EXHIBIT 10.34

PURCHASE AND SALE OF ASSETS AGREEMENT

Between

U S LIQUIDS OF LA., L.P.

And

U S LIQUIDS INC.,

on the first part

And

TRINITY STORAGE SERVICES, L.P.

And

CCBS, INC., Its General Partner,

on the second part

 

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TABLE OF CONTENTS

            SECTION     PAGE

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ARTICLE 1. SALE OF ASSETS
    4    
Section 1.1. Description of Assets
    4    
Section 1.2. Excluded Assets
    6    
Section 1.3. Non-Assignment of Certain Customer Contracts
    6    
Section 1.4. Prepaid Services
    7    
Section 1.5. Proration of Cash on Hand
    7    
Section 1.6. Handling of Receivables
    7  
ARTICLE 2. PURCHASE PRICE
    7    
Section 2.1. Purchase Price
    7    
Section 2.2. Additional Consideration
    8    
Section 2.3. Payment of Certain Accounts Payable
    8  
ARTICLE 3. CLOSING
    9    
Section 3.1. Time and Place of Closing
    9    
Section 3.2. Deliveries by Seller and General Partner
    9    
Section 3.3. Deliveries by Buyer
    10  
ARTICLE 4. POST CLOSING COVENANTS
    10    
Section 4.1. Further Assurance
    10    
Section 4.2. Transition
    10  
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF SELLER & GENERAL PARTNER
    10    
Section 5.1. Organization; Authority
    11    
Section 5.2. Binding Effect
    11    
Section 5.3. Predecessor Entities; Trade Names
    11    
Section 5.4. No Subsidiaries
    11    
Section 5.5. Financial Statements
    12    
Section 5.6. Non-Balance Sheet Liabilities
    12    
Section 5.7. Permits; Environmental Documents
    13    
Section 5.8. Personal Property
    13    
Section 5.9. Title to Real Property
    14    
Section 5.10. Contracts
    15    
Section 5.11. Insurance Policies
    16    
Section 5.12. Employees; Compensation
    16    
Section 5.13. Employee Relations and Benefit Plans
    16    
Section 5.14. Compliance with Law; No Conflicts
    16    
Section 5.15. Taxes
    17    
Section 5.16. Litigation
    17    
Section 5.17. Absence of Price Renegotiation Contracts
    17    
Section 5.18. Conduct of Seller’s Business Since Balance Sheet Date
    17    
Section 5.19. Hazardous Materials; Disposal Sites
    18    
Section 5.20. Underground Storage Tanks
    19    
Section 5.21. Corrupt Practices
    19    
Section 5.22. Complete Disclosure
    19    
Section 5.23. Due Diligence Disclosure
    19  
ARTICLE 6. REPRESENTATIONS AND WARRANTIES OF BUYER
    19    
Section 6.1. Corporate Organization
    19    
Section 6.2. Corporate Authority
    19  

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Section 6.3. US Liquids Stock
    19    
Section 6.4. No Conflicts
    20    
Section 6.5. Binding Agreement
    20  
ARTICLES 7. COVENANTS OF STOCKHOLDERS AND SELLER PRIOR TO CLOSING
    20    
Section 7.1. Access to Land and Records
    20    
Section 7.2. Activities of Seller Prior to Closing
    20    
Section 7.3. Prohibited Activities Prior to Closing
    21    
Section 7.4. Contact with Government Officials
    22    
Section 7.5. Notice of Developments
    22    
Section 7.6. Barge Surveys
    22    
Section 7.7 Venice
    22  
ARTICLE 8. CONDITIONS PRECEDENT TO OBLIGATIONS OF GENERAL PARTNER &SELLER
    22    
Section 8.1. Representations and Warranties
    22    
Section 8.2. Consents
    22    
Section 8.3. No Adverse Proceeding
    23    
Section 8.4. Noncompetition Agreements
    23    
Section 8.5. Certificates
    23  
ARTICLE 9. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER & U S LIQUIDS
    23    
Section 9.1. Representations and Warranties
    23    
Section 9.2. Covenants
    23    
Section 9.3. No Adverse Proceeding
    23    
Section 9.4. No Adverse Change
    23    
Section 9.5. General Release
    23    
Section 9.6. Consents
    23    
Section 9.7. Good Standing Certificate
    23    
Section 9.8. Agreements
    24    
Section 9.9. Transferability of Permits
    24    
Section 9.10. Consents to Assignment of Real Estate Leases
    24    
Section 9.11. Environmental Review
    24    
Section 9.12. Due Diligence
    24    
Section 9.13. Barge Surveys Section 9.14. Certificates
    24    
Section 9.15 Bank Approval
    24    
Section 9.16. General
    25  
ARTICLE 10. NON-ASSUMPTION OF LIABILITIES
    25  
ARTICLE 11. INDEMNIFICATION
    26    
Section 11.1. Indemnification by General Partner and Seller
    26    
Section 11.2. Indemnification by Buyer and U S Liquids
    26    
Section 11.3. Procedure for Indemnification with Respect to Third Party Claims
    26  
ARTICLE 12. TERMINATION OF AGREEMENT
    27    
Section 12.1. Termination by Buyer
    27    
Section 12.2. Termination by Seller
    28    
Section 12.3. Termination by Either Party
    28    
Section 12.4. Effect of Termination
    28  
ARTICLE 13. NONDISCLOSURE OF CONFIDENTIAL INFORMATION
    29    
Section 13.1. Nondisclosure by Seller and General Partner
    28    
Section 13.2. Nondisclosure by Buyer
    28  

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ARTICLE 14. FEDERAL SECURITIES ACT AND CONTRACTUAL RESTRICTIONS ON STOCK
    29    
Section 14.1. U S Liquids Stock
    29    
Section 14.2. Compliance with Law
    29  
ARTICLE 15. GENERAL
    29    
Section 15.1. Assignment; Binding Effect; Amendment
    29    
Section 15.2. Third Party Beneficiary
    29    
Section 15.3. Entire Agreement
    29    
Section 15.4. Counterparts
    29    
Section 15.5. No Brokers
    29    
Section 15.6. Expenses of Transaction
    30    
Section 15.7. Notices
    30    
Section 15.8. Governing Law
    31    
Section 15.9. No Waiver
    31    
Section 15.10. Time of the Essence
    31    
Section 15.11. Captions
    31    
Section 15.12. Severability
    31    
Section 15.13. Construction
    31    
Section 15.14. Standstill Agreement
    31    
Section 15.15 Press Releases and Public Announcements
    32  

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PURCHASE AND SALE OF ASSETS AGREEMENT

     This PURCHASE AND SALE OF ASSETS AGREEMENT (the “Agreement”) is executed
and delivered on this 15th day of July, 2002, among U S LIQUIDS LA., L.P., a
Delaware limited partnership (“Buyer”) and its parent company, U S LIQUIDS INC.,
a Delaware corporation (“U S Liquids”); TRINITY STORAGE SERVICES, L.P., a Texas
Limited Partnership (“Seller”); and CCBS, INC., a Texas corporation, the general
partner of Seller (the “General Partner”).

WHEREAS, Seller is engaged in the business of operating docks and transfer
facilities for the collection, transfer and transportation for disposal of
liquid and semi-liquid wastes generated in connection with the drilling of oil
and gas wells (“Oilfield Waste”) in the Texas and Louisiana Gulf Coast area (the
“Business);

WHEREAS, in connection with operating the Business, Seller leases or controls
certain real property described in Exhibit A attached hereto and made a part
hereof (the “Land”), pursuant to written agreements which are attached hereto as
Exhibit B and made a part hereof (the “Real Estate Leases”), on which it
operates, or has the exclusive right to operate commercial transfer facilities
for handling Oilfield Waste (the “Transfer Stations”);

WHEREAS, Buyer desires to purchase and acquire certain assets, equipment and
contractual rights of Seller used in connection with the Business and Seller
desires to sell such assets, equipment and contractual rights to Buyer, all in
accordance with the terms and conditions set forth in this Agreement;

WHEREAS, General Partner desires that Seller sell such assets, equipment and
contractual rights to Buyer upon the terms and subject to the conditions set
forth in this Agreement and, in order to induce Buyer to enter into this
Agreement, are willing to make the covenants and promises herein set forth;

WHEREAS, Seller is unwilling to enter into this Agreement without the covenants
and promises of U S Liquids herein set forth;

WHEREAS, Buyer is unwilling to enter into this Agreement without the covenants
and promises of General Partner herein set forth; and

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:

ARTICLE 1. SALE OF ASSETS

Section 1.1. Description of Assets. Upon the terms and subject to the conditions
set forth in this Agreement, Seller hereby agrees to convey, sell, transfer and
assign to Buyer the following assets, equipment and contractual rights of
Seller, wherever located, subject to the exclusions hereinafter set forth:

  (a)   all of Seller’s right, title, estate and interest in and to the Real
Estate Leases and all improvements owned by Seller that are located on the Land;
    (b)   all governmental permits, franchises, licenses, orders, consents and
approvals of every kind held by Seller and necessary to operate the Transfer
Stations and the Business (the “Permits”);

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  (c)   all other permits, franchises, licenses, rights, consents and approvals
of every kind held by Seller and necessary to operate the Business (the
“Licenses”), including, without limitation, all licenses or rights related to
computer software and programs;     (d)   all equipment owned by Seller and used
or for use in the Business (the “Equipment”), including, without limitation, all
equipment listed on Schedule 1.1(d), attached hereto and made a part hereof;    
(e)   all of the motor vehicles owned by Seller and used or for use in the
Business and all attachments, accessories and other equipment now located in or
on such motor vehicles (the “Motor Vehicles”), as the same are more completely
described by manufacturer, model number, model year and VIN on Schedule 1.1(e),
attached hereto and made a part hereof;     (f)   all of Seller’s right title,
estate and interest in and to the equipment leases to which Seller is a party
(the “Equipment Leases”), as the same are more completely described by lessor
name, equipment description, term and lease payment on Schedule 1.1(f), attached
hereto and made a part hereof;     (g)   all of Seller’s right title, estate and
interest in and to the motor vehicle leases to which Seller is a party (the
“Motor Vehicle Leases”), as the same are more completely described by lessor
name, manufacturer, model number, model year, VIN, term and lease payment on
Schedule 1.1(g), attached hereto and made a part hereof;     (h)   all computer
hardware, software, programs and source codes (for both internally and
externally developed programs) (“Computers”) used or for use in the Business,
including, without limitation, all manual and automated billing systems and
components thereof;     (i)   all of Seller’s inventory of parts, tires and
accessories of every kind, nature, and description used or for use in the
Business (the “Inventory”);     (j)   all right, title and interest of Seller in
and to all trade secrets and proprietary information used in the Business and
owned or licensed by Seller (“Proprietary Rights”) ;     (k)   all contractual
rights of Seller with Seller’s customers (whether oral or in writing) relating
to the operation of the Business (the “Customer Contracts”), and all
commitments, lists, leases, permits, licenses, consents, approvals, franchises
and other instruments relating to the Customer Contracts (the “Related
Approvals”), a complete and accurate list of the Customer Contracts and the
Related Approvals is set forth on Schedule 1.1(k), attached hereto and made a
part hereof;     (l)   all other contractual rights of Seller, other than the
Permits, Licenses, Equipment Leases, Motor Vehicle Leases and Customer
Contracts, used or for use in, or necessary to the operation of, the Business
(the “Contracts”), including, without limitation, all operating, management,
utilization or consulting agreements, a complete and accurate list of which is
set forth in Schedule 1.1(l) attached hereto and made a part hereof;     (m)  
all right, title, and interest of Seller in and to the telephone numbers used in
the operation of the Business;

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  (n)   all radio base stations, together with all radios, mobile
telephones/radios and other communications equipment used in connection with the
Business, wherever located;     (o)   all of Seller’s shop tools, nuts and bolts
relating to the Business;     (p)   all of Seller’s existing documents, files
and other material related to all current or past customers and operations of
the Business; and     (q)   all of the goodwill of the Business.

