Exhibit 10.25
August 12, 2003
Mr. Matthew W. Hardey PERSONAL AND
c/o Newpark Resources, Inc. CONFIDENTIAL
3850 North Causeway Blvd.
Suite 1770
Metairie, Louisiana 70002
Dear Matt:
Newpark Resources, Inc., a Delaware corporation ("NEWPARK"), considers
you a valuable executive, and the Board of Directors (the "BOARD") has
authorized certain actions to reinforce and encourage your attention and
dedication to your duties without distraction if Newpark should become the
target of a hostile takeover attempt or enter into negotiations that could lead
to a change in control of Newpark.
This letter (the "AGREEMENT") sets forth the understanding between you
and Newpark concerning the continuation of your employment in connection with a
"CHANGE IN CONTROL" or "POTENTIAL CHANGE IN CONTROL" and the "TERMINATION
BENEFIT" you will receive if your employment with Newpark is terminated by
Newpark without "CAUSE" or by you for "GOOD REASON" during an "EMPLOYMENT
PERIOD," as those terms are defined in ANNEX A attached to this letter.
This Agreement is entered into with the understanding between you and
Newpark that you will have knowledge or otherwise be notified of a CHANGE IN
CONTROL or POTENTIAL CHANGE IN CONTROL, or the termination thereof, at the time
it occurs.
1. DEFINITIONS. Capitalized terms used in this Agreement are
defined in ANNEX A attached hereto and hereby incorporated into this Agreement
by reference.
2. CONSIDERATION; TERMINATION DURING EMPLOYMENT PERIOD.
2.1 Subject to the terms and conditions of this
Agreement, you agree that you will not resign from Newpark during an EMPLOYMENT
PERIOD except for GOOD REASON.
2.2 If your employment with Newpark is terminated during
an EMPLOYMENT PERIOD, Newpark shall pay you the TERMINATION BENEFIT, unless such
termination is (a) because of your death, (b) because of your failure to resume
full-time performance of your duties after the end of a DISABILITY PERIOD, (c)
by Newpark for CAUSE or (d) by your resignation other than for GOOD REASON.
2.3 If your employment with Newpark is terminated by
Newpark during an EMPLOYMENT PERIOD for CAUSE, Newpark shall give you written
notice of termination specifying the facts and circumstances constituting such
CAUSE.
Mr. Matthew W. Hardey
August 12, 2003
Page 2
3. COMPENSATION UPON TERMINATION OR DURING DISABILITY.
3.1 During any DISABILITY PERIOD occurring during an
EMPLOYMENT PERIOD, you shall continue to receive your full base salary at the
rate then in effect, unless and until your employment is terminated.
3.2 If your employment is terminated by Newpark for
CAUSE, Newpark shall pay you your full base salary at the rate then in effect
through the date of termination, together with any severance pay, vacation pay
and sick leave pay to which you are entitled in accordance with Newpark policy.
Neither this provision nor any payment made by Newpark in accordance herewith
shall constitute waiver of Newpark's right to recover from you any damages
caused by your conduct which constituted CAUSE for such termination and any
similar conduct.
3.3 If you become entitled to the TERMINATION BENEFIT in
accordance with Paragraph 2.2, you shall receive, in addition to the TERMINATION
BENEFIT, your full base salary at the rate then in effect through the date of
termination. The TERMINATION BENEFIT shall be in lieu of any severance pay,
vacation pay and sick leave pay to which you would otherwise be entitled in
accordance with Newpark policy.
3.4 If you become entitled to the TERMINATION BENEFIT in
accordance with Paragraph 2.2, all unexpired unexercised stock options
("OPTIONS"), if any, granted to you prior to a CHANGE IN CONTROL under any stock
option plan of Newpark or otherwise, shall become exercisable in full on the day
preceding the date of termination, whether or not they would have been fully
exercisable but for this provision, and shall remain exercisable for a period of
one (1) year from the date of termination, whether or not they would remain
exercisable for such period but for this provision.
