<PAGE>
 
                                 EXHIBIT 2.06 

     THIS ASSET PURCHASE AGREEMENT dated the 11th day of July, 1996.


BETWEEN:


          IAM/ENVIRONMENTAL, INC., a corporation incorporated under the 
          ----------------------
          laws of the State of Texas
          
          (hereinafter called the "Vendor")
          
          -and-
          
          PHILIP ENVIRONMENTAL SERVICES CORPORATION, a corporation 
          -----------------------------------------
          incorporated pursuant to the laws of the State of Missouri
          
          (hereinafter called the "Purchaser")
         

     WHEREAS the Vendor carries on the business of lead and asbestos removal, 
site remediation, industrial services, and related activities;

     AND WHEREAS the Vendor, as part of such business, operates warehouses and 
offices which capabilities include remediation of lead and asbestos 
contamination;

     AND WHEREAS the Purchaser wishes to purchase from the Vendor and the Vendor
wishes to sell to the Purchaser, certain property and assets pertaining to the 
lead and asbestos removal and site remediation and industrial services division 
of such business located in Texas and Florida upon the terms and conditions 
herein contained;

     AND WHEREAS, the Purchaser wishes to acquire and assume the benefits, 
burdens and obligations under customer contracts of the Business (as defined 
below);

     NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of these 
presents, the receipt and sufficiency of which are hereby acknowledged, the 
parties hereto covenant and promise and agree with each other as follows:

                                   ARTICLE 1
                                   ---------
                                  DEFINITIONS
                                  -----------

1.1  In this Agreement and in any amending or supplemental agreement hereto, 
unless the subject matter or context is inconsistent therewith, the following 
words and phrases shall have the meanings set forth below:


<PAGE>
 
(a)  "Act" means the Texas Business Corporations Act as amended from time to 
     time, and all regulations thereunder;

(b)  "Accounts Payable" shall mean the accounts payable as listed in Schedule 
     1.1(b);

(c)  "Accounts Receivable" shall have the meaning attributed hereto in 
     Paragraph 2.1(m);

(d)  "Agreement", "this Agreement", "hereto", "herein", "hereof", "hereby",
     "hereunder" and similar expressions refer to this Agreement as amended
     from time to time;

(e)  "Bonds" means those bonds which are assumed by the Purchaser as more 
     particularly set out in Schedule 1.1(e);

(f)  "Business" means the business of operating two (2) lead and asbestos 
     removal, site remediation and industrial services facilities presently 
     carried on by the Vendor in Houston, Texas and Tampa, Florida;

(g)  "Change of Control Financial Statements" means financial statements of the
     Business prepared by the Vendor which include a schedule of the cash flow
     effect of the excluded assets and excluded liabilities from the Effective
     Date through the Closing Date, dated as of the Effective Date and based on
     information as at the Closing Date, which are prepared under generally
     accepted accounting principles on a basis consistent with the Financial
     Statements within on hundred and twenty (120) days of the Closing Date;

(h)  "Closing" means the completion of the sale and purchase by the Purchaser
     of the Purchased Assets under this Agreement;

(i)  "Closing Date" means the 11th day of July, 1996 or such earlier or later 
     date as may be mutually agreed upon in writing by the parties hereto;

(j)  "Contracts" shall have the meaning attributed hereto in Paragraph 2.1(o)
     hereof;

(k)  "Current Assets" means the Accounts Receivable, inventories and prepaid 
     expenses and other current assets as more particularly set out in Schedule 
     1.1(k);




                                       2
<PAGE>
 
(l)    "Current Liabilities" means the Accounts Payable, insurance premiums
       financed and taxes and other current liabilities and accrued expenses as
       more particularly set out in Schedule 1.1(l);

(m)    "Customer Contracts" means all customer contracts, whether or not in
       writing, of the Business, and whether at the bid preparation, bid
       submitted, contract awarded, work commenced or work completed stage, as
       listed in Schedule 1.1(m);

(n)    "Effective Date" means April 30, 1996;

(o)    "Emcumbrances" means mortgages, charges, pledges, security interests,
       liens, encumbrances, actions, claims, demands and equities of any nature
       whatsoever or howsoever arising and any rights or privileges capable of
       becoming any of the foregoing;

(p)    "Environmental Laws" means all laws in force and effective as at the date
       hereof relating in full or in part to the protection of the environment,
       and includes, without limitation, those Environmental Laws relating to
       the storage, generation, use, handling, manufacture, processing,
       labeling, advertising, sale, display, transportation, treatment, Release
       and disposal of Hazardous Substances;

(q)    "Equipment" means the equipment beneficially owned by the Vendor and used
       in the Business, including the equipment more particularly set out in
       Schedule 1.1(t);

(r)    "Equipment Leases" means those leases for equipment used in the Business 
       by the Vendor as more particularly set out in Schedule 1.1(r);

(s)    "Financial Statements" means the unaudited financial statements of the
       Business dated December 31, 1995 and the unaudited financial statements
       for the fiscal period ended April 30, 1996, consisting of the balance
       sheet and the statement of earnings and retained earnings and changes in
       financial position and all notes thereto as prepared by the Vendor copies
       of which are attached as Schedule 1.1(s);

(t)    "Fixed Assets" means the machinery, equipment, computer equipment, tools,
       furniture, furnishings and other miscellaneous items used in or relating
       to the Business including, without limitation, all those listed in
       Schedule 1.1(t);

(u)    "Hazardous Substance" means any pollutant, contaminant, waste of any 
       nature, hazardous substance, hazardous material, toxic substance,




                                       3
<PAGE>
 
            dangerous substance or dangerous good as defined, judicially
            interpreted or identified in any Environmental Law as at the date
            hereof;

     (v)    "Leases" means the real property leases for the premises located at
            2525 McAllister, Houston, Texas, 77092, and at 4613 Clark Avenue,
            Tampa, Florida, 33614, as more particularly set out in copies of the
            Leases attached hereto as Schedule 1.1(v);

     (w)    "Leased Premises" means the premises leased by the Vendor for the
            operation of the Business pursuant to the Leases;

     (x)    "Net Assets" means the book value of the Current Assets plus the
            Fixed Assets being purchased minus the Current Liabilities being
            assumed by the Purchaser;

     (y)    "Permits" shall have the meaning attributed hereto in Paragraph
            2.1(j), copies of which are more particularly set out in Schedule
            1.1(y);

     (z)    "Person" includes an individual, partnership, corporation, trust or
            unincorporated organization, a government agency or political
            subdivision thereof, a regulatory body or agency or any combination
            of the foregoing;

     (aa)   "Purchase Price" shall have the meaning attributed thereto in 
            Paragraph 3.1;

     (bb)   "Purchased Assets" means the undertakings and assets of the
            Business, which are to be sold by the Vendor to the Purchaser
            pursuant to Paragraph 2.1 hereof;

     (cc)   "Release" has the meaning prescribed in any Environmental Law and
            includes, without limitation, any release, spill, leak, pumping,
            pouring, emission, emptying, discharge, injection, escape, leaching,
            disposal, dumping, deposit, spraying, burial, abandonment,
            incineration, seepage, or placement;

     (dd)   "Time of Closing" means 10:00 o'clock in the morning (local time) on
            the Closing Date, or such earlier or later time on the Closing Date
            as may be agreed upon by the parties hereto or their respective
            solicitors.

1.2  Best of Knowledge: Any reference herein to "the best of the knowledge" of
     -----------------
the Vendor will mean the actual knowledge of the Vendor and the knowledge which
it would have had if it had conducted a diligent inquiry into the relevant
subject matter of Roy G. DiPasquale and Jeffrey A Stocks, the principal
executive officers of the Vendor, and onsite managers for each facility of the
Business.


                                      4 






  

<PAGE>
 
1.3  Currency of funds:  Unless otherwise indicated all dollar amounts referred 
     -----------------
to in this Agreement are in United States funds.

1.4  Interpretation Not Affected by Headings or Party Drafting:  The division of
     ---------------------------------------------------------
this Agreement into articles, sections, paragraphs, subparagraphs and clauses
and the insertion of headings are for convenience of reference only and shall
not affect the construction or interpretation of this Agreement. The terms "this
Agreement", "hereof", "herein", "hereunder" and similar expressions refer to
this Agreement and the schedules hereto and not to any particular article,
section, paragraph, subparagraph, clause or other portion hereof and include any
agreement or instrument supplementary or ancillary hereto. Each party hereto
acknowledges that it and its legal counsel have reviewed and participated in
settling the terms of this Agreement.

1.5  Number and Gender:  When calculating the period of time within or following
     -----------------
which any act is to be done or step taken pursuant to this Agreement, the date 
which is the reference date in calculating such period shall be excluded.  If 
the last day of such period is not a Business Day, the period in question shall 
end on the next Business Day.

