10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2006

or

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 000-25955

Waste Services, Inc.

(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation or organization) 01-0780204
(I.R.S. Employer
Identification No.)

1122 International Blvd., Suite 601, Burlington, Ontario, Canada L7L 6Z8
(Address of principal executive offices) (zip code)

(905) 319-1237
(Registrant’s telephone number, including area code)

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act). (Check one):

Large accelerated filer o Accelerated Filer þ Non-accelerated filer o

     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

     The number of shares of Common Stock, $0.01 par value, of the registrant outstanding at July 25, 2006 was 36,066,236 (assuming exchange of 6,324,882 exchangeable shares of Waste Services (CA) Inc. not owned by Capital Environmental Holdings Company for 2,108,294 shares of the registrant’s common stock).

TABLE OF CONTENTS

	Page
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements.
Condensed Consolidated Balance Sheets as of June 30, 2006 (unaudited) and December 31, 2005.		2
Unaudited Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2006 and 2005.		3
Unaudited Condensed Consolidated Statement of Shareholders’ Equity for the six months ended June 30, 2006.		4
Unaudited Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2006 and 2005.		5
Notes to Unaudited Condensed Consolidated Financial Statements.		6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.		29
Item 3. Quantitative and Qualitative Disclosures About Market Risk.		42
Item 4. Controls and Procedures.		42
PART II — OTHER INFORMATION
Item 1. Legal Proceedings.		42
Item 1A. Risk Factors.		42
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.		42
Item 3. Defaults upon Senior Securities.		42
Item 4. Submission of Matters to a Vote of Security Holders.		43
Item 5. Other Information.		43
Item 6. Exhibits.		43
Signatures.		45
EX-4.16 SUPPLEMENTAL INDENTURE DATED MAY 12, 2006
EX-4.17 SUPPLEMENTAL INDENTURE DATED JUNE 30, 2006
SUPPLEMENTAL INDENTURE DATED JUNE 30, 2006
EX-10.20 ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT
EX-31.1 SECTION 302 CERTIFICATION OF CEO
EX-31.2 SECTION 302 CERTIFICATION OF CFO
EX-32.1 SECTION 1350 CERTIFICATION OF CEO AND CFO

1

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

WASTE SERVICES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts)

	June 30,			December 31,
	2006			2005
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	2,740		$	8,886
Accounts receivable (net of allowance for doubtful accounts of $696 and $672 as of June 30, 2006 and December 31, 2005, respectively)		52,500			45,381
Prepaid expenses and other current assets		8,607			10,063
Current assets of discontinued operations		4,609			5,252
Total current assets		68,456			69,582
Property and equipment, net		139,445			119,485
Landfill sites, net		182,247			156,498
Goodwill and other intangible assets, net		337,443			307,869
Other assets		9,411			23,816
Non-current assets of discontinued operations		51,057			51,139
Total assets	$	788,059		$	728,389
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	30,832		$	25,959
Accrued expenses and other current liabilities		42,866			39,065
Short-term financing and current portion of long-term debt		1,677			1,365
Current liabilities of discontinued operations		1,997			1,827
Total current liabilities		77,372			68,216
Long-term debt		315,220			284,850
Accrued closure, post-closure and other obligations		30,713			25,651
Cumulative mandatorily redeemable Preferred Stock (net of discount of nil and $2,347 as of June 30, 2006 and December 31, 2005, respectively)		95,128			84,971
Non-current liabilities of discontinued operations		287			210
Total liabilities		518,720			463,898
Shareholders’ equity:
Common stock $0.01 par value; 166,666,666 and 500,000,000 (pre-reverse split) shares authorized at June 30, 2006 and December 31, 2005, respectively; 33,957,942 shares issued and outstanding at June 30, 2006; 93,685,889 shares (pre-reverse split) issued and 93,185,889 shares (pre-reverse split) outstanding at December 31, 2005		340			937
Additional paid-in capital		410,266			383,618
Treasury stock at cost; 500,000 shares (pre-reverse split)		—			(1,235	)
Accumulated other comprehensive income		43,074			35,673
Accumulated deficit		(184,341	)		(154,502	)
Total shareholders’ equity		269,339			264,491
Total liabilities and shareholders’ equity	$	788,059		$	728,389

The accompanying notes are an integral part of these condensed consolidated financial statements.

2

WASTE SERVICES, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

	Three Months Ended June 30,						Six Months Ended June 30,
	2006			2005			2006			2005
Revenue	$	101,587		$	88,853		$	190,147		$	171,760
Operating and other expenses:
Cost of operations (exclusive of depreciation, depletion and amortization)		70,000			64,515			132,378			124,816
Selling, general and administrative expense (exclusive of depreciation, depletion and amortization)		14,363			13,371			29,600			27,587
Deferred acquisition costs		—			—			5,612			—
Depreciation, depletion and amortization		10,153			10,039			19,870			19,056
Foreign exchange loss (gain) and other		2,247			1			2,166			(184	)
Income from operations		4,824			927			521			485
Interest expense		7,825			7,173			14,880			13,998
Cumulative mandatorily redeemable preferred stock dividends and amortization of issue costs		4,841			5,114			10,537			9,956
Loss from continuing operations before income taxes		(7,842	)		(11,360	)		(24,896	)		(23,469	)
Income tax provision		3,368			3,013			4,340			5,330
Net loss from continuing operations		(11,210	)		(14,373	)		(29,236	)		(28,799	)
Net income (loss) from discontinued operations		136			(141	)		(603	)		18
Net loss	$	(11,074	)	$	(14,514	)	$	(29,839	)	$	(28,781	)
Basic and diluted loss per share:
Loss per share — continuing operations		(0.33	)		(0.44	)		(0.87	)		(0.88	)
Loss per share — discontinued operations		0.01			—			(0.01	)		—
Basic and diluted loss per share	$	(0.32	)	$	(0.44	)	$	(0.88	)	$	(0.88	)
Weighted average common shares outstanding — basic and diluted		34,130			33,024			33,756			32,600

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

WASTE SERVICES, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY
For the Six Months Ended June 30, 2006
(In thousands)

													Accumulated
	Waste Services, Inc.									Treasury			Other					Total
	Common Stock						Additional			Stock			Comprehensive		Accumulated			Shareholders’
	Shares			Amount			Paid-in Capital			at Cost			Income		Deficit			Equity
Balance, December 31, 2005		93,686		$	937		$	383,618		$	(1,235	)	$	35,673	$	(154,502	)	$	264,491
Common shares issued		8,154			82			25,265			1,235			—		—			26,582
Exercise of options and warrants		28			—			86			—			—		—			86
Stock-based compensation		—			—			1,547			—			—		—			1,547
Conversion of exchangeable shares		6			—			—			—			—		—			—
Share reimbursement agreement		—			—			(929	)		—			—		—			(929	)
Foreign currency translation adjustment		—			—			—			—			7,401		—			7,401
Effect of reverse stock split		(67,916	)		(679	)		679			—			—		—			—
Net loss		—			—			—			—			—		(29,839	)		(29,839	)
Balance, June 30, 2006		33,958		$	340		$	410,266		$	—		$	43,074	$	(184,341	)	$	269,339

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

WASTE SERVICES, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

	Six Months Ended June 30,
	2006			2005
Cash flows from operating activities:
Net loss	$	(29,839	)	$	(28,781	)
Adjustments to reconcile net loss to net cash flows from operating activities:
Net loss (income) from discontinued operations		603			(18	)
Depreciation, depletion and amortization		19,870			19,056
Cumulative mandatorily redeemable preferred stock dividends and amortization of issue costs		10,537			9,956
Amortization of debt issue costs		776			705
Deferred income tax provision		4,289			5,063
Non-cash stock-based compensation expense		1,547			1,147
Deferred acquisition costs expensed		5,612			—
Foreign exchange loss (gain)		2,052			(6	)
Other non-cash items		403			303
Changes in operating assets and liabilities (excluding the effects of acquisitions):
Accounts receivable		(2,946	)		(478	)
Prepaid expenses and other current assets		(676	)		1,843
Accounts payable		652			(1,995	)
Accrued expenses and other current liabilities		3,011			1,085
Net cash provided by continuing operations		15,891			7,880
Net cash provided by discontinued operations		1,580			2,129
Net cash provided by operating activites		17,471			10,009
Cash flows from investing activities:
Cash used in business combinations and significant asset acquisitions, net of cash acquired		(28,943	)		(150	)
Capital expenditures		(25,514	)		(16,544	)
Proceeds from asset sales and business divestitures		4,529			636
Share reimbursement agreement		(929	)		—
Deposits for business acquisitions and other		—			(691	)
Net cash used in continuing operations		(50,857	)		(16,749	)
Net cash used in discontinued operations		(2,107	)		(3,643	)
Net cash used in investing activities		(52,964	)		(20,392	)
Cash flows from financing activities:
Proceeds from issuance of debt and draws on revolving credit facility		36,197			—
Principal repayments of debt and capital lease obligations		(7,038	)		(830	)
Sale of common shares and warrants		—			7,125
Proceeds from the exercise of options and warrants		86			521
Fees paid for financing transactions		(138	)		—
Net cash provided by financing activities — continuing operations		29,107			6,816
Effect of exchange rate changes on cash and cash equivalents		240			(133	)
Decrease in cash and cash equivalents		(6,146	)		(3,700	)
Cash and cash equivalents, beginning of period		8,886			8,476
Cash and cash equivalents, end of period	$	2,740		$	4,776

The accompanying notes are an integral part of these condensed consolidated financial statements.

5

WASTE SERVICES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Organization of Business and Basis of Presentation

     The accompanying Unaudited Condensed Consolidated Financial Statements include the accounts of Waste Services, Inc. (“Waste Services”) and its wholly owned subsidiaries (collectively, “we”, “us”, or “our”). We are a multi-regional, integrated solid waste services company providing collection, transfer, landfill disposal and recycling services for commercial, industrial and residential customers. Our operating strategy is disposal-based, whereby we enter geographic markets with attractive growth or positive competitive characteristics by acquiring and developing landfill disposal capacity, then acquiring and developing waste collection and transfer operations. Our operations are located in the United States and Canada. Our U.S. operations are located in Florida, Texas and Arizona and our Canadian operations are located in Eastern Canada (Ontario) and Western Canada (Alberta, Saskatchewan and British Columbia). During the current quarter, we have presented our Arizona operations as discontinued.

     These condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. All significant intercompany transactions and accounts have been eliminated. All figures are presented in thousands of U.S. dollars, except share and per share data, or except where expressly stated as being in Canadian dollars (“C$”) or in millions. Certain information related to our organization, significant accounting policies and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States has been condensed or omitted. Except for the adoption of FASB Statement No. 123(R), Share-Based Payment (“SFAS 123(R)”), which is more fully described in Note 3, the accounting policies followed in the preparation of these unaudited condensed consolidated financial statements are consistent with those followed in our annual consolidated financial statements for the year ended December 31, 2005, as filed on Form 10-K. In the opinion of management, these unaudited condensed consolidated financial statements contain all material adjustments, consisting only of normal recurring adjustments, necessary to fairly state our financial position, results of operations and cash flows for the periods presented and the presentations and disclosures herein are adequate when read in conjunction with our Form 10-K for the year ended December 31, 2005. Income taxes during these interim periods have been provided based upon our anticipated annual effective income tax rate. Certain reclassifications have been made to the prior period financial statement amounts to conform to the current presentation. Due to the seasonal nature of our business, operating results for interim periods are not necessarily indicative of the results for full years.

     The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include the allowance for doubtful accounts, depletion of landfill development costs, goodwill and other intangible assets, liabilities for landfill capping, closure and post-closure obligations, insurance reserves, liabilities for potential litigation and deferred taxes.

     As a portion of our operations is domiciled in Canada, for each reporting period we translate the results of operations and financial condition of our Canadian operations into U.S. dollars. Therefore, the reported results of our operations and financial condition are subject to changes in the exchange relationship between the two currencies. For example, as the relationship of the Canadian dollar strengthens against the U.S. dollar, revenue is favorably affected and conversely expenses are unfavorably affected. Assets and liabilities of Canadian operations are translated from Canadian dollars into U.S. dollars at the exchange rates in effect at the relevant balance sheet dates, and revenue and expenses of Canadian operations are translated from Canadian dollars into U.S. dollars at the average exchange rates prevailing during the period. Unrealized gains and losses on translation of the Canadian operations into U.S. dollars are reported as a separate component of shareholders’ equity and are included in comprehensive income. Separately, monetary assets and liabilities denominated in U.S. dollars held by our Canadian operations are re-measured from U.S. dollars into Canadian dollars and then translated into U.S. dollars. The effects of re-measurement are reported currently as a component of net income (loss). Currently, we do not hedge our exposure to changes in foreign exchange rates.

     On June 30, 2006, we effected a reverse one for three split of our common stock. As a result of the reverse split, each holder of three outstanding shares of common stock is entitled to one share of common stock. No fractional shares of common stock will be issued in connection with the reverse stock split. In lieu of such fractional shares, stockholders will receive a cash payment equal to the product obtained by multiplying the fraction of common stock by the average closing price per share of common stock (as adjusted for the reverse stock split) as quoted on the Nasdaq National Market for the five trading days immediately preceding June 30, 2006. Corresponding amendments have been made to the exchangeable shares of Waste Services (CA) Inc., so that each one exchangeable share will entitle the holder to one-third of one share of our common stock, without regard to any fractional shares.

6

WASTE SERVICES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

     Basic earnings (loss) per share is calculated by dividing income (loss) by the weighted average number of common shares outstanding for the period, including exchangeable shares of Waste Services (CA) not owned by us on an as exchanged basis. Diluted earnings (loss) per share is calculated based on the weighted average shares of common stock outstanding, including the exchangeable shares, during the period plus the dilutive effect of common stock purchase warrants and stock options using the treasury stock method. Contingently issuable shares are included in the computation of basic earnings (loss) per share when issuance of the shares is no longer contingent. Due to the net losses for the three and six months ended June 30, 2006 and 2005, basic and diluted loss per share were the same, as the effect of potentially dilutive securities would have been anti-dilutive.

     Potentially dilutive securities not included in the diluted loss per share calculation, due to net losses, are as follows (given effect for the reverse one for three split to the earliest period presented) (unaudited) (in thousands):

	Three months ended June 30,				Six months ended June 30,
	2006		2005		2006		2005
Common shares issuable under exercisable options		—		27		—		16
Common shares issuable under exercisable warrants		38		869		176		714
Dilutive securities		38		896		176		730

     For purposes of computing net income (loss) per common share — basic and diluted, for the three and six months ended June 30, 2006, the weighted average number of shares of common stock outstanding includes the effect of 6,326,135 and 6,322,915 exchangeable shares of Waste Services (CA), respectively (exchangeable for 2,108,711 and 2,107,638 shares of our common stock, respectively), as if they were shares of our outstanding common stock from July 31, 2004, the date our migration transaction was completed. For the three and six months ended June 30, 2005, the weighted average number of shares of common stock outstanding includes the effect of 6,501,594 and 6,524,662 exchangeable shares of Waste Services (CA), respectively (exchangeable for 2,167,198 and 2,174,887 shares of our common stock, respectively), as if they were shares of our outstanding common stock from July 31, 2004.

2. Discontinued Operations

     On July 20, 2006, we announced the execution of definitive agreements with Allied Waste Industries, Inc. (“Allied Waste”) whereby we will (i) purchase Allied Waste’s hauling, transfer station and recycling operations in Miami, Florida for $61.0 million with an additional contingent payment of $2.0 million due upon the successful renewal of a certain municipal recycling contract and (ii) sell our Arizona hauling, transfer station and landfill operations to Allied Waste for $53.0 million. Accordingly, we have presented the net assets and operations of Arizona as discontinued operations for all periods presented. Revenue from discontinued operations was $7.5 million and $6.5 million for the three months ended June 30, 2006 and 2005, respectively, and $14.5 million and $12.6 million for the six months ended June 30, 2006 and 2005, respectively. Pre-tax net income (loss) from discontinued operations was $0.1 million and $(0.1) million for the three months ended June 30, 2006 and 2005, respectively, and $(0.6) million and nil for the six months ended June 30, 2006 and 2005, respectively. Net assets related to discontinued operations are as follows (unaudited):

7

WASTE SERVICES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

	June 30,		December 31,
	2006		2005
Accounts receivable	$	3,878	$	4,202
Prepaid expenses and other current assets		731		1,050
Current assets of discontinued operations		4,609		5,252
Property and equipment		13,231		13,777
Landfill sites		16,188		15,630
Goodwill and other intangible assets		21,518		21,602
Other assets		120		130
Non-current assets of discontinued operations		51,057		51,139
Total assets of discontinued operations	$	55,666	$	56,391
Accounts payable	$	294	$	192
Accrued expenses and other current liabilities		1,703		1,635
Current liabilities of discontinued operations		1,997		1,827
Accrued closure, post closure and other obligations		287		210
Non-current liabilities of discontinued operations		287		210
Total liabilities of discontinued operations		2,284		2,037
Net assets of discontinued operations	$	53,382	$	54,354

3. Share-Based Payments

     We have a 1997 Stock Option Plan and a 1999 Stock Option Plan, which are described in our consolidated financial statements for the year ended December 31, 2005 filed on Form 10-K. Employee stock options are denominated in U.S. and Canadian dollars. Prior to January 1, 2006 we accounted for our stock-based compensation plans under the recognition and measurement provisions of APB Opinion No. 25, Accounting for Stock Issued to Employees (“APB 25”), and related Interpretations, as permitted by FASB Statement No. 123, Accounting for Stock-Based Compensation (“SFAS 123”). Stock-based employee compensation cost (benefit) is recognized as a component of selling, general and administrative expense in the Statement of Operations. For the years ended December 31, 2005 and 2004, stock-based employee compensation expense was $0.3 million and $(1.4) million, respectively. For the three and six months ended June 30, 2005, stock-based compensation expensed for employees was $0.1 million and $0.2 million, respectively. Effective January 1, 2006, we adopted the fair value recognition provisions of SFAS 123(R), using the modified-prospective transition method. Under that transition method, employee compensation cost recognized in 2006 includes: (i) compensation cost for all share-based payments granted prior to, but not yet vested as of January 1, 2006, based on the grant date fair value estimated in accordance with the original provisions of SFAS 123 and (ii) compensation cost for all share-based payments granted subsequent to January 1, 2006, based on the grant date fair value estimated in accordance with the provisions of SFAS 123(R). Results for prior periods have not been restated.

     As a result of adopting SFAS 123(R) on January 1, 2006, our net loss and loss before income taxes for the three and six months ended June 30, 2006, is approximately $0.4 million and $1.4 million higher, respectively, than if we had continued to account for share-based compensation under APB 25. The adoption of this standard had no impact on our provision for income taxes due to: (i) the valuation allowance for our U.S. deferred tax assets due to our lack of operating history relative to our U.S. operations and (ii) the non-deductibility of options issued to our Canadian employees.

     Prior to the adoption of SFAS 123(R), we presented all tax benefits, if any, of deductions resulting from the exercise of stock options as operating cash flows in the Statement of Cash Flows. SFAS 123(R) requires the cash flows resulting from the tax benefits resulting from tax deductions in excess of the compensation cost recognized for those options (excess tax benefits) to be classified as financing cash flows.

     The following table illustrates the effect on net loss and loss per share if we had applied the fair value recognition provisions of

8

WASTE SERVICES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

SFAS 123 to options granted to employees under our stock option plans during the three and six months ended June 30, 2005 (unaudited):

	Three Months			Six Months
	Ended June 30,			Ended June 30,
	2005			2005
Net loss as reported	$	(14,514	)	$	(28,781	)
Add: Employee compensation expense for equity awards included in the determination of net loss as reported		86			172
Less: Stock based compensation expense for equity awards determined by the fair value based method prescribed under SFAS 123		(2,485	)		(4,935	)
Pro forma net loss	$	(16,913	)	$	(33,544	)
Basic and diluted loss per share:
As reported	$	(0.44	)	$	(0.88	)
Pro forma	$	(0.51	)	$	(1.03	)

     The above pro forma disclosures are provided for 2005 because employee stock options were not accounted for using the fair-value method during that period. No pro forma disclosure has been presented for the three and six months ended June 30, 2006 as share-based payments to employees have been accounted for under SFAS 123(R)’s fair-value method for such periods.

