Exhibit 10.1

EXECUTION COPY

STOCK PURCHASE AGREEMENT

BY AND AMONG

CASELLA WASTE SYSTEMS, INC.,

BLOW BROS. (D/B/A BBI WASTE INDUSTRIES AND BESTWAY DISPOSAL SERVICES),

THE STOCKHOLDERS OF BLOW BROS. (D/B/A BBI WASTE INDUSTRIES AND BESTWAY DISPOSAL
SERVICES) NAMED HEREIN,

ARTHUR E. ST. HILAIRE, SOLELY IN HIS CAPACITY AS THE REPRESENTATIVE

AND, FOR THE LIMITED PURPOSES SET FORTH HEREIN AND ON THE SIGNATURE PAGES
HERETO,

TRASH LADY, LLC AND TRASH LADY NH, LLC

December 6, 2012

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Table of Contents

Page

 

ARTICLE I PURCHASE AND SALE      1   

1.1

   Purchase and Sale      1   

1.2

   Purchase Price      1   

1.3

   Actions at the Closing      2   

1.4

   Adjustments Before and After the Closing      3   

1.5

   True-Up Escrow; Closing Net Working Capital      5   

1.6

   Escrow Arrangements      6   

1.7

   Representative      7   

1.8

   Withholding Obligations      8   

1.9

   Allocation      8    ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE SELLERS
     9   

2.1

   Ownership of Company Shares      9   

2.2

   Litigation      9   

2.3

   Noncontravention      9   

2.4

   Broker’s Fees      10   

2.5

   Investment Representations      10    ARTICLE III REPRESENTATIONS AND
WARRANTIES OF THE SELLERS AND THE COMPANY REGARDING THE
          COMPANY      11   

3.1

   Organization, Qualification and Corporate Power      11   

3.2

   Capitalization      11   

3.3

   Authorization      12   

3.4

   Noncontravention      12   

3.5

   Subsidiaries      13   

3.6

   Financial Statements      13   

3.7

   Absence of Certain Changes      14   

3.8

   Undisclosed Liabilities      14   

3.9

   Tax Matters      14   

3.10

   Assets      18   

3.11

   Owned Real Property      18   

3.12

   Real Property Leases      20   

3.13

   Intellectual Property      22   

3.14

   Inventory      23   

3.15

   Contracts      23   

3.16

   Accounts Receivable      25   

3.17

   Powers of Attorney      25   

3.18

   Insurance      25   

3.19

   Litigation      25   

3.20

   Employees      26   

3.21

   Employee Benefits      27   

3.22

   Environmental Matters      31   

3.23

   Legal Compliance      31   

 

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3.24

   Customers and Suppliers      31   

3.25

   Permits      32   

3.26

   Certain Business Relationships With Affiliates      32   

3.27

   Brokers’ Fees      32   

3.28

   Books and Records      32   

3.29

   Prepayments, Prebilled Invoices and Deposits      32   

3.30

   Government Contracts      33   

3.31

   Disclosure      33    ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE BUYER
     33   

4.1

   Organization and Corporate Power      33   

4.2

   Authorization of the Transaction      33   

4.3

   Noncontravention      34   

4.4

   Reports and Financial Statements      34    ARTICLE V COVENANTS      35   

5.1

   Closing Efforts      35   

5.2

   Governmental and Third-Party Notices and Consents      35   

5.3

   Operation of Business      35   

5.4

   Access to Information      37   

5.5

   Notice of Breaches      37   

5.6

   Exclusivity      38   

5.7

   Expenses      38   

5.8

   Access to Customers and Suppliers      38   

5.9

   Title Insurance      38   

5.10

   Surveys      39   

5.11

   Estoppels      39   

5.12

   FIRPTA Tax Certificate      40   

5.13

   Termination of 401(k) Plan      40   

5.14

   Termination of Employee Benefit Plans      40   

5.15

   Indebtedness      40   

5.16

   Transfer of Owned Real Property; Fixtures, Etc. Used by Company      40   
ARTICLE VI CONDITIONS TO CLOSING      41   

6.1

   Conditions to Obligations of the Buyer      41   

6.2

   Conditions to Obligations of Company and the Sellers      42    ARTICLE VII
INDEMNIFICATION      43   

7.1

   Indemnification by the Sellers      43   

7.2

   Indemnification Claims      44   

7.3

   Survival of Representations and Warranties      47   

7.4

   Limitations      48    ARTICLE VIII TAX MATTERS      49   

8.1

   Preparation and Filing of Tax Returns; Payment of Taxes      49   

8.2

   Allocation of Certain Taxes      50   

8.3

   Cooperation on Tax Matters; Tax Audits      51   

 

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ARTICLE IX POST-CLOSING COVENANTS      51   

9.1

   Proprietary Information      51   

9.2

   Solicitation and Hiring      52   

9.3

   Non-Competition      52   

9.4

   Agreement Not to Transfer Equity Consideration Shares      53   

9.5

   Cooperation with Respect to Permits      54   

9.6

   Cooperation with Respect to certain New Leases      54    ARTICLE X
TERMINATION      54   

10.1

   Termination of Agreement      54   

10.2

   Effect of Termination      55    ARTICLE XI DEFINITIONS      55    ARTICLE
XII MISCELLANEOUS      66   

12.1

   Press Releases and Announcements      66   

12.2

   No Third Party Beneficiaries      66   

12.3

   Entire Agreement      66   

12.4

   Succession and Assignment      67   

12.5

   Counterparts and Facsimile Signature      67   

12.6

   Headings      67   

12.7

   Notices      67   

12.8

   Governing Law      68   

12.9

   Amendments and Waivers      68   

12.10

   Severability      68   

12.11

   Submission to Jurisdiction      69   

12.12

   Construction      69   

 

Exhibits       Exhibit A    –        Form of Escrow Agreement Exhibit B    –    
   New Leases Exhibit B-1, B-2, B-3 and B-4            –        Form of Ground
Lease Agreement Exhibit C    –        Form of Oceanside Right of First Refusal
Agreement Exhibit D    –        Assignment, Collection and Release Agreement
Exhibit 1.5(c)    –        Revenue True-Up and Closing Net Working Capital
Illustrations Disclosure Schedules       Other Schedules       Schedule I   
–        Allocation of Purchase Price Schedule II    –        Estimated Closing
Adjustment Items Schedule 1.5    –        90 Day Accounts Receivables Schedule
3.20    –        Key Employees Schedule 6.1(a)    –        Required Waivers,
Consents, Notices and Filings

 

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STOCK PURCHASE AGREEMENT

This Stock Purchase Agreement (this “Agreement”) is entered into as of
December 6, 2012 by and among Casella Waste Systems, Inc., a Delaware
corporation (the “Buyer”), Blow Bros. (d/b/a BBI Waste Industries and Bestway
Disposal Services), a Maine corporation (the “Company”), the Persons named as
sellers on the signature pages attached hereto (each, a “Seller” and,
collectively, the “Sellers”), Arthur E. St. Hilaire, solely in his capacity as
the representative of the Sellers (the “Representative”) and, for the limited
purposes set forth herein and on the signature pages hereto, Trash Lady, LLC, a
Maine limited liability company (“Trash Lady ME”), and Trash Lady NH, LLC, a New
Hampshire limited liability company (“Trash Lady NH”).

Capitalized terms used in this Agreement shall have the meanings ascribed to
them in Article XI.

In consideration of the representations, warranties and covenants herein
contained, the Parties agree as follows.

INTRODUCTION

A. The Sellers own all of the issued and outstanding Company Shares.

B. Concurrently with the execution of this Agreement, and as a condition of the
willingness of the Buyer to enter into this Agreement, Trash Lady ME and the
Sellers are entering into the Oceanside Right of First Refusal Agreement with
the Buyer.

C. The Parties desire to enter into this Agreement pursuant to which each Seller
agrees to sell to the Buyer and the Buyer agrees to purchase from each Seller
all of the Company Shares owned by such Seller, on and subject to the terms and
conditions contained herein.

NOW, THEREFORE, in consideration for the mutual covenants and agreements set
forth herein and for good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the Parties hereto agree as follows:

ARTICLE I

PURCHASE AND SALE

1.1 Purchase and Sale. At the Closing, upon the terms and subject to the
conditions set forth herein, the Buyer shall purchase from each Seller, and each
Seller shall, severally and not jointly, sell, convey, assign, transfer, and
deliver to the Buyer, all of the Company Shares owned by such Seller, free and
clear of all Security Interests.

1.2 Purchase Price. Subject to adjustment as provided in Section 1.4 and
Section 1.5, the aggregate purchase price to be paid by the Buyer to the Sellers
shall consist of the following (the “Purchase Price”):

(a) $20,000,000 in cash (the “Cash Consideration Amount”); and

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(b) the Buyer shall issue or cause to be issued an aggregate of 625,000
restricted shares of the Class A Common Stock, par value $0.01 per share, of the
Buyer (the “Buyer Shares”) to the Sellers (such shares issued to the Sellers,
the “Equity Consideration Shares”). The Equity Consideration Shares are subject
to restrictions on transfer set forth in Section 9.4 below.

(c) The Purchase Price shall be allocated among the Sellers in accordance with
Schedule I.

1.3 Actions at the Closing.

(a) The Closing shall take place at the offices of Casella Waste Systems, Inc.
located at 110 Main Street, Suite 301, Saco, Maine commencing at 2:00 p.m. local
time on the Closing Date, or at such other location, time or date as is mutually
agreed by the parties. All transactions at the Closing shall be deemed to take
place simultaneously, and no transaction shall be deemed to have been completed
and no documents or certificates shall be deemed to have been delivered until
all other transactions are completed and all other documents and certificates
are delivered.

(b) Effective on the day preceding the Closing Date but conditioned upon the
occurrence of the Closing, the Company shall transfer and assign the accounts
receivable identified on Schedule 1.3(b) attached hereto to Trash Lady ME, and
the Company and Trash Lady ME shall execute and deliver the Assignment,
Collection and Release Agreement.

(c) Immediately prior to the Closing, the Company shall transfer $1,288,883.82
in cash by wire transfer of immediately available funds to one or more accounts
designated by Trash Lady ME.

(d) At the Closing:

(i) the Sellers shall deliver to the Buyer the Certificates representing all of
the Company Shares held by each Seller, duly endorsed in blank or accompanied by
stock powers duly executed in blank, in form satisfactory to the Buyer;

(ii) the Buyer shall pay the Closing Cash Consideration Amount in cash by wire
transfer of immediately available funds to one or more accounts designated by
the Representative;

(iii) the Buyer shall deliver or cause to be delivered to each Seller in book
entry form with Computershare Trust Company, N.A., the Company’s transfer agent,
such number of Equity Consideration Shares as is equal to the result obtained by
multiplying (A) such Seller’s respective pro rata allocation set forth on
Schedule I, by (B) the aggregate Equity Consideration Shares issuable to the
Sellers, in each case, rounded down to the nearest whole share. In lieu of any
fractional Equity Consideration Shares that such Seller would have otherwise
been issued, if any, the Buyer shall pay to such Seller a cash payment equal to
(x) the average of the highest and lowest selling price of the Buyer Shares
during the five trading days immediately preceding and ending on the trading day
that is three trading days prior to the Closing Date, multiplied by (y) the
fractional Equity Consideration Shares that such Seller would otherwise be
entitled to receive pursuant to this Section 1.3(d)(iii);

 

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(iv) the Buyer, the Representative and the Escrow Agent shall execute and
deliver the Escrow Agreement, and the Buyer shall deliver to the Escrow Agent
the Indemnification Escrow Amount and the True-Up Escrow Amount being placed in
escrow on the Closing Date pursuant to Section 1.6;

(v) the Buyer, Trash Lady ME and the Sellers shall execute and deliver the
Oceanside Right of First Refusal Agreement;

(vi) the Company shall deliver to the Buyer the Company Certificate;

(vii) the Buyer shall have deliver to the Representative the Buyer Certificate;

(viii) the Company and the Sellers shall deliver (or shall have delivered prior
to the Closing) to the Buyer the various certificates, instruments and documents
referred to in Section 6.1; and

(ix) the Buyer shall deliver (or shall have delivered prior to the Closing) to
the Representative the various certificates, instruments and documents referred
to in Section 6.2.

1.4 Adjustments Before and After the Closing. The Purchase Price shall be
subject to adjustment as follows:

(a) Not later than five days prior to the Closing Date, the Company shall
prepare and deliver to the Buyer a statement (the “Estimated Closing Adjustment
Statement”) setting forth the Estimated Closing Adjustment, together with all
relevant backup materials, in detail reasonably acceptable to the Buyer.
Schedule II attached hereto reflects the Closing Adjustment Items to be included
in the Estimated Closing Adjustment Statement, including estimated amounts in
respect thereof as of the date of this Agreement. If within two days following
receipt of the Estimated Closing Adjustment Statement, the Buyer has not given
the Company notice of its objection to the Estimated Closing Adjustment, the
Cash Consideration Amount shall be adjusted as set forth in the Estimated
Closing Adjustment Statement. If the Buyer gives such notice of objection, the
Company and the Buyer will work together in good faith to resolve the issues in
dispute. If all disputed issues are resolved, the amounts as agreed upon by the
Buyer and the Company shall be used to complete the Estimated Closing
Adjustment. If the Buyer and the Company are unable to resolve all such disputed
issues within three Business Days following Buyer’s receipt of the Estimated
Closing Adjustment Statement, the Estimated Closing Adjustment shall be as
determined by the Buyer.

(b) Not later than 60 days after the Closing Date, the Buyer shall deliver to
the Representative the Closing Adjustment Statement. The Closing Adjustment
Statement shall be prepared in accordance with GAAP applied consistently with
the Company’s past practices (to the extent such past practices are consistent
with GAAP).

 

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(c) The Closing Adjustment Statement delivered pursuant to paragraph (b) above
shall be accompanied by (i) all relevant backup materials, in detail reasonably
acceptable to the Representative, and (ii) a statement setting forth the amount,
if any, by which the total of the Closing Adjustment Items is greater than, or
less than, the Estimated Closing Adjustment.

(d) In the event that the Representative disputes the Closing Adjustment
Statement or the amount of the Closing Adjustment Items, the Representative
shall notify the Buyer in writing (the “Dispute Notice”) of the amount, nature
and basis of such dispute, within 30 days after delivery of the Closing
Adjustment Statement. Any such Dispute Notice shall specify those items or
amounts as to which the Representative disagrees, and the Representative shall
be deemed to have agreed with all other items and amounts contained in the
Closing Adjustment Statement and the amount of the Closing Adjustment Items
delivered pursuant to Sections 1.4(b) and 1.4(c). In the event of such a
dispute, the Buyer and the Representative shall first use their Reasonable Best
Efforts to reach agreement on the disputed items or amounts in order to
determine the amount of the Closing Adjustment Items, which amount shall not be
more than the Buyer’s calculation delivered pursuant to Section 1.4(c) nor less
than the Representative’s calculation delivered pursuant to this Section 1.4(d).
If the Buyer and the Representative are unable to resolve the dispute within 30
days after delivery of the Dispute Notice, then any remaining items in dispute
shall be submitted to an independent nationally recognized accounting firm
selected in writing by the Representative and the Buyer or, if the
Representative and the Buyer fail or refuse to select a firm within 10 days
after written request therefor by the Representative or the Buyer, such an
independent nationally recognized accounting firm shall be selected in
accordance with the rules of the Boston, Massachusetts office of the AAA (the
“Neutral Accountant”). All determinations and calculations pursuant to this
paragraph (d) shall consider only those Closing Adjustment Items as to which the
Representative has disagreed, shall be in writing and shall be delivered to the
Buyer and the Representative as promptly as practicable. The determination of
the Neutral Accountant as to the resolution of any dispute shall be binding and
conclusive upon all Parties. A judgment on the determination made by the Neutral
Accountant pursuant to this Section 1.4 may be entered in and enforced by any
court having jurisdiction thereover.

(e) The fees and expenses of the Neutral Accountant in connection with the
resolution of disputes pursuant to
Section 1.4(d) shall be shared equally by the Sellers, on the one hand, and the
Buyer, on the other hand; provided that if the Neutral Accountant determines
that one such party has adopted a position or positions with respect to the
Closing Adjustment Statement or the amount of the Closing Adjustment Items that
is frivolous or clearly without merit, the Neutral Accountant may, in its
discretion, assign a greater portion of any such fees and expenses to such
party.

(f) Immediately upon the expiration of the 30 day period for giving the Dispute
Notice, if no such notice is given, or upon notification by the Representative
to the Buyer that no such notice will be given, or immediately upon the
resolution of disputes, if any, pursuant to this Section 1.4, the Purchase Price
shall be adjusted as follows (the “Adjusted Purchase Price”):

 

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(i) If the amount of the Final Closing Adjustment exceeds the amount of the
Estimated Closing Adjustment, the Buyer shall be entitled to recover such
deficiency pursuant to the terms of the Escrow Agreement;

(ii) If the amount of the Final Closing Adjustment is equal to the amount of the
Estimated Closing Adjustment, the Purchase Price shall not be adjusted; and

(iii) If the amount of the Estimated Closing Adjustment exceeds the Final
Closing Adjustment (the “Closing Adjustment Surplus”), the Buyer shall deliver
95% of such Closing Adjustment Surplus to the Sellers and 5% of such Closing
Adjustment Surplus to the Escrow Agent to be held in escrow as additional
Indemnification Escrow Amount pursuant to the Escrow Agreement. The percentage
of the Closing Adjustment Surplus, if any, to be distributed to each Seller
shall be such Seller’s respective pro rata allocation set forth on Schedule I.

1.5 True-Up Escrow; Closing Net Working Capital. In addition to the adjustments
to the Purchase Price set forth in Section 1.4, the Purchase Price shall be
subject to further adjustment as follows:

(a) $1,000,000 shall be withheld from the Purchase Price paid by the Buyer at
the Closing (the “True-Up Escrow Amount”) and placed in escrow on the Closing
Date pursuant to Section 1.6. Within five Business Days following the True-Up
Date, the Buyer and the Respresentative shall jointly instruct the Escrow Agent
to disburse the True-Up Escrow Fund in accordance with the terms of the Escrow
Agreement, subject to the set-offs set forth below:

(i) If the Average Monthly Revenue is less than $1,040,000.00 (the “Guaranteed
Monthly Revenue”), then the Buyer shall be entitled to recover from the True-Up
Escrow Amount an amount determined by the following formula: (Guaranteed Monthly
Revenue – Average Monthly Revenue) x 13.94 (the “Revenue True-Up Adjustment
Amount”).

(ii) If the Closing Net Working Capital is less than zero, then the Buyer shall
be entitled to recover from the True-Up Escrow Amount, in addition to the amount
described in paragraph (i), an amount equal to the amount by which the Closing
Net Working Capital is less than zero (the “Net Working Capital Adjustment
Amount”).

(iii) If the sum of the Revenue True-Up Adjustment Amount and the Net Working
Capital Adjustment Amount exceeds the True-Up Escrow Amount (such excess, the
“Excess True-Up Escrow Amount”), then the Buyer shall be entitled to recover the
True-Up Escrow Amount in full, and the Sellers promptly shall reimburse the
Excess True-Up Escrow Amount to the Buyer by wire transfer of immediately
available funds to one or more accounts designated by the Buyer (or, at the
option of the Buyer, the Buyer may recover such amount from the Indemnification
Escrow Amount), and any recovery in accordance with this Section 1.5(a)(iii)
shall be treated as a reduction in the Purchase Price.

(iv) Notwithstanding anything to the contrary set forth herein, after
application of the set-offs set forth in
Sections 1.5(a)(i)-(iii) above, any interest or other amounts earned on the
True-Up Escrow Amount prior to the date of disbursement thereof in accordance
with this Section 1.5 and the Escrow Agreement shall be held in escrow as
additional Indemnification Escrow Amount pursuant to the Escrow Agreement.

 

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(b) Subject to Section 1.5(a) above, in the event the Closing Net Working
Capital is greater than zero (the “Closing Net Working Capital Surplus”):

(i) if the Revenue True-Up Adjustment Amount is greater than or equal to the
True-Up Escrow Amount (the amount by which the Revenue True-Up Adjustment Amount
exceeds the True-Up Escrow Amount, the “Revenue True-Up Deficit”), and the
Revenue True-Up Deficit is greater than or equal to the Closing Net Working
Capital Surplus, the Buyer shall be entitled to retain the Closing Net Working
Capital Surplus in full;

(ii) if the Revenue True-Up Adjustment Amount is greater than or equal to the
True-Up Escrow Amount and the Revenue True-Up Deficit is less than the Closing
Net Working Capital Surplus, (A) the Buyer shall be entitled to retain that
portion of the Closing Net Working Capital Surplus equal to the Revenue True-Up
Deficit Amount, and (B) the remainder of the Closing Net Working Capital
Surplus, if any, shall be delivered to the Sellers in an amount equal to 95% of
such remainder and to the Escrow Agent in an amount equal to 5% of such
remainder to be held in escrow as additional Indemnification Escrow Amount
pursuant to the Escrow Agreement; and

(iii) if the Revenue True-Up Adjustment Amount is less than the True-Up Escrow
Amount, the Buyer shall deliver 95% of any Closing Net Working Capital Surplus
to the Sellers and 5% of any Closing Net Working Capital Surplus to the Escrow
Agent to be held in escrow as additional Indemnification Escrow Amount pursuant
to the Escrow Agreement.

The percentage of the Closing Net Working Capital Surplus, if any, to be
distributed to each Seller pursuant to this Section 1.5(b) shall be such
Seller’s respective pro rata allocation set forth on Schedule I.

(c) Exhibit 1.5(c) attached hereto sets forth illustrations of the operation of
this Section 1.5.

1.6 Escrow Arrangements.

(a) On the Closing Date, the Buyer shall deliver to the Escrow Agent the
Indemnification Escrow Amount for the purpose of (a) providing security for any
adjustment to the amount of the Purchase Price pursuant to Section 1.4 and
(b) securing the indemnification obligations of the Sellers and the Company set
forth in Article VII.

(b) On the Closing Date, the Buyer shall deliver to the Escrow Agent the True-Up
Escrow Amount for the purpose of providing security for any adjustment to the
amount of the Purchase Price pursuant to Section 1.5.

(c) Each of the Indemnification Escrow Fund and the True-Up Escrow Fund shall be
held by the Escrow Agent under the Escrow Agreement pursuant to the terms
thereof. Each of the Indemnification Escrow Fund and the True-Up Escrow Fund
shall be held as a trust fund and shall not be subject to any lien, attachment,
trustee process or any other judicial process of any creditor of any party, and
shall be held and disbursed solely for the purposes and in accordance with the
terms of the Escrow Agreement.

 

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(d) The Sellers, by their execution of this Agreement, hereby approve the Escrow
Agreement and of all of the arrangements relating thereto, including the
placement of each of the Indemnification Escrow Amount and the True-Up Escrow
Amount in the escrow established pursuant to this Section 1.6.

1.7 Representative.

(a) In order to efficiently administer the transactions contemplated hereby,
including (i) the determination of the Final Closing Adjustment and the Adjusted
Purchase Price, (ii) the waiver of any condition to the obligations of the
Sellers to consummate the transactions contemplated hereby and (iii) the defense
and/or settlement of any claims for which the Sellers may be required to
indemnify the Buyer pursuant to this Agreement, the Sellers hereby designate the
Representative as their representative, attorney-in-fact and agent.

