exv10w31



 



EXHIBIT 10.31



ASSET PURCHASE AGREEMENT





 






 





TABLE OF CONTENTS




	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	 	 	 	 	 	 	

	 	1.	 	 	CERTAIN DEFINITIONS
	 	 	3	 
	 	2.	 	 	SALE AND PURCHASE OF ASSETS
	 	 	8	 
	 	 	 	 	2.1 Purchased Assets
	 	 	8	 
	 	 	 	 	2.2 Assumed Liabilities
	 	 	12	 
	 	 	 	 	2.3 Excluded Assets and Liabilities
	 	 	12	 
	 	3.	 	 	CONSIDERATION
	 	 	14	 
	 	 	 	 	3.1 Purchase Price; Preliminary Agreement for Allocation
	 	 	14	 
	 	 	 	 	3.2 Scheduled Payments
	 	 	14	 
	 	 	 	 	3.3 Purchase Price Assumptions and Potential Adjustment of Closing Payment
	 	 	15	 
	 	 	 	 	3.4 Retention Amounts
	 	 	16	 
	 	4.	 	 	TRANSFER OF EMPLOYEES AND EMPLOYEE BENEFITS
	 	 	19	 
	 	 	 	 	4.1 Workers’ Compensation
	 	 	19	 
	 	 	 	 	4.2 Transfer of Employees
	 	 	20	 
	 	 	 	 	4.3 Seller Employee Benefit Plans
	 	 	21	 
	 	5.	 	 	THE CLOSING
	 	 	21	 
	 	 	 	 	5.1 The Closing
	 	 	21	 
	 	 	 	 	5.2 Seller Entity Deliveries at Closing
	 	 	22	 
	 	 	 	 	5.3 Purchaser Deliveries at Closing
	 	 	24	 
	 	6.	 	 	REPRESENTATIONS OF SELLER ENTITIES
	 	 	25	 
	 	 	 	 	6.1 Organization and Valid Existence
	 	 	25	 
	 	 	 	 	6.2 Corporate Authority
	 	 	26	 
	 	 	 	 	6.3 No Violations
	 	 	26	 
	 	 	 	 	6.4 Conduct of Business; Absence of Certain Changes
	 	 	26	 
	 	 	 	 	6.5 Title to Purchased Assets
	 	 	29	 
	 	 	 	 	6.6 Real Estate
	 	 	29	 
	 	 	 	 	6.7 Contracts
	 	 	29	 
	 	 	 	 	6.8 Litigation
	 	 	30	 
	 	 	 	 	6.9 Intellectual Property
	 	 	31	 
	 	 	 	 	6.10 Compliance with Laws
	 	 	33	 
	 	 	 	 	6.11 Environmental Matters
	 	 	33	 





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TABLE OF CONTENTS

(continued)



	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	 	 	 	 	 	 	

	 	 	 	 	6.12 Employee Benefit Plans
	 	 	35	 
	 	 	 	 	6.13 Taxes
	 	 	35	 
	 	 	 	 	6.14 Insurance
	 	 	36	 
	 	 	 	 	6.15 Labor Agreements and Policies
	 	 	36	 
	 	 	 	 	6.16 Licenses and Permits
	 	 	37	 
	 	 	 	 	6.17 Employees; Employment Matters
	 	 	37	 
	 	 	 	 	6.18 No Finder
	 	 	38	 
	 	 	 	 	6.19 Business Relations
	 	 	39	 
	 	 	 	 	6.20 Warranty
	 	 	39	 
	 	 	 	 	6.21 Sufficiency of Assets
	 	 	40	 
	 	 	 	 	6.22 Description of Owned Real Property
	 	 	40	 
	 	 	 	 	6.23 Description of Leased Real Property
	 	 	40	 
	 	 	 	 	6.24 Schedules
	 	 	40	 
	 	 	 	 	6.25 Accuracy of Disclosure
	 	 	40	 
	 	 	 	 	6.26 No Other Warranties or Representations
	 	 	40	 
	 	7.	 	 	REPRESENTATIONS OF PURCHASER
	 	 	41	 
	 	 	 	 	7.1 Organization and Authority
	 	 	41	 
	 	 	 	 	7.2 Authorization of Agreement
	 	 	41	 
	 	 	 	 	7.3 Litigation; Compliance with Law
	 	 	41	 
	 	 	 	 	7.4 No Finder
	 	 	42	 
	 	 	 	 	7.5 Disclosure of Known Breaches
	 	 	42	 
	 	8.	 	 	POST-CLOSING AGREEMENTS OF SELLER AND PURCHASER
	 	 	42	 
	 	 	 	 	8.1 Covenant Not to Compete
	 	 	42	 
	 	 	 	 	8.2 Non-Solicitation
	 	 	44	 
	 	 	 	 	8.3 Seller Arrangement with Eric Warden; Access to Eric Warden
	 	 	44	 
	 	 	 	 	8.4 Access to Properties and Records
	 	 	45	 
	 	 	 	 	8.5 Confidentiality
	 	 	45	 
	 	 	 	 	8.6 Taxes
	 	 	46	 
	 	 	 	 	8.7 Further Assurances
	 	 	48	 
	 	 	 	 	8.8 Retained Information
	 	 	49	 





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TABLE OF CONTENTS

(continued)



	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	 	 	 	 	 	 	

	 	 	 	 	8.9 Transfer of Lease Program Rolling Stock
	 	 	50	 
	 	 	 	 	8.10 Revocation of Permits
	 	 	50	 
	 	9.	 	 	CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
	 	 	50	 
	 	 	 	 	9.1 Due Diligence
	 	 	51	 
	 	 	 	 	9.2 Transfers Effected
	 	 	51	 
	 	 	 	 	9.3 Removal of Waste
	 	 	51	 
	 	 	 	 	9.4 Formation of LLCs
	 	 	51	 
	 	 	 	 	9.5 Closing Deliveries
	 	 	51	 
	 	 	 	 	9.6 Continued Truth of Representations and Warranties; No Breach
	 	 	51	 
	 	 	 	 	9.7 Litigation
	 	 	52	 
	 	 	 	 	9.8 No Material Adverse Change
	 	 	52	 
	 	 	 	 	9.9 Bank Approval
	 	 	52	 
	 	 	 	 	9.10 Arrangement with Eric Warden
	 	 	52	 
	 	10.	 	 	CONDITIONS TO OBLIGATIONS OF SELLER
	 	 	52	 
	 	 	 	 	10.1 Continued Truth of Representations and Warranties; No Breach
	 	 	53	 
	 	 	 	 	10.2 Litigation
	 	 	53	 
	 	11.	 	 	AMENDMENT AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES
	 	 	53	 
	 	12.	 	 	INDEMNIFICATION
	 	 	54	 
	 	 	 	 	12.1 Indemnification by Seller
	 	 	54	 
	 	 	 	 	12.2 Indemnification by Purchaser
	 	 	55	 
	 	 	 	 	12.3 Limitation of Recourse
	 	 	57	 
	 	13.	 	 	FORCE MAJEURE
	 	 	57	 
	 	14.	 	 	EXPENSES
	 	 	57	 
	 	15.	 	 	NOTICES
	 	 	58	 
	 	16.	 	 	SUCCESSORS
	 	 	59	 
	 	17.	 	 	ARTICLE AND SECTION HEADINGS
	 	 	59	 
	 	18.	 	 	GOVERNING LAW
	 	 	59	 
	 	19.	 	 	DISPUTE RESOLUTION
	 	 	59	 
	 	20.	 	 	ENTIRE AGREEMENT
	 	 	62	 
	 	21.	 	 	COUNTERPARTS
	 	 	62	 
	 	22.	 	 	SEVERABILITY
	 	 	62	 





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ASSET PURCHASE AGREEMENT



     THIS ASSET PURCHASE AGREEMENT (the “Agreement”), is entered into effective
as of November 1, 2002 (the “Effective Date”) by and among Liquid Environmental
Solutions of Texas, L.P., a Texas limited partnership (“Purchaser”), U S
Liquids of Houston, L.L.C., a Texas limited liability company, U S Liquids of
Dallas, L.L.C., a Texas limited liability company, and U S Liquids of Central
Texas, L.L.C., a Texas limited liability company (collectively, “Seller”), U
S Liquids of Texas, Inc., a Texas corporation (“Seller Parent”), and U S
Liquids, Inc., a Delaware corporation (“USL”) (Seller, Seller Parent and USL
shall each be referred to as a “Seller Entity” and shall collectively be
referred to herein as “Seller Entities”).


RECITALS



     A.     USL owns all of the issued and outstanding stock of Seller Parent,
which owns all of the membership interests of each limited liability company
constituting Seller;


     B.     Seller is engaged in the following lines of business: (i) yellow grease
and grease and grit trap collection, processing and disposal operations in
Texas and Louisiana, (ii) non-hazardous liquid industrial waste processing and
disposal operations in Texas, (iii) non-hazardous liquid industrial waste
transportation in the Houston metropolitan areas, and surrounding contiguous
counties (specifically Harris, Galveston, Liberty, Montgomery, Chambers,
Waller, Fort Bend and Brazoria Counties), (iv) emergency response and spill
cleanup in the Austin and San Antonio metropolitan areas and surrounding
contiguous counties (specifically Travis, Bastrop, Lee, Williamson, Burnet,
Blanco, Caldwell, Guadalupe, Comal, Hays, Kendall, Bexar, Wilson, Bandera,
Medina, and Atascosa Counties), (v) the grease and grit trap collection
business conducted by Cactus and related to the Acquired Cactus Assets as




 






 




described in Section 2.1.14, and (v) illegal drug seizure collection,
processing and disposal (collectively, the “Acquired Business Operations”);


     C.     For purposes of this Agreement, the Acquired Business Operations do not
include (i) the Excluded Cactus Business as defined in Section 2.3, (ii) the
Singleton Property as defined in Section 2.1.1, (iii) U S Liquids of LA., LP’s
oilfield operations, (iv) oily waters, used oil and antifreeze collection,
transportation, processing and disposal in Texas, (v) oil recycling and
recovery operations (Houston Reclaim/Lawndale operations), and (vi) any other
hazardous waste business operations within the Texas and Louisiana operations
of Seller or the US Liquids administrative area commonly referred to by Seller
Entities as the “Southwest Region” (including contracts, jobs, permits and
accounts receivable associated therewith) (collectively, the “Excluded Business
Operations”);


     D.     Seller desires to sell to Purchaser, on a going concern basis,
substantially all of the assets, properties and goodwill of the Acquired
Business Operations of Seller;


     E.     Purchaser desires to purchase said assets, properties and goodwill of
the Acquired Business Operations and assume certain specified liabilities and
obligations of Seller relating to the Acquired Business Operations on the terms
and conditions set forth herein; and


     F.     U.S. Public Ventures, LLC (acting on behalf and for the benefit of
Purchaser) and Seller Parent are parties to that certain Letter Agreement dated
September 18, 2002, reflecting certain non-binding understandings, as well as
certain binding obligations with respect to the transactions contemplated by
this Agreement.


     NOW, THEREFORE, in consideration of the premises and the covenants and
agreements herein contained and other good and valuable consideration, receipt
of which is hereby acknowledged, it is hereby agreed as follows:



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1. CERTAIN DEFINITIONS.


As used herein, the following terms shall have the meanings indicated.


     "Accounts Payable” has the meaning given in Section 2.2.


     “Accounts Receivable” has the meaning given in Section 2.1.7.


     “Acquired Business Operations” has the meaning given in Recital B hereof.


     "Acquired Cactus Assets” has the meaning given in Section 2.1.14.


     "Acquired Intellectual Property” has the meaning given in Section 6.9.


     "Acquired Real Property” has the meaning given in Section 2.1.1.


     "Allocation Schedule” has the meaning given in Section 3.1.


     "Assumed Liabilities” has the meaning specified in Section 2.2.


     "Available Employees” has the meaning given in Section 4.2.


     "Bank Approval” means written confirmation from Bank of America, N.A., as
agent bank, that Seller and Seller Parent have obtained the approval of the
banks that are signatories to that certain Second Amended and Restated Credit
Agreement of USL dated February 3, 1999. The date of the Bank Approval for
purposes of this Agreement will be the date on which such written confirmation
is delivered to Purchaser.


     “Business Day” means any day other than (a) Saturday or Sunday or (b) any
other day on which commercial banks in Texas or California are permitted or
required to be closed.


     "Cactus” has the meaning specified in Section 2.3.1(a).


     "Closing” has the meaning specified in Section 5.1.


     "Closing Date” has the meaning specified in Section 5.1.


     "Closing Payment” has the meaning given in Section 3.2.1.


     "Code” means the Internal Revenue Code of 1986, as amended.


     "Contract” and “Contracts” have the meaning set forth in Section 6.7.



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     "Dispute” has the meaning given in Section 19.


     "Effective Date” has the meaning given in the Preamble hereof.


     "Effective Time” has the meaning specified in Section 5.1.


     "Employee Benefit Plan” means all plans, contracts, schemes, programs,
funds, commitments or arrangements providing money, services, property, or
other benefits, whether written or oral, formal or informal, qualified or
non-qualified, funded or unfunded and including any that have been frozen or
terminated, which pertain to any employee or former employee of Seller or any
Seller Entity engaged in the Acquired Business Operations and identified on
Schedule 6.12.


     "Enforceability Limitations” means (i) bankruptcy, insolvency,
reorganization, moratorium or similar laws now or hereafter in effect affecting
or limiting the enforcement of creditors’ rights generally and (ii) the
discretion of the appropriate court with respect to specific performance,
injunctive relief or other equitable remedies.


     "Environmental Laws” means any and all laws (including, but not limited
to, the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, the Resource Conservation and Recovery Act, as amended, and
corresponding state or local statute or regulation), statutes, ordinances,
rules, regulations, orders, judicial decrees, administrative orders or permit
conditions of any Governmental Body pertaining to the workplace and/or health
or the environment in the jurisdictions in which the Acquired Business
Operations are conducted or where the Acquired Real Property is located.


