NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE HEREOF NOR
ANY INTEREST OR PARTICIPATION HEREIN OR THEREIN MAY BE SOLD, ASSIGNED,
PLEDGED, HYPOTHECATED, ENCUMBERED OR IN ANY OTHER MANNER TRANSFERRED OR
DISPOSED OF EXCEPT AS PROVIDED HEREIN. THE HOLDER OF THIS WARRANT AND THE
SECURITIES ISSUABLE UPON EXERCISE HEREOF ARE SUBJECT TO THE RESTRICTIONS
HEREIN SET FORTH.
-------------------------------
-------------------------------
Warrant No. 1
WARRANT
TO
PURCHASE SHARES OF COMMON STOCK
OF
US LIQUIDS INC.
-------------------------------
-------------------------------
This Warrant, dated as of December 13, 1996 (this "Warrant"), certifies
that, for good and valuable consideration, US Liquids Inc., a Delaware
corporation (the "Company"), hereby grants to Sanifill, Inc., a Delaware
corporation ("Sanifill"), and, together with any transferee of this
Warrant or Warrant Shares (as defined below) (the "Warrantholder" or
"Warrantholders"), subject to the terms and conditions set forth herein, the
right to subscribe for and purchase from the Company 2,000,000 shares (the
"Warrant Shares") of common stock of the Company, par value $.01 per share
("Common Stock"), during the period from and after 10:00 a.m., Houston, Texas
time, on the date hereof (the "Initial Exercise Date") and to and including
5:00 p.m., Houston, Texas time, on the tenth anniversary of the date hereof
(the "Expiration Date") at a purchase price of $1.00 per share (the "Exercise
Price"). The Exercise Price and the number of Warrant Shares are subject to
adjustment from time to time as provided in Section 6 hereof.
1. DURATION AND EXERCISE OF WARRANT; LIMITATION ON EXERCISE; PAYMENT
OF TAXES.
1.1 DURATION AND EXERCISE OF WARRANT. The rights represented by
this Warrant may be exercised by the Warrantholder of record, in whole or
from time to time in part, by
surrender of this Warrant, accompanied by a completed Exercise Form (the
form of which is annexed hereto) (the "Exercise Form") duly executed by the
Warrantholder of record and specifying the number of Warrant Shares to be
purchased, to the Company at the principal office of the Company located at
in Houston, Texas (or such other office or agency of the Company as it may
designate by written notice to the Warrantholder) during normal business
hours on any business day but not later than 5:00 p.m. on the Expiration
Date (or 5:00 p.m. on the next succeeding business day, if the Expiration
Date falls on a Saturday, Sunday or other day on which the Company is not
open for business), a check to the order of the Company in the amount of
the Exercise Price for the number of Warrant Shares specified in the
Exercise Form and such documentation as to the identity and authority of
the Warrantholder as the Company may reasonably request. Such Warrant
Shares shall be deemed to be issued to the Warrantholder that is the record
holder of this Warrant as of the close of business on the date on which
this Warrant shall have been surrendered and payment made for the Warrant
Shares as aforesaid. Certificates for the Warrant Shares specified in
the Exercise Form shall be delivered to the Warrantholder as promptly as
practicable, and in any event within five business days thereafter. The
certificates so delivered shall be in denominations specified by the
Warrantholder, and shall be issued in the name of the Warrantholder or, if
permitted by Section 1.4 hereof and in accordance with the provisions
thereof, in such other name as shall be designated in the Exercise Form.
If this Warrant shall have been exercised only in part, the Company shall,
at the time of delivery of the certificates representing the Warrant
Shares, deliver to the Warrantholder a new Warrant evidencing the right to
purchase the remaining Warrant Shares, which new Warrant shall in all
other respects be identical to this Warrant. No adjustments or payments
shall be made on or in respect of Warrant Shares issuable on the exercise
of this Warrant for any cash dividends paid or payable to holders of
record of Common Stock as of any date prior to the date as of which
the Warrantholder shall be deemed to be the record holder of such
Warrant Shares.
1.2 LIMITATION ON EXERCISE. If this Warrant is not exercised prior
to 5:00 p.m., Houston, Texas time, on the Expiration Date (or the next
succeeding business day, if the Expiration Date falls on a Saturday, Sunday
or other day on which the Company is not open for business), this Warrant,
or any new Warrant issued pursuant to Section 1.1, shall cease to be
exercisable and shall become void and all rights of the Warrantholder
hereunder shall cease. This Warrant shall not be exercisable and no
Warrant Shares shall be issued hereunder, prior to 10:00 a.m., Houston,
Texas time, on the Initial Exercise Date.
1.3 PAYMENT OF TAXES. The issuance of certificates for Warrant
Shares shall be made without charge to the Warrantholder for any stock
transfer or other issuance tax in respect thereto; PROVIDED, HOWEVER, that
the Warrantholder shall be responsible for payment of any and all taxes
which may be payable in respect of any transfer involved in the issuance
and delivery of any certificates for Warrant Shares in a name other than
that of the then Warrantholder as reflected upon the books of the Company.
1.4 TRANSFER; RESTRICTION ON TRANSFER AND LEGEND.
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(a) Subject to the provisions of Section 1.4(b) below, this
Warrant shall be transferable, in whole or in part, at any time after
the date hereof, without the consent of the Company, upon notice from
Warrantholder. The Company shall keep at its principal office a
register in which the Company shall provide for the registration,
transfer and exchange of this Warrant. The Company will not at any
time, except upon the dissolution, liquidation or winding up of the
Company, close such register so as to prevent or delay the exercise
or transfer of this Warrant.
