UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): JANUARY 31, 1997
TRANSAMERICAN WASTE INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 0-19615 13-3487422
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification Number)
314 NORTH POST OAK LANE
HOUSTON, TEXAS
77024
(Address of principal executive office)
(Zip Code)
(713) 956-1212
(Registrant's telephone number, including area code)
The Exhibit index is located on page 6.
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ITEMS 2 AND 5. ACQUISITION OR DISPOSITION OF ASSETS; OTHER EVENTS.
GENERAL
On January 31, 1997, TransAmerican Waste Industries, Inc., a Delaware
corporation, through one of its wholly owned subsidiaries (the "Company"),
acquired certain solid waste collection and disposal assets and operations of
Sanifill, Inc. ("Sanifill") located in the Houston, Texas area (the "Sanifill
Assets"). In connection with the acquisition of Sanifill by USA Waste Services,
Inc. ("USA Waste") in 1996, the United States Department of Justice ordered the
divestiture of the Sanifill Assets, and pursuant to the order, the Company
submitted a bid which was subsequently accepted. The total consideration for the
purchase of the Sanifill Assets was $13,600,000 in cash plus warrants to
purchase 1,500,000 shares of Common Stock at an exercise price of $1.50 per
share (the "USA Warrants"). The USA Warrants are exercisable for a period of
five years from the closing date of the Company's acquisition of the Sanifill
Assets. The Company is obligated within six months to register for resale the
Common Stock issuable upon the exercise of the USA Warrants.
THE SANIFILL ASSETS
The Sanifill Assets consist of assets used in connection with (a) the
servicing of approximately 4,000 commercial waste collection and disposal
accounts in the Houston, Texas metropolitan area, (b) the servicing of
approximately 100,000 residential waste collection and disposal accounts in the
Houston, Texas metropolitan area, (c) a construction and demolition ("C&D")
landfill located in Galveston County, Texas, (d) two office, maintenance and
parking facilities (one of which will become the Company's corporate
headquarters), and (e) preferred pricing for disposal of waste at USA Waste's
Baytown, Texas and Brazoria County, Texas landfills. As to the preferred pricing
contract, USA Waste will operate the gate, scale house, and disposal areas of
these landfills as the Company's agent under terms and conditions no less
favorable than the most favorable terms provided to USA Waste's vehicles or the
vehicles of any municipality or other customer in the Houston area. These
airspace rights grant the Company the option to dispose of waste over a ten-year
period beginning on the date of divestiture of a total of two million tons of
municipal solid waste ("MSW") in amounts up to 270,000 tons of MSW per year.
FINANCING
Financing for the transaction was arranged through a combination of debt
and equity sources.
(a) BANK FINANCING. In connection with the transaction, the Company
entered into a bank facility in the amount of $8.5 million (the "Bank Facility")
composed of (i) a $7.5 million note bearing interest at the prime rate plus 1%,
to be repaid based upon a five year amortization schedule and having a final
maturity of February 15, 1999, and (ii) a $1 million revolving line of credit at
prime rate plus 1% having a final maturity of February 15, 1998. The Bank
Facility
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is secured by a security interest in all assets of the Company's subsidiary,
including the Sanifill Assets. The Bank Facility is guaranteed by the Company
and personally guaranteed by Tom J. Fatjo, Jr., the Chief Executive Officer and
Chairman of the Board of the Company, and by Robert K. Moses, Jr. As
consideration for his guarantee, the Company issued Mr. Moses warrants having a
term of five years to purchase a total of three million shares of Common Stock.
The exercise price of such warrants with respect to two million shares is $1.00
per share, and the exercise price with respect to the remaining one million
shares is $1.25 per share. In addition, the Company granted Mr. Moses the right
to designate up to three members of the Company's Board of Directors.
(b) SHARE OFFERING. The Company raised $6,750,000 in equity financing by
issuing 11,250,000 shares of its Common Stock through a private placement
arranged by a placement agent (the "Placement Agent") at a price of $.60 per
share (the "Offering"). The Company will file within four months of the Closing
a registration statement covering the resale of the Shares under the Securities
Act of 1933 with the Securities and Exchange Commission ("SEC") and in such
states as the Company and the holders may select. The Company has agreed to use
its best efforts to cause such registration statement to become effective within
seven months of the Closing. If, subject to certain exceptions, within seven
months of the Closing, such registration statement is not effective for at least
six months out of the nine month period immediately following the date on which
the registration initially becomes effective, then the Company shall be
obligated to issue to each purchaser in the Offering, at a purchase price of
$.01 per share, additional shares of Common Stock equal to 50% of the number of
shares purchased by such person in the Offering.
BRIDGE NOTES
In connection with the Company's execution of the definitive agreement to
purchase the Sanifill Assets in December, 1996, the Company borrowed $700,000
from an investment limited partnership under an agreement in principle dated
December 3, 1996 (the "December Note"). The December Note was to mature on the
earlier of the Company's next placement of debt or equity securities (subject to
certain exceptions) or August 8, 1997, had an interest rate of 12% per annum,
and was convertible into shares of Common Stock at $1.00 per share. The Company
also issued warrants that entitled the holder of the December Note to purchase
an aggregate of 300,000 shares of the Company's Common Stock for $0.75 per
share, expiring on December 3, 2001. In connection with the December Note, the
agreement in principle stated that, among other terms, the $1,500,000 loan made
in August, 1996 by the same partnership (together with the December Note, the
"Bridge Notes") would be extended to mature on August 8, 1997, and the exercise
price of 275,000 warrants issued in connection with such loan would be reset to
$1.00 per share.
As of January 31, 1997, the Company had repaid the December Note and
exchanged the $1,500,000 note issued by the Company in August 1996 for a
$1,500,000 note convertible into shares of the Company's Common Stock at $1.12
per share. In connection therewith, the Company obtained certain waivers,
consents and releases necessary to consummate the
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acquisition of the Sanifill Assets and the transactions related thereto. In
addition, the Company repriced the 575,000 warrants previously issued to such
investment limited partnership to have an exercise price of $.60 per share.
1997 STOCK PARTICIPATION PLAN
Effective January 1, 1997, the Board of Directors of the Company approved
the TransAmerican Waste Industries, Inc. 1997 Stock Participation Plan
("Participation Plan"), pursuant to which the Company will issue restricted
shares of Common Stock to the executive officers and certain key employees of
the Company who are selected in the discretion of the Compensation Committee of
the Board of Directors ("Committee"). Pursuant to the Participation Plan, the
Company has issued 833,334 shares of Common Stock to seven participants under
the Participation Plan.
The shares awarded under the Participation Plan (the "Restricted Shares")
are registered in the name of the grantee but are held by the Chairman of the
Board of Directors of the Company until such time as the restrictions on their
transfer have expired. The Restricted Shares will vest in equal 20% increments
on each anniversary of the grant date over a five-year period. If the grantee
should voluntarily terminate his employment or retire, or if his employment is
terminated by the Company for any reason other than for cause, the grantee will
forfeit his right to receive any shares that are not vested at the time of
termination. In the event that the grantee is terminated for cause, he will
forfeit all rights to receive any vested or unvested shares. If the grantee's
employment is terminated due to his death or disability, or if a change of
control of the Company should occur before the grantee's employment has been
terminated, then all unvested shares will automatically become 100% vested.
In the event that the grantee's employment is not terminated within the
five-year vesting period, as of the expiration of such period, the Company will
issue and deliver to the grantee a certificate for all the grantee's vested
shares free of restrictions. In the event that the grantee's employment is
terminated for any reason except cause before the end of the five-year vesting
period, or in the event of a change of control of the Company regardless of
whether his employment is terminated, at such time the Committee shall issue and
deliver to grantee a certificate for all vested shares free of restrictions.
PARTICIPATION PLAN BANK LOAN
The Company has received a bank loan in the amount of $500,000 ("Bank
Loan") to acquire 833,334 shares of Common Stock from the Company at $.60 per
share pursuant to the Participation Plan. The terms of the Bank Loan required
the Company to execute a $500,000 note bearing interest at 9% per annum to be
repaid based upon a five-year amortization schedule. The Bank Loan is secured by
the shares of the Company's Common Stock to be granted pursuant to the
Participation Plan and is guaranteed personally by Tom J. Fatjo, Jr., the Chief
Executive Officer and Chairman of the Board of the Company.
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CORPORATE GOVERNANCE
In connection with the closing of the Offering, the Board of Directors
authorized the creation of a committee of officers (the "Management Committee")
to be responsible for the oversight of the day-to-day management of the Company.
The Board of Directors shall appoint the members of the Management Committee and
shall instruct the executive officers of the Company, including the members of
the Management Committee, to consult with the members of such committee prior to
making any decision or taking any action which the officer believes, using his
best judgment, would have a significant effect on the business of the Company or
a material effect on its profitability. The Management Committee consists of
four members, who initially will be Tom J. Fatjo, Jr., Lance C. Ruud, J. David
Green and Jerome M. Kruszka. In addition, a representative designated by the
Placement Agent (which initially will be George L. Ball) shall be entitled to
serve on the Board of Directors of the Company and on any committee thereof to
which the Management Committee may be designated to report.
SUMMARY OF SHARES ISSUED
The following table summarizes the total number of shares issuable upon
the consummation of the Offering and the transactions described in this Form
8-K.
NUMBER OF
SHARES OR WARRANTS
Offering 11,250,000
USA Waste Warrants 1,500,000
Guarantor Warrants 3,000,000
Participation Plan 833,334
Placement Agent Warrants 1,125,000
Bridge Note Warrants 575,000
----------
Total 18,283,334
==========
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED. Financial statements of
the business acquired are not included in this initial report and will be filed
by amendment not later than 60 days after the date that the initial report on
this Form 8-K must be filed.
(b) PRO FORMA FINANCIAL INFORMATION. Pro forma financial information
relating to the Company's acquisition of the Sanifill Assets are not included in
this initial report and will be filed by amendment not later than 60 days after
the date that the initial report on this Form 8-K must be filed.
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(c) EXHIBITS. PAGE NUMBER
2.1 Purchase and Sale Agreement among the Company and 9
Sanifill, Inc., Sanifill of Texas Hauling, Inc., Sunray Services,
Inc., S & J Landfill Limited Partnership, and Brazoria County
Recycling Center, Inc. dated December 3, 1996 (the "Stock Purchase
Agreement").
2.2 Amendment to Stock Purchase Agreement dated December 4, 37
1996.
2.3 Second Amendment to Stock Purchase Agreement dated 40
December 12, 1996.
2.4 Third Amendment to Stock Purchase Agreement dated December 43
31, 1996.
2.5 Fourth Amendment to Stock Purchase Agreement dated January 49
30, 1996.
4.1 Stock Purchase Warrant dated January 31, 1997. 53
4.2 Warrant to Purchase Common Stock of the Company dated 58
January 31, 1997 entitling Robert K. Morris to purchase 2,000,000
shares.
4.3 Warrant to Purchase Common Stock of the Company dated 75
January 31, 1997 entitling Robert K. Morris to purchase 1,000,000
shares.
4.4 Warrant to Purchase Common Stock of the Company dated 92
January 31, 1997 entitling Sanders Morris Mundy Inc. to purchase
1,000,000 shares.
4.5 Warrant to Purchase Common Stock of the Company dated 109
February 10, 1997 entitling Sanders Morris Mundy Inc. to purchase
125,000 shares.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
TRANSAMERICAN WASTE INDUSTRIES, INC.
Date: February 18, 1997 By:/s/ LANCE C. RUUD
Lance C. Ruud, Senior Vice President
and Chief Financial Officer
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EXHIBIT 2.1
PURCHASE AND SALE AGREEMENT
BETWEEN
TRANSAMERICAN WASTE INDUSTRIES, INC.,
AND
SANIFILL, INC.,
SANIFILL OF TEXAS HAULING, INC.,
SUNRAY SERVICES, INC.,
S & J LANDFILL LIMITED PARTNERSHIP, AND
BRAZORIA COUNTY RECYCLING CENTER, INC.
DECEMBER 3, 1996
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TABLE OF CONTENTS
PAGE
ARTICLE 1. SALE OF STOCK AND/OR ASSETS.............................. 1
Section 1.1 Description of Assets.............................. 1
(a) Houston Area Front-End Loader Assets..................... 1
(b) Channelview Rearload Assets.............................. 2
(c) Garage Facilities........................................ 2
(d) Sunray Type IV Landfill.................................. 3
Section 1.2 Baytown/Angleton Airspace Assets................... 3
Section 1.3 Retained Items..................................... 5
ARTICLE 2. PURCHASE PRICE........................................... 5
Section 2.1 Consideration...................................... 5
Section 2.2 Down Payment....................................... 6
Section 2.3 Cash Payment....................................... 6
Section 2.4 Grant of Warrants.................................. 6
Section 2.5 Post-Closing Adjustment............................ 6
(a) Calculation of Net Working Capital on the Closing Date... 6
(b) Payment of Adjustment Amount............................. 6
Section 2.6 Contingency in Respect of Expansion Permit......... 6
Section 2.7 Accounts Receivable; Prepaid Services.............. 7
ARTICLE 3. ASSUMPTION OF OBLIGATIONS................................ 7
ARTICLE 4. CLOSING.................................................. 8
Section 4.1 Time and Place of Closing.......................... 8
Section 4.2 Deliveries by Sellers.............................. 8
Section 4.3 Deliveries by Buyer................................ 8
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF SELLERS................ 9
Section 5.1 Representations and Warranties..................... 9
(a) Authority................................................ 9
(b) Compliance with Law...................................... 9
(c) Containers, etc.......................................... 9
(d) Front-End and Rearload Trucks............................ 9
(e) Customer Contracts....................................... 9
(f) Title to the Assets...................................... 10
(g) Litigation............................................... 10
(h) Tax Matters.............................................. 10
(i) The Landfill............................................. 10
(j) The Final Judgment....................................... 11
(k) Disclaimer Regarding Assets.............................. 11
Section 5.2 Survival........................................... 12
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ARTICLE 6. REPRESENTATIONS AND WARRANTIES OF BUYER.................. 12
Section 6.1 Representations and Warranties..................... 12
(a) Corporate Organization................................... 12
(b) Authorization............................................ 12
(c) Noncontravention......................................... 12
(d) Investment Intent........................................ 13
(e) Available Funds.......................................... 13
Section 6.2 Survival........................................... 13
ARTICLE 7. TERMINATION.............................................. 13
Section 7.1 Termination........................................ 13
Section 7.2 Effect of Termination.............................. 14
Section 7.3 Pre-Closing Damages................................ 14
ARTICLE 8. CONDITIONS TO CONSUMMATION OF THE AGREEMENT.............. 14
Section 8.1 Conditions to Each Party's Obligation to
Effect the Agreement.............................. 14
Section 8.2 Conditions to Obligation of Sellers to
Effect the Agreement.............................. 14
Section 8.3 Conditions to Obligation of Buyer to
Effect the Agreement.............................. 15
ARTICLE 9. COVENANTS................................................ 15
Section 9.1 Grantors' Covenants................................ 15
Section 9.2 Buyer's Covenants.................................. 15
(a) Compliance with the Final Judgment....................... 15
(b) Release of Sureties and Bonds............................ 15
(c) Filing of Registration Statement......................... 15
Section 9.3 Sellers' Covenants................................. 16
(a) Expansion Permit......................................... 16
(b) Maintain Subject Assets and Operations;
Non-Solicitation of Employees.......................... 16
Section 9.4 Covenants of Each Party............................ 16
(a) Rearload Customer Contracts.............................. 16
ARTICLE 10. INDEMNIFICATION.......................................... 17
Section 10.1 Indemnification Provisions for
Benefit of Buyer.................................. 17
Section 10.2 Indemnification Provisions for
Benefit of Sellers................................ 17
Section 10.3 Procedure for Indemnification of
Third Party Claims................................ 17
Section 10.4 Negligence and Strict Liability.................... 18
Section 10.5 Subrogation........................................ 18
Section 10.6 Limitations on Indemnification
Provisions; Exclusive Remedy...................... 18
(a) Deductible and Maximum Aggregate Liability............... 18
(b) Waiver of Non-Compensatory Damages....................... 18
(c) Waiver of Right to Rescission............................ 18
(d) Mitigation Obligation.................................... 18
(e) Exclusive Remedy; Waiver and Release..................... 18
ARTICLE 11. GENERAL.................................................. 19
Section 11.1 No Third Party Beneficiaries....................... 19
Section 11.2 Notices............................................ 19
Section 11.3 Use of Name........................................ 19
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Section 11.4 Entire Agreement................................... 20
Section 11.5 Expenses of Transaction............................ 20
Section 11.6 Broker's Commission................................ 20
Section 11.7 Modification; Remedies Cumulative.................. 20
Section 11.8 Severability....................................... 20
Section 11.9 Availability of Records............................ 20
Section 11.10 Sales and Other Taxes.............................. 20
Section 11.11 Allocation of Purchase Price....................... 21
Section 11.12 Definition of Knowledge............................ 21
Section 11.13 Construction....................................... 21
Section 11.14 Governing Law...................................... 21
Section 11.15 DTPA Waiver........................................ 21
EXHIBIT 1.2(d)(iii) Form of Agreement of Assignee.......................... 24
SCHEDULE 1.1(a)(i) Front-End Containers.................................... 25
SCHEDULE 1.1(a)(ii) Front-End Trucks....................................... 26
SCHEDULE 1.1(b)(i) Rearload Containers, Carts and Compactors............... 27
SCHEDULE 1.1(b)(ii) Rearload Trucks........................................ 28
SCHEDULE 1.1(c) Description of Garage Facilities........................... 29
SCHEDULE 1.1(d)(i) Description of the Land................................. 30
SCHEDULE 1.1(d)(iv) Description of Personal Property and
Equipment at the Landfill................................................ 31
SCHEDULE 1.3 Specified Retained Items...................................... 32
SCHEDULE 5.1(b) Notices of Violations...................................... 33
SCHEDULE 5.1(g) Pending or Threatened Claims............................... 34
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INDEX OF DEFINITIONS
TERM SECTION
Agreement..............................................Introductory Paragraphs
Airspace Tonnage...........................................................1.2
Assumed Liabilities..........................................................3
Brazoria Recycling.....................................Introductory Paragraphs
Buyer..................................................Introductory Paragraphs
Cash Payment...............................................................2.3
Closing....................................................................4.1
Closing Date...............................................................4.1
Down Payment...............................................................2.2
Final Judgment..........................................................5.1(j)
Front-End Customer Contracts.......................................1.1(a)(iii)
Front-End Trucks....................................................1.1(a)(ii)
Grantors...................................................................1.2
Hauling................................................Introductory Paragraphs
Hazardous Materials.................................................5.1(i)(iv)
Houston Commercial Business..........................................1.1(a)(i)
Including................................................................11.13
Indemnified Party.........................................................10.3
Indemnifying Party........................................................10.3
Land.................................................................1.1(d)(i)
Landfill............................................................1.1(d)(ii)
Losses....................................................................10.1
Notice....................................................................10.3
Permit..............................................................1.1(d)(ii)
Permit Application.................................................1.1(d)(iii)
Rearload Customer Contracts........................................1.1(b)(iii)
Rearload Business.......................................................1.1(b)
Rearload Trucks.....................................................1.1(b)(ii)
Records..............................................................1.1(a)(v)
Retained Items.............................................................1.3
S&J Landfill...........................................Introductory Paragraphs
Sanifill...............................................Introductory Paragraphs
Securities Act..........................................................6.1(d)
Sellers................................................Introductory Paragraphs
Subject Assets.............................................................1.1
Sunray.................................................Introductory Paragraphs
Target Date................................................................2.6
Termination Notice......................................................7.1(b)
Third Person..............................................................10.3
TNRCC...................................................................1.1(d)
Transfer Taxes...........................................................11.10
Transferred Corporations...................................................2.5
Transferred Employee....................................................9.3(b)
Warrants...................................................................2.4
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PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (the "AGREEMENT") is executed and
delivered as of the third day of December, 1996, between TransAmerican Waste
Industries, Inc., a Delaware corporation ("BUYER"), and Sanifill, Inc., a
Delaware corporation ("SANIFILL"), Sanifill of Texas Hauling, Inc., a Texas
corporation ("HAULING"), Sunray Services, Inc., a Delaware corporation
("SUNRAY"), S&J Landfill Limited Partnership, a limited partnership formed under
Texas law ("S&J LANDFILL") and Brazoria County Recycling Center, Inc., a Texas
corporation ("BRAZORIA RECYCLING"), (Sanifill, Hauling, Sunray, S&J Landfill and
Brazoria Recycling are collectively referred to herein as "SELLERS").
P R E M I S E S:
This Agreement contemplates a transaction in which Buyer will purchase (a)
certain front-end loader assets and businesses in the Houston area specified
below, (b) the rearload assets and the rearload business in the Channelview area
specified below, (c) certain garage and office facilities, including the real
property and improvements thereto, as specified below and (d) the Sunray Type IV
landfill specified below, in each case through various asset sales or the
acquisition of all of the capital stock of Hauling, and in addition S&J Landfill
and Brazoria Recycling will grant to Buyer the right to dispose, over a ten-year
period, up to a total of 2,000,000 tons of municipal solid waste at the Baytown
and Angleton Type I landfills specified below.
Now, therefore, in consideration of the mutual promises and covenants
herein contained and other good and valuable consideration, received to the full
satisfaction of each of them, the parties hereby agree as follows:
A G R E E M E N T:
ARTICLE 1.
SALE OF STOCK AND/OR ASSETS
SECTION 1.1 DESCRIPTION OF ASSETS. In accordance with the terms of this
Agreement, Buyer will purchase all of the capital stock of Hauling from Sanifill
at the Closing. Buyer may designate one or more of its wholly-owned subsidiaries
to purchase assets or stock hereunder provided that Buyer shall remain liable in
all respects hereunder and under all agreements and instruments executed in
connection herewith. Prior to the Closing, Hauling will have transferred and
conveyed to other parties all of its assets, properties and operations other
than those listed in SUBSECTIONS (A), (B), (C) AND (D) below, to the end that
from and after the Closing the assets, properties and operations of Hauling
shall consist only of the items specified in this SECTION 1.1 (collectively, the
"SUBJECT ASSETS"):
(a) HOUSTON AREA FRONT-END LOADER ASSETS. The following front-end
loader waste collection, transportation, hauling and disposal business
assets:
(i) all of the containers owned and used by Hauling in
conducting the Houston Commercial Business as described in SCHEDULE
1.1(A)(I). As used herein, the term "HOUSTON COMMERCIAL BUSINESS"
means the front-end loader commercial business currently conducted
by Hauling in Harris, Chambers, Brazoria, Fort Bend, Montgomery,
Walker and Galveston Counties in the State of Texas;
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(ii) the front-end loader trucks, and all attachments,
accessories and materials handling equipment now located in or on
such motor vehicles, as described in SCHEDULE 1.1(A)(II) (the
"FRONT-END TRUCKS");
(iii) all contractual rights of Hauling with Hauling's
customers (whether oral or in writing), and all customer accounts,
in each case attributable to the Houston Commercial Business (the
"FRONT-END CUSTOMER CONTRACTS"), as Buyer has had access to or have
otherwise been made available to Buyer;
(iv) all of Hauling's inventory of parts, tires and
accessories of every kind, nature and description used or held for
use in the Houston Commercial Business; and
(v) the books and records, excluding original copies of the
tax returns and business records that are Retained Items set forth
in SECTION 1.3(B) (the "RECORDS"), that primarily relate to the
Houston Commercial Business.
(b) CHANNELVIEW REARLOAD ASSETS. The rearload residential waste
collection, transportation, hauling and disposal business presently served
by the Channelview garage located at 999 Ashland in Channelview, Texas
(the "REARLOAD BUSINESS"), including:
(i) all of the containers, carts and compactors used or for
use in the Rearload Business as described in SCHEDULE 1.1(B)(I);
(ii) the rearload trucks, and all attachments, accessories and
materials handling equipment now located in or on such motor
vehicles (the "REARLOAD TRUCKS"), as described in SCHEDULE
1.1(B)(II);
(iii) all contractual rights of Hauling with Hauling's
customers (whether oral or in writing), and all customer accounts,
of the Rearload Business (the "REARLOAD CUSTOMER CONTRACTS"), as
Buyer has had access to or have otherwise been made available to
Buyer;
(iv) all of Hauling's inventory of parts, tires and
accessories of every kind, nature and description used or held for
use in the Rearload Business; and
(v) the Records that primarily relate to the Rearload
Business.
(c) GARAGE FACILITIES. The following garage facilities, including
the real property and improvements thereon, as further described and
defined on SCHEDULE 1.1(C):
(i) the Channelview Facility located at 999 Ashland in
Channelview, Texas; and
(ii) the Tanner Road Facility located at 10554 Tanner Road in
Houston, Texas.
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(d) SUNRAY TYPE IV LANDFILL:
(i) the real property described on SCHEDULE 1.1(D)(I) attached
hereto (the "LAND") and all improvements on and all fixtures related
to the Land;
(ii) the Permit No. MSW-1849, being a State of Texas Permit
for a Type IV landfill ("PERMIT") authorizing and permitting the
operation of a Type IV landfill (the "LANDFILL") on the Land;
(iii) the Permit Amendment Application 1849A for an additional
19.99 acres adjacent to the currently permitted area (the "PERMIT
APPLICATION");
(iv) all personal property and equipment located at the
Landfill used or held for use in the operation of the Landfill and
listed on SCHEDULE 1.1(D)(IV);
(v) all engineering and architectural drawings, plans and
designs owned by Sunray relating to the Landfill; and
(vi) the Records that primarily relate to the Permit and the
operations at the Landfill; PROVIDED, HOWEVER, that Sellers shall
retain possession of, or retain copies of or otherwise have access
to, all such Records, together with all items referred to in
SECTIONS 1.1(D)(III) AND 1.1(D)(V) above to the extent necessary to
discharge its obligations pursuant to SECTION 9.3(A) hereof.
In the event that the transactions set forth herein can be accomplished more
expeditiously or at lower cost by means of one or more sales of assets directly
to Buyer (or any subsidiary designated by Buyer), then in such event certain, or
all, of the Subject Assets may be transferred to Buyer by means of such asset
sale. Furthermore, to the extent certain of the Subject Assets are currently
owned by a subsidiary of Sanifill other than Hauling, Sellers may at their
option transfer all assets and operations other than the Subject Assets out of
such subsidiary and thereafter transfer the stock of such subsidiary to Buyer on
the Closing Date. In addition, in the event that the Texas Natural Resource
Conservation Commission (the "TNRCC") has not approved the transfer of the
Permit necessary to give effect to the transactions set forth herein on or
before December 31, 1996, then the parties will enter into a management and
operating agreement or similar arrangement to permit Buyer to operate the
Landfill and receive the revenues therefrom, and providing that Buyer will pay
all costs in connection with such operation, and indemnify and hold Sellers
harmless in respect of such operation.
SECTION 1.2 BAYTOWN/ANGLETON AIRSPACE ASSETS. S&J Landfill and Brazoria
Recycling (collectively referred to as "GRANTORS") hereby grant to Buyer the
right to dispose, over a ten-year period beginning on the Closing Date, and
terminating on the tenth anniversary of the Closing Date, up to a total of
2,000,000 tons of municipal solid waste (the "AIRSPACE TONNAGE") in amounts not
to exceed a total of 270,000 tons per year in the aggregate at the Hazelwood
Type I landfill located at 4971 Tri-City Beach Road in Baytown, Texas (Permit
No. 1535) and the Brazoria County Type I landfill located at 10310 FM 523 in
Angleton, Texas (Permit No. 1539). Buyer's right to dispose or deliver waste,
and Grantors' obligation to accept such waste or deliveries, as set forth in
this SECTION 1.2 shall be suspended, in Grantors' sole discretion, in the event
that Buyer is not in compliance with Grantors' non-discriminatory, uniform rules
and procedures regarding the use of the above landfills or is at least
forty-five days delinquent in payment of any invoices for the use of such
landfills (unless there is a bona fide dispute over the payment of such invoiced
amounts, provided that any non-disputed amounts are paid without
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delinquency). In connection with the conversion of yards to tons and vice-versa
for purposes of this SECTION 1.2, Buyer and Sellers agree to implement a
conversion rate of (a) 3.5:1 yards to tons in respect of commercial waste and
(b) 2.5:1 yards to tons in respect of residential waste.
(a) Buyer will pay to Grantors, as applicable, for the disposal or
delivery of such municipal solid waste the following fees for the periods
indicated:
(i) an initial fee of $4.87 per yard of waste disposed at the
Baytown or Angleton Type I landfills; or
(ii) an initial fee of $23.08 per ton of waste delivered to
the Sam Houston Transfer Station (Permit No. 1471) or the WRS
Transfer Station (Permit No. 1483).
Buyer will be invoiced for such disposal and deliveries in the ordinary
course of Grantors' business; PROVIDED, HOWEVER, that in no event will
such billing be done more frequently than on a monthly basis.
(b) Buyer shall further pay the Grantors, not later than 30 days
after receipt of invoices therefor, the following additional costs
incurred by them in connection with operation of such landfills and their
receipt of waste as part of the Airspace Tonnage:
(i) any tax, fee, levy or charge imposed by any government or
regulatory authority, including without limitation any increases in
state fees imposed on the disposal of waste, and any increases in
host fees or similar fees;
(ii) increases in costs of doing business resulting from
revised laws, ordinances, regulations or other legal requirements,
if any, to be borne by Grantors hereunder; and
(iii) each year from and after the first anniversary of the
Agreement increases in fees as will give effect to an annual
consumer price index price adjustment (based on the fee in effect at
the beginning of the year net of taxes) as determined by the
Consumer Price Index for All Urban Consumers, U.S. City Average -
All Items, as published by the U.S. Department of Labor, Bureau of
Labor Statistics.
Grantors shall provide Buyer with reasonable justification for the basis
of the increased costs specified above, including the manner in which the
amount of such increase is calculated; and in the case of any increase
pursuant to SECTION 1.2(B)(II) above, shall spread such increased costs
uniformly over the available airspace affected by the increased costs,
subject to any non-uniform adjustments that may reasonably be made to
account for the economic impact of the specific changes involved.
(c) Notwithstanding the foregoing provisions of SECTIONS 1.2(A) AND
1.2(B), in respect of waste disposed of by Buyer at Grantors' landfills
pursuant to the above grant, Buyer shall be charged a disposal fee equal
to the lower of (i) the fee set forth in SECTIONS 1.2(A) AND 1.2(B) above;
(ii) Grantors' then-current internal gate rate for the applicable landfill
at the time of disposal; or (iii) the lowest rate charged by Grantors at
the time of disposal to any unaffiliated third party for disposal at the
applicable landfill. The provisions of this SUBSECTION (C) shall not apply
to waste deposited at a transfer station.
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(d) all or any portion of the Airspace Tonnage may be assigned by
Buyer at any time from and after the Closing Date and from time to time,
provided the following procedures are followed in connection with such
assignment:
(i) Buyer will give Sellers written notice of any proposed
assignment, including information reasonably identifying the
proposed assignee, at least ten business days prior to the effective
date of any such assignment;
(ii) such assignment will be void and of no effect, and
Sellers shall be under no obligation to give effect to such
assignment, in the event that within five (5) business days of their
receipt of a notice of proposed transfer Sellers notify Buyer in
writing that Sellers do not consent to such transfer on the grounds
that, based on prior actions of the proposed assignee, Sellers
reasonably and in good faith believe the assignee will not comply
with its obligations pursuant to the terms of this Agreement; and
(iii) no such assignment will become effective unless and
until Buyer and its assignee have executed and delivered to Buyer an
agreement in the form attached hereto as EXHIBIT 1.2(D)(III),
pursuant to which, among other matters, such assignee agrees to be
bound by the terms of this Agreement regarding the Airspace Tonnage.
SECTION 1.3 RETAINED ITEMS. Anything in SECTIONS 1.1 AND 1.2 to the
contrary notwithstanding, there shall be excluded from the Subject Assets the
following items (the "RETAINED ITEMS"):
(a) all cash and cash equivalent instruments;
(b) Sellers' tax returns and any business records which might
reasonably be required by Sellers in preparation of Sellers' tax returns,
provided that Buyer shall be provided copies thereof or given reasonable
access thereto;
(c) any and all rights to tax refunds and credits;
(d) any intellectual property rights and proprietary processes and
technology of Sellers, including without limitation all trademarks and the
use of their business names;
(e) all accounts receivable for services performed by Sellers on or
prior to the Closing Date in respect of the Subject Assets and the
businesses and operations primarily related thereto; and
(f) those certain items, including the specified office furniture,
listed on SCHEDULE 1.2 hereto.
ARTICLE 2.
PURCHASE PRICE
SECTION 2.1 CONSIDERATION. Buyer shall pay to Sellers for the Subject
Assets the Down Payment, the Cash Payment (in each case as defined below) and
the grant of warrants (set forth below). Such payments, together with the
obligations undertaken by Buyer pursuant hereto (including its
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obligations in respect of the Assumed Liabilities), constitute the consideration
to be paid by Buyer hereunder.
SECTION 2.2 DOWN PAYMENT. Upon execution of this Agreement, Buyer has paid
Sellers $1,000,000 by wire transfer or other payment in immediately available
funds to Sellers' designated account as earnest money and as a nonrefundable
down payment (the "DOWN PAYMENT") toward payment of the purchase price
hereunder. The Down Payment will be nonrefundable except as specified in SECTION
7.2 below.