(b) The Sellers hereby authorize the Representative (i) to make all decisions
relating to the determination of the Final Closing Adjustment and the Adjusted
Purchase Price pursuant to Section 1.4, (ii) to take all action necessary in
connection with the waiver of any condition to the obligations of the Company
and the Sellers to consummate the transactions contemplated hereby, or the
defense and/or settlement of any claims for which the Sellers may be required to
indemnify the Buyer pursuant to Article VII hereof, (iii) to give and receive
all notices required to be given under the Agreement and (iv) to take any and
all additional action as is contemplated to be taken by or on behalf of the
Sellers by the terms of this Agreement, including the amendment hereof, and/or
the Escrow Agreement.

(c) In the event that the Representative becomes unable to perform his
responsibilities hereunder or resigns from such position, the Sellers (acting by
the vote of the Sellers who immediately prior to the Closing held at least a
majority of the outstanding Company Shares) shall select another representative
to fill the vacancy of the Representative initially chosen by the Sellers, and
such substituted representative shall be deemed to be the Representative for all
purposes of this Agreement and the documents delivered pursuant hereto.

(d) A decision, act, consent, instruction or action of the Representative,
including any agreement between the Representative and the Buyer relating to the
determination of the Final Closing Adjustment, the Adjusted Purchase Price or
the defense or settlement of any claims for which the Sellers may be required to
indemnify the Buyer pursuant to Article VII hereof, shall constitute a decision,
act, consent, instruction or action of all Sellers and shall be binding and
conclusive upon each of such Sellers, and the Buyer and the Escrow Agent may
rely upon any such decision, act, consent, instruction or action as being the
decision, act, consent or instructions of each and every such Seller. The Buyer
and the Escrow Agent are hereby relieved from any liability to any Seller for
any acts done by them in accordance with such decision, act, consent,
instruction or action of the Representative.

(e) By his, her or its execution of this Agreement, each Seller agrees that:

 

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(i) the Buyer shall be able to rely conclusively on the instructions and
decisions of the Representative as to the determination of the Final Closing
Adjustment and the Adjusted Purchase Price, the settlement of any claims for
indemnification by the Buyer pursuant to Article VII or any other actions
required or permitted to be taken by the Representative hereunder, and no party
shall have any cause of action against the Buyer for any action taken by the
Buyer in reliance upon the instructions or decisions of the Representative;

(ii) no Seller shall have any cause of action against the Representative for any
action taken, decision made or instruction given by the Representative under
this Agreement, except for fraud or willful breach of this Agreement by the
Representative;

(iii) the provisions of this Section 1.7 are independent and severable, are
irrevocable and coupled with an interest and shall be enforceable
notwithstanding any rights or remedies that any Seller may have in connection
with the transactions contemplated by this Agreement;

(iv) remedies available at Law for any breach of the provisions of this
Section 1.7 are inadequate; therefore, the Buyer shall be entitled to temporary
and permanent injunctive relief without the necessity of proving damages if the
Buyer brings an action to enforce the provisions of this Section 1.7; and

(v) the provisions of this Section 1.7 shall be binding upon the executors,
heirs, legal representatives, personal representatives, successors and permitted
assigns of each Seller, and any references in this Agreement to a Seller or the
Sellers shall mean and include the successors to the Seller’s rights hereunder,
whether pursuant to testamentary disposition, the Laws of descent and
distribution or otherwise.

1.8 Withholding Obligations. Each of the Buyer, the Company and the Escrow Agent
shall be entitled to deduct and withhold from the consideration otherwise
payable pursuant to any provision of this Agreement to any Person such amounts
as it reasonably determines that it is required to deduct and withhold with
respect to the making of such payment under the Code, or any other applicable
Law. To the extent that amounts are so withheld by the Buyer, the Company and
the Escrow Agent, as the case may be, such withheld amounts shall be treated for
all purposes of this Agreement as having been paid to the Persons in respect of
which such deduction and withholding was made by the Buyer, the Company or the
Escrow Agent, as the case may be. The Buyer shall also have the right to collect
any necessary Tax forms, including Form W-9 or the appropriate series of Form
W-8, as applicable, or such other forms relating to United States federal or
state withholding obligations as may be applicable or any similar information,
from the Sellers.

1.9 Allocation. The Buyer and the Sellers agree to allocate 5% of the Purchase
Price to the non-competition covenants set forth in Section 9.3 and the balance
of the Purchase Price to the Company Shares in accordance with Schedule I.
Except to the extent otherwise required by applicable Laws, the Buyer and the
Sellers will make all Tax Returns, reports, forms, declarations, claims and
other statements in a manner consistent with such allocation and will not make
any inconsistent statements or adjustments on any returns or during the course
of any Tax audit or other proceeding relating to Taxes.

 

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ARTICLE II

REPRESENTATIONS AND WARRANTIES OF THE SELLERS

The Sellers severally, and not jointly, represent and warrant to the Buyer that,
except as set forth in the Disclosure Schedule, the statements contained in this
Article II are true and correct with respect to the applicable Seller as of the
date of this Agreement and will be true and correct with respect to such Seller
as of the Closing as though made as of the Closing, except to the extent such
representations and warranties are specifically made as of a particular date (in
which case such representations and warranties will be true and correct as of
such date). The Disclosure Schedule shall be arranged in sections and
subsections corresponding to the numbered and lettered sections and subsections
contained in this Article II and in Article III. The disclosures in any section
or subsection of the Disclosure Schedule shall qualify only the corresponding
section or subsection in this Article II or Article III, as the case may be.

2.1 Ownership of Company Shares. The Seller holds beneficially and of record all
of the Seller’s Company Shares as set forth on Section 2.1 of the Disclosure
Schedule, free and clear of any Security Interests (other than restrictions on
transfer arising under the Securities Act and state or foreign securities Laws).
The Seller is not a party to any voting trust, proxy, or other agreement or
understanding with respect to the voting or transfer of any Company Shares. Upon
consummation of the purchase contemplated hereby, the Buyer will acquire from
the Seller good and marketable title to all Company Shares owned by the Seller,
free and clear of all Security Interests.

2.2 Litigation. The Seller is not a party to, subject to or bound by any
agreement or any judgment, order, writ, prohibition, injunction or decree of any
court or other governmental body which would prevent the execution or delivery
of this Agreement by such Seller or the transfer, conveyance and sale of the
Company Shares to be sold by such Seller to the Buyer pursuant to the terms
hereof, and there is no Legal Proceeding which is pending or has been threatened
in writing against the Seller that questions the validity of this Agreement or
any action taken or to be taken by the Seller in connection herewith or that
could reasonably be expected to have a material adverse effect on the Seller’s
ability to consummate the transactions contemplated by this Agreement.

2.3 Noncontravention. Neither the execution and delivery by the Seller of this
Agreement or any other agreement contemplated hereby, nor the performance by the
Seller of its obligations hereunder or thereunder, nor the consummation by the
Seller of the transactions contemplated hereby or thereby, will:

(a) require on the part of the Seller any notice to or filing with, or any
permit, authorization, consent or approval of, any Governmental Entity;

(b) conflict with, result in a breach of, constitute (with or without due notice
or lapse of time or both) a default under, result in the acceleration of
obligations under, create in any party the right to accelerate, terminate,
modify or cancel, or require any notice, consent or waiver under, any contract,
lease, sublease, license, sublicense, franchise, permit, indenture, agreement or
mortgage for borrowed money, instrument of indebtedness, Security Interest or
other arrangement to which the Seller is a party or by which the Seller is bound
or to which any of the assets of the Seller are subject;

 

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(c) result in the imposition of any Security Interest upon any assets of the
Seller; or

(d) violate any order, writ, injunction, decree, statute, rule or regulation
applicable to the Seller or any of its respective properties or assets.

Section 2.3 of the Disclosure Schedule sets forth a true, correct and complete
list of all consents and approvals of third parties and Governmental Entities,
and all filings and notices, that are required in connection with the
consummation by the Seller of the transactions contemplated by this Agreement.

2.4 Broker’s Fees. The Seller has no liability or obligation to pay any fees or
commissions to any broker, finder or agent with respect to the transactions
contemplated by this Agreement.

2.5 Investment Representations.

(a) The Seller is acquiring the Equity Consideration Shares for the Seller’s own
account for investment only, and not with a view to, or for sale in connection
with, any distribution of the Equity Consideration Shares in violation of the
Securities Act, or any rule or regulation under the Securities Act.

(b) The Seller has had such opportunity as the Seller has deemed adequate to
obtain from representatives of the Buyer such information as is necessary to
permit the Seller to evaluate the merits and risks of the Seller’s investment in
the Company, including the Disclosure Statement delivered to the Seller on the
date hereof.

(c) The Seller has sufficient experience in business, financial and investment
matters to be able to evaluate the risks involved in the purchase of the Equity
Consideration Shares and to make an informed investment decision with respect to
such purchase.

(d) The Seller can afford a complete loss of the value of the Equity
Consideration Shares, and the Seller is able to bear the economic risk of
holding the Equity Consideration Shares for an indefinite period.

(e) The Seller understands and acknowledges that (i) the Equity Consideration
Shares have not been registered under the Securities Act and are “restricted
securities” within the meaning of Rule 144 under the Securities Act (as
described further in Section 9.4 below), (ii) the Equity Consideration Shares
are subject to restrictions on transfer set forth in Section 9.4 below; (iii) in
any event, the exemption from registration under Rule 144 will not be available
for at least six months and even then will not be available unless a public
market then exists for the Buyer Shares, adequate information concerning the
Buyer is then available to the public, and other terms and conditions of Rule
144 are complied with; and (iv) there is now no registration statement on file
with the SEC with respect to the Equity Consideration Shares, and the Company
has no obligation or current intention to register the Equity Consideration
Shares under the Securities Act.

 

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(f) A legend substantially in the following form will be placed on the
certificate(s) representing the Equity Consideration Shares: “The shares
represented by this certificate have not been registered under the Securities
Act of 1933, as amended, and may not be sold, transferred or otherwise disposed
of in the absence of an effective registration statement under such Act or an
opinion of counsel satisfactory to the corporation to the effect that such
registration is not required.”

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE SELLERS AND THE COMPANY REGARDING THE
COMPANY

The Sellers severally, and not jointly, and the Company represent and warrant to
the Buyer that, except as set forth in the Disclosure Schedule, the statements
contained in this Article III are true and correct as of the date of this
Agreement and will be true and correct as of the Closing as though made as of
the Closing, except to the extent such representations and warranties are
specifically made as of a particular date (in which case such representations
and warranties will be true and correct as of such date).

3.1 Organization, Qualification and Corporate Power. The Company is a
corporation duly organized, validly existing and in corporate and Tax good
standing under the Laws of the State of Maine. The Company is duly qualified to
conduct business and is in corporate and Tax good standing under the Laws of
each jurisdiction listed in Section 3.1 of the Disclosure Schedule, which
jurisdictions constitute the only jurisdictions in which the nature of the
Company’s business or the ownership or leasing of its properties requires such
qualification. The Company has all requisite corporate power and authority to
carry on the business in which it is engaged and to own and use the properties
owned and used by it. The Company has furnished to the Buyer complete and
accurate copies of its articles of incorporation and by-laws (each as amended to
date). The Company is not in default under or in violation of any provision of
its articles of incorporation or by-laws.

3.2 Capitalization. The authorized capital stock of the Company consists of
2,000 shares of common stock, no par value per share, of which, as of the date
of this Agreement, 200 shares were issued and outstanding, and 1,800 shares were
held in the treasury of the Company. Section 3.2 of the Disclosure Schedule sets
forth a complete and accurate list, as of the date of this Agreement, of all
stockholders of the Company, indicating the number and class or series of shares
of capital stock of the Company held by each stockholder and (for shares other
than common stock) the number of shares of common stock (if any) into which such
shares are convertible. No subscription, warrant, option, convertible security
or other rights (contingent or otherwise) to purchase or acquire any shares of
capital stock of the Company are authorized or outstanding. The Company has no
obligation (contingent or otherwise) to issue any subscription, warrant, option,
convertible security or other such right, or to issue or distribute to holders
of any shares of its capital stock any evidences of indebtedness or assets of
the Company. The Company has no obligation (contingent or otherwise) to
purchase, redeem or otherwise acquire

 

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any shares of capital stock of the Company or any interest therein or to pay any
dividend or to make any other distribution in respect thereof. There are no
outstanding or authorized stock appreciation, phantom stock or similar rights
with respect to the Company. All of the issued and outstanding shares of capital
stock of the Company have been and on the Closing Date will be duly authorized,
validly issued, fully paid, nonassessable and free of all preemptive rights. All
of the issued and outstanding shares of capital stock of the Company have been
offered, issued and sold by the Company in compliance with all applicable
federal and state securities Laws.

3.3 Authorization. The Company has all requisite power and authority to execute
and deliver this Agreement and the other agreements contemplated hereby and to
perform its obligations hereunder and thereunder. The execution and delivery by
the Company of this Agreement and the other agreements contemplated hereby and
the performance by the Company of this Agreement and the other agreements
contemplated hereby and the consummation by the Company of the transactions
contemplated hereby and thereby have been duly and validly authorized by all
necessary corporate action on the part of the Company. This Agreement and all
other agreements contemplated hereby have been, or will be as of the Closing
Date, duly and validly executed and delivered by the Company and constitutes, or
will constitute, upon its execution and delivery by the Company, a valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms.

3.4 Noncontravention. Neither the execution and delivery by the Company of this
Agreement or any other agreement contemplated hereby, nor the performance by the
Company of its obligations hereunder or thereunder, nor the consummation by the
Company of the transactions contemplated hereby or thereby, will:

(a) conflict with or violate any provision of the articles of incorporation or
by-laws of the Company, each as amended or restated to date;

(b) require on the part of the Company any notice to or filing with, or any
permit, authorization, consent or approval of, any Governmental Entity;

(c) conflict with, result in a breach of, constitute (with or without due notice
or lapse of time or both) a default under, result in the acceleration of
obligations under, create in any party the right to accelerate, terminate,
modify or cancel, or require any notice, consent or waiver under, any contract,
lease, sublease, license, sublicense, franchise, permit, indenture, agreement or
mortgage for borrowed money, instrument of indebtedness, Security Interest or
other arrangement to which the Company is a party or by which the Company is
bound or to which any of the assets of the Company are subject;

(d) result in the imposition of any Security Interest upon any assets of the
Company; or

(e) violate any order, writ, injunction, decree, statute, rule or regulation
applicable to the Company or any of its properties or assets.

Section 3.4 of the Disclosure Schedule sets forth a true, correct and complete
list of all consents and approvals of third parties and Governmental Entities,
and all filings and notices, that are required in connection with the
consummation by the Company of the transactions contemplated by this Agreement.

 

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3.5 Subsidiaries. The Company does not own or control directly or indirectly or
have any direct or indirect equity participation or similar interest in any
corporation, partnership, limited liability company, joint venture, trust or
other business association or entity.

3.6 Financial Statements.

(a) The Company has provided to the Buyer the reviewed consolidated balance
sheets and statements of income, changes in stockholders’ equity and cash flows
of the Company as of the end of and for each of the years ended December 31,
2009, December 31, 2010 and December 31, 2011, unreviewed consolidated balance
sheets and statements of income, changes in stockholders’ equity and cash flows
of the Company as of each of the months ended January through September 2012,
and the Most Recent Balance Sheet and the unreviewed consolidated statements of
income, changes in stockholders’ equity and cash flows for the nine months ended
as of the Most Recent Balance Sheet Date (collectively, the “Financial
Statements”).

(b) The Financial Statements (i) comply as to form in all respects with all
applicable accounting requirements and (ii) were prepared in accordance with
GAAP applied on a consistent basis throughout the periods covered thereby
(except as may be indicated in the notes to such financial statements).

(c) Each of the Financial Statements fairly presents the financial position of
the Company as of the dates thereof and the results of its operations and cash
flows for the periods indicated, consistent with the books and records of the
Company, except that the unreviewed interim financial statements are subject to
normal recurring year-end adjustments (which, individually and in the aggregate,
will not be material in amount or effect) and do not include footnotes.

(d) The Company maintains disclosure controls and procedures that are effective
to ensure that all material information concerning the Company is made known on
a timely basis to the individuals responsible for the preparation of the
Company’s financial statements. Section 3.6(d) of the Disclosure Schedule lists,
and the Company has delivered to the Buyer copies of, all written descriptions
of, and all policies, manuals and other documents promulgating, such disclosure
controls and procedures.

(e) Section 3.6(e) of the Disclosure Schedule lists, and the Company has
delivered to the Buyer, copies of the documentation creating or governing, all
securitization transactions and “off-balance sheet arrangements” (as defined in
Item 303(a)(4) of Regulation S-K of the SEC) effected by the Company.
Section 3.6(e) of the Disclosure Schedule lists all non-audit services performed
by Ouellette & Associates, P.A., the Company’s current accountant (“Ouellette &
Associates”) for the Company.

(f) The Company has not extended or maintained credit, arranged for the
extension of credit, modified or renewed an extension of credit, in the form of
a personal loan or otherwise, to or for any director or executive officer of the
Company. Section 3.6(f) of the Disclosure Schedule identifies any loan or
extension of credit maintained by the Company to which the second sentence of
Section 13(k)(1) of the Exchange Act would apply.

 

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(g) Ouellette & Associates is and has been at all times since its engagement by
the Company (x) “independent” with respect to the Company within the meaning of
Regulation S-X and (y) in compliance with subsections (g) through (l) of
Section 10A of the Exchange Act (to the extent applicable) and the related rules
of the SEC and the Public Company Accounting Oversight Board.

3.7 Absence of Certain Changes. Since December 31, 2011, (a) there has occurred
no event or development which, individually or in the aggregate, has had, or
could reasonably be expected to have in the future, a Company Material Adverse
Effect, and (b) the Company has not taken any of the actions set forth in
Section 5.3.

3.8 Undisclosed Liabilities. The Company does not have any liability (whether
known or unknown, whether absolute or contingent, whether liquidated or
unliquidated and whether due or to become due), except for (a) liabilities shown
on the Most Recent Balance Sheet, a copy of which is attached to Section 3.8(a)
of the Disclosure Schedule, (b) liabilities which have arisen since the Most
Recent Balance Sheet Date in the Ordinary Course of Business and which are
listed in Section 3.8(b) of the Disclosure Schedule and (c) contractual
liabilities which are not required by GAAP to be reflected on a balance sheet.
Section 3.8(c) of the Disclosure Schedule sets forth, as of the date hereof,
(i) a specific list of the Company’s Indebtedness immediately prior to the
Closing, which such list includes the creditor and aggregate amount outstanding
(including interest accrued on such principal balance and prepayment penalties,
if any) and (ii) all liens and Security Interests on or affecting any of the
Company’s property or assets.

3.9 Tax Matters.

(a) The Company has properly filed on a timely basis all material Tax Returns
that it is and was required to file, and all such Tax Returns were true, correct
and complete in all material respects. The Company has properly paid on a timely
basis all Taxes, whether or not shown on any of their respective Tax Returns,
that were due and payable. All Taxes that the Company is or was required by Law
to withhold or collect have been withheld or collected and, to the extent
required, have been properly paid on a timely basis to the appropriate
Governmental Entity. The Company has complied with all information reporting and
back-up withholding requirements including maintenance of the required records
with respect thereto, in connection with amounts paid to any employee,
independent contractor, stockholder, creditor or other third party.

(b) The unpaid Taxes of the Company for periods through the Most Recent Balance
Sheet Date do not exceed the accruals and reserves for Taxes (excluding accruals
and reserves for deferred Taxes established to reflect timing differences
between book and Tax income) set forth on the Most Recent Balance Sheet. All
Taxes attributable to the period from and after the Most Recent Balance Sheet
Date and continuing through the Closing Date are, or will be, attributable to
the conduct by the Company of its operations in the Ordinary Course of Business
and are, or will be, consistent both as to type and amount with Taxes
attributable to such comparable period in the immediately preceding year.

 

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(c) The Company is not and has never been a member of any group of corporations
with which it has filed (or been required to file) consolidated, combined, or
unitary Tax Returns. The Company does not have any actual or potential liability
under Treasury Regulation Section 1.1502-6 (or any comparable or similar
provision of federal, state, local, or foreign Law), or as a transferee or
successor, by contract, or otherwise for any Taxes of any Person (including
without limitation any affiliated, combined, or unitary group of corporations or
other entities that included the Company during a prior Taxable period). The
Company is not or has not been required to make a basis reduction pursuant to
Treasury Regulation Section 1.1502-20(b) or Treasury Regulation
Section 1.337(d)-2(b).

(d) The Company has delivered or made available to the Buyer (i) complete and
correct copies of all Tax Returns of the Company relating to Taxes for all
Taxable periods for which the applicable statute of limitations has not yet
expired and (ii) complete and correct copies of all private letter rulings,
revenue agent reports, information document requests, notices of assessment,
notices of proposed deficiencies, deficiency notices, protests, petitions,
closing agreements, settlement agreements, pending ruling requests and any
similar documents submitted by, received by or agreed to by or on behalf of the
Company relating to Taxes for all Taxable periods for which the applicable
statute of limitations has not yet expired. The federal income Tax Returns of
the Company have been audited by the Internal Revenue Service or are closed by
the applicable statute of limitations for all taxable years through the taxable
year specified in Section 3.9(d) of the Disclosure Schedule. No examination or
audit of any Tax Return of the Company by any Governmental Entity is currently
in progress or, to the Knowledge of the Company, threatened or contemplated, and
the Company does not know of any basis upon which a Tax deficiency or assessment
could reasonably be expected to be asserted against the Company. The Company has
not been informed by any jurisdiction that the jurisdiction believes that the
Company was required to file any Tax Return that was not filed.

(e) The Company has not (i) waived any statute of limitations with respect to
Taxes or agreed to extend the period for assessment or collection of any Taxes,
which waiver or extension is still in effect, (ii) requested any extension of
time within which to file any Tax Return, which Tax Return has not yet been
filed, or (iii) executed or filed any power of attorney relating to Taxes with
any Governmental Entity.

(f) The Company is not a party to any Tax litigation. The Company is not and has
never been a party to any transaction or agreement that is in conflict with the
Tax rules on transfer pricing in any relevant jurisdiction. The Company has
disclosed on its federal income Tax Returns all positions taken therein that
could give rise to a substantial understatement of federal income Tax within the
meaning of Section 6662 of the Code. The Company has never engaged in any
“reportable transaction” or “listed transaction” for purposes of Treasury
Regulations Sections 1.6011-4(b) or 301.6111-2(b)(2) or any analogous provision
of state, local or foreign Law.

 

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(g) There are (and immediately following the Closing there will be) no Liens or
other encumbrances with respect to Taxes upon any of the assets or properties of
the Company, other than with respect to Taxes not yet due and payable.

(h) The Company has not been a United States real property holding corporation
within the meaning of Section 897(c)(2) of the Code during the applicable period
specified in Section 897(c)(l)(A)(ii) of the Code.

(i) The Company has not made any payments, is not obligated to make any
payments, and is not a party to any agreement, contract, arrangement, or plan
that could obligate it to make any payments, that are or could be, separately or
in the aggregate, “excess parachute payments” within the meaning of Section 280G
of the Code (without regard to Sections 280G(b)(4) and 280G(b)(5) thereof).