(b) Neither this Warrant nor any of the Warrant Shares, nor any
interest or participation in either, may be in any manner transferred
or disposed of, in whole or in part, except in compliance with
applicable United States federal and state securities laws.
Each certificate for Warrant Shares and any Warrant issued at any time
in exchange or substitution for any Warrant bearing such a legend shall
bear a legend similar in effect to the foregoing paragraph unless, in the
opinion of counsel for the Company, the Warrant need no longer be subject
to the restriction contained herein. The provisions of this Section 1.4
shall be binding upon all subsequent holders of this Warrant, if any.
Warrant Shares transferred to the public as expressly permitted by, and
in accordance with, the provisions of this Warrant shall thereafter cease
to be deemed to be "Warrant Shares" for purposes of this Section 1.4.
1.5 DIVISIBILITY OF WARRANT. This Warrant may be divided into
warrants representing one Warrant Share or multiples thereof, upon
surrender at the principal office of the Company on any business day,
without charge to any Warrantholder, except as provided below. Upon any
such division, and if permitted by Section 1.4 and in accordance with the
provisions thereof, the Warrants may be transferred of record to a name
other than that of the Warrantholder of record; PROVIDED, HOWEVER, that
the Warrantholder shall be responsible for payment of any and all transfer
taxes with respect thereto.
1.6 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY. The
Company hereby represents, warrants and covenants as follows:
(a) EXISTENCE. The Company is a corporation duly organized
and validly existing under the laws of the State of Delaware and
is authorized to do business and is in good standing as a foreign
corporation in every jurisdiction in which it owns or leases real
property or in which the nature of its business requires it to be so
qualified, except where the failure to so qualify, individually or in
the aggregate, could not reasonably be expected to have a material
adverse effect on the Company.
-3-
(b) ORGANIZATIONAL DOCUMENTS. True and complete copies of
the Company's charter and bylaws, each as amended to date, have been
delivered to the Warrantholder prior to the date hereof.
(c) POWER AND AUTHORITY. The Company has all requisite
corporate power and authority, and has taken all corporate action
necessary (i) to execute, deliver and perform this Warrant, (ii) to
grant, issue and deliver this Warrant and (iii) to authorize and
reserve for issuance and, upon payment from time to time of the
Exercise Price, to issue and deliver the shares of Common Stock
initially issuable upon exercise of the Warrant. This Warrant has
been duly executed and delivered by the Company.
(d) RESERVATION, ISSUANCE AND DELIVERY OF COMMON STOCK. There
have been reserved for issuance out of the authorized and unissued
shares of Common Stock a number of shares sufficient to provide for
the exercise of the rights represented by this Warrant as of the
Initial Exercise Date.
(e) NO VIOLATION; CONSENTS AND APPROVALS. Neither the execution
or delivery of this Warrant nor the consummation of the transactions
contemplated herein does or will (i) result in a breach or violation
of any of the terms or provisions of, or constitute a default under,
any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Company is a party or by which
the Company is bound or to which any of the properties or assets of
the Company are subject, (ii) result in any violation of any provision
of the charter or bylaws of the Company or any statute or any order,
rule or regulation of any court or governmental agency or body having
jurisdiction over the Company or any of its properties or (iii)
require any filing with, or any consent or approval of, any
governmental authority.
(f) ENFORCEABILITY. This Warrant, when duly executed and
delivered, will constitute the legal, valid and binding obligation
of the Company, enforceable against the Company in accordance with
its terms, subject to any applicable bankruptcy, insolvency or other
laws of general application affecting creditors' rights and judicial
decisions interpreting any of the foregoing.
(g) NO OUTSTANDING RIGHTS. Except as contemplated by this
Warrant, the Company has not issued any warrants, options or other
securities convertible into or exchangeable for shares of Common Stock
and there are no registration rights outstanding with respect to any
securities of the Company.
2. RESERVATION AND LISTING OF SHARES.
All Warrant Shares which are issued upon the exercise of the rights
represented by this Warrant shall, upon issuance and payment of the Exercise
Price, be validly issued, fully paid and
-4-
nonassessable and free from all taxes, liens, security interests, charges and
other encumbrances with respect to the issue thereof other than taxes in
respect of any transfer occurring contemporaneously with such issuance.
During the period within which this Warrant may be exercised, the Company
shall at all times have authorized and reserved, and keep available free from
preemptive rights, a sufficient number of shares of Common Stock to provide
for the exercise of this Warrant, and shall at its expense procure such
listing thereof (subject to official notice of issuance) as then may be
required on all stock exchanges on which the Common Stock is then listed,
if any. The Company from time to time shall take all such action as may be
required to assure that the par value per share of the Warrant Shares is at
all times equal to or less than the then effective Exercise Price.
3. REGISTRATION RIGHTS.
3.1 INITIAL PUBLIC OFFERING. In the event the Company does not have
Common Stock or other equity securities registered pursuant to Section
12(b) or 12(g) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), on or prior to December 31, 2001, the Warrantholder shall
have the right to require that the Company forthwith prepare and file a
registration statement under the Securities Act of 1933, as amended (the
"Securities Act") with respect to an initial public offering by the Company
of its Common Stock for its own account, and shall use its best efforts to
have such registration statement declared effective as soon as practicable,
but not more than 60 days after the filing of such registration statement.
The Warrantholder shall have the right to participate in such offering as
provided in Section 3.2.