1.7  Schedules:  The following are the schedules attached to and incorporated in
     ---------
this Agreement by reference and deemed to be part hereof:

     Schedule 1.1(b)-     Accounts Payable
     Schedule 1.1(e)-     Bonds
     Schedule 1.1(k)-     Current Assets
     Schedule 1.1(l)-     Current Liabilities
     Schedule 1.1(m)-     Customer Contracts
     Schedule 1.1(r)-     Equipment Leases
     Schedule 1.1(s)-     Financial Statements
     Schedule 1.1(t)-     Fixed Assets
     Schedule 1.1(v)-     Leases
     Schedule 1.1(y)-     Permits
     Schedule 2.1(e)-     Customer List
     Schedule 2.1(g)-     Inventory
     Schedule 2.1(h)-     Excluded Business Records
     Schedule 2.1(m)-     Accounts Receivable
     Schedule 2.1(n)-     Supply Contracts
     Schedule 2.1(o)-     Contracts
     Schedule 2.2-        Claims Receivable
     Schedule 3.6-        Retainages
     Schedule 3.8-        Allocation of Purchase Price
     Schedule 4.1(t)-     Litigation
     Schedule 4.1(v)-     Employee Matters

                                       5

<PAGE>
 
     Schedule 4.1(xy)-    Exceptions to Representations and Warranties
     Schedule 6.2(e)-     Non-Competition Agreement
     Schedule 6.2(n)-     Assignment and Assumption of Contracts
     Schedule 6.2(o)-     Management Services Agreement


                                   ARTICLE 2
                                   ---------
                        AGREEMENT OF PURCHASE AND SALE
                        ------------------------------

2.1  Purchased Assets: Subject to the terms and conditions hereof, the Vendor 
     ----------------
hereby agrees to sell, assign, transfer and convey to the Purchaser and the 
Purchaser hereby agrees to purchase from the Vendor all of the property, assets 
and undertakings (other than the property and assets described in Paragraph 2.2)
used in the operation of the Business, including, without limiting the 
generality of the foregoing:

     (a)  Machinery, Equipment and Furniture: all machinery, equipment, computer
          equipment, tools, furniture, furnishings and other miscellaneous items
          used in or relating to the Business including, without limitation, all
          those listed in Schedule 1.1(t) attached hereto;

     (b)  Leased Equipment and Vehicles: to the extent transferable and in
          accordance with the terms thereof, all right, title and interest of
          the Vendor in and under leases of equipment and vehicles used in or
          relating to the Business including, without limitation, all leases and
          other agreements listed in Schedule 1.1(r) attached hereto;

     (c)  Prepaid Expenses: all prepaid expenses which are usable and
          consumable in the ordinary course of the business relating to the
          business as of the Time of Closing;

     (d)  Leased Premises and Leasehold Improvements: all right, title and
          interest of the Vendor in and to the Leased Premises and under the
          Leases (all of which are described in Schedule 1.1(v) attached hereto)
          including, without limitation, any prepaid rent and security deposits
          thereunder and all leasehold improvements owned by the Vendor and
          forming part of the Leased Premises;

     (e)  Customer Lists and Information: all customer lists, files, data and
          information relating to customers and prospective customers of the
          Business as of the Time of Closing including, without limitation, the
          customer list which has been delivered by the Vendor to the Purchase
          prior to the date hereof, which most current customer list is attached
          hereto as Schedule 2.1(e);

                                       6
<PAGE>
 
(f)  Warranty Rights and Maintenance Contracts: the full benefit, to the extent
     transferable, of all warranties and warranty rights (express and implied)
     against manufacturers or sellers which apply to any of the Purchased Assets
     and all maintenance contracts on machinery, equipment and the other
     Purchased Assets;

(g)  Inventories: all inventories of or relating to the Business as of the Time
     of Closing including those described on Schedule 2.1(g);

(h)  Business Records: all books, records, files and documents relating to the
     Business, including without limitation, books of account, ledgers,
     journals, sales and purchase records, lists of suppliers, credit
     information, cost and pricing information, business reports, plans and
     projections and all other correspondence, data and information, financial
     or otherwise, in any format and media whatsoever, related to the Business
     except those records described in Schedule 2.2(h);

(i)  Goodwill: the goodwill of the Business, together with the exclusive right
     of the Purchaser to represent itself as carrying on the Business in
     continuation of and in succession to the Vendor;

(j)  License Rights and Permits: all licenses, permits and other rights and
     privilege, to the extent transferable, owned or held by the Vendor
     including those described in Schedule 1.1(y);

(k)  Regulatory Licenses: all licenses, registrations and qualifications of the
     Business required by any governmental or regulatory authority, to the
     extent transferable, including those described in Schedule 1.1(y);

(l)  Insurance Benefits: any benefits payable under the insurance policy which
     is assumed by the Purchaser pursuant to Paragraph 4.1(v)(aa) in respect of
     claims based on occurrences prior to the Time of Closing as included in
     assets and balance sheets contained in the Financial Statements and the
     Change of Control Financial Statements;

(m)  Accounts Receivable: the accounts receivable as listed in Schedule 2.1(m)
     attached hereto plus the account receivable generated by the Business from
     the Effective Date to the Time of Closing, less such accounts receivable as
     were collected by the Vendor to the Time of Closing;

(n)  Supply Contracts: the full benefit of all contracts, to the extent
     transferable, providing for the supply of goods and services to the
     Business which are referred to in Schedule 2.1(n);


                                       7
<PAGE>
 
     (o)  Contract: all right, title and interest of the Vendor in, to and 
          under, and the full benefit of, all other contracts and agreements of
          or pertaining to the Business, to the extent transferable, to which
          the Vendor is party, including the Customer Contracts and those set
          out in Schedule 2.1(o) attached hereto;

     (p)  Other Agreements: all of the Vendor's right, title and interest to 
          and under all contracts and agreements (written or oral) relating
          directly or indirectly to the Business, to the extent transferable, as
          required for the operation of the Business, subject to the Purchaser's
          review and acceptance of such contracts and agreements prior to the
          Closing Date.

(all of which property and assets are herein collectively referred to as the 
"Purchased Assets").

2.2  Excluded Assets: There shall be specifically excluded from the Purchased 
     ---------------
Assets the following property and assets of the Vendor pertaining to the 
Business: (i) all cash, bank balances, money in possession of banks and other
depositories, term or time deposits and similar cash items of, owned or held by
or for the account of the Vendor, as set out in the Balance Sheet for the fiscal
period ended April 30, 1996 contained in the Financial Statements; (ii) the
assets and liabilities for a joint venture between the Vendor and RMA
Environmental Inc.; and (iii) the claims receivable set out in Schedule 2.2.

2.3  Assumed Liabilities: Subject to the terms and conditions hereof, the 
     -------------------
Purchaser shall assume the following obligations of the Vendor pertaining to the
Business upon Closing:

     (a)  the Current Liabilities as at the Effective Date, a complete and 
          accurate list of which is attached hereto as Schedule 1.1(l),
          together with all current liabilities incurred in the ordinary course
          of business through the Closing Date;

     (b)  all remaining obligations under the Equipment Leases, the Leasings,
          the Bonds, and all Contracts to be assigned to the Purchaser as at the
          Effective Date, it being agreed that any obligations under such leases
          and contracts which occurred or arose prior to the Effective Date are
          not being assumed by the Purchaser and shall remain the liability of
          the Vendor, unless such liability is contained in Schedule 1.1(e) or
          Schedule 1.1(l); and

     (c)  completion of the Customer Contracts in accordance with Paragraph 
          5.3(b).

2.4  Retained Liabilities and Indemnity: The Purchaser will not assume and will 
     ----------------------------------
not be liable for, and the Vendor will indemnify and save harmless the 
Purchaser, its officers, directors, employees, agents and shareholders from and 
against, all obligations,

                                       8
<PAGE>
 
commitments, expenses, costs and liabilities of and claims against the Vendor 
(whether absolute, accrued or contingent) relating to the Business, except for 
the assumed liabilities outlined in paragraph 2.3 above or to the extent accrued
for on the Financial Statements and assumed by the Purchaser or covered by 
insurance continued by the Purchaser pursuant to Paragraph 4.1(v)(aa). Without 
limiting the generality of the foregoing, it is agreed that the Purchaser will 
have no liability for any of the following obligations and liabilities (with the
exception of those outlined in Paragraph 2.3 above):

     (a)  all liabilities in respect of all indebtedness of the Vendor to all 
          persons;

     (b)  all product liability claims and liabilities for product claims
          relating to any product or service of the Business produced, sold,
          performed or delivered prior to the Closing Date that will not be
          covered by any insurance pertaining to the Business;

     (c)  all liabilities for all taxes, duties, levies, assessments and other
          such charges, including any penalties, interests and fines with
          respect thereto, payable by the Vendor to any federal, state, local or
          other governmental agency, authority, board, bureau or commission,
          domestic or foreign, including, without limitation, any taxes in
          respect of or measured by the sale, consumption or performance by the
          Vendor of any product or service prior to the Effective Date and
          pursuant to any legislation in respect of all remuneration payable to
          all persons employed in the Business prior to the Effective Date,
          except that the Purchaser shall be liable for timely payment in
          respect of two-thirds of the 1996 property tax bills of the Business.

