AMENDED AND RESTATED EMPLOYMENT
AGREEMENT
THIS AMENDED AND RESTATED AGREEMENT dated and
effective December 31, 2008 (the “ Effective Date
”) is entered into by Newpark Resources, Inc. (the “
Company ”), a Delaware corporation, and Paul L. Howes
(the “ Executive ”) and is intended to
incorporate and accurately reflect all prior negotiations,
discussions, or agreements between the parties concerning the
amendment and restatement of the terms and conditions of
Executive’s employment.
WHEREAS, the Company has employed Executive as
its Chief Executive pursuant to an Employment Agreement dated
March 22, 2006, as amended by the Amendment to Employment
Agreement dated June 7, 2006, (the “ Prior Employment
Agreement ”).
WHEREAS, the parties mutually desire to amend
and restate the Prior Employer Agreement to take into account
Section 409A of the Internal Revenue Code of 1986, as amended,
and the Treasury Regulations and other guidance thereunder (“
Code Section 409A ”) with respect to certain
payments provided for in the Prior Employment Agreement and to make
certain other mutually agreed upon modifications to the Prior
Employment Agreement.
WHEREAS, as of
the Effective Date this Agreement supersedes the Prior
Agreement.
NOW, THEREFORE in consideration of the promises
and mutual covenants herein contained, and other good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, it is mutually covenanted and agreed by and between
the parties as follows:
1.
Employment of Executive Officer.
1.1 Employment Term . The Company hereby offers to employ and
continue to employ Executive, and Executive hereby accepts
continued employment by the Company, as its Chief Executive Officer
(“ CEO ”) on the terms and conditions set forth
in this Agreement.
(a) The Executive’s Employment Term
under this Agreement commenced on March 22, 2006 (“
Employment Date ”), and shall continue for a period of
five (5) years and nine (9) days thereafter, i.e.
March 31, 2011, (the “ Initial Employment Term
”), and shall automatically be renewed for successive one
(1) year periods thereafter ending on each succeeding
March 31 (each such additional period each an “
Extension Term ” and, collectively with the Initial
Term, the “ Employment Term ”), unless
Executive’s employment is terminated by either party giving
written notice to the other party at least sixty (60) days in
advance of the expiration of the Initial Employment Term or any
Extension Term.
1.2
Compensation and Benefits.
(a) Base Salary. As of the
Effective Date and during the remainder of the Employment Term, the
Company will pay Executive a base salary at an annualized rate of
at least Four Hundred Eighty-Six Thousand Dollars ($486,000) per
twelve month year (“ Base Salary ”). The Board
of Directors of the Company (the “ Board ”) will
review annually Executive’s Base Salary and, at its
reasonable discretion, may increase such Base Salary as it deems
appropriate, provided Executive’s Base Salary for any
subsequent twelve month year shall not be less than the preceding
twelve month year except with Executive’s prior written
agreement. Board approved adjustments in Base Salary shall be
automatically incorporated herein by reference and be contractual
obligations of Company. Such Base Salary shall be paid in
accordance with the Company’s standard payroll practice for
its executive officers.
(b) Incentive Compensation . In
addition to the Base Salary, during the Employment Term Executive
shall be eligible for participation in the 2003 Executive Incentive
Plan (“ EICP ”) and the 2003 Long Term Incentive
Plan (“ LTIP ”), subject to any amendments made
at Board’s discretion as provided herein, in each of the
years ending December 31, 2006, 2007, and 2008. Performance
measures and goals will be set by the Compensation Committee of the
Board. The Performance Target (as defined in the EICP) under the
EICP on the Effective Date is equal to eighty (80%) percent of Base
Salary with a maximum limitation of one hundred sixty percent
(160%) of Executive’s annual Base Salary during the relevant
Performance Period (as defined in the EICP). Any payout for 2006
performance shall be based on the Company performance prorated for
the eligible period. Payout under the EICP for a particular year
will be made in cash by March 15 of the next year, e.g. payout
for 2006 will occur on or before March 15, 2007. The EICP and
LTIP as in effect as of March 22, 2006, are incorporated
herein by reference as if set forth in their entirety within this
document. Actual awards in accordance with the Board approved plan,
and any amendments, are at the discretion of the Compensation
Committee, provided that Company represents and warrants to
Executive that the terms of the EICP and LTIP will not be amended,
modified, changed, or interpreted or applied to make them less
generous than they are on March 22, 2006, without prior
written notice.
(c) Stock Options and Share Awards
. In addition, Executive shall receive such number of stock options
and performance restricted share awards as are granted by the
Compensation Committee in accordance with the Board approved plans
(all such plans being referred to as the “ Plans
”). Vesting shall be as provided in these existing plans, and
subject to any amendments. In accordance with the Employment Offer
Term Sheet dated February 15, 2006, that Company provided to
Executive, under the Company’s Long Term Incentive Award
Guidelines the annual stock award for Executive would consist of
80,000 fair market value options and a performance restricted share
award of 50,000 shares. When used in this Agreement
“stock” and “shares” mean the
Company’s publicly traded common stock, $.01 par value.
