NO SALE, TRANSFER, PLEDGE, OR OTHER DISPOSITION OF THIS
WARRANT OR THE SHARES PURCHASABLE HEREUNDER MAY BE MADE
EXCEPT PURSUANT TO REGISTRATION UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR PURSUANT TO AN EXEMPTION THEREFROM.
U S LIQUIDS INC.
WARRANT TO PURCHASE 45,000
SHARES OF COMMON STOCK
This Warrant is being issued in connection with that certain letter
agreement, dated June 23, 1997 (the "Service Agreement"), between U S Liquids
Inc., a Delaware corporation ("Company"), and Bellmeade Capital Partners,
L.L.C. ("Bellmeade"). During the Exercise Period (as defined in Section 3),
and subject to the terms and conditions set forth below, for value received,
Bellmeade is entitled to purchase from Company, forty-five thousand (45,000)
fully paid and nonassessable shares of Company's common stock, par value
$0.01 per share ("Common Stock"), at the Exercise Price per share set forth
in Section 1 (subject to adjustment as provided below). Holder shall be
entitled to receive such shares of Common Stock upon (i) surrender to Company
at Company's principal office at 000 X. Xxx Xxxxxxx Xxxxxxx Xxxx, Xxxxx 000,
Xxxxxxx, XX 00000-0000 (or at such other location as Company may notify
Holder) of this Warrant, properly endorsed with the attached Notice of
Exercise Form filled in and signed, and (ii) payment of the aggregate
Exercise Price (as defined in Section 1) for the number of shares for which
this Warrant is being exercised.
This Warrant is subject to the following further terms and
conditions:
1. EXERCISE PRICE; NUMBER OF SHARES.
1.1. INITIAL EXERCISE PRICE. The initial per share exercise price
pursuant to this Warrant shall be the price at which shares of Common Stock
are offered to the public in the Company's initial public offering of Common
Stock pursuant to an effective registration statement filed with the
Securities and Exchange Commission. Such exercise price shall be subject to
adjustment pursuant to Section 1.2. Such exercise price, as adjusted from
time to time in accordance with Section 1.2, is referred to as the "Exercise
Price."
1.2. ADJUSTMENT OF EXERCISE PRICE AND NUMBER/KIND OF SHARES. The
Exercise Price and the number of and kind of securities purchasable upon
exercise of this Warrant shall be subject to adjustment from time to time as
follows:
(i) SUBDIVISIONS; COMBINATIONS; OTHER ISSUANCES. If the
outstanding shares of Common Stock shall be subdivided (by stock split, stock
dividend, or otherwise) into a greater number of shares of Common Stock, then
concurrently with the effectiveness of such subdivision the number of shares
of Common Stock purchasable hereunder shall be proportionately increased and
the Exercise Price shall be proportionately decreased. If the outstanding
shares of Common Stock shall be combined or consolidated (by reclassification
or otherwise) into a lesser number of shares of Common Stock, then
concurrently with the effectiveness of such combination or consolidation the
number of shares of Common Stock purchasable hereunder shall be
proportionately decreased and the Exercise Price shall be proportionately
increased.
(ii) RECAPITALIZATION. If a distribution (other than a cash
dividend or a dividend payable in property other than Common Stock) shall be
paid in respect of the Common Stock, or if there shall occur any
reclassification, capital reorganization, or recapitalization of Company
affecting the Common Stock (other than a change in par value or a subdivision
or combination described in Section 1.2(i)), or if there shall occur any
consolidation or merger of Company with or into another entity, then (as part
of any such distribution, reclassification, reorganization, recapitalization,
consolidation, or merger) provision shall be made so that the holder of this
Warrant shall have the right thereafter to receive upon exercise of this
Warrant the kind and number of shares of stock, other securities, or property
which such holder would have been entitled to receive if immediately prior to
such distribution, reclassification, reorganization, recapitalization,
consolidation, or merger such holder had held the shares of Common Stock
which were then purchasable upon exercise of this Warrant. In any such case,
appropriate adjustment shall be made (as determined by Company's Board of
Directors in its sole discretion) in the application of the provisions of
this Warrant with respect to the rights and interests of the holder so that
the provisions of this Warrant (including provisions with respect to
adjustment of the Exercise Price) shall thereafter be applicable, as nearly
as practicable, to any shares of stock, other securities, or property
thereafter purchasable upon exercise of this Warrant.