     (d)  all liabilities for salary, bonus, vacation pay and other compensation
          and all liabilities under employee benefit plans of the Vendor
          relating to employment of all persons in the Business prior to the
          Effective Date;

     (e)  all severance payments, damages for wrongful dismissal and all related
          costs in respect of the termination by the Vendor of the employment of
          any employee of the Business who does not accept the Purchaser's offer
          of employment made in accordance with Paragraph 5.1(a) and in respect
          of any employee of the Business who is not offered permanent
          employment by the Purchaser;

     (f)  all liabilities for claims for injury, disability, death or workers'
          compensation (except for claims in respect of which there is coverage
          pursuant to the Workers' Compensation insurance Plan assumed by the
          Purchaser pursuant to Paragraph 4.1(v)(aa)) arising from or related to
          employment in the Business prior to the Effective Date;

                                       9
<PAGE>
 
      (g)   all obligations and liabilities and any claims against third parties
            which arise pursuant to any bonds which are not specifically assumed
            by the Purchaser pursuant to Paragraph 2.3(b); and

      (h)   all liabilities which existed or arose prior to the Time of Closing
            as a result of non-compliance with any Environmental Law.

2.5   Payment of Taxes:  The Purchaser shall be liable for and shall pay all 
      ----------------
      applicable federal and state sales tax, excise taxes and all other taxes
      (other than income taxes of the Vendor), duties and other like charges
      properly payable upon and in connection with the conveyance and transfer
      of the Purchased Assets to the Purchaser. The Vendor will do and cause to
      be done such things as are reasonably requested to enable the Purchaser to
      comply with such obligation in an efficient manner.

2.6   Sales Tax Clearance:  The vendor hereby represents and warrants to the 
      -------------------
      Purchaser that all sales taxes and related interest and penalties in
      respect of the Business have been fully paid or accrued. The Vendor shall
      provide, within one-hundred & twenty (120) days of the Closing Date, tax
      clearances from both the Florida Department of Revenue and the Texas State
      Comptroller to such effect.


                                   ARTICLE 3 
                                   ---------
                  PURCHASE PRICE, ALLOCATION AND ADJUSTMENTS
                  ------------------------------------------


3.1   Purchase Price:  Subject to the adjustments provided for in this 
      --------------
      Agreement, the Purchase Price payable by the Purchaser to the Vendor for
      the Purchased Assets shall be the sum of:

      (a)   One Million, Five Hundred Thousand Dollars ($1,500,000.00); plus

      (b)   the value of the Net Assets, in the amount of One Million, Six 
            Hundred & Thirty-Six Thousand, Four Hundred & Seventy-Five Dollars
            ($1,636,475.00), subject to adjustment under Paragraph 3.3 hereof.

3.2   Effective Date:  The sale and purchase contemplated under this Agreement 
      --------------
      shall, when completed on the Closing Date, take effect as of the close of
      business on the Effective Date and from such time to the Closing Date the
      Business shall be carried on by the Vendor in the ordinary course for the
      account of the Purchaser.

3.3   Adjustments to Purchase Price:  Within 120 days of the Closing Date, the 
      -----------------------------
      Vendor shall deliver to the Purchaser a copy of the Change of Control
      Financial Statements. The Change of Control Financial Statements shall be
      prepared in accordance with generally accepted accounting principles,
      consistently applied. The balance sheet contained in the Change of Control
      Financial Statements shall be based upon the unaudited balance sheet for
      the period ended April 30, 1996 contained in the Financial Statements,
      subject to such


                                      10
<PAGE>
 
adjustments as may result based on such information as becomes available during 
the period from April 30, 1996 to the close of business the day prior to the 
Closing Date.  Based upon the Change of Control Financial Statements, the 
parties shall determine any adjustments necessary to the Purchase Price in 
accordance with the following:

      (a)   If the Net Assets reflected on the Change of Control Financial
            Statements are in excess of One Million, Six Hundred & Thirty-Six
            Thousand, Four Hundred & Seventy-Five Dollars ($1,636,475.00), then
            the threshold amount referred to in Paragraph 4.5 shall be increased
            by such amount.

      (b)   If the Net Assets reflected on the Change of Control Financial
            Statements are less than One Million, Six Hundred & Thirty-Six
            Thousand, Four Hundred & Seventy-Five Dollars ($1,636,475.00), then
            the portion of the Purchase Price specified in Paragraph 3.1(b)
            shall be decreased by an amount equal to One Million, Six Hundred &
            Thirty-Six Thousand, Four Hundred & Seventy-Five Dollars
            ($1,636,475.00), minus the value of the Net Assets reflected on the
            Change of Control Financial Statements.

Any difference which is determined and results from the calculation made in 
accordance with Paragraph 3.3(b) shall be payable by the Vendor to the Purchaser
as an adjustment to the Purchase Price.  All adjustments to the Purchase Price 
shall be made in accordance with Paragraph 3.5 below.  Payment of any 
adjustments to be made by the Vendor shall be satisfied by offsetting and 
deducting such amount against the amount held back by the Purchaser in 
accordance with Paragraph 3.5 below.

3.4   Settlement for Net Cash Disbursed:  If the schedule of cash flow effects 
      ---------------------------------
contained in the Change of Control Financial Statements establish that the cash 
disbursed in settlement of liabilities of the Business which were not assumed by
the Purchaser exceeds the cash generated on account of assets of the Business 
which were not purchased by the Purchaser, the difference shall be credited to 
the Purchaser and settled in accordance with Paragraph 3.5 below.

3.5   Holdback:
      --------

      (a)   The Purchaser shall hold back the sum of THREE HUNDRED THOUSAND
            DOLLARS ($300,000.00) (the "Holdback") from the Purchase Price, and
            the Holdback shall be dealt with in accordance with the provisions
            of this paragraph. If the Change of Control Financial Statements
            vary from the estimate of the Net Assets provided pursuant to
            Paragraph 3.1(b), any net credit in favour of the Purchaser shall be
            subtracted from the Purchase Price. If the amount of the net credit
            is less than the amount of the Holdback, the Purchaser shall be
            entitled to retain the amount of the net credit from the Holdback,
            and shall by certified cheque pay, subject to any set-off made
            pursuant to Paragraph 7.3 determined as of the Settlement Date (as
            hereinafter defined), the balance


                                      11
<PAGE>
 
     of the Holdback to the Vendor within thirty (30) days of the date upon
     which the Change of Control Financial Statements were delivered (the
     "Settlement Date"). If the Change of Control Financial Statements
     establish that cash disbursements in settlement of unassumed liabilities
     exceed cash generated on account of non-purchased assets in accordance with
     Paragraph 3.4, any such net credit in favor of the Purchaser shall be
     payable by the Vendor to the Purchaser and the Purchaser shall be entitled
     to retain the amount of the net credit from the Holdback. If the amount of
     the net credits in favour of the Purchaser in respect of the adjustments
     and settlement made in accordance with Paragraphs 3.3(b) and 3.4 exceed the
     amount of the Holdback, the Purchaser shall be entitled to retain the full
     amount of the Holdback, and the Vendor shall pay to the Purchaser by
     certified cheque the amount by which such net credits exceed the amount of
     the Holdback. On or prior to the Settlement Date, the parties jointly shall
     prepare an allocation of the Purchase Price with respect to the Purchased
     Assets which may be different from the allocations set out in Schedule 3.8
     by virtue of the adjustments provided for in this paragraph.

(b)  In the event the Purchaser objects in good faith to any aspect of the
     Change of Control Financial Statements, the Purchaser shall so advise the
     Vendor by delivery to the Vendor of a written notice (the "Objection
     Notice") within fifteen (15) days after the delivery to the Purchaser of
     the Change of Control Financial Statements. The Objection Notice shall set
     out the reasons for the Purchaser's objection as well as the amount under
     dispute and the reasonable details of the calculation of such amount. In
     the event that the parties agree on a resolution of the dispute set out in
     the Objection Notice, the parties shall confirm this resolution in writing
     and shall thereafter be bound by such resolution. In the event that the
     parties are unable to settle any dispute with respect to the Change of
     Control Financial Statements within fifteen (15) days after the delivery by
     the Purchaser to the Vendor of the Objection Notice, the auditor for the
     Purchaser and the auditor for the Vendor shall choose a third accountant
     (the "Accountant") to make a binding decision as to the generally accepted
     accounting standards and principles (subject to any adjustments and
     valuations as provided for in this Agreement). The party against whom the
     Accountant finds shall bear the cost and expenses incurred by the
     Accountant. The determination of the Accountant shall be final and binding
     on all parties. The Change of Control Financial Statements and the Purchase
     Price shall be adjusted in accordance with the determination of the
     Accountant. In the event of an Objection Notice, upon resolution of the
     dispute or a determination by the Accountant, the payment of the Holdback
     or part thereof, if any, shall be made forthwith by certified cheque to the
     Vendor.