3.2 PIGGY-BACK REGISTRATION.
(a) If the Company proposes to file a registration statement
under the Securities Act with respect to an offering by the Company
for its own account or for the account of any other person or entity
of any class of equity security, including any security convertible
into or exchangeable for any equity securities (other than (i) a
registration statement on Form S-4 or S-8 (or any substitute form for
comparable purposes that may be adopted by the Commission) or (ii) in
connection with a registration statement that is on a form pursuant to
which an offering of the Warrant Shares cannot be registered), then
the Company shall in each case give written notice of such proposed
filing to the Warrantholder at least twenty (20) business days before
the anticipated filing date, and such notice shall offer the
Warrantholder the opportunity to register such number of Warrant
Shares as the Warrantholder may request. Upon the written request of
the Warrantholder received by the Company within ten (10) business
days after the date of the Company's delivery of its notice to the
Warrantholder of its intention to file such a registration statement,
subject to the conditions and in accordance with the procedures set
forth herein, the Company shall use its best efforts to cause the
managing underwriter or underwriters of a proposed underwritten
offering to permit the inclusion of the Warrant Shares requested by
the Warrantholder to be registered under the registration statement
for such offering on
-5-
the same terms and conditions as any similar securities of the
Company included therein. Notwithstanding the foregoing, if the
managing underwriter or underwriters of such offering indicates in
writing to the Warrantholder its reasonable belief that because of
the size of the offering intended to be made, the inclusion of the
Warrant Shares requested to be included might reasonably be expected
to jeopardize the success of the offering of the securities of the
Company to be offered and sold by the Company for its own account,
then the amount of securities to be offered for the account of the
Warrantholder shall be reduced, on a pro rata basis with all sellers
other than the Company, to the extent necessary to reduce the total
amount of securities to be included in such offering to the amount
recommended by such managing underwriter or underwriters. The
Company will bear all Registration Expenses (as hereinafter defined)
in connection with piggy-back registrations.
3.3 DEMAND REGISTRATION RIGHTS.
(a) Upon the written request by the Warrantholder that the
Company effect the registration of the Warrant Shares under the
Securities Act specifying the aggregate number of Warrant Shares
requested to be registered and the intended method or methods of
disposition thereof, including the name of the selected managing
underwriter, if any, the Company will file or cause to be filed a
shelf registration statement (the "Shelf Registration Statement")
pursuant to Rule 415 of the Securities Act within 45 days after
receipt of such request and to have the Shelf Registration Statement
declared effective within 30 days of filing, for disposition in
accordance with the intended method or methods of disposition stated
in such request. The Company shall keep the Shelf Registration
Statement continuously effective, supplemented and amended in order
to permit the prospectus included therein to be usable for sales of
Warrant Shares until the earlier of (i) three years after the date of
final exercise of the Warrant or (ii) such time as the Warrantholder
or any holder of Warrant Shares has sold all of the Warrant Shares
held by it, whether pursuant to such Shelf Registration Statement or
otherwise.
Notwithstanding the foregoing, the Company shall not be required
to take any action pursuant to this Section 3 within a period of 90
days after the effective date of any other registration statement
relating to the Common Stock (other than registration statements on
Form S-4 or S-8 or similar forms).
(b) The Company will not include any securities other than the
Warrant Shares in any registration statement filed pursuant to this
Section 3.3 without the prior written consent of the Warrantholder.
3.4 RESTRICTIONS ON REGISTRATION.
-6-
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 100,000
1998 200,000
1999 300,000
2000 400,000
2001 500,000
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
hereof; and PROVIDED FURTHER that any Warrant Shares registered in piggy-back
registrations pursuant to Section 3.2 hereof shall be exempt from and not
counted toward the foregoing limitations.
3.5 REGISTRATION PROCEDURES.
Whenever the registration of Warrant Shares is to be effected
hereunder, the Company shall (unless such registration statement is not filed
or is withdrawn):
(a) (i) prior to filing a registration statement or prospectus
or any amendments or supplements thereto, furnish to the Warrantholder
and counsel selected by the Warrantholder copies of all such documents
proposed to be filed, which documents will be subject to the review
of such counsel, (ii) furnish to the Warrantholder prior to filing a
registration statement copies of such registration statement as
proposed to be filed, and thereafter furnish to the Warrantholder such
number of copies of such registration statement, each amendment and
supplement thereto (in each case including all exhibits thereto), the
prospectus included in such registration statement (including each
preliminary prospectus) and such other documents as the Warrantholder
may reasonably request in order to facilitate the disposition of the
Warrant Shares, and (iii) after the filing of the registration
statement, promptly notify the Warrantholder of any stop order issued
or threatened by the Commission and take all reasonable actions
required to prevent the entry of such stop order or to remove it if
entered;
-7-
(b) use its best efforts to register or qualify such Warrant
Shares under such other securities or blue sky laws of any
jurisdictions as the Warrantholder reasonably requests and do any
and all other acts and things which may be reasonably necessary or
advisable to enable the Warrantholder to consummate the disposition of
the Warrant Shares in such jurisdictions; PROVIDED, HOWEVER, that this
paragraph (b) shall not require the Company to register or qualify the
Warrant Shares in any state where such registration or qualification
would require the Company to qualify to transact business as a foreign
corporation or place an undue burden on the Company;
(c) use its best efforts to cause such Warrant Shares to be
registered with or approved by such other governmental agencies or
authorities as may be necessary to enable the Warrantholder thereof
to consummate the disposition of such Warrant Shares;
