Asset Purchase Agreement



 






EXHIBIT 10.17




ASSET PURCHASE AGREEMENT




by and between




SPA CREEK SERVICES, LLC




and




MIDDLETON PEST CONTROL, INC.




dated as of December 16, 2005





 









 








TABLE OF CONTENTS




	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	1.	 	Definitions	 	 	1	 
	 
	 	 	 	 	 	 	 	 
	2.	 	Basic Transaction	 	 	4	 
	 

	 	(a)
	 	Purchase and Sale
	 	 	4	 
	 

	 	(b)
	 	Excluded Assets
	 	 	5	 
	 

	 	(c)
	 	Transaction Consideration
	 	 	6	 
	 

	 	(d)
	 	Excluded Liabilities
	 	 	6	 
	 

	 	(e)
	 	Payment of Liabilities of Company
	 	 	7	 
	 

	 	(f)
	 	Assumption of Obligations
	 	 	7	 
	 

	 	(g)
	 	Collection of Accounts Receivable
	 	 	7	 
	 

	 	(h)
	 	Proration of Certain Items
	 	 	7	 
	 

	 	(i)
	 	Post Closing Adjustments
	 	 	8	 
	 

	 	(j)
	 	Allocation of the Transaction Consideration
	 	 	8	 
	 

	 	(k)
	 	Assignment of Contracts
	 	 	9	 
	 

	 	(l)
	 	No Expansion of Third Party Rights
	 	 	9	 
	 

	 	(m)
	 	The Closing
	 	 	9	 
	 

	 	(n)
	 	AS IS SALE
	 	 	9	 
	 

	 	(o)
	 	Successor Liability
	 	 	10	 
	 
	 	 	 	 	 	 	 	 
	3.	 	Representations and Warranties Relating to the Company	 	 	10	 
	 

	 	(a)
	 	Noncontravention
	 	 	10	 
	 

	 	(b)
	 	Corporate Status
	 	 	10	 
	 

	 	(c)
	 	Good Title to and Condition of Purchased Assets
	 	 	11	 
	 

	 	(d)
	 	Power and Authority
	 	 	11	 
	 

	 	(e)
	 	Enforceability
	 	 	11	 
	 

	 	(f)
	 	Absence of Subsidiaries
	 	 	11	 
	 

	 	(g)
	 	Intentionally Deleted
	 	 	11	 
	 

	 	(h)
	 	Financial Statements
	 	 	11	 
	 

	 	(i)
	 	Absence of Certain Developments
	 	 	12	 
	 

	 	(j)
	 	Liens
	 	 	13	 
	 

	 	(k)
	 	Legal Compliance
	 	 	13	 
	 

	 	(l)
	 	Tax Matters
	 	 	13	 
	 

	 	(m)
	 	Real Property
	 	 	14	 
	 

	 	(n)
	 	Intellectual Property
	 	 	14	 
	 

	 	(o)
	 	Contracts
	 	 	15	 
	 

	 	(p)
	 	Insurance and Risk of Loss
	 	 	15	 
	 

	 	(q)
	 	Litigation
	 	 	15	 
	 

	 	(r)
	 	Employees
	 	 	16	 
	 

	 	(s)
	 	Employee Benefits
	 	 	16	 
	 

	 	(t)
	 	Environmental Matters
	 	 	16	 
	 

	 	(u)
	 	Intentionally Deleted
	 	 	19	 
	 

	 	(v)
	 	Company Permits
	 	 	19	 
	 

	 	(w)
	 	Accounts Receivable; Inventory; Returns
	 	 	19	 
	 

	 	(x)
	 	Intentionally Deleted
	 	 	20	 






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TABLE OF CONTENTS
(Continued)






	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	 

	 	(y)
	 	Books and Records
	 	 	20	 
	 

	 	(z)
	 	Customers and Suppliers
	 	 	20	 
	 

	 	(aa)
	 	Pest Treatment
	 	 	20	 
	 

	 	(bb)
	 	Names; Prior Acquisitions; Business Locations
	 	 	21	 
	 

	 	(cc)
	 	Brokers’ Fees
	 	 	21	 
	 

	 	(dd)
	 	Accuracy of Information Furnished by the Company
	 	 	21	 
	 
	 	 	 	 	 	 	 	 
	4.	 	Representations and Warranties of the Buyer	 	 	21	 
	 

	 	(a)
	 	Organization of the Buyer
	 	 	21	 
	 

	 	(b)
	 	Authorization of Transaction
	 	 	21	 
	 

	 	(c)
	 	Noncontravention
	 	 	22	 
	 

	 	(d)
	 	Brokers’ Fees
	 	 	22	 
	 
	 	 	 	 	 	 	 	 
	5.	 	Pre-Closing Covenants	 	 	22	 
	 

	 	(a)
	 	General
	 	 	22	 
	 

	 	(b)
	 	Notices and Consents
	 	 	22	 
	 

	 	(c)
	 	Access
	 	 	22	 
	 

	 	(d)
	 	Confidentiality
	 	 	23	 
	 

	 	(e)
	 	Intentionally Omitted
	 	 	23	 
	 

	 	(f)
	 	Environmental Assessment
	 	 	23	 
	 

	 	(g)
	 	Trading in Parent Common Stock
	 	 	23	 
	 

	 	(h)
	 	No Shop
	 	 	23	 
	 

	 	(i)
	 	Non-Competition Agreements
	 	 	24	 
	 

	 	(j)
	 	Preservation of Business
	 	 	24	 
	 

	 	(k)
	 	Intentionally Omitted
	 	 	25	 
	 
	 	 	 	 	 	 	 	 
	6.	 	Post-Closing Covenants	 	 	25	 
	 

	 	(a)
	 	Litigation Support; Access to Books and Records
	 	 	25	 
	 

	 	(b)
	 	Tax Matters
	 	 	25	 
	 

	 	(c)
	 	Restrictive Covenant
	 	 	26	 
	 

	 	(d)
	 	Credit Under Buyer Employee Benefit Plans
	 	 	27	 
	 

	 	(e)
	 	Intentionally Omitted
	 	 	27	 
	 

	 	(f)
	 	Assumption of Leased Real Property and Landlord Waiver
	 	 	27	 
	 	 	(g)	 	Use of Certain Leased Premises	 	 	27	 
	 

	 	(h)
	 	Name
	 	 	27	 
	 
	 	 	 	 	 	 	 	 
	7.	 	Conditions to Obligation to Effect the Closing	 	 	27	 
	 

	 	(a)
	 	Conditions to Obligation of the Buyer
	 	 	27	 
	 

	 	(b)
	 	Conditions to Obligation of the Company
	 	 	29	 
	 
	 	 	 	 	 	 	 	 
	8.	 	Remedies for Breaches of this Agreement	 	 	29	 
	 

	 	(a)
	 	Survival
	 	 	29	 
	 

	 	(b)
	 	Net Worth Maintenance
	 	 	29	 
	 

	 	(c)
	 	Arbitration
	 	 	29	 
	 
	 	 	 	 	 	 	 	 
	9.	 	Termination	 	 	30	 
	 

	 	(a)
	 	Termination of Agreement
	 	 	30	 






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TABLE OF CONTENTS
(Continued)






	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	 

	 	(b)
	 	Effect of Termination
	 	 	31	 
	 
	 	 	 	 	 	 	 	 
	10.	 	Miscellaneous	 	 	31	 
	 

	 	(a)
	 	Press Releases and Public Announcements
	 	 	31	 
	 

	 	(b)
	 	Third-Party Beneficiaries
	 	 	31	 
	 

	 	(c)
	 	Entire Agreement
	 	 	31	 
	 

	 	(d)
	 	Succession and Assignment
	 	 	32	 
	 

	 	(e)
	 	Counterparts
	 	 	32	 
	 

	 	(f)
	 	Headings
	 	 	32	 
	 

	 	(g)
	 	Notices
	 	 	32	 
	 

	 	(h)
	 	Governing Law; Jurisdiction; Venue
	 	 	33	 
	 

	 	(i)
	 	Amendments and Waivers
	 	 	33	 
	 

	 	(j)
	 	Severability
	 	 	33	 
	 

	 	(k)
	 	Expenses
	 	 	33	 
	 

	 	(l)
	 	Construction
	 	 	33	 
	 

	 	(m)
	 	Business Day
	 	 	34	 
	 

	 	(n)
	 	Prevailing Party
	 	 	34	 
	 

	 	(o)
	 	Exhibits; Disclosure Schedule
	 	 	34	 
	 

	 	(p)
	 	Waiver of Jury Trial
	 	 	34	 







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ASSET PURCHASE AGREEMENT




     This Asset Purchase Agreement (this “Agreement”) is made as of December 16, 2005 (the
“Effective Date”), by and between Middleton Pest Control, Inc., a Florida corporation (the
“Buyer”), and Spa Creek Services, LLC, a Delaware limited liability company (the
“Company”). The Buyer and the Company are each referred to in this Agreement as a “Party”
and collectively as the “Parties.”



RECITALS




     The Company is engaged in the pest control services business which is operated from its
branches located in Brooksville, Lakeland, Ocala and Orlando, Florida. The Buyer desires to
purchase and the Company desires to sell to the Buyer substantially all of the assets, properties
and business of the Company, upon the terms and conditions set forth in this Agreement for the
consideration described in Section 2 of this Agreement.



TERMS OF AGREEMENT




     NOW, THEREFORE, in consideration of the premises and the mutual promises herein made, and in
consideration of the representations, warranties and covenants herein contained, the Parties agree
as follows:


1. Definitions. In addition to the terms defined in the Preamble and other Sections of
this Agreement, the capitalized terms set forth below are defined as follows:




     “Advisors” means, with respect to any Person, such Person’s managers, directors,
officers, employees, accountants, lenders, agents, legal counsel, and financial, regulatory, Tax
and other advisors.



     “Affiliate” has the meaning set forth in Rule 12b-2 of the regulations promulgated
under the Securities Exchange Act.



     “Change of Control Payments” means any and all (i) bonuses or similar payments payable
by Company as a result of the transactions contemplated hereby, (ii) investment banking and other
fees payable by Company as a result of the transactions contemplated hereby and (iii) amounts
payable by Company to obtain any consents or approvals required to be listed on Section 3(a) of the
Disclosure Schedule, including without limitation, the payments described on Exhibit A,
attached hereto.



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



     “Company’s Knowledge” means the actual knowledge of any manager, executive officer or
director of the Company after a reasonably diligent inquiry and investigation.



     “Company Transaction Expenses” means any and all legal, accounting, consulting,
investment advisory and other fees, costs and expenses of Company and relating to the transaction
contemplated hereby.



 









 





     “Confidential Information” means any information concerning or relating to a
disclosing Party or its Affiliate or a disclosing Party’s or its Affiliate’s financial condition,
businesses, personnel, operations, customers and customer data, or prospects in the possession of
the receiving Party, its Affiliates or its Advisors or furnished or to be furnished to the
receiving Party, its Affiliates or its Advisors including, without limitation, any Trade Secrets
which should reasonably be deemed confidential to the disclosing Party; provided that the term
“Confidential Information” does not include information which (i) becomes generally available to
the public other than as a result of a disclosure of such information by the receiving Party, its
Affiliates or its Advisors in violation of this Agreement, (ii) was available to the receiving
Party, its Affiliates or its Advisors on a non-confidential basis prior to its disclosure by the
disclosing Party or its Advisors, or (iii) was or becomes available to the receiving Party, its
Affiliates or its Advisors on a non-confidential basis, from a source other than disclosing Party
or its Advisors, provided, that such source is or was (at the time of receipt of the relevant
information) not known to the receiving Party, to be bound by a confidentiality agreement with or
for the benefit of (or other confidentiality obligation to) the disclosing Party.



     “Consistently Applied” means the consistent and historically utilized application of
accounting principles and policies, and methods based on reasonably acceptable commercial standards
and prudent management determinations and estimates and judgments, utilized in the construct of the
Company’s Most Recent Financial Statements.



     “Customer Prepayments” means the prepayments for Company services made by customers
and for which the Company is obligated to provide services including for annual customers (as
defined in Section 3(f)), even if not recognized as a prepaid service on the Company’s balance
sheet.