                                      12
<PAGE>
 
3.6  Acounts Receivable: On the date being 120 days after the Closing Date, the 
     ------------------
Purchaser will re-assign to the Vendor all Accounts Receivable, save and except 
the retainages set out in Schedule 3.6 as of the Effective Date still 
outstanding prior to the Closing Date transferred by the Vendor to the Purchaser
which the Purchaser has not collected. Such re-assignment shall be 
dollar-for-dollar, without any set-off or reduction whatsoever. Without limiting
the foregoing, it is understood that such re-assignment of Accounts Receivable 
shall not be reduced or set-off pursuant to the adjustment under Paragraph 3.3, 
nor shall the Indemnification Threshold (as hereinafter defined) referred to in 
Paragraph 4.5 be applicable thereto. Upon such assignment, the amount equal to 
the amount by which the gross amount of such Accounts Receivable less the 
allowance for doubtful accounts receivable that was reflected in Schedule 2.1(m)
exceeds the amount of the Accounts Receivable collected by the Purchaser shall 
be deducted from the Holdback. It is understood that any payments from customers
which are not designated for specific invoices will be applied to the oldest 
invoices first, regardless of whether the invoices had been issued by the Vendor
or are issued by the Purchaser subsequent to Closing. It is further agreed that 
prior to any re-assignment of Accounts Receivable to the Vendor, the Purchaser 
will use reasonable best efforts (except that it will have no obligation to 
bring legal or other proceedings) to collect such Accounts Receivable, and the 
Purchaser shall take no action which results in the collectibility of such 
accounts receivable being impaired or compromised. The Vendor may take any 
reasonable actions after Closing to effect the collection of Accounts 
Receivable.

3.7  Payment: Subject to the adjustments and Holdback set out in Paragraphs 3.3,
     -------
3.4 and 3.5, the Purchase Price shall be paid by the Purchaser to the Vendor by 
cash, bank draft or certified cheque at the Time of Closing in the amount of 
Three Million, One Hundred and Thirty-Six Thousand, Four Hundred & Seventy-Five 
Dollars ($3,136,475.00).

3.8  Allocation: The Vendor and the Purchaser covenant and agree that the 
     ----------
Purchase Price shall be allocated among the Purchased Assets in the manner set 
out in Schedule 3.8 which allocation shall be prepared by the Purchaser within 
45 days of the Closing Date and presented to the Vendor for its prior review and
approval, such approval not to be unreasonably withheld.

                                   ARTICLE 4
                                   ---------
                        REPRESENTATIONS AND WARRANTIES
                        ------------------------------

4.1  Representations and Warranties of the Vendor: To induce the Purchaser to 
     --------------------------------------------
enter into this Agreement and to consummate the transaction of purchase and sale
herein contemplated, the Vendor hereby represents and warrants, except as set 
forth on Schedule 4.1(xy), to the Purchaser as follows and hereby acknowledges 
and confirms that the Purchaser is relying on such representations and 
warranties in connection with the purchase by it of the Purchased Assets:

                                      13
<PAGE>
 
(i) as to the Vendor:
---------------------

     (a)  the Vendor is a corporation duly incorporated and organized pursuant
          to the laws of the State of Texas and is a validly subsisting
          corporation under the laws of the State of Texas with full corporate
          capacity, power and authority (i) to own, lease and operate the
          Purchased Assets, (ii) to carry on the Business as heretofore
          conducted by it, (iii) to execute and deliver this Agreement, and all
          other agreements, documents and instruments to be executed and
          delivered pursuant hereto, (iv) to sell, assign, transfer, convey and
          deliver the Purchased Assets to the Purchaser as herein contemplated,
          and (v) to otherwise observe, perform, satisfy and carry out its
          obligations hereunder. Except as otherwise provided herein, to the
          best knowledge of the Vendor it is duly authorized, qualified and
          licensed under all applicable laws, regulations, ordinances or orders
          of public authorities to carry on the Business at the locations and in
          the manner in which such Business is now being conducted;

     (b)  the execution and delivery of this Agreement and all other agreements,
          documents and instruments to be executed and delivered by the Vendor
          pursuant hereto or in connection with the completion of the
          transaction contemplated herein will have been duly authorized and
          approved by all necessary action of the board of directors of the
          Vendor on or prior to the Closing Date and by any other necessary
          corporate action on the part of the Vendor to comply with applicable
          law;

     (c)  no suit, action or any other legal proceedings of any nature, kind or
          description whatsoever are pending or are threatened against the
          Vendor which would restrain or otherwise prevent, in any manner, the
          Vendor from effectually and legally transferring good and marketable
          title to the Purchased Assets to the Purchaser hereunder, nor are any
          suits, actions or any other legal proceedings relative to the Vendor,
          the effect of which would be to cause a lien to attach such property
          or assets or to divest title to such property or assets from the
          Vendor hereunder, pending or threatened, and in particular, and
          without restricting the generality of the foregoing, the Vendor:

          (i)    has not had any petition or application for a receiving order 
                 in bankruptcy filed against it;

          (ii)   has not filed a proposal under any applicable insolvency,
                 bankruptcy or creditor's rights legislation or otherwise taken
                 any proceedings with respect to a compromise or arrangement
                 with its creditors;

          (iii)  has not made a voluntary assignment in bankruptcy;

                                      14
<PAGE>
 
     (iv)    has not taken any proceedings, nor has any person instituted
             proceedings, to have the Vendor wound up or to have its charters
             canceled or its corporate existence terminated;

     (v)     has not taken any proceedings, nor have any proceedings been filed
             or taken against it, to have a receiver appointed to all or any
             part of its property or assets;

     which petition, application, proposal, compromise, arrangement or other
     proceeding is presently pending and no execution has become enforceable
     against the Vendor or become levied upon any of its property or assets nor
     has any encumbrancer taken possession of any of the property or assets of
     the Vendor;

(d)  to the best of the knowledge of the Vendor, no governmental or regulatory
     authorization, approval, order, consent or filing is required on the part
     of the Vendor in connection with the execution, delivery and performance of
     this Agreement or any other documents and agreements to be delivered under
     this Agreement or the performance of the Vendor's obligations under this
     Agreement save and except pursuant to the Permits, the rights under which
     the Purchaser shall have secured pursuant to the terms of the Management
     Services Agreement referred to in Paragraph 6.2(o);

(e)  nothing prevents the Vendor from fully and timely fulfilling its
     obligations pursuant to the terms of the Assignment and Assumption of
     Contracts and the Management Services Agreement referred to in Paragraph
     6.2(n) and 6.2(o);

(f)  the Financial Statements have been prepared in accordance with generally
     accepted accounting principles applied on a basis consistent with that of
     the preceding period and present fairly all of the assets, liabilities and
     financial position of the Business as at December 31, 1995 and April 30,
     1996 and the sales, earnings, results of operation and changes in financial
     position of the Business for the periods ended December 31st, 1995 and
     April 30, 1996;

(g)  since the date of the balance sheet of the Business as at April 30, 1996, 
     there has not been:

     (i)     any material change in the financial condition, operations or
             prospects of the Business or the Purchased Assets other than
             changes in the ordinary and usual course of business, none of which
             has been materially adverse;


                                      15

<PAGE>
 
          (ii)  any damage, destruction, loss, labour, concerns or other event,
                development or condition of any character (whether or not
                covered by insurance) materially and adversely affecting the
                assets, properties or future prospects of the Business; or

          (iii) any material charge in the level of the inventories;

     (h)  the Accounts Receivable of the Business reflected in the Financial
          Statements arose from bona fide transactions in the ordinary course of
          the Business and are valid and fully collectible and enforceable,
          subject to a reasonable allowance, consistent with past practice, for
          doubtful accounts as reflected in the Financial Statements. Such
          Accounts Receivable are not subject to any set-off or counterclaim
          save and except for any set-off by the bonding company or a customer
          pursuant to a Customer Contract arising from Purchaser's improper
          completion of a job subsequent to the Closing Date;

     (i)  this Agreement has been duly and validly executed and delivered by the
          Vendor and constitutes a valid and legally binding obligation of the
          Vendor enforceable against it in accordance with the terms hereof,
          subject to the qualification that enforceability may be limited by
          bankruptcy, insolvency or other laws affecting the enforceability of
          creditors' rights and by general equitable principles;

