 4.13. Employee Benefit Plans.......................................... 21
Section 4.14. Compliance With Laws............................................ 22
Section 4.15. Registration Statement; Proxy Statement/Prospectus.............. 22
Section 4.16. Labor Matters................................................... 23
Section 4.17. Insurance....................................................... 23
Section 4.18. Opinion of Financial Advisor.................................... 23
Section 4.19. No Existing Discussions......................................... 23
Section 4.20. Anti-Takeover Laws.............................................. 24
ARTICLE V. CONDUCT OF BUSINESS..................................................... 24
Section 5.01. Covenants of Newpark............................................ 24
Section 5.02. Covenants of Tuboscope.......................................... 26
Section 5.03. Tax-Free Reorganization......................................... 27
Section 5.04. Cooperation..................................................... 28
Section 5.05. Tuboscope Board Resolutions..................................... 28
ARTICLE VI. ADDITIONAL AGREEMENTS.................................................. 28
Section 6.01. No Solicitation................................................. 28
Section 6.02. Proxy Statement/Prospectus; Registration Statement.............. 29
Section 6.03. NYSE Listings................................................... 30
Section 6.04. Access to Information........................................... 30
Section 6.05. Stockholders Meetings........................................... 30
Section 6.06. Legal Conditions to Merger...................................... 31
Section 6.07. Public Disclosure............................................... 32
Section 6.08. Affiliate Legends............................................... 32
Section 6.09. NYSE Listing.................................................... 32
Section 6.10. Stock Plans..................................................... 32
Section 6.11. Brokers or Finders.............................................. 34
Section 6.12. Indemnification................................................. 35
Section 6.13. Letter of Tuboscope's Accountants............................... 35
Section 6.14. Letter of Newpark's Accountants................................. 35
Section 6.15. Benefit Plans................................................... 36
ARTICLE VII. CONDITIONS TO MERGER.................................................. 36
Section 7.01. Conditions to Each Party's Obligation To Effect the Merger...... 36
Section 7.02. Additional Conditions to Obligations of Tuboscope............... 37
Section 7.03. Additional Conditions to Obligations of Newpark................. 38
ARTICLE VIII. TERMINATION AND AMENDMENT............................................ 38
Section 8.01. Termination..................................................... 38
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Section 8.02. Effect of Termination........................................... 40
Section 8.03. Fees and Expenses............................................... 40
Section 8.04. Amendment....................................................... 44
Section 8.05. Extension; Waiver............................................... 44
ARTICLE IX. MISCELLANEOUS.......................................................... 44
Section 9.01. Nonsurvival of Representations, Warranties and Agreements....... 44
Section 9.02. Notices......................................................... 44
Section 9.03. Interpretation.................................................. 45
Section 9.04. Counterparts.................................................... 45
Section 9.05. Entire Agreement; No Third Party Beneficiaries.................. 45
Section 9.06. Governing Law................................................... 46
Section 9.07. Assignment...................................................... 46
Section 9.08. Waiver of Jury Trial............................................ 46
</TABLE>
Schedule 1 - List of Directors and Corporate Executive Officers
Exhibit "A" ................. Tax Opinion Certificate of Newpark (Latham &
Watkins)
Exhibit "B" ................. Tax Opinion Certificate of Tuboscope (Latham &
Watkins)
Exhibit "C" ................. Tax Opinion Certificate of Newpark (Ervin, Cohen &
Jessup LLP)
Exhibit "D" ................. TAx Opinion Certificate of Tuboscope (Ervin, Cohen
& Jessup LLP)
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TABLE OF DEFINED TERMS
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Cross Reference
Terms in Agreement
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Acquisition Proposal...................................................... Section 6.01(a)
Affiliate................................................................. Section 6.08
Agreement................................................................. Preamble
Alternative Transaction................................................... Section 8.03(g)
Antitrust Laws............................................................ Section 6.06(b)
Bankruptcy and Equity Exception........................................... Section 3.03(a)
Certificate of Merger..................................................... Section 1.02
Certificates.............................................................. Section 2.02(b)
Closing................................................................... Section 1.03
Closing Date.............................................................. Section 1.03
Code...................................................................... Preamble
Confidentiality Agreement................................................. Section 6.01(a)
Continuing Employee....................................................... Section 6.15(a)
Costs..................................................................... Section 6.12(a)
Current Market Price...................................................... Section 8.03(f)
DGCL...................................................................... Section 1.01
Effective Time............................................................ Section 1.02
Environmental Law......................................................... Section 3.12(b)
ERISA..................................................................... Section 3.13(a)
ERISA Affiliate........................................................... Section 3.13(a)
Exchange Act.............................................................. Section 3.03(c)
Exchange Agent............................................................ Section 2.02(a)
Exchange Fund............................................................. Section 2.02(a)
Exchange Ratio............................................................ Section 2.01(b)
Governmental Entity....................................................... Section 3.03(c)
Hazardous Substance....................................................... Section 3.12(c)
HSR Act................................................................... Section 3.03(c)
Indemnified Parties....................................................... Section 6.12(a)
IRS....................................................................... Section 3.07(b)
Joint Proxy Statement..................................................... Section 3.15
Material Adverse Change................................................... Section 3.06
Material Leases........................................................... Section 3.08
Merger.................................................................... Preamble
Newpark................................................................... Preamble
Newpark Balance Sheet..................................................... Section 3.04(b)
Newpark Common Stock...................................................... Section 2.01(a)
Newpark Disclosure Schedule............................................... Article III
Newpark Employee Plans.................................................... Section 3.13(a)
Newpark Material Adverse Effect........................................... Section 3.01
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Cross Reference
Terms in Agreement
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Newpark Material Contracts................................................ Section 3.10
Newpark Preferred Stock................................................... Section 3.02(a)
Newpark SEC Reports....................................................... Section 3.04(a)
Newpark Series A Preferred Stock.......................................... Section 3.02(a)
Newpark Stock Option...................................................... Section 6.10(a)
Newpark Stock Plans....................................................... Section 3.02(a)
Newpark Stockholders' Meeting............................................. Section 3.15
Newpark Warrant........................................................... Section 3.02(a)
NYSE...................................................................... Section 2.02(e)
Order..................................................................... Section 6.06(b)
Outside Date.............................................................. Section 8.01(b)
Preferred Merger Consideration............................................ Section 2.01(c)
Registration Statement.................................................... Section 3.15
Rule 145.................................................................. Section 6.08
SEC....................................................................... Section 3.03(c)
Securities Act............................................................ Section 3.04(a)
Standard Registration Rights Agreement.................................... Section 8.03(f)
Subsidiary................................................................ Section 3.01
Superior Proposal......................................................... Section 6.01(a)
Tax....................................................................... Section 3.07(a)
Taxes..................................................................... Section 3.07(a)
Third Party............................................................... Section 8.03(g)
Tuboscope................................................................. Preamble
Tuboscope Balance Sheet................................................... Section 4.04(b)
Tuboscope Common Stock.................................................... Section 2.01(a)
Tuboscope Disclosure Schedule............................................. Article IV
Tuboscope Employee Plans.................................................. Section 4.13(a)
Tuboscope Material Adverse Effect......................................... Section 4.01
Tuboscope Material Contracts.............................................. Section 4.10
Tuboscope Preferred Stock................................................. Section 4.02(a)
Tuboscope SEC Reports..................................................... Section 4.04(a)
Tuboscope Stock Plans..................................................... Section 4.02(a)
Tuboscope Stockholders' Meeting........................................... Section 3.15
Tuboscope Voting Proposal................................................. Section 6.05(a)
</TABLE>
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AGREEMENT AND PLAN OF MERGER
----------------------------
AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated as of June 24,
1999, by and among Tuboscope Inc., a Delaware corporation ("Tuboscope"), and
Newpark Resources, Inc., a Delaware corporation ("Newpark").
WHEREAS, the Boards of Directors of Tuboscope and Newpark deem it
advisable and in the best interests of each corporation and its respective
stockholders that Tuboscope and Newpark combine in order to advance the long-
term business interests of Tuboscope and Newpark;
WHEREAS, the combination of Tuboscope and Newpark shall be effected by
the terms of this Agreement through a merger in which the stockholders of
Newpark will become stockholders of Tuboscope (the "Merger"); and
WHEREAS, for Federal income tax purposes, it is intended that the
Merger shall qualify as a reorganization within the meaning of Section 368(a) of
the Internal Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth below, the
parties agree as follows:
ARTICLE I.
THE MERGER
Section 1.01. The Merger. Upon the terms and subject to the
----------
conditions of this Agreement, in accordance with the Delaware General
Corporation Law (the "DGCL"), at the Effective Time (as defined in Section 1.02
hereof), Newpark shall merge with and into Tuboscope.
Section 1.02. Effective Time of the Merger. Subject to the
----------------------------
provisions of this Agreement, a certificate of merger with respect to the Merger
in such form as is required by the relevant provisions of the DGCL (the
"Certificate of Merger") shall be duly executed by Tuboscope and thereafter
delivered to the Secretary of State of the State of Delaware for filing, as
early as practicable on the Closing Date (as defined in Section 1.03). The
Merger shall become effective at 4:00 p.m., C.S.T., on the date of filing of the
Certificate of Merger with the Secretary of State of the State of Delaware or at
such other time as specified herein (the "Effective Time").
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Section 1.03. Closing. The closing of the Merger (the "Closing")
-------
will take place at 10:00 a.m., C.S.T., on a date to be specified by Tuboscope
and Newpark, which shall be no later than the second business day after
satisfaction of the latest to occur of the conditions set forth in Sections
7.01, 7.02(b) (other than the delivery of the officers' certificate referred to
therein) and 7.03(b) (other than the delivery of the officers' certificate
referred to therein) (provided that the other closing conditions set forth in
Article VII have been met or waived as provided in Article VII at or prior to
the Closing) (the "Closing Date"), at the corporate offices of Tuboscope at the
address indicated in Section 9.02 unless another date, place or time is agreed
to in writing by Tuboscope and Newpark.
Section 1.04. Effects of the Merger. As a result of the Merger, the
---------------------
separate corporation existence of Newpark shall cease and Tuboscope shall
continue as the surviving corporation.
Section 1.05. Directors. At or prior to the Effective Time,
---------
Tuboscope shall (i) set the number of the members of the Board of Directors of
Tuboscope at ten and (ii) take such action as may be necessary to cause the ten
individuals named on Schedule I attached hereto to be the members of the Board
of Directors of Tuboscope as of the Effective Time.
ARTICLE II.
CONVERSION OF SECURITIES
Section 2.01. Conversion of Capital Stock. As of the Effective Time,
---------------------------
by virtue of the Merger and without any action on the part of the holder of any
shares of capital stock of Newpark or Tuboscope:
(a) Cancellation of Treasury Stock and Tuboscope-Owned Stock.
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All shares of Common Stock of Newpark ("Newpark Common Stock") that are owned by
Newpark as treasury stock and any shares of Newpark Common Stock owned by
Tuboscope or any Subsidiary (as defined in Section 3.01) of Tuboscope shall be
canceled and retired and shall cease to exist and no stock of Tuboscope or other
consideration shall be delivered in exchange therefor. All shares of Common
Stock, par value $.01 per share, of Tuboscope ("Tuboscope Common Stock") owned
by Newpark shall be canceled and retired and shall cease to exist and no stock
of Tuboscope or other consideration shall be delivered in exchange therefor.
(b) Exchange Ratio for Newpark Common Stock. Subject to Section
2.02, each issued and outstanding share of Newpark Common Stock shall be
converted into the right to receive .65 share (the "Exchange Ratio") of
Tuboscope Common Stock. All such shares of Newpark Common Stock, when so
converted, shall no longer be outstanding and shall automatically be canceled
and retired and shall cease to exist, and each holder of a certificate
representing any such shares shall cease to have any rights with respect
thereto, except the right to receive the shares of Tuboscope Common Stock and
any cash in lieu of fractional shares of Tuboscope Common Stock to be issued or
paid in consideration therefor upon the surrender of such certificate in
accordance with Section 2.02, without interest. Notwithstanding the foregoing,
if between the date of this Agreement and the Effective Time the outstanding
2
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shares of Tuboscope Common Stock shall have been changed into a different number
of shares or a different class, by reason of any stock dividend, subdivision,
reclassification, recapitalization, split, combination or exchange of shares,
then the Exchange Ratio contemplated shall be correspondingly adjusted to
reflect such stock dividend, subdivision, reclassification, recapitalization,
split, combination or exchange of shares.
(c) Conversion of Newpark Preferred Stock. Subject to Section 2.02,
-------------------------------------
the issued and outstanding shares of Series A Cumulative Perpetual Preferred
Stock, par value $.01 per share, of Newpark (the "Newpark Series A Preferred
Stock") shall be converted into and represent the right to receive 965,347
shares of Tuboscope Common Stock plus, if applicable, a number of shares of
Tuboscope Common Stock equal to the product of (i) the Exchange Ratio and (ii)
the number of shares of Newpark Common Stock which would be issuable as a
dividend for accrued but unpaid dividends with respect to the Newpark Series A
Preferred Stock as of the Effective Time, calculated based on the average Market
Price (as defined in the Certificate of Designation of the Newpark Series A
Preferred Stock) of the Newpark Common Stock for the five trading days ending
the day before the Effective Time (collectively, the "Preferred Merger
Consideration"). As of the Effective Time, all such shares of Newpark Series A
Preferred Stock shall no longer be outstanding and shall automatically be
canceled and retired and shall cease to exist, and each holder of a certificate
which, prior to the Effective Time, represented any such shares of Newpark
Series A Preferred Stock shall cease to have any rights with respect thereto,
except the right to receive the Preferred Merger Consideration and any cash in
lieu of fractional shares of Tuboscope Common Stock to be issued or paid in
consideration therefor upon surrender of such certificate in accordance with
Section 2.02, without interest. Notwithstanding the foregoing, if between the
date of this Agreement and the Effective Time the outstanding shares of
Tuboscope Common Stock shall have been changed into a different number of shares
or a different class, by reason of any stock dividend, subdivision,
reclassification, recapitalization, split, combination or exchange of shares,
then the Exchange Ratio contemplated shall be correspondingly adjusted to
reflect such stock dividend, subdivision, reclassification, recapitalization,
split, combination or exchange of shares.
Section 2.02. Exchange of Certificates. The procedures for
------------------------
exchanging outstanding shares of Newpark Common Stock for Tuboscope Common Stock
pursuant to the Merger are as follows:
(a) Exchange Agent. As of the Effective Time, Tuboscope shall
--------------
deposit with a bank or trust company designated by Tuboscope and Newpark (the
"Exchange Agent"), for the benefit of the holders of shares of Newpark Common
Stock and Newpark Series A Preferred Stock, for exchange in accordance with this
Section 2.02, through the Exchange Agent, certificates representing the shares
of Tuboscope Common Stock and an estimated amount of cash in lieu of fractional
shares (such shares of Tuboscope Common Stock, together with any dividends or
distributions with respect thereto, and cash in lieu of fractional shares being
hereinafter referred to as the "Exchange Fund") issuable pursuant to Section
2.01 in exchange for outstanding shares of Newpark Common Stock and Newpark
Series A Preferred Stock.
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(b) Exchange Procedures. As soon as reasonably practicable
-------------------
after the Effective Time, the Exchange Agent shall mail to each holder of record
of a certificate or certificates which immediately prior to the Effective Time
represented outstanding shares of Newpark Common Stock or Newpark Series A
Preferred Stock (the "Certificates") whose shares were converted pursuant to
Section 2.01 into the right to receive shares of Tuboscope Common Stock (i) a
letter of transmittal (which shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall be in such form and have such other
provisions as Tuboscope and Newpark may reasonably specify) and (ii)
instructions for effecting the surrender of the Certificates in exchange for
certificates representing shares of Tuboscope Common Stock (plus cash in lieu of
fractional shares, if any, of Tuboscope Common Stock as provided below). Upon
surrender of a Certificate for cancellation to the Exchange Agent or to such
other agent or agents as may be appointed by Tuboscope, together with such
letter of transmittal, duly executed, the holder of such Certificate shall be
entitled to receive in exchange therefor a certificate representing that number
of whole shares of Tuboscope Common Stock and cash in lieu of fractional shares
which such holder has the right to receive pursuant to the provisions of this
Article II, and the Certificate so surrendered shall immediately be canceled. In
the event of a transfer of ownership of Newpark Common Stock or Newpark Series A
Preferred Stock which is not registered in the transfer records of Newpark, a
certificate representing the proper number of shares of Tuboscope Common Stock
may be issued to a transferee if the Certificate representing such Newpark
Common Stock or Newpark Series A Preferred Stock is presented to the Exchange
Agent, accompanied by all documents required to evidence and effect such
transfer and by evidence that any applicable stock transfer taxes have been
paid. Until surrendered as contemplated by this Section 2.02, each Certificate
shall be deemed at any time after the Effective Time to represent only the right
to receive upon such surrender the certificate representing shares of Tuboscope
Common Stock and cash in lieu of any fractional shares of Tuboscope Common Stock
as contemplated by this Section 2.02.
