Document:

exv10w32

 

EXHIBIT 10.32

TRANSITION SERVICES AGREEMENT

     THIS TRANSITION SERVICES AGREEMENT (the “Agreement”) is dated as of
November 1, 2002 by and among Liquid Environmental Solutions of Texas, L.P., a
Texas limited partnership (“Purchaser”) and US Liquids of Houston, LLC, a Texas
limited liability company, US Liquids of Dallas, LLC, a Texas limited liability
company, and US Liquids of Central Texas, LLC, a Texas limited liability
company (collectively, “Seller”), US Liquids of Texas, Inc., a Texas
corporation (“Seller Parent”), and US Liquids, Inc., a Delaware corporation
(“USL”). Seller, Seller Parent and USL are each referred to herein as a
“Seller Entity” and are collectively referred to herein as “Seller Entities.”

WITNESSETH:

     WHEREAS, Purchaser and the Seller Entities have entered into an Asset
Purchase Agreement dated as of November 1, 2002 (the “Purchase Agreement”),
providing, among other things, for the sale by the Seller Entities and the
purchase by Purchaser of the Purchased Assets and the Acquired Business
Operations (all capitalized terms used herein without definition shall have the
meanings assigned to them in the Purchase Agreement); and

     WHEREAS, in connection with the closing of the Purchase Agreement and
pursuant to the terms and conditions hereof, the Seller Entities and Purchaser
have each agreed to make available to the other certain administrative services
and assistance, including the use of certain personnel employed by the
respective parties, and the Seller Entities and Purchaser have agreed to
procure such services, in order to further the provisions of the Purchase
Agreement and to provide an orderly transition in connection with the
conveyance of the Purchased Assets and the Acquired Business Operations from
the Seller Entities to the Purchaser.

     NOW, THEREFORE, in consideration of the premises, the covenants set forth
herein and the benefits to be derived herefrom, the parties hereby agree as
follows:

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ARTICLE I

Services to be Provided

     1.1 Provision of Services by Seller Entities.

         (a) In order for Purchaser to support the operation of the Acquired
Business Operations through the Transition Period (as hereinafter defined) in a
manner substantially similar to the manner in which the Acquired Business
Operations were operated by Seller immediately prior to the Closing Date, the
Seller Entities shall use commercially reasonable efforts during the Transition
Period (unless a shorter period for the applicable period is set forth in
Schedule 1 or in this Section 1.1) (a) to provide and perform those services
described in Schedule 1 attached hereto and incorporated herein by this
reference (the “Seller Services”). Additional services may be provided by
Seller Entities to Purchaser upon the mutual agreement of the parties.

         (b) In no event will the Seller Services include (i) executive management,
(ii) legal services, (iii) insurance or (iv) financial support.

         (c) To the extent that Purchaser wishes to terminate any Seller Service,
Purchaser will give Seller at least three (3) days prior written notice
identifying those Seller Services that Purchaser, in its sole discretion, has
determined it no longer wishes to utilize. After such three (3) day notice
period elapses, Seller Entities will have no further obligation to provide such
terminated Seller Services, and Purchaser will have no further financial
obligations in connection with such terminated Seller Services.

         (d) All employees of Seller providing Seller Services to Purchaser
hereunder will be and remain the employees of Seller and not Purchaser.
Subject to the provisions of Section 1.3, Seller will be solely responsible for
all hiring and termination decisions with respect to such employees and for the
payment of all salaries, taxes, benefits, bonuses and other amounts with
respect to such employees.

     1.2 Provision of Services by Purchaser. During the Transition Period
(except where the time period of the service is expressly limited herein),
Purchaser shall provide and perform, or cause its affiliates to provide and
perform without charge, the following services: (a) invoicing and payable

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accounting services by Purchaser personnel with respect to the Cactus
business operations (including reasonable access to general ledger information)
to the extent described in Section 8.4 of the Purchase Agreement, (b)
accounting support by Purchaser personnel reasonably necessary to timely close
the Seller’s books of account with respect to the period ending the Closing
Date and to produce financial statements with respect to such period, (c) the
utilization by Seller, on an “as available” basis, for a period of thirty (30)
days from the Closing Date of the services of a human resources manager and
certain administrative personnel formerly employed by Seller in the Acquired
Business Operations, and (d) the services at the Houston Tank Wash facility
(the “Houston Tank Wash Services”), as set forth on Schedule 2 (collectively,
the “Purchaser Services”). Additional services may be provided by Purchaser to
Seller Entities upon the mutual agreement of the parties. In no event will the
Purchaser Services include (i) executive management, (ii) legal services, (iii)
insurance or (iv) financial support. All employees of Purchaser providing
Purchaser Services hereunder will be and remain the employees of Purchaser and
not of any Seller Entity. Purchaser will be responsible for all hiring and
termination decisions with respect to such employees and for the payment of all
salaries, taxes, benefits, bonuses and other amounts with respect to such
employees.