(ii) as to the Purchased Assets:
     --------------------------

     (j)  the Vendor, at the Time of Closing will be the sole unconditional
          owner of, and have good, valid and marketable title to, all of the
          Purchased Assets free and clear of all Encumbrances, subject to
          payment of the Current Liabilities and the terms of all leases,
          conditional sale or other title retention agreements, restrictions,
          demands, equities, encumbrances and rights of any Persons or every
          nature, kind and description whatsoever, including without limitation,
          rights of any Person (other than the Purchaser hereunder) to acquire
          any ownership interest in or right to possess or occupy any of the
          Purchased Assets, and the Vendor has the exclusive right and full
          power and authority to sell, assign, transfer, convey and deliver good
          and marketable title to such assets to the Purchaser as herein
          contemplated;

     (k)  to the best of the knowledge of the Vendor, all of the Equipment and
          Leased Equipment used in the operation of the Business are in good
          condition, repair and proper working order for their intended
          purposes, and age and such assets have been properly and regularly
          maintained and are not obsolete unless valued at a nominal value, net
          of depreciation, on the Financial Statements;

                                      16

<PAGE>
 
     (l)  to the best of the knowledge of the Vendor, the Leases are in good
          standing with the respective landlords;

     (m)  each of the Equipment Leases are in good standing and the Vendor is
          not in breach of any material terms of each of the Equipment Leases
          nor has the Vendor received any notice of breach of any terms of each
          of the Equipment Leases;

     (n)  all of the Accounts Receivable are, net of any allowance on the
          Financial Statements, valid and fully collectible;

     (o)  all inventories are in good condition and repair, fit for their
          intended purpose and not obsolete, or have a nominal value on the
          Financial Statement;

     (p)  the Contracts, true and complete copies of which (or, in the case of
          oral arrangements, brief and accurate summaries of which) have been
          delivered to the Purchaser are in good standing and in full force and
          effect and have not been modified or supplemented in any way and
          constitute the entire agreement between the Vendor, on the one hand,
          and the lessee or other co-contractant on the other hand, such that
          there are no understandings, representations, warranties, allowances,
          concessions or promises affecting the Vendor's rights or obligations
          thereunder except as set forth in the said agreements;

     (q)  the Vendor, the operation of the Business, the property and assets
          owned or used by the Vendor, including the Purchased Assets, and the
          use, maintenance and operation thereof have been and are in compliance
          with all federal, state and local laws, by-laws, statutes and
          regulations in force and effective as of the Closing Date, including
          but not limited to Environmental Laws. Any Release by the Vendor of
          any Hazardous Substance from the Business or the Purchased Assets into
          the environment complied and complies with all Environmental Laws.
          There are no outstanding or potential liabilities relating to the
          Vendor or the operation of the Business in respect of the transport,
          disposal or Release of asbestos or lead paint to any third party sites
          pursuant to the Comprehensive Environmental Response, Compensation and
          Liability Act 1980, or any other Environmental Laws. The Vendor has
          complied with all reporting and monitoring requirements under all
          Environmental Laws. The Vendor has not received any notice of any non-
          compliance with any Environmental Laws, and the Vendor has never been
          convicted of an offense for non-compliance with any Environmental Laws
          or been fined or otherwise sentenced or settled such prosecution short
          of conviction. The Vendor has no knowledge of any Hazardous Substance
          in, on or under any

                                      17

<PAGE>
 
          Purchased Assets other than such Hazardous Substances which may be
          present in the ordinary course of the Business. Sewer use by the
          Vendor in the operation of the Business has been and is in compliance
          with all Environmental Laws, including but not limited to by-law
          compliance;

     (r)  there are no material outstanding work orders, non-compliance orders,
          deficiency notices or other such notices relative to the Leased
          Premises, the Purchased Assets or the Business which have been issued
          by any regulatory authority, police or fire department, sanitation,
          environment, labour, health or other governmental authorities or
          agencies. There are no matters under discussion with any such
          department or authority relating to work orders, non-compliance
          orders, deficiency notices or other such notices. The Business is not
          being carried on, and none of the Leased Premises or the other
          Purchased Assets are being operated, in a manner which is in
          contravention of any statute, regulation, rule, code, standard or
          policy. No amounts are owing by the Vendor in respect of the Leased
          Premises to any governmental authority or public utility, other than
          current accounts which are not in arrears;

     (s)  intentionally deleted

(iii) as to the Condition of the Business:
      -----------------------------------

     (t)  except as disclosed in Schedule 4.1(t) attached hereto there are no
          claims, actions, suits, proceedings (including arbitration
          proceedings), or investigations (whether or not purportedly on behalf
          or the Vendor) pending or, to the best of its knowledge, information
          and belief, threatened at law or in equity or before or by any
          federal, provincial, municipal or other governmental department,
          commission, bureau, agency or instrumentality, domestic or foreign,
          which involves the possibility of materially and adversely affecting
          the Purchased Assets or the Business; and the Vendor is not aware of
          any existing ground on which any claim, action, suit, proceeding or
          investigation might be commenced with any reasonable likelihood of
          success:

     (u)  during the period between the Effective Date to the Time of Closing,
  
          (i)    the Business was operated in the ordinary course thereof,
                 consistent with past practices;

          (ii)   no obligation or liability (fixed or contingent) was incurred
                 except normal trade or business obligations incurred in the
                 ordinary course of the Business, none of which is materially
                 adverse to the Business;



                                      18



<PAGE>
 
(iv) as to Employee matters;
     ----------------------

     (v)    Schedule 4.1 (v) annexed hereto sets forth:

            (i)   the names, current annual salaries, job positions, length of
                  employment and date and amounts of the most recent increases
                  in salaries of all Persons who are employed by the Vendor on a
                  full-time or part-time basis in connection with the Business
                  and including all independent commission agents;

            (ii)  particulars of any contracts, commitments, arrangements or
                  understandings, written or oral, with any such employees or
                  agents outstanding on the Closing Date;

            (iii) particulars of any agreements with any labour union or 
                  employee associations; and

            (iv)  particulars of all employee insurance, hospital or medical
                  expense program, pension, retirement, profit sharing, stock
                  options or other employee benefit plans, programs or
                  arrangements or any executive or key personnel incentives or
                  other special compensation arrangements to which the Vendor is
                  a party or is bound in respect of the employees or agents
                  contemplated in (i) above;

     (w)    save as disclosed in Schedule 4.1(v), the Vendor does not have any
            agreements with any labour union or employee association nor has it
            made commitments to or conducted negotiations with any union or
            employee association with respect to any future agreements, and the
            Vendor is not aware of any current attempts to organize or establish
            any labour union or employee association for the employees of
            Vendor;

     (x)    the Vendor is not engaged in any material dispute with any of the
            employees identified in Schedule 4.1(v) annexed hereto and there is
            not, to the best of the knowledge of the Vendor, now pending or
            threatened any labour dispute or work stoppage which affects or may
            affect the Business or may interfere with its continued operations
            and there are no outstanding breaches of any collective agreement or
            outstanding or potential grievances;

     (y)    the terms and conditions of employment of all such employees of the
            Business conform with the minimum employment and labour standards
            requirements laid down by the States of Texas and Florida, as
            applicable;



                                      19
<PAGE>
 
        (z)     all salaries, workers compensation assessments and surcharges,
                unemployment insurance assessments, pension remittances,
                employer health tax remittances, sick day credits, vacation pay
                including the monetary value of lieu days and associated payroll
                costs thereof, and similar charges or amounts with respect to
                all of the employees owing by the Vendor to those of its
                employees identified in Schedule 4.1(v) annexed hereto will have
                been paid or accrued up to the Closing Date or adjusted for at 
                the Closing Date;

(v) as to Insurance:
    ---------------
        (aa)    all insurance policies relating to the Business are valid and in
                full force and effect up to the Time of Closing and the Vendor
                shall retain the benefits and burdens of such policies save and
                except Zurich-American Worker's Compensation Plan Policy No.
                WC365224400, which shall continue in full force and effect and
                be assumed by the Purchaser on Closing;

(vi) Miscellaneous:
     -------------

        (bb)    the computer systems, including hardware and software are to the
                best of the Vendor's knowledge free from viruses;

        (cc)    at the Time of Closing, all remittances with respect to state
                retail sales tax will have been made or accrued up to and
                including the Closing Date;

        (dd)    no representation or warranty of the Vendor contained in the
                Agreement or contained in any statement, document, certificate
                or list made, delivered or furnished by or on behalf of the
                Vendor pursuant to this Agreement or in connection with the
                consummation of the transaction herein contemplated contains or
                will contain any untrue statement of a material fact or omits or
                will omit to state any fact necessary to make the statements
                herein and therein not misleading other than those facts as
                discovered by the Purchaser while performing its due diligence
                of the Business.