Further, throughout this Agreement, the words “stock options,
awards, and grants” are used separately or in various
combinations to describe awards of shares or the right to acquire
shares of Company stock under various benefit plans or this
Agreement, or both.
(d) Employment Inducement Awards.
As an incentive to accepting employment with Company and entering
into the Prior Employment Agreement, Executive was awarded at no
cost to Executive: (i) three hundred seventy-five thousand
(375,000) fair market value options at the market price on the day
the Prior Employment Agreement was dated which vest ratably over
three (3) years with the first year being the anniversary of
the Prior Employment Agreement and (ii) two hundred thousand
(200,000) time restricted shares, which shares vest ratably over
five (5) years with the first year being the anniversary of
the Prior Employment Agreement.
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(e) Benefit Plans and Vacation.
Subject to the terms of such plans, during the Employment Term,
Executive shall be entitled to participate in any and all employee
benefits plans or programs of the Company to the extent that he is
otherwise eligible to participate under the terms of those plans,
including participation in any welfare benefit programs provided by
the Company (including, without limitation, medical, prescription,
dental, disability, employee life, group life, accidental death and
travel accident insurance programs), and fringe benefits and
perquisites available generally to other executives of the Company,
including rights to indemnification, advance of litigation
expenses, exculpation and Directors and Officers liability
insurance (“ D&O insurance ”) provided to
directors and officers of the Company, including special
arrangement provisions that may be applicable to other senior
executives. The Company shall not be obligated to institute,
maintain, or refrain from changing, amending, or discontinuing any
benefit plan, or perquisite, so long as such changes are similarly
applicable to similarly-situated employees generally, provided,
however, the Company shall at all times defend, indemnify, and hold
harmless Executive to the maximum extent permitted by law from any
actual cost, loss, damages, attorneys fees, or liability suffered
or incurred by Executive for Executive’s service as Chief
Executive Officer of the Company and participation in the
management of the Company and shall at all times provide at the
Company’s sole cost D&O insurance coverage in amounts
adequate to fully satisfy its obligations to Executive. The Company
shall also provide Executive with D&O insurance tail coverage
for 6 years (or the maximum time period permitted by law) in
the same amount following the termination of Executive’s
employment. That certain Indemnification Agreement by and between
the Company and Executive and dated June 7, 2006 (with some
identical copies thereof having been dated May 7, 2006), as
amended by Amendment to Indemnification Agreement dated
September 1, 2007, is attached hereto and incorporated herein
by reference.
Executive shall be entitled to an annual medical
examination at the Cleveland Clinic, or other like medical facility
in New Orleans or Houston at Company’s cost.
During the Employment Term, Executive shall be
entitled to four (4) weeks paid vacation each calendar year,
including 2006, to be used and accrued in accordance with the
Company’s policies in effect from time to time, provided the
four (4) of weeks of vacation provided in this paragraph shall
not be reduced under such policies.
When Executive travels in connection with his
duties and as otherwise appropriate, Company will provide Executive
with travel life insurance in the minimum amount of $2,000,000,
medical evacuation insurance that provides for transport to the
city in which Executive is then living, and other appropriate
security precautions available to Company executives during
international travel.
(f) Expense Reimbursement. The
Company will reimburse Executive in full for all reasonable and
necessary business, entertainment and travel expenses incurred or
expended by Executive during the Employment Term in the performance
of the duties hereunder in accordance with the Company’s
customary practices applicable to its executive officers.
Notwithstanding the foregoing, (i) the amount of expenses
eligible for reimbursement during a calendar year may not affect
the expenses eligible for reimbursement in any other calendar year,
(ii) the reimbursement must be made on or before the last day
of the calendar year following the calendar year in which the
expense was incurred and (iii) the right to reimbursement
shall not be subject to liquidation or exchange for any other
benefit.
(g) Other Benefits. The Company
shall assist Executive with a country club membership at a club of
his choice in the Houston, Texas area. The Company shall pay
one-half of the Club initiation fee. The Company shall pay
Executive an annual stipend of $20,000 during the Employment Term
to be used by Executive in his discretion for monthly club dues,
automobile costs and the like.
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(h) Schedule of Compensation and
Benefit Plans. Attached to this Agreement is a schedule of the
compensation and benefit plans by name or description that the
Company and Executive understand and intend to cover Executive. The
terms and provisions of the items listed on the Schedule, as
modified by this Agreement, are incorporated herein by reference
(whether or not the actual plan documents are attached as exhibits)
and are contractual by and between Company and
Executive.