All of the foregoing assets, properties and contractual rights are hereinafter
sometimes collectively called the “Assets.”

Section 1.2. Excluded Assets. The parties agree that there shall be excluded
from the Assets the following which are not being sold to Buyer pursuant to this
Agreement (the “Excluded Assets”):

  (a)   all cash on hand and on deposit, except as set forth in Section 1.5
hereof, all cash equivalents (including marketable securities and short-term
investments) and all accounts receivable and notes receivable of Seller (the
“Receivables”), subject to Section 1.6 hereof;     (b)   the Moss Bluff
Operating Agreement dated January 1, 2000 between Seller and OGW Enterprises,
Inc. (“OGW”) and the Anahuac dock and transfer facility lease, and any assets
owned or leased by Seller and used solely in connection with the Moss Bluff
Operating Agreement or the Anahuac dock and transfer facility;     (c)   the
promissory note executed by OGW and delivered to Seller in connection with the
Moss Bluff Operating Agreement and all agreements securing payment of such
promissory note;     (d)   all telephones, radios and other communications
equipment used at the Moss Bluff disposal facility, the Anahuac dock and
transfer facility or CCNG, Inc.’s Houston office, and all telephone numbers used
at such locations;     (e)   all, if any, real property and all buildings on and
fixtures to all real property of Seller other than that set forth in
Section 1.1(a), (the “Excluded Real Estate”);     (f)   all contracts and
contract rights and obligations of Seller (whether oral or in writing) not
relating to the Business; and     (g)   all employment contracts to which Seller
is a party or by which Seller is bound;

Section 1.3. Non-Assignment of Certain Contracts and Leases. Notwithstanding
anything to the contrary in this Agreement, to the extent that the assignment
hereunder of any contract or lease shall require the consent of any third party,
neither this Agreement nor any action taken pursuant to its provisions shall
constitute an assignment, an agreement to assign or an attempted assignment if
such assignment, agreement to assign or attempted assignment would constitute a
breach thereof or result in the loss or diminution thereof; provided, however,
that in each such case, Seller and General Partner shall use reasonable
commercial efforts to obtain the consent of such other party to such assignment
to Buyer. If such consent is not obtained, and if the Closing occurs, Seller and
General Partner shall cooperate with Buyer in any reasonable arrangement
designed to provide for Buyer the benefits under any such contract or lease,
(provided, there shall be no adjustment of the purchase price set forth in
Section 2.1 hereof) and the enforcement for the account and benefit of Buyer, of
any and all rights of Seller against any other

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person arising out of the breach or cancellation of any such contract or lease
by such other person or otherwise. Attached hereto as Schedule 1.3 is a list of
all contracts or leases requiring consent to their assignment (“Customer
Contracts Requiring Consent”).

Section 1.4. Prepaid Services. Seller shall remit to Buyer all payments received
by Seller from customers prior to or after the date hereof for services to be
performed by Buyer on and after the date of Closing.

Section 1.5. Proration of Cash on Hand. The parties shall prorate, as of the
close of business on the Closing Date, all sums paid to Seller pursuant to the
advance billing practice of Seller or otherwise representing a prepayment to
Seller of services to be rendered after the Closing. Seller shall be entitled to
all such sums allocable to services performed on or before the close of business
on the date of Closing and Buyer shall be entitled to all such sums allocable to
services to be performed thereafter.

Section 1.6. Handling of Receivables. Seller shall diligently attempt to collect
the Receivables and shall apply the proceeds collected as follows:

  (a)   First, to discharge that certain Loan Agreement between Seller and Bank
of America, N.A. dated November 9, 2001 in the principal sum of $1,200,000.00;  
  (b)   Then, to any portion of the Payables, if any, which Buyer has not
discharged pursuant to Section 2.1(a);     (c)   Then, to any accounts payable,
notes payable or other financial obligations of Seller relating to the Moss
Bluff disposal facility and/or the Anahuac dock and transfer facility.

To the extent that Seller fails or refuses to apply the proceeds derived from
the collection of the Receivables to item (b), above, Buyer may elect to do so
and shall be entitled to a credit against the sums payable under Section 2.2,
below, or, if said sums have already been fully paid, to a claim against Seller
and the General Partner. Buyer and Seller shall cooperate and provide assistance
to each other, to the extent reasonably possible, in connection with Seller’s
attempts to collect the Receivables. For purposes hereof, cooperation and
assistance shall include regular communications with each other to provide
updates on collection activities and reasonable advance notice to the other
party if one party intends to take any action related to a customer in
connection with a Receivable owing from that customer, which action could be
reasonably anticipated to hinder, make more difficult or otherwise cause
problems with either Seller’s attempts to collect that Receivable or Buyer’s
ongoing relationship with that customer. Any sums received by Buyer from a
customer shall be presumed to be payment for services rendered by Buyer and
shall be applied to that customer’s account balance with Buyer unless otherwise
specified by the customer.

ARTICLE 2. PURCHASE PRICE

Section 2.1. Purchase Price. At the Closing, Buyer shall pay to Seller for the
Assets as follows:

  (a)   At Closing, Buyer shall pay the sum of Two Million Five Hundred Thousand
Dollars ($2,500,000.00) toward the Payables (defined below), as determined by
Buyer; provided, however, that Buyer may set aside a portion of the aforesaid
sum (the “Holdback”), the amount of which shall be reasonably determined by
Buyer, for the payment of any outstanding amounts due and owing to any vendor
providing goods or services in connection with the operation of the Transfer
Stations or Transportation (defined below) as to which Seller has not received
an invoice as of the Closing Date or as to which all or a portion may be in
dispute. If the amount of the

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      Payables paid by Buyer at Closing plus the amount of the Holdback is less
that $2,500,000.00, Buyer shall pay the difference to Seller at Closing in
immediately payable funds. Any such difference paid at Closing shall be applied
by Seller in the manner set forth in Section 1.6(a) — (c), above. On the
ninety-first (91st ) day after the Closing Date, Buyer shall remit the unused
portion of the Holdback to Seller; provided, however, that in the event Buyer
thereafter receives any invoices for goods or services provided in connection
with the operation of the Transfer Stations or Transportation prior to the
Closing Date, Buyer shall submit such invoices to Seller and Seller shall be
solely responsible for the payment thereof. To the extent that Seller fails or
refuses to pay any such invoices, Buyer may elect to do so and shall be entitled
to a claim against the Seller and the General Partner. Each party shall have the
right to audit the payment by the other party of the amounts provided in this
section or any amounts required to be paid by either party to any third party
under this Agreement.     (b)   At Closing, U S Liquids shall issue Seller
warrants to purchase 100,000 shares of the common stock of U S Liquids, par
value $.01 per share (“U S Liquids Stock”), with an expiration date of five
years from the Closing Date, with the following strike prices:

          No. Shares   Strike Price

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50,000
  Closing Price
50,000
  Closing Price x 1.25

      For purposes of the foregoing, the Closing Price would be the AMEX closing
price of said stock on the last day of trading prior to the day on which a
public announcement of the signing of this Agreement by the parties occurs.

Section 2.2. Additional Consideration. Buyer shall pay Seller the sum of
$100,000.00 for each calendar month or portion thereof that elapses from July 1,
2002 until the earlier to occur of the Closing Date or the date this Agreement
is terminated (the “Monthly Payment”); provided, however, that in no event shall
Buyer be required to pay more than $450,000.00 in aggregate Monthly Payments
pursuant to this section. The Monthly Payment shall be due and payable on the
last day of each month beginning with July 31, 2002, except that if the Closing
occurs or if this Agreement is terminated on a date other than the last day of a
month, the due date shall be the Closing Date or the termination date, whichever
is applicable. Buyer shall pay Seller $25,000.00 on the date of this Agreement
or as soon thereafter as said money can be wire transferred, which amount shall
be credited to the Monthly Payment due on July 31, 2002. In the event the
Closing occurs prior to November 15, 2002, at the Closing, Buyer shall pay
Seller (in addition to the amounts due under Section 2.1, above) the difference
between $450,000.00 and the total amount of the Monthly Payments that have been
paid (including any Monthly Payment then due for the month in which the Closing
occurs). In the event this Agreement is terminated by either party pursuant to
Article 12, Buyer shall have no further obligation to make Monthly Payments
hereunder except for the Monthly Payment for the month in which such termination
occurs and for any unpaid Monthly Payments for any months prior thereto. All
amounts payable under this Section shall be paid by wire transfer of immediately
available funds to an account designated by Seller.

Section 2.3. Payment of Certain Accounts Payable. At the Closing, Buyer shall
pay the verified accounts payable and accrued liabilities directly relating to
the operation of the Transfer Stations or the transportation of Oilfield Waste
by barge from the Transfer Stations to the ultimate disposal site
(“Transportation”), subject to the terms of and in the manner described in
Section 2.1(a), above (the “Payables”). A detailed list of the creditors and
evidence of the Payables is set forth on Schedule 2.3. In addition, Buyer shall
assume all of Seller’s obligations under all of the Real Estate Leases, Permits,

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Licenses, Equipment Leases, Motor Vehicle Leases, Customer Contracts and
Contracts assigned to Buyer to the extent, and only to the extent, such
obligations first mature and are required to be performed subsequent to the
close of business on the Closing Date (the “Assumed Contracts Obligations”). The
Assumed Contracts Obligations are in addition to the Payables. U S Liquids
hereby guarantees the performance by Buyer of its obligations under this
Section 2.3.

ARTICLE 3. CLOSING

Section 3.1. Time and Place of Closing. This transaction shall be closed on
August 15, 2002, or on such other date and time as mutually agreed by the
parties, subject to the satisfaction of all of the conditions to closing set
forth in Articles 8 and 9 (the “Closing”). The Closing shall take place at a
location mutually agreeable to Buyer and Seller. The date on which the Closing
occurs shall be referred to as the “Closing Date.”