(j) None of the assets of the Company (i) is property that is required to be
treated as being owned by any other person pursuant to the provisions of former
Section 168(f)(8) of the Internal Revenue Code of 1954, (ii) is “tax exempt use
property” within the meaning of Section 168(h) of the Code, (iii) directly or
indirectly secures any debt the interest on which is tax exempt under
Section 103(a) of the Code, or (iv) is subject to a lease under Section 7701(h)
of the Code or under any predecessor section.

(k) There is no limitation on the utilization by the Company of its net
operating losses, built-in losses, Tax credits, or similar items under Sections
382, 383 or 384 of the Code or comparable provisions of foreign, state or local
Law (other than any such limitation arising as a result of the consummation of
the transactions contemplated by this Agreement).

(l) The Company has not undergone a change in its method of accounting resulting
in an adjustment to its Taxable income pursuant to Section 481 of the Code. The
Company will not be required to include any item of income in, or exclude any
item of deduction from, Taxable income for any Taxable period (or portion
thereof) ending after the Closing Date as a result of any (i) change in method
of accounting for a Taxable period ending on or prior to the Closing Date (or as
a result of the transactions contemplated by this Agreement) under Section 481
of the Code (or any corresponding or similar provision of federal, state, local
or foreign Tax Law); (ii) “closing agreement” as described in Section 7121 of
the Code (or any corresponding or similar provision of state, local or foreign
Tax Law) executed on or prior to the Closing Date; (iii) deferred intercompany
gain or any excess loss account described in Treasury Regulations under
Section 1502 of the Code (or any corresponding or similar provision of state,
local or foreign Tax Law); (iv) installment sale or open transaction disposition
made on or prior to the Closing Date; or (v) prepaid amount received on or prior
to the Closing Date. The Company currently utilizes the accrual method of
accounting for income Tax purposes, and such method of accounting has not
changed in the past five (5) years.

(m) The Company has not participated in or cooperated with an international
boycott within the meaning of Section 999 of the Code.

 

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(n) The Company has not distributed to its stockholders or security holders
stock or securities of a controlled corporation, nor have stock or securities of
the Company been distributed, in a transaction to which Section 355 or
Section 361 of the Code applies.

(o) Schedule 3.9(o) of the Disclosure Schedule sets forth each jurisdiction
(other than United States federal) in which the Company files, or is required to
file or has been required to file a Tax Return or is or has been liable for
Taxes on a “nexus” basis and each jurisdiction that has sent notices or
communications of any kind requesting information relating to the Company’s
nexus with such jurisdiction.

(p) The Company (i) is not a party to any joint venture, partnership, or other
arrangement that is treated as a partnership for federal income Tax purposes,
(ii) has not made an entity classification (“check-the-box”) election under
Section 7701, (iii) is not and has never been a stockholder of a “controlled
foreign corporation” as defined in Section 957 of the Code (or any similar
provision of state, local or foreign Law), or (iv) is not and has never been a
stockholder in a “passive foreign investment company” within the meaning of
Section 1297 of the Code.

(q) The Company is not a “consenting corporation” within the meaning of
Section 341(f) of the Code, and none of the assets of the Company are subject to
an election under Section 341(f) of the Code.

(r) To the Knowledge of the Company, there is no basis for the assertion of any
claim relating or attributable to Taxes, which, if adversely determined, would
result in any Lien on the assets of the Company, or would reasonably be expected
to have, individually or in the aggregate, a Company Material Adverse Effect.

(s) The Company has maintained complete and accurate records, including all
applicable exemption, resale or other certificates, of (i) all sales to
purchasers claiming to be exempt from sale and use Taxes based on the exempt
status of the purchaser, and (ii) all other sales for which sales Tax or use Tax
was not collected by the Company and as to which the seller is required to
receive and retain resale certificates or other certificates relating to the
exempt nature of the sale or use or non-applicability of the sale and use Taxes.

(t) The Company does not have any actual or potential liability under the
escheat Laws or any other Laws of any jurisdiction relating to abandoned
property.

(u) The Company is not bound by any Tax Indemnity, Tax sharing or Tax allocation
agreement.

(v) No holder of shares of Company Shares holds any Company Shares that are
non-transferable and subject to a substantial risk of forfeiture within the
meaning of Section 83 of the Code with respect to which a valid election under
Section 83(b) of the Code has not been made.

(w) The Company has been a validly electing S corporation within the meaning of
Code Section 1361 and Section 1362 at all times since 1987 and the Company will
be an S corporation up to and including the day before the Closing Date.

 

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(x) Section 3.9(x) of the Disclosure Schedule sets forth a complete and accurate
list of all agreements, rulings, settlements or other Tax documents relating to
Tax incentives between the Company and a Governmental Entity.

(y) The Company does not have and has never had a permanent establishment in any
foreign country as defined in any applicable Tax treaty or convention between
the United States and such foreign country.

(z) The Company does not have and has never had an account or any other interest
in a bank or other financial institution located outside of the United States.

3.10 Assets.

(a) The Company is the true and lawful owner of, and has good title to, all of
the assets (tangible or intangible) purported to be owned by the Company, free
and clear of all Security Interests. The Company owns or leases all tangible
assets sufficient for the conduct of its businesses as presently conducted and
as presently proposed to be conducted, which tangible assets are reflected in
the Financial Statements (other than to the extent disposed of in the Ordinary
Course of Business). Each such tangible asset is free from material defects, has
been maintained in accordance with normal industry practice, is in good
operating condition and repair (subject to normal wear and tear) and is suitable
for the purposes for which it presently is used (except to the extent such
tangible assets are owned by the Company and used solely for spare parts in the
Ordinary Course of Business).

(b) Section 3.10(b) of the Disclosure Schedule lists individually (i) all fixed
assets (within the meaning of GAAP) of the Company, indicating the cost,
accumulated book depreciation (if any) and the net book value of each such fixed
asset as of the Most Recent Balance Sheet Date and (ii) all other assets of a
tangible nature (other than inventories) of the Company.

(c) Each item of equipment, motor vehicle and other asset that the Company has
possession of pursuant to a lease agreement or other contractual arrangement is
in such condition that, upon its return to its lessor or owner in its present
condition at the end of the relevant lease term or as otherwise contemplated by
the applicable lease or contract, the obligations of the Company to such lessor
or owner will have been discharged in full.

3.11 Owned Real Property. Section 3.11 of the Disclosure Schedule lists the
property address, legal description and owner of all of all real property the
Company owns or has ever owned (whether or not subject to a New Lease). With
respect to each piece of Owned Real Property:

(a) Trash Lady ME or Trash Lady NH, as applicable, has good and clear record and
marketable title to such Owned Real Property as set forth on Section 3.11 of the
Disclosure Schedule, insurable by a recognized national title insurance company
at standard rates, free and clear of any Security Interest, easement,
environmental lien or other lien, environmental use restriction, covenant or
other restriction or other encumbrance, except for recorded easements, covenants
and other non-environmental restrictions which do not impair the uses, occupancy
or value of such Owned Real Property;

 

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(b) there are no (i) pending or, to the Knowledge of the Company, threatened
condemnation proceedings relating to such Owned Real Property, (ii) pending or,
to the Knowledge of the Company, threatened litigation or administrative actions
relating to such Owned Real Property, or (iii) other matters affecting adversely
the use, occupancy or value thereof;

(c) the legal description for such Owned Real Property contained in the deed
thereof describes such Owned Real Property fully and adequately; the Owned Real
Property, including the buildings and improvements thereon may be used as of
right under, and is in compliance with, applicable zoning and land use Laws,
building codes and other municipal or governmental requirements for the Intended
Uses, and such buildings and improvements are located within the boundary lines
of the described parcels of land, are not in violation of current setback
requirements, zoning Laws and ordinances and do not encroach on any easement
which may burden the land; the land does not serve any adjoining property for
any purpose inconsistent with the use of the land; and such Owned Real Property
is not located within any flood plain or subject to any similar type restriction
for which any permits or licenses necessary to the use thereof have not been
obtained;

(d) there are no leases, subleases, licenses or agreements, written or
unwritten, granting to any party or parties (other than the Company) the right
of use or occupancy of any portion of such Owned Real Property;

(e) there are no outstanding options or rights of first refusal to purchase or
lease such Owned Real Property, or any portion thereof or interest therein;

(f) all facilities located on such Owned Real Property are supplied with
utilities and other services necessary for the operation of such facilities,
including gas, electricity, water, telephone, sanitary sewer and storm sewer,
all of which services are adequate for the use of such Owned Real Property and
in accordance with all applicable Laws and are provided via public roads or via
permanent, irrevocable, appurtenant easements benefiting such Owned Real
Property;

(g) such Owned Real Property abuts on and has direct vehicular access to a
public road or access to a public road via a permanent, irrevocable, appurtenant
easement benefiting such property;

(h) the Company has not received notice of, and to the Knowledge of the Company,
there is no proposed or pending proceeding to change or redefine the zoning
classification of all or any portion of such Owned Real Property;

(i) the improvements constructed on such Owned Real Property are in good
condition and proper order, free of roof leaks, insect infestation, and material
construction defects, as applicable, and all mechanical and utility systems
servicing such improvements, as applicable, are in good condition and proper
working order, free of material defects;

(j) such Owned Real Property is an independent unit which does not rely on any
facilities (other than the facilities of public utility and water companies)
located on any other property (i) to fulfill any zoning, building code, or other
municipal or governmental requirement,

 

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(ii) for structural support or the furnishing of any essential building systems
or utilities, including, but not limited to electric, plumbing, mechanical,
heating, ventilating, and air conditioning systems, or (iii) to fulfill the
requirements of any lease. No building or other improvement not included in such
Owned Real Property relies on any part of such Owned Real Property to fulfill
any zoning, building code, or other municipal or governmental requirement or for
structural support or the furnishing of any essential building systems or
utilities. Such Owned Real Property is assessed by local property assessors as a
Tax parcel or parcels separate from all other Tax parcels; and

(k) the Company has delivered to the Buyer complete and accurate copies of all
of the following materials relating to such Owned Real Property: title insurance
policies and commitments; deeds; encumbrance and easement documents and other
documents and agreements affecting title to or for operation of such Owned Real
Property; surveys; as-built construction plans; construction contracts and
warranties; appraisals; structural inspection, soils, environmental assessment
and similar reports.

3.12 Real Property Leases. Section 3.12 of the Disclosure Schedule lists all
Leases and lists the term of such Lease, any extension and expansion options,
and the rent payable, security deposit, maintenance and like charges thereunder,
and any advance rent thereunder. The Company has delivered to the Buyer complete
and accurate copies of the Leases (except for any unwritten Lease, in which
case, Section 3.12 of the Disclosure Schedule sets forth all material terms and
provisions of such unwritten Lease). The real property leased, subleased,
licensed or otherwise occupied pursuant to the Leases is referred to herein as
the “Leased Real Property”. The Company does not now and has never leased,
subleased, licensed or otherwise occupied any real estate other than the Owned
Real Property and the Leased Real Property. With respect to each Lease:

(a) such Lease is legal, valid, binding, enforceable and in full force and
effect against the Company and, to the Company’s Knowledge, against each other
party thereto;

(b) such Lease will continue to be legal, valid, binding, enforceable and in
full force and effect against the Company and, to the Company’s Knowledge,
against each other party thereto immediately following the Closing in accordance
with the terms thereof as in effect immediately prior to the Closing;

(c) none of the Company or, to the Knowledge of the Company, any other party, is
in breach or violation of, or default under, any such Lease, and no event has
occurred, is pending or, to the Knowledge of the Company, is threatened, which,
after the giving of notice, with lapse of time, or otherwise, would constitute a
breach or default by the Company or, to the Knowledge of the Company, any other
party under such Lease;

(d) there are no disputes, oral agreements or forbearance programs in effect as
to such Lease;

(e) the Company has not assigned, subleased, licensed, transferred, conveyed,
mortgaged, deeded in trust or encumbered any interest in such Lease or Leased
Property;

 

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(f) all facilities leased or subleased thereunder are supplied with utilities
and other services adequate for the operation of said facilities, in each case,
from adjacent public roads abutting the Leased Property;

(g) the Company has no Knowledge of any Security Interest, easement, covenant or
other restriction applicable to the real property subject to such Lease which
would reasonably be expected to impair the current uses or the occupancy by the
Company of the property subject thereto;

(h) no construction, alteration or other leasehold improvement work with respect
to the Lease remains to be paid for or performed by the Company;

(i) the Company is not obligated to pay any leasing or brokerage commission
relating to such Lease and will not have any obligation to pay any leasing or
brokerage commission upon the renewal of the Lease;

(j) the Financial Statements contain adequate reserves to provide for the
restoration of the property subject to the Lease at the end of the respective
Lease term, to the extent required by the Lease;

(k) the landlord under each of the Leases has good and clear record and
marketable title to such Leased Real Property, and the Company has good and
clear record and marketable leasehold title to the Leased Real Property, in each
case insurable by a recognized national title insurance company at standard
rates, free and clear of any Security Interest, easement, environmental lien or
other lien, environmental use restriction, covenant or other restriction or
other encumbrance, except for recorded easements, covenants and other
non-environmental restrictions which do not impair the uses, occupancy or value
of such Leased Real Property; provided, that neither the Leased Real Property
nor the Lease are subject to a Security Interest.

(l) there are no (i) pending or, to the Knowledge of the Company, threatened
condemnation proceedings relating to such Leased Real Property or any Lease,
(ii) pending or, to the Knowledge of the Company, threatened litigation or
administrative actions relating to such Leased Real Property and Leases or
(iii) other matters affecting adversely the Intended Uses, occupancy or value
thereof;

(m) the legal description for such Leased Real Property contained in the Lease
thereof describes such Leased Real Property fully and adequately; the Leased
Real Property, including the buildings and improvements located thereon, leased
thereunder or used in connection therewith, may be used as of right under, and
is in compliance with, applicable zoning and land use Laws, building codes and
other municipal or governmental requirements for the Intended Uses, and such
buildings and improvements are located within the boundary lines of the
described parcels of land, are not in violation of current setback requirements,
zoning Laws and ordinances and do not encroach on any easement which may burden
the land; the land does not serve any adjoining property for any purpose
inconsistent with the use of the land; and such Leased Real Property is not
located within any flood plain or subject to any similar type restriction for
which any permits or licenses necessary to the use thereof have not been
obtained;

 

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(n) there are no outstanding options or rights of first refusal to purchase,
lease or take and assignment or sublease of or under such Lease or Leased Real
Property, or any portion thereof or interest therein;

(o) such Leased Real Property abuts on and has direct vehicular access to a
public road or access to a public road via a permanent, irrevocable, appurtenant
easement benefiting such property;

(p) the Company has not received notice of, and to the Knowledge of the Company,
there is no proposed or pending proceeding to change or redefine the zoning
classification of all or any portion of such Leased Real Property;

(q) the improvements constructed on such Leased Real Property are in good
condition and proper order, free of roof leaks, insect infestation, and material
construction defects, as applicable, and all mechanical and utility systems
servicing such improvements, as applicable, are in good condition and proper
working order, free of material defects;

(r) such Leased Real Property is an independent unit which does not rely on any
facilities (other than the facilities of public utility and water companies)
located on any other property (i) to fulfill any zoning, building code, or other
municipal or governmental requirement, (ii) for structural support or the
furnishing of any essential building systems or utilities, including, but not
limited to electric, plumbing, mechanical, heating, ventilating, and air
conditioning systems, or (iii) to fulfill the requirements of the Lease. No
building or other improvement not included in such Leased Real Property relies
on any part of such Leased Real Property to fulfill any zoning, building code,
or other municipal or governmental requirement or for structural support or the
furnishing of any essential building systems or utilities. Such Leased Real
Property is assessed by local property assessors as a tax parcel or parcels
separate from all other Tax parcels; and

(s) the Company has delivered to the Buyer complete and accurate copies of all
of the following materials relating to such Leased Real Property: title
insurance policies and commitments; deeds; encumbrance and easement documents
and other documents and agreements affecting title to or for operation of such
Leased Real Property; surveys; as-built construction plans; construction
contracts and warranties; appraisals; structural inspection, soils,
environmental assessment and similar reports.

3.13 Intellectual Property. Section 3.13 of the Disclosure Schedule lists all
Company Registrations, in each case enumerating specifically the applicable
filing or registration number, title, jurisdiction in which filing was made or
from which registration issued, date of filing or issuance, names of all current
applicant(s) and registered owners(s), as applicable. All assignments of Company
Registrations to the Company have been properly executed and recorded. The
Company is the sole and exclusive owner of all Company Owned Intellectual
Property, free and clear of any Security Interests and has the right to use all
other intellectual property used by it pursuant to valid and enforceable license
agreements listed on Section 3.13 of the Disclosure Schedule. To the Knowledge
of the Company, no activity undertaken by the Company with respect to the
business of the Company, as such business has been conducted, is conducted or is
currently contemplated to be conducted by the Company, infringes or violates, or
constitutes a misappropriation of, any intellectual property rights of any third
party.

 

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3.14 Inventory. Other than general office supplies, the Company does not
maintain any inventory.

3.15 Contracts.

(a) Section 3.15(a) of the Disclosure Schedule lists the following agreements
(written or oral (provided that
Section 3.15(a) of the Disclosure Schedule sets forth all material terms and
provisions of any such oral agreement)) to which the Company is a party as of
the date of this Agreement:

(i) any Customer Contracts;

(ii) any agreement (or group of related agreements) for the lease of personal
property from or to third parties providing for lease payments in excess of
$5,000 per annum or having a remaining term longer than 12 months;

(iii) any agreement (or group of related agreements) for the purchase or sale of
products or for the furnishing or receipt of services (A) which calls for
performance over a period of more than one year, (B) which involves more than
the sum of $5,000, or (C) in which the Company has granted “most favored nation”
pricing provisions or exclusive marketing or distribution rights relating to any
products or territory or have agreed to purchase a minimum quantity of goods or
services (including airspace) or have agreed to purchase goods or services
(including airspace) exclusively from a certain party;

(iv) any agreement concerning the establishment or operation of a partnership,
joint venture or limited liability company;

(v) any agreement with Oceanside or any equityholder or other Affiliates
thereof;

(vi) any agreement (or group of related agreements) under which the Company has
created, incurred, assumed or guaranteed (or may create, incur, assume or
guarantee) indebtedness (including capitalized lease obligations) or under which
the Company has imposed (or may impose) a Security Interest on any of its
assets, tangible or intangible;

(vii) any agreement for the disposition of any significant portion of the assets
or business of the Company (other than sales of products in the Ordinary Course
of Business) or any agreement for the acquisition of the assets or business of
any other entity (other than purchases of inventory or components in the
Ordinary Course of Business);

(viii) any agreement concerning exclusivity, confidentiality, noncompetition or
non-solicitation;

(ix) any employment or consulting agreement;

 

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(x) any severance (or agreement that includes provisions for the payment of
severance), “stay pay,” retention, termination or similar agreement with any
officer or other employee;

(xi) any settlement agreement or settlement-related agreement (including any
agreement in connection with which any employment-related claim is settled);

(xii) any agreement involving any current or former officer, director,
stockholder, manager or member of the Company or an Affiliate thereof;

(xiii) any agreement under which the consequences of a default or termination
would reasonably be expected to have a Company Material Adverse Effect;

(xiv) any agreement which contains any provisions requiring the Company to
indemnify any other party (excluding indemnities contained in agreements for the
purchase, sale or license of products entered into in the Ordinary Course of
Business);

(xv) any agreement that could reasonably be expected to have the effect of
prohibiting or impairing the conduct of the business of the Company, the Buyer
or any subsidiary of the Buyer as currently conducted and as currently proposed
to be conducted;

(xvi) any agreement under which the Company is restricted from selling its
products or providing services to customers, potential customers or any class of
customers, in any geographic area, during any period of time or any segment of
the market or line of business;

(xvii) any agreement for the acquisition by the Company of any operating
business or the capital stock of any other person;

(xviii) any agreement (i) for Indebtedness of the Company or (ii) pursuant to
which there are liens or Security Interests on or affecting any of the Company’s
property or assets, in each case, including any such agreement to which the
Company is a party or bound prior to the consummation of the transactions
contemplated by this Agreement; and

(xix) any other agreement (or group of related agreements) either involving more
than $25,000 or not entered into in the Ordinary Course of Business.

(b) The Company has delivered to the Buyer a complete and accurate copy of each
agreement listed in
Section 3.12, Section 3.13 and Section 3.15(a) of the Disclosure Schedule (each,
a “Contract” and, collectively, the “Contracts”). With respect to each Contract:
(i) the Contract is legal, valid, binding and enforceable and in full force and
effect against the Company and, to the Company’s Knowledge, against each other
party thereto; (ii) the Contract will continue to be legal, valid, binding and
enforceable and in full force and effect against the Company immediately
following the Closing in accordance with the terms thereof as in effect
immediately prior to the Closing; and (iii) neither the Company nor, to the
Knowledge of the Company, any other party, is in breach or violation of, or
default under, any such agreement, and no event has occurred, is pending or, to
the Knowledge of the Company, is threatened, which, after the giving of notice,
with lapse of time, or otherwise, would constitute a breach or default by the
Company or, to the Knowledge of the Company, any other party under such
agreement.

 

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(c) The Company is not a party to any oral contract, agreement or other
arrangement which, if reduced to written form, would be required to be listed in
Section 3.15(a) of the Disclosure Schedule under the terms of Section 3.15(a).
The Company is not a party to any written or oral arrangement (i) to perform
services or sell products which is expected to be performed at, or to result in,
a loss or (ii) for which the customer has already been billed or paid that have
not been fully accounted for on the Most Recent Balance Sheet.

3.16 Accounts Receivable. All accounts receivable of the Company reflected on
the Most Recent Balance Sheet (other than those paid since such date) are valid
receivables subject to no setoffs or counterclaims and are current and
collectible (within 90 days after the date on which it first became due and
payable), net of the applicable reserve for bad debts on the Most Recent Balance
Sheet. A complete and accurate list of the accounts receivable reflected on the
Most Recent Balance Sheet, showing the aging thereof, is included in
Section 3.16 of the Disclosure Schedule. All accounts receivable of the Company
that have arisen since the Most Recent Balance Sheet Date are valid receivables
subject to no setoffs or counterclaims and are collectible (within 90 days after
the date on which it first became due and payable), net of a reserve for bad
debts related to such accounts receivable in an amount proportionate to the
reserve shown on the Most Recent Balance Sheet. The Company has not received any
written notice from an account debtor stating that any account receivable in an
amount in excess of $5,000 is subject to any contest, claim or setoff by such
account debtor.

3.17 Powers of Attorney. There are no outstanding powers of attorney executed on
behalf of the Company.

3.18 Insurance. Section 3.18 of the Disclosure Schedule lists each insurance
policy (including fire, theft, casualty, comprehensive general liability,
workers compensation, business interruption, environmental, product liability
and automobile insurance policies and bond and surety arrangements) to which the
Company is a party, a named insured or otherwise the beneficiary of coverage,
all of which are in full force and effect. Such insurance policies are of the
type and in amounts customarily carried by organizations conducting businesses
or owning assets similar to those of the Company. All claims eligible to be
asserted by the Company under any such policy have been asserted on a timely
basis. There is no material claim pending under any such policy as to which
coverage has been questioned, denied or disputed by the underwriter of such
policy. All premiums due and payable under all such policies have been paid, the
Company will not be liable for retroactive premiums or similar payments, and
Company is otherwise in compliance in all material respects with the terms of
such policies. The Company has no Knowledge of any threatened termination of, or
premium increase with respect to, any such policy. Each such policy will
continue to be enforceable and in full force and effect immediately following
the Closing in accordance with the terms thereof as in effect immediately prior
to the Closing.