     "Environmental Retention” has the meaning given in Section 3.4.3.


     "ERISA” means the Employee Retirement Income Security Act of 1974, as
amended.


     "Excluded Cactus Business” has the meaning specified in Section 2.3.1(a).



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     "Excluded Liabilities” shall mean those assets and liabilities described
in Section 2.3.


     “Excluded Real Property” has the meaning specified in Section 2.1.1.


     "Financial Statements” has the meaning specified in Section 5.2.12.


     "Fixed Asset List” has the meaning given in Section 3.3.1(b).


     "GAAP” means generally accepted accounting principles, consistently
applied.


     "Governmental Body” means any foreign, federal, state, local or other
governmental authority or regulatory body.


     "Hired Employees” has the meaning given in Section 4.2.


     "Intellectual Property” means, with respect to the Acquired Business
Operations and, in each case, to the extent owned or licensed (whether as
licensor or licensee) by the Seller or by another Seller Entity for the benefit
of the Acquired Business Operations, all physical or intangible embodiments of
(a) all trademarks, service marks, trade dress, logos, trade names, domain
names and corporate names, together with all translations, adaptations,
derivations and combinations thereof, and all applications, registrations and
renewals in connection therewith, (b) all copyrightable works, all copyrights,
and all applications, registrations and renewals in connection therewith, (c)
all trade secrets and confidential business information (including, without
limitation, all research, techniques, technology, models, databases,
specifications, customer and supplier lists, pricing and cost information,
internet properties, and business and marketing plans and proposals), and (d)
all computer software (including data and related documentation).


     "Interim Financial Statement Date” has the meaning specified in Section
6.4.


     "Inventory” has the meaning given in Section 2.1.15.



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     “Knowledge of Seller” shall mean (i) facts or matters actually known by
the CEO, CFO, COO, Chief Accounting Officer, Treasurer or the general counsel
of USL, Eric Warden, Greg Gunzelman or Wendy O’Dell, or (ii) facts or matters
that any of the foregoing persons should know or could be reasonably expected
to discover or otherwise become aware of following a reasonably diligent good
faith inquiry with respect to such matter.


     “Land Improvements” means all buildings, structures, fixtures and
improvements located on the Acquired Real Property or included in the Purchased
Assets, including those under construction.


     "Letter of Intent” has the meaning specified in Recital F.


     "Liens” has the meaning specified in Section 6.5.


     "Limitation Period” has the meaning specified in Section 11.


     “Liquid Waste Handlers of Texas I, LLC” shall mean the limited liability
company that holds all rolling stock relating to the Acquired Business
Operations, other than rolling stock to be owned by Liquid Waste Handlers of
Texas II, LLC.


     “Liquid Waste Handlers of Texas II, LLC” shall mean the limited liability
company to be organized in accordance with Section 8.9 hereto for the purpose
of owning all rolling stock relating to the Acquired Business Operations other
than rolling stock owned by Liquid Waste Handlers of Texas I, LLC.


     "Material” and “Materially” or any variation thereof means (unless
otherwise expressly stated herein), with respect to an obligation, contract,
commitment or Lien, any obligation, contract, commitment or Lien that requires
an expenditure, individually or in the aggregate, of more than $10,000 and,
with respect to any other event or circumstance, an event or circumstance that
would have an adverse effect of at least $10,000 on the business, operations,




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employee or client relations, properties, assets (including intangible
assets), liabilities (contingent or otherwise), financial condition or results
of operations of Seller.


     "PP&E” means the physical assets of the Acquired Business Operations,
including, but not limited to, all Acquired Real Property (but excluding the
Excluded Real Property), Land Improvements, vehicles, equipment, office
furniture and equipment, buildings, leasehold improvements, and other
facilities improvements. PP&E shall also specifically include the vehicles and
equipment associated with Seller’s hazardous waste transportation business,
other than those of Cactus.


     "Permits” has the meaning set forth in Section 6.16.


     “Permitted Liens” means (a) the Liens described or referred to in Schedule
6.5 hereto, (b) Liens for current Taxes and assessments not yet due and
payable, including, but not limited to, Liens for nondelinquent ad valorem
Taxes, nondelinquent statutory Liens arising other than by reason of any
default on the part of a Seller Entity (and subject to proration as provided in
Section 8.6), (c) Liens incurred in the ordinary course of business and which
relate to Assumed Liabilities, and (d) (i) such liens, imperfections of title
which are not Material and do not affect revenues or the present use of the
real property subject thereto, or (ii) easements on real property or leasehold
estates as do not in any Material respect detract from the value thereof and do
not interfere with the present use of the property subject thereto.


     "Person” means any individual, corporation, partnership, joint venture,
limited liability company, association, joint-stock company, trust,
unincorporated organization or governmental body.


     "Purchase Price” has the meaning set forth in Section 3.1.


     "Purchased Assets” has the meaning given in Section 2.1.



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     "Purchaser” has the meaning given in the Preamble.


     "Purchaser Funds” has the meaning set forth in Section 8.7.2.


     "Purchaser Indemnitees” has the meaning set forth in Section 12.1.


     "Purchaser Transaction Documents” has the meaning given in Section 7.1.


     "Retention Amounts” has the meaning set forth in Section 3.2.2.


     "Seller” has the meaning given in the Preamble.


     "Seller Entity” and “Seller Entities” has the meaning given in the
Preamble.


     "Seller Indemnitees” has the meaning set forth in Section 12.2.


     "Seller Parent” has the meaning given in the Preamble.


     "Seller Transaction Documents” has the meaning given in Section 6.1.


     "Singleton Property” has the meaning set forth in Section 2.1.1.


     "Tax” means any federal, state, local or foreign net income, alternative
or add-on minimum, gross income, gross receipts, property, sales, use,
transfer, gains, license, excise, employment, payroll, withholding or minimum
tax, or any other tax custom, duty, governmental fee or other like assessment
or charge of any kind whatsoever, together with any interest or any penalty,
addition to tax or additional amount imposed by any Governmental Body.


     "Transferred Business Records” has the meaning set forth in Section 8.8.


     "Working Capital” means the Accounts Receivable minus the Accounts Payable
on the Closing Date.


2. SALE AND PURCHASE OF ASSETS.


     2.1 Purchased Assets. Subject to the terms and conditions of this
Agreement and to the continued accuracy of the representations and warranties
contained herein, on the Closing Date, Seller shall sell, convey, assign,
transfer and deliver to Purchaser, and Purchaser shall purchase, receive and
accept delivery from Seller, on a going concern basis, free and clear of all




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Liens other than Permitted Liens, all of Seller’s assets, properties and
goodwill of every kind and nature, real, personal or mixed, tangible or
intangible, wherever located, whether owned directly by Seller or owned by
another Seller Entity or another subsidiary of USL and held for the benefit of
Seller, and used in or relating to the Acquired Business Operations of Seller
(collectively, the “Purchased Assets”), including, without limitation, all
right, title and interest of Seller in, to and under:


         2.1.1 All real property (leased or owned) (including all improvements,
fixtures, fittings, appurtenances, easements located thereon or associated
therewith) set forth in Schedule 2.1.1 (the “Acquired Real Property”) EXCEPT
(i) the real property located at 4960 Singleton Blvd., Dallas, Texas and
referred to herein as the “Singleton Property,” (ii) the real property located
at Tract 7, Block 81, Galveston County, Texas and referred to as the “San Leon”
property, (iii) the real property located at Highway 16 in Bexar County, (iv)
the Giddings property located in Lee County and the associated oil business and
assets, (v) the leased real property located at 11115 Goodnight Lane, Dallas,
Texas 75229, and (vi) the real property located at 7026 Lawndale, Houston,
Texas 77023 and referred to as the Houston Reclaim waste treatment
facility/Lawndale (collectively, the “Excluded Real Property”).


         2.1.2 All tangible personal property, equipment (including any equipment
associated with the hazardous businesses of Seller, excluding Cactus),
vehicles, furniture and other physical operating assets (whether or not fully
depreciated) listed on Schedule 2.1.2.


         2.1.3 To the extent assignable, all environmental permits, and all other
government licenses, permits, authorizations etc. used in the Acquired Business
Operations and listed on Schedule 2.1.3;



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         2.1.4 All contracts, service agreements and other written or oral
contracts or agreements used in or necessary to the Acquired Business
Operations and set forth in Schedule 2.1.4;


         2.1.5 To the extent assignable, all non-competition and non-solicitation
agreements (i) between any Seller Entity and the employees employed in the
Acquired Business Operations or (ii) in connection with acquisitions by any
Seller Entity conducted prior to the Closing Date and listed on Schedule 2.1.5;


         2.1.6 All Acquired Intellectual Property described in Section 6.9 and
listed on Schedule 2.1.6;


         2.1.7 All accounts receivable listed on Schedule 2.1.7 without adjustment
for doubtful accounts, including accruals for all accounts receivable generated
through the Closing Date, but adjusted to reflect credits due to customers of
the Acquired Business Operations as of the Closing Date (with all such credits
also listed on Schedule 2.1.7) (the “Accounts Receivable”); provided, however,
that Accounts Receivable will not include accounts receivable from employees or
accounts receivable from the Excluded Business Operations;


         2.1.8 All deposits (including security deposits under Acquired Real
Property or equipment leases and cash deposits supporting transferable
Permits), prepaid expenses, claims for refunds and rights of set off relating
to the Acquired Business Operations and listed on Schedule 2.1.8;


         2.1.9 All data and business records related to the Acquired Business
Operations including, but not limited to, client and customer lists, lists of
customer prospects and former clients, telephone records, referral sources,
processing reports and records, service and warranty records, equipment logs,
operating guides and manuals, financial and accounting records,




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advertising and promotional materials, and, subject to any applicable
legal restrictions, copies of all personnel records relating to Hired
Employees;


         2.1.10 A license to use USL’s proprietary IMS software and any other
Seller Entity-owned proprietary software used in connection with the Acquired
Business Operations for up to twelve (12) months from the Closing Date
substantially in the form attached hereto as Exhibit H;


         2.1.11 A license to use mutually agreed upon portions of the Singleton
Property pursuant to the Facility Use and Access Agreement attached hereto as
Exhibit F;


         2.1.12 All insurance proceeds payable to a Seller Entity arising from
losses or claims relating to the Acquired Business Operations or the Purchased
Assets which have occurred since August 31, 2002, except to the extent that
such proceeds have been utilized by Seller to repair or remedy the event or
Purchased Asset to which they relate (following notice to and consent of
Purchaser to such utilization), including those currently known to Seller and
listed in Schedule 2.1.12;


         2.1.13 All of the membership interests of Seller in Liquid Waste Handlers
of Texas I, LLC, and, in accordance with Section 8.9 hereof, Liquid Waste
Handlers of Texas II, LLC;


         2.1.14 Those business assets of Cactus that relate primarily to the grease
and grit trap collection business conducted by Cactus as more fully described
on Schedule 2.1.14 attached hereto (the “Acquired Cactus Assets”);


         2.1.15 All inventory of Seller as listed on Schedule 2.1.15 attached
hereto (the “Inventory”); and



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         2.1.16 All general intangibles used primarily in the Acquired Business
Operations including, without limitation, all good will as a going concern.


     2.2 Assumed Liabilities. On the Closing Date, Purchaser will assume the
accounts payable (including purchase order system accruals and trade accruals)
associated with the Acquired Business Operations and listed on Schedule 2.2
attached hereto (the “Accounts Payable”). Purchaser shall have the right, but
not the obligation, to assume any accounts payable associated with the Acquired
Business Operations not listed on Schedule 2.2 or which are understated on
Schedule 2.2 (subject to credit for such un-scheduled or understated accounts
payable as provided in Section 3.3.1). Except for obligations arising from or
related to the Purchased Assets as a result of events first occurring or coming
into existence after the Closing Date and the Accounts Payable (the “Assumed
Liabilities”), Purchaser shall not assume any other liabilities of the Acquired
Business Operations of any Seller Entity.


     2.3 Excluded Assets and Liabilities. Notwithstanding anything to the
contrary contained in this Agreement, Purchaser will not assume or be liable
for, and the respective Seller Entities will retain and remain responsible for,
all of the assets and/or debts, liabilities and obligations of such Seller
Entity, of any nature whatsoever, other than the Assumed Liabilities, whether
accrued, absolute or contingent, whether known or unknown, whether due or to
become due and whether related to the Acquired Business Operations, the
Purchased Assets or otherwise (including, without limitation, liabilities
arising from or relating to events or conditions first occurring or existing on
or prior to the Closing Date), and regardless of when asserted (the “Excluded
Liabilities”).


         2.3.1 Without limiting the scope of Excluded Liabilities under this
Section 2.3, the Excluded Liabilities will specifically include, and Purchaser
shall not acquire:



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             (a) With the exception of certain equipment included in Schedule 2.1.2
hereof, any customers, contracts, accounts receivable, jobs, licenses, and
permits primarily associated with, used in or relating to the business of
collection, handling, transportation, processing and/or disposal of hazardous
waste by any Seller Entity, or (ii) with the exception of the Acquired Cactus
Assets, any of the customers, contracts, accounts receivable, jobs, licenses,
permits, vehicles, equipment or other assets associated with Seller’s Cactus
Environmental business (“Cactus”), which business includes, without limitation,
hazardous and non-hazardous waste transportation, lab packing, emergency
response and spill cleanup, building demolition and debris disposal, site
assessment and/or remediation, plant decommissioning and/or decontamination,
waste analysis and waste characterization services, waste management
consulting, and similar services (the “Excluded Cactus Business”);


             (b) any contracts, agreements, understandings, debts or obligations
between or among any Seller Entities or any of their respective affiliates;


             (c) the stock of any subsidiaries of any Seller Entity (other than the
membership interests in Liquid Waste Handlers of Texas I, LLC or Liquid Waste
Handlers of Texas II, LLC);


             (d) the Excluded Real Property;


             (e) any assets, debts, liabilities or obligations associated with the
Excluded Business Operations;


             (f) the assets listed on Schedule 2.3.1(f) attached hereto;


             (g) any litigation matters; or



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             (h) any claims under Environmental Laws with respect to the Acquired
Business Operations or the Purchased Assets for events or conditions first
occurring or coming into existence on or prior to the Closing Date.