(c) Distributions with Respect to Unexchanged Shares. No
------------------------------------------------
dividends or other distributions declared or made after the Effective Time with
respect to Tuboscope Common Stock with a record date after the Effective Time
shall be paid to the holder of any unsurrendered Certificate with respect to the
shares of Tuboscope Common Stock represented thereby and no cash payment in lieu
of fractional shares shall be paid to any such holder pursuant to subsection (e)
below until the holder of record of such Certificate shall surrender such
Certificate. Subject to the effect of applicable laws, following surrender of
any such Certificate, there shall be paid to the record holder of the
certificates representing whole shares of Tuboscope Common Stock issued in
exchange therefor, without interest, (i) at the time of such surrender, the
amount of any cash payable in lieu of a fractional share of Tuboscope Common
Stock to which such holder is entitled pursuant to subsection (e) below and the
amount of dividends or other distributions with a record date after the
Effective Time previously paid with respect to such whole shares of Tuboscope
Common Stock, and (ii) at the appropriate payment date, the amount of dividends
or other distributions with a record date after the Effective Time but prior to
surrender and a payment date subsequent to surrender payable with respect to
such whole shares of Tuboscope Common Stock.
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(d) No Further Ownership Rights in Newpark Common Stock or
------------------------------------------------------
Newpark Series A Preferred Stock. All shares of Tuboscope Common Stock issued
- --------------------------------
upon the surrender for exchange of Certificates in accordance with the terms
hereof (including any cash paid pursuant to subsection (c) or (e) of this
Section 2.02) shall be deemed to have been issued in full satisfaction of all
rights pertaining to such shares of Newpark Common Stock or Newpark Series A
Preferred Stock. Notwithstanding the foregoing, Tuboscope is obligated to pay
any dividends or make any other distributions with a record date prior to the
Effective Time which may have been declared or made by Newpark on shares of
Newpark Common Stock or Newpark Series A Preferred Stock in accordance with the
terms of this Agreement (to the extent permitted under Section 5.01) prior to
the date hereof and which remain unpaid at the Effective Time. From and after
the Effective Time, there shall be no further registration of transfers on the
stock transfer books of Tuboscope of the shares of Newpark Common Stock or
Newpark Series A Preferred Stock which were outstanding immediately prior to the
Effective Time. If, after the Effective Time, Certificates are presented to
Tuboscope for any reason, they shall be canceled and exchanged as provided in
this Section 2.02.
(e) No Fractional Shares. No certificate or scrip representing
--------------------
fractional shares of Tuboscope Common Stock shall be issued upon the surrender
for exchange of Certificates, and such fractional share interests will not
entitle the owner thereof to vote or to any other rights of a stockholder of
Tuboscope. Notwithstanding any other provision of this Agreement, each holder of
shares of Newpark Common Stock or Newpark Series A Preferred Stock exchanged
pursuant to the Merger who would otherwise have been entitled to receive a
fraction of a share of Tuboscope Common Stock (after taking into account all
Certificates delivered by such holder) shall receive, in lieu thereof, cash
(without interest) in an amount equal to such fractional part of a share of
Tuboscope Common Stock multiplied by the average of the last reported sales
prices of Tuboscope Common Stock, as reported on the New York Stock Exchange
("NYSE"), on each of the ten trading days immediately preceding the date of the
Effective Time.
(f) Termination of Exchange Fund. Any portion of the Exchange
----------------------------
Fund which remains undistributed to the stockholders of Newpark for 180 days
after the Effective Time shall be delivered to Tuboscope, upon demand, and any
stockholders of Newpark who have not previously complied with this Section 2.02
shall thereafter look only to Tuboscope for payment of their claim for Tuboscope
Common Stock, any cash in lieu of fractional shares of Tuboscope Common Stock
and any dividends or distributions with respect to Tuboscope Common Stock.
(g) No Liability. Neither Tuboscope nor Newpark shall be liable
------------
to any holder of shares of Newpark Common Stock, Newpark Series A Preferred
Stock or Tuboscope Common Stock, as the case may be, for such shares (or
dividends or distributions with respect thereto) delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
(h) Withholding Rights. Tuboscope shall be entitled to deduct
------------------
and withhold from the consideration otherwise payable pursuant to this Agreement
to any holder of
5
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shares of Newpark Common Stock or Newpark Series A Preferred Stock such amounts
as it is required to deduct and withhold with respect to the making of such
payment under the Code, or any provision of state, local or foreign tax law. To
the extent that amounts are so withheld by Tuboscope, such withheld amounts
shall be treated for all purposes of this Agreement as having been paid to the
holder of the shares of Newpark Common Stock or Newpark Series A Preferred Stock
in respect of which such deduction and withholding was made by Tuboscope.
(i) Lost Certificates. If any Certificate shall have been lost,
-----------------
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required by
Tuboscope, the posting by such person of a bond in such reasonable amount as
Tuboscope may direct as indemnity against any claim that may be made against it
with respect to such Certificate, the Exchange Agent will issue in exchange for
such lost, stolen or destroyed Certificate the shares of Tuboscope Common Stock
and any cash in lieu of fractional shares, and unpaid dividends and
distributions on shares of Tuboscope Common Stock deliverable in respect thereof
pursuant to this Agreement.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF NEWPARK
Newpark represents and warrants to Tuboscope that the statements
contained in this Article III are true and correct except as set forth herein
and in the disclosure schedule delivered by Newpark to Tuboscope on or before
the date of this Agreement (the "Newpark Disclosure Schedule"). The Newpark
Disclosure Schedule shall be arranged in paragraphs corresponding to the
numbered and lettered paragraphs contained in this Article III and the
disclosure in any paragraph shall qualify other paragraphs in this Article III
only to the extent that it is reasonably apparent from a reading of such
disclosure that it also qualifies or applies to such other paragraphs.
Section 3.01. Organization of Newpark. Each of Newpark and its
-----------------------
Subsidiaries (as defined below) is a corporation or unincorporated entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization, has all requisite corporate
or entity power to own, lease and operate its property and to carry on its
business as now being conducted and as proposed to be conducted, and is duly
qualified to do business and is in good standing as a foreign corporation or
organization in each jurisdiction in which the failure to be so qualified would
have a material adverse effect on the business, properties, financial condition,
or results of operations of Newpark and its Subsidiaries, taken as a whole (a
"Newpark Material Adverse Effect"). Except as set forth in the Newpark SEC
Reports (as defined in Section 3.04) filed prior to the date hereof, neither
Newpark nor any of its Subsidiaries directly or indirectly owns any equity or
similar interest in, or any interest convertible into or exchangeable or
exercisable for, any corporation, partnership, joint venture or other business
association or entity, excluding securities in any publicly traded company held
for investment by Newpark or its Subsidiaries and comprising less than five
percent (5%) of the outstanding stock of such company. As used in this
Agreement, the word "Subsidiary" means, with respect to any party, any
corporation or other organization, whether incorporated or unincorporated, of
which (i) such party or any other Subsidiary of such party is a general partner
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(excluding partnerships, the general partnership interests of which held by such
party or any Subsidiary of such party do not have a majority of the voting
interest in such partnership) or (ii) at least a majority of the securities or
other interests having by their terms ordinary voting power to elect a majority
of the Board of Directors or others performing similar functions with respect to
such corporation or other organization is directly or indirectly owned or
controlled by such party or by any one or more of its Subsidiaries, or by such
party and one or more of its Subsidiaries.
Section 3.02. Newpark Capital Structure.
-------------------------
(a) The authorized capital stock of Newpark consists of
100,000,000 shares of Common Stock and 1,000,000 shares of Preferred Stock
("Newpark Preferred Stock"). As of June 16, 1999, (i) 68,905,444 shares of
Newpark Common Stock were issued and outstanding, all of which are validly
issued, fully paid and nonassessable, (ii) 150,000 shares of Newpark Series A
Preferred Stock were issued and outstanding, all of which are validly issued,
fully paid and nonassessable, and (iii) no shares of Newpark Common Stock or
Newpark Preferred Stock were held in the treasury of Newpark or by Subsidiaries
of Newpark. The Newpark Disclosure Schedule shows the number of shares of
Newpark Common Stock reserved for future issuance pursuant to an outstanding
warrant (the "Newpark Warrant"), stock options and restricted stock awards
granted and outstanding as of June 16, 1999 and the plans under which such
options or shares of restricted stock were granted or issued (collectively, the
"Newpark Stock Plans"). Except as set forth in the Newpark Disclosure Schedule,
no change in such capitalization has occurred between June 16, 1999 and the date
of this Agreement. All shares of Newpark Common Stock subject to issuance as
specified above are duly authorized and, upon issuance on the terms and
conditions specified in the instruments pursuant to which they are issuable,
shall be validly issued, fully paid and nonassessable. There are no obligations,
contingent or otherwise, of Newpark or any of its Subsidiaries to repurchase,
redeem or otherwise acquire any shares of Newpark Common Stock or Newpark
Preferred Stock or the capital stock of any Subsidiary or to provide funds to or
make any material investment (in the form of a loan, capital contribution or
otherwise) in any such Subsidiary or any other entity other than guarantees of
obligations of Subsidiaries entered into in the ordinary course of business. All
of the outstanding shares of capital stock of each of Newpark's Subsidiaries are
duly authorized, validly issued, fully paid and nonassessable and all such
shares (other than directors' qualifying shares in the case of foreign
Subsidiaries) are owned by Newpark or another Subsidiary free and clear of all
security interests, liens, claims, pledges, agreements, limitations in Newpark's
voting rights, charges or other encumbrances of any nature.
(b) Except as set forth in this Section 3.02 or as reserved for
future grants of securities under the Newpark Stock Plans or issuances upon
exercise of the Newpark Warrant, there are no equity securities of any class of
Newpark or any of its Subsidiaries, or any security exchangeable into or
exercisable for such equity securities, issued, reserved for issuance or
outstanding. Except as set forth in this Section 3.02, there are no options,
warrants, equity securities, calls, rights, commitments or agreements of any
character to which Newpark or any of its Subsidiaries is a party or by which it
is bound obligating Newpark or any of its Subsidiaries to issue, deliver or
sell, or cause to be issued, delivered or sold, additional shares of capital
stock of
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Newpark or any of its Subsidiaries or obligating Newpark or any of its
Subsidiaries to grant, extend, accelerate the vesting of or enter into any such
option, warrant, equity security, call, right, commitment or agreement. To the
best knowledge of Newpark, there are no voting trusts, proxies or other voting
agreements or understandings with respect to the shares of capital stock of
Newpark.
(c) Newpark has received a written consent, in the form
previously delivered to Tuboscope, from the holder of a majority of the shares
of Newpark Series A Preferred Stock indicating such holder's consent to the
Merger.
Section 3.03. Authority; No Conflict; Required Filings and Consents.
-----------------------------------------------------
(a) Newpark has all requisite corporate power and authority to
enter into this Agreement and to consummate the transactions contemplated by
this Agreement. The execution and delivery of this Agreement and the
consummation of the transactions contemplated by this Agreement by Newpark have
been duly authorized by all necessary corporate action on the part of Newpark,
subject only to the approval of the Merger by Newpark's stockholders under the
DGCL. This Agreement has been duly executed and delivered by Newpark and
constitutes the valid and binding obligation of Newpark, enforceable in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity principles (the
"Bankruptcy and Equity Exception").
(b) The execution and delivery of this Agreement by Newpark do
not, and the consummation of the transactions contemplated by this Agreement
will not, (i) conflict with, or result in any violation or breach of, any
provision of the certificate of incorporation or bylaws of Newpark, (ii) result
in any violation or breach of, or constitute (with or without notice or lapse of
time, or both) a default (or give rise to a right of termination, cancellation
or acceleration of any obligation or loss of any material benefit) under, or
require a consent or waiver under, any of the terms, conditions or provisions of
any note, bond, mortgage, indenture, lease, contract or other agreement,
instrument or obligation to which Newpark or any of its Subsidiaries is a party
or by which any of them or any of their properties or assets may be bound, or
(iii) conflict with or violate any permit, concession, franchise, license,
judgment, order, decree, statute, law, ordinance, rule or regulation applicable
to Newpark or any of its Subsidiaries or any of its or their properties or
assets, except in the case of (ii) and (iii) for any such conflicts, violations,
defaults, terminations, cancellations or accelerations which are not,
individually or in the aggregate, reasonably likely to have a Newpark Material
Adverse Effect.
(c) No consent, approval, order or authorization of, or
registration, declaration or filing with, any court, administrative agency or
commission or other governmental authority or instrumentality ("Governmental
Entity") is required by or with respect to Newpark or any of its Subsidiaries in
connection with the execution and delivery of this Agreement or the consummation
of the transactions contemplated hereby, except for (i) the filing of the pre-
merger notification report under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended ("HSR Act"), (ii) the filing of the Certificate of
Merger with the Delaware Secretary of State, (iii)
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the filing of the Joint Proxy Statement (as defined in Section 3.15 below) with
the Securities and Exchange Commission (the "SEC") in accordance with the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), (iv) such
consents, approvals, orders, authorizations, registrations, declarations and
filings as may be required under applicable state securities laws and the laws
of any foreign country and the European Union, and (v) such other consents,
authorizations, filings, approvals and registrations which, if not obtained or
made, would not be reasonably likely to have a Newpark Material Adverse Effect.
Section 3.04. SEC Filings; Financial Statements.
---------------------------------
(a) Newpark has filed and made available to Tuboscope all forms,
reports and documents required to be filed by Newpark with the SEC since January
1, 1996 other than registration statements on Form S-8 (collectively, the
"Newpark SEC Reports"). The Newpark SEC Reports (i) at the time filed, complied
in all material respects with the applicable requirements of the Securities Act
of 1933, as amended (the "Securities Act"), and the Exchange Act, as the case
may be, and (ii) did not at the time they were filed (or if amended or
superseded by a filing prior to the date of this Agreement, then on the date of
such filing) contain any untrue statement of a material fact or omit to state a
material fact required to be stated in such Newpark SEC Reports or necessary in
order to make the statements in such Newpark SEC Reports, in the light of the
circumstances under which they were made, not misleading. None of Newpark's
Subsidiaries is required to file any forms, reports or other documents with the
SEC.
(b) Each of the consolidated financial statements (including, in
each case, any related notes) contained in the Newpark SEC Reports complied as
to form in all material respects with the applicable published rules and
regulations of the SEC with respect thereto, was prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes to such
financial statements or, in the case of unaudited statements, as permitted by
Form 10-Q of the SEC) and fairly presented the consolidated financial position
of Newpark and its Subsidiaries as of the dates and the consolidated results of
its operations and cash flows for the periods indicated, except that the
unaudited interim financial statements were or are subject to normal and
recurring year-end adjustments which were not or are not expected to be material
in amount. The audited balance sheet of Newpark as of December 31, 1998 is
referred to herein as the "Newpark Balance Sheet."
Section 3.05. No Undisclosed Liabilities. Except as disclosed in the
--------------------------
Newpark SEC Reports filed prior to the date hereof, and except for normal or
recurring liabilities incurred since December 31, 1998 in the ordinary course of
business consistent with past practices, Newpark and its Subsidiaries do not
have any liabilities, either accrued, contingent or otherwise (whether or not
required to be reflected in financial statements in accordance with generally
accepted accounting principles), and whether due or to become due, which
individually or in the aggregate are reasonably likely to have a Newpark
Material Adverse Effect.
Section 3.06. Absence of Certain Changes or Events. Except as
------------------------------------
disclosed in the Newpark SEC Reports filed prior to the date hereof, since the
date of the Newpark Balance
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Sheet, Newpark and its Subsidiaries have conducted their businesses only in the
ordinary course and in a manner consistent with past practice and, since such
date, there has not been (i) any material adverse change in the financial
condition, results of operations, business or properties (a "Material Adverse
Change") of Newpark and its Subsidiaries, taken as a whole (other than changes
that are the effect or result of economic factors affecting the oil and gas
exploration and production industry or the economy as a whole) or any
development or combination of developments of which the management of Newpark is
aware that, individually or in the aggregate, has had, or is reasonably likely
to have, a Newpark Material Adverse Effect (other than developments that are the
effect or result of actions to be taken by Tuboscope or economic factors
affecting the oil and gas exploration and production industry or the economy as
a whole); (ii) any damage, destruction or loss (whether or not covered by
insurance) with respect to Newpark or any of its Subsidiaries having a Newpark
Material Adverse Effect; (iii) any material change by Newpark in its accounting
methods, principles or practices to which Tuboscope has not previously consented
in writing; (iv) any revaluation by Newpark of any of its assets having a
Newpark Material Adverse Effect; or (v) any other action or event that would
have required the consent of Tuboscope pursuant to Section 5.01 of this
Agreement had such action or event occurred after the date of this Agreement and
that, individually or in the aggregate, has had or is reasonably likely to have
a Newpark Material Adverse Effect.
Section 3.07. Taxes.
-----
(a) For the purposes of this Agreement, a (i) "Tax" or,
collectively, "Taxes," means any and all federal, state, local or foreign gross
receipts, income, profits, sales, use, value added, ad valorem, transfer, gains,
franchise, withholding, payroll, recapture, employment, excise, unemployment,
social security, license, occupation, business organization, stamp,
environmental, property, severance, premium, custom duties, capital stock,
disability, registration, alternative or add-on minimum, estimated, or other tax
of any kind whatsoever, including any interest, penalty or addition thereto,
whether disputed or not, and any obligations under any agreements or
arrangements with any other person with respect to such amounts and any
liability for such amounts of a predecessor entity, and (ii) "Tax Return" shall
mean any return, declaration, report, claim for refund, or information return or
statement relating to Taxes, including any schedule or attachment thereto, and
including any amendment thereof.