SECTION 2.3 CASH PAYMENT. At the Closing, Buyer will pay to Sellers Twelve
Million Six Hundred Thousand and No/100 Dollars ($12,600,000) (the "CASH
PAYMENT") by wire transfer of immediately available funds to Sellers' designated
account(s) on the Closing Date. Such Cash Payment is in addition to the Down
Payment paid by Buyer to Sellers on December 3, 1996.
SECTION 2.4 GRANT OF WARRANTS. At the Closing, Buyer will grant to Sellers
warrants for the purchase of 1,500,000 shares of Buyer's common stock at an
exercise price of $1.50 per share (the "WARRANTS"). The Warrants shall provide
Sellers customary anti-dilution protection in respect of the underlying common
stock, such that Sellers shall be protected from dilution resulting from stock
splits, stock dividends, recapitalizations, mergers and similar corporate
actions. The Warrants shall be exercisable for a period of at least five (5)
years from the Closing Date, and shall be transferrable, together with the
registration rights granted pursuant to SECTION 9.2(C) hereof.
SECTION 2.5 POST-CLOSING ADJUSTMENT. In the event the transactions set
forth herein are accomplished in whole or in part as a sale of stock, the
following provisions shall apply as to the corporations sold to Buyer hereunder
(the "TRANSFERRED CORPORATIONS").
(a) CALCULATION OF NET WORKING CAPITAL ON THE CLOSING DATE. On or
before the date that is forty-five (45) days after the Closing Date,
Sellers' accountants shall compute in good faith the amount of net working
capital of the Transferred Corporations as of the Closing Date (but
without taking into account any termination of leases, notes, consulting
agreements or other transactions effected in order to accomplish Sellers'
sale of the capital stock of the Transferred Corporations, if applicable;
PROVIDED HOWEVER, that any tax accruals in respect of such transactions
will be taken into account) in accordance with GAAP, and shall provide
Buyer a summary reflecting how such computations were made. Buyer shall
review such computations and deliver any objections to Sellers within ten
(10) days of receipt whereupon the parties shall in good faith resolve any
disputes.
(b) PAYMENT OF ADJUSTMENT AMOUNT. If the net working capital as of
the Closing Date is (i) less than the zero, then Sellers, within five
business days of such computation, shall pay Buyer, by check, an amount
equal to the negative amount of net working capital at the Closing Date or
(ii) greater than the zero, then Buyer, within five business days of such
computation, shall pay Sellers, by check, an amount equal to the positive
amount of net working capital at the Closing Date.
SECTION 2.6 CONTINGENCY IN RESPECT OF EXPANSION PERMIT. In the event that
it is determined that the TNRCC has denied approval of the application to expand
the Permit on substantially the terms set forth in the Permit Application, or
has denied its approval to transfer such expansion permit to Buyer as set forth
in SECTION 9.3(A), and such denials have become final and subject to no further
appeal, then (a) Sellers shall pay to Buyer $1,575,000 by corporate check or by
wire transfer to Buyer's designated
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account(s); (b) Sellers will not be obligated to convey to Buyer the portion of
the Land subject to the Permit Application; and (c) the foregoing contingent
payment shall constitute the sole and exclusive remedy of Buyer for such failure
to expand the Permit and provide for its transfer to Buyer. In the event that
the TNRCC grants the Permit Application for a permitted airspace capacity of
less than 2,750,000 cubic yards, Sellers shall pay to Buyer by corporate check
or wire transfer to Buyer's designated account an amount equal to the product
obtained by multiplying $1,575,000 by a fraction, the numerator of which is the
difference obtained by subtracting the number of cubic yards of airspace
permitted for the expansion permit from 2,990,000 and the denominator of which
is 2,990,000.
In addition to the foregoing, in the event that the Permit Application has
not been approved by the TNRCC by the later of (x) the date the Landfill is
completely filled or (y) September 30, 1996 (the "TARGET DATE") then Sellers
shall on the Target Date deposit the $1,575,000 contingent payment into escrow.
Such funds shall be held by the escrow agent until the earlier to occur of (a)
such time as the TNRCC has denied approval of the application to expand the
Permit, or has denied its approval to transfer such expansion permit to Buyer,
at which time such payment shall be delivered to Buyer or (b) such time as the
Permit Application is approved by the TNRCC, at which time such payment shall be
returned to Sellers. Buyer shall be paid all interest accrued by the $1,575,000
contingent payment while such payment is held by the escrow agent.
SECTION 2.7 ACCOUNTS RECEIVABLE; PREPAID SERVICES. The provisions of this
SECTION 2.7 shall apply to any assets and operations that are transferred by
asset sale rather than by stock sale. All accounts receivable of Sellers for
service through the Closing Date and all preceding months are retained items of
Sellers. Accordingly, Buyer shall have no obligation whatsoever to Sellers in
connection with such accounts receivable, nor shall Buyer in any way have any
responsibility for collecting such accounts receivable. In the event, however,
that Buyer receives payments on Sellers' accounts receivable that are clearly
marked to indicate that they relate to Sellers' accounts receivable, Buyer shall
promptly remit such payments to Sellers. In the event either party receives
payments on accounts receivable with respect to periods both before and after
the Closing Date, such payments shall be divided pro rata between Sellers and
Buyer to conform to the division of accounts receivable set forth in this
Section, and each party shall promptly remit to the other any portion of such
payments due to the other party pursuant thereto. In the event that,
notwithstanding Sellers' customary practices, Sellers receive any prepayment for
services to be rendered by Buyer after the Closing Date in respect of the
Subject Assets and the businesses and operations related thereto, Sellers shall
promptly remit to Buyer all such prepayments to the extent they are attributable
to such post-Closing services.
ARTICLE 3.
ASSUMPTION OF OBLIGATIONS
Pursuant to this Agreement, and as part of the consideration paid by Buyer
hereunder, Buyer shall assume all liabilities, duties and obligations of every
kind whatsoever of Sellers (a) relative to the ownership or operation of the
Subject Assets from and after the Closing Date, including without limitation (i)
Hauling's obligations pursuant to the express terms of the written Front-End
Customer Contracts and Hauling's obligations pursuant to the express terms of
the Rearload Customer Contracts and (ii) the written summaries of oral Front-End
Customer Contracts provided by Hauling to Buyer and the written summaries of
oral Rearload Customer Contracts provided by Hauling to Buyer, (b) relative to
the condition of the Subject Assets existing as of the Closing Date and (c)
before, on or after the Closing Date (except to the extent Sellers have
expressly agreed hereunder to indemnify Buyer in respect of such matters)
relative to (i) the status of title to any real property or real property
interests, (ii) any matter or
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circumstance relating to environmental laws, the release of materials into the
environment or protection of the environment or health, regardless in each case
whether known or unknown and (iii) any loss caused relative to or arising from
any materials deposited as a part of the Airspace Tonnage which materials are
not permitted to be accepted by the applicable permits relative to such Airspace
Tonnage or are otherwise deposited in violation of any applicable laws (the
foregoing referred to as the "ASSUMED LIABILITIES").
ARTICLE 4.
CLOSING
SECTION 4.1 TIME AND PLACE OF CLOSING. The closing of the transactions set
forth herein (the "CLOSING") shall take place at the offices of Mayor, Day,
Caldwell & Keeton, L.L.P., 700 Louisiana, Suite 1900, Houston, Texas 77002, on
December 31, 1996 or at such earlier date and time as the closing conditions
specified in ARTICLE 8 have been satisfied (the "CLOSING DATE"), and shall be
effective for all purposes as of 12:01 a.m., local time, on the Closing Date.
SECTION 4.2 DELIVERIES BY SELLERS. At the Closing, Sellers shall deliver
to Buyer, each as applicable:
(a) a bill of sale conveying, selling, transferring and assigning to
Buyer the Subject Assets, as applicable in event of one or more asset
sales hereunder, and assigning to Buyer Sellers' rights in any contracts
that may be transferred hereunder by asset sale;
(b) special warranty deeds conveying the Channelview and Tanner Road
Facilities, including real property and improvements thereto, to Buyer;
(c) motor vehicle certificates of title and registrations to the
Front-End Trucks, the Rearload Trucks and any certificated vehicles
located on the Land and used in the operation of the Landfill, properly
endorsed to Buyer, as applicable in the event of one or more asset sales
hereunder;
(d) a special warranty deed conveying the Land, and all improvements
on and all fixtures related to the Land, to Buyer, in the event such Land
is transferred by asset sale; PROVIDED, HOWEVER, that the portion of the
Land subject to the Permit Application need not be conveyed to Buyer until
such time as the Permit Application has been granted;
(e) title insurance policies covering the Land, the Channelview
Facility and the Tanner Road Facility;
(f) the stock certificates of Hauling, endorsed in blank or
accompanied by duly executed assignment documents;
(g) certificates of good standing for each Seller organized as a
corporation; and/or
(h) an officer's certificate pursuant to SECTION 8.3.
SECTION 4.3 DELIVERIES BY BUYER. At the Closing, Buyer shall deliver to
Sellers:
(a) the Cash Payment;
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(b) the Warrants;
(c) an assumption agreement evidencing Buyer's assumption of the
Assumed Liabilities; and
(d) an officer's certificate pursuant to SECTION 8.2.
ARTICLE 5.
REPRESENTATIONS AND WARRANTIES OF SELLERS
SECTION 5.1 REPRESENTATIONS AND WARRANTIES. Sellers represent and warrant
to Buyer that:
(a) AUTHORITY. Sellers have full power and capacity, are under no
legal restraint, and have all necessary authority to enter into this
Agreement, perform Sellers' obligations hereunder and consummate the
transactions contemplated hereby. Sellers (other than S&J Landfill) are
corporations duly organized and constituted and in good standing under the
laws of their respective states of incorporation. S&J Landfill is a
limited partnership duly formed under the Texas Revised Uniform Limited
Partnership Act. The execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby and the compliance by
Sellers with the terms of this Agreement do not and will not conflict with
or result in a breach of any terms of, or constitute a default under,
their respective Articles of Incorporation or Bylaws (or, in the case of
S&J Landfill, its Agreement of Limited Partnership). This Agreement
constitutes a valid obligation of Sellers enforceable in accordance with
its terms except as limited by bankruptcy, insolvency, reorganization or
other such laws concerning the rights of creditors.
(b) COMPLIANCE WITH LAW. Except as disclosed in SCHEDULE 5.1(B),
since June 1, 1993, Sellers have not received any notice alleging any
violation of applicable federal, state or local laws, statutes,
ordinances, permits, licenses, orders, approvals, variances, rules or
regulations or judicial or administrative decisions, except for
insignificant instances of non-compliance that would not, individually or
in the aggregate, have a material adverse effect upon the Subject Assets,
the Houston Commercial Business or the Rearload Business.
(c) CONTAINERS, ETC. Listed on SCHEDULE 1.1(A)(I) hereto is a
complete and accurate list of all containers owned by Hauling with respect
to the Houston Commercial Business. Listed on SCHEDULE 1.1(B)(I) hereto is
a complete and accurate list of all containers, carts and compactors owned
by Hauling with respect to the Rearload Business.
(d) FRONT-END AND REARLOAD TRUCKS. Listed on SCHEDULE 1.1(A)(II)
hereto is a complete and accurate list of all Front-End Trucks used in the
Houston Commercial Business and listed on SCHEDULE 1.1(B)(II) hereto is a
complete and accurate list of all Rearload Trucks used in the Rearload
Business.
(e) CUSTOMER CONTRACTS. A complete and accurate set of all Front-End
Customer Contracts and Rearload Customer Contracts has been delivered to
Buyer simultaneously with the execution of this Agreement. Hauling is
currently providing services pursuant to each Front-End Customer Contract
and Hauling is currently providing services pursuant to each Rearload
Customer Contract. As to each Rearload Customer Contract, either (i) no
approval of the customer is needed to give effect to the transactions set
forth herein, (ii) the approval of the
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customer to give effect to the transactions set forth herein has been
obtained or (iii) adequate provision has been made to hold Buyer harmless
in respect of any Rearload Customer Contract as to which such approval is
required and has not been obtained (and in the event such provision
involves Sellers' retention of the obligation to perform such contract,
Sellers shall retain the motor vehicles and the equipment dedicated to
performing such contract, and deduct the net book value thereof from the
purchase price otherwise payable in respect of the Subject Assets).
(f) TITLE TO THE ASSETS. Sellers have good and marketable title to
the Subject Assets, as applicable, free and clear of all liens and
security interests. By virtue of the grant, conveyance, sale, transfer,
and assignment of the Subject Assets hereunder, Buyer shall receive good
and marketable title (or in the case of Subject Assets consisting of real
estate, good and indefeasible title) to the Subject Assets free and clear
of all liens and security interests.
(g) LITIGATION. Except as set forth on SCHEDULE 5.1(G) hereof, there
is no claim, litigation, action, suit or proceeding, administrative or
judicial, pending or, to Sellers' knowledge threatened, against Sellers,
or involving the Subject Assets, the Houston Commercial Business or the
Rearload Business or the transactions set forth herein, at law or in
equity, before any federal, state or local court or regulatory agency, or
other governmental authority. Except as set forth on such Schedule,
Sellers have received no notice of any of the above.
(h) TAX MATTERS. Sellers have filed all income tax returns that they
were required to file, and have paid all income taxes shown thereon as
owing, except where the failure to file income tax returns or to pay
income taxes would not have a material adverse effect on the financial
condition of Sellers taken as a whole. Sellers have paid, or have made
provision on their books for payment of, all taxes incurred in the
operation of the Subject Assets through the Closing Date. Sellers are not
a party to any income tax allocation or sharing agreement.
(i) THE LANDFILL. To Sellers' knowledge, the following statements
are true in all material respects:
(i) The Land is, and at all times during its operation has
been, fully licensed, permitted and authorized as a State of Texas
Type IV landfill under applicable laws;
(ii) As of the date hereof, Sellers are not in default under
any applicable laws or under any order of any court or governmental
administrative body having jurisdiction over Sellers, the Land or
the Permit, or any operations or activities thereon or thereunder,
and which default would have a material adverse effect on Sellers,
the Land or the Permit;
(iii) As of the date hereof, there are no claims, actions,
suits or proceedings, at law or in equity, pending or threatened,
against or directly involving Sellers, before any court or
administrative body, and which claims, actions, suits or proceedings
directly involve the Land, the Permit or the Landfill, and no notice
of any such claim, action, suit or proceeding, whether pending or
threatened, has been received by Sellers. Furthermore, there are no
actions, suits or proceedings pending against Sellers, or threatened
to be brought against Sellers, in any court or before any
administrative agency or authority which, if adversely determined,
would (A) adversely affect the ability of Sellers or Buyer to
operate the Landfill in the manner in which it is currently
operated; (B) adversely affect the ability of Sellers to perform
their respective obligations hereunder
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and in connection with the transactions contemplated hereby or (C)
result in any liability being imposed on Buyer or any lien, charge
or encumbrance being imposed on the Landfill;
(iv) Except for small quantities of materials and substances
commonly contained in municipal solid waste and non-hazardous
industrial solid waste, Sellers have never knowingly owned, leased,
had an interest in, generated, transported, handled, recycled,
reclaimed, disposed of, or contracted for the disposal of, hazardous
wastes, hazardous substances, toxic wastes or substances, or
radioactive waste, as those terms are defined by applicable laws
regarding environmental matters (collectively, "HAZARDOUS
MATERIALS");
(v) As of the date hereof, the Land does not contain any
underground or above-ground storage tanks or transformers containing
Hazardous Materials, petroleum products or wastes or other hazardous
substances regulated by 40 CFR 280 or other laws applicable to
underground or above-ground storage tanks or transformers;
(vi) As of the date hereof, Sellers have not received any type
of summons or written notice from the TNRCC, or any other local,
state or federal governmental entity, in regard to any alleged
violation by Sellers of that part or portion of the applicable laws
which would apply to the receipt and/or storage of any Hazardous
Materials by Sellers at the Landfill; and
(vii) As of the date hereof, there has been no storage of
disposable materials or dirt on the Land by Sellers that would
violate the horizontal or vertical storage restrictions imposed upon
the Landfill by the Permit.
(j) THE FINAL JUDGMENT. Sellers have satisfied, and will in all
respects satisfy and comply with, all obligations and requirements
applicable to Sellers in respect of Buyer under the Final Judgment dated
as of September 3, 1996 entered in the suit styled UNITED STATES OF
AMERICA, ET. AL. V. USA WASTE SERVICES, INC., ET. AL. Civil Action No.
962031 in the United States District Court for the District of Columbia
(the "FINAL JUDGMENT").
(k) DISCLAIMER REGARDING ASSETS. EXCEPT AS OTHERWISE EXPRESSLY
PROVIDED IN THIS AGREEMENT, BUYER ACKNOWLEDGES THAT SELLERS HAVE NOT MADE,
AND SELLERS HEREBY EXPRESSLY DISCLAIM AND NEGATE, ANY REPRESENTATION OR
WARRANTY, EXPRESS OR IMPLIED, RELATING TO THE CONDITION OF THE FACILITIES,
REALTY RIGHTS, IMMOVABLE PROPERTY, MOVABLE PROPERTY, EQUIPMENT, INVENTORY,
MACHINERY, FIXTURES AND PERSONAL PROPERTY CONSTITUTING PART OF THE SUBJECT
ASSETS (INCLUDING, WITHOUT LIMITATION, (a) ANY IMPLIED OR EXPRESS WARRANTY
OF MERCHANTABILITY, (b) ANY IMPLIED OR EXPRESS WARRANTY OF FITNESS FOR A
PARTICULAR PURPOSE, (c) ANY IMPLIED OR EXPRESS WARRANTY OF CONFORMITY TO
MODELS OR SAMPLES OF MATERIALS, (d) ANY RIGHTS OF BUYER UNDER APPROPRIATE
STATUTES TO CLAIM DIMINUTION OF CONSIDERATION OR RETURN OF THE PURCHASE
PRICE, (e) ANY IMPLIED OR EXPRESS WARRANTY OF FREEDOM FROM PATENT OR
TRADEMARK INFRINGEMENT, (f) ANY AND ALL IMPLIED WARRANTIES EXISTING UNDER
APPLICABLE LAW NOW OR HEREAFTER IN EFFECT, AND (g) ANY IMPLIED OR
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EXPRESS WARRANTY REGARDING ENVIRONMENTAL LAWS, THE RELEASE OF MATERIALS
INTO THE ENVIRONMENT OR PROTECTION OF THE ENVIRONMENT OR HEALTH), IT BEING
THE EXPRESS INTENTION OF BUYER AND SELLERS THAT (EXCEPT TO THE EXTENT
EXPRESSLY PROVIDED IN THIS AGREEMENT) THE FACILITIES, REALTY RIGHTS,
IMMOVABLE PROPERTY, MOVABLE PROPERTY, EQUIPMENT, INVENTORY, MACHINERY,
FIXTURES AND PERSONAL PROPERTY CONSTITUTING PART OF THE SUBJECT ASSETS
SHALL BE CONVEYED TO BUYER "AS IS" "WHERE IS" AND IN THEIR PRESENT
CONDITION AND STATE OF REPAIR AND BUYER REPRESENTS TO SELLERS THAT BUYER
HAS MADE OR CAUSED TO BE MADE SUCH INSPECTIONS WITH RESPECT TO THE
FACILITIES, REALTY RIGHTS, IMMOVABLE PROPERTY, MOVABLE PROPERTY,
EQUIPMENT, INVENTORY, MACHINERY, FIXTURES AND PERSONAL PROPERTY
CONSTITUTING PART OF THE SUBJECT ASSETS AS BUYER DEEMS APPROPRIATE AND
BUYER WILL ACCEPT THE FACILITIES, REALTY RIGHTS, IMMOVABLE PROPERTY,
MOVABLE PROPERTY, EQUIPMENT, INVENTORY, MACHINERY, FIXTURES AND PERSONAL
PROPERTY CONSTITUTING PART OF THE SUBJECT ASSETS "AS IS" "WHERE IS," IN
THEIR PRESENT CONDITION AND STATE OF REPAIR. THE PARTIES AGREE THAT THIS
PARAGRAPH CONSTITUTES A CONSPICUOUS LEGEND.
SECTION 5.2 SURVIVAL. Each of the representations and warranties set forth
in this ARTICLE 5 or elsewhere in this Agreement shall survive Closing (unless
Buyer knew or had reason to know of any misrepresentation or breach of warranty
at the time of Closing) and the transfer of the Subject Assets and shall remain
in effect for a period of one year thereafter.
ARTICLE 6.
REPRESENTATIONS AND WARRANTIES OF BUYER
SECTION 6.1 REPRESENTATIONS AND WARRANTIES. Buyer represents and warrants
to Sellers that:
(a) CORPORATE ORGANIZATION. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware.
(b) AUTHORIZATION. Buyer has all requisite corporate power and
corporate authority to enter into this agreement, perform its obligations
hereunder and consummate the transactions contemplated hereby. The
execution and delivery of this Agreement, the consummation of the
transactions contemplated hereby and the compliance by Buyer with the
terms of this Agreement do not and will not conflict with or result in a
breach of any terms of, or constitute a default under, Buyer's Articles of
Incorporation or Bylaws or, in any material respect, any material
agreement or instrument to which Buyer is a party or by which it is bound.
All necessary corporate action has been taken by Buyer with respect to the
execution and delivery of this Agreement, and this Agreement constitutes a
valid obligation of Buyer enforceable in accordance with its terms except
as limited by bankruptcy, insolvency, reorganization or other such laws
concerning the rights of creditors.
(c) NONCONTRAVENTION. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby
(including the assignments and assumptions contemplated hereby), will
violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
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governmental agency, or court to which Buyer is subject or any provision
of its Articles of Incorporation or Bylaws. Buyer does not need to give
any notice to, make any filing with, or obtain any authorization, consent,
or approval of any government or governmental agency in order for the
parties to consummate the transactions contemplated by this Agreement
(including the assignments and assumptions contemplated hereby).
(d) INVESTMENT INTENT. In connection with the purchase of the
capital stock of Hauling and any subsidiary of Hauling, by Buyer, if
applicable, Buyer hereby represents and warrants that the securities to be
acquired by Buyer pursuant to this Agreement are being acquired by Buyer
for Buyer's own account, not as a nominee or agent, and without a view to
resale or other distribution within the meaning of the Securities Act of
1933 (the "SECURITIES ACT") and the rules and regulations thereunder, and
that Buyer will not distribute any of such securities in violation of the
Securities Act.
(e) AVAILABLE FUNDS. Buyer has sufficient funds available to pay the
Cash Payment on the Closing Date.
SECTION 6.2 SURVIVAL. Each of the representations and warranties set forth
in this ARTICLE 6 or elsewhere in this Agreement shall survive the Closing and
the transfer of the Subject Assets and shall remain in effect for a period of
one year thereafter.
ARTICLE 7.
TERMINATION
SECTION 7.1 TERMINATION. This Agreement may be terminated at any time
prior to the Closing Date:
(a) by the written agreement of Buyer and Sellers;
(b) by either Sellers or Buyer by written notice to the other (a
"TERMINATION NOTICE") if (i) the U.S. Department of Justice makes an
objection to this sale pursuant to the Final Judgment or (ii) the Closing
has failed to occur on or before 5:00 p.m. Houston time on December 31,
1996, (or such later date as Sellers and Buyer shall agree in writing),
except that neither Buyer nor Sellers shall terminate this Agreement by
delivery of a Termination Notice while such party is in breach or default
of its obligations hereunder;
(c) by Buyer by written notice to Sellers if the representations and
warranties of Sellers shall not have been true and correct in all respects
(in the case of any representation or warranty containing any materiality
qualification) or in all material respects (in the case of any
representation or warranty without any materiality qualification) as of
the date when made, or Sellers have breached in a material respect their
covenants hereunder; or
(d) by Sellers by written notice to Buyer if the representations and
warranties of Buyer shall not have been true and correct in all respects
(in the case of any representation or warranty containing any materiality
qualification) or in all material respects (in the case of any
representation or warranty without any materiality qualification) as of
the date when made, or Buyer has breached in a material respect its
covenants hereunder.
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SECTION 7.2 EFFECT OF TERMINATION. In the event of the termination of this
Agreement pursuant to the provisions of SECTION 7.1, this Agreement shall become
void and have no effect, without any liability to any person in respect hereof
or of the transactions contemplated hereby on the part of any party hereto, or
any of its directors, officers, employees, agents, consultants, representatives,
advisers, stockholders or affiliates, except as specified in SECTION 11.5 and
except for any liability resulting from such party's breach of this Agreement.
Notwithstanding the foregoing, in the event this Agreement is terminated as a
result of (a) Sellers' default, (b) an objection to the sale by the U.S.
Department of Justice pursuant to the Final Judgment or (c) the failure to
satisfy the closing conditions specified at SECTIONS 8.1(B) OR 8.1(C) resulting
from any litigation, proceeding, order or the like (provided that Buyer has not
directly or indirectly caused, instigated, participated in or been at fault in
respect of such matter), then in such event Sellers shall refund to Buyer the
Down Payment promptly after such termination.
SECTION 7.3 PRE-CLOSING DAMAGES. If this Agreement is terminated by either
party, upon the default of or breach by the other party, prior to Closing, the
parties agree that the damages resulting from such breach shall be limited to
the amount of the Down Payment and the Cash Payment and shall be for actual
damages only and not for consequential or punitive damages. Nothing contained in
this SECTION 7.3 shall limit the right of either party to seek equitable relief
(including the right of specific performance) in addition to monetary damages in
the event of a breach by the other party.
ARTICLE 8.
CONDITIONS TO CONSUMMATION OF THE AGREEMENT
SECTION 8.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE AGREEMENT.
The respective obligations of each party to effect the Agreement shall be
subject to the satisfaction at or prior to the Closing Date of the following
conditions:
(a) the U.S. Department of Justice shall have confirmed that it will
not make any objection to this sale pursuant to the Final Judgment, or the
time period for making such objection pursuant to the Final Judgment shall
have expired;
(b) no statute, rule, regulation, executive order, decree, ruling,
or preliminary or permanent injunction shall have been enacted, entered,
promulgated, or enforced by any federal or state court or governmental
authority that prohibits, restrains, enjoins, or restricts the
consummation of the Agreement; and
(c) no claim, action, suit, arbitration, inquiry proceeding, or
investigation shall have been commenced by or before any United States
federal, state, or local or any foreign government, governmental,
regulatory, or administrative authority, agency, or commission or any
court, tribunal or judicial or arbitral body against Buyer or Sellers
seeking to restrain or materially and adversely alter the transactions
contemplated by this Agreement that, in the reasonable good faith
determination of any party, is likely to render it impossible or unlawful
to consummate such transactions; PROVIDED, HOWEVER, that the provisions of
this SECTION 8.1(C) shall not apply to any party that has directly or
indirectly solicited or encouraged any such action.
SECTION 8.2 CONDITIONS TO OBLIGATION OF SELLERS TO EFFECT THE AGREEMENT.
The obligation of Sellers to effect the Agreement shall be subject to the
satisfaction at or prior to the Closing Date of the following additional
conditions: Buyer shall have performed in all material respects its obligations
under this Agreement required to be performed by it at or prior to the Closing
Date; the representations
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and warranties of Buyer contained in this Agreement that are qualified with
respect to materiality shall be true and correct in all respects, and such
representations and warranties that are not so qualified shall be true and
correct in all material respects, in each case as of the date of this Agreement
and on the Closing Date as if made at and as of such time except as contemplated
by this Agreement; and Sellers shall have received a certificate of the chairman
of the board, the president, an executive vice president, a senior vice
president, or the chief financial officer of Buyer as to the satisfaction of
this condition.
SECTION 8.3 CONDITIONS TO OBLIGATION OF BUYER TO EFFECT THE AGREEMENT. The
obligations of Buyer to effect the Agreement shall be subject to the
satisfaction at or prior to the Closing Date of the following additional
conditions: Sellers shall have performed in all material respects their
obligations under this Agreement required to be performed by them at or prior to
the Closing Date; the representations and warranties of Sellers contained in
this Agreement that are qualified with respect to materiality shall be true and
correct in all respects, and such representations and warranties that are not so
qualified shall be true and correct in all material respects, in each case as of
the date of this Agreement and at and as of the Closing Date as if made at and
as of such time, except as contemplated by this Agreement; and Buyer shall have
received a certificate of the chairman of the board, the president, or a vice
president of each Seller as to the satisfaction of this condition.
ARTICLE 9.
COVENANTS
SECTION 9.1 GRANTORS' COVENANTS. Grantors will in all respects satisfy and
comply with SECTION IV.F of the Final Judgment, including operating the gate,
scale house, and disposal area under terms and conditions no less favorable than
those provided to Grantors' vehicles or the vehicles of any municipality in the
Houston area, except as to price and credit terms.
SECTION 9.2 BUYER'S COVENANTS.
(a) COMPLIANCE WITH THE FINAL JUDGMENT. Buyer will in all respects
satisfy and comply with all obligations and requirements applicable to a
buyer of the Subject Assets under the Final Judgment and will comply with
all of its obligations hereunder including without limitation those set
forth at SECTION 1.2(D).
(b) RELEASE OF SURETIES AND BONDS. Buyer shall cause Sellers to be
released of all sureties and bonds within one hundred eighty (180) days of
the Closing Date. In addition to the foregoing, Buyer shall obtain a
replacement bond in its name for the bond currently in place with respect
to the Land and the operation of the Landfill not later than such time as
the Permit Application is transferred to Buyer hereunder; and Buyer shall
cause Sellers to be released from such bond at such date.
(c) FILING OF REGISTRATION STATEMENT. Buyer shall, reasonably
promptly after all requisite information (including pro forma financial
information) becomes available therefor but in no event later than March
30, 1997, file a Form S-3 registration statement with the Securities and
Exchange Commission to effect the registration of the resale of the shares
of common stock issuable upon exercise of the Warrants under the
Securities Act and use its best efforts to cause such registration
statement to become effective by June 30, 1997; and Buyer shall maintain
the effectiveness of such registration statement until the exercise period
of the Warrants has expired and the shares issuable upon exercise of the
Warrants have been resold; and in the event that after
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the effective date of the registration statement resales may not be made
under such registration statement for a consecutive period of at least
forty-five (45) days, whether as a result of the staleness of financial
statements of Buyer or otherwise, Buyer shall take such actions (including
without limitation giving Sellers the right to demand registration on some
other form of registration statement), or shall grant Sellers such other
benefits, as will afford Sellers the economic benefits of selling the
shares in a registered transaction.
SECTION 9.3 SELLERS' COVENANTS.
(a) EXPANSION PERMIT. Sellers will use their commercially reasonable
best efforts at Sellers' expense to obtain from the TNRCC the approval of
the application to expand the Permit on substantially the terms set forth
in the Permit Application. Sellers' obligation pursuant hereto will
terminate at such time as the parties have received a draft permit on
substantially the terms applied for, and have made adequate arrangements
for the transfer of such expansion permit to Buyer; and in the event the
TNRCC finally denies such application or the transfer of the expansion
permit to Buyer, Buyer shall be entitled to payment to the extent set
forth in SECTION 2.6.
(b) MAINTAIN SUBJECT ASSETS AND OPERATIONS; NON-SOLICITATION OF
EMPLOYEES. In the period of time from the Closing to the Closing Date,
Sellers shall (i) carry on their businesses in the ordinary course
consistent with past practices and in compliance with all applicable laws,
rules and regulations, except where failure to be in such compliance would
not have a material adverse effect on Buyer, (ii) use their reasonable
efforts to collect their accounts receivable, (iii) use their reasonable
efforts to preserve their business organization, maintain their rights and
franchises, keep available the services of their officers and employees
and preserve the goodwill and their relationships with customers,
suppliers and others having business dealings with them, (iv) use their
reasonable efforts to preserve in full force and effect all leases,
operating agreements, easements, rights-of-way, permits, licenses,
contracts and other agreements which relate to their assets (other than
those expiring by their terms and those whose failure to preserve would
not have a material adverse effect on Buyer), (v) use their reasonable
efforts to perform or cause to be performed all of their obligations in or
under any of such leases, agreements and contracts, except where the
failure to perform would not have a material adverse effect on Buyer, and
(vi) consistent with past practices, use their reasonable efforts to
safeguard and maintain secure all engineering data, reports and other
confidential data in the possession of Sellers relating to their assets.
For a period terminating six months after the Closing Date, Sellers
further covenant not to call upon any Transferred Employee with the intent
of enticing such employee away from or out of the employ of Buyer. As used
herein, the term "TRANSFERRED EMPLOYEE" means any person who is employed
by Sellers in connection with Sellers' operation of businesses primarily
related to the Subject Assets prior to the Closing Date and who becomes an
employee of Buyer immediately after the Closing Date; PROVIDED HOWEVER,
that from and after the time any such persons ceases to be employed by
Buyer or its subsidiaries, for any reason, and Sellers have not breached
their covenants hereunder in respect of such former employee, such former
employee shall cease to be a "TRANSFERRED EMPLOYEE."
SECTION 9.4 COVENANTS OF EACH PARTY.
(a) REARLOAD CUSTOMER CONTRACTS. Sellers shall take such action as
is required to hold Buyer harmless in respect of any Rearload Customer
Contract as to which approval is required and has not been obtained. In
the event such provision involves Sellers' retention of the
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obligation to perform such contract, Sellers may, in satisfaction of the
preceding sentence, reacquire the motor vehicles and the equipment
dedicated to performing such contract and pay to Buyer the net book value
thereof.