     1.3 Purchaser Incurred Costs. Purchaser will reimburse Seller not later
than thirty (30) days after receipt of an appropriate invoice from Seller for
the charges as set forth on Schedule 1 in connection with the provision of the
Seller Services (the charges therefore collectively being referred to as the
“Purchaser Incurred Costs”). For the Seller Services, the Purchaser Incurred
Costs, if any, will be as set forth on Schedule 1. Seller will maintain
records of the Seller Services provided and of all Purchaser Incurred Costs and
will make the same available to Purchaser for inspection at Purchaser’s
reasonable request and in connection with any final accounting of the Purchaser
Incurred Costs.

     1.4 Seller Incurred Costs. Seller will reimburse Purchaser not later than
thirty (30) days after receipt of an appropriate invoice from Purchaser for any
out of pocket expenses incurred by Purchaser (other than normal costs of
employment) in connection with the provision of the Purchaser Services or other
mutually agreed upon charges for any additional services provided by Purchaser

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hereunder (the costs therefore collectively being referred to as the
“Seller Incurred Costs”). Purchaser will maintain records of the Purchaser
Services provided and all Seller Incurred Costs properly incurred by Seller and
will make the same available to Seller for inspection at Seller’s reasonable
request and in connection with any final accounting of the Seller Incurred
Expenses.

     1.5 Other Transition Services. During the Transition Period, Seller
Entities will, without further consideration, execute and deliver such other
instruments of conveyance and transfer, and take such other action as Purchaser
may reasonably request (i) to more effectively convey, transfer to and vest in
Purchaser and to put Purchaser in possession of the Purchased Assets and the
Acquired Business Operations, (ii) in the case of Contracts, Permits and
rights, if any, which cannot be transferred to Purchaser effectively without
the consents of other Persons, to use reasonable best efforts to obtain such
consents promptly following the Closing Date, and if any such consents cannot
be obtained, to cooperate in any reasonable arrangement designed to obtain for
Purchaser all benefits and privileges of the applicable Contract or Permit
without limitation on the conduct of the Acquired Business Operations while
also protecting Seller Entities from continuing liabilities or obligations
thereunder, and (iii) to efficiently transition any Hired Employees without
disrupting the day to day operations of Seller Entities or Purchaser.

     1.6 Standards of Services. Each Seller Entity and Purchaser will use
reasonable efforts to cause any and all personnel providing Seller Services or
Purchaser Services to perform such services with the same degree of care, skill
and diligence with which it causes similar services to be performed for itself
and its various other affiliates.

     1.7 Term. The term of this Agreement shall commence on the date hereof
and shall expire six (6) months after the date hereof, subject to earlier
termination upon the mutual agreement of the parties (the “Transition Period”).

     1.8 Indemnification. Subject to the limitations on indemnities set forth
in the Asset Purchase Agreement, each Seller Entity and Purchaser agrees to
defend, indemnify and hold harmless the other parties, their respective
affiliates, and their respective officers, directors, managers, agents and
employees, when performing the services to be provided hereunder, against any
and all claims,

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losses, liabilities, damages and causes of action, whether based on tort,
breach of contract or any other legal theory in favor of anyone, on account of
taxes, liens, debts, personal injuries, death or damage to property and all
other claims or demands of every character arising out of, in connection with,
or as an incident to, any act or omission in connection with the performance of
the services or fulfillment of the responsibilities under this Agreement,
including negligence (but not gross negligence or willful misconduct) of such
Seller Entity or Purchaser, their respective affiliates, or their respective
officers, directors, managers, agents or employees.

ARTICLE II

Miscellaneous

     2.1 Assignment. Neither the Seller Entities nor Purchaser may transfer or
assign its rights under this Agreement without the prior written consent of the
other parties hereto, which consent will not be unreasonably withheld or
delayed. Any attempted assignment without such consent shall be void.

     2.2 Force Majeure. Performance under this Agreement, other than the
obligation to make payments of money due, shall be suspended in the event such
performance is prevented by fires, floods, hurricanes, storms, bad weather,
tornadoes, lightning, explosions, acts of God or the public enemy, governmental
laws, rules, regulations or orders, and other events, whether similar or
dissimilar, beyond the control of the parties.