     “Employee Pension Benefit Plan” has the meaning set forth in ERISA Section 3 (2).



     “Employee Welfare Benefit Plan” has the meaning set forth in ERISA Section 3 (l).



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



     “ERISA Affiliate” means any trade or business, whether or not incorporated, that
together with the Company would be deemed a “single employer” within the meaning of Section 4001 of
ERISA.



     “GAAP” means United States generally accepted accounting principles in effect at the
time the relevant financial statements were (or are) prepared.



     “Governmental Authority” means any foreign, federal, state or local governmental
entity or any department, agency, or political subdivision thereof or any court, judicial
authority, tribunal or quasi-judicial authority or tribunal including any arbitrator or arbitration
proceeding.



     “Income Tax” means any foreign, federal, state or local tax imposed on, or measured
by, net income.



     “Income Tax Return” means any return, declaration, report, claim for refund or
information return or statement relating to Income Taxes.



2









 





     “Indebtedness For Borrowed Money” means, with respect to any Person, (a) indebtedness
of such Person for borrowed money, (b) obligations of such Person evidenced by notes, bonds,
debentures or other similar instruments, (c) obligations of such Person as lessee under leases
required to be capitalized pursuant to GAAP, (d) obligations of such Person for amounts drawn under
acceptances, letters of credit or similar facilities, (e) any purchase money indebtedness for goods
purchased from vendors and other trade payables and (f) guarantees and similar commitments relating
to any of the foregoing items.



     “Intellectual Property” means, with respect to the Company, all patents, patent
applications, patent disclosures and inventions; trademarks, service marks, trade dress, logos,
trade names, and Internet domain names; copyrights and copyrightable works; information systems,
databases and software; websites and web addresses; licenses, registrations, applications and
renewals for any of the foregoing; and Trade Secrets; and all derivations, modifications and
enhancements to any of the foregoing.



     “Lien” means any mortgage, pledge, lien, encumbrance, charge or other security
interest of any kind whatsoever.



     “Material Adverse Effect” means either:



          (i) a material adverse effect on (or material adverse change in) the assets, liabilities
assumed by the Buyer, business or the financial condition of the Company; or




          (ii) any event, matter or circumstance which could reasonably be expected to result in a
material adverse effect on (or material adverse change in) the assets, liabilities assumed by the
Buyer, business or financial condition of the Company, other than (for purposes of this clause (ii)
only) changes in the following: (A) regional, national or international political or economic
conditions or financial markets; (B) any of the industries in which the Company operates; (C)
applicable laws or regulations; (D) election results at the federal, state or local levels; (E)
Consistently Applied accounting principles; (F) acts of terrorism or war (whether or not declared);
or (G) any adverse change in or effect on the business of the Company that is cured to the
reasonable satisfaction of the Buyer, before the earlier of (1) the Closing Date and (2) the date
on which this Agreement is terminated pursuant to Section 9 hereof.




     “Most Recent Balance Sheet” means the balance sheet contained within the Most Recent
Financial Statements.



     “Multiemployer Plan” has the meaning set forth in ERISA Section 3(37).



     “Ordinary Course of Business” means the ordinary course of business consistent with
commercially reasonable past practices.



     “Parent” means Sunair Electronics, Inc., a Florida corporation and parent of Buyer.



     “Permitted Liens” means with respect to any assets of the Company (i) mechanic’s,
materialmen’s and similar liens with respect to amounts not past due, (ii) liens for Income Taxes
or other Taxes not yet due and payable or for Income Taxes or other Taxes that the taxpayer is
contesting in good faith pursuant to proceedings disclosed on the Disclosure Schedule,



3









 




(iii) purchase money liens arising by operation of law (including liens on inventory and other
assets in favor of vendors of the Company) and (iv) liens securing rental payments under capital
lease arrangements disclosed on the Disclosure Schedule or other Liens disclosed on the Disclosure
Schedule.




     “Person” means an individual, a partnership, a corporation, an association, a joint
stock company, a trust, a joint venture, an unincorporated organization, or a Governmental
Authority (or any department, agency, or political subdivision thereof).



     “Subsidiary” means, with respect to any Person, any corporation, association or other
entity of which either such Person or any Subsidiary of such Person (alone or together) owns or
controls (either directly or indirectly or through another Subsidiary) at least a majority of the
issued share capital or other ownership interest, in each case having ordinary voting power to
elect directors, managers or trustees of such corporation or other entity (whether or not any
capital stock or other ownership interests or any other class or classes of capital stock or other
ownership interests shall or might have voting power upon the occurrence of any contingency).



     “Taxes” means any and all taxes of any kind (together with any and all interest,
penalties, additions to tax and additional amounts imposed with respect thereto) imposed by any
Governmental Authority including Income Taxes.



     “Tax Return” means any return (including any information return and Income Tax
Return), report, statement, schedule, notice, form, or other document or information filed with or
submitted to, or required to be filed with or submitted to, any Government Authority in connection
with the determination, assessment, collection or payment of any Tax or in connection with the
administration, implementation or enforcement of or compliance with any Tax law.



     “Trade Secrets” means technical or non-technical data, formulae, patterns,
compilations, programs, devices, business-related information, methods, know-how, techniques,
competitive information, drawings, processes, financial data, personnel data, financial plans,
product plans, or customer or supplier lists, in each case which (i) are material to the Company
and (ii) are or would be reasonably expected to be not commonly known by or available to the
public, or are defined as trade secrets pursuant to applicable law.



2. Basic Transaction.




     (a) Purchase and Sale. At the Closing, upon the terms and subject to the conditions
of this Agreement, the Company shall sell, convey, transfer, assign and deliver to Buyer, free and
clear of any and all Liens or other restrictions of any kind, all of its assets, properties and
business of every kind and description, whether real, personal or mixed, tangible or intangible,
wherever located (except those assets of the Company which are specifically excluded as provided in
Section 2 (b) hereof) as shall exist on the Closing Date (collectively, the “Purchased Assets”).
Without limiting the generality of the foregoing, the Purchased Assets shall include, but not be
limited to, the following:



          (i) Tangible Personal Property. All machinery, equipment, tools, leasehold
improvements, construction in progress, containers, furniture and fixtures, trucks, automobiles,


4









 






vehicles, trailers, containers, calibrating and measuring equipment, purchased parts, computer
equipment, computer software and any other fixed assets owned by the Company (collectively, the
“Equipment”), as more particularly described on Schedule 2(a)(i) attached hereto;




          (ii) Inventory. All items of inventory of the Company (“Inventory”) as more
particularly described on Schedule 2(a)(ii) attached hereto;




          (iii) Customer Accounts. All of the Company’s residential and commercial contract and
non-contract customer accounts and customer contracts (the “Customer Contracts”), Customer
Prepayments and other rights to provide services or products to the customers of the Company, as
more particularly described on Schedule 2(a)(iii) attached hereto and all inquiries,
proposals, offers or correspondence to Persons that the Company has had an interest in acquiring
(that are legally permitted to be disclosed), also set forth in Schedule 2(a)(iii), which
will be delivered at Closing;




          (iv) Deposits. All prepaid items of the Company including, without limitation,
prepaid rentals, security deposits, advances, other deposits and prepayments by the Company
relating to the operations of the Company as described on Schedule 2(a)(iv) attached hereto
(the “Company Deposits”);




          (v) Receivables. All customer accounts receivables of the Company (the
“Receivables”), as more particularly described on 
Schedule 2(a)(v);




          (vi) Leasehold Interests. All of the interest of and the rights and benefits accruing
to the Company as lessee under any leases of Equipment;




          (vii) Proprietary Rights. All Intellectual Property of the Company; all of the
proprietary rights of the Company; all licenses of Intellectual Property or other intangible
property; computer software, source codes, object codes and other programming codes; telephone and
facsimile numbers for the business; slogans; domain name rights; operating rights; all rights
relating to the business of the Company; all goodwill developed through the use of such
Intellectual Property and other proprietary rights; and all derivatives, modifications and
enhancements to any of the foregoing (“Proprietary Rights”) as more particularly described on
Schedule 2(a)(vii) attached hereto;




          (viii) Licenses and Permits. All permits, licenses, certificates of authority,
franchises, accreditations, variances, exemptions, registrations and other authorizations issued or
used in connection with the business of the Company (the “Permits”), to the extent assignable; and




          (ix) Books, Records and Other Assets. All data, files, books and records of the
Company, including without limitation, customer lists and records, financial, accounting and credit
records, correspondence, budgets, service and warranty records, equipment logs, operating guides
and manuals, copies of personnel records for employees of the business hired by Buyer, all other
similar documents and records, and the Company’s post office boxes.




     (b) Excluded Assets. The Purchased Assets shall exclude the following assets of the
Company: (i) the Transaction Consideration and other rights of the Company under this



5









 




Agreement; (ii) the corporate minute books and stock records of the
Company; (iii) the assets listed in Schedule 2(b) attached hereto; and (iv) and any cash of
the business as of the close of business on the Closing Date provided that payments received on the
Closing Date for Receivables being sold to Buyer shall reduce the value of Receivables sold to
Buyer.




     (c) Transaction Consideration. In consideration for the sale and delivery of the
Purchased Assets and the business of the Company to Buyer, (i) Buyer will assume and pay the
Assumed Liabilities (as defined in Section 2(f)), (ii) Buyer will pay (during the post Closing
adjustment period set forth in Section 2(i)) an amount equal to ninety percent (90%) of the value
of the Receivables of the business transferred to the Buyer as of the Closing Date which are less
than ninety (90) days outstanding from the date of billing, (iii) Buyer will pay (during the post
Closing adjustment period set forth in Section 2(i)) to the Company the value of Inventory, which
shall be valued at the Company’s historical cost, transferred as of the Closing which Buyer
reasonably determines is not obsolete, past its due date or will be past its due date within 90
days of the Closing, and is reasonably likely to be used in the business after Closing, (iv)
subject to applicable prorations prepaid expenses paid by the Company in connection with the
operation of the business consistent with the Ordinary Course of Business of the Company which
support or sustain the Purchased Assets and purchased business after the Closing including but not
limited to security deposits and pre-paid lease or other contractual payments under contracts or
commitments assumed by Buyer, and (v) Buyer will pay to the Company Five Million Five Hundred
Thousand Dollars ($5,500,000) (the “Purchase Price”), payable in cash at Closing by wire transfer
of immediately available funds to an account designated by the Company. The Company shall pay to
the Buyer, as part of the transfer of Purchased Assets, an amount equal to the aggregate of all
Customer Prepayments which shall be reimbursed to Buyer during the post Closing adjustment period
as set forth in Section 2(i).



     (d) Excluded
Liabilities. Notwithstanding anything to the contrary set forth in this
Agreement, the Parties hereto expressly agree that the Buyer shall not assume or otherwise become
liable for any obligation or liability of the Company or relating to the business, the properties
or any of the Purchased Assets, absolute or contingent, known or unknown, other than the Assumed
Liabilities (such obligations or liabilities other than the Assumed Liabilities are hereinafter
referred to as the “Excluded Liabilities”). Without limiting the foregoing, the Excluded
Liabilities shall be deemed to include any liability or obligation of the Company (i) arising under
this Agreement; (ii) relating to any default under any Assumed Liability to the extent such default
existed at or prior to the Closing; (iii) incurred in connection with any breach of contract,
breach of warranty, tort, violation of law, action, suit, or other legal or administrative
proceedings or governmental investigation arising as a result of events occurring or facts or
circumstances arising or existing on or prior to the Closing; (iv) for Taxes arising or accruing
prior to the Closing, including (a) any Taxes arising as a result of the operation of the
business, ownership of the Purchased Assets or use or occupancy of the properties of the Company on
or prior to the Closing, (b) any Taxes that will arise as a result of the sale of the business and
Purchased Assets pursuant to this Agreement, and (c) any deferred Taxes of any nature; (v) under
any contract that is not expressly an Assumed Liability or an Assumed Contract (as defined below);
(vi) with respect to any employee of the Company (whether arising before, on or after the Closing)
relating to or arising out of, or in connection
with their employment by the Company at any time including, without limitation, any payroll or
salary, any employee benefit plan, deferred compensation plan, or any other plans or arrangements
for the benefit of any



6









 




employees of the Company including but not limited to unfunded pension
liabilities, and accrued salary, payroll, vacation, and other accrued compensation and benefits
owed to employees; (vii) any Indebtedness For Borrowed Money; (viii) any and all expenses, costs,
damages, liabilities, or obligations (including, without limitation, fees and expenses of counsel)
incurred by, under or pursuant to any violation of Environmental Laws (as defined in Section 3(t))
or related to the Discharge (as defined in Section 3(t)), Handling (as defined in Section 3(t)),
presence or clean up of Hazardous Substances (as defined in Section 3(t)) arising as a result of
events occurring or facts or circumstances arising or existing on or prior to the Closing (whether
or not in the Ordinary Course of Business and whether or not set forth on the Disclosure Schedule);
(ix) all payables of the business outstanding or arising prior to Closing; (x) all obligations
involving or related to the Excluded Assets; and (xi) all Company Transaction Expenses and Change
of Control Payments.




