[Letterhead of Newpark Resources,
Inc.]
[Executive
Officer]
c/o Newpark Resources, Inc.
3850 North Causeway Blvd., Suite 1770
Metairie, LA 70002
Dear [Executive
Officer]:
As you know,
Newpark Resources, Inc. ( “Newpark" ) has initiated a
formal search for a new Chief Executive Officer (
“CEO” ) to take office on or before
January 1, 2006. You are a valuable executive, and the Board
of Directors of Newpark has authorized the preparation and
execution of this letter agreement (the “Agreement" )
to reinforce and encourage your attention and dedication to your
duties while the search for a new CEO continues and after the new
CEO joins Newpark.
This letter (the
“Agreement" ) sets forth the understanding between you
and Newpark concerning the continuation of your employment in
connection with a “Change of CEO” and the
“Termination Benefit” you will receive if your
employment with Newpark is terminated by Newpark without
“Cause” during an “Employment
Period,” as those terms are defined in this
letter.
1.
Definitions. The following terms used in this Agreement
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.
1.2 “Change of CEO” shall mean the election of a
CEO to replace James D. Cole, which shall be deemed effective when
the replacement CEO starts to perform his or her duties as
CEO.
1.3 “Code” shall mean the Internal Revenue Code
of 1986, as amended.
1.4 “Disability” shall mean Executive’s
full time absence from his duties with Newpark, as a result of
incapacity due to physical or mental illness.
1.5 “Disability Period” shall mean a period of
120 days commencing on the first day of a Disability occurring
during an Employment Period.
1.6 “Employment Period” shall mean a period
commencing on the Start Date and ending three years
later.
1.7 “Executive” (or “you" ) shall
mean the person to whom this letter is addressed.
1.8 “Newpark” shall mean Newpark Resources,
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.
1.9 “Start Date” means the date when a Change of
CEO occurs.
1.10 “Termination Benefit” shall mean the amount
determined in accordance with paragraph (a) below, reduced as
provided in paragraph (b) below, if applicable.
(a) The
Termination Benefit shall be an amount equal to (i) one and
one-half times Executive’s annual base salary for the fiscal
year of Newpark in which the Change of CEO occurs plus
(ii) one and one-half times the “Target Bonus”
awards granted to Executive under the 2003 Executive Incentive
Compensation Plan of Newpark (whether or not earned) for the fiscal
year of Newpark in which the Change of CEO 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.
2
2.
Consideration; Termination During Employment
Period.
2.1 If your employment with Newpark is terminated during an
Employment Period, subject to Section 2.2, Newpark shall pay
you the Termination Benefit, unless such termination is
(a) because of your death (b) because of your voluntary
resignation within one and one-half years after the Start Date,
(c) by Newpark because of your failure to resume full time
performance of your duties after the end of a Disability Period, or
(d) by Newpark for Cause. Subject to Section 2.2, the
Termination Benefit shall be paid to you as follows: one-third of
the Termination Benefit shall be paid to you on the first day of
the calendar month (the “Payment Date”) immediately
following the six-month anniversary of the date your employment
terminated, and the balance of the Termination Benefit shall be
paid to you in twelve equal monthly installments commencing on the
first day of the calendar month following the Payment Date. For
purposes of this Section 2.1, Executive shall not be deemed to
have voluntarily resigned if Executive resigns following the
occurrence after the Start Date of one or more of the following
events:
(a) the
assignment to Executive of duties inconsistent with
Executive’s status prior to the Start Date as an officer of
Newpark or a substantial change in the level of officer or officers
to which Executive reports from the level of officer or officers to
which Executive 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; or
(d) the
failure of Newpark to award Executive the opportunity to receive a
performance bonus at an Incentive Award Opportunity level that is
reasonably equivalent to the Incentive Award Opportunity level
awarded to Executive for the year prior to the year in which the
Start Date occurred.
2.2 Conditions Precedent and Subsequent .
(a) As
a condition precedent to Newpark’s obligation to pay the
Termination Benefit to you, you shall have executed and delivered
to Newpark, in form and substance reasonably satisfactory to
Newpark, (i) an agreement, not limited as to time
(“Confidentiality Agreement”), to maintain in
confidence and to refrain from using in a m
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