(d) notify the Warrantholder, at any time when a prospectus
relating thereto is required to be delivered under the Securities
Act, of the occurrence of an event requiring the preparation of a
supplement or amendment to such prospectus so that, as thereafter
delivered to the purchasers of such Warrant Shares, such prospectus
will not contain an untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary
to make the statements therein not misleading and promptly prepare,
file and make available to the Warrantholder any such supplement or
amendment;
(e) enter into or arrange for the furnishing of customary
agreements and documents (including an underwriting agreement
in customary form) and take such other actions as are reasonably
required in order to expedite or facilitate the disposition of
such Warrant Shares;
(f) make available for inspection by the Warrantholder,
any underwriter participating in any disposition pursuant to
such registration statement and any attorney, accountant or other
professional retained by the Warrantholder or underwriter
(collectively, the "Inspectors"), all financial and other pertinent
records, corporate documents and properties of the Company and its
subsidiaries (collectively, the "Records") as shall be reasonably
necessary to enable them to exercise their due diligence
responsibility, and cause the Company's officers, directors and
employees to supply all information reasonably requested by any such
Inspector in connection with such registration statement. The
Warrantholder agrees that information obtained by it as a result of
such inspections which is material and deemed confidential shall not
be used by it as the basis for any market transactions in securities
of the Company unless and until such information is made generally
available to the public; and
-8-
(g) otherwise comply with all applicable rules and regulations
of the Commission, and make available to its security holders, as soon
as reasonably practicable, an earnings statement covering a period of
twelve months, beginning within three months after the effective date
of the registration statement, which earnings statement shall satisfy
the provisions of Section 11(a) of the Securities Act.
In addition:
(a) the Company may require the Warrantholder to furnish to
the Company such information regarding the Warrantholder and the
distribution of the Warrant Shares as the Company may from time to
time reasonably request in writing and such other information as may
be legally required in connection with such registration. In
addition, the Warrantholder agrees to notify the Company of any event
relating to the Warrantholder that occurs that would require the
preparation of a supplement or amendment to the prospectus so that
such prospectus will not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading;
(b) if any offering (other than an offering of the Company
as to which the Warrantholder has exercised piggy-back registration
rights pursuant to Section 3.2 hereof) in which the Warrantholder
participates is an underwritten offering, the Company will select a
managing underwriter or underwriters to administer the offering, which
managing underwriter or underwriters shall be reasonably satisfactory
to the Warrantholder;
(c) the Company shall be permitted to delay the filing of any
registration statement or delay its effectiveness for a reasonable
period of time (not to exceed 90 days) if, in the good faith judgment
of the Company, such delay is necessary in light of pending financing
transactions, corporate reorganizations or other events involving the
Company. The Company shall not be obligated to prepare and file any
registration statement hereunder at any time when the Company, in its
good faith judgment, reasonably believes that the filing thereof at
the time requested, or the offering of Warrant Shares pursuant
thereto, would materially adversely affect a pending or scheduled
public offering of securities of the Company or an acquisition,
merger, recapitalization, consolidation, reorganization or similar
transaction or negotiations or discussions of pending proposals with
respect thereto or might materially adversely affect the business or
prospects of the Company in view of disclosures that may be required
thereby involving any threatened litigation, claim, assessment or
governmental investigation or any facts or circumstances relating
thereto. Once the cause of such delay is eliminated, the Company
shall promptly notify the Warrantholder, and as soon as the
Warrantholder requests the Company to proceed, the Company shall
cause such offering to be registered under the Securities Act and
-9-
qualify the offering under the securities laws of any states that
may be required under this Section 3.5; and
(d) in connection with any offering of the Warrant Shares
pursuant to this Agreement, the Warrantholder agrees to execute
all consents, powers of attorney, registration statements and other
documents required in order to cause such registration statement
to become effective. The Warrantholder further agrees that, in
disposing of the Warrant Shares, it will comply with Rules 10b-2,
10b-6 and 10b-7 and any other applicable rules promulgated by the
Commission under the Exchange Act.
3.6 REGISTRATION EXPENSES.
All expenses incident to the Company's performance of or compliance
with this Section 3, including, without limitation, all registration and
filing fees, any fees and expenses of compliance with securities or blue sky
laws (including fees and disbursements of counsel in connection with blue sky
qualifications of the Warrant Shares), rating agency fees, printing expenses,
messenger and delivery expenses, internal expenses (including, without
limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the fees and expenses incurred in
connection with the listing of the securities to be registered and fees and
disbursements of counsel for the Company and its independent certified public
accountants (including the expenses of any special audit or comfort letters
required by or incident to such performance), securities act liability
insurance (if the Company elects to obtain such insurance), the fees and
expenses of any special experts retained by the Company in connection with
such registration, and fees and expenses of other persons retained by the
Company, in connection with each registration hereunder and fees and expenses
of the Warrantholder's counsel (but not including any underwriting discounts
or commissions attributable to the sale of the Warrant Shares) (collectively,
the "Registration Expenses") will be borne by the Company. In addition, if
the Warrantholder participates in any road show at the request of the Company
or any underwriter, all of the expenses of the Warrantholder in connection
with such road show shall be borne by the Company.
