EXHIBIT 10.3
NEWPARK RESOURCES, INC.
NON-STATUTORY STOCK OPTION AGREEMENT
     This Non-statutory Stock Option Agreement (the “Agreement”) is made and
entered into as of March 22, 2006 (hereinafter referred to as the “Date of
Grant”), by and between NEWPARK RESOURCES, INC., a Delaware corporation (the
“Company”), and PAUL L. HOWES, (“Optionee”), with reference to the following
facts:
     A. On March 22, 2006, Optionee and the Company entered into an employment
agreement (the “Employment Agreement”), under which Optionee was elected and
accepted employment as the Chief Executive Officer of the Company. Terms used in
this Agreement that are defined in the Employment Agreement and not otherwise
defined herein shall have the meanings attributed to them in the Employment
Agreement.
     B. As an inducement for Optionee to accept employment with the Company, the
Company agreed in the Employment Agreement, among other things, to grant to
Optionee, without further payment, the right and option (the “Option”) to
purchase from the Company all or any part of an aggregate of 375,000 shares of
its common stock, subject to vesting over a three-year period. This Agreement
and the Employment Agreement set forth the agreement between the Company and
Optionee with respect to the issuance, vesting and exercise of the Option.
     NOW, THEREFORE, the parties agree as follows:
     1. Grant of Option.
          The Company hereby grants to Optionee the Option to purchase all or
any part of an aggregate 375,000 shares of Common Stock (each an “Option Share”)
of the Company on the terms and conditions set forth in this Agreement.
     2. Purchase Price.
          The purchase price (the “Exercise Price”) of each Option Share shall
be $8.08.
     3. Option Period.
          The Option shall commence on the Date of Grant and shall expire, and
all rights to purchase the Option Shares shall terminate at the close of
business on the day immediately preceding the tenth anniversary of the Date of
Grant, unless terminated earlier as provided in this Agreement. The Option shall
not be exercisable until all legal requirements in connection with the Option
have been fully complied with. Subject to the foregoing, the Option shall be
exercisable during its term as to one-third of the Option Shares during the
twelve months beginning on the first anniversary of the Date of Grant; (b) as to
an additional one-third of the Option Shares on the second anniversary of the
Date of Grant; and (c) as to the remaining one-third of the Option Shares on the
third anniversary of the Date of Grant; provided, however, that, if Optionee
shall not in any one exercise period purchase all of the Option Shares which
Optionee is entitled to purchase in such period, Optionee may purchase all or
any part of such Option Shares at any time after the end of such period and
prior to the expiration of the Option. Notwithstanding the foregoing, if
Optionee is subject to the reporting requirements of Section

 

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16(a) of the Securities Exchange Act of 1934 (the “Exchange Act”), the Option
shall not be exercisable until at least six months and one day from the Date of
Grant.
     4. Exercise of Option.
          4.1 The Option shall be exercised by delivering this Agreement for
endorsement to the Company, at its principal office, attention of the Corporate
Secretary, together with a Notice and Agreement of Exercise in the form attached
hereto indicating the number of Option Shares Optionee wishes to purchase and
full payment of the Exercise Price of such shares. In no event shall the Company
be required to issue or transfer fractional shares.
          4.2 Payment for Option Shares may be made in cash, by cashier’s or
certified check or by delivery to the Company of shares of Common Stock, duly
assigned to the Company by a stock power with signatures guaranteed as provided
on the back of the stock certificate. The value of each share delivered in
payment of the Exercise Price of Option Shares shall be the fair market value
(“Fair Market Value”) of the Common Stock on the date such shares are delivered.
The Fair Market Value of a share of the Common Stock on any date shall be equal
to the closing price of the Common Stock for the last preceding day on which the
Company’s shares were traded, and the method for determining the closing price
shall be determined by the Board of Directors (the “Board”) of the Company or a
duly authorized committee thereof, and the Board or such committee are sometimes
referred to herein as the “Committee.”
     5. Employment of Optionee.
          5.1 Except as otherwise provided in paragraph 6 of this Agreement,
Optionee may not exercise the Option unless, at the time of exercise, Optionee
is an employee of the Company or a parent or a subsidiary thereof and has been
in the employ of the Company or a parent or a subsidiary thereof continuously
since the Date of Grant.
          5.2 Nothing contained herein shall be construed to impose upon the
Company or upon any parent or subsidiary thereof any obligation to employ
Optionee for any period or to supersede or in any way alter, increase or
diminish the respective rights and obligations of the Company or any parent or
subsidiary thereof and Optionee under any employment contract now or hereafter
existing between them.
     6. Termination of Employment.
          6.1 If the employment of Optionee with the Company or a subsidiary
shall terminate because of Total Disability or death, unless otherwise provided
by the Committee, (a) the Option, to the extent then presently exercisable,
shall remain in full force and effect and may be exercised pursuant to the
provisions hereof, including expiration at the end of the fixed term hereof, and
(b) the Option, to the extent not then presently exercisable, shall terminate as
of the date of such termination of employment and shall not be exercisable
thereafter.
          6.2 If the employment of Optionee with the Company or a subsidiary is
terminated by the Company without Cause or by the Optionee for Good Reason, in
either case occurring during the Employment Term or within twenty-four
(24) months after a Change in Control, if the Executive is in the employ of the
Company or a subsidiary when the Change in Control occurs, the Option, whether
or not then exercisable, shall become exercisable to purchase all of the Option
Shares underlying the Option and shall remain in full force and effect and may
be exercised pursuant to the provisions hereof, including expiration at the end
of the fixed term hereof.