     During the six months ended June 30, 2006 and 2005, we granted 165,000 (pre-reverse split) options and 815,000 (pre-reverse split) options, respectively, to certain employees with option exercise prices equal to the market value of our common stock on the date of the grant. The weighted-average grant-date fair value of these option grants was $1.04 (pre-reverse split) and $1.77 (pre-reverse split), respectively. The fair value of options granted is estimated using the Black-Scholes option pricing model using the following assumptions:

	Three months ended June 30,					Six months ended June 30,
	2006		2005			2006			2005
Annual dividend yield		N/A		—			—			—
Weighted-average expected life (years)		N/A	2.8 years			3.0 years			2.8 years
Risk-free interest rate		N/A	2.57% to 4.62%				4.83	%	2.57% to 4.62%
Expected volatility		N/A		74	%		38	%		74	%

     Expected volatility is based primarily on historical volatility. Historical volatility was computed using daily pricing observations for the most recent three years. We believe this method produces an estimate that is representative of our expectations of the future volatility over the expected term of our options. We currently have no reason to believe future volatility over the expected life of these options is likely to differ materially from historical volatility. The weighted-average expected life is based upon share option exercises, pre and post vesting terminations and share option term expiration. The risk-free interest rate is based on the U.S. treasury security rate estimated for the expected life of the options at the date of grant.

     SFAS 123(R) requires the estimation of forfeitures when recognizing compensation expense and that this estimate of forfeitures be adjusted over the requisite service period should actual forfeitures differ from such estimates. Changes in estimated forfeitures are recognized through a cumulative adjustment, which is recognized in the period of change and which impacts the amount of unamortized compensation expense to be recognized in future periods.

     During the six months ended June 30, 2006, no employee options were exercised, 535,500 (pre-reverse split) options were forfeited and 6,500 (pre-reverse split) options expired. During the six months ended June 30, 2005, 15,000 (pre-reverse split) employee options were exercised and 112,194 (pre-reverse split) options expired. As of June 30, 2006, $0.8 million of total unrecognized compensation cost related to employee stock options is expected to be recognized over a weighted average period of approximately 0.6 year. Additional information relative to our employee options outstanding at June 30, 2006 is summarized as follows (unaudited):

9

WASTE SERVICES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

	Options		Options
	Outstanding		Exercisable
Number of U.S. dollar denominated options		7,356,500		6,456,500
Number of Canadian dollar denominated options		4,830,000		4,825,000
Total number of options		12,186,500		11,281,500
Aggregate intrinsic value of options	$	—	$	—
Weighted average remaining contractual term (years)		2.1		1.9
Weighted average exercise price — U.S. dollar denominated options	$	4.43	$	4.54
Weighted average exercise price — Canadian dollar denominated options	C$	6.21	C$	6.21

     All share numbers and exercise prices in the above table are before giving effect to the reverse one for three split of our common stock. The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between our closing stock price on the last trading day of the second quarter of 2006 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on June 30, 2006. As of June 30, 2006, we have not provided for forfeitures relative to our unvested employee stock options due to the relatively short vesting period remaining on these options and the de minimus nature of potential future forfeitures for these options.

4. Business Combinations and Significant Asset Acquisitions

     We believe the primary value of an acquisition is the opportunities made available to vertically integrate operations or increase market presence within a geographic market.

     In April 2006 we completed the acquisition of a materials recovery facility and solid waste transfer station in Taft, Florida (“Taft Recycling”). The purchase price for the facility consisted of $11.3 million in cash and the issuance of 1,269,841 (pre-reverse split) shares of common stock of Waste Services valued at approximately $3.9 million. In addition, upon the issuance of the final operating permit on June 15, 2006, we paid $1.5 million in cash and delivered an additional 1,269,842 (pre-reverse split) shares of common stock of Waste Services valued at approximately $3.7 million, of which 769,842 (pre-reverse split) shares were newly issued and 500,000 (pre-reverse split) shares were transferred from treasury. The acquisition of Taft Recycling will allow us greater access to third party waste volumes that can be disposed at our landfill facility in Osceola County, Florida.

     In May 2006, we completed the acquisition of Liberty Waste, LLC (“Liberty Waste”) in Tampa, Florida. The purchase price for Liberty Waste consisted of $8.0 million in cash and the issuance of 1,155,116 (pre-reverse split) shares of common stock of Waste Services valued at approximately $3.6 million. We had previously paid a deposit of $6.0 million in cash and issued 946,372 (pre-reverse split) shares of common stock of Waste Services valued at approximately $2.9 million. Liberty Waste is a collection operation based in Tampa with two transfer stations, one located in Tampa and the other in Clearwater. The transfer stations are both permitted to accept construction and demolition and Class III waste volumes.

     In June 2006, we completed the acquisition of Sun Country Materials, LLC (“Sun Country Materials”) in Hillsborough County, Florida. The purchase price for Sun Country Materials consisted of $5.0 million in cash and the issuance of 4,013,378 (pre-reverse split) shares of common stock of Waste Services valued at approximately $12.4 million. Sun Country Materials owns a construction and demolition landfill located in Hillsborough County, Florida, and the site has recently been issued an expansion permit.

     Details of the net assets acquired and cash used in asset and business acquisitions for the six months ended June 30, 2006 are as follows (unaudited):

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WASTE SERVICES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

				Liberty Waste
	Taft			and Sun Country			Other
	Recycling			Materials			Acquisitions		Total
Purchase price:
Cash	$	13,300		$	20,622		$	2,528	$	36,450
Common stock		7,645			18,937			—		26,582
Total purchase price		20,945			39,559			2,528		63,032
Allocated as follows:
Working capital assumed:
Cash and cash equivalents		125			488			—		613
Accounts receivable		952			2,144			—		3,096
Prepaid expenses and other current assets		10			591			—		601
Accounts payable		(462	)		(2,724	)		—		(3,186	)
Accrued expenses and other current liabilities		(252	)		(693	)		—		(945	)
Net working capital		373			(194	)		—		179
Property and equipment		3,254			9,408			675		13,337
Landfill sites		—			23,290			—		23,290
Debt		—			(390	)		—		(390	)
Accrued closure, post-closure and other obligations		(73	)		(2,257	)		—		(2,330	)
Net book value of assets acquired and liabilities assumed		3,554			29,857			675		34,086
Excess purchase price to be allocated	$	17,391		$	9,702		$	1,853	$	28,946
Allocated as follows:
Goodwill		17,391			9,702			1,672		28,765
Other intangible assets		—			—			181		181
Total allocated	$	17,391		$	9,702		$	1,853	$	28,946

     The above table includes cash deposits and acquisition related costs of $6.9 million, which relate to the Liberty Waste and Sun Country Materials acquisitions that were paid or deposited prior to 2006 and were capitalized to the cost of these acquisitions during 2006. We expect goodwill generated from these acquisitions to be deductible for income tax purposes.

     The purchase price allocations are considered preliminary until we have obtained all required information to complete the allocation. Although the time required to obtain the necessary information will vary with circumstances specific to an individual acquisition, the “allocation period” for finalizing purchase price allocations generally does not exceed one year from the date of consummation of an acquisition. Adjustments to the allocation of purchase price may decrease those amounts allocated to goodwill and, as such, may increase those amounts allocated to other tangible or intangible assets, which may result in higher depreciation or amortization expense in future periods. Assets acquired in a business combination that will be sold are valued at fair value less cost to sell. Results of operating these assets are recognized currently in the period in which those operations occur. The value of shares issued in connection with an acquisition is based upon the average market price of our common stock during the five day period consisting of the period two days before, the day of and the two days after the terms of the acquisition are agreed to and/or announced. Contingent consideration is valued as of the date the contingency is resolved.

     The following unaudited condensed consolidated pro forma statement of operations data shows the results of our operations for the three and six months ended June 30, 2006 and 2005 as if completed acquisitions had occurred at the beginning of the respective period (in thousands except per share amounts):

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WASTE SERVICES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

	Three Months Ended June 30,						Six Months Ended June 30,
	2006			2005			2006			2005
Revenue	$	104,570		$	96,083		$	201,064		$	186,098
Net loss	$	(11,372	)	$	(14,941	)	$	(30,470	)	$	(29,748	)
Basic and diluted net loss per common share	$	(0.31	)	$	(0.42	)	$	(0.84	)	$	(0.84	)
Basic and diluted pro forma weighted average number of common shares outstanding		36,186			35,909			36,067			35,485

     These unaudited condensed pro forma consolidated results have been prepared for comparative purposes only and are not necessarily indicative of the actual results of operations had the acquisitions taken place as of the beginning of the respective periods, or the results of our future operations. Furthermore, the pro forma results do not give effect to all cost savings or incremental costs that may occur as a result of the integration and consolidation of the acquisitions.

5. Allowance for Doubtful Accounts

     We maintain an allowance for doubtful accounts based on the expected collectibility of our accounts receivable. We perform credit evaluations of significant customers and establish an allowance for doubtful accounts based on the aging of receivables, payment performance factors, historical trends and other information. In general, we reserve a portion of those receivables outstanding more than 90 days and 100% of those outstanding more than 120 days. We evaluate and revise our reserve on a monthly basis based upon a review of specific accounts outstanding and our history of uncollectible accounts.

     The changes to the allowance for doubtful accounts for the six months ended June 30, 2006 and 2005 are as follows (unaudited):

	2006			2005
Balance, beginning of period	$	672		$	545
Provisions		128			323
Bad debts charged to reserves, net of recoveries		(413	)		(366	)
Increase due to acquisitions		303			—
Impact of foreign exchange rate fluctuations		6			(2	)
Balance, end of period	$	696		$	500

6. Prepaid Expenses and Other Current Assets

     Prepaid expenses and other current assets consist of the following:

	June 30,		December 31,
	2006		2005
	(Unaudited)
Prepaid expenses	$	2,961	$	2,357
Deferred income taxes		2,280		4,763
Parts and supplies		1,770		1,673
Other current assets		1,596		1,270
	$	8,607	$	10,063

7. Property and Equipment

     Property and equipment consist of the following:

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WASTE SERVICES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

	June 30,			December 31,
	2006			2005
	(Unaudited)
Land and buildings		33,681			24,596
Vehicles		109,596			96,492
Containers, compactors and landfill and recycling equipment		72,232			64,547
Furniture, fixtures, other office equipment and leasehold improvements		10,105			9,393
Total property and equipment		225,614			195,028
Less: Accumulated depreciation		(86,169	)		(75,543	)
Property and equipment, net	$	139,445		$	119,485

8. Landfill Sites, Accrued Closure, Post-Closure and Other Obligations

Landfill Sites

     Landfill sites consist of the following:

	June 30,			December 31,
	2006			2005
	(Unaudited)
Landfill sites	$	222,623		$	189,280
Less: Accumulated depletion		(40,376	)		(32,782	)
Landfill sites, net	$	182,247		$	156,498

     The changes in landfill sites for the six months ended June 30, 2006 and 2005 are as follows (unaudited):

	2006			2005
Balance, beginning of period	$	156,498		$	159,385
Acquisitions		23,290			—
Additional landfill site costs		7,632			4,184
Additional asset retirement obligations		1,013			721
Depletion		(6,622	)		(5,369	)
Purchase price allocation adjustments for prior acquisitions and other		—			99
Effect of foreign exchange rate fluctuations		436			(280	)
Balance, end of period	$	182,247		$	158,740

Accrued Closure, Post-Closure and Other Obligations

     Accrued closure, post-closure and other obligations consist of the following:

	June 30,		December 31,
	2006		2005
	(Unaudited)
Accrued closure and post-closure obligations	$	11,945	$	9,074
Deferred income tax liability		18,124		16,206
Other obligations		644		371
	$	30,713	$	25,651

     Accrued closure and post-closure obligations include costs associated with obligations for closure and post-closure of our landfills. The anticipated timeframe for paying these costs varies based on the remaining useful life of each landfill as well as the duration of the post-closure monitoring period. The changes in accrued closure and post-closure obligations for the six months ended June 30, 2006 and 2005 are as follows (unaudited):

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WASTE SERVICES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

	2006		2005
Balance, beginning of period	$	9,074	$	6,385
Acquisitions		1,201		—
Accretion		386		356
Additional asset retirement obligations		1,013		721
Effect of foreign exchange rate fluctuations		271		(86	)
Balance, end of period	$	11,945	$	7,376

9. Goodwill and Other Intangible Assets

     Goodwill and other intangible assets consist of the following:

	June 30,			December 31,
	2006			2005
	(Unaudited)
Other intangible assets subject to amortization:
Customer relationships and contracts	$	34,699		$	34,768
Non-competition agreements and other		2,959			2,744
		37,658			37,512
Less: Accumulated amortization:
Customer relationships and contracts		(14,392	)		(12,128	)
Non-competition agreements and other		(2,134	)		(1,761	)
Other intangible assets subject to amortization, net		21,132			23,623
Goodwill		316,311			284,246
Goodwill and other intangible assets, net	$	337,443		$	307,869

     The changes in goodwill for the six months ended June 30, 2006 and 2005 are as follows (unaudited):

	Six Months Ended June 30, 2006
	Florida			Canada		Total
Balance, beginning of period	$	199,377		$	84,869	$	284,246
Acquisitions		27,093			1,672		28,765
Purchase price allocation adjustments for prior acquisitions		(259	)		—		(259	)
Effect of foreign exchange rate fluctuations		—			3,559		3,559
Balance, end of period	$	226,211		$	90,100	$	316,311

	Six Months Ended June 30, 2005
	Florida		Canada			Total
Balance, beginning of period	$	174,629	$	85,255		$	259,884
Effect of foreign exchange rate fluctuations		—		(1,620	)		(1,620	)
Purchase price allocation adjustments for prior acquisitions		24,748		—			24,748
Balance, end of period	$	199,377	$	83,635		$	283,012

     During the first six months of 2005, we revised our estimate of the fair value of customer relationships, non-compete arrangements and certain vehicles and containers acquired as part of the acquisition of Florida Recycling Services, Inc. (“Florida Recycling”).

10. Other Assets

     Other assets consist of the following:

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WASTE SERVICES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

	June 30,		December 31,
	2006		2005
	(Unaudited)
Debt and redeemable Preferred Stock issue costs, net of accumulated amortization of $3,060 and $4,761 as of June 30, 2006 and December 31, 2005, respectively	$	8,410	$	9,428
Acquisition deposits and deferred acquisition costs		—		13,815
Other assets		1,001		573
	$	9,411	$	23,816

     In April 2006, we ceased being actively engaged in negotiations with Lucien Rémillard, one of our directors, concerning the potential acquisition of the solid waste collection and disposal business assets owned by a company controlled by Mr. Rémillard in Quebec, Canada. During the first quarter of 2006, we recognized an expense related to these previously deferred acquisition costs of approximately $5.6 million.

11. Debt

     Debt consists of the following:

	June 30,			December 31,
	2006			2005
	(Unaudited)
Senior Secured Credit Facilities:
Revolving credit facility, floating interest rate at 9.8% as of June 30, 2006, due April 2009	$	8,000		$	—
Term loan facility, floating interest rate at 8.5% and 7.9% as of June 30, 2006 and December 31, 2005, respectively, due $370 per quarter to March 2010, $35,020 per quarter thereafter, due March 2011		145,630			123,250
Senior Subordinated Notes, fixed interest rate at 9.5%, due 2014		160,000			160,000
Other notes payable, interest at 4.3% to 6.7%, due through June 2025		3,267			2,965
		316,897			286,215
Less: Current portion		(1,677	)		(1,365	)
Long-term portion	$	315,220		$	284,850

Senior Secured Credit Facilities

     On April 30, 2004, we entered into new Senior Secured Credit Facilities (the “Credit Facilities”) with a syndicate of lenders. The Credit Facilities consist of a five-year revolving credit facility in the amount of $60.0 million, up to $15.0 million of which is available to our Canadian operations, and a seven-year term loan facility in the amount of $100.0 million. The Credit Facilities bear interest based upon a spread over base rate or Eurodollar loans, as defined, at our option. The Credit Facilities are secured by substantially all of the assets of our U.S. restricted subsidiaries. Our Canadian operations guarantee and pledge all of their assets only in support of the portion of the revolving credit facility available to them. Additionally, 65% of the common shares of Waste Services’ first tier foreign subsidiaries including Waste Services (CA), are pledged to secure obligations under the Credit Facilities. As of June 30, 2006, there was $8.0 million outstanding on the revolving credit facility and an additional $21.1 million of capacity was used to support outstanding letters of credit.

     On December 28, 2005, we entered into another amendment to the Credit Facilities, which provided for the incurrence of up to $50.0 million of additional term loans under a new term loan tranche, as provided for under the terms of our existing Credit Facilities. We drew $25.0 million of this facility at close to refinance amounts then outstanding under our existing revolving credit facility. We drew another $23.0 million of this facility during the second quarter of 2006, which was used for the financing of acquisitions that are otherwise permitted under the terms of the Credit Facilities. Availability under this amendment expired in May 2006.

     On June 20, 2006, we further amended our Credit Facilities to provide us with more flexible terms, including the ability to increase our Canadian revolving facility from $15.0 million to $25.0 million in the future, and to allow for the potential redemption of our mandatorily redeemable preferred stock.

     Our Credit Facilities, as amended, contain certain financial and other covenants that restrict our ability to, among other things, make capital expenditures, incur indebtedness, incur liens, dispose of property, repay debt, pay dividends, repurchase shares and make

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WASTE SERVICES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

certain acquisitions. Our financial covenants include: (i) minimum consolidated interest coverage, (ii) maximum total leverage and (iii) maximum senior secured leverage. The covenants and restrictions limit the manner in which we conduct our operations and could adversely affect our ability to raise additional capital.

Senior Subordinated Notes

     On April 30, 2004, we completed a private offering of 9¹/2% Senior Subordinated Notes (“Subordinated Notes”) due 2014 for gross proceeds of $160.0 million. The Subordinated Notes mature on April 15, 2014. Interest on the Subordinated Notes is payable semi-annually on October 15 and April 15. The Subordinated Notes are redeemable, in whole or in part, at our option, on or after April 15, 2009, at a redemption price of 104.75% of the principal amount, declining ratably in annual increments to par on or after April 15, 2012, together with accrued interest to the redemption date. In addition, prior to April 15, 2007, we may redeem up to 35.0% of the aggregate principal amount of the Subordinated Notes with the proceeds of certain equity offerings, at a redemption price equal to 109.5% of the principal amount. Upon a change of control, as such term is defined in the Indenture, we are required to offer to repurchase all the Subordinated Notes at 101.0% of the principal amount, together with accrued interest and liquidated damages, if any, and obtain the consent of our senior lenders to such payment or repay our indebtedness of our Credit Facilities.

     The Subordinated Notes are unsecured and are subordinate to our existing and future senior secured indebtedness, including our Credit Facilities, structurally subordinated to existing and future indebtedness of our non-guarantor subsidiaries, rank equally with any unsecured senior subordinated indebtedness and senior to our existing and future subordinated indebtedness. Our obligations with respect to the Subordinated Notes, including principal, interest, premium, if any, and liquidated damages, if any, are fully and unconditionally guaranteed on an unsecured, senior subordinated basis by all of our existing and future domestic restricted subsidiaries. Our Canadian operations are not guarantors under the Subordinated Notes.

