exv10w34



 



EXHIBIT 10.34

PURCHASE AND SALE OF ASSETS AGREEMENT


Between


U S LIQUIDS OF LA., L.P.


And


U S LIQUIDS INC.,


on the first part


And


TRINITY STORAGE SERVICES, L.P.


And


CCBS, INC., Its General Partner,


on the second part



 






 


TABLE OF CONTENTS




	 	 	 	 	 	 
	SECTION
        	 	 	PAGE
	
	 	 	

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





1






 




	 	 	 	 	 	 
	SECTION	 	 	PAGE
	
	 	 	

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





2






 




	 	 	 	 	 	 
	SECTION	 	 	PAGE
	
	 	 	

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





3






 



PURCHASE AND SALE OF ASSETS AGREEMENT



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


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


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


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


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


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


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


NOW, THEREFORE, in consideration of the mutual promises and covenants herein
contained and other good and valuable consideration, received to the full
satisfaction of each of them, the parties hereby agree as follows:


ARTICLE 1. SALE OF ASSETS



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



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





4






 







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





5






 







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



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


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



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



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




6






 




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


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


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


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



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



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


ARTICLE 2. PURCHASE PRICE



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



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





7






 





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




	 	 	 	 	 
	No. Shares	 	Strike Price
	
	 	

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




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



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


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




8






 




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


ARTICLE 3. CLOSING



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


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



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





9






 






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



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



ARTICLE 4. POST CLOSING COVENANTS



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


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


ARTICLE 5. REPRESENTATIONS AND WARRANTIES

OF SELLER AND GENERAL PARTNER.



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




10






 




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


Section 5.1.Organization; Authority.



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



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


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


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



11






 


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



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



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



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




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




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





12






 







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



Section 5.7. Permits; Environmental Documents.



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



Section 5.8. Personal Property.



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





13






 





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



Section 5.9. Title to Real Property.



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




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





14






 







	 	(viii)	 	There are no mechanics’ liens affecting the Land and no work
has been performed on the Land within 120 days of the date hereof
for which a mechanics’ lien could be filed.
	 
	 	(ix)	 	There are no levied or pending special assessments affecting
all or any part of the Land owed to any governmental entity and
none is threatened.
	 
	 	(x)	 	There are no proceedings pending or, to the best of Seller’s
and General Partner’ knowledge, threatened by, any third party
which would result in a change in the allowable uses of the Land or
which would modify the right of Buyer to use the Land for its
current uses after the Closing Date.
	 
	 	(xi)	 	There are no pending or, to the best of General Partner’
knowledge, threatened condemnation or eminent domain proceedings
affecting all or any part of the Land.
	 
	 	(xii)	 	The Real Estate Leases are in full force and effect and
valid, binding and enforceable against the landlord thereunder.
Seller is not in default in, nor has there occurred an event or
condition (including, subject only to obtaining the consent of each
landlord to the assignment of the Real Estate Leases to Buyer,
Seller’s execution and delivery of or performance under this
Agreement) which with the passage of time or giving of notice (or
both) would constitute a default under the Real Estate Lease. To
the best of Seller’s and General Partner’s knowledge, no landlord
is in default in, nor has there occurred any event or condition
which with the passage of time or giving of notice (or both) would
constitute a default by any landlord under the Real Estate Leases.
	 
	 	(xiii)	 	There have been no spills, leaks, deposits or other releases
of Hazardous Materials into or onto the Land by Seller or, to the
best of Seller’s and General Partner’s knowledge, by any
predecessor of Seller. No portion of the Land is listed on the
CERCLIS list or the National Priorities List of Hazardous Waste
Sites or any similar list maintained by the State of Louisiana or
the State of Texas. The Land does not contain any underground or
above-ground storage tanks or transformers containing Hazardous
Materials, petroleum products or wastes or other hazardous
substances regulated by 40 CFR 280 or other Applicable Laws.
	 