(b) Newpark and each of its Subsidiaries have timely filed all
Tax Returns and reports required to be filed by them prior to the date of this
Agreement (taking into account extensions), except for any such returns which
are not likely, individually or in the aggregate, to have a Newpark Material
Adverse Effect. All such Tax Returns are complete and correct in all respects,
except for any such omissions or errors which are not reasonably likely,
individually or in the aggregate, to have a Newpark Material Adverse Effect.
Newpark and each of its Subsidiaries has paid (or Newpark has paid on its
Subsidiaries' behalf) all Taxes shown as due on such Tax Returns, and Newpark's
most recent consolidated financial statements reflect an adequate reserve for
all Taxes payable by Newpark and its Subsidiaries for all taxable periods and
portions thereof through the date of such financial statements, except to the
extent that any such Taxes are not reasonably likely, individually or in the
aggregate, to have a Newpark Material Adverse Effect. Neither the Internal
Revenue Service (the "IRS") nor any other taxing
10
<PAGE>
authority has asserted any claim for Taxes, or to the actual knowledge of the
executive officers of Newpark, is threatening to assert any claims for Taxes,
which claims, individually or in the aggregate, are reasonably likely to have a
Newpark Material Adverse Effect. No deficiencies for any Taxes (other than those
which are not reasonably likely, individually or in the aggregate, to have a
Newpark Material Adverse Effect) have been proposed, asserted or assessed
against Newpark or any of its Subsidiaries that have not been fully paid or
adequately provided for in the appropriate financial statements of Newpark and
its Subsidiaries, no requests for waivers of the time to assess any Taxes are
pending, and none of Newpark or any of its Subsidiaries have waived any statute
of limitations in respect of Taxes or agreed to any extension of time with
respect to a Tax assessment or deficiency. Newpark and each of its Subsidiaries
have withheld or collected and paid over to the appropriate governmental
authorities (or are properly holding for such payment) all Taxes required by law
to be withheld or collected, except for amounts which are not reasonably likely,
individually or in the aggregate, to have a Newpark Material Adverse Effect.
Neither Newpark nor any of its Subsidiaries has made an election under Section
341(f) of the Code, except for any such election which shall not have a Newpark
Material Adverse Effect. There are no liens for Taxes upon the assets of Newpark
or any of its Subsidiaries (other than liens for Taxes that are not yet due or
that are being contested in good faith by appropriate proceedings), except for
liens which are not reasonably likely, individually or in the aggregate, to have
a Newpark Material Adverse Effect.
Section 3.08. Properties.
----------
(a) Newpark has provided to Tuboscope a true and complete list of
all real property leased by Newpark or its Subsidiaries pursuant to leases
providing for the occupancy of facilities in excess of 10,000 square feet
(collectively "Material Leases"). Newpark is not in default under any of such
leases, except where the existence of such defaults, individually or in the
aggregate, is not reasonably likely to have a Newpark Material Adverse Effect.
(b) Newpark has provided to Tuboscope a true and complete list of
all real property that Newpark or any of its Subsidiaries owns. With respect to
each such item of real property, except for such matters that, individually or
in the aggregate, are not reasonably likely to have a Newpark Material Adverse
Effect: (a) Newpark or the identified Subsidiary has good and clear record and
marketable title to such property, free and clear of any security interest,
easement, covenant or other restriction, except for security interests,
easements, covenants and other restrictions which do not materially impair the
current uses or occupancy of such property; and (b) the improvements constructed
on such property are in good condition, and all mechanical and utility systems
servicing such improvements are in good condition, free in each case of material
defects.
Section 3.09. Intellectual Property. Newpark owns, or is licensed or
---------------------
otherwise possesses legally enforceable rights to use, all trademarks, trade
names, service marks, copyrights, and any applications for such trademarks,
trade names, service marks and copyrights, know-how, computer software programs
or applications and tangible or intangible proprietary information or material
that are necessary to conduct the business of Newpark as currently
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conducted, subject to such exceptions that would not be reasonably likely to
have a Newpark Material Adverse Effect.
Section 3.10. Agreements, Contracts and Commitments. Newpark has not
-------------------------------------
breached, or received in writing any claim or notice that it has breached, any
of the terms or conditions of any material agreement, contract or commitment
filed as an exhibit to the Newpark SEC Reports ("Newpark Material Contracts") in
such a manner as, individually or in the aggregate, are reasonably likely to
have a Newpark Material Adverse Effect. Each Newpark Material Contract that has
not expired by its terms is in full force and effect.
Section 3.11. Litigation. Except as described in the Newpark SEC
----------
Reports filed prior to the date hereof, there is no action, suit or proceeding,
claim, arbitration or investigation against Newpark pending or as to which
Newpark has received any written notice of assertion, which, individually or in
the aggregate, is reasonably likely to have a Newpark Material Adverse Effect or
a material adverse effect on the ability of Newpark to consummate the
transactions contemplated by this Agreement.
Section 3.12. Environmental Matters.
---------------------
(a) Except for matters that are specifically disclosed in the
Newpark SEC Reports filed prior to the date hereof (with reference to a
specifically named site or claim) and except for such matters that, individually
or in the aggregate, are not reasonably likely to have a Newpark Material
Adverse Effect: (i) Newpark and its Subsidiaries comply, and within all
applicable statutes of limitations periods have complied, with all applicable
Environmental Laws (as defined in Section 3.12(b)); (ii) neither Newpark nor its
Subsidiaries are subject to liability for any Hazardous Substance disposal or
contamination on any third party property; (iii) neither Newpark nor any of its
Subsidiaries are subject to liability for any release of, or any exposure of any
person or property to, any Hazardous Substance; (iv) neither Newpark nor any of
its Subsidiaries has received any notice, demand, letter, claim or request for
information alleging that Newpark or any of its Subsidiaries may be in violation
of or liable under any Environmental Law; (v) neither Newpark nor any of its
Subsidiaries is subject to any orders, decrees or injunctions issued by, or
other arrangements with, any Governmental Entity or is subject to any indemnity
or other agreement with any third party relating to liability under any
Environmental Law or relating to Hazardous Substances; and (vi) there are no
circumstances or conditions involving Newpark or any of its Subsidiaries that
could reasonably be expected to cause Newpark or any of its Subsidiaries to
become subject to any claims, liability, investigations or costs, or to
restrictions on the ownership, use or transfer of any property of Newpark or any
of its Subsidiaries, pursuant to any Environmental Law.
(b) As used herein, the term "Environmental Law" means any
federal, state, local or foreign law, regulation, order, decree, permit,
authorization, opinion, common law or agency requirement relating to: (A) the
protection, preservation, investigation, remediation or restoration of
environmental quality, health and safety, or natural resources, or (B) noise,
odor, wetlands, pollution, contamination or any injury or threat of injury to
persons or property.
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(c) As used herein, the term "Hazardous Substance" means: (A) any
substance that is listed, classified or regulated pursuant to or that could
result in liability under any Environmental Law; (B) any petroleum product or
by-product, asbestos-containing material, lead-containing paint or plumbing,
polychlorinated biphenyls, radioactive materials or radon; or (C) any other
substance which is the subject of regulatory action by any Governmental Entity
pursuant to any Environmental Law.
Section 3.13. Employee Benefit Plans.
----------------------
(a) Newpark has listed in Section 3.13 of the Newpark Disclosure
Schedule all employee benefit plans (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) and all bonus,
stock option, stock purchase, incentive, deferred compensation, supplemental
retirement, severance and other similar employee benefit plans, and all
unexpired severance agreements, written or otherwise, for the benefit of, or
relating to, any current or former employee of Newpark or any trade or business
(whether or not incorporated) which is a member or which is under common control
with Newpark (an "ERISA Affiliate") within the meaning of Section 414 of the
Code, or any Subsidiary of Newpark, other than employment or consulting
agreements entered into by any Newpark Subsidiary in connection with acquisition
transactions in which the aggregate annual compensation thereunder, excluding
any discretionary bonuses, does not exceed $150,000 (together, the "Newpark
Employee Plans").
(b) With respect to each Newpark Employee Plan, Newpark has made
available to Tuboscope, a true and correct copy of (i) the most recent annual
report (Form 5500) filed with the IRS, (ii) such Newpark Employee Plan, (iii)
each trust agreement and group annuity contract, if any, relating to such
Newpark Employee Plan and (iv) the most recent actuarial report or valuation
relating to a Newpark Employee Plan subject to Title IV of ERISA.
(c) With respect to the Newpark Employee Plans, individually and
in the aggregate, no event has occurred, and to the knowledge of Newpark, there
exists no condition or set of circumstances in connection with which Newpark
could be subject to any liability that is reasonably likely to have a Newpark
Material Adverse Effect under ERISA, the Code or any other applicable law.
(d) With respect to the Newpark Employee Plans, individually and
in the aggregate, there are no funded benefit obligations for which
contributions have not been made or properly accrued and there are no unfunded
benefit obligations which have not been accounted for by reserves, or otherwise
properly footnoted in accordance with generally accepted accounting principles,
on the financial statements of Newpark, which obligations are reasonably likely
to have a Newpark Material Adverse Effect.
(e) Except as disclosed in Newpark SEC Reports filed prior to the
date of this Agreement, and except as provided for in this Agreement, neither
Newpark nor any of its Subsidiaries is a party to any oral or written (i)
agreement with any officer or other key employee of Newpark or any of its
Subsidiaries, the benefits of which are contingent, or the terms of which
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are materially altered, upon the occurrence of a transaction involving Newpark
of the nature contemplated by this Agreement, (ii) agreement with any officer of
Newpark providing any term of employment or compensation guarantee extending for
a period longer than one year from the date hereof and for the payment of
compensation in excess of $100,000 per annum, or (iii) agreement or plan,
including any stock option plan, stock appreciation right plan, restricted stock
plan or stock purchase plan, any of the benefits of which will be increased, or
the vesting of the benefits of which will be accelerated, by the occurrence of
any of the transactions contemplated by this Agreement or the value of any of
the benefits of which will be calculated on the basis of any of the transactions
contemplated by this Agreement.
Section 3.14. Compliance With Laws. Newpark has complied with, is
--------------------
not in violation of, and has not received any notices of violation with respect
to, any federal, state or local statute, law or regulation with respect to the
conduct of its business, or the ownership or operation of its business, except
for failures to comply or violations which, individually or in the aggregate,
have not had and are not reasonably likely to have a Newpark Material Adverse
Effect.
Section 3.15. Registration Statement; Proxy Statement/Prospectus.
--------------------------------------------------
The information to be supplied by Newpark for inclusion in the registration
statement on Form S-4 pursuant to which shares of Tuboscope Common Stock issued
in the Merger will be registered under the Securities Act (the "Registration
Statement"), shall not at the time the Registration Statement is declared
effective by the SEC contain any untrue statement of a material fact or omit to
state any material fact required to be stated in the Registration Statement or
necessary in order to make the statements in the Registration Statement, in
light of the circumstances under which they were made, not misleading. The
information supplied by Newpark for inclusion in the joint proxy
statement/prospectus to be sent to the stockholders of Tuboscope and Newpark in
connection with the meeting of Newpark's stockholders to consider this Agreement
and the Merger (the "Newpark Stockholders' Meeting") and in connection with the
meeting of Tuboscope's stockholders (the "Tuboscope Stockholders' Meeting") to
consider this Agreement, the Merger and the issuance of shares of Tuboscope
Common Stock pursuant to the Merger (the "Joint Proxy Statement") shall not, on
the date the Joint Proxy Statement is first mailed to stockholders of Newpark or
Tuboscope, at the time of the Newpark Stockholders' Meeting and the Tuboscope
Stockholders' Meeting and at the Effective Time, contain any statement which, at
such time and in light of the circumstances under which it shall be made, is
false or misleading with respect to any material fact, or omit to state any
material fact necessary in order to make the statements made in the Joint Proxy
Statement not false or misleading; or omit to state any material fact necessary
to correct any statement in any earlier communication with respect to the
solicitation of proxies for the Newpark Stockholders' Meeting or the Tuboscope
Stockholders' Meeting which has become false or misleading. If at any time prior
to the Effective Time any event relating to Newpark or any of its Affiliates,
officers or directors should be discovered by Newpark which should be set forth
in an amendment to the Registration Statement or a supplement to the Joint Proxy
Statement, Newpark shall promptly inform Tuboscope.
Section 3.16. Labor Matters. Neither Newpark nor any of its
-------------
Subsidiaries is a party to or otherwise bound by any collective bargaining
agreement, contract or other agreement
14
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or understanding with a labor union or labor organization, nor is any such
contract or agreement presently being negotiated, nor is there, nor has there
been in the last five years, a representation question respecting any of the
employees of Newpark or its Subsidiaries, and, to the best knowledge of the
executive officers of Newpark, there are no campaigns being conducted to solicit
cards from employees of Newpark or its Subsidiaries to authorize representation
by any labor organization, nor is Newpark or its Subsidiaries a party to, or
bound by, any consent decree with, or citation by, any governmental agency
relating to employees or employment practices. Nor, as of the date hereof, is
Newpark or any of its Subsidiaries the subject of any material proceeding
asserting that Newpark or any of its Subsidiaries has committed an unfair labor
practice or is seeking to compel it to bargain with any labor union or labor
organization nor, as of the date of this Agreement, is there pending or, to the
knowledge of the executive officers of Newpark, threatened, any material labor
strike, dispute, walkout, work stoppage, slow-down or lockout involving Newpark
or any of its Subsidiaries.
Section 3.17. Insurance. All material fire and casualty, general
---------
liability, business interruption, product liability, and sprinkler and water
damage insurance policies maintained by Newpark or any of its Subsidiaries are
with reputable insurance carriers and are in character and amount at least
equivalent to that carried by persons engaged in similar businesses and subject
to the same or similar perils or hazards, except for any such failures to
maintain insurance policies that, individually or in the aggregate, are not
reasonably likely to have a Newpark Material Adverse Effect.
Section 3.18. No Existing Discussions. As of the date hereof,
-----------------------
Newpark is not engaged, directly or indirectly, in any discussions or
negotiations with any other party with respect to an Acquisition Proposal (as
defined in Section 6.01(a)).
Section 3.19. Opinion of Financial Advisor. The financial advisor of
----------------------------
Newpark, Salomon Smith Barney Inc., has delivered to Newpark its opinion dated
the date of this Agreement to the effect that the Exchange Ratio is fair to the
holders of Newpark Common Stock from a financial point of view.
Section 3.20. Anti-Takeover Laws. The restrictions contained in
------------------
Section 203 of the DGCL with respect to a "business combination" (as defined in
DGCL Section 203) have been rendered inapplicable to the authorization,
execution, delivery and performance of the Agreement by Newpark or the
consummation of the Merger by Newpark. No other "fair price," "moratorium,"
"control share acquisition" or other similar anti-takeover statute or regulation
is applicable to Newpark or (solely by reason of Newpark's participation
therein) the Merger or the other transactions contemplated by this Agreement.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF TUBOSCOPE
Tuboscope represents and warrants to Newpark that the statements
contained in this Article IV are true and correct, except as set forth herein
and in the disclosure schedule delivered by Tuboscope to Newpark on or before
the date of this Agreement (the "Tuboscope
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Disclosure Schedule"). The Tuboscope Disclosure Schedule shall be arranged in
paragraphs corresponding to the numbered and lettered paragraphs contained in
this Article IV and the disclosure in any paragraph shall qualify other
paragraphs in this Article IV only to the extent that it is reasonably apparent
from a reading of such disclosure that it also qualifies or applies to such
other paragraphs.
Section 4.01. Organization of Tuboscope. Each of Tuboscope and its
-------------------------
Subsidiaries is a corporation or unincorporated entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization, has all requisite corporate or entity power to
own, lease and operate its property and to carry on its business as now being
conducted and as proposed to be conducted, and is duly qualified to do business
and is in good standing as a foreign corporation or organization in each
jurisdiction in which the failure to be so qualified would have a material
adverse effect on the business, properties, financial condition, or results of
operations of Tuboscope and its Subsidiaries, taken as a whole (a "Tuboscope
Material Adverse Effect"). Except as set forth in the Tuboscope SEC Reports (as
defined in Section 4.04) filed prior to the date hereof, neither Tuboscope nor
any of its Subsidiaries directly or indirectly owns any equity or similar
interest in, or any interest convertible into or exchangeable or exercisable
for, any corporation, partnership, joint venture or other business association
or entity, excluding securities in any publicly traded company held for
investment by Tuboscope or its Subsidiaries and comprising less than five
percent (5%) of the outstanding stock of such company.
Section 4.02. Tuboscope Capital Structure.