(i) Supplemental Disability
Benefit. During any period (other than brief absences) in which
Executive is unable to perform the essential functions of his
position, despite any reasonable accommodation required by law, by
reason of illness or injury, (i) the Company may place
Executive on an approved leave of absence and relieve him of some
or all of his duties while on leave; (ii) the Company shall pay
Executive his Base Salary as of the date the illness or injury
commenced, inclusive of any short-term disability benefits or other
paid leave to which Executive may be entitled or eligible, for a
maximum of six (6) months with such payments to be made on the
Company’s regular payroll dates; and (iii) if Executive
is receiving long-term disability benefits and provided Executive
continues to be eligible to receive such benefits, the Company
shall pay to Executive the excess, if any, of 50% of his Base
Salary as of the date of the illness or injury commenced divided by
twelve (12) over the monthly benefit under the long-term
disability plan over, for a period of one (1) year for each
year of service up to five (5) years or Executive reaches age
65, whichever occurs first, with such payments to commence in the
calendar month in which the Executive first begins to receive
benefits under the long-term disability plan and to be made on the
Company’s regular payroll dates. The Company’s actions
consistent with (i) shall not constitute a termination of
Executive’s employment.
1.3 Extent
of Services; Conflicts of Interest.
(a) Executive shall devote substantially
all of his working time, attention and energies to the business of
the Company, and its affiliated entities, from the Company’s
headquarters. Executive may be involved in charitable and
professional activities, trade and industry associations and the
like, and, with the prior written consent of the Chairman of the
Board, serve on boards of other entities, provided such activities
do not interfere with the performance of his duties hereunder or
any provision of this Agreement.
(b) During the Employment Term, Executive
shall not, directly or indirectly, without the prior consent of a
majority of the members of the Board, render any services to any
other person or entity or acquire any interests of any type in any
other entity, that might be deemed in competition with the Company
or any of its subsidiaries or affiliates or in conflict with his
position as Chief Executive Officer, provided, however, that the
foregoing shall not be deemed to prohibit Executive from
(a) acquiring, solely as an investment, any securities of a
partnership, trust, limited liability company, corporation or other
entity (i) so long as he remains a passive investor in such
entity, (ii) so long as he does not become part of any control
group thereof, and (iii) so long as such entity is not,
directly or indirectly, in competition with the Company or any of
its subsidiaries or affiliates, or (b) serving as a
consultant, advisor or director of any corporation which has a
class of outstanding equity securities registered under Sections
12(b) or 12(g) of the Securities Exchange Act of 1934, as amended
(the “ Exchange Act ”), and which is not in
competition with the Company or any of its subsidiaries or
affiliates.
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2.
Termination of Employment.
2.1 Termination . Executive’s employment by the Company
shall be terminated (1) automatically, upon the death of
Executive; (2) by reason of Executive’s Disability (as
defined below); (3) at the election of Executive without Good
Reason (as defined below) upon 30 days’ advance written
notice to the Company; (4) at the election of Executive with
Good Reason (as defined below) immediately upon written notice to
the Company; (5) by the Company without Cause (as defined
below) upon 30 days’ advance written notice to Executive;
(5) by the Company with Cause (as defined below) immediately
upon written notice to Executive; or (6) by Executive or the
Company pursuant to Section 1.1(a).
2.2 Termination by Executive without Good Reason
or pursuant to Section 1.1(a) . If Executive’s employment is terminated
by Executive without Good Reason or by 60-day notice of non-renewal
by Executive pursuant to Section 1.1(a), Executive shall be
entitled to receive only the following: (i) any unpaid Base
Salary through the date of termination; (ii) any earned but
unpaid portion of the stipend referred to in Section 1.2(g)
through the date of termination; (iii) any unreimbursed expenses
incurred or expended by Executive pursuant to Section 1.2(f)
as of the date of termination; and (iv) such stock options,
share awards, and grants as shall have fully vested before the date
of termination pursuant to the terms of the associated Plans.
Executive shall be ineligible for and shall forfeit all rights with
respect to any stock option, share awards, and grants that have not
vested as of the date of termination. The amounts, if any, in (i),
(ii), and (iii), if any, shall be paid at the time and in the
manner required by applicable law but in no event later than thirty
(30) business days after the date of termination.
2.3 Termination by Executive for Good Reason, by
Company without Cause, or by Company pursuant to
Section 1.1(a) .