Section 3.2. Deliveries by Seller and General Partner. At the Closing, Seller
and General Partner shall deliver to Buyer, all duly executed:

  (a)   an assignment of each of the Real Estate Leases to Buyer, containing the
consent of the landlord and the landlord’s acknowledgment that no defaults exist
under said Real Estate Leases and an assumption by Buyer of the Real Estate
Leases in form and substance satisfactory to Buyer, Seller and each landlord
(the “Assignment and Assumption of Real Estate Leases”);     (b)   a General
Conveyance, Assignment, Bill of Sale and Assumption of Certain Liabilities, in
form and substance reasonably satisfactory to Buyer and Seller, conveying,
selling, transferring and assigning to Buyer all of the Assets (other than the
Real Estate Leases) and pursuant to which Buyer assumes the Assumed Contracts
Obligations (the “Bill of Sale”);     (c)   consents by all governmental
entities required for the transfer of the Permits to Buyer;     (d)   all
Certificates of Title and registrations to the Motor Vehicles;     (e)  
certified copies of resolutions or consents of all of the partners (including
the General Partner and all limited partners) of Seller authorizing the
execution of this Agreement, the sale of the Assets to Buyer, and the
consummation of the transactions contemplated herein, along with any evidence of
authority that Buyer may reasonably require;     (f)   a non-competition
agreement duly and properly executed by Seller, the General Partner and each
limited partner, in form and substance attached hereto as Exhibit C and made a
part hereof (the “Noncompetition Agreements”);     (g)   fully executed consents
to the assignment or transfer of the Customer Contracts, Equipment Leases, Motor
Vehicle Leases, Licenses, Proprietary Rights and Contracts, in form and
substance satisfactory to Buyer;     (h)   evidence of the payment in full of
all debts encumbering the Assets other than the Payables and the Assumed
Contract Obligations; and     (i)   such other separate instruments of sale,
assignment, or transfer reasonably required by Buyer.

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Section 3.3. Deliveries by Buyer. At the Closing, Buyer shall deliver to Seller,
all duly and properly executed (where applicable):

  (a)   the purchase price provided in Section 2.1;     (b)   the Assignment and
Assumption of Real Estate Leases, the Bill of Sale, the Noncompetition
Agreement, all executed by Seller and Buyer.     (c)   certified copies of
resolutions of the Director and Stockholders of Seller authorizing the execution
of this Agreement, the purchase of the Assets by Buyer, and the consummation of
the transactions contemplated herein, along with any other evidence of authority
that Seller may reasonably require.

ARTICLE 4. POST CLOSING COVENANTS

Section 4.1. Further Assurance. From time to time on and after the Closing and
without further consideration, the parties hereto shall each deliver or cause to
be delivered to any other party at such times and places as shall be reasonably
requested, such additional instruments as any of the others may reasonably
request for the purpose of carrying out this Agreement and the transaction
contemplated hereby. General Partner and Seller, also without further
consideration, agree to cooperate with Buyer and to use their reasonable efforts
to have the officers and employees of Seller cooperate on and after the Closing
Date in furnishing to Buyer information, evidence, testimony, and other
assistance in connection with obtaining all necessary permits and approvals and
in connection with any actions, proceedings, arrangements or disputes of any
nature with respect to matters pertaining to all periods prior to the Closing
Date; provided that U S Liquids shall reimburse Seller and General Partner for
all reasonable and necessary expenses incurred by them in connection with such
cooperation.

Section 4.2. Transition. Neither Seller, the General Partner nor any limited
partner will take any action that is designed or intended to have the effect of
discouraging any customer or business associate of Seller from maintaining the
same business relationships with Buyer after the Closing that it maintained with
Seller before the Closing. Seller, the General Partner and each limited partner
will refer all customer inquiries relating to the Business to Buyer from and
after the Closing. Further, Seller, the General Partner and each limited partner
agree that for a period of 90 days following the Closing Date, they will,
without additional consideration, assist Buyer with the orderly transition of
the operations of the Business from Seller to Buyer; provided, that U S Liquids
shall reimburse Seller and General Partner for all reasonable and necessary
expenses incurred by them in connection with such assistance.

ARTICLE 5. REPRESENTATIONS AND WARRANTIES
OF SELLER AND GENERAL PARTNER.

Seller and the General Partner, jointly and severally, represent and warrant to
Buyer (i) that the statements contained in this Section 5 are correct and
complete as of the date of this Agreement and will be correct and complete as of
the Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this Section 5, taking
into account all amendments and supplements thereto pursuant to Section 7.5
provided by Seller to Buyer prior to the Closing); (ii) that the schedules to
the subsections of this Section 5 delivered by Seller and General Partner to
Buyer on the date hereof (such schedules hereinafter collectively referred to as
the “Disclosure Schedules” and, individually, as a “Disclosure Schedule) are
correct and complete as of the date of this Agreement and will be correct and
complete as of the Closing Date (as though made then and as though the Closing
Date were substituted for the date of this Agreement throughout this Section 5,
taking into account all amendments and supplements thereto pursuant to Section
7.5 provided by Seller to Buyer prior to the

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Closing); and (iii) that said statements and Disclosure Schedules shall survive
the Closing for a period of two (2) years. Nothing in the Disclosure Schedules
shall be deemed adequate to disclose an exception to a representation or
warranty made herein, however, unless the Disclosure Schedule identifies the
exception with particularity and describes the relevant facts in detail;
provided, however, that anything disclosed in the Disclosure Schedules or any
amendments or supplements thereto shall be deemed adequate to disclose an
exception to a representation or warranty made herein if the item disclosed
would have placed a reasonably diligent person on notice that the
representations or warranties were qualified by such information. Wherever a
representation or warranty herein is qualified as having been made “to the best
of Seller’s or General Partner’ knowledge”, such phrase shall mean the actual
knowledge of Seller or General Partner, their respective officers, directors,
employees and representatives, after reasonable inquiry.

Section 5.1.Organization; Authority.

  (a)   Seller is a limited partnership duly organized, validly existing and in
good standing under the laws of the State of Texas and is now and has been at
all times since its inception, duly authorized, and qualified and licensed under
all laws, regulations, ordinances and orders of public authorities to carry on
its businesses in the places and in the manner as conducted at the time such
activities were conducted except for where failure to be so authorized,
qualified or licensed would not have a material adverse affect on Seller’s
business. Copies of Seller’s Partnership Agreement and other documents pertinent
to its organization and existence, each as amended, are attached hereto as
Schedule 5.1(a)     (b)   General Partner is a corporation duly organized,
validly existing and in good standing under the laws of the State of Texas and
is now and has been at all time since its inception, duly authorized, and
qualified and licensed under all laws, regulations, ordinances and orders of
public authorities to carry on its business in the places and in the manner as
conducted at the time such activities were conducted except for where failure to
be so authorized, qualified or licensed would not have a material adverse affect
on General Partner’s business. Copies of Seller’s Articles of Incorporation
(certified by the Secretary of State of Texas) and Bylaws (certified by the
Secretary of General Partner), each as amended, are attached hereto as
Schedule 5.1(b).     (c)   Seller and General Partner have full legal right,
power and authority to enter into this Agreement and to consummate the
transactions contemplated by this Agreement. All action of Seller and all
corporate action of General Partner necessary to approve the sale of the Assets
by Seller have been taken, including approval of the limited partners and
director and shareholder approvals, if necessary.

Section 5.2. Binding Effect. This Agreement is the valid and binding obligation
of Seller and General Partner, enforceable against them in accordance with its
terms.

Section 5.3. Predecessor Entities; Trade Names. Set forth on Schedule 5.3 is a
list of the names of all predecessors of Seller, all prior names of Seller and
all trade names and “doing business names” of Seller, including the names of all
entities substantially all of the assets of which were previously acquired by
Seller. Seller was formed solely to operate the Business and has never conducted
any other business or activity other than the Moss Bluff Disposal Facility and
the Anahuac dock and transfer facility.

Section 5.4. No Subsidiaries. Seller has never owned or controlled and does not
now own, of record or beneficially, or control, directly or indirectly, any
capital stock, securities convertible into capital stock or any other equity
interest in any corporation, association, partnership or other business entity.

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Section 5.5. Financial Statements. Attached as Schedule 5.5 are copies of the
following financial statements (together, the “Financial Statements”):

  (a)   Seller’s balance sheet as of December 31, 2001 (the “Balance Sheet
Date”), and a statement of income, cash flow and retained earnings for the year
then ended;     (b)   Seller’s balance sheet as of March 31, 2002, and a
statement of income for the three month period then ended; and     (c)  
Seller’s monthly interim balance sheets and statements of income commencing for
the month ended April 30, 2002, and continuing for each month end until the
month ended immediately prior to the Closing Date.     (d)   Except as set forth
on Schedule 5.5, (i) each of the Financial Statements (including any footnotes
thereto) has been prepared in accordance with GAAP, applied on a consistent
basis throughout the periods indicated, (ii) each of the Financial Statements
(including all footnotes thereto) is true, complete and correct, (iii) each of
the balance sheets presents fairly the financial condition of Seller as of the
date indicated thereon and each of such statements of income presents fairly on
an accrual basis the results of the operations of Seller for the period
indicated thereon, (iv) each Financial Statement includes all footnotes required
by GAAP, each such footnote is complete and accurate, and contains all
information required by GAAP to be contained therein, (v) all reserves for
contingent risks have been estimated in accordance with GAAP and are appropriate
and sufficient to cover all costs reasonably expected to be incurred from such
risks, (vi) since its inception, Seller has not (a) made any material change in
its accounting policies or (b) effected any prior period adjustment to, or other
restatement of, its financial statements for any period. And (vii) the Financial
Statements are consistent with the books and records of Seller (which books and
records are correct and complete).

Section 5.6. Non-Balance Sheet Liabilities. Attached hereto as Schedule 5.6
(“Non-Balance Sheet Liabilities”) is a complete and accurate list as of the date
hereof of all liabilities and obligations of Seller, excluding obligations
arising under this Agreement, which are not individually reflected in the
Financial Statements dated the Balance Sheet Date, but which would have been so
reflected in a full GAAP accounting (whether or not incurred in the ordinary
course of business) of any kind, character and description, whether known or
unknown, accrued or unaccrued, absolute or contingent, secured or unsecured,
liquidated or unliquidated, due or to become due, together with, in the case of
those liabilities and other obligations the amounts of which are not fixed, a
reasonable best estimate of the maximum amount which may be payable. For each
liability or obligation for which the amount is not fixed or is contested,
General Partner shall provide the following information:

  (a)   a summary description of the liability or other obligation together with
the following:

  (i)   copies of all relevant documentation relating thereto;     (ii)  
amounts claimed and any other action or relief sought; and     (iii)   name of
claimant and all other parties to the claim, suit or proceeding, if any.

  (b)   the name of each court or agency before which a claim, suit or
proceeding is pending;     (c)   the date such claim, suit or proceeding was
instituted;

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  (d)   a reasonable best estimate by Seller and General Partner of the maximum
amount, if any, which is likely to become payable with respect to each such
liability or the cost of performance with respect to each such other obligation.

Section 5.7. Permits; Environmental Documents.