     2.3 No Partnership. Nothing contained herein will create, or will be
construed as creating, a partnership or joint venture of any kind or as
imposing on any party hereto any partnership duty, obligation or liability to
the other party. Seller Entities and Purchaser are independent contractors
hereunder and no party is an agent of any other party. Except as may be
expressly stated in the Purchase Agreement, nothing in this Agreement will
restrict a Seller Entity or Purchaser from engaging in any business or from
contracting with any other Person.

     2.4 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by facsimile
transmission or mailed by registered or certified mail (return receipt
requested), postage prepaid, to the parties at the addresses given in the

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Purchase Agreement (or at such other address for a party as shall be
specified by like notice; provided that notices of a change of address shall be
effective only upon receipt thereof).

     2.5 Governing Law. This Agreement shall be governed by and construed in
accordance with laws of the State of Texas, without regard to its principles of
conflicts of laws.

     2.6 Headings. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.

     2.7 No Third Party Beneficiaries. Except as expressly provided herein,
nothing in this Agreement shall entitle any person other than the Seller
Entities or Purchaser, or their respective successors and assigns permitted
hereby, to any claim, cause of action, remedy or right of any kind.

     2.8 Counterparts. This Agreement may be executed in any number of
counterparts, no one of which needs to be executed by both parties, and this
Agreement shall be binding upon both parties with the same force and effect as
if both parties had signed the same document, and each such signed counterpart
shall constitute an original of this Agreement.

     2.9 Amendment. No modification or amendment of this Agreement shall be
binding upon either party unless in writing and signed by the parties hereto.

     2.10 Entire Agreement. This Agreement, together with the Purchase
Agreement and the schedules attached hereto, constitutes the entire agreement
between the parties pertaining to the transition services described herein, and
supersedes all prior agreements, understandings, negotiations and discussions,
whether oral or written, of the parties hereto regarding the subject matter
hereof. No statement, representation, warranty, covenant or agreement of any
kind not expressly set forth in this Agreement or the Purchase Agreement will
effect, or be used to interpret, change or restrict, the express terms and
provisions of this Agreement.

     2.11 Counterparts. This Agreement may be executed in counterparts and
signatures sent by facsimile will be binding as evidence of execution and
acceptance of the terms hereof. Signatures may be exchanged by telecopy with
original signatures to follow in the manner set forth herein for the giving of
notice. Each party to this Agreement agrees that it will be bound by its own
telecopied signature and that it accepts the telecopied signature of each other
party to this Agreement.

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     IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first written above.

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

	 	 	

	Its:	General Partner
	 	 	JOHN MIKLICH, President
	 	 
	 	 	 
	 	
By:
	 	 	 	 	Date:	 	 
	 	 	

	 	 	

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

	 	 	 	 	 	 		JOHN MIKLICH, President 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Date:	 	 
	 	 	 	 	 	 	 	

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

	 	 	 	 	 	 		JOHN MIKLICH, President 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Date:	 	 
	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	US LIQUIDS, INC.
	 	 	 	 	 	 	a Delaware corporation
	 	 	 	 	 	 	By:	 	 
	 	 	 	 	 	 	 	

	 	 	 	 	 	 		WILLIAM M. DEARMAN, CEO 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Date:	 	 
	 	 	 	 	 	 	 	

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

	 	 	 	 	 	 		JOHN MIKLICH, President
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Date:	 	 
	 	 	 	 	 	 	 	

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Schedule 1

Seller Services

A. DESCRIPTION OF SELLER SERVICES:

		
	 	1. Display and use of USL name and trademark on all placarded vehicles and
equipment transferred to Purchaser on the Closing Date and on all uniforms
worn by employees of Purchaser pending replacement of the USL name and
trademark on such vehicles, equipment and uniforms. Purchaser will
complete the replacement of all such USL names and trademarks as soon as
practicable following the Closing Date, but in no event more than Thirty
(30) days from the Closing Date. In the event that Purchaser, through the
exercise of reasonable diligence, is unable to complete the replacement of
such USL names and trademarks within thirty (30) days following the
Closing Date, Purchaser may, with the consent of Seller, which will not be
unreasonably withheld, have additional time to complete the replacement,
so long as Purchaser continues to diligently pursue such replacement.
Notwithstanding the foregoing, Purchaser may continue to display the USL
name at those facilities, if any, whose post-Closing operation is
continued under untransferred or non-transferrable USL Permits pursuant to
Paragraph 3 below.
	 