3.7 INDEMNIFICATION; CONTRIBUTION.
(a) INDEMNIFICATION BY THE COMPANY. To the extent permitted by
applicable law, the Company agrees to indemnify and hold harmless the
Warrantholder, its officers, directors, partners, attorneys and agents
and each person, if any, who controls the Warrantholder within the
meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, from and against any and all losses, claims, damages
(whether in contract, tort or otherwise), liabilities and expenses
(including reasonable costs of investigation) whatsoever (as incurred
or suffered) arising out of or based upon any untrue statement or
alleged untrue statement of a material fact contained in any
registration statement or prospectus relating to the Warrant Shares
or in any amendment or supplement thereto or in any preliminary
-10-
prospectus, or arising out of or based upon any omission or alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages, liabilities or
expenses arise out of, or are based upon, any such untrue statement
or omission or allegation thereof based upon information furnished in
writing to the Company by or on behalf of the Warrantholder expressly
for use therein; PROVIDED, that with respect to any untrue statement
or omission or alleged untrue statement or omission made in any
preliminary prospectus, the indemnity agreement contained in this
paragraph shall not apply to the extent that any such loss, claim,
damage, liability or expense results from the fact that a current copy
of the prospectus was not sent or given to the person asserting any
such loss, claim, damage, liability or expense at or prior to the
written confirmation of the sale of the Warrant Shares concerned to
such person if it is determined that the Company had previously
provided the Warrantholder with such current copy of the prospectus,
it was the responsibility of the Warrantholder to provide such person
with such current copy of the prospectus and such current copy of the
prospectus would have cured the defect giving rise to such loss,
claim, damage, liability or expense. The Company also agrees to
indemnify any underwriters of the Warrant Shares, their officers,
partners and directors and each person who controls such underwriters
on substantially the same basis as that of the indemnification of the
Warrantholder provided herein or such other indemnification
customarily obtained by underwriters at the time of offering.
(b) CONDUCT OF INDEMNIFICATION PROCEEDINGS. If any action
or proceeding (including any governmental investigation) shall be
brought or asserted against the Warrantholder (or its officers,
directors, partners, attorneys or agents) or any person controlling
the Warrantholder in respect of which indemnity may be sought from the
Company, the Company shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to the Warrantholder and
shall assume the payment of all expenses. The Warrantholder or any
controlling person of the Warrantholder shall have the right to employ
separate counsel in any such action and to participate in the defense
thereof, but the fees and expenses of such counsel shall be at the
expense of the Warrantholder or such controlling person unless (i) the
Company has agreed to pay such fees and expenses or (ii) the named
parties to any such action or proceeding (including any impleaded
parties) include both the Warrantholder or such controlling person and
the Company, and the Warrantholder or such controlling person shall
have been advised by counsel that there may be one or more legal
defenses available to the Warrantholder or such controlling person
which are different from or additional to those available to the
Company (in which case, if the Warrantholder or such controlling
person notifies the Company in writing that it elects to employ
separate counsel at the expense of the Company, the Company shall not
have the right to assume the defense of such action or proceeding on
behalf of the Warrantholder or such controlling person; it being
understood, however, that the Company shall not, in connection with
any one such action or proceeding or separate
-11-
but substantially similar or related actions or proceedings in the
same jurisdiction arising out of the same general allegations or
circumstances, be liable for the fees and expenses of more than one
separate firm of attorneys (together with appropriate local counsel)
at any time for the Warrantholder or such controlling person, which
firm shall be designated in writing by such Warrantholder). The
Company shall not be liable for any settlement of any such action or
proceeding effected without the Company's written consent, but if
settled with its written consent, or if there be a final judgment
for the plaintiff in any such action or proceeding, the Company
agrees to indemnify and hold harmless the Warrantholder and
controlling person from and against any loss or liability (to the
extent stated above) by reason of such settlement or judgment.
(c) INDEMNIFICATION BY THE WARRANTHOLDER. The Warrantholder
agrees to indemnify and hold harmless the Company, its directors and
officers and each person, if any, who controls the Company within the
meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act, to the same extent as the foregoing indemnity from
the Company to the Warrantholder, but only with respect to information
furnished in writing by or on behalf of the Warrantholder expressly
for use in any registration statement or prospectus relating to the
Warrant Shares, or any amendment or supplement thereto, or any
preliminary prospectus. In case any action or proceeding shall be
brought against the Company or its directors or officers, or any such
controlling person, in respect of which indemnity may be sought
against the Warrantholder shall have the rights and duties given to
the Company, and the Company or its directors or officers or such
controlling person shall have the rights and duties given to the
Warrantholder, by the preceding paragraph. The Warrantholder also
agrees that it will enter into an indemnity agreement to indemnify
and hold harmless underwriters of the Warrant Shares, their officers
and directors and each person who controls such underwriters on
substantially the same basis as that of the indemnification of the
Company provided for herein. Notwithstanding the foregoing, the
liability of the Warrantholder for all claims pursuant to this
Section 3 shall not exceed the amount of the net proceeds to the
Warrantholder from such offering.
(d) CONTRIBUTION. If the indemnification provided for in this
Section 3 is unavailable to the Company, the Warrantholder or the
underwriters in respect of any losses, claims, damages, liabilities
or judgments referred to herein, then each such indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such
losses, claims, damages, liabilities and judgments (i) as between the
Company and the Warrantholder on the one hand and the underwriters on
the other, in such proportion as is appropriate to reflect the
relative benefits received by the Company and the Warrantholder on the
one hand and the underwriters on the other from the offering of the
Warrant Shares, or if such allocation is not permitted by applicable
law, in such
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proportion as is appropriate to reflect not only such relative
benefits but also the relative fault of the Company and the
Warrantholder on the one hand and of the underwriters on the other
in connection with the statements or omissions which resulted in
such losses, claims, damages, liabilities or judgments, as well as
any other relevant equitable considerations and (ii) as between the
Company, on the one hand, and the Warrantholder, on the other, in such
proportion as is appropriate to reflect the relative fault of the
Company and of the Warrantholder in connection with such statements
or omissions, as well as any other relevant equitable considerations.