     (e) Payment of Liabilities of Company. The Company shall be obligated to pay and
discharge, all of the Excluded Liabilities; provided, however, nothing contained in this Section
shall require Company to pay any liability or obligation before its due date other than
indebtedness secured by a Lien on the Purchased Assets, and which obligations shall be paid and
satisfied at Closing so that the Purchased Assets that are subject to any Liens shall be conveyed
to Buyer free and clear of any and all Liens as of the Closing.



     (f) Assumption of Obligations. At the Closing, Buyer shall only assume those
obligations and liabilities of Company under those Contracts (as defined in Section 3(o)) expressly
assumed by the Buyer and solely with respect to obligations which arise by their terms after the
Closing Date and are set forth on Schedule 2(f) which shall include but not be limited to
all of the Company’s vehicle leases (the “Assumed Contracts” or “Assumed Liabilities”).



     (g) Collection of Accounts Receivable. After the Closing, Company shall provide to
the Buyer reasonable assistance and cooperation to collect any Receivables. To the extent Company
receives payment on any such Receivables it shall promptly remit such amount to the Buyer in the
form received with any necessary endorsement. The Company shall not take any action in connection
with the collection of Receivables that interfere with the conduct of Buyer’s business or adversely
affect the relationship with any customers of the Buyer.



     (h) Proration of Certain Items. With respect to certain expenses incurred in the
operation of the business, the following prorations shall be made:



          (i) Operating Expenses. Company shall continue to be responsible for all costs and
expenses attributable to the operation of the business or the ownership of the Purchased Assets up
to the Closing Date, and the Buyer shall become responsible for all costs and expenses attributable
to the ownership of the Purchased Assets and conduct of the business as conducted by Buyer from and
after the Closing Date.




          (ii) Taxes. Real and personal ad valorem property taxes shall be apportioned as of
the Closing Date, based on current tax bills if available; and if not available, based on the most
recent tax bills available with appropriate subsequent adjustment among the Parties when bills for
the current year are received.




7









 








          (iii) Utilities. Utilities, water and sewer charges shall be paid directly to the
applicable utility by Company and Buyer based on meter readings as of the Closing Date and at the
prevailing rates, if possible; otherwise such charges shall be apportioned based on the number of
days occurring before and after the Closing Date during the billing period for each such charge
with appropriate subsequent adjustment among the Parties when bills are received.




          (iv) Real and Personal Property Leases. The next payment due to lessors after the
Closing Date with respect to any leased real estate, vehicles or Equipment that are assigned to and
assumed by Buyer shall be apportioned between Company and Buyer based on the time in such period
before and after the Closing Date.




          (v) Deposits. Any Company Deposits which can be assigned to Buyer will be so
assigned and Buyer will pay Company the full amount thereof, subject to claims by the particular
utility or lessor for damages and other costs, expenses and charges accrued or resulting from
actions occurring prior to the Closing Date.




     Appropriate cash payments by Company or Buyer, as the case may require, shall be made from
time to time, as soon as practicable after the facts giving rise to the obligation for such
payments are known, to give effect to the prorations required by this Section. The obligations
imposed by this Section shall survive until all prorations are finally determined to be acceptable
to the Parties.



     (i) Post Closing Adjustments. Within forty-five (45) days after the Closing Date but
in no event later than ninety (90) days after the Closing Date, the Parties shall mutually agree on
any adjustments as of the Closing Date to (i) the Receivables, (ii) Inventory, (iii) Customer
Prepayments, and (iv) any other adjustments related to the items contained in Section 2(h), and no
later than fifteen (15) days thereafter the Parties shall mutually prepare and execute a statement
(the “Settlement Statement”) setting forth any adjustments to the foregoing. Within five (5) days
after completion of the Settlement Statement, Buyer shall remit to the Company, in immediately
available funds, the balance of the consideration, or in the event of any overpayment of the
consideration by Buyer, the Company shall remit to Buyer, in immediately available funds, the
amount of such overpayment and the Parties shall within such five (5) day period amend the
Allocation of the Transaction Consideration as set forth on Exhibit E consistent with such
adjustments. Each party hereto shall pay its own costs and expenses incurred in connection with
the Settlement Statement. The Company shall establish reasonably appropriate reserves not less
than Fifty Thousand Dollars ($50,000) as contemplated by Section 8(b) hereof.



     (j) Allocation of the Transaction Consideration. The Parties hereto acknowledge and
agree that the transactions contemplated by this Agreement shall be treated for tax purposes as a
taxable transaction under the Code. The Parties agree that the allocation of the Transaction
Consideration shall be mutually determined by the Parties and shall be allocated among the
assets and the Restrictive Covenants (set forth in Section 6(c)) in a manner consistent with the
requirements set forth in Section 1060 of the Code and the Treasury regulations promulgated there
under and shall be set forth in Exhibit E to be delivered as of the Closing Date, as
adjusted pursuant to Section 2(i). Such allocation will be binding on the Parties for federal
income tax purposes, and will be consistently reflected by each Party on their respective federal
income tax returns. The Parties agree to prepare and timely file all applicable Internal Revenue
Service



8









 




forms reflecting such allocation, and to furnish each other with a copy of such forms upon
request.




     (k) Assignment of Contracts. Notwithstanding anything in this Agreement to the
contrary, this Agreement shall not constitute an assignment of any claim, contract, license,
franchise, lease, commitment, sales order, sales contract, supply contract, service agreement,
purchase order or purchase commitment if an attempted assignment thereof, without the consent of a
third party thereto (other than the Company), would constitute a breach thereof or in any way
adversely affect the rights of Buyer thereunder. If such consent is not obtained, the Company
shall cooperate with the Buyer to the extent necessary to provide for Buyer the benefits under such
claim, contract, license, franchise, lease, commitment, sales order, sales contract, supply
contract, service agreement, purchase order or purchase commitment, including enforcement for the
benefit of Buyer of any and all rights of the Company against a third party thereto arising out of
the breach or cancellation by such third party or otherwise.



     (l) No Expansion of Third Party Rights. The assumption by Buyer of the Assumed
Liabilities, and the transfer thereof by the Company, shall in no way expand the rights or remedies
of any third party against the Buyer as compared to the rights and remedies which such third party
would have had against the Company had the Buyer not assumed such liabilities. Without limiting
the generality of the preceding sentence, the assumption by Buyer of the Assumed Liabilities shall
not create any third party beneficiary rights.



     (m) The Closing. Subject to the terms and conditions of this Agreement, the closing
of the transactions contemplated by this Agreement (the “Closing”) shall take place at the
offices of Akerman Senterfitt, in Miami, Florida as soon after all closing conditions set forth in
Section 7 hereof (other than those to be satisfied at the Closing or post-Closing) have been
satisfied or been waived in writing but in no event shall the Closing occur later than December 16,
2005. The effective date of the closing shall be as of 12:01 a.m. the day immediately following the
day the Purchase Price is wire transferred to the Company. The date of the Closing is herein
referred to as the “Closing Date.” The Company shall deliver to the Buyer a Bill of Sale
and the Assignments in the forms attached hereto as Exhibit B and Exhibit C,
respectively, and such other deeds, bills of sale, endorsements, assignments, releases and other
instruments, in such form as is satisfactory to the Buyer and as shall be sufficient to vest in the
Buyer good and marketable title to the Purchased Assets free and clear of all Liens and shall
deliver to the Buyer immediate possession of the Purchased Assets.



     (n) AS IS SALE. THE COMPANY DOES NOT WARRANT THAT THE PURCHASED ASSETS ARE
MERCHANTABLE OR FIT FOR ANY
PARTICULAR PURPOSE. THE PURCHASED ASSETS ARE SOLD “AS IS” AND WITH ALL FAULTS. THE COMPANY
WARRANTS CLEAR TITLE TO THE PURCHASED ASSETS AND THAT THE PURCHASED ASSETS ARE BEING TRANSFERRED
FREE AND CLEAR OF ALL LIENS. THERE ARE NO EXPRESS OR IMPLIED WARRANTIES BY THE COMPANY, EXCEPT AS
EXPRESSLY STATED IN THIS AGREEMENT. THE BUYER ACKNOWLEDGES THAT THE PURCHASED ASSETS ARE SOLD BY
THE COMPANY TO BUYER “AS IS” AND THAT THE COMPANY EXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES,
EITHER EXPRESS OR IMPLIED, AS TO THE CONDITION OF THE PURCHASED ASSETS EXCEPT AS EXPRESSLY SET
FORTH HEREIN. THE PARTIES



9









 




ACKNOWLEDGE THAT THE ADJUSTMENTS CONTEMPLATED BY THE PROVISIONS OF
SECTION 2(i) SHALL SUPERCEDE TO THE EXTENT OF ANY INCONSISTENCY THE PROVISIONS OF THIS SECTION
2(n).




     (o) Successor Liability. The transaction contemplated by this Agreement is a purchase
and sale of assets and not a de facto merger of the Company and Buyer. Buyer is not a successor in
interest to Company, and neither the Company nor any owner, manager or officer of Company shall
have any participation in the ownership of Buyer following the Closing Date. Except as
specifically set forth in this Agreement, Company and Buyer agree that Buyer shall not assume or
become liable for any of the Company’s debts, liabilities, or obligations of any kind existing as
of the Closing Date or thereafter incurred by Company, whether known or unknown, absolute or
contingent, mature or unmatured, liquidated or unliquidated, or accrued or threatened, including,
without limitation, any accounts payable of the Company related to the business of the Company or
otherwise, other than the Assumed Liabilities or Assumed Contracts.


3. Representations and Warranties Relating to the Company. The Company hereby represents
and warrants to the Buyer that the statements contained in this Section 3 are true and correct as
of the date of this Agreement, except as set forth in the disclosure schedule accompanying this
Agreement (the “Disclosure Schedule”).




     (a) Noncontravention. Neither the execution and the delivery of this Agreement, nor
the consummation of the transactions contemplated hereby, shall (i) violate any provision of the
Company’s articles of formation or operating agreement or other governing documents or to Company’s
knowledge violate any statute, regulation, rule, injunction, judgment, order, decree, approval,
exemption, variance or ruling of any Governmental Authority to which the Company is subject or (ii)
except as set forth on Section 3(a) of the Disclosure Schedule conflict with, result in a breach
of, constitute a default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify or cancel, or require any notice under any agreement, contract,
lease, license, permit or instrument to which the Company is a party or by which the Company is
bound or to which any of its assets are subject. Except as set forth on Section 3(a) of the
Disclosure Schedule, the Company is not required to give any notice to, make any filing with, or
obtain any authorization, consent or approval of any Governmental Authority or third party in order
for the Company to consummate the transactions contemplated by this Agreement.



     (b) Corporate Status. The Company is duly organized, validly existing and in good
standing under the laws of the State of Delaware. The Company has full 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. The Company is qualified to transact business as a foreign corporation in the State of Florida
and its status is active. Other than the State of Florida the Company is not qualified to transact
business in any other jurisdiction, and to the Company’s knowledge the nature of the Company’s
properties and the conduct of its business does not require such qualification. To the Company’s
knowledge the Company has fully complied with all of the requirements of any statute governing the
use and registration of fictitious names, and has the legal right to use the names under which it
operates its business. There is no pending or to the Company’s knowledge threatened proceeding for
the dissolution, liquidation, insolvency or rehabilitation of the Company.