	 	2. Services of the following personnel on an hourly “as available” basis to
the extent engaged or employed by Seller Entities (nothing herein shall
obligate Seller Entities to continue the engagement or employment of any
such personnel):

	 	 	 
	(a)	 	
Eric Warden for a period of up to 90 days from the Closing Date;
	(b)	 	
Greg Gunselman during the Transition Period;
	(c)	 	
Cactus mechanics;
	(d)	 	
Steve Boydston; and
	(e)	 	
Personnel of Seller Entities responsible for
Department of Transportation enforcement and monitoring
issues during the Transition Period.

		
	 	3. For those facilities, equipment and vehicles subject to Contracts or
Permits that have not been transferred or, if non-transferable, replaced
by new Contracts or Permits in Purchaser’s name, Seller will continue to
operate such facilities, equipment and vehicles under Seller’s Contracts
and Permits at Purchaser’s expense (but with Seller continuing any
existing bonds, letters of credit or other deposits supporting such
Contracts and Permits, subject to reimbursement by Purchaser for any costs
incurred as a result of the maintenance of such bonds, letters of credit
or other deposits) and subject to Purchaser’s direction so as to obtain
for Purchaser all benefits and privileges of the applicable Contract or
Permit without limitation on Purchaser’s ability to conduct the Acquired
Business Operations while also protecting Seller from continuing
liabilities or obligations thereunder.
	 
	 	4. Seller will ensure that on the Closing Date, or as soon after the Closing
Date as is reasonably possible, (i) all vehicles and equipment included in
the Purchased Assets that were used in the collection of Hazardous
Materials are emptied and properly cleaned so as to be free from Hazardous
Materials, and (ii) all vehicles and trailers constituting Excluded Assets
are removed from any Acquired Real Property.

B. PRICING OF SELLER SERVICES:

	1.	 	Eric Warden — $75.00 per hour.
	 
	2.	 	Steve Boydston — First 40 hours at no charge; thereafter, $40.00 per
hour.

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	3.	 	Services of other Seller personnel referenced in item 2 above shall be
performed at a rate of 1.33 times the hourly rate equivalent to such
person’s annual base salary cost (before, bonus, benefits, and other
compensation).

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Schedule 2

Houston Tank Wash Services

A. DESCRIPTION OF HOUSTON TANK WASH SERVICES:

		
	 	1. During the Transition Period, Seller may continue to use and access
the Houston Tank Wash facility to park and dispatch vehicles and
equipment. Seller agrees to provide written notice to Purchaser at such
time as it intends to cease such use and access of the Houston Tank Wash
facility.

		
	 	2. During the Transition Period, Seller may continue to dispatch vehicles
and equipment, invoice and contact hazardous waste customers using the
USL name, and Purchaser shall provide the reasonable assistance of its
personnel in connection therewith. Seller will not use or access the
Houston Tank Wash facility in connection with service to non-hazardous
waste customers.

		
	 	3. For so long as Seller may engage in any of the Houston Tank Wash
Services set forth herein, Seller shall continue to maintain the
site-specific Permit relating to the Houston Tank Wash facility.

		
	 	4. Seller acknowledges that the Houston Tank Wash facility shall at all
times during the term of this Agreement remain the exclusive property of
the Purchaser, and except as expressly set forth herein shall remain
under Purchaser’s sole dominion and control, and nothing in this
Agreement shall be construed to transfer to Seller any ownership or
leasehold rights in or to the Houston Tank Wash facility, other than the
rights to use and access the Houston Tank Wash facility as set forth
herein. In the event that Purchaser enters into an agreement for the
sale of all or substantially all of the Houston Tank Wash facility,
Purchaser may terminate its agreement to provide the Houston Tank Wash
Services upon thirty (30) days prior written notice to Seller.

B. CONSIDERATION FOR HOUSTON TANK WASH SERVICES:

		
	 	     For each thirty (30) day period, or portion thereof, from the date
hereof during which Seller engages in any Houston Tank Wash Services,
Purchaser shall accrue a credit of $5,000 against any Purchaser Incurred
Costs arising under this Agreement or any service fees arising under the
Software License Agreement. Purchaser may accumulate and carry forward
any credits arising hereunder and not fully applied during any given
month, however such credits may only be applied as set forth herein and
shall not entitle Purchaser to any payment of cash.