     The Subordinated Notes contain certain covenants that, in certain circumstances and subject to certain limitations and qualifications, restrict, among other things: (i) the incurrence of additional debt; (ii) the payment of dividends and repurchases of stock; (iii) the issuance of preferred stock and the issuance of stock of our subsidiaries; (iv) certain investments; (v) the repurchase of our Preferred Stock; (vi) transactions with affiliates; and (vii) certain sales of assets.

12. Cumulative Mandatorily Redeemable Preferred Stock

     In May 2003, we issued 55,000 shares of redeemable Preferred Stock (the “Preferred Stock”) to Kelso Investment Associates VI, L.P. and KEP VI, LLC (collectively “Kelso”), pursuant to the terms of an agreement dated as of May 6, 2003, as amended in February 2004, (the “Subscription Agreement”), at a price of $1,000 per share. We also issued to Kelso warrants to purchase 7,150,000 (pre-reverse split) shares of our common stock for $3.00 (pre-reverse split) per share. The warrants are exercisable at any time until May 6, 2010. The issuance of the Preferred Stock resulted in proceeds of approximately $49.5 million, net of fees of approximately $5.5 million. The shares of Preferred Stock are non-voting. The Preferred Stock entitles the holders to cash dividends of 17³/4% per annum compounding and accruing quarterly in arrears. The liquidation preference approximated $95.1 million as of June 30, 2006. The Preferred Stock entitles the holders to a liquidation preference of $1,000 per share, adjusted for any stock dividend, stock split, reclassification, recapitalization, consolidation or similar event affecting the Preferred Stock, plus the amount of any accrued but unpaid dividends on such share as of any date of determination.

     As we are not permitted to declare and pay cash dividends pursuant to the terms of our Credit Facilities, the dividend payments accrue. The Preferred Stock, including all accrued and unpaid dividends, must be redeemed in full by no later than May 6, 2015. If we do not exercise our option to redeem all of the Preferred Stock by May 6, 2009, Kelso may require us to initiate a sale of our assets to redeem approximately $156.1 million of principal and accrued dividends, on terms acceptable to our board consistent with the exercise of their fiduciary duties. Pursuant to an amendment to the Certificate of Designations of Waste Services dated April 30, 2004, if we determine, after conducting a sale process, that any such sale would not yield sufficient proceeds to repay in full the indebtedness then outstanding under our Credit Facilities and the redemption amount of our Senior Subordinated Notes issued on April 30, 2004, then we may elect to delay such sale. The sale date may be delayed until the earliest to occur of (i) the final maturity date of the Senior Subordinated Notes (April 15, 2014); (ii) the date on which our Credit Facilities and the Senior Subordinated Notes are fully repaid or otherwise satisfied; or (iii) a sale of our assets to a third party. We refer to this date as the delayed sale date. If we do not initiate and complete a sale of our assets within 20 months of initiation of the sale process by the holders of the Preferred Stock, then on notice from the holders of the Preferred Stock, all outstanding Preferred Stock will become due and payable on the first anniversary of the date on which the holders of Preferred Stock gave notice requiring the initiation of a sale process, for a liquidation amount of 1.20 times the liquidation preference of $1,000 per share. If the sale day has been delayed, then we are not required to pay this increased liquidation amount until the delayed sale date.

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WASTE SERVICES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

     Also pursuant to the Amended Certificate of Designations, if we become subject to a liquidation or insolvency event (as such terms are defined in our Amended and Restated Credit Agreement dated April 30, 2004) or in the event of a change of control (as such term is defined in the Amended Certificate of Designations), all payments and other distributions to holders of Preferred Stock will be subordinate to the repayment in full of our Credit Facilities. This provision does not prohibit any accrual or increase in the dividend rate or in the liquidation preference of the Preferred Stock as provided for in the Amended Certificate of Designations, or the distribution of additional shares or other equity securities to the holders of Preferred Stock, so long as such additional shares or other equity securities are subject to at least equivalent subordination provisions. In addition, the Amended Certificate of Designations prohibits us from making any payment or distribution to the holders of Preferred Stock in the event of a sale of our assets, or the exercise by the holders of the Preferred Stock of their right to require payment of the liquidation amount of their shares as a result of the failure to consummate a sale of our assets as described in the preceding paragraph, unless such payment or distribution is expressly permitted pursuant to the terms of the agreement then governing our Credit Facilities.

13. Commitments and Contingencies

Environmental Risks

     We are subject to liability for environmental damage that our solid waste facilities may cause, including damage to neighboring landowners or residents, particularly as a result of the contamination of soil, groundwater or surface water, including damage resulting from conditions existing prior to our acquisition of such facilities. Pollutants or hazardous substances whose transportation, treatment, or disposal was arranged by us or our predecessors, may also subject us to liability for any off-site environmental contamination caused by these pollutants or hazardous substances.

     Any substantial liability for environmental damage incurred by us could have a material adverse effect on our financial condition, results of operations or cash flows. As of the date of these condensed consolidated financial statements, we estimate the range of reasonably possible losses related to environmental matters to be insignificant and we are not aware of any such environmental liabilities that would be material to our operations or financial condition.

Legal Proceedings

     In the normal course of our business and as a result of the extensive governmental regulation of the solid waste industry, we may periodically become subject to various judicial and administrative proceedings involving federal, state, provincial or local agencies. In these proceedings, an agency may seek to impose fines on us or revoke or deny renewal of an operating permit or license held by us. From time to time, we may also be subject to actions brought by citizens’ groups, adjacent landowners or residents in connection with the permitting and licensing of transfer stations and landfills or allegations related to environmental damage or violations of the permits and licenses pursuant to which we operate. In addition, we may become party to various claims and suits for alleged damages to persons and property, alleged violations of certain laws and alleged liabilities arising out of matters occurring during the normal operation of a waste management business.

     During the second quarter of 2006, we resolved the litigation commenced by Waste Management, Inc. (“Waste Management”) against our President and Chief Operating Officer, Charles A. Wilcox, for breach of his employment contract and against us, claiming, among other things, tortious interference with contractual relations. In the settlement, we and Mr. Wilcox agreed to a final judgment entered in favor of Waste Management and to pay Waste Management the sum of $0.1 million. As a result of the settlement, Mr. Wilcox is no longer subject to any restrictions on his employment activities for us.

     In March 2005, we filed a Complaint against Waste Management in the U.S. District Court in the Middle District of Florida (Orlando). The Complaint alleges that Waste Management sought to prevent us from establishing ourselves as an effective competitor to Waste Management in the State of Florida, by tortiously interfering with our business relationships and committing antitrust violations under both federal and Florida law. We are seeking in excess of $25.0 million in damages against Waste Management. If we are successful in our suit under antitrust laws, Waste Management could be liable for treble damages, or in excess of $75.0 million.

     Except for the settlement previously described, no provision has been made in these financial statements for the above matters. We do not currently believe that the possible losses in respect of all or any of these matters would have a material adverse impact on our business, financial condition, results of operations or cash flows.

Surety Bonds, Letters of Credit and Insurance

     Municipal solid waste service contracts and permits and licenses to operate transfer stations, landfills and recycling facilities may

17

WASTE SERVICES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

require performance or surety bonds, letters of credit or other means of financial assurance to secure contractual performance. As of June 30, 2006 and December 31, 2005, we had provided customers and various regulatory authorities with such bonds and letters of credit amounting to approximately $74.0 million and $65.5 million, respectively, to collateralize our obligations.

     Our domestic based automobile, general liability and workers’ compensation insurance coverage is subject to certain deductible limits. We retain up to $0.5 million and $0.25 million of risk per claim, plus claims handling expense under our workers’ compensation and our auto and general liability insurance programs, respectively. Claims in excess of such deductible levels are fully insured subject to our policy limits. However, we have a limited claims history for our U.S. operations and it is reasonably possible that recorded reserves may not be adequate to cover future payments of claims. Adjustments, if any, to our reserves will be reflected in the period in which the adjustments are known. As of June 30, 2006, and included in the $74.0 million of bonds and letters of credit previously discussed, we have posted a letter of credit with our U.S. insurer of approximately $9.3 million to secure the liability for losses within the deductible limit.

     The changes in insurance reserves for our U.S. operations for the six months ended June 30, 2006 and 2005 are as follows (unaudited):

	Six Months Ended June 30,
	2006			2005
Balance, beginning of period	$	4,356		$	2,426
Provisions		2,575			1,868
Payments		(1,317	)		(428	)
Favorable claim development		(315	)		(279	)
Balance, end of period	$	5,299		$	3,587

Disposal Agreement

     We have entered into a put or pay disposal agreement with RCI Environment Inc., Centres de Transbordement et de Valorisation Nord Sud Inc., RCM Environnement Inc. (collectively the “RCI Companies”) and Intersan Inc. pursuant to which we have posted a letter of credit for C$4.0 million to secure our obligations and those of the RCI Companies to Intersan Inc. Concurrently with the put or pay disposal agreement with the RCI Companies, we entered into a three year agreement with Waste Management of Canada Corporation (formerly Canadian Waste Services Inc.) to allow us to deliver non-hazardous solid waste to their landfill in Michigan, which has now expired. On January 17, 2006, Waste Management drew C$0.3 million against the letter of credit posted by us to secure RCI’s obligations, as such we have provided for the draw as of December 31, 2005. The companies within the RCI group are controlled by a director of ours and/or individuals related to that director. Details of these agreements are further described in our annual financial statements for the year ended December 31, 2005, as filed on Form 10-K.

Other Contractual Arrangements

     During December 2003, we issued common shares as part of the purchase price of an acquisition. In connection with this acquisition, we entered into a reimbursement agreement whereby for a period of one year after the second anniversary of the closing date, we will reimburse the seller for the loss on sale of shares below $4.75 (pre-reverse split) per share. During the first quarter of 2006, we received a claim for reimbursement under the agreement of $0.9 million, which was charged to additional paid-in capital.

     From time to time and in the ordinary course of business we may enter into certain acquisitions whereby we will also enter into a royalty agreement. These agreements are usually based upon the amount of waste deposited at our landfill sites or in certain instances our transfer stations. Royalties are expensed as incurred and recognized as a cost of operations.

14. Authorized Capital Stock and Migration Transaction

Total Shares

     As of June 30, 2006, we were authorized to issue a total of 171,666,666 shares of capital stock consisting of:

• 166,666,666 shares of common stock, par value 0.01 per share; and

18

WASTE SERVICES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

• 5,000,000 shares of preferred stock, par value 0.01 per share, of which 100,000 shares have been designated as Series A Preferred Stock and one share has been designated as Special Voting Preferred Stock.

Preferred Stock

     The Series A Preferred Stock with a par value of $0.01 per share and a liquidation preference of $1,000.00 per share, have the powers, preferences and other special rights and the qualifications, limitations and restrictions that are set forth in the Certificate of Designations of Series A Preferred Stock as amended. 55,000 shares of Series A Preferred Stock are currently outstanding. The Special Voting Preferred Stock has the rights, preference, and limitations set forth in the Amended Certificate of Designation of Special Voting Preferred Stock. One share of Special Voting Preferred Stock is presently outstanding.

Migration Transaction

     Effective July 31, 2004, we entered into a migration transaction by which our corporate structure was reorganized so that Waste Services became the ultimate parent company of our corporate group. Prior to the migration transaction, we were a subsidiary of Waste Services (CA). After the migration transaction, Waste Services (CA) became our subsidiary.

     The migration transaction occurred by way of a plan of arrangement under the Business Corporations Act (Ontario) and consisted primarily of: (i) the exchange of 87,657,035 common shares of Waste Services (CA) for 87,657,035 (pre-reverse split) shares of our common stock; and (ii) the conversion of the remaining 9,229,676 common shares of Waste Services (CA) held by non-U.S. residents who elected to receive exchangeable shares into 9,229,676 exchangeable shares of Waste Services (CA). The transaction was approved by the Ontario Superior Court of Justice on July 30, 2004 and by our shareholders at a special meeting held on July 27, 2004.

     The terms of the exchangeable shares of Waste Services (CA) are the economic and functional equivalent of our common stock. Holders of exchangeable shares: (i) will receive the same dividends as holders of shares of our common stock, and (ii) will be entitled to vote on the same matters as holders of shares of our common stock. Such voting is accomplished through the one share of Special Voting Preferred Stock held by Computershare Trust Company of Canada as trustee, who will vote on the instructions of the holders of the exchangeable shares (one-third of one vote for each exchangeable share). As such, the exchangeable shares are classified as part of our equity.

     Upon the occurrence of certain events, such as the liquidation of Waste Services (CA), or after the redemption date, our Canadian holding company, Capital Environmental Holdings Company will have the right to purchase each exchangeable share for one-third of a share of our common stock, plus all declared and unpaid dividends on the exchangeable share and payment for any fractional shares resulting from the reverse stock split of our common stock, on the same basis as holders of our common stock received payment for their fractional shares. Unless certain events occur, such redemption date will not be earlier than December 31, 2016. Holders of exchangeable shares also have the right at any time at their option, to exchange their exchangeable shares for shares of our common stock, on the basis of one-third of a share of common stock for each one exchangeable share.

15. Comprehensive Income (Loss)

     Comprehensive income (loss) includes the effects of foreign currency translation. Comprehensive income (loss) for the three and six months ended June 30, 2006 and 2005 is as follows (unaudited):

	Three Months Ended June 30,						Six Months Ended June 30,
	2006			2005			2006			2005
Net loss	$	(11,074	)	$	(14,514	)	$	(29,839	)	$	(28,781	)
Foreign currency translation adjustment		8,136			(3,613	)		7,401			(3,611	)
Comprehensive loss	$	(2,938	)	$	(18,127	)	$	(22,438	)	$	(32,392	)

16. Segment Information

     We have determined our operating and reporting segments pursuant to the requirements of SFAS No. 131, “Disclosures about Segments of an Enterprise and Related Information” (“SFAS 131”). In making this determination, we considered our organization/reporting structure and the information used by our chief operating decision makers to make decisions about resource

19

WASTE SERVICES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

allocation and performance assessment. We are organized along geographic locations or regions within the U.S. and Canada. Our Canadian operations are organized between two regions, Eastern and Western Canada while the U.S. is organized into Florida, Texas and Arizona. As previously discussed, we have entered into a definitive agreement whereby we plan to divest of our Arizona operations, as such the results of our Arizona operations are presented as discontinued operations and are not included in the segment data presented herein.

     We believe our Canadian geographic segments meet the “Aggregation Criteria” set forth in SFAS 131 for the following reasons: (i) these segments are economically similar, (ii) the nature of the service, waste collection and disposal, is the same and transferable across locations; (iii) the type and class of customer is consistent among regions/districts; (iv) the methods used to deliver services are essentially the same (e.g. containers collect waste at market locations and trucks collect and transfer waste to landfills); and (v) the regulatory environment is consistent within Canada. We do not have significant (in volume or dollars) inter-segment related transactions. We have reflected both of our domestic corporate and Canadian corporate offices as “Corporate.”

     Summarized financial information concerning our reportable segments as of and for the three and six months ended June 30, 2006 and 2005 is as follows:

	Three Months Ended June 30, 2006
					All Other
	Florida		Canada		Operations			Corporate			Total
Revenue	$	52,637	$	47,843	$	1,107		$	—		$	101,587
Depreciation, depletion and amortization		5,581		3,792		407			373			10,153
Income (loss) from operations		7,284		7,755		(101	)		(10,114	)		4,824
Capital expenditures		2,918		9,655		302			292			13,167

	Three Months Ended June 30, 2005
					All Other
	Florida		Canada		Operations			Corporate			Total
Revenue	$	47,055	$	41,134	$	664		$	—		$	88,853
Depreciation, depletion and amortization		4,943		4,497		240			359			10,039
Income (loss) from operations		2,340		5,821		(274	)		(6,960	)		927
Capital expenditures		5,514		4,858		9			774			11,155

	Six Months Ended June 30, 2006
					All Other
	Florida		Canada		Operations			Corporate			Total
Revenue	$	101,030	$	86,934	$	2,183		$	—		$	190,147
Depreciation, depletion and amortization		10,855		7,480		777			758			19,870
Income (loss) from operations		12,788		12,379		(232	)		(24,414	)		521
Capital expenditures		10,260		13,178		1,262			814			25,514

	Six Months Ended June 30, 2005
					All Other
	Florida		Canada		Operations			Corporate			Total
Revenue	$	93,559	$	77,278	$	923		$	—		$	171,760
Depreciation, depletion and amortization		9,653		8,392		389			622			19,056
Income (loss) from operations		5,840		9,820		(666	)		(14,509	)		485
Capital expenditures		8,960		5,893		398			1,293			16,544

17. Condensed Consolidating Financial Statements

     Waste Services is the primary obligor under the Subordinated Notes, however Waste Services has no independent assets or operations, and the guarantees of our domestic restricted subsidiaries are full and unconditional and joint and several with respect to the Subordinated Notes, including principal, interest, premium, if any, and liquidated damages, if any. Presented below are our Condensed Consolidating Balance Sheets as of June 30, 2006 (unaudited) and December 31, 2005 and the related Unaudited Condensed Consolidating Statements of Operations for the three and six months ended June 30, 2006 and 2005 and the Unaudited

20

WASTE SERVICES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Condensed Consolidating Statements of Cash Flows for the six months ended June 30, 2006 and 2005 of our guarantor subsidiaries, our U.S. operating and reporting segments, (“Guarantors”) and the subsidiaries which are not guarantors, our Canadian operating and reporting segments (“Non-guarantors”):

	June 30, 2006
			Non-
	Guarantors		Guarantors		Eliminations			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	1,657	$	1,083	$	—		$	2,740
Accounts receivable, net		24,050		28,450		—			52,500
Prepaid expenses and other current assets		2,545		6,062		—			8,607
Current assets of discontinued operations		4,609		—		—			4,609
Total current assets		32,861		35,595		—			68,456
Property and equipment, net		64,234		75,211		—			139,445
Landfill sites, net		171,100		11,147		—			182,247
Goodwill and other intangible assets, net		246,164		91,279		—			337,443
Other assets		9,411		—		—			9,411
Due from affiliates		—		10,907		(10,907	)		—
Investment in subsidiary		183,574		—		(183,574	)		—
Non-current assets of discontinued operations		51,057		—		—			51,057
Total assets	$	758,401	$	224,139	$	(194,481	)	$	788,059
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	16,011	$	14,821	$	—		$	30,832
Accrued expenses and other current liabilities		30,208		12,658		—			42,866
Short-term financing and current portion of long-term debt		1,677		—		—			1,677
Current liabilities of discontinued operations		1,997		—		—			1,997
Total current liabilities		49,893		27,479		—			77,372
Long-term debt		315,220		—		—			315,220
Accrued closure, post-closure and other obligations		17,627		13,086		—			30,713
Cumulative mandatorily redeemable Preferred Stock		95,128		—		—			95,128
Due to affiliates		10,907		—		(10,907	)		—
Non-current liabilities of discontinued operations		287		—		—			287
Total liabilities		489,062		40,565		(10,907	)		518,720
Shareholders’ equity:
Common stock of Waste Services, Inc		340		—		—			340
Other equity		268,999		183,574		(183,574	)		268,999
Total shareholders’ equity		269,339		183,574		(183,574	)		269,339
Total liabilities and shareholders’ equity	$	758,401	$	224,139	$	(194,481	)	$	788,059