3.5 If you become entitled to the TERMINATION BENEFIT in
accordance with Paragraph 2.2, all unvested shares of restricted stock and all
deferred compensation amounts, including restricted stock or deferred
compensation subject to vesting based on achieving performance criteria, if any,
granted or awarded to you prior to a CHANGE IN CONTROL under any stock plan or
deferred compensation plan of Newpark or otherwise, shall become vested in full
on the day preceding the date of termination and all restrictions thereon shall
lapse, whether or not they would have been vested in full but for this
provision. Newpark shall promptly deliver all such shares to you, and all such
deferred compensation shall be paid to you in a lump sum on the date of
termination.
3.6 If you become entitled to the TERMINATION BENEFIT in
accordance with Paragraph 2.2, Newpark shall continue to provide you and your
eligible family members, based on the cost sharing arrangement between you and
Newpark on the date of termination, with life insurance, medical and dental
health benefits and disability coverage and benefits at least equal to those
which would have been provided to you if your employment had not terminated.
Notwithstanding the foregoing, if you become re-employed and are eligible to
receive life insurance, medical and dental health benefits and disability
coverage and benefits under another employer's plans, Newpark's obligations
under this paragraph shall be reduced to the extent of any such coverage and
benefits. You agree to promptly report any such coverage and benefits to
Mr. Matthew W. Hardey
August 12, 2003
Page 3
Newpark. If you are ineligible under the terms of Newpark's benefit plans or
programs to continue to be so covered, Newpark shall provide you with
substantially equivalent coverage through other sources or will reimburse you
for the cost of obtaining such coverage and benefits.
3.7 If you become entitled to the TERMINATION BENEFIT in
accordance with Paragraph 2.2, Newpark shall provide you with outplacement
services, payable by Newpark, with an aggregate cost not to exceed $10,000 per
month, with an executive outplacement service firm reasonably acceptable to you
and Newpark, for a maximum of twelve (12) months.
3.8 Except as provided in Paragraph 3.6, you shall not be
required to mitigate the amount of any TERMINATION BENEFIT by seeking other
employment or otherwise, nor shall the amount of any TERMINATION BENEFIT be
reduced by any compensation earned by you as the result of employment by another
employer, or otherwise.
3.9 Except as expressly provided otherwise herein, none
of the provisions of this Agreement is intended to curtail or limit in any way
any contractual rights which you may have under any plan in which you are
eligible to participate or under any agreement binding on Newpark to which you
are a party, and all such contractual rights shall survive the execution of this
Agreement and any CHANGE IN CONTROL. The TERMINATION BENEFIT shall not be
considered compensation for any benefit calculation or other purpose under any
retirement plan or other benefit plan maintained by Newpark.
4. SUCCESSORS; BINDING AGREEMENT. This Agreement shall be binding
on and inure to the benefit of Newpark and any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of Newpark. This Agreement shall
inure to the benefit of and be enforceable by your personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees.
5. TERMINATION OF AGREEMENT. Newpark may terminate this Agreement
effective at any time after August 11, 2003, by notice to you, if no CHANGE IN
CONTROL has occurred prior to the giving of such notice, and no POTENTIAL CHANGE
IN CONTROL then exists. Once terminated, this Agreement shall have no further
force or effect.
6. NOTICES. All notices and all other communications provided for
in the Agreement shall be in writing and shall be deemed to have been duly given
when delivered or mailed by United States registered mail, return receipt
requested, postage prepaid, addressed to the respective addresses set forth on
the first page of this Agreement, or to such other address as either party may
have furnished to the other in writing in accordance herewith, except that
notice of change of address shall be effective only upon receipt. Notices to
Newpark shall be directed to the attention of the Secretary of Newpark.
7. AMENDMENTS; WAIVERS. No provision or term of this Agreement
may be supplemented, amended, modified, waived or terminated except in a writing
duly executed by all parties intended to be bound thereby. No waiver of any of
the provisions of this Agreement shall be deemed or shall constitute a waiver of
any other provision hereof (whether or not similar), nor shall such waiver
constitute a continuing waiver unless otherwise expressly provided. Failure of
Mr. Matthew W. Hardey
August 12, 2003
Page 4
a party to insist on strict compliance with any of the terms and conditions of
this Agreement shall not be deemed a waiver of any such terms and conditions.