C. INDEMNITIES:

		
	 	     Seller Entities hereby agree to fully indemnify, defend and hold
harmless Purchaser from and against any and all damages, expenses,
liabilities, losses and costs (“Damages”) incurred by Purchaser in
connection with or otherwise arising out of Seller’s use of and access to
the Houston Tank Wash facility as set forth herein, other than Damages
caused by the negligence or willful misconduct of Purchaser. Seller
further agrees to reimburse Purchaser for any and all Damages caused to
the Houston Tank Wash facility as a result of Seller’s use and access
pursuant to this Agreement, other than Damages caused by the negligence
or willful misconduct of Purchaser.

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EXHIBIT 10.33

LICENSE AGREEMENT

     This License Agreement (the “Agreement”) is entered into as of this 1st
day of November, 2002, by and between U S LIQUIDS INC., a Delaware corporation
(“USL”), and LIQUID ENVIRONMENTAL SOLUTIONS OF TEXAS, L.P., a Texas limited
partnership (“LES”).

WITNESSETH:

     WHEREAS, USL and LES, along with US Liquids of Houston, LLC, a Texas
limited liability company, US Liquids of Dallas, LLC, a Texas limited liability
company, US Liquids of Central Texas, LLC, a Texas limited liability company,
and US Liquids of Texas, Inc., a Texas corporation (collectively with USL, the
“Seller Entities”), have entered into an Asset Purchase Agreement dated as of
November 1, 2002 (the “Asset Purchase Agreement”), providing, among other
things, for the sale by USL and the Seller Entities and the purchase by LES of
the Purchased Assets and the Acquired Business Operations (all capitalized
terms used herein without definition shall have the meanings assigned to them
in the Asset Purchase Agreement); and

     WHEREAS, USL has developed certain proprietary IMS software and purchased
certain other software (collectively, the “Software”), as described in Exhibit
A attached hereto and incorporated by reference herein, which is utilized by
USL in its business, including, but not limited to, the Acquired Business
Operations; and

     WHEREAS, LES desires to obtain a limited license of the Software, along
with access to USL’s technology staff, and USL desires to grant to LES such
limited license of the Software and access to its technology staff, subject to
the terms and conditions set forth herein.

     NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and in the Asset Purchase Agreement, the parties hereto agree
as follows:

I. GRANT OF LICENSE

	 	 	 
	1.01	 	
Grant of License. In exchange for a single license fee of One Hundred
Twenty Thousand and No/100 Dollars ($120,000), paid concurrently herewith,
USL hereby grants to LES an exclusive, nontransferable right and license
to use the Software for the license term as designated herein. In
connection with the foregoing, LES is further granted a license under and
to any applicable patents and applications for patent owned or licensed by
USL with respect to the Software, and the right to use all formulations,
trade secrets, trade names, registrations and other proprietary
information relating to the Software necessary to give effect to the
license set forth in the preceding sentence. The effectiveness of the
license granted herein is subject to the following conditions: (i) LES
shall not further sell, assign or otherwise transfer, convey or deliver
the Software, or the license granted to LES hereunder, to any other party
without the prior written consent of USL; and (ii) LES will use the
Software exclusively in the conduct of the Acquired Business Operations.

 

 

	 	 	 
	1.02	 	
No Transfer of Ownership. LES acknowledges that the Software and all
patents, trade secrets and other proprietary information relating to the
Software, are licensed by USL and that nothing in this Agreement shall be
construed to transfer to LES any ownership rights in or to the Software or
such information other than the limited license granted in Section 1.01
hereto.

II. ADDITIONAL AGREEMENTS

	 	 	 
	2.01	 	
Provision of Services by USL. For a period of six (6) months from the
date of this Agreement, USL shall provide and perform, or cause its
affiliates to provide and perform, certain information technology
maintenance and support services as reasonably requested from time to time
by LES (the “USL Services”). The USL Services to be provided hereunder
will be as more particularly set forth on Exhibit A hereto, and may
include the utilization by LES of the services of USL’s technology staff
on an “as available” basis not to exceed 40 hours per month. Additional
services may be provided by USL to LES upon the mutual agreement of the
parties. The personnel comprising USL’s technology staff shall be and
remain employees of USL at all times when performing the USL Services, and
LES shall not incur any responsibility for the payment of salary, wages,
benefits or severance claims arising out of or relating to the provision
of the USL Services hereunder.
	 	 	 
	2.02	 	
Service Fee. In exchange for the USL Services provided hereunder, LES
shall pay to USL 1.33 times USL’s straight labor cost, as set forth on
Exhibit B attached hereto, for the technology staff providing such USL
Services. Exhibit B may be modified from time to time by the mutual
agreement of the parties.
	 	 	 