10









 





     (c) Good Title to and Condition of Purchased Assets.



          (i) Except as set forth on Section 3(c) of the Disclosure Schedule, the Company has good and
marketable title to all of the Purchased Assets with full power to sell, transfer and assign the
same, free and clear of any Liens or restrictions on use and by delivery of the Bill of Sale and
Assignment as contemplated by Section 2 the Company will deliver to the Buyer title to the
Purchased Assets free and clear of any Liens. The Company covenants and agrees that it will
warrant and defend the property hereby sold to the Buyer, its successors and assigns, against the
lawful claims, demands and charges of all Persons whomsoever.




          (ii) The Purchased Assets currently in use or necessary for the business and operations of the
Company are in good operating condition, normal wear and tear excepted, and have been maintained in
substantial compliance with all applicable manufacturer’s specifications and warranties.




          (iii) THE COMPANY DOES NOT WARRANT THAT THE EQUIPMENT IS MERCHANTABLE OR FIT FOR ANY
PARTICULAR PURPOSE BUT ONLY THAT THE EQUIPMENT HAS BEEN MAINTAINED IN THE ORDINARY COURSE OF
BUSINESS.




     (d) Power and Authority. The Company has the limited liability company power and
authority to execute and deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The Company has taken all action necessary to
authorize the execution and delivery of this Agreement, the performance of its obligations
hereunder and the consummation of the transactions contemplated hereby.



     (e) Enforceability. This Agreement has been duly executed and delivered by the Company
and constitutes its legal, valid and binding obligation enforceable against it in accordance with
its terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditors’ rights generally and general
equitable principles regardless of whether such enforceability is considered in a proceeding at law
or in equity.



     (f) Absence of Subsidiaries. The Company has no Subsidiaries.



     (g) Intentionally Deleted.



     (h) Financial Statements. The Company has attached hereto as Section 3(h) of the
Disclosure Schedule, the following financial statements (collectively the “Financial
Statements”): (i) the Company’s consolidated unaudited balance sheet and statements of income
and cash flows for the year ended December 31, 2004 (the “Most Recent Fiscal Year End”) and
(ii) the Company’s consolidated unaudited balance sheet and statements of income and cash flows for
the period beginning January 1, 2005 and ending October 31, 2005 (and for the interim periods
thereof) (the “Most Recent Financial Statements”). The Financial Statements have been
prepared in accordance with Consistently Applied accounting principles throughout the periods
covered thereby, except as otherwise set forth on Section 3(h) of the Disclosure Schedule, and
present fairly in all material respects the financial condition of the Company and its assets and
liabilities as of such dates and the results of operations of the Company for such periods;
provided, that, the Most Recent Financial Statements are subject to normal year-end adjustments



11









 




(which in the aggregate are not material). There are no extraordinary or material non-recurring
items of income or expense (subject to fluctuations in the Ordinary Course of Business) that have
occurred during the periods covered by the Financial Statements and the balance sheets included in
the Financial Statements do not reflect any write-up or revaluation increasing the book value of
any assets, except as specifically disclosed in the notes thereto and has occurred pursuant to
allocations established in connection with the purchase of pest, termite and lawn care businesses
by the Company and the sale by the Company of its lawn care business. For purposes of the
Consistently Applied accounting principles of the Company, the Company recognizes revenues with
respect to services rendered to customers as follows: (i) revenue for customers who pay for
specific services as such services are rendered (“pay-as-you-go-customers”), is recognized at the
time each service is provided to a pay-as-you-go-customer, and (ii) revenue for services for which
the Company bills the customer once each year for services provided throughout the year (“annual
customer”) is recognized at such time the first service for the year is provided to the annual
customer rather than when services are actually rendered as the year progresses. Account number
2301 titled “Prepaid Services” on the Company’s balance sheet does not include the revenue from the
services provided to annual customers because revenue for such annual services has been recognized
in full by the Company rather than being carried as a prepaid service on the balance sheet.




     (i) Absence of Certain Developments. Except as otherwise contemplated by this
Agreement or as set forth in Section 3(i) of the Disclosure Schedule, since the Most Recent
Financial Statements, the Company has been operated in the Ordinary Course of Business and the
Company has not:



          (i) borrowed any material amount or incurred any material liabilities affecting the Purchased
Assets;




          (ii) mortgaged, pledged or subjected to any Lien, any Purchased Assets, except for Permitted
Liens;




          (iii) sold, assigned, transferred or to the Company’s knowledge permitted the lapse of any
right relating to any of the Purchased Assets;




          (iv) made any capital expenditures or commitments therefor in excess of $25,000 in the
aggregate or failed to make any material budgeted capital expense concerning the Purchased Assets;




          (v) suffered any theft, damage, destruction or casualty loss to the Purchased Assets in excess
of $5,000 not covered by insurance;




          (vi) granted any increase in the salaries, compensation or benefits of any of its employees
except increases in the Ordinary Course of Business;




          (vii) acquired any capital stock, equity interests or assets of any Person except assets
acquired in the Ordinary Course of Business;




          (viii) made any change in its accounting principles or Tax elections, written up or written
down any inventory (except in the Ordinary Course of Business), or materially





12









 







increased or
decreased any accounting reserves, except as set forth in Section 3(i) of the Disclosure Schedule;




          (ix) amended the articles of formation, operating agreement, bylaws, or other similar
organizational documents of the Company;





          (x) adopted a plan of complete or partial liquidation or authorized any liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or other similar
transaction;



          (xi) enter into any lease of personal property or any renewals of the existing leases that are
being assumed by Buyer involving a term of more than one year or rental obligation exceeding
$10,000 per year in any single case, or exceeding $25,000 per year in the aggregate in all such
cases, outside the Ordinary Course of Business;




          (xii) taken any action or failed to take any action that results in the creation of any Lien
over the Purchased Assets;




          (xiii) waive, release or cancel any material claims against any customers; or




          (xiv) experienced any current customer warranty claims in excess of $500, other than as
scheduled herein.




     (j) Liens. Except as disclosed in Section 3(j) of the Disclosure Schedule, the
Company does not have any outstanding indebtedness which is secured by a Lien on the Purchased
Assets.



     (k) Legal Compliance. To the Company’s knowledge the Company is in compliance with
all statutes, laws, ordinances, rules, orders and regulations of Governmental Authorities
applicable to it, its business and operations (as
conducted by it now and in the past), the Purchased Assets, and the Leased Real Property (as
defined in Section 3(m)). Except as set forth on Section 3(k) of the Disclosure Schedule, since
January 1, 2004, the Company has not received any written communication from any Governmental
Authority that alleges that the Company is not in compliance with any federal, state or local laws,
rules or regulations.



     (l) Tax Matters.



          (i) The Company has filed all Tax Returns required to be filed by it and has paid all Taxes
shown as due on such Tax Returns. To the Company’s knowledge all such Tax Returns are true and
correct in all material respects. The Company has provided to the Buyer true and correct copies of
the federal Tax Returns filed to date of Closing. The Company is not delinquent in the payment of
any applicable Taxes.




          (ii) To the Company’s knowledge no Tax Return of the Company is under audit or examination by
any taxing authority, and no written notice of an audit or examination has been received by the
Company.




13









 









     (iii) To the Company’s knowledge the Company has withheld and paid all Taxes required
to have been withheld and paid in connection with any amounts paid or owing to any employee,
independent contractor, creditor, Member, stockholder or other third party.



     (m) Real Property. The Company does not own any real property nor has ever owned any
real property. Section 3(m) of the Disclosure Schedule sets forth the address of each parcel of
real property leased by the Company (“Leased Real Property”), and a list of all leases for such
Leased Real Property. A copy of each such lease has been made available to Buyer. Except as set
forth on Section 3(m) of the Disclosure Schedule, with respect to each of the Leased Real Property
leases:




     A. To the Company’s knowledge neither the Company nor any other party to such
lease is in material breach or default under such lease;




     B. the Company enjoys peaceful and undisturbed possession of the Leased Real
Property, and the Company has not subleased, licensed or otherwise granted any
Person the right to use or occupy such Leased Real Property or any portion thereof;
and




     C. the Company has not collaterally assigned or granted any other Lien in such
lease or any interest therein other than to its secured lenders listed on Section
3(j) of the Disclosure Schedule.



     (n) Intellectual Property. Section 3(n)(i) of the Disclosure Schedule identifies: (A)
each patent, trademark or copyright registration that has been issued to the Company with respect
to any of the Intellectual Property; (B) each pending patent, trademark or copyright application
which the Company has made with respect to any of the Intellectual Property; (C) each material
license or agreement, that the Company has granted to any third party with respect to any of the
Intellectual Property; and (D) each material trade name,
registered trademark, and service mark owned by the Company. Copies of all such patents,
copyrights, and trademark registrations and applications, licenses and agreements (as amended to
date) have been made available to Buyer. Except as set forth on Section 3(n)(ii) of the Disclosure
Schedule, with respect to each item of Intellectual Property required to be identified in Section
3(n)(i) of the Disclosure Schedule: (A) the item is not subject to any outstanding injunction,
judgment, order, decree or ruling prohibiting the Company’s use thereof; and (B) no action, suit or
proceeding is pending which challenges the legality, validity, enforceability, use, or ownership of
the item. Section 3(n)(iii) of the Disclosure Schedule identifies each item of Intellectual
Property that any third party owns and that the Company uses pursuant to a written license or
agreement. Copies of all such material licenses and agreements (as amended to date) have been made
available to Buyer. With respect to each such item of Intellectual Property required to be
identified in Section 3(n)(i) of the Disclosure Schedule, to Company’s knowledge: (A) the license
or agreement covering the item is legal, valid, binding, enforceable against the Company, and in
full force and effect; and (B) the Company is not in breach or default of such license or
agreement; and (C) the Company has not granted any sublicense or similar right with respect to the
license or agreement and to Company’s knowledge the Intellectual Property owned by the Company and
the business methods and operations of the Company as in effect prior to Closing



14









 




do not violate,
breach or infringe the patent, trademark, copyright or other intellectual property rights of any
other Person.




     (o) Contracts. Section 3(o) of the Disclosure Schedule lists the following agreements
to which the Company is a party:



          (i) any agreement for the lease of Equipment or other personal property to or from any Person
and all Leased Real Property leases;




          (ii) any agreement creating a partnership or joint venture;




          (iii) any agreement under which it has created a Lien on any of the Purchased Assets;




          (iv) any employment agreement for employees currently employed by Company which contains a
non-compete or any agreement with an employee to be hired by Buyer after Closing; and




          (v) any agreement with any customer or Supplier that are expected to represent in excess of
$10,000 of the Company’s revenues or expenses for fiscal year 2005 or any annual period
thereafter.




     A copy of each written agreement required to be listed in Section 3(o) of the Disclosure
Schedule (and all amendments and modifications thereto) has been made available to Buyer (as well
as written descriptions of each oral agreement). With respect to each such agreement: (A) to
Company’s knowledge the agreement is legal, valid, binding, enforceable and in full force and
effect; (B) to the Company’s knowledge the Company is not, and the other party is not, in material
breach or default, and no event has occurred which with notice or lapse of time would constitute a
material breach or default, or permit termination, material modification, or acceleration, under
the agreement; (C) no party has repudiated in writing any material provision
of the agreement and (D) no amendment or waiver has been made since December 31, 2004 and no
amendment or waiver is currently being proposed by any party thereto.



     (p) Insurance and Risk of Loss. The Company has in place policies of insurance
insuring the business and the Purchased Assets (the “Insurance Policies”). Section 3(p) of the
Disclosure Schedule provides a detailed description of each pending claim under any of the
Insurance Policies and any claims filed after January 1, 2003 which have been resolved. The
Company shall assume all risk of loss of, damage to, or destruction of the business and Purchased
Assets occurring prior to Closing.



     (q) Litigation. Section 3(q) of the Disclosure Schedule sets forth each instance in
which the Company (i) is subject to any outstanding injunction, judgment, order, decree or ruling
or (ii) is a party or, to the Company’s knowledge, has been threatened to be made a party, to any
action, suit, proceeding, hearing or investigation of, in or before any Governmental Authority.