3. CONSIDERATION.


     3.1 Purchase Price; Preliminary Agreement for Allocation. The purchase
price payable by Purchaser for the Purchased Assets (the “Purchase Price”) is
Fifteen Million Dollars ($15,000,000), subject to adjustment as provided in
Section 3.3 below. On the Closing Date, Purchaser and Seller will agree upon
and execute a preliminary allocation schedule allocating the Purchase Price on
IRS Form 8594 (the “Allocation Schedule”), which will be prepared in accordance
with Section 1060 of the Code and the regulations thereunder. Purchaser and
Seller agree to finalize the Allocation Schedule after the Closing once the
Retention Amount (as described in Section 3.4) is fully utilized by Purchaser
or paid to Seller. The preliminary Allocation Schedule will be attached hereto
as Schedule 3.1. Following agreement on the finalized Allocation Schedule,
Purchaser and Seller each agree to file Internal Revenue Service Form 8594 in
accordance with IRS regulations.


     3.2 Scheduled Payments. Purchaser has deposited in the IOLTA Trust
Account of Seller’s counsel the sum of Two Hundred Fifty Thousand Dollars
($250,000) in conjunction with the parties’ execution of the Letter of Intent;
which deposit will be credited against the Purchase Price at the Closing.
Purchaser shall pay the remainder of the Purchase Price to Seller on or before
the dates specified below:


         3.2.1 Thirteen Million Dollars ($13,000,000) at the Closing, subject to
adjustment as contemplated in Section 3.3 below (the “Closing Payment”). Any
adjustment to the Closing Payment pursuant to Section 3.3 will adjust the
aggregate Purchase Price but not the Retention Amount.



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         3.2.2 Up to One Million Seven Hundred Fifty Thousand Dollars ($1,750,000)
(the “Retention Amount”) subject to satisfaction of the conditions set forth in
Section 3.4 below. The Retention Amount shall be placed in a separate interest
bearing account of Purchaser. Interest accrued on the Retention Amount shall
be distributed ratably according to the distribution of the Retention Amount as
set forth in Section 3.4.


         3.2.3 All payments of the Purchase Price will be made by wire transfer of
immediately available funds based on wire instructions provided by Seller to
Purchaser at least three (3) business days before the Closing. Seller will
notify Purchaser of any changes to such wire instructions at least three (3)
business days before the dates scheduled for payment of the Retention Amounts
under Section 3.4.2.


     3.3 Purchase Price Assumptions and Potential Adjustment of Closing
Payment.


         3.3.1 Subject to the terms set forth below in this Section 3.3, the
Closing Payment may be subject to adjustment as follows:


             (a) The Closing Payment will be increased or decreased on a
dollar-for-dollar basis by the amount by which the Working Capital on the
Closing Date exceeds or falls short of $2,500,000.


             (b) The Purchase Price assumes PP&E has a net book value of $9,368,430 as
reflected in Seller’s fixed asset listing and financial records (the “Fixed
Asset List”) dated as of August 31, 2002. In the event of any purchase, sale
or transfer of any PP&E after August 31, 2002, the Closing Payment will be
increased or decreased on a dollar-for-dollar basis by the amount paid or
received for such purchased or sold item of PP&E or the net book value of any
transferred item of PP&E. Seller will provide Purchaser at the Closing with a
certificate from the Chief Financial Officer of Seller Parent attesting to the
items of PP&E




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purchased, sold or transferred between August 31, 2002 and the Closing
Date, together with documentation supporting each such purchase, sale or
transfer. In the event of any material loss or damage to any item of PP&E
after August 31, 2002, Seller shall assign any proceeds of insurance related
thereto (or the right to receive such proceeds) to Purchaser in accordance with
Section 2.1.12 and the Closing Payment will be increased or decreased on a
dollar-for-dollar basis by the difference, if any, between the amount of such
insurance proceeds (or right thereto) and the net book value of such item of
PP&E as of the date of the loss or damage. A loss or damage shall be material
with respect to PP&E if such loss or damage impairs the value of the asset by
30% or more of its net book value.


         3.3.2 The Purchase Price assumes that Seller will transfer Inventory
associated with the Acquired Business Operations as reflected on Seller’s
balance sheet as of August 31, 2002, with an aggregate net book value of
$24,551 (using the same valuation conventions of Seller in place as of August
31, 2002). This amount shall include only those types of items included in
Inventory as of August 31, 2002 or listed on Schedule 2.1.15. The Closing
Payment will be increased or decreased by the amount by which the aggregate net
book value of the Inventory listed on Schedule 2.1.15 exceeds or falls short of
$24,551.


     3.4 Retention Amounts.


         3.4.1 The Retention Amount will be utilized by Purchaser, or paid to
Seller, as provided in this Section 3.4. The Retention Amount, if
insufficient, will not serve as a cap or limit on the Purchaser’s ability to
seek a remedy for any claims associated with the Accounts Receivable, Accounts
Payable, any environmental liability, or any title or survey defects on the
Acquired Real Property.



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         3.4.2 Up to Five Hundred Thousand Dollars ($500,000) of the Retention
Amount will be used to compensate Purchaser for any Accounts Receivable that
remain uncollected as of ninety (90) days after the Closing Date and for any
payments made by Purchaser with respect to Accounts Payable incurred by Seller
or Seller Parent prior to the Closing Date but not included on Schedule 2.2.
Accounts Receivable not collected as of ninety (90) days after the Closing Date
may be deducted from the $500,000 Retention Amount on a dollar-for-dollar
basis, in Purchaser’s sole discretion, or may be retained by Purchaser, in
which case Seller Entities shall have no further obligation to Purchaser with
respect to such retained Accounts Receivable. The amount of any Accounts
Payable incurred prior to the Closing Date but not identified in Schedule 2.2
may be deducted from the $500,000 Retention Amount on a dollar-for-dollar basis
if Purchaser elects to assume such un-identified Accounts Payable in
Purchaser’s sole discretion. The calculation of Accounts Receivable and/or
Accounts Payable to be deducted from this Retention Amount will be made by
Purchaser within one hundred four (104) days after the Closing Date and any
unused portion of this $500,000 Retention Amount must be remitted to Seller
before the end of that one hundred four (104) day period together with any
interest accrued on the amount so remitted from the Closing Date to the
remittance date. Uncollected Accounts Receivable charged against the $500,000
Retention Amount shall be promptly reassigned to Seller by Purchaser.
Purchaser shall use good faith and reasonable collection efforts to collect the
Accounts Receivable.


         3.4.3 Up to One Million Two Hundred Fifty Thousand Dollars ($1,250,000) of
the Retention Amount will be used by Purchaser for the purposes described in
Section 3.4.3(a) below (the “Environmental Retention”). No more than twenty
percent (20%) of the Environmental Retention may be used to address title or
survey defects.



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             (a) The Environmental Retention may be used by Purchaser for the following
purposes:


                 (i) To cover the costs of any required remediation of Acquired Real
Property, or re-inspections following remediation of Acquired Real Property,
recommended by Purchaser’s environmental inspection reports. Required
remediation shall include only such matters or conditions constituting a
non-compliance with, or requiring remediation pursuant to, applicable
Environmental Laws and shall be remediated only to the extent reasonably
necessary to bring such matters or conditions into compliance with such
Environmental Laws. Notwithstanding the foregoing, with respect to the Mesa
Processing facility located at 11115 Goodnight Lane, Dallas, Texas (the “Mesa
Facility”), (i) the required remediation will include the reasonable costs of
procuring an innocent owner certification from the Texas Environmental Quality
Commission for the benefit of Purchaser, which costs (a) shall not exceed
$40,000 and (b) shall not include costs associated with the phase I and phase
II audits and reports conducted by Purchaser prior to the Closing Date, and
(ii) the required remediation will not include any costs associated with any
remediation or cleanup of contamination on the Mesa Facility that was not
caused by or the result of operations of any Seller Entities thereupon or the
failure of the Mesa Facility to comply with Centralized Waste Treatment
requirements. With Purchaser’s reasonable approval, Seller Entities may use
qualified, in-house personnel to perform the remediation, however, in such
case, the Environmental Retention shall be applied to cover the cost of any
independent re-inspection requested by Purchaser; and/or


                 (ii) To cure title or survey defects with respect to the Acquired Real
Property.



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             (b) Any unused portion of the Environmental Retention shall be released to
Seller on the earlier of (i) a determination that the condition of all Acquired
Real Property is compliant with, including, without limitation, meeting or
exceeding an applicable clean up standard pursuant to, applicable Environmental
Laws (either because Purchaser’s environmental investigation verified
compliance or because remediation and re-inspection has verified compliance),
or (ii) three (3) months from the Closing Date; provided, however, that a
reasonable portion of the Environmental Retention may be retained by Purchaser
following the third month after the Closing Date to the extent such funds are
necessary to pay amounts likely to be incurred in remediating any required
remediation event identified by Purchaser in its environmental investigation
(where such remediation is not yet complete) or to complete resolution of title
or survey defects; provided further, however, that following the completion of
such required remedial activities, any unused portion of the Environmental
Retention shall be promptly paid to Seller. Interest accruing on that portion
of the Environmental Retention paid to Seller also will be paid to Seller.


         3.4.4 Any disputes between Purchaser and Seller or Seller Parent regarding
the use of the Retention Amounts will be resolved according to the provisions
of Section 19 herein regarding dispute resolution.


4. TRANSFER OF EMPLOYEES AND EMPLOYEE BENEFITS.


     4.1 Workers’ Compensation. Without limiting the scope of Excluded
Liabilities under Section 2.3, Seller shall be responsible for any workers’
compensation claims based on injuries initially occurring prior to the Closing
Date regardless of the date on which the claim was filed or whether subsequent
injuries occurred, and Seller and Seller Parent shall jointly and severally
indemnify, defend and hold Purchaser harmless against any and all losses,
damages, costs and expenses (including, without limitation, reasonable
attorneys’ fees and related




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expenses) arising out of or relating to all such claims in accordance with
Section 12.1 hereof. Seller represents and warrants that no workers’
compensation claims are currently filed or pending against Seller other than
those set forth in Schedule 4.1. Purchaser shall be responsible for all
workers’ compensation claims based on injuries initially occurring on and after
the Closing Date (and unrelated to an injury occurring prior to the Closing
Date) and shall indemnify, defend and hold Seller harmless against any and all
losses, damages, costs and expenses (including, without limitation, reasonable
attorneys’ fees and related expenses) arising out of or relating to all such
claims in accordance with Section 12.2 hereof.


     4.2 Transfer of Employees. Purchaser has the right, but not the
obligation, to hire any or all of the employees working in the Acquired
Business Operations and listed on Schedule 4.2 (the “Available Employees”).
Also set forth on Schedule 4.2 is a list of all of the Available Employees who
Purchaser desires to employ on the Closing Date (the “Hired Employees”).
Seller shall not hinder or discourage any of the Hired Employees from accepting
employment with Purchaser. Notwithstanding the foregoing, Purchaser will not
have any continuing obligation after the Closing Date to employ or continue the
employment of any Hired Employee, or to maintain the compensation of any Hired
Employee at any particular level.


     On the Closing Date, Seller will terminate all of the Hired Employees and
will ensure full and final payment to such Hired Employees of all salary,
commissions, accrued bonuses payable under the applicable Seller Entity bonus
program to the extent and at the time Seller is obligated to pay such bonuses
(based on annualized performance and assuming completion of service by the
Hired Employees through December 31, 2002, but pro-rated to the Closing Date),
any severance payments, and benefits (including accrued vacation and personal
time off) payable as of such termination date. Seller Entities and Purchaser
will cooperate to transition the Hired




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Employees to Purchaser’s benefit programs so as to minimize (to the extent
reasonably possible) the loss of benefits of the Hired Employees. In
furtherance of the foregoing, Seller Entities agree not to request termination
of Hired Employees from their existing 401(k) plan prior to December 31, 2002.
Except as otherwise set forth in this Section 4.2, the Seller Entities are
solely responsible for any liability which may arise under the Worker
Adjustment and Retraining Notification Act, 29 U.S.C. § 2101 et seq (the “WARN
Act”) as a result of any acts or omissions of the Seller Entities prior to the
Closing Date or the transactions contemplated by this Agreement and will,
jointly and severally, indemnify, defend and hold Purchaser harmless from any
and all losses, damages, costs and expenses (including, without limitation,
reasonable attorneys’ fees and related expenses) arising out of or relating to
Seller Entities’ responsibilities under the WARN Act. Purchaser shall be
solely responsible for any liability which may be required or arise under the
WARN Act as a result of any acts or omissions of Purchaser following the
Closing Date and will indemnify, defend and hold Seller harmless from any and
all losses, damages, costs and expenses (including, without limitation,
reasonable attorneys’ fees and related expenses) arising out of or relating to
Purchaser’s responsibilities under the WARN Act.


     4.3 Seller Employee Benefit Plans. Purchaser shall have no obligation to
continue or to make any contribution or payment with respect to any Employee
Benefit Plan. Seller shall indemnify, defend and hold Purchaser harmless
against any and all losses, damages, costs and expenses (including, without
limitation, reasonable attorneys’ fees and related expenses) arising out of or
relating to any Employee Benefit Plan in accordance with Section 12.1 hereof.