4.2     Representations and Warranties of the Purchaser:  The Purchaser hereby 
        -----------------------------------------------
        represents and warrants to the Vendor as follows and hereby acknowledges
        and confirms that the Vendor is relying on such representations and
        warranties in connection with the sale of the Purchased Assets:

        (a)     the Purchaser is a corporation duly incorporated and organized
                pursuant to the laws of the State of Missouri and is a validly
                subsisting corporation with full corporate capacity, power and
                authority to enter into this Agreement and carry out its
                obligations hereunder;

                                      20

<PAGE>
 
     (b)   the execution and delivery of the Agreement, and all other
           agreements, documents and instruments to be executed and delivered by
           the Purchaser pursuant hereto or in connection with the completion of
           the transaction contemplated herein have been duly authorized and
           approved by all necessary action of the board of directions of the
           Purchaser on or prior to the Closing Date and by any other necessary
           corporate action on the part of the Purchaser to comply with
           applicable law;

     (c)   the execution and delivery of the Agreement and all other agreements,
           documents and instruments to be executed and delivered by the
           Purchaser pursuant hereto or in connection with the completion of the
           transaction contemplated herein, and the performance of this
           Agreement or any other such agreement by the Purchaser will not:

           (i)   violate any provision of the Purchaser's Articles of 
                 Incorporation or by-laws, or

           (ii)  result in the breach of violation of any provision of or
                 constitute a default under any indenture, agreement or other
                 instrument to which the Purchaser is a party or by which the
                 Purchaser or any of its properties may be bound, or

           (iii) to the best knowledge of the Purchaser violate any law, rules 
                 or regulations to which the Purchaser is subject.

4.3  Non-Waiver:  No investigations made by or on behalf of either the 
     ----------
Purchaser or the Vendor at any time shall have the effect of waiving,
diminishing the scope of or otherwise affecting or mitigating any representation
or warranty made herein or pursuant hereto or the right of the party or parties
to whom such representation or warranty is made to reply on such representation
and warranty.

4.4  Nature and Survival of Representations and Warranties:  The representations
     -----------------------------------------------------
and warranties of the parties hereto contained in this Agreement shall survive
the Closing and notwithstanding such or any investigation made by or on behalf 
of either party, shall continue in full force and effect for the following 
periods:

     (a)   for three (3) years after the Closing Date with respect to the 
           representations made in Paragraphs 4.1(i) and 4.1(iii);

     (b)   for one (1) year after the Closing Date with respect to the
           representations made in Paragraph 4.1(ii), except for Paragraph
           4.1(ii)(q) relating to Environmental Laws, which representations
           shall survive for five (5) years after the Closing Date;


                                      21
<PAGE>
 
     (c)   for one (1) year after the Closing Date with respect to the 
           representations made in Paragraphs 4.1(iv) and 4.1(v); and

     (d)   For one (1) year after the Closing Date with respect to the
           representations made in Paragraph 4.1(vi), except for Paragraph
           4.1(vi)(dd), which representation shall survive the period from the
           Closing Date to which the particular representation relates.

4.5  Threshold for Violation of Representations and Warranties.  Save and except
     ---------------------------------------------------------
in respect of the operation of Paragraph 3.6, the Vendor shall only be liable to
the Purchaser for any violation of any representation or warranty to the extent 
the net damages suffered by the Purchaser exceed Seventy-Five Thousand Dollars 
($75,000.00) plus such amount as is calculated in accordance with Paragraph 
3.3(a).  Net damages for purposes of this Section 4.5 shall mean any cost or 
claim of any nature whatsoever including any demand, liability, obligation, 
debt, cause of action, suit, proceeding, judgment, award, assessment or 
re-assessment as reduced and/or offset by any net benefit in the relevant 
Purchased Assets or Assumed Liabilities realized by the Purchaser or accrued on 
the Change of Control Financial Statements.

                                   ARTICLE 5
                                   ---------

                        OTHER COVENANTS OF THE PARTIES
                        ------------------------------

5.1  Employees
     ---------

     (a)  Offer of Employment. Upon Closing, the Purchaser shall offer
          -------------------
          employment to all employees of the Business, save and except Roy
          DiPasquale and Jeff Stocks, by way of a letter reasonably acceptable
          to the Vendor on terms and conditions which are substantially
          equivalent to those upon which such persons are presently employed by
          the Vendor. The Purchaser shall not succeed to any rights under any
          employment agreements between the Vendor and any of its employees.

     (b)  Services, Credits, etc. The Purchaser shall accord to the employees of
          ----------------------
          the Business the service credits and seniority accumulated by such
          employees while in the employment of the Vendor.

     (c)  Other Benefits. Until Closing, the Vendor shall be responsible for all
          --------------
          wages, bonuses, earned vacations, sick leave, severance pay, and other
          remuneration benefits for all of the employees of the Business.
          Thereafter, the Purchaser shall be responsible for all such benefits
          of such employees.

5.2  Bulk Sales. The Vendor and the Purchaser hereby waive compliance with the
     ----------
     provisions of applicable bulk sales legislation. Notwithstanding the
     foregoing, the Vendor shall indemnify and hold harmless the Purchaser from
     and against any and all

                                      22

<PAGE>
 
claims which may be made or brought against the Purchaser or which the Purchaser
may suffer or incur as a result of, or arising out of such non-compliance unless
such non-compliance is a result of the Purchaser's non-satisfaction of assumed
liabilities as described herein.

5.3  Other Purchaser's Covenants.  The Purchaser:
     ---------------------------

     (a)  shall discharge in accordance with their terms in the timely and 
          usual course of business the Current Liabilities;

     (b)  shall complete all Customer Contracts in a timely manner in the 
          ordinary course of business in accordance with their terms;

     (c)  can and will, provided the Vendor fulfills all of its obligations,
          conditions, representations and warranties pursuant to this Agreement,
          qualify as successor and replacement for the Vendor on all Customer
          Contracts; and

     (d)  shall cause Law Companies Group, Inc. and its affiliates to be
          released from all indemnities on Bonds for the Vendor which are
          assumed by the Purchaser within fourteen (14) days of the Closing
          Date.

5.4  Other Vendor's Covenants.  The Vendor:
     ------------------------

     (a)  can and will fulfill all of its obligations, conditions,
          representations and warranties pursuant to the Assignment and
          Assumption of Contracts and the Management Services Agreement
          referred to in Paragraphs 6.2(n) and 6.2(o); and

     (b)  shall co-operate sully with and use its best efforts to assist the
          Purchaser in obtaining assignments of and filing applications for the
          Permits under its own name.

5.5  Covenant of Philip Environmental Inc.  Philip Environmental Inc. ("PEN") 
     ------------------------------------
covenants that should the Purchaser fail to fulfill its covenants contained in 
Paragraphs 5.3(b) or (d), PEN shall cause the prompt performance of such 
obligations and shall be liable for and save the Vendor harmless in respect 
thereof.

                                   ARTICLE 6
                                   ---------
             CLOSING ARRANGEMENTS AND CONDITIONS AND RISK OF LOSS
             ----------------------------------------------------

6.1  Place of Closing: The closing of the transaction contemplated hereto shall 
     ----------------
take place at the Time of Closing, on the Closing Date at the Purchaser's 
offices in Hamilton, Ontario, or at such other place as may be mutually agreed 
upon by the parties hereto or their respective solicitors and attorneys.

                                      23
<PAGE>
 
6.2  Conditions of Closing: Except as otherwise set forth in this Agreement, 
     ---------------------
completion of the purchase and sale of the Purchased Assets contemplated hereto 
is subject to the following conditions having been satisfied. The conditions 
contained in Paragraphs 6.2(a) to (o), both inclusive, are for the exclusive 
benefit of the Purchaser. The conditions contained in Paragraphs 6.2 (p) to (r) 
both inclusive, are for the exclusive benefit of the Vendor. All conditions 
referred to herein are to be satisfied at the Time of Closing. The following are
the conditions:

     (a)  all of the representations and warranties of the Vendor contained in
          the Agreement or contained in any certificate or other document
          delivered to the Purchaser pursuant hereto shall be true and correct
          on and as of the Closing Date, with the same force and effect as if
          those representations and warranties had been made on and as of such
          date, regardless of the date as of which the information in this
          agreement or in any such certificate or document is given, and there
          shall have been compliance with the covenants and obligations on the
          part of the Vendor contained herein which were to have been complied
          with by the Vendor at or prior to the Time of Closing and the Vendor
          shall have delivered to the Purchaser a certificate executed by the
          president or chief executive officer of the Vendor to that effect. The
          acceptance of such certificate and the completion of the transaction
          of purchase and sale herein contemplated shall not be a waiver of the
          covenants, representations and warranties contained herein or in any
          certificate or other document given pursuant to this Agreement, which
          covenants, representations and warranties shall continue in full force
          and effect as provided in Paragraph 4.4 hereof;