15









 





     (r) Employees. Section 3 (r) of the Disclosure Schedule sets forth the name, address,
social security number and current rate of compensation of the employees of the Company
(“Employees”). Except as set forth in Section 3(r) of the Disclosure Schedule, there is no accrued
and unpaid vacation pay or other benefits for any employee. The Company is not a party to or bound
by any collective bargaining agreement or any other agreement with a labor union, and to the
Company’s knowledge there has been no effort by any labor union during the 24 months prior to the
date hereof to organize any employees of the Company into one or more collective bargaining units.
There is no pending or, to the Company’s knowledge threatened, labor dispute, strike or work
stoppage which affects or which may affect the business of the Company or which may interfere with
its continued operations. To the Company’s knowledge there is no pending or threatened, charge or
complaint against the Company by or with the National Labor Relations Board or any representative
thereof. To the Company’s knowledge no key employee (other than Gary Wiegmann and Wiley McIlrath)
or group of employees has any plans to terminate his, her or their employment with the Company as a
result of the transactions contemplated hereby. Section 3(o) of the Disclosure Schedule also
identifies each employee currently employed by the Company that has a non-compete agreement. Each
employee non-compete agreement for employees currently employed by the Company is assignable and is
being assigned to Buyer.



     (s) Employee Benefits. The Company shall be responsible for paying and shall pay all
employees of the Company all compensation and benefits arising or accruing prior to Closing
including, without limitation, vacation pay, overtime pay, retirement benefits, salaries,
commissions, bonuses and benefits under all Employee Pension Benefit Plans, Employee Welfare
Benefit Plans and all other employee benefits, fringe benefit plans and programs maintained or
contributed to by the Company, or any ERISA Affiliate with respect to current or former employees
of the Company and all severance and Change of Control Payments.



     (t) Environmental Matters.




          (i) To the Company’s knowledge, the Company is and has at all times been in compliance in all
material respects with all Environmental Laws (as defined below) governing its business,
operations, properties and assets, including, without limitation: (i) all requirements relating to
the Discharge (as defined below) and Handling (as defined below) of Hazardous Substances (as
defined below); (ii) to Company’s knowledge all requirements relating to notice, record keeping and
reporting; (iii) to Company’s knowledge all requirements relating to obtaining and maintaining
Licenses (as defined below) for the ownership of its properties and assets and the operation of its
business as presently conducted, including Licenses relating to the Handling and Discharge of
Hazardous Substances; and (iv) to Company’s knowledge all applicable writs, orders, judgments,
injunctions, governmental communications, decrees, informational requests or demands issued
pursuant to, or arising under, any Environmental Laws (as defined below).




16









 








          (ii) Except as set forth in Section 3(t) of the Disclosure Schedule there are no (and to
Company’s knowledge there is no basis for any) non-compliance orders, warning letters, notices of
violation (collectively “Notices”), claims, suits, actions, judgments, penalties, fines, or
administrative or judicial investigations or proceedings (collectively “Proceedings”) pending or to
Company’s knowledge threatened against or involving the Company, or its business, operations,
properties or assets, issued by any Governmental Authority or third party with respect to any
Environmental Laws or Licenses issued to the Company thereunder in connection with, related to or
arising out of the ownership by the Company of its properties or assets or the operation of its
business, which have not been resolved to the satisfaction of the issuing




          (iii) Governmental Authority or third party in a manner that would not impose any material
obligation, burden or continuing material liability on the Buyer, the Purchased Assets, or the
Company in the event that the transactions contemplated by this Agreement are consummated, or which
could have a Material Adverse Effect on the Company, the Purchased Assets, or the Buyer, including,
without limitation: (i) Notices or Proceedings related to the Company being a potentially
responsible party for a federal or state environmental cleanup site or for corrective action under
any applicable Environmental Laws; (ii) Notices or Proceedings relating to the Company being
responsible to undertake any response or remedial actions or clean-up actions of any kind; or (iii)
Notices or Proceedings related to the Company being liable under any Environmental Laws for
personal injury, property damage, natural resource damage, or clean up obligations.




          (iv) The Company has not Handled or Discharged, nor has it allowed or arranged for any third
party to Handle or Discharge, Hazardous Substances to, at or upon: (i) any location other than a
site lawfully permitted to receive such Hazardous Substances; (ii) any real property currently or
previously owned or leased by the Company (other than in the Ordinary Course of Business in
compliance in all material respects with applicable Environmental Laws); or (iii) to the Company’s
knowledge any site which, pursuant to any Environmental Laws, (x) has been placed on the National
Priorities List or its state equivalent, or (y) the Environmental Protection Agency or the relevant
state agency or other Governmental Authority has notified the Company that such Governmental
Authority has proposed or is proposing to place on the National Priorities List or its state
equivalent. To the Company’s knowledge there has not occurred, nor is there presently occurring, a
Discharge, or threatened Discharge, of any Hazardous Substance on, into or beneath the surface of,
or adjacent to, any real property currently leased by the Company in an amount requiring a notice
or report to be made to a Governmental Authority or in violation of any applicable Environmental
Laws.




          (v) Section 3(t) of the Disclosure Schedule identifies the operations and activities, and
locations thereof, which have been conducted or are being conducted by the Company on any real
property currently leased by the Company which involve the Handling or Discharge of Hazardous
Substances.




          (vi) The Company does not use, nor has it used, any Aboveground Storage Tanks (as defined
below) or Underground Storage Tanks (as defined below), and there are not now nor to Company’s
knowledge have there ever been any Underground Storage Tanks beneath any real property currently
leased by the Company that are required to be registered under applicable Environmental Laws.




17









 








          (vii) Section 3(t) of the Disclosure Schedule identifies (i) all environmental audits,
assessments or occupational health studies undertaken by the Company or its agents or undertaken by
any Governmental Authority, or any third party, relating to or to the Company’s knowledge affecting
the Company or any real property currently leased by the Company; (ii) the results of any ground,
water, soil, air or asbestos monitoring undertaken by the Company or its agents or to the Company’s
knowledge undertaken by any Governmental Authority or any third party, relating to or affecting the
Company or any real property currently leased by the Company which indicate the presence of
Hazardous Substances at levels requiring a notice or report to be made to a Governmental Authority
or in violation of any applicable Environmental Laws; (iii) all material written communications
between the Company and any Governmental Authority arising under or related to Environmental Laws;
and (iv) all outstanding citations issued under OSHA, or similar state or local statutes, laws,
ordinances, codes, rules, regulations, orders, rulings, or decrees, relating to or to the Company’s
knowledge affecting either the Company or any real property currently leased by the Company.




          (viii) For purposes of this Section 3(t), the following terms shall have the meanings ascribed
to them below:




     “Aboveground Storage Tank” shall have the meaning ascribed to such term in Section 6901
et seq., as amended, of RCRA (as defined in this clause (vii)), or any law
governing Aboveground Storage Tanks.



     “Discharge” means any manner of spilling, leaking, dumping, discharging, releasing or
emitting, as any of such terms may further be defined in any Environmental Law, into any medium
including, without limitation, ground water, surface water, soil or air.



     “Environmental Laws” means all federal, state, regional or local statutes, laws, rules,
regulations, codes, orders, plans, injunctions, decrees, rulings, and changes or ordinances or
judicial or administrative interpretations thereof, or similar laws of foreign jurisdictions where
the Company conducts business, currently in existence any of which govern or relate to pollution,
protection of the environment, public health and safety, air emissions, water discharges, hazardous
or toxic substances, solid or hazardous waste or occupational health and safety, as any of these
terms are or may be defined in such statutes, laws, rules, regulations, codes, orders, plans,
injunctions, decrees, rulings and ordinances, or judicial or administrative interpretations
thereof, including, without limitation: the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended by the Superfund Amendment and Reauthorization Act of 1986, 42
U.S.C. §9601, et seq. (collectively “CERCLA”); the Solid Waste Disposal Act, as
amended by the Resource Conservation and Recovery Act of 1976 and subsequent Hazardous and Solid
Waste Amendments of 1984, 42 U.S.C. §6901 et seq. (collectively “RCRA”); the
Hazardous Materials Transportation Act, as amended, 49 U.S.C. §1801, et seq.; the
Clean Water Act, as amended, 33 U.S.C. §1311, et seq.; the Clean Air Act, as
amended (42 U.S.C. §7401-7642); the Toxic Substances Control Act, as amended, 15 U.S.C. §2601
et seq.; the Federal Insecticide, Fungicide, and Rodenticide Act as amended, 7
U.S.C. §136-136y (“FIFRA”); the Emergency Planning and Community Right-to-Know Act of 1986 as
amended, 42 U.S.C. §11001, et seq. (Title III of SARA) (“EPCRA”); and the
Occupational Safety and Health Act of 1970, as amended, 29 U.S.C. §651, et seq.
(“OSHA”); Chapters 115, 168.



18









 





     “Handle” means any manner of generating, accumulating, storing, treating, disposing of,
transporting, transferring, labeling, handling, manufacturing or using, as any of such terms may
further be defined in any Environmental Law, of any Hazardous Substances or Waste.



     “Hazardous Substances” shall be construed broadly to include any toxic or hazardous substance,
material, or waste, and any other contaminant, pollutant or constituent thereof, whether liquid,
solid, semi-solid, sludge and/or gaseous, including without limitation, chemicals, compounds,
by-products, pesticides, asbestos containing materials, petroleum or petroleum products, and
polychlorinated biphenyls, the presence of which requires investigation or remediation under any
Environmental Laws or which are or become regulated, listed or controlled by, under or pursuant to
any Environmental Laws, including, without limitation, RCRA, CERCLA, the Hazardous Materials
Transportation Act, the Toxic Substances Control Act, the Clean Air Act, the Clean Water Act,
FIFRA, EPCRA and OSHA, or any similar state statute, or any future amendments to, or regulations
implementing such statutes, laws, ordinances, codes, rules, regulations, orders, rulings, or
decrees, or which has been or shall be determined or interpreted at any time by any Governmental
Authority to be a hazardous or toxic substance regulated under any other statute, law, regulation,
code, rule, order, or decree.



     “License” means all certificates, permits, approvals and restrictions.



     “Underground Storage Tank” shall have the meaning ascribed to such term in Section 6901
et seq., as amended, of RCRA, or any applicable state or local statute, law,
ordinance, code, rule, regulation, order ruling, or decree governing Underground Storage Tanks.



     “Waste” shall be construed broadly to include agricultural wastes, biomedical wastes,
biological wastes, bulky wastes, construction and demolition debris, garbage, household waste,
industrial solid wastes, liquid wastes, recyclable materials, sludge solid wastes, special wastes,
used oils, white goods and yard trash as these are defined by any other statute law, regulation,
order, code, sale or decree.



     (u) Intentionally Deleted.



     (v) Company Permits. To the Company’s knowledge, the Company holds all Permits of all
Governmental Authorities necessary for the lawful conduct for its businesses and operations,
including with respect to the operation of each of the Leased Real Properties, and Section 3 (v)
contains a true and complete list of all such Permits. To the Company’s knowledge, the Company is
in compliance in all material respects with the respective requirements thereof and no proceeding
is pending or to the Company’s knowledge threatened to revoke or amend any Permit.



     (w) Accounts Receivable; Inventory; Returns.



          (i) Set forth on Schedule 2(a)(v) is a list of all Receivables of the Company. All
Receivables are valid and legally binding, and arose in the Ordinary Course of Business from bona
fide transactions. Except as set forth in Section 3(w)(i) of the Disclosure Schedule, all
Receivables are current and are expected to be collected within ninety (90) days of the date of
billing without setoff or counter claim.




19









 








          (ii) Set forth in Section 3(a)(ii) of the Disclosure Schedule is a list of all Inventory of
the Company. All Inventory is usable and saleable in the Ordinary Course of Business. Except as
set forth in Section 3(a)(ii) of the Disclosure Schedule, the Inventory, taken as a whole, is
valued on the Company’s books of account in accordance with the Consistently Applied accounting
principles at the Company’s historical cost.