  (a)   Attached as Schedule 5.7(a) is a complete and accurate list and summary
description as of the date hereof of all Permits, Licenses and Proprietary
Rights owned or held by Seller, and all applications, disclosures and related
documents (“Applications”), none of which Permits, Licenses, Applications and
Proprietary Rights infringe on the rights of others and all of which are now
valid, in good standing and in full force and effect. Neither Seller nor General
Partner are aware of any other Permits, Licenses, Applications and Proprietary
Rights required for the operation of the Business as presently constituted;    
(b)   In addition to the items set forth on Schedule 5.7(a), to Seller’s and
General Partner’s knowledge, Seller has delivered to Buyer, a description of and
copies, as of the date of this Agreement, of all correspondence to or from
government regulatory agencies, official reports, notifications, environmental
impact studies, assessments and audits and all other official notifications from
governmental agencies in the possession or control of Seller or General Partner
relating to: (a) each actual and alleged violation of Applicable Laws
(hereinafter defined) by Seller or otherwise relating to the Business or the
Assets and all, if any, claims thereof; (b) the discharge, leakage, spillage,
transport, disposal or release of any material into the environment by Seller;
(c) the arrangement for transport, disposal or release of material into the
environment by Seller; and (d) health of employees of Seller (whether direct or
indirect), public health or the environment (collectively, the “Environmental
Documents”).

Section 5.8. Personal Property.

  (a)   Listed on Schedule 1.1(d) hereto is a complete and accurate list of all
Equipment. To Seller’s and General Partner’s knowledge, each piece of Equipment
is in good working order and has been maintained in a good and proper manner,
ordinary wear and tear excepted;     (b)   Listed on Schedule 1.1(e) hereto is a
complete and accurate list of all Motor Vehicles. To Seller’s and General
Partner’s knowledge, each motor vehicle, attachment, accessory and piece of
materials handling equipment comprising the Motor Vehicles is in good working
order and has been maintained in a good and proper manner, ordinary wear and
tear excepted.     (c)   All of the Assets are either owned by Seller or leased
under an agreement indicated on Exhibit B, Schedule 1.1(f) or Schedule 1.1(g).
All leases set forth on Exhibit B, Schedule 1.1(f) and 1.1(g) are in full force
and effect and constitute valid and binding agreements of the parties (and their
successors) thereto in accordance with their respective terms. Excluding the
obligation to obtain the consent of lessor to any assignment, and subject to the
parties obtaining such consent, no default by Seller or, to Seller’s and General
Partner’s knowledge, any other party to any of such leases exists or would exist
except for the passage of time or delivery of a notice or both.     (d)   At the
Closing, Seller shall have good and marketable title to the Assets, free and
clear of all debts, lease payments (including lease-end buyout payments), liens,
encumbrances, security interests, equities or restrictions whatsoever except the
Payables and Assumed Contracts Obligations and, by virtue of the grant,
conveyance, sale, transfer, and assignment of the Assets hereunder, Buyer shall
receive good and marketable title to the Assets, free and clear of all debts,

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      lease payments (including lease-end buyout payments), liens, encumbrances,
security interests, equities or restrictions whatsoever except the Payables and
Assumed Contracts Obligations. The Assets constitute all of the assets owned by
Seller used in the Business.

Section 5.9. Title to Real Property.

  (a)   Seller has never owned, leased or otherwise occupied, had an interest in
or operated any real property other than the Land, the Real Estate Leases and
the Excluded Real Estate. Seller has good leasehold title to the Land except as
permitted under Article 3 hereof. Exhibit B contains a true and complete copy of
the Real Estate Leases and all amendments, modifications or other changes
thereto. Except as set forth on Schedule 5.9(a):

  (i)   At all times during the operation of the Business, the Land has been
licensed, permitted and authorized for the operation of the Business under all
Applicable Laws (hereinafter defined) relating to the protection of the
environment, the Land and the conduct of the Business thereon (including,
without limitation, all zoning restrictions and land use requirements).     (ii)
  The Land is usable for its current uses, and, subject only to obtaining the
consent of each landlord for the assignment of the Real Estate Leases to Buyer,
the Land can be used by Buyer after the Closing in the manner currently operated
by Seller, without violating any Applicable Law or private restriction, and such
uses are legal conforming uses.     (iii)   General Partner and Seller have made
available to Buyer all engineering, geologic and other similar reports,
documentation and maps relating to the Land in the possession or control of any
of the General Partner or Seller.     (iv)   No third parties have any rights to
drill or explore for, collect, produce, mine, excavate, deliver or transport
oil, gas, coal, or other minerals or utilize any salt dome, salt cavern or
similar geologic structure in, on, beneath, across, over, through, from or to
any portion of the Land.     (v)   Neither the Land (to Seller’s and General
Partner’s knowledge), Seller nor the General Partner now is or ever has been
involved in any litigation or administrative proceeding seeking to impose fines,
penalties or other liabilities or seeking injunctive relief for violation of any
Applicable Laws relating to the environment.     (vi)   No party has a present
or future right to possession of all or any part of the Land except the
landlords under the Real Estate Leases.     (vii)   No portion of the Land
contains any areas that could be characterized as disturbed, undisturbed or man
made wetlands or as “waters of the United States” pursuant to any Applicable
Laws or the procedural manuals of the Environmental Protection Agency, U.S. Army
Corps of Engineers, the Louisiana Department of Environmental Quality, the Texas
Natural Resource Conservation Commission, the Texas Railroad Commission or any
other federal or state agency having jurisdiction over the Land, whether such
characterization reflects current conditions or historic conditions which have
been altered without the necessary permits or approvals.

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  (viii)   There are no mechanics’ liens affecting the Land and no work has been
performed on the Land within 120 days of the date hereof for which a mechanics’
lien could be filed.     (ix)   There are no levied or pending special
assessments affecting all or any part of the Land owed to any governmental
entity and none is threatened.     (x)   There are no proceedings pending or, to
the best of Seller’s and General Partner’ knowledge, threatened by, any third
party which would result in a change in the allowable uses of the Land or which
would modify the right of Buyer to use the Land for its current uses after the
Closing Date.     (xi)   There are no pending or, to the best of General
Partner’ knowledge, threatened condemnation or eminent domain proceedings
affecting all or any part of the Land.     (xii)   The Real Estate Leases are in
full force and effect and valid, binding and enforceable against the landlord
thereunder. Seller is not in default in, nor has there occurred an event or
condition (including, subject only to obtaining the consent of each landlord to
the assignment of the Real Estate Leases to Buyer, Seller’s execution and
delivery of or performance under this Agreement) which with the passage of time
or giving of notice (or both) would constitute a default under the Real Estate
Lease. To the best of Seller’s and General Partner’s knowledge, no landlord is
in default in, nor has there occurred any event or condition which with the
passage of time or giving of notice (or both) would constitute a default by any
landlord under the Real Estate Leases.     (xiii)   There have been no spills,
leaks, deposits or other releases of Hazardous Materials into or onto the Land
by Seller or, to the best of Seller’s and General Partner’s knowledge, by any
predecessor of Seller. No portion of the Land is listed on the CERCLIS list or
the National Priorities List of Hazardous Waste Sites or any similar list
maintained by the State of Louisiana or the State of Texas. 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 Applicable Laws.     (xiv)   Seller has
provided to the government agencies requiring the same, all reports, notices,
filings and other disclosures required by Applicable Laws and all such reports,
notices, filings and other documents were complete and accurate in all material
respects at the time provided to said government agencies.

Section 5.10. Contracts. Listed on Schedule 1.1(k) hereto is a complete and
accurate list of the Customer Contracts and Related Approvals as of April 30,
2002, true and complete copies of which have been delivered to Buyer. Except as
set forth in Schedule 1.1(k), none of the Customer Contracts or Related
Approvals listed on Schedule 1.1(k) have been modified, altered, terminated or
otherwise amended and there have been no waivers, oral agreements,
representations or other statements with relation thereto. Except as set forth
on Schedule 1.3, all Customer Contracts are (and will be immediately following
the Closing) in full force and effect and are valid, binding and enforceable
against the respective parties thereto in accordance with their respective
provisions and Seller is not in default in, nor has there occurred an event or
condition (including, subject only to obtaining the consent of each landlord to
the assignment of the Real Estate Leases to Buyer, Seller’s execution and
delivery of or performance under this Agreement) which with the passage of time
or the giving of notice (or both) would constitute a default, with regard to the
payment or performance of any obligation under any Customer Contract; no

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claim of such a default has been asserted and there is no reasonable basis upon
which such a claim could validly be made. Seller has not received any notice
that any person intends or desires to modify, waive, amend, rescind, release,
cancel or terminate any Customer Contract. By virtue of the grant, conveyance,
sale, transfer and assignment of the Customer Contracts by Seller to Buyer
hereunder, Buyer shall own and hold all right, title and interest of Seller in
and to the Customer Contracts, without the consent or approval of any other
person or entity.

Section 5.11. Insurance Policies. Attached as Schedule 5.11 are complete and
accurate copies as of the date hereof of all insurance policies carried by
Seller and an accurate list of all insurance loss runs and workers’ compensation
claims received for the past three policy years. All insurance policies are in
full force and effect and shall remain in full force and effect through the
Closing Date. Seller’s insurance has never been cancelled and Seller has not
been denied coverage within the last three years.

Section 5.12. Employees; Compensation. Attached as Schedule 5.12 is a complete
and accurate list of all employees of Seller and their rate of compensation as
of the date hereof (including a breakdown of the portion thereof attributable to
salary, bonus and other compensation, respectively). Each employee of Seller is
an employee at will except as otherwise specified on Schedule 5.12.
Schedule 5.12 shall also include a copy of all employment contracts between
Seller and its employees. Seller shall retain, and Buyer shall incur no
liability nor assume any responsibility for, severance obligations relating to
the termination of any of Seller’s employees, whether or not related directly or
indirectly to the consummation of this transaction.

Section 5.13. Employee Relations and Benefit Plans. Set forth on Schedule 5.13
is an accurate and complete list of all agreements of any kind between Seller
and its employees or group of employees, including, without limitation,
employment agreements, collective bargaining agreements and benefit plans. Buyer
shall not, by the execution and delivery of this Agreement or otherwise, become
obligated to employ any employee of Seller or assume any liabilities or
contractual obligations with respect to such employees or otherwise become
liable for or obligated in any manner (contractual or otherwise) to any employee
of Seller, including, without limiting the generality of the foregoing, any
liability or obligation pursuant to any collective bargaining agreement,
employment agreement, or pension, profit sharing or other employee benefit plan
(within the meaning of Section 3(3) of the Employment Retirement Income Security
Act of 1974, as amended) or any other fringe benefit program maintained by
Seller or to which Seller contributes or any liability for the withdrawal or
partial withdrawal from or termination of any such plan or program by Seller.

Section 5.14. Compliance with Law; No Conflicts.

  (a)   Seller has in the past complied with, and is now in compliance with, all
federal, state and local statutes, laws, rules, regulations, orders, permits
(including, without limitation, zoning classifications and restrictions,
variances, special use permits and other land use requirements) and licenses and
all administrative and judicial judgments, rulings, decisions and orders
applicable to Seller or the Business (collectively, the “Applicable Laws”).
Neither Seller nor General Partner has received any notice that Seller is under
investigation or other form of review with respect to any Applicable Law; and  
  (b)   Except as set forth in Schedule 5.14(b), the execution, delivery and
performance of this Agreement, the consummation of any transactions herein
referred to or contemplated hereby and the fulfillment of the terms hereof and
thereof will not:

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  (i)   conflict with, or result in a breach or violation of the Partnership
Agreement or other organizational documents of Seller or the Articles of
Incorporation or Bylaws of General Partner;     (ii)   conflict with, or result
in a breach under any document, agreement or other instrument to which Seller or
General Partner is a party, or result in the creation or imposition of any lien,
charge or encumbrance on any properties of Seller or General Partner pursuant
to: (A) any law or regulation to which Seller or General Partner, or any of
their respective properties are subject, or (B) any judgment, order or decree to
which Seller or General Partner is bound or any of their respective property is
subject;     (iii)   result in termination or any impairment of any permit,
license, franchise, contractual right or other authorization of Seller; or    
(iv)   require notice to, or the consent or approval of, any governmental
authority or agency or other third party in order to remain in full force and
effect.