5. THE CLOSING.


     5.1 The Closing. The “Closing” means the time at which the Seller
Entities shall effect the sale of the Purchased Assets as contemplated by this
Agreement to Purchaser. Subject




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to satisfaction or waiver in writing of each and every condition to
Closing in Sections 9 and 10, and unless otherwise agreed by the parties, the
Closing shall take place at the offices of USL, 411 N. Sam Houston Parkway
East, Suite 400, Houston Texas, on or before November 1, 2002. The “Closing
Date” shall be the date on which the Closing occurs. The Closing shall be
effective for all purposes under this Agreement as of 12:01 a.m. Central
Standard Time on the Closing Date (the “Effective Time”).


     5.2 Seller Entity Deliveries at Closing. Subject to fulfillment or
written waiver of the conditions set forth in Section 10, at the Closing,
Seller or the appropriate Seller Entity will deliver to Purchaser all of the
following:


         5.2.1 certificates of a manager of each limited liability company
constituting Seller dated the Closing Date, in form and substance reasonably
satisfactory to Purchaser (i) attaching true and correct copies of the
organizational documents for such limited liability company and a resolution of
the Board of Managers of such limited liability company authorizing the
execution and performance of this Agreement, and all related agreements
referenced herein and the transactions contemplated hereby; and (ii) containing
incumbency certificates for the individuals authorized to execute this
Agreement and all related agreements on behalf of such limited liability
company;


         5.2.2 a certificate of the Chief Executive Officer and Secretary of Seller
Parent and USL dated the Closing Date, in form and substance reasonably
satisfactory to Purchaser (i) attaching true and correct copies of the Articles
of Incorporation for each of Seller Parent and USL and a resolution of the
Board of Directors of Seller Parent and USL authorizing the execution and
performance of this Agreement and the transactions contemplated hereby; (ii)
attaching a true and correct copy of the Bank Approval; and (iii) containing
incumbency




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certificates for the individuals authorized to execute this Agreement and
all related agreements on behalf of Seller Parent and USL;


         5.2.3 a Bill of Sale substantially in the form of Exhibit A hereto duly
executed by Seller;


         5.2.4 an Assignment and Assumption Agreement substantially in the form of
Exhibit B hereto duly executed by Seller and Seller Parent;


         5.2.5 warranty deeds and commitments for title insurance (obtained at
Seller’s expense) with respect to each parcel of Acquired Real Property that is
not merely a leasehold interest substantially in the form of Exhibit D hereto
duly executed by Seller or Seller Parent, as applicable, and in proper form for
recording;


         5.2.6 an opinion of counsel to the Seller Entities substantially in the
form of Exhibit E hereto.


         5.2.7 certificates of title or origin (or like documents) with respect to
any property included in the Purchased Assets for which a certificate of title
or origin is required in order to transfer title;


         5.2.8 the closing certificate contemplated by Section 9 hereof;


         5.2.9 the Facility Use and Access Agreement for the Singleton Property
substantially in the form of Exhibit F duly executed by Seller;


         5.2.10 certificates representing all of the outstanding membership
interests of Liquid Waste Handlers of Texas I, LLC duly endorsed by Seller or
Seller Parent, as applicable, in favor of Purchaser;


         5.2.11 evidence of consents from Seller’s customers, to the extent
required by contract, and all such other executed endorsements, assignments,
and other instruments of




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transfer and conveyance consistent with the terms of this Agreement and as
may be requested by Purchaser, in form and substance reasonably satisfactory to
counsel for Purchaser, to effectively vest in Purchaser all of the right, title
and interest of Seller in the Purchased Assets, free and clear of all Liens
including, without limitation, releases of the Purchased Assets from any
lending or financing arrangements;


         5.2.12 separate financial statements, balance sheets and statements of
income for the Acquired Business Operations as of the end of the month
preceding the Closing Date (the “Financial Statements”). Within twenty (20)
days following the Closing Date, Seller shall also furnish Purchaser with
financial statements, balance sheets and statements of income for the Acquired
Business Operations as of the Closing Date;


         5.2.13 the Transition Services Agreement substantially in the form of
Exhibit G duly executed by Seller;


         5.2.14 the Software License substantially in the form of Exhibit H; and


         5.2.15 a copy of the Agreement with Eric Warden described in Section 8.3
herein.


     5.3 Purchaser Deliveries at Closing. Subject to fulfillment or written
waiver of the conditions set forth in Section 9, at the Closing, Purchaser
shall deliver to Seller Entities all of the following:


         5.3.1 the Closing Payment (as adjusted) as provided in Sections 3.2 and
3.3;


         5.3.2 a certificate of the general partner of Purchaser, dated the Closing
Date, in form and substance reasonably satisfactory to Seller and Seller
Parent, (i) attaching a true and correct copy of the limited partnership
agreement of Purchaser and the action of the general partner of Purchaser
authorizing the execution and performance of this Agreement, all related




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agreements referenced herein and the transactions contemplated hereby; and
(ii) containing incumbency certificates for the individuals authorized to
execute this Agreement and all related agreements on behalf of Purchaser;


         5.3.3 the Assignment and Assumption Agreement substantially in the form of
Exhibit B duly executed by Purchaser;


         5.3.4 the closing certificate contemplated by Section 10;


         5.3.5 the Software License substantially in the form of Exhibit H;


         5.3.6 the Facility Use and Access Agreement for the Singleton Property
substantially in the form of Exhibit F and duly executed by Purchaser;


         5.3.7 an opinion of counsel of the Purchaser substantially in the form of
Exhibit I hereto; and


         5.3.8 the Transition Services Agreement substantially in the form of
Exhibit G and duly executed by Purchaser.


6. REPRESENTATIONS OF SELLER ENTITIES.


     As an inducement to Purchaser to enter into this Agreement and to
consummate the transactions contemplated by this Agreement, Seller Entities,
jointly and severally, represent to Purchaser and agree as follows:


     6.1 Organization and Valid Existence. Each of the limited liability
companies which constitute Seller, is a limited liability company duly
organized and validly existing under the laws of the State of Texas. Seller
Parent is a corporation duly organized and validly existing under the laws of
the State of Texas. USL is a corporation duly organized and validly existing
under the laws of the State of Delaware. Each Seller Entity has the full power
and authority to carry on the Acquired Business Operations as they are now
being conducted and to enter into and perform this Agreement and all related
documents referenced herein and to which each such




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Seller Entity is a party (collectively, the “Seller Transaction
Documents”). Seller Parent owns all of the outstanding membership interests of
each of the limited liability companies which constitute Seller.


     6.2 Corporate Authority. The execution and delivery of the Seller
Transaction Documents and the consummation of the transactions contemplated
thereby have been duly authorized by the appropriate Seller Entity. The Seller
Transaction Documents and all other agreements and written obligations entered
into or undertaken in connection with the transactions contemplated thereby
constitute the valid and legally binding obligations of the appropriate Seller
Entity enforceable against such Seller Entity in accordance with their
respective terms, except as may be limited by the Enforceability Limitations.


     6.3 No Violations. Neither the execution or delivery of the Seller
Transaction Documents, the consummation of any of the transactions contemplated
thereby, nor the fulfillment of any of the terms thereof, (i) will violate or
conflict with the Articles of Incorporation or Bylaws of USL or Seller Parent
or the Articles of Organization or Operating Agreements of any of the limited
liability companies which constitute Seller, (ii) will result in any breach of
or any default (including events of acceleration, termination or cancellation
or loss of rights) under any provision of any Contract or any other agreement
to which any Seller Entity is a party or by which any Seller Entity is bound or
to which the Purchased Assets are subject, or (iii) will result in a violation
of any statutes, laws, ordinances, rules, regulations or requirements of
Governmental Bodies having jurisdiction over the Acquired Business Operations
or the business of Seller Entities.


     6.4 Conduct of Business; Absence of Certain Changes.



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         6.4.1 Except as disclosed in the Financial Statements or in Schedule 6.4
hereto, from August 31, 2002 (the “Interim Financial Statement Date”) until the
Closing Date, no Seller Entity has:


             (a) had any change in its condition (financial or otherwise) or its
operations which could reasonably be expected to have a Material adverse effect
on the Acquired Business Operations, the Purchased Assets or the Assumed
Liabilities,


             (b) suffered any damage, destruction or loss of physical property (whether
or not covered by insurance) Materially affecting Seller’s or Seller Parent’s
condition (financial or otherwise) or the Acquired Business Operations;


             (c) sold, assigned, transferred or otherwise disposed of, or agreed to
sell, assign, transfer or otherwise dispose of, any assets of Seller or Seller
Parent having a fair market value at the time of sale, assignment, transfer or
disposition of Ten Thousand Dollars ($10,000) or more in the aggregate, or
canceled other than in the ordinary course of business and consistent with past
practice, or agreed to cancel, any debts or claims of Seller or Seller Parent
in the amount of Five Thousand Dollars ($5,000) or more in the aggregate;


             (d) mortgaged, pledged, or subjected to any Lien any of the Purchased
Assets other than Permitted Liens or Liens that will be removed on or prior to
the Closing Date;


             (e) failed to use its commercially reasonable efforts to preserve the
possession and control of the Purchased Assets and the Acquired Business
Operations, to keep in faithful service the present key employees of the
Acquired Business Operations, to preserve the goodwill of the customers,
agents, consultants of, and others having business relations with, the Acquired
Business Operations, and to keep and preserve the Acquired Business Operations
as it is existing on August 31, 2002;



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             (f) increased, or agreed to increase, the compensation or bonuses or
special compensation of any kind of any of the employees, independent
contractors or agents of the Acquired Business Operations over the rate being
paid to them on August 31, 2002, or adopted or increased any benefit under any
insurance, pension or other employee benefit plan, program or arrangement made
to, for or with any such employee, independent contractor or agent over
benefits available on August 31, 2002;


             (g) had any strike, work stoppage or any other labor dispute, controversy
or trouble affecting the Acquired Business Operations;


             (h) changed its method of collecting Accounts Receivable in the ordinary
course of business;


             (i) failed to pay Accounts Payable consistent with practices as of August
31, 2002;


             (j) failed to operate the Acquired Business Operations and maintain the
books, accounts and records of the Acquired Business Operations in the
customary manner and in the ordinary or regular course of business;


             (k) made any change in its accounting methods or practices with respect to
the Acquired Business Operations or the Purchased Assets; or


             (l) incurred any contractual obligation or liability (absolute or
contingent) on behalf of the Acquired Business Operations except current
liabilities incurred and obligations under contracts entered into in the
ordinary course of business;


             (m) entered into any Material transaction, including, but not limited to,
any lease, contract, agreement or understanding on behalf of the Acquired
Business Operations, not in the ordinary course of its business consistent with
past practice.



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         6.4.2 From the date of the Letter of Intent to the Closing Date, each
Seller Entity has:


             (a) duly complied in all Material respects with all laws and regulations
which are applicable to Seller or to the conduct of Acquired Business
Operations;


             (b) maintained all insurance applicable to the Acquired Business
Operations in effect on the date of the Letter of Intent; and


             (c) performed its obligations under all Contracts and agreements relating
to the Acquired Business Operations binding upon it.


     6.5 Title to Purchased Assets. Seller has good and marketable title to
all of the Purchased Assets free and clear of any mortgage, pledge, conditional
sales contract, lien, security interest, right of possession in favor of any
third party, claim or encumbrance (collectively “Liens”), except for Permitted
Liens and Liens which will be removed or accepted by Purchaser in its sole
discretion on or before the Closing. Seller has (or on the Closing will have)
all necessary corporate power and authority to transfer ownership of the
Purchased Assets to Purchaser free and clear of all Liens other than Permitted
Liens.


     6.6 Real Estate. Except as set forth on Schedule 6.6 hereto, no Seller
Entity has received any notice during the twelve (12) months preceding the
Closing Date that the conduct of the Acquired Business Operations on or in any
of the Acquired Real Property is in violation of any provisions of any
applicable deed restrictions, zoning laws, or other governmental ordinances,
orders or regulations in any respect, which violations have or would have an
adverse affect upon the interests of Seller or Seller Parent.


     6.7 Contracts. Schedule 2.1.4 contains a list (and, in the case of oral
agreements, contracts or leases, a summary of the material terms) of (i) all
Material vendor contracts and




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agreements, (ii) all customer contracts and agreements for accounts
generating more than $20,000 in revenues during the period from January 1
through August 31, 2002, (iii) agreements and leases for real or personal
property to which a Seller Entity is a party, and (iv) Material contracts and
agreements other than vendor, customer and real or personal property contracts,
which are related to the Acquired Business Operations or to which the Purchased
Assets may be subject (the “Contracts”). The Contracts are valid, binding and
enforceable by the applicable Seller Entity in accordance with their respective
terms and are in full force and effect except as such enforcement may be
limited by the Enforceability Limitations, provided, however, that Seller
Entities make no representations regarding Purchaser’s ability to enforce any
of the non-competition or non-solicitation provisions set forth on Schedule
2.1.5. Seller has delivered to Purchaser true and complete copies of the
Contracts listed on Schedule 2.1.4 and all amendments thereto, other than those
oral agreements summarized on Schedule 2.1.4. The applicable Seller Entity has
complied in all respects with all of the Contracts and is not in default under
any of the Contracts. No Seller Entity nor, to the Knowledge of Seller, any
other Person is in default in the observance or the performance of any Material
term or obligation to be performed by it under any Contract listed in said
Schedule 2.1.4.


     6.8 Litigation. Except as set forth on Schedule 6.8 hereto, there is no
litigation, proceeding (arbitral or otherwise), claim or investigation of any
nature pending or, to the Knowledge of Seller, threatened against any Seller
Entity relating to the Acquired Business Operations or the Purchased Assets.
Except as set forth on Schedule 6.8 hereto, there are no writs, injunctions,
decrees, arbitration decisions, unsatisfied judgments or similar orders
outstanding against a Seller Entity relating to either the Acquired Business
Operations or the Purchased Assets.