	 	(xiv)	 	Seller has provided to the government agencies requiring the
same, all reports, notices, filings and other disclosures required
by Applicable Laws and all such reports, notices, filings and other
documents were complete and accurate in all material respects at
the time provided to said government agencies.



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




15






 




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


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


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


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


Section 5.14. Compliance with Law; No Conflicts.



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





16






 







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



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


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


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


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



17






 



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



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




18






 




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


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


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


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


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


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



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


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


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


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




19






 




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


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



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



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


ARTICLES 7. COVENANTS OF STOCKHOLDERS AND SELLER PRIOR TO CLOSING



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


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



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





20






 







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



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



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





21






 






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


Section 7.5 Notice of Developments.



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



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


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


ARTICLE 8. CONDITIONS PRECEDENT TO OBLIGATIONS

OF GENERAL PARTNER AND SELLER



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


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


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



22






 


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


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


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


ARTICLE 9. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER



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


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


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


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


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


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


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


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




23






 




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


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


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


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


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


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


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


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


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



24






 


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


ARTICLE 10. NON-ASSUMPTION OF LIABILITIES



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



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



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



25






 


ARTICLE 11. INDEMNIFICATION



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


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


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



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





26






 







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



ARTICLE 12. TERMINATION OF AGREEMENT



Section 12.1. Termination by Buyer.



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





27






 







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



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


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


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


ARTICLE 13. NONDISCLOSURE OF CONFIDENTIAL INFORMATION



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


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




28






 




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


ARTICLE 14. FEDERAL SECURITIES ACT AND RESTRICTIONS ON STOCK



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


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


ARTICLE 15. GENERAL



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


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


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


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


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




29






 




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


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


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



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




	 	U S Liquids of LA, L.P.

11079 Triangle Shell Road

Jennings, Louisiana 70546

Attn: Divisional Vice President




	 	 	 	with a copy to:




	 	U S Liquids, Inc.

411 N. Sam Houston Parkway E., Suite 400

Houston, Texas 77060

Attn: General Counsel




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




	 	Trinity Storage Services, L.P.

13453 Highway 71

Bee Cave, Texas 78738

Attn: Daniel B. Porter




	 	 	 	with a copy to:




	 	Matthews & Branscomb

802 Carancahua, Suite 1900

Corpus Christi, Texas 78470

Attn: Jeffrey S. Dickerson & Mark J. Hulings




30






 


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


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


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


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


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


Section 15.12. Severability. In case any provision of this Agreement
shall be invalid, illegal or unenforceable, it shall, to the extent possible,
be modified in such manner as to be valid, legal and enforceable but so as most
nearly to retain the intent of the parties. If such modification is not
possible, such provision shall be severed from this Agreement. In either case
the validity, legality and enforceability of the remaining provisions of this
Agreement shall not in any way be affected or impaired thereby.


Section 15.13. Construction. The parties have participated jointly in
the negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof
shall arise favoring or disfavoring any party by virtue of the authorship of
any of the provisions of this Agreement. Any reference to any federal, state,
local or foreign statute shall be deemed to refer to all rules and regulations
promulgated thereunder, unless the context requires otherwise. The word
“including” means including, without limitation. The parties intend that
representation, warranty and covenant contained herein shall have independent
significance. If any party has breached any representation, warranty or
covenant contained herein in any respect, the fact that there exists another
representation, warranty or covenant relating to the same subject matter
(regardless of the relative levels of specificity) that the party has not
breached shall not detract from or mitigate the fact the party is in breach of
the first representation, warranty or covenant.


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



31






 


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


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



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

	 	 	 	 	 	 	 
	
U S LIQUIDS INC
	 	CCBS, INC
	 	 	 	 	 	 	 
	By:	 	 	 	By:	 	 
	 	 	
	 	 	 	






32






 



LIST OF SCHEDULES



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





33






 



LIST OF EXHIBITS



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




34