Section 5.15. Taxes. Seller and General Partner have filed, or will file, in a
timely manner all requisite federal, state, local and other tax returns relating
to the Business or the Assets due for all fiscal periods ended on or before the
date hereof and as of the Closing shall have filed in a timely manner all such
returns due for all periods ended on or before the Closing Date. No federal,
state, local or other tax returns or reports filed by Seller (whether filed
prior to, on or after the date hereof) with respect to the Business or the
Assets will result in any taxes, assessments, fees or other governmental charges
upon the Assets or Buyer, whether as a transferee of the Assets or otherwise.
All federal, state and local taxes due and payable with respect to the Business
or the Assets have been paid, including, without limiting the generality of the
foregoing, all federal, state and local income, sales, use franchise, excise and
property taxes. There are no state or federal tax liens filed against the Land
or the Assets, nor have Seller or General Partner received any notice of intent
to file any such liens. There are no agreements to extend the statutory period
for the assessment of any taxes, examinations in progress or claims against
Seller for federal, state, local and other taxes (including penalties and
interest) for any period or periods prior to and including the date hereof (and
as of the Closing Date) and no notice of any claim, whether pending or
threatened, for taxes has been received. Except as set forth on Schedule 5.5,
the amounts shown as accruals for taxes on the Financial Statements are
sufficient in accordance with GAAP for the payment of all taxes of the kinds
indicated (including penalties and interest) for all fiscal periods ended on or
before the Closing Date.

Section 5.16. Litigation. Except as set forth on Schedule 5.16, there is no
claim, litigation, action, suit or proceeding, formal arbitration, informal
arbitration or mediation, administrative, judicial or otherwise, pending or, to
the best of Seller’s and General Partner’s knowledge, threatened, or otherwise
relating to the Assets or Business, at law or in equity, before any federal,
state or local court or regulatory agency, or other governmental or private
authority; no notice of any of the above has been received by Seller or General
Partner; and, to the best of Seller’s and General Partner’s knowledge, no facts
or circumstances exist which would give rise to any of the foregoing.

Section 5.17. Absence of Price Renegotiation Contracts. Seller is not now nor
has ever been a party to any governmental contracts subject to price
redetermination or renegotiation.

Section 5.18. Conduct of Seller’s Business Since Balance Sheet Date. Since the
Balance Sheet Date, there has not been any:

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  (a)   change in the authorized capital or equity ownership of Seller;     (b)
  increase (other than normal increases in the ordinary course of business) in
the compensation, bonus, sales commissions or fee arrangements payable or to
become payable by Seller to any of its partners, officers, directors,
shareholders, employees, consultants or agents;     (c)   work interruption,
labor grievance or claim filed;     (d)   sale or transfer of, or any agreement
to sell or transfer, any of the Assets or any plan, agreement or arrangement
granting any preferential right to purchase or acquire any interest in Seller,
the Business or any of the Assets, or requiring consent of any party to the
sale, transfer and/or assignment of any interest in Seller, the Business or any
of the Assets;     (e)   waiver of any rights or claims of Seller;     (f)  
breach, amendment or termination of any Real Estate Lease, Equipment Lease,
Motor Vehicle Lease, Permit, License, Customer Contract or Contract;     (g)  
transaction by Seller outside the ordinary course of its business;     (h)  
amendment to the Partnership Agreement or any other organizational documents of
Seller;     (i)   any other material occurrence, event, incident, action or
failure to act outside the ordinary course of business of Seller; or     (j)  
any action by Seller, General Partner, or any employee, officer or agent of
Seller or General Partner committing to do any of the foregoing.

Section 5.19. Hazardous Materials; Disposal Sites. Seller has never generated,
transported, stored, handled, recycled, reclaimed, disposed of, or contracted
for the transportation or disposal of, hazardous materials, hazardous wastes,
hazardous substances, toxic wastes or substances, infectious or medical waste,
radioactive waste or sewage sludges as those terms are defined by the Resource
Conservation and Recovery Act of 1976; the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (“CERCLA”); the Atomic Energy Act of
1954; the Toxic Substances Control Act; the Occupational Health and Safety Act;
any comparable or similar state statute; any other Applicable Law or the rules
and regulations promulgated under any of the foregoing, as each of the foregoing
may have been from time to time amended (collectively, “Hazardous Materials”).
There have been no spills, leaks, deposits or other releases into the
environment, or onto or under the Land, of any Hazardous Materials during the
terms of the Real Estate Leases. No liens with respect to environmental
liability have been imposed against Seller or any of the Assets under CERCLA,
any comparable state statute or other Applicable Law, and no facts or
circumstances exist which would give rise to the same. Further, no portion of
the Land is listed on the CERCLA list or the National Priorities List of
Hazardous Waste Sites or any similar list maintained by the States of Texas and
Louisiana and neither Seller nor General Partner is listed as a potentially
responsible party under CERCLA, any comparable state statute or other Applicable
Law, and neither Seller nor General Partner has received a notice of such
listing. Seller has never owned, operated, had an interest in, engaged in and/or
leased a waste transfer, recycling, treatment, storage or disposal facility,
business or activity other than in connection with the Business. Seller has in
place procedures intended to detect an effort by third parties to transport
Hazardous Materials in connection with the Business and has obtained and
maintained all necessary records, signed by the applicable waste generators
demonstrating the nature of all waste transported in connection with the
Business; which records are accurate and

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complete. No employee, contractor or agent of Seller has, in the course and
scope of employment with Seller, been harmed by exposure to Hazardous Materials.
Included on Schedule 5.20 is a complete list of the names and addresses of all
disposal sites at any time now or in the past utilized by Seller, none of which
sites is listed on the CERCLA list or the National Priorities List of hazardous
waste sites or any comparable state list. Seller has no direct or contingent
liability or obligation for or in connection with any claimed release, discharge
or leak of any substance into the environment.

Section 5.20. Underground Storage Tanks. Seller has never owned, leased or
operated any real property having any underground or above-ground storage tanks
containing Hazardous Materials, petroleum products or wastes or other hazardous
substances regulated by 40 CFR 280 or other Applicable Law.

Section 5.21. Corrupt Practices. Neither Seller nor General Partner has ever
made, offered or agreed to offer anything of value to any employees of any
customers of Seller for the purpose of attracting business to Seller or to any
foreign or domestic governmental official, political party or candidate for
government office or any of their employees or representatives, nor have they
otherwise taken any action which would cause it to be in violation of the
Foreign Corrupt Practices Act of 1977, as amended.

Section 5.22. Complete Disclosure. This Agreement and the schedules hereto,
taken as a whole, do not and will not include any untrue statement of a material
fact or omit to state a material fact necessary to make the statements therein
not misleading.

Section 5.23. Due Diligence Disclosure. The documents and written information
furnished to Buyer and its representatives pursuant to the due diligence
investigations of Buyer or its employees or representatives, taken as a whole,
do not knowingly or intentionally contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements therein
not misleading.

ARTICLE 6. REPRESENTATIONS AND WARRANTIES OF BUYER AND U S LIQUIDS.

Buyer and U S Liquids, jointly and severally, represent and warrant that the
statements contained in this Section 6: (i) are correct and complete as of the
date of this Agreement; (ii) will be correct and complete as of the Closing Date
(as though made then and as though the Closing Date were substituted for the
date of this Agreement throughout this Section 6); and (iii) shall survive the
Closing.

Section 6.1. Corporate Organization. U S Liquids is duly incorporated, validly
existing and in good standing under the laws of the State of Delaware. Buyer is
a limited partnership, duly organized, validly existing and in good standing
under the laws of the State of Delaware and is duly authorized, qualified and
licensed under all applicable laws, regulations and ordinances of public
authorities to carry on its businesses in the places and in the manner as now
conducted except for where the failure to be so authorized, qualified or
licensed would not have a material adverse affect on such businesses.

Section 6.2. Corporate Authority. The officers of Buyer’s general partner and of
U S Liquids executing this Agreement have the corporate authority to enter into
and bind Buyer and U S Liquids to the terms of this Agreement and Buyer’s
general partner and U S Liquids have taken all necessary corporate action to
authorize the execution, delivery and performance of this Agreement. All
corporate action by Buyer’s general partner and U S Liquids necessary to approve
the transaction, including both shareholder and director approvals (if
required), have been taken.

Section 6.3. US Liquids Stock. Upon exercise by Seller of the warrants described
in Section 2.1(b), the US Liquids Stock to be delivered to Seller in accordance
with the terms of this Agreement, will constitute valid and legally issued
shares, fully paid and nonassessable and will be free from any lien, security

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interest or other restriction on transfer other than restrictions imposed by the
Act or the regulations promulgated thereunder.

Section 6.4. No Conflicts. The execution, delivery and performance of this
Agreement, the consummation of any transactions herein referred to or
contemplated hereby and the fulfillment of the terms hereof and thereof will
not:

  (a)   conflict with, or result in a breach or violation of the Articles of
Incorporation or Bylaws of U S Liquids or the Partnership Agreement of Buyer;  
  (b)   conflict with, or result in a material breach under any document,
agreement or other instrument to which Buyer or U S Liquids is a party, or
result in the creation or imposition of any lien, charge or encumbrance on any
properties of Buyer or U S Liquids pursuant to: (i) any law or regulation to
which Buyer or U S Liquids or any of their property is subject, or (ii) any
judgment, order or decree to which Buyer or U S Liquids is bound or any of its
property is subject;     (c)   result in termination or any impairment of any
material permit, license, franchise, contractual right or other authorization of
Buyer or U S Liquids; or     (d)   require the consent of, or the filing with
any governmental authority or agency or any other third party in order to remain
in full force and effect.

Section 6.5. Binding Agreement. This Agreement is the binding and valid
obligation of Buyer and U S Liquids, enforceable against them in accordance with
its terms.

ARTICLES 7. COVENANTS OF STOCKHOLDERS AND SELLER PRIOR TO CLOSING

Section 7.1. Access to Land and Records. Between the date of this Agreement and
the Closing Date, General Partner and Seller will provide the officers and
authorized representatives of Buyer access to all of the Land (including,
without limitation, for the purpose of performing all testing, inspections and
other procedures considered desirable by Buyer), Assets, books and records of
Seller, including, without limitation, the Environmental Documents, at all
reasonable times and upon reasonable notice and will furnish Buyer with such
additional financial and operating data and other information as to the business
and properties, both current and former, of Seller as Buyer may from time to
time reasonably request. Seller will cooperate with Buyer, its representatives,
engineers, auditors and counsel in the preparation of any documents or other
material which may be required in connection with any documents or materials
required by any governmental agency. Buyer will cause all information obtained
in connection with the negotiation of this Agreement to be treated as
confidential in accordance with the provisions of Article 13 hereof.