	2.03	 	
Standards of Services. USL shall use reasonable efforts to cause any and
all personnel providing USL Services to perform such USL Services with the
same degree of care, skill and diligence with which it causes similar
services to be performed for itself and its various other subsidiaries.
	 	 	 
	2.04	 	
Payment of Service Fees. USL shall submit an invoice to LES each month
setting forth the USL Services performed during the preceding month and
the fees incurred and required to be paid by LES for such month. LES
shall pay all such invoices net thirty (30) days of receipt.
	 	 	 
	2.05	 	
Indemnification. Subject to the limitations on indemnities set forth in
the Asset Purchase Agreement, LES agrees to defend, indemnify and hold
harmless USL and its affiliates and its and their officers, directors,
managers, agents and employees, when performing the USL Services to be
provided hereunder, against any and all claims, losses, liabilities,
damages and causes of action, whether based on tort, breach of contract or
any other legal theory in favor of anyone, resulting in damage to LES’
property (including data), in connection with, or as an incident to, any
act or omission in connection with the performance of the USL Services or
fulfillment of the responsibilities under this Agreement, including
negligence (but not gross negligence or willful misconduct) of USL, its
affiliates, or their respective officers, directors, managers, agents or
employees.

2

 

	 	 	 
	2.06	 	
Disclaimer of Warranties. EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES
OF USL EXPRESSLY SET FORTH HEREIN AND IN THE ASSET PURCHASE AGREEMENT, USL
MAKES NO WARRANTY REGARDING THE SOFTWARE, EXPRESS OR IMPLIED. USL
SPECIFICALLY DISCLAIMS THAT THE SOFTWARE IS MERCHANTABLE OR FIT FOR ANY
PARTICULAR PURPOSE; THE SOFTWARE IS BEING LICENSED TO LES ON AN “AS IS”
“WHERE IS” BASIS.
	 	 	 
	2.07	 	
Historical Data. All historical data relative to the Acquired Business
Operations, together with any such data generated by LES after the Closing
Date, whether or not it resides on USL’s hardware, shall be and remain the
sole and exclusive property of LES. Notwithstanding the foregoing, USL
shall have the right to keep and maintain a copy of all such data for
archive purposes.

III. TERM AND TERMINATION

	 	 	 
	3.01	 	
Term. Unless terminated earlier by the mutual agreement of the parties,
this Agreement shall commence on the Closing Date and shall continue for a
term of one (1) year, except as otherwise set forth herein.
	 	 	 
	3.02	 	
Termination by Either Party. Either party may terminate this Agreement
prior to its expiration on the occurrence of a material default by the
other party which has not been cured within thirty (30) days of written
notice given to the defaulting party by the non-defaulting party.
	 	 	 
	3.03	 	
Duties Upon Termination. Upon expiration or termination of this
Agreement, LES agrees to immediately cease all use of the Software and to
promptly return to USL all manuals, memoranda, machinery, devices, and
other materials and property pertaining to the Software then in its
possession or control.

IV. CONSIDERATION

	 	 	 
	4.01	 	
Royalty. The consideration for the grant of the license of the Software
by USL to LES hereunder shall be as set forth in Section 1.01.

V. MISCELLANEOUS

	 	 	 
	5.01	 	
Assignment. Neither party may assign any of its rights or delegate any
of its duties under this Agreement without the prior written approval of
the other party.
	 	 	 
	5.02	 	
Governing Law. This Agreement shall be governed by and interpreted under
the internal laws of the State a Texas applicable to Agreements made and
to be performed wholly within the State of Texas.
	 	 	 
	5.03	 	
Entire Agreement. The terms of this Agreement are confidential and are
intended by the parties as the final expression of their agreement with
respect to such terms as are included in

3

 

	 	 	 
	 	 	
this Agreement and may not be
contradicted by evidence of any prior or contemporaneous agreement.
	 	 	 
	5.04	 	
Modifications and Amendments. This Agreement may not be modified, changed
or supplemented, nor may any obligations hereunder be waived, except by
written instrument signed by the parties to be charged.
	 	 	 
	5.05	 	
Waiver and Extension. No waiver of any breach of any agreement or
provision herein contained shall be deemed a waiver of any proceeding or
succeeding breach thereof, or of any other agreement or provision herein
contained. No extension of time for performance of any obligations or
acts hereunder shall be deemed an extension of the time for performance of
any other obligations or acts.
	 	 	 
	5.06	 	
Successors and assigns. This Agreement shall be binding upon each of the
parties, and their respective approved successors and assigns.
	 	 	 