8. ENTIRE AGREEMENT. This Agreement, including ANNEX A,
constitutes the entire agreement of the parties hereto with respect to the
subject matter hereof and supersedes all previous agreements, whether written or
oral, relating to the same subject matter. All such previous agreements between
the parties hereto are hereby terminated and shall have no further force or
effect.
9. ATTORNEYS' FEES. In any litigation relating to this Agreement,
including litigation with respect to any instrument, document or agreement made
under or in connection with this Agreement, the prevailing party shall be
entitled to recover its costs and reasonable attorneys' fees.
10. CHOICE OF LAW. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Delaware.
If this letter correctly sets forth our understanding on the subject
matter hereof, kindly sign and return to Newpark the enclosed copy of this
letter, which will then constitute our Agreement on this subject.
Very truly yours,
NEWPARK RESOURCES, INC.
By /s/ James D. Cole
----------------------------------
James D. Cole, Chairman and Chief
Executive Officer
Agreed to this 12th day of
August, 2003
/s/ Matthew W. Hardey
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Matthew W. Hardey
ANNEX A TO LETTER AGREEMENT
DATED AUGUST 12, 2003
The following terms used herein and in letter agreement (the
"AGREEMENT") dated August 12, 2003 between Newpark Resources, Inc., and James D.
Cole ("EXECUTIVE") shall have the following meanings:
"CAUSE", when used with reference to termination of the employment of
Executive by Newpark for "Cause", shall mean:
a) the conviction of Executive for a felony or other crime
involving fraud and/or moral turpitude;
b) dishonesty, willful misconduct or material neglect, which
neglect causes material harm to Newpark, of Executive with respect to Newpark or
any of its subsidiaries;
c) any intentional act on the part of Executive that causes
material damage to Newpark and/or its subsidiaries' reputation;
d) appropriation (or an overt act attempting appropriation) of a
material business opportunity of Newpark or its subsidiaries by Executive;
e) misappropriation (or an overt act attempting misappropriation)
of any funds of Newpark or its subsidiaries by Executive;
f) the failure of Executive to follow the reasonable and lawful
written instructions or policy of Newpark with respect to the services to be
rendered and the manner of rendering such services by Executive, provided
Executive has been given reasonable written notice thereof and opportunity to
cure and no cure has been effected within a reasonable time after such notice;
or
g) the failure of Executive to perform or observe any of the
material terms or conditions of Executive's employment other than by reason of
illness, injury or incapacity, provided Executive has been given reasonable
written notice thereof and opportunity to cure and no cure has been effected
within a reasonable time after such notice.
A "CHANGE OF CONTROL" shall be deemed to occur if: (i) a "TAKEOVER
TRANSACTION" (as defined below) occurs; or (ii) any election of directors of
Newpark takes place (whether by the directors then in office or by the
stockholders at a meeting or by written consent) and a majority of the directors
in the office following such election are individuals who were not nominated by
a vote of two-thirds of the members of the Board of Directors or its nominating
committee immediately preceding such election; or (iii) Newpark effectuates a
complete liquidation or a sale or disposition of all or substantially all of its
assets. A "TAKEOVER TRANSACTION" shall mean (i) a merger or consolidation of
Newpark with, or an acquisition of Newpark or all or substantially all of its
assets by, any other corporation or entity, other than a merger, consolidation
or acquisition in which the individuals who were members of the Board of
Directors of Newpark immediately prior to such transaction continue to
constitute a majority of the Board of Directors or other governing body of the
surviving corporation or entity (or, in the case of an acquisition involving a
holding company, constitute a majority of the Board of Directors or other
governing body of the holding company) for a period of not less than twelve
(12) months following the closing of such transaction, or (ii) one or more
occurrences or events as a result of which any "person" (as such term is used in
Sections 13(d) and 14(d)(2) of the Exchange Act) becomes the "beneficial owner"
(as such term is defined in Rule 13d-3 under the Securities Exchange Act),
directly or indirectly, of thirty percent (30%) or more of the combined voting
power of Newpark's then outstanding securities.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"COMPANY" shall mean Newpark Resource, Inc., and its consolidated
subsidiaries and any successor to its business and/or assets which assumes or
becomes subject to this Agreement by operation of law or otherwise.