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     6.9 Intellectual Property. Schedule 2.1.6 contains a true and complete
list of all Intellectual Property used in the Acquired Business Operations
other than Intellectual Property used primarily by Seller Entities the Excluded
Business Operations or in their other operations (the “Acquired Intellectual
Property”). The Acquired Intellectual Property included in Schedule 2.1.6 is
included as part of the Purchased Assets. Seller has delivered to Purchaser
copies of all documents (if any) establishing the rights of the Seller
Entities, as applicable, to use the Acquired Intellectual Property.


         6.9.1 Seller owns, or uses under valid and fully paid licenses, all
Acquired Intellectual Property.


         6.9.2 There are no claims or demands, and to the Knowledge of Seller, no
reasonable basis for any such claim or demand, of any Person that any of the
Acquired Intellectual Property infringes or conflicts in any way with any
copyright, patent, trademark, service mark trade name, trade secret, license,
application or other proprietary right or intellectual property of any other
Person, or makes unauthorized use of any secret process, formula, method,
information, know-how, or any other proprietary confidential information,
including, without limitation, any software or software documentation of any
other Person. Seller’s rights in and to the owned Acquired Intellectual
Property are freely assignable, including the right to create derivatives, and
Seller is not under any obligation to pay any royalty or other compensation to
any Person or to obtain approval or consent for use of licensing any of such
Acquired Intellectual Property. All of the interests of Seller in the Acquired
Intellectual Property are free and clear of all Liens other than Permitted
Liens and are not currently being challenged or, to the Knowledge of Seller,
infringed in any way or involved in any pending legal or administrative
proceeding before any Governmental Body. No current licenses for use of the




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Acquired Intellectual Property have been granted by Seller to any Person,
Seller has no obligation to grant licenses or other rights, and to the
Knowledge of Seller, none of such Acquired Intellectual Property is being used
by any other Person.


         6.9.3 No employees or independent contractors of Seller Entities have any
valid claims or rights to any of the Acquired Intellectual Property. To the
Knowledge of Seller, no employee or independent contractor of Seller is a party
to or otherwise bound by any agreement with or obligated to any other Person
(including any former employer) which in any respect conflicts with any
obligation, commitment or job responsibility to which currently he or she is a
party or otherwise.


         6.9.4 Neither Seller nor Seller Parent is or will be, as a result of the
execution and delivery of the Seller Transaction Documents or the performance
of its obligations under the Seller Transaction Documents, in breach of any
license, sublicense or other agreement relating to the Acquired Intellectual
Property or any license, sublicense or other agreement pursuant to which Seller
is authorized to use any third party patents, trademarks or copyrights,
including software, which are used in the creation of, incorporated in, or form
a part of the Acquired Business Operations.


         6.9.5 To the Knowledge of Seller, all rights in the Acquired Intellectual
Property held by Seller are valid and enforceable. Seller (i) is not a party
to any suit, action or proceeding which involves a claim of infringement of any
patent, trademark, service mark or copyright or the violation of any trade
secret or other proprietary right of any third Person; or (ii) has any
Knowledge that the marketing, licensing, sale, offer for sale, or use of any of
its services or products infringes any patent, trademark, service mark,
copyright, trade secret or other proprietary right of any third Person.



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     6.10 Compliance with Laws. The Seller Entities are in compliance in all
Material respects with all federal, state, local and foreign statutes, laws,
ordinances, regulations, rules, permits, judgments, orders or decrees
applicable to Seller, the Acquired Business Operations and the Purchased
Assets.


     6.11 Environmental Matters. Except as set forth on Schedule 6.11 hereto:


         6.11.1 To the Knowledge of Seller, the Acquired Business Operations, the
Purchased Assets and the Acquired Real Property are in compliance with all
applicable Environmental Laws in effect as of the Closing Date, and no Seller
Entity has received notice of a violation, claim or investigation with respect
to any Environmental Law concerning the Acquired Business Operations, the
Purchased Assets and the Acquired Real Property;


         6.11.2 To the Knowledge of Seller, there has been no release of Hazardous
Substances (as defined below) to the air, soil, water or groundwater at, from,
in, on, under, to, or above any of the Acquired Business Operations, the
Purchased Assets or the Acquired Real Property by any Seller Entity, or, to the
Knowledge of Seller, by any Person, except as permitted by Environmental Laws;
and to the Knowledge of Seller, there is no on-site or off-site location to
which a Seller Entity or the Acquired Business Operations have transported or
disposed or arranged for the transportation or disposal of Hazardous Substances
which is the subject of federal, state or local enforcement or other
investigation under any Environmental Law in effect as of the Closing Date.


         6.11.3 There are no Environmental Claims (as defined below) pending or, to
the Knowledge of Seller, threatened against a Seller Entity with respect to any
of the Acquired Business Operations, the Purchased Assets or the Acquired Real
Property; and no Seller Entity has received any written notice or demand letter
from any Governmental Body or any other




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Person, or any requests for information from any Governmental Body, which
allege or indicate that a Seller Entity, the Acquired Business Operations, the
Purchased Assets or the Acquired Real Property may be in violation of, liable
under, or under investigation pursuant to any Environmental Law in effect as of
the Closing Date.


         6.11.4 To the Knowledge of Seller, there are no facts, circumstances, or
other conditions that have occurred or that exist with respect to a Seller
Entity, the Acquired Business Operations, the Purchased Assets or the Acquired
Real Property that could reasonably be expected to impose liability upon any
Seller Entity or, after Closing, upon Purchaser, under any Environmental Law in
effect as of the Closing Date, or under any other legal theory based on injury
to the environment or environmental amenities or on injury to persons or
property due to environmental exposures.


         6.11.5 As used in this Agreement, (A) the term “Environmental Claim” means
any claim, action, investigation or written notice by any Person alleging
potential liability (including, without limitation, potential liability for
investigative costs, cleanup costs, governmental response costs, natural
resource damages, personal injuries, property damage, or administrative, civil,
or criminal penalties) arising out of, based on or resulting from (a) the
presence, or release into the environment, of any Hazardous Substance or (b)
circumstances forming the basis of any violation or alleged violation of any
applicable Environmental Law; and (B) the term “Hazardous Substance” means any
chemicals, pollutants, contaminants, hazardous wastes, toxic substances,
polychlorinated biphenyls, radon, asbestos and oil and petroleum products,
by-products and fractions as those terms are defined in any applicable
Environmental Law.



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     6.12 Employee Benefit Plans. Schedule 6.12 contains a true and complete
list of all Employee Benefit Plans maintained by any Seller Entity for the
benefit of the Available Employees. The Employee Benefit Plans maintained by
any Seller Entity for the benefit of the Available Employees are in compliance
in all Material respects with all applicable laws relating to labor and
employee benefits including, without limitation, all applicable provisions of
ERISA and the Code, any laws relating to wages, termination pay, vacation pay,
fringe benefits, collective bargaining and the payment and/or accrual of the
same and all taxes, insurance and other costs and expenses applicable thereto.


     6.13 Taxes.


     The representations and warranties set forth in this Section 6.13 shall be
subject to the qualifications set forth on Schedule 6.13. Seller Entities are
consolidated entities for federal income tax purposes, and USL has timely filed
all consolidated federal income Tax returns required to be filed on behalf of
the Seller Entities. Each Seller Entity has filed or caused to be filed on
timely basis all Tax returns and all reports with respect to Taxes that are or
were required to be filed by the Seller Entity pursuant to applicable legal
requirements with respect to the Acquired Business Operations. All Tax returns
and reports filed by a Seller Entity were true, correct and complete as of the
date filed. Each Seller Entity has paid, or made provisions for the payment
of, all Taxes that have or may have become due for all periods covered by the
Tax returns or otherwise, or pursuant to any assessment received by the Seller
Entity. No Seller Entity is currently the beneficiary of any extension of time
within which to file any Tax return with respect to the Acquired Business
Operations. No claim has ever been made or is expected to be made by any
Governmental Body in a jurisdiction where a Seller Entity does not file Tax
returns with respect to the Acquired Business Operations that it is or may be
subject to taxation




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by that jurisdiction. There are no encumbrances on any of the Purchased
Assets that arose in connection with any failure (or alleged failure) to pay
any Tax, and to the Knowledge of Seller there is no basis for assertion of any
claims attributable to Taxes which, if adversely determined, would result in
any such encumbrance. There are no Tax liens upon any of the Purchased Assets,
except liens for current Taxes not yet due. Each Seller Entity has withheld
and paid all Taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor, creditor or
other third party of the Acquired Business Operations. The Seller has not at
any time during the Seller’s existence owned any subsidiaries other than Liquid
Handlers of Texas I, LLC or Liquid Handlers of Texas II, LLC.


     6.14 Insurance. Schedule 6.14 contains an accurate and complete
description of all Material insurance policies, including, but not limited to,
environmental, pollution, contractor’s, fire, liability, workmen’s
compensation, errors and omissions and other forms of insurance owned or held
by any Seller Entity for the benefit of Seller. All such policies are in full
force and effect, and a true and correct listing of the claims history since
January 1, 2002 under such policies is set forth on Schedule 6.14.


     6.15 Labor Agreements and Policies. Neither Seller nor any Seller Entity
is a party to or bound by any collective bargaining agreement affecting the
Acquired Business Operations. There are no strikes or other labor disputes or
organizational efforts pending or, to the Knowledge of Seller, threatened
against any Seller Entity that might have a Material adverse affect on the
Acquired Business Operations or the Purchased Assets. Seller Entities are in
compliance with all applicable laws with respect to hours worked, working
conditions and any payments made to the Available Employees.



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     6.16 Licenses and Permits. Schedule 2.1.3 lists all licenses,
registrations, certificates, privileges, immunities, approvals, franchises,
authorizations and permits held or applied for by Seller from any Governmental
Body (the “Permits”). Except as set forth on Schedule 6.16, Seller holds all
required permits, the absence of which could, individually or in the aggregate,
have a Material adverse effect on the Acquired Business Operations or the
Purchased Assets. The Seller has complied in all Material respects with the
terms and conditions of all such Permits, and the Seller has not received
notification from any such Governmental Body of violation of any such Permit or
other requirement of law governing the issuance or continued validity thereof.
All of such Permits are valid and in full force and effect and, except as set
forth on Schedule 6.16 are transferable to Purchaser in accordance with the
terms of this Agreement. To the Knowledge of Seller, no additional Permit is
required from any Governmental Body in connection with the transfer of the
Purchased Assets to Purchaser and Purchaser’s conduct of the Acquired Business
Operation which Permit, if not obtained, would have a Material adverse effect
on the Acquired Business Operations.


     6.17 Employees; Employment Matters. Attached hereto as Schedule 6.17 is a
list of all independent contractors and temporary employees of the Acquired
Business Operations. No Seller Entity has any unsatisfied liability to any
previously terminated employee or independent contractor with respect to the
Acquired Business Operations. Seller and Seller Parent have provided true and
correct copies of all written employee handbooks, policies, programs and
arrangements relating to the Acquired Business Operations to Purchaser. Except
as set forth on Schedule 6.17 hereto, all Available Employees are employees at
will or otherwise are employed such that Seller and Seller Parent may terminate
their employment at any time, with or without cause, without creating any
Material cause of action against Seller or Seller Parent or otherwise




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giving rise to any Material liability of a Seller Entity for wrongful
discharge, breach of contract or tort. Each Person whom Seller or Seller
Parent has retained as an independent contractor in connection with the
Acquired Business Operations during the past two years qualifies as an
independent contractor and not as an employee of such Seller Entity under the
Code and all applicable state laws. Neither the execution of this Agreement
nor the consummation of the transactions contemplated hereby will cause any
Seller Entity to be in breach of any agreement with any employee, contractor or
consultant. True and correct copies of all written agreements between any
Seller Entity and any Available Employee, contractor or consultant with respect
to the Acquired Business Operations have been furnished to Purchaser. Seller
and Seller Parent have maintained, and provided to Purchaser prior to the
Closing Date, personnel files on all Available Employees. Except as set forth
in the personnel file of the subject employee or independent contractor or
disclosed on Schedule 6.16 hereto, to the Knowledge of Seller, no Available
Employee has been the subject of allegations or an investigation for financial
irregularities, sexual or other types of harassment or dishonesty in the
workplace.


     6.18 No Finder. No Seller Entity or any Person acting on its behalf has
paid or become obligated to pay any fee or commission to any broker, finder or
intermediary for or on account of the transactions contemplated by this
Agreement or with respect to any Purchased Asset. Seller Entities have in the
past engaged brokers or finders to assist them in the sale of certain assets,
including Banc of America Securities LLC and K.C. Gifford of Keller Williams,
and Seller has furnished to Purchaser true and correct copies of any engagement
or listing agreement that would encumber the Purchased Assets following the
Closing. Seller Entities shall jointly and severally indemnify, defend and
hold harmless Purchaser from any claims by




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such brokers or finders engaged by any of the Seller Entities for any
fees, commissions or other payments as a result of the consummation of the
transactions contemplated by this Agreement.


     6.19 Business Relations. To the Knowledge of Seller, no customer,
supplier or vendor engaged in doing business with Seller in connection with the
Acquired Business Operations will cease to do business with Purchaser after the
consummation of the transactions contemplated hereby in the same manner and at
the same levels as previously conducted with Seller except for any reductions
which, individually or in the aggregate, would not have a Material adverse
effect on the Acquired Business Operations or the Purchased Assets. To the
Knowledge of Seller no notice of cancellation of any Material Contract or
Material business arrangement (other than termination due to expiration of the
term as set forth in such contract) with any Person has been given, and to the
Knowledge of Seller, no facts exist which could lead a Seller Entity to
believe that the Acquired Business Operations will be subject to cancellation
of any such Contract or business arrangement. Attached hereto as Schedule
6.19(A) is a complete list of all customers that generated at least $10,000 in
annual revenues to Seller in any of the last three (3) years. Attached hereto
as Schedule 6.19(B) is a list of all customers with billings in 2002 in excess
of $5,000. Since August 31, 2002, no customer of the Acquired Business
Operations accounting for more than $5,000 of revenues in fiscal 2002 pursuant
to a written agreement has canceled or given written notice to Seller of the
cancellation of such contract prior to the expiration of such term.