1.3. REQUIRED NOTIFICATIONS. (i) If at any time Company shall
declare a cash dividend or stock dividend upon its Common Stock, or shall
make any special dividend or other distribution to the holders of its Common
Stock, then Company shall give notice to the holder of this Warrant at least
seven (7) days prior to the date on which a record shall be taken for such
dividend or distribution, which notice shall specify the date (if any) on
which the holders of Common Stock shall be entitled to any such dividend or
distribution.
(ii) If at any time there shall be any reorganization or
reclassification of Company's capital stock, or any consolidation or merger
of Company with, or sale of all or substantially all of Company's assets to,
another entity, or a voluntary or involuntary dissolution, liquidation, or
winding-up of Company, then Company shall give notice to the holder of this
Warrant at least
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seven (7) days prior to the date on which Company's books shall close or the
date on which a record shall be taken for determining rights to vote in
respect of any such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation, or winding-up. Such notice shall also
specify the date on which the holders of Common Stock shall be entitled to
exchange their Common Stock for securities or other property deliverable upon
such reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation, or winding-up.
2. PAYMENT OF EXERCISE PRICE. Payment for shares of Common Stock
purchasable upon exercise of this Warrant may be made in the form of (i)
cash, certified check or other immediately available funds for the aggregate
Exercise Price for such shares of Common Stock, (ii) the exchange of a number
of shares of Common Stock owned by the holder, free and clear of all liens or
encumbrances, the Fair Market Value (defined below) of which at the time of
exercise is equal to the aggregate Exercise Price of such shares, accompanied
by executed stock powers and any other documents of transfer requested by the
Company, (iii) the relinquishment of Warrant Shares (defined below), which
Warrant Shares shall be deemed to have a value equal to the aggregate Fair
Market Value of such Warrant Shares less the aggregate Exercise Price of such
Warrant Shares, or (iv) a combination of (i), (ii) or (iii). For purposes of
this Section 2, the term "Fair Market Value", as of a particular day, means
(a) if the shares of Common Stock are then listed or admitted for trading on
a national securities exchange or quoted on the National Association of
Securities Dealers Automated Quotation System, the last reported sales price
or the average of the closing bid and ask prices, as applicable, of the
Common Stock on the last trading day before such date, or (b) if the shares
of Common Stock are not then listed or admitted for trading on a national
securities exchange or quoted on the National Association of Securities
Dealers Automated Quotation System, such value as the entire Board of
Directors of the Company, in its absolute discretion, may determine in good
faith. For purposes of this Section 2, the term "Warrant Shares" means
shares of Common Stock issuable upon exercise of this Warrant.
3. CONDITIONS TO EXERCISE; EXERCISE PERIOD. This Warrant shall
be exercisable only if Bellmeade shall not have breached its obligations
under the Service Agreement. This Warrant shall be exercisable only during
the period ("Exercise Period") beginning on the first business day after
December 23, 1997 and ending at the close of business on the fifth
anniversary of the execution date of this Warrant, at which time any
unexercised portion of this Warrant shall expire and become null and void.
Notwithstanding anything to the contrary herein, the Company may, at its sole
discretion, terminate the Service Agreement and rescind this Warrant if an
initial public offering of the Common Stock has not been completed by
December 31, 1998 by giving written notice thereof to Bellmeade. Immediately
upon the giving of such notice, this Warrant shall become null and void.
4. RECORD DATE; CERTIFICATES; ETC. Any shares of Common Stock
purchased upon exercise of this Warrant shall be deemed to have been issued
to the holder thereof as of the close of business on the date of exercise.
Subject to Section 5, certificates for the shares of Common Stock so
purchased shall be delivered to the holder thereof promptly after exercise.