ARTICLE 10.
INDEMNIFICATION
SECTION 10.1 INDEMNIFICATION PROVISIONS FOR BENEFIT OF BUYER. In the event
Sellers breach any of their representations, warranties, and covenants contained
in this Agreement, and, if there is an applicable survival period pursuant to
SECTION 5.2 above, provided that Buyer makes a written claim for indemnification
against Sellers pursuant to SECTION 11.2 below within such survival period, then
Sellers agree to indemnify Buyer from and against any Losses (as hereinafter
defined) Buyer shall suffer caused proximately by the breach. As used in this
Agreement, "LOSSES" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid
in settlement, liabilities, obligations, taxes, liens, losses, expenses, and
fees, including court costs and attorneys' fees and expenses, but net of all
insurance proceeds or similar reimbursements or recoveries, and after giving
effect to any tax savings resulting from such indemnified matter.
SECTION 10.2 INDEMNIFICATION PROVISIONS FOR BENEFIT OF SELLERS.
(a) In the event Buyer breaches any of its representations,
warranties, and covenants contained in this Agreement, and, if there is an
applicable survival period pursuant to SECTION 6.2 above, provided that
Sellers make a written claim for indemnification against Buyer pursuant to
SECTION 11.2 below within such survival period, then Buyer agrees to
indemnify Sellers from and against the entirety of any Losses Sellers
shall suffer caused proximately by the breach.
(b) Buyer agrees to indemnify Sellers from and against the entirety
of any Losses Sellers shall suffer caused by any liability of Sellers
which is an Assumed Liability.
SECTION 10.3 PROCEDURE FOR INDEMNIFICATION OF THIRD PARTY CLAIMS. Promptly
after a party hereto (hereinafter the "INDEMNIFIED PARTY") has received notice
of or has knowledge of any claim by a person not a party to this Agreement
("THIRD PERSON") or the commencement of any action or proceeding by a Third
Person, the Indemnified Party shall, as a condition precedent to a claim with
respect thereto being made against any party obligated to provide
indemnification pursuant to this Agreement (hereinafter the "INDEMNIFYING
PARTY"), give the Indemnifying Party written notice of such claim or the
commencement of such action or proceeding (the "NOTICE"). The Notice shall state
the nature and the specific basis of such claim and a reasonable estimate of the
amount thereof. The Indemnifying Party, after receipt of the Notice, may defend
and settle, at its own expense and by its own counsel, each such matter;
PROVIDED, HOWEVER, that the Indemnifying Party will not consent to the entry of
any judgment or enter into any settlement with respect to the third party claim
without the prior written consent of the Indemnified Party if such judgment or
settlement requires the Indemnified Party to take, or refrain from taking, any
actions other than the payment of monetary damages to be paid by the Indemnified
Party. Notwithstanding the foregoing, the Indemnified Party shall have the right
to participate in any matter through counsel of its own choosing. Such separate
representation shall be at the cost and expense of the Indemnified Party as long
as the Indemnifying Party is pursuing the defense of such matter diligently,
reasonably and in good faith. If the Indemnifying Party within fifteen (15) days
fails to acknowledge in writing to the Indemnified Party its obligation to
defend any such matter or does not assume the defense hereunder
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within fifteen (15) days diligently, reasonably and in good faith, the
Indemnified Party may undertake such defense through counsel of its choice and
at the Indemnifying Party's expense.
SECTION 10.4 NEGLIGENCE AND STRICT LIABILITY. WITHOUT LIMITING OR
ENLARGING THE SCOPE OF THE INDEMNIFICATION OBLIGATIONS SET FORTH IN THIS
AGREEMENT, THE PARTIES HERETO SHALL BE ENTITLED TO INDEMNIFICATION IN ACCORDANCE
WITH THE TERMS HEREOF, REGARDLESS OF WHETHER THE LOSS OR CLAIM GIVING RISE TO
SUCH INDEMNIFICATION OBLIGATION IS THE RESULT OF THE STRICT LIABILITY OR
NEGLIGENCE OF THE PARTY INDEMNIFIED. THE PARTIES AGREE THAT THIS PARAGRAPH
CONSTITUTES A CONSPICUOUS LEGEND.
SECTION 10.5 SUBROGATION. Any party providing indemnification hereunder
shall be entitled to subrogation as to all rights of the indemnified party in
respect of such indemnified matter to the extent of amounts paid by the
indemnifying party as a result of such matter.
SECTION 10.6 LIMITATIONS ON INDEMNIFICATION PROVISIONS; EXCLUSIVE REMEDY.
(a) DEDUCTIBLE AND MAXIMUM AGGREGATE LIABILITY. No party shall be
entitled to indemnity hereunder for any misrepresentation or breach of
warranty until the Losses suffered by such party as a result thereof shall
exceed $75,000 in the aggregate and then only for Losses in excess of such
amount. In addition to the foregoing, the maximum amount of Losses that
either party may recover from the other on account of indemnification for
all misrepresentations and breaches of warranties hereunder shall be
$2,200,000 in the aggregate.
(b) WAIVER OF NON-COMPENSATORY DAMAGES. No Indemnified Party shall
be entitled to recover from an Indemnifying Party for any losses, costs,
expenses, or damages as to which indemnification is provided under this
Agreement any amount in excess of the actual compensatory damages, court
costs and reasonable attorney fees, suffered by such party; and Buyer and
Sellers waive any right to recover punitive, special, exemplary and
consequential damages arising in connection with or with respect to the
indemnification provisions hereof.
(c) WAIVER OF RIGHT TO RESCISSION. Sellers and Buyer acknowledge
that the payment of money, as limited by the terms of this Agreement,
shall be adequate compensation for breach of any representation, warranty,
covenant or agreement contained herein or for any other claim arising in
connection with or with respect to the transactions contemplated in this
Agreement. As the payment of money shall be adequate compensation, Buyer
and Sellers waive any right to rescind this Agreement or any of the
transactions contemplated hereby.
(d) MITIGATION OBLIGATION. Each person entitled to indemnification
hereunder shall take all reasonable steps to mitigate all losses, costs,
expenses and damages after becoming aware of any event which could
reasonably be expected to give rise to any losses, costs, expenses and
damages that are indemnifiable or recoverable hereunder or in connection
herewith.
(e) EXCLUSIVE REMEDY; WAIVER AND RELEASE. The indemnifications under
this ARTICLE 3, and enforcement of the various agreements and instruments
executed pursuant hereto at the Closing, shall be Buyer's and Sellers'
sole and exclusive remedies, each against the other, with respect to
matters arising under this Agreement, of any kind or nature, or relating
to the Houston Commercial Business, the Rearload Business, the ownership,
operation, management, use or control of the Subject Assets. Buyer and
Sellers hereby waive and release any other
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rights, remedies, causes of action or claims that they have or that may
arise against the other with respect to matters arising under this
Agreement, of any kind or nature, or relating to the Houston Commercial
Business, the Rearload Business, the ownership, operation, management, use
or control of the Subject Assets.
ARTICLE 11.
GENERAL
SECTION 11.1 NO THIRD PARTY BENEFICIARIES. This Agreement shall not confer
any rights or remedies upon any person other than the parties and their
respective successors and permitted assigns.
SECTION 11.2 NOTICES. All notices or communications required or permitted
under this Agreement shall be given in writing and served either by personal
delivery, overnight courier or by deposit in the United States mail and sent by
first class registered or certified mail, return receipt requested, postage
prepaid:
If to Sellers: Sellers/Purchase and Sale of Assets Agreement
c/o USA Waste Services, Inc.
2777 Allen Parkway, Suite 700
Houston, Texas 77019-2155
Attn: President
with copies to: USA Waste Services, Inc.
5400 LBJ Freeway, Suite 300 - Tower One
Dallas, Texas 75240
Attn: Gregory T. Sangalis
and: Mayor, Day, Caldwell & Keeton, L.L.P.
700 Louisiana, Suite 1900
Houston, Texas 77002
Attn: Roy E. Bertolatus
If to Buyer: TransAmerican Waste Industries, Inc.
314 North Post Oak Lane
Houston, Texas 77024
Attn: David Green
Notice shall be deemed given and effective the day personally delivered, the day
after being sent by overnight courier and three days after deposit in the U.S.
mail as provided above, or when actually received, if earlier. Either party may
change the address for notices or communications to be given to it by written
notice to the other party given as provided in this Section.
SECTION 11.3 USE OF NAME. Sellers hereby consent to the use by Buyer of
the name "Sanifill" and any variation or derivation thereof and any trademarks,
service marks, trade names, trade dress, logos, business and product names and
slogans for a period of (a) 90 days after the Closing Date in connection with
controllable invoicing; (b) 180 days after the Closing Date in connection with
(i) the identifying marks on the trucks forming a part of the Subject Assets and
(ii) the phone identification of the businesses; and (c) one year after the
Closing Date in connection with identifying marks on containers
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as of the Closing Date. Not later than fifteen days after the Closing Date,
Buyer shall take all action necessary to change the corporate name of any
Transferred Corporation to a name dissimilar to "Sanifill"; and following the
expiration of the periods set forth herein, Buyer will discontinue its limited
uses of the name "Sanifill" and the related intellectual property rights
permitted hereunder.
SECTION 11.4 ENTIRE AGREEMENT. This Agreement, the Schedules hereto and
the other agreements referred to herein constitute the entire agreement and
understanding of the parties with respect to the subject matter hereof, and
supersede all prior and contemporaneous agreements and understandings, oral or
written, relative to said subject matter.
SECTION 11.5 EXPENSES OF TRANSACTION. Each of Buyer and Sellers will bear
their own costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby, including, without limitation, the fees and
expenses of attorneys and accountants.
SECTION 11.6 BROKER'S COMMISSION. Sellers represent and warrant to Buyer
and Buyer represents and warrants to Sellers that the warranting party has had
no dealing with any dealer, broker or agent so as to entitle such dealer, broker
or agent to a commission or fee in connection with the sale of the Subject
Assets to Buyer. If for any reason a commission or fee shall become due, the
party dealing with such dealer, broker or agent shall pay such commission or fee
and agrees to indemnify and save the other party harmless from all claims for
such commission or fee and from all attorneys' fees, litigation costs and other
expense relating to such claim.
SECTION 11.7 MODIFICATION; REMEDIES CUMULATIVE. This Agreement may not be
changed, amended, terminated, augmented, rescinded or otherwise altered, in
whole or in part, except by a writing executed by the parties hereto. No right,
remedy or election given by any term of this Agreement shall be deemed exclusive
but each shall be cumulative with all other rights, remedies and elections
available at law or in equity.
SECTION 11.8 SEVERABILITY. In case any provision of this Agreement shall
be invalid, illegal or unenforceable, it shall, to the extent possible, be
modified in such manner as to be valid, legal and enforceable and so as to most
nearly retain the intent of the parties. If such modification is not possible,
such provision shall be severed from this Agreement. In either case the
validity, legality and enforceability of the remaining provisions of this
Agreement shall not in any way be affected or impaired hereby.
SECTION 11.9 AVAILABILITY OF RECORDS. Buyer shall cooperate in providing
Sellers with copies of, or reasonable access to, such records as Sellers may
need in connection with any audit, claim, challenge or review of Sellers' tax
liabilities, including any tax liabilities relating to its operation of the
Houston Commercial Business or the Rearload Business.
SECTION 11.10 SALES AND OTHER TAXES. The parties hereto will use
reasonable efforts to minimize all sales, use, value added, documentary, stamp,
gross receipts, registration, transfer, conveyance, excise, recording, license
and other similar taxes and fees ("TRANSFER TAXES") and will equally share such
Transfer Taxes payable in connection with the transaction contemplated hereby;
PROVIDED, HOWEVER, that the first $50,000 of such Transfer Taxes shall be borne
by Sellers. Sellers shall prepare and timely file all tax returns required to be
filed in respect of Transfer Taxes. Sellers' preparation of any such tax returns
involving payments for which Buyer will share the cost shall be subject to
Buyer's approval, which approval shall not be withheld unreasonably.
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SECTION 11.11 ALLOCATION OF PURCHASE PRICE. The parties will attempt to
agree on the allocation of the purchase price among the Subject Assets prior to
the Closing. In the event they are unable to agree on such allocation, neither
party shall have any liability or obligation to the other in connection with the
other party's allocation.
SECTION 11.12 DEFINITION OF KNOWLEDGE. As used herein, the terms
"knowledge," "best of knowledge," "with knowledge," "knowingly" and the like
refer to matters that are actually known by the executive officer having
responsibility for the matter as to any corporation or entity making the
applicable representation, without any implied duty of investigation on the part
of such executive officer.
SECTION 11.13 CONSTRUCTION. Buyer and Sellers have participated jointly in
the negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by Buyer and Sellers and no presumption or burden of proof
shall arise favoring or disfavoring any party by virtue of the authorship of any
of the provisions of this Agreement. Any reference to any federal, state, local,
or foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "INCLUDING" shall mean including without limitation. The parties intend
that each representation, warranty, and covenant contained herein shall have
independent significance. If any party has breached any representation,
warranty, or covenant contained herein in any respect, the fact that there
exists another representation, warranty, or covenant relating to the same
subject matter (regardless of the relative levels of specificity) which the
party has not breached shall not detract from or mitigate the fact that the
party is in breach of the first representation, warranty, or covenant.
SECTION 11.14 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED IN ALL
RESPECTS, INCLUDING AS TO VALIDITY, INTERPRETATION AND EFFECT, BY THE INTERNAL
LAWS OF THE STATE OF TEXAS, WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS RULES
THEREOF. BUYER AND SELLERS HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF THE
COURTS OF THE STATE OF TEXAS AND THE FEDERAL COURTS OF THE UNITED STATES OF
AMERICA LOCATED IN THE STATE OF TEXAS SOLELY IN RESPECT OF THE INTERPRETATION
AND ENFORCEMENT OF THE PROVISIONS OF THIS AGREEMENT AND OF THE DOCUMENTS
REFERRED TO IN THIS AGREEMENT, AND HEREBY WAIVE, AND AGREE NOT TO ASSERT, AS A
DEFENSE IN ANY ACTION, SUIT OR PROCEEDING FOR THE INTERPRETATION OR ENFORCEMENT
HEREOF OR OF ANY SUCH DOCUMENT, THAT IS NOT SUBJECT THERETO OR THAT SUCH ACTION,
SUIT OR PROCEEDING MAY NOT BE BROUGHT OR IS NOT MAINTAINABLE IN SAID COURTS OR
THAT THE VENUE THEREOF MAY NOT BE APPROPRIATE OR THAT THIS AGREEMENT OR ANY OF
SUCH DOCUMENTS MAY NOT BE ENFORCED IN OR BY SAID COURTS, AND THE PARTIES HERETO
IRREVOCABLY AGREE THAT ALL CLAIMS WITH RESPECT TO SUCH ACTION OR PROCEEDING
SHALL BE HEARD AND DETERMINED IN SUCH A TEXAS OR FEDERAL COURT. BUYER AND
SELLERS HEREBY CONSENT TO AND GRANT ANY SUCH COURT JURISDICTION OVER THE PERSON
OF SUCH PARTIES AND OVER THE SUBJECT MATTER OF ANY SUCH DISPUTE AND AGREE THAT
MAILING OF PROCESS OR OTHER PAPERS IN CONNECTION WITH ANY SUCH ACTION OR
PROCEEDING IN THE MANNER PROVIDED IN SECTION 11.2, OR IN SUCH OTHER MANNER AS
MAY BE PERMITTED BY LAW, SHALL BE VALID AND SUFFICIENT SERVICE THEREOF.
SECTION 11.15 DTPA WAIVER. BUYER HEREBY WAIVES THE PROVISIONS OF THE TEXAS
DECEPTIVE TRADE PRACTICES ACT, CHAPTER 17, SUBCHAPTER E, SECTIONS 17.41 THROUGH
17.63, INCLUSIVE (OTHER THAN SECTION 17.555, WHICH IS NOT WAIVED), OF THE TEXAS
BUSINESS AND COMMERCE CODE. TO EVIDENCE ITS ABILITY TO GRANT SUCH WAIVER, BUYER
REPRESENTS TO SELLERS THAT IT (A) IS IN THE BUSINESS OF SEEKING OR ACQUIRING, BY
PURCHASE OR LEASE, GOODS OR SERVICES FOR COMMERCIAL OR BUSINESS USE, (B) HAS,
EITHER BY ITSELF OR TOGETHER WITH ANY ENTITY THAT CONTROLS IT, ASSETS OF $25
MILLION OR MORE ACCORDING TO ITS MOST RECENT FINANCIAL STATEMENT PREPARED IN
ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES, (C) HAS KNOWLEDGE AND
EXPERIENCE IN FINANCIAL AND BUSINESS MATTERS THAT ENABLE IT TO
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EVALUATE THE MERITS AND RISKS OF THE TRANSACTION CONTEMPLATED HEREBY, AND (D) IS
NOT IN A SIGNIFICANTLY DISPARATE BARGAINING POSITION.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
BUYER:
TRANSAMERICAN WASTE INDUSTRIES, INC.
By: /s/ TOM J. FATJO
Name: Tom J. Fatjo
Title: President & Chairman
SELLERS:
SANIFILL, INC.
By: /s/ ARTHUR W. JOHNSON
Name: Arthur W. Johnson
Title: Authorized Representative & Attorney-in-Fact
SANIFILL OF TEXAS HAULING, INC.
By: /s/ ARTHUR W. JOHNSON
Name: Arthur W. Johnson
Title: Authorized Representative & Attorney-in-Fact
SUNRAY SERVICES, INC.
By: /s/ ARTHUR W. JOHNSON
Name: Arthur W. Johnson
Title: Authorized Representative & Attorney-in-Fact
S & J LANDFILL LIMITED PARTNERSHIP
By: /s/ ARTHUR W. JOHNSON
Name: Arthur W. Johnson
Title: Authorized Representative & Attorney-in-Fact
BRAZORIA COUNTY RECYCLING CENTER, INC.
By: /s/ ARTHUR W. JOHNSON
Name: Arthur W. Johnson
Title: Authorized Representative & Attorney-in-Fact
23
EXHIBIT 2.2
December 4, 1996
TransAmerican Waste Industries, Inc.
314 North Post Oak Lane
Houston, Texas 77024
Attn: Mr. Tom J. Fatjo
RE: PURCHASE AND SALE AGREEMENT EXECUTED DECEMBER 3, 1996 (THE
"AGREEMENT") BY AND AMONG TRANSAMERICAN WASTE INDUSTRIES, INC., A
DELAWARE CORPORATION ("BUYER"), AND SANIFILL, INC., A DELAWARE
CORPORATION ("SANIFILL"), SANIFILL OF TEXAS HAULING, INC., A TEXAS
CORPORATION ("HAULING"), SUNRAY SERVICES, INC., A DELAWARE
CORPORATION ("SUNRAY"), S&J LANDFILL LIMITED PARTNERSHIP, A LIMITED
PARTNERSHIP FORMED UNDER TEXAS LAW ("S&J LANDFILL") AND BRAZORIA
COUNTY RECYCLING CENTER, INC., A TEXAS CORPORATION ("BRAZORIA
RECYCLING"), (SANIFILL, HAULING, SUNRAY, S&J LANDFILL AND BRAZORIA
RECYCLING ARE COLLECTIVELY REFERRED TO HEREIN AS "SELLERS")
Dear Mr. Fatjo:
As we have discussed, SECTION 1.2(A)(II) of the Agreement provides that
Buyer will pay to Grantors (as defined in the Agreement), as applicable, for the
disposal or delivery of municipal solid waste an initial fee of $23.08 per ton
of waste delivered to the Sam Houston Transfer Station (Permit No. 1471) or the
WRS Transfer Station (Permit No. 1483), subject to adjustment as provided in the
Agreement.
We have further discussed the following proposed amendment of the
Agreement:
Sellers and Buyer agree that for all purposes from and after the
date hereof:
1. Clause (ii) of SECTION 1.2(A) of the Agreement shall be deleted
and the following clauses (ii) through (iv) shall be inserted in lieu
thereof:
"(ii) an initial fee of $21.75 per ton of waste delivered to
the Sam Houston Transfer Station (Permit No. 1471) or the WRS
Transfer Station (Permit No. 1483) (collectively, the "TRANSFER
STATIONS") during the period from January 1, 1997 through December
31, 1997;
(iii) a fee of $22.25 per ton of waste delivered to the
Transfer Stations during the period from January 1, 1998 through
December 31, 1998;
(iv) a fee of $23.00 per ton of waste delivered to the
Transfer Stations during the period from January 1, 1999 through
December 31, 1999;"
<PAGE>
2. The following provision shall be added to the end of clause (iii)
of SECTION 1.2(B) of the Agreement:
"; PROVIDED, HOWEVER, that no such consumer price index
increase shall be made in respect of disposal rates for waste
delivered to the Transfer Stations on or before December 31,
1999."
3. In addition, we noticed that an element in the definition of
Target Date in the second paragraph of SECTION 2.6 of the Agreement
incorrectly references September 30, 1996. Such date set forth at the
beginning of clause (y) of the second paragraph of SECTION 2.6 is hereby
amended to read "September 30, 1997".
Capitalized terms used in this letter agreement that are not otherwise
defined herein shall have the meaning set forth in respect thereof in the
Agreement. Except as specifically amended hereby, the Agreement shall remain in
full force and effect without modification.
If the foregoing correctly sets forth the terms of our agreement, please
execute this letter agreement in the space provided below.
SELLERS:
SANIFILL, INC.
By: /s/ ARTHUR W. JOHNSON
Arthur W. Johnson
Authorized Representative and Attorney-in-Fact
SANIFILL OF TEXAS HAULING, INC.
By: /s/ ARTHUR W. JOHNSON
Arthur W. Johnson
Authorized Representative and Attorney-in-Fact
SUNRAY SERVICES, INC.
By: /s/ ARTHUR W. JOHNSON
Arthur W. Johnson
Authorized Representative and Attorney-in-Fact
S & J LANDFILL LIMITED PARTNERSHIP
by Sanifill of Texas, Inc., its general partner
By: /s/ ARTHUR W. JOHNSON
Arthur W. Johnson
Authorized Representative and Attorney-in-Fact
BRAZORIA COUNTY RECYCLING CENTER, INC.
By: /s/ ARTHUR W. JOHNSON
Arthur W. Johnson
Authorized Representative and Attorney-in-Fact
2
<PAGE>
Amendments set forth in above
letter accepted and agreed to as
of the date first set forth above:
BUYER:
TRANSAMERICAN WASTE
INDUSTRIES, INC.
By: /s/ TOM J. FATJO
Tom J. Fatjo
President and Chairman
EXHIBIT 2.3
December 12, 1996
TransAmerican Waste Industries, Inc.
314 North Post Oak Lane
Houston, Texas 77024
Attn: Mr. Tom J. Fatjo
RE: SECOND AMENDMENT ("SECOND AMENDMENT") TO PURCHASE AND SALE AGREEMENT
EXECUTED DECEMBER 3, 1996 (THE "AGREEMENT") BY AND AMONG
TRANSAMERICAN WASTE INDUSTRIES, INC., A DELAWARE CORPORATION
("BUYER"), AND SANIFILL, INC., A DELAWARE CORPORATION ("SANIFILL"),
SANIFILL OF TEXAS HAULING, INC., A TEXAS CORPORATION ("HAULING"),
SUNRAY SERVICES, INC., A DELAWARE CORPORATION ("SUNRAY"), S&J
LANDFILL LIMITED PARTNERSHIP, A LIMITED PARTNERSHIP FORMED UNDER
TEXAS LAW ("S&J LANDFILL") AND BRAZORIA COUNTY RECYCLING CENTER,
INC., A TEXAS CORPORATION ("BRAZORIA RECYCLING"), (SANIFILL,
HAULING, SUNRAY, S&J LANDFILL AND BRAZORIA RECYCLING ARE
COLLECTIVELY REFERRED TO HEREIN AS "SELLERS")
Dear Mr. Fatjo:
As we have discussed, SECTION 2.4 of the Agreement provides that Buyer
will grant to Sellers warrants for the purchase of 1,500,000 shares of Buyer's
common stock at an exercise price of $1.50 per share and that the warrants will
provide Sellers customary anti-dilution protection in respect of the underlying
common stock as set forth in the Agreement.
We have further discussed the following proposed amendment of the
Agreement:
Sellers and Buyer agree that for all purposes from and after the
date hereof:
1. The following additional sentence shall be added to the end of
SECTION 2.4 of the Agreement:
"The Warrants shall be evidenced by a warrant agreement in the
form attached as EXHIBIT 2.4.";
2. The following additional clause shall be added to the end of
SECTION 4.3 of the Agreement:
"(e) the Stock Purchase Warrant.";
3. The following additional exhibit cover page shall be added
immediately after EXHIBIT 1.2(D)(III) and before SCHEDULE 1.1(A)(I) of the
Agreement:
"EXHIBIT 2.4
FORM OF WARRANT AGREEMENT"; and
<PAGE>
4. The warrant agreement to be attached as EXHIBIT 2.4 to the
Agreement shall be in the form attached to this Second Amendment of the
Agreement.
Capitalized terms used in this letter agreement that are not otherwise
defined herein shall have the meaning set forth in respect thereof in the
Agreement. Except as specifically amended hereby, the Agreement shall remain in
full force and effect without modification.
If the foregoing correctly sets forth the terms of our agreement, please
execute this letter agreement in the space provided below.
SELLERS:
SANIFILL, INC.
By: /s/ MONTY MATHEWS
Monty Mathews
Authorized Representative and Attorney-in-Fact
SANIFILL OF TEXAS HAULING, INC.
By: /s/ MONTY MATHEWS
Monty Mathews
Authorized Representative and Attorney-in-Fact
SUNRAY SERVICES, INC.
By: /s/ MONTY MATHEWS
Monty Mathews
Authorized Representative and Attorney-in-Fact
S & J LANDFILL LIMITED PARTNERSHIP
by Sanifill of Texas, Inc., its general partner
By: /s/ MONTY MATHEWS
Monty Mathews
Authorized Representative and Attorney-in-Fact
BRAZORIA COUNTY RECYCLING CENTER, INC.
By: /s/ MONTY MATHEWS
Monty Mathews
Authorized Representative and Attorney-in-Fact
2
<PAGE>
Amendments set forth in above letter accepted and agreed to as of the date first
set forth above:
BUYER:
TRANSAMERICAN WASTE
INDUSTRIES, INC.
By: /s/ TOM J. FATJO
Tom J. Fatjo
President and Chairman
3
EXHIBIT 2.4
December 31, 1996
TransAmerican Waste Industries, Inc.
314 North Post Oak Lane
Houston, Texas 77024
RE: THIRD AMENDMENT ("THIRD AMENDMENT") TO PURCHASE AND SALE AGREEMENT
EXECUTED DECEMBER 3, 1996 BY AND AMONG TRANSAMERICAN WASTE
INDUSTRIES, INC., A DELAWARE CORPORATION ("BUYER"), AND SANIFILL,
INC., A DELAWARE CORPORATION ("SANIFILL"), SANIFILL OF TEXAS
HAULING, INC., A TEXAS CORPORATION ("HAULING"), SUNRAY SERVICES,
INC., A DELAWARE CORPORATION ("SUNRAY"), S&J LANDFILL LIMITED
PARTNERSHIP, A LIMITED PARTNERSHIP FORMED UNDER TEXAS LAW ("S&J
LANDFILL") AND BRAZORIA COUNTY RECYCLING CENTER, INC., A TEXAS
CORPORATION ("BRAZORIA RECYCLING"), (SANIFILL, HAULING, SUNRAY, S&J
LANDFILL AND BRAZORIA RECYCLING ARE COLLECTIVELY REFERRED TO HEREIN
AS "SELLERS"), AS AMENDED BY A FIRST AMENDMENT DATED DECEMBER 4,
1996 AND A SECOND AMENDMENT DATED DECEMBER 12, 1996 (COLLECTIVELY,
THE "AGREEMENT")
Gentlemen:
As we have discussed, the Agreement provides that the Closing thereunder
will take place on December 31, 1996 or at such earlier date and time as the
closing conditions specified in Article VIII have been satisfied. The Agreement
further provides, at Section 7.1(b)(ii), that it may be terminated by either
party in the event the Closing fails to occur on or before 5:00 p.m. Houston
time on December 31, 1996 (except that neither party would have the right to
terminate while such party was in default of its obligations under the
Agreement). In the event either party should terminate the Agreement pursuant to
Section 7.1(b)(ii), other than as a result of Sellers' default or the
commencement of certain legal or administrative proceedings, Sellers are
entitled to retain the Down Payment.
Pursuant to Section 6.1(e) of the Agreement, Buyer represented that it has
sufficient funds available to pay the Cash Payment on the Closing Date.
Notwithstanding such representation, Buyer has advised Sellers that it does not
have sufficient funds available to pay the Cash Payment on the Closing Date.
Buyer alleges that its inability to obtain sufficient funds has resulted from
Sellers' alleged breach of their covenants set forth at Section 9.3(b)(iii) of
the Agreement to use reasonable efforts to preserve Sellers' business
organization, maintain Sellers' rights and franchises, and keep available the
services of Sellers' officers and employees insofar as they relate to the
Subject Assets.
Without either Buyer or Sellers admitting or conceding that any such party
has in any respect been in breach of its obligations or representations or
warranties pursuant to the Agreement, the parties have agreed and confirmed
that, but for Buyer's inability to obtain sufficient funds to close the
transactions contemplated by the Agreement, both Buyer and Sellers would have
been able to have closed
<PAGE>
such transactions as of the date hereof on such terms as are set forth in the
Agreement as in effect prior to this Third Amendment, and would have done so.
Without limiting the generality of the foregoing, Buyer confirms and agrees that
it has completed all due diligence and other review and investigation with
regard to the Subject Assets and otherwise in connection with the business and
affairs of Sellers; and Buyer further confirms that, subject to compliance by
Sellers with the agreements set forth in this Third Amendment, Buyer will not
assert, or be entitled to assert, any noncompliance or breach by Sellers of any
representation, warranty or covenant in the Agreement as a basis for not closing
the transactions contemplated by the Agreement, unless any such breach or
violation is based on actions taken, or conditions that first come into
existence, after the date hereof.
Buyer hereby further confirms and agrees that it will not assert, and
hereby forever and for all purposes waives, releases and discharges, any claim
for indemnification based on any breach of any representation or warranty of
Sellers, or any breach by Sellers of its covenants under the Agreement, in each
case unless such breach or violation is not known to Buyer as of the date hereof
and could not reasonably be known to Sellers after fully completing a thorough
due diligence review and investigation of the Subject Assets and Sellers'
businesses and operations.
The parties hereby further agree as follows:
1. Not later than noon, Houston time, on Friday, January 3, 1997, Buyer
will deliver to Sellers by cashier's check or wire transfer of immediately
available funds to Sellers' account, an additional $250,000 as an additional
down payment (the "Additional Down Payment"). In the event the Additional Down
Payment is not received by such time for any reason, Sellers shall be entitled
thereupon to terminate the Agreement, and to retain the Down Payment, without
any liability whatsoever to Buyer.
2. In the event that Sellers have not received, by the close of business
on January 10, 1997, each of (a) a written statement executed by each of Robert
K. Moses ("Moses") and St. James Capital Corp. ("St. James") confirming the
accuracy of the matters set forth in the affidavit ("Affidavit") of J. David
Green attached hereto within Annex A, (b) a commitment letter, of like tenor
with the commitment letters of St. James and Sanders Morris Mundy Inc. ("SMM")
attached as Annex A committing viable lending institutions to provide loans of
the type described in the Affidavit (or firm commitments from parties capable of
performing their obligations thereunder to make equity investments in Buyer) in
each case in such amounts, when aggregated with the financial commitments of SMM
and St. James, and providing for the timing of such funding, as will enable
Buyer to close the transactions set forth in the Agreement, and (c) a revised
commitment letter of SMM providing for a closing date not later than January 31,
1997, then in such event Sellers shall be entitled thereupon to terminate the
Agreement and to retain the Down Payment, without any liability whatsoever to
Buyer; PROVIDED, HOWEVER, that in such event Sellers shall promptly return to
Buyer, without interest, the Additional Down Payment. Notwithstanding the
foregoing provisions, in the event Buyer receives binding commitments pursuant
to clause (b) above to provide funding to Buyer subject to no contingencies
other than the Closing taking place and receipt of customary loan or closing
documentation, and such commitments require no personal guaranties of Moses or
St. James, Buyer shall not be required to deliver the written statements of
Moses and St. James provided in clause (a) above.
2
<PAGE>
3. Buyer has delivered to Sellers the financial commitments attached
hereto as Annex A. Buyer hereby represents and warrants to, and covenants with,
Sellers that the parties providing such financing, as well as the parties
providing financing pursuant to the commitments referred to in Section 2 above,
will provide such financing based on the terms of the Agreement, as in effect
after giving effect to this Third Amendment, without any change or modification
thereof.
4. Buyer will, not less frequently than every third business day until the
Closing Date, provide Sellers with a status report on the availability of
financing from the parties identified on Annex A or the commitment letters
referred to in Section 2 above, listing in reasonable detail any matters that
need to be resolved prior to the provision of funds by such finance parties.
5. Section 1.1(d) of the Agreement is hereby amended to change the
reference in the last sentence of such Section from December 31, 1996 to January
31, 1997.