     (b)  the Vendor shall deliver to the Purchaser all necessary deeds,
          conveyances, bills of sale, assurances, transfers, assignments,
          consents, releases, discharges and other documents, necessary or
          reasonably required in the opinion of the Purchaser, to transfer
          effectively to the Purchaser good and marketable title to the
          Purchased Assets free and clear of all mortgages, liens, charges,
          security interests, pledges, adverse claims, conditional sale or other
          title retention agreements, restrictions, demands, equities,
          encumbrances and rights of any Person of every nature, kind and
          description whatsoever (save and except such encumbrances, claims or
          defects in title as are specifically scheduled or otherwise referenced
          in this Agreement as being consented to or assumed by the Purchaser);

     (c)  the Vendor shall have delivered to the Purchaser possession of the
          Purchased Assets including documents relating to the Business
          contemplated in Paragraph 2.1 hereof;

     (d)  save and except the Permits, the rights under which the Purchaser
          shall have secured pursuant to the terms of the Management Services
          Agreement referred to in Paragraph 6.2(o), the Purchaser shall have

                                      24

<PAGE>
 
          obtained or received all material licenses, permits, consents,
          approvals and authorizations from all appropriate federal, state,
          local or other governmental or administrative bodies under all
          applicable laws, regulations, rules and ordinances as may be necessary
          and appropriate to enable the Purchaser to carry on the Business in
          the same manner in which such Business in now being carried on by the
          Vendor or as may be required to permit the change of ownership of the
          Purchased Assets herein provided for to be completed, without
          affecting or resulting in the cancellation or termination of any
          Permit or of any license or permit held by the Purchaser;

     (e)  Law Companies Group, Inc. ("Law Group") shall execute a non-
          competition agreement whereby Law Group agrees to refrain from
          engaging in any similar business to the Business within Canada or the
          United States for a period of five (5) years from the Closing Date,
          which agreement shall be in substantially the form as set forth in
          Schedule 6.2(e);

     (f)  on the Closing Date, and except as otherwise contemplated hereunder,
          title to the Purchased Assets shall be free and clear of all
          mortgages, liens, charges, security interest, pledges, adverse claims,
          conditional sale or other title retention agreements, restrictions,
          description whatsoever and there shall have been no material change to
          the Purchased assets;

     (g)  the Vendor shall not have made from the Effective Date to Closing any
          capital expenditure, or dispose of any single capital asset, in excess
          or valued at $5,000.00, except with the Purchaser's prior written
          consent;

     (h)  from the Effective Date to Closing, the Vendor shall not erode the
          working capital of the Business and, in particular, shall not make any
          cash outlays or draws other than the collection and settlement of
          commercial transactions in the normal course of business;

     (i)  the Vendor shall provide to the Purchaser within thirty (30) days of
          the Closing Date the written consent of each lessor or third party
          under the Equipment Leases and Contracts to the assignment of same to
          the Purchaser and each of the lessors' and third party's
          acknowledgments that the Vendor is not in breach of any terms of each
          of the Equipment Leases and Contracts;

     (j)  the Vendor shall assign to the Purchaser as of the Closing Date its
          interest in two Leases in regard to the properties located 2525
          McAllister, Houston, Texas, 77092 and 4613 Clark Avenue, Tampa,
          Florida, 33614;

     (k)  the Vendor shall provide to the Purchaser on the Closing Date, an
          acknowledgment and consent from each of the landlords under the
          Leases:

                                      25








<PAGE>
 
     (i)     acknowledging that the Vendor shall not be in breach of any terms
             of the Leases and that each Lease is in good standing as at the
             Closing Date; and

     (ii)    consenting to the assignments of the Leases as contemplating in 
             Paragraph 6.2(j) above.

(l)  the Vendor shall have performed or complied with all of its obligations, 
     covenants and agreements hereunder;

(m)  the Purchaser shall have secured the approval of the board of directors of
     Philip Environmental Inc., authorizing and approving the transaction of
     purchase and sale herein contemplated, and shall have delivered to the
     Vendor a copy of such resolution of the board of directors evidencing the
     due authorization of the Purchaser to enter into this Agreement, to
     consummate the transaction of purchase and sale herein contemplated and to
     otherwise perform its obligations hereunder;

(n)  the Vendor shall deliver to the Purchaser an executed Assignment and
     Assumption of Contracts in substantially the form set out in Schedule
     6.2(n);

(o)  the Vendor shall deliver to the Purchaser an executed Management Services
     Agreement in substantially the form set out in Schedule 6.2(o);

(p)  all of the representations and warranties of the Purchaser contained in
     this Agreement or contained in any certificate or other document delivered
     to the Vendor pursuant hereto shall be true and correct on and as of the
     Closing Date with the same force and effect as if such representations and
     warranties have been made on and as such date, regardless of the date as of
     which the information in this Agreement or in any such certificate or
     document is given, and there shall have been compliance with the covenants
     and obligations on the part of the Purchaser contained herein which were to
     have been complied with at or prior to Closing and the Purchaser shall have
     delivered to the Vendor a certificate executed by the president or chief
     executive officer of the Purchaser to that effect. The acceptance of such
     certificate and the compliance of the transaction of purchase and sale
     herein contemplated shall not be a waiver of the covenants, representations
     and warranties contained herein or in any certificate or document given
     pursuant to this Agreement, which covenants, representations and warranties
     shall continue in full force and effect as provided in Paragraph 4.4
     hereof;


                                      26
<PAGE>
 
     (q)  the Purchaser shall have paid to the Vendor the amount payable at
          Closing pursuant to Paragraph 3.6 hereof;

     (r)  the Purchaser shall have performed or complied with all its 
          obligations, covenants and agreements hereunder.

6.3  Risk of Loss: If, at or prior to the Closing, all or any part of the 
     ------------
Purchased Assets are lost, destroyed or damaged by fire or any other casualty, 
event or circumstance or are expropriated or otherwise seized by governmental 
or other lawful authority the Vendor shall immediately advise the Purchaser 
thereof in writing and the Purchaser shall have the option, exercisable by 
notice in writing to be given by the Purchaser to the Vendor within five (5) 
business days of the Purchaser receiving the aforesaid notice from the Vendor to
either:

     (a)  reduce the Purchase Price by the book value of all or any part of the 
          Purchased Assets so lost, destroyed or damaged, or

     (b)  in regard to circumstances in which a material part of the Purchased
          Assets is so lost destroyed or damaged, refuse to complete the
          transaction contemplated herein by notice to the Vendor and in such
          event all parties hereto shall be released from all obligations
          hereunder.

                                   ARTICLE 7
                                   ---------
                                INDEMNIFICATION
                                ---------------

7.1  Indemnification by Vendor: Subject to Paragraph 4.5, the Vendor covenants 
     -------------------------
and agrees to indemnify and save harmless the Purchaser, its officers, 
directors, employees, agents and shareholders from and against any and all 
losses, damages, liabilities, costs and expenses (including reasonable legal 
fees and disbursements) suffered or incurred by the Purchaser or any such other 
Person as a result of, in consequence of or arising out of, under or by reason
of:

     (a)  any representations or warranty of the Vendor contained in this
          Agreement or contained in any document or certificate delivered by the
          Vendor pursuant hereto or in connection with the completion of the
          transaction herein contemplated being untrue, inaccurate or misleading
          in any material respect;

     (b)  a breach by the Vendor in any respect of any of its covenants or
          obligations contained herein or contained in any document or
          instrument delivered by the Vendor pursuant hereto or in connection
          with completion of the transaction contemplated herein; or

                                      27
<PAGE>
 
        (c)     any liability pertaining to the Business which occurred or arose
                prior to the Time of Closing except for the liabilities the
                Purchaser is assuming pursuant to Paragraph 2.3 herein.

7.2     Indemnification by Purchaser: The Purchaser covenants and agrees to
        ---------------------------
        indemnify and save harmless the Vendor from and against any and all
        losses, damages, liabilities, costs and expenses (including reasonable
        legal fees and disbursements) suffered or incurred by the Vendor or any
        such other Person as a result of, in consequence of or arising out of,
        under or by reason of:

        (a)     any representation or warranty of the Purchaser contained in
                this Agreement or contained in any document or certificate
                delivered by the Purchaser pursuant hereto or in connection with
                the completion of the transaction herein contemplated being
                untrue, inaccurate or misleading in any material respect;

        (b)     the failure of the Purchaser to offer employment to employees of
                the Business in accordance with Paragraph 5.1(a) on terms and
                conditions which are substantially equivalent to those upon
                which such persons are presently employed by the Vendor;

        (c)     any other breach by the Purchaser in any respect of any of its
                covenants or obligations contained herein or contained in any
                document or instrument delivered by the Purchaser pursuant
                hereto or in connection with the completion of the transactions
                contemplated herein; or

        (d)     any failure by the Purchaser or PEN to fully and timely complete
                the obligations set forth in Paragraphs 5.3 and 5.4
                respectively.