          (iii) The Company has delivered to the Buyer a complete and accurate written summary of the
rights of the Company to return products to each of the Suppliers (as defined in Section 3(z)(i)),
including all price protection rights and limitations on returns (the “Return Policies”).
None of the Return Policies have been amended or repudiated since December 31, 2004. To the
Company’s knowledge, no Supplier intends to amend or repudiate its Return Policy. The Company’s
rights under each Return Policy will not be affected by the transactions contemplated hereby.




     (x) Intentionally Deleted.



     (y) Books and Records. The files, data, books and records of the Company relating to
the business and Purchased Assets, as previously made available to Buyer and its representatives,
are accurate in all material respects.



     (z) Customers and Suppliers.



          (i) Section 3(z)(i) of the Disclosure Schedule sets forth a true, accurate and complete list:





     A. of the thirty (30) largest commercial customers and the thirty (30) largest
residential customers of the Company in terms of revenue earned during the most
recently completed fiscal year and the portion of the current fiscal year prior to
the date of this Agreement (collectively, the “Significant Customers”),
showing the total revenue earned in each such period from each such customer; and




     B. of the suppliers of the Company in terms of purchases during the most
recently completed fiscal year and the portion of current fiscal year prior to the
date of this Agreement (collectively, the “Suppliers”).



          (ii) Since December 31, 2004, except as set forth on Section 3(z)(ii) of the Disclosure
Schedule, there has not been any material dispute between the Company and any Significant Customer
or Supplier, and, no Significant Customer or Supplier has indicated to the Company that such
Significant Customer or Supplier intends to materially reduce its purchases from, or sales to, or
to otherwise materially reduce its business relationship with, the Company.




          (iii) The Company has kept its customer lists and customer agreements confidential and has not
provided the customer lists and customer agreements to any Person outside the Company other than to
the Company’s auditors, attorneys and lenders.




     (aa) Pest Treatment. To Company’s knowledge the Company is in compliance with all
statutes, laws, ordinances, rules, orders and regulations of all Governmental Authorities and



20









 




manufacturer treatments and protocols applicable to it, its
business and operations as conducted by it now) relating to the pest control and termite control
segment of the business and, except as set forth in Section 3(aa) of the Disclosure Schedule, there
are no claims pending under any of the Company’s pest control and/or termite warranties or
guarantees, nor has the Company received notice of any such claims and to the Company’s knowledge,
no such claims are threatened. Except as set forth on Section (aa) of the Disclosure Schedule,
since January 1, 2004, the Company has not received any written communication from any Governmental
Authority or manufacturer that alleges that the Company is not in compliance with any applicable
statutes, laws, rules or regulations or manufacturer treatments and protocols.




     (bb) Names; Prior Acquisitions; Business Locations. All names under which the Company
does business as of the date hereof are specified on Section 3(bb) of the Disclosure Schedule.
Except as set forth on Section 3(bb) of the Disclosure Schedule, the Company has not changed its
name or used any assumed or fictitious name, or been the surviving entity in a merger, acquired any
business or changed its principal place of business or chief executive office, within the past
three years. As of the date hereof, the Company has no office or place of business other than as
identified on Section 3(bb) of the Disclosure Schedule and the Company’s principal places of
business and chief executive offices are indicated on Section 3(bb) of the Disclosure Schedule,
and, except for equipment leased to customers in the ordinary course of business, all locations
where the Equipment, Inventory and books and records of the Company is located as of the date
hereof are fully identified on Section 3(bb) of the Disclosure Schedule).



     (cc) Brokers’ Fees. The Company does not have any liability or obligation to pay any
fees, expenses, or commissions to any broker, investment banker, finder or agent with respect to
the transactions contemplated by this Agreement for which the Buyer could become liable or
obligated.



     (dd) Accuracy of Information Furnished by the Company. No representation, statement
or information made or furnished by the Company to the Buyer or any of the Buyer’s representatives
contained in this Agreement and the various Disclosure Schedules attached hereto contains any
untrue statement of a material fact or omits any material fact necessary to make the information
contained herein not misleading. The Company has provided the Buyer with true, accurate and
complete copies of all documents listed or described in the various Disclosure Schedules attached
hereto. Notwithstanding the foregoing, the representation contained in this Section 3(dd) does not
supersede or modify the specific representations contained in other sections herein.


4. Representations and Warranties of the Buyer. The Buyer represents and warrants to the
Company that the statements contained in Section 4 are true and correct as of the date of this
Agreement, except as set forth in the Disclosure Schedule.




     (a) Organization of the Buyer. The Buyer is a Florida corporation, duly organized,
validly existing, and in good standing under the laws of the jurisdiction of its incorporation.



     (b) Authorization of Transaction. The Buyer has full power and authority (including
full corporate power and authority) to execute and deliver this Agreement and to perform its



21









 




obligations hereunder. This Agreement constitutes the valid and legally binding obligation of the
Buyer, enforceable in accordance with its terms and conditions.




     (c) Noncontravention. Neither the execution and the delivery of this Agreement, nor
the consummation of the transactions contemplated hereby, shall (i) violate any statute,
regulation, rule, injunction, judgment, order, decree or ruling of any Governmental Authority to
which the Buyer is subject, or any provision of its charter or bylaws, or (ii) other than under the
terms of its credit agreement with Wachovia Bank, N.A., conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify or cancel, or require any notice under any material agreement,
contract, lease, license or instrument to which the Buyer is a party or by which it is bound or to
which any of its assets are subject. Except as set forth on Section 5(c) of the Disclosure
Schedule, the Buyer is not required to give any notice to, make any filing with, or obtain any
authorization, consent or approval of any Governmental Authority or third party in order for the
Buyer to consummate the transactions contemplated by this Agreement.



     (d) Brokers’ Fees. The Buyer is working with Anthony Advisors, Inc. in connection
with this transaction and will be solely responsible for its fees. Otherwise, the Buyer has no
liability or obligation to pay any fees, expenses, or commissions to any broker, investment banker,
finder or agent with respect to the transactions contemplated by this Agreement for which the
Company or the Members could become liable or obligated.


5. Pre-Closing Covenants. The Parties agree as follows with respect to the period prior to
the Closing.




     (a) General. Each of the Parties shall use its best commercial efforts to take all
action required of it and to do all things necessary, proper or advisable on its part in order to
consummate and make effective the transactions contemplated by this Agreement (including
satisfaction, but not waiver, of the conditions set forth in Section 7 below).




     (b) Notices and Consents. Each of the Parties shall give any notices to, make any
filings with, and use their best commercial efforts to obtain any authorizations, consents and
approvals of Governmental Authorities and third parties which are required to be given, made or
obtained by it in connection with consummation of the transaction. In addition, both prior to and
following the Closing, the Company shall use its reasonable best efforts to assist the transfer to
Buyer of all of the customer Contracts and to assist Buyer in the retention of all customer
Contracts including but not limited to the Significant Customers.




     (c) Access. The Company shall permit the Buyer and/or Parent and their
representatives to have access to the directors, officers, assets and properties of the Company and
each of its Subsidiaries and all relevant books, records and documents of or
relating to the Company and each of its Subsidiaries and each of their respective businesses
and assets during such times as Company and Buyer reasonably determine is appropriate and will
furnish to the Buyer such information, financial records and other documents relating to the
Company and each of its Subsidiaries and their respective business and assets as the Buyer and/or
Parent may reasonably request. Without limiting the foregoing, the Company shall permit the Buyer’
and/or Parent’s representatives to meet with the officers of the Company and its Subsidiaries
responsible




22









 







for its financial statements, the internal controls of the Company and its Subsidiaries
and the disclosure controls and procedures of the Company and its Subsidiaries to discuss such
matters as the Buyer and/or Parent may deem necessary or appropriate for the Buyer to satisfy its
obligations under Sections 302, 404 and 906 of the Sarbanes-Oxley Act of 2002 and any rules and
regulations relating thereto.




     (d) Confidentiality. Company, on the one hand, and Buyer, on the other hand
acknowledges that it has or may have had in the past, currently has and in the future may have
access to Confidential Information of the other Parties hereto. Each of the Parties agrees that it
will keep confidential all such Confidential Information furnished to it and, except with the
specific prior written consent of the other Party, will not disclose such Confidential Information
to any Person except representatives of such Party, provided that these representatives (other than
counsel) agree to the confidentiality provisions of this Section 5(d). In the event of a breach or
threatened breach by any Party of the provisions of this Section 5(d) with respect to any
Confidential Information, the other Party shall be entitled to an injunction restraining such Party
from disclosing, in whole or in part such Confidential Information. Nothing herein shall be
construed as prohibiting a Party from pursuing any other available remedy for such breach or
threatened breach, including the recovery of damages. Because of the difficulty of measuring
economic losses as a result of the breach of the covenants in this Section, and because of the
immediate and irreparable damage that would be caused to a Party as a result of such breach for
which it would have no other adequate remedy, each of the Parties agrees that a Party may enforce
the provisions of Section by injunctions and restraining orders against any Party which breaches
any of those provisions. The obligations of the Parties under this Section shall survive the
termination of this Agreement.



     (e) Intentionally Omitted.



     (f) Environmental Assessment. The Buyer shall be entitled to have conducted prior to
Closing an environmental assessment (hereinafter referred to as “Environmental Assessment”). The
Environmental Assessment may include, but not be limited to, a physical examination of the Company
premises, and any structures, facilities, or equipment located thereon, soil samples, ground and
surface water samples, storage tank testing, review of pertinent records, documents, and Permits of
each of the Company and its Subsidiaries. The Company shall provide the Buyer or its designated
agents or consultants with the access to such properties which the Buyer, its agents or consultants
reasonably require to conduct the Environmental Assessment. Buyer shall not be deemed to waive any
breaches of any representations or warranties by virtue of any Environmental Assessment.



     (g) Trading in Parent Common Stock. Except as otherwise expressly consented to by the
Buyer, until three (3) business days after
the Closing Date, the Company (nor any of its Affiliates) will directly or indirectly purchase
or sell (including short sales) any shares of the Parent’s capital stock in any transactions
effected on the AMEX or otherwise, or sell, transfer, pledge, dispose of or otherwise part with any
interest in or with respect to or in any other manner reduce their investment risk with respect to
any shares of the Parent’s capital stock.



     (h) No Shop. The Company and its management and Advisors shall (and will not permit
any Affiliate, employee, manager, officer, director, stockholder, member, agent or other



23









 




Person
acting on its behalf to) (i) solicit, encourage, consider or accept any offers from any other
Person to acquire all or any portion of the assets of or any interest in the Company, (ii)
participate in any discussions or negotiations with any other Person concerning the sale of all or
any portion of the assets of or any interest in the Company (an “Acquisition Proposal”), (iii)
provide any Confidential Information about the Company to any Person related to an Acquisition
Proposal, or (iv) otherwise cooperate in any way with, assist, facilitate or encourage any effort
by any other Person seeking to acquire all or any portion of the assets of or any interest in the
Company. The Company hereby confirms covenants and agrees that: (i) there is no binding agreement,
arrangement or understanding with any other third party with respect to any Acquisition Proposal
other than this Agreement, (ii) any and all discussions with third parties regarding an Acquisition
Proposal have been terminated, and (iii) it will promptly notify the Buyer if any Acquisition
Proposal, or any inquiry or contact with any Person with respect thereto, is made and the terms
thereof.




     (i) Non-Competition Agreements. The Company shall use its reasonable best efforts to
have each Company employee hired by Buyer after the Closing sign a non-competition and
non-solicitation agreement with the Buyer, effective as of the Closing, in form and substance
acceptable to Buyer.