6. Effective upon Sellers' receipt of the Additional Down Payment, the
last sentence of Section 2.2 of the Agreement is amended to add after the term
"Down Payment" the words "and the Additional Down Payment;" to add to the end of
such sentence the clause "and, as to the Additional Down Payment, as set forth
in the Third Amendment to this Agreement;" and to add the following sentence at
the end of such Section:
"The Additional Down Payment in the amount of $250,000 was paid by Buyer
to Sellers on or before noon, Houston time, on January 3, 1997."
7. Section 2.3 is hereby deleted and the following Section 2.3 is inserted
in lieu thereof:
"Section 2.3 CASH PAYMENT. At the Closing, Buyer will pay to Sellers
Twelve Million Three Hundred Fifty Thousand Dollars ($12,350,000) (the
"Cash Payment") by wire transfer of immediately available funds to
Sellers' designated account(s) on the Closing Date. Such Cash Payment is
in addition to the Down Payment paid by Buyer to Sellers on December 3,
1996 and the Additional Down Payment paid on or before January 3, 1997."
8. Section 4.1 of the Agreement is hereby amended to delete the phrase "on
December 31, 1996 or at such earlier date and time as the closing conditions
specified in Article VIII have been satisfied" and to insert in lieu thereof the
phrase "on January 31, 1997 or at such earlier date and time as Buyer has
obtained sufficient financing to deliver the Cash Payment."
9. Section 4.2 of the Agreement is hereby amended to insert a new
subsection (i), which shall read as follows:
"(i) An agreement of Sellers not to solicit customers of the Houston
Commercial Business or the Rearload Business who are active customers of
such businesses as of January 31, 1997 for the purpose of providing
front-end or rearload collection services to such customers, which
agreement shall remain in effect for a period ending on the first
3
<PAGE>
anniversary of the Closing Date; PROVIDED HOWEVER, that such
non-solicitation agreement will not prohibit Sellers or their affiliated
parties from (A) bidding on or soliciting any business of any customer
that is put out for bid or as to which any customer makes a general
solicitation for services or (B) engaging in any business or providing any
services other than front-end or rearload collection services. Such
agreement shall provide customary provisions regarding specific
performance of the obligations set forth in such agreement."
10. Section 7.1(b) of the Agreement is hereby amended to change the
reference in Clause (ii) of such Section from December 31, 1996 to January 31,
1997.
11. Section 7.2 of the Agreement is hereby amended to add, in the last
sentence of such Section, after the term "the Down Payment", the words "and the
Additional Down Payment."
12. Section 7.3 of the Agreement is hereby amended to add to the first
sentence of such Section, after the term "the Down Payment," the words ", the
Additional Down Payment."
13. Section 9.3(b) of the Agreement is hereby deleted in its entirety and
for all purposes, and the following Section 9.3(b) shall be inserted in lieu
thereof:
(b) INTERIM OPERATION OF BUSINESS. In the period from January 1, 1997
until the Closing Date, Buyer has designated Jerry Kruszka as its
representative to manage and monitor the Assets. Jerry Kruszka will be
considered the General Manager of the business, subject to the control and
supervision of Mr. Arthur W. Johnson, the authorized representative of
Sellers, and will report to Mr. Johnson. Buyer, through Mr. Kruszka, and
subject to the control and supervision of Mr. Johnson, shall have the
right to (i) make personnel decisions, specifically including hiring at
least two new sales representatives; (ii) review and approve all
municipal, association and other residential bids or proposals; (iii)
review and approve all routing decisions; (iv) review and approve
commercial sales efforts and pricing; and (v) manage all administrative
and support services provided at the Tanner Road and Channelview
facilities. Buyer shall not without the prior written consent of Sellers
authorize any capital purchases of containers or equipment, or any other
capital expenditures, during interim operations unless such purchase is
made at Buyer's expense. All compensation, benefits and other costs and
expenses in respect of Mr. Kruszka will be borne by Buyer, and Buyer shall
hold Sellers harmless in respect thereof.
14. Section 9.3 of the Agreement is hereby amended to add the following
Section 9.3(c):
(c) TRANSFERRED EMPLOYEES. From January 1, 1997 through the period
terminating six months after the Closing Date, Sellers further covenant
not to call upon any Transferred Employee with the intent of enticing such
employee away from or out of the employ of Buyer. As used herein, the term
"Transferred Employee" means any person who is employed by Sellers in
connection with Sellers' operation of businesses primarily related
4
<PAGE>
to the Subject Assets prior to the Closing Date and who becomes an
employee of Buyer immediately after the Closing Date; PROVIDED HOWEVER,
that from and after the time any such persons ceases to be employed by
Buyer or its subsidiaries, for any reason, and Sellers have not breached
their covenants hereunder in respect of such former employee, such former
employee shall cease to be a "Transferred Employee."
15. Section 9.4 of the Agreement is hereby amended to add a new subsection
(b), which shall read as follows:
"(b) The parties shall use their commercially reasonable best efforts to
cause the Closing to take place as soon as is practicable."
The parties further agree that this Third Amendment is conditioned upon
the granting by the U.S. Department of Justice of an extension through January
31, 1997 of the period during which Sellers may consummate the sale of the
Subject Assets without such sale being conducted by a trustee. In the event that
such extension is not granted, this Third Amendment shall cease to be of any
force or effect; Sellers shall promptly return to Buyer, without interest, the
Additional Down Payment; and the Agreement, as amended through the Second
Amendment thereof, shall remain in full force and effect.
Capitalized terms used in this letter agreement that are not otherwise
defined herein shall have the meaning set forth in respect thereof in the
Agreement. Except as specifically amended hereby, the Agreement shall remain in
full force and effect without modification.
If the foregoing correctly sets forth the terms of our agreement, please
execute this letter agreement in the space provided below.
SELLERS:
SANIFILL, INC.
By:
Arthur W. Johnson
Authorized Representative and Attorney-in-Fact
SANIFILL OF TEXAS HAULING, INC.
By: /s/ ARTHUR W. JOHNSON
Arthur W. Johnson
Authorized Representative and Attorney-in-Fact
SUNRAY SERVICES, INC.
By: /s/ ARTHUR W. JOHNSON
Arthur W. Johnson
Authorized Representative and Attorney-in-Fact
5
<PAGE>
S & J LANDFILL LIMITED PARTNERSHIP
by Sanifill of Texas, Inc., its general partner
By: /s/ ARTHUR W. JOHNSON
Arthur W. Johnson
Authorized Representative and Attorney-in-Fact
BRAZORIA COUNTY RECYCLING CENTER, INC.
By: /s/ ARTHUR W. JOHNSON
Arthur W. Johnson
Authorized Representative and Attorney-in-Fact
Amendments set forth in above letter accepted and agreed to as of the date first
set forth above:
BUYER:
TRANSAMERICAN WASTE
INDUSTRIES, INC.
By: /s/ J. DAVID GREEN
J. David Green
Senior Vice President
6
EXHIBIT 2.5
January 30, 1997
TransAmerican Waste Industries, Inc.
314 North Post Oak Lane
Houston, Texas 77024
Attn: J. David Green
RE: FOURTH AMENDMENT ("FOURTH AMENDMENT") TO PURCHASE AND SALE AGREEMENT
EXECUTED DECEMBER 3, 1996 BY AND AMONG TRANSAMERICAN WASTE
INDUSTRIES, INC., A DELAWARE CORPORATION ("BUYER"), AND SANIFILL,
INC., A DELAWARE CORPORATION ("SANIFILL"), SANIFILL OF TEXAS
HAULING, INC., A TEXAS CORPORATION ("HAULING"), SUNRAY SERVICES,
INC., A DELAWARE CORPORATION ("SUNRAY"), S&J LANDFILL LIMITED
PARTNERSHIP, A LIMITED PARTNERSHIP FORMED UNDER TEXAS LAW ("S&J
LANDFILL") AND BRAZORIA COUNTY RECYCLING CENTER, INC., A TEXAS
CORPORATION ("BRAZORIA RECYCLING"), (SANIFILL, HAULING, SUNRAY, S&J
LANDFILL AND BRAZORIA RECYCLING ARE COLLECTIVELY REFERRED TO HEREIN
AS "SELLERS"), AS AMENDED BY A FIRST AMENDMENT DATED DECEMBER 4,
1996, A SECOND AMENDMENT DATED DECEMBER 12, 1996 AND A THIRD
AMENDMENT DATED DECEMBER 31, 1996 (THE "THIRD AMENDMENT") (SUCH
PURCHASE AGREEMENT, AS AMENDED TO DATE, REFERRED TO HEREIN AS THE
"PURCHASE AGREEMENT")
Dear Mr. Green:
As we have discussed and in connection with the closing of the Purchase
Agreement, Sellers and Buyer agree that the Purchase Agreement, and the prior
amendments thereto, shall be further modified and amended as set forth herein:
1. The last two pages of SCHEDULE 1.1(C), purporting to be a metes and
bounds description of 9.250 acres of land constituting the real property at the
Tanner Road Facility, is hereby deleted and the pages marked SCHEDULE 1.1(C)
attached hereto are inserted in lieu thereof for all purposes.
2. The first clause of SECTION 2.5(A), "Post-Closing Adjustment;
Calculation of Net Working Capital on the Closing Date", of the Purchase
Agreement is hereby deleted and the following clause is inserted in lieu thereof
for all purposes:
"On or before March 31, 1997,"
3. The dates set forth in the first sentence of SECTION 9.2(C), "Buyer's
Covenants; Filing of Registration Statement", shall be amended such that
(a) March 30, 1997, the date for filing the Form S-3 registration
statement, shall be deleted and "within four months of the Closing (as
defined in the Registration Rights Agreement (as defined below))", the
date for filing the registration statement set forth in the Registration
Rights Agreement dated January 31, 1997 between Buyer, Sanders Morris
Mundy Inc., a Texas
<PAGE>
TransAmerican Waste Industries, Inc.
January 30, 1997
Page
corporation, and the persons set forth on Exhibit A to such agreement (the
"Registration Rights Agreement"), shall be inserted in lieu thereof for
all purposes; and
(b) June 30, 1997, the date for causing the registration statement
to become effective, shall be deleted and "in no event later that seven
months after the Closing (as defined in the Registration Rights
Agreement)", the date for causing the registration statement to become
effective as set forth in the Registration Rights Agreement, shall be
inserted in lieu thereof for all purposes.
4. The following additional sentence shall be added to the end of SECTION
9.2(C), "Buyer's Covenants; Filing of Registration Statement" of the Purchase
Agreement:
"Sellers' registration rights hereunder shall be not less favorable to
Sellers than the registration rights granted to Sanders Morris Mundy Inc.,
a Texas corporation, and the persons on Exhibit A to the Registration
Rights Agreement dated January 31, 1997 between Buyer, Sanders Morris
Mundy Inc., a Texas corporation, and the persons set forth on Exhibit A to
such agreement (the "REGISTRATION RIGHTS AGREEMENT")."
5. The last four words of the first sentence of SECTION 11.11, "Allocation
of Purchase Price", of the Purchase Agreement is hereby deleted and the
following words are inserted in lieu thereof for all purposes:
"on or before March 31, 1997."
6. The following additional Sections 11.16 and 11.17 shall be added after
SECTION 11.15, "DTPA Waiver", of the Purchase Agreement:
" SECTION 11.16 ASSIGNMENT. This Agreement shall be binding upon the
parties hereto and their respective successors and assigns, provided that
any assignment will not release the assignor from its obligations or
liabilities hereunder without the consent of the other parties hereto.
Notwithstanding the foregoing, Buyer may at any time collaterally assign
its rights hereunder to any person providing financing to Buyer; PROVIDED,
HOWEVER, that no such assignment shall impair any rights of Sellers
hereunder or any defenses of Sellers in connection with this Agreement and
the transactions contemplated hereby, and PROVIDED FURTHER, that any such
person who, by foreclosure or otherwise, succeeds to the rights of Buyer
hereunder shall likewise be subject to all obligations of Buyer hereunder.
SECTION 11.17 EFFECTIVE DATE OF CLOSING. Regardless of whether all
or any part of the documents executed and delivered at the Closing are
executed and delivered on an earlier date, and regardless of whether the
funding of Buyers' payment of the Cash Payment is effective on January 30,
1997 or January 31, 1997, the Closing shall be effective for all purposes
as of the close of business on January 31, 1997."
7. In connection with the acquisition of the expansion tract constituting
real property that will be added to the Landfill in the event to the Permit
Application is granted, Sunray agrees to contribute up to $11,000 in premiums to
acquire a title insurance policy insuring title in such expansion tract in
TransAmerican Waste of Houston, Inc. up to a face amount of such policy of
$1,750,000.
2
<PAGE>
TransAmerican Waste Industries, Inc.
January 30, 1997
Page
Capitalized terms used in this letter agreement that are not otherwise
defined herein shall have the meaning set forth in respect thereof in the
Purchase Agreement. Except as specifically amended hereby, the Purchase
Agreement, as amended through the Third Amendment thereof, and the terms of the
Third Amendment and each prior amendment of the Purchase Agreement, shall remain
in full force and effect.
[Balance of page intentionally left blank.]
3
<PAGE>
TransAmerican Waste Industries, Inc.
January 30, 1997
Page
If the foregoing correctly sets forth the terms of our agreement, please
execute this letter agreement in the space provided below.
SELLERS:
SANIFILL, INC.
By: /s/ MONTY MATHEWS
Monty Mathews
Authorized Representative and Attorney-in-Fact
SANIFILL OF TEXAS HAULING, INC.
By: /s/ MONTY MATHEWS
Monty Mathews
Authorized Representative and Attorney-in-Fact
SUNRAY SERVICES, INC.
By: /s/ MONTY MATHEWS
Monty Mathews
Authorized Representative and Attorney-in-Fact
S & J LANDFILL LIMITED PARTNERSHIP
by Sanifill of Texas, Inc., its general partner
By: /s/ MONTY MATHEWS
Monty Mathews
Authorized Representative and Attorney-in-Fact
BRAZORIA COUNTY RECYCLING CENTER, INC.
By: /s/ MONTY MATHEWS
Monty Mathews
Authorized Representative and Attorney-in-Fact
Amendments set forth in above letter accepted and agreed to as of the date first
set forth above:
BUYER:
TRANSAMERICAN WASTE
INDUSTRIES, INC.
By: /s/ J. DAVID GREEN
J. David Green
Senior Vice President
4
EXHIBIT 4.1
STOCK PURCHASE WARRANT
THE SECURITIES REPRESENTED BY THIS INSTRUMENT AND THE UNDERLYING COMMON
STOCK HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE OR OTHER
JURISDICTION. WITHOUT SUCH REGISTRATION, SUCH SECURITIES MAY NOT BE SOLD,
PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED, EXCEPT UPON DELIVERY TO
TRANSAMERICAN WASTE INDUSTRIES, INC. ("COMPANY") OF AN OPINION OF COUNSEL TO THE
EFFECT THAT REGISTRATION IS NOT REQUIRED FOR SUCH TRANSFER, OR SUBMISSION TO THE
COMPANY OF OTHER REASONABLE EVIDENCE TO THE EFFECT THAT ANY SUCH TRANSFER SHALL
NOT BE IN VIOLATION OF THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE
STATE OR FOREIGN SECURITIES LAW OR ANY RULE OR REGULATION PROMULGATED
THEREUNDER.
The undersigned, TransAmerican Waste Industries, Inc., a Delaware
corporation ("COMPANY"), for good and valuable consideration, receipt of which
is hereby acknowledged, hereby certifies and confirms that:
1. The Company hereby grants to USA Waste Services, Inc. ("WARRANT
HOLDER") the right to purchase, at the option of the Warrant Holder and on the
terms and conditions hereinafter set forth, all or any part of 1,500,000 shares
("SHARES") of common stock, $.001 par value per share, of the Company, such
right to be exercisable at a purchase price ("PURCHASE PRICE") equal to $1.50
per share. This Warrant may be exercised at any time, and from time to time,
during the period from the date hereof and ending at 5:00 p.m. Houston, Texas
time, on December 31, 2001. The number of Shares subject to this Warrant and the
Purchase Price therefor shall be subject to adjustment as hereinafter set forth.
2. This Warrant may be exercised by the Warrant Holder from time to time
by delivery of written notice specifying therein the number of shares which it
has elected to purchase and the payment in cash or by cashier's or official bank
check to the Company, or other form of payment acceptable to the Company, of the
Purchase Price of the Shares which the Warrant Holder shall then elect to
purchase. Notwithstanding the foregoing, the Warrant Holder shall not exercise
this Warrant at any one time for an amount of Shares exceeding five percent (5%)
of the total number of common stock outstanding of the Company.
3. The Company shall at all times during the term of this Stock Purchase
Warrant reserve and keep available such number of shares of its Common Stock as
will be sufficient to satisfy the requirements of this Stock Purchase Warrant,
and shall pay all fees and expenses necessarily incurred by the Company in
connection therewith. The reserved shares may be either authorized and unissued
shares of its Common Stock or shares of Common Stock held in its treasury, or
partly unissued and partly treasury shares.
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4. This Warrant, and the rights and privileges conferred hereby may be
exercised by the Warrant Holder and its or his legal representatives, successors
or permitted assignees. This Warrant, and all registration rights of the Warrant
Holder as set forth in that certain Purchase and Sale Agreement between the
parties hereto dated December 3, 1996, may be transferred by the Warrant Holder
from time to time in whole or in part.
5. Wherever this Stock Purchase Warrant specifies a number of Shares or a
Purchase Price per share, the specified number of Shares or the specified
Purchase Price per share shall be changed to reflect adjustments required by
this section.
5.1 ADJUSTMENTS. If prior to the expiration or exercise of this Warrant
there shall be any change in the capital structure of the Company, the
Shares covered by the Warrant and the Purchase Price payable therefor
shall be adjusted as follows:
a. In case the Company shall (i) pay a dividend in shares of Common
Stock or make a distribution in shares of Common Stock, (ii) subdivide its
outstanding shares of Common Stock, (iii) combine its outstanding shares
of Common Stock into a smaller number of shares of Common Stock or (iv)
issue by reclassification of its shares of Common Stock other securities
of the Company, the number of Shares purchasable upon exercise of this
Stock Purchase Warrant immediately prior thereto shall be adjusted so that
the Warrant Holder shall be entitled to receive the kind and number of
shares or other securities of the Company which he would have owned or
have been entitled to receive after the happening of any 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 shall issue rights, options or warrants to
all or substantially all holders of its shares of Common Stock, without
any charge to such holders, entitling them to subscribe for or purchase
shares of Common Stock at a price per share which is lower at the record
date mentioned below than the Purchase Price of this Warrant, the number
of Shares thereafter purchasable upon the exercise of this Stock Purchase
Warrant shall be determined by multiplying the number of Shares
theretofore purchasable upon exercise of this Warrant by a fraction, of
which the numerator shall be the number of shares of Common Stock
outstanding on the date of issuance of such rights, options or warrants
plus the number of additional shares of Common Stock offered for
subscription or purchase, and of which the denominator shall be the number
of shares of Common Stock outstanding on the date of issuance of such
rights, options or warrants plus the number of shares which the aggregate
offering price of the total number of shares of Common Stock so offered
would purchase at the Purchase Price. Such adjustment shall be made
whenever such rights, options or warrants are issued, and shall become
effective retroactively immediately after the record date for the
determination of stockholders entitled to receive such rights, options or
warrants.
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c. In case the Company shall distribute to all or substantially all
holders of its shares of Common Stock evidences of its indebtedness or
assets (excluding cash dividends or distributions out of earnings) or
rights, options or warrants or convertible securities containing the right
to subscribe for or purchase shares of Common Stock (excluding those
referred to in PARAGRAPH (B) above) then in each case the number of Shares
thereafter purchasable upon the exercise of this Stock Purchase Warrant
shall be determined by multiplying the number of Shares theretofore
purchasable upon exercise of the Warrant by a fraction, of which the
numerator shall be the Purchase Price of this Warrant on the date of such
distribution, and of which the denominator shall be the Purchase Price of
the Warrant less the then fair market value of the portion of the assets
or evidences of indebtedness so distributed or of such subscription
rights, options or warrants, or of such convertible securities applicable
to one share of Common Stock. Such adjustment shall be made whenever any
such distribution is made, and shall become effective on the date of
distribution retroactive to the record date for the determination of
shareholders entitled to receive such distribution.
d. Whenever the number of Shares purchasable upon the exercise of
this Stock Purchase Warrant is adjusted, as herein provided, the Purchase
Price per share payable upon exercise hereof shall be adjusted by
multiplying such Purchase Price immediately prior to such adjustment by a
fraction, of which the numerator shall be the number of Shares purchasable
upon the exercise of such Warrant immediately prior to such adjustment,
and of which the denominator shall be the number of Shares so purchasable
immediately thereafter.
e. Whenever the number of Shares purchasable upon the exercise of
this Warrant or the Purchase Price of such Shares is adjusted, as herein
provided, the Company shall promptly mail by first class mail, postage
prepaid, to each Warrant Holder notice of such adjustment or adjustments
setting forth the number of Shares purchasable upon the exercise of such
Warrant and the Purchase Price of such Shares after such adjustment, a
brief statement of the facts requiring such adjustment and the computation
by which such adjustment was made.
f. For the purpose of this SECTION 5, the term "COMMON STOCK" shall
mean (i) the class of stock designated as the Common Stock of the Company
at the date of this Stock Purchase Warrant, or (ii) any other class of
stock resulting from successive changes or reclassification of such shares
consisting solely of changes in par value, or from par value to no par
value, or from no par value to par value. In the event that at any time,
as a result of an adjustment made pursuant to this SECTION 5, the Warrant
Holder shall become entitled to purchase any shares of the Company other
than shares of Common Stock, thereafter the number of such other shares so
purchasable upon exercise of this Warrant and the Purchase Price of such
shares shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect
to the shares contained in PARAGRAPHS (A) THROUGH (E), inclusive, above
and
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the other Sections of this Stock Purchase Warrant shall apply on like
terms to any such other shares.
5.2 PRESERVATION OF PURCHASE RIGHTS UPON RECLASSIFICATION, CONSOLIDATION,
ETC. In the event of any consolidation of the Company with or merger of
the Company into another corporation or in the event of any sale or
conveyance to another corporation of the property, assets or business of
the Company as an entirety or substantially as an entirety, the Company or
such successor or purchasing corporation, as the case may be, shall
execute an agreement that each Warrant Holder shall have the right
thereafter upon payment of the Purchase 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 which he would have
owned or have been entitled to receive after the happening of such
consolidation, merger, sale or conveyance had such Warrant been exercised
immediately prior to such action. Such agreement shall provide for
adjustments, which shall be as nearly equivalent as may be practicable to
the adjustments provided for in this SECTION 5. The Company shall mail by
first class mail, postage prepaid, to the Warrant Holder, notice of the
execution of any such agreement. The provisions of this SUBSECTION 5.2
shall similarly apply to successive consolidations, mergers, sales, or
conveyances.
5.3 STATEMENT ON WARRANTS. Irrespective of any adjustments in the Purchase
Price of the number or kind of Shares purchasable upon the exercise of
this Warrant, Warrants theretofore or thereafter issued may continue to
express the same price and number and kind of shares as are stated in the
Warrants initially issuable pursuant to this Stock Purchase Warrant.
5.4 LEGEND ON SHARES. In the event that, notwithstanding the Company's
covenant in SECTION 9.2(C) of the Purchase and Sale Agreement dated
December 3, 1996 among the Company and certain affiliates of the Warrant
Holder to file a registration statement in respect of the Shares to be
effective by June 30, 1997, the Warrant Holder exercises the Warrant
before such registration statement is effective, the Shares shall contain
a legend stating that the Shares have not been registered under the
Securities Act of 1993, as amended, or the securities laws of any state or
other jurisdiction.
6. This Stock Purchase Warrant shall be construed and enforced in
accordance with the laws of the State of Texas. Any notices to be given under
the terms of this Stock Purchase Warrant shall be addressed to the Company at
314 North Post Oak Lane, Houston, Texas 77024, Attention: Chairman, and notice
to be given to the Warrant Holder shall be addressed to it at 1001 Fannin, Suite
4000, Houston, Texas 77002 or at any such other address as either party may
hereafter designate, by notice in writing, to the other. Notice shall be deemed
given and effective the day personally delivered, the day after being sent by
overnight courier and three days after deposit in the U.S. mail as provided
above, or when actually received, if earlier. Either party may change the
address for notices or communications to be given to it by written notice to the
other party given as provided in this Section.
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<PAGE>
7. This Stock Purchase Warrant shall be binding upon and inure to the
benefit of any successor or successors of the Company, and shall inure to the
benefit of and shall be enforceable by the Warrant Holder and its legal
representatives, successors, heirs and assigns.
8. As long as USA Waste Services, Inc. or any affiliate of USA Waste
Services, Inc. is the Warrant Holder, such Warrant Holder agrees that upon
exercise of this Warrant, in whole or in part, it will simultaneously with such
exercise (or as soon thereafter as is practical) sell or otherwise transfer and
convey to a party unaffiliated with USA Waste Services, Inc. all shares of
Common Stock acquired upon such exercise.
Dated this 31st day of January, 1997.
TRANSAMERICAN WASTE INDUSTRIES, INC.
ATTEST:
/s/ J. DAVID GREEN /s/ TOM J. FATJO, JR.
- --------------------------- -----------------------------
J. David Green, Secretary Tom J. Fatjo, Jr., Chairman
5
EXHIBIT 4.2
THE SECURITIES REPRESENTED BY THIS WARRANT AND THE COMMON STOCK ISSUABLE THEREBY
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY OTHER APPLICABLE SECURITIES LAW AND, ACCORDINGLY, THE
SECURITIES REPRESENTED BY THIS WARRANT MAY NOT BE RESOLD, PLEDGED, OR OTHERWISE
TRANSFERRED, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER, OR IN
A TRANSACTION EXEMPT FROM REGISTRATION UNDER, THE SECURITIES ACT AND IN
ACCORDANCE WITH ANY OTHER APPLICABLE SECURITIES LAWS.
WARRANT
to Purchase Common Stock of
TRANSAMERICAN WASTE INDUSTRIES, INC.
Expiring on January 31, 2002
This Common Stock Purchase Warrant (the "Warrant") certifies that for
value received, Robert K. Moses, Jr. (the "Holder") or its assigns, is entitled
to subscribe for and purchase from the Company (as hereinafter defined), in
whole or in part, 2,000,000 shares of duly authorized, validly issued, fully
paid and nonassessable shares of Common Stock (as hereinafter defined) at an
initial Exercise Price (as hereinafter defined) per share of $1.00, subject,
however, to the provisions and upon the terms and conditions hereinafter set
forth. The number of Warrants (as hereinafter defined), the number of shares of
Common Stock purchasable hereunder, and the Exercise Price therefor are subject
to adjustment as hereinafter set forth. This Warrant and all rights hereunder
shall expire at 5:00 p.m., Houston, Texas time, on January 31, 2002.
As used herein, the following terms shall have the meanings set forth
below:
"COMPANY" shall mean TransAmerican Waste Industries, Inc., a Delaware
corporation, and shall also include any successor thereto with respect to the
obligations hereunder, by merger, consolidation or otherwise.
"COMMON STOCK" shall mean and include the Company's Common Stock, par
value $0.001 per share, authorized on the date of the original issue of this
Warrant and shall also include (i) in case of any reorganization,
reclassification, consolidation, merger, share exchange or sale, transfer or
other disposition of assets of the character referred to in Section hereof, the
stock, securities provided for in such Section , and (ii) any other shares of
common stock of the Company into which such shares of Common Stock may be
converted.
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"EXERCISE PRICE" shall mean the initial purchase price of $1.00 per share
of Common Stock payable upon exercise of the Warrants, as adjusted from time to
time pursuant to the provisions hereof.
"MARKET PRICE" for any day, when used with reference to Common Stock,
shall mean the price of said Common Stock determined as follows: (x) the last
reported sale price for the Common Stock on such day on the principal securities
exchange on which the Common Stock is listed or admitted to trading or if no
such sale takes place on such date, the average of the closing bid and asked
prices thereof as officially reported, or, if not so listed or admitted to
trading on any securities exchange, the last sale price for the Common Stock on
the National Association of Securities Dealers SmallCap Market on such date, or,
if there shall have been no trading on such date or if the Common Stock shall
not be listed on such system, the average of the closing bid and asked prices in
the over-the-counter market as furnished by any NASD member firm selected from
time to time by the Company for such purpose, in each such case, unless
otherwise provided herein, averaged over a period of ten (10) consecutive
Trading Days prior to the date as of which the determination is to be made; or
(y) if the Common Stock shall not be listed or admitted to trading as provided
in clause (x) above, the fair market value of the Common Stock as determined in
good faith by the Board of Directors of the Company.
"OUTSTANDING," when used with reference to Common Stock, shall mean
(except as otherwise expressly provided herein) at any date as of which the
number of shares thereof is to be determined, all issued shares of Common Stock,
except shares then owned or held by or for the account of the Company.
"TRADING DAYS" shall mean any days during the course of which the
principal securities exchange on which the Common Stock is listed or admitted to
trading is open for the exchange of securities.
"WARRANT" shall mean the right upon exercise to purchase one Warrant
Share.
"WARRANT SHARES" shall mean the shares of Common Stock purchased or
purchasable by the holder hereof upon the exercise of the Warrants.
ARTICLE I
EXERCISE OF WARRANTS
1.1 METHOD OF EXERCISE. The Warrants represented hereby may be exercised
by the holder hereof, in whole or in part, at any time and from time to time on
or after the date hereof until 5:00 p.m., Houston, Texas time, on January 31,
2002. To exercise the Warrants, the holder hereof shall deliver to the Company,
at the Warrant Office designated in Section hereof, (i) a written notice in the
form of the Subscription Notice attached as an exhibit hereto, stating therein
the election of such holder to exercise the Warrants in the manner provided in
the Subscription Notice; (ii) payment in full of the Exercise Price (A) in cash
or by bank check for all Warrant
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<PAGE>
Shares purchased hereunder, or (B) through a "cashless" or "net-issue" exercise
of each such Warrant ("Cashless Exercise"); the holder shall exchange each
Warrant subject to a Cashless Exercise for that number of Warrant Shares
determined by multiplying the number of Warrant Shares issuable hereunder by a
fraction, the numerator of which shall be the difference between (x) the Market
Price and (y) the Exercise Price for each such Warrant, and the denominator of
which shall be the Market Price; the Subscription Notice shall set forth the
calculation upon which the Cashless Exercise is based, or (C) a combination of
(A) and (B) above; and (iii) this Warrant. The Warrants shall be deemed to be
exercised on the date of receipt by the Company of the Subscription Notice,
accompanied by payment for the Warrant Shares and surrender of this Warrant, as
aforesaid, and such date is referred to herein as the "Exercise Date". Upon such
exercise, the Company shall, as promptly as practicable and in any event within
ten (10) business days, issue and deliver to such holder a certificate or
certificates for the full number of the Warrant Shares purchased by such holder
hereunder, and shall, unless the Warrants have expired, deliver to the holder
hereof a new Warrant representing the number of Warrants, if any, that shall not
have been exercised, in all other respects identical to this Warrant. As
permitted by applicable law, the Person in whose name the certificates for
Common Stock are to be issued shall be deemed to have become a holder of record
of such Common Stock on the Exercise Date and shall be entitled to all of the
benefits of such holder on the Exercise Date, including without limitation the
right to receive dividends and other distributions for which the record date
falls on or after the Exercise Date and to exercise voting rights.
1.2 EXPENSES AND TAXES. The Company shall pay all expenses, and taxes
(including, without limitation, all documentary, stamp, transfer or other
transactional taxes) other than income taxes attributable to the preparation,
issuance or delivery of the Warrants and of the shares of Common Stock issuable
upon exercise of the Warrants.
1.3 RESERVATION OF SHARES. The Company shall reserve at all times so long
as the Warrants remain outstanding, free from preemptive rights, out of its
treasury Common Stock or its authorized but unissued shares of Common Stock, or
both, solely for the purpose of effecting the exercise of the Warrants, a
sufficient number of shares of Common Stock to provide for the exercise of the
Warrants.
1.4 VALID ISSUANCE. All shares of Common Stock that may be issued upon
exercise of the Warrants will, upon issuance by the Company, be duly and validly
issued, fully paid and nonassessable and free from all taxes, liens and charges
with respect to the issuance thereof and, without limiting the generality of the
foregoing, the Company shall take no action or fail to take any action which
will cause a contrary result (including, without limitation, any action that
would cause the Exercise Price to be less than the par value, if any, of the
Common Stock).
1.5 ACKNOWLEDGMENT OF RIGHTS. At the time of the exercise of the Warrants
in accordance with the terms hereof and upon the written request of the holder
hereof, the Company will acknowledge in writing its continuing obligation to
afford to such holder any rights (including, without limitation, any right to
registration of the Warrant Shares) to which such holder shall continue to be
entitled after such exercise in accordance with the provisions of this
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Warrant; PROVIDED, HOWEVER, that if the holder hereof shall fail to make any
such request, such failure shall not affect the continuing obligation of the
Company to afford to such holder any such rights.