7.3     Right of Set-Off: The Vendor acknowledges that the Purchaser shall have 
        ----------------
the right to set any amounts owing by the Vendor to the Purchaser under 
Paragraph 7.1 against the Holdback referred to in Paragraph 3.5 Such amount 
shall be determined from the Change of Control Financial Statements as prepared 
and agreed upon pursuant to Paragraphs 3.3 and 3.4.

                                   ARTICLE 8
                                   ---------
                          GENERAL CONTRACT PROVISIONS
                          ---------------------------

8.1     Notice:
        ------
(1)     Any notice, designation, communication, request, demand or other 
document, required or permitted to be given or sent or delivered hereunder to 
any party hereto shall be in writing and shall be sufficiently given or sent or 
delivered if it is:

                                      28
<PAGE>
 
     (a)   delivered personally to an officer or director of such party;

     (b)   sent to the party entitled to receive it by registered mail, postage 
           prepaid, or

     (c)   sent by telecopy machine.

(2)  Notices shall be sent to the following addresses or telecopy numbers:

     (a)   in the case of the Vendor:

           IAM/Environmental, Inc.
           c/o Law Companies Group, Inc.
           3 Ravinia Drive
           Suite 1830
           Atlanta, Georgia  30346
           Attention:  Mr. Darryl B. Segraves, Esq.
                       General Counsel, Executive Vice President & Secretary
           Fax No.: (770) 390-3289


           with a copy to:

           Porter & Hedges, L.L.P.
           700 Louisiana, 36th Floor
           Houston, Texas
           77002-2764
           Attention: John M. Ransom
           Fax No.: (713) 228-1331


           (b)   in the case of the Purchaser:

           Philip Environmental Services Corporation
           c/o 100 King Street West
           P.O. Box 2440 LCD 1
           Hamilton, Ontario L8N 4J6
           Attention: Colin Soule, Corporate Secretary
           Fax No.: (905) 521-9160

           
           or to such other address or telecopier number as the party entitled
           to or receiving such notice, designation, communication, request,
           demand or other document shall, by a notice given in accordance with
           this section, have communicated to the party giving or sending or
           delivering such notice, designation, communication, request, demand
           or other document.


                                      29
<PAGE>
 
                Any notice, designation, communication, request, demand or other
                document given or sent or delivered as aforesaid shall

        (c)     if delivered as aforesaid, be deemed to have been given, sent, 
                delivered and received on the date of delivery;

        (d)     if sent by mail as aforesaid, be deemed to have been given, 
                sent, delivered and received (but not actually received) on the
                fourth Business Day following the date of mailing, unless at any
                time between the date of mailing and the fourth Business day
                thereafter is a discontinuance or interruption of regular postal
                service, whether due to strike or lockout or work slowdown
                affecting postal service at the point of dispatch or delivery or
                any intermediate point, in which case the same shall be deemed
                to have been given, sent, delivered and received in the ordinary
                course of the mails, allowing for such discontinuance of
                interruption of regular postal service, and,

        (e)     if sent by telecopy machine, be deemed to have been given, sent,
                delivered and received on the date the sender receives the
                telecopy answer back confirming receipt by the recipient.

8.2     Time of Essence: Time shall be of the essence of this Agreement and of 
        ---------------
        every part hereof and no extension or variation of this Agreement shall
        operate as a waiver of this provision.

8.3     Further Assurances: The parties hereto shall, with reasonable diligence 
        ------------------
        do all such things and provide all such reasonable assurances as may be
        required to consummate the transactions contemplated hereby and each
        party shall provide such further documents or instruments required by
        any other party as may be reasonably necessary or desirable to effect
        the purpose of this Agreement and to carry out its provisions, whether
        before or after the consummation of the transaction contemplated herein.

8.4     Expenses: Each of the parties hereto shall bear its own respective 
        --------
        expenses (including, but not limited to, all compensation and expenses
        of counsel, financial advisors, consultants, actuaries and auditors)
        incurred in connection with the negotiations, preparation and execution
        of this Agreement, the consummation of the transaction contemplated
        hereto and any post-closing matters.

8.5     Governing Law:  This Agreement shall be governed by and construed in 
        -------------
        accordance with the laws of the State of Texas, which shall be deemed to
        be the proper law hereof. The Courts of Texas shall have jurisdiction to
        entertain and determine all dispute and claims, both at law and in
        equity, arising out of or in any way connected with the construction,
        breach or alleged, threatened or anticipated breach of this Agreement,

                                      30
<PAGE>
 
and shall have jurisdiction to hear and determine all questions as to the 
validity, existence or enforceability thereof. The prevailing party shall 
recover attorneys' fees. THE PARTIES HEREBY UNCONDITIONALLY WAIVE THEIR RIGHT TO
A JURY TRIAL IN RESPECT OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING 
OUT OF, DIRECTLY OR INDIRECTLY, THIS AGREEMENT, ANY RELATED DOCUMENTS OR THE 
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

8.6  Entire Agreement: This Agreement shall constitute the entire agreement 
     ----------------
among the parties hereto pertaining to the subject matter hereof and supersedes 
all prior and contemporaneous agreements, understandings, negotiations and 
discussions, whether oral or written, of the parties hereto, and there are no 
representations, warranties or agreements between the parties hereto except as 
set forth or contemplated herein or in any document or instrument delivered 
pursuant hereto. This Agreement shall not be amended except by a memorandum in 
writing signed by all of the parties hereto and any amendment hereof shall be 
null and void and shall not be binding upon any party which has not given its 
consent as aforesaid.

8.7  Assignment: Neither this Agreement nor any rights or obligations hereunder 
     ----------
shall be assignable by any party hereto without the prior written consent of the
other parties hereto, except that the Purchaser shall, without any prior consent
required, be entitled to assign this Agreement to a related or affiliated
company to be incorporated in the State of Texas or Florida. This Agreement
shall enure to the benefit of and be binding upon the parties hereto and their
respective heirs, executors, administrators, legal representative, successors
and permitted assigns.

8.8  Publicity: Save as required by law or by any stock exchange, neither the 
     ---------
Purchaser nor the Vendor shall issue any press release or make any other public 
statement or announcement relating to or connected with or arising out of this 
Agreement or the matters contained herein, without obtaining the prior written 
approval of the other party hereto on the contents and the manner of 
presentation and publication thereof. If disclosure is required by law or by any
stock exchange, the disclosing party shall consult in advance with the other 
party hereto and attempt in good faith to reflect such other party's concerns 
in the required disclosure.

8.9  Counterparts: This Agreement may be executed by the parties in separate 
     ------------
counterparts, each of which when so executed and delivered shall be deemed to be
an original and such counterparts together shall constitute one and the same 
instrument, which shall be sufficiently evidenced by any such counterpart, or 
longer as required by law.

8.10  Storage and Access to Records: The Purchaser agrees to provide the Vendor 
      -----------------------------
(as well as the Vendor's accountants, auditors or other representatives) 
reasonable use of the Purchaser's (and Vendor's former) employee to gain access 
to the books and records forming part of the Purchased Assets and otherwise 
provide reasonable access to such


                                      31
<PAGE>
 
books and records during normal business hours at the premises of the Business, 
to the extent necessary to complete any financial statements required for this 
Agreement or otherwise required by the Vendor, to collect any accounts 
receivable re-assigned by the Purchaser to the Vendor, to prosecute or defend 
claims or lawsuits, to prepare tax returns and to comply with audits by taxing 
authorities.  The Purchaser will not dipose of any such books and records that 
were compiled by the Vendor without prior written notice to the Vendor and 
providing the Vendor with a reasonable opportunity to re-possess such books and 
records.  The provisions of this paragraph shall not merge but shall survive the
closing of all transactions contemplated in this Agreement and shall continue in
full force and effect for a period of ten (10) years, or longer as required by 
law.

        IN WITNESS WHEREOF the parties hereto have hereunto set their respective
hands and seals.


                                        PHILIP ENVIRONMENTAL SERVICES
                                        CORPORATION


                                        Per: /s/ J. A. Woockroff
                                            ---------------------------
                                                                A.S.O.

                                        IAM/ENVIRONMENTAL INC.


                                        Per: /s/ R. S. [ILLEGIBLE LAST NAME]
                                            ----------------------------
                                                                A.S.O.  RM


        As to the covenant contained in Paragraph 5.5 hereof, agreed to by:

                                        PHILIP ENVIRONMENTAL INC.



                                        Per: /s/ J. A. Woockroff
                                            ---------------------------
                                                                A.S.O.


                                      32