     6.20 Warranty. All services rendered by Seller have been in Material
conformity with all applicable contractual commitments and all applicable
warranties of Seller, and Seller has no liability for damages in connection
therewith.



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     6.21 Sufficiency of Assets. Except as set forth in Schedule 6.21, the
Purchased Assets constitute all of the assets, tangible and intangible, of any
nature whatsoever, necessary to operate the Acquired Business Operations in the
manner presently operated by Seller.


     6.22 Description of Owned Real Property. Schedule 6.22 contains a correct
legal description and street address of all Acquired Real Property in which
Seller has an ownership interest.


     6.23 Description of Leased Real Property. Schedule 6.23 contains a
correct legal description (if available) and street address of all Acquired
Real Property in which Seller has a leasehold interest and Purchaser has been
furnished with a true and correct copy of all Acquired Real Property leases.


     6.24 Schedules. Any information set forth in or attached to any Schedule
delivered or required to be delivered pursuant to this Agreement shall be
deemed to constitute disclosure for any other Schedule delivered or to be
delivered pursuant to this Agreement.


     6.25 Accuracy of Disclosure. No representation or warranty made by any
Seller Entity in this Agreement, and no exhibit, certificate, schedule,
document, list or instrument prepared, made or delivered, or to be prepared,
made or delivered, by or on behalf of any Seller Entity pursuant hereto
contains or will contain any untrue statement of a Material fact or omits or
will omit to state a Material fact necessary to make the statements contained
herein and therein not misleading.


     6.26 No Other Warranties or Representations. SUBJECT TO THE EXPRESS
REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS SECTION 6 AND THE COVENANTS
CONTAINED IN THIS AGREEMENT, NO SELLER ENTITY MAKES ANY WARRANTY REGARDING THE
CONDITION OF THE PURCHASED ASSETS, THE




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HABITABILITY OF ANY LAND IMPROVEMENTS, THAT ANY OF THE PURCHASED ASSETS
ARE MERCHANTABLE OR FIT FOR ANY PARTICULAR PURPOSE NOR IS THERE ANY OTHER
WARRANTY WITH RESPECT THERETO, EXPRESS OR IMPLIED; THE PURCHASED ASSETS ARE
BEING SOLD TO PURCHASER ON AN “AS IS” “WHERE IS” BASIS.


7. REPRESENTATIONS OF PURCHASER. PURCHASER REPRESENTS AND WARRANTS TO

SELLER ENTITIES:


     7.1 Organization and Authority. Purchaser is a limited partnership duly
organized, validly existing and in good standing under the laws of the State of
Texas, has all requisite partnership power and authority to own its properties,
to carry on its businesses as now being conducted, to execute and deliver this
Agreement and all related agreements referenced herein to which Purchaser is a
party (collectively, the “Purchaser Transaction Documents”) and to consummate
the transactions contemplated hereby. The Purchaser Transaction Documents
entered into or undertaken in connection with the transactions contemplated
hereby constitute the valid and legally binding obligations of Purchaser
enforceable against Purchaser in accordance with their respective terms, except
as such enforcement may be limited by the Enforceability Limitations.


     7.2 Authorization of Agreement. The execution and delivery of the
Purchaser Transaction Documents by Purchaser, and the consummation by Purchaser
of all obligations contemplated thereby, have been duly authorized by all
requisite partnership action.


     7.3 Litigation; Compliance with Law. There is no litigation, proceeding
(arbitral or otherwise), claim or investigation of any nature, pending, or to
the actual knowledge of an executive officer of Purchaser’s general partner,
threatened, against Purchaser that reasonably




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could be expected to adversely affect Purchaser’s ability to perform in
accordance with the terms of the Purchaser Transaction Documents.


     7.4 No Finder. Neither Purchaser, nor any Person acting on its or their
behalf has paid or become obligated to pay any fee or commission to any broker,
finder or intermediary for or on account of the transactions contemplated by
this Agreement or with respect to any Purchased Asset except for US Public
Ventures LLC. Purchaser shall indemnify, defend and hold harmless Seller
Entities from any claims by such brokers or finders engaged by Purchaser, or
any of its affiliates, for any fees, commissions or other payments as a result
of the consummation of the transactions contemplated by this Agreement.


     7.5 Disclosure of Known Breaches. Schedule 7.5 attached hereto and
incorporated herein by this reference is a summary listing of information
obtained by the executive officers of Purchaser’s general partner during
Purchaser’s due diligence review that will not be used by Purchaser as the
basis for a claim that Seller has breached its representations and warranties
under this Agreement. Schedule 7.5 is not an exhaustive or complete listing of
the results of Purchaser’s due diligence efforts, but rather a good faith
identification of the factual matters actually known to such executive officers
on the Closing Date that might serve as the basis for such a claim.


8. POST-CLOSING AGREEMENTS OF SELLER AND PURCHASER.


     The agreements and covenants set forth in this Section 8 will survive the
Closing for periods specified herein.


     8.1 Covenant Not to Compete. In consideration for the payments to be made
by Purchaser under Section 3 hereof, no Seller Entity will directly or
indirectly engage in, or have any interest in any Person (whether as a security
holder, creditor or otherwise) that engages in any activity that is competitive
with Purchaser for a period of three (3) years from the Closing




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Date with respect to those activities and in those geographic areas
described in the definition of the Acquired Business Operations as of the
Closing Date (the “Restricted Activities”). This non-competition agreement
expressly excludes any restriction on Seller’s conduct of the Excluded Cactus
Business or the Excluded Business Operations, other than the Restricted
Activities. Seller Entities acknowledge that the provisions of this Section
8.1 are reasonable and necessary to protect and preserve Purchaser’s legitimate
business interests and the value of the Purchased Assets and to prevent any
unfair advantage being conferred on Seller Entities. In particular, but
without limitation, no Seller Entity shall (i) solicit any business involving
Restricted Activities of any Person who is a customer of Purchaser; (ii) cause,
induce or attempt to cause or induce any customer, supplier, licensee,
licensor, franchisee, employee, consultant or other business relation of
Purchaser to cease doing business with Purchaser, to deal with any competitor
of Purchaser or in any way interfere with its relationship with Purchaser, in
each case in connection with the Restricted Activities; or (iii) cause, induce
or attempt to cause or induce any customer, supplier, licensee, licensor,
franchisee, employee, consultant or other business relation of Seller on the
Closing Date or within the year preceding the Closing Date to cease doing
business with Purchaser, to deal with any competitor of Purchaser or in any way
interfere with its relationship with Purchaser, in each case in connection with
the Restricted Activities. The covenant contained in this Section 8.1 is a
series of separate covenants for each jurisdiction in which the Acquired
Business Operations are conducted. Except for geographic coverage, each
separate covenant will be considered identical in terms to the covenant
contained in Section 8.1. If a final judgment of a court or tribunal of
competent jurisdiction determines that any term or provision contained in this
Section 8.1 is invalid or unenforceable, then the Parties agree that the court
or tribunal will have the power to reduce the scope, duration or geographic
area of the term or




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provision, to delete specific words or phrases or to replace any invalid
or unenforceable term of provision with a term or provision that is valid and
enforceable and that comes closest to expressing the intention of the invalid
or unenforceable term or provision.


     8.2 Non-Solicitation. With respect to the Hired Employees, Seller
Entities shall not, directly or indirectly, for a period of one (1) year from
the Closing Date with respect to hourly Hired Employees and for a period of two
(2) years from the Closing Date with respect to salaried Hired Employees, hire,
retain or attempt to hire or retain any Hired Employee of Purchaser or in any
way interfere with the relationship between Purchaser and any of the Hired
Employees. The foregoing restriction shall not apply to any Hired Employees
actually discharged or terminated by Purchaser after the Closing Date. If a
final judgment of a court or tribunal of competent jurisdiction determines that
any term or provision contained in this Section 8.2 is invalid or
unenforceable, then the Parties agree that the court or tribunal will have the
power to reduce the scope, duration or geographic area of the term or
provision, to delete specific words or phrases or to replace any invalid or
unenforceable term of provision with a term or provision that is valid and
enforceable and that comes closest to expressing the intention of the invalid
or unenforceable term or provision. This Section 8.2 is reasonable and
necessary to protect and preserve Purchaser’s legitimate business interests and
the value of the Purchased Assets and to prevent any unfair advantage conferred
by Seller.


     8.3 Seller Arrangement with Eric Warden; Access to Eric Warden. Prior to
the Closing Date, a Seller Entity shall enter into a written arrangement to
retain the exclusive services of Eric Warden at the Seller Entity’s sole cost
and expense with respect to matters relating to the Acquired Business
Operations for a minimum of two (2) years from the Closing Date. A copy of
such written arrangement will be furnished to Purchaser on the Closing Date.




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     For so long as Eric Warden is employed with or engaged as a consultant by
a Seller Entity, Purchaser may, on an “as-available” basis during the first
ninety (90) days following the Closing Date and at a rate of $75 per hour
payable to such Seller Entity, utilize the services of Eric Warden in
connection with the transition of the Acquired Business Operations and the
Purchased Assets.


     8.4 Access to Properties and Records. From and after the Closing Date and
for a period of three (3) years thereafter, Seller Entities shall afford to the
officers, employees, attorneys, accountants and other authorized
representatives of Purchaser, reasonable access, upon reasonable notice and
during normal business hours, to all employees, books and records retained by
Seller Entities related to the Acquired Business Operations so that Purchaser
may have reasonable opportunity to make such investigation as it shall desire
to make of the Acquired Business Operations and the Purchased Assets for the
purpose of preparing financial statements, tax returns and other proper
corporate activities. Purchaser shall be permitted to make abstracts from, or
copies of, such books and records at Purchaser’s sole cost.


     8.5 Confidentiality. For a period of one (1) year from the Closing Date,
each of the parties hereto agrees that it will treat in confidence this
Agreement and all documents, materials and other information which it may have
obtained regarding the other party during the course of the negotiations
leading to the preparation of this Agreement and other related documents. If a
party (the “Recipient”) is requested or required (by oral questions,
interrogatories, requests for information or documents, subpoena, civil
investigative demand or similar process) to disclose the confidential
information of another party (the “Disclosing Party”), the Recipient must
provide the Disclosing Party with prompt notice of such request(s) so the
Disclosing Party may seek an appropriate protective order or other appropriate
remedy and/or waive compliance with




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the confidentiality provisions of this Agreement. In the event that such
protective order or other remedy is not obtained, or the Disclosing Party
grants a waiver hereunder, the Recipient may furnish that portion (and only
that portion) of the confidential information which it is legally compelled to
disclose and must exercise its reasonable efforts to obtain reliable assurance
that confidential treatment will be accorded any confidential information so
furnished. The obligation of each party to treat such documents, materials and
other information in confidence shall not apply to any information which (i) is
or becomes available to such party from a source other than such party, (ii) is
or becomes available to the public other than as a result of disclosure by such
party or its agents, (iii) is required to be disclosed under applicable law or
judicial process, but only to the extent it must be disclosed, (iv) such party
reasonably deems necessary to disclose to obtain any of the consents or
approvals contemplated hereby, or (v) is required to be disclosed pursuant to
applicable laws or the rules or regulations of the US Securities and Exchange
Commission or any national securities market host or exchange with which
securities of any party are listed.


     8.6 Taxes. Seller and Seller Parent shall be jointly and severally liable
for and shall pay all Taxes (whether assessed or unassessed) applicable to the
Acquired Business Operations and the Purchased Assets, in each case
attributable to periods (or portions thereof) ending on or prior to the Closing
Date including (i) all income Taxes of Seller Entities arising in connection
with the consummation of the transactions contemplated by this Agreement and
(ii) any liability of a Seller Entity for the unpaid Taxes of any Person under
Treasury Regulation Section 1.1502-6 (or any similar provision of state, local
or foreign law) as a transferee or successor (by contract or otherwise).
Purchaser shall pay or deliver to Seller on the Closing Date cash equal to the
amount of all Taxes accrued (whether or not yet due) with respect to any
Acquired Real Property




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or personal property included in the Purchased Assets from the Closing
Date through December 31, 2002 in an amount to be mutually agreed by Purchaser
and Seller on or before the Closing Date. Such payment will be deposited in
the IOLTA Trust account of Sellers’ counsel, and held until the Taxes are due
and payable. Seller Entities shall be jointly and severally liable for the
payment of all such Taxes for fiscal year 2002 and will, jointly and severally,
indemnify, defend and hold Purchaser harmless from any and all losses, damages,
costs and expenses (including, without limitation, reasonable attorneys’ fees
and related expenses) arising out of or relating to Seller Entities’ failure to
pay all such Taxes; such indemnification obligation exists without regard to
the $50,000 limitation on indemnification claims set forth in Section 12.3
hereof. All such Taxes shall be reflected on Schedule 8.6. Except as otherwise
provided in this Section 8.6, Purchaser shall be liable for and shall pay all
Taxes (whether assessed or unassessed) applicable to the Acquired Business
Operations, the Purchased Assets and the Fleet Ownership LLCs, in each case
attributable to periods (or portions thereof) beginning after the Closing Date.
For purposes of this Section 8.6, any period beginning before and ending after
the Closing Date shall be treated as two partial periods, one ending on the
Closing Date and the other beginning after the Closing Date, except that Taxes
(such as Taxes on Acquired Real Property) imposed on a periodic basis shall be
allocated on a daily basis. Notwithstanding the foregoing, any sales Tax, use
Tax, real property transfer or gains Tax, documentary stamp Tax or similar Tax
attributable to the sale or transfer of the Purchased Assets shall be paid by
Purchaser. Seller Entities shall use commercially reasonable efforts to
cooperate and assist Purchaser in establishing an exemption from (or otherwise
reducing), or making a report with respect to, such Taxes. Seller Entities or
Purchaser, as the case may be, shall provide reimbursement for any Tax paid by
one party all or a portion of which is the responsibility of the other party in
accordance with the terms




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of this Section 8.6. Within a reasonable time prior to the payment of any
said Tax, the party paying such Tax will give notice to the other party of the
Tax payable and the portion of which is the liability of the each party,
although failure to do so will not relieve the other party from its liability
hereunder. This Section 8.6 will survive the Closing for a period of seven (7)
years.