---------------------------
(a) The authorized capital stock of Tuboscope consists of
60,000,000 shares of Common Stock, $.01 par value, and 5,000,000 shares of
Preferred Stock, $.01 par value ("Tuboscope Preferred Stock"). As of June 16,
1999, (i) 44,270,234 shares of Tuboscope Common Stock were issued and
outstanding, all of which are validly issued, fully paid and nonassessable, (ii)
1,424,700 shares of Tuboscope Common Stock were held in the treasury of
Tuboscope or by Subsidiaries of Tuboscope and (iii) no shares of Tuboscope
Preferred Stock were issued and outstanding. The Tuboscope Disclosure Schedule
shows the number of shares of Tuboscope Common Stock reserved for future
issuance pursuant to warrants, stock options and restricted stock awards granted
and outstanding as of June 16, 1999 and the plans under which such options and
restricted stock awards were granted (collectively, the "Tuboscope Stock
Plans"). No change in such capitalization has occurred between June 16, 1999 and
the date of this Agreement. As of the date of this Agreement, no shares of
Tuboscope Preferred Stock are issued and outstanding. All shares of Tuboscope
Common Stock subject to issuance as specified above are duly authorized and,
upon issuance on the terms and conditions specified in the instruments pursuant
to which they are issuable, shall be validly issued, fully paid and
nonassessable. There are no obligations, contingent or otherwise, of Tuboscope
or any of its Subsidiaries to repurchase, redeem or otherwise acquire any shares
of Tuboscope Common Stock or the capital stock of any Subsidiary or to provide
funds to or make any material investment (in the form of a loan, capital
contribution or otherwise) in any such Subsidiary or any other entity other than
guarantees of obligations of Subsidiaries entered into in the ordinary course of
business. All of the outstanding shares of capital stock of each of Tuboscope's
Subsidiaries are
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duly authorized, validly issued, fully paid and nonassessable and all such
shares (other than directors' qualifying shares in the case of foreign
Subsidiaries) are owned by Tuboscope or another Subsidiary free and clear of all
security interests, liens, claims, pledges, agreements, limitations in
Tuboscope's voting rights, charges or other encumbrances of any nature.
(b) Except as set forth in this Section 4.02 or as reserved for
future grants of securities under the Tuboscope Stock Plans, there are no equity
securities of any class of Tuboscope or any of its Subsidiaries, or any security
exchangeable into or exercisable for such equity securities, issued, reserved
for issuance or outstanding. Except as set forth in this Section 4.02, there are
no options, warrants, equity securities, calls, rights, commitments or
agreements of any character to which Tuboscope or any of its Subsidiaries is a
party or by which it is bound obligating Tuboscope or any of its Subsidiaries to
issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock of Tuboscope or any of its Subsidiaries or obligating
Tuboscope or any of its Subsidiaries to grant, extend, accelerate the vesting of
or enter into any such option, warrant, equity security, call, right, commitment
or agreement. To the best knowledge of Tuboscope, there are no voting trusts,
proxies or other voting agreements or understandings with respect to the shares
of capital stock of Tuboscope.
Section 4.03. Authority; No Conflict; Required Filings and Consents.
-----------------------------------------------------
(a) Tuboscope has all requisite corporate power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Tuboscope, subject only to the approval of the
Tuboscope Voting Proposal (as defined in Section 6.05) by Tuboscope's
stockholders. This Agreement has been duly executed and delivered by Tuboscope
and constitutes the valid and binding obligation of Tuboscope, enforceable in
accordance with its terms, subject to the Bankruptcy and Equity Exception.
(b) The execution and delivery of this Agreement by Tuboscope do
not, and the consummation of the transactions contemplated hereby will not, (i)
conflict with, or result in any violation or breach of, any provision of the
certificate of incorporation or bylaws of Tuboscope, (ii) result in any
violation or breach of, or constitute (with or without notice or lapse of time,
or both) a default (or give rise to a right of termination, cancellation or
acceleration of any obligation or loss of any material benefit) under, or
require a consent or waiver under, any of the terms, conditions or provisions of
any note, bond, mortgage, indenture, lease, contract or other agreement,
instrument or obligation to which Tuboscope or any of its Subsidiaries is a
party or by which any of them or any of their properties or assets may be bound,
or (iii) conflict with or violate any permit, concession, franchise, license,
judgment, order, decree, statute, law, ordinance, rule or regulation applicable
to Tuboscope or any of its Subsidiaries or any of its or their properties or
assets, except in the case of (ii) and (iii) for any such conflicts, violations,
defaults, terminations, cancellations or accelerations which are not,
individually or in the aggregate, reasonably likely to have a Tuboscope Material
Adverse Effect.
17
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(c) No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is required by
or with respect to Tuboscope or any of its Subsidiaries in connection with the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby, except for (i) the filing of the pre-merger notification
report under the HSR Act, (ii) the filing of the Registration Statement with the
SEC in accordance with the Securities Act, (iii) the filing of the Certificate
of Merger with the Delaware Secretary of State, (iv) the filing of the Joint
Proxy Statement with the SEC in accordance with the Exchange Act, (v) such
consents, approvals, orders, authorizations, registrations, declarations and
filings as may be required under applicable state securities laws and the laws
of any foreign country and the European Union, and (vi) such other consents,
authorizations, filings, approvals and registrations which, if not obtained or
made, would not be reasonably likely to have a Tuboscope Material Adverse
Effect.
Section 4.04. SEC Filings; Financial Statements.
---------------------------------
(a) Tuboscope has filed and made available to Newpark all forms,
reports and documents required to be filed by Tuboscope with the SEC since
January 1, 1996 other than registration statements on Form S-8 (collectively,
the "Tuboscope SEC Reports"). The Tuboscope SEC Reports (i) at the time filed,
complied in all material respects with the applicable requirements of the
Securities Act and the Exchange Act, as the case may be, and (ii) did not at the
time they were filed (or if amended or superseded by a filing prior to the date
of this Agreement, then on the date of such filing) contain any untrue statement
of a material fact or omit to state a material fact required to be stated in
such Tuboscope SEC Reports or necessary in order to make the statements in such
Tuboscope SEC Reports, in the light of the circumstances under which they were
made, not misleading. None of Tuboscope's Subsidiaries is required to file any
forms, reports or other documents with the SEC.
(b) Each of the consolidated financial statements (including, in
each case, any related notes) contained in the Tuboscope SEC Reports complied as
to form in all material respects with the applicable published rules and
regulations of the SEC with respect thereto, was prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes to such
financial statements or, in the case of unaudited statements, as permitted by
Form 10-Q of the SEC) and fairly presented the consolidated financial position
of Tuboscope and its Subsidiaries as of the dates and the consolidated results
of its operations and cash flows for the periods indicated, except that the
unaudited interim financial statements were or are subject to normal and
recurring year-end adjustments which were not or are not expected to be material
in amount. The audited balance sheet of Tuboscope as of December 31, 1998 is
referred to herein as the "Tuboscope Balance Sheet."
Section 4.05. No Undisclosed Liabilities. Except as disclosed in the
--------------------------
Tuboscope SEC Reports filed prior to the date hereof, and except for normal or
recurring liabilities incurred since December 31, 1998 in the ordinary course of
business consistent with past practices, Tuboscope and its Subsidiaries do not
have any liabilities, either accrued, contingent or otherwise (whether or not
required to be reflected in financial statements in accordance with
18
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generally accepted accounting principles), and whether due or to become due,
which individually or in the aggregate are reasonably likely to have a Tuboscope
Material Adverse Effect.
Section 4.06. Absence of Certain Changes or Events. Except as
------------------------------------
disclosed in the Tuboscope SEC Reports filed prior to the date hereof, since the
date of the Tuboscope Balance Sheet, Tuboscope and its Subsidiaries have
conducted their businesses only in the ordinary course and in a manner
consistent with past practice and, since such date, there has not been (i) any
Material Adverse Change in Tuboscope and its Subsidiaries, taken as a whole
(other than changes that are the effect or result of economic factors affecting
the oil and gas exploration and production industry or the economy as a whole)
or any development or combination of developments of which the management of
Tuboscope is aware that, individually or in the aggregate, has had, or is
reasonably likely to have, a Tuboscope Material Adverse Effect (other than
developments that are the effect or result of actions to be taken by Newpark or
economic factors affecting the oil and gas exploration and production industry
or the economy as a whole); (ii) any damage, destruction or loss (whether or not
covered by insurance) with respect to Tuboscope or any of its Subsidiaries
having a Tuboscope Material Adverse Effect; (iii) any material change by
Tuboscope in its accounting methods, principles or practices to which Newpark
has not previously consented in writing; (iv) any revaluation by Tuboscope of
any of its assets having a Tuboscope Material Adverse Effect; or (v) any other
action or event that would have required the consent of Newpark pursuant to
Section 5.02 of this Agreement had such action or event occurred after the date
of this Agreement and that, individually or in the aggregate, has had or is
reasonably likely to have a Tuboscope Material Adverse Effect.
Section 4.07. Taxes. Tuboscope and each of its Subsidiaries have
-----
timely filed all Tax Returns and reports required to be filed by them prior to
the date of this Agreement (taking into account extensions), except for any such
returns which are not likely, individually or in the aggregate, to have a
Tuboscope Material Adverse Effect. All such Tax Returns are complete and correct
in all respects, except for any such omissions or errors which are not
reasonably likely, individually or in the aggregate, to have a Tuboscope
Material Adverse Effect. Tuboscope and each of its Subsidiaries has paid (or
Tuboscope has paid on its Subsidiaries' behalf) all Taxes shown as due on such
Tax Returns, and Tuboscope's most recent consolidated financial statements
reflect an adequate reserve for all Taxes payable by Tuboscope and its
Subsidiaries for all taxable periods and portions thereof through the date of
such financial statements, except to the extent that any such Taxes are not
reasonably likely, individually or in the aggregate, to have a Tuboscope
Material Adverse Effect. Neither the IRS nor any other taxing authority has
asserted any claim for Taxes, or to the actual knowledge of the executive
officers of Tuboscope, is threatening to assert any claims for Taxes, which
claims, individually or in the aggregate, are reasonably likely to have a
Tuboscope Material Adverse Effect. No deficiencies for any Taxes (other than
those which are not reasonably likely, individually or in the aggregate, to have
a Tuboscope Material Adverse Effect) have been proposed, asserted or assessed
against Tuboscope or any of its Subsidiaries that have not been fully paid or
adequately provided for in the appropriate financial statements of Tuboscope and
its Subsidiaries, no requests for waivers of the time to assess any Taxes are
pending, and none of Tuboscope or any of its Subsidiaries have waived any
statute of limitations in respect of Taxes or agreed to any extension of time
with
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respect to a Tax assessment or deficiency. Tuboscope and each of its
Subsidiaries have withheld or collected and paid over to the appropriate
governmental authorities (or are properly holding for such payment) all Taxes
required by law to be withheld or collected, except for amounts which are not
reasonably likely, individually or in the aggregate, to have a Tuboscope
Material Adverse Effect. Neither Tuboscope nor any of its Subsidiaries has made
an election under Section 341(f) of the Code, except for any such election which
shall not have a Tuboscope Material Adverse Effect. There are no liens for Taxes
upon the assets of Tuboscope or any of its Subsidiaries (other than liens for
Taxes that are not yet due or that are being contested in good faith by
appropriate proceedings), except for liens which are not reasonably likely,
individually or in the aggregate, to have a Tuboscope Material Adverse Effect.
Section 4.08. Properties.
----------
(a) Tuboscope has provided to Newpark a true and complete list of
all of its Material Leases. Tuboscope is not in default under any Material
Leases, except where the existence of such defaults, individually or in the
aggregate, is not reasonably likely to have a Tuboscope Material Adverse Effect.
(b) Tuboscope has provided to Newpark a true and complete list of
all real property that Tuboscope or any of its Subsidiaries owns. With respect
to each such item of real property, except for such matters that, individually
or in the aggregate, are not reasonably likely to have a Tuboscope Material
Adverse Effect: (a) Tuboscope or the identified Subsidiary has good and clear
record and marketable title to such property free and clear of any security
interest, easement, covenant or other restriction, except for security
interests, easements, covenants and other restrictions which do not materially
impair the current uses or occupancy of such property; and (b) the improvements
constructed on such property are in good condition, and all mechanical and
utility systems servicing such improvements are in good condition, free in each
case of material defects.
Section 4.09. Intellectual Property. Tuboscope owns, or is licensed
---------------------
or otherwise possesses legally enforceable rights to use, all trademarks, trade
names, service marks, copyrights, and any applications for such trademarks,
trade names, service marks and copyrights, know-how, computer software programs
or applications, and tangible or intangible proprietary information or material
that are necessary to conduct the business of Tuboscope as currently conducted,
subject to such exceptions that would not be reasonably likely to have a
Tuboscope Material Adverse Effect.
Section 4.10. Agreements, Contracts and Commitments. Tuboscope has
-------------------------------------
not breached, or received in writing any claim or notice that it has breached,
any of the terms or conditions of any material agreement, contract or commitment
filed as an exhibit to the Tuboscope SEC Reports ("Tuboscope Material
Contracts") in such a manner as, individually or in the aggregate, are
reasonably likely to have a Tuboscope Material Adverse Effect. Each Tuboscope
Material Contract that has not expired by its terms is in full force and effect.
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Section 4.11. Litigation. Except as described in the Tuboscope SEC
----------
Reports filed prior to the date hereof, there is no action, suit or proceeding,
claim, arbitration or investigation against Tuboscope pending or as to which
Tuboscope has received any written notice of assertion, which, individually or
in the aggregate, is reasonably likely to have a Tuboscope Material Adverse
Effect or a material adverse effect on the ability of Tuboscope to consummate
the transactions contemplated by this Agreement.
Section 4.12. Environmental Matters. Except for matters that are
---------------------
specifically disclosed in the Tuboscope SEC Reports filed prior to the date
hereof (with reference to a specifically named site or claim) and except for
such matters that, individually or in the aggregate, are not reasonably likely
to have a Tuboscope Material Adverse Effect: (i) Tuboscope and its Subsidiaries
comply, and within all applicable statute of limitation periods have complied,
with all applicable Environmental Laws; (ii) neither Tuboscope nor its
Subsidiaries are subject to liability for any Hazardous Substance disposal or
contamination on any third party property; (iii) neither Tuboscope nor any of
its Subsidiaries are subject to liability for any release of, or any exposure of
any person or property to, any Hazardous Substance; (iv) neither Tuboscope nor
any of its Subsidiaries has received any notice, demand, letter, claim or
request for information alleging that Tuboscope or any of its Subsidiaries may
be in violation of or liable under any Environmental Law; (v) neither Tuboscope
nor any of its Subsidiaries is subject to any orders, decrees or injunctions
issued by, or other arrangements with, any Governmental Entity or is subject to
any indemnity or other agreement with any third party relating to liability
under any Environmental Law or relating to Hazardous Substances; and (vi) there
are no circumstances or conditions involving Tuboscope or any of its
Subsidiaries that could reasonably be expected to cause Tuboscope or any of its
Subsidiaries to become subject to any claims, liability, investigations or
costs, or to restrictions on the ownership, use or transfer of any property of
Tuboscope or any of its Subsidiaries, pursuant to any Environmental Law.
Section 4.13. Employee Benefit Plans.
----------------------
(a) Tuboscope has listed in Section 4.13 of the Tuboscope
Disclosure Schedule all employee benefit plans (as defined in Section 3(3) of
ERISA) and all bonus, stock option, stock purchase, incentive, deferred
compensation, supplemental retirement, severance and other similar employee
benefit plans, and all unexpired severance agreements, written or otherwise, for
the benefit of, or relating to, any current or former employee of Tuboscope or
any ERISA Affiliate of Tuboscope, or any Subsidiary of Tuboscope, other than
employment or consulting agreements entered into by any Tuboscope Subsidiary in
connection with acquisition transactions in which the aggregate annual
compensation thereunder, excluding any discretionary bonuses, does not exceed
$150,000 (together, the "Tuboscope Employee Plans").
(b) With respect to each Tuboscope Employee Plan, Tuboscope has
made available to Newpark, a true and correct copy of (i) the most recent annual
report (Form 5500) filed with the IRS, (ii) such Tuboscope Employee Plan, (iii)
each trust agreement and group annuity contract, if any, relating to such
Tuboscope Employee Plan and (iv) the most recent actuarial report or valuation
relating to a Tuboscope Employee Plan subject to Title IV of ERISA.
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(c) With respect to the Tuboscope Employee Plans, individually
and in the aggregate, no event has occurred, and to the knowledge of Tuboscope,
there exists no condition or set of circumstances in connection with which
Tuboscope could be subject to any liability that is reasonably likely to have a
Tuboscope Material Adverse Effect under ERISA, the Code or any other applicable
law.
(d) With respect to the Tuboscope Employee Plans, individually
and in the aggregate, there are no funded benefit obligations for which
contributions have not been made or properly accrued and there are no unfunded
benefit obligations which have not been accounted for by reserves, or otherwise
properly footnoted in accordance with generally accepted accounting principles,
on the financial statements of Tuboscope, which obligations are reasonably
likely to have a Tuboscope Material Adverse Effect.