The relative benefits received by the Company and the Warrantholder on
the one hand and the underwriters on the other shall be deemed to be
in the same proportion as the total proceeds from the offering (net of
underwriting discounts and commissions but before deducting expenses)
received by the Company and the Warrantholder bear to the total
underwriting discounts and commissions received by the underwriters,
in each case as set forth in the table on the cover page of the
prospectus. The relative fault of the Company and the Warrantholder
on the one hand and of the underwriters on the other shall be
determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by
the Company and the Warrantholder or by the underwriters. The
relative fault of the Company on the one hand and of the Warrantholder
on the other shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or
the omission or alleged omission to state a material fact relates to
information supplied by such party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Company and the Warrantholder agree that it would not be just
and equitable if contribution pursuant to this Section were determined
by pro rata allocation (even if the underwriters were treated as one
entity for such purpose) or by any other method of allocation which
does not take account of the equitable considerations referred to in
the immediately preceding paragraph. The amount paid or payable by
an indemnified party as a result of the losses, claims, damages,
liabilities, or judgments referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any
such action or claim. Notwithstanding the provisions of this Section,
no underwriter shall be required to contribute any amount in excess
of the amount by which the total price at which the Warrant Shares
underwritten by it and distributed to the public were offered to
the public exceeds the amount of any damages which such underwriter
has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission, and the
Warrantholder shall not be required to contribute any amount in excess
of the amount of the total proceeds to the Warrantholder from such
offering. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be
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entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(e) INDEMNIFICATION PAYMENTS. The indemnification and
contribution required hereunder shall be made by periodic payments of
the amount thereof during the course of the investigation or defense,
as and when bills are received or expense, loss, damage or liability
are incurred.
3.8 RULE 144 AND REPORTS.
The Company covenants that, commencing upon the effectiveness of any
registration of equity securities pursuant to Section 12(b) or 12(g) under
the Exchange Act, it will file the reports required to be filed by it under
the Securities Act and the Exchange Act, and the rules and regulations
adopted by the Commission thereunder (or, if the Company is not required
to file such reports, it will, upon the request of the Warrantholder, make
publicly available other information so long as necessary to permit sales
under Rule 144 under the Securities Act), and it will take such other
action as the Warrantholder may reasonably request, all to the extent
required from time to time to enable the Warrantholder to sell Warrant
Shares without registration under the Securities Act within the limitation
of the exemptions provided by (a) Rule 144 under the Securities Act, as
such Rule may be amended from time to time, or (b) any similar rule or
regulation hereafter adopted by the Commission. Upon the request of the
Warrantholder, the Company will deliver to the Warrantholder a written
statement as to whether it has complied with such requirements.
Additionally, the Company will make generally available to its security
holders an earnings statement satisfying the provisions of Section 11(a)
of the Securities Act no later than 45 days after the end of the 12-month
period beginning with the first day of the Company's first fiscal quarter
commencing after the effective date of any registration statement including
Warrant Shares.
3.9 TRANSFER OF REGISTRATION RIGHTS. In the event this Warrant
is transferred in accordance with Section 1.4, such transferee shall be
entitled to all of the registration rights provided to the Warrantholder
pursuant to this Section 3.
4. EXCHANGE, LOSS OR DESTRUCTION OF WARRANT.
If permitted by Section 1.4 or 1.5 hereof and in accordance with the
provisions thereof, upon surrender of this Warrant to the Company with a duly
executed instrument of assignment and funds sufficient to pay any applicable
transfer taxes, the Company, without charge to the Warrantholder, shall
execute and deliver a new Warrant of like tenor in the name of the assignee
named in such instrument of assignment and this Warrant shall promptly be
canceled. Upon receipt by the Company of evidence reasonably satisfactory to
it of the loss, theft, destruction or mutilation of this Warrant and, in the
case of mutilation, upon surrender and cancellation of this Warrant, the
Company will execute and deliver a new Warrant of like tenor. The term
"Warrant" as used herein includes any Warrants issued in substitution or
exchange of this Warrant.
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5. OWNERSHIP OF WARRANT.
The Company may deem and treat the person in whose name this Warrant is
registered as the holder and owner hereof for all purposes (notwithstanding
any notations of ownership or writing hereon made by anyone other than the
Company) and shall not be affected by any notice to the contrary, until
presentation of this Warrant for registration of transfer as provided in
Sections 1.1, 1.4 and 1.5 or in Section 4.
6. CERTAIN ADJUSTMENTS.
The Exercise Price at which Warrant Shares may be purchased hereunder,
and the number of Warrant Shares to be purchased upon exercise hereof, are
subject to change or adjustment after the Initial Exercise Date as follows:
6.1 GENERAL. The number of Warrant Shares purchasable upon the
exercise of this Warrant and the Exercise Price shall be subject to
adjustment as follows:
(a) In case the Company, after the Initial Exercise Date,
(i) pays a dividend in shares of Common Stock or make a distribution
in shares of Common Stock, (ii) subdivides its outstanding shares
of Common Stock into a greater number of shares of Common Stock,
(iii) combines its outstanding shares of Common Stock into a smaller
number of shares of Common Stock or (iv) issues by reclassification of
its shares of Common Stock other securities of the Company (including
any such reclassification in connection with a consolidation or merger
in which the Company is the surviving corporation), the number of
Warrant Shares purchasable upon exercise of this Warrant shall be
adjusted so that the Warrantholder shall be entitled to receive the
kind and number of Warrant Shares or other securities of the Company
that the Warrantholder would have owned or have been entitled to
receive after the happening of any of the events described above, had
this Warrant been exercised immediately prior to the happening of such
event or any record date with respect thereto. An adjustment made
pursuant to this paragraph (a) shall become effective immediately
after the effective date of such event retroactive to the record date,
if any, for such event.