1.6 NO FRACTIONAL SHARES. The Company shall not be required to issue
fractional shares of Common Stock on the exercise of this Warrant. If more than
one Warrant shall be presented for exercise at the same time by the same holder,
the number of full shares of Common Stock which shall be issuable upon such
exercise shall be computed on the basis of the aggregate number of whole shares
of Common Stock purchasable on exercise of the Warrants so presented. If any
fraction of a share of Common Stock would, except for the provisions of this
Section , be issuable on the exercise of this Warrant, the Company shall pay an
amount in cash calculated by it to be equal to the Market Price of one share of
Common Stock at the time of such exercise multiplied by such fraction computed
to the nearest whole cent.
ARTICLE II
TRANSFER
2.1 WARRANT OFFICE. The Company shall maintain an office for certain
purposes specified herein (the "Warrant Office"), which office shall initially
be the Company's offices at 314 North Post Oak Lane, Houston Texas 77024, and
may subsequently be such other office of the Company or of any transfer agent of
the Common Stock in the continental United States as to which written notice has
previously been given to the holder hereof. The Company shall maintain, at the
Warrant Office, a register for the Warrants in which the Company shall record
the name and address of the Person in whose name this Warrant has been issued,
as well as the name and address of each permitted assignee of the rights of the
registered owner hereof.
2.2 OWNERSHIP OF WARRANTS. The Company may deem and treat the Person in
whose name the Warrants are registered as the holder and owner hereof
(notwithstanding any notations of ownership or writing hereon made by anyone
other than the Company) for all purposes and shall not be affected by any notice
to the contrary until presentation of this Warrant for registration of transfer
as provided in this Article II. Notwithstanding the foregoing, the Warrants
represented hereby, if properly assigned in compliance with this Article II, may
be exercised by an assignee for the purchase of Warrant Shares without having a
new Warrant issued.
2.3 RESTRICTIONS ON TRANSFER OF WARRANTS. The Company agrees to maintain
at the Warrant Office books for the registration and transfer of the Warrants.
Subject to the restrictions on transfer of the Warrants in this Section , the
Company, from time to time, shall register the transfer of the Warrants in such
books upon surrender of this Warrant at the Warrant Office properly endorsed or
accompanied by appropriate instruments of transfer and written instructions for
transfer satisfactory to the Company. Upon any such transfer and upon payment by
the holder or its transferee of any applicable transfer taxes, new Warrants
shall be issued to the transferee and the transferor (as their respective
interests may appear) and the surrendered
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Warrants shall be cancelled by the Company. The Company shall pay all taxes
(other than securities transfer taxes or income taxes) and all other expenses
and charges payable in connection with the transfer of the Warrants pursuant to
this Section .
2.3.1 RESTRICTIONS IN GENERAL. The holder of the Warrants agrees
that it will neither (i) transfer the Warrants prior to delivery to the Company
of written notice of such transfer, nor (ii) transfer such Warrant Shares prior
to delivery to the Company of written notice of such transfer, or until
registration of such Warrant Shares under the Securities Act and any applicable
state securities or blue sky laws has become effective.
2.4 COMPLIANCE WITH SECURITIES LAWS. Subject to the terms of the
Registration Rights Agreement between the Holder and the Company dated as of the
date hereof and notwithstanding any other provisions contained in this Warrant,
the holder hereof understands and agrees that the following restrictions and
limitations shall be applicable to all Warrant Shares and to all resales or
other transfers thereof pursuant to the Securities Act:
2.4.1 The holder hereof agrees that the Warrant Shares shall not be
sold or otherwise transferred unless the Warrant Shares are registered under the
Securities Act and applicable state securities or blue sky laws or are exempt
therefrom.
2.4.2 A legend in substantially the following form will be placed on
the certificate(s) evidencing the Warrant Shares:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR ANY OTHER APPLICABLE SECURITIES LAW
AND, ACCORDINGLY, THE SECURITIES REPRESENTED BY THIS
CERTIFICATE MAY NOT BE RESOLD, PLEDGED, OR OTHERWISE
TRANSFERRED, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER, OR IN A TRANSACTION EXEMPT FROM REGISTRATION
UNDER, THE SECURITIES ACT AND IN ACCORDANCE WITH ANY OTHER
APPLICABLE SECURITIES LAWS."
2.4.3 Stop transfer instructions will be imposed with respect to the
Warrant Shares so as to restrict resale or other transfer thereof, subject to
this Section 2.4.
<PAGE>
ARTICLE III
ANTI-DILUTION
3.1 ANTI-DILUTION PROVISIONS. The Exercise Price shall be subject to
adjustment from time to time as hereinafter provided. Upon each adjustment of
the Exercise Price, the holder of this Warrant shall thereafter be entitled to
purchase, at the Exercise Price resulting from such
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adjustment, the number of shares of Common Stock obtained by multiplying the
Exercise Price in effect immediately prior to such adjustment by the number of
shares purchasable pursuant hereto immediately prior to such adjustment and
dividing the product thereof by the Exercise Price resulting from such
adjustment.
3.2 ADJUSTMENT OF EXERCISE PRICE UPON ISSUANCE OF COMMON STOCK.
3.2.1 (A) If and whenever after the date hereof the Company shall
issue or sell any Common Stock for no consideration or for a consideration per
share less than the Exercise Price, then, forthwith upon such issue or sale, the
Exercise Price shall be reduced (but not increased, except as otherwise
specifically provided in Section hereof), to the price (calculated to the
nearest one-ten thousandth of a cent) determined by dividing (x) an amount equal
to the sum of (i) the aggregate number of shares of Common Stock outstanding
immediately prior to such issue or sale multiplied by then existing Exercise
Price plus (ii) the consideration received by the Company upon such issue or
sale by (y) the aggregate number of shares of Common Stock outstanding
immediately after such issue or sale. Notwithstanding the foregoing and in lieu
thereof, in the event the Company issues additional shares pursuant to Section
of that certain Registration Rights Agreement of even date herewith among the
Company, Sanders Morris Mundy Inc. and certain other persons named on Exhibit A
thereto, then the Exercise Price shall be reduced to the price determined by
dividing the then existing Exercise Price by one and one-half (1.5).
(B) Notwithstanding the provisions of this Section , no
adjustment shall be made in the Exercise Price in the event that the Company
issues, in one or more transactions, (i) Common Stock or convertible securities
upon exercise of any options issued to officers, directors or employees of the
Company pursuant to a stock option plan or an employment, severance or
consulting agreement as now or hereafter in effect, in each case approved by the
Board of Directors (provided that the aggregate number of shares of Common Stock
which may be issuable, including options issued prior to the date hereof, under
all such employee plans and agreements shall at no time exceed the number of
such shares of Common Stock that are issuable under currently effective employee
plans and agreements); (ii) Common Stock upon exercise of any stock purchase
warrant or option (other than the options referred to in clause (i) above) or
other convertible security outstanding on the date hereof; or (iii) Common Stock
issued as consideration in, or in connection with, acquisitions by the Company.
In addition, for purposes of calculating any adjustment of the Exercise Price as
provided in this Section , all of the shares of Common Stock issuable pursuant
to any of the foregoing shall be assumed to be outstanding prior to the event
causing such adjustment to be made.
3.2.2 For purposes of this Section , the following Sections to
inclusive, shall be applicable:
(A) ISSUANCE OF RIGHTS OR OPTIONS. In case at any time after the
date hereof the Company shall in any manner grant (whether directly or by
assumption in a merger or otherwise) any rights to subscribe for or to
purchase, or any options for the purchase of,
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Common Stock or any stock or securities convertible into or exchangeable
for Common Stock (such convertible or exchangeable stock or securities
being herein called "Convertible Securities"), whether or not such rights
or options or the right to convert or exchange any such Convertible
Securities are immediately exercisable, and the price per share for which
shares of Common Stock are issuable upon the exercise of such rights or
options or upon conversion or exchange of such Convertible Securities
(determined by dividing (i) the total amount, if any, received or
receivable by the Company as consideration for the granting of such rights
or options, plus the minimum aggregate amount of additional consideration,
if any, payable to the Company upon the exercise of such rights or
options, or plus, in the case of such rights or options that relate to
Convertible Securities, the minimum aggregate amount of additional
consideration, if any, payable upon the issue or sale of such Convertible
Securities and upon the conversion or exchange thereof, by (ii) the total
maximum number of shares of Common Stock issuable upon the exercise of
such rights or options or upon the conversion or exchange of all such
Convertible Securities issuable upon the exercise of such rights or
options) shall be less than the Exercise Price in effect as of the date of
granting such rights or options, then the total maximum number of shares
of Common Stock issuable upon the exercise of such rights or options or
upon conversion or exchange of all such Convertible Securities issuable
upon the exercise of such rights or options shall be deemed to be
outstanding as of the date of the granting of such rights or options and
to have been issued for such price per share, with the effect on the
Exercise Price specified in Section hereof. Except as provided in Section
hereof, no further adjustment of the Exercise Price shall be made upon the
actual issuance of such Common Stock or of such Convertible Securities
upon exercise of such rights or options or upon the actual issuance of
such Common Stock upon conversion or exchange of such Convertible
Securities.
(B) CHANGE IN OPTION PRICE OR CONVERSION RATE. Upon the happening of
any of the following events, namely, if the purchase price provided for in
any right or option referred to in Section , the additional consideration,
if any, payable upon the conversion or exchange of any Convertible
Securities referred to in Section , or the rate at which any Convertible
Securities referred to in Section , are convertible into or exchangeable
for Common Stock shall change (other than under or by reason of provisions
designed to protect against dilution), the Exercise Price then in effect
hereunder shall forthwith be readjusted (increased or decreased, as the
case may be) to the Exercise Price that would have been in effect at such
time had such rights, options or Convertible Securities still outstanding
provided for such changed purchase price, additional consideration or
conversion rate, as the case may be, at the time initially granted, issued
or sold. On the expiration of any such option or right referred to in
Section , or on the termination of any such right to convert or exchange
any such Convertible Securities referred to in Section , the Exercise
Price then in effect hereunder shall forthwith be readjusted (increased or
decreased, as the case may be) to the Exercise Price that would have been
in effect at the time of such expiration or termination had such right,
option or Convertible Securities, to the extent outstanding immediately
prior to such expiration or termination, never been granted, issued or
sold, and the Common Stock issuable
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thereunder shall no longer be deemed to be outstanding. If the purchase
price provided for in Section or the rate at which any Convertible
Securities referred to in Section reduced at any time under or by reason
of provisions with respect thereto designed to protect against dilution,
then in case of the delivery of Common Stock upon the exercise of any such
right or option or upon conversion or exchange of any such Convertible
Securities, the Exercise Price then in effect hereunder shall, if not
already adjusted, forthwith be adjusted to such amount as would have
obtained had such right, option or Convertible Securities never been
issued as to such Common Stock and had adjustments been made upon the
issuance of the Common Stock delivered as aforesaid, but only if as a
result of such adjustment the Exercise Price then in effect hereunder is
thereby reduced.
(C) CONSIDERATION FOR STOCK. In case at any time Common Stock or
Convertible Securities or any rights or options to purchase any such
Common Stock or Convertible Securities shall be issued or sold for cash,
the consideration therefor shall be deemed to be the amount received by
the Company therefor. In case at any time any Common Stock, Convertible
Securities or any rights or options to purchase any such Common Stock or
Convertible Securities shall be issued or sold for consideration other
than cash, the amount of the consideration other than cash received by the
Company shall be deemed to be the fair value of such consideration, as
determined reasonably and in good faith by the Board of Directors of the
Company. In case at any time any Common Stock, Convertible Securities or
any rights or options to purchase any Common Stock or Convertible
Securities shall be issued in connection with any merger or consolidation
in which the Company is the surviving corporation, the amount of
consideration received therefor shall be deemed to be the fair value, as
determined reasonably and in good faith by the Board of Directors of the
Company, of such portion of the assets and business of the nonsurviving
corporation as such Board of Directors may determine to be attributable to
such Common Stock, Convertible Securities, rights or options as the case
may be. In case at any time any rights or options to purchase any shares
of Common Stock or Convertible Securities shall be issued in connection
with the issuance and sale of other securities of the Company, together
consisting of one integral transaction in which no consideration is
allocated to such rights or options by the parties, such rights or options
shall be deemed to have been issued with consideration.
(D) RECORD DATE. In the case the Company shall take a record of the
holders of its Common Stock for the purpose of entitling them (i) to
receive a dividend or other distribution payable in Common Stock or
Convertible Securities, or (ii) to subscribe for or purchase Common Stock
or Convertible Securities, then such record date shall be deemed to be the
date of the issuance or sale of the Common Stock or Convertible Securities
deemed to have been issued or sold as a result of the declaration of such
dividend or the making of such other distribution or the date of the
granting of such right of subscription or purchase, as the case may be.
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(E) TREASURY SHARES. The number of shares of Common Stock
outstanding at any given time shall not include shares owned directly by
the Company in treasury, and the disposition of any such shares shall be
considered an issuance or sale of Common Stock for the purpose of this
Section .
3.3 STOCK DIVIDENDS. In case the Company shall declare a dividend or make
any other distribution upon any shares of the Company, payable in Common Stock
or Convertible Securities, any Common Stock or Convertible Securities, as the
case may be, issuable in payment of such dividend or distribution shall be
deemed to have been issued or sold without consideration.
3.4 STOCK SPLITS AND REVERSE SPLITS. In the event that the Company shall
at any time subdivide its outstanding shares of Common Stock into a greater
number of shares, the Exercise Price in effect immediately prior to such
subdivision shall be proportionately reduced and the number of Warrant Shares
purchasable pursuant to this Warrant immediately prior to such subdivision shall
be proportionately increased, and conversely, in the event that the outstanding
shares of Common stock shall at any time be combined into a smaller number of
shares, the Exercise Price in effect immediately prior to such combination shall
be proportionately increased and the number of Warrant Shares purchasable upon
the exercise of this Warrant immediately prior to such combination shall be
proportionately reduced. Except as provided in this Section , no adjustment in
the Exercise Price and no change in the number of Warrant Shares purchasable
shall be made under this Article III as a result of or by reason of any such
subdivision or combination.
3.5 REORGANIZATIONS AND ASSET SALES. If any capital reorganization or
reclassification of the capital stock of the Company, or any consolidation,
merger or share exchange of the Company with another Person, or the sale,
transfer or other disposition of all or substantially all of its assets to
another Person shall be effected in such a way that a holder of Common Stock of
the Company shall be entitled to receive capital stock, securities or assets
with respect to or in exchange for their shares, then the following provisions
shall apply:
3.5.1 As a condition of such reorganization, reclassification,
consolidation, merger, share exchange, sale, transfer or other disposition
(except as otherwise provided below in this Section ), lawful and adequate
provisions shall be made whereby the holder of Warrants shall thereafter have
the right to purchase and receive upon the terms and conditions specified in
this Warrant and in lieu of the Warrant Shares immediately theretofore
receivable upon the exercise of the rights represented hereby, such shares of
capital stock, securities or assets as may be issued or payable with respect to
or in exchange for a number of outstanding shares of such Common Stock equal to
the number of Warrant Shares immediately theretofore so receivable had such
reorganization, reclassification, consolidation, merger, share exchange or sale
not taken place, and in any such case appropriate provision reasonably
satisfactory to such holder shall be made with respect to the rights and
interests of such holder to the end that the provisions hereof (including,
without limitation, provisions for adjustments of the Exercise Price and of the
number of Warrant Shares receivable upon the exercise) shall thereafter be
applicable,
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as nearly as possible, in relation to any shares of capital stock, securities or
assets thereafter deliverable upon the exercise of Warrants.
3.5.2 In the event of a merger, share exchange or consolidation of
the Company with or into another Person as a result of which a number of shares
of common stock or its equivalent of the successor Person greater or lesser than
the number of shares of Common Stock outstanding immediately prior to such
merger, share exchange or consolidation are issuable to holders of Common Stock,
then the Exercise Price in effect immediately prior to such merger, share
exchange or consolidation shall be adjusted in the same manner as though there
were a subdivision or combination of the outstanding shares of Common Stock.
3.5.3 The Company shall not effect any such consolidation, merger,
share exchange, sale, transfer or other disposition unless prior to or
simultaneously with the consummation thereof the successor Person (if other than
the Company) resulting from such consolidation, share exchange or merger or the
Person purchasing or otherwise acquiring such assets shall have assumed by
written instrument executed and mailed or delivered to the holder hereof at the
last address of such holder appearing on the books of the Company the obligation
to deliver to such holder such shares of capital stock, securities or assets as,
in accordance with the foregoing provisions, such holder may be entitled to
receive, and all other liabilities and obligations of the Company hereunder.
Upon written request by the holder hereof, such successor Person will issue a
new Warrant revised to reflect the modifications in this Warrant effected
pursuant to this Section .
3.5.4 If a purchase, tender or exchange offer is made to and
accepted by the holders of 50% or more of the outstanding shares of Common
Stock, the Company shall not effect any consolidation, merger, share exchange or
sale, transfer or other disposition of all or substantially all of the Company's
assets with the Person having made such offer or with any affiliate of such
Person, unless prior to the consummation of such consolidation, merger, share
exchange, sale, transfer or other disposition the holder hereof shall have been
given a reasonable opportunity to then elect to receive upon the exercise of the
Warrants either the capital stock, securities or assets then issuable with
respect to the Common Stock or the capital stock, securities or assets, or the
equivalent, issued to previous holders of the Common Stock in accordance with
such offer.
3.6 ADJUSTMENT FOR ASSET DISTRIBUTION. If the Company declares a dividend
or other distribution payable to all holders of shares of Common Stock in
evidences of indebtedness of the Company or other assets of the Company
(including, cash (other than regular cash dividends declared by the Board of
Directors), capital stock (other than Common Stock, Convertible Securities or
options or rights thereto) or other property), the Exercise Price in effect
immediately prior to such declaration of such dividend or other distribution
shall be reduced by an amount equal to the amount of such dividend or
distribution payable per share of Common Stock, in the case of a cash dividend
or distribution, or by the fair value of such dividend or distribution per share
of Common Stock (as reasonably determined in good faith by the Board of
Directors of the Company), in the case of any other dividend or distribution.
Such reduction shall be made
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whenever any such dividend or distribution is made and shall be effective as of
the date as of which a record is taken for purpose of such dividend or
distribution or, if a record is not taken, the date as of which holders of
record of Common Stock entitled to such dividend or distribution are determined.
3.7 DE MINIMIS ADJUSTMENTS. No adjustment in the number of shares of
Common Stock purchasable hereunder shall be required unless such adjustment
would require an increase or decrease of at least one share of Common Stock
purchasable upon an exercise of each Warrant and no adjustment in the Exercise
Price shall be required unless such adjustment would require an increase or
decrease of at least $0.01 in the Exercise Price; provided, however, that any
adjustments which by reason of this Section are not required to be made shall be
carried forward and taken into account in any subsequent adjustment. All
calculations shall be made to the nearest full share or nearest one hundredth of
a dollar, as applicable.
3.8 NOTICE OF ADJUSTMENT. Whenever the Exercise Price or the number of
Warrant Shares issuable upon the exercise of the Warrants shall be adjusted as
herein provided, or the rights of the holder hereof shall change by reason of
other events specified herein, the Company shall compute the adjusted Exercise
Price and the adjusted number of Warrant Shares in accordance with the
provisions hereof and shall prepare an Officer's Certificate setting forth the
adjusted Exercise Price and the adjusted number of Warrant Shares issuable upon
the exercise of the Warrants or specifying the other shares of stock, securities
or assets receivable as a result of such change in rights, and showing in
reasonable detail the facts and calculations upon which such adjustments or
other changes are based. The Company shall cause to be mailed to the holder
hereof copies of such Officer's Certificate together with a notice stating that
the Exercise Price and the number of Warrant Shares purchasable upon exercise of
the Warrants have been adjusted and setting forth the adjusted Exercise Price
and the adjusted number of Warrant Shares purchasable upon the exercise of the
Warrants.
3.9 NOTIFICATIONS TO HOLDERS. In case at any time the Company proposes:
(i) to declare any dividend upon its Common Stock payable in capital
stock or make any special dividend or other distribution (other than cash
dividends) to the holders of its Common Stock;
(ii) to offer for subscription pro rata to all of the holders of its
Common Stock any additional shares of capital stock of any class or other
rights;
(iii) to effect any capital reorganization, or reclassification of
the capital stock of the Company, or consolidation, merger or share
exchange of the Company with another Person, or sale, transfer or other
disposition of all or substantially all of its assets; or
(iv) to effect a voluntary or involuntary dissolution, liquidation
or winding up of the Company,
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then, in any one or more of such cases, the Company shall give the holder hereof
(a) at least 10 days' (but not more than 90 days') prior written notice of the
date of which the books of the Company shall close or a record shall be taken
for such dividend, distribution or subscription rights or for determining rights
to vote in respect of such issuance, reorganization, reclassification,
consolidation, merger, share exchange, sale, transfer, disposition, dissolution,
liquidation or winding up, and (b) in the case of any such issuance,
reorganization, reclassification, consolidation, merger, share exchange, sale,
transfer, disposition, dissolution, liquidation or winding up, at least 10 days'
(but not more than 90 days') prior written notice of the date when the same
shall take place. Such notice in accordance with the foregoing clause (a) shall
also specify, in the case of any such dividend, distribution or subscription
rights, the date on which the holders of Common Stock shall be entitled thereto,
and such notice in accordance with the foregoing clause (b) shall also specify
the date on which the holders of Common Stock shall be entitled to exchange
their Common Stock, as the case may be, for securities or other property
deliverable upon such reorganization, reclassification, consolidation, merger,
share exchange, sale, transfer, disposition, dissolution, liquidation or winding
up, as the case may be.
3.10 COMPANY TO PREVENT DILUTION. If any event or condition occurs as to
which other provisions of this Article III are not strictly applicable or if
strictly applicable would not fairly protect the exercise or purchase rights of
the Warrants evidenced hereby in accordance with the essential intent and
principles of such provisions, or that might materially and adversely affect the
exercise or purchase rights of the holder hereof under any provisions of this
Warrant, then the Company shall make such adjustments in the application of such
provisions, in accordance with such essential intent and principles, so as to
protect such exercise and purchase rights as aforesaid, and any adjustments
necessary with respect to the Exercise Price and the number of Warrant Shares
purchasable hereunder so as to preserve the rights of the holder hereunder. In
no event shall any such adjustment have the effect of increasing the Exercise
Price as otherwise determined pursuant to this Article III except in the event
of a combination of shares of the type contemplated in Section hereof, and then
in no event to an amount greater than the Exercise Price as adjusted pursuant to
Section hereof.
ARTICLE IV
MISCELLANEOUS
4.1 ENTIRE AGREEMENT. This Warrant contains the entire agreement between
the holder hereof and the Company with respect to the Warrant Shares purchasable
upon exercise hereof and the related transactions and supersedes all prior
arrangements or understandings with respect thereto.
4.2 GOVERNING LAW. This warrant shall be governed by and construed in
accordance with the laws of the State of Delaware.
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4.3 WAIVER AND AMENDMENT. Any term or provision of this Warrant may be
waived at any time by the party which is entitled to the benefits thereof and
any term or provision of this Warrant may be amended or supplemented at any time
by agreement of the holder hereof and the Company, except that any waiver of any
term or condition, or any amendment or supplementation, of this Warrant shall be
in writing. A waiver of any breach or failure to enforce any of the terms or
conditions of this Warrant shall not in any way effect, limit or waive a party's
rights hereunder at any time to enforce strict compliance thereafter with every
term or condition of this Warrant.
4.4 ILLEGALITY. In the event that any one or more of the provisions
contained in this Warrant shall be determined to be invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in any other respect and the remaining
provisions of this Warrant shall not, at the election of the party for whom the
benefit of the provision exists, be in any way impaired.
4.5 COPY OF WARRANT. A copy of this Warrant shall be filed among the
records of the Company.
4.6 NOTICE. Any notice or other document required or permitted to be given
or delivered to the holder hereof shall be in writing and delivered at, or sent
by certified or registered mail to such holder at, the last address shown on the
books of the Company maintained at the Warrant Office for the registration of
this Warrant or at any more recent address of which the holder hereof shall have
notified the Company in writing. Any notice or other document required or
permitted to be given or delivered to the Company, other than such notice or
documents required to be delivered to the Warrant Office, shall be delivered at,
or sent by certified or registered mail to, the offices of the Company at 314
North Post Oak Lane, Houston, Texas 77024 or such other address within the
continental United States of America as shall have been furnished by the Company
to the holder of this Warrant.
4.7 LIMITATION OF LIABILITY; NOT STOCKHOLDERS. No provision of this
Warrant shall be construed as conferring upon the holder hereof the right to
vote, consent, receive dividends or receive notices (other than as herein
expressly provided) in respect of meetings of stockholders for the election of
directors of the Company or any other matter whatsoever as a stockholder of the
Company. No provision hereof, in the absence of affirmative action by the holder
hereof to purchase shares of Common Stock, and no mere enumeration herein of the
rights or privileges of the holder hereof, shall give rise to any liability of
such holder for the purchase price of any shares of Common Stock or as a
stockholder of the Company, whether such liability is asserted by the Company or
by creditors of the Company.
4.8 EXCHANGE, LOSS, DESTRUCTION, ETC. OF WARRANT. Upon receipt of evidence
satisfactory to the Company of the loss, theft, mutilation or destruction of
this Warrant, and in the case of any such loss, theft or destruction upon
delivery of a bond of indemnity or such other security in such form and amount
as shall be reasonably satisfactory to the Company, or in the event of such
mutilation upon surrender and cancellation of this Warrant, the Company will
make
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and deliver a new Warrant of like tenor, in lieu of such lost, stolen, destroyed
or mutilated Warrant. Any Warrant issued under the provisions of this Section in
lieu of any Warrant alleged to be lost, destroyed or stolen, or in lieu of any
mutilated Warrant, shall constitute an original contractual obligation on the
part of the Company. This Warrant shall be promptly canceled by the Company upon
the surrender hereof in connection with any exchange or replacement. The Company
shall pay all taxes (other than securities transfer taxes or income taxes) and
all other expenses and charges payable in connection with the preparation,
execution and delivery of Warrants pursuant to this Section .
4.9 REGISTRATION RIGHTS. The Warrant Shares shall be entitled to such
registration rights under the Securities Act and under applicable state
securities laws as are specified in the Registration Rights Agreement.
4.10 HEADINGS. The Article and Section and other headings herein are for
convenience only and are not a part of this Warrant and shall not affect the
interpretation thereof.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed in
its name.
Dated: January 31, 1997
TRANSAMERICAN WASTE INDUSTRIES, INC.
By: /s/ LANCE C. RUUD
Lance C. Ruud, Senior Vice President
and Chief Financial Officer
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SUBSCRIPTION NOTICE
The undersigned, the holder of the foregoing Warrant, hereby elects to
exercise purchase rights represented thereby and to purchase thereunder ________
shares of the Common Stock covered by such Warrant, and herewith makes payment
in full for such shares pursuant to Section 1.1 of such Warrant, and requests
(a) that certificates for such shares (and any other securities or other
property issuable upon such exercise) be issued in the name of, and delivered to
_____________________________________ and (b), if such shares shall not include
all of the shares issuable as provided in such Warrant, that a new Warrant of
like tenor and date for the balance of the shares issuable thereunder be
delivered to the undersigned.
Date:
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ASSIGNMENT
For value received, _______________________, hereby sells, assigns, and
transfers unto _________________________ the within Warrant, together with all
right, title and interest therein, and does hereby irrevocably constitute and
appoint ________________________ attorney, to transfer such Warrant on the books
of the Company, with full power of substitution.
Date:
16
EXHIBIT 4.3
THE SECURITIES REPRESENTED BY THIS WARRANT AND THE COMMON STOCK ISSUABLE THEREBY
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY OTHER APPLICABLE SECURITIES LAW AND, ACCORDINGLY, THE
SECURITIES REPRESENTED BY THIS WARRANT MAY NOT BE RESOLD, PLEDGED, OR OTHERWISE
TRANSFERRED, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER, OR IN
A TRANSACTION EXEMPT FROM REGISTRATION UNDER, THE SECURITIES ACT AND IN
ACCORDANCE WITH ANY OTHER APPLICABLE SECURITIES LAWS.
WARRANT
to Purchase Common Stock of
TRANSAMERICAN WASTE INDUSTRIES, INC.
Expiring on January 31, 2002
This Common Stock Purchase Warrant (the "Warrant") certifies that for
value received, Robert K. Moses, Jr. (the "Holder") or its assigns, is entitled
to subscribe for and purchase from the Company (as hereinafter defined), in
whole or in part, 1,000,000 shares of duly authorized, validly issued, fully
paid and nonassessable shares of Common Stock (as hereinafter defined) at an
initial Exercise Price (as hereinafter defined) per share of $1.25, subject,
however, to the provisions and upon the terms and conditions hereinafter set
forth. The number of Warrants (as hereinafter defined), the number of shares of
Common Stock purchasable hereunder, and the Exercise Price therefor are subject
to adjustment as hereinafter set forth. This Warrant and all rights hereunder
shall expire at 5:00 p.m., Houston, Texas time, on January 31, 2002.
As used herein, the following terms shall have the meanings set forth
below:
"COMPANY" shall mean TransAmerican Waste Industries, Inc., a Delaware
corporation, and shall also include any successor thereto with respect to the
obligations hereunder, by merger, consolidation or otherwise.
"COMMON STOCK" shall mean and include the Company's Common Stock, par
value $0.001 per share, authorized on the date of the original issue of this
Warrant and shall also include (i) in case of any reorganization,
reclassification, consolidation, merger, share exchange or sale, transfer or
other disposition of assets of the character referred to in Section hereof, the
stock, securities provided for in such Section , and (ii) any other shares of
common stock of the Company into which such shares of Common Stock may be
converted.
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"EXERCISE PRICE" shall mean the initial purchase price of $1.25 per share
of Common Stock payable upon exercise of the Warrants, as adjusted from time to
time pursuant to the provisions hereof.
"MARKET PRICE" for any day, when used with reference to Common Stock,
shall mean the price of said Common Stock determined as follows: (x) the last
reported sale price for the Common Stock on such day on the principal securities
exchange on which the Common Stock is listed or admitted to trading or if no
such sale takes place on such date, the average of the closing bid and asked
prices thereof as officially reported, or, if not so listed or admitted to
trading on any securities exchange, the last sale price for the Common Stock on
the National Association of Securities Dealers SmallCap Market on such date, or,
if there shall have been no trading on such date or if the Common Stock shall
not be listed on such system, the average of the closing bid and asked prices in
the over-the-counter market as furnished by any NASD member firm selected from
time to time by the Company for such purpose, in each such case, unless
otherwise provided herein, averaged over a period of ten (10) consecutive
Trading Days prior to the date as of which the determination is to be made; or
(y) if the Common Stock shall not be listed or admitted to trading as provided
in clause (x) above, the fair market value of the Common Stock as determined in
good faith by the Board of Directors of the Company.
"OUTSTANDING," when used with reference to Common Stock, shall mean
(except as otherwise expressly provided herein) at any date as of which the
number of shares thereof is to be determined, all issued shares of Common Stock,
except shares then owned or held by or for the account of the Company.
"TRADING DAYS" shall mean any days during the course of which the
principal securities exchange on which the Common Stock is listed or admitted to
trading is open for the exchange of securities.
"WARRANT" shall mean the right upon exercise to purchase one Warrant
Share.
"WARRANT SHARES" shall mean the shares of Common Stock purchased or
purchasable by the holder hereof upon the exercise of the Warrants.
ARTICLE I
EXERCISE OF WARRANTS
1.1 METHOD OF EXERCISE. The Warrants represented hereby may be exercised
by the holder hereof, in whole or in part, at any time and from time to time on
or after the date hereof until 5:00 p.m., Houston, Texas time, on January 31,
2002. To exercise the Warrants, the holder hereof shall deliver to the Company,
at the Warrant Office designated in Section hereof, (i) a written notice in the
form of the Subscription Notice attached as an exhibit hereto, stating therein
the election of such holder to exercise the Warrants in the manner provided in
the Subscription Notice; (ii) payment in full of the Exercise Price (A) in cash
or by bank check for all Warrant
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Shares purchased hereunder, or (B) through a "cashless" or "net-issue" exercise
of each such Warrant ("Cashless Exercise"); the holder shall exchange each
Warrant subject to a Cashless Exercise for that number of Warrant Shares
determined by multiplying the number of Warrant Shares issuable hereunder by a
fraction, the numerator of which shall be the difference between (x) the Market
Price and (y) the Exercise Price for each such Warrant, and the denominator of
which shall be the Market Price; the Subscription Notice shall set forth the
calculation upon which the Cashless Exercise is based, or (C) a combination of
(A) and (B) above; and (iii) this Warrant. The Warrants shall be deemed to be
exercised on the date of receipt by the Company of the Subscription Notice,
accompanied by payment for the Warrant Shares and surrender of this Warrant, as
aforesaid, and such date is referred to herein as the "Exercise Date". Upon such
exercise, the Company shall, as promptly as practicable and in any event within
ten (10) business days, issue and deliver to such holder a certificate or
certificates for the full number of the Warrant Shares purchased by such holder
hereunder, and shall, unless the Warrants have expired, deliver to the holder
hereof a new Warrant representing the number of Warrants, if any, that shall not
have been exercised, in all other respects identical to this Warrant. As
permitted by applicable law, the Person in whose name the certificates for
Common Stock are to be issued shall be deemed to have become a holder of record
of such Common Stock on the Exercise Date and shall be entitled to all of the
benefits of such holder on the Exercise Date, including without limitation the
right to receive dividends and other distributions for which the record date
falls on or after the Exercise Date and to exercise voting rights.