"DISABILITY" shall mean Executive's full-time absence from his duties
with Newpark, as a result of incapacity due to physical or mental illness.
"DISABILITY PERIOD" shall mean a period of six (6) months commencing on
the first day of a Disability occurring during the Employment Period.
"EMPLOYMENT PERIOD" shall mean a period (a) commencing when a Potential
Change in Control occurs or, if no Potential Change in Control has occurred with
respect to a Change in Control, when such Change in Control occurs, and (b)
ending two years after such Change in Control occurred. If the event or
agreement that gives rise to a Potential Change in Control terminates or is
terminated without the Change in Control contemplated thereby having occurred,
the Employment Period shall terminate upon termination of such event or
agreement; however, a new Employment Period shall commence under the same
conditions upon any subsequent Potential Change in Control or Change in Control.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"GOOD REASON" shall mean any one or more of the following, occurring
without Executive's express written consent during the Employment Period and
within 90 days prior to Executive's resignation as a result thereof:
a) the assignment to Executive of duties inconsistent with his status
prior to the START DATE as an officer of Newpark or a substantial change in the
officer or officers to whom he reports from the officer or officers to whom he
reported immediately prior to the START DATE;
b) the elimination or reassignment of a majority of the duties and
responsibilities that were assigned to Executive immediately prior to the START
DATE;
c) a reduction by Newpark in Executive's annual base salary as in
effect immediately prior to the START DATE;
d) Newpark's requiring Executive to be based anywhere outside a 50 mile
radius from the Newpark office at which Executive had been based prior to the
Change in Control or Potential Change in Control, or a 50 mile radius from his
present residence, whichever is farther, except for required travel on Newpark's
business to an extent substantially consistent with Executive's present business
travel obligations; or
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e) the failure of Newpark to grant Executive a performance bonus
reasonably equivalent to the same percentage of salary Executive normally
received prior to the START DATE, given comparable performance by Newpark and
Executive.
A "POTENTIAL CHANGE IN CONTROL" shall be deemed to have occurred on the
date that (a) Newpark first has actual knowledge that any person (as such term
is used in Sections 13(d) and 14(d)(2) of the Exchange Act) has become the
beneficial owner (as defined in Rule 13(d)-3 under the Exchange Act), directly
or indirectly, or has initiated an offer which has not expired and which, if
accepted by holders of a sufficient number of Newpark's then outstanding
securities, would result in such person's becoming the beneficial owner,
directly or indirectly, of securities of Newpark representing thirty percent
(30%) or more of the combined voting power of Newpark's then outstanding
securities, or (b) Newpark enters into an agreement (including a letter of
intent) the consummation of which would result in a Change in Control.
"START DATE" shall mean the first day of an EMPLOYMENT PERIOD.
"TERMINATION BENEFIT" shall mean the amount determined in accordance
with paragraph (a) below, reduced as provided in paragraph (b) below, if
applicable. If Executive is entitled to a TERMINATION BENEFIT, it shall be paid
to Executive no later than the 60th day following the date on which his
employment terminates.
a) The TERMINATION BENEFIT shall be an amount equal to (i) two times
Executive's annual base salary for the fiscal year of Newpark immediately
preceding the fiscal year in which the START DATE occurs plus (ii) two times the
["Maximum Award Opportunity"] to which Executive would be entitled under the
2003 Executive Incentive Compensation Plan of Newpark for the fiscal year of
Newpark immediately preceding the fiscal year in which the START DATE occurs.
b) The TERMINATION BENEFIT otherwise payable hereunder shall be reduced
to the extent, if any, necessary to prevent (i) the sum of all amounts (whether
pursuant to the Agreement or otherwise) that constitute "parachute payments" to
Executive under Section 280G (or any successor section) of the CODE, from
exceeding (ii) One Dollar less than three times Executive's "base amount", as
defined in said section of the CODE. Newpark's independent certified public
accountants shall determine Executive's "base amount" and the amounts that
constitute "parachute payments" to Executive, and such determinations shall be
final and binding on Newpark and Executive.
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