(a) If Executive’s employment is
terminated by Executive for Good Reason, by the Company without
Cause, or by 60-day notice of non-renewal by the Company pursuant
to Section 1.1(a), Executive shall be entitled to receive the
following: (i) any unpaid Base Salary through the date of
termination; (ii) any earned but unpaid portion of the stipend
referred to in Section 1.2(g) through the date of termination;
(iii) any unreimbursed expenses incurred or expended by
Executive pursuant to Section 1.2(f) as of the date of
termination; and (iv) such stock options, share awards, and
grants as shall have fully vested before the date of termination
pursuant to the terms of the associated Plans. Subject to
Section 2.3(b)(iii) and, where applicable,
Section 2.7(a), Executive shall be ineligible for and shall
forfeit all rights with respect to any stock option, share awards,
and grants that have not vested as of the date of termination. The
amounts, if any, in (i), (ii), and (iii) shall be paid at the
time and in the manner required by applicable law but in no event
later than thirty (30) business days after the date of
termination.
(b) Except where Section 2.7 is
applicable, if Executive’s employment is terminated by
Executive for Good Reason, by the Company without Cause, or by the
Company pursuant to Section 1.1(a), and such termination
constitutes a Separation from Service, Executive shall be entitled
to receive the following in addition to the payments provided for
in Section 2.3(a): (i) an amount equal to two
(2) times the amount of his Base Salary at the time of
termination; (ii) an amount equal to two times (2X) the
Performance Target (as defined in the EICP and Section 1.2(b))
for the Performance Period (as defined in the EICP) in which the
date of termination occurs; (iii) full vesting of all time
related restricted shares and options awarded at commencement
of
5
employment
pursuant to Section 1.2(d), provided however, there will be no
vesting of annual stock awards in the post-employment exercise
period in accordance with the Plans; (iv) should Executive
timely elect to continue coverage under a group health insurance
plan sponsored by Employer or one of its affiliates, pay or
reimburse Executive for the cost of continued coverage under the
Consolidated Omnibus Budget Reconciliation Act of 1985 (“
COBRA ”) for Executive and any of his eligible
dependents until the earlier of (A) the date Executive becomes
eligible for coverage under another group health insurance plan or
otherwise ceases to be entitled to COBRA continuation coverage and
(B) eighteen (18) months following the date of
termination; and (v) reimbursement by the Company for the
costs of outplacement services obtained by the Executive within the
two (2) year period after termination, not to exceed $20,000;
provided, however, that the Company’s obligations are
contingent on Executive’s compliance with his obligations
under Appendix A and Appendix B to this Agreement, as
such appendices may be amended by mutual agreement, which are
incorporated by this reference.
(c) Subject to Section 3.12, the
amounts set out in Section 2.3(b)(i) and (ii) shall be
paid to Executive in the form of a single lump sum payment on or
prior to the date that is sixty (60) days following
Executive’s Separation from Service.
2.4 Termination for by the Company for
Cause. If
Executive’s employment is terminated by the Company for
Cause, Executive shall be entitled to receive only the following:
(i) any unpaid Base Salary through the date of termination;
(ii) any unreimbursed expenses incurred or expended by
Executive pursuant to Section 1.2(f) as of the date of
termination; and (iii) such stock options, share awards, and
grants as shall have fully vested before the date of termination
pursuant to the terms of the associated Plans. Executive shall be
ineligible for and shall forfeit all rights with respect to any
stock option, share awards, and grants that have not vested as of
the date of termination. The amounts, if any, in (i) and
(ii) shall be paid at the time and in the manner required by
applicable law but in no event later than thirty (30) business
days after the date of termination.
2.5 Termination as a Result of Death.
If Executive dies during the
Employment Term, such person as Executive shall designate in a
written notice to Employer or, if no such person is designated, his
estate, shall be entitled to receive only the following:
(i) any unpaid Base Salary through the date of death;
(ii) any earned but unpaid portion of the stipend referred to
in Section 1.2(g) through the date of death; (iii) any
unreimbursed expenses incurred or expended by Executive pursuant to
Section 1.2(f) as of the date of death; and (iv) such
stock options, share awards, and grants as shall have fully vested
before the date of death pursuant to the terms of the associated
Plans. Executive shall be ineligible for and shall forfeit all
rights with respect to any stock option, share awards, and grants
that have not vested as of the date of death. The amounts, if any,
in (i), (ii), and (iii), if any, shall be paid at the time and in
the manner required by applicable law but in no event later than
thirty (30) business days after the date of death.
2.6
Termination by Reason of Executive’s Disability
.
(a) The Company may terminate
Executive’s employment by reason of Executive’s
Disability upon written notice to Executive. For purposes of this
Agreement, “ Disability ” means and shall be
deemed to have occurred if (i) Executive is receiving benefits
under the Company’s long-term disability plan or is receiving
Social Security total disability benefits; or (ii) in the
absence of Executive’s receipt of such benefits,
(x) Executive has been unable to perform the essential
functions of his position, despite any reasonable accommodation
required by law, by reason of an illness or injury for a continuous
period of not less than six (6) months or six (6) months in
any twelve (12)-month period, or (y) a major
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