21

WASTE SERVICES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

	December 31, 2005
			Non-
	Guarantors		Guarantors		Eliminations			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	3,680	$	5,206	$	—		$	8,886
Accounts receivable, net		21,236		24,145		—			45,381
Prepaid expenses and other current assets		1,969		8,094		—			10,063
Current assets of discontinued operations		5,252		—		—			5,252
Total current assets		32,137		37,445		—			69,582
Property and equipment, net		53,576		65,909		—			119,485
Landfill sites, net		146,398		10,100		—			156,498
Goodwill and other intangible assets, net		221,674		86,195		—			307,869
Other assets		10,263		13,553		—			23,816
Due from affiliates		—		2,295		(2,295	)		—
Investment in subsidiary		177,882		—		(177,882	)		—
Non-current assets of discontinued operations		51,139		—		—			51,139
Total assets	$	693,069	$	215,497	$	(180,177	)	$	728,389
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	14,473	$	11,486	$	—		$	25,959
Accrued expenses and other current liabilities		26,276		12,789		—			39,065
Short-term financing and current portion of long-term debt		1,365		—		—			1,365
Current liabilities of discontinued operations		1,827		—		—			1,827
Total current liabilities		43,941		24,275		—			68,216
Long-term debt		284,850		—		—			284,850
Accrued closure, post-closure and other obligations		12,311		13,340		—			25,651
Cumulative mandatorily redeemable Preferred Stock		84,971		—		—			84,971
Due to affiliates		2,295		—		(2,295	)		—
Non-current liabilities of discontinued operations		210		—		—			210
Total liabilities		428,578		37,615		(2,295	)		463,898
Shareholders’ equity:
Common stock of Waste Services, Inc		937		—		—			937
Other equity		263,554		177,882		(177,882	)		263,554
Total shareholders’ equity		264,491		177,882		(177,882	)		264,491
Total liabilities and shareholders’ equity	$	693,069	$	215,497	$	(180,177	)	$	728,389

22

WASTE SERVICES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

	Three Months Ended June 30, 2006
				Non-
	Guarantors			Guarantors		Eliminations			Consolidated
Revenue	$	53,744		$	47,843	$	—		$	101,587
Operating and other expenses:
Cost of operations (exclusive of depreciation, depletion and amortization)		37,234			32,766		—			70,000
Selling, general and administrative expense (exclusive of depreciation, depletion and amortization)		8,634			5,729		—			14,363
Depreciation, depletion and amortization		5,999			4,154		—			10,153
Foreign exchange gain and other		85			2,162		—			2,247
Equity earnings in investees		(1,017	)		—		1,017			—
Income from operations		2,809			3,032		(1,017	)		4,824
Interest expense		7,704			121		—			7,825
Cumulative mandatorily redeemable preferred stock dividends and amortization of issue costs		4,841			—		—			4,841
Loss from continuing operations before income taxes		(9,736	)		2,911		(1,017	)		(7,842	)
Income tax provision		1,474			1,894		—			3,368
Net loss from continuing operations		(11,210	)		1,017		(1,017	)		(11,210	)
Net income from discontinued operations		136			—		—			136
Net income (loss) attributable to Common Shareholders	$	(11,074	)	$	1,017	$	(1,017	)	$	(11,074	)

23

WASTE SERVICES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

	Three Months Ended June 30, 2005
				Non-
	Guarantors			Guarantors			Eliminations			Consolidated
Revenue	$	47,719		$	41,134		$	—		$	88,853
Operating and other expenses:
Cost of operations (exclusive of depreciation, depletion and amortization)		36,983			27,532			—			64,515
Selling, general and administrative expense (exclusive of depreciation, depletion and amortization)		7,663			5,708			—			13,371
Depreciation, depletion and amortization		5,231			4,808			—			10,039
Foreign exchange gain and other		29			(28	)		—			1
Equity earnings in investees		(1,417	)		—			1,417			—
Income (loss) from operations		(770	)		3,114			(1,417	)		927
Interest expense		7,126			47			—			7,173
Cumulative mandatorily redeemable preferred stock dividends and amortization of issue costs		5,114			—			—			5,114
Loss from continuing operations before income taxes		(13,010	)		3,067			(1,417	)		(11,360	)
Income tax provision		1,363			1,650			—			3,013
Net loss from continuing operations		(14,373	)		1,417			(1,417	)		(14,373	)
Net loss from discontinued operations		(141	)		—			—			(141	)
Net income (loss) attributable to Common Shareholders	$	(14,514	)	$	1,417		$	(1,417	)	$	(14,514	)

24

WASTE SERVICES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

	Six Months Ended June 30, 2006
				Non-
	Guarantors			Guarantors			Eliminations			Consolidated
Revenue	$	103,213		$	86,934		$	—		$	190,147
Operating and other expenses:
Cost of operations (exclusive of depreciation, depletion and amortization)		72,388			59,990			—			132,378
Selling, general and administrative expense (exclusive of depreciation, depletion and amortization)		17,799			11,801			—			29,600
Deferred acquisition costs		439			5,173			—			5,612
Depreciation, depletion and amortization		11,653			8,217			—			19,870
Foreign exchange gain and other		140			2,026			—			2,166
Equity earnings in investees		1,991			—			(1,991	)		—
Income (loss) from operations		(1,197	)		(273	)		1,991			521
Interest expense		14,663			217			—			14,880
Cumulative mandatorily redeemable preferred stock dividends and amortization of issue costs		10,537			—			—			10,537
Loss from continuing operations before income taxes		(26,397	)		(490	)		1,991			(24,896	)
Income tax provision		2,839			1,501			—			4,340
Net loss from continuing operations		(29,236	)		(1,991	)		1,991			(29,236	)
Net loss from discontinued operations		(603	)		—			—			(603	)
Net loss attributable to Common Shareholders	$	(29,839	)	$	(1,991	)	$	1,991		$	(29,839	)

25

WASTE SERVICES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

	Six Months Ended June 30, 2005
				Non-
	Guarantors			Guarantors			Eliminations			Consolidated
Revenue	$	94,482		$	77,278		$	—		$	171,760
Operating and other expenses:
Cost of operations (exclusive of depreciation, depletion and amortization)		72,301			52,515			—			124,816
Selling, general and administrative expense (exclusive of depreciation, depletion and amortization)		16,037			11,550			—			27,587
Depreciation, depletion and amortization		10,109			8,947			—			19,056
Foreign exchange gain and other		—			(184	)		—			(184	)
Equity earnings in investees		(1,692	)		—			1,692			—
Income (loss) from operations		(2,273	)		4,450			(1,692	)		485
Interest expense		13,844			154			—			13,998
Cumulative mandatorily redeemable preferred stock dividends and amortization of issue costs		9,956			—			—			9,956
Loss from continuing operations before income taxes		(26,073	)		4,296			(1,692	)		(23,469	)
Income tax provision		2,726			2,604			—			5,330
Net loss from continuing operations		(28,799	)		1,692			(1,692	)		(28,799	)
Net income from discontinued operations		18			—			—			18
Net income (loss) attributable to Common Shareholders	$	(28,781	)	$	1,692		$	(1,692	)	$	(28,781	)

26

WASTE SERVICES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

	Six Months Ended June 30, 2006
				Non-
	Guarantors			Guarantors			Eliminations			Consolidated
Cash flows from operating activities:
Net cash provided by operating activities	$	2,451		$	15,020		$	—		$	17,471
Cash flows from investing activities:
Cash used in business combinations and significant asset acquisitions, net of cash acquired		(26,415	)		(2,528	)		—			(28,943	)
Capital expenditures		(11,732	)		(13,782	)		—			(25,514	)
Proceeds from asset sales and business divestitures		4,182			347			—			4,529
Share reimbursement agreement		(929	)		—			—			(929	)
Intercompany		—			(2,955	)		2,955			—
Net cash used in continuing operations		(34,894	)		(18,918	)		2,955			(50,857	)
Net cash used in discontinued operations		(2,107	)		—			—			(2,107	)
Net cash used in investing activities		(37,001	)		(18,918	)		2,955			(52,964	)
Cash flows from financing activities:
Proceeds from issuance of debt and draws on revolving credit facility		34,000			2,197			—			36,197
Principal repayments of debt and capital lease obligations		(4,376	)		(2,662	)		—			(7,038	)
Proceeds from the exercise of options and warrants		86			—						86
Fees paid for financing transactions		(138	)		—			—			(138	)
Intercompany		2,955			—			(2,955	)		—
		32,527			(465	)		(2,955	)		29,107
Effect of exchange rate changes on cash and cash equivalents		—			240			—			240
Decrease in cash and cash equivalents		(2,023	)		(4,123	)		—			(6,146	)
Cash and cash equivalents, beginning of period		3,680			5,206			—			8,886
Cash and cash equivalents, end of period	$	1,657		$	1,083		$	—		$	2,740

27

WASTE SERVICES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

	Six Months Ended June 30, 2005
				Non-
	Guarantors			Guarantors			Eliminations			Consolidated
Cash flows from operating activities:
Net cash provided by operating activities	$	(5,085	)	$	15,094		$	—		$	10,009
Cash flows from investing activities:
Cash used in business combinations and significant asset acquisitions, net of cash acquired		(150	)		—			—			(150	)
Capital expenditures		(9,363	)		(7,181	)		—			(16,544	)
Proceeds from asset sales and business divestitures		314			322			—			636
Deposits for business acquisitions and other		23			(714	)		—			(691	)
Intercompany		—			(6,715	)		6,715			—
Net cash used in continuing operations		(9,176	)		(14,288	)		6,715			(16,749	)
Net cash used in discontinued operations		(3,643	)		—			—			(3,643	)
Net cash used in investing activities		(12,819	)		(14,288	)		6,715			(20,392	)
Cash flows from financing activities:
Principal repayments of debt and capital lease obligations		(581	)		(249	)		—			(830	)
Sale of common shares and warrants		7,125			—			—			7,125
Proceeds from the exercise of options and warrants		521			—						521
Intercompany		6,715			—			(6,715	)		—
		13,780			(249	)		(6,715	)		6,816
Effect of exchange rate changes on cash and cash equivalents		—			(133	)		—			(133	)
Increase (decrease) in cash and cash equivalents		(4,124	)		424			—			(3,700	)
Cash and cash equivalents, beginning of period		6,192			2,284			—			8,476
Cash and cash equivalents, end of period	$	2,068		$	2,708		$	—		$	4,776

28

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

     The following discussion should be read in conjunction with the Unaudited Condensed Consolidated Financial Statements and Notes thereto included elsewhere herein as well as our annual report on Form 10-K for the year ended December 31, 2005, as filed with the Securities and Exchange Commission, including the factors set forth in the section titled “Disclosure Regarding Forward-Looking Statements” and factors affecting future results as well as our other filings made with the Securities and Exchange Commission.

Overview

     We are a multi-regional, integrated solid waste services company, providing collection, transfer, landfill disposal and recycling services for commercial, industrial and residential customers. Our operating strategy is disposal-based, whereby we enter geographic markets with attractive growth or positive competitive characteristics by acquiring and developing landfill disposal capacity, then acquiring and developing waste collection and transfer operations. Our operations are located in the United States and Canada. Our U.S. operations are located in Florida, Texas and Arizona and our Canadian operations are located in Eastern Canada (Ontario) and Western Canada (Alberta, Saskatchewan and British Columbia). During the current quarter, we have presented our Arizona operations as discontinued.

Sources of Revenue

     Our revenue consists primarily of fees charged to customers for solid waste collection, landfill disposal, transfer and recycling services.

     We derive our collection revenue from services provided to commercial, industrial and residential customers. Collection services are generally performed under service agreements or pursuant to contracts with municipalities. We recognize revenue when services are rendered. Amounts billed to customers prior to providing the related services are reflected as deferred revenue and reported as revenue in the periods in which the services are rendered.

     We provide collection services for commercial and industrial customers generally under one to five year service agreements. We determine the fees we charge our customers based on a variety of factors, including collection frequency, level of service, route density, the type, volume and weight of the waste collected, type of equipment and containers furnished, the distance to the disposal or processing facility, the cost of disposal or processing and prices charged by competitors for similar services. Our contracts with commercial and industrial customers typically allow us to pass on increased costs resulting from variable items such as disposal and fuel costs and surcharges. Our ability to pass on cost increases is however, sometimes limited by the terms of our contracts.

     We provide residential waste collection services through a variety of contractual arrangements, including contracts with municipalities, owners and operators of large residential complexes, mobile home parks and homeowners associations or through subscription arrangements with individual homeowners. Our contracts with municipalities are typically for a term of three to ten years and contain a formula, generally based on a predetermined published price index, for adjustments to fees to cover increases in some, but not all, of our operating costs. Certain of our contracts with municipalities contain renewal provisions. The fees we charge for residential solid waste collection services provided on a subscription basis are based primarily on route density, the frequency and level of service, the distance to the disposal or processing facility, the cost of disposal or processing and prices we charge in the market for similar services.

     We charge our landfill and transfer station customers a tipping fee per ton or per cubic yard basis for disposing of their solid waste at our transfer stations and landfills. We generally base our landfill tipping fees on market factors and the type and weight of, or volume of the waste deposited. We generally base our transfer station tipping fees on market factors and the cost of processing the waste deposited at the transfer station, the cost of transporting the waste to a disposal facility and the cost of disposal.

     Material recovery facilities generate revenue from the sale of recyclable commodities. In an effort to reduce our exposure to commodity price fluctuations on recycled materials, where competitive pressures permit, we charge collection or processing fees for recycling volume collected from our customers. We may also manage our exposure to commodity price fluctuations through the use of commodity brokers who will arrange for the sale of recyclable materials from our collection operations to third party purchasers.

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Expense Structure

     Our cost of operations primarily includes tipping fees and related disposal costs, labor and related benefit costs, equipment maintenance, fuel, vehicle, liability and workers’ compensation insurance and landfill capping, closure and post-closure costs. Our strategy is to create vertically integrated operations where possible, using transfer stations to link collection operations with our landfills to increase internalization of our waste volume. Internalization lowers our disposal costs by allowing us to eliminate tipping fees otherwise paid to third party landfill or transfer station operators. We believe that internalization provides us with a competitive advantage by allowing us to be a low cost provider in our markets. We expect that our internalization will gradually increase over time as we develop our network of transfer stations and maximize delivery of collection volumes to our landfill sites.

     In markets where we do not have our own landfills, we seek to secure disposal arrangements with municipalities or private owners of landfills or transfer stations. In these markets, our ability to maintain competitive prices for our collection services is generally dependent upon our ability to secure competitive disposal pricing. If owners of third party disposal sites discontinue our arrangements, we would have to seek alternative disposal sites which could impact our profitability and cash flow. In addition, if third party disposal sites increase their tipping fees and we are unable to pass these increases on to our collection customers, our profitability and cash flow would be negatively impacted.

     We believe that the age and condition of our vehicle fleet has a significant impact on operating costs, including, but not limited to, repairs and maintenance, insurance and driver training and retention costs. Through capital investment, we seek to maintain an average fleet age of approximately six years. We believe that this enables us to best control our repair and maintenance costs, safety and insurance costs and employee turnover related costs.

     Selling, general and administrative expenses include managerial costs, information systems, sales force, administrative expenses and professional fees.

     Depreciation, depletion and amortization includes depreciation of fixed assets over their estimated useful lives using the straight-line method, depletion of landfill costs, including capping, closure and post-closure obligations using the units-of-consumption method, and amortization of intangible assets including customer relationships and contracts and covenants not-to-compete, which are amortized over the expected life of the benefit to be received from such intangibles.

     We capitalize certain third party costs related to pending acquisitions or development projects. These costs remain deferred until we cease to be engaged on a regular and ongoing basis with completion of the proposed acquisition, at which point they are charged to current earnings. In the event that the target is acquired, these costs are incorporated in the cost of the acquired business. We expense indirect and internal costs including executive salaries, overhead and travel costs related to acquisitions as they are incurred.

Recent Developments

     On July 20, 2006, we announced the execution of definitive agreements with Allied Waste Industries, Inc. (“Allied Waste”) whereby we will (i) purchase Allied Waste’s hauling, transfer station and recycling operations in Miami, Florida for $61.0 million with an additional contingent payment of $2.0 million due upon the successful renewal of a certain municipal recycling contract and (ii) sell our Arizona hauling, transfer station and landfill operations to Allied Waste for $53.0 million. Accordingly, we have presented the net assets and operations of Arizona as discontinued operations for all periods presented. Revenue from discontinued operations was $7.5 million and $6.5 million for the three months ended June 30, 2006 and 2005, respectively, and $14.5 million and $12.6 million for the six months ended June 30, 2006 and 2005, respectively. Pre-tax net income (loss) from discontinued operations was $0.1 million and $(0.1) million for the three months ended June 30, 2006 and 2005, respectively, and $(0.6) million and nil for the six months ended June 30, 2006 and 2005, respectively. Net assets related to discontinued operations as of June 30, 2006 were $53.4 million.

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     In June 2006, we completed the acquisition of Sun Country Materials, LLC (“Sun Country Materials”) in Hillsborough County, Florida. The purchase price for Sun Country Materials consisted of $5.0 million in cash and the issuance of 4,013,378 (pre-reverse split) shares of common stock of Waste Services valued at approximately $12.4 million. Sun Country Materials owns a construction and demolition landfill located in Hillsborough County, Florida, and the site has recently been issued an expansion permit.

     In May 2006, we completed the acquisition of Liberty Waste, LLC (“Liberty Waste”) in Tampa, Florida. The purchase price for Liberty Waste consisted of $8.0 million in cash and the issuance of 1,155,116 (pre-reverse split) shares of common stock of Waste Services valued at approximately $3.6 million. We had previously paid a deposit of $6.0 million in cash and issued 946,372 (pre-reverse split) shares of common stock of Waste Services valued at approximately $2.9 million. Liberty Waste is a collection operation based in Tampa with two transfer stations, one located in Tampa and the other in Clearwater. The transfer stations are both permitted to accept construction and demolition and Class III waste volumes.

     The Liberty Waste and Sun Country Materials acquisitions will compliment our existing operations in the Tampa market. In addition with the acquisition of Sun County, we will be able to internalize our existing construction and demolition waste volumes and those of Liberty Waste into the acquired landfill.

     In April 2006 we completed the acquisition of a materials recovery facility and solid waste transfer station in Taft, Florida (“Taft Recycling”). The purchase price for the facility consisted of $11.3 million in cash and the issuance of 1,269,841 (pre-reverse split) shares of common stock of Waste Services valued at approximately $3.9 million. In addition, upon the issuance of the final operating permit on June 15, 2006, we paid $1.5 million in cash and delivered an additional 1,269,842 (pre-reverse split) shares of common stock of Waste Services valued at approximately $3.7 million, of which 769,842 (pre-reverse split) shares were newly issued and 500,000 (pre-reverse split) shares were transferred from treasury. The acquisition of Taft Recycling will allow us greater access to third party waste volumes that can be disposed at our landfill facility in Osceola County, Florida.

Results of Operations for the Three and Six Months Ended June 30, 2006 and 2005

     Certain of our operations are domiciled in Canada; as such, for each reporting period we translate the results of operations and financial condition of our Canadian operations into U.S. dollars. Therefore, the reported results of our operations and financial condition are subject to changes in the exchange relationship between the two currencies. For example, as the relationship of the

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Canadian dollar strengthens against the U.S. dollar, revenue is favorably affected and conversely expenses are unfavorably affected. Assets and liabilities of Canadian operations are translated from Canadian dollars into U.S. dollars at the exchange rates in effect at the relevant balance sheet dates, and revenue and expenses of Canadian operations are translated from Canadian dollars into U.S. dollars at the average exchange rates prevailing during the period. Unrealized gains and losses on translation of the Canadian operations into U.S. dollars are reported as a separate component of shareholders’ equity and are included in comprehensive income (loss). Separately, monetary assets and liabilities denominated in U.S. dollars held by our Canadian operations are re-measured from U.S. dollars into Canadian dollars and then translated into U.S. dollars. The effects of re-measurement are reported currently as a component of net income (loss). Currently, we do not hedge our exposure to changes in foreign exchange rates.