(e) Except as disclosed in Tuboscope SEC Reports filed prior to
the date of this Agreement, and except as provided for in this Agreement,
neither Tuboscope nor any of its Subsidiaries is a party to any oral or written
(i) agreement with any officer or other key employee of Tuboscope or any of its
Subsidiaries, the benefits of which are contingent, or the terms of which are
materially altered, upon the occurrence of a transaction involving Tuboscope of
the nature contemplated by this Agreement, (ii) agreement with any officer of
Tuboscope providing any term of employment or compensation guarantee extending
for a period longer than one year from the date hereof or for the payment of
compensation in excess of $100,000 per annum, or (iii) agreement or plan,
including any stock option plan, stock appreciation right plan, restricted stock
plan or stock purchase plan, any of the benefits of which will be increased, or
the vesting of the benefits of which will be accelerated, by the occurrence of
any of the transactions contemplated by this Agreement or the value of any of
the benefits of which will be calculated on the basis of any of the transactions
contemplated by this Agreement.
Section 4.14. Compliance With Laws. Tuboscope has complied with, is
--------------------
not in violation of, and has not received any notices of violation with respect
to, any federal, state or local statute, law or regulation with respect to the
conduct of its business, or the ownership or operation of its business, except
for failures to comply or violations which, individually or in the aggregate,
have not had and are not reasonably likely to have a Tuboscope Material Adverse
Effect.
Section 4.15. Registration Statement; Proxy Statement/Prospectus.
--------------------------------------------------
The information in the Registration Statement (except for information supplied
by Newpark for inclusion in the Registration Statement, as to which Tuboscope
makes no representation) shall not at the time the Registration Statement is
declared effective by the SEC contain any untrue statement of a material fact or
omit to state any material fact required to be stated in the Registration
Statement or necessary in order to make the statements in the Registration
Statement, in light of the circumstances under which they were made, not
misleading. The information (except for information supplied by Newpark for
inclusion in the Joint Proxy Statement, as to which Tuboscope makes no
representation) in the Joint Proxy Statement shall not, on the date the Joint
Proxy Statement is first mailed to stockholders of Tuboscope or Newpark, at the
time of the Tuboscope Stockholders' Meeting and the Newpark Stockholder's
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Meeting and at the Effective Time, contain any statement which, at such time and
in light of the circumstances under which it shall be made, is false or
misleading with respect to any material fact, or omit to state any material fact
necessary in order to make the statements made in the Joint Proxy Statement not
false or misleading; or omit to state any material fact necessary to correct any
statement in any earlier communication with respect to the solicitation of
proxies for the Tuboscope Stockholders' Meeting or the Newpark Stockholders'
Meetings which has become false or misleading. If at any time prior to the
Effective Time any event relating to Tuboscope or any of its Affiliates,
officers or directors should be discovered by Tuboscope which should be set
forth in an amendment to the Registration Statement or a supplement to the Joint
Proxy Statement, Tuboscope shall promptly inform Newpark.
Section 4.16. Labor Matters. Neither Tuboscope nor any of its
-------------
Subsidiaries is a party to or otherwise bound by any collective bargaining
agreement, contract or other agreement or understanding with a labor union or
labor organization, nor is any such contract or agreement presently being
negotiated, nor is there, nor has there been in the last five years, a
representation question respecting any of the employees of Tuboscope or its
Subsidiaries, and, to the best knowledge of the executive officers of Tuboscope,
there are no campaigns being conducted to solicit cards from employees of
Tuboscope or its Subsidiaries to authorize representation by any labor
organization, nor is Tuboscope or its Subsidiaries a party to, or bound by, any
consent decree with, or citation by, any governmental agency relating to
employees or employment practices. Nor, as of the date hereof, is Tuboscope or
any of its Subsidiaries the subject of any material proceeding asserting that
Tuboscope or any of its Subsidiaries has committed an unfair labor practice or
is seeking to compel it to bargain with any labor union or labor organization
nor, as of the date of this Agreement, is there pending or, to the knowledge of
the executive officers of Tuboscope, threatened, any material labor strike,
dispute, walkout, work stoppage, slow-down or lockout involving Tuboscope or any
of its Subsidiaries.
Section 4.17. Insurance. All material fire and casualty, general
---------
liability, business interruption, product liability, and sprinkler and water
damage insurance policies maintained by Tuboscope or any of its Subsidiaries are
with reputable insurance carriers and are in character and amount at least
equivalent to that carried by persons engaged in similar businesses and subject
to the same or similar perils or hazards, except for any such failures to
maintain insurance policies that, individually or in the aggregate, are not
reasonably likely to have a Tuboscope Material Adverse Effect.
Section 4.18. Opinion of Financial Advisor. The financial advisor of
----------------------------
Tuboscope, Morgan Stanley & Co. Incorporated, has delivered to Tuboscope an
opinion, dated the date of this Agreement, to the effect that the Exchange Ratio
is fair to Tuboscope from a financial point of view.
Section 4.19. No Existing Discussions. As of the date hereof,
-----------------------
Tuboscope is not engaged, directly or indirectly, in any discussions or
negotiations with any other party with respect to an Acquisition Proposal (as
defined in Section 6.01(a)).
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Section 4.20. Anti-Takeover Laws. The restrictions contained in
------------------
Section 203 of the DGCL with respect to a "business combination" (as defined in
DGCL Section 203) have been rendered inapplicable to the authorization,
execution, delivery and performance of the Agreement by Tuboscope or the
consummation of the Merger by Tuboscope. No other "fair price," "moratorium,"
"control share acquisition" or other similar anti-takeover statute or regulation
is applicable to Tuboscope or (solely by reason of Tuboscope's participation
therein) the Merger or the other transactions contemplated by this Agreement.
ARTICLE V.
CONDUCT OF BUSINESS
Section 5.01. Covenants of Newpark. During the period from the date
--------------------
of this Agreement and continuing until the earlier of the termination of this
Agreement or the Effective Time, Newpark agrees as to itself and its respective
Subsidiaries (except to the extent that Tuboscope shall otherwise consent in
writing), to carry on its business in the usual, regular and ordinary course in
substantially the same manner as previously conducted, to pay its debts and
Taxes when due subject to good faith disputes over such debts or Taxes, to pay
or perform its other obligations when due, and, to the extent consistent with
such business, use all reasonable efforts consistent with past practices and
policies to preserve intact its present business organization, keep available
the services of its present officers and key employees and preserve its
relationships with customers, suppliers, distributors, and others having
business dealings with it. Newpark shall promptly notify the other party of any
material event or occurrence not in the ordinary course of business of Newpark.
Except as expressly contemplated by this Agreement, Newpark shall not (and shall
not permit any of its respective Subsidiaries to), without the written consent
of Tuboscope:
(a) Accelerate, amend or change the period of exercisability or
vesting of options or restricted stock granted under any employee stock plan of
such party or authorize cash payments in exchange for any options granted under
any of such plans except as required by the terms of such plans or any related
agreements in effect as of the date of this Agreement;
(b) Except for the issuance of Newpark Common Stock as quarterly
dividends on the Newpark Series A Preferred Stock in accordance with the rights
of the holders of the Newpark Series A Preferred Stock, declare or pay any
dividends on or make any other distributions (whether in cash, stock or
property) in respect of any of its capital stock, or split, combine or
reclassify any of its capital stock or issue or authorize the issuance of any
other securities in respect of, in lieu of or in substitution for shares of its
capital stock, or purchase or otherwise acquire, directly or indirectly, any
shares of its capital stock except from former employees, directors and
consultants in accordance with agreements providing for the repurchase of shares
in connection with any termination of service to such party;
(c) Except for the issuance of Newpark Common Stock as quarterly
dividends on the Newpark Series A Preferred Stock in accordance with the rights
of the holders of the Newpark Series A Preferred Stock, issue, deliver or sell,
or authorize or propose the issuance, delivery or sale of, any shares of its
capital stock or securities convertible into shares of
24
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its capital stock, or subscriptions, rights, warrants or options to acquire, or
other agreements or commitments of any character obligating it to issue any such
shares or other convertible securities, other than the issuance of shares of
Newpark Common Stock pursuant to (i) the exercise of options outstanding on the
date of this Agreement, (ii) the exercise of the Newpark Warrant, (iii) the
exercise of additional options exercisable for an aggregate of no more than
25,000 shares of Newpark Common Stock granted after the date of this Agreement
or (iv) the 1999 Employee Stock Purchase Plan of Newpark;
(d) Acquire or agree to acquire by merging or consolidating with,
or by purchasing a substantial equity interest in or substantial portion of the
assets of, or by any other manner, any business or any corporation, partnership
or other business organization or division, or otherwise acquire or agree to
acquire any assets (other than inventory and other items in the ordinary course
of business), except for all such acquisitions involving aggregate consideration
of not more than $3 million;
(e) Sell, lease, license or otherwise dispose of any of its
material properties or assets, except for transactions in the ordinary course of
business;
(f) (i) Increase or agree to increase the compensation payable or
to become payable to its officers or employees, except for increases in salary
or wages of employees in accordance with past practices (including bonuses),
(ii) grant any additional severance or termination pay to, or enter into any
employment or severance agreements with, any employees or officers, other than
payments or agreements paid to or entered into with employees (other than
officers) in the ordinary course of business in accordance with past practices
or the performance of agreements in effect on the date of this Agreement, (iii)
enter into any collective bargaining agreement (other than as required by law or
extensions to existing agreements in the ordinary course of business), (iv)
establish, adopt, enter into or amend any bonus, profit sharing, thrift,
compensation, stock option, restricted stock, pension, retirement, deferred
compensation, employment, termination, severance or other plan, trust, fund,
policy or arrangement for the benefit of any directors, officers or employees;
(g) Amend or propose to amend its charter or bylaws, except as
contemplated by this Agreement;
(h) Incur any indebtedness for borrowed money other than pursuant
to credit agreements in effect as of the date hereof or up to $1 million (which
may be denominated in foreign currency) in borrowings under loan agreements
entered into hereafter;
(i) Initiate, compromise, or settle any material litigation or
arbitration proceeding;
(j) Except in the ordinary course of business, modify, amend or
terminate any Newpark Material Contract or waive, release or assign any material
rights or claims;
25
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(k) Make or commit to make any capital expenditures that would
cause the aggregate capital budget furnished by Newpark to Tuboscope to be
exceeded; or
(l) Take, or agree in writing or otherwise to take, any of the
actions described in Sections (a) through (k) above.
Section 5.02. Covenants of Tuboscope. During the period from the
----------------------
date of this Agreement and continuing until the earlier of the termination of
this Agreement or the Effective Time, Tuboscope agrees as to itself and its
respective Subsidiaries (except to the extent that Newpark shall otherwise
consent in writing), to carry on its business in the usual, regular and ordinary
course in substantially the same manner as previously conducted, to pay its
debts and Taxes when due subject to good faith disputes over such debts or
Taxes, to pay or perform its other obligations when due, and, to the extent
consistent with such business, use all reasonable efforts consistent with past
practices and policies to preserve intact its present business organization,
keep available the services of its present officers and key employees and
preserve its relationships with customers, suppliers, distributors, and others
having business dealings with it. Tuboscope shall promptly notify the other
party of any material event or occurrence not in the ordinary course of business
of Tuboscope. Except as expressly contemplated by this Agreement, Tuboscope
shall not (and shall not permit any of its respective Subsidiaries to), without
the written consent of Newpark:
(a) Accelerate, amend or change the period of exercisability or
vesting of options or restricted stock granted under any employee stock plan of
such party or authorize cash payments in exchange for any options granted under
any of such plans except as required by the terms of such plans or any related
agreements in effect as of the date of this Agreement;
(b) Declare or pay any dividends on or make any other
distributions (whether in cash, stock or property) in respect of any of its
capital stock, or split, combine or reclassify any of its capital stock (other
than a stock dividend or stock split as a result of which the Exchange Ratio is
adjusted pursuant to Section 2.01(b)) or issue or authorize the issuance of any
other securities in respect of, in lieu of or in substitution for shares of its
capital stock, or purchase or otherwise acquire, directly or indirectly, any
shares of its capital stock except from former employees, directors and
consultants in accordance with agreements providing for the repurchase of shares
in connection with any termination of service to such party;
(c) Issue, deliver or sell, or authorize or propose the issuance,
delivery or sale of, any shares of its capital stock or securities convertible
into shares of its capital stock, or subscriptions, rights, warrants or options
to acquire, or other agreements or commitments of any character obligating it to
issue any such shares or other convertible securities, other than the issuance
of shares of Tuboscope Common Stock pursuant to the exercise of options,
warrants or convertible securities outstanding on the date of this Agreement and
the Tuboscope Employee Qualified Stock Purchase Plan;
(d) Acquire or agree to acquire by merging or consolidating with,
or by purchasing a substantial equity interest in or substantial portion of the
assets of, or by any
26
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other manner, any business or any corporation, partnership or other business
organization or division, or otherwise acquire or agree to acquire any assets
(other than inventory and other items in the ordinary course of business),
except for all such acquisitions involving aggregate consideration of not more
than $3 million;
(e) Sell, lease, license or otherwise dispose of any of its
material properties or assets, except for transactions in the ordinary course of
business;
(f) (i) Increase or agree to increase the compensation payable or
to become payable to its officers or employees, except for increases in salary
or wages of employees in accordance with past practices (including bonuses),
(ii) grant any additional severance or termination pay to, or enter into any
employment or severance agreements with, any employees or officers, other than
payments or agreements paid to or entered into with employees (other than
officers) in the ordinary course of business in accordance with past practices
or the performance of agreements in effect on the date of this Agreement, (iii)
enter into any collective bargaining agreement (other than as required by law or
extensions to existing agreements in the ordinary course of business), (iv)
establish, adopt, enter into or amend any bonus, profit sharing, thrift,
compensation, stock option, restricted stock, pension, retirement, deferred
compensation, employment, termination, severance or other plan, trust, fund,
policy or arrangement for the benefit of any directors, officers or employees;
(g) Amend or propose to amend its charter or bylaws, except as
contemplated by this Agreement;
(h) Incur any indebtedness for borrowed money other than pursuant
to credit agreements in effect as of the date hereof or up to $1 million (which
may be denominated in foreign currency) in borrowings under loan agreements
entered into hereafter;
(i) Initiate, compromise, or settle any material litigation or
arbitration proceeding;
(j) Except in the ordinary course of business, modify, amend or
terminate any Tuboscope Material Contract or waive, release or assign any
material rights or claims;
(k) Make or commit to make any capital expenditures that would
cause the aggregate capital budget furnished by Tuboscope to Newpark to be
exceeded; or
(l) Take, or agree in writing or otherwise to take, any of the
actions described in Sections (a) through (k) above.
Section 5.03. Tax-Free Reorganization. Tuboscope and Newpark shall
-----------------------
each use its best efforts to cause the Merger to qualify as, and will not take
or agree to take any action that would prevent the Merger from qualifying as, a
reorganization within the meaning of Section 368(a) of the Code.
27
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Section 5.04. Cooperation. Subject to compliance with applicable
-----------
law, from the date hereof until the Effective Time, each of Tuboscope and
Newpark shall confer on a regular and frequent basis with one or more
representatives of the other party to report on the general status of ongoing
operations and shall promptly provide the other party or its counsel with copies
of all filings made by such party with any Governmental Entity in connection
with this Agreement, the Merger and the transactions contemplated hereby and
thereby.
Section 5.05. Tuboscope Board Resolutions. The Board of Directors of
---------------------------
Tuboscope shall adopt such resolutions as shall be necessary for the acquisition
of equity securities (including options and other derivative securities) of
Tuboscope by officers or directors of Newpark who are to become officers or
directors of Tuboscope in the Merger to be deemed an acquisition from Tuboscope
eligible for Rule 16b-3(d) under the Exchange Act.
ARTICLE VI.
ADDITIONAL AGREEMENTS
Section 6.01. No Solicitation.
---------------
(a) Tuboscope and Newpark each shall not, directly or indirectly,
through any officer, director, employee, financial advisor, representative or
agent of such party (i) solicit, initiate, or encourage any inquiries or
proposals that constitute, or could reasonably be expected to lead to, a
proposal or offer for an Alternative Transaction (as defined below) involving
such party or any of its Subsidiaries (any of the foregoing inquiries or
proposals being referred to in this Agreement as an "Acquisition Proposal"),
(ii) engage in negotiations or discussions concerning, or provide any non-public
information to any person or entity relating to, any Acquisition Proposal, or
(iii) agree to or recommend any Acquisition Proposal; provided, however, that
-------- --------
nothing contained in this Agreement shall prevent Tuboscope or Newpark, or their
respective Board of Directors, from (A) furnishing non-public information to, or
entering into discussions or negotiations with, any person or entity in
connection with an unsolicited bona fide written Acquisition Proposal by such
person or entity or recommending an unsolicited bona fide written Acquisition
Proposal to the stockholders of such party, if and only to the extent that (1)
the Board of Directors of such party believes in good faith (after consultation
with its financial advisor) that such Acquisition Proposal is reasonably capable
of being completed on the terms proposed and, after taking into account the
strategic benefits anticipated to be derived from the Merger and the long-term
prospects of Newpark and Tuboscope as a combined company, would, if consummated,
result in a transaction more favorable than the transaction contemplated by this
Agreement (any such more favorable Acquisition Proposal being referred to in
this Agreement as a "Superior Proposal") and the Board of Directors of such
party determines in good faith after consultation with outside legal counsel
that failure to take such action would be reasonably likely to constitute a
breach of the fiduciary duties of such Board of Directors to stockholders under
applicable law, (2) prior to furnishing such non-public information to, or
entering into discussions or negotiations with, such person or entity, such
Board of Directors receives from such person or entity an executed
confidentiality agreement with terms no less favorable to such party than those
contained in the Agreement dated June 4, 1999 between Tuboscope and Newpark (the
"Confidentiality Agreement"), and (3) prior to furnishing such non-public
28
<PAGE>
information or providing access to the properties, books or records of such
party, such party has complied with the provisions of Section 6.01(b); or (B)
complying with Rule 14e-2 promulgated under the Exchange Act with regard to an
Acquisition Proposal.