The stock
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certificates so delivered shall be in denominations requested by the holder
of this Warrant and shall be registered in such holder's name. Upon partial
exercise of this Warrant, a new warrant shall promptly be issued to the
holder of this Warrant, representing the right to purchase the number of
shares of Common Stock with respect to which this Warrant shall not have been
exercised.
5. RESTRICTIONS ON TRANSFER. This Warrant and the rights
hereunder are not transferable unless and until Bellmeade shall have fully
and completely performed all of its obligations under the Service Agreement;
provided, however, that, subject to the remaining provisions of this Section
5, the Warrant may be divided among the principals of Bellmeade at their
discretion. Further, holder shall not offer, sell, pledge, hypothecate, or
otherwise dispose of this Warrant unless such offer, sale, pledge,
hypothecation, or other disposition (i) is registered under the Securities
Act of 1933, as amended (the "Securities Act"), (ii) is in compliance with an
opinion of counsel, addressed to Company or upon which Company is authorized
to rely ("Opinion of Counsel"), to the effect that such offer, sale, pledge,
hypothecation, or other disposition does not violate the Securities Act, or
(iii) is in compliance with an Opinion of Counsel that the transaction
complies with Rule 144 promulgated by the Securities and Exchange Commission
("Rule 144"). Subject to the foregoing, transfer of this Warrant shall be
made by holder at Company's principal office (or at such other location as
Company may notify holder) by holder in person or by his duly authorized
attorney, upon surrender of this Warrant properly endorsed, with the attached
Registration of Assignment completed. Unless the securities transferred are
no longer "restricted securities" as defined under Rule 144, the
permissibility of transfers pursuant to this Section 5 shall be conditioned
upon such transferee making in writing to Company the covenant set forth in
the second sentence of this Section 5. All expenses of transfer including,
without limitation, transfer taxes and attorneys' fees, whether incurred by
the Company or the transferor, shall be borne by the transferor.
6. SHARES TO BE FULLY PAID; RESERVATION OF SHARES. All shares of
Common Stock issued upon exercise of this Warrant, in accordance with the
terms of this Warrant, shall be duly authorized, validly issued, fully paid,
nonassessable, and free from preemptive rights. During the Exercise Period,
Company will have authorized and reserved for issuance or transfer upon
exercise of this Warrant, a sufficient number of shares of authorized but
unissued Common Stock, free from preemptive rights, when and as required to
provide for exercise of this Warrant.
7. NO VOTING OR DIVIDEND RIGHTS; LIMITATION OF LIABILITY.
Nothing contained in this Warrant shall be construed as conferring upon
holder the right to vote as a stockholder or to consent or to receive notice
as a stockholder in respect of meetings of Company's stockholders for
election of directors or for other matters. Nothing contained in this
Warrant shall be construed as conferring upon holder any other right as a
stockholder of Company. No dividend or interest shall be payable or accrued
in respect of this Warrant or the stock reserved for issuance in connection
herewith until, and only to the extent that, this Warrant shall have been
exercised. In the absence of affirmative action by holder to purchase shares
of Common Stock, no provision
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of this Warrant and no enumeration in this Warrant of holder's rights or
privileges, shall give rise to any liability of holder for the Exercise Price.
8. AMENDMENT; WAIVER. This Warrant may not be amended or
otherwise modified without the prior written consent of the Company and the
then registered holder of this Warrant.
9. NOTICES. All notices, approvals, consents, requests, demands,
and other communications in connection with this Warrant shall be in writing
and shall be deemed to have been duly given (i) when delivered personally,
(ii) three days after deposit in the U.S. mail (registered or certified
mail), postage prepaid, or (iii) when sent by facsimile machine with machine
or other confirmation of delivery, as follows:
(a) If to Company, to:
000 X. Xxx Xxxxxxx Xxxxxxx Xxxx,
Xxxxx 000
Xxxxxxx, XX 00000-0000
Fax No.: (000) 000-0000
Attention: President
(b) If to Bellmeade Capital Partners, L.L.C., to:
000 Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Fax No.: (000) 000-0000
Attention: X.X. Xxxxxxxx
If to any subsequent holder of this Warrant, to it at such address or fax
number as may have been furnished to Company in writing by such subsequent
holder. If no address has been furnished to Company by such subsequent
holder, Company shall deliver any notice to the subsequent holder in care of
the previous holder at the address provided to Company in accordance with
this Warrant. Company and any holder of this Warrant may change their
respective addresses for purposes of notice hereunder by notice to the other
party in accordance with this Section.