     Our consolidated results of operations for the three and six months ended June 30, 2006 and 2005 are as follows (in thousands):

	Three Months Ended June 30, 2006
	US		Canada					Total
Revenue	$	53,744		100.0	%	$	47,843		100.0	%	$	101,587	100.0	%
Operating expenses:
Cost of operations		37,234		69.3	%		32,766		68.5	%		70,000	68.9	%
Selling, general and administrative expense		8,634		16.1	%		5,729		12.0	%		14,363	14.1	%
Depreciation, depletion and amortization		5,999		11.2	%		4,154		8.7	%		10,153	10.0	%
Foreign exchange loss and other		85		0.1	%		2,162		4.5	%		2,247	2.3	%
Income from operations	$	1,792		3.3	%	$	3,032		6.3	%	$	4,824	4.7	%

	Three Months Ended June 30, 2005
	US			Canada						Total
Revenue	$	47,719			100.0	%	$	41,134			100.0	%	$	88,853	100.0	%
Operating expenses:
Cost of operations		36,983			77.5	%		27,532			66.9	%		64,515	72.6	%
Selling, general and administrative expense		7,663			16.1	%		5,708			13.9	%		13,371	15.0	%
Depreciation, depletion and amortization		5,231			11.0	%		4,808			11.7	%		10,039	11.4	%
Foreign exchange loss (gain) and other		29			0.0	%		(28	)		-0.1	%		1	0.0	%
Income (loss) from operations	$	(2,187	)		-4.6	%	$	3,114			7.6	%	$	927	1.0	%

	Six Months Ended June 30, 2006
	US		Canada						Total
Revenue	$	103,213		100.0	%	$	86,934			100.0	%	$	190,147	100.0	%
Operating expenses:
Cost of operations		72,388		70.1	%		59,990			69.0	%		132,378	69.6	%
Selling, general and administrative expense		17,799		17.2	%		11,801			13.6	%		29,600	15.6	%
Impairment of deferred acquisition costs		439		0.4	%		5,173			6.0	%		5,612	3.0	%
Depreciation , depletion and amortization		11,653		11.4	%		8,217			9.4	%		19,870	10.4	%
Foreign exchange loss (gain) and other		140		0.1	%		2,026			2.3	%		2,166	1.1	%
Income (loss) from operations	$	794		0.8	%	$	(273	)		-0.3	%	$	521	0.3	%

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	Six Months Ended June 30, 2005
	US			Canada						Total
Revenue	$	94,482			100.0	%	$	77,278			100.0	%	$	171,760		100.0	%
Operating expenses:
Cost of operations		72,301			76.5	%		52,515			68.0	%		124,816		72.7	%
Selling, general and administrative expense		16,037			17.0	%		11,550			14.9	%		27,587		16.1	%
Depreciation, depletion and amortization		10,109			10.7	%		8,947			11.5	%		19,056		11.0	%
Foreign exchange loss (gain) and other		—			0.0	%		(184	)		-0.2	%		(184	)	-0.1	%
Income (loss) from operations	$	(3,965	)		-4.2	%	$	4,450			5.8	%	$	485		0.3	%

Revenue

     A summary of our revenue is as follows (in thousands):

	Three Months Ended June 30,										Six Months Ended June 30,
	2006					2005					2006					2005
Collection	$	83,196		73.6	%	$	74,109		76.2	%	$	156,846		74.7	%	$	144,057		77.2	%
Landfill disposal		14,005		12.4	%		10,350		10.6	%		26,580		12.7	%		18,068		9.7	%
Transfer station		12,706		11.2	%		9,330		9.6	%		21,015		10.0	%		17,785		9.5	%
Material recovery facilities		2,845		2.5	%		2,835		2.9	%		5,098		2.4	%		5,637		3.0	%
Other specialized services		290		0.3	%		580		0.7	%		440		0.2	%		1,013		0.6	%
		113,042		100.0	%		97,204		100.0	%		209,979		100.0	%		186,560		100.0	%
Intercompany elimination		(11,455	)				(8,351	)				(19,832	)				(14,800	)
	$	101,587				$	88,853				$	190,147				$	171,760

					All Other		Total
Three Months Ended June 30,	Florida		Canada		Operations		Revenue
2006	$	52,637	$	47,843	$	1,107	$	101,587
2005		47,055		41,134		664		88,853

					All Other		Total
Six Months Ended June 30,	Florida		Canada		Operations		Revenue
2006	$	101,030	$	86,934	$	2,183	$	190,147
2005		93,559		77,278		923		171,760

     Revenue was $101.6 million and $88.9 million for the three months ended June 30, 2006 and 2005, respectively, an increase of $12.7 million or 14.3%. The increase in revenue for our Florida operations for the three months ended June 30, 2006 of $5.6 million or 11.9% was driven by price increases of $3.7 million, of which $1.7 million related to fuel surcharges, increased volume at our landfill sites of $3.4 million, acquisitions, net of dispositions, of $1.4 million and other organic volume growth of $0.4 million. Offsetting these increases were net decreases of $3.3 million, primarily related the expiration or assignment of certain lower margin residential collection contracts.

     The increase in revenue for our Canadian operations for the three months ended June 30, 2006 of $6.7 million or 16.3% was due to price increases of $3.0 million, of which $0.7 million related to fuel surcharges, other organic volume growth of $1.5 million, acquisitions of $0.5 million and the favorable effects of foreign exchange movements of $4.6 million. Offsetting these increases were decreases at our landfill sites, primarily due to special waste projects in 2005 that did not recur in 2006 of $1.5 million and decreases related to our the expiration of certain contracts of $1.4 million.

     The increase in revenue for our other operating segments for the three months ended June 30 2006 of $0.4 million or 66.7% was due to increased volume at our landfill sites of $0.3 million and other organic volume growth of $0.1 million.

     Revenue was $190.1 million and $171.8 million for the six months ended June 30, 2006 and 2005, respectively, an increase of $18.3 million or 10.7%. The increase in revenue for our Florida operations for the six months ended June 30, 2006 of $7.5 million or 8.0% was driven by price increases of $6.8 million, of which $2.7 million related to fuel surcharges, increased volume at our landfill sites of $6.5 million, other organic volume growth of $1.1 million and other increases of $0.7 million. Offsetting these increases were net decreases of $7.6 million, primarily related the expiration or assignment of certain lower margin residential collection contracts and dispositions, net of acquisitions, of previously acquired operations.

     The increase in revenue for our Canadian operations for the six months ended June 30, 2006 of $9.7 million or 12.5% was due to price increases of $5.4 million, of which $1.3 million related to fuel surcharges, other organic volume growth of $2.5 million, acquisitions of $0.6 million and the favorable effects of foreign exchange movements of $6.8 million. Offsetting these increases were

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decreases at our landfill sites, primarily due to special waste projects in 2005 that did not recur in 2006 of $2.7 million and decreases related to our the expiration of certain contracts of $2.9 million.

     The increase in revenue for our other operating segments for the six months ended June 30 2006 of $1.3 million or in excess of 100%, was due to increased volume at our landfill sites of $0.7 million and other organic volume growth of $0.6 million.

     Cost of Operations

     Cost of operations was $70.0 million and $64.5 million for the three months ended June 30, 2006 and 2005, respectively, an increase of $5.5 million or 8.5%. As a percentage of revenue, cost of operations was 68.9% and 72.6% for three months ended June 30, 2006 and 2005, respectively.

     The increase in cost of operations for our U.S. operations for the three months ended June 30, 2006 of $0.2 million or 0.7% was driven by higher insurance costs of $0.7 million, increased landfill operating costs related to increased host and royalty fees from increased disposal volumes of $0.6 million, maintenance and repair increases of $0.4 million and increased fuel costs of $0.3 million. Acquisitions in our Florida segment, net of dispositions, increased cost of operations by $0.4 million. Offsetting these cost increases were lower costs for third party disposal due to increased internalization, of $1.6 million and lower labor costs, primarily due to our Florida operations exiting certain lower margin residential collection contracts, of $0.6 million. As a percentage of revenue, cost of operations for our domestic operations was 69.3% and 77.5% for the three months ended June 30, 2006 and 2005, respectively. The improvement in our domestic gross margin is primarily due to increased volumes at our domestic landfill sites, increased internalization and the disposition of certain lower margin residential collection contracts in Florida.

     The increase in cost of operations for our Canadian operations for the three months ended June 30, 2006 of $5.3 million or 19.0% was due to increased disposal volumes, rates and sub-contractor costs of $1.0 million, increased labor costs of $0.6 million, maintenance and repair increases of $0.4 million, increased fuel costs of $0.3 million and the unfavorable effects of foreign exchange movements of $3.1 million, offset by other decreases of $0.1 million. Cost of operations as a percentage of revenue increased to 68.5% from 66.9% for the three months ended June 30, 2006 and 2005, respectively. The decrease in margin is primarily due to lower overall landfill volumes.

     Cost of operations was $132.4 million and $124.8 million for the six months ended June 30, 2006 and 2005, respectively, an increase of $7.6 million or 6.1%. As a percentage of revenue, cost of operations was 69.6% and 72.7% for six months ended June 30, 2006 and 2005, respectively.

     The increase in cost of operations for our U.S. operations for the six months ended June 30, 2006 of $0.1 million or 0.1% was driven by higher landfill operating costs related to increased host and royalty fees from increased disposal volumes of $1.2 million, maintenance and repair increases of $1.1 million, higher insurance costs of $1.0 million, increased fuel costs of $0.7 million and other operating increases of $0.3 million. Offsetting these cost increases were lower costs for third party disposal due to increased internalization, of $2.0 million and lower labor costs, primarily due to our Florida operations exiting certain lower margin residential collection contracts, of $0.7 million. Dispositions in our Florida segment, net of acquisitions completed in the second quarter of 2006, decreased cost of operations by $1.5 million. As a percentage of revenue, cost of operations for our domestic operations was 70.1% and 76.5% for the six months ended June 30, 2006 and 2005, respectively. The improvement in our domestic gross margin is primarily due to increased volumes at our domestic landfill sites, increased internalization and the disposition of certain lower margin residential collection contracts in Florida.

     The increase in cost of operations for our Canadian operations for the six months ended June 30, 2006 of $7.5 million or 14.2% was due to increased disposal volumes, rates and sub-contractor costs of $1.5 million, increased labor costs of $0.6 million, increased fuel costs of $0.5 million, maintenance and repair increases of $0.4 million and the unfavorable effects of foreign exchange movements of $4.7 million, offset by other decreases of $0.2 million. Cost of operations as a percentage of revenue increased to 69.0% from 68.0% for the six months ended June 30, 2006 and 2005, respectively. The decline in margin is primarily due to lower overall landfill volumes.

     Selling, General and Administrative Expense

     Selling, general and administrative expense was $14.4 million and $13.4 million for the three months ended June 30, 2006 and 2005, respectively, an increase of $1.0 million or 7.4%. As a percentage of revenue, selling, general and administrative expense was 14.1% and 15.0% for the three months ended June 30, 2006 and 2005, respectively. The overall increase in selling, general and

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administrative expense is due to increased legal fees of $1.0 million, primarily related to litigation with Waste Management, which is more fully described in the notes to the unaudited condensed consolidated financial statements included elsewhere in this filing, increased salaries and wages of $1.0 million and the unfavorable effects of foreign exchange movements of $0.6 million. Offsetting these increases were decreases in accounting and other professional fees of $0.7 million, primarily related to the re-audit of the Florida Recycling financial statements in 2005, decreased insurance costs of $0.4 million, decreased stock-based compensation expense, inclusive of employees and consultants, of $0.3 million and other net decreases of $0.2 million. As of January 1, 2006 we adopted the fair value recognition provisions of FASB Statement No. 123(R), Share-Based Payment, using the modified-prospective transition method.

     Selling, general and administrative expense was $29.6 million and $27.6 million for the six months ended June 30, 2006 and 2005, respectively, an increase of $2.0 million or 7.3%. As a percentage of revenue, selling, general and administrative expense was 15.6% and 16.1% for the three months ended June 30, 2006 and 2005, respectively. The overall increase in selling, general and administrative expense is due to increased salaries and wages of $1.4 million, increased legal fees of $1.2 million, primarily related to litigation with Waste Management, which is more fully described in the notes to the unaudited condensed consolidated financial statements included elsewhere in this filing, increased stock-based compensation expense, inclusive of employees and consultants of $0.4 million, the unfavorable effects of foreign exchange movements of $0.9 million and other net increases of $0.3 million. Offsetting these increases were decreases in accounting and other professional fees of $1.3 million, primarily related to the re-audit of the Florida Recycling financial statements in 2005 and decreased insurance costs of $0.9 million.

     Deferred Acquisition Costs

     In April 2006, we ceased being actively engaged in negotiations with Lucien Rémillard, one of our directors, concerning the potential acquisition of the solid waste collection and disposal business assets owned by a company controlled by Mr. Rémillard in Quebec, Canada. During the first quarter of 2006, we recognized an expense related to these previously deferred acquisition costs of approximately $5.6 million.

     Depreciation, Depletion and Amortization

     Depreciation, depletion and amortization was $10.2 million and $10.0 million for the three months ended June 30, 2006 and 2005, respectively, an increase of $0.2 million or 1.1%. As a percentage of revenue, depreciation, depletion and amortization was 10.0% and 11.4% for the three months ended June 30, 2006 and 2005, respectively. The overall increase in depreciation, depletion and amortization is primarily attributable to increased disposal volumes at our domestic landfills, offset by lower volumes coupled with a decrease in the overall weighted average depletion rates. The unfavorable effects of foreign exchange movements increased depreciation, depletion and amortization by $0.4 million. Landfill depletion rates for our U.S. landfills ranged from $4.00 to $7.68 per ton and from $3.84 to $8.10 per ton during the three months ended June 30, 2006 and 2005, respectively. Landfill depletion rates for our Canadian landfills ranged from C$2.70 to C$11.82 per tonne and C$2.57 to C$17.80 per tonne during the three months ended June 30, 2006 and 2005, respectively.

     Depreciation, depletion and amortization was $19.9 million and $19.1 million for the six months ended June 30, 2006 and 2005, respectively, an increase of $0.8 million or 4.3%. As a percentage of revenue, depreciation, depletion and amortization was 10.4% and 11.0% for the six months ended June 30, 2006 and 2005, respectively. The overall increase in depreciation, depletion and amortization is primarily attributable to increased disposal volumes at our domestic landfills, offset by lower volumes coupled with a decrease in the overall weighted average depletion rates. The unfavorable effects of foreign exchange movements increased depreciation, depletion and amortization by $0.6 million. Landfill depletion rates for our U.S. landfills ranged from $4.00 to $7.68 per ton and from $3.84 to $8.10 per ton during the six months ended June 30, 2006 and 2005, respectively. Landfill depletion rates for our Canadian landfills ranged from C$2.70 to C$11.82 per tonne and C$2.57 to C$17.80 per tonne during the six months ended June 30, 2006 and 2005, respectively.

     Foreign Exchange Loss (Gain) and Other

     Foreign exchange loss and other was $2.2 million and nil for the three months ended June 30, 2006 and 2005, respectively. The foreign exchange loss relates to the re-measuring of U.S. dollar denominated monetary accounts into Canadian dollars. The increase in loss is primarily due to an increase in a U.S. monetary note receivable due from the U.S. parent to the WSI (CA) subsidiary. Other items primarily relate to gains on sales of equipment.

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     Foreign exchange loss (gain) and other was $2.0 million and $(0.2) million for the six months ended June 30, 2006 and 2005, respectively. The foreign exchange loss (gain) relates to the re-measuring of U.S. dollar denominated monetary accounts into Canadian dollars. Other items primarily relate to gains on sales of equipment. The increase in loss is primarily due to an increase in a U.S. monetary note receivable due from the U.S. parent to the WSI (CA) subsidiary. Other items primarily relate to gains on sales of equipment.

Interest Expense

     The components of interest expense, including cumulative mandatorily redeemable preferred stock dividends and amortization of issue costs, for the three and six months ended June 30, 2006 and 2005 are as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2006		2005		2006		2005
Preferred Stock dividends and amortization of issue costs	$	4,841	$	5,114	$	10,537	$	9,956
Credit facility and Subordinated Note interest		6,953		6,445		13,119		12,518
Amortization of debt issue costs		388		361		776		705
Other interest expense		484		367		985		775
	$	12,666	$	12,287	$	25,417	$	23,954

Interest expense was $12.7 million and $12.3 million for the three months ended June 30, 2006 and 2005, respectively, an increase of $0.4 million or 3.1%. Cash interest expense increased $0.6 million for the three months ended June 30, 2006 due to higher prevailing short-term interest rates, higher balances outstanding under our Credit Facilities and commitment fees paid on the new term loan tranche available under our Credit Facilities, offset by the elimination of penalty interest payable on our Subordinated Notes and lower amended rates on our Credit Facilities. The decrease in Preferred Stock dividends and amortization of issue costs was due to issue costs becoming fully amortized during the second quarter of 2006, offset by higher principal amounts outstanding. The weighted average interest rate on Credit Facility borrowings was 8.4% and 7.7% for the three months ended June 30, 2006 and 2005, respectively.

Interest expense was $25.4 million and $24.0 million for the six months ended June 30, 2006 and 2005, respectively, an increase of $1.4 million or 6.1%. Cash interest expense increased $0.8 million for the six months ended June 30, 2006 due to higher prevailing short-term interest rates, higher balances outstanding under our Credit Facilities and commitment fees paid on the new term loan tranche available under our Credit Facilities, offset by the elimination of penalty interest payable on our Subordinated Notes and lower amended rates on our Credit Facilities. The increase in Preferred Stock dividends and amortization of issue costs was due to higher principal amounts outstanding. The weighted average interest rate on Credit Facility borrowings was 8.1% and 7.4% for the six months ended June 30, 2006 and 2005, respectively.

Income Tax Provision

     The provision for income taxes was $3.4 million and $3.0 million for the three months ended June 30, 2006 and 2005, respectively and $4.3 million and $5.3 million for the six months ended June 30, 2006 and 2005, respectively. We recognize a provision for income taxes despite our pre-tax loss due to the tax effect of the non-deductible dividends on our cumulative mandatorily redeemable preferred stock and provisions for foreign taxes. Additionally, due to the lack of operating history relative to our U.S. operations, we have provided a valuation allowance for our net operating loss carry-forwards generated in the U.S.

Liquidity and Capital Resources

     Our principal capital requirements are to fund capital expenditures, and to fund debt service and asset acquisitions. Significant sources of liquidity are cash on hand, working capital, borrowings from our Credit Facilities and proceeds from debt and/or equity issuances. The following discussion should be read in conjunction with the Unaudited Condensed Consolidated Financial Statements and Notes thereto included elsewhere herein.

Senior Secured Credit Facilities

     On April 30, 2004, we entered into new Senior Secured Credit Facilities (the “Credit Facilities”) with a syndicate of lenders. The Credit Facilities consist of a five-year revolving credit facility in the amount of $60.0 million, up to $15.0 million of which is available

36

to our Canadian operations, and a seven-year term loan facility in the amount of $100.0 million. The Credit Facilities bear interest based upon a spread over base rate or Eurodollar loans, as defined, at our option. The Credit Facilities are secured by substantially all of the assets of our U.S. restricted subsidiaries. Our Canadian operations guarantee and pledge all of their assets only in support of the portion of the revolving credit facility available to them. Separately, 65% of the common shares of Waste Services’ first tier foreign subsidiaries including Waste Services (CA), are pledged to secure obligations under the Credit Facilities. As of June 30, 2006, there was $8.0 million outstanding on the revolving credit facility and an additional $21.1 million of capacity used to support outstanding letters of credit. As of July 25, 2006, there was $9.3 million outstanding on the revolving credit facility and an additional $20.9 million of capacity used to support outstanding letters of credit.

