ESTOPPEL, WAIVER AND AMENDMENT AGREEMENT
This Estoppel, Waiver and Amendment Agreement (the "Agreement") is entered
into by and between Sanifill, Inc. ("Sanifill") and U S Liquids Inc. ("Liquids")
on the 16th day of June, 1997. In consideration of the mutual covenants and
conditions contained herein, the parties agree as follows:
1. EXPLANATORY PROVISIONS.
1.1 Pursuant to the terms of that certain Asset Purchase Agreement,
dated December 2, 1996, among Liquids, Sanifill, Xxxxxxxx Xxxxx, X.X. and
Xxxxxxxx Xxxxx XXXX, L.P., Liquids and Sanifill have entered into a Note
Agreement, dated December 13, 1996 (the "Note Agreement"), and a Warrant to
purchase shares of common stock of Liquids in favor of Sanifill, dated December
13, 1996 (the "Warrant"), and Liquids has issued to Sanifill its promissory
note, dated December 13, 1996 (the "Note") in the original principal amount of
$27,800,000.
1.2 Liquids desires to enter into separate merger agreements (the
"Merger Agreements") pursuant to which (i) wholly-owned subsidiaries of Liquids
will merge (the "Merger Transactions") with and into (a) Mesa Processing, Inc.
("Mesa"), T&T Grease Service, Inc. ("T&T"), and Phoenix Fats & Oils, Inc.
("Phoenix"), each a Texas corporation under common ownership (Mesa, T&T and
Phoenix are collectively referred to herein as the "Mesa Companies"), and (b)
American WasteWater Inc., a Texas corporation
("AWW"), (ii) the Mesa Companies and AWW will become wholly-owned
subsidiaries of Liquids, and (iii) the stockholders of the Mesa Companies and
AWW will become stockholders of Liquids.
1.3 It is contemplated that, following the closing of the Merger
Transactions, Liquids will engage an underwriter to make an initial public
offering (the "IPO") of its common stock.
1.4 Sanifill desires to facilitate and encourage Liquids to enter
into the Merger Transactions and to conduct the IPO.
2. ESTOPPEL AND WAIVER OF DEFAULT. Sanifill hereby agrees that the
execution of the Merger Agreements and the consummation of the Merger
Transactions and the execution of the documents necessary to effect the Merger
Transactions shall not constitute a default under or a violation of either the
Note Agreement or the Warrant. Without limiting the foregoing, Sanifill (i)
acknowledges that, following the closing of the Merger Transactions, certain
Liens will exist upon certain real and personal property of the Mesa Companies,
subsidiaries of the Mesa Companies, and AWW (such Liens are hereinafter referred
to as the "Acquisition Liens"), and (ii) agrees that the continuing existence of
the Acquisition Liens following the consummation of the Merger Transactions
shall not constitute, or be deemed to constitute, a violation or breach of, or a
Default or an Event of Default under, the Note Agreement, or otherwise permit
Sanifill to exercise any of its rights or remedies under Section 7 of the Note
Agreement. Sanifill expressly
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acknowledges that it is its intent to waive any violation, breach, Default
and/or Event of Default that would otherwise arise or occur as a result of
the continued existence of the Acquisition Liens following the consummation
of the Merger Transactions; provided, however, that nothing in this Section 2
shall constitute, or be deemed to constitute, a waiver of Liquids' continuing
covenants under Sections 6A and 6C(2) of the Note Agreement.
3. WAIVER OF CERTAIN REGISTRATION RIGHTS. Sanifill hereby waives its
right to have any Warrant Shares (as defined in the Warrant) registered for
resale in connection with the IPO.
4. FUTURE ACQUISITION LIENS. Sanifill hereby acknowledges that it is the
intention of Liquids to expand through acquisitions of the capital stock or
assets of companies involved in the treatment, processing and disposal of
nonhazardous liquid wastes. Any such acquisition of capital stock or assets is
hereinafter referred to as an "Acquisition". Notwithstanding anything to the
contrary in the Note Agreement, Sanifill hereby agrees that the existence (or
continued existence following consummation of an Acquisition) of any Lien upon
any property or assets acquired by Liquids (including property or assets held by
any entity that is acquired by Liquids) in an Acquisition that is consummated
after the date hereof shall not constitute, or be deemed to constitute, a
violation or breach of, or Default or Event of Default under, the Note
Agreement, or otherwise permit Sanifill to exercise any of its rights or
remedies under Section 7 of the Note Agreement. Sanifill
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further expressly acknowledges that it is its intent to waive any violation,
breach, Default or Event of Default that would otherwise arise or occur as a
result of the continued existence of any Lien upon any property or assets
acquired by Liquids (including property or assets held by any entity that is
acquired by Liquids) in an Acquisition that is consummated after the date
hereof; provided, however, that nothing in this Section 4 shall constitute,
or be deemed to constitute, a waiver of Liquids' continuing covenants under
Sections 6A and 6C(2) of the Note Agreement; and further provided, however,
that, without the prior written consent of Sanifill, Liquids will not
thereafter allow or cause any entity acquired in any such Acquisition to
incur any additional secured indebtedness.