(b) Tuboscope and Newpark shall each notify the other party
immediately after receipt by Tuboscope or Newpark (or their advisors) of any
Acquisition Proposal or any request for nonpublic information in connection with
an Acquisition Proposal or for access to the properties, books or records of
such party by any person or entity that informs such party that it is
considering making, or has made, an Acquisition Proposal. Such notice shall be
made orally and in writing and shall indicate in reasonable detail the identity
of the offer or and the terms and conditions of such proposal, inquiry or
contact. Such party shall, to the extent permitted by law, continue to keep the
other party hereto informed, on a current basis, of the status of any such
discussions or negotiations and the terms being discussed or negotiated.
Section 6.02. Proxy Statement/Prospectus; Registration Statement.
--------------------------------------------------
(a) As promptly as practical after the execution of this
Agreement, Tuboscope and Newpark shall prepare and file with the SEC the Joint
Proxy Statement, and Tuboscope shall prepare and file with the SEC the
Registration Statement, in which the Joint Proxy Statement will be included as a
prospectus, provided that Tuboscope may delay the filing of the Registration
Statement until approval of the Joint Proxy Statement by the SEC. Tuboscope and
Newpark shall use all reasonable efforts to cause the Registration Statement to
become effective as soon after such filing as practical. The Joint Proxy
Statement, and any amendment or supplement thereto, shall include the
recommendation of the Board of Directors of Newpark in favor of this Agreement
and the Merger (including a declaration that the Merger is advisable in
accordance with Section 251 of the DGCL) and the recommendation of the Board of
Directors of Tuboscope in favor of this Agreement, the Merger (including a
declaration that the Merger is advisable in accordance with Section 251 of the
DGCL), an amendment to Tuboscope's Second Restated Certificate of Incorporation
to increase the number of authorized shares of Tuboscope Common Stock from
60,000,000 to 200,000,000 and the issuance of shares of Tuboscope Common Stock
pursuant to the Merger; provided that the Board of Directors of Newpark may
withdraw such recommendation if (but only if) (i) the Board of Directors of
Newpark has received a Superior Proposal, and (ii) such Board of Directors upon
advice of its outside legal counsel determines that it is reasonably likely that
a failure to recommend such Superior Proposal would constitute a breach of its
fiduciary duties under applicable law, and the Board of Directors of Tuboscope
may withdraw such recommendation if (but only if) (i) the Board of Directors of
Tuboscope has received a Superior Proposal, and (ii) such Board of Directors
upon advice of its outside legal counsel determines that it is reasonably likely
that a failure to recommend such Superior Proposal would constitute a breach of
its fiduciary duties under applicable law. Nothing is this Section 6.02(a) shall
release the obligations of Tuboscope or Newpark to hold the Tuboscope
Stockholders' Meeting and the Newpark Stockholders' Meeting, respectively, in
accordance with Section 6.05.
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(b) Tuboscope and Newpark shall make all necessary filings with
respect to the Merger under the Securities Act, the Exchange Act, applicable
state blue sky laws and the rules and regulations thereunder.
Section 6.03. NYSE Listings. Newpark agrees to continue the listing
-------------
of Newpark Common Stock on the NYSE during the term of this Agreement. Tuboscope
agrees to continue the listing of Tuboscope Common Stock on the NYSE during the
term of this Agreement.
Section 6.04. Access to Information. Upon reasonable notice, Newpark
---------------------
and Tuboscope shall each (and shall cause each of their respective Subsidiaries
to) afford to the officers, employees, accountants, counsel and other
representatives of the other, access, during normal business hours during the
period prior to the Effective Time, to all its properties, books, contracts,
commitments and records and, during such period, each of Newpark and Tuboscope
shall (and shall cause each of their respective Subsidiaries to) furnish
promptly to the other (a) a copy of each report, schedule, registration
statement and other document filed or received by it during such period pursuant
to the requirements of federal securities laws and (b) all other information
concerning its business, properties and personnel as such other party may
reasonably request. Unless otherwise required by law, the parties will hold any
such information which is nonpublic in confidence in accordance with the
Confidentiality Agreement. No information or knowledge obtained in any
investigation pursuant to this Section 6.04 shall affect or be deemed to modify
any representation or warranty contained in this Agreement or the conditions to
the obligations of the parties to consummate the Merger.
Section 6.05. Stockholders Meetings.
---------------------
(a) Newpark and Tuboscope each shall call a meeting of its
respective stockholders to be held as promptly as practicable for the purpose of
voting, in the case of Newpark, upon this Agreement and the Merger and, in the
case of Tuboscope, upon this Agreement, the Merger, an amendment to Tuboscope's
Second Restated Certificate of Incorporation to increase the number of
authorized shares of Tuboscope Common Stock from 60,000,000 to 200,000,000 and
the issuance of shares of Tuboscope Common Stock pursuant to the Merger (the
"Tuboscope Voting Proposal"). Subject to Section 6.02(a), Tuboscope and Newpark
shall use all reasonable efforts to solicit proxies in favor of such matters.
Tuboscope and Newpark shall coordinate and cooperate with respect to the timing
of such meetings and shall use their best efforts to hold such meetings on the
same day and as soon as practicable after the date hereof. The Newpark
stockholder vote required for the approval of the Agreement and Merger shall be
a majority of the shares of Newpark Common Stock outstanding on the record date
for the Newpark Stockholders' Meeting and a majority of the shares of Newpark
Series A Preferred Stock. The Tuboscope stockholder vote required for approval
of the Tuboscope Voting Proposal shall be a majority of the shares of Tuboscope
Common Stock outstanding on the record date for the Tuboscope Stockholders'
Meeting.
(b) Tuboscope may also submit additional routine proposals to its
stockholders at the Tuboscope Stockholders' Meeting, separate from the proposal
referred to in
30
<PAGE>
Section 6.05(a), provided that Tuboscope shall consult with Newpark as to the
submission of such proposals. The approval by Tuboscope's stockholders of such
additional proposals shall not be a condition to the closing of the Merger under
this Agreement.
Section 6.06. Legal Conditions to Merger.
--------------------------
(a) Newpark and Tuboscope shall each use their best efforts to
(i) take, or cause to be taken, all appropriate action, and do, or cause to be
done, all things necessary and proper under applicable law to consummate and
make effective the transactions contemplated hereby as promptly as practicable,
(ii) obtain from any Governmental Entity or any other third party any consents,
licenses, permits, waivers, approvals, authorizations, or orders required to be
obtained or made by Newpark or Tuboscope or any of their Subsidiaries in
connection with the authorization, execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby including, without
limitation, the Merger, and (iii) as promptly as practicable, make all necessary
filings, and thereafter make any other required submissions, with respect to
this Agreement and the Merger required under (A) the Securities Act and the
Exchange Act, and any other applicable federal or state securities laws, (B) the
HSR Act and any related governmental request thereunder, and (C) any other
applicable law. Newpark and Tuboscope shall cooperate with each other in
connection with the making of all such filings, including providing copies of
all such documents to the non-filing party and its advisors prior to filing and,
if requested, to accept all reasonable additions, deletions or changes suggested
in connection therewith. Newpark and Tuboscope shall use their best efforts to
furnish to each other all information required for any application or other
filing to be made pursuant to the rules and regulations of any applicable law
(including all information required to be included in the Joint Proxy Statement
and the Registration Statement) in connection with the transactions contemplated
by this Agreement.
(b) Tuboscope and Newpark agree, and shall cause each of their
respective Subsidiaries, to cooperate and to use their respective best efforts
to obtain any government clearances or approvals required for Closing under the
HSR Act, the Sherman Act, as amended, the Clayton Act, as amended, the Federal
Trade Commission Act, as amended, and any other Federal, state or foreign law
or, regulation or decree designed to prohibit, restrict or regulate actions for
the purpose or effect of monopolization or restraint of trade (collectively
"Antitrust Laws"), to respond to any government requests for information under
any Antitrust Law, and to contest and resist any action, including any
legislative, administrative or judicial action, and to have vacated, lifted,
reversed or overturned any decree, judgment, injunction or other order (whether
temporary, preliminary or permanent) (an "Order") that restricts, prevents or
prohibits the consummation of the Merger or any other transactions contemplated
by this Agreement under any Antitrust Law. The parties hereto will consult and
cooperate with one another, and consider in good faith the views of one another,
in connection with any analyses, appearances, presentations, memoranda, briefs,
arguments, opinions and proposals made or submitted by or on behalf of any party
hereto in connection with proceedings under or relating to any Antitrust Law.
Notwithstanding anything to the contrary in this Section 6.06, neither Tuboscope
nor Newpark nor any of their Subsidiaries shall be required to divest any of
their respective businesses, product lines or assets, or to take or agree to
take any other action or agree
31
<PAGE>
to any limitation, that could reasonably be expected to have a material adverse
effect on Tuboscope or of Tuboscope combined with Newpark after the Effective
Time.
(c) Each of Newpark and Tuboscope shall give (or shall
cause their respective Subsidiaries to give) any notices to third parties, and
use, and cause their respective Subsidiaries to use, their best efforts to
obtain any third party consents related to or required in connection with the
Merger that are (A) necessary to consummate the transactions contemplated
hereby, (B) disclosed or required to be disclosed in the Newpark Disclosure
Schedule or the Tuboscope Disclosure Schedule, as the case may be, or (C)
required to prevent a Newpark Material Adverse Effect or a Tuboscope Material
Adverse Effect from occurring prior to or after the Effective Time.
Section 6.07. Public Disclosure. Tuboscope and Newpark shall agree
-----------------
on the form and content of the initial joint press release regarding the
transactions contemplated hereby, and thereafter shall consult with each other
before issuing any press release or otherwise making any public statement with
respect to the Merger or this Agreement and shall not issue any such press
release or make any such public statement prior to such consultation, except as
may be required by law.
Section 6.08. Affiliate Legends. Upon the execution of this
-----------------
Agreement, Tuboscope and Newpark will provide each other with a list of those
persons who are, in Tuboscope's or Newpark's respective reasonable judgment,
"affiliates" of Tuboscope or Newpark, respectively, within the meaning of Rule
145 (each such person who is an "affiliate" of Tuboscope or Newpark within the
meaning of Rule 145 is referred to as an "Affiliate") promulgated under the
Securities Act ("Rule 145"). Tuboscope and Newpark shall provide each other such
information and documents as Newpark or Tuboscope shall reasonably request for
purposes of reviewing such list and shall notify the other party in writing
regarding any change in the identity of its Affiliates prior to the Closing
Date. Tuboscope shall be entitled to place appropriate legends on the
certificates evidencing any Tuboscope Common Stock to be received by such
Affiliates of Newpark pursuant to the terms of this Agreement, and to issue
appropriate stop transfer instructions to the transfer agent for the Tuboscope
Common Stock (provided that such legends or stop transfer instructions shall be
removed, two years after the Effective Date, upon the request of any stockholder
that is not then an Affiliate of Tuboscope).
Section 6.09. NYSE Listing. Tuboscope shall use its best efforts to
------------
cause the shares of Tuboscope Common Stock to be issued in the Merger to be
approved for listing on the NYSE, subject to official notice of issuance, prior
to the Closing Date.
Section 6.10. Stock Plans.
-----------
(a) At the Effective Time, each outstanding option to
purchase shares of Newpark Common Stock (a "Newpark Stock Option") under the
Newpark Stock Plans, whether vested or unvested, shall constitute an option to
acquire, on the same terms and conditions as were applicable under such Newpark
Stock Option, the same number of shares of Tuboscope Common Stock as the holder
of such Newpark Stock Option would have been
32
<PAGE>
entitled to receive pursuant to the Merger had such holder exercised such option
in full immediately prior to the Effective Time (rounded downward to the nearest
whole number), at a price per share (rounded upward to the nearest whole cent)
equal to (y) the aggregate exercise price for the shares of Newpark Common Stock
purchasable pursuant to such Newpark Stock Option immediately prior to the
Effective Time divided by (z) the number of full shares of Tuboscope Common
Stock deemed purchasable pursuant to such Newpark Stock Option in accordance
with the foregoing.
(b) As soon as practicable after the Effective Time, Tuboscope
shall deliver to the participants in Newpark Stock Plans appropriate notice
setting forth such participants' rights pursuant thereto and the grants pursuant
to Newpark Stock Plans shall continue in effect on the same terms and conditions
(subject to the adjustments required by this Section 6.10 after giving effect to
the Merger).
(c) Tuboscope shall take all corporate action necessary to
reserve for issuance a sufficient number of shares of Tuboscope Common Stock for
delivery under Newpark Stock Plans assumed in accordance with this Section 6.10.
As soon as practicable after the Effective Time, Tuboscope shall file a
registration statement on Form S-8 (or any successor or other appropriate
forms), or another appropriate form with respect to the shares of Tuboscope
Common Stock subject to such options and shall use its best efforts to maintain
the effectiveness of such registration statement or registration statements (and
maintain the current status of the prospectus or prospectuses contained therein)
for so long as such options remain outstanding.
(d) The Board of Directors of Newpark shall, prior to or as of
the Effective Time, take all necessary actions, if any, pursuant to and in
accordance with the terms of the Newpark Stock Plans and the instruments
evidencing the Newpark Stock Options, to provide for the conversion of the
Newpark Stock Options into options to acquire Tuboscope Common Stock in
accordance with this Section 6.10, and that no consent of the holders of the
Newpark Stock Options is required in connection with such conversion.
(e) The shares of Newpark Common Stock awarded, issued and
outstanding under the Newpark Long Term Cash and Stock Incentive Plan shall be
converted into Tuboscope Common Stock on the Effective Date as provided in
Article II of this Agreement and shall remain subject to restriction and
forfeiture and to the lapse or expiration of such restrictions and risk of
forfeiture on the terms and conditions provided in the agreements under which
such shares were awarded and issued. Such agreements shall remain in full force
and effect in accordance with these terms after the Effective Date.
(f) At the Effective Time, the Newpark Warrant shall constitute a
warrant to acquire the same number of shares of Tuboscope Common Stock as the
holder of the Newpark Warrant would have been entitled to receive pursuant to
the Merger had such holder exercised the Newpark Warrant in full immediately
prior to the Effective Time (rounded downward to the nearest whole number), at a
price per share (rounded upward to the nearest whole cent) equal to (y) the
aggregate exercise price for the shares of Newpark Common Stock purchasable
pursuant to the Newpark Warrant immediately prior to the Effective Time divided
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<PAGE>
by (z) the number of full shares of Tuboscope Common Stock deemed purchasable
pursuant to the Newpark Warrant in accordance with the foregoing.
Section 6.11. Brokers or Finders. Each of Tuboscope and Newpark
------------------
represents, as to itself, its Subsidiaries and its Affiliates, that no agent,
broker, investment banker, financial advisor or other firm or person is or will
be entitled to any broker's or finder's fee or any other commission or similar
fee in connection with any of the transactions contemplated by this Agreement
except Salomon Smith Barney Inc. whose fees and expenses will be paid by Newpark
in accordance with Newpark's agreements with such firm, and Morgan Stanley & Co.
Incorporated, whose fees and expenses will be paid by Tuboscope in accordance
with Tuboscope's agreement with such firm. Each of Tuboscope and Newpark agrees
to indemnify and hold the other harmless from and against any and all claims,
liabilities or obligations with respect to any such fees, commissions or
expenses asserted by any person on the basis of any act or statement alleged to
have been made by such party or any of its Affiliates.
34
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Section 6.12. Indemnification.
---------------
(a) From and after the Effective Time, Tuboscope agrees
that it will indemnify and hold harmless each present and former director and
officer of Newpark (the "Indemnified Parties"), against any costs or expenses
(including attorneys' fees), judgments, fines, losses, claims, damages,
liabilities or amounts paid in settlement (collectively, "Costs") incurred in
connection with any claim, action, suit, proceeding or investigation, whether
civil, criminal, administrative or investigative, arising out of or pertaining
to matters existing or occurring at or prior to the Effective Time, whether
asserted or claimed prior to, at or after the Effective Time, to the fullest
extent that Newpark would have been permitted under Delaware law and its
certificate of incorporation or bylaws in effect on the date hereof to indemnify
such Indemnified Party (and Tuboscope shall also advance expenses as incurred to
the fullest extent permitted under applicable law, provided the Indemnified
Party to whom expenses are advanced provides an undertaking to repay such
advances if it is ultimately determined that such Indemnified Party is not
entitled to indemnification).
(b) The provisions of this Section 6.12 are intended to be
an addition to the rights otherwise available to the current and former officers
and directors of Newpark by law, charter, statute, bylaw or agreement, and shall
operate for the benefit of, and shall be enforceable by, each of the Indemnified
Parties, their heirs and their representatives.