10. BENEFITS OF AGREEMENT. Nothing in this Warrant shall be
construed to give to any person or entity other than Company and the
registered holder of this Warrant any legal or equitable right, remedy or
claim under this Warrant. This Warrant shall be for the sole and exclusive
benefit of Company and the registered holder of the Warrant.
11. SECTION HEADINGS; APPLICABLE LAW. The section headings in
this Warrant are for reference purposes only and are not intended to affect
the meaning or construction of this Warrant.
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THIS WARRANT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF TEXAS.
12. LOST WARRANT. Upon receipt of evidence reasonably satisfactory
to Company of the loss, theft, destruction, or mutilation of this Warrant,
Company will make and deliver a new warrant, of like tenor, in lieu of the
lost, stolen, destroyed, or mutilated Warrant; provided that (i) upon any
such loss, theft, or destruction, holder shall provide Company with an
indemnity and/or bond reasonably satisfactory to Company, and (ii) upon any
such mutilation, holder shall surrender this Warrant for cancellation.
Holder shall indemnify Company for any liability arising from replacement of
this Warrant.
13. FRACTIONAL SHARES. No fractional shares shall be issued or
accepted by the Company upon exercise of this Warrant. In lieu of issuing a
fractional share, Company shall pay holder in cash a sum equal to the
applicable fraction multiplied by the per share Exercise Price.
IN WITNESS WHEREOF, Company has caused this Warrant to be duly
executed as of June 23, 1997.
U S Liquids Inc.
By: /s/ W. Xxxxxxx Xxx
------------------------------------
W. Xxxxxxx Xxx, President
ATTEST:
By: /s/ Xxxx X. Xxxxxxxxx
------------------------------------
Xxxx X. Xxxxxxxxx, Secretary
(Corporate Seal)
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NOTICE OF EXERCISE FORM
(To be signed only upon exercise of Warrant)
To U S Liquids Inc.:
The undersigned, the holder of the within Warrant, hereby
irrevocably elects to exercise the purchase right represented by such Warrant
for, and to purchase thereunder, _______________________________(_________) (*)
shares of Common Stock of U S Liquids Inc. The undersigned hereby elects
to pay for such shares pursuant to clause ___(**) of Section 2 of the Warrant
and requests that certificates for such shares be issued in the name of (and
delivered to) the undersigned at the undersigned's address as follows:
----------------------------
----------------------------
The undersigned represents that it is acquiring such Common
Stock for its own account for investment and not with a view to or for sale
in connection with any distribution thereof. Further, the undersigned makes
and reiterates the representations and covenants to Company contained in
Section 5 of the Warrant as of the date of execution hereof.
Dated:
------------------- ------------------------------------------
(Signature must conform in all respects to
name of holder as specified on the face of
the Warrant or a duly executed and delivered
Form of Assignment)
(Print Name and address)
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(*) Insert the number of shares of Common Stock called for on the face of
the Warrant (or, in the case of partial exercise, the portion thereof
as to which the Warrant is being exercised), without making any
adjustment for additional Common Stock or any other stock or other
securities or property or cash which, pursuant to the adjustment
provisions of the Warrant, may be deliverable upon exercise.
(**) Insert the number of the particular clause of Section 2 describing the
payment method elected by the holder (i.e., clause (i), (ii) or (iii))
or describe the combination of such payment methods elected by the
holder.
REGISTRATION OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned, the holder of the within
Warrant, hereby sells, assigns, and transfers all of its rights under the
within Warrant, in compliance with and subject to Section 5 of the Warrant,
with respect to the number of shares of Common Stock covered thereby and set
forth below, to:
Name of Assignee Address No. of Shares
---------------- ------- -------------
Dated:
------------------ ------------------------------------------
(Signature must conform in all respects to
name of holder as specified on the face of
the Warrant)
(Print name and address)
------------------------------------------
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