	5.07	 	
Partial Invalidity. If any provision of this Agreement is found to be
invalid by any court of competent jurisdiction, the invalidity of such
provision shall not affect the validity of the remaining provisions
hereof. Without limiting the generality of the preceding sentence, if any
remedy set forth in this Agreement is determined to have failed its
essential purpose, then all other provisions of this Agreement, including
the limitations of liability and exclusions of damages shall nevertheless
remain in full force and effect.
	 	 	 
	5.08	 	
Corporate Authority. Each individual executing this Agreement on behalf
of any corporation or other entity which is a party to this Agreement
represents and warrants that he or she is duly authorized to execute and
deliver this Agreement on behalf of said entity.
	 	 	 
	5.09	 	
Notices. All notices required or permitted to be given hereunder shall be
in writing and may be personally served, transmitted by telegram or
facsimile, or may be deposited in the United States mail, registered or
certified, return receipt requested, postage prepaid to the address set
forth below or to such other address as such party shall have specified
most recently by written notice delivered in such manner. Notice
transmitted by personal delivery shall be deemed given on the date of
receipt. Notice transmitted by telegram, or fax shall be deemed given on
the date transmitted, provided receipt of the transmission shall have been
confirmed by telephone to the appropriate party.

	 	 	 
	LES:	 	
Liquid Environmental Solutions of Texas, L.P.
	 	 	
4960 Singleton Blvd.
	 	 	
Dallas, TX 75212
	 	 	
Attn: Alan Viterbi
	 	 	
Fax: 214-252-5065

4

 

	 	 	 
	USL:	 	
U S Liquids Inc.
	 	 	
411 N. Sam Houston Parkway, Suite 400
	 	 	
Houston, TX 77060
	 	 	
Attn: General Counsel
	 	 	
Fax: 281-272-4545

	 	 	 
	5.10	 	
Relationship of Parties. LES and USL shall not be deemed to be partners
or joint venturers nor to have any relationship other than that of
independent contractors and of licensor and licensee. No party shall have
the right to perform any act on behalf of or bind the other party without
the written authorization or agreement from the other party.

[Signatures on Following Page]

5

 

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

	 	 	 
	
U S LIQUIDS, INC.
	 	 	 
	By:	 	 
	 	 	

	 	 	
William M. DeArman, Chief Executive Officer
	 	 	 
	
LIQUID ENVIRONMENTAL SOLUTIONS
OF TEXAS, L.P.,
	
By CLST, Inc., its General Partner
	 	 	 
	By:	 	 
	 	 	

	 	 	
Alan Viterbi, President

6

 

EXHIBIT A

Agreements Regarding Software and USL Services

	1.	 	IT Hardware and shrink-wrap Software

	 	a.	 	Site Location Hardware and Infrastructure
	 
	 	 	 	All hardware and infrastructure assets at the LES site necessary
for the performance of the USL Services will be provided by LES and
shall at all times remain the property of LES.
	 
	 	b.	 	Datacenter Hardware and Infrastructure
	 
	 	 	 	USL will allow LES to utilize datacenter hardware and
infrastructure for normal business operations for a period of 6
months after the Closing Date. In the event LES needs additional
equipment or infrastructure components, LES will provide a hardware
and infrastructure request form which must be approved by USL’s IT
group.
	 
	 	c.	 	Shrink-Wrapped Software
	 
	 	 	 	USL currently has open license agreements with most of its
shrink-wrapped software vendors. These licenses are
non-transferable, and as such, USL will allow use of these software
licenses for a period of 6 months after the Closing Date
royalty-free.

	2.	 	Custom USL Applications

	 	a.	 	IMS
	 
	 	 	 	USL will allow LES to use its proprietary IMS software and database
for a period of 6 months after the Closing Date, royalty-free.
Additionally, LES will only be allowed to use IMS as part of the
normal conduct of the Acquired Business Operations. Any sale,
assignment, transfer, conveyance or unlawful use of this IMS
software will result in termination of this Agreement.
	 
	 	b.	 	Management Reporting Database and Application (MRD&A)
	 
	 	 	 	USL will allow LES to use its proprietary management reporting
application and database for a period of 6 months after the
transaction Closing Date, royalty-free. Additionally, LES will only
be allowed to use MRD&A as part of the normal conduct of the
Acquired Business Operations. Any sale, assignment, transfer,
conveyance or unlawful use of the MRD&A will result in termination
of this Agreement.
	 
	 	c.	 	Pricing Database and Application (PD&A)
	 
	 	 	 	USL will allow LES to use its proprietary pricing application and
database for a period of 6 months after the Closing Date,
royalty-free. Additionally, LES will only be allowed to use PD&A
as part of the normal conduct of the Acquired Business Operations.
Any sale, assignment, transfer, conveyance or unlawful use of the
PD&A will result in termination of this Agreement.