Section 6.13. Letter of Tuboscope's Accountants. Tuboscope shall use
---------------------------------
reasonable best efforts to cause to be delivered to Newpark and Tuboscope a
letter of Ernst & Young LLP, Tuboscope's independent auditors, dated a date
within two business days before the date on which the Registration Statement
shall become effective and addressed to Newpark, in form reasonably satisfactory
to Newpark and customary in scope and substance for letters delivered by
independent public accountants in connection with registration statements
similar to the Registration Statement. In connection with Newpark's efforts to
obtain such letter, if requested by Ernst & Young LLP, Tuboscope shall provide a
representation letter to Ernst & Young LLP complying with SAS 72, if then
required.
Section 6.14. Letter of Newpark's Accountants. Newpark shall use
-------------------------------
reasonable best efforts to cause to be delivered to Tuboscope and Newpark a
letter of Arthur Andersen, Newpark's independent auditors, dated a date within
two business days before the date on which the Registration Statement shall
become effective and addressed to Tuboscope, in form reasonably satisfactory to
Tuboscope and customary in scope and substance for letters delivered by
independent public accountants in connection with registration statements
similar to the Registration Statement. In connection with Tuboscope's efforts to
obtain such letter, if requested by Arthur Andersen, Newpark shall provide a
representation letter to Arthur Andersen complying with the SAS 72, if then
required.
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Section 6.15. Benefit Plans.
-------------
(a) Continuation of Benefits. Tuboscope agrees that, during
------------------------
the period commencing at the Effective Time and ending December 31, 1999, the
employees of Newpark and its Subsidiaries who remain in the employ of Tuboscope
or any of its Subsidiaries (a "Continuing Employee") will continue to be
provided with benefits under health insurance, vision care, life insurance,
employee assistance programs, flexible spending accounts, disability, vacation,
holiday, profit-sharing, section 401(k), dental and sick pay plans and stock
option plans which are not materially less favorable in the aggregate than those
currently provided by Newpark and its Subsidiaries to such employees.
(b) Treatment. Each Continuing Employee shall be treated
---------
under Tuboscope's benefit plans and compensation and employment policies and
practices in a manner that is no less favorable than is applicable to an
employee of Tuboscope and its Subsidiaries who performs comparable duties and
responsibilities for his or her employer on an equally satisfactory basis.
ARTICLE VII.
CONDITIONS TO MERGER
Section 7.01. Conditions to Each Party's Obligation To Effect the
---------------------------------------------------
Merger. The respective obligations of each party to this Agreement to effect
- ------
the Merger shall be subject to the satisfaction or waiver prior to the Closing
Date of the following conditions:
(a) Stockholder Approval. This Agreement and the Merger
--------------------
shall have been approved and adopted by the affirmative vote of the holders of a
majority of the shares of Newpark Common Stock outstanding on the record date
for the Newpark Stockholders' Meeting and the holders of a majority of the
Newpark Series A Preferred Stock and the Tuboscope Voting Proposal shall have
been approved by the affirmative vote of the holders of a majority of the shares
of Tuboscope Common Stock outstanding on the record date for the Tuboscope
Stockholders' Meeting.
(b) Regulatory Approvals. The waiting period applicable to
--------------------
the consummation of the Merger under the HSR Act shall have expired or been
terminated, and approvals and/or clearances shall have been obtained from (or
decisions indicating no objections to the Merger or other indications to that
effect satisfactory to Tuboscope shall have been made by) the European
Commission (if applicable) and under any other antitrust or competition law
applicable to any significant operations.
36
<PAGE>
(c) Approvals. Other than the filing provided for by
---------
Section 1.02, all authorizations, consents, orders or approvals of, or
declarations or filings with, or expirations of waiting periods imposed by, any
Governmental Entity the failure of which to file, obtain or occur is reasonably
likely to have a Tuboscope Material Adverse Effect or Newpark Material Adverse
Effect shall have been filed, been obtained or occurred.
(d) Registration Statement. The Registration Statement
----------------------
shall have become effective under the Securities Act and shall not be the
subject of any stop order or proceedings seeking a stop order.
(e) No Injunctions. No Governmental Entity or federal,
--------------
state or foreign court of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any Order or statute, rule, regulation which is
in effect and which has the effect of making the Merger illegal or otherwise
prohibiting consummation of the Merger.
(f) NYSE. The shares of Tuboscope Common Stock to be issued
----
in the Merger shall have been approved for listing on the NYSE, subject to
official notice of issuance.
Section 7.02. Additional Conditions to Obligations of Tuboscope. The
-------------------------------------------------
obligation of Tuboscope to effect the Merger is subject to the satisfaction of
each of the following conditions, any of which may be waived in writing
exclusively by Tuboscope :
(a) Representations and Warranties. The representations and
------------------------------
warranties of Newpark set forth in this Agreement shall be true and correct as
of the date of this Agreement and (except to the extent such representations and
warranties speak as of an earlier date) as of the Closing Date as though made on
and as of the Closing Date, except for, (i) changes contemplated by this
Agreement and (ii) where the failures to be true and correct, individually or in
the aggregate, have not had and are not reasonably likely to have a Newpark
Material Adverse Effect or a material adverse effect upon the consummation of
the transactions contemplated hereby; and Tuboscope shall have received a
certificate signed on behalf of Newpark by the chief executive officer and the
chief financial officer of Newpark to such effect.
37
<PAGE>
(b) Performance of Obligations of Newpark. Newpark shall
-------------------------------------
have performed in all material respects all obligations required to be performed
by it under this Agreement at or prior to the Closing Date; and Tuboscope shall
have received a certificate signed on behalf of Newpark by the chief executive
officer and the chief financial officer of Newpark to such effect.
(c) Tax Opinion. Tuboscope shall have received a written
-----------
opinion from Latham & Watkins, counsel to Tuboscope, to the effect that the
Merger will be treated for Federal income tax purposes as a tax-free
reorganization within the meaning of Section 368(a) of the Code. In rendering
such opinion, Latham & Watkins shall receive and may rely upon representations
contained in certificates of Newpark and Tuboscope substantially in the forms of
Exhibits "A" and "B" attached hereto.
Section 7.03. Additional Conditions to Obligations of Newpark. The
-----------------------------------------------
obligation of Newpark to effect the Merger is subject to the satisfaction of
each of the following conditions, any of which may be waived, in writing,
exclusively by Newpark:
(a) Representations and Warranties. The representations and
------------------------------
warranties of Tuboscope set forth in this Agreement shall be true and correct as
of the date of this Agreement and (except to the extent such representations
speak as of an earlier date) as of the Closing Date as though made on and as of
the Closing Date, except for, (i) changes contemplated by this Agreement and
(ii) where the failures to be true and correct, individually or in the
aggregate, have not had and are not reasonably likely to have a Tuboscope
Material Adverse Effect or a material adverse effect upon the consummation of
the transactions contemplated hereby; and Newpark shall have received a
certificate signed on behalf of Tuboscope by the chief executive officer and the
chief financial officer of Tuboscope to such effect.
(b) Performance of Obligations of Tuboscope. Tuboscope
---------------------------------------
shall have performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing Date; and
Newpark shall have received a certificate signed on behalf of Tuboscope by the
chief executive officer and the chief financial officer of Tuboscope to such
effect.
(c) Tax Opinion. Newpark shall have received the opinion of
-----------
Ervin, Cohen & Jessup LLP, counsel to Newpark, to the effect that the Merger
will be treated for Federal income tax purposes as a tax-free reorganization
within the meaning of Section 368(a) of the Code. In rendering such opinion,
Ervin, Cohen & Jessup LLP shall receive and may rely upon representations
contained in certificates of Newpark and Tuboscope substantially in the forms of
Exhibits "C" and "D" attached hereto.
ARTICLE VIII.
TERMINATION AND AMENDMENT
Section 8.01. Termination. This Agreement may be terminated at any
-----------
time prior to the Effective Time (with respect to Sections 8.01(b) through
8.01(g), by written notice by the
38
<PAGE>
terminating party to the other party), whether before or after approval of the
matters presented in connection with the Merger by the stockholders of Newpark
or Tuboscope:
(a) by mutual written consent of Tuboscope and Newpark; or
(b) by either Tuboscope or Newpark if the Merger shall not have
been consummated by December 31, 1999 (provided that either Tuboscope or Newpark
may extend such date to March 31, 2000 by providing written notice thereof to
the other party on or prior to December 31, 1999). December 31, 1999, as it may
be so extended, shall be referred to herein as the "Outside Date" (provided that
the right to terminate this Agreement under this Section 8.01(b) shall not be
available to any party whose failure to fulfill any obligation under this
Agreement has been the cause of or resulted in the failure of the Merger to
occur on or before such date); or
(c) by either Tuboscope or Newpark if a court of competent
jurisdiction or other Governmental Entity shall have issued a nonappealable
final order, decree or ruling or taken any other nonappealable final action, in
each case having the effect of permanently restraining, enjoining or otherwise
prohibiting the Merger; or
(d) by Tuboscope, if, at the Newpark Stockholders' Meeting
(including any adjournment or postponement), the requisite vote of the
stockholders of Newpark in favor of this Agreement and the Merger shall not have
been obtained; or by Newpark if, at the Tuboscope Stockholders' Meeting
(including any adjournment or postponement), the requisite vote of the
stockholders of Tuboscope in favor of the Tuboscope Voting Proposal shall not
have been obtained; or
(e) by Tuboscope, if (i) the Board of Directors of Newpark shall
have withdrawn or modified its recommendation of this Agreement or the Merger or
such Board shall have resolved to do so; (ii) after the receipt by Newpark of an
Acquisition Proposal, Tuboscope requests in writing that the Board of Directors
of Newpark reconfirm its recommendation of this Agreement or the Merger and the
Board of Directors of Newpark fails to do so within 10 business days after its
receipt of Tuboscope's request; (iii) the Board of Directors of Newpark shall
have recommended to the stockholders of Newpark an Alternative Transaction (as
defined in Section 8.03(g)) or such Board shall have resolved to do so; (iv) a
tender offer or exchange offer for 25% or more of the outstanding shares of
Newpark Common Stock is commenced (other than by Tuboscope or an Affiliate of
Tuboscope) and the Board of Directors of Newpark recommends that the
stockholders of Newpark tender their shares in such tender or exchange offer or
the Board of Directors fails to recommend that stockholders reject such tender
or exchange offer within 10 business days after receipt of Tuboscope's request
to do so; or (v) for any reason Newpark fails to call and hold the Newpark
Stockholders' Meeting by the Outside Date (provided that Tuboscope's right to
terminate this Agreement under such clause (v) shall not be available if at such
time Newpark would be entitled to terminate this Agreement under Section
8.01(g)); or
39
<PAGE>
(f) by Newpark, if (i) the Board of Directors of Tuboscope shall
have withdrawn or modified its recommendation of the Tuboscope Voting Proposal
or such Board shall have resolved to do so; (ii) after the receipt by Tuboscope
of an Acquisition Proposal, Newpark requests in writing that the Board of
Directors of Tuboscope reconfirm its recommendation of the Tuboscope Voting
Proposal and the Board of Directors of Tuboscope fails to do so within 10
business days after its receipt of Newpark's request; (iii) the Board of
Directors of Tuboscope shall have recommended to the stockholders of Tuboscope
an Alternative Transaction (as defined in Section 8.03(g)) or such Board shall
have resolved to do so; (iv) a tender offer or exchange offer for 25% or more of
the outstanding shares of Tuboscope Common Stock is commenced (other than by
Newpark or an Affiliate of Newpark) and the Board of Directors of Tuboscope
recommends that the stockholders of Tuboscope tender their shares in such tender
or exchange offer or the Board of Directors fails to recommend that stockholders
reject such tender or exchange offer within 10 business days after receipt of
Newpark's request to do so; or (v) for any reason Tuboscope fails to call and
hold the Tuboscope Stockholders' Meeting by the Outside Date (provided that
Newpark's right to terminate this Agreement under such clause (v) shall not be
available if at such time Tuboscope would be entitled to terminate this
Agreement under Section 8.01(g)); or
(g) by Tuboscope or Newpark, if there has been a breach of any
representation, warranty, covenant or agreement on the part of the other party
set forth in this Agreement, which breach (i) causes the conditions set forth in
Section 7.02(a) or (b) (in the case of termination by Tuboscope) or 7.03(a) or
(b) (in the case of termination by Newpark) not to be satisfied, and (ii) shall
not have been cured within 20 business days following receipt by the breaching
party of written notice of such breach from the other party.
Section 8.02. Effect of Termination. In the event of termination of
---------------------
this Agreement as provided in Section 8.01, this Agreement shall immediately
become void and there shall be no liability or obligation on the part of
Tuboscope or Newpark or their respective officers, directors, stockholders or
Affiliates, except as set forth in Sections 6.11 and 8.03; provided that the
provisions of Sections 6.11 and 8.03 of this Agreement and the Confidentiality
Agreement shall remain in full force and effect and survive any termination of
this Agreement.
Section 8.03. Fees and Expenses.
-----------------
(a) Except as set forth in this Section 8.03, all fees and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses, whether
or not the Merger is consummated, except that each of Tuboscope and Newpark will
bear and pay one-half of the costs and expenses incurred in connection with the
filing, printing and mailing of the Joint Proxy Statement (including SEC filing
fees).
(b) Newpark shall pay Tuboscope up to $5,000,000 as reimbursement
for expenses of Tuboscope actually incurred relating to the transactions
contemplated by this Agreement prior to termination (including, but not limited
to, fees and expenses of Tuboscope's counsel, accountants and financial
advisors, but excluding any discretionary fees paid to such
40
<PAGE>
financial advisors), upon the termination of this Agreement by Tuboscope
pursuant to (i) Section 8.01(d) as a result of the failure to receive the
requisite vote for approval of this Agreement and the Merger by the stockholders
of Newpark at the Newpark Stockholders' Meeting (other than in the circumstances
set forth in Section 8.03(c)(i)) or (ii) Section 8.01(b) or Section 8.01(g) as a
result of the failure to satisfy the condition set forth in Section 7.02(a).
(c) Upon the earliest to occur of the following events:
(i) the termination of this Agreement by
Tuboscope pursuant to Section 8.01(d), if, prior to the
Newpark Stockholders' Meeting, a proposal for an Alternative
Transaction (as defined below) reasonably capable of being
performed involving Newpark or which is a Superior Proposal
shall have been made and the Board of Directors of Newpark
shall have withdrawn or modified its recommendation or
failed to reconfirm its recommendation of this Agreement or
the Merger;
(ii) the termination of this Agreement by
Tuboscope pursuant to Section 8.01(e); or
(iii) the consummation of an Alternative
Transaction involving Newpark within 12 months after the
termination of this Agreement,
Newpark shall pay to Tuboscope a fee of $25,000,000 (the "Newpark Termination
Fee").
Newpark's payment of a termination fee pursuant to this subsection
shall be the sole and exclusive remedy of Tuboscope against Newpark and any of
its Subsidiaries and their respective directors, officers, employees, agents,
advisors or other representatives with respect to the occurrences giving rise to
such payment.
(d) Tuboscope shall pay Newpark up to $5,000,000 as
reimbursement for expenses of Newpark actually incurred relating to the
transactions contemplated by this Agreement prior to termination (including, but
not limited to, fees and expenses of Newpark's counsel, accountants and
financial advisors, but excluding any discretionary fees paid to such financial
advisors), upon the termination of this Agreement by Newpark pursuant to (i)
Section 8.01(d) as a result of the failure to receive the requisite vote for
approval of the Tuboscope Voting Proposal by the stockholders of Tuboscope at
the Tuboscope Stockholders' Meeting (other than in the circumstances set forth
in Section 8.03(e)(i)) or (ii) Section 8.01(b) or Section 8.01(g) as a result of
the failure to satisfy the condition set forth in Section 7.03(a).
(e) Upon the earliest to occur of the following events:
(i) the termination of this Agreement by
Newpark pursuant to Section 8.01(d), if prior to the
Tuboscope Stockholders' Meeting a proposal for an
Alternative Transaction (as defined below) reasonably
capable of being performed involving Tuboscope or which is a
41
<PAGE>
Superior Proposal shall have been made and the Board of
Directors of Tuboscope shall have withdrawn or modified its
recommendation or failed to reconfirm its recommendation of
this Agreement or the Merger;
(ii) the termination of this Agreement by
Newpark pursuant to Section 8.01(f); or
(iii) the consummation of an Alternative
Transaction involving Tuboscope within 12 months after the
termination of this Agreement,
Tuboscope shall pay to Newpark a fee of $25,000,000 (the "Tuboscope Termination
Fee").
Tuboscope's payment of a termination fee pursuant to this subsection
shall be the sole and exclusive remedy of Newpark against Tuboscope and any of
its Subsidiaries and their respective directors, officers, employees, agents,
advisors or other representatives with respect to the occurrences giving rise to
such payment.