5. REPRESENTATION OF OWNERSHIP. Sanifill hereby represents that it is
the sole owner of the Warrant and of the single Note issued pursuant to the Note
Agreement, such ownership is free and clear of all liens, encumbrances or other
charges of any kind and no person or entity has any right to acquire either the
Warrant or the Note or any interest therein.
6. REGISTRATION OF WARRANT SHARES. Notwithstanding anything contained
herein or in the Warrant to the contrary, within ninety (90) days after the
effective date of the IPO, Liquids shall file or cause to be filed a shelf
registration statement pursuant to Rule 415 of the Securities Act of 1933, as
amended, and shall use reasonable efforts to cause such shelf registration
statement to be effective within 45 days of the date of such filing, which shelf
registration statement shall include the issuance of the Warrant Shares or the
resale
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thereof, as permitted under the applicable rules and regulation of the
Securities Exchange Commission. Liquids shall maintain this shelf
registration statement for the period described in Section 3.3(a) of the
Warrant. The costs and expenses of filing and maintaining the shelf
registration statement shall be paid by Liquids. Sanifill acknowledges and
agrees that the filing and maintenance of this shelf registration statement
in accordance with the terms hereof shall be deemed to satisfy Liquids'
obligations to file a shelf registration statement under Section 3.3 of the
Warrant.
7. ADDITIONAL AMENDMENTS TO WARRANT. Section 3.4 of the Warrant shall be
amended in its entirety to read as follows:
3.4 RESTRICTIONS ON REGISTRATION.
The Warrantholder agrees that, without the prior written
consent of the Company, the number of Warrant Shares to be offered
pursuant to the shelf registration statement in any calendar year
shall not exceed the following limitations:
Maximum Number
Year of Warrant Shares to Be Offered
---- -------------------------------
1997 0
1998 400,000
1999 400,000
2000 500,000
2001 600,000
2002 600,000
2003 600,000
2004 600,000
2005 600,000
2006 600,000
; provided that such maximum number of Warrant Shares shall be subject
to adjustment from time to time in accordance with the provisions of
Section 6
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hereof; and further provided, however, that the Warrantholder shall be
entitled to offer Warrant Shares in connection with (i) any firm
commitment underwritten public offering and (ii) any orderly market
transactions (such as cross-trades or arranged block sales) approved in
advance in writing by either of Xxx Xxxxxx & Company or Xxxxxxx Xxxxxx
Xxxxx Inc., which approval under this Section 3.4 shall not be unreasonably
withheld. The parties acknowledge that the share numbers set forth in the
table above are pre-reverse stock split numbers.
8. LOCK-UP LETTER. Contemporaneously with the execution of this
Agreement, Sanifill shall execute and deliver to Liquids a lock-up letter in the
form attached hereto as Exhibit "A".
9. MISCELLANEOUS. For purposes of this Agreement, the terms "Warrant
Shares", "Lien", "Default" and "Event of Default" shall have the respective
meanings assigned to such terms in the Note Agreement. Except as stated herein,
the parties agree that the Warrant and the Note Agreement shall remain in full
force and effect as executed.
IN WITNESS WHEREOF, this Agreement has been duly executed by each of the
parties as of the date first above written.
SANIFILL, INC.
By: s/ X. X. Xxxxxxxx
--------------------------------
Name: X. X. Xxxxxxxx
-------------------------
Title: Vice President
------------------------
U S LIQUIDS INC.
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By: s/ W. Xxxxxxx Xxx
--------------------------------
W. Xxxxxxx Xxx, Chief Executive
Officer
For purposes of giving the approval described in Section 7 only, each of the
undersigned hereby agrees to become a party to this Agreement.
XXX XXXXXX & COMPANY
By: s/ Xxxxx X. Xxxxxxx
-----------------------------------------
Xxxxx X. Xxxxxxx, Senior Vice President
XXXXXXX XXXXXX XXXXX INC.
By: s/ Xxxxx X. XxXxxxx
-----------------------------------------
Xxxxx X. XxXxxxx, Vice President
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