7

 

	 	 	 
	Note:	 	
It is expressly understood and agreed that all works, inventions,
programs, source code and other materials created, developed or performed
by USL in the course of its performance of this Agreement will be and will
remain the exclusive property of USL or its affiliates, and USL or its
affiliates will have all rights, title and interest therein, including
without limitation, copyrights, patents, trade secrets and any other
proprietary rights. LES will have a royalty-free, non-exclusive and
non-transferable right and license to use the aforementioned applications
and databases during the term of this Agreement solely for LES internal
purposes in accordance with the terms of this Agreement.

	3.	 	USL Services

     USL will provide service and support in the following areas for a period
of 6 months after the transaction Closing Date:

	 	a.	 	General
	 
	 	 	 	USL will provide general desktop, server and infrastructure support
to LES regardless of issue or problem. LES understands that this
support will be provided under the agreement that current USL load
sets and configuration will be supported. New applications or
configurations can not and will not be supported.
	 
	 	b.	 	Telco
	 
	 	 	 	USL will provide high-level support to LES relative to Telco issue
resolutions. However, USL has no control over current Telco
operations; thus, issue resolution time frame may vary based on
Telco timeliness. Additionally, all voice Telco services will be
transferred to LES on transaction Closing Date, and Frame Relay \
Internet charges will be billed to LES on a monthly basis relative
the acquired entities \ locations.
	 
	 	c.	 	IMS
	 
	 	 	 	IMS is a USL developed application, thus, USL will provide full
service and support for this application and database for the
duration indicated above. This will include general support, work
stoppage bug modifications, database support, report support, and
overall functional support. This does not include major code
revisions nor modifications of the existing IMS system as
determined by USL’s IT staff and Arya Farinpour.
	 
	 	d.	 	Great Plains 5.5 & FRX
	 
	 	 	 	USL will provide baseline support on Great Plains; however, this
application is fully supported by Microsoft. Thus, a support
agreement should be obtained from Microsoft and\or independent
consultant.
	 
	 	e.	 	Citrix
	 
	 	 	 	USL will provide baseline support on Citrix MetaFrame, however,
this application is fully supported by Citrix. Thus, a support
agreement should be obtained from Citrix and\or independent consultant.

8

 

	 	f.	 	Management Reporting and Pricing Application
	 
	 	 	 	USL hired outside consultants to created two additional custom
databases and applications to support management reporting issues
and pricing modeling within USL. Thus, USL will only provide
base-line support for these applications and databases. Higher
level support will be provided by Jane McManus (independent
contractor). LES will need to contract with Ms. McManus for code
modifications, database modifications, report creation and
modifications, and overall functional support.
	 
	 	g.	 	Disaster Recovery
	 
	 	 	 	USL will provide DRP support as part of their normal operating
procedures. Arya Farinpour will review current procedures and
continue to review and perform quality assurance checks throughout
to 6 month period in order to insure safeguard of data, and
operations.
	 
	 	h.	 	PBX
	 
	 	 	 	All PBX support agreements will transfer to LES on the transaction
Closing Date.

	 	 	 
	Note:	 	
If USL’s IT support team is unable to provide support based on
backlogged support work\issues in Keystone, LES will be required to seek
outside independent consultants in order to assist USL’s in house IT Team.
All service and support issues will be responded to within a 24 hour
period. However, resolution time for issues logged may vary, thus no fix
issue resolution time will be quoted. In the event that both parties do
not agree on resolution time, Arya Farinpour will insert himself in the
process as liaison in order to resolve the resolution time issue.
	 	 	 
	 	 	
Additionally, USL will endeavor to submit to LES invoices for USL
Services rendered hereunder within 15 days after the end of each month.
LES may have such invoices reviewed by Arya Farinpour prior to payment.

9

 

EXHIBIT B

Service Fees for USL Services

	 	 	 	 	 
	USL Employee	 	Hourly Rate
	
	 	

	Greg Fleck
	 	$	35.90	 
	Kevin Fletcher
	 	$	28.85	 
	Denise Poston
	 	$	36.06	 
	Don Sharp
	 	$	33.65	 
	Glenn Wyers
	 	$	43.27	 

10

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