3.19 Litigation. There is no Legal Proceeding which is pending or has been
threatened in writing against the Company. There are no judgments, orders or
decrees outstanding against the Company.

 

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3.20 Employees.

(a) Section 3.20(a)(i) of the Disclosure Schedule contains a list of all
employees of the Company, along with the position, location, and hourly,
overtime, and/or salary rate of compensation of each such person, estimated or
target annual incentive compensation of each such person and employment status
of each such person (including whether the person is on leave of absence and the
dates of any such leave). Section 3.20(a)(ii) of the Disclosure Schedule
contains a list of all employees of the Company who are a party to an agreement
containing non-competition and/or non-solicitation obligations, copies of such
agreements have previously been delivered to the Buyer, and such agreements will
continue to be legal, valid, binding and enforceable and in full force and
effect immediately following the Closing in accordance with the terms thereof as
in effect immediately prior to the Closing. Section 3.20(a)(iii) of the
Disclosure Schedule contains a list of all employees of the Company who are
working in the United States but are not citizens or lawful permanent residents
of the United States, and for each, the basis of his or her employment
authorization and the expiration of such authorization. To the Knowledge of the
Company, no Key Employee or group of employees has any plans to terminate
employment with the Company or not to continue employment with the Buyer. The
Company is in compliance with all applicable Laws relating to the hiring,
employment, and termination of employees, including all Laws respecting labor,
employment, employment discrimination, terms and conditions of employment, wages
and hours, employee classification, workers’ compensation, the Immigration
Reform and Control Act, the Worker Adjustment Retraining and Notification Act,
and occupational safety and health requirements. To the Knowledge of the
Company, there are no pending or threatened investigations, claims, charges,
suits, legal actions, matters or litigations with any court, the IRS, Department
of Labor, Pension Benefit Guarantee Company, or any state Taxing authority,
state unemployment insurance agency, or any other state or federal agency.

(b) There are no amounts of compensation outstanding (including bonuses,
vacation pay and other liabilities accrued through the date hereof) to any
employee or former employee of the Company (other than accrued amounts
representing salary or bonus entitlements due for the current pay period or for
the reimbursement of legitimate business expenses).

(c) The Company is not a party to or bound by any union contract or collective
bargaining agreement, and there are no union contracts or collective bargaining
agreements being negotiated by the Company. The Company has not experienced any
strikes, slowdowns, lockouts, work stoppages, grievances, claims of unfair labor
practices or other collective bargaining disputes, nor are any such disputes
pending or threatened. The Company has no Knowledge of any organizational effort
made or threatened (including the filing of a petition for certification),
either currently or within the past two years, by or on behalf of any labor
union or works council with respect to employees of the Company.

(d) Except as set forth on Section 3.20(d) of the Disclosure Schedule, none of
the Company, any director, officer, manager or other Key Employee of the
Company, or any Affiliate of any of the foregoing, has any existing undisclosed
contractual relationship with the Company or owns, directly or indirectly,
individually or collectively, any interest in any entity which is in a business
similar or competitive to the business of the Company.

 

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(e) All persons employed by the Company are employees at will and are employed
such that the Company may lawfully terminate their employment at any time, with
or without cause, without any severance or other continuing payment or benefit
obligations, and without creating any cause of action against the Company or
otherwise giving rise to any liability of the Company for wrongful discharge,
breach of contract or tort or any other similar cause of action at Law or in
equity.

(f) The Company is not a party to any agreement with any current or former
employee that provides for the payment of compensation or severance in the event
of a change in control of the Company.

(g) Section 3.20(g) of the Disclosure Schedule contains a list of all
consultants and independent contractors currently engaged by the Company, along
with each such Person’s date of retention and rate of remuneration, and a
description of the services each such Person provides for the Company. None of
such consultants or independent contractors is a party to a written agreement or
contract with the Company. Each person whom the Company has retained as an
independent contractor qualifies or qualified as an independent contractor and
not as an employee of the Company under the Code, the Fair Labor Standards Act,
and all applicable state Laws, including state wage and unemployment insurance
Laws. The Company has fully and accurately reported the compensation of their
consultants and independent contractors on IRS Forms 1099 or other applicable
Tax forms for independent contractors.

(h) The Company has not incurred, and no circumstances exist under which the
Company could incur, any liability arising from the misclassification of
employees as consultants or independent contractors, or from the
misclassification of consultants or independent contractors as employees.

(i) The Company has withheld and paid to the appropriate Governmental Entity or
is holding for payment not yet due to such Governmental Entity all amounts
required to be withheld from its employees and is not liable for any arrears of
wages, Taxes, penalties or other sums for failure to comply with any of the
foregoing. There are no, and at no time have there been, any independent
contractors who have provided services to the Company for a period of six
consecutive months or longer. The Company has never had any temporary or leased
employees.

(j) Section 3.20(j) of the Disclosure Schedule contains a complete and accurate
list of (A) all of the Company’s written employee handbooks, employment manuals,
employment policies, and affirmative action plans, and (B) written summaries of
all unwritten employment policies and practices.

(k) The Company has not triggered and will not trigger, at any time from the
date that is 90 days immediately preceding the date of this Agreement and
continuing through the Closing Date, any obligations under any applicable plant
closing and/or mass layoff Law.

3.21 Employee Benefits.

(a) Section 3.21(a) of the Disclosure Schedule contains a complete and accurate
list of all Company Plans. Complete and accurate copies of (i) all Company Plans
which have been reduced to writing, together with all amendments thereto,
(ii) written summaries of all unwritten Company Plans, (iii) all related trust
agreements, insurance contracts

 

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and summary plan descriptions, (iv) all annual reports filed on IRS Form 5500,
5500C or 5500R and (for all funded plans) all plan financial statements for the
last five plan years for each Company Plan, (v) all reports regarding the
satisfaction of the nondiscrimination requirements of Sections 410(b), 401(k),
and 401(m) of the Code for the past five years, (vi) all disclosures received by
the Company with respect to ERISA Section 408(b)(2) or provided by a Company
Plan pursuant to ERISA Section 404(a) and (vii) any written or electronic
communications from or to the Internal Revenue Service, the United States
Department of Labor (“DOL”) or any other Governmental Entity with respect to a
Company Plan (including any voluntary correction submissions), have been
delivered to the Buyer. All Company Plans comply with all applicable Law.

(b) Each Company Plan has been administered in all material respects in
accordance with its terms and each of the Company and the ERISA Affiliates has
in all material respects met its obligations with respect to each Company Plan
and has timely made all required contributions thereto. The Company, each ERISA
Affiliate and each Company Plan are in compliance in all material respects with
the currently applicable provisions of ERISA and the Code and the regulations
thereunder (including Section 4980 B of the Code, Subtitle K, Chapter 100 of the
Code and Sections 601 through 608 and Section 701 et seq. of ERISA). All filings
and reports as to each Company Plan required to have been submitted to the
Internal Revenue Service or to the DOL have been duly submitted. No Company Plan
has assets that include securities issued by the Company or any ERISA Affiliate.

(c) There are no Legal Proceedings (except claims for benefits payable in the
normal operation of the Company Plans and proceedings with respect to qualified
domestic relations orders) against or involving any Employee Benefit Plan or
asserting any rights or claims to benefits under any Employee Benefit Plan that
could give rise to any material liability to the Company. No Company Plan is, or
within the last three calendar years has been, the subject of, or has received
notice that it is the subject of, examination by a Governmental Entity or a
participant in a government sponsored amnesty, voluntary compliance or similar
program.

(d) All the Company Plans that are intended to be qualified under Section 401(a)
of the Code have received determination letters or opinion letters from the
Internal Revenue Service to the effect that such Company Plans are qualified and
the plans and the trusts related thereto are exempt from federal income Taxes
under Sections 401(a) and 501(a), respectively, of the Code, no such
determination letter or opinion letter has been revoked and revocation has not
been threatened, and no such Company Plan has been amended since the date of its
most recent determination letter or application therefor in any respect, and no
act or omission has occurred, that would adversely affect its qualification or
materially increase its cost. There has been no termination or partial
termination of such a Company Plan. Each Company Plan that is required to
satisfy Section 401(k)(3) or Section 401(m)(2) of the Code has been tested for
compliance with, and satisfies the requirements of Section 401(k)(3) and
Section 401(m)(2) of the Code for each plan year ending prior to the Closing
Date. Each Company Plan that provides for compliance with Section 404(c) of
ERISA or is intended to comply with such provision, so complies. Each Company
Plan is in compliance with ERISA Section 408(b)(2) (or other applicable
exemption) and with ERISA Section 404(a).

 

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(e) Neither the Company nor any ERISA Affiliate has ever maintained or
contributed to an Employee Benefit Plan that was ever subject to Section 412 of
the Code or Title IV of ERISA.

(f) At no time has the Company or any ERISA Affiliate been obligated to
contribute to any “multiemployer plan” (as defined in Section 4001(a)(3) of
ERISA).

(g) With respect to the Company Plans, there are no benefit obligations for
which contributions have not been made or properly accrued and there are no
benefit obligations that have not been accounted for by reserves, or otherwise
properly footnoted in accordance with GAAP, on the Financial Statements. The
Company does not have any liability for benefits (contingent or otherwise) under
any Company Plan, except as set forth on the Financial Statements. The assets of
each Company Plan that is funded are reported at their fair market value on the
books and records of such Employee Benefit Plan.

(h) All group health plans of the Company and any ERISA Affiliate comply in all
respects with the requirements of COBRA, Code Section 5000, the Health Insurance
Portability and Accountability Act, the Patient Protection and Affordable Care
Act (“PPACA”), and any other applicable Laws. Neither the Company nor any ERISA
Affiliate has any liability under or with respect to COBRA for its own actions
or omissions, or those of any predecessor. No Company Plan provides health care
continuation coverage beyond termination of employment, except to COBRA
qualified beneficiaries at their own, and not at the Company’s, expense. No
Person (or any beneficiary of such Person) is entitled to receive any welfare
benefits, including death or medical benefits (whether or not insured) beyond
retirement or other termination of employment, other than as applicable Law
requires, and there have been no written or oral commitments inconsistent with
the foregoing. Each group health plan subject to PPACA is grandfathered.

(i) No act or omission has occurred and no condition exists with respect to any
Employee Benefit Plan that would subject the Buyer, the Company, any ERISA
Affiliate or any plan participant to (i) any material fine, penalty, Tax or
liability of any kind imposed under ERISA, the Code or any other applicable Law
or (ii) any contractual indemnification or contribution obligation protecting
any fiduciary, insurer or service provider with respect to any Company Plan, nor
will the transactions contemplated by this Agreement give rise to any such
liability.

(j) No Company Plan is funded by, associated with or related to a “voluntary
employee’s beneficiary association” within the meaning of Section 501(c)(9) of
the Code.

(k) Each Company Plan is amendable and terminable unilaterally by the Company at
any time without liability or expense to the Company or such Company Plan as a
result thereof (other than for benefits accrued through the date of termination
or amendment and reasonable administrative expenses related thereto), and no
Company Plan, plan documentation or agreement, summary plan description or other
written communication distributed generally to employees by its terms prohibits
the Company from amending or terminating any such Company Plan, or in any way
limits such action. The investment vehicles used to fund any Company Plan may be
changed at any time without incurring a sales charge, surrender fee or other
similar expense.

 

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(l) Section 3.21(l) of the Disclosure Schedule discloses each: (i) agreement
with any stockholder, director, executive officer, member, manager, other
employee or contractor of the Company (A) the benefits of which are contingent,
or the terms of which are altered, upon the occurrence of a transaction
involving the Company of the nature of any of the transactions contemplated by
this Agreement, (B) providing any term of employment or compensation guarantee
or (C) providing severance benefits or other benefits after the termination of
employment of such stockholder, director, executive officer, member, manager,
other employee or contractor; (ii) agreement, plan or arrangement under which
any person may receive payments from the Company that may be subject to the Tax
imposed by Section 4999 of the Code or included in the determination of such
person’s “parachute payment” under Section 280G of the Code without regard to
Section 280G(b)(4); and (iii) agreement or plan binding the Company, including
any stock option plan, stock appreciation right plan, restricted stock plan,
stock purchase plan, severance benefit plan or Company Plan, any of the benefits
of which will be increased, or the vesting of the benefits of which will be
accelerated, by the occurrence of any of the transactions contemplated by this
Agreement or the value of any of the benefits of which will be calculated on the
basis of any of the transactions contemplated by this Agreement.

(m) Section 3.21(m) of the Disclosure Schedule sets forth the policy of the
Company with respect to accrued vacation, accrued sick time and earned time off
and the amount of such liabilities as of the Most Recent Balance Sheet Date.

(n) Section 3.21(n) of the Disclosure Schedule sets forth all bonuses earned by
the Company’s employees through the Closing Date that are expected to be accrued
on the Closing Adjustment Statement but unpaid as of the Closing Date.

(o) There are no loans or extensions of credit from the Company or any ERISA
Affiliate to any employee of or independent contractor to the Company.

(p) There is no plan or commitment, whether legally binding or not, to create
any additional Company Plans or to modify any existing Company Plans with
respect to employees of the Company.

(q) There is no corporate-owned life insurance (COLI), split-dollar life
insurance policy or any other life insurance policy on the life of any employee
of the Company or on any Company Stockholder.

(r) Each Company Plan that is a “nonqualified deferred compensation plan” (as
defined in Code Section 409A(d)(1)) has been operated since January 1, 2005 in
good faith compliance with Code Section 409A and IRS Notice 2005-1. No Company
Plan that is a “nonqualified deferred compensation plan” has been materially
modified (as determined under Notice 2005-1) after October 3, 2004. No event has
occurred that would be treated by Code Section 409A(b) as a transfer of property
for purposes of Code Section 83.

 

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3.22 Environmental Matters.

(a) The Company is currently, and at all times since January 1, 2007 has been,
in compliance with all applicable Environmental Laws. There is no pending or, to
the Knowledge of the Company, threatened civil or criminal litigation, written
notice of violation, administrative proceeding, or investigation, inquiry or
information request by any Governmental Entity, relating to any Environmental
Law involving the Company.

(b) The Company does not have any liabilities or obligations arising from the
release or threatened release of any Materials of Environmental Concern into the
environment.

(c) The Company is not a party to or bound by any court order, administrative
order, consent order or other agreement with any Governmental Entity or third
party entered into in connection with any legal obligation or liability arising
under any Environmental Law.

(d) Set forth in Section 3.22(d) of the Disclosure Schedule is a list of all
documents (whether in hard copy or electronic form) that contain any
environmental reports, investigations and audits relating to premises currently
or previously owned or operated by the Company (whether conducted by or on
behalf of the Company or a third party, and whether done at the initiative of
the Company or directed by a Governmental Entity or other third party) which
were issued or conducted during the past five years and which the Company has
possession of or access to. A complete and accurate copy of each such document
has been provided to the Buyer.

(e) The Company has no Knowledge of any material environmental liability
relating to any solid or hazardous waste transporter or treatment, storage or
disposal facility that has been used by the Company.

3.23 Legal Compliance. The Company is currently conducting, and has at all times
since January 1, 2007 conducted, its business in material compliance with each
applicable Law of any federal, state, local or foreign government, or any
Governmental Entity. The Company has not received any notice or communication
from any Governmental Entity alleging noncompliance with any applicable Law.

3.24 Customers and Suppliers. Section 3.24 of the Disclosure Schedule sets forth
a list of (a) all of the customers of the Company during the last full fiscal
year and the interim period through the Most Recent Balance Sheet Date, (b) the
amount of revenues accounted for by each such customer that accounted for more
than 1% of the revenues of the Company during each such period (such customers,
each a “Major Customer” and, collectively, the “Major Customers”) and (c) each
supplier that is the sole supplier of any significant product or service to the
Company. No Major Customer or any such supplier has indicated within the past
year that it will stop, or decrease the rate of, buying products or services or
supplying products or services, as applicable, to the Company. The Company has
good relations with its customers. No unfilled customer order or commitment
obligating the Company to provide or deliver products or perform services will
result in a loss to the Company upon completion of performance. No purchase
order or commitment of the Company is in excess of normal requirements, nor are
prices provided therein in excess of current market prices for the products or
services to be provided thereunder.

 

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3.25 Permits. Section 3.25 of the Disclosure Schedule sets forth a list of all
Permits issued to or held by the Company (including those issued or required
under Environmental Laws and those relating to the occupancy or use of owned or
leased real property). Such listed Permits are the only Permits that are
required for the Company to conduct its business as presently conducted or as
proposed to be conducted. Each such Permit is in full force and effect, the
Company is in compliance with the terms of each such Permit, and to the
Knowledge of the Company, no suspension or cancellation of such Permit is
threatened and there is no basis for believing that such Permit will not be
renewable upon expiration. Each such Permit will continue in full force and
effect immediately following the Closing.

3.26 Certain Business Relationships With Affiliates. No Affiliate of the Company
or Oceanside (a) owns any property or right, tangible or intangible, which is
used in the business of the Company, (b) has any claim or cause of action
against the Company, (c) owes any money to, or is owed any money by, the Company
or (d) is a party to any contract or other arrangement (written or oral) with
the Company. Section 3.26 of the Disclosure Schedule describes any transactions
or relationships between the Company, on the one hand, and any Affiliate
thereof, on the other hand, which occurred or have existed since the beginning
of the time period covered by the Financial Statements.

3.27 Brokers’ Fees. The Company does not have any liability or obligation to pay
any fees or commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement.

3.28 Books and Records. The minute books and other similar records of the
Company contain complete and accurate records of all actions taken at any
meetings of the Company’s stockholders, Board of Directors or any committee
thereof, and of all written consents executed in lieu of the holding of any such
meeting of the Company. The books and records of the Company accurately reflect
the assets, liabilities, business, financial condition and results of operations
of the Company and have been maintained in accordance with good business and
bookkeeping practices. Section 3.28 of the Disclosure Schedule contains a list
of all bank accounts and safe deposit boxes of the Company and the names of
persons having signature authority with respect thereto or access thereto.

3.29 Prepayments, Prebilled Invoices and Deposits.

(a) Section 3.29(a) of the Disclosure Schedule sets forth (i) all prepayments,
prebilled invoices and deposits that have been received by the Company as of the
date of this Agreement from customers for products to be shipped, services to be
performed or other benefits to be provided, after the Closing Date, and
(ii) with respect to each such prepayment, prebilled invoice or deposit, (A) the
party and contract credited, (B) the date received or invoiced, (C) the products
and/or services to be delivered and (D) the conditions for the return of such
prepayment, prebilled invoice or deposit. All such prepayments, prebilled
invoices and deposits are properly accrued for on the Most Recent Balance Sheet
in accordance with GAAP applied on a consistent basis with the past practice of
the Company.

 

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(b) Section 3.29(b) of the Disclosure Schedule sets forth (i) all prepayments,
prebilled invoices and deposits that have been made or paid by the Company as of
the date of this Agreement for products to be purchased, services to be
performed or other benefits to be received after the Closing Date and (ii) with
respect to each such prepayment, prebilled invoice or deposit, (A) the party to
whom such prepayment, prebilled invoice or deposit was made or paid, (B) the
date made or paid, (C) the products and/or services to be delivered and (D) the
conditions for the return of such prepayment, prebilled invoice or deposit. All
such prepayments, prebilled invoices and deposits are properly accrued for on
the Most Recent Balance Sheet in accordance with GAAP applied on a consistent
basis with the past practice of the Company.

3.30 Government Contracts. The Company has not been suspended or debarred from
bidding on contracts or subcontracts with any Governmental Entity; no such
suspension or debarment has been threatened or initiated or, to the Knowledge of
the Company, threatened; and the consummation of the transactions contemplated
by this Agreement will not result in any such suspension or debarment of the
Company or the Buyer (assuming that no such suspension or debarment will result
solely from the identity of the Buyer). To the Knowledge of the Company, there
is no valid basis for (i) the suspension or debarment of the Company from
bidding on contracts or subcontracts with any Governmental Entity or (ii) any
claim (including any claim for return of funds to the Government) pursuant to an
audit or investigation by any of the entities named in the foregoing sentence.

3.31 Disclosure. No representation or warranty by the Company contained in this
Agreement, and no statement contained in the Disclosure Schedule or any other
document, certificate or other instrument delivered or to be delivered by or on
behalf of the Company pursuant to this Agreement, contains or will contain any
untrue statement of a material fact or omits or will omit to state any material
fact necessary, in light of the circumstances under which it was or will be
made, in order to make the statements herein or therein not misleading. The
Company has disclosed to the Buyer all material information relating to the
business of the Company or the transactions contemplated by this Agreement.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE BUYER

The Buyer represents and warrants to the Sellers that the statements contained
in this Article IV are true and correct as of the date of this Agreement and
will be true and correct as of the Closing as though made as of the Closing,
except to the extent such representations and warranties are specifically made
as of a particular date (in which case such representations and warranties will
be true and correct as of such date):

4.1 Organization and Corporate Power. The Buyer is a corporation duly organized,
validly existing and in good standing under the Laws of the State of Delaware.
The Buyer has all requisite corporate power and authority to carry on the
businesses in which it is engaged and to own and use the properties owned and
used by it.

4.2 Authorization of the Transaction. The Buyer has all requisite power and
authority to execute and deliver this Agreement and the Escrow Agreement and to
perform its respective obligations hereunder and thereunder. The execution and
delivery by the Buyer of this

 

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Agreement and the Escrow Agreement and the consummation by the Buyer of the
transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action on the part of the Buyer. This
Agreement has been duly and validly executed and delivered by the Buyer and
constitutes a valid and binding obligation of the Buyer, enforceable against the
Buyer in accordance with its terms.

4.3 Noncontravention. Subject to compliance with the applicable requirements of
the Securities Act and any applicable state securities Laws, the Exchange Act
and to the filing or other regulatory requirements, if any, of any applicable
U.S. or foreign regulatory body, neither the execution and delivery by the Buyer
of this Agreement or the Escrow Agreement, nor the performance by the Buyer of
its obligations hereunder or thereunder, nor the consummation by the Buyer of
the transactions contemplated hereby or thereby, will:

(a) conflict with or violate any provision of the certificate of incorporation
or by-laws of the Buyer (in each case, as amended and/or restated to date);

(b) require on the part of the Buyer any filing with, or permit, authorization,
consent or approval of, any Governmental Entity;

(c) conflict with, result in breach of, constitute (with or without due notice
or lapse of time or both) a default under, result in the acceleration of
obligations under, create in any party any right to terminate, modify or cancel,
or require any notice, consent or waiver under, any contract or instrument to
which the Buyer is a party or by which it is bound or to which any of the
Buyer’s assets is subject; or

(d) violate any order, writ, injunction, decree, statute, rule or regulation
applicable to the Buyer or any of the properties or assets of the Buyer.