1.2 EXPENSES AND TAXES. The Company shall pay all expenses, and taxes
(including, without limitation, all documentary, stamp, transfer or other
transactional taxes) other than income taxes attributable to the preparation,
issuance or delivery of the Warrants and of the shares of Common Stock issuable
upon exercise of the Warrants.
1.3 RESERVATION OF SHARES. The Company shall reserve at all times so long
as the Warrants remain outstanding, free from preemptive rights, out of its
treasury Common Stock or its authorized but unissued shares of Common Stock, or
both, solely for the purpose of effecting the exercise of the Warrants, a
sufficient number of shares of Common Stock to provide for the exercise of the
Warrants.
1.4 VALID ISSUANCE. All shares of Common Stock that may be issued upon
exercise of the Warrants will, upon issuance by the Company, be duly and validly
issued, fully paid and nonassessable and free from all taxes, liens and charges
with respect to the issuance thereof and, without limiting the generality of the
foregoing, the Company shall take no action or fail to take any action which
will cause a contrary result (including, without limitation, any action that
would cause the Exercise Price to be less than the par value, if any, of the
Common Stock).
1.5 ACKNOWLEDGMENT OF RIGHTS. At the time of the exercise of the Warrants
in accordance with the terms hereof and upon the written request of the holder
hereof, the Company will acknowledge in writing its continuing obligation to
afford to such holder any rights (including, without limitation, any right to
registration of the Warrant Shares) to which such holder shall continue to be
entitled after such exercise in accordance with the provisions of this
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Warrant; PROVIDED, HOWEVER, that if the holder hereof shall fail to make any
such request, such failure shall not affect the continuing obligation of the
Company to afford to such holder any such rights.
1.6 NO FRACTIONAL SHARES. The Company shall not be required to issue
fractional shares of Common Stock on the exercise of this Warrant. If more than
one Warrant shall be presented for exercise at the same time by the same holder,
the number of full shares of Common Stock which shall be issuable upon such
exercise shall be computed on the basis of the aggregate number of whole shares
of Common Stock purchasable on exercise of the Warrants so presented. If any
fraction of a share of Common Stock would, except for the provisions of this
Section , be issuable on the exercise of this Warrant, the Company shall pay an
amount in cash calculated by it to be equal to the Market Price of one share of
Common Stock at the time of such exercise multiplied by such fraction computed
to the nearest whole cent.
ARTICLE II
TRANSFER
2.1 WARRANT OFFICE. The Company shall maintain an office for certain
purposes specified herein (the "Warrant Office"), which office shall initially
be the Company's offices at 314 North Post Oak Lane, Houston Texas 77024, and
may subsequently be such other office of the Company or of any transfer agent of
the Common Stock in the continental United States as to which written notice has
previously been given to the holder hereof. The Company shall maintain, at the
Warrant Office, a register for the Warrants in which the Company shall record
the name and address of the Person in whose name this Warrant has been issued,
as well as the name and address of each permitted assignee of the rights of the
registered owner hereof.
2.2 OWNERSHIP OF WARRANTS. The Company may deem and treat the Person in
whose name the Warrants are registered as the holder and owner hereof
(notwithstanding any notations of ownership or writing hereon made by anyone
other than the Company) for all purposes and shall not be affected by any notice
to the contrary until presentation of this Warrant for registration of transfer
as provided in this Article II. Notwithstanding the foregoing, the Warrants
represented hereby, if properly assigned in compliance with this Article II, may
be exercised by an assignee for the purchase of Warrant Shares without having a
new Warrant issued.
2.3 RESTRICTIONS ON TRANSFER OF WARRANTS. The Company agrees to maintain
at the Warrant Office books for the registration and transfer of the Warrants.
Subject to the restrictions on transfer of the Warrants in this Section , the
Company, from time to time, shall register the transfer of the Warrants in such
books upon surrender of this Warrant at the Warrant Office properly endorsed or
accompanied by appropriate instruments of transfer and written instructions for
transfer satisfactory to the Company. Upon any such transfer and upon payment by
the holder or its transferee of any applicable transfer taxes, new Warrants
shall be issued to the transferee and the transferor (as their respective
interests may appear) and the surrendered
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Warrants shall be cancelled by the Company. The Company shall pay all taxes
(other than securities transfer taxes or income taxes) and all other expenses
and charges payable in connection with the transfer of the Warrants pursuant to
this Section .
2.3.1 RESTRICTIONS IN GENERAL. The holder of the Warrants agrees
that it will neither (i) transfer the Warrants prior to delivery to the Company
of written notice of such transfer, nor (ii) transfer such Warrant Shares prior
to delivery to the Company of written notice of such transfer, or until
registration of such Warrant Shares under the Securities Act and any applicable
state securities or blue sky laws has become effective.
2.4 COMPLIANCE WITH SECURITIES LAWS. Subject to the terms of the
Registration Rights Agreement between the Holder and the Company dated as of the
date hereof and notwithstanding any other provisions contained in this Warrant,
the holder hereof understands and agrees that the following restrictions and
limitations shall be applicable to all Warrant Shares and to all resales or
other transfers thereof pursuant to the Securities Act:
2.4.1 The holder hereof agrees that the Warrant Shares shall not be
sold or otherwise transferred unless the Warrant Shares are registered under the
Securities Act and applicable state securities or blue sky laws or are exempt
therefrom.
2.4.2 A legend in substantially the following form will be placed on
the certificate(s) evidencing the Warrant Shares:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY OTHER APPLICABLE SECURITIES LAW AND,
ACCORDINGLY, THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT
BE RESOLD, PLEDGED, OR OTHERWISE TRANSFERRED, EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER, OR IN A TRANSACTION EXEMPT
FROM REGISTRATION UNDER, THE SECURITIES ACT AND IN ACCORDANCE WITH
ANY OTHER APPLICABLE SECURITIES LAWS."
2.4.3 Stop transfer instructions will be imposed with respect to the
Warrant Shares so as to restrict resale or other transfer thereof, subject to
this Section 2.4.
<PAGE>
ARTICLE III
ANTI-DILUTION
3.1 ANTI-DILUTION PROVISIONS. The Exercise Price shall be subject to
adjustment from time to time as hereinafter provided. Upon each adjustment of
the Exercise Price, the holder of this Warrant shall thereafter be entitled to
purchase, at the Exercise Price resulting from such
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adjustment, the number of shares of Common Stock obtained by multiplying the
Exercise Price in effect immediately prior to such adjustment by the number of
shares purchasable pursuant hereto immediately prior to such adjustment and
dividing the product thereof by the Exercise Price resulting from such
adjustment.
3.2 ADJUSTMENT OF EXERCISE PRICE UPON ISSUANCE OF COMMON STOCK.
3.2.1 (A) If and whenever after the date hereof the Company shall
issue or sell any Common Stock for no consideration or for a consideration per
share less than the Exercise Price, then, forthwith upon such issue or sale, the
Exercise Price shall be reduced (but not increased, except as otherwise
specifically provided in Section hereof), to the price (calculated to the
nearest one-ten thousandth of a cent) determined by dividing (x) an amount equal
to the sum of (i) the aggregate number of shares of Common Stock outstanding
immediately prior to such issue or sale multiplied by then existing Exercise
Price plus (ii) the consideration received by the Company upon such issue or
sale by (y) the aggregate number of shares of Common Stock outstanding
immediately after such issue or sale. Notwithstanding the foregoing and in lieu
thereof, in the event the Company issues additional shares pursuant to Section
of that certain Registration Rights Agreement of even date herewith among the
Company, Sanders Morris Mundy, Inc. and certain other persons named on Exhibit A
thereto, then the Exercise Price shall be reduced to the price determined by
dividing the then existing Exercise Price by one and one-half (1.5).
(B) Notwithstanding the provisions of this Section , no
adjustment shall be made in the Exercise Price in the event that the Company
issues, in one or more transactions, (i) Common Stock or convertible securities
upon exercise of any options issued to officers, directors or employees of the
Company pursuant to a stock option plan or an employment, severance or
consulting agreement as now or hereafter in effect, in each case approved by the
Board of Directors (provided that the aggregate number of shares of Common Stock
which may be issuable, including options issued prior to the date hereof, under
all such employee plans and agreements shall at no time exceed the number of
such shares of Common Stock that are issuable under currently effective employee
plans and agreements); (ii) Common Stock upon exercise of any stock purchase
warrant or option (other than the options referred to in clause (i) above) or
other convertible security outstanding on the date hereof; or (iii) Common Stock
issued as consideration in, or in connection with, acquisitions by the Company.
In addition, for purposes of calculating any adjustment of the Exercise Price as
provided in this Section , all of the shares of Common Stock issuable pursuant
to any of the foregoing shall be assumed to be outstanding prior to the event
causing such adjustment to be made.
3.2.2 For purposes of this Section , the following Sections to
inclusive, shall be applicable:
(A) ISSUANCE OF RIGHTS OR OPTIONS. In case at any time after the
date hereof the Company shall in any manner grant (whether directly or by
assumption in a merger or otherwise) any rights to subscribe for or to
purchase, or any options for the purchase of,
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Common Stock or any stock or securities convertible into or exchangeable
for Common Stock (such convertible or exchangeable stock or securities
being herein called "Convertible Securities"), whether or not such rights
or options or the right to convert or exchange any such Convertible
Securities are immediately exercisable, and the price per share for which
shares of Common Stock are issuable upon the exercise of such rights or
options or upon conversion or exchange of such Convertible Securities
(determined by dividing (i) the total amount, if any, received or
receivable by the Company as consideration for the granting of such rights
or options, plus the minimum aggregate amount of additional consideration,
if any, payable to the Company upon the exercise of such rights or
options, or plus, in the case of such rights or options that relate to
Convertible Securities, the minimum aggregate amount of additional
consideration, if any, payable upon the issue or sale of such Convertible
Securities and upon the conversion or exchange thereof, by (ii) the total
maximum number of shares of Common Stock issuable upon the exercise of
such rights or options or upon the conversion or exchange of all such
Convertible Securities issuable upon the exercise of such rights or
options) shall be less than the Exercise Price in effect as of the date of
granting such rights or options, then the total maximum number of shares
of Common Stock issuable upon the exercise of such rights or options or
upon conversion or exchange of all such Convertible Securities issuable
upon the exercise of such rights or options shall be deemed to be
outstanding as of the date of the granting of such rights or options and
to have been issued for such price per share, with the effect on the
Exercise Price specified in Section hereof. Except as provided in Section
hereof, no further adjustment of the Exercise Price shall be made upon the
actual issuance of such Common Stock or of such Convertible Securities
upon exercise of such rights or options or upon the actual issuance of
such Common Stock upon conversion or exchange of such Convertible
Securities.
(B) CHANGE IN OPTION PRICE OR CONVERSION RATE. Upon the happening of
any of the following events, namely, if the purchase price provided for in
any right or option referred to in Section , the additional consideration,
if any, payable upon the conversion or exchange of any Convertible
Securities referred to in Section , or the rate at which any Convertible
Securities referred to in Section , are convertible into or exchangeable
for Common Stock shall change (other than under or by reason of provisions
designed to protect against dilution), the Exercise Price then in effect
hereunder shall forthwith be readjusted (increased or decreased, as the
case may be) to the Exercise Price that would have been in effect at such
time had such rights, options or Convertible Securities still outstanding
provided for such changed purchase price, additional consideration or
conversion rate, as the case may be, at the time initially granted, issued
or sold. On the expiration of any such option or right referred to in
Section , or on the termination of any such right to convert or exchange
any such Convertible Securities referred to in Section , the Exercise
Price then in effect hereunder shall forthwith be readjusted (increased or
decreased, as the case may be) to the Exercise Price that would have been
in effect at the time of such expiration or termination had such right,
option or Convertible Securities, to the extent outstanding immediately
prior to such expiration or termination, never been granted, issued or
sold, and the Common Stock issuable
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thereunder shall no longer be deemed to be outstanding. If the purchase
price provided for in Section or the rate at which any Convertible
Securities referred to in Section reduced at any time under or by reason
of provisions with respect thereto designed to protect against dilution,
then in case of the delivery of Common Stock upon the exercise of any such
right or option or upon conversion or exchange of any such Convertible
Securities, the Exercise Price then in effect hereunder shall, if not
already adjusted, forthwith be adjusted to such amount as would have
obtained had such right, option or Convertible Securities never been
issued as to such Common Stock and had adjustments been made upon the
issuance of the Common Stock delivered as aforesaid, but only if as a
result of such adjustment the Exercise Price then in effect hereunder is
thereby reduced.
(C) CONSIDERATION FOR STOCK. In case at any time Common Stock or
Convertible Securities or any rights or options to purchase any such
Common Stock or Convertible Securities shall be issued or sold for cash,
the consideration therefor shall be deemed to be the amount received by
the Company therefor. In case at any time any Common Stock, Convertible
Securities or any rights or options to purchase any such Common Stock or
Convertible Securities shall be issued or sold for consideration other
than cash, the amount of the consideration other than cash received by the
Company shall be deemed to be the fair value of such consideration, as
determined reasonably and in good faith by the Board of Directors of the
Company. In case at any time any Common Stock, Convertible Securities or
any rights or options to purchase any Common Stock or Convertible
Securities shall be issued in connection with any merger or consolidation
in which the Company is the surviving corporation, the amount of
consideration received therefor shall be deemed to be the fair value, as
determined reasonably and in good faith by the Board of Directors of the
Company, of such portion of the assets and business of the nonsurviving
corporation as such Board of Directors may determine to be attributable to
such Common Stock, Convertible Securities, rights or options as the case
may be. In case at any time any rights or options to purchase any shares
of Common Stock or Convertible Securities shall be issued in connection
with the issuance and sale of other securities of the Company, together
consisting of one integral transaction in which no consideration is
allocated to such rights or options by the parties, such rights or options
shall be deemed to have been issued with consideration.
(D) RECORD DATE. In the case the Company shall take a record of the
holders of its Common Stock for the purpose of entitling them (i) to
receive a dividend or other distribution payable in Common Stock or
Convertible Securities, or (ii) to subscribe for or purchase Common Stock
or Convertible Securities, then such record date shall be deemed to be the
date of the issuance or sale of the Common Stock or Convertible Securities
deemed to have been issued or sold as a result of the declaration of such
dividend or the making of such other distribution or the date of the
granting of such right of subscription or purchase, as the case may be.
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(E) TREASURY SHARES. The number of shares of Common Stock
outstanding at any given time shall not include shares owned directly by
the Company in treasury, and the disposition of any such shares shall be
considered an issuance or sale of Common Stock for the purpose of this
Section .
3.3 STOCK DIVIDENDS. In case the Company shall declare a dividend or make
any other distribution upon any shares of the Company, payable in Common Stock
or Convertible Securities, any Common Stock or Convertible Securities, as the
case may be, issuable in payment of such dividend or distribution shall be
deemed to have been issued or sold without consideration.
3.4 STOCK SPLITS AND REVERSE SPLITS. In the event that the Company shall
at any time subdivide its outstanding shares of Common Stock into a greater
number of shares, the Exercise Price in effect immediately prior to such
subdivision shall be proportionately reduced and the number of Warrant Shares
purchasable pursuant to this Warrant immediately prior to such subdivision shall
be proportionately increased, and conversely, in the event that the outstanding
shares of Common stock shall at any time be combined into a smaller number of
shares, the Exercise Price in effect immediately prior to such combination shall
be proportionately increased and the number of Warrant Shares purchasable upon
the exercise of this Warrant immediately prior to such combination shall be
proportionately reduced. Except as provided in this Section , no adjustment in
the Exercise Price and no change in the number of Warrant Shares purchasable
shall be made under this Article III as a result of or by reason of any such
subdivision or combination.
3.5 REORGANIZATIONS AND ASSET SALES. If any capital reorganization or
reclassification of the capital stock of the Company, or any consolidation,
merger or share exchange of the Company with another Person, or the sale,
transfer or other disposition of all or substantially all of its assets to
another Person shall be effected in such a way that a holder of Common Stock of
the Company shall be entitled to receive capital stock, securities or assets
with respect to or in exchange for their shares, then the following provisions
shall apply:
3.5.1 As a condition of such reorganization, reclassification,
consolidation, merger, share exchange, sale, transfer or other disposition
(except as otherwise provided below in this Section ), lawful and adequate
provisions shall be made whereby the holder of Warrants shall thereafter have
the right to purchase and receive upon the terms and conditions specified in
this Warrant and in lieu of the Warrant Shares immediately theretofore
receivable upon the exercise of the rights represented hereby, such shares of
capital stock, securities or assets as may be issued or payable with respect to
or in exchange for a number of outstanding shares of such Common Stock equal to
the number of Warrant Shares immediately theretofore so receivable had such
reorganization, reclassification, consolidation, merger, share exchange or sale
not taken place, and in any such case appropriate provision reasonably
satisfactory to such holder shall be made with respect to the rights and
interests of such holder to the end that the provisions hereof (including,
without limitation, provisions for adjustments of the Exercise Price and of the
number of Warrant Shares receivable upon the exercise) shall thereafter be
applicable,
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as nearly as possible, in relation to any shares of capital stock, securities or
assets thereafter deliverable upon the exercise of Warrants.
3.5.2 In the event of a merger, share exchange or consolidation of
the Company with or into another Person as a result of which a number of shares
of common stock or its equivalent of the successor Person greater or lesser than
the number of shares of Common Stock outstanding immediately prior to such
merger, share exchange or consolidation are issuable to holders of Common Stock,
then the Exercise Price in effect immediately prior to such merger, share
exchange or consolidation shall be adjusted in the same manner as though there
were a subdivision or combination of the outstanding shares of Common Stock.
3.5.3 The Company shall not effect any such consolidation, merger,
share exchange, sale, transfer or other disposition unless prior to or
simultaneously with the consummation thereof the successor Person (if other than
the Company) resulting from such consolidation, share exchange or merger or the
Person purchasing or otherwise acquiring such assets shall have assumed by
written instrument executed and mailed or delivered to the holder hereof at the
last address of such holder appearing on the books of the Company the obligation
to deliver to such holder such shares of capital stock, securities or assets as,
in accordance with the foregoing provisions, such holder may be entitled to
receive, and all other liabilities and obligations of the Company hereunder.
Upon written request by the holder hereof, such successor Person will issue a
new Warrant revised to reflect the modifications in this Warrant effected
pursuant to this Section .
3.5.4 If a purchase, tender or exchange offer is made to and
accepted by the holders of 50% or more of the outstanding shares of Common
Stock, the Company shall not effect any consolidation, merger, share exchange or
sale, transfer or other disposition of all or substantially all of the Company's
assets with the Person having made such offer or with any affiliate of such
Person, unless prior to the consummation of such consolidation, merger, share
exchange, sale, transfer or other disposition the holder hereof shall have been
given a reasonable opportunity to then elect to receive upon the exercise of the
Warrants either the capital stock, securities or assets then issuable with
respect to the Common Stock or the capital stock, securities or assets, or the
equivalent, issued to previous holders of the Common Stock in accordance with
such offer.
3.6 ADJUSTMENT FOR ASSET DISTRIBUTION. If the Company declares a dividend
or other distribution payable to all holders of shares of Common Stock in
evidences of indebtedness of the Company or other assets of the Company
(including, cash (other than regular cash dividends declared by the Board of
Directors), capital stock (other than Common Stock, Convertible Securities or
options or rights thereto) or other property), the Exercise Price in effect
immediately prior to such declaration of such dividend or other distribution
shall be reduced by an amount equal to the amount of such dividend or
distribution payable per share of Common Stock, in the case of a cash dividend
or distribution, or by the fair value of such dividend or distribution per share
of Common Stock (as reasonably determined in good faith by the Board of
Directors of the Company), in the case of any other dividend or distribution.
Such reduction shall be made
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whenever any such dividend or distribution is made and shall be effective as of
the date as of which a record is taken for purpose of such dividend or
distribution or, if a record is not taken, the date as of which holders of
record of Common Stock entitled to such dividend or distribution are determined.
3.7 DE MINIMIS ADJUSTMENTS. No adjustment in the number of shares of
Common Stock purchasable hereunder shall be required unless such adjustment
would require an increase or decrease of at least one share of Common Stock
purchasable upon an exercise of each Warrant and no adjustment in the Exercise
Price shall be required unless such adjustment would require an increase or
decrease of at least $0.01 in the Exercise Price; provided, however, that any
adjustments which by reason of this Section are not required to be made shall be
carried forward and taken into account in any subsequent adjustment. All
calculations shall be made to the nearest full share or nearest one hundredth of
a dollar, as applicable.
3.8 NOTICE OF ADJUSTMENT. Whenever the Exercise Price or the number of
Warrant Shares issuable upon the exercise of the Warrants shall be adjusted as
herein provided, or the rights of the holder hereof shall change by reason of
other events specified herein, the Company shall compute the adjusted Exercise
Price and the adjusted number of Warrant Shares in accordance with the
provisions hereof and shall prepare an Officer's Certificate setting forth the
adjusted Exercise Price and the adjusted number of Warrant Shares issuable upon
the exercise of the Warrants or specifying the other shares of stock, securities
or assets receivable as a result of such change in rights, and showing in
reasonable detail the facts and calculations upon which such adjustments or
other changes are based. The Company shall cause to be mailed to the holder
hereof copies of such Officer's Certificate together with a notice stating that
the Exercise Price and the number of Warrant Shares purchasable upon exercise of
the Warrants have been adjusted and setting forth the adjusted Exercise Price
and the adjusted number of Warrant Shares purchasable upon the exercise of the
Warrants.
3.9 NOTIFICATIONS TO HOLDERS. In case at any time the Company proposes:
(i) to declare any dividend upon its Common Stock payable in capital
stock or make any special dividend or other distribution (other than cash
dividends) to the holders of its Common Stock;
(ii) to offer for subscription pro rata to all of the holders of its
Common Stock any additional shares of capital stock of any class or other
rights;
(iii) to effect any capital reorganization, or reclassification of
the capital stock of the Company, or consolidation, merger or share
exchange of the Company with another Person, or sale, transfer or other
disposition of all or substantially all of its assets; or
(iv) to effect a voluntary or involuntary dissolution, liquidation
or winding up of the Company,
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then, in any one or more of such cases, the Company shall give the holder hereof
(a) at least 10 days' (but not more than 90 days') prior written notice of the
date of which the books of the Company shall close or a record shall be taken
for such dividend, distribution or subscription rights or for determining rights
to vote in respect of such issuance, reorganization, reclassification,
consolidation, merger, share exchange, sale, transfer, disposition, dissolution,
liquidation or winding up, and (b) in the case of any such issuance,
reorganization, reclassification, consolidation, merger, share exchange, sale,
transfer, disposition, dissolution, liquidation or winding up, at least 10 days'
(but not more than 90 days') prior written notice of the date when the same
shall take place. Such notice in accordance with the foregoing clause (a) shall
also specify, in the case of any such dividend, distribution or subscription
rights, the date on which the holders of Common Stock shall be entitled thereto,
and such notice in accordance with the foregoing clause (b) shall also specify
the date on which the holders of Common Stock shall be entitled to exchange
their Common Stock, as the case may be, for securities or other property
deliverable upon such reorganization, reclassification, consolidation, merger,
share exchange, sale, transfer, disposition, dissolution, liquidation or winding
up, as the case may be.
3.10 COMPANY TO PREVENT DILUTION. If any event or condition occurs as to
which other provisions of this Article III are not strictly applicable or if
strictly applicable would not fairly protect the exercise or purchase rights of
the Warrants evidenced hereby in accordance with the essential intent and
principles of such provisions, or that might materially and adversely affect the
exercise or purchase rights of the holder hereof under any provisions of this
Warrant, then the Company shall make such adjustments in the application of such
provisions, in accordance with such essential intent and principles, so as to
protect such exercise and purchase rights as aforesaid, and any adjustments
necessary with respect to the Exercise Price and the number of Warrant Shares
purchasable hereunder so as to preserve the rights of the holder hereunder. In
no event shall any such adjustment have the effect of increasing the Exercise
Price as otherwise determined pursuant to this Article III except in the event
of a combination of shares of the type contemplated in Section hereof, and then
in no event to an amount greater than the Exercise Price as adjusted pursuant to
Section hereof.
ARTICLE IV
MISCELLANEOUS
4.1 ENTIRE AGREEMENT. This Warrant contains the entire agreement between
the holder hereof and the Company with respect to the Warrant Shares purchasable
upon exercise hereof and the related transactions and supersedes all prior
arrangements or understandings with respect thereto.
4.2 GOVERNING LAW. This warrant shall be governed by and construed in
accordance with the laws of the State of Delaware.
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4.3 WAIVER AND AMENDMENT. Any term or provision of this Warrant may be
waived at any time by the party which is entitled to the benefits thereof and
any term or provision of this Warrant may be amended or supplemented at any time
by agreement of the holder hereof and the Company, except that any waiver of any
term or condition, or any amendment or supplementation, of this Warrant shall be
in writing. A waiver of any breach or failure to enforce any of the terms or
conditions of this Warrant shall not in any way effect, limit or waive a party's
rights hereunder at any time to enforce strict compliance thereafter with every
term or condition of this Warrant.
4.4 ILLEGALITY. In the event that any one or more of the provisions
contained in this Warrant shall be determined to be invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in any other respect and the remaining
provisions of this Warrant shall not, at the election of the party for whom the
benefit of the provision exists, be in any way impaired.
4.5 COPY OF WARRANT. A copy of this Warrant shall be filed among the
records of the Company.
4.6 NOTICE. Any notice or other document required or permitted to be given
or delivered to the holder hereof shall be in writing and delivered at, or sent
by certified or registered mail to such holder at, the last address shown on the
books of the Company maintained at the Warrant Office for the registration of
this Warrant or at any more recent address of which the holder hereof shall have
notified the Company in writing. Any notice or other document required or
permitted to be given or delivered to the Company, other than such notice or
documents required to be delivered to the Warrant Office, shall be delivered at,
or sent by certified or registered mail to, the offices of the Company at 314
North Post Oak Lane, Houston, Texas 77024 or such other address within the
continental United States of America as shall have been furnished by the Company
to the holder of this Warrant.
4.7 LIMITATION OF LIABILITY; NOT STOCKHOLDERS. No provision of this
Warrant shall be construed as conferring upon the holder hereof the right to
vote, consent, receive dividends or receive notices (other than as herein
expressly provided) in respect of meetings of stockholders for the election of
directors of the Company or any other matter whatsoever as a stockholder of the
Company. No provision hereof, in the absence of affirmative action by the holder
hereof to purchase shares of Common Stock, and no mere enumeration herein of the
rights or privileges of the holder hereof, shall give rise to any liability of
such holder for the purchase price of any shares of Common Stock or as a
stockholder of the Company, whether such liability is asserted by the Company or
by creditors of the Company.
4.8 EXCHANGE, LOSS, DESTRUCTION, ETC. OF WARRANT. Upon receipt of evidence
satisfactory to the Company of the loss, theft, mutilation or destruction of
this Warrant, and in the case of any such loss, theft or destruction upon
delivery of a bond of indemnity or such other security in such form and amount
as shall be reasonably satisfactory to the Company, or in the event of such
mutilation upon surrender and cancellation of this Warrant, the Company will
make
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and deliver a new Warrant of like tenor, in lieu of such lost, stolen, destroyed
or mutilated Warrant. Any Warrant issued under the provisions of this Section in
lieu of any Warrant alleged to be lost, destroyed or stolen, or in lieu of any
mutilated Warrant, shall constitute an original contractual obligation on the
part of the Company. This Warrant shall be promptly canceled by the Company upon
the surrender hereof in connection with any exchange or replacement. The Company
shall pay all taxes (other than securities transfer taxes or income taxes) and
all other expenses and charges payable in connection with the preparation,
execution and delivery of Warrants pursuant to this Section .
4.9 REGISTRATION RIGHTS. The Warrant Shares shall be entitled to such
registration rights under the Securities Act and under applicable state
securities laws as are specified in the Registration Rights Agreement.
4.10 HEADINGS. The Article and Section and other headings herein are for
convenience only and are not a part of this Warrant and shall not affect the
interpretation thereof.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed in
its name.
Dated: January 31, 1997
TRANSAMERICAN WASTE INDUSTRIES, INC.
By: /s/ LANCE C. RUUD
Lance C. Ruud, Senior Vice President
and Chief Financial Officer
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SUBSCRIPTION NOTICE
The undersigned, the holder of the foregoing Warrant, hereby elects to
exercise purchase rights represented thereby and to purchase thereunder ________
shares of the Common Stock covered by such Warrant, and herewith makes payment
in full for such shares pursuant to Section 1.1 of such Warrant, and requests
(a) that certificates for such shares (and any other securities or other
property issuable upon such exercise) be issued in the name of, and delivered to
_____________________________________ and (b), if such shares shall not include
all of the shares issuable as provided in such Warrant, that a new Warrant of
like tenor and date for the balance of the shares issuable thereunder be
delivered to the undersigned.
Date:
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ASSIGNMENT
For value received, _______________________, hereby sells, assigns, and
transfers unto _________________________ the within Warrant, together with all
right, title and interest therein, and does hereby irrevocably constitute and
appoint ________________________ attorney, to transfer such Warrant on the books
of the Company, with full power of substitution.
Date:
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EXHIBIT 4.4
THE SECURITIES REPRESENTED BY THIS WARRANT AND THE COMMON STOCK ISSUABLE THEREBY
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY OTHER APPLICABLE SECURITIES LAW AND, ACCORDINGLY, THE
SECURITIES REPRESENTED BY THIS WARRANT MAY NOT BE RESOLD, PLEDGED, OR OTHERWISE
TRANSFERRED, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER, OR IN
A TRANSACTION EXEMPT FROM REGISTRATION UNDER, THE SECURITIES ACT AND IN
ACCORDANCE WITH ANY OTHER APPLICABLE SECURITIES LAWS.
WARRANT
to Purchase Common Stock of
TRANSAMERICAN WASTE INDUSTRIES, INC.
Expiring on January 31, 2002
This Common Stock Purchase Warrant (the "Warrant") certifies that for
value received, Sanders Morris Mundy Inc., a Texas corporation (the "Holder") or
its assigns, is entitled to subscribe for and purchase from the Company (as
hereinafter defined), in whole or in part, 1,000,000 shares of duly authorized,
validly issued, fully paid and nonassessable shares of Common Stock (as
hereinafter defined) at an initial Exercise Price (as hereinafter defined) per
share of $.66, subject, however, to the provisions and upon the terms and
conditions hereinafter set forth. The number of Warrants (as hereinafter
defined), the number of shares of Common Stock purchasable hereunder, and the
Exercise Price therefor are subject to adjustment as hereinafter set forth. This
Warrant and all rights hereunder shall expire at 5:00 p.m., Houston, Texas time,
on January 31, 2002.
As used herein, the following terms shall have the meanings set forth
below:
"COMPANY" shall mean TransAmerican Waste Industries, Inc., a Delaware
corporation, and shall also include any successor thereto with respect to the
obligations hereunder, by merger, consolidation or otherwise.
"COMMON STOCK" shall mean and include the Company's Common Stock, par
value $0.001 per share, authorized on the date of the original issue of this
Warrant and shall also include (i) in case of any reorganization,
reclassification, consolidation, merger, share exchange or sale, transfer or
other disposition of assets of the character referred to in Section hereof, the
stock, securities provided for in such Section , and (ii) any other shares of
common stock of the Company into which such shares of Common Stock may be
converted.
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"EXERCISE PRICE" shall mean the initial purchase price of $.66 per share
of Common Stock payable upon exercise of the Warrants, as adjusted from time to
time pursuant to the provisions hereof.
"MARKET PRICE" for any day, when used with reference to Common Stock,
shall mean the price of said Common Stock determined as follows: (x) the last
reported sale price for the Common Stock on such day on the principal securities
exchange on which the Common Stock is listed or admitted to trading or if no
such sale takes place on such date, the average of the closing bid and asked
prices thereof as officially reported, or, if not so listed or admitted to
trading on any securities exchange, the last sale price for the Common Stock on
the National Association of Securities Dealers SmallCap Market on such date, or,
if there shall have been no trading on such date or if the Common Stock shall
not be listed on such system, the average of the closing bid and asked prices in
the over-the-counter market as furnished by any NASD member firm selected from
time to time by the Company for such purpose, in each such case, unless
otherwise provided herein, averaged over a period of ten (10) consecutive
Trading Days prior to the date as of which the determination is to be made; or
(y) if the Common Stock shall not be listed or admitted to trading as provided
in clause (x) above, the fair market value of the Common Stock as determined in
good faith by the Board of Directors of the Company.
"OUTSTANDING," when used with reference to Common Stock, shall mean
(except as otherwise expressly provided herein) at any date as of which the
number of shares thereof is to be determined, all issued shares of Common Stock,
except shares then owned or held by or for the account of the Company.
"TRADING DAYS" shall mean any days during the course of which the
principal securities exchange on which the Common Stock is listed or admitted to
trading is open for the exchange of securities.
"WARRANT" shall mean the right upon exercise to purchase one Warrant
Share.
"WARRANT SHARES" shall mean the shares of Common Stock purchased or
purchasable by the holder hereof upon the exercise of the Warrants.