     8.7 Further Assurances.


         8.7.1 From and after the Closing Date, Seller Entities shall take all such
steps as may be necessary to put Purchaser in actual possession and operating
control of the Purchased Assets, and Seller agrees that at any time or from
time to time (without further cost or expense to Purchaser) after the Closing
Date, upon the request of Purchaser, Seller Entities will execute, acknowledge
and deliver such other instruments of conveyance and transfer and take such
other action as may be reasonably required to vest in Purchaser good and
marketable title to any of the Purchased Assets.


         8.7.2 To the extent any Seller Entity receives any funds or other assets
related to the Acquired Business Operations and that are part of the Purchased
Assets (the “Purchaser Funds”) after the Closing Date, such Seller Entity will
as soon as practicable deliver such Purchaser Funds to Purchaser and will take
all steps necessary to vest title to such funds and assets in Purchaser. The
Seller Entities hereby designate Purchaser as their true and lawful
attorney-in-fact, with full power of substitution, to execute or endorse for
the benefit of Purchaser any checks, notes or other documents received by
Seller Entities in connection with either the Accounts Receivable or any
Purchaser Funds which are not subject to a good faith dispute by Seller and
Purchaser. Seller Entities hereby acknowledge and agree that the power of
attorney set forth in the preceding sentence is coupled with an interest, and
further agree to




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execute and deliver to Purchaser from time to time any documents or
instruments reasonably requested by Purchaser to evidence such power of
attorney.


         8.7.3 Credits due to customers of the Acquired Business Operations as of
the Closing Date will be reflected on Schedule 2.1.7. Seller Entities shall be
responsible for the payment of (i) any credit not listed on Schedule 2.1.7 or
(ii) any credit listed on Schedule 2.1.7, but with a value greater than that
listed on Schedule 2.1.7.


         8.7.4 At any time or from time to time after the Closing, each party
hereunder shall, at the request of the other, execute and deliver any further
instruments or documents and take all such further action as such party may
reasonably request in order to carry out the transactions contemplated hereby.


         8.7.5 If the transfer of any Contract or Permit which is part of the
Purchased Assets and necessary to the Acquired Business Operations requires the
consent of any Person other than Seller, then this Agreement shall not
constitute an agreement to assign the same, and such items shall not be
assigned to or assumed by Purchaser if an actual or attempted assignment
thereof would constitute a breach or default thereunder. Seller and Purchaser
shall use their reasonable best efforts to obtain such consents to the extent
required of such other Persons. If any such consent cannot be obtained as of
the Closing Date, Seller will cooperate in any reasonable arrangement designed
to obtain for Purchaser all benefits and privileges of the applicable Contract
or Permit without limitation on the conduct of the Acquired Business Operations
while also protecting Seller from continuing liabilities or obligations
thereunder.


     8.8 Retained Information. For a period of three (3) years after the
Closing, to the extent not prohibited by law or restricted by applicable
ethical rules, Purchaser shall make available to Seller Entities any business
records related to the operations of Seller prior to the




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Closing which are transferred to Purchaser at the Closing (the
“Transferred Business Records”) for inspection and copying to the extent Seller
Entities require access to such records in response to tax audits or other
reasonable business necessity as reasonably determined by Seller Entities.
Seller’s access to the Transferred Business Records is subject to the
confidentiality obligations of Seller Entities under Section 8.5 hereof.


     8.9 Transfer of Lease Program and Liened Rolling Stock. As soon as
practicable following the Closing Date, Seller Entities shall, at their sole
cost and expense, procure the release of all rolling stock currently pledged to
and held under the lease program with Fleet Bank or subject to liens of Bank of
America or any other Person as set forth on Schedule 6.5 hereto and transfer
such rolling stock to Liquid Waste Handlers of Texas II, LLC. Upon completion
of the transfer of all such rolling stock to Liquid Waste Handlers of Texas II,
LLC, all of the membership interests in such entity shall be transferred,
without additional consideration to Purchaser. Prior to such transfer, all
rolling stock currently encumbered under the Fleet Bank lease program or liens
of Bank of America or any other Person as set forth on Schedule 6.5 hereto
shall be subleased to Purchaser for an annual lease payment of $1.


     8.10 Revocation of Permits. Following the Closing Date, Seller shall use
commercially reasonable efforts to terminate all existing permits to operate
Seller’s ETS and Houston Reclaim waste treatment facilities. Until such
termination, Seller agrees that it shall not sell or transfer the ETS or
Houston Reclaim permits to any other Person or permit the operation of the ETS
or Houston Reclaim waste treatment facilities by any Person under such permits.


9. CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER.


     The obligations of Purchaser under this Agreement are subject, at the
Closing, to the fulfillment in all material respects of the following
conditions precedent, each of which may be waived in writing at the sole
discretion of Purchaser. Seller Entities must deliver a certificate




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executed by a manager of each of the limited liability companies that
constitutes Seller and a certificate executed by the Chief Executive Officer
and Secretary of Seller Parent and USL certifying the satisfaction in all
respects of the conditions precedent set forth in this Sections 9.2 through
9.910.


     9.1 Due Diligence. Financial, legal and environmental due diligence of
the Acquired Business Operations, the Purchased Assets and the Assumed
Liabilities will have been satisfactorily completed by Purchaser.


     9.2 Transfers Effected. Transfer of all assignable Permits shall have
been effected, or reasonable accommodations made in lieu of such transfers
pursuant to the Transition Services Agreement shall have been made.


     9.3 Removal of Waste. Seller shall have removed or caused to be removed,
to Purchaser’s satisfaction and at Seller’s sole expense, any tornado damage,
scrap items, debris or other waste, including inoperable vehicles and/or
equipment, drums containing waste, etc., located within or along the roadways
adjacent to the Houston Tank Wash facility.


     9.4 Formation of LLCs. Seller will have caused to be formed Liquid Waste
Handlers of Texas I, LLC and Liquid Waste Handlers of Texas II, LLC, and will
have transferred ownership of all unencumbered rolling stock relating to the
Acquired Business Operations to Liquid Waste Handlers of Texas I, LLC.


     9.5 Closing Deliveries. Seller Entities will have made the closing
deliveries described in Section 5.2.


     9.6 Continued Truth of Representations and Warranties; No Breach. Each of
the representations and warranties of Seller Entities in this Agreement shall
be true and correct in all Material respects on and as of the Closing as though
such representations and warranties were




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made on and as of such date, except for representations and warranties
that are qualified as to Materiality, which shall be true and correct in all
respects, and Seller Entities shall have performed and complied with all of the
terms, conditions, obligations, agreements and restrictions required by this
Agreement to be performed or complied with by it prior to or on the Closing
Date.


     9.7 Litigation. No action or proceeding shall have been instituted or
threatened by any Governmental Body prior to the Closing Date before a court or
Governmental Body of any kind for the stated purpose or with the probable
effect of enjoining or preventing the consummation of this Agreement and the
transactions contemplated hereby or to recover damages by reason thereof. No
action or proceeding shall have been instituted by any private Person prior to
the Closing Date before a court or Governmental Body of any kind with the
probable effect of enjoining or preventing the consummation of the transactions
contemplated by this Agreement.


     9.8 No Material Adverse Change. There will have been no Material adverse
change in the Acquired Business Operations or Purchased Assets, including, but
not limited to, loss of key employees or customers, adverse changes in
Environmental Laws, or loss of governmental approvals or permits, from the date
of the Letter of Intent through and including the Closing Date.


     9.9 Bank Approval. Seller Entities shall have obtained Bank Approval and
no action has been taken by any Person to revoke such Bank Approval.


     9.10 Arrangement with Eric Warden. Seller Entities shall have entered
into an arrangement to retain the services of Eric Warden that is reasonably
satisfactory to Purchaser.



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10. CONDITIONS TO OBLIGATIONS OF SELLER.


     The obligations of Seller Entities under this Agreement are subject, at
the Closing Date, to the fulfillment in all material respects of the following
conditions precedent, each of which may be waived in writing at the discretion
of the Seller Entities. Purchaser must deliver a certificate executed by the
Chief Executive Officer and Secretary of Purchaser’s general partner certifying
the satisfaction in all respects of the conditions precedent set forth in this
Section 10.


     10.1 Continued Truth of Representations and Warranties; No Breach. The
representations and warranties made by Purchaser in this Agreement shall be
true in all respects on and as of the Closing Date as though such
representations and warranties were made on and as of such date, and Purchaser
shall have performed and complied with all terms, conditions, obligations,
agreements and restrictions required by this Agreement to be performed or
complied with by it prior to or on the Closing Date.


     10.2 Litigation. No action or proceeding shall have been instituted or
threatened by any Governmental Body prior to the Closing Date before a court or
Governmental Body of any kind for the stated purpose or with the probable
effect of enjoining or preventing the consummation of this Agreement and the
transactions contemplated hereby or to recover damages by reason thereof. No
action or proceeding shall have been instituted by any private Person prior to
the Closing Date before a court or Governmental Body of any kind with the
probable effect of enjoining or preventing the consummation of this Agreement
and the transactions contemplated hereby.


11. AMENDMENT AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES.


     The representations and warranties of the parties contained herein, and
all claims and causes of action related thereto, shall survive the consummation
of the transactions contemplated hereby until the second anniversary of the
Closing Date, provided, however, that the




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representations and warranties set forth in Section 6.11 will survive the
consummation of the transactions contemplated hereby until the third
anniversary of the Closing Date (in each case the “Limitations Period”).
Notwithstanding the foregoing, the Limitations Period set forth in this Section
11 will not apply to any fraudulent breach of any representation or warranty.


12. INDEMNIFICATION.


     12.1 Indemnification by Seller. Seller Entities, jointly and severally,
agree to defend and indemnify Purchaser and its owners, directors, officers,
employees, agents, representatives, affiliates, successors and assigns
(collectively, “Purchaser Indemnitees”) and hold each Purchaser Indemnitee
harmless from any loss, damage or expense (including reasonable attorneys’
fees) which any may incur, suffer or become liable for as a result of or in
connection with (a) the breach of any representation or warranty of Seller
Entities contained in this Agreement, including any Exhibit or Schedule hereto,
occurring or developing during the applicable Limitations Period; (b) the
breach of any agreement of Seller Entities contained in this Agreement,
including any claims by any third Persons alleging facts or circumstances
which, if true would constitute such breach; or (c) any assertion against a
Purchaser Indemnitee of any claim or liability that is not an Assumed
Liability, including, without limitation, the assertion against a Purchaser
Indemnitee by any Person or Governmental Body of any obligation or liability
relating to the operation of the Acquired Business Operations prior to the
Closing Date, the ownership of the Acquired Real Property or the conduct of
Seller Entities prior to the Closing Date including, without limitation, Tax
claims or liabilities or claims or liabilities under Environmental Law or
theories of strict liability. Purchaser shall give Seller Entities prompt
written notice of any claim, suit or demand which Purchaser believes will give
rise to indemnification by Seller Entities under this Section 12.1; provided,
however, that, the failure to give such notice shall not affect the liability
of Seller Entities hereunder except to the extent that




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the failure to promptly give notice has materially prejudiced Seller
Entities’ ability to defend or mitigate the claim. No notice of claim, suit or
demand will be effective after 90 days following the expiration of the
applicable Limitations Period. Except as hereinafter provided and except where
a conflict of interest between Seller Entity and the Purchaser Indemnitee
suggests separate counsel is appropriate, Seller Entities shall have the right
to defend and to direct the defense against any such claim, suit or demand, in
its name or in the name of the Purchaser Indemnitee at Seller Entities’ expense
and with outside counsel of Seller Entities’ own choosing. Each Purchaser
Indemnitee shall, at Seller Entities’ expense, cooperate reasonably in the
defense of any such claim, suit or demand. If Seller Entities, within
reasonable time after notice of a claim, fails to defend a Purchaser
Indemnitee, the Purchaser Indemnitee shall be entitled to undertake the
defense, compromise or settlement of such claim at the expense of and for the
account and risk of Seller Entities subject to the right of Seller Entities to
assume the defense of such claim at any time prior to the settlement,
compromise or final determination thereof if the only issues remaining therein
involve liability for, or the amount of, money damages to be assessed against
the Purchaser Indemnitee, provided no Seller Entity will, without the Purchaser
Indemnitee’s written consent, settle or compromise any claim or consent to any
entry of judgment which does not include as an unconditional term thereof the
giving by the claimant or the plaintiff to the Purchaser Indemnitee a release
from all liability in respect of such claim.