 

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          6.3 If the employment of Optionee with the Company or a subsidiary
shall terminate for any reason other than the reasons set forth in paragraphs
6.1 and 6.2 hereof, unless otherwise provided by the Committee, (a) the Option,
to the extent then presently exercisable, shall remain in full force and effect
and may be exercised pursuant to the provisions hereof, including expiration at
the end of the fixed term hereof, and (b) the Option, to the extent not then
presently exercisable, shall terminate as of the date of such termination of
employment and shall not be exercisable thereafter.
     7. Securities Laws Requirements.
          7.1 The Option shall not be exercisable unless and until any
applicable registration or qualification requirements of federal and state
securities laws, and all other requirements of law or any regulatory bodies
having jurisdiction over such exercise or issuance and delivery, have been fully
complied with. The Company will use reasonable efforts to maintain the
effectiveness of a Registration Statement under the Securities Act of 1933 (the
“Securities Act”) for the issuance of the Option and the Option Shares, but
there may be times when no such Registration Statement will be currently
effective. Exercise of the Option may be temporarily suspended without liability
to the Company during times when no such Registration Statement is currently
effective, or during times when, in the reasonable opinion of the Committee,
such suspension is necessary to preclude violation of any requirements of
applicable law or regulatory bodies having jurisdiction over the Company. If the
Option would expire for any reason except the end of its term during such a
suspension, then if exercise of the Option is duly tendered before its
expiration, the Option shall be exercisable and exercised (unless the attempted
exercise is withdrawn) as of the first day after the end of such suspension. The
Company shall have no obligation to file any Registration Statement covering
resales of the Option Shares.
          7.2 Upon each exercise of the Option, Optionee shall represent,
warrant and agree, by the Notice and Agreement of Exercise delivered to the
Company, that (a) no Option Shares will be sold or otherwise distributed in
violation of the Securities Act or any other applicable federal or state
securities laws, (b) if Optionee is subject to the reporting requirements under
Section 16(a) of the Exchange Act, Optionee will furnish to the Company a copy
of each Form 4 or Form 5 filed by Optionee and will timely file all reports
required under federal securities laws, and (c) Optionee will report all sales
of Option Shares to the Company in writing on the form prescribed from time to
time by the Company. All Option Share certificates may be imprinted with legend
conditions reflecting federal and state securities law restrictions and
conditions and the Company may comply therewith and issue “stop transfer”
instructions to its transfer agents and registrars without liability.
     8. Transferability of Option.
          The Option (a) shall be transferable by Optionee only to
(i) Optionee’s Immediate Family Members, (ii) a trust or trusts for the
exclusive benefit of Optionee’s Immediate Family Members, (iii) a corporation,
partnership, limited partnership or limited liability company in which no
persons or entities other than Optionee and Optionee’s Immediate Family Members
have beneficial interests, or (iv) such other persons or entities as the
Committee may specifically approve, on a case-by-case basis, and (b) shall be
exercisable by any such transferees. As used herein, Immediate Family Members
means the spouse, children (including step-children and adopted children) or
grandchildren of the Optionee. Unless the Committee shall determine otherwise in
its sole discretion, any Option so transferred may not be further transferred by
the

 