     As of June 30, 2004, we failed to meet certain of the financial covenants contained in the Credit Facilities. On October 4, 2004, we entered into an amendment to the credit agreement with the administrative agent for the lenders. The amendment included changes to certain of the financial and other covenants contained in the credit facilities and increased the interest rates payable on amounts outstanding by 125 basis points to 450 basis points over Euro dollar loans. Until we met certain target leverage ratios, as defined, availability under the amended revolving credit facility was reduced to $50.0 million, up to $12.5 million of which was available for our Canadian operations. In connection with the amendment, we paid a fee of approximately $0.4 million to our lenders. The amendment also required us to receive an equity investment of at least $7.5 million prior to March 28, 2005. On March 28, 2005 we issued 2,640,845 (pre-reverse split) shares of common stock and 264,085 (pre-reverse split) common stock purchase warrants for net proceeds of approximately $6.8 million in satisfaction of this covenant.

     On October 26, 2005, we entered into an amendment to the Credit Facilities with the administrative agent for the lenders. The amendment, among other items, decreases the current interest rate on our term loan by 125 basis points to 325 basis points over Eurodollar loans. In addition, the amendment restored access under the revolving credit facility to $60.0 million, up to $15.0 million of which is available to our Canadian operations.

     On December 28, 2005, we entered into another amendment to the Credit Facilities, which provided for the incurrence of up to $50.0 million of additional term loans under a new term loan tranche, as provided for under the terms of our existing Credit Facilities. We drew $25.0 million of this facility at close to refinance amounts then outstanding under our existing revolving credit facility. We drew another $23.0 million of this facility during the second quarter of 2006, which was used for the financing of acquisitions that are otherwise permitted under the terms of the Credit Facilities. Availability under this amendment expired in May 2006.

     On June 20, 2006, we further amended our Credit Facilities to provide us with more flexible terms, including the ability to increase our Canadian revolving facility from $15.0 million to $25.0 million in the future, and to allow for the potential redemption of our mandatorily redeemable preferred stock.

     The following table sets forth our financial covenant levels for the current and each of the next four quarters:

			Maximum Consolidated
	Maximum Consolidated		Senior Secured		Minimum Consolidated
Fiscal Quarter	Leverage Ratio		Leverage Ratio		Interest Coverage Ratio
FQ2 2006		5.25:1.00		2.25:1.00		2.00:1.00
FQ3 2006		5.00:1.00		2.25:1.00		2.00:1.00
FQ4 2006		4.75:1.00		2.25:1.00		2.25:1.00
FQ1 2007		4.75:1.00		2.25:1.00		2.25:1.00
FQ2 2007		4.50:1.00		2.25:1.00		2.25:1.00

Senior Subordinated Notes

     On April 30, 2004, we completed a private offering of 9¹/2% Senior Subordinated Notes (“Subordinated Notes”) due 2014 for gross proceeds of $160.0 million. The Subordinated Notes mature on April 15, 2014. Interest on the Subordinated Notes is payable semi-annually on October 15 and April 15.

     In April 2004, we entered into a Registration Rights Agreement with the initial purchaser of the Senior Subordinated Notes in which we agreed to file a registration statement for the exchange of the Senior Subordinated Notes for registered notes with identical terms and have such registration statement declared effective within specified time frames. Prior to the third quarter of 2005 we were

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required to pay liquidated damages to the holders of the notes, as we had not yet complied with these registration requirements. These liquidated damages were expensed as incurred and were payable in cash at the same time as interest payments were due under the notes. During the third quarter of 2005, the registration statement was filed and declared effective, and the exchange offer was commenced and consummated. As of September 28, 2005 we were no longer required to pay liquidated damages.

Equity Placement

     During the first six months of 2006, we issued 8,654,549 (pre-reverse split) shares of our common stock in connection with the Taft Recycling, Liberty Waste and Sun Country Materials acquisitions.

Cumulative Mandatory Redeemable Preferred Stock

     In May 2003, we issued 55,000 shares of cumulative mandatorily redeemable Preferred Stock (the “Preferred Stock”) to Kelso Investment Associates VI, L.P. and KEP VI, LLC (collectively “Kelso”), pursuant to the terms of an agreement dated as of May 6, 2003, as amended in February and June 2004 at a price of $1,000 per share. We also issued to Kelso warrants to purchase 7,150,000 (pre-reverse split) shares of our common stock for $3.00 (pre-reverse split) per share. The warrants are exercisable at any time until May 6, 2010. The issuance of the Preferred Stock resulted in proceeds of approximately $49.5 million, net of fees of approximately $5.5 million. The shares of Preferred Stock are non-voting.

     The Preferred Stock entitles the holders to cash dividends of 17.75% per annum compounding and accruing quarterly in arrears, and to a liquidation preference of $1,000 per share, adjusted for any stock dividend, stock split, reclassification, recapitalization, consolidation or similar event affecting the Preferred Stock, plus the amount of any accrued but unpaid dividends on such shares as of any date of determination. The liquidation preference approximated $95.1 million as of June 30, 2006.

Migration Transaction

     As part of our business strategy to expand into the United States, we entered into a migration transaction that became effective July 31, 2004. Under the migration transaction, our corporate structure was reorganized so that Waste Services, Inc., a Delaware company, became the ultimate parent company of our corporate group. Prior to the migration transaction, we were a subsidiary of Capital. After the migration transaction, Capital, now Waste Services (CA), became our subsidiary.

     The migration transaction occurred by way of a plan of arrangement under the Business Corporations Act (Ontario) and consisted primarily of: (i) the exchange of 87,657,035 common shares of Capital for 87,657,035 (pre-reverse split) shares our of common stock and (ii) the conversion of the remaining 9,229,676 common shares of Capital held by non-US residents who elected to receive exchangeable shares into 9,229,676 exchangeable shares of Waste Services (CA). The transaction was approved by the Ontario Superior Court of Justice on July 30, 2004 and by our shareholders at a special meeting held on July 27, 2004.

Surety Bonds, Letters of Credit and Insurance

     Municipal solid waste services contracts and permits and licenses to operate transfer stations, landfills and recycling facilities may require performance or surety bonds, letters of credit or other means of financial assurance to secure contractual performance. As of June 30, 2006, we had provided customers and various regulatory authorities with such bonds and letters of credit amounting to approximately $74.0 million to collateralize our obligations. The majority of these obligations are renewed on an annual basis.

     Our U.S.-based automobile, general liability and workers’ compensation insurance coverage is subject to certain deductible limits. We retain up to $0.5 million and $0.25 million of risk per claim, plus claims handling expense under our workers’ compensation and our auto and general liability insurance programs, respectively. Claims in excess of such deductible levels are fully insured subject to our policy limits. However, we have a limited claims history for our U.S. operations and it is reasonably possible that recorded reserves may not be adequate to cover future payments of claims. Adjustments, if any, to our reserves will be reflected in the period in which the adjustments are known. As of June 30, 2006 and included in the $74.0 million of bonds and letters of credit discussed previously, we have posted a letter of credit with our U.S. insurer of approximately $9.3 million to secure the liability for losses within the deductible limit.

Cash Flows

     The following discussion relates to the major components of the changes in cash flows for the six months ended June 30, 2006 and 2005.

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Cash Flows from Operating Activities

     Cash provided by operating activities of our continuing operations was $15.9 million and $7.9 million for the six months ended June 30, 2006 and 2005, respectively. The increase in cash provided by operating activities is primarily due to cash generated from operations.

Cash Flows from Investing Activities

     Cash used in investing activities of our continuing operations was $50.9 million and $16.7 million for the six months ended June 30, 2006 and 2005, respectively. The increase in cash used in investing activities is primarily due to increased capital expenditures and business acquisitions. Companywide capital expenditures were $27.6 million and $19.6 million for the six months ended June 30, 2006 and 2005, respectively. The increase in capital expenditures was primarily driven by landfill development costs. We expect our capital expenditures to range from $50.0 million to $55.0 million for all of 2006. Cash used in business acquisitions of $28.9 million for the first six months of 2006 primarily relates to the acquisitions of Taft Recycling, Liberty Waste and Sun Country Materials.

Cash Flows from Financing Activities

     Cash provided by financing activities was $29.1 million and $6.8 million for the six months ended June 30, 2006 and 2005, respectively. The increase in cash flows from financing activities is due primarily to the additional $23.0 million draw on our term loan facility and an $8.0 million net draw on our revolving credit facility, offset by the equity private placement that occurred during the first quarter of 2005.

Off-Balance Sheet Financing

     We have no off-balance sheet debt or similar obligations, other than our letters of credit and performance and surety bonds discussed previously, which are not debt. We have no transactions or obligations with related parties that are not disclosed, consolidated into or reflected in our reported results of operations or financial position. We do not guarantee any third party debt. We have entered into a put or pay disposal agreement with RCI Environment Inc., Centres de Transbordement et de Valorisation Nord Sud Inc., RCM Environnement Inc. (collectively the “RCI Companies”) and Intersan Inc. pursuant to which we have posted a letter of credit for C$4.0 million to secure our obligations and those of the RCI Companies to Intersan Inc. Concurrently with the put or pay disposal agreement with the RCI Companies, we entered into a three year agreement with Waste Management of Canada Corporation (formerly Canadian Waste Services Inc.) to allow us to deliver non-hazardous solid waste to their landfill in Michigan, which has now expired. On January 17, 2006, Waste Management drew C$0.3 million against the letter of credit posted by us to secure RCI’s obligations, as such we provided for the draw as of December 31, 2005. Waste Management has commenced arbitration proceedings in Quebec, Canada seeking to require us to top-up the letter of credit by the C$0.3 million drawn by them in January, 2006. The companies within the RCI group are controlled by a director of ours and/or individuals related to that director. Details of these agreements are further described in our annual financial statements for the year ended December 31, 2005, as filed on Form 10-K.

Landfill Sites

     The following table summarizes the changes in our operating landfill capacity at our continuing operations for the six months ended June 30, 2006 (in thousands of cubic yards):

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	June 30, 2006
	Balance,
	Beginning of							Balance, End of
	Period		Landfills Acquired		Airspace Consumed			Period
United States
Permitted Capacity		70,840		17,042		(1,270	)		86,612
Probable expansion capacity		18,300		—		—			18,300
Total available airspace		89,140		17,042		(1,270	)		104,912
Number of landfill sites		3		1		—			4
Canada
Permitted Capacity		11,878		—		(176	)		11,702
Probable expansion capacity		—		—		—			—
Total available airspace		11,878		—		(176	)		11,702
Number of landfill sites		3		—		—			3
Total
Permitted Capacity		82,718		17,042		(1,446	)		98,314
Probable expansion capacity		18,300		—		—			18,300
Total available airspace		101,018		17,042		(1,446	)		116,614
Number of landfill sites		6		1		—			7

Trend Information

Seasonality

     We expect the results of our Canadian operations to vary seasonally, with revenue typically lowest in the first quarter of the year, higher in the second and third quarters, and lower in the fourth quarter than in the third quarter. The seasonality is attributable to a number of factors. First, less solid waste is generated during the late fall, winter and early spring because of decreased construction and demolition activity. Second, certain operating costs are higher in the winter months because winter weather conditions slow waste collection activities, resulting in higher labor costs, and rain and snow increase the weight of collected waste, resulting in higher disposal costs, which are calculated on a per ton basis. Also, during the summer months, there are more tourists and part-time residents in some of our service areas, resulting in more residential and commercial collection. Consequently, we expect operating income to be generally lower during the winter. The effect of seasonality on our results of operations from our U.S. operations, which are located in warmer climates than our Canadian operations, is less significant than that of our Canadian operations.

New Accounting Pronouncements

     In July 2006, the Financial Accounting Standards Board (FASB) issued FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes – an interpretation of FASB Statement No. 109” (“FIN 48”). FIN 48 Clarifies the accounting for income taxes by prescribing the minimum recognition threshold a tax position is required to meet before being recognized in the financial statements. FIN 48 is effective for fiscal years beginning after December 15, 2006. We expect the adoption of FIN 48 will not have a material effect on our financial position or results of operations.

     Refer to the Notes to the Unaudited Condensed Consolidated Financial Statements for a discussion of other new accounting pronouncements adopted during the year.

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Disclosure Regarding Forward-Looking Statements and Factors Affecting Future Results

     This Form 10-Q contains certain “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, or the Exchange Act. Some of these forward-looking statements include forward-looking phrases such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “foresees,” “intends,” “may,” “should” or “will continue,” or similar expressions or the negatives thereof or other variations on these expressions, or similar terminology, or discussions of strategy, plans or intentions.

     Such statements reflect our current views regarding future events and are subject to certain risks, uncertainties and assumptions. Many factors could cause the actual results, performance or achievements to be materially different from any future results, performance or achievements that forward-looking statements may express or imply, including, among others:

• our substantial indebtedness and the significant restrictive covenants in our various credit facilities and our ability to finance acquisitions with cash on hand, debt or equity offerings;

• our ability to implement a refinancing plan for our mandatorily redeemable preferred stock and to achieve the expected benefits;

• our ability to maintain and perform our financial assurance obligations;

• changes in regulations affecting our business and costs of compliance;

• revocation of existing permits and licenses or the refusal to renew or grant new permits and licenses, which are required to enable us to operate our business or implement our growth strategy;

• our ability to successfully implement our corporate strategy and integrate any acquisitions we undertake;

• our ability to negotiate renewals of existing service agreements at favorable rates;

• our ability to enhance profitability of certain aspects of our operations in markets where we are not internalized through either divestiture or asset swaps;

• costs and risks associated with litigation;

• changes in general business and economic conditions, changes in exchange rates and in the financial markets;

• changes in accounting standards or pronouncements; and

• construction, equipment delivery or permitting delays for our transfer stations or landfills.

     Some of these factors are discussed in more detail in our annual report on Form 10-K, as filed with the Securities and Exchange Commission for the year ended December 31, 2005, included under Item 1A. of the annual report, “Risk Factors”. If one or more of these risks or uncertainties affects future events and circumstances, or if underlying assumptions do not materialize, actual results may vary materially from those described in this Form 10-Q and our annual report as anticipated, believed, estimated or expected, and this could have a material adverse effect on our business, financial condition and the results of our operations. Further, any forward-looking statement speaks only as of the date on which it is made, and except as required by law, we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which it is made or to reflect the occurrence of anticipated or unanticipated events or circumstances.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

     A portion of our operations are domiciled in Canada; as such, we translate the results of our operations and financial condition of our Canadian operations into U.S. dollars. Therefore, the reported results of our operations and financial condition are subject to changes in the exchange relationship between the two currencies. For example, as the relationship of the Canadian dollar strengthens against the U.S. dollar our revenue is favorably affected and conversely our expenses are unfavorably affected. Assets and liabilities of Canadian operations are translated from Canadian dollars into U.S. dollars at the exchange rates in effect at the relevant balance sheet date, and revenue and expenses of Canadian operations are translated from Canadian dollars into U.S. dollars at the average exchange rates prevailing during the period. Unrealized gains and losses on translation of the Canadian operations into U.S. dollars are reported as a separate component of shareholders’ equity and are included in comprehensive income (loss). Separately, monetary assets and liabilities denominated in U.S. dollars held by our Canadian operation are re-measured from U.S. dollars into Canadian dollars and then translated into U.S. dollars. The effects of re-measurement are reported currently as a component of net income (loss). Currently, we do not hedge our exposure to changes in foreign exchange rates. For the six months ended June 30, 2006, we estimate that a 5.0% increase or decrease in the relationship of the Canadian dollar to the U.S. dollar would increase or decrease operating profit from our Canadian operations by approximately $0.2 million.

     As of June 30, 2006, we were exposed to variable interest rates under our Credit Facilities, as amended. The interest rates payable on our revolving and term facilities are based on a spread over base rate or Eurodollar loans as defined. A 25 basis point increase in base interest rates would increase cash interest expense by approximately $0.2 million for the six months ended June 30, 2006.

Item 4. Controls and Procedures

Disclosure Controls and Procedures/Evaluation of Disclosure Controls and Procedures

     We maintain disclosure controls and procedures designed to ensure that information required to be disclosed in our filings under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported accurately within the time periods specified in the Securities and Exchange Commission’s rules and forms. As of the end of the period covered by this report, an evaluation was performed under the supervision and with the participation of management, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of the design and operation of our disclosure controls and procedures (pursuant to Exchange Act Rule 13a-15). Based upon this evaluation, the CEO and CFO concluded that our disclosure controls and procedures are effective. The conclusions of the CEO and CFO from this evaluation were communicated to the Audit Committee.

Changes in Internal Controls Over Financial Reporting

     There were no changes in our internal control over financial reporting that occurred during our last fiscal quarter that would have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

     Information regarding our legal proceedings may be found under the “Legal Proceedings” section of Note 11, “Commitments and Contingencies” to our Unaudited Condensed Consolidated Financial Statements contained herein.

Item 1A. Risk Factors

     There have been no material changes in risk factors previously disclosed in our Form 10-K for the year ended December 31, 2005.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

     None

Item 3. Defaults upon Senior Securities

     None

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Item 4. Submission of Matters to a Vote of Security Holders

     On June 26, 2006, we held our annual stockholders meeting. At the annual meeting, Wallace Timmeny and Michael Verrochi were re-elected as directors to hold office until the 2009 annual stockholders meeting and the reverse one for three split of our common stock was approved. All share numbers in the following tables are before giving effect to the one for three split of our common stock.

     The following table sets forth the number of votes cast for or withheld for each director nominee:

Director	For		Withheld
Wallace Timmeny		44,588,231		11,973,280
Michael Verrochi		44,588,231		11,973,280

     The directors whose terms of office as director continued after the meeting were: David Sutherland-Yoest, Gary W. DeGroote, Michael B. Lazar, George E. Matelich, Jack E. Short and Lucien Rémillard.

     The following table sets forth the number of votes cast for, against or withheld for approval of the reverse one for three stock split:

For	Against		Abstentions		Broker Non-Votes
54,060,087		2,263,384		238,040		0

Item 5. Other Information

     None

Item 6. Exhibits

Exhibit 3.7 Amendment to Amended and Restated Certificate of Incorporation of Waste Services, Inc. (incorporated by reference to Exhibit 3.1 filed on Form 8-K on July 5, 2006).

Exhibit 3.8 Amended Certificate of Designations of Special Voting Preferred Stock of Waste Services, Inc. (incorporated by reference to Exhibit 3.2 filed on Form 8-K on July 5, 2006).

Exhibit 3.9 Amendment to Provisions for Exchangeable Shares of Waste Services (CA) Inc. effective June 30, 2006 (incorporated by reference to Exhibit 3.3 filed on Form 8-K on July 5, 2006).

Exhibit 4.15 Agreement effective as of the 30th day of March, 2006 among Waste Services, Inc., Kelso Investment Associates VI, L.P, and KEP VI, LLC. (incorporated by reference to Exhibit 20.3 filed on Form 8-K on April 5, 2006).

Exhibit 4.16 Supplemental Indenture dated as of May 12, 2006 to the Note Indenture among Liberty Waste, LLC, Waste Services, Inc., the other guarantors and Wells Fargo Bank National Association, as Trustee.

Exhibit 4.17 Supplemental Indenture dated as of June 30, 2006 to the Note Indenture among Taft Recycling, Inc., Waste Services, Inc., the other guarantors and Wells Fargo Bank National Association, as Trustee.

Exhibit 4.18 Supplemental Indenture dated as of June 30, 2006 to the Note Indenture among Sun Country Materials, LLC., Waste Services, Inc., the other guarantors and Wells Fargo Bank National Association, as Trustee.

Exhibit 10.17 Fifth Amendment to Amended and Restated Credit Agreement dated as of March 22, 2006 (incorporated by reference to Exhibit 20.1 filed on Form 8-K on April 5, 2006).

Exhibit 10.18 Sixth Amendment to Amended and Restated Credit Agreement dated as of March 31, 2006 (incorporated by reference to Exhibit 20.2 filed on Form 8-K on April 5, 2006).

Exhibit 10.19 Seventh Amendment to Amended and Restated Credit Agreement dated as of June 20, 2006 (incorporated by reference to Exhibit 20.1 on Form 8-K on June 20, 2006).