4.4 Reports and Financial Statements. The Buyer has previously delivered to the
Company and the Sellers complete and accurate copies, as amended or
supplemented, of the Buyer’s prospectus dated October 30, 1997, as filed with
the SEC, as supplemented by all reports filed by the Buyer under Section 13 of
the Exchange Act with the SEC since the end of the Buyer’s most recent fiscal
year (such reports are collectively referred to herein as the “Buyer Reports”).
The Buyer Reports constitute all of the documents required to be filed by the
Buyer under Section 13 of the Exchange Act with the SEC since the end of the
Buyer’s most recent fiscal year, and no event has occurred which requires the
filing prior to the date hereof of any other Buyer Report which has not been
filed. As of their respective dates, the Buyer Reports did not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The audited financial
statements and unaudited interim financial statements, if any, of the Buyer
included in the Buyer Reports (i) comply as to form in all material respects
with applicable accounting requirements and the published rules and regulations
of the SEC with respect thereto, (ii) have been prepared in accordance with GAAP
applied on a consistent basis throughout the periods covered thereby (except as
may be indicated therein or in the notes thereto, and in the case of quarterly
financial statements, as permitted by Form 10-Q under the Exchange Act),
(iii) fairly present the consolidated financial condition, results of operations
and cash flows of the Buyer as of the respective dates thereof and for the
periods referred to therein and (iv) are consistent with the books and records
of the Buyer.

 

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ARTICLE V

COVENANTS

5.1 Closing Efforts. Each of the Parties shall use its Reasonable Best Efforts
to take all actions and to do all things necessary, proper or advisable to
consummate the transactions contemplated by this Agreement, including using its
Reasonable Best Efforts to cause (i) its representations and warranties to
remain true and correct in all material respects through the Closing Date and
(ii) the conditions to the obligations of the other Party to consummate the
transactions contemplated by this Agreement to be satisfied.

5.2 Governmental and Third-Party Notices and Consents.

(a) Each Party shall use its Reasonable Best Efforts to obtain, at its expense,
all waivers, permits, consents, approvals or other authorizations from
Governmental Entities, and to effect all registrations, filings and notices with
or to Governmental Entities, as may be required for such Party to consummate the
transactions contemplated by this Agreement and to otherwise comply with all
applicable Laws in connection with the consummation of the transactions
contemplated by this Agreement.

(b) The Company shall use its Reasonable Best Efforts to obtain, at its expense,
all such waivers, consents or approvals from third parties, and to give all such
notices to third parties, as required to be listed in the Disclosure Schedule,
all in form and substance reasonably acceptable to the Buyer.

5.3 Operation of Business.

(a) Except as contemplated by this Agreement or as otherwise set forth in
Section 5.3 of the Disclosure Schedule, during the period from the date of this
Agreement to the Closing or the earlier termination of this Agreement in
accordance with Article X hereof (the “Pre-Closing Period”), the Company shall
conduct its operations only in the Ordinary Course of Business and in compliance
with all applicable Laws and, to the extent consistent therewith, use its
Reasonable Best Efforts to preserve intact its current business organization and
keep its physical assets in good working condition, keep available the services
of its current officers and employees and preserve its relationships with
customers, suppliers and others having business dealings with it to the end that
its goodwill and ongoing business shall not be impaired in any material respect.

(b) Without limiting the generality of Section 5.3(a), during the Pre-Closing
Period, the Company shall not without the written consent of the Buyer:

(i) issue or sell any stock or other securities of the Company or any options,
warrants or other rights to acquire any such stock or other securities;

(ii) split, combine or reclassify any shares of its capital stock;

 

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(iii) declare, set aside or pay any dividend or other distribution (whether in
cash, stock or property or any combination thereof) in respect of its capital
stock;

(iv) create, incur or assume any indebtedness (including obligations in respect
of capital leases); assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the obligations of
any other Person; or make any loans, advances or capital contributions to, or
investments in, any other Person;

(v) enter into, adopt, terminate or amend any Employee Benefit Plan or any
employment or severance agreement or arrangement of the type described in
Section 3.21(l) or increase in any manner the compensation or fringe benefits
of, or materially modify the employment terms of, its directors, officers or
employees, generally or individually, or pay any bonus or other benefit to its
directors, officers or employees (except for existing payment obligations listed
in Section 3.21(l) of the Disclosure Schedule) or hire any new officers or
(except in the Ordinary Course of Business) any new employees or consultants;
amend or accelerate the payment, right to payment, or vesting of any
compensation or benefits; or take any action other than in the Ordinary Course
of Business to fund or in any other way secure the payment of compensation or
benefits under any Employee Benefit Plan;

(vi) acquire, sell, lease, license or dispose of any assets or property, other
than purchases and sales of assets in the Ordinary Course of Business;

(vii) mortgage or pledge any of its property or assets or subject any such
property or assets to any Security Interest;

(viii) discharge or satisfy any Security Interest or pay any obligation or
liability other than in the Ordinary Course of Business;

(ix) amend its certificate of incorporation, by-laws or other organizational
documents in a manner that could have an adverse effect on the transactions
contemplated by this Agreement;

(x) change the nature or scope of its business being carried on as of the date
of this Agreement or commence any new business not being ancillary or incidental
to such business or take any action to alter its organizational or management
structure;

(xi) change its accounting methods, principles or practices, except insofar as
may be required by a generally applicable change in GAAP, or make any new Tax
election or change any current election or settle and/or compromise any Tax
liability; prepare any Tax Returns in a manner which is inconsistent with the
past practices of the Company, as applicable, with respect to the treatment of
items on such Tax Returns; incur any material liability for Taxes other than in
the Ordinary Course of Business, or file an amended Tax Return or a claim for
refund of Taxes with respect to the income, operations or property of the
Company;

(xii) enter into, amend, terminate, take or omit to take any action that would
constitute a violation of or default under, or waive any rights under,
applicable Law or any contract or agreement of a nature required to be listed in
Section 3.12 or Section 3.15(a) of the Disclosure Schedule;

 

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(xiii) make or commit to make any capital expenditure in excess of $300,000 in
the aggregate;

(xiv) institute or settle any Legal Proceeding;

(xv) take any action or fail to take any action permitted by this Agreement with
the knowledge that such action or failure to take action would result in (i) any
of the representations and warranties of the Company set forth in this Agreement
becoming untrue at the Closing or (ii) any of the conditions to the Closing set
forth in Article VI not being satisfied;

(xvi) fail to take any action necessary to preserve the validity of any Permit;
or

(xvii) agree in writing or otherwise to take any of the foregoing actions.

5.4 Access to Information. During the Pre-Closing Period, upon reasonable
advance notice, the Company shall permit representatives of the Buyer to have
full access (at all reasonable times and in a manner so as not to interfere with
the normal business operations of the Company or to alert the Company’s
non-executive employees as to the reason for such access) to all premises,
properties, financial, Tax and accounting records (including the work papers of
each Seller’s independent accountants), contracts, other records and documents,
and personnel, of or pertaining to the Company for the purpose of performing
such inspections and tests as the Buyer deem necessary or appropriate.

5.5 Notice of Breaches.

(a) During the Pre-Closing Period, the Company and the Sellers shall promptly
deliver to the Buyer supplemental information concerning events or circumstances
occurring subsequent to the date hereof which would render any representation,
warranty or statement of the Company or the Sellers in this Agreement or the
Disclosure Schedule inaccurate or incomplete in any material respect at any time
after the date of this Agreement until the Closing. No such supplemental
information shall be deemed to avoid or cure any misrepresentation or breach of
warranty or constitute an amendment of any representation, warranty or statement
in this Agreement or the Disclosure Schedule.

(b) From the date of this Agreement until the Closing, the Buyer shall promptly
deliver to the Sellers supplemental information concerning events or
circumstances occurring subsequent to the date hereof which would render any
representation or warranty in this Agreement inaccurate or incomplete in any
material respect at any time after the date of this Agreement until the Closing.
No such supplemental information shall be deemed to avoid or cure any
misrepresentation or breach of warranty or constitute an amendment of any
representation or warranty in this Agreement.

 

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5.6 Exclusivity.

(a) During the Pre-Closing Period, the Sellers and the Company shall not, and
the Sellers and the Company shall require each of their respective officers,
directors, employees, representatives and agents not to, directly or indirectly,
through any officer, director, employee, Affiliate, agent or representative or
otherwise (i) initiate, solicit, encourage or otherwise facilitate any inquiry,
proposal, offer or discussion with any party (other than the Buyer or its
representatives) concerning any acquisition, equity or debt financing, joint
venture, merger, reorganization, consolidation, recapitalization, business
combination, liquidation, dissolution, share exchange, sale of stock, sale of
material assets or similar business transaction involving the Company,
(ii) furnish any non-public information concerning the business, properties or
assets of the Company or the Company Shares to any party (other than the Buyer
or its representatives) or (iii) engage in discussions or negotiations or enter
in any agreement with any party (other than the Buyer or its representatives)
concerning any such transaction.

(b) The Sellers and the Company shall immediately notify any party with which
discussions or negotiations of the nature described in paragraph (a) above were
pending that the Sellers and the Company are terminating such discussions or
negotiations. If any Seller or the Company receives any inquiry, proposal or
offer of the nature described in paragraph (a) above, such Seller and the
Company shall, within one Business Day after such receipt, notify the Buyer of
such inquiry, proposal or offer, including the identity of the other party and
the terms of such inquiry, proposal or offer.

5.7 Expenses. Except as otherwise expressly provided herein, the Buyer will pay
all fees, expenses and other obligations (including legal and accounting fees
and expenses) incurred by it in connection with the transactions contemplated
hereby, and the Company will prior to the Closing pay all fees, expenses and
other obligations (including legal and accounting fees and expenses) incurred by
it in connection with the transactions contemplated hereby (provided, however,
that the Company Transaction Expenses shall be paid by the Sellers). Each Seller
shall be responsible for payment of all sales or transfer Taxes (including real
property transfer Taxes) arising out of the conveyance of the Company Shares
owned by such Seller.

5.8 Access to Customers and Suppliers. The Company shall, if requested by the
Buyer, introduce the Buyer to customers and suppliers of the Company for the
purpose of facilitating the post-Closing integration of the Company and its
businesses into that of the Buyer.

5.9 Title Insurance.

(a) With respect to each parcel of real estate to be covered by a New Lease and
which Section 3.12 of the Disclosure Schedule indicates is a property for which
a title insurance policy is to be procured, the Company shall, at the Company’s
sole cost and expense, procure, prior to the Closing, the following title
insurance commitments, policies and riders: an ALTA Leasehold Owner’s Policy of
Title Insurance-1987 (or equivalent policy reasonably acceptable to the Buyer if
the real property is located in a state in which an ALTA Leasehold Owner’s
Policy of Title Insurance-1987 is not available) issued by a title insurer
reasonably satisfactory to the Buyer (and, if requested by the Buyer, reinsured
in whole or in part by one or more insurance companies and pursuant to a direct
access agreement reasonably acceptable to the Buyer) in such amount as the Buyer
reasonably may determine (taking into account all factors relevant to the Buyer,
including the revenue produced by the leased property, the time

 

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cost of money (using prevailing interest rates) and other factors such as
whether the fair market rental value of the premises exceeds the stipulated
consideration in such New Lease, whether the tenant has any option to renew or
extend, whether the tenant owns any improvements located on the premises,
whether the tenant is permitted to sublease, and whether the tenant would owe
any amount under such New Lease if evicted), insuring title to the leasehold
estate to be in the Buyer as of the Closing or such later date as the applicable
notice of Lease with respect to such Lease is record in the applicable land
records (subject only to the title exceptions described in Section 3.12 of the
Disclosure Schedule and in all events not subject or subordinate to any monetary
liens). To facilitate the issuance of such policies, the Company will deliver to
the Buyer, no later than 14 days prior to the Closing, a commitment for such
insurance issued by the title insurer, along with legible copies of all
documents listed as exceptions therein.

(b) Each title insurance policy obtained under Section 5.9(a) shall: (i) insure
title to the real property and all recorded easements benefiting such real
property, (ii) contain an “extended coverage endorsement” insuring over the
general exceptions contained customarily in such policies, (iii) contain an ALTA
Zoning Endorsement 3.1 (or the equivalent thereof), (iv) contain an endorsement
insuring that the real property described in the title insurance policy is the
same real estate as shown on the survey delivered pursuant to Section 5.10 with
respect to such property, (v) contain an endorsement insuring that each street
adjacent to the real property is a public street and that there is direct and
unencumbered pedestrian and vehicular access to such street from the real
property, (vi) contain an endorsement that electricity, water, gas, sewer and
other utilities serve the real property described in the title insurance policy
directly from an adjacent public street, (vii) if the real property consists of
more than one record parcel, contain a “contiguity” endorsement insuring that
all of the record parcels are contiguous to one another, and (viii) contain a
“non-imputation” endorsement to the effect that title defects known to the
officers, directors, and stockholders of the owner prior to the Closing shall
not be deemed “facts known to the insured” for purposes of the policy.

5.10 Surveys. With respect to each parcel of real property as to which a title
insurance policy is to be procured pursuant to Section 5.9, the Company shall
procure, at the Company’s sole cost and expense, no later than 14 days prior to
the Closing, a current survey of the real property certified to the Buyer,
prepared by a licensed surveyor and conforming to current ALTA Minimum Detail
Requirements for Land Title Surveys, disclosing the location of all
improvements, easements and other matters of record, party walls, sidewalks,
roadways, utility lines, and other matters shown customarily on such surveys,
and showing access affirmatively to public streets and roads. Such survey shall
not disclose any survey defect or encroachment from or onto the real property or
any easements which has not been cured or insured over to the Buyer’s reasonable
satisfaction prior to the Closing.

5.11 Estoppels. With respect to each Lease, the Company shall procure prior to
Closing an estoppel certificate from the landlord or other counterparty thereto,
in form and substance reasonably acceptable to Buyer, certifying that the Lease
is in full force and effect, and has not been amended or modified, the date
through which rent and all other monetary obligations have been paid, and the
amount thereof, that no party thereunder is in default thereunder, that to its
knowledge no fact or circumstance exists which could give rise to such a
default, the remaining term of the Lease and any extension or early termination
options (and whether any of the same have been exercised), the rental rates,
that the Lease will continue in

 

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full force and effect, unmodified, following the transaction contemplated
herein, and such other matters as Buyer may reasonably request following its
review of the Lease. No estoppel certificate will be considered acceptable or
delivered unless it is consistent in all material respects with the information
contained in the Lease and the Disclosure Schedule.

5.12 FIRPTA Tax Certificate. Prior to the Closing, (a) the Company shall deliver
to the Buyer and to the Internal Revenue Service notices that the Company Shares
are not “U.S. real property interests” in accordance with Treasury Regulations
under Sections 897 and 1445 of the Code, or (b) each of the Sellers shall
deliver to the Buyer certifications that they are not foreign Persons in
accordance with the Treasury Regulations under Section 1445 of the Code. If the
Buyer does not receive either the notices or certifications described above on
or before the Closing Date, the Buyer or the Escrow Agent shall be permitted to
withhold from the payments to be made pursuant to this Agreement any required
withholding Tax under Section 1445 of the Code.

5.13 Termination of 401(k) Plan. Prior to the Closing, the Company shall
terminate any and all Company Plans intended to qualify under Section 401(k) of
the Code, or any successor statute, effective not later than the day immediately
preceding the Closing Date. Upon the termination of such plans pursuant to this
Section 5.13, the Company shall provide the Buyer with evidence that such 401(k)
plans have been terminated pursuant to resolution of the Company’s board of
directors not later than the day immediately preceding the Closing Date.

5.14 Termination of Employee Benefit Plans. Upon the Buyer’s written request,
prior to the Closing, the Company shall terminate any and all Company Plans as
the Buyer may request with any such requested termination to be effective on the
date determined by the Buyer.

5.15 Indebtedness. Prior to the Closing, the Company shall satisfy, eliminate or
cause to be paid all Indebtedness of the Company, except as set forth on
Section 5.15 of the Disclosure Schedule.

5.16 Transfer of Owned Real Property; Fixtures, Etc. Used by Company.

(a) Effective not later than the day immediately preceding the Closing Date, at
the Sellers’ sole cost and expense (including all transfer Taxes and recording
fees), the Company shall: (i) transfer the Owned Real Property to Trash Lady ME
and Trash Lady NH as set forth on Section 5.16 of the Disclosure Schedule, in
each case, without any representations or warranties from the Company;
(ii) Trash Lady ME and Trash Lady NH shall have assumed the Indebtedness set
forth on Section 5.15 of the Disclosure Schedule; and (iii) the Company shall
have obtained full releases and indemnities from such transferees with respect
to such Owned Real Property, any liabilities related thereto and the assumption
of Indebtedness related thereto, in each case, in form and substance acceptable
to the Buyer.

(b) Notwithstanding anything to the contrary set forth in the transfer documents
effecting the transactions contemplated by Section 5.16(a), the Company, the
Sellers, Trash Lady ME and Trash Lady NH hereby acknowledge and agree that all
fixtures, equipment and other similar items of personal property used by the
Company in the conduct of its businesses as presently conducted and as presently
proposed to be conducted

 

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(the “Retained Fixtures”) shall remain property of the Company upon the
consummation of the transfers set forth in Section 5.16(a). At the Buyer’s
request, the Sellers and each of Trash Lady ME and Trash Lady NH, as applicable,
shall execute an instrument in recordable form clarifying the Company’s
continued ownership of the Retained Fixtures.

ARTICLE VI

CONDITIONS TO CLOSING

6.1 Conditions to Obligations of the Buyer. The obligation of the Buyer to
consummate the transactions contemplated by this Agreement is subject to the
satisfaction of the following conditions precedent, each of which may be waived
in writing in the sole discretion of the Buyer:

(a) the Company shall have obtained at its own expense (and shall have provided
copies thereof to the Buyer) all of the waivers, permits, consents, approvals or
other authorizations, and effected all of the registrations, filings and notices
listed on Schedule 6.1(a), in form and substance reasonably acceptable to the
Buyer;

(b) the representations and warranties of the Sellers, the representations and
warranties of the Company set forth in the first and second sentence of
Section 3.1, in Section 3.2 and in Section 3.3 and any other representations and
warranties of the Sellers and the Company set forth in this Agreement that are
qualified as to materiality shall be true and correct in all respects, and all
other representations and warranties of the Company set forth in this Agreement
shall be true and correct in all material respects, in each case as of the date
of this Agreement and as of the Closing as though made as of the Closing, except
to the extent such representations and warranties are specifically made as of a
particular date (in which case such representations and warranties shall be true
and correct as of such date);

(c) the Company and the Sellers shall have performed or complied with in all
material respects their agreements and covenants required to be performed or
complied with under this Agreement as of or prior to the Closing;

(d) there shall have occurred no change, event, circumstance or development
which, individually or taken together with all other changes, events,
circumstances or developments, has had, or could reasonably be expected in the
future to have, a Company Material Adverse Effect;

(e) no Legal Proceeding shall be pending or threatened wherein an unfavorable
judgment, order, decree, stipulation or injunction could reasonably (i) prevent
consummation of the transactions contemplated by this Agreement, (ii) cause the
transactions contemplated by this Agreement to be rescinded following
consummation of such transactions or (iii) have, individually or in the
aggregate, a Company Material Adverse Effect;

(f) the Company shall have procured at its own expense and delivered to the
Buyer all of the title insurance commitments, policies and riders and real
estate surveys referred to in Sections 5.9 and 5.10;

 

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(g) the Company shall have provided to the Buyer the estoppel certificates set
forth in Section 5.11, and the same shall have been delivered in compliance with
such section;

(h) effective not later than the day immediately preceding the Closing Date, the
Owned Real Property shall have been transferred in accordance with Section 5.16;

(i) the Company shall cause to be fully executed and delivered to the Buyer each
of the New Leases (other than the New Lease in the form attached as Exhibit
B-4), along with (A) a termination of each existing lease or occupancy agreement
affecting the real property subject to such New Lease, if applicable, and (B) a
notice or memorandum of each New Lease (in statutory and customary recordable
form acceptable to the Buyer) providing constructive record notice of each New
Lease;

(j) effective not later than the day immediately preceding the Closing Date, the
Trash Lady Interests shall have been transferred from the Company, at the
Sellers’ sole cost and expense (including all transfer Taxes and filing fees) to
the Sellers;

(k) the Company shall have delivered to the Buyer Tax good standing certificates
for each of the following jurisdictions: Maine and New Hampshire;

(l) the Company shall have undertaken, in accordance with all applicable Laws
including the Fair Credit Reporting Act and any state analogs, motor vehicle
background checks of all of its employees, and shall have advised the Buyer in
writing at least 14 days prior to the Closing Date of any employees whose
driving records make them ineligible for employment with the Buyer, pursuant to
guidelines to be provided by the Buyer to the Company;

(m) the Sellers shall have complied with all applicable state Tax Law statutes
requiring notification to a Governmental Entity of the proposed transaction and
shall have obtained and delivered to the Buyer such waivers, certificates or
other documentation sufficient to relieve the Buyer from any liability under
such statutes;

(n) in accordance with the terms and conditions of the Credit Agreement, (A) the
Buyer shall have satisfied each of the conditions set forth in the First
Amendment to Credit Agreement, including Annex 3 thereof, and (B) the
Administrative Agent and the requisite Credit Agreement Lenders shall have
consented to the consummation of the transactions contemplated by this
Agreement; and

(o) the Buyer shall have received such other certificates and instruments
(including certificates of good standing of the Company in its jurisdiction of
organization and the various foreign jurisdictions in which it is qualified,
certified charter documents, certificates as to the incumbency of officers and
the adoption of authorizing resolutions) as the Buyer shall reasonably request
in connection with the Closing.

6.2 Conditions to Obligations of Company and the Sellers. The obligation of the
Company and the Sellers to consummate the transactions contemplated by this
Agreement is subject to the satisfaction of the following conditions precedent,
each of which may be waived in writing in the sole discretion of the Company and
the Representative:

 

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(a) the representations and warranties of the Buyer set forth in the first and
second sentences of Section 4.1 and in Section 4.2 and any representations and
warranties of the Buyer set forth in this Agreement that are qualified as to
materiality shall be true and correct in all respects, and all other
representations and warranties of the Buyer set forth in this Agreement shall be
true and correct in all material respects, in each case, as of the date of this
Agreement and as of the Closing as though made as of the Closing, except to the
extent such representations and warranties are specifically made as of a
particular date (in which case such representations and warranties shall be true
and correct as of such date) and except to the extent any such inaccuracies,
individually or in the aggregate, have not had and would not reasonably be
expected to have a material adverse effect on the ability of the Buyer to
consummate the transactions contemplated by this Agreement;

(b) the Buyer shall have performed or complied with in all material respects its
agreements and covenants required to be performed or complied with under this
Agreement as of or prior to the Closing; and

(c) the Representative shall have received such other certificates and
instruments (including certificates of good standing of the Buyer in its
jurisdiction of organization, certified charter documents, certificates as to
the incumbency of officers and the adoption of authorizing resolutions) as it
shall reasonably request in connection with the Closing.