Section 7.2. Activities of Seller Prior to Closing. Between the date of this
Agreement and the Closing Date, General Partner and Seller will use reasonable
commercial efforts:

  (a)   to maintain the Assets in as good working order and condition as at
present, ordinary wear and tear excepted;     (b)   to perform all of its
obligations under the Real Estate Leases, Equipment Leases, Motor Vehicle
Leases, Permits, Licenses, Customer Contracts and Related Approvals and
Contracts;

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  (c)   to keep in full force and effect present insurance policies or other
comparable insurance coverage with reputable insurers;     (d)   to use
reasonable efforts to maintain its relationships with suppliers, customers,
consultants, independent contractors and others having business relations with
Seller;     (e)   to maintain compliance with all Applicable Laws;     (f)   to
maintain and perform present debt and lease instruments in accordance with their
terms and not enter into new or amended debt or lease instruments, without the
prior written consent of Buyer;     (g)   to provide the interim financial
statements required by Section 5.5; and     (h)   to make or obtain all
necessary notices, filings and third party consents and otherwise provide all
reasonable assistance to Buyer to provide for an orderly transfer of the Assets
from Seller to Buyer.

Section 7.3. Prohibited Activities Prior to Closing. Between the date of this
Agreement and the Closing Date, General Partner and Seller agree not, without
the prior written consent of Buyer:

  (a)   to change the Partnership Agreement or other organizational documents,
admit new partners or permit the withdrawal of existing partners of Seller, or
grant any options, rights or commitments relating to its equity or partnership
interests of any kind;     (b)   to enter into any contract or commitment
related to the Business or the Assets that would bind Buyer after Closing;    
(c)   to incur or agree to incur any debt or other financial obligation or make
any capital expenditures related to the Assets in excess of an aggregate of
$25,000;     (d)   to increase the aggregate amount of the Payables or to add
any new accounts payable except to the extent necessary to ensure Seller’s
ability to carry on the Business in the ordinary course, and then only upon
prior notice to Buyer;     (d)   to create, assume or permit to exist any
mortgage, pledge or other lien or encumbrance upon any Assets;     (e)   to
cause a material breach of, or to amend or terminate, any Real Estate Lease,
Equipment Lease, Motor Vehicle Lease, Permit, License, Customer Contract or
Related Approvals or Contract;     (f)   to enter into any other transaction
outside the ordinary course of the business of Seller or otherwise prohibited
hereunder; or     (g)   to use reasonable commercial efforts not to take or
allow to be taken any other action or omission, or series of actions or
omissions, by Seller or General Partner that would cause a representation and
warranty of Seller and General Partner made in Section 5.19 of this Agreement to
be untrue on the Closing Date.

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Section 7.4. Contact with Government Officials. Seller and General Partner shall
each use reasonable commercial efforts to cooperate with Buyer in making contact
with the appropriate governmental agencies and officials having information
about or jurisdiction over Seller, the General Partner or the Land, Assets or
any obligations or rights of Seller, including, without limitation,
environmental and land use agencies and officials, in order to assist Buyer in
completing its regulatory evaluation of Seller and its obligations.

Section 7.5 Notice of Developments.

  (a)   Between the date of execution of this Agreement and the Closing, Seller
shall notify Buyer of any development or any information coming to Seller’s
attention that would cause a breach of any of its representations and warranties
in Article 5 above. Any such written notice pursuant to this Section will be
deemed to have amended the applicable representation or warranty, and to have
cured any misrepresentation or breach of warranty that otherwise might have
existed hereunder by reason of the development or information.     (b)   Each
party will give prompt written notice to the other party of any development
occurring, or any information coming to its attention, prior to Closing that
causes a breach of any of its own or any other party’s representations and
warranties in Articles 5 or 6.

Section 7.6 Barge Surveys. Seller will provide Buyer and Buyer’s representatives
with reasonable access to barges used by Seller in connection with
Transportation for the purpose of conducting surveys of the condition of said
barges and determining the extent, if any, of any damages to said barges
requiring repair and the estimated cost of such repairs. Seller understands and
acknowledges that in order for such surveys to be done the barges must be empty
and hereby waives any claim against Buyer for any rental charges or other costs
incurred in connection with such surveys which arises as a result of any of the
barges being held empty, other than in the ordinary course, while such surveys
are completed.

Section 7.7 Venice. Seller will use its reasonable best efforts to assist Buyer
in obtaining a new lease or other legally binding document for dock space and a
transfer facility at Venice, Louisiana, on terms reasonably acceptable to Buyer,
to replace the existing Shorebase Operation and Management Agreement and the
existing Shorebase Utilization Agreement to which Seller is a party and which
are included in Exhibit B, attached hereto.

ARTICLE 8. CONDITIONS PRECEDENT TO OBLIGATIONS
OF GENERAL PARTNER AND SELLER

The obligations of General Partner and Seller hereunder are subject to the
completion, satisfaction, or at their option, waiver, on or prior to the Closing
Date, of the following conditions.

Section 8.1. Representations and Warranties. The representations and warranties
of Buyer and U S Liquids contained in this Agreement shall be accurate on and as
of the Closing Date with the same effect as though such representations and
warranties had been made on and as of such date; and each and all of the terms,
covenants and conditions of this Agreement to be complied with and performed by
Buyer and U S Liquids on or before the Closing Date shall have been duly
complied with and performed.

Section 8.2. Consents. All necessary notices to, consents of and filings with
any governmental authority or agency or other third party relating to the
consummation of the Closing or the other transactions contemplated herein shall
have been obtained and made.

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Section 8.3. No Adverse Proceeding. No action or proceeding before a court or
any other governmental agency or body shall have been instituted or threatened
to restrain or prohibit any of the transactions contemplated by this Agreement.

Section 8.4. Agreements. Buyer shall have executed and delivered at the Closing
the Noncompetition Agreement in the form attached hereto as Exhibit C.

Section 8.5. Certificates. Buyer and U S Liquids shall have delivered to Seller
a certificate to the effect that each of the conditions specified in 8.1, 8.2
and 8.3 above have been satisfied in all respects.

ARTICLE 9. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER

The obligations of Buyer and U S Liquids hereunder are subject to the
completion, satisfaction or, at its option, waiver, on or prior to the Closing
Date, of the following conditions.

Section 9.1. Representations and Warranties. The representations and warranties
of Seller and General Partner contained in this Agreement shall be accurate in
all material respects on and as of the Closing Date with the same effect as
though such representations and warranties had been made on and as of such date,
and a certificate to the foregoing effect, or setting forth any discrepancies in
such representations and warranties which have arisen since the date of this
Agreement, dated the Closing Date and signed by Seller and General Partner shall
have been delivered to Buyer. The foregoing notwithstanding, Seller and General
Partner agree that no limitation of any representation or warranty shall
restrict Buyer’s right to terminate this Agreement if any such representation or
warranty as set forth in Article 5 is inaccurate in any material respect as of
the Closing Date.

Section 9.2. Covenants. Each and all of the terms, covenants and conditions of
this Agreement to be complied with and performed by Seller and General Partner
on or before the Closing Date shall have been duly complied with and performed
in all material respects.

Section 9.3. No Adverse Proceeding. No action or proceeding before a court or
any other governmental agency or body shall have been instituted or threatened
to restrain or prohibit any of the transactions contemplated by this Agreement.

Section 9.4. No Adverse Change. No material and adverse change in the results of
operations, financial condition or business of Seller shall have occurred since
the Balance Sheet Date. Seller shall not have suffered any loss or damage to any
of its properties or assets, whether or not covered by insurance, since the
Balance Sheet Date, which change, loss or damage would materially affect or
impair the ability of Buyer to operate the Business.

Section 9.5. General Release. Seller and General Partner shall have delivered to
Buyer an instrument dated the Closing Date releasing Buyer and US Liquids from
any and all claims of Seller and General Partner against Buyer arising out of
events which occurred prior to the Closing (but not including any claims
pursuant to this Agreement).

Section 9.6. Consents. All necessary notices to, consents of and filings with
any governmental authority or agency or other third party relating to the
consummation of the transactions contemplated herein shall have been obtained
and made.

Section 9.7. Good Standing Certificate. General Partner shall have delivered to
Buyer a certificate, dated as of a date no earlier than 10 days prior to the
Closing Date, duly issued by the appropriate governmental

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authority or authorities showing that Seller is in good standing in its state of
incorporation and is authorized to do business in the States of Texas and
Louisiana.

Section 9.8. Agreements. The Noncompetition Agreement shall have been executed
and delivered by all parties thereto at the Closing in the form attached hereto
as Exhibit C.

Section 9.9. Transferability of Permits. All of the Permits required for the
operation of the Business shall have been transferred to Buyer, subject to
restrictions and limitations and with covenants and undertakings imposed upon or
required of Buyer which are reasonably satisfactory to Buyer and U S Liquids, or
Buyer shall have determined that they can be so transferred without public
hearing or other regulatory re-approval process,.

Section 9.10 Consents to Assignment of Real Estate Leases. All consents to the
assignment of the Real Estate Leases to Buyer shall have been obtained on terms
and conditions (including, without limitation, changes in the amount of rent or
any other amount or type of consideration required to be paid to obtain each
such consent) reasonably acceptable to Buyer and U S Liquids.

Section 9.11. Environmental Review. Buyer and U S Liquids, through their
authorized representatives, shall have completed a review (including, without
limitation, all testing, inspections and other procedures, review of existing
files of, and discussions with, governmental agencies and officials having
jurisdiction over Seller or the Assets) of the environmental and land use
practices, procedures, operations and activities of Seller; the results of which
review, without limiting the generality of the foregoing, reflects compliance
with all Applicable Laws governing the operations of Seller, discloses no actual
or probable material violations or compliance problems, and reveals no required
capital expenditures, remediation or clean-up costs exceeding, in the aggregate,
$75,000.00, or any other substantial environmental related concerns.

Section 9.12. Due Diligence. Buyer and U S Liquids, through their authorized
representatives, shall have completed a review of Seller’s Financial Statements,
other financial and accounting documents and related and supporting accounting
and financial records and data; the Real Estate Leases, Equipment Leases, Motor
Vehicle Leases, Permits, Licenses, Customer Contracts and Related Approvals,
Contracts, Proprietary Rights, Receivables and Computers, an inspection of the
Land, Equipment (including the leased equipment), Motor Vehicles (including the
leased motor vehicles), Inventory, Computers, and a review of Seller’s legal,
insurance and risk management, health and safety, operations, human resources,
tax and information systems records, documents, practices, procedures and
activities; the results of which review, and inspection, discloses no actual or
probable material problems, required capital expenditures or facility repairs
exceeding, in the aggregate, $75,000.00 or any other substantial concerns and
are otherwise satisfactory in all material respects to Buyer and U S Liquids in
their reasonable judgment.

Section 9.13. Barge Surveys. All barge surveys described in Section 7.6 shall
have been completed and the results thereof shall be reasonably satisfactory to
Buyer.

Section 9.14. Certificates. Seller and General Partner shall have delivered to
Buyer a certificate to the effect that each of the conditions specified in 9.1,
9.3, 9.4 and 9.6 above have been satisfied in all respects.