     (j) Preservation of Business. Prior to the Closing, the Company shall conduct its
businesses in the Ordinary Course of Business. Without limiting the foregoing, the Company
covenants and agrees that, except (i) as contemplated by this Agreement or (ii) with the prior
written consent of Buyer, after the date hereof and before the Closing Date, it shall not:



          (i) amend the articles of formation, bylaws, or other organizational documents of the Company;




          (ii) except as may be permitted by this Agreement, acquire, sell, lease or dispose of any
assets of the businesses except purchases and sales of inventory in the Ordinary Course of
Business;




          (iii) acquire any business or Person or create any Subsidiary;




          (iv) change any of the accounting methods or Tax elections used by the Company, write down any
inventory (except in the Ordinary Course of Business), write up any inventory, or change any
accounting reserves;





          (v) transfer, issue, sell, pledge or dispose of any shares of capital stock or other
securities of, or ownership interests in, the Company;




          (vi) change the compensation or benefits payable to any employee except changes
affecting hourly employees in the Ordinary Course of Business;



          (vii) enter into any lease of personal property for property being purchased hereunder or any
renewals thereof involving a term of more than one year, or rental obligation or capital investment
exceeding $10,000 per year in any single case, or exceeding $25,000 per year in the aggregate in
all such cases concerning the Purchased Assets;





24









 








          (viii) permit the lapse of any right relating to any Intellectual Property or any other
material intangible asset used in the business;




          (ix) take any action or fail to take any action that results in the creation of any Lien over
any of the Purchased assets;




          (x) enter into any contract or transaction or any amendment or modification to any contract or
transaction except in the Ordinary Course of Business; or




          (xi) enter into any agreement or commitment to take any of the actions described in this
Section.




     Nothing herein shall prevent the Company from paying and settling existing obligations prior
to Closing.



     (k) Intentionally Omitted.


6. Post-Closing Covenants. The Parties agree as follows with respect to the period
following the Closing.




     (a) Litigation Support; Access to Books and Records. In the event and for so long as
any Party actively is contesting or defending against any third-party action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand in connection with (i) any transaction
contemplated under this Agreement or (ii) any fact, situation, circumstance, status, condition,
activity, practice, plan, occurrence, event, incident, action, failure to act, or transaction on or
prior to the Closing Date involving the Company, each of the other Parties shall cooperate with
such Party or its counsel in the defense or contest, make available their personnel, and provide
such testimony and access to their books and records as shall be necessary in connection with the
defense or contest, all at the sole cost and expense of the contesting or defending Party (except
as otherwise provided in Section 8). The Parties shall also provide each other access to any books
and records constituting Purchased Assets that either Party reasonably requests to prepare its tax
returns or for other reasonable business purposes.



     (b) Tax Matters.



          (i) The Company shall be solely responsible for filing all Tax Returns and paying all Taxes
incurred or accrued by the Company including in connection with the transactions contemplated by
this Agreement.




          (ii) The Buyer shall be solely responsible for filing all Tax Returns and paying all Taxes
related to the operation of the Purchased Assets and business conducted by the Buyer for all
periods after the Closing.




          (iii) The Buyer shall prepare or cause to be prepared and filed or cause to be filed, and the
Parties shall cooperate in the preparation, execution and filing of all returns, questionnaires,
applications, or other documents regarding any sales, use, transfer, recording, registration and
other fees, and any similar Taxes, which become payable in connection with the transactions
contemplated by this Agreement, with each Party paying their respective Taxes.




25









 








     (c) Restrictive Covenant. In order to assure that the Buyer will realize the benefits
of the transactions contemplated hereby, the Company agrees that it will not:



          (i) for a period of five years from the Closing Date within the State of Florida, directly or
indirectly, alone or as a partner, joint venturer, officer, director, employee, consultant, agent,
independent contractor or owner of, or lender to, assist, or become associated with any business
directly or indirectly competitive with the pest control, termite control and other related
businesses of the Company conveyed to Buyer pursuant to this Agreement (the “Business”),
provided, however, that, the beneficial ownership of less than five percent (5%) of
the shares of stock of any Person (engaged in a business similar to the Business) having a class of
equity securities actively traded on a national securities exchange or over-the-counter market
shall not be deemed, in and of itself, to violate the prohibitions of this Section 6(c)(i);




          (ii) for a period of five years from the Closing Date, directly or indirectly induce any
Person that is a customer or supplier of the Buyer in the State of Florida to patronize any
business directly or indirectly in competition with the Business in the State of Florida, in a
manner adverse to the Buyer or solicit or accept from any Person that is a customer of the Buyer in
the State of Florida, any such business which is competitive with the Business in the State of
Florida; or request or advise any Person that is a customer or supplier of the Buyer to curtail or
cancel any of such customer’s or supplier’s Business with the Buyer in the State of Florida;




          (iii) for a period of five years from the Closing Date, directly or indirectly employ, or
knowingly permit any Person directly or indirectly controlled by it to solicit, or employ or engage
as a consultant or otherwise, any person who was employed by the Company at or within six months
prior to the Closing Date and employed by Buyer after the Closing Date or in any other manner seek
to induce any such person to leave his or her employment with the Buyer; and




          (iv) directly or indirectly, at any time following the Closing Date, in any way utilize,
disclose, copy, reproduce or retain in his, her or its possession any Company or Buyer Confidential
Information, except as required by law.




     The Company agrees and acknowledges that the restrictions contained in this Section 6(c) are
reasonable in scope and duration and are necessary to protect the Buyer after the Closing Date. If
any provision of this Section 6(c) as applied to any Party or to any circumstance is adjudged by a
court to be invalid or unenforceable, the same will in no way affect any other
circumstance or the validity or enforceability of this Agreement. If any such provision, or
any part thereof, is held to be unenforceable because of the duration of such provision or the area
covered thereby, the parties agree that the court making such determination shall have the power to
reduce the duration and/or area of such provision, and/or to delete specific words or phrases, and
in its reduced form, such provision shall then be enforceable and shall be enforced. The Parties
agree and acknowledge that any breach of this Section 6(c) will cause irreparable damage to the
Buyer and upon breach of any provision of this Section 6(c), the Buyer shall be entitled to
injunctive relief, specific performance or other equitable relief; provided, however, that, this
shall in no way limit any other remedies which the Buyer may have (including, without limitation,
the right to seek monetary damages).



26









 





     (d) Credit Under Buyer Employee Benefit Plans. If and to the extent reasonably
permitted under Buyer’s existing employee benefit plans, Buyer shall use commercially reasonable
efforts to provide for credit under such plans for prior employment with the Company for those
Company employees hired by Buyer as of the Closing Date.



     (e) Intentionally Omitted.



     (f) Assumption of Leased Real Property and Landlord Waiver. Within one (1) month
after the Closing Buyer shall inform Company as to which of the Leased Real Property leases Buyer
wishes to assume, if any, and thereafter the Parties shall use their reasonable commercial efforts
to cause the landlord for such Leased Real Property to consent to the assignment of the Leased Real
Property to Buyer pursuant to the terms of the Assignment and Assumption of Lease Agreement in the
form attached hereto as Exhibit 6(f). The Parties shall also use their reasonable
commercial efforts to cause the landlord for the Leased Real Property being assumed to execute and
deliver the Wachovia Bank, National Association form of Landlord Lien Waiver Agreement in the form
also attached hereto as part of Exhibit 6(f).



     (g) Use of Certain Leased Premises . Until Buyer informs Company pursuant to the
provisions of Section 6(f), but in no event for more than one (1) month following the Closing,
Company shall provide Buyer with use of the space currently occupied by the Company at the
locations requested by Buyer and use of the Company’s employees at Buyer’s expense that have not
been hired by Buyer to facilitate the transitioning of the purchased business and Purchased Assets,
the terms of which shall be set forth in an agreement reasonably acceptable to the parties. The
rental for such space shall be consistent with the rental rates currently paid by the Company for
such space and shall include utilities and janitorial services. Buyer shall be responsible for
paying all costs that it incurs at such space.



     (h) Name “Pest Environmental”. The Company shall cease using the name “Pest
Environmental” and shall execute and deliver to Buyer any and all documents reasonably necessary to
transfer all of Company’s interest, right and title in and to said name to the Buyer.


7. Conditions to Obligation to Effect the Closing.




     (a) Conditions to Obligation of the Buyer. The obligation of the Buyer to consummate
the transactions to be performed by it in connection with the Closing is subject to satisfaction of
the following conditions:



          (i) except for representations and warranties that by their terms speak only as of a specified
date, the representations and warranties set forth in Section 3 shall be true and correct in all
material respects at and as of the Closing Date as though made on and as of the Closing Date;




          (ii) the Company shall have materially performed and complied with all of the covenants
hereunder required to be performed and complied with by Company at or prior to the Closing;




          (iii) there shall not be any injunction, judgment, order, decree, or ruling in effect
preventing consummation of any of the transactions contemplated by this Agreement nor





27









 







shall there
have occurred any damage or loss to any of the Purchased Assets whether or not covered by insurance
which equals or exceeds ten percent (10%) of the Purchase Price;




          (iv) all material filings that are required to have been made by the Company with any
Governmental Authority in order to carry out the transactions contemplated by this Agreement shall
have been made; all material authorizations, consents, approvals and Permits from all such
Governmental Authorities required for the Company to carry out the transactions contemplated by
this Agreement shall have been received, and all statutory waiting periods (or extensions thereof)
in respect thereof shall have expired or otherwise been terminated; all of the consents set forth
in Schedule 7(a)(iv) shall have been obtained (“Company Required Consents”); the Buyer
shall have received from legal counsel to the Company an opinion substantially in the form attached
as Exhibit 7(a)(iv) hereto;




          (v) Company shall have delivered to the Buyer a certificate dated as of the Closing stating
that the conditions set forth in Sections 7(a)(i), 7(a)(ii), 7(a)(iii) and 7(a)(iv) have been
satisfied and attaching true and correct copies of all Equipment and subject to post-Closing
adjustment, good faith estimates of Inventory, Receivables and Customer Prepayments (including
amounts for services to be rendered to annual customers) dated as of the Closing Date.




          (vi) Gary Wiegmann shall have executed and delivered to the Buyer a consulting agreement (the
“Consulting Agreement”) which shall contain a non-compete provision for a two (2) year period from
Closing in substantially the form attached hereto as Exhibit D-1, and Wiley McIlrath shall
have executed and delivered a non-compete agreement substantially in the form attached hereto as
Exhibit D-2 (the “McIlrath Agreement”).




          (vii) At the Closing, the Company shall duly execute and deliver to the Buyer a Bill of Sale
and Assignment and Assumptions in the form attached hereto as Exhibits B and C and such
other instruments of transfer of title as are necessary to transfer to the Buyer good and
marketable title to the Purchased Assets free and clear of all Liens, and shall deliver to the
Buyer immediate possession of the Purchased Assets;




          (viii) Buyer shall have received the consent of its secured lenders under its credit agreement
to acquire the business and Purchased Assets of the Company and shall have received a commitment
for a loan or other capital infusion sufficient to pay the Transaction Consideration in full within
five (5) business days prior to the Closing;




          (ix) the Company shall have caused any Liens (other than Permitted Liens) in or on the
Purchased Assets to be released;




          (x) the Company shall execute and/or deliver all such other documents as are reasonably
requested by Buyer or its counsel; and




          (xi) no Material Adverse Effect shall have occurred, nor shall there be (A) any material
dispute between the Company and any Significant Customer or Supplier or (B) any indication from any
Significant Customer or Supplier that such Significant Customer or Supplier, as the case may be,
intends to materially reduce its purchases from or sales to, or to otherwise materially reduce its
business relationship with, the Company.




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The Buyer may waive in writing any condition specified in this Section 7(a) at or prior to the
Closing.




     (b) Conditions to Obligation of the Company. The obligation of the Company to
consummate the transactions to be performed by them in connection with the Closing is subject to
satisfaction of the following conditions:



          (i) the representations and warranties set forth in Section 4 above shall be true and correct
in all material respects at and as of the Closing Date as though made on and as of the Closing
Date;




          (ii) the Buyer shall have materially performed and complied with all of its covenants
hereunder required to be performed and complied with by it at or prior to the Closing;




          (iii) there shall not be any injunction, judgment, order, decree or ruling in effect
preventing consummation of any of the transactions contemplated by this Agreement;




          (iv) Buyer shall deliver to Company a certificate dated as of the Closing certifying that the
conditions set forth in Sections 7(b)(i), 7(b)(ii) and 7(b)(iii) have been satisfied;




          (v) Buyer shall execute and/or deliver to Company all such other documents as are reasonably
requested by Company or Company’s counsel; and




          (vi) Buyer shall have tendered to the Company the Purchase Price and delivered all documents
reasonably required hereunder to complete the sale and transfer of the Purchased Assets.




     The Company may waive in writing any condition specified in this Section 7(b) at or prior to
the Closing.