ARTICLE VII

INDEMNIFICATION

7.1 Indemnification by the Sellers. The Sellers shall, jointly and severally
(except as otherwise provided in clauses (a), (c) and (e) below), indemnify the
Buyer in respect of, and hold the Buyer harmless against, any and all Damages
incurred or suffered by the Company, the Buyer or any Affiliate thereof
resulting from, relating to or constituting:

(a) any breach or inaccuracy, as of the date of this Agreement or as of the
Closing Date, of any representation or warranty of any Seller contained in this
Agreement or any other agreement or instrument furnished by such Seller to the
Buyer pursuant to this Agreement (with respect to which such Seller shall be
solely liable for such indemnification obligation);

(b) any breach or inaccuracy, as of the date of this Agreement or as of the
Closing Date, of any representation or warranty of the Company contained in this
Agreement or any other agreement or instrument furnished by the Company to the
Buyer pursuant to this Agreement;

(c) any failure to perform any covenant or agreement of any Seller contained in
this Agreement or any other agreement or instrument furnished by such Seller to
the Buyer or the Company pursuant to or in connection with this Agreement (with
respect to which such Seller shall be solely liable for such indemnification
obligation; provided that the Sellers shall, jointly and severally, be liable
for such indemnification obligation with respect to the failure of Trash Lady ME
or Trash Lady NH to perform any such covenant or agreement);

 

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(d) any failure to perform any covenant or agreement of the Company contained in
this Agreement or any other agreement or instrument furnished by the Company to
the Buyer pursuant to this Agreement;

(e) any failure of any Seller to have good, valid and marketable title to the
Company Shares issued in the name of such Seller, free and clear of all Security
Interests (with respect to which such Seller shall be solely liable for such
indemnification obligation);

(f) any claim by a stockholder or former stockholder of the Company, or any
other Person, seeking to assert, or based upon: (i) the ownership or rights to
ownership of any shares of stock of the Company; (ii) any rights of a
stockholder (other than the right to receive any of the Purchase Price, if any,
to which such Person is entitled pursuant to this Agreement), including any
option, preemptive rights or rights to notice or to vote; (iii) any rights under
the certificate of incorporation or by-laws of the Company; or (iv) any claim
that his, her or its shares were wrongfully repurchased by the Company;

(g) any claim for fraud or a Knowing Misrepresentation arising in connection
with the transactions contemplated by this Agreement;

(h) any Litigation Matter;

(i) any Environmental Matters (including any and all “costs of response” and
“damages” to “natural resources,” as those terms are defined under CERCLA, any
and all costs to correct or remedy any failure to comply with applicable
Environmental Law as of the Closing Date); or

(j) any liability (whether known or unknown, whether absolute or contingent,
whether liquidated or unliquidated and whether due or to become due) arising
from or related to the Owned Real Property (other than obligations expressly
undertaken by the Company under the New Leases).

7.2 Indemnification Claims.

(a) The Buyer shall give written notification to the Representative of the
commencement of any Third Party Action. Such notification shall be given within
20 days after receipt by the Buyer of notice of such Third Party Action, and
shall describe in reasonable detail (to the extent then known by the Buyer) the
facts constituting the basis for such Third Party Action and the amount of the
claimed damages. No delay or failure on the part of the Buyer in so notifying
the Representative shall relieve the Sellers of any liability or obligation
hereunder except to the extent of any damage or liability caused by or arising
out of such delay or failure. Within 20 days after delivery of such
notification, the Representative may, upon written notice thereof to the Buyer,
assume control of the defense of such Third Party Action with counsel reasonably
satisfactory to the Buyer; provided, that (i) the Representative may only assume
control of such defense if (A) it acknowledges in writing to the Buyer on behalf
of all of the Sellers that any damages, fines, costs or other liabilities that
may be assessed against the Buyer in connection with such Third Party Action
constitute Damages for which the Buyer shall be indemnified pursuant to this
Article VII, (B) the ad damnum in such Third Party Action, taken together with
the estimated costs of defense thereof and the Claimed Amount with respect to
any

 

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unresolved claims for indemnification then pending, is less than or equal to the
current balance of the Indemnification Escrow Fund, and (C) in the determination
of the Buyer, an adverse resolution of the Third Party Action would not have a
material adverse effect on the goodwill or reputation of the Buyer or the
business, operations or future conduct of the Buyer and (ii) the Representative
may not assume control of the defense of any Third Party Action involving
criminal or Tax liability, or which involves any Permit, or in which equitable
relief is sought against the Buyer or any of its subsidiaries. If the
Representative does not, or is not permitted under the terms hereof to, so
assume control of the defense of a Third Party Action, the Buyer shall control
such defense. The Non-Controlling Party may participate in such defense at its
own expense. The Controlling Party shall keep the Non-Controlling Party advised
of the status of such Third Party Action and the defense thereof and shall
consider in good faith recommendations made by the Non-Controlling Party with
respect thereto. The Non-Controlling Party shall furnish the Controlling Party
with such information as it may have with respect to such Third Party Action
(including copies of any summons, complaint or other pleading which may have
been served on such party and any written claim, demand, invoice, billing or
other document evidencing or asserting the same) and shall otherwise cooperate
with and assist the Controlling Party in the defense of such Third Party Action.
The fees and expenses of counsel to the Buyer with respect to a Third Party
Action shall be considered Damages for purposes of this Agreement if (i) the
Buyer controls the defense of such Third Party Action pursuant to the terms of
this Section 7.2(a) or (ii) the Representative assumes control of such defense
and the Buyer reasonably concludes that the Sellers and the Buyer have
conflicting interests or different defenses available with respect to such Third
Party Action. Neither the Sellers nor the Representative shall agree to any
settlement of, or the entry of any judgment arising from, any Third Party Action
without the prior written consent of the Buyer, which shall not be unreasonably
withheld, conditioned or delayed; provided, that the consent of the Buyer shall
not be required if the Representative, on behalf of all of the Sellers, agrees
in writing to pay any amounts payable pursuant to such settlement or judgment
and such settlement or judgment includes a complete release of the Buyer and its
Affiliates from further liability and has no other adverse effect on the Buyer
or its Affiliates. Except as provided in Section 7.2(f) below, the Buyer shall
not agree to any settlement of, or the entry of any judgment arising from, any
such Third Party Action without the prior written consent of the Representative,
which shall not be unreasonably withheld, conditioned or delayed.

(b) In order to seek indemnification under this Article VII, the Buyer shall
deliver a Claim Notice to the Representative.

(c) Within 20 days after delivery of a Claim Notice, the Representative shall
deliver to the Buyer a Response, in which the Representative, on behalf of all
of the Sellers, shall: (i) agree that the Buyer is entitled to receive all of
the Claimed Amount (in which case the Response shall be accompanied by payment
or by a letter from the Representative instructing the Escrow Agent to disburse
to the Buyer from the Indemnification Escrow Fund an amount in cash equal to the
Claimed Amount, (ii) agree that the Buyer is entitled to receive the Agreed
Amount (in which case the Response shall be accompanied by payment or by a
letter from the Representative instructing the Escrow Agent to disburse to the
Buyer from the Indemnification Escrow Fund an amount in cash equal to the Agreed
Amount), or (iii) dispute that the Buyer is entitled to receive any of the
Claimed Amount. The Representative may contest the payment of all or a portion
of the Claimed Amount only based upon a good faith belief that all or such

 

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portion of the Claimed Amount does not constitute Damages for which the Buyer is
entitled to indemnification under this Article VII. If no Response is delivered
by the Representative within such 20-day period, the Sellers shall be deemed to
have agreed that all of the Claimed Amount is owed to the Buyer. Acceptance by
the Buyer of partial payment of any Claimed Amount shall be without prejudice to
the Buyer’s right to claim the balance of any such Claimed Amount.

(d) During the 30-day period following the delivery of a Response that reflects
a Dispute, the Representative and the Buyer shall use good faith efforts to
resolve the Dispute. If the Dispute is not resolved within such 30-day period,
the Representative and the Buyer shall discuss in good faith the submission of
the Dispute to binding arbitration, and if the Representative and the Buyer
agree in writing to submit the Dispute to such arbitration, then the provisions
of Section 7.2(e) shall become effective with respect to such Dispute. The
provisions of this Section 7.2(d) shall not obligate the Representative and the
Buyer to submit to arbitration or any other alternative dispute resolution
procedure with respect to any Dispute, and in the absence of an agreement by the
Representative and the Buyer to arbitrate a Dispute, such Dispute shall be
resolved in a court of competent jurisdiction, in accordance with Section 12.11.
If the Buyer is seeking to enforce the claim that is the subject of the Dispute
pursuant to the Escrow Agreement, the Representative and the Buyer shall deliver
to the Escrow Agent, promptly following the resolution of the Dispute (whether
by mutual agreement, arbitration, judicial decision or otherwise), a written
notice executed by both parties instructing the Escrow Agent as to what (if any)
portion of the Indemnification Escrow Fund shall be distributed to the Buyer
(which notice shall be consistent with the terms of the resolution of the
Dispute).

(e) If, as set forth in Section 7.2(d), the Buyer and the Representative agree
to submit any Dispute to binding arbitration, the arbitration shall be conducted
by the Arbitrator in accordance with the Commercial Rules of the American
Arbitration Association (“AAA”) and the Maine Uniform Arbitration Statute (Maine
Revised Statutes §5927, et seq.) in effect from time to time and the following
provisions:

(i) In the event of any conflict between the Commercial Rules in effect from
time to time and the provisions of this Agreement, the provisions of this
Agreement shall prevail and be controlling. In the event of any conflict between
the Commercial Rules in effect from time to time and the Maine Uniform
Arbitration Statute, the provisions of the Statute shall prevail and be
controlling.

(ii) Either party shall commence the arbitration by filing a written submission
with the Boston, Massachusetts office of the AAA in accordance with Commercial
Rule 5 (or any successor provision).

(iii) No depositions or other discovery shall be conducted in connection with
the arbitration.

(iv) The arbitration hearings shall be in Portland, Maine.

 

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(v) Not later than 30 days after the conclusion of the arbitration hearing, the
Arbitrator shall prepare and distribute to the parties a writing setting forth
the arbitral award and the Arbitrator’s reasons therefor. The Arbitrator shall
have no power or authority, under the Commercial Rules or otherwise, to
(x) modify or disregard any provision of this Agreement, including the
provisions of this Section 7.2(e), or (y) address or resolve any issue not
submitted by the parties or (z) grant injunctive relief, specific performance or
other equitable relief.

(vi) Any award rendered by the Arbitrator shall be final, conclusive and binding
upon the parties, and judgment thereon may be entered and enforced in any court
of competent jurisdiction (subject to Section 12.11).

(vii) In connection with any arbitration proceeding pursuant to this Agreement,
each party shall bear its own costs and expenses, except that the fees and costs
of the AAA and the Arbitrator, the costs and expenses of obtaining the facility
where the arbitration hearing is held, and such other costs and expenses as the
Arbitrator may determine to be directly related to the conduct of the
arbitration and appropriately borne jointly by the parties (which shall not
include any party’s attorneys’ fees or costs, witness fees (if any), costs of
investigation and similar expenses) shall be shared equally by the Buyer and the
Sellers.

(f) Notwithstanding the other provisions of this Section 7.2, if a third party
asserts (other than by means of a lawsuit) that the Buyer or the Company is
liable to such third party for a monetary or other obligation which may
constitute or result in Damages for which the Buyer may be entitled to
indemnification pursuant to this Article VII, and the Buyer reasonably
determines that it has a valid business reason to fulfill such obligation, then
(i) the Buyer shall be entitled to satisfy such obligation, without prior notice
to or consent from the Representative or the Sellers, (ii) the Buyer may
subsequently make a claim for indemnification in accordance with the provisions
of this Article VII, and (iii) the Buyer shall be reimbursed, in accordance with
the provisions of this Article VII, for any such Damages for which it is
entitled to indemnification pursuant to this Article VII (subject to the right
of the Representative, on the behalf of the Sellers, to dispute the Buyer’s
entitlement to indemnification, or the amount for which it is entitled to
indemnification, under the terms of this Article VII).

(g) The Representative shall have full power and authority on behalf of each
Seller to take any and all actions on behalf of, execute any and all instruments
on behalf of, and execute or waive any and all rights of, the Sellers under this
Article VII. The Representative shall have no liability to any Sellers for any
action taken or omitted on behalf of the Sellers pursuant to this
Article VII.

7.3 Survival of Representations and Warranties.

(a) Unless otherwise specified in this Section 7.3 or elsewhere in this
Agreement, all provisions of this Agreement shall survive the Closing and the
consummation of the transactions contemplated hereby and shall continue in full
force and effect in accordance with their terms until 60 days after the
expiration of the applicable statute of limitations; provided, however, that
except for claims based on fraud or a Knowing Misrepresentation, all
representations and warranties that are covered by the indemnification
obligations in Section 7.1(b) shall expire on the twelve month anniversary of
the Closing; provided, however, that the representations and warranties set
forth in Sections 3.1, 3.2, 3.3, 3.9, 3.11, 3.12, 3.13, 3.20, 3.21, 3.22 and
3.27 (the “Fundamental Representations”) shall survive indefinitely, other than
Sections 3.9, 3.13 and 3.21, which shall survive until 60 days after the
expiration of the applicable statute of limitations.

 

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(b) If the Buyer delivers to the Representative, before expiration of a
representation, warranty, covenant or agreement, either a Claim Notice based
upon a breach of such representation, warranty, covenant or agreement or an
Expected Claim Notice based upon a breach of such representation, warranty,
covenant or agreement then the applicable representation, warranty, covenant or
agreement shall survive until, but only for purposes of, the resolution of the
matter covered by such notice. If the legal proceeding or written claim with
respect to which an Expected Claim Notice has been given is definitively
withdrawn or resolved in favor of the Buyer, the Buyer shall promptly so notify
the Representative. The rights to indemnification set forth in this Article VII
shall not be affected by (i) any investigation conducted by or on behalf of the
Buyer or any knowledge acquired (or capable of being acquired) by the Buyer,
whether before or after the date of this Agreement or the Closing Date, with
respect to the inaccuracy or noncompliance with any representation, warranty,
covenant or obligation which is the subject of indemnification hereunder, or
(ii) any waiver by the Buyer of any closing condition relating to the accuracy
of representations and warranties or the performance of or compliance with
agreements and covenants.

7.4 Limitations.

(a) Except for (i) claims based on fraud or Knowing Misrepresentation and
(ii) claims based on a breach of any of the Fundamental Representations, the
Escrow Agreement shall be the exclusive means for the Buyer to collect any
Damages for which it is entitled to indemnification under Section 7.1(b) from
any Seller. Notwithstanding the foregoing, the Buyer shall not attempt to
collect any Damages directly from any Seller (other than on account of Sections
7.1(a), 7.1(c) or 7.1(e)) unless there are insufficient unclaimed Escrow Funds
remaining to satisfy such Damages pursuant to the Escrow Agreement.

(b) Notwithstanding anything to the contrary herein, except for claims based on
fraud or a Knowing Misrepresentation, claims related to Taxes, claims arising
under Sections 7.1(i)-(j) and claims arising under Article IX, the aggregate
liability of each Seller for Damages under this Article VII shall not exceed the
amount of the Purchase Price such Seller is entitled to receive pursuant to this
Agreement.

(c) No Seller shall have any right of contribution against the Company with
respect to any breach by the Company of any of its representations, warranties,
covenants or agreements.

(d) Except with respect to claims based on fraud or a Knowing Misrepresentation,
claims arising under Article IX, and claims for specific performance and other
equitable relief, after the Closing, the rights of the Buyer under this Article
VII shall be the exclusive remedy of the Buyer with respect to claims resulting
from or relating to any misrepresentation, breach of warranty or failure to
perform any covenant or agreement of the Company or any Seller contained in this
Agreement.

 

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(e) Any payments made to a Party pursuant to this Article VII or pursuant to the
Escrow Agreement shall be treated as an adjustment to the Adjusted Purchase
Price for Tax purposes to the extent permitted by Law.

(f) For purposes of this Article VII, the terms “material,” “materially”,
“materiality”, “Material Adverse Effect” and other similar qualifications shall
be disregarded and deemed not be included in any representation or warranty of
the Company or the Sellers.

ARTICLE VIII

TAX MATTERS

8.1 Preparation and Filing of Tax Returns; Payment of Taxes.

(a) The Sellers, at their expense, (i) shall prepare and timely file or shall
cause to be prepared and timely filed all Tax Returns of the Company required to
be filed (taking into account extensions) prior to the Closing Date (ii) shall
prepare or cause to be prepared all Tax Returns for the Company required to be
filed after the Closing Date for all periods that end on or before the Closing
Date, provided, however, that in the case of both clauses (i) and (ii), the
content of such Tax Returns shall be subject to the approval of the Buyer in its
sole discretion. The Sellers shall provide the Buyer with a copy of each
proposed Tax Return (and such additional information regarding such Tax Return
as may be reasonably requested by the Buyer) at least 20 days prior to the
filing due date for each such Tax Return in the case of federal and state income
Tax Returns and the New Hampshire Business Enterprise Tax Return and at least
five days prior to the filing due date for all other Tax Returns. The Sellers
shall deliver to the Buyer at least five days prior to the payment due date, all
payments associated with all such Tax Returns to the extent such Taxes are
attributable (as determined under Section 8.2 hereof) to periods ending (or
deemed pursuant to Section 8.2(b) to end) on or before the Closing Date and, to
the extent such Taxes are not accounted for in a reduction of the Purchase
Price, shall promptly reimburse the Buyer for the amount of such Taxes paid by
the Buyer or the Company.

(b) The Buyer shall prepare and timely file or shall cause to be prepared and
timely filed all other Tax Returns for the Company. The Buyer shall make all
payments required with respect to any such Tax Returns; provided, however, that
the Sellers shall promptly reimburse the Buyer to the extent any payment the
Buyer is required to make relates to the operations of the Company for any
period ending (or deemed pursuant to Section 8.2(b) to end) on or before the
Closing Date.

(c) To the extent permissible under applicable Law, any Tax Return to be
prepared and filed for Taxable periods beginning before the Closing Date and
ending after the Closing Date shall be prepared on a basis consistent with the
last previous similar Tax Return.

(d) The Sellers shall be responsible for the payment of any transfer, sales,
use, stamp, conveyance, value added, recording, registration, documentary,
filing and other non-income Taxes and administrative fees (including, notary
fees) arising in connection with the consummation of the transactions
contemplated by this Agreement, including the transfers required by
Section 6.1(h) and Section 6.1(j).

 

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8.2 Allocation of Certain Taxes.

(a) The Buyer and the Sellers agree that if the Company is permitted but not
required under applicable foreign, state or local Tax Laws to treat the Closing
Date as the last day of a Taxable period, the Buyer and the Sellers shall treat
such day as the last day of a Taxable period.

(b) Subject to Section 8.1, any Taxes for a Taxable period beginning before and
ending after the Closing Date shall be paid by the Buyer or its Affiliates and
the portion of any such Taxes allocable to the portion of such period ending on
the Closing Date shall be deemed to equal (i) in the case of Taxes that (x) are
based upon or related to income or receipts or (y) the New Hampshire Business
Enterprise Tax, the amount which would be payable if the taxable year ended on
the day before the Closing Date, (ii) in the case of payroll Taxes, and Taxes
imposed in connection with any sale or other transfer or assignment of property,
including all sales, use and transfer Taxes, other than Taxes described in
Section 8.1(d), the amount that would be payable if the Taxable year ended on
the Closing Date, and (iii) in the case of other Taxes imposed on a periodic
basis (including property Taxes), the amount of such Taxes for the entire period
multiplied by a fraction the numerator of which is the number of calendar days
in the period ending with the Closing Date and the denominator of which is the
number of calendar days in the entire period. For purposes of the provisions of
Section 8.1, each portion of such period shall be deemed to be a Taxable period
(whether or not it is in fact a Taxable period). Transactions that occur on the
Closing Date but before the Closing and that are not incurred in the Ordinary
Course of Business of the Company shall be considered to be attributable to the
period that ends on the day before the Closing Date, and the Sellers agree to
report and to cause to be reported all transactions not in the Ordinary Course
of Business occurring on the Closing Date but before the Closing as occurring at
the end of the prior day. Transactions that occur on the Closing Date but after
the Closing and that are not incurred in the Ordinary Course of Business of the
Company shall be considered to be attributable to the period that commences on
the day following the Closing Date. The Buyer agrees to report and to cause to
be reported all transactions not in the Ordinary Course of Business occurring on
the Closing Date but after the Closing as occurring at the beginning of the
following day.

(c) If the Company is entitled to a refund or credit of income Taxes for any
period ending prior to the Closing Date that is attributable to the carryback of
losses, credits or similar items of the Company from any period beginning on or
after the Closing Date, and if the refund or credit is paid to the Sellers or
any of their respective Affiliates, the Sellers shall pay to the Buyer the
amount of such refund or credit promptly after receipt, together with any
interest or other amount received in connection therewith.

(d) For the avoidance of doubt the Sellers shall be responsible for all Taxes
allocated to them under this Article VIII (including Section 8.1(d)) to the
extent such Taxes are not accounted for in a reduction of the Purchase Price and
shall reimburse the Buyer or the Company to the extent such Taxes are paid by
the Buyer or the Company.

 

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8.3 Cooperation on Tax Matters; Tax Audits.

(a) The Buyer and the Sellers and their respective Affiliates shall cooperate in
the preparation of all Tax Returns for any Tax periods for which one Party could
reasonably require the assistance of the other Party in obtaining any necessary
information. Such cooperation shall include, but not be limited to, furnishing
prior years’ Tax Returns or return preparation packages to the extent related to
the Company illustrating previous reporting practices or containing historical
information relevant to the preparation of such Tax Returns, and furnishing such
other information within such Party’s possession requested by the Party filing
such Tax Returns as is relevant to their preparation. Such cooperation and
information also shall include promptly forwarding copies of appropriate notices
and forms or other communications received from or sent to any Governmental
Entity which relate to the Company, and providing copies of all relevant Tax
Returns to the extent related to the Company, together with accompanying
schedules and related work papers, documents relating to rulings or other
determinations by any Governmental Entity and records concerning the ownership
and Tax basis of property, which the requested Party may possess. The Buyer and
the Sellers and their respective Affiliates shall make their respective
employees and facilities available on a mutually convenient basis to explain any
documents or information provided hereunder.

(b) The Buyer shall have the right, at its own expense, to control any Tax
audit, initiate any claim for refund, contest, resolve and defend against any
assessment, notice of deficiency, or other adjustment or proposed adjustment
relating to any and all Taxes for any Taxable period with respect to the
Company; provided that, with respect to (i) any state, local or foreign Taxes
for any Taxable period beginning before the Closing Date and ending after the
Closing Date and (ii) any item the adjustment of which may cause the Sellers to
become obligated to make any payment pursuant to Section 8.1(a) hereof, the
Buyer shall consult with the Representative with respect to the resolution of
any issue that would affect the Sellers, and not settle any such issue, or file
any amended Tax Return relating to such issue, without the consent of the
Representative, such consent not to be unreasonably withheld. Where consent to a
settlement is withheld by the Representative pursuant to this Section 8.3(b),
the Sellers may continue or initiate any further proceedings at their own
expense, provided that any liability of the Buyer, after giving effect to this
Agreement, shall not exceed the liability that would have resulted had the
Representative not withheld his consent and any resolution of an issue will not
result in a change in accounting method for Tax purposes without the Buyer’s
consent.