Section 9.15 Bank Approval. Buyer and U S Liquids shall have obtained the
approvals required under Section 10.11 of its Second Amended and Restated Credit
Agreement dated February 3, 1999, as amended; provided, however, that in the
event Buyer fails to obtain such approvals by July 31, 2002 such failure shall
be considered an uncured breach under Section 12.2 and Seller may elect to
terminate this Agreement pursuant to that Section.

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Section 9.16. General. All actions taken by General Partner and Seller in
connection with the consummation of the transactions contemplated hereby and all
certificates, opinions and other documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in form and substance to
Buyer.

ARTICLE 10. NON-ASSUMPTION OF LIABILITIES

Except as explicitly set forth in Section 2.3, above, neither Buyer nor U S
Liquids shall by the execution and performance of this Agreement or otherwise,
assume, become responsible for or incur any liability or obligation of any
nature of Seller or General Partner, whether legal or equitable, matured or
contingent, known or unknown, foreseen or unforeseen, ordinary or extraordinary,
patent or latent, whether arising out of occurrences prior to, at or after the
date of this Agreement, including, without limiting the generality of the
foregoing, any liability or obligation arising out of or relating to:

  (a)   any occurrence or circumstance (whether known or unknown) which occurs
or exists on or prior to the date of this Agreement and which constitutes, or
which by the lapse of time or giving notice (or both) would constitute, a breach
or default under any lease, contract, or other instrument or agreement (whether
written or oral) other than the Customer Contracts;     (b)   injury to or death
of any person or damage to or destruction of any property, whether based on
negligence, breach of warranty, or any other theory;     (c)   violation of the
requirements of any governmental authority or of the rights of any third person,
including, without limitation, any requirements relating to the reporting and
payment of federal, state, local or other income, sales, use, franchise, excise
or property tax liabilities of Seller or General Partner;     (d)   the
generation, collection, transportation, storage or disposal by Seller of any
materials, including, without limitation, Hazardous Materials;     (e)   any
agreement or arrangement between Seller and the employees of Seller or any labor
or collective bargaining unit representing any such employees;     (f)   any
severance pay obligation of Seller or General Partner or any employee benefit
plan (within the meaning of Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended) or any other fringe benefit program maintained
or sponsored by Seller or to which Seller contributes or any contributions,
benefits or liabilities therefor or any liability for the withdrawal or partial
withdrawal from or termination of any such plan or program by Seller;     (g)  
any obligations related to any of the Excluded Assets (including, without
limitation, the Excluded Real Estate);     (h)   any debts or obligations of
Seller or General Partner other than the Assumed Payables and Assumed Contracts
Obligations; and     (i)   liabilities or obligations of Seller or General
Partner for brokerage or other commissions relative to this Agreement or the
transactions contemplated hereunder.

Seller and General Partner hereby jointly and severally agree to indemnify
Buyer, its successors and assigns from and against all of the above liabilities
and obligations in accordance with Section 11.1 below.

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ARTICLE 11. INDEMNIFICATION

Section 11.1. Indemnification by General Partner and Seller. Seller and General
Partner agree that they will each, jointly and severally, indemnify, defend (as
to third party claims only), protect and hold harmless Buyer, U S Liquids and
their respective officers, shareholders, directors, divisions, subdivisions,
affiliates, subsidiaries, parent, agents, employees, successors and assigns at
all times from and after the date of this Agreement from and against all
liabilities, claims, damages, actions, suits, proceedings, demands, assessments,
adjustments, penalties, losses, costs and expenses whatsoever (including
specifically, but without limitation, court costs, reasonable attorneys’ fees
and expenses and expenses of investigation) whether equitable or legal, matured
or contingent, known or unknown, foreseen or unforeseen, ordinary or
extraordinary, patent or latent, whether arising out of occurrences prior to, at
or after the date of this Agreement, incurred as a result of or incident to:
(a) any breach of, misrepresentation in, untruth in or inaccuracy in the
representations and warranties by Seller or any Stockholder (including, without
limitation, those relating to Seller’s environmental compliance), set forth
herein or in the Schedules, Exhibits or certificates attached hereto or
delivered pursuant hereto; (b) nonfulfillment or nonperformance of any
agreement, covenant or condition on the part of General Partner or Seller made
in this Agreement; (c) the matters set forth in Article 10; (d) the existence of
liabilities of Seller in excess of the liabilities represented by General
Partner and Seller; (e) the imposition upon Buyer of any liability or obligation
of Seller or General Partner resulting from any pending or threatened lawsuits,
legal or regulatory proceedings, investigations or judgments or (f) any claim by
a third party that, if true, would mean that a condition for indemnification set
forth in subsections (a) through (f) of this Section 11.1 had been satisfied.

Section 11.2. Indemnification by Buyer and U S Liquids. Buyer and U S Liquids
agree that they will each, jointly and severally, indemnify, defend (as to third
party claims only), protect and hold harmless Seller and General Partner at all
times from and after the Closing Date from and against all liabilities, claims,
damages, actions, suits, proceedings, demands, assessments, adjustments,
penalties, losses, costs and expenses whatsoever (including specifically, but
without limitation, court costs, reasonable attorneys’ fees and expenses and
expenses of investigation) whether equitable or legal, matured or contingent,
known or unknown, foreseen or unforeseen, ordinary or extra-ordinary, patent or
latent, incurred by Seller or General Partner as a result of or incident to:
(a) any breach of, misrepresentation in, untruth in or inaccuracy in the
representations and warranties set forth herein, or in the Schedules or
certificates attached hereto or delivered pursuant hereto by Buyer or U S
Liquids; (b) nonfulfillment or nonperformance of any agreement, covenant or
condition on the part of Buyer or U S Liquids made in this Agreement (including,
without limitation, the covenant to perform the Customer Contracts set forth in
Section 2.3); and (c) any claim by a third party that, if true, would mean that
a condition for indemnification set forth in subsections (i) or (ii) of this
Section 11.2 had been satisfied.

Section 11.3. Procedure for Indemnification with Respect to Third Party Claims.

  (a)   If any third party shall notify a party to this Agreement (the
“Indemnified Party”) with respect to any matter (a “Third Party Claim”) that may
give rise to a claim for indemnification against any other party to this
Agreement (the “Indemnifying Party”) or if any party who may make a claim for
indemnification under this Agreement otherwise becomes aware of any matter that
may give rise to such a claim or wishes to make such a claim (whether or not
related to a Third Party Claim), then the Indemnified Party shall promptly
notify each Indemnifying party thereof in writing; provided, however, that no
delay on the part of the Indemnified Party in notifying any Indemnifying Party
shall relieve the Indemnifying Party from any obligation hereunder unless (and
then solely to the extent) the Indemnifying Party is thereby prejudiced.

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  (b)   Any Indemnifying Party will have the right to defend the Indemnified
Party against a Third Party Claim with counsel of its choice satisfactory to the
Indemnified Party so long as (i) the Indemnifying Party notifies the Indemnified
Party in writing within a reasonable time after the Indemnified Party has given
notice of the Third Party Claim that the Indemnifying Party will indemnify the
Indemnified Party from and against the entirety of any adverse consequences
(which will include, without limitation, all losses, claims, liens, and
attorneys’ fees and related expenses) the Indemnified Party may suffer resulting
from, arising out of, relating to, in the nature of, or caused by the Third
Party Claim, (ii) the Indemnifying Party provides the Indemnified Party with
evidence acceptable to the Indemnified Party that the Indemnifying Party will
have the financial resources to defend against the Third Party Claim and fulfill
its indemnification obligations hereunder, (iii) the Third Party Claim involves
only monetary damages and does not seek an injunction or equitable relief,
(iv) settlement of, or adverse judgment with respect to the Third Party Claim is
not, in the good faith judgment of the Indemnified Party, likely to establish a
precedential custom or practice adverse to the continuing business interests of
the Indemnified Party, and (v) the Indemnifying Party conducts the defense of
the Third Party Claim actively and diligently.     (c)   So long as the
Indemnifying Party is conducting the defense of the Third Party Claim in
accordance with Section 11.3(b) above, (i) the Indemnified Party may retain
separate co-counsel at its sole cost and expense and participate in the defense
of the Third Party Claim, (ii) the Indemnified 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 Indemnifying Party (which
will not be unreasonably withheld) and (iii) 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 (which will not be unreasonably withheld).     (d)   In the event or to
the extent that any of the conditions set forth in Section 11.3(b) above is or
becomes unsatisfied, however, (i) the Indemnified Party may defend against, and
consent to the entry of any judgment or enter into any settlement with respect
to, the Third Party Claim and any matter it may deem appropriate in its sole
discretion and the Indemnified Party need not consult with, or obtain any
consent from, any Indemnifying Party in connection therewith (but will keep the
Indemnifying Party reasonably informed regarding the progress and anticipated
cost thereof), (ii) the Indemnifying Party will reimburse the Indemnified Party
promptly and periodically for the cost of defending against the Third Party
Claim (including attorneys’ fees and expenses), (iii) the Indemnifying Party
will remain responsible for any adverse consequences the Indemnified Party may
suffer resulting from, arising out of, relating to, in the nature of, or caused
by the Third Party Claim to the fullest extent provided in this Section 11, and
(iv) the Indemnifying Party shall be deemed to have waived any claim that its
indemnification obligation should be reduced because of the manner in which the
counsel for the Indemnified Party handled the Third Party Claim.

ARTICLE 12. TERMINATION OF AGREEMENT

Section 12.1. Termination by Buyer.

  (a)   Buyer, by notice in the manner hereinafter provided on or before the
Closing Date, may terminate this Agreement in the event of a breach by General
Partner or Seller in the observance or in the due and timely performance of any
of the agreements or conditions contained herein on their part to be performed,
and such breach shall not have been cured on or before the Closing Date.

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  (b)   Buyer may terminate this Agreement by giving written notice to Seller at
any time prior to the Closing in the event that Seller has given Buyer any
notice pursuant to Section 7.5 above and the development or information that is
the subject of the notice has had or would be likely to have a material adverse
effect on the financial condition of Seller, the financial prospects of the
Business or the ability to continue the operation of the Business after the
Closing in substantially the same manner as Buyer reasonably contemplated prior
to becoming aware of the development or information.

Section 12.2. Termination by Seller. Seller may, by notice in the manner
hereinafter provided on or before the Closing Date, terminate this Agreement in
the event of a breach by Buyer in the observance or in the due and timely
performance of any of the covenants, agreements or conditions contained herein
on its part to be performed, and such breach shall not have been cured on or
before the Closing Date.

Section 12.3 Termination by Either Party. Any party may terminate this Agreement
by giving written notice to the other parties at any time prior to the Closing
if the Closing shall not have occurred on or before November 15, 2002, or such
party has reasonably determined that it can not occur by such date, by reason of
the failure of any condition precedent under Articles 8 or 9 (unless the failure
results primarily from such party itself breaching any representation, warranty
or covenant contained in this Agreement).

Section 12.4 Effect of Termination. If any party terminates this Agreement
pursuant to this Article 12, all rights and obligations of the parties hereunder
shall terminate without any liability of any party to any other party (except
for any liability of any party then in breach); provided, however, that the
confidentiality provisions contained in Article 13 shall survive termination.