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transferees thereof except by will or the laws of descent and distribution or
pursuant to a “qualified domestic relations order”, as defined in the Internal
Revenue Code of 1986, as amended (the “Code”). Notwithstanding any transfer
permitted in accordance with the foregoing provisions, a transferred Option
shall continue to be subject to the same terms and conditions as were applicable
immediately before such transfer (other than permitting the Option to be
exercised by a permitted transferee), including but not limited to the
provisions of this Agreement governing (x) the exercise of the Option, (y) the
termination of the Option at the expiration of its term or following termination
of the employment of Optionee and (z) the payment of withholding taxes. Except
as specifically provided above, the Option shall be transferable only by will or
the laws of descent and distribution or pursuant to a qualified domestic
relations order, and shall be exercisable during Optionee’s lifetime only by
Optionee or by Optionee’s legal representative. If Optionee is subject to the
reporting requirements of Section 16(a) of the Exchange Act at the time of a
proposed transfer, the Option shall be transferable only if such transferability
or transfer would not cause the Option to fail to qualify for the exemption
provided for in Rule 16b-3 under the Exchange Act, as determined by the
Committee in its sole and absolute discretion. Notwithstanding the foregoing,
the Option shall not be assignable by operation of law and shall not be subject
to attachment, execution, garnishment, sequestration, the law of bankruptcy or
any other legal or equitable process. Any attempted assignment, transfer,
pledge, hypothecation or other disposition contrary to the provisions of this
Agreement, and the levy of any execution, attachment or similar process
thereupon, shall be null and void and without effect.
     9. Changes in Capitalization.
          9.1 The number and class of shares subject to the Option, the Exercise
Price (but not the total price), and the minimum number of shares as to which
the Option may be exercised at any one time, shall be proportionately adjusted
in the event of any increase or decrease in the number of the issued shares of
Common Stock which results from a split-up or consolidation of shares, payment
of a stock dividend or stock dividends exceeding a total of two and one-half
percent (2.5%) for which the record dates occur in any one fiscal year, a
recapitalization (other than the conversion of convertible securities according
to their terms), a combination of shares or other like capital adjustment, so
that upon exercise of the Option, Optionee shall receive the number and class of
shares Optionee would have received had Optionee been the holder of the number
of shares of Common Stock for which the Option is being exercised upon the date
of such change or increase or decrease in the number of issued shares of the
Company.
          9.2 Upon a reorganization, merger or consolidation of the Company with
one or more corporations as a result of which the Company is not the surviving
corporation, or in which the Company survives as a wholly-owned subsidiary of
another corporation, or upon a sale of all or substantially all of the property
of the Company to another corporation, or any dividend or distribution to
stockholders of more than 10% of the Company’s assets, adequate adjustment or
other provisions shall be made by the Company or other party to such transaction
so that there shall remain and/or be substituted for the Option Shares provided
for herein, the shares, securities or assets which would have been issuable or
payable in respect of or in exchange for the Option Shares then remaining under
the Option, as if Optionee had been the owner of such shares as of the
applicable date. Any securities so substituted shall be subject to similar
successive adjustments.
     10. Relationship to Other Employee Benefit Plans.

 

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          The Option shall not be deemed to be salary or other compensation to
Optionee for purposes of any pension, thrift, profit sharing, stock purchase or
other employee benefit plan now maintained or hereafter adopted by the Company.
     11. Subsidiary.
          The term “subsidiary” as used herein, shall mean each corporation
which is a “subsidiary corporation” of the Company, within the definition
contained in Section 424(f) of the Code. Unless the context indicates otherwise,
references to the Company shall include all subsidiaries of the Company and any
parent it may have in the future.
     12. Privileges of Ownership.
          Optionee shall not have any of the rights of a stockholder with
respect to the Option Shares except to the extent that share certificates have
actually been issued and registered in Optionee’s name on the books of the
Company or its registrar upon the due exercise of the Option. The Company shall
be allowed a reasonable time following notice of exercise in which to accomplish
the issuance and registration.
     13. Notices.
          Any notice to be given under the terms of this Agreement shall be
addressed to the Company in care of its Corporate Secretary at 3850 North
Causeway Boulevard, Suite 1770, Metairie, Louisiana 70002, and any notice to be
given to Optionee shall be addressed to Optionee at the address appearing on the
employment records of the Company, or at such other address or addresses as
either party may hereafter designate in writing to the other. Any such notice
shall be deemed duly given when enclosed in a properly sealed envelope,
addressed as herein required and deposited, postage prepaid, in a post office or
branch post office regularly maintained by the United States Government.

 

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     14. Withholding Taxes.
          The Company shall have the right at the time of exercise of the Option
to make adequate provision for any federal, state, local or foreign taxes which
it believes are or may be required by law to be withheld with respect to such
exercise (“Tax Liability”), to ensure the payment (through withholding from
Optionee’s salary or the Option Shares or otherwise as the Company shall deem in
its sole and conclusive discretion to be in its best interests) of any such Tax
Liability.
     15. Number and Gender.
          Terms used herein in any number or gender include other numbers or
genders, as the context may require.
     16. Counterparts.
          This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
     17. Governing Law.
          This Agreement and performance under it, shall be construed in
accordance with and under the laws of the State of Delaware. Should a court or
other body of competent jurisdiction determine that any term or provision of
this Agreement is excessive in scope, such term or provision shall be adjusted
rather than voided and interpreted so as to be enforceable to the fullest extent
possible, and all other terms and provisions of this Agreement shall be deemed
valid and enforceable to the fullest extent possible.
     IN WITNESS WHEREOF, the Company and Optionee have executed this Agreement
as of the Date of Grant.

     
“OPTIONEE”
  “COMPANY”
 
   
 
  NEWPARK RESOURCES, INC.
/s/ Paul L. Howes
   
 
          (Signature)
   

             
Paul L. Howes
  By   /s/ David Hunt    
 
          (Print Name)
     
 
Name: David Hunt    
 
      Title:   Board Chairman