ARTICLE I
EXERCISE OF WARRANTS
1.1 METHOD OF EXERCISE. The Warrants represented hereby may be exercised
by the holder hereof, in whole or in part, at any time and from time to time on
or after the date hereof until 5:00 p.m., Houston, Texas time, on January 31,
2002. To exercise the Warrants, the holder hereof shall deliver to the Company,
at the Warrant Office designated in Section hereof, (i) a written notice in the
form of the Subscription Notice attached as an exhibit hereto, stating therein
the election of such holder to exercise the Warrants in the manner provided in
the Subscription Notice; (ii) payment in full of the Exercise Price (A) in cash
or by bank check for all Warrant
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Shares purchased hereunder, or (B) through a "cashless" or "net-issue" exercise
of each such Warrant ("Cashless Exercise"); the holder shall exchange each
Warrant subject to a Cashless Exercise for that number of Warrant Shares
determined by multiplying the number of Warrant Shares issuable hereunder by a
fraction, the numerator of which shall be the difference between (x) the Market
Price and (y) the Exercise Price for each such Warrant, and the denominator of
which shall be the Market Price; the Subscription Notice shall set forth the
calculation upon which the Cashless Exercise is based, or (C) a combination of
(A) and (B) above; and (iii) this Warrant. The Warrants shall be deemed to be
exercised on the date of receipt by the Company of the Subscription Notice,
accompanied by payment for the Warrant Shares and surrender of this Warrant, as
aforesaid, and such date is referred to herein as the "Exercise Date". Upon such
exercise, the Company shall, as promptly as practicable and in any event within
ten (10) business days, issue and deliver to such holder a certificate or
certificates for the full number of the Warrant Shares purchased by such holder
hereunder, and shall, unless the Warrants have expired, deliver to the holder
hereof a new Warrant representing the number of Warrants, if any, that shall not
have been exercised, in all other respects identical to this Warrant. As
permitted by applicable law, the Person in whose name the certificates for
Common Stock are to be issued shall be deemed to have become a holder of record
of such Common Stock on the Exercise Date and shall be entitled to all of the
benefits of such holder on the Exercise Date, including without limitation the
right to receive dividends and other distributions for which the record date
falls on or after the Exercise Date and to exercise voting rights.
1.2 EXPENSES AND TAXES. The Company shall pay all expenses, and taxes
(including, without limitation, all documentary, stamp, transfer or other
transactional taxes) other than income taxes attributable to the preparation,
issuance or delivery of the Warrants and of the shares of Common Stock issuable
upon exercise of the Warrants.
1.3 RESERVATION OF SHARES. The Company shall reserve at all times so long
as the Warrants remain outstanding, free from preemptive rights, out of its
treasury Common Stock or its authorized but unissued shares of Common Stock, or
both, solely for the purpose of effecting the exercise of the Warrants, a
sufficient number of shares of Common Stock to provide for the exercise of the
Warrants.
1.4 VALID ISSUANCE. All shares of Common Stock that may be issued upon
exercise of the Warrants will, upon issuance by the Company, be duly and validly
issued, fully paid and nonassessable and free from all taxes, liens and charges
with respect to the issuance thereof and, without limiting the generality of the
foregoing, the Company shall take no action or fail to take any action which
will cause a contrary result (including, without limitation, any action that
would cause the Exercise Price to be less than the par value, if any, of the
Common Stock).
1.5 ACKNOWLEDGMENT OF RIGHTS. At the time of the exercise of the Warrants
in accordance with the terms hereof and upon the written request of the holder
hereof, the Company will acknowledge in writing its continuing obligation to
afford to such holder any rights (including, without limitation, any right to
registration of the Warrant Shares) to which such holder shall continue to be
entitled after such exercise in accordance with the provisions of this
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Warrant; PROVIDED, HOWEVER, that if the holder hereof shall fail to make any
such request, such failure shall not affect the continuing obligation of the
Company to afford to such holder any such rights.
1.6 NO FRACTIONAL SHARES. The Company shall not be required to issue
fractional shares of Common Stock on the exercise of this Warrant. If more than
one Warrant shall be presented for exercise at the same time by the same holder,
the number of full shares of Common Stock which shall be issuable upon such
exercise shall be computed on the basis of the aggregate number of whole shares
of Common Stock purchasable on exercise of the Warrants so presented. If any
fraction of a share of Common Stock would, except for the provisions of this
Section , be issuable on the exercise of this Warrant, the Company shall pay an
amount in cash calculated by it to be equal to the Market Price of one share of
Common Stock at the time of such exercise multiplied by such fraction computed
to the nearest whole cent.
ARTICLE II
TRANSFER
2.1 WARRANT OFFICE. The Company shall maintain an office for certain
purposes specified herein (the "Warrant Office"), which office shall initially
be the Company's offices at 314 North Post Oak Lane, Houston Texas 77024, and
may subsequently be such other office of the Company or of any transfer agent of
the Common Stock in the continental United States as to which written notice has
previously been given to the holder hereof. The Company shall maintain, at the
Warrant Office, a register for the Warrants in which the Company shall record
the name and address of the Person in whose name this Warrant has been issued,
as well as the name and address of each permitted assignee of the rights of the
registered owner hereof.
2.2 OWNERSHIP OF WARRANTS. The Company may deem and treat the Person in
whose name the Warrants are registered as the holder and owner hereof
(notwithstanding any notations of ownership or writing hereon made by anyone
other than the Company) for all purposes and shall not be affected by any notice
to the contrary until presentation of this Warrant for registration of transfer
as provided in this Article II. Notwithstanding the foregoing, the Warrants
represented hereby, if properly assigned in compliance with this Article II, may
be exercised by an assignee for the purchase of Warrant Shares without having a
new Warrant issued.
2.3 RESTRICTIONS ON TRANSFER OF WARRANTS. The Company agrees to maintain
at the Warrant Office books for the registration and transfer of the Warrants.
Subject to the restrictions on transfer of the Warrants in this Section , the
Company, from time to time, shall register the transfer of the Warrants in such
books upon surrender of this Warrant at the Warrant Office properly endorsed or
accompanied by appropriate instruments of transfer and written instructions for
transfer satisfactory to the Company. Upon any such transfer and upon payment by
the holder or its transferee of any applicable transfer taxes, new Warrants
shall be issued to the transferee and the transferor (as their respective
interests may appear) and the surrendered
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Warrants shall be cancelled by the Company. The Company shall pay all taxes
(other than securities transfer taxes or income taxes) and all other expenses
and charges payable in connection with the transfer of the Warrants pursuant to
this Section .
2.3.1 RESTRICTIONS IN GENERAL. The holder of the Warrants agrees
that it will neither (i) transfer the Warrants prior to delivery to the Company
of written notice of such transfer, nor (ii) transfer such Warrant Shares prior
to delivery to the Company of written notice of such transfer, or until
registration of such Warrant Shares under the Securities Act and any applicable
state securities or blue sky laws has become effective. Notwithstanding the
foregoing, the holder of the Warrants may transfer Warrants to its employees and
affiliates in one or more exempt transactions upon written notice to the Company
thereof.
2.4 COMPLIANCE WITH SECURITIES LAWS. Subject to the terms of the
Registration Rights Agreement between the Holder and the Company dated as of the
date hereof and notwithstanding any other provisions contained in this Warrant,
the holder hereof understands and agrees that the following restrictions and
limitations shall be applicable to all Warrant Shares and to all resales or
other transfers thereof pursuant to the Securities Act:
2.4.1 The holder hereof agrees that the Warrant Shares shall not be
sold or otherwise transferred unless the Warrant Shares are registered under the
Securities Act and applicable state securities or blue sky laws or are exempt
therefrom.
2.4.2 A legend in substantially the following form will be placed on
the certificate(s) evidencing the Warrant Shares:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY OTHER APPLICABLE SECURITIES LAW AND,
ACCORDINGLY, THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT
BE RESOLD, PLEDGED, OR OTHERWISE TRANSFERRED, EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER, OR IN A TRANSACTION EXEMPT
FROM REGISTRATION UNDER, THE SECURITIES ACT AND IN ACCORDANCE WITH
ANY OTHER APPLICABLE SECURITIES LAWS."
2.4.3 Stop transfer instructions will be imposed with respect to the
Warrant Shares so as to restrict resale or other transfer thereof, subject to
this Section .
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ARTICLE III
ANTI-DILUTION
3.1 ANTI-DILUTION PROVISIONS. The Exercise Price shall be subject to
adjustment from time to time as hereinafter provided. Upon each adjustment of
the Exercise Price, the holder of this Warrant shall thereafter be entitled to
purchase, at the Exercise Price resulting from such adjustment, the number of
shares of Common Stock obtained by multiplying the Exercise Price in effect
immediately prior to such adjustment by the number of shares purchasable
pursuant hereto immediately prior to such adjustment and dividing the product
thereof by the Exercise Price resulting from such adjustment.
3.2 ADJUSTMENT OF EXERCISE PRICE UPON ISSUANCE OF COMMON STOCK.
3.2.1 (A) If and whenever after the date hereof the Company shall
issue or sell any Common Stock for no consideration or for a consideration per
share less than the Exercise Price, then, forthwith upon such issue or sale, the
Exercise Price shall be reduced (but not increased, except as otherwise
specifically provided in Section hereof), to the price (calculated to the
nearest one-ten thousandth of a cent) determined by dividing (x) an amount equal
to the sum of (i) the aggregate number of shares of Common Stock outstanding
immediately prior to such issue or sale multiplied by then existing Exercise
Price plus (ii) the consideration received by the Company upon such issue or
sale by (y) the aggregate number of shares of Common Stock outstanding
immediately after such issue or sale. Notwithstanding the foregoing and in lieu
thereof, in the event the Company issues additional shares pursuant to Section
of that certain Registration Rights Agreement of even date herewith among the
Company, the Holder and certain other persons named on Exhibit A thereto, then
the Exercise Price shall be reduced to the price determined by dividing the then
existing Exercise Price by one and one-half (1.5).
(B) Notwithstanding the provisions of this Section , no
adjustment shall be made in the Exercise Price in the event that the Company
issues, in one or more transactions, (i) Common Stock or convertible securities
upon exercise of any options issued to officers, directors or employees of the
Company pursuant to a stock option plan or an employment, severance or
consulting agreement as now or hereafter in effect, in each case approved by the
Board of Directors (provided that the aggregate number of shares of Common Stock
which may be issuable, including options issued prior to the date hereof, under
all such employee plans and agreements shall at no time exceed the number of
such shares of Common Stock that are issuable under currently effective employee
plans and agreements); (ii) Common Stock upon exercise of any stock purchase
warrant or option (other than the options referred to in clause (i) above) or
other convertible security outstanding on the date hereof; or (iii) Common Stock
as consideration in an acquisition by the Company. In addition, for purposes of
calculating any adjustment of the Exercise Price as provided in this Section ,
all of the shares of Common Stock issuable pursuant to any of the foregoing
shall be assumed to be outstanding prior to the event causing such adjustment to
be made.
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3.2.2 For purposes of this Section , the following Sections to
inclusive, shall be applicable:
(A) ISSUANCE OF RIGHTS OR OPTIONS. In case at any time after the
date hereof the Company shall in any manner grant (whether directly or by
assumption in a merger or otherwise) any rights to subscribe for or to
purchase, or any options for the purchase of, Common Stock or any stock or
securities convertible into or exchangeable for Common Stock (such
convertible or exchangeable stock or securities being herein called
"Convertible Securities"), whether or not such rights or options or the
right to convert or exchange any such Convertible Securities are
immediately exercisable, and the price per share for which shares of
Common Stock are issuable upon the exercise of such rights or options or
upon conversion or exchange of such Convertible Securities (determined by
dividing (i) the total amount, if any, received or receivable by the
Company as consideration for the granting of such rights or options, plus
the minimum aggregate amount of additional consideration, if any, payable
to the Company upon the exercise of such rights or options, or plus, in
the case of such rights or options that relate to Convertible Securities,
the minimum aggregate amount of additional consideration, if any, payable
upon the issue or sale of such Convertible Securities and upon the
conversion or exchange thereof, by (ii) the total maximum number of shares
of Common Stock issuable upon the exercise of such rights or options or
upon the conversion or exchange of all such Convertible Securities
issuable upon the exercise of such rights or options) shall be less than
the Exercise Price in effect as of the date of granting such rights or
options, then the total maximum number of shares of Common Stock issuable
upon the exercise of such rights or options or upon conversion or exchange
of all such Convertible Securities issuable upon the exercise of such
rights or options shall be deemed to be outstanding as of the date of the
granting of such rights or options and to have been issued for such price
per share, with the effect on the Exercise Price specified in Section
hereof. Except as provided in Section 3.2.2 hereof, no further adjustment
of the Exercise Price shall be made upon the actual issuance of such
Common Stock or of such Convertible Securities upon exercise of such
rights or options or upon
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the actual issuance of such Common Stock upon conversion or exchange of
such Convertible Securities.
(B) CHANGE IN OPTION PRICE OR CONVERSION RATE. Upon the happening of
any of the following events, namely, if the purchase price provided for in
any right or option referred to in Section , the additional consideration,
if any, payable upon the conversion or exchange of any Convertible
Securities referred to in Section , or the rate at which any Convertible
Securities referred to in Section , are convertible into or exchangeable
for Common Stock shall change (other than under or by reason of provisions
designed to protect against dilution), the Exercise Price then in effect
hereunder shall forthwith be readjusted (increased or decreased, as the
case may be) to the Exercise Price that would have been in effect at such
time had such rights, options or Convertible Securities still outstanding
provided for such changed purchase price, additional consideration or
conversion rate, as the case may be, at the time initially granted, issued
or sold. On the expiration of any such option or right referred to in
Section , or on
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the termination of any such right to convert or exchange any such
Convertible Securities referred to in Section , the Exercise Price then in
effect hereunder shall forthwith be readjusted (increased or decreased, as
the case may be) to the Exercise Price that would have been in effect at
the time of such expiration or termination had such right, option or
Convertible Securities, to the extent outstanding immediately prior to
such expiration or termination, never been granted, issued or sold, and
the Common Stock issuable thereunder shall no longer be deemed to be
outstanding. If the purchase price provided for in Section or the rate at
which any Convertible Securities referred to in Section reduced at any
time under or by reason of provisions with respect thereto designed to
protect against dilution, then in case of the delivery of Common Stock
upon the exercise of any such right or option or upon conversion or
exchange of any such Convertible Securities, the Exercise Price then in
effect hereunder shall, if not already adjusted, forthwith be adjusted to
such amount as would have obtained had such right, option or Convertible
Securities never been issued as to such Common Stock and had adjustments
been made upon the issuance of the Common Stock delivered as aforesaid,
but only if as a result of such adjustment the Exercise Price then in
effect hereunder is thereby reduced.
(C) CONSIDERATION FOR STOCK. In case at any time Common Stock or
Convertible Securities or any rights or options to purchase any such
Common Stock or Convertible Securities shall be issued or sold for cash,
the consideration therefor shall be deemed to be the amount received by
the Company therefor. In case at any time any Common Stock, Convertible
Securities or any rights or options to purchase any such Common Stock or
Convertible Securities shall be issued or sold for consideration other
than cash, the amount of the consideration other than cash received by the
Company shall be deemed to be the fair value of such consideration, as
determined reasonably and in good faith by the Board of Directors of the
Company. In case at any time any Common Stock, Convertible Securities or
any rights or options to purchase any Common Stock or Convertible
Securities shall be issued in connection with any merger or consolidation
in which the Company is the surviving corporation, the amount of
consideration received therefor shall be deemed to be the fair value, as
determined reasonably and in good faith by the Board of Directors of the
Company, of such portion of the assets and business of the nonsurviving
corporation as such Board of Directors may determine to be attributable to
such Common Stock, Convertible Securities, rights or options as the case
may be. In case at any time any rights or options to purchase any shares
of Common Stock or Convertible Securities shall be issued in connection
with the issuance and sale of other securities of the Company, together
consisting of one integral transaction in which no consideration is
allocated to such rights or options by the parties, such rights or options
shall be deemed to have been issued with consideration.
(D) RECORD DATE. In the case the Company shall take a record of the
holders of its Common Stock for the purpose of entitling them (i) to
receive a dividend or other distribution payable in Common Stock or
Convertible Securities, or (ii) to subscribe for or purchase Common Stock
or Convertible Securities, then such record date shall be
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deemed to be the date of the issuance or sale of the Common Stock or
Convertible Securities deemed to have been issued or sold as a result of
the declaration of such dividend or the making of such other distribution
or the date of the granting of such right of subscription or purchase, as
the case may be.
(E) TREASURY SHARES. The number of shares of Common Stock
outstanding at any given time shall not include shares owned directly by
the Company in treasury, and the disposition of any such shares shall be
considered an issuance or sale of Common Stock for the purpose of this
Section .
3.3 STOCK DIVIDENDS. In case the Company shall declare a dividend or make
any other distribution upon any shares of the Company, payable in Common Stock
or Convertible Securities, any Common Stock or Convertible Securities, as the
case may be, issuable in payment of such dividend or distribution shall be
deemed to have been issued or sold without consideration.
3.4 STOCK SPLITS AND REVERSE SPLITS. In the event that the Company shall
at any time subdivide its outstanding shares of Common Stock into a greater
number of shares, the Exercise Price in effect immediately prior to such
subdivision shall be proportionately reduced and the number of Warrant Shares
purchasable pursuant to this Warrant immediately prior to such subdivision shall
be proportionately increased, and conversely, in the event that the outstanding
shares of Common stock shall at any time be combined into a smaller number of
shares, the Exercise Price in effect immediately prior to such combination shall
be proportionately increased and the number of Warrant Shares purchasable upon
the exercise of this Warrant immediately prior to such combination shall be
proportionately reduced. Except as provided in this Section , no adjustment in
the Exercise Price and no change in the number of Warrant Shares purchasable
shall be made under this Article III as a result of or by reason of any such
subdivision or combination.
3.5 REORGANIZATIONS AND ASSET SALES. If any capital reorganization or
reclassification of the capital stock of the Company, or any consolidation,
merger or share exchange of the Company with another Person, or the sale,
transfer or other disposition of all or substantially all of its assets to
another Person shall be effected in such a way that a holder of Common Stock of
the Company shall be entitled to receive capital stock, securities or assets
with respect to or in exchange for their shares, then the following provisions
shall apply:
3.5.1 As a condition of such reorganization, reclassification,
consolidation, merger, share exchange, sale, transfer or other disposition
(except as otherwise provided below in this Section ), lawful and adequate
provisions shall be made whereby the holder of Warrants shall thereafter have
the right to purchase and receive upon the terms and conditions specified in
this Warrant and in lieu of the Warrant Shares immediately theretofore
receivable upon the exercise of the rights represented hereby, such shares of
capital stock, securities or assets as may be issued or payable with respect to
or in exchange for a number of outstanding shares of such Common Stock equal to
the number of Warrant Shares immediately theretofore
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so receivable had such reorganization, reclassification, consolidation, merger,
share exchange or sale not taken place, and in any such case appropriate
provision reasonably satisfactory to such holder shall be made with respect to
the rights and interests of such holder to the end that the provisions hereof
(including, without limitation, provisions for adjustments of the Exercise Price
and of the number of Warrant Shares receivable upon the exercise) shall
thereafter be applicable, as nearly as possible, in relation to any shares of
capital stock, securities or assets thereafter deliverable upon the exercise of
Warrants.
3.5.2 In the event of a merger, share exchange or consolidation of
the Company with or into another Person as a result of which a number of shares
of common stock or its equivalent of the successor Person greater or lesser than
the number of shares of Common Stock outstanding immediately prior to such
merger, share exchange or consolidation are issuable to holders of Common Stock,
then the Exercise Price in effect immediately prior to such merger, share
exchange or consolidation shall be adjusted in the same manner as though there
were a subdivision or combination of the outstanding shares of Common Stock.
3.5.3 The Company shall not effect any such consolidation, merger,
share exchange, sale, transfer or other disposition unless prior to or
simultaneously with the consummation thereof the successor Person (if other than
the Company) resulting from such consolidation, share exchange or merger or the
Person purchasing or otherwise acquiring such assets shall have assumed by
written instrument executed and mailed or delivered to the holder hereof at the
last address of such holder appearing on the books of the Company the obligation
to deliver to such holder such shares of capital stock, securities or assets as,
in accordance with the foregoing provisions, such holder may be entitled to
receive, and all other liabilities and obligations of the Company hereunder.
Upon written request by the holder hereof, such successor Person will issue a
new Warrant revised to reflect the modifications in this Warrant effected
pursuant to this Section .
3.5.4 If a purchase, tender or exchange offer is made to and
accepted by the holders of 50% or more of the outstanding shares of Common
Stock, the Company shall not effect any consolidation, merger, share exchange or
sale, transfer or other disposition of all or substantially all of the Company's
assets with the Person having made such offer or with any affiliate of such
Person, unless prior to the consummation of such consolidation, merger, share
exchange, sale, transfer or other disposition the holder hereof shall have been
given a reasonable opportunity to then elect to receive upon the exercise of the
Warrants either the capital stock, securities or assets then issuable with
respect to the Common Stock or the capital stock, securities or assets, or the
equivalent, issued to previous holders of the Common Stock in accordance with
such offer.
3.6 ADJUSTMENT FOR ASSET DISTRIBUTION. If the Company declares a dividend
or other distribution payable to all holders of shares of Common Stock in
evidences of indebtedness of the Company or other assets of the Company
(including, cash (other than regular cash dividends declared by the Board of
Directors), capital stock (other than Common Stock, Convertible Securities or
options or rights thereto) or other property), the Exercise Price in effect
immediately
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prior to such declaration of such dividend or other distribution shall be
reduced by an amount equal to the amount of such dividend or distribution
payable per share of Common Stock, in the case of a cash dividend or
distribution, or by the fair value of such dividend or distribution per share of
Common Stock (as reasonably determined in good faith by the Board of Directors
of the Company), in the case of any other dividend or distribution. Such
reduction shall be made whenever any such dividend or distribution is made and
shall be effective as of the date as of which a record is taken for purpose of
such dividend or distribution or, if a record is not taken, the date as of which
holders of record of Common Stock entitled to such dividend or distribution are
determined.
3.7 DE MINIMIS ADJUSTMENTS. No adjustment in the number of shares of
Common Stock purchasable hereunder shall be required unless such adjustment
would require an increase or decrease of at least one share of Common Stock
purchasable upon an exercise of each Warrant and no adjustment in the Exercise
Price shall be required unless such adjustment would require an increase or
decrease of at least $0.01 in the Exercise Price; provided, however, that any
adjustments which by reason of this Section are not required to be made shall be
carried forward and taken into account in any subsequent adjustment. All
calculations shall be made to the nearest full share or nearest one hundredth of
a dollar, as applicable.
3.8 NOTICE OF ADJUSTMENT. Whenever the Exercise Price or the number of
Warrant Shares issuable upon the exercise of the Warrants shall be adjusted as
herein provided, or the rights of the holder hereof shall change by reason of
other events specified herein, the Company shall compute the adjusted Exercise
Price and the adjusted number of Warrant Shares in accordance with the
provisions hereof and shall prepare an Officer's Certificate setting forth the
adjusted Exercise Price and the adjusted number of Warrant Shares issuable upon
the exercise of the Warrants or specifying the other shares of stock, securities
or assets receivable as a result of such change in rights, and showing in
reasonable detail the facts and calculations upon which such adjustments or
other changes are based. The Company shall cause to be mailed to the holder
hereof copies of such Officer's Certificate together with a notice stating that
the Exercise Price and the number of Warrant Shares purchasable upon exercise of
the Warrants have been adjusted and setting forth the adjusted Exercise Price
and the adjusted number of Warrant Shares purchasable upon the exercise of the
Warrants.
3.9 NOTIFICATIONS TO HOLDERS. In case at any time the Company proposes:
(i) to declare any dividend upon its Common Stock payable in capital
stock or make any special dividend or other distribution (other than cash
dividends) to the holders of its Common Stock;
(ii) to offer for subscription pro rata to all of the holders of its
Common Stock any additional shares of capital stock of any class or other
rights;
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(iii) to effect any capital reorganization, or reclassification of
the capital stock of the Company, or consolidation, merger or share
exchange of the Company with another Person, or sale, transfer or other
disposition of all or substantially all of its assets; or
(iv) to effect a voluntary or involuntary dissolution, liquidation
or winding up of the Company,
then, in any one or more of such cases, the Company shall give the holder hereof
(a) at least 10 days' (but not more than 90 days') prior written notice of the
date of which the books of the Company shall close or a record shall be taken
for such dividend, distribution or subscription rights or for determining rights
to vote in respect of such issuance, reorganization, reclassification,
consolidation, merger, share exchange, sale, transfer, disposition, dissolution,
liquidation or winding up, and (b) in the case of any such issuance,
reorganization, reclassification, consolidation, merger, share exchange, sale,
transfer, disposition, dissolution, liquidation or winding up, at least 10 days'
(but not more than 90 days') prior written notice of the date when the same
shall take place. Such notice in accordance with the foregoing clause (a) shall
also specify, in the case of any such dividend, distribution or subscription
rights, the date on which the holders of Common Stock shall be entitled thereto,
and such notice in accordance with the foregoing clause (b) shall also specify
the date on which the holders of Common Stock shall be entitled to exchange
their Common Stock, as the case may be, for securities or other property
deliverable upon such reorganization, reclassification, consolidation, merger,
share exchange, sale, transfer, disposition, dissolution, liquidation or winding
up, as the case may be.
3.10 COMPANY TO PREVENT DILUTION. If any event or condition occurs as to
which other provisions of this Article III are not strictly applicable or if
strictly applicable would not fairly protect the exercise or purchase rights of
the Warrants evidenced hereby in accordance with the essential intent and
principles of such provisions, or that might materially and adversely affect the
exercise or purchase rights of the holder hereof under any provisions of this
Warrant, then the Company shall make such adjustments in the application of such
provisions, in accordance with such essential intent and principles, so as to
protect such exercise and purchase rights as aforesaid, and any adjustments
necessary with respect to the Exercise Price and the number of Warrant Shares
purchasable hereunder so as to preserve the rights of the holder hereunder. In
no event shall any such adjustment have the effect of increasing the Exercise
Price as otherwise determined pursuant to this Article III except in the event
of a combination of shares of the type contemplated in Section hereof, and then
in no event to an amount greater than the Exercise Price as adjusted pursuant to
Section hereof.
ARTICLE IV
MISCELLANEOUS
4.1 ENTIRE AGREEMENT. This Warrant contains the entire agreement between
the holder hereof and the Company with respect to the Warrant Shares purchasable
upon exercise hereof
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and the related transactions and supersedes all prior arrangements or
understandings with respect thereto.
4.2 GOVERNING LAW. This warrant shall be governed by and construed in
accordance with the laws of the State of Delaware.
4.3 WAIVER AND AMENDMENT. Any term or provision of this Warrant may be
waived at any time by the party which is entitled to the benefits thereof and
any term or provision of this Warrant may be amended or supplemented at any time
by agreement of the holder hereof and the Company, except that any waiver of any
term or condition, or any amendment or supplementation, of this Warrant shall be
in writing. A waiver of any breach or failure to enforce any of the terms or
conditions of this Warrant shall not in any way effect, limit or waive a party's
rights hereunder at any time to enforce strict compliance thereafter with every
term or condition of this Warrant.
4.4 ILLEGALITY. In the event that any one or more of the provisions
contained in this Warrant shall be determined to be invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in any other respect and the remaining
provisions of this Warrant shall not, at the election of the party for whom the
benefit of the provision exists, be in any way impaired.
4.5 COPY OF WARRANT. A copy of this Warrant shall be filed among the
records of the Company.
4.6 NOTICE. Any notice or other document required or permitted to be given
or delivered to the holder hereof shall be in writing and delivered at, or sent
by certified or registered mail to such holder at, the last address shown on the
books of the Company maintained at the Warrant Office for the registration of
this Warrant or at any more recent address of which the holder hereof shall have
notified the Company in writing. Any notice or other document required or
permitted to be given or delivered to the Company, other than such notice or
documents required to be delivered to the Warrant Office, shall be delivered at,
or sent by certified or registered mail to, the offices of the Company at 314
North Post Oak Lane, Houston, Texas 77024 or such other address within the
continental United States of America as shall have been furnished by the Company
to the holder of this Warrant.
4.7 LIMITATION OF LIABILITY; NOT STOCKHOLDERS. No provision of this
Warrant shall be construed as conferring upon the holder hereof the right to
vote, consent, receive dividends or receive notices (other than as herein
expressly provided) in respect of meetings of stockholders for the election of
directors of the Company or any other matter whatsoever as a stockholder of the
Company. No provision hereof, in the absence of affirmative action by the holder
hereof to purchase shares of Common Stock, and no mere enumeration herein of the
rights or privileges of the holder hereof, shall give rise to any liability of
such holder for the purchase price of any shares of Common Stock or as a
stockholder of the Company, whether such liability is asserted by the Company or
by creditors of the Company.
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4.8 EXCHANGE, LOSS, DESTRUCTION, ETC. OF WARRANT. Upon receipt of evidence
satisfactory to the Company of the loss, theft, mutilation or destruction of
this Warrant, and in the case of any such loss, theft or destruction upon
delivery of a bond of indemnity or such other security in such form and amount
as shall be reasonably satisfactory to the Company, or in the event of such
mutilation upon surrender and cancellation of this Warrant, the Company will
make and deliver a new Warrant of like tenor, in lieu of such lost, stolen,
destroyed or mutilated Warrant. Any Warrant issued under the provisions of this
Section in lieu of any Warrant alleged to be lost, destroyed or stolen, or in
lieu of any mutilated Warrant, shall constitute an original contractual
obligation on the part of the Company. This Warrant shall be promptly canceled
by the Company upon the surrender hereof in connection with any exchange or
replacement. The Company shall pay all taxes (other than securities transfer
taxes or income taxes) and all other expenses and charges payable in connection
with the preparation, execution and delivery of Warrants pursuant to this
Section .
4.9 REGISTRATION RIGHTS. The Warrant Shares shall be entitled to such
registration rights under the Securities Act and under applicable state
securities laws as are specified in the Registration Rights Agreement.
4.10 HEADINGS. The Article and Section and other headings herein are for
convenience only and are not a part of this Warrant and shall not affect the
interpretation thereof.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed in
its name.
Dated: January 31, 1997
TRANSAMERICAN WASTE INDUSTRIES, INC.
By: /s/ J. DAVID GREEN
J. David Green, Vice President, Secretary
and General Counsel
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SUBSCRIPTION NOTICE
The undersigned, the holder of the foregoing Warrant, hereby elects to
exercise purchase rights represented thereby and to purchase thereunder ________
shares of the Common Stock covered by such Warrant, and herewith makes payment
in full for such shares pursuant to Section 1.1 of such Warrant, and requests
(a) that certificates for such shares (and any other securities or other
property issuable upon such exercise) be issued in the name of, and delivered to
_____________________________________ and (b), if such shares shall not include
all of the shares issuable as provided in such Warrant, that a new Warrant of
like tenor and date for the balance of the shares issuable thereunder be
delivered to the undersigned.
Date:
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ASSIGNMENT
For value received, _______________________, hereby sells, assigns, and
transfers unto _________________________ the within Warrant, together with all
right, title and interest therein, and does hereby irrevocably constitute and
appoint ________________________ attorney, to transfer such Warrant on the books
of the Company, with full power of substitution.
Date:
16
EXHIBIT 4.5
THE SECURITIES REPRESENTED BY THIS WARRANT AND THE COMMON STOCK ISSUABLE THEREBY
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY OTHER APPLICABLE SECURITIES LAW AND, ACCORDINGLY, THE
SECURITIES REPRESENTED BY THIS WARRANT MAY NOT BE RESOLD, PLEDGED, OR OTHERWISE
TRANSFERRED, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER, OR IN
A TRANSACTION EXEMPT FROM REGISTRATION UNDER, THE SECURITIES ACT AND IN
ACCORDANCE WITH ANY OTHER APPLICABLE SECURITIES LAWS.
WARRANT
to Purchase Common Stock of
TRANSAMERICAN WASTE INDUSTRIES, INC.
Expiring on January 31, 2002
This Common Stock Purchase Warrant (the "Warrant") certifies that for
value received, Sanders Morris Mundy Inc., a Texas corporation (the "Holder") or
its assigns, is entitled to subscribe for and purchase from the Company (as
hereinafter defined), in whole or in part, 125,000 shares of duly authorized,
validly issued, fully paid and nonassessable shares of Common Stock (as
hereinafter defined) at an initial Exercise Price (as hereinafter defined) per
share of $.66, subject, however, to the provisions and upon the terms and
conditions hereinafter set forth. The number of Warrants (as hereinafter
defined), the number of shares of Common Stock purchasable hereunder, and the
Exercise Price therefor are subject to adjustment as hereinafter set forth. This
Warrant and all rights hereunder shall expire at 5:00 p.m., Houston, Texas time,
on January 31, 2002.
As used herein, the following terms shall have the meanings set forth
below:
"COMPANY" shall mean TransAmerican Waste Industries, Inc., a Delaware
corporation, and shall also include any successor thereto with respect to the
obligations hereunder, by merger, consolidation or otherwise.
"COMMON STOCK" shall mean and include the Company's Common Stock, par
value $0.001 per share, authorized on the date of the original issue of this
Warrant and shall also include (i) in case of any reorganization,
reclassification, consolidation, merger, share exchange or sale, transfer or
other disposition of assets of the character referred to in Section hereof, the
stock, securities provided for in such Section , and (ii) any other shares of
common stock of the Company into which such shares of Common Stock may be
converted.