ARTICLE IX

POST-CLOSING COVENANTS

9.1 Proprietary Information.

(a) From and after the Closing, the Sellers and each of their respective
Affiliates shall not disclose or make use of any information relating to the
business of the Company that provides the Company or the Buyer with a
competitive advantage (or that could be used to the disadvantage of the Company
or the Buyer by a Competitive Business), which is not generally known by, nor
easily learned or determined by, persons outside the Company (collectively
referred to herein as “Proprietary Information”) including, but not limited to:
(i) customer and prospect lists, details of agreements and communications with
customers and prospects, and other customer information; (ii) sales plans and
projections, product pricing

 

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information, protocols, acquisition, expansion, marketing, financial and other
business information and existing and future products and business plans and
strategies of the Company or the Buyer; (iii) sales proposals, demonstrations
systems, sales material; (iv) research and development; (vi) software systems,
computer programs and source codes; (vii) sources of supply; (viii) identity of
specialized consultants and contractors and Proprietary Information developed by
them for the Company; (ix) purchasing, operating and other cost data;
(x) special customer needs, cost and pricing data; and (xi) employee information
(including personnel, payroll, compensation and benefit data and plans),
including all such information recorded in manuals, memoranda, projections,
reports, minutes, plans, drawings, sketches, designs, data, specifications,
software programs and records, whether or not legended or otherwise identified
by the Company or the Buyer as Proprietary Information, as well as such
information that is the subject of meetings and discussions and not recorded.
Proprietary Information shall not include such information that the Sellers can
demonstrate (A) is generally available to the public (other than as a result of
a disclosure by a Seller) or (B) was disclosed to the Sellers by a third party
under no obligation to keep such information confidential. Notwithstanding the
foregoing, the Sellers shall have no obligation hereunder to keep confidential
any of the Proprietary Information to the extent disclosure thereof is required
by Law; provided, however, that in the event disclosure is required by Law, the
Sellers shall use best efforts to provide the Buyer with prompt advance notice
of such requirement so that the Buyer may seek an appropriate protective order.

(b) Each Seller agrees that the remedy at Law for any breach of this Section 9.1
would be inadequate and that the Buyer shall be entitled to seek injunctive
relief in addition to any other remedy it may have upon breach of any provision
of this Section 9.1.

9.2 Solicitation and Hiring. For a period of six years after the Closing Date,
none of the Sellers shall, either directly or indirectly (including through an
Affiliate), (a) solicit or attempt to induce any Restricted Employee to
terminate his employment with the Buyer, the Company or any of their respective
Affiliates or (b) hire, attempt to hire, employ or use in any subcontracting
arrangement any Restricted Employee; provided that, subject to Section 9.3, this
clause (b) shall not apply to (i) any Restricted Employee (other than any Key
Employee) whose employment with the Buyer or an Affiliate of the Buyer has been
terminated for a period of six months or longer or (ii) any Key Employee whose
employment with the Buyer or an Affiliate of the Buyer has been terminated for a
period of eighteen months or longer.

9.3 Non-Competition.

(a) For a period of six years after the Closing Date, none of the Sellers shall
(other than in his capacity as an employee of the Buyer or any of its respective
Affiliates), either directly or indirectly (including through an Affiliate) as a
stockholder, lender, investor, employer, joint venturer, partner, member,
manager, consultant, employee, subcontractor, independent contractor or
otherwise, within 150 miles from any location out of which the Buyer or its
Affiliates operates or provides services as of the Closing Date (the “Geographic
Area”):

(i) engage in, operate or establish (A) any aspect of the business of the
Company as such business has been conducted or had on the Closing Date been
planned to be conducted by the Company or (B) any aspect of the business of
Buyer or its Affiliates as such business has been conducted;

 

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(ii) solicit, divert or take away, or attempt to solicit, divert or take away,
the business or patronage of any individual, corporation or other entity which
was or is a prospective client, customer or account of the Company or any of its
subsidiaries on the Closing Date, or had been a client, customer or account of
the Company or any of its subsidiaries within the three-year period prior to the
Closing Date; or

(iii) acquire, invest in, own or otherwise hold, directly or indirectly, any
authorized capital stock of Oceanside other than the Oceanside Shares issued and
outstanding and held by Trash Lady ME on the date hereof, provided that such
investment and ownership in the Oceanside Shares shall remain a passive
investment.

(b) Each of the Sellers acknowledges being represented by and having consulted
with counsel prior to entering into this Agreement, and each of the Parties
agrees that the duration and geographic scope of the non-competition provision
set forth in this Section 9.3 are reasonable. In the event that any court of
competent jurisdiction determines that the duration or the geographic scope, or
both, are unreasonable and that such provision is to that extent unenforceable,
each of the Parties agrees that the provision shall remain in full force and
effect for the greatest time period and in the greatest area that would not
render it unenforceable. Each of the Parties intends that this non-competition
provision shall be deemed to be a series of separate covenants, one for each and
every county of each and every state within the Geographic Area. Each of the
Parties agrees that damages are an inadequate remedy for any breach of this
provision and that the Buyer shall, whether or not it is pursuing any potential
remedies at Law, be entitled to equitable relief in the form of preliminary and
permanent injunctions without bond or other security upon any actual or
threatened breach of this non-competition provision.

(c) The Sellers acknowledge that their ownership of Company Shares represents a
substantial interest in the Company and each Seller intends to transfer to the
Buyer the goodwill reflected in the Company Shares owned by such Seller. The
Sellers further acknowledge that the Buyer would not enter into this Agreement
but for the restrictions in this Section 9.3.

(d) If a Seller violates the terms of this Section 9.3, such Seller shall
continue to be bound by the restrictions set forth herein until a period of
three years has expired without any violations of this Section 9.3.

9.4 AGREEMENT NOT TO TRANSFER EQUITY CONSIDERATION SHARES.

(a) Lockup. Each Seller hereby agrees that it will not, without the prior
written consent of the Buyer, during the period commencing on Closing Date and
ending on the date l80 days thereafter, (a) lend, offer, pledge, sell, contract
to sell, sell any option or contract to purchase, purchase any option or
contract to sell, grant any option, right or warrant to purchase, or otherwise
transfer or dispose of, directly or indirectly, any Equity Consideration Shares
or (b) enter into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of the Equity
Consideration Shares, whether any such transaction described in clause (a) or
(b) above is to be settled by delivery of Equity Consideration Shares or other
securities, in cash or otherwise.

 

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(b) Restrictions on Transfer. Each Seller hereby agrees and acknowledges that no
Equity Consideration Shares can be sold or transferred unless either (i) such
Equity Consideration Shares have ceased to be “restricted securities” within the
meaning of Rule 144 under the Securities Act or (ii) the Buyer shall have been
furnished with an opinion of legal counsel, reasonably satisfactory to the
Buyer, to the effect that such sale or transfer is exempt from the registration
requirements of the Securities Act. The Equity Consideration Shares shall cease
to be “restricted securities” for purposes of the Securities Act (x) upon any
sale pursuant to a registration statement under the Securities Act, Section 4(1)
of the Securities Act or Rule 144 under the Securities Act or (y) at such time
as (A) a period of at least one year, as determined in accordance with paragraph
(d) of Rule 144 under the Securities Act, has elapsed since the later of the
date the Equity Consideration Shares were acquired from the Buyer or an
affiliate of the Company and (B) the Equity Consideration Shares become eligible
for sale under Rule 144(b)(1)(i) under the Securities Act. Each Seller
understands that the Buyer has no obligation or present intention to file a
registration statement with respect to the Equity Consideration Shares.

9.5 Cooperation with Respect to Permits. From and after the Closing, each of the
Sellers and their respective Affiliates shall cooperate with the Buyer and its
Affiliates with respect to the preparation and filing of any and all Permits
(including modifications, extensions, renewals or transfers thereof) as the
Buyer or its Affiliates may request in connection with the transactions
contemplated by this Agreement. Such cooperation shall include providing such
information within such Seller’s possession requested by the Buyer or its
Affiliates as is relevant to preparation or filing of any and all Permits
(including modifications, extensions, renewals or transfers thereof) and
forwarding copies of appropriate notices and forms or other communications
received from or sent to any Governmental Entity which relate to such Permits.

9.6 Cooperation with Respect to certain New Leases. From and after the Closing,
each of the Sellers and their respective Affiliates shall use its Reasonable
Best Efforts to cooperate with, assist and otherwise aid the Buyer and its
Affiliates in to order cause to be fully executed and delivered to the Buyer, as
soon as reasonably practicable after the Closing, the New Lease in substantially
the form attached hereto as Exhibit B-4, along with (A) a termination of each
existing lease or occupancy agreement affecting the real property subject to
such New Lease, if applicable, and (B) a notice or memorandum of such New Lease
(in statutory and customary recordable form acceptable to the Buyer) providing
constructive record notice of such New Lease.

ARTICLE X

TERMINATION

10.1 Termination of Agreement. The Parties may terminate this Agreement prior to
the Closing, as provided below:

 

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(a) the Parties may terminate this Agreement by written consent among the Buyer,
the Company and the Representative;

(b) the Buyer may terminate this Agreement by giving written notice to the
Company and the Representative (on behalf of the Sellers) in the event any
Seller or the Company is in breach of any representation, warranty or covenant
contained in this Agreement, and such breach, individually or in combination
with any other such breach, (i) would cause the conditions set forth in clauses
(b), (c), (d) or (e) of Section 6.1 not to be satisfied and (ii) is not cured
within 20 days following delivery by the Buyer to the Company of written notice
of such breach;

(c) the Company and the Representative (on behalf of the Sellers) may terminate
this Agreement by giving written notice to the Buyer in the event the Buyer is
in breach of any representation, warranty or covenant contained in this
Agreement, and such breach, individually or in combination with any other such
breach, (i) would cause the conditions set forth in clauses (a) and (b) of
Section 6.2 not to be satisfied and (ii) is not cured within 20 days following
delivery by the Company and the Representative to the Buyer of written notice of
such breach;

(d) the Buyer may terminate this Agreement by giving written notice to the
Company and the Representative if the Closing shall not have occurred on or
before the Outside Date by reason of the failure of any condition precedent
under Section 6.1 (unless the failure results primarily from a breach by the
Buyer of any representation, warranty or covenant contained in this Agreement);
or

(e) the Company and the Representative (on behalf of the Sellers) may terminate
this Agreement by giving written notice to the Buyer if the Closing shall not
have occurred on or before the Outside Date by reason of the failure of any
condition precedent under Section 6.2 (unless the failure results primarily from
a breach by any Seller or the Company of any representation, warranty or
covenant contained in this Agreement);

10.2 Effect of Termination. If any Party terminates this Agreement pursuant to
Section 10.1, all obligations of the Parties hereunder shall terminate without
any liability of any Party to any other Party (except for any liability of any
Party for willful breaches of this Agreement or for breaches of Section 5.6).

ARTICLE XI

DEFINITIONS

For purposes of this Agreement, each of the following terms shall have the
meaning set forth below.

“AAA” shall have the meaning set forth in Section 7.2(e).

“Adjusted Purchase Price” shall have the meaning set forth in Section 1.4(f).

“Administrative Agent” shall mean Bank of America, N.A.

 

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“Affiliate” shall mean any affiliate, as defined in Rule 12b-2 under the
Exchange Act. For the avoidance of doubt, Trash Lady ME and Trash Lady NH shall
each be deemed an Affiliate of the Company and the Sellers for purposes of this
Agreement.

“Agreed Amount” shall mean part, but not all, of the Claimed Amount.

“Agreement” shall have the meaning set forth in the first paragraph hereto.

“Arbitrator” shall mean a single arbitrator selected by the Buyer and the
Representative (on behalf of the Sellers) in accordance with the Commercial
Rules.

“Average Monthly Revenue” shall mean the amount equal to the True-Up Revenue
divided by three.

“Assignment, Collection and Release Agreement” shall mean the Assignment,
Collection and Release Agreement in the form attached hereto as Exhibit D by and
between the Company and Trash Lady ME.

“Business Day” shall mean any day other than (i) a Saturday or Sunday or (ii) a
day on which banking institutions located in Boston, Massachusetts are permitted
or required by Law, executive order or governmental decree to remain closed.

“Buyer” shall have the meaning set forth in the first paragraph of this
Agreement.

“Buyer Certificate” shall mean a certificate delivered by the Buyer (without
qualification as to knowledge, materiality or otherwise), signed on behalf of
the Buyer by an authorized officer of the Buyer, to the effect that each of the
conditions specified in clauses (a) and (b) of Section 6.2 is satisfied in all
respects.

“Buyer Reports” shall have the meaning set forth in Section 4.4.

“Buyer Shares” shall have the meaning set forth in Section 1.2(b).

“Cash Consideration Amount” shall have the meaning set forth in Section 1.2(a).

“CERCLA” shall mean the federal Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended.

“Certificates” shall mean stock certificates for Company Shares or, as
applicable, a notarized affidavit of loss with respect thereto.

“Claim Notice” shall mean written notification which contains (i) a description
of the Damages incurred or reasonably expected to be incurred by the Buyer and
the Claimed Amount of such Damages, to the extent then known, (ii) a statement
that the Buyer is entitled to indemnification under Article VII for such Damages
and a reasonable explanation of the basis therefor, and (iii) a demand for
payment in the amount of such Damages.

 

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“Claimed Amount” shall mean the amount of any Damages incurred or reasonably
expected to be incurred by the Buyer.

“Close of Business” shall mean, with respect to a Business Day, 5:00 p.m.
Boston, Massachusetts time.

“Closing” shall mean the closing of the transactions contemplated by this
Agreement.

“Closing Adjustment Items” shall mean (a) the Company Transaction Expenses,
(b) the Employee Amount and (c) any Indebtedness outstanding at the Closing.

“Closing Adjustment Statement” shall mean the statement of the Closing
Adjustment Items prepared in accordance with the provisions of Section 1.4
hereof.

“Closing Adjustment Surplus” shall have the meaning set forth in
Section 1.4(f)(iii).

“Closing Cash Consideration Amount” shall mean an amount equal to the Cash
Consideration Amount less the Estimated Closing Adjustment and less the
Indemnification Escrow Amount and True-Up Escrow Amount.

“Closing Date” shall mean the date two Business Days after the satisfaction or
waiver of all of the conditions to the obligations of the Parties to consummate
the transactions contemplated hereby (excluding the delivery at the Closing of
any documents set forth in Section 1.3) or such other date as may be mutually
agreeable to the Parties.

“Closing Net Working Capital” shall mean, as of the Closing Date, the Company’s
consolidated current assets less the Company’s consolidated current liabilities
(deferred revenue will include short term and long term portions) as of the
Closing (each determined in accordance with GAAP, consistently applied with the
Financial Statements); provided, however, that for purposes hereof, any accounts
receivables that are uncollected as of the end of the True-Up Period shall be
valued at zero. Closing Net Working Capital shall not include (a) cash and cash
equivalents (but shall include, as a liability, any outstanding checks),
(b) current and deferred Tax assets and liabilities and (c) any accounts
receivables that are set forth on Schedule 1.5 attached hereto and transferred
to Trash Lady ME pursuant to the Assignment, Collection and Release
Agreement. For the avoidance of doubt, Company Transaction Expenses, the
Employee Amount and Indebtedness shall not be included in Closing Net Working
Capital.

“Closing Net Working Capital Surplus” shall have the meaning set forth in
Section 1.5(b).

“Code” shall mean the Internal Revenue Code of 1986, as amended.

“Commercial Rules” shall mean the Commercial Arbitration Rules of the AAA.

“Company” shall have the meaning set forth in the first paragraph of this
Agreement.

“Company Certificate” shall mean a certificate delivered by the Company (without
qualification as to knowledge, materiality or otherwise), signed on behalf of
the Company by the President of the Company, to the effect that each of the
conditions specified in clauses (a) through (m) and (o) of Section 6.1 is
satisfied in all respects.

 

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“Company Material Adverse Effect” shall mean any material adverse change, event,
circumstance or development with respect to, or material adverse effect on,
(a) the business, assets, liabilities, capitalization, condition (financial or
other), prospects or results of operations of the Company (b) the ability of the
Buyer to operate the business of the Company immediately after the Closing or
(c) the ability of the officers of the Buyer, following the Closing, to certify
without qualification to the Buyer’s financial statements or filings made with
the SEC as they relate to the business or operations previously conducted by the
Company. For the avoidance of doubt, the parties agree that the terms
“material,” “materially” and “materiality” as used in this Agreement with an
initial lower case “m” shall have their respective customary and ordinary
meanings, without regard to the meaning ascribed to Company Material Adverse
Effect.

“Company Owned Intellectual Property” shall mean all Intellectual Property owned
or purported to be owned by the Company, in whole or in part.

“Company Plan” shall mean any Employee Benefit Plan maintained, or contributed
to, by the Company or any ERISA Affiliate for the benefit of or relating to any
current or former employee or independent contractor of the Company.

“Company Registrations” shall mean Intellectual Property Registrations that are
registered or filed in the name of the Company, alone or jointly with others.

“Company Shares” shall mean the shares of common stock, no par value per share,
of the Company.

“Company Stock Plan” shall mean any stock option plan or other stock or
equity-related plan of the Company.

“Company Stockholders” shall mean the stockholders of record of the Company
immediately prior to the Closing.

“Company Transaction Expenses” shall mean any Taxes arising in connection with
the transfers set forth in Sections 6.1(h) and (j) and any and all fees,
expenses and other obligations unpaid as of the Closing (whether or not due and
payable as of the Closing) and incurred by the Company in connection with the
transactions contemplated by this Agreement.

“Competitive Business” shall mean any business or other activity that, directly
or indirectly, provides one or more third parties with products, services or
solutions for solid waste and septic waste, recycling and resource management
(including to residential, commercial, municipal or industrial customers) in the
areas of solid waste and liquid waste collection, transfer, disposal, recycling
and organics services.

“Contract” shall have the meaning set forth in Section 3.15(b).

“Controlling Party” shall mean the party controlling the defense of any Third
Party Action.

“Credit Agreement Lenders” shall mean each of the lenders listed on the
signature pages to the Credit Agreement.

 

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“Credit Agreement” shall mean that certain Amended and Restated Credit
Agreement, dated as of March 18, 2011, as amended or restated from time to time,
by and among the Buyer, the Buyer’s subsidiaries listed on Schedule 1 thereto,
the Administrative Agent and the Credit Agreement Lenders, as such agreement may
be amended and in effect from time to time.

“Customer Contracts” shall mean any contracts, agreements, instruments or
understandings with the Company’s customers.

“Damages” shall mean any and all claims, debts, obligations and other
liabilities (whether absolute, accrued, contingent, fixed or otherwise, or
whether known or unknown, or due or to become due or otherwise), diminution in
value, monetary damages, fines, fees, penalties, interest obligations,
deficiencies, losses and expenses (including amounts paid in settlement,
interest, court costs, costs of investigators, fees and expenses of attorneys,
accountants, financial advisors and other experts, and other expenses of
litigation, arbitration or other dispute resolution procedures), other than
those costs and expenses of arbitration of a Dispute which are to be shared
equally by the Buyer and the Representative as set forth in Section 7.2(e).

“Disclosure Schedule” shall mean the disclosure schedules provided by the
Sellers and the Company to the Buyer on the date hereof and accepted in writing
by the Buyer.

“Disclosure Statement” shall mean a written information statement, which
includes a summary of this Agreement.

“Dispute” shall mean the dispute resulting if the Representative in a Response
disputes the liability of the Sellers for all or part of a Claimed Amount.

“Dispute Notice” shall have the meaning set forth in Section 1.4(d).

“DOL” shall have the meaning set forth in Section 3.21(a).

“Employee Amount” shall mean the aggregate amount payable to employees of the
Company pursuant to any change in control bonus plan, severance plan, change of
control, retention or similar arrangement of the Company, in each case, payable
solely as a result of the transactions contemplated by this Agreement.

“Employee Benefit Plan” shall mean any “employee pension benefit plan” (as
defined in Section 3(2) of ERISA), any “employee welfare benefit plan” (as
defined in Section 3(1) of ERISA), and any other written or unwritten plan,
policy, agreement or arrangement involving direct or indirect compensation,
including insurance coverage, severance benefits, change in control benefits,
disability benefits, deferred compensation, bonuses, fringe benefits, stock
options, stock purchase, phantom stock, stock appreciation or other forms of
incentive compensation or post-termination compensation, and all employment
agreements providing for terms of compensation.

 

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“Environmental Law” shall mean any Law relating to the environment, occupational
health and safety, or exposure of persons or property to Materials of
Environmental Concern, including any statute, regulation, administrative
decision or order pertaining to: (i) the presence of or the treatment, storage,
disposal, generation, transportation, handling, distribution, manufacture,
processing, use, import, export, labeling, recycling, registration,
investigation or remediation of Materials of Environmental Concern or
documentation related to the foregoing; (ii) air, water and noise pollution;
(iii) groundwater and soil contamination; (iv) the release, threatened release,
or accidental release into the environment, the workplace or other areas of
Materials of Environmental Concern, including emissions, discharges, injections,
spills, escapes or dumping of Materials of Environmental Concern; (v) transfer
of interests in or control of real property which may be contaminated;
(vi) community or worker right-to-know disclosures with respect to Materials of
Environmental Concern; (vii) the protection of wild life, marine life and
wetlands, and endangered and threatened species; (viii) storage tanks, vessels,
containers, abandoned or discarded barrels and other closed receptacles; and
(ix) health and safety of employees and other persons. As used above, the term
“release” shall have the meaning set forth in CERCLA.

“Environmental Matters” shall mean any liability or obligation arising under
Environmental Law, whether arising under theories of contract, tort, negligence,
successor or enterprise liability, strict liability or other legal or equitable
theory, including (i) any failure to comply with an applicable Environmental Law
and (ii) any liability or obligation arising from the presence of, release or
threatened release of, or exposure of persons or property to, Materials of
Environmental Concern. As used above, the term “release” shall have the meaning
set forth in CERCLA.

“Equity Consideration Shares” shall have the meaning set forth in
Section 1.2(b).

“ERISA Affiliate” shall mean any entity which is, or at any applicable time was,
a member of (1) a controlled group of corporations (as defined in Section 414(b)
of the Code), (2) a group of trades or businesses under common control (as
defined in Section 414(c) of the Code), or (3) an affiliated service group (as
defined under Section 414(m) of the Code or the regulations under Section 414(o)
of the Code), any of which includes or included the Company.

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended.

“Escrow Agent” shall mean Wilmington Trust, National Association, a national
banking association.

“Escrow Agreement” shall mean the Escrow Agreement in the form attached hereto
as Exhibit A by and among the Buyer, the Representative and the Escrow Agent.

“Estimated Closing Adjustment” shall mean the sum of the Closing Adjustment
Items estimated as of the Closing Date pursuant to the Estimated Closing
Adjustment Statement in accordance with the provisions of Section 1.4.

“Estimated Closing Adjustment Statement” shall have the meaning set forth in
Section 1.4(a).

 

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“Excess True-Up Escrow Amount” shall have the meaning set forth in
Section 1.5(a)(iii).

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

“Expected Claim Notice” shall mean a notice that, as a result of a legal
proceeding instituted by or written claim made by a third party, the Buyer
reasonably expects to incur Damages for which it is entitled to indemnification
under Article VII.

“Final Closing Adjustment” shall mean the amount of the Closing Adjustment Items
determined in accordance with the provisions of Section 1.4.

“Financial Statements” shall have the meaning set forth in Section 3.6(a).

“First Amendment to Credit Agreement” shall mean that certain First Amendment to
Amended and Restated Credit Agreement and Consent, dated as of April 27, 2012,
by and among the Buyer, the Buyer’s subsidiaries, the Administrative Agent and
the lenders listed on the signature pages thereto.

“Fundamental Representations” shall have the meaning set forth in
Section 7.3(a).

“GAAP” shall mean United States generally accepted accounting principles.