     12.2 Indemnification by Purchaser. Purchaser agrees to indemnify Seller
Entities and each of their respective owners, directors, managers, officers,
employees, agents, representatives, affiliates, successors and assigns
(collectively “Seller Indemnitees”) and hold Seller Entities harmless from any
loss, damage or expense (including reasonable attorneys’ fees) which a Seller
Indemnitee may incur, suffer or become liable for as a result of or in
connection




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with (a) the inaccuracy or breach of any representation or warranty of
Purchaser contained in this Agreement, including any Exhibit or Schedule
hereto, occurring or developing during the applicable Limitations Period; (b)
the breach of any agreement of Purchaser contained in this Agreement, including
any claims by any third Person alleging facts and circumstances which, if true
would constitute such a breach; or (c) any assertion against a Seller
Indemnitee of any claim or liability relating to the Assumed Liabilities after
the Closing Date including theories of strict liability. Seller Entities shall
give Purchaser prompt written notice of any claim, suit or demand which Seller
Entities believe will give rise to indemnification by Purchaser under this
paragraph; provided, however, that, the failure to give such notice shall not
affect the liability of Purchaser hereunder except to the extent that the
failure to promptly give notice has materially prejudiced Purchaser’s ability
to defend or mitigate the claim. No notice of claim, suit or demand will be
effective after 90 days following the expiration of the applicable Limitations
Period. Except as hereinafter provided and except where a conflict of interest
between a Seller Indemnitee and Purchaser, Purchaser shall have the right to
defend and to direct the defense against any such claim, suit or demand, in its
name or in the name of a Seller Indemnitee at Purchaser’s expense and with
counsel of Purchaser’s own choosing. Each Seller Indemnitee shall, at
Purchaser’s expense, cooperate reasonably in the defense of any such claim,
suit or demand. If Purchaser, within reasonable time after notice of a claim,
fails to defend a Seller Indemnitee, the Seller Indemnitee shall be entitled to
undertake the defense, compromise or settlement of such claim at the expense of
and for the account and risk of Purchaser subject to the right of Purchaser to
assume the defense of such claim at any time prior to the settlement,
compromise or final determination thereof if the only issues remaining therein
involve liability for, or the amount of, money damages to be assessed against
the Seller Indemnitee, provided Purchaser will not,




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without the Seller Indemnitee’s written consent, settle or compromise any
claim or consent to any entry of judgment which does not include as an
unconditional term thereof the giving by the claimant or the plaintiff to the
Seller Indemnitee a release from all liability in respect of such claim.


     12.3 Limitation of Recourse. The Parties shall be required to indemnify,
defend and hold harmless one another under this Section 12 only to the extent
that the aggregate amount of such losses and expenses incurred by a Party
exceeds Fifty Thousand Dollars ($50,000); and (b) the aggregate amount that the
Parties shall be required to indemnify and hold harmless under this Section 12
shall not exceed Fifteen Million Dollars ($15,000,000). Once the basket for
losses and expenses under Section 12.3(a) has reached Fifty Thousand Dollars
($50,000), a Party entitled to indemnification may recover the entire amount of
the losses and expenses back to the first dollar.


13. FORCE MAJEURE.


     Except as provided in this Section 13, any prevention, delay or stoppage
due to strikes, lockouts, labor disputes, acts of God, inability to obtain
services, labor, or materials or reasonable substitutes thereof, governmental
actions, civil commotions, severe weather, fire or other casualty, and other
causes beyond the reasonable control of the party obligated to perform
(collectively, a “Force Majeure”), notwithstanding anything to the contrary
contained in this Agreement, shall excuse the performance of either party for a
period equal to any such prevention, delay or stoppage and, therefore, if this
Agreement specifies a time period for performance of an obligation of either
party, that time period shall be extended by the period of any delay in such
party’s performance cased by a Force Majeure.



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14. EXPENSES.


     Except as may otherwise be expressly provided herein, Purchaser and Seller
Entities shall each pay their own expenses in connection with this Agreement
and the transactions contemplated hereby, including taxes, recording fees and
attorneys’ or accountants’ fees.


15. NOTICES.


     Any notices or other communications required or permitted hereunder shall
be sufficiently given if delivered personally, sent by nationally recognized
overnight courier, or sent by registered or certified mail, return receipt
requested, postage prepaid, or transmitted by telecopy with a confirmation copy
sent by first class mail, postage prepaid, addressed as follows or to such
other address of which the parties may have given notice in accordance with
this Section 15:



	 	 	 
	 	 	
In the case of Purchaser, to:
	 	 	 
	 	 	
Liquid Environmental Solutions of Texas, L.P.
	 	 	
4960 Singleton Blvd.
	 	 	
Dallas, Texas 75212
	 	 	
Attention: Alan Viterbi
	 	 	
Fax: (214) 252-5065
	 	 	 
	 	 	
with a copy to:
	 	 	 
	 	 	
Carol Kerr, Esq.
	 	 	
Folger Levin & Kahn LLP
	 	 	
1900 Avenue of the Stars, 28th Floor
	 	 	
Los Angeles, CA 90067
	 	 	
Fax: (310) 556-3770
	 	 	 
	 	 	
In the case of Seller Entities to:
	 	 	 
	 	 	
U S Liquids of Houston, L.L.C.
	 	 	
U S Liquids of Dallas, L.L.C.
	 	 	
U S Liquids of Central Texas, L.L.C.
	 	 	
U S Liquids, Inc.
	 	 	
U S Liquids of Texas, Inc.
	 	 	
411 N. Sam Houston Parkway East, Suite 400
	 	 	
Houston, TX 77060





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Attention: General Counsel
	 	 	
Fax: (281) 272-4545
	 	 	 
	 	 	
with a copy to:
	 	 	 
	 	 	
Jared D. Nielsen, Esq.
	 	 	
Jared D. Nielsen & Associates, P.C.
	 	 	
1201 Prince Street
	 	 	
Houston, TX 77008
	 	 	
Fax: (713) 683-9940



16. SUCCESSORS.


     This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns, except that no
party may assign their respective obligations hereunder (directly or indirectly
or as a matter of law) without the prior written consent of the other parties.


17. ARTICLE AND SECTION HEADINGS.


     The Article and section headings used in this Agreement are for the
convenience of the parties and in no way alter, modify, amend, limit, or
restrict the contractual obligations of the parties.


18. GOVERNING LAW.


     This Agreement shall be governed by and construed in accordance with the
laws of the State of Texas applicable to agreements made and to be performed
therein (without giving effect to the conflict of law provisions of such
jurisdiction).


19. DISPUTE RESOLUTION.


     Any dispute, controversy or claim (including, without limitation, any
dispute arising under Section 3.4 of this Agreement, whether based on contract,
tort, statute, fraud, misrepresentation or any other legal theory (a “Dispute”)
between Seller Entities, on the one hand, and Purchaser on the other hand
(including their respective affiliates) arising out of or




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relating to this Agreement, any obligations hereunder, or the relationship
of the parties under this Agreement shall be resolved first in accordance with
the internal resolution procedures described in this Section 19. The parties
hereto agree to establish an internal hierarchy to facilitate resolution of
these issues as set forth below:


             (a) Upon written consent of any Seller Entity, on the one hand, or
Purchaser on the other hand, each will appoint a designated representative
whose task it will be to meet for the purpose of endeavoring to resolve such
Dispute.


             (b) The designated representatives will meet as often as the parties
reasonably deem necessary to discuss the Dispute in an effort to resolve the
Dispute without the necessity of any formal proceeding. During the
discussions, all reasonable requests by a party to the other parties for
non-privileged information reasonably related to the Dispute will be honored in
order that every party may be fully advised of the other parties’ position.


             (c) Formal proceedings to arbitrate a Dispute may not be commenced until
the earlier of (i) the date on which the designated representatives conclude in
good faith that amicable resolution through continued negotiation of the
Dispute does not appear likely; or (ii) the expiration of the thirty (30) day
period immediately following the initial request to negotiate the Dispute;
provided, however, that this Section (c) will not be construed to prevent a
party from instituting formal proceedings in a court of law earlier to avoid
the expiration of any applicable limitations period, to preserve a superior
position with respect to other creditors, or to seek temporary or preliminary
injunctive relief.


             (d) Any Dispute that is not resolved informally by the parties under this
Section 19 shall be settled by binding arbitration in Texas by a single
arbitrator who must be a person experienced in negotiating, making and
consummating acquisition agreements and will




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be mutually selected by Purchaser and Seller Entities. If the parties
cannot agree on the selection of an arbitrator, an arbitrator will be chosen by
the American Arbitration Association. The rules of arbitration shall be the
Commercial Arbitration Rules of the American Arbitration Association, as
modified by any other instructions that the parties may agree upon at the time,
except that each party shall have the right to conduct discovery in a manner
and to the extent authorized by the Federal Rules of Civil Procedure as
interpreted by the federal courts in Texas. If there is any conflict between
those Rules and the provisions of this Section (d), the provisions in this
Section (d) shall prevail. The arbitrator shall be bound by and shall strictly
enforce the terms of this Agreement and may not limit, expand or otherwise
modify its terms. The arbitrator shall make a good faith effort to apply
substantive applicable law, but an arbitration decision shall not be subject to
review because of errors of law. The arbitrator shall be bound to honor claims
of privilege or work-product doctrine recognized at law, but the arbitrator
shall have the discretion to determine whether any such claim of privilege or
work-product doctrine applies. The arbitrator’s decision shall provide a
reasoned basis for the resolution of each dispute and for any award. The
arbitrator shall not have power to award damages in connection with any dispute
in excess of actual compensatory damages and shall not multiply actual damages
or award consequential or punitive damages. Each party shall bear its own fees
and expenses with respect to the arbitration and any proceeding related thereto
and the parties shall share equally the fees and expenses of the American
Arbitration Association and the arbitrator. The arbitrator shall have power
and authority to award any remedy or judgment that could be awarded by a court
of law in Texas. The award rendered by arbitration shall be final and binding
upon the parties, and judgment upon the award may be entered in any court of
competent jurisdiction in the United States. Notwithstanding the foregoing,
nothing in this Section (d) will prevent a party from




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instituting formal proceedings in a court of law to seek temporary or
preliminary injunctive relief.


20. ENTIRE AGREEMENT.


     This Agreement, including all Schedules and Exhibits hereto, and all
agreements to be delivered by the parties pursuant hereto, represents the
entire understanding and agreement between the parties hereto with respect to
the subject matter hereof and, therefore, supersedes all prior negotiations
between the parties including, without limitation, the Letter of Intent and
cannot be amended, supplemented or changed orally, but only by an agreement in
writing which makes specific reference to this Agreement or the agreement
delivered pursuant hereto, as the case may be, and which is signed by the party
against whom enforcement of any such amendment, supplement or modification is
sought.


21. COUNTERPARTS.


     This Agreement may be signed in two or more counterparts, each signed by
one or more of the parties hereto so long as each party shall sign at least one
counterpart of this Agreement, all of which taken together shall constitute one
and the same instrument. The exchange of copies of this Agreement of signature
pages by facsimile transmission shall constitute effective execution and
delivery of this Agreement as to the parties and may be used in lieu of the
original Agreement for all purposes. Signatures of the parties transmitted by
facsimile shall be deemed to be their original signatures for all purposes.


22. SEVERABILITY.


     If any provision of this Agreement is held invalid or unenforceable by any
court of competent jurisdiction, the other provisions of this Agreement will
remain in full force and effect. Any provision of this Agreement held invalid
or unenforceable only in part of degree will remain in full force and effect to
the extent not held invalid or unenforceable.



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     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the date first above
written.



	 	 	 	 	 	 	 	 	 
	Liquid Environmental
Solutions of Texas, L.P.
	 	US LIQUIDS OF HOUSTON, LLC
	a Texas limited partnership
	 	a Texas limited liability company
	By:	CLST, Inc.
	 	By:	 	 
	 	

	 	 	

	Its:	General Partner
	 	Its:	 
	 	 
	 	 	

	 	
By:
	 	 	 	 	Date:	 	 
	 	 	

	 	 	

	 	
Its:
	 	President	 	 	 	 
	 	 	 	 	 	 	 	 	 
	Date:	 	 	 	 	 	 	 	 
	 	
	 	 	 	 
	 	 	 	 	 	 	US LIQUIDS OF DALLAS, LLC
	 	 	 	 	 	 	a Texas limited liability company
	 	 	 	 	 	 	By:
	 	 
	 	 	 	 	 	 	 	

	 	 	 	 	 	 	Its:	 	 
	 	 	 	 	 	 	 	

	 	 	 	 	 	 	Date:	 	 
	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	US LIQUIDS OF CENTRAL TEXAS, LLC
	 	 	 	 	 	 	a Texas limited liability company
	 	 	 	 	 	 	By:	 	 
	 	 	 	 	 	 	 	

	 	 	 	 	 	 	Its:	 	 
	 	 	 	 	 	 	 	

	 	 	 	 	 	 	Date:	 	 
	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	US LIQUIDS, INC.
	 	 	 	 	 	 	a Delaware corporation
	 	 	 	 	 	 	By:	 	 
	 	 	 	 	 	 	 	

	 	 	 	 	 	 	Its:	 	 
	 	 	 	 	 	 	 	

	 	 	 	 	 	 	Date:	 	 
	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	US LIQUIDS OF TEXAS, INC.,
	 	 	 	 	 	 	a Texas corporation
	 	 	 	 	 	 	By:	 	 
	 	 	 	 	 	 	 	

	 	 	 	 	 	 	Its:	 
	 	 	 	 	 	 	 	

	 	 	 	 	 	 	Date:	 	 
	 	 	 	 	 	 	 	






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LIST OF EXHIBITS




	 	 	 	 	 
	1.	 	
Exhibit A
	 	Bill of Sale [personal property/intangibles]
	2.	 	
Exhibit B
	 	Assignment and Assumption Agreement [contracts, leases]
	3.	 	
Exhibit C
	 	N/A
	4.	 	
Exhibit D
	 	Warranty Deeds
	5.	 	
Exhibit E
	 	Seller Entity Legal Opinion
	6.	 	
Exhibit F
	 	Facility Use and Access Agreement
	7.	 	
Exhibit G
	 	Transition Services Agreement
	8.	 	
Exhibit H
	 	Software License
	9.	 	
Exhibit I
	 	Purchaser Legal Opinion




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