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"EXERCISE PRICE" shall mean the initial purchase price of $.66 per share
of Common Stock payable upon exercise of the Warrants, as adjusted from time to
time pursuant to the provisions hereof.
"MARKET PRICE" for any day, when used with reference to Common Stock,
shall mean the price of said Common Stock determined as follows: (x) the last
reported sale price for the Common Stock on such day on the principal securities
exchange on which the Common Stock is listed or admitted to trading or if no
such sale takes place on such date, the average of the closing bid and asked
prices thereof as officially reported, or, if not so listed or admitted to
trading on any securities exchange, the last sale price for the Common Stock on
the National Association of Securities Dealers SmallCap Market on such date, or,
if there shall have been no trading on such date or if the Common Stock shall
not be listed on such system, the average of the closing bid and asked prices in
the over-the-counter market as furnished by any NASD member firm selected from
time to time by the Company for such purpose, in each such case, unless
otherwise provided herein, averaged over a period of ten (10) consecutive
Trading Days prior to the date as of which the determination is to be made; or
(y) if the Common Stock shall not be listed or admitted to trading as provided
in clause (x) above, the fair market value of the Common Stock as determined in
good faith by the Board of Directors of the Company.
"OUTSTANDING," when used with reference to Common Stock, shall mean
(except as otherwise expressly provided herein) at any date as of which the
number of shares thereof is to be determined, all issued shares of Common Stock,
except shares then owned or held by or for the account of the Company.
"TRADING DAYS" shall mean any days during the course of which the
principal securities exchange on which the Common Stock is listed or admitted to
trading is open for the exchange of securities.
"WARRANT" shall mean the right upon exercise to purchase one Warrant
Share.
"WARRANT SHARES" shall mean the shares of Common Stock purchased or
purchasable by the holder hereof upon the exercise of the Warrants.
ARTICLE I
EXERCISE OF WARRANTS
1.1 METHOD OF EXERCISE. The Warrants represented hereby may be exercised
by the holder hereof, in whole or in part, at any time and from time to time on
or after the date hereof until 5:00 p.m., Houston, Texas time, on January 31,
2002. To exercise the Warrants, the holder hereof shall deliver to the Company,
at the Warrant Office designated in Section hereof, (i) a written notice in the
form of the Subscription Notice attached as an exhibit hereto, stating therein
the election of such holder to exercise the Warrants in the manner provided in
the Subscription Notice; (ii) payment in full of the Exercise Price (A) in cash
or by bank check for all Warrant
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Shares purchased hereunder, or (B) through a "cashless" or "net-issue" exercise
of each such Warrant ("Cashless Exercise"); the holder shall exchange each
Warrant subject to a Cashless Exercise for that number of Warrant Shares
determined by multiplying the number of Warrant Shares issuable hereunder by a
fraction, the numerator of which shall be the difference between (x) the Market
Price and (y) the Exercise Price for each such Warrant, and the denominator of
which shall be the Market Price; the Subscription Notice shall set forth the
calculation upon which the Cashless Exercise is based, or (C) a combination of
(A) and (B) above; and (iii) this Warrant. The Warrants shall be deemed to be
exercised on the date of receipt by the Company of the Subscription Notice,
accompanied by payment for the Warrant Shares and surrender of this Warrant, as
aforesaid, and such date is referred to herein as the "Exercise Date". Upon such
exercise, the Company shall, as promptly as practicable and in any event within
ten (10) business days, issue and deliver to such holder a certificate or
certificates for the full number of the Warrant Shares purchased by such holder
hereunder, and shall, unless the Warrants have expired, deliver to the holder
hereof a new Warrant representing the number of Warrants, if any, that shall not
have been exercised, in all other respects identical to this Warrant. As
permitted by applicable law, the Person in whose name the certificates for
Common Stock are to be issued shall be deemed to have become a holder of record
of such Common Stock on the Exercise Date and shall be entitled to all of the
benefits of such holder on the Exercise Date, including without limitation the
right to receive dividends and other distributions for which the record date
falls on or after the Exercise Date and to exercise voting rights.
1.2 EXPENSES AND TAXES. The Company shall pay all expenses, and taxes
(including, without limitation, all documentary, stamp, transfer or other
transactional taxes) other than income taxes attributable to the preparation,
issuance or delivery of the Warrants and of the shares of Common Stock issuable
upon exercise of the Warrants.
1.3 RESERVATION OF SHARES. The Company shall reserve at all times so long
as the Warrants remain outstanding, free from preemptive rights, out of its
treasury Common Stock or its authorized but unissued shares of Common Stock, or
both, solely for the purpose of effecting the exercise of the Warrants, a
sufficient number of shares of Common Stock to provide for the exercise of the
Warrants.
1.4 VALID ISSUANCE. All shares of Common Stock that may be issued upon
exercise of the Warrants will, upon issuance by the Company, be duly and validly
issued, fully paid and nonassessable and free from all taxes, liens and charges
with respect to the issuance thereof and, without limiting the generality of the
foregoing, the Company shall take no action or fail to take any action which
will cause a contrary result (including, without limitation, any action that
would cause the Exercise Price to be less than the par value, if any, of the
Common Stock).
1.5 ACKNOWLEDGMENT OF RIGHTS. At the time of the exercise of the Warrants
in accordance with the terms hereof and upon the written request of the holder
hereof, the Company will acknowledge in writing its continuing obligation to
afford to such holder any rights (including, without limitation, any right to
registration of the Warrant Shares) to which such holder shall continue to be
entitled after such exercise in accordance with the provisions of this
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Warrant; PROVIDED, HOWEVER, that if the holder hereof shall fail to make any
such request, such failure shall not affect the continuing obligation of the
Company to afford to such holder any such rights.
1.6 NO FRACTIONAL SHARES. The Company shall not be required to issue
fractional shares of Common Stock on the exercise of this Warrant. If more than
one Warrant shall be presented for exercise at the same time by the same holder,
the number of full shares of Common Stock which shall be issuable upon such
exercise shall be computed on the basis of the aggregate number of whole shares
of Common Stock purchasable on exercise of the Warrants so presented. If any
fraction of a share of Common Stock would, except for the provisions of this
Section , be issuable on the exercise of this Warrant, the Company shall pay an
amount in cash calculated by it to be equal to the Market Price of one share of
Common Stock at the time of such exercise multiplied by such fraction computed
to the nearest whole cent.
ARTICLE II
TRANSFER
2.1 WARRANT OFFICE. The Company shall maintain an office for certain
purposes specified herein (the "Warrant Office"), which office shall initially
be the Company's offices at 314 North Post Oak Lane, Houston Texas 77024, and
may subsequently be such other office of the Company or of any transfer agent of
the Common Stock in the continental United States as to which written notice has
previously been given to the holder hereof. The Company shall maintain, at the
Warrant Office, a register for the Warrants in which the Company shall record
the name and address of the Person in whose name this Warrant has been issued,
as well as the name and address of each permitted assignee of the rights of the
registered owner hereof.
2.2 OWNERSHIP OF WARRANTS. The Company may deem and treat the Person in
whose name the Warrants are registered as the holder and owner hereof
(notwithstanding any notations of ownership or writing hereon made by anyone
other than the Company) for all purposes and shall not be affected by any notice
to the contrary until presentation of this Warrant for registration of transfer
as provided in this Article II. Notwithstanding the foregoing, the Warrants
represented hereby, if properly assigned in compliance with this Article II, may
be exercised by an assignee for the purchase of Warrant Shares without having a
new Warrant issued.
2.3 RESTRICTIONS ON TRANSFER OF WARRANTS. The Company agrees to maintain
at the Warrant Office books for the registration and transfer of the Warrants.
Subject to the restrictions on transfer of the Warrants in this Section , the
Company, from time to time, shall register the transfer of the Warrants in such
books upon surrender of this Warrant at the Warrant Office properly endorsed or
accompanied by appropriate instruments of transfer and written instructions for
transfer satisfactory to the Company. Upon any such transfer and upon payment by
the holder or its transferee of any applicable transfer taxes, new Warrants
shall be issued to the transferee and the transferor (as their respective
interests may appear) and the surrendered
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Warrants shall be cancelled by the Company. The Company shall pay all taxes
(other than securities transfer taxes or income taxes) and all other expenses
and charges payable in connection with the transfer of the Warrants pursuant to
this Section .
2.3.1 RESTRICTIONS IN GENERAL. The holder of the Warrants agrees
that it will neither (i) transfer the Warrants prior to delivery to the Company
of written notice of such transfer, nor (ii) transfer such Warrant Shares prior
to delivery to the Company of written notice of such transfer, or until
registration of such Warrant Shares under the Securities Act and any applicable
state securities or blue sky laws has become effective. Notwithstanding the
foregoing, the holder of the Warrants may transfer Warrants to its employees and
affiliates in one or more exempt transactions upon written notice to the Company
thereof.
2.4 COMPLIANCE WITH SECURITIES LAWS. Subject to the terms of the
Registration Rights Agreement between the Holder and the Company dated as of the
date hereof and notwithstanding any other provisions contained in this Warrant,
the holder hereof understands and agrees that the following restrictions and
limitations shall be applicable to all Warrant Shares and to all resales or
other transfers thereof pursuant to the Securities Act:
2.4.1 The holder hereof agrees that the Warrant Shares shall not be
sold or otherwise transferred unless the Warrant Shares are registered under the
Securities Act and applicable state securities or blue sky laws or are exempt
therefrom.
2.4.2 A legend in substantially the following form will be placed on
the certificate(s) evidencing the Warrant Shares:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY OTHER APPLICABLE SECURITIES LAW AND,
ACCORDINGLY, THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT
BE RESOLD, PLEDGED, OR OTHERWISE TRANSFERRED, EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER, OR IN A TRANSACTION EXEMPT
FROM REGISTRATION UNDER, THE SECURITIES ACT AND IN ACCORDANCE WITH
ANY OTHER APPLICABLE SECURITIES LAWS."
2.4.3 Stop transfer instructions will be imposed with respect to the
Warrant Shares so as to restrict resale or other transfer thereof, subject to
this Section 2.4.
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ARTICLE III
ANTI-DILUTION
3.1 ANTI-DILUTION PROVISIONS. The Exercise Price shall be subject to
adjustment from time to time as hereinafter provided. Upon each adjustment of
the Exercise Price, the holder of this Warrant shall thereafter be entitled to
purchase, at the Exercise Price resulting from such adjustment, the number of
shares of Common Stock obtained by multiplying the Exercise Price in effect
immediately prior to such adjustment by the number of shares purchasable
pursuant hereto immediately prior to such adjustment and dividing the product
thereof by the Exercise Price resulting from such adjustment.
3.2 ADJUSTMENT OF EXERCISE PRICE UPON ISSUANCE OF COMMON STOCK.
3.2.1 (A) If and whenever after the date hereof the Company shall
issue or sell any Common Stock for no consideration or for a consideration per
share less than the Exercise Price, then, forthwith upon such issue or sale, the
Exercise Price shall be reduced (but not increased, except as otherwise
specifically provided in Section hereof), to the price (calculated to the
nearest one-ten thousandth of a cent) determined by dividing (x) an amount equal
to the sum of (i) the aggregate number of shares of Common Stock outstanding
immediately prior to such issue or sale multiplied by then existing Exercise
Price plus (ii) the consideration received by the Company upon such issue or
sale by (y) the aggregate number of shares of Common Stock outstanding
immediately after such issue or sale. Notwithstanding the foregoing and in lieu
thereof, in the event the Company issues additional shares pursuant to Section
of that certain Registration Rights Agreement of even date herewith among the
Company, the Holder and certain other persons named on Exhibit A thereto, then
the Exercise Price shall be reduced to the price determined by dividing the then
existing Exercise Price by one and one-half (1.5).
(B) Notwithstanding the provisions of this Section , no
adjustment shall be made in the Exercise Price in the event that the Company
issues, in one or more transactions, (i) Common Stock or convertible securities
upon exercise of any options issued to officers, directors or employees of the
Company pursuant to a stock option plan or an employment, severance or
consulting agreement as now or hereafter in effect, in each case approved by the
Board of Directors (provided that the aggregate number of shares of Common Stock
which may be issuable, including options issued prior to the date hereof, under
all such employee plans and agreements shall at no time exceed the number of
such shares of Common Stock that are issuable under currently effective employee
plans and agreements); (ii) Common Stock upon exercise of any stock purchase
warrant or option (other than the options referred to in clause (i) above) or
other convertible security outstanding on the date hereof; or (iii) Common Stock
as consideration in an acquisition by the Company. In addition, for purposes of
calculating any adjustment of the Exercise Price as provided in this Section ,
all of the shares of Common Stock issuable pursuant to any of the foregoing
shall be assumed to be outstanding prior to the event causing such adjustment to
be made.
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3.2.2 For purposes of this Section , the following Sections to
inclusive, shall be applicable:
(A) ISSUANCE OF RIGHTS OR OPTIONS. In case at any time after the
date hereof the Company shall in any manner grant (whether directly or by
assumption in a merger or otherwise) any rights to subscribe for or to
purchase, or any options for the purchase of, Common Stock or any stock or
securities convertible into or exchangeable for Common Stock (such
convertible or exchangeable stock or securities being herein called
"Convertible Securities"), whether or not such rights or options or the
right to convert or exchange any such Convertible Securities are
immediately exercisable, and the price per share for which shares of
Common Stock are issuable upon the exercise of such rights or options or
upon conversion or exchange of such Convertible Securities (determined by
dividing (i) the total amount, if any, received or receivable by the
Company as consideration for the granting of such rights or options, plus
the minimum aggregate amount of additional consideration, if any, payable
to the Company upon the exercise of such rights or options, or plus, in
the case of such rights or options that relate to Convertible Securities,
the minimum aggregate amount of additional consideration, if any, payable
upon the issue or sale of such Convertible Securities and upon the
conversion or exchange thereof, by (ii) the total maximum number of shares
of Common Stock issuable upon the exercise of such rights or options or
upon the conversion or exchange of all such Convertible Securities
issuable upon the exercise of such rights or options) shall be less than
the Exercise Price in effect as of the date of granting such rights or
options, then the total maximum number of shares of Common Stock issuable
upon the exercise of such rights or options or upon conversion or exchange
of all such Convertible Securities issuable upon the exercise of such
rights or options shall be deemed to be outstanding as of the date of the
granting of such rights or options and to have been issued for such price
per share, with the effect on the Exercise Price specified in Section
hereof. Except as provided in Section hereof, no further adjustment of the
Exercise Price shall be made upon the actual issuance of such Common Stock
or of such Convertible Securities upon exercise of such rights or options
or upon the actual issuance of such Common Stock upon conversion or
exchange of such Convertible Securities.
(B) CHANGE IN OPTION PRICE OR CONVERSION RATE. Upon the happening of
any of the following events, namely, if the purchase price provided for in
any right or option referred to in Section , the additional consideration,
if any, payable upon the conversion or exchange of any Convertible
Securities referred to in Section , or the rate at which any Convertible
Securities referred to in Section , are convertible into or exchangeable
for Common Stock shall change (other than under or by reason of provisions
designed to protect against dilution), the Exercise Price then in effect
hereunder shall forthwith be readjusted (increased or decreased, as the
case may be) to the Exercise Price that would have been in effect at such
time had such rights, options or Convertible Securities still outstanding
provided for such changed purchase price, additional consideration or
conversion rate, as the case may be, at the time initially granted, issued
or sold. On the expiration of any such option or right referred to in
Section , or on
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the termination of any such right to convert or exchange any such
Convertible Securities referred to in Section , the Exercise Price then in
effect hereunder shall forthwith be readjusted (increased or decreased, as
the case may be) to the Exercise Price that would have been in effect at
the time of such expiration or termination had such right, option or
Convertible Securities, to the extent outstanding immediately prior to
such expiration or termination, never been granted, issued or sold, and
the Common Stock issuable thereunder shall no longer be deemed to be
outstanding. If the purchase price provided for in Section or the rate at
which any Convertible Securities referred to in Section reduced at any
time under or by reason of provisions with respect thereto designed to
protect against dilution, then in case of the delivery of Common Stock
upon the exercise of any such right or option or upon conversion or
exchange of any such Convertible Securities, the Exercise Price then in
effect hereunder shall, if not already adjusted, forthwith be adjusted to
such amount as would have obtained had such right, option or Convertible
Securities never been issued as to such Common Stock and had adjustments
been made upon the issuance of the Common Stock delivered as aforesaid,
but only if as a result of such adjustment the Exercise Price then in
effect hereunder is thereby reduced.
(C) CONSIDERATION FOR STOCK. In case at any time Common Stock or
Convertible Securities or any rights or options to purchase any such
Common Stock or Convertible Securities shall be issued or sold for cash,
the consideration therefor shall be deemed to be the amount received by
the Company therefor. In case at any time any Common Stock, Convertible
Securities or any rights or options to purchase any such Common Stock or
Convertible Securities shall be issued or sold for consideration other
than cash, the amount of the consideration other than cash received by the
Company shall be deemed to be the fair value of such consideration, as
determined reasonably and in good faith by the Board of Directors of the
Company. In case at any time any Common Stock, Convertible Securities or
any rights or options to purchase any Common Stock or Convertible
Securities shall be issued in connection with any merger or consolidation
in which the Company is the surviving corporation, the amount of
consideration received therefor shall be deemed to be the fair value, as
determined reasonably and in good faith by the Board of Directors of the
Company, of such portion of the assets and business of the nonsurviving
corporation as such Board of Directors may determine to be attributable to
such Common Stock, Convertible Securities, rights or options as the case
may be. In case at any time any rights or options to purchase any shares
of Common Stock or Convertible Securities shall be issued in connection
with the issuance and sale of other securities of the Company, together
consisting of one integral transaction in which no consideration is
allocated to such rights or options by the parties, such rights or options
shall be deemed to have been issued with consideration.
(D) RECORD DATE. In the case the Company shall take a record of the
holders of its Common Stock for the purpose of entitling them (i) to
receive a dividend or other distribution payable in Common Stock or
Convertible Securities, or (ii) to subscribe for or purchase Common Stock
or Convertible Securities, then such record date shall be
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deemed to be the date of the issuance or sale of the Common Stock or
Convertible Securities deemed to have been issued or sold as a result of
the declaration of such dividend or the making of such other distribution
or the date of the granting of such right of subscription or purchase, as
the case may be.
(E) TREASURY SHARES. The number of shares of Common Stock
outstanding at any given time shall not include shares owned directly by
the Company in treasury, and the disposition of any such shares shall be
considered an issuance or sale of Common Stock for the purpose of this
Section .
3.3 STOCK DIVIDENDS. In case the Company shall declare a dividend or make
any other distribution upon any shares of the Company, payable in Common Stock
or Convertible Securities, any Common Stock or Convertible Securities, as the
case may be, issuable in payment of such dividend or distribution shall be
deemed to have been issued or sold without consideration.
3.4 STOCK SPLITS AND REVERSE SPLITS. In the event that the Company shall
at any time subdivide its outstanding shares of Common Stock into a greater
number of shares, the Exercise Price in effect immediately prior to such
subdivision shall be proportionately reduced and the number of Warrant Shares
purchasable pursuant to this Warrant immediately prior to such subdivision shall
be proportionately increased, and conversely, in the event that the outstanding
shares of Common stock shall at any time be combined into a smaller number of
shares, the Exercise Price in effect immediately prior to such combination shall
be proportionately increased and the number of Warrant Shares purchasable upon
the exercise of this Warrant immediately prior to such combination shall be
proportionately reduced. Except as provided in this Section , no adjustment in
the Exercise Price and no change in the number of Warrant Shares purchasable
shall be made under this Article III as a result of or by reason of any such
subdivision or combination.
3.5 REORGANIZATIONS AND ASSET SALES. If any capital reorganization or
reclassification of the capital stock of the Company, or any consolidation,
merger or share exchange of the Company with another Person, or the sale,
transfer or other disposition of all or substantially all of its assets to
another Person shall be effected in such a way that a holder of Common Stock of
the Company shall be entitled to receive capital stock, securities or assets
with respect to or in exchange for their shares, then the following provisions
shall apply:
3.5.1 As a condition of such reorganization, reclassification,
consolidation, merger, share exchange, sale, transfer or other disposition
(except as otherwise provided below in this Section ), lawful and adequate
provisions shall be made whereby the holder of Warrants shall thereafter have
the right to purchase and receive upon the terms and conditions specified in
this Warrant and in lieu of the Warrant Shares immediately theretofore
receivable upon the exercise of the rights represented hereby, such shares of
capital stock, securities or assets as may be issued or payable with respect to
or in exchange for a number of outstanding shares of such Common Stock equal to
the number of Warrant Shares immediately theretofore
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so receivable had such reorganization, reclassification, consolidation, merger,
share exchange or sale not taken place, and in any such case appropriate
provision reasonably satisfactory to such holder shall be made with respect to
the rights and interests of such holder to the end that the provisions hereof
(including, without limitation, provisions for adjustments of the Exercise Price
and of the number of Warrant Shares receivable upon the exercise) shall
thereafter be applicable, as nearly as possible, in relation to any shares of
capital stock, securities or assets thereafter deliverable upon the exercise of
Warrants.
3.5.2 In the event of a merger, share exchange or consolidation of
the Company with or into another Person as a result of which a number of shares
of common stock or its equivalent of the successor Person greater or lesser than
the number of shares of Common Stock outstanding immediately prior to such
merger, share exchange or consolidation are issuable to holders of Common Stock,
then the Exercise Price in effect immediately prior to such merger, share
exchange or consolidation shall be adjusted in the same manner as though there
were a subdivision or combination of the outstanding shares of Common Stock.
3.5.3 The Company shall not effect any such consolidation, merger,
share exchange, sale, transfer or other disposition unless prior to or
simultaneously with the consummation thereof the successor Person (if other than
the Company) resulting from such consolidation, share exchange or merger or the
Person purchasing or otherwise acquiring such assets shall have assumed by
written instrument executed and mailed or delivered to the holder hereof at the
last address of such holder appearing on the books of the Company the obligation
to deliver to such holder such shares of capital stock, securities or assets as,
in accordance with the foregoing provisions, such holder may be entitled to
receive, and all other liabilities and obligations of the Company hereunder.
Upon written request by the holder hereof, such successor Person will issue a
new Warrant revised to reflect the modifications in this Warrant effected
pursuant to this Section .
3.5.4 If a purchase, tender or exchange offer is made to and
accepted by the holders of 50% or more of the outstanding shares of Common
Stock, the Company shall not effect any consolidation, merger, share exchange or
sale, transfer or other disposition of all or substantially all of the Company's
assets with the Person having made such offer or with any affiliate of such
Person, unless prior to the consummation of such consolidation, merger, share
exchange, sale, transfer or other disposition the holder hereof shall have been
given a reasonable opportunity to then elect to receive upon the exercise of the
Warrants either the capital stock, securities or assets then issuable with
respect to the Common Stock or the capital stock, securities or assets, or the
equivalent, issued to previous holders of the Common Stock in accordance with
such offer.
3.6 ADJUSTMENT FOR ASSET DISTRIBUTION. If the Company declares a dividend
or other distribution payable to all holders of shares of Common Stock in
evidences of indebtedness of the Company or other assets of the Company
(including, cash (other than regular cash dividends declared by the Board of
Directors), capital stock (other than Common Stock, Convertible Securities or
options or rights thereto) or other property), the Exercise Price in effect
immediately
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prior to such declaration of such dividend or other distribution shall be
reduced by an amount equal to the amount of such dividend or distribution
payable per share of Common Stock, in the case of a cash dividend or
distribution, or by the fair value of such dividend or distribution per share of
Common Stock (as reasonably determined in good faith by the Board of Directors
of the Company), in the case of any other dividend or distribution. Such
reduction shall be made whenever any such dividend or distribution is made and
shall be effective as of the date as of which a record is taken for purpose of
such dividend or distribution or, if a record is not taken, the date as of which
holders of record of Common Stock entitled to such dividend or distribution are
determined.
3.7 DE MINIMIS ADJUSTMENTS. No adjustment in the number of shares of
Common Stock purchasable hereunder shall be required unless such adjustment
would require an increase or decrease of at least one share of Common Stock
purchasable upon an exercise of each Warrant and no adjustment in the Exercise
Price shall be required unless such adjustment would require an increase or
decrease of at least $0.01 in the Exercise Price; provided, however, that any
adjustments which by reason of this Section are not required to be made shall be
carried forward and taken into account in any subsequent adjustment. All
calculations shall be made to the nearest full share or nearest one hundredth of
a dollar, as applicable.
3.8 NOTICE OF ADJUSTMENT. Whenever the Exercise Price or the number of
Warrant Shares issuable upon the exercise of the Warrants shall be adjusted as
herein provided, or the rights of the holder hereof shall change by reason of
other events specified herein, the Company shall compute the adjusted Exercise
Price and the adjusted number of Warrant Shares in accordance with the
provisions hereof and shall prepare an Officer's Certificate setting forth the
adjusted Exercise Price and the adjusted number of Warrant Shares issuable upon
the exercise of the Warrants or specifying the other shares of stock, securities
or assets receivable as a result of such change in rights, and showing in
reasonable detail the facts and calculations upon which such adjustments or
other changes are based. The Company shall cause to be mailed to the holder
hereof copies of such Officer's Certificate together with a notice stating that
the Exercise Price and the number of Warrant Shares purchasable upon exercise of
the Warrants have been adjusted and setting forth the adjusted Exercise Price
and the adjusted number of Warrant Shares purchasable upon the exercise of the
Warrants.
3.9 NOTIFICATIONS TO HOLDERS. In case at any time the Company proposes:
(i) to declare any dividend upon its Common Stock payable in capital
stock or make any special dividend or other distribution (other than cash
dividends) to the holders of its Common Stock;
(ii) to offer for subscription pro rata to all of the holders of its
Common Stock any additional shares of capital stock of any class or other
rights;
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(iii) to effect any capital reorganization, or reclassification of
the capital stock of the Company, or consolidation, merger or share
exchange of the Company with another Person, or sale, transfer or other
disposition of all or substantially all of its assets; or
(iv) to effect a voluntary or involuntary dissolution, liquidation
or winding up of the Company,
then, in any one or more of such cases, the Company shall give the holder hereof
(a) at least 10 days' (but not more than 90 days') prior written notice of the
date of which the books of the Company shall close or a record shall be taken
for such dividend, distribution or subscription rights or for determining rights
to vote in respect of such issuance, reorganization, reclassification,
consolidation, merger, share exchange, sale, transfer, disposition, dissolution,
liquidation or winding up, and (b) in the case of any such issuance,
reorganization, reclassification, consolidation, merger, share exchange, sale,
transfer, disposition, dissolution, liquidation or winding up, at least 10 days'
(but not more than 90 days') prior written notice of the date when the same
shall take place. Such notice in accordance with the foregoing clause (a) shall
also specify, in the case of any such dividend, distribution or subscription
rights, the date on which the holders of Common Stock shall be entitled thereto,
and such notice in accordance with the foregoing clause (b) shall also specify
the date on which the holders of Common Stock shall be entitled to exchange
their Common Stock, as the case may be, for securities or other property
deliverable upon such reorganization, reclassification, consolidation, merger,
share exchange, sale, transfer, disposition, dissolution, liquidation or winding
up, as the case may be.
3.10 COMPANY TO PREVENT DILUTION. If any event or condition occurs as to
which other provisions of this Article III are not strictly applicable or if
strictly applicable would not fairly protect the exercise or purchase rights of
the Warrants evidenced hereby in accordance with the essential intent and
principles of such provisions, or that might materially and adversely affect the
exercise or purchase rights of the holder hereof under any provisions of this
Warrant, then the Company shall make such adjustments in the application of such
provisions, in accordance with such essential intent and principles, so as to
protect such exercise and purchase rights as aforesaid, and any adjustments
necessary with respect to the Exercise Price and the number of Warrant Shares
purchasable hereunder so as to preserve the rights of the holder hereunder. In
no event shall any such adjustment have the effect of increasing the Exercise
Price as otherwise determined pursuant to this Article III except in the event
of a combination of shares of the type contemplated in Section hereof, and then
in no event to an amount greater than the Exercise Price as adjusted pursuant to
Section hereof.
ARTICLE IV
MISCELLANEOUS
4.1 ENTIRE AGREEMENT. This Warrant contains the entire agreement between
the holder hereof and the Company with respect to the Warrant Shares purchasable
upon exercise hereof
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and the related transactions and supersedes all prior arrangements or
understandings with respect thereto.
4.2 GOVERNING LAW. This warrant shall be governed by and construed in
accordance with the laws of the State of Delaware.
4.3 WAIVER AND AMENDMENT. Any term or provision of this Warrant may be
waived at any time by the party which is entitled to the benefits thereof and
any term or provision of this Warrant may be amended or supplemented at any time
by agreement of the holder hereof and the Company, except that any waiver of any
term or condition, or any amendment or supplementation, of this Warrant shall be
in writing. A waiver of any breach or failure to enforce any of the terms or
conditions of this Warrant shall not in any way effect, limit or waive a party's
rights hereunder at any time to enforce strict compliance thereafter with every
term or condition of this Warrant.
4.4 ILLEGALITY. In the event that any one or more of the provisions
contained in this Warrant shall be determined to be invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in any other respect and the remaining
provisions of this Warrant shall not, at the election of the party for whom the
benefit of the provision exists, be in any way impaired.
4.5 COPY OF WARRANT. A copy of this Warrant shall be filed among the
records of the Company.
4.6 NOTICE. Any notice or other document required or permitted to be given
or delivered to the holder hereof shall be in writing and delivered at, or sent
by certified or registered mail to such holder at, the last address shown on the
books of the Company maintained at the Warrant Office for the registration of
this Warrant or at any more recent address of which the holder hereof shall have
notified the Company in writing. Any notice or other document required or
permitted to be given or delivered to the Company, other than such notice or
documents required to be delivered to the Warrant Office, shall be delivered at,
or sent by certified or registered mail to, the offices of the Company at 314
North Post Oak Lane, Houston, Texas 77024 or such other address within the
continental United States of America as shall have been furnished by the Company
to the holder of this Warrant.
4.7 LIMITATION OF LIABILITY; NOT STOCKHOLDERS. No provision of this
Warrant shall be construed as conferring upon the holder hereof the right to
vote, consent, receive dividends or receive notices (other than as herein
expressly provided) in respect of meetings of stockholders for the election of
directors of the Company or any other matter whatsoever as a stockholder of the
Company. No provision hereof, in the absence of affirmative action by the holder
hereof to purchase shares of Common Stock, and no mere enumeration herein of the
rights or privileges of the holder hereof, shall give rise to any liability of
such holder for the purchase price of any shares of Common Stock or as a
stockholder of the Company, whether such liability is asserted by the Company or
by creditors of the Company.
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4.8 EXCHANGE, LOSS, DESTRUCTION, ETC. OF WARRANT. Upon receipt of evidence
satisfactory to the Company of the loss, theft, mutilation or destruction of
this Warrant, and in the case of any such loss, theft or destruction upon
delivery of a bond of indemnity or such other security in such form and amount
as shall be reasonably satisfactory to the Company, or in the event of such
mutilation upon surrender and cancellation of this Warrant, the Company will
make and deliver a new Warrant of like tenor, in lieu of such lost, stolen,
destroyed or mutilated Warrant. Any Warrant issued under the provisions of this
Section in lieu of any Warrant alleged to be lost, destroyed or stolen, or in
lieu of any mutilated Warrant, shall constitute an original contractual
obligation on the part of the Company. This Warrant shall be promptly canceled
by the Company upon the surrender hereof in connection with any exchange or
replacement. The Company shall pay all taxes (other than securities transfer
taxes or income taxes) and all other expenses and charges payable in connection
with the preparation, execution and delivery of Warrants pursuant to this
Section .
4.9 REGISTRATION RIGHTS. The Warrant Shares shall be entitled to such
registration rights under the Securities Act and under applicable state
securities laws as are specified in the Registration Rights Agreement.
4.10 HEADINGS. The Article and Section and other headings herein are for
convenience only and are not a part of this Warrant and shall not affect the
interpretation thereof.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed in
its name.
Dated: February 10, 1997.
TRANSAMERICAN WASTE INDUSTRIES, INC.
By: /s/ LANCE C. RUUD
Lance C. Ruud, Senior Vice President
and Chief Financial Officer
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SUBSCRIPTION NOTICE
The undersigned, the holder of the foregoing Warrant, hereby elects to
exercise purchase rights represented thereby and to purchase thereunder ________
shares of the Common Stock covered by such Warrant, and herewith makes payment
in full for such shares pursuant to Section 1.1 of such Warrant, and requests
(a) that certificates for such shares (and any other securities or other
property issuable upon such exercise) be issued in the name of, and delivered to
_____________________________________ and (b), if such shares shall not include
all of the shares issuable as provided in such Warrant, that a new Warrant of
like tenor and date for the balance of the shares issuable thereunder be
delivered to the undersigned.
Date:
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ASSIGNMENT
For value received, _______________________, hereby sells, assigns, and
transfers unto _________________________ the within Warrant, together with all
right, title and interest therein, and does hereby irrevocably constitute and
appoint ________________________ attorney, to transfer such Warrant on the books
of the Company, with full power of substitution.
Date:
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