8. Remedies for Breaches of this Agreement.




     (a) Survival. The representations and warranties of the Company and the Buyer
contained in Sections 3 and 4 shall survive the Closing and continue in full force and effect until
the first anniversary of the Closing Date. All covenants herein shall survive the Closing and
continue in full force and effect until performed, subject to any applicable statute of limitations
and other restrictions or limitations in such covenants.



     (b) Net Worth Maintenance. In order to satisfy the Company’s obligations under this
Agreement and to satisfy any amounts Company is required to pay to creditors or Buyer pursuant to
Section 2(i) of this Agreement, Company agrees to maintain a net worth of no less than $50,000
until such time as the Settlement Statement has been issued and the reconciliations required by
Section 2(i) of this Agreement have been satisfied.



     (c) Arbitration. In the event a dispute arises between Buyer and Company regarding
this Agreement or any document executed in connection herewith, the Parties shall submit their
dispute to non-binding mediation in Broward County, Florida. If the dispute is not resolved



29









 




within
thirty (30) days of submission of the dispute to non-binding mediation, then either Party, may
submit the dispute to binding arbitration in Broward County, Florida and the arbitration proceeding
shall be subject to the following requirements:




          (i) Any controversy arbitrated by the Parties shall be arbitrated by a single arbitrator if
the amount of the controversy is less than or equal to One Hundred Thousand Dollars ($100,000). If
the amount of the controversy between the Company and Buyer is greater than One Hundred Thousand
Dollars ($100,000) then the arbitration shall be conducted by a panel of three (3) arbitrators.
Within fifteen (15) days after submission of the dispute to binding arbitration, the Parties shall
mutually agree on an arbitrator if the controversy is to be arbitrated by a single arbitrator in
accordance with this paragraph. If no agreement on an arbitrator is reached within said fifteen
(15) day period, then the arbitrator shall be selected in accordance with the procedures of the
American Arbitration Association (“AAA”) and shall be from, if available, the “Commercial
Arbitration Panel” employed by the AAA. If more than one arbitrator is required to conduct the
arbitration, then the arbitrators shall be selected in accordance with the procedures of the AAA,
and shall be from, if available, the “Commercial Arbitration Panel” employed by the AAA. The
Parties intend that this agreement to arbitrate be valid, specifically enforceable and irrevocable.




          (ii) Within ten (10) days of the presentation of the Parties claims to the arbitrator, the
arbitrator shall issue its written decision.




          (iii) In the absence of fraud, gross misconduct or an error in law appearing on the face of
the order or award issued by the arbitrator, the written decision of the arbitrator shall be final
and binding upon the parties.




          (iv) The arbitration proceeding shall be carried on and heard in accordance with the
Commercial Rules of Arbitration of the American Arbitration Association.




          (v) The arbitrator shall award to the prevailing party in any arbitration proceeding commenced
hereunder, and the court shall include in its judgment for the prevailing party in any claim
arising under this Agreement or relating to the transactions contemplated hereby, the prevailing
party’s costs and expenses (including without limitation expert witness expenses and reasonable
attorneys’ fees) of investigating, preparing and presenting such arbitration claim or cause of
action.



9. Termination.




     (a) Termination of Agreement. The Parties may terminate this Agreement as provided
below:



          (i) the Buyer and the Company may terminate this Agreement by mutual written consent at any
time prior to the Closing;




          (ii) the Buyer may terminate this Agreement by giving written notice to the Company at any
time prior to the Closing (A) in the event that the Company has breached any representation,
warranty or covenant contained in this Agreement and such breach could reasonably be expected to
have a Material Adverse Effect, the Buyer has notified the Company






30









 







of the breach, and the breach
has continued without cure for a period of 30 days after the notice of breach or as of 5 p.m. on
December 16, 2005, whichever is earlier; or (B) if the Closing shall not have occurred by 5 p.m. on
December 16, 2005, by reason of the failure of any condition precedent to have occurred under
Section 7(a) hereof (unless the failure results primarily from the Buyer’s breach of any
representation, warranty or covenant contained in this Agreement); (C) if the Closing shall not
have occurred by 5 p.m. on December 16, 2005, by reason of the failure of the Company to obtain any
required governmental or third party consent (unless the failure results primarily from the
Buyer’s breach of any representation, warranty or covenant contained in this Agreement (other than
failure of the Buyer to obtain consent from its secured lenders or to have received financing to
pay the Transaction Consideration, the failure of such conditions precedent shall be without
liability to either Buyer or Seller)); or (D) there is a loss, damage or destruction to the
Purchased Assets which in the aggregate exceeds ten percent (10%) of the Purchase Price; and




          (iii) the Company may terminate this Agreement by giving written notice to the Buyer at any
time prior to the Closing (A) in the event the Buyer has breached any representation, warranty or
covenant contained in this Agreement in any material respect, the Company has notified the Buyer of
the breach, and the breach has continued without cure for a period of 30 days after the notice of
breach or as of 5 p.m. on December 15, 2005 whichever is earlier; (B) if the Closing shall not have
occurred by 5 p.m. on December 15, 2005, by reason of the failure of any condition precedent to
have occurred (other than failure of the Buyer to obtain consent from its secured lenders or to
have received financing to pay the Transaction Consideration, the failure of such conditions
precedent shall be without liability to either Buyer or Seller) under Section 7(b) hereof (unless
the failure results primarily from the Company’s breach of any representation, warranty or covenant
contained in this Agreement); or (D) there is a loss, damage or destruction to the Purchased Assets
which in the aggregate exceeds ten percent (10%) of the Purchase Price.




     (b) Effect of Termination. No termination of this Agreement shall cause any Party
then in breach to be released of its obligations hereunder in the absence of an express written
release.


10. Miscellaneous.




     (a) Press Releases and Public Announcements. No party shall issue any press release
or public announcement relating to the subject matter of this Agreement without the prior written
approval of the other party. Notwithstanding the foregoing, Parent shall be entitled to disclose
this Agreement and the transactions contemplated hereby to comply with the rules or regulations of
the U.S. Securities and Exchange Commission and the rules, regulations or requirements of any
exchange on which the Parent’s securities are listed.



     (b) 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.



     (c) Entire Agreement. This Agreement (including the Disclosure Schedules, Exhibits
and the documents, referred to herein) constitutes the entire agreement between the Parties
with



31









 




respect to the subject matter hereof and supersedes any prior understandings, agreements, or
representations by the Parties, written or oral, to the extent they are related to the subject
matter of this Agreement including but not limited to that certain letter dated July 26, 2005
between the Company and Sunair Southeast Pest Holdings, Inc.




     (d) 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 Buyer and the Company; provided, however,
that without the consent of any other Parties Buyer may (i) collaterally assign its rights
hereunder to one or more lenders, (ii) assign its rights and obligations hereunder after the
Closing to any Person who acquires all or a material portion of the assets or equity of the Buyer,
or (iii) assign its rights and obligations to an Affiliate. In the event Buyer assigns this
Agreement Buyer shall not be released from its obligations hereunder.



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



     (f) Headings. The Section headings contained in this Agreement and the Disclosure
Schedules are inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement or the Disclosure Schedules.



     (g) 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 given if personally delivered or sent by registered or certified mail, return
receipt requested, postage prepaid, or by reputable overnight courier and addressed to the intended
recipient as set forth below:



	 	 	 
	     If to the Company:

	 	Spa Creek Services, LLC
	 

	 	c/o Gary Wiegmann
	 

	 	14261 Southern Maple Drive
	 

	 	Orlando, FL 32828
	 
	 	 
	     If to the Buyer:

	 	Middleton Pest Control, Inc.
	 

	 	c/o Sunair Southeast Pest Holdings, Inc.
	 

	 	3005 SW 3rd Ave
	 

	 	Fort Lauderdale, FL 33315-3312
	 

	 	Attention: Chief Executive Officer
	 
	 	 
	     With a copy to (which shall not constitute notice to the Buyer):

	 	Akerman Senterfitt
	 

	 	SunTrust International Center — 28th Floor
	 

	 	One Southeast Third Avenue
	 

	 	Miami, Florida 33131-1714
	 

	 	Attention: Stephen K. Roddenberry, Esq.






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     Any Party may send any notice, request, demand, claim or other communication hereunder to the
intended recipient at the address set forth above using any other means (including messenger
service, telecopy, telex, 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 intended recipient. Any Party may change the address to which notices, requests,
demands, claims and other communications hereunder are to be delivered by giving the other Party
notice in the manner herein set forth.



     (h) Governing Law; Jurisdiction; Venue. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Florida (i.e., without giving effect
to any choice or conflict of law provision or rule (whether of the State of Florida or any other
jurisdiction) that would cause the application of the laws of any jurisdiction other than the State
of Florida). Each of the Parties submits to the exclusive jurisdiction of any federal or state
court sitting in Miami-Dade County, Florida, in any action or proceeding arising out of or relating
to this Agreement and agrees that all claims in respect of the action or proceeding shall be heard
and determined in any such court. Each of the Parties waives any defense of inconvenient forum to
the maintenance of any action or proceeding so brought.



     (i) Amendments and Waivers. No amendment of any provision of this Agreement shall be
valid unless the same shall be in writing and signed by the Buyer and the Company.



     (j) 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.



     (k) Expenses. Except as otherwise provided in this Agreement, each of the Parties
shall bear its own fees, costs and expenses (including, without limitation, legal, accounting,
consulting and investment advisory fees and expenses) incurred in connection with this Agreement
and the transactions contemplated hereby.



     (l) Construction. The Parties have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly by the Parties and no presumption
or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any
of the provisions of this Agreement. Any reference to any federal, state, local or foreign statute
or law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless
the context requires otherwise. When a reference is made in this Agreement to an article, Section,
paragraph, clause, schedule or exhibit, such reference shall be deemed to be to this Agreement
unless otherwise indicated. Whenever the words “include,” “includes,” or “including” are used in
this Agreement, they shall be deemed to be followed by the words “without limitation.” As used
herein, words in the singular will be held to include the plural and
vice versa (unless the context
otherwise requires), words of one gender shall be held to include the other gender (or the neuter)
as the context requires, and the terms “hereof,” “herein,” and “herewith” and words of similar
import will, unless otherwise stated, be construed to refer to this Agreement as a whole and not to
any particular provision of this Agreement. For the avoidance of doubt, all references to the



33









 




Company relating to financial matters shall be deemed to be the Company on a consolidated basis.




     (m) Business Day. If any time period set forth in this Agreement expires on other
than a business day in the City of Miami, Florida; i.e. upon a Saturday, Sunday or legal or bank
holiday, such period shall be extended to and through the next succeeding business day in such
City.



     (n) Prevailing Party. In the event that attorneys’ fees or other costs are incurred
to secure performance of any obligation, or to establish damages for the breach of any obligation,
agreement or covenant, or to obtain any other appropriate relief, whether by way of prosecution or
defense, the prevailing party shall be entitled to recover its reasonable attorneys’ fees and costs
and the costs, fees and expenses incurred to enforce or collect such judgment or award and any
other relief granted.



     (o) Exhibits; Disclosure Schedule. The Exhibits to this Agreement and the Disclosure
Schedules are incorporated herein by reference and made a part hereof. The inclusion of
information in the Disclosure Schedules shall not be construed as an admission that such
information is material to the Company. The Section numbers in the Disclosure Schedules will
correspond to the Section numbers in this Agreement.



     (p) Waiver of Jury Trial. EACH PARTY HERETO INDIVIDUALLY HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, TRIAL BY JURY
IN ANY SUIT, ACTION OR PROCEEDING BASED ON THIS AGREEMENT OR, ARISING HEREUNDER OR RELATED HERETO.
THIS PROVISION IS
A MATERIAL INDUCEMENT FOR EACH PARTY TO ENTER INTO AND CONSUMMATE THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT.



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



	 	 	 	 	 
	 	MIDDLETON PEST CONTROL, INC. 

 	 
	 	By:  	/s/ JOHN J. HAYES
 	 
	 	Name:  	John J. Hayes 	 
	 	Title:  	Director 	 
	 



	 	 	 	 	 
	 	SPA CREEK SERVICES, LLC 

 	 
	 	By:  	/s/ GARY WIEGMANN
 	 
	 	Name:  	Gary Wiegmann 	 
	 	Title:  	President & CEO 	 



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