Exhibit 10.20 Asset Purchase Agreement dated as of July 19, 2006 among Waste Services of Florida, Inc. and various affiliates of Allied Waste Industries, Inc.

Exhibit 10.21 Asset Purchase Agreement dated as of July 19, 2006 among Allied Waste Transfer Services of Arizona, LLC, Waste Services, Inc. and Waste Services of Arizona, Inc.

Exhibit 31.1 — Section 302 Certification of David Sutherland-Yoest, Chief Executive Officer

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Exhibit 31.2 — Section 302 Certification of Mark A. Pytosh, Chief Financial Officer

Exhibit 32.1 — Section 1350 Certification of the Chief Executive Officer and Chief Financial Officer

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SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		Waste Services, Inc.
Date: August 1, 2006
	By:	/s/ DAVID SUTHERLAND-YOEST
		David Sutherland-Yoest
		Chairman of the Board,
		Chief Executive Officer, and Director
	By:	/s/ MARK A. PYTOSH
		Mark A. Pytosh
		Executive Vice President and
		Chief Financial Officer

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EXHIBIT INDEX

Exhibit No	Description
Exhibit 3.7	Amendment to Amended and Restated Certificate of Incorporation of Waste Services, Inc. (incorporated by reference to Exhibit 3.1 filed on Form 8-K on July 5, 2006).
Exhibit 3.8	Amended Certificate of Designations of Special Voting Preferred Stock of Waste Services, Inc. (incorporated by reference to Exhibit 3.2 filed on Form 8-K on July 5, 2006).
Exhibit 3.9	Amendment to Provisions for Exchangeable Shares of Waste Services (CA) Inc. effective June 30, 2006 (incorporated by reference to Exhibit 3.3 filed on Form 8-K on July 5, 2006).
Exhibit 4.15	Agreement effective as of the 30th day of March, 2006 among Waste Services, Inc., Kelso Investment Associates VI, L.P, and KEP VI, LLC. (incorporated by reference to Exhibit 20.3 filed on Form 8-K on April 5, 2006).
Exhibit 4.16	Supplemental Indenture dated as of May 12, 2006 to the Note Indenture among Liberty Waste, LLC, Waste Services, Inc., the other guarantors and Wells Fargo Bank National Association, as Trustee.
Exhibit 4.17	Supplemental Indenture dated as of June 30, 2006 to the Note Indenture among Taft Recycling, Inc., Waste Services, Inc., the other guarantors and Wells Fargo Bank National Association, as Trustee.
Exhibit 4.18	Supplemental Indenture dated as of June 30, 2006 to the Note Indenture among Sun Country Materials, LLC., Waste Services, Inc., the other guarantors and Wells Fargo Bank National Association, as Trustee.
Exhibit 10.17	Fifth Amendment to Amended and Restated Credit Agreement dated as of March 22, 2006 (incorporated by reference to Exhibit 20.1 filed on Form 8-K on April 5, 2006).
Exhibit 10.18	Sixth Amendment to Amended and Restated Credit Agreement dated as of March 31, 2006 (incorporated by reference to Exhibit 20.2 filed on Form 8-K on April 5, 2006).
Exhibit 10.19	Seventh Amendment to Amended and Restated Credit Agreement dated as of June 20, 2006 (incorporated by reference to Exhibit 20.1 on Form 8-K on June 20, 2006).
Exhibit 10.20	Asset Purchase Agreement dated as of July 19, 2006 among Waste Services of Florida, Inc. and various affiliates of Allied Waste Industries, Inc.
Exhibit 10.21	Asset Purchase Agreement dated as of July 19, 2006 among Allied Waste Transfer Services of Arizona, LLC, Waste Services, Inc. and Waste Services of Arizona, Inc.
Exhibit 31.1	Section 302 Certification of David Sutherland-Yoest, Chief Executive Officer
Exhibit 31.2	Section 302 Certification of Mark A. Pytosh, Chief Financial Officer
Exhibit 32.1	Section 1350 Certification of the Chief Executive Officer and Chief Financial Officer

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EX-4.16

Exhibit 4.16

SUPPLEMENTAL INDENTURE

     SUPPLEMENTAL INDENTURE (this “Supplemental Indenture”), dated as of May 12, 2006, among Liberty Waste, LLC, a Delaware limited liability company (the “Guaranteeing Subsidiary”), a subsidiary of Waste Services, Inc. (or its permitted successor), a Delaware corporation (the “Company”), the Company, the other Guarantors (as defined in the Indenture referred to herein) party to the Indenture on the date hereof and Wells Fargo Bank, National Association, as trustee under the Indenture referred to below (the “Trustee”).

W I T N E S S E T H

     WHEREAS, the Company has heretofore executed and delivered to the Trustee an indenture (the “Indenture”), dated as of April 30, 2004, providing for the issuance of 9½ % Senior Subordinated Notes due 2014 (the “Notes”);

     WHEREAS, the Indenture provides that under certain circumstances the Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally guarantee all of the Company’s Obligations under the Notes and the Indenture on the terms and conditions set forth herein (the “Note Guarantee”); and

     WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture;

     NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Guaranteeing Subsidiary and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes as follows:

     1. Capitalized Terms. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture.

     2. Agreement To Guarantee. The Guaranteeing Subsidiary hereby agrees to provide an unconditional Guarantee on the terms and subject to the conditions set forth in the Note Guarantee and in the Indenture including but not limited to Article 11 thereof.

     3. No Recourse Against Others. No past, present or future director, officer, employee, incorporator, stockholder or agent of the Guaranteeing Subsidiary, as such, shall have any liability for any obligations of the Company or any Guarantor (including the Guaranteeing Subsidiary) under the Notes, any Note Guarantees, the Indenture or this Supplemental Indenture, as applicable, or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of the Notes by accepting a Note waives and releases all such liability. This waiver and release are part of the consideration for issuance of the Notes. Such waiver may not be effective to waive liabilities under the federal securities laws and it is the view of the SEC that such a waiver is against public policy.

     4. NEW YORK LAW TO GOVERN. THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.

     5. Counterparts. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement.

     6. Effect of Headings. The Section headings herein are for convenience only and shall not affect the construction hereof.

     7. The Trustee. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by the Guaranteeing Subsidiary and the Company.

     IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed and attested, all as of the date first above written.

LIBERTY WASTE, LLC
By:	/s/ Ivan R. Cairns
	Ivan R. Cairns
	Vice President and Secretary

WASTE SERVICES, INC.
By:	/s/ Ivan R. Cairns
	Ivan R. Cairns
	Executive Vice President, General Counsel and Secretary

WASTE SERVICES OF FLORIDA, INC.
By:	/s/ Ivan R. Cairns
	Ivan R. Cairns
	Vice President and Secretary

SANFORD RECYCLING AND TRANSFER, INC.
By:	/s/ Ivan R. Cairns
	Ivan R. Cairns
	Vice President and Secretary

Page 2 of 5

JACKSONVILLE FLORIDA LANDFILL, INC.
By:	/s/ Ivan R. Cairns
	Ivan R. Cairns
	Vice President and Secretary

JONES ROAD LANDFILL AND RECYCLING, LTD. by its General Partner, JACKSONVILLE FLORIDA LANDFILL, INC.
By:	/s/ Ivan R. Cairns
	Ivan R. Cairns
	Vice President and Secretary

OMNI WASTE OF OSCEOLA COUNTY LLC
By:	/s/ Ivan R. Cairns
	Ivan R. Cairns
	Manager

CACTUS WASTE SYSTEMS, LLC
By:	/s/ Ivan R. Cairns
	Ivan R. Cairns
	Manager

WASTE SERVICES OF ARIZONA, INC.
By:	/s/ Ivan R. Cairns
	Ivan R. Cairns
	Vice President and Secretary

Page 3 of 5

WASTE SERVICES LIMITED PARTNER, LLC
By:	/s/ Ivan R. Cairns
	Ivan R. Cairns
	Manager

WS GENERAL PARTNER, LLC by its Sole Member, WASTE SERVICES, INC.
By:	/s/ Ivan R. Cairns
	Ivan R. Cairns
	Executive Vice President, General Counsel and Secretary

RUFFINO HILLS TRANSFER STATION LP
By:	/s/ Ivan R. Cairns
	Ivan R. Cairns
	Vice President and Secretary

FORT BEND REGIONAL LANDFILL LP
By:	/s/ Ivan R. Cairns
	Ivan R. Cairns
	Vice President and Secretary

WSI WASTE SERVICES OF TEXAS, LP
By:	/s/ Ivan R. Cairns
	Ivan R. Cairns
	Vice President and Secretary

Page 4 of 5

WASTE SERVICES OF ALABAMA, INC.
By:	/s/ Ivan R. Cairns
	Ivan R. Cairns
	Vice President and Secretary

WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee
By:	/s/ Joseph P. O’Donnell
	Name:	Joseph P. O’Donnell
	Title:	Vice President

Page 5 of 5

EX-4.17

Exhibit 4.17

SUPPLEMENTAL INDENTURE

     SUPPLEMENTAL INDENTURE (this “Supplemental Indenture”), dated as of June 30, 2006, among Taft Recycling, Inc., a Florida company (the “Guaranteeing Subsidiary”), a subsidiary of Waste Services, Inc. (or its permitted successor), a Delaware corporation (the “Company”), the Company, the other Guarantors (as defined in the Indenture referred to herein) party to the Indenture on the date hereof and Wells Fargo Bank, National Association, as trustee under the Indenture referred to below (the “Trustee”).

W I T N E S S E T H

     WHEREAS, the Company has heretofore executed and delivered to the Trustee an indenture (the “Indenture”), dated as of April 30, 2004, providing for the issuance of 9½ % Senior Subordinated Notes due 2014 (the “Notes”);

     WHEREAS, the Indenture provides that under certain circumstances the Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally guarantee all of the Company’s Obligations under the Notes and the Indenture on the terms and conditions set forth herein (the “Note Guarantee”); and

     WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture;

     NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Guaranteeing Subsidiary and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes as follows:

     1. Capitalized Terms. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture.

     2. Agreement To Guarantee. The Guaranteeing Subsidiary hereby agrees to provide an unconditional Guarantee on the terms and subject to the conditions set forth in the Note Guarantee and in the Indenture including but not limited to Article 11 thereof.

     3. No Recourse Against Others. No past, present or future director, officer, employee, incorporator, stockholder or agent of the Guaranteeing Subsidiary, as such, shall have any liability for any obligations of the Company or any Guarantor (including the Guaranteeing Subsidiary) under the Notes, any Note Guarantees, the Indenture or this Supplemental Indenture, as applicable, or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of the Notes by accepting a Note waives and releases all such liability. This waiver and release are part of the consideration for issuance of the Notes. Such waiver may not be effective to waive liabilities under the federal securities laws and it is the view of the SEC that such a waiver is against public policy.

     4. NEW YORK LAW TO GOVERN. THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.

     5. Counterparts. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement.

     6. Effect of Headings. The Section headings herein are for convenience only and shall not affect the construction hereof.

     7. The Trustee. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by the Guaranteeing Subsidiary and the Company.

     IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed and attested, all as of the date first above written.

TAFT RECYCLING, INC.
By:	/s/ Ivan R. Cairns
	Ivan R. Cairns
	Vice President and Secretary

WASTE SERVICES, INC.
By:	/s/ Ivan R. Cairns
	Ivan R. Cairns
	Executive Vice President, General Counsel and Secretary

WASTE SERVICES OF FLORIDA, INC.
By:	/s/ Ivan R. Cairns
	Ivan R. Cairns
	Vice President and Secretary

LIBERTY WASTE, LLC
By:	/s/ Ivan R. Cairns
	Ivan R. Cairns
	Vice President and Secretary

Page 2 of 5

SANFORD RECYCLING AND TRANSFER, INC.
By:	/s/ Ivan R. Cairns
	Ivan R. Cairns
	Vice President and Secretary

JACKSONVILLE FLORIDA LANDFILL, INC.
By:	/s/ Ivan R. Cairns
	Ivan R. Cairns
	Vice President and Secretary

JONES ROAD LANDFILL AND RECYCLING, LTD. by its General Partner, JACKSONVILLE FLORIDA LANDFILL, INC.
By:	/s/ Ivan R. Cairns
	Ivan R. Cairns
	Vice President and Secretary

OMNI WASTE OF OSCEOLA COUNTY LLC
By:	/s/ Ivan R. Cairns
	Ivan R. Cairns
	Manager

CACTUS WASTE SYSTEMS, LLC
By:	/s/ Ivan R. Cairns
	Ivan R. Cairns
	Manager

Page 3 of 5

WASTE SERVICES OF ARIZONA, INC.
By:	/s/ Ivan R. Cairns
	Ivan R. Cairns
	Vice President and Secretary

WASTE SERVICES LIMITED PARTNER, LLC
By:	/s/ Ivan R. Cairns
	Ivan R. Cairns
	Manager

WS GENERAL PARTNER, LLC by its Sole Member, WASTE SERVICES, INC.
By:	/s/ Ivan R. Cairns
	Ivan R. Cairns
	Executive Vice President, General Counsel and Secretary

RUFFINO HILLS TRANSFER STATION LP
By:	/s/ Ivan R. Cairns
	Ivan R. Cairns
	Vice President and Secretary

FORT BEND REGIONAL LANDFILL LP
By:	/s/ Ivan R. Cairns
	Ivan R. Cairns
	Vice President and Secretary

Page 4 of 5

WSI WASTE SERVICES OF TEXAS, LP
By:	/s/ Ivan R. Cairns
	Ivan R. Cairns
	Vice President and Secretary

WASTE SERVICES OF ALABAMA, INC.
By:	/s/ Ivan R. Cairns
	Ivan R. Cairns
	Vice President and Secretary

WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee
By:	/s/
	Name:
	Title:

Page 5 of 5

EX-4.18

Exhibit 4.18

SUPPLEMENTAL INDENTURE

     SUPPLEMENTAL INDENTURE (this “Supplemental Indenture”), dated as of June 30, 2006, among Sun Country Materials, LLC, a Delaware limited liability company (the “Guaranteeing Subsidiary”), a subsidiary of Waste Services, Inc. (or its permitted successor), a Delaware corporation (the “Company”), the Company, the other Guarantors (as defined in the Indenture referred to herein) party to the Indenture on the date hereof and Wells Fargo Bank, National Association, as trustee under the Indenture referred to below (the “Trustee”).

W I T N E S S E T H

     WHEREAS, the Company has heretofore executed and delivered to the Trustee an indenture (the “Indenture”), dated as of April 30, 2004, providing for the issuance of 9 ½ % Senior Subordinated Notes due 2014 (the “Notes”);

     WHEREAS, the Indenture provides that under certain circumstances the Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally guarantee all of the Company’s Obligations under the Notes and the Indenture on the terms and conditions set forth herein (the “Note Guarantee”); and

     WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture;

     NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Guaranteeing Subsidiary and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes as follows:

     1. Capitalized Terms. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture.

     2. Agreement To Guarantee. The Guaranteeing Subsidiary hereby agrees to provide an unconditional Guarantee on the terms and subject to the conditions set forth in the Note Guarantee and in the Indenture including but not limited to Article 11 thereof.

     3. No Recourse Against Others. No past, present or future director, officer, employee, incorporator, stockholder or agent of the Guaranteeing Subsidiary, as such, shall have any liability for any obligations of the Company or any Guarantor (including the Guaranteeing Subsidiary) under the Notes, any Note Guarantees, the Indenture or this Supplemental Indenture, as applicable, or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of the Notes by accepting a Note waives and releases all such liability. This waiver and release are part of the consideration for issuance of the Notes. Such waiver may not be effective to waive liabilities under the federal securities laws and it is the view of the SEC that such a waiver is against public policy.

     4. NEW YORK LAW TO GOVERN. THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.

     5. Counterparts. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement.

     6. Effect of Headings. The Section headings herein are for convenience only and shall not affect the construction hereof.

     7. The Trustee. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by the Guaranteeing Subsidiary and the Company.

     IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed and attested, all as of the date first above written.

SUN COUNTRY MATERIALS, LLC
By:	/s/ Ivan R. Cairns
	Ivan R. Cairns
	Vice President and Secretary
WASTE SERVICES, INC.
By:	/s/ Ivan R. Cairns
	Ivan R. Cairns
	Executive Vice President, General Counsel and Secretary
WASTE SERVICES OF FLORIDA, INC.
By:	/s/ Ivan R. Cairns
	Ivan R. Cairns
	Vice President and Secretary
LIBERTY WASTE, LLC
By:	/s/ Ivan R. Cairns
	Ivan R. Cairns
	Vice President and Secretary

Page 2 of 5

TAFT RECYCLING, INC.
By:	/s/ Ivan R. Cairns
	Ivan R. Cairns
	Vice President and Secretary

SANFORD RECYCLING AND TRANSFER, INC.
By:	/s/ Ivan R. Cairns
	Ivan R. Cairns
	Vice President and Secretary

JACKSONVILLE FLORIDA LANDFILL, INC.
By:	/s/ Ivan R. Cairns
	Ivan R. Cairns
	Vice President and Secretary

JONES ROAD LANDFILL AND RECYCLING, LTD. by its General Partner, JACKSONVILLE FLORIDA LANDFILL, INC.
By:	/s/ Ivan R. Cairns
	Ivan R. Cairns
	Vice President and Secretary

OMNI WASTE OF OSCEOLA COUNTY LLC
By:	/s/ Ivan R. Cairns
	Ivan R. Cairns
	Manager

Page 3 of 5

CACTUS WASTE SYSTEMS, LLC
By:	/s/ Ivan R. Cairns
	Ivan R. Cairns
	Manager

WASTE SERVICES OF ARIZONA, INC.
By:	/s/ Ivan R. Cairns
	Ivan R. Cairns
	Vice President and Secretary

WASTE SERVICES LIMITED PARTNER, LLC
By:	/s/ Ivan R. Cairns
	Ivan R. Cairns
	Manager

WS GENERAL PARTNER, LLC by its Sole Member, WASTE SERVICES, INC.
By:	/s/ Ivan R. Cairns
	Ivan R. Cairns
	Executive Vice President, General Counsel and Secretary

RUFFINO HILLS TRANSFER STATION LP
By:	/s/ Ivan R. Cairns
	Ivan R. Cairns
	Vice President and Secretary

Page 4 of 5

FORT BEND REGIONAL LANDFILL LP
By:	/s/ Ivan R. Cairns
	Ivan R. Cairns
	Vice President and Secretary

WSI WASTE SERVICES OF TEXAS, LP
By:	/s/ Ivan R. Cairns
	Ivan R. Cairns
	Vice President and Secretary

WASTE SERVICES OF ALABAMA, INC.
By:	/s/ Ivan R. Cairns
	Ivan R. Cairns
	Vice President and Secretary

WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee
By:	/s/
	Name:
	Title:

Page 5 of 5

EX-10.20

Exhibit 10.20

ASSET PURCHASE AGREEMENT

     THIS ASSET PURCHASE AGREEMENT (the “Agreement”) is executed and delivered as of July 19, 2006, among Waste Services of Florida, Inc., a Delaware corporation (“Buyer”); and those entities set forth as Sellers on Exhibit A (“Sellers”).

RECITALS

     A. Sellers own and operate hauling operations, transfer station operations and MRF operations (collectively, the “Business”) in Miami-Dade County, Florida (the “Area”).

     B. Buyer desires to purchase and acquire substantially all of the assets, properties and contractual rights used by Sellers in connection with the Business, and Sellers desire to sell such assets, properties and contractual rights to Buyer, all in accordance with the terms and conditions set forth in this Agreement.

     C. The assets and properties used by Sellers in connection with the Business include the real property described on Exhibit B-1 (the “Land”) and the leased real property described on Exhibit B-2 (the “Leased Real Property”).

     D. Except as the context otherwise requires, capitalized terms used in this Agreement shall have the meanings assigned to them in Exhibit C.