(b) In case the Company, after the Initial Exercise Date:
(i) issues rights, options or warrants generally to
holders of its outstanding Common Stock, without any charge to
such holders, entitling them at the time of such issuance to
subscribe for or purchase, pursuant to such an issuance, shares
of Common Stock at a price per share that is lower at the record
date for the determination of stockholders entitled to receive
such rights, options or warrants than the then-current Exercise
Price per share
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of Common Stock (in the event the Company does not have Common
Stock or other equity securities registered pursuant to Section
12(b) or 12(g) of the Exchange Act) or the then-current market
price per share of Common Stock (in the event the Company does
have Common Stock or other equity securities so registered), or
(ii) distributes generally to holders of its shares of
Common Stock evidences of its indebtedness or assets (excluding
cash dividends or distributions and dividends or distributions
referred to in paragraph (a) of this Section 6.1) or rights,
options or warrants, or convertible or exchangeable securities
containing the right to subscribe for or purchase shares of
Common Stock,
appropriate adjustments shall be made to the number of Warrant
Shares purchasable upon the exercise of the Warrant and/or the
Exercise Price in order to preserve the relative rights and interests
of the Warrantholders, such adjustments to be made by the good faith
determination of the Board of Directors of the Company.
6.2 VOLUNTARY ADJUSTMENT BY THE COMPANY. The Company may, at its
option, at any time during the term of the Warrant, reduce the then current
Exercise Price to any amount, consistent with applicable law, deemed
appropriate by the Board of Directors of the Company.
6.3 NOTICE OF ADJUSTMENT. Whenever the number of Warrant Shares or
the Exercise Price of such Warrant Shares is adjusted, as herein provided,
the Company shall promptly deliver notice of such adjustment to the
Warrantholder of record.
6.4 NO ADJUSTMENT FOR CASH DIVIDENDS. No adjustment in respect of
any cash dividends shall be made during the term of this Warrant or upon
the exercise of this Warrant.
6.5 PRESERVATION OF PURCHASE RIGHTS UPON MERGER, CONSOLIDATION, ETC.
(a) So long as this Warrant remains in effect, the Company will
not merge or consolidate with or into, or sell, transfer or lease all
or substantially all of its property to, any other person unless the
successor or purchaser, as the case may be, shall be the Company or,
if not the Company, shall expressly assume, by supplemental agreement
executed and delivered to the Warrantholders, the performance and
observance of each and every covenant and condition of this Warrant
to be performed and observed by the Company under this Warrant.
(b) In case of any consolidation of the Company with or merger
of the Company into another person or in case of any sale, transfer or
lease to another person of all or substantially all of the assets of
the Company in accordance with
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paragraph (a) above, the Company or such successor or purchaser, as
the case may be, shall enter into an agreement with the Warrantholders
providing that such Warrantholders shall have the right thereafter
upon payment of the Exercise Price in effect immediately prior to
such action to purchase upon exercise of each Warrant the kind and
amount of shares and other securities and property that the holder
thereof would have owned or have been entitled to receive after the
happening of such consolidation, merger, sale, transfer or lease
had such Warrant been exercised immediately prior to such action;
PROVIDED, HOWEVER, that no adjustment in respect of cash dividends,
interest or other income on or from such shares or other securities
and property shall be made during the term of this Warrant or upon
the exercise of this Warrant. Such agreement shall provide for
adjustments, which shall be as nearly equivalent as practicable to
the adjustments provided for in this Section 6. The provisions of
this Section 6.5 shall apply similarly to successive consolidations,
mergers, sales, transfers or leases.
7. NO IMPAIRMENT.
The Company shall not take any action (including, without limitation,
amending its Certificate of Incorporation or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action) to avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, but will at
all times in good faith assist in the carrying out of all such terms and in
the taking of all such actions as may be necessary or appropriate to protect
the rights of the Warrantholders against impairment. Without limiting the
generality of the foregoing, the Company (a) will not change the par value
of any shares of Common Stock receivable upon the exercise of this Warrant to
an amount greater than the amount payable therefor upon such exercise, (b)
will take all such action as may be necessary or appropriate in order that
the Company may validly and legally issue fully paid and nonassessable shares
of Common Stock upon the exercise of this Warrant, (c) will obtain all such
authorizations, exemptions or consents from any public regulatory body having
jurisdiction thereof as may be necessary to enable the Company to perform its
obligations under this Warrant and (d) will not undertake any reverse stock
split, combination, reorganization or other reclassification of its capital
stock that would have the effect of making this Warrant exercisable for less
than one share of Common Stock.
Upon the request of a Warrantholder at any time during the period that
this Warrant is outstanding, the Company will acknowledge in writing, in form
reasonably satisfactory to such Warrantholder, the continued validity of this
Warrant and the Company's obligations hereunder.