ARTICLE 13. NONDISCLOSURE OF CONFIDENTIAL INFORMATION

Section 13.1. Nondisclosure by Seller and General Partner. Seller and General
Partner recognize and acknowledge that they had in the past, currently have, and
in the future may possibly have, access to certain confidential information of
Buyer, such as lists of customers, operational policies, and pricing and cost
policies that are valuable, special and unique assets of Buyer and its
businesses. Seller and General Partner each agree that, except as may be
required by Applicable Laws or other legal process, they will not disclose such
confidential information to any person, firm, corporation, association or other
entity for any purpose or reason whatsoever, except to authorized
representatives of Buyer, unless such information becomes known to the public
generally through no fault of Seller or any Stockholder. In the case of a
disclosure required by Applicable Laws or other legal process, Seller and
General Partner shall make no disclosure without prior written notice to Buyer.
In the event of a breach or threatened breach by Seller or one of the General
Partner of the provisions of this Section, Buyer shall be entitled to an
injunction restraining such party from disclosing, in whole or in part, such
confidential information. Nothing herein shall be construed as prohibiting Buyer
from pursuing any other available remedy for such breach or threatened breach,
including, without limitation, the recovery of damages. The provisions of this
Section shall apply at all times prior to the Closing Date and for a period of
one year following the termination of this Agreement without a Closing having
occurred.

Section 13.2. Nondisclosure by Buyer. Buyer and U S Liquids recognize and
acknowledge that they have in the past, currently have, and prior to the Closing
Date, will have access to certain confidential information of Seller, such as
lists of customers, operational policies, and pricing and cost policies that are
valuable, special and unique assets of Seller. Buyer and U S Liquids agree that
they will not, except as may be required by Applicable Laws or valid legal
process, disclose such confidential information to any person, firm,
corporation, association, or other entity for any purpose or reason whatsoever,
prior to the Closing Date without Seller’s prior written consent. In the case of
a disclosure required by Applicable

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Laws or other legal process, Seller and General Partner shall make no disclosure
without prior written notice to Buyer. In the event of a breach or threatened
breach by Buyer or U S Liquids of the provisions of this Section, Seller shall
be entitled to an injunction restraining such party from disclosing, in whole or
in part, such confidential information. Nothing contained herein shall be
construed as prohibiting Seller from pursuing any other available remedy for
such breach or threatened breach, including, without limitation, the recovery of
damages. The provisions of this Section shall apply at all times prior to the
Closing Date and for a period of one year following the termination of this
Agreement without a Closing having occurred.

ARTICLE 14. FEDERAL SECURITIES ACT AND RESTRICTIONS ON STOCK

Section 14.1. U S Liquids Stock. Buyer and U S Liquids, jointly and severally,
represent and warrant to Seller and Seller acknowledges that all of the shares
of US Liquids Stock to be delivered to Seller upon Seller’s exercise of the
warrants delivered pursuant this Agreement will be validly and legally issued
under Delaware law and will not be registered under the Securities Act of 1933,
as amended (the “Act”) or any applicable state securities laws, prior to
delivery to Seller.

Section 14.2. Compliance with Law. Seller covenants, warrants and represents
that none of the shares of US Liquids Stock will be offered, sold, assigned,
pledged, hypothecated, transferred or otherwise disposed of except in full
compliance with the Act and the rules and regulations promulgated thereunder.

ARTICLE 15. GENERAL

Section 15.1. Assignment; Binding Effect; Amendment. This Agreement and the
rights of the parties hereunder may not be assigned (except by operation of law)
and shall be binding upon and shall inure to the benefit of the parties hereto,
the successors of Buyer and Seller, and the respective heirs and legal
representatives of General Partner. This Agreement, upon execution and delivery,
constitutes a valid and binding agreement of the parties hereto enforceable in
accordance with its terms and may be modified or amended only by a written
instrument executed by all parties hereto.

Section 15.2. Third Party Beneficiary. Each of the parties hereto intends that
US Liquids shall be a third party beneficiary to this Agreement, shall be
entitled to the benefits hereof and shall have the ability to exercise the
rights granted to Buyer herein as fully as if it were a direct signatory hereto.
The parties agree that no other entity shall be a third party beneficiary to
this Agreement.

Section 15.3. Entire Agreement. This Agreement is the final, complete and
exclusive statement and expression of the agreement among the parties hereto
with relation to the subject matter of this Agreement, it being understood that
there are no oral representations, understandings or agreements covering the
same subject matter as this Agreement. This Agreement supersedes, and cannot be
varied, contradicted or supplemented by evidence of any prior or contemporaneous
discussions, correspondence, or oral or written agreements of any kind.

Section 15.4. Counterparts. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument.

Section 15.5. No Brokers. Seller and General Partner represent and warrant to
Buyer and Buyer represents to Seller and General Partner that the warranting
party has had no dealings with any broker or agent so as to entitle such broker
or agent to a commission or fee in connection with the within transaction. If
for any reason a commission or fee shall become due, the party dealing with such
agent or broker shall pay such commission or fee and agrees to indemnify and
save harmless each of the other

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parties from all claims for such commission or fee and from all attorneys’ fees,
litigation costs and other expenses relating to such claim.

Section 15.6. Expenses of Transaction. Whether or not the transactions herein
contemplated shall be consummated: (a) Buyer will pay the fees, expenses and
disbursements of Buyer and its agents, representatives, accountants and counsel
incurred in connection with the subject matter of this Agreement and any
amendments hereto and all other costs and expenses incurred in the performance
and compliance with all conditions to be performed by Buyer under this
Agreement; and (b) Seller will pay the fees, expenses and disbursements of
Seller and General Partner and their respective agents, representatives,
accountants and counsel incurred in connection with the subject matter of this
Agreement and any amendments hereto and all other costs and expenses incurred in
the performance and compliance with all conditions to be performed by General
Partner and Seller under this Agreement. All such fees, expenses and
disbursements of General Partner and Seller shall be paid by Seller prior to the
Closing so that the Assets will not be charged with or diminished by any such
fee, cost or expense. General Partner and Seller represent and warrant to Buyer
that General Partner and Seller have relied on their own advisors for all legal,
accounting, tax or other advice whatsoever with respect to this Agreement and
the transactions contemplated hereby.

Section 15.7. Notices. All notices or other communications required or permitted
hereunder shall be in writing and may be given by depositing the same in United
States mail, addressed to the party to be notified, postage prepaid and
registered or certified with return receipt requested, by overnight courier or
by delivering the same in person to such party.

  (a)   If to Buyer, addressed to it at:

  U S Liquids of LA, L.P.
11079 Triangle Shell Road
Jennings, Louisiana 70546
Attn: Divisional Vice President

      with a copy to:

  U S Liquids, Inc.
411 N. Sam Houston Parkway E., Suite 400
Houston, Texas 77060
Attn: General Counsel

  (b)   If to Seller, addressed to it at:

  Trinity Storage Services, L.P.
13453 Highway 71
Bee Cave, Texas 78738
Attn: Daniel B. Porter

      with a copy to:

  Matthews & Branscomb
802 Carancahua, Suite 1900
Corpus Christi, Texas 78470
Attn: Jeffrey S. Dickerson & Mark J. Hulings

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Notice shall be deemed given and effective the day personally delivered, the day
after being sent by overnight courier, subject to signature verification, and
three business days after the deposit in the U.S. mail of a writing addressed as
above and sent first class mail, certified, return receipt requested, or when
actually received, if earlier. Any party may change the address for notice by
notifying the other parties of such change in accordance with this Section.

Section 15.8. Governing Law. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of Texas, without giving
effect to any choice or conflict of law provision or rule (whether of the State
of Texas or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of Texas.

Section 15.9. No Waiver. No delay of or omission in the exercise of any right,
power or remedy accruing to any party as a result of any breach or default by
any other party under this Agreement shall impair any such right, power or
remedy, nor shall it be construed as a waiver of or acquiescence in any such
breach or default, or of or in any similar breach or default occurring later;
nor shall any waiver of any single breach or default be deemed a waiver of any
other breach of default occurring before or after that waiver.

Section 15.10. Time of the Essence. Time is of the essence of this Agreement.

Section 15.11. Captions. The headings of this Agreement are inserted for
convenience only, shall not constitute a part of this Agreement or be used to
construe or interpret any provision hereof.

Section 15.12. 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 but so as most nearly to
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 thereby.

Section 15.13. Construction. The parties 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 the parties 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 shall be deemed to refer to all rules and regulations
promulgated thereunder, unless the context requires otherwise. The word
“including” means including, without limitation. The parties intend that
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) that the party has not
breached shall not detract from or mitigate the fact the party is in breach of
the first representation, warranty or covenant.

Section 15.14. Standstill Agreement. Unless and until this Agreement is
terminated pursuant to Article 12 hereof without the Closing having taken place,
Seller will not directly or indirectly solicit offers for the stock or the
assets of Seller or for a merger or consolidation involving Seller, or respond
to inquiries from, share information with, negotiate with or in any way
facilitate inquiries or offers from, third parties who express or who have
heretofore expressed an interest in acquiring Seller by merger, consolidation or
other combination or acquiring any of the Assets of Seller; nor will any
Stockholder permit Seller to do any of the foregoing.

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Section 15.15. Press Releases and Public Announcements. No party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement without the prior written approval of the other party; provided,
however, that any party may make any public disclosure it believes in good faith
to be required by applicable law, rule or regulation or any listing or trading
agreement concerning its publicly traded securities (in which case the
disclosing party will use reasonable efforts to advise the other party prior to
making such disclosure).

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the day and year first above written.

              U S LIQUIDS OF LA, L.P.   TRINITY STORAGE SYSTEMS, L.P.          
    By:   MBO, Inc., Its General Partner   By:   CCBS, Inc., its General Partner
              By:       By:        

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              U S LIQUIDS INC   CCBS, INC               By:       By:        

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LIST OF SCHEDULES

          Schedule 1.1(d)   —   Equipment Schedule 1.1(e)   —   Motor Vehicles
Schedule 1.1(f)   —   Equipment Leases Schedule 1.1(g)   —   Motor Vehicle
Leases Schedule 1.1(k)   —   Customer Contracts and Related Approvals
Schedule 1.1(l)   —   Contracts Schedule 1.3   —   Customer Contracts Requiring
Consent to Assignment Schedule 2.3   —   Seller’s Debt Schedule 5.1(a)   —  
Partnership Agreement and Related Documents of Seller Schedule 5.1(b)   —  
Articles of Incorporation and Bylaws of General Partner Schedule 5.3   —  
Predecessors Schedule 5.5   —   Financial Statements Schedule 5.6   —  
Non-Balance Sheet Liabilities Schedule 5.7(a)   —   Permits; Licenses;
Applications; Proprietary Rights Schedule 5.9(a)   —   Real Property Disclosure
Schedule 5.11   —   Insurance Policies Schedule 5.12   —   Employees
Schedule 5.13   —   Employee Plans Schedule 5.14(b)   —   Compliance with Laws
Schedule 5.16   —   Litigation Schedule 5.19   —   List of Disposal Sites

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LIST OF EXHIBITS

          Exhibit A   —   Description of the Real Property Exhibit B   —   Real
Estate Leases Exhibit C   —   Noncompetition Agreement

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