(f) The expenses and fees, if applicable, payable pursuant to
Section 8.03(b), 8.03(c), 8.03(d) or 8.03(e) shall be paid as follows:
(i) payments pursuant to Section 8.03(b) or
8.03(d) shall be paid by the applicable party within five
business days after the first to occur of the events
described in Section 8.03(b) or 8.03(d), as applicable;
(ii) the Newpark Termination Fee shall be
payable by Newpark in either of the following manners, which
manner shall be selected by Tuboscope in its sole and
absolute discretion:
(A) upon Newpark's receipt of a written
request from Tuboscope for payment of the Newpark
Termination Fee in shares of Newpark Common Stock
(which request shall be made no earlier than the
earliest date on which an obligation to pay the Newpark
Termination Fee is triggered and no later than twelve
months after the termination of this Agreement),
Newpark shall issue to Tuboscope within five business
days an amount of Newpark Common Stock having a Current
Market Value (as defined below) of $25,000,000 and
shall provide Tuboscope with registration rights with
respect to such shares of Newpark Common Stock
substantially similar to the registration rights
provided to SCF-III, L.P. ("SCF-III") by Tuboscope
pursuant to that certain Registration Rights Agreement
dated as of April 24, 1996 by and among Tuboscope, SCF-
III and certain other securityholders of Tuboscope (the
"Standard Registration Rights Agreement"); or
42
<PAGE>
(B) if Tuboscope does not request payment
under subparagraph 8.03(f)(ii)(A), Newpark shall pay to
Tuboscope the Newpark Termination Fee in cash on the
date of the closing of the applicable Alternative
Transaction; and
(iii) the Tuboscope Termination Fee shall be
payable by Tuboscope in either of the following manners,
which manner shall be selected by Newpark in its sole and
absolute discretion:
(A) upon Tuboscope's receipt of a written
request from Newpark for payment of the Tuboscope
Termination Fee in shares of Tuboscope Common Stock
(which request shall be made no earlier than the
earliest date on which an obligation to pay the
Tuboscope Termination Fee is triggered and no later
than twelve months after the termination of this
Agreement), Tuboscope shall issue to Newpark within
five business days an amount of Tuboscope Common Stock
having a Current Market Value of $25,000,000 and shall
provide Newpark with registration rights with respect
to such shares of Tuboscope Common Stock substantially
similar to the registration rights provided to SCF-III,
L.P. ("SCF-III") by Tuboscope pursuant to the Standard
Registration Rights Agreement; provided, however, that
such registration rights shall be subordinate to the
rights of the holders of registration rights under the
Standard Registration Rights Agreement as of the date
of this Agreement; or
(B) if Newpark does not request payment
under subparagraph 8.03(f)(iii)(A), Tuboscope shall pay
to Newpark the Tuboscope Termination Fee in cash on the
date of the closing of the applicable Alternative
Transaction.
For purposes of this subsection 8.03(f), "Current Market Price" shall
mean, with respect to either Newpark Common Stock or Tuboscope Common Stock, the
average of the last reported sales prices of such security on the NYSE on each
of the five trading days immediately preceding the date of this Agreement.
(g) As used in this Agreement, "Alternative Transaction" means
either (i) a transaction pursuant to which any person (or group of persons)
other than Tuboscope or Newpark or their respective affiliates (a "Third
Party"), acquires more than 25% of the outstanding shares of Newpark Common
Stock or Tuboscope Common Stock, as the case may be, pursuant to a tender offer
or exchange offer or otherwise, (ii) a merger or other business combination
involving Tuboscope or Newpark pursuant to which any Third Party acquires more
than 25% of the outstanding shares of Newpark Common Stock or Tuboscope Common
Stock, as the case may be, or the entity surviving such merger or business
combination, (iii) any other transaction pursuant to which any Third Party
acquires control of assets (including for this
43
<PAGE>
purpose the outstanding equity securities of Subsidiaries of Tuboscope or
Newpark, and the entity surviving any merger or business combination including
any of them) of Tuboscope or Newpark having a fair market value (as determined
by the Board of Directors of Tuboscope or Newpark, as the case may be, in good
faith) equal to more than 25% of the fair market value of all the assets of
Tuboscope or Newpark, as the case may be, and its Subsidiaries, taken as a
whole, immediately prior to such transaction, or (iv) any public announcement of
a proposal, plan or intention to do any of the foregoing or any agreement to
engage in any of the foregoing.
Section 8.04. Amendment. This Agreement may be amended by the
---------
parties hereto, by action taken or authorized by their respective Boards of
Directors, at any time before or after approval of the matters presented in
connection with the Merger by the stockholders of Newpark or of Tuboscope, but,
after any such approval, no amendment shall be made which by law requires
further approval by such stockholders without such further approval. This
Agreement may not be amended except by an instrument in writing signed on behalf
of each of the parties hereto.
Section 8.05. Extension; Waiver. At any time prior to the Effective
-----------------
Time, the parties hereto, by action taken or authorized by their respective
Boards of Directors, may, to the extent legally allowed, (i) extend the time for
the performance of any of the obligations or other acts of the other parties
hereto, (ii) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto and (iii) waive
compliance with any of the agreements or conditions contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in a written instrument signed on behalf of such party.
ARTICLE IX.
MISCELLANEOUS
Section 9.01. Nonsurvival of Representations, Warranties and
----------------------------------------------
Agreements. None of the representations, warranties and agreements in this
- ----------
Agreement or in any instrument delivered pursuant to this Agreement shall
survive the Effective Time, except for the agreements contained in Sections
1.04, 2.01, 2.02, 6.08, 6.12 and 6.15 and Article IX. The Confidentiality
Agreement shall survive the execution and delivery of this Agreement.
Section 9.02. Notices. All notices and other communications
-------
hereunder shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed) or mailed by registered or certified mail
(return receipt requested) to the parties at the following addresses (or at such
other address for a party as shall be specified by like notice):
(a) if to Tuboscope, to
2835 Holmes Road
Houston, Texas 77051
Attn: James F. Maroney, III
Telecopy: (713) 799-5100
44
<PAGE>
with a copy to:
Latham & Watkins
650 Town Center Drive
Costa Mesa, CA 92626-1925
Attn: Patrick T. Seaver, Esq.
Telecopy: (714) 755-8290
(b) if to Newpark, to
3850 North Causeway, Suite 1770
Metairie, Louisiana 70002
Attn: James D. Cole
Telecopy: (504) 838-8222
with a copy to:
Ervin, Cohen & Jessup LLP
9401 Wilshire Blvd., 9th Floor
Beverly Hills, CA 90212-2974
Attn: Bertram K. Massing, Esq.
Telecopy: (310) 859-2325
Section 9.03. Interpretation. When a reference is made in this
--------------
Agreement to Sections, such reference shall be to a Section of this Agreement
unless otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement they shall be deemed to be
followed by the words "without limitation." The phrase "made available" in this
Agreement shall mean that the information referred to has been made available if
requested by the party to whom such information is to be made available. The
phrases "the date of this Agreement", "the date hereof," and terms of similar
import, unless the context otherwise requires, shall be deemed to refer to June
24, 1999.
Section 9.04. Counterparts. This Agreement may be executed in two or
------------
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when two 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 9.05. Entire Agreement; No Third Party Beneficiaries. This
----------------------------------------------
Agreement (including the documents and the instruments referred to herein) (a)
constitute the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof, and (b) except as provided in Section 6.12 are not
intended to confer upon any person other than the parties hereto any rights or
remedies hereunder; provided that the Confidentiality Agreement shall remain in
full force and effect until
45
<PAGE>
the Effective Time. Each party hereto agrees that, except for the
representations and warranties contained in this Agreement, neither Newpark nor
Tuboscope makes any other representations or warranties, and each hereby
disclaims any other representations and warranties made by itself or any of its
officers, directors, employees, agents, financial and legal advisors or other
representatives, with respect to the execution and delivery of this Agreement,
the documents and the instruments referred to herein, or the transactions
contemplated hereby or thereby, notwithstanding the delivery or disclosure to
the other or the other's representatives of any documentation or other
information with respect to any one or more of the foregoing.
Section 9.06. Governing Law. This Agreement shall be governed and
-------------
construed in accordance with the laws of the State of Delaware without regard to
any applicable conflicts of law.
Section 9.07. 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) without the prior
written consent of the other parties. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns.
Section 9.08. Waiver of Jury Trial. Each party hereto hereby waives
--------------------
any right to a trial by jury in connection with any action, suit or proceeding
brought in connection with this Agreement.
46
<PAGE>
IN WITNESS WHEREOF, Tuboscope and Newpark have caused this Agreement
to be signed by their respective officers thereunto duly authorized as of the
date first written above.
Tuboscope Inc.
By: /s/ JOHN F. LAULETTA
---------------------------------
Name: John F. Lauletta
Title: Chief Executive Officer
By: /s/ JAMES F. MARONEY, III
---------------------------------
Name: James F. Maroney, III
Title: Secretary
Newpark Resources, Inc.
By: /s/ JAMES D. COLE
---------------------------------
Name: James D. Cole
Title: Chief Executive Officer
By: /s/ EDAH KEATING
---------------------------------
Name: Edah Keating
Title: Secretary
47
<PAGE>
EXHIBIT 99.1
Tuboscope and Newpark Resources Announce Merger Plans;
50-50 Ownership Values Deal at Approximately $1.3 Billion
June 24, 1999 04:28 PM
HOUSTON--(BUSINESS WIRE)--June 24, 1999--Tuboscope ("Tuboscope") TBI and
Newpark Resources Inc. ("Newpark") NR announced today that the companies have
agreed to merge, creating a worldwide supplier of highly engineered products and
services to the oil and gas industry with over $800 million in combined sales in
1998. Under the terms of a definitive merger agreement approved by both boards
of directors and executed today, Newpark common shareholders would receive 0.65
common shares of Tuboscope for each common share of Newpark. At that ratio each
shareholder group will own approximately 50% of the combined company. Tuboscope
will be the surviving company with its name likely to be changed to reflect the
integrated services to be provided. The proposed merger is subject to
stockholder, lender, and regulatory approval and is expected to be accounted for
as a purchase.
The merger will enable the combined company to provide a comprehensive
package of sophisticated drilling and production waste minimization and disposal
technologies. The company plans to integrate Tuboscope's leading position in
solids control products used to separate drilling waste from drilling fluids and
Newpark's drilling fluid and waste minimization and disposal capabilities, to
offer "one-stop" shopping for fluids and waste management for the drilling
industry worldwide.
James D. Cole, President, CEO and Chairman of Newpark will become Chairman
and John F. Lauletta will be President and CEO of the new company. L.E. Simmons,
current Chairman of Tuboscope, will chair an executive committee of the new
board of directors which will be composed of directors from both companies. Joe
Winkler will remain as Executive Vice President and Chief Financial Officer.
W.T. Ballantine, current Executive Vice President of Newpark, will assume a
senior management position with continued responsibility for key Newpark
operating companies.
"The oil and gas industry has moved quickly and prudently to reduce the
environmental impact of drilling operations over the past several years,"
remarked Jim Cole. "This transaction will align leading technologies and
capabilities to provide superior solutions to customers' drilling waste
management challenges". Commented John Lauletta, "Newpark's theater of
operations has traditionally been focused on the U.S. Gulf Coast. Tuboscope's
infrastructure, spanning 49 countries, provides an extensive platform to
accelerate the growth of products and services." Lauletta and Cole also remarked
that cost savings from efficiency improvements are likely to arise from the
merger, but declined to give estimates, saying only that both are committed to
aggressive pursuit of improved efficiency and market growth initiatives.
Lauletta added, "Besides the benefits of the strategic fit and synergies; the
broader shareholder base, share liquidity, market capitalization, product and
geographic diversity should increase value for our combined shareholders."
Morgan Stanley Dean Witter provided a fairness opinion to Tuboscope's Board
of Directors. Salomon Smith Barney provided a fairness opinion to Newpark's
Board of Directors. The merger is expected to close in the third quarter of
1999.
<PAGE>
Tuboscope is the world's leading supplier of oilfield internal tubular
coating and tubular inspection services; oilfield solids control equipment and
services; and coiled tubing and pressure control equipment to the petroleum
industry. Additionally, it provides in-service inspection of pipelines;
manufactures high pressure fiberglass tubulars; sells and leases advanced in-
line inspection equipment to makers of oil country tubular goods; and provides
quality assurance and inspection services to a diverse range of industries.
Tuboscope is headquartered in Houston, Texas and services markets in 49
countries. 1998 revenues were $568 million.
Newpark is a leading provider of integrated drilling fluids management,
environmental and oilfield services to the natural gas exploration and
production industry. Newpark is headquartered in Metairie, La. and services
markets in Canada, the United States, Mexico and Venezuela. 1998 revenues were
$257 million.
The foregoing contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. The forward-looking statements are those that do not state
historical facts and are inherently subject to risk and uncertainties. The
forward-looking statements contained herein are based on current expectations
and entail various risks and uncertainties that could cause actual results to
differ materially from those projected in the forward-looking statements. Such
risks and uncertainties include, among others, the cyclical nature of the
oilfield services industry, risks associated with the Company's significant
foreign operations, compliance with environmental laws, risks associated with
growth through acquisitions and other factors discussed in the Company's Annual
Report on Form 10-K for the year ended December 31, 1998, under the caption
"Factors Affecting Future Operating Results".
2
<PAGE>
Exhibit 99.2
AGREEMENT
AGREEMENT ("Agreement") dated as of June 24, 1999 among Newpark Resources,
Inc., a Delaware corporation ("Newpark"), Tuboscope Inc., a Delaware corporation
("Tuboscope"), and SCF-IV, L.P., a Delaware limited partnership (the
"Stockholder").
W I T N E S S E T H:
WHEREAS, the Stockholder owns an aggregate of 150,000 shares (the "Shares")
of Series A Cumulative Perpetual Preferred Stock, par value $.01 per share, of
Newpark which Shares Stockholder acquired pursuant to a Purchase Agreement (the
"Purchase Agreement") by and among Newpark and Stockholder dated as of April 8,
1999;
WHEREAS, Stockholder also acquired pursuant to the Purchase Agreement a
Warrant (the "Warrant") dated April 16, 1999 to purchase 2,400,000 shares of
common stock, par value $.01 per share, of Newpark;
WHEREAS, Stockholder and Newpark entered into a Registration Rights
Agreement (the "Registration Rights Agreement") by and among Newpark and
Stockholder dated as of April 16, 1999;
WHEREAS, Newpark and Tuboscope are prepared to enter into an Agreement and
Plan of Merger to be dated as of the date hereof in the form provided to
Stockholder (the "Merger Agreement") providing for the merger of Newpark with
and into Tuboscope (the "Merger") and the conversion of the Shares upon the
consummation of the Merger into shares of common stock of Tuboscope;
NOW, THEREFORE, in consideration of the premises set forth above, the
mutual promises set forth below, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. The Stockholder hereby consents to and votes all Shares in favor of
approval of the Merger Agreement and the Merger. Notwithstanding the foregoing,
such consent and vote shall not be valid (i) if the Merger Agreement is
terminated; (ii) if the Merger does not become effective prior to March 31,
2000; (iii) if there is any amendment without Stockholder's written consent to
(x) Article II of the Merger Agreement, (y) Section 6.10(f) of the Merger
Agreement, or (z) any other provision of the Merger Agreement that would affect
the number of shares of Tuboscope common stock that Stockholder would receive on
or after the consummation of the Merger in respect of the Shares or upon
exercise of the Warrant; or (iv) if the Merger Agreement is amended without
Stockholder's written consent in a manner that would materially adversely affect
the Stockholder, the Shares or the Warrant.
<PAGE>
2. Tuboscope and Stockholder agree that Section 5.6 and Section 5.9 of
the Purchase Agreement shall terminate and be of no further force or effect upon
consummation of the Merger.
3. Tuboscope agrees that on and after the consummation of the Merger,
Tuboscope will comply with Newpark's obligations under the Registration Rights
Agreement.
4. Tuboscope and Newpark agree that an Early Exercise Event (as such term
is defined in the Warrant) will occur in connection with the execution of the
Merger Agreement and that Stockholder will have the right to exercise the
Warrant on or after the date of the Merger Agreement and prior to the Expiration
Time (as such term is defined in the Warrant).
5. Tuboscope and Newpark agree to reimburse Stockholder for Stockholder's
reasonable out-of-pocket legal expenses incurred in connection with the
negotiation of this Agreement.
6. Newpark agrees to reimburse Stockholder for any filing fees and
reasonable out-of-pocket expenses, if any, incurred by Stockholder in complying
with the HSR Act (as such term is defined in the Merger Agreement) in connection
with the Merger.
7. This Agreement shall be binding upon, and inure to the benefit of, the
parties hereto and their respective heirs, personal representatives, successors
and assigns, but shall not be assignable by any party hereto without the prior
written consent of the other parties hereto.
8. This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of Texas.
9. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which shall constitute one and the
same instrument.
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<PAGE>
IN WITNESS WHEREOF, Newpark, Tuboscope and the Stockholder have each caused
this Agreement to be duly executed by their respective officers, each of whom is
duly authorized, all as of the day and year first above written.
NEWPARK RESOURCES, INC.
By: /s/ James D. Cole
----------------------------------------
Name: James D. Cole
--------------------------------------
Title: President
-------------------------------------
TUBOSCOPE INC.
By: /s/ John F. Lauletta
----------------------------------------
Name: John F. Lauletta
--------------------------------------
Title: President and Chief Executive 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/ Anthony F. DeLuca
----------------------------------------
Name: Anthony F. DeLuca
--------------------------------------
Title: Chief Financial Officer
-------------------------------------
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