8. MISCELLANEOUS.
8.1 ENTIRE AGREEMENT. This Warrant constitutes the entire agreement
between the Company and the Warrantholder with respect to this Warrant and
the Warrant Shares.
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8.2 BINDING EFFECTS; BENEFITS. This Warrant shall inure to the
benefit of and shall be binding upon the Company, the Warrantholder
and holders of Warrant Shares and their respective heirs, legal
representatives, successors and assigns. Nothing in this Warrant,
expressed or implied, is intended to or shall confer on any person
other than the Company, the Warrantholder and holders of Warrant Shares,
or their respective heirs, legal representatives, successors or assigns,
any rights, remedies, obligations or liabilities under or by reason of
this Warrant or the Warrant Shares.
8.3 AMENDMENTS AND WAIVERS. This Warrant may not be modified or
amended except by an instrument in writing signed by the Company and the
Warrantholder. The Company, the Warrantholder or holders of Warrant
Shares may, by an instrument in writing, waive compliance by the other
party with any term or provision of this Warrant on the part of such other
party hereto to be performed or complied with. The waiver by any such
party of a breach of any term or provision of this Warrant shall not be
construed as a waiver of any subsequent breach.
8.4 FIDUCIARY DUTIES. The Company and its directors shall owe the
Warrantholder the same fiduciary duties that the Company and its directors
would owe to holders of Warrant Shares and the other stockholders of the
Company.
8.5 SECTION AND OTHER HEADINGS. The section and other headings
contained in this Warrant are for reference purposes only and shall not
be deemed to be a part of this Warrant or to affect the meaning or
interpretation of this Warrant.
8.6 FURTHER ASSURANCES. Each of the Company, the Warrantholder and
holders of Warrant Shares shall do and perform all such further acts and
things and execute and deliver all such other certificates, instruments
and/or powers of attorney as may be necessary or appropriate as any party
hereto may, at any time and from time to time, reasonably request in
connection with the performance of any of the provisions of this Warrant.
8.7 NOTICES. All demands, requests, notices and other communications
required or permitted to be given under this Warrant shall be in writing
and shall be deemed to have been duly given if delivered personally or sent
by United States certified or registered first class mail, postage prepaid,
to the parties hereto at the following addresses or at such other address
as any party hereto shall hereafter specify by notice to the other party
hereto:
(a) if to the Company, addressed to:
US Liquids Inc.
00 Xxxxx Xxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxx 00000-0000
Attention: W. Xxxxxxx Xxx
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(b) if to the Warrantholder or any holder of Warrant Shares,
addressed to the address of such person appearing on the books of
the Company.
8.8 SEVERABILITY. Any term or provision of this Warrant that
is invalid or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable any other
term or provision of this Warrant or affecting the validity or
enforceability of any of the terms or provisions of this Warrant in
any other jurisdiction.
8.9 FRACTIONAL SHARES. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant. With
respect to any fraction of a share called for upon any exercise hereof, the
Company shall pay to the Warrantholder an amount in cash equal to such
fraction multiplied by the then-current market price.
8.10 RIGHTS OF THE HOLDER. No Warrantholder shall, solely by virtue
of this Warrant, be entitled to any rights of a stockholder of the Company,
either at law or in equity.
8.11 GOVERNING LAW. This Warrant shall be deemed to be a contract
made under the laws of the State of Texas and for all purposes shall be
governed by and construed in accordance with the laws of such State
applicable to contracts made and performed in Texas.
8.12 RIGHT TO INFORMATION. The Company will furnish the following
information to the Warrantholder and all holders of Warrant Shares:
(a) as soon as available but in any event within ninety (90)
days after the end of each fiscal year, consolidated balance sheets,
income statements and cash flow statements of the Company, showing
its financial condition as of the close of such fiscal year and the
results of its operations during such year, all of the foregoing
financial statements to be audited by independent accountants of
nationally recognized standing and prepared in accordance with
generally accepted accounting principles ("GAAP");
(b) as soon as available but in any event within thirty (30)
days after the end of each fiscal quarter, the unaudited consolidated
balance sheets, income statements and cash flow statements, showing
the financial condition and results of operations of the Company,
as of the end of each such fiscal quarter and for the then elapsed
portion of the fiscal year, in each case prepared in accordance with
GAAP;
(c) promptly upon their becoming available, copies of any
statements, reports and other communications, if any, which the
Company shall have provided to its stockholders or filed with the
Securities and Exchange Commission or any national securities
exchange; and
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(d) as soon as practicable and in any event not less than
15 days after the end of (i) each fiscal year of the Company and
(ii) the second fiscal quarter of each fiscal year of the Company,
a certificate certifying as to the percentage of Common Stock
(on a fully diluted basis) of the Company that the shares of Common
Stock underlying this Warrant represent.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer as of the date first written above.
US LIQUIDS INC.
By: /s/ W. Xxxxxxx Xxx
---------------------------
W. Xxxxxxx Xxx
President
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EXERCISE FORM
(To be executed upon exercise of this Warrant)
The undersigned, the record holder of this Warrant, hereby irrevocably
elects to exercise the right, represented by this Warrant, to purchase
__________ of the Warrant Shares and herewith tenders payment for such
Warrant Shares to the order of __________________________________, in the
amount of $___________ in accordance with the terms of this Warrant. The
undersigned requests that a certificate for such Warrant Shares be registered
in the name of _________________ and that such certificate be delivered to
_______________________________, whose address is
________________________________________.
[NAME OF WARRANTHOLDER]
Date: By:
------------------- --------------------------
Name:
Title:
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