“Geographic Area” shall have the meaning set forth in Section 9.3(a).

“Governmental Entity” shall mean any federal, state, local or foreign government
or any court, arbitrational tribunal, administrative agency or commission or
other governmental or regulatory authority or agency acting under the authority
of the federal or any state, local or foreign government.

“Guaranteed Monthly Revenue” shall have the meaning set forth in
Section 1.5(a)(i).

“Indebtedness” with respect to any Person shall mean (a) any indebtedness or
other obligation for borrowed money; (b) any obligation incurred for all or any
part of the purchase price of property or other assets or for the cost of
property or other assets constructed or of improvements thereto (including
non-compete covenants), other than accounts payable included in current
liabilities and incurred in respect of property purchased in the Ordinary Course
of Business; (c) the face amount of all letters of credit issued for the account
of such Person; (d) obligations (whether or not such Person has assumed or
become liable for the payment of such obligation) secured by Security Interests;
(e) capitalized lease obligations; (f) all guarantees and similar obligations of
such Person; (g) all accrued interest, fees and charges in respect of any
indebtedness; (h) all bankers acceptances and overdrafts; and (i) all interest,
prepayment premiums and penalties, and any other fees, expenses, indemnities and
other amounts payable as a result of the prepayment or discharge of any
indebtedness.

“Indemnification Escrow Amount” shall mean $1,000,000 of the Cash Consideration
Amount deposited in escrow pursuant to Section 1.6.

 

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“Indemnification Escrow Fund” shall mean the Indemnification Escrow Amount held
and disposed of in accordance with the terms of the Escrow Agreement, together
with (a) any additional amounts deposited in escrow pursuant to
Section 1.4(f)(iii) and (b) any interest thereon.

“Intellectual Property” shall mean the following subsisting throughout the
world: (a) Trademarks and all goodwill in the Trademarks; (b) copyrights,
designs, data and database rights and registrations and applications for
registration thereof, including moral rights of authors; and (c) other
proprietary rights relating to any of the foregoing (including remedies against
infringement thereof and rights of protection of interest therein under the Laws
of all jurisdictions).

“Intellectual Property Registrations” shall mean registered Trademarks,
registered copyrights and designs, and applications for each of the foregoing.

“Intended Uses” shall mean the operations of the Company as currently conducted
and as currently proposed to be conducted.

“Key Employees” shall mean each of the persons employed by the Company and
identified on Schedule 3.20 attached hereto.

“Knowing Misrepresentation” shall mean that, to the actual knowledge of any of
the Sellers, such representation or warranty was incorrect when made.

“Knowledge of the Company”, “Company’s Knowledge” and phrases of like import
shall mean the knowledge of any of the Sellers. The above named individuals will
be deemed to have knowledge of a particular fact, circumstance, event or other
matter if (a) such individual has actual knowledge of such fact, circumstance,
event or other matter, (b) such fact, circumstance, event or other matter is
reflected in one or more documents (whether written or electronic, including
electronic mails sent to or by such individual) in the possession of such
individual, including his or her personal files, (c) such fact, circumstance,
event or other matter is reflected in one or more documents (whether written or
electronic) contained in books and records of such individual that would
reasonably be expected to be reviewed by such individual in the customary
performance of his or her duties or (d) such fact, circumstance, event or other
matter would be known to such individual had he or she made reasonable inquiry
of appropriate employees.

“Law” shall mean any United States federal, state or local or foreign law,
common law, statute, standard, ordinance, code, rule, regulation, resolution or
promulgation, or any decree, order, injunction, rule, judgment, consent of or by
any Governmental Entity, or any Permit or similar right granted under any of the
foregoing, or any similar provision having the force or effect of law.

“Lease” shall mean any lease or sublease, license or other occupancy agreement,
as amended to date, whether written or unwritten, pursuant to which the Company
leases or subleases from another party or otherwise occupies any real property.
For the avoidance of doubt, the term Lease shall include the Operating
Agreements and the New Leases.

“Leased Real Property” shall have the meaning set forth in Section 3.12.

 

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“Legal Proceeding” shall mean any action, suit, proceeding, claim, complaint,
hearing, arbitration or investigation before any Governmental Entity or before
any arbitrator.

“Litigation Matter” shall mean any Legal Proceedings set forth in Section 3.19
of the Disclosure Schedule.

“Major Customer” shall have the meaning set forth in Section 3.24.

“Materials of Environmental Concern” shall mean any: pollutants, contaminants or
hazardous substances (as such terms are defined under CERCLA), pesticides (as
such term is defined under the Federal Insecticide, Fungicide and Rodenticide
Act), solid wastes and hazardous wastes (as such terms are defined under the
Resource Conservation and Recovery Act), chemicals, other hazardous, radioactive
or toxic materials, oil, petroleum and petroleum products (and fractions
thereof), or any other material (or article containing such material) listed or
subject to regulation under any Law due to its potential, directly or
indirectly, to harm the environment or the health of humans or other living
beings.

“Most Recent Balance Sheet” shall mean the unreviewed consolidated balance sheet
of the Company as of the Most Recent Balance Sheet Date.

“Most Recent Balance Sheet Date” shall mean September 31, 2012.

“Net Working Capital Adjustment Amount” shall have the meaning set forth in
Section 1.5(a)(ii).

“Neutral Accountant” shall have the meaning set forth in Section 1.4(d).

“New Leases” shall mean the ground leases in the forms attached hereto as
Exhibits B-1, B-2, B-3 and B-4 with respect to the Company’s business conducted
in (i) Old Orchard Beach, Maine, (ii) Belmont, New Hampshire, (iii) Hermon,
Maine and (iv) Brentwood, New Hampshire, respectively, which the Company shall
deliver to the Buyer on or prior to the Closing for each parcel specified on
Exhibit B.

“Non-Controlling Party” shall mean the party not controlling the defense of any
Third Party Action.

“Oceanside” shall mean Oceanside Rubbish, Inc., a Maine corporation.

“Oceanside Right of First Refusal Agreement” shall mean the Right of First
Refusal Agreement in the form attached hereto as Exhibit C by and between the
Buyer and Trash Lady ME.

“Oceanside Shares” shall mean the 340 shares Oceanside’s common stock, no par
value, held by Trash Lady ME as of the date of this Agreement, as adjusted to
reflect any stock dividend, split, combination or other recapitalization
affecting such shares after the date of this Agreement.

 

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“Operating Agreement” shall mean the operating agreements, as amended from time
to time, between the Company and each of the following cities or municipalities:
(i) the City of Concord, New Hampshire (including the lease attached as Exhibit
B thereto); (ii) the Town of Raymond, New Hampshire; and (iii) the Town of
Dayton, Maine.

“Ordinary Course of Business” shall mean the ordinary course of business
consistent with past custom and practice (including with respect to frequency
and amount).

“Ouellette & Associates” shall have the meaning set forth in Section 3.6(e).

“Outside Date” shall mean the Close of Business on December 31, 2012.

“Owned Real Property” shall mean each parcel of real estate set forth on
Section 3.11 of the Disclosure Schedule.

“Parties” shall mean the Buyer, the Company, the Sellers and Arthur E. St.
Hilaire, solely in his capacity as the Representative.

“Permits” shall mean all permits, licenses, registrations, certificates, orders,
approvals, franchises, variances and similar rights issued by or obtained from
any Governmental Entity (including those issued or required under Environmental
Laws and those relating to the occupancy or use of owned or leased real
property).

“Person” shall mean an individual, a partnership, a corporation, an association,
a limited liability company, a joint stock company, a trust, a joint venture, an
unincorporated organization or a Governmental Entity.

“PPACA” shall have the meaning set forth in Section 3.21(h).

“Pre-Closing Period” shall have the meaning set forth in Section 5.3(a).

“Proprietary Information” shall have the meaning set forth in Section 9.1(a).

“Purchase Price” shall have the meaning set forth in Section 1.2.

“Reasonable Best Efforts” shall mean best efforts, to the extent commercially
reasonable.

“Representative” shall have the meaning set forth in the first paragraph of this
Agreement.

“Response” shall mean a written response containing the information provided for
in Section 7.2(c).

“Restricted Employee” shall mean any person who either (i) was an employee of
the Buyer or any of its Affiliates on either the date of this Agreement or the
Closing Date or (ii) was an employee of the Company on either the date of this
Agreement or the Closing Date. For the avoidance of doubt, a Restricted Employee
shall include any Key Employee.

“Retained Fixtures” shall have the meaning set forth in Section 5.16(b).

 

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“Revenue True-Up Adjustment Amount” shall have the meaning set forth in
Section 1.5(a)(i).

“Revenue True-Up Deficit” shall have the meaning set forth in Section 1.5(b)(i).

“SEC” shall mean the United States Securities and Exchange Commission.

“Securities Act” shall mean the Securities Act of 1933, as amended.

“Security Interest” shall mean any mortgage, pledge, security interest,
encumbrance, charge or other lien (whether arising by contract or by operation
of Law), other than (i) mechanic’s, materialmen’s, and similar liens, (ii) liens
arising under worker’s compensation, unemployment insurance, social security,
retirement, and similar legislation and (iii) liens on goods in transit incurred
pursuant to documentary letters of credit, in each case arising in the Ordinary
Course of Business of the Company and not material to the Company.

“Sellers” shall have the meaning set forth in the first paragraph of this
Agreement; provided that each of Trash Lady ME and Trash Lady NH shall be deemed
a Seller for purposes of Section 7.1(c), Section 7.2, Section 7.3 and
Section 7.4.

“Tax Returns” shall mean any and all reports, returns (including information
returns), declarations, or statements relating to Taxes, including any schedule
or attachment thereto and any related or supporting workpapers or information
with respect to any of the foregoing, including any amendment thereof filed with
or submitted to any Governmental Entity in connection with the determination,
assessment, collection or payment of Taxes or in connection with the
administration, implementation or enforcement of or compliance with any legal
requirement relating to any Tax, and including, for the avoidance of doubt, U.S.
Department of the Treasury Form TD F 90-22.1.

“Taxes” (including with correlative meaning “Tax” and “Taxable”) shall mean
(x) any and all taxes, and any and all other charges, fees, levies, duties,
deficiencies, customs or other similar assessments or liabilities in the nature
of a tax, including without limitation any income, gross receipts, ad valorem,
net worth, premium, value-added, alternative or add-on minimum, excise,
severance, stamp, occupation, windfall profits, real property, personal
property, assets, sales, use, capital stock, capital gains, documentary,
recapture, transfer, transfer gains, estimated, withholding, disability,
registration, recording, employment, unemployment insurance, unemployment
compensation, social security, business license, business organization,
environmental, workers compensation, payroll, profits, license, lease, service,
service use, gains, franchise and other taxes imposed by any federal, state,
local, or foreign governmental entity, (y) any interest, fines, penalties,
assessments, or additions resulting from, attributable to, or incurred in
connection with any items described in this paragraph or any contest or dispute
thereof, and (z) any items described in this paragraph that are attributable to
another person but that the Company is liable to pay by Law, by contract, or
otherwise.

“Third Party Action” shall mean any suit or proceeding by a Person other than a
Party for which indemnification may be sought by the Buyer or the Sellers under
Article VII.

 

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“Trademarks” shall mean all registered trademarks and service marks, logos,
Internet domain names, corporate names and doing business designations and all
registrations and applications for registration of the foregoing, common law
trademarks and service marks and trade dress.

“Trash Lady Interests” shall mean the membership interests of the Company in
Trash Lady ME.

“Trash Lady ME” shall have the meaning set forth in the first paragraph of this
Agreement.

“Trash Lady NH” shall have the meaning set forth in the first paragraph of this
Agreement.

“True-Up Date” shall mean 120 days after the Closing Date.

“True-Up Escrow Amount” shall have the meaning set forth in Section 1.5(a).

“True-Up Escrow Fund” shall mean the True-Up Escrow Amount held and disposed of
in accordance with the terms of the Escrow Agreement, together with any interest
thereon.

“True-Up Period” shall mean the 90-day period following the Closing Date.

“True-Up Revenue” shall mean the gross revenue recognized by the Buyer pursuant
to the Customer Contracts during the True-Up Period.

ARTICLE XII

MISCELLANEOUS

12.1 Press Releases and Announcements. No Party shall issue any press release or
public announcements relating to the subject matter of this Agreement without
the prior written approval of the other Parties; provided, however, that (a) any
Party may make any public disclosure it believes in good faith is required by
applicable Law or stock market rule (in which case, the disclosing Party shall
use reasonable efforts to advise the other Parties and provide them with a copy
of the proposed disclosure prior to making the disclosure) and (b) the Buyer and
its Affiliates shall not be bound by the provisions of this Section 12.1
following the Closing Date.

12.2 No Third Party Beneficiaries. This Agreement shall not confer any rights or
remedies upon any Person other than the Parties and their respective successors
and permitted assigns.

12.3 Entire Agreement. This Agreement (including the documents referred to
herein) constitutes the entire agreement among the Parties and supersedes any
prior understandings, agreements or representations by or among the Parties,
written or oral, with respect to the subject matter hereof.

 

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12.4 Succession and Assignment. This Agreement shall be binding upon and inure
to the benefit of the Parties named herein and their respective successors and
permitted assigns. No Party may assign either this Agreement or any of its
rights, interests or obligations hereunder without the prior written approval of
the other Parties hereto; provided, that the Buyer may assign some or all of its
rights, interests and obligations hereunder to one or more Affiliates of the
Buyer without prior written approval of any Party hereto.

12.5 Counterparts and Facsimile Signature. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument and shall become effective
when counterparts have been signed by each Party hereto and delivered to the
other Party, it being understood that each Party need not sign the same
counterpart. This Agreement may be executed by facsimile or by an electronic PDF
delivered by electronic mail.

12.6 Headings. The section headings contained in this Agreement are inserted for
convenience only and shall not affect in any way the meaning or interpretation
of this Agreement.

12.7 Notices. All notices, requests, demands, claims, and other communications
hereunder shall be in writing. Any notice, request, demand, claim, or other
communication hereunder shall be deemed duly delivered (i) one Business Day
after it is sent (a) for next Business Day delivery via a reputable nationwide
overnight courier service or (b) via facsimile or other electronic transmission,
provided electronic confirmation of successful transmission is received by the
sending Party and a confirmation copy is sent on the same day as such facsimile
or electronic transmission by certified mail, return receipt requested or
(ii) four Business Days after it is sent by registered or certified mail, return
receipt requested, postage prepaid, in each case, to the intended recipient as
set forth below or on the signature pages hereto:

 

If to the Buyer:

   Copy to:

Casella Waste Systems, Inc.

25 Greens Hill Lane

Rutland, Vermont 05701

Email: david.schmitt@casella.com

Fax: (802) 770-5030

Attention: David Schmitt, General Counsel

  

Wilmer Cutler Pickering Hale and Dorr LLP

60 State Street

Boston, Massachusetts 02109

Email: jeff.stein@wilmerhale.com

Fax: (617) 526-5000

Attention: Jeffrey A. Stein, Esq.

If to the Company:

   Copy to:

Blow Bros.

One Vallee Lane

Old Orchard Beach, Maine 04064

Email: Archiept@gwi.net

Fax: (207) 934-7184

Attention: Arthur E. St. Hilaire,

Personal and Confidential

  

Smith & Elliott, P.A.

P.O. Box 1179 Saco, Maine 04072

Email: dordway@sesg.com

Attention: David R. Ordway, Esq.

 

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If to the Sellers:

   Copy to:

Arthur E. St. Hilaire

288 Ferry Road

Saco, Maine 04072

Email: Archiept@gwi.net

Facsimile: (207) 934-7184

Attention: Representative

  

Smith & Elliott, P.A.

P.O. Box 1179

Saco, Maine 04072

Email: dordway@sesg.com

Attention: David R. Ordway, Esq.

Any Party may give any notice, request, demand, claim, or other communication
hereunder using any other means (including personal delivery, expedited courier,
messenger service, telecopy, ordinary mail or electronic mail), but no such
notice, request, demand, claim, or other communication shall be deemed to have
been duly given unless and until it actually is received by the party for whom
it is intended. Any Party may change the address to which notices, requests,
demands, claims, and other communications hereunder are to be delivered by
giving the other Parties notice in the manner herein set forth.

12.8 Governing Law. This Agreement (including the validity and applicability of
the arbitration provisions of this Agreement, the conduct of any arbitration of
a Dispute, the enforcement of any arbitral award made hereunder and any other
questions of arbitration Law or procedure arising hereunder) shall be governed
by and construed in accordance with the internal Laws of the State of Delaware,
without giving effect to any choice or conflict of Law provision or rule
(whether of the State of Delaware or any other jurisdiction) that would cause
the application of Laws of any jurisdictions other than those of the State of
Delaware.

12.9 Amendments and Waivers. The Parties may mutually amend any provision of
this Agreement at any time prior to the Closing. No amendment of any provision
of this Agreement shall be valid unless the same shall be in writing and signed
by all of the Parties. No waiver of any right or remedy hereunder shall be valid
unless the same shall be in writing and signed by the Party giving such waiver.
No waiver by any Party with respect to any default, misrepresentation, or breach
of warranty or covenant hereunder shall be deemed to extend to any prior or
subsequent default, misrepresentation, or breach of warranty or covenant
hereunder or affect in any way any rights arising by virtue of any prior or
subsequent such occurrence.

12.10 Severability. Any term or provision of this Agreement that is invalid or
unenforceable in any situation in any jurisdiction shall not affect the validity
or enforceability of the remaining terms and provisions hereof or the validity
or enforceability of the offending term or provision in any other situation or
in any other jurisdiction. If the final judgment of a court of competent
jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the Parties agree that the court making the determination of
invalidity or unenforceability shall have the power to limit the scope, duration
or area of the term or provision, to delete specific words or phrases, or to
replace any invalid or unenforceable term or provision with a term or provision
that is valid and enforceable and that comes closest to expressing the intention
of the invalid or unenforceable term or provision, and this Agreement shall be
enforceable as so modified.

 

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12.11 Submission to Jurisdiction. Each Party (a) submits to the jurisdiction of
any state or federal court sitting in Maine in any action or proceeding arising
out of or relating to this Agreement (including any action or proceeding for the
enforcement of any arbitral award made in connection with any arbitration of a
Dispute hereunder), (b) agrees that all claims in respect of such action or
proceeding may be heard and determined in any such court, (c) waives any claim
of inconvenient forum or other challenge to venue in such court, (d) agrees not
to bring any action or proceeding arising out of or relating to this Agreement
in any other court and (e) waives any right it may have to a trial by jury with
respect to any action or proceeding arising out of or relating to this
Agreement; provided, in each case, that, solely with respect to any arbitration
of a Dispute, the Arbitrator shall resolve all threshold issues relating to the
validity and applicability of the arbitration provisions of this Agreement,
contract validity, applicability of statutes of limitations and issue
preclusion, and such threshold issues shall not be heard or determined by such
court. Each Party agrees to accept service of any summons, complaint or other
initial pleading made in the manner provided for the giving of notices in
Section 12.7; provided that nothing in this Section 12.11 shall affect the right
of any Party to serve such summons, complaint or other initial pleading in any
other manner permitted by Law.

12.12 Construction.

(a) The language used in this Agreement shall be deemed to be the language
chosen by the Parties to express their mutual intent, and no rule of strict
construction shall be applied against any Party.

(b) Any reference herein to “including” shall be interpreted as “including
without limitation”.

(c) Any reference to any Article, Section or paragraph shall be deemed to refer
to an Article, Section or paragraph of this Agreement, unless the context
clearly indicates otherwise.

(d) When reference is made in this Agreement to information that has been “made
available” to the Buyer, that shall mean that such information was delivered to
the Buyer or its counsel, in each case, not less than two Business Days prior to
the date of this Agreement.

[Remainder of page intentionally left blank]

 

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

 

BUYER: CASELLA WASTE SYSTEMS, INC. By:   /s/ John W. Casella Name:   John W.
Casella Title:   Chief Executive Officer COMPANY: BLOW BROS. (D/B/A BBI WASTE
INDUSTRIES AND BESTWAY DISPOSAL SERVICES) By:   /s/ Arthur E. St. Hilaire Name:
  Arthur E. St. Hilaire Title:   President REPRESENTATIVE, solely in his
capacity as the Representative:

/s/ Arthur E. St. Hilaire

Name: Arthur E. St. Hilaire

[Signature Page to Stock Purchase Agreement]

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SELLERS: /s/ Kenneth C. Blow Kenneth C. Blow /s/ Arthur E. St. Hilaire Arthur E.
St. Hilaire /s/ Paul A. St. Hilaire Paul A. St. Hilaire /s/ James D. Blow James
D. Blow /s/ Dale A. Blow Dale A. Blow /s/ Jon M. Blow Jon M. Blow /s/ Steven J.
Blow Steven J. Blow

[Signature Page to Stock Purchase Agreement]

--------------------------------------------------------------------------------

Trash Lady ME and Trash Lady NH have executed this Agreement for the limited
purpose of agreeing to and becoming bound by the provisions of Section 5.16,
Section 7.1(c), Section 7.2, Section 7.3, Section 7.4 and Article XII.

 

TRASH LADY, LLC /s/ Arthur E. St. Hilaire Name: Arthur E. St. Hilaire Title:
Manager Address:         P.O. Box E         Old Orchard Beach, Maine 04064 TRASH
LADY NH, LLC /s/ Arthur E. St. Hilaire Name: Arthur E. St. Hilaire Title:
Manager Address:         P.O. Box E         Old Orchard Beach, Maine 04064

[Signature Page to Stock Purchase Agreement]

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Schedule I

Allocation of Purchase Price

 

Stockholder

   Number of
Company  Shares      Pro Rata
Allocation  

Arthur E. St. Hilaire

     50         25.00 % 

Paul A. St. Hilaire

     50         25.00 % 

Kenneth C. Blow

     20         10.00 % 

James D. Blow

     20         10.00 % 

Steven J. Blow

     20         10.00 % 

Jon M. Blow

     20         10.00 % 

Dale A. Blow

     20         10.00 %    

 

 

    

 

 

 

Total

     200         100.00 % 

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Schedule II

Estimated Closing Adjustment Items

 

Item

   Estimated Amount
as  of
December 6, 2012  

Company Transaction Expenses

  

Taxes

   $ —     

Legal fees

   $ —     

Accounting fees

   $ —     

Expenses

   $ —        

 

 

 

Total estimated Company Transaction Expenses

   $ —     

Employee Amount

   $ —     

Indebtedness outstanding at the Closing(1)

   $ 1,265,729.57      

 

 

 

Estimated Closing Adjustment

   $ 1,265,729.57   

Cash Consideration Amount

   $ 20,000,000.00   

Estimated Closing Adjustment

   $ 1,265,729.57   

Indemnification Escrow Amount

   $ 1,000,000.00   

Estimated Closing Adjustment

   $ 1,000,000.00      

 

 

 

Closing Cash Consideration Amount

   $ 16,734,270.43      

 

 

 

 

(1) 

Amount includes aggregate per diem amounts for period of one day after Closing.

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Schedule 1.5

90 Day Accounts Receivables

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Schedule 3.20

Key Employees

 

1. Arthur E. St. Hilaire

 

2. Paul A. St. Hilaire

 

3. Kenneth C. Blow

 

4. James D. Blow

 

5. Steven J. Blow

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Schedule 6.1(a)

Required Waivers, Consents, Notices and Filings

 

1. None.