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

ARTICLE I

SALE OF ASSETS

     1.1 Sale of Assets by Sellers. On the terms and subject to the conditions set forth in this Agreement, at the Closing Sellers shall grant, convey, sell, transfer and assign to Buyer, and Buyer shall purchase from Sellers, all of Sellers’ right, title and interest in and to the following assets used in the Business (but excluding the Excluded Assets), free and clear of all Encumbrances except Permitted Exceptions and Blanket Liens:

          (a) the Land, including all structures, improvements, fixtures, easements and other rights and interests relating thereto, and all leases with respect to the Leased Real Property;

          (b) subject to Section 1.3, all Permits held by Sellers in connection with the Business, including the Permits listed on Schedule 1.1(b);

          (c) subject to Section 7.10, all Equipment, including the Equipment listed on Schedule 1.1(c);

          (d) subject to Section 7.10, all Rolling Stock, including the Rolling Stock described on Schedule 1.1(d);

1

          (e) all computer hardware and related basic operating systems used, or held for use, principally in connection with the Business;

          (f) all Inventory, including the Inventory listed on Schedule 1.1(f);

          (g) all intangible property owned by Sellers and used principally in connection with the Business, including all symbols, trademarks, service marks, logos and trade names, including the Business Names listed on Schedule 1.1(g), except (subject to Section 4.1) those symbols, trademarks, service marks, logos and trade names that include the names of or otherwise identify “Allied,” “Browning-Ferris” or “BFI” (the “Retained IP”);

          (h) all Customer Contracts, Assumed Leases, Employee Contracts, and Other Contracts (collectively, the “Assumed Contracts”);

          (i) the telephone numbers used principally in the conduct of the Business;

          (j) all shop tools, nuts and bolts used principally in connection with the Business;

          (k) all books and records relating principally to the Business, including customer lists and vendor lists;

          (l) to the extent relating to the Business, all prepaid expenses and deposits, including any such expenses and deposits with respect to leases, rentals and utilities;

          (m) all Accounts Receivable;

          (n) all recycling property, plant or equipment used or held for use in connection with the Business, wherever located (including any items located on a customer’s site);

          (o) all furniture, fixtures and office equipment used principally in connection with the Business;

          (p) to the extent relating principally to the Business, all rights under agreements with employees and other third Persons concerning confidentiality and assignment of inventions; and

          (q) all goodwill of the Business.

All of the foregoing assets of Sellers described in this Section 1.1 are referred to as the “Assets”.

     1.2 Excluded Assets. The parties agree that certain assets of Sellers shall remain the property of Sellers and shall not be sold to Buyer at the Closing (the “Excluded Assets”). The Excluded Assets are: (a) all assets that are not used or held for use in, owned by, leased by or in the possession of Sellers or their Affiliates principally in connection with the Business; (b) records which relate primarily to Excluded Assets or Excluded Liabilities, including files relating to Taxes and personnel files; (c) the stock and membership interests and corporate or other entity

2

level record books of Sellers; (d) the rights which accrue or will accrue to Sellers under this Agreement; (e) any inter-company receivables from Sellers or their Affiliates; (f) all present and future refunds relating to Taxes of Sellers; (g) all insurance policies and all rights with respect thereto; (h) all litigation rights to which Sellers are plaintiffs and all causes of action and claims of every nature, kind and description; (i) all billing, route management and other software programs other than basic operating systems; (j) all petty and other cash and cash equivalents on hand or in a bank; (k) all bank accounts; (l) all escrow accounts; (m) all right, title and interest in any financial responsibility, financial assurance or similar mechanisms; (n) the National Accounts; (o) all other real property and all buildings on and fixtures to all real property of Sellers and their Affiliates not described on Exhibit B; (p) all time clocks and GPS systems; (r) any assets sold by Sellers in accordance with Section 7.3(d); and (s) all other assets that do not constitute Assets.

     1.3 Commercially Reasonable Efforts to Assign. To the extent that the sale or assignment of any Customer Contract, Assumed Lease or Permit included within the Assets shall require the consent of any third party, Sellers and Buyer shall each use commercially reasonable efforts to obtain the consent of such other party to such assignment to Buyer both before and after the Closing.

ARTICLE II

PURCHASE PRICE

     2.1 Purchase Price. Subject to adjustment as provided in this Article II and Sections 7.10 and 11.7, Buyer shall pay to Sellers (a) $61,000,000 at the Closing, and (b) $2,000,000 when a new recycling contract with Miami-Dade County is executed or the current recycling contract is renewed (collectively, the “Purchase Price”), in each case by wire transfer of immediately available funds.

     2.2 Purchase Price Adjustments.

          (a) Adjustment for Certain Assumed Obligations. The Purchase Price payable at the Closing pursuant to Section 2.1(a) shall be reduced on a dollar-for-dollar basis for the liability reflected on the balance sheet as of the Closing Date with respect to capitalized equipment leases, if any, assumed by Buyer under Section 10.2.

          (b) Working Capital Adjustment.

               (i) The following capitalized terms used in this Agreement shall have the following meanings:

                    (1) “Adjustment Amount” means an amount (which may be positive or negative) equal to the actual amount of Net Working Capital as of Closing.

                    (2) “Net Working Capital” means (A) the aggregate current assets included in the Assets, less (B) the aggregate current liabilities of Sellers assumed by Buyer under Section 10.2, in each case determined in accordance with GAAP on a basis consistent with the balance sheet dated May 31, 2006 included within Sellers’ Financial Statements.

3

               (ii) At least five Business Days prior to the Closing Date, Sellers shall deliver to Buyer a worksheet setting forth their good faith estimate of the Net Working Capital of the Business as of the Closing Date and a computation of the estimated Adjustment Amount (the “Estimated Adjustment Amount”). The worksheet shall be prepared by Sellers and shall be subject to the approval of Buyer, which shall not be unreasonably withheld. If the worksheet is not acceptable to Buyer, Buyer shall promptly submit its comments on the worksheet to Sellers, and Buyer and Sellers shall endeavor in good faith to address such comments so as not to delay the Closing. If the Estimated Adjustment Amount is a positive number, the Purchase Price payable at Closing shall be increased in an amount equal to the positive Estimated Adjustment Amount. If the Estimated Adjustment Amount is a negative number, the Purchase Price payable at Closing shall be decreased in an amount equal to the negative Estimated Adjustment Amount.

               (iii) Within 45 days after the Closing, Buyer shall prepare a computation of the actual Net Working Capital and the actual Adjustment Amount as of the Closing Date (the “Actual Adjustment Amount”) and deliver such computation to Sellers. If within 20 days following delivery of such computation Sellers do not deliver a written objection thereto to Buyer, then the Actual Adjustment Amount shall be as reflected on the computation provided pursuant to the preceding sentence. If Sellers timely object to the computation, then Buyer and Sellers shall negotiate in good faith and attempt to resolve their disagreement. Should such negotiations not result in an agreement within 20 days after delivery of such written objection, then the matter shall be submitted to KPMG LLP (the “Neutral Auditor”). All fees and expenses relating to the work, if any, performed by the Neutral Auditor will be borne equally by Buyer and Sellers. The Neutral Auditor will deliver to Buyer and Sellers a written determination (such determination to include a worksheet setting forth all material calculations used in arriving at such determination and to be based solely on information provided to the Neutral Auditor by Buyer and Sellers, or their respective Affiliates) of the disputed items within 30 days of receipt of the disputed items, which determination will be final, binding and conclusive on the parties.

               (iv) Promptly following agreement on or delivery of the final, binding and conclusive computation setting forth the Actual Adjustment Amount, Buyer and Sellers shall account to each other as provided for in this Section 2.2(b)(iv). If the Estimated Adjustment Amount less the Actual Adjustment Amount is a positive number, then Sellers shall pay Buyer a cash payment equal to such excess as a decrease in the Purchase Price. If the Estimated Adjustment Amount less the Actual Adjustment Amount is a negative number, then Buyer shall pay Sellers a cash payment equal to such deficit as an increase in the Purchase Price. Any such excess or deficit payment shall be due and payable within 10 days after the final determination of the Actual Adjustment Amount pursuant to Section 2.2(b)(iii) and shall be paid in immediately available funds by wire transfer to an account designated by Buyer or Sellers, as applicable.

     2.3 Allocation of Purchase Price. The Purchase Price (including any liabilities that are considered to be an increase to the Purchase Price for federal income tax purposes) shall be allocated among the Assets in the manner agreed to by Sellers and Buyer, in accordance with the requirements of Code Section 1060 and based on the fair market value of the Assets as

4

determined by arm’s length negotiations. Within 30 days after the Actual Adjustment Amount is finally determined pursuant to Section 2.2, Sellers will propose a Purchase Price allocation to Buyer, and the parties shall work in good faith to agree to the same. The parties agree to file (or cause to be filed) (i) all required federal Forms 8594, Asset Acquisition Statement under Section 1060, and (ii) all other Tax returns (including amended Tax returns and claims for refund) in a manner consistent with such allocation of the Purchase Price described in this Section 2.3, and to use their commercially reasonable efforts to sustain such allocation in any subsequent Tax audit or Tax dispute.

ARTICLE III

CLOSING

     3.1 Time and Place of Closing.

          (a) Generally. The purchase and sale provided for in this Agreement (the “Closing”) shall take place at the offices of Fennemore Craig, P.C., 3003 North Central Avenue, Suite 2600, Phoenix, Arizona 85012 at 9:00 a.m., local time, as promptly as practicable (but in any event within 10 Business Days) following the date on which the last of the conditions set forth in Article VIII and Article IX are fulfilled, satisfied or waived or at such other time or place as the parties shall agree in writing. The date on which the Closing occurs is referred to as the “Closing Date.” The Closing shall be effective for all purposes at 12:01, a.m., Eastern Time, on the date subsequent to the Closing Date. The parties shall use commercially reasonable efforts to cause the Closing to occur on or before September 30, 2006. At the Closing, the sale and conveyance of the Land and the assignment of the leases for the Leased Real Property shall be consummated through an escrow established at the Title Company, although actual payment of the Purchase Price allocable to the Land shall not be paid through the escrow (unless required to cure an Unpermitted Exception for which Sellers are obligated or have elected to cure).

          (b) Permit Transfer Issues. If, despite the parties’ commercially reasonable efforts, the Closing cannot occur as of the relevant date on account of Permit transfer issues or governmental approvals, and the parties are unable to consummate the Closing under an operating agreement mutually satisfactory to the parties, then with the mutual consent of Sellers and Buyer the aspects of the Business affected by such Permit or governmental approval may be carved out by way of an amendment to this Agreement (including an appropriate adjustment to the Purchase Price) and the Closing shall occur forthwith. The transfer of the affected aspects of the Business shall close as soon as practicable after the Closing when the Permit transfer issues are resolved or the governmental approvals are obtained, as the case may be.

     3.2 Deliveries by Sellers. At the Closing, Sellers shall deliver or cause to be delivered to Buyer, all duly and properly executed (where applicable):

          (a) subject to Section 3.8, Deeds conveying to Buyer indefeasible, fee simple title to each parcel of Land subject only to the Permitted Exceptions, in form and substance reasonably satisfactory to Buyer;

          (b) a Bill of Sale;

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          (c) a sworn affidavit from each Seller stating, under penalty of perjury, that such Seller is not a “foreign person” as defined under Section 1445(f)(3) of the Code and other appropriate evidence or documents necessary to relieve Buyer of any obligation to withhold any portion of the Purchase Price under Section 1445(a) of the Code or any other withholding provision of any other Tax law;

          (d) a National Account subcontract substantially in the form of Exhibit D (the “National Account Subcontract”);

          (e) an Assignment, Assumption and Consent to Leased Real Property for each parcel of Leased Real Property, and an Estoppel Certificate (which may be included within the Assignment, Assumption and Consent to Leased Real Property) for each parcel of Leased Real Property (provided, however, that if any real estate lease does not require the owner of the Leased Real Property to provide estoppel certificates, and if Sellers cannot obtain an Estoppel Certificate from the owner through reasonable efforts, then Sellers shall not be required under this subsection to deliver an Estoppel Certificate with respect to such real estate lease);

          (f) a letter from Sellers’ (or their Affiliate’s) lenders confirming that all Blanket Liens on the Assets will be released concurrently with the Closing and that evidence thereof shall be delivered within 60 days following the Closing Date and evidence reasonably satisfactory to Buyer of satisfaction of all Encumbrances encumbering the Assets other than Permitted Exceptions; and

          (g) such other separate documents or instruments of sale, assignment, or transfer as Buyer shall reasonably request, including titles and registrations for the Rolling Stock.

     3.3 Deliveries by Buyer. At the Closing, Buyer shall deliver or cause to be delivered to Sellers, all duly and properly executed (where applicable):

          (a) the Purchase Price specified in Section 2.1(a), as adjusted as provided in Section 2.2, by wire transfer of immediately available funds to the account specified by Sellers;

          (b) the Buyer’s Assumption Agreements;

          (c) the National Account Subcontract;

          (d) the Assignment, Assumption and Consent to Leased Real Property and

          (e) such other separate documents or instruments of sale, assignment, transfer or assumption as Sellers shall reasonably request.

     3.4 Title Policies and Documents.

          (a) As soon as reasonably practicable after execution of this Agreement, Sellers shall provide Buyer with (i) a complete legal description and/or tax parcel numbers for each parcel of the Land, (ii) for each parcel of Land, a copy of any title policy, title commitment or any certificate of title that Sellers possess, evidencing title to each parcel of Land as of the

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date of the applicable certificate, commitment or policy, and (iii) complete and legible copies of all instruments and documents affecting title to the Land that Sellers possess.

          (b) Promptly thereafter and based on the legal descriptions and/or tax parcel numbers provided, Sellers shall cause the Title Company to issue one or more Title Commitments for standard owner’s title insurance insuring fee simple title in the name of Buyer for the Land. Buyer shall cause the Title Company to deliver to Sellers duplicate copies of Title Commitments and Schedule B items thereto. In addition, within two Business Days after receipt of a written request from Buyer, Sellers will execute and deliver authorizations that may be sent by Buyer to governmental and other public authorities that authorize such authorities to reveal to Buyer all information, if any, in any files the authorities have on the Land, or any part thereof, provided such authorizations do not authorize or request inspections with respect to the Land in each case to the extent such authorizations are required of Sellers. All costs attributable to the issuance of the Title Commitments, endorsements, modifications, title searches, title policies, or new title opinions ordered in accordance with the foregoing shall be borne by Buyer. Sellers agree at their cost to execute all customary affidavits, in reasonable form, and other reasonable documents, in order to obtain any title opinions or title policies, including a “non-imputation” endorsement, if available, to the effect that title defects known to the officers, directors, and stockholders of the owner prior to the Closing shall not be deemed “facts known to the insured” for purposes of the policies.

          (c) The value of the Land for title insurance, transfer tax, documentary stamps and other relevant purposes will equal the fair value of each parcel as determined by the relevant governmental assessor, as adjusted by the multiplier covering such assessor, as determined by Deloitte & Touche, LLP.

     3.5 Title Review/Permitted Exceptions. Buyer shall have 10 days after receipt of (i) all of the Title Commitments and title searches ordered by Sellers in accordance with Section 3.4(b), (ii) complete and legible copies of items listed as exceptions to title on the Title Commitments or title searches and (iii) a Survey for each tract of Land, to notify Sellers in writing of any Unpermitted Exceptions. Sellers shall have 10 days after notice of any Unpermitted Exception is delivered by Buyer within which Sellers shall deliver notice to Buyer in writing as to whether Sellers elect to cure, or insure around at Sellers’ expense, any such matter; provided, however, that Sellers shall be required to cure at Sellers’ expense any monetary Unpermitted Exception (i.e., an exception which can be deleted as an exception upon the delivery of sufficient funds to the Title Company) at or prior to Closing. Except with respect to a monetary Unpermitted Exception, failure to notify Buyer in writing within such period of their election to cure or insure around shall be deemed Sellers’ election not to cure or insure around. Buyer shall have 10 days following receipt of Sellers’ notice or deemed notice electing not to cure or insure around in which to (a) elect to waive its objection to any Unpermitted Exception that Sellers do not elect to cure or insure around, (b) remove the Land subject to the Unpermitted Exception from the Assets, which shall result in a mutually-agreeable reduction of the Purchase Price, or (c) terminate this Agreement in accordance with Article XII, but only if the existence of the Unpermitted Exception and the removal of the Land pursuant to clause (b) would result in a Material Adverse Change if the rights, benefits or privileges under such title exception(s) are asserted or enforced. If Buyer fails to notify Sellers in writing of Buyer’s election within such

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10-day period, Buyer shall be deemed to have elected to proceed in accordance with clause (a) of the preceding sentence.

     3.6 Surveys. As soon as reasonably practicable after execution of this Agreement, Sellers shall deliver to Buyer any surveys of the Land, or any part thereof, that Sellers possess. In addition, Sellers shall cause a survey to be prepared by the Surveyor and the costs and expenses thereof shall be borne by Buyer. Sellers shall deliver to Buyer a duplicate copy of any survey that Sellers receive. For purposes of this Agreement, any survey that satisfies the Title Company in connection with the issuance of the Title Policy shall be referred to as a “Survey”.

     3.7 Prorations and Charges. All Taxes relating to the Land for any tax year prior to the real estate tax year in which the Closing occurs shall be paid in full by Sellers on or before the Closing Date or an amount sufficient to fully discharge the same shall be deposited in escrow with the Title Company for payment to the relevant Tax authority. Real property Taxes for the current tax year shall be prorated between Sellers and Buyer as of the Closing Date on a daily, pro-rata basis based upon the latest available estimates of the amount thereof or the actual amount of such Taxes. If the pro rata amounts are not known as of the Closing Date, adjustments shall be made post-Closing at such time as they are known to the parties. Buyer and Sellers shall each pay one-half of the escrow fees and cancellation fees to the Title Company. The following costs shall be paid by Buyer: (a) all costs attributable to the issuance of the Title Commitments and any amendments or modifications thereto, endorsements, title searches and title policies ordered in accordance with Section 3.4(b); (b) the costs and expenses of the Survey pursuant to Section 3.6; and (c) documentary, transfer or stamp fees and other customary Closing costs, such as recording fees.

     3.8 Post-Closing Title and Survey Work. Notwithstanding anything in this Agreement to the contrary, if as of the Closing Date, through no fault of Buyer, (a) the Title Company is not prepared to issue title insurance, and/or (b) Buyer has not had the time permitted under Section 3.5 to review Title Commitments or title searches, title exception documents and Surveys, and/or (c) Buyer has not obtained a Survey, then Buyer shall have the right, in its sole discretion, to either (i) elect to close under this Agreement, provided Sellers agree in writing at the Closing to provide such missing items promptly after the Closing; or (ii) delay the Closing with respect to such parcel of Land only and close with respect to such Land when the missing items are obtained and approved by Buyer in accordance with this Agreement, with (x) Buyer and Sellers to execute an agreement at Closing regarding the delay of payment of the Purchase Price attributable to such Land and the use of such Land by Buyer until the extended Closing Date, and (y) the representations, warranties and covenants of Seller with respect to the applicable Land continuing until the extended Closing Date.

     3.9 Condemnation or Casualty. If prior to Closing, the Land or any part thereof is subject to an eminent domain or condemnation proceeding or any improvement thereon is damaged by fire, flood or other casualty, Sellers shall give written notice thereof to Buyer, and Buyer shall be entitled, contingent upon the Closing occurring, to any condemnation award or insurance proceeds resulting from any such event. At the Closing Sellers shall execute and deliver all documents reasonably requested of Buyer to effectuate such assignment. The assignment of a condemnation award or insurance proceeds shall be Buyer’s sole remedy as a

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result of the occurrence of any of the foregoing events, and all risk of collection with respect thereto shall be on Buyer and not Sellers.

     3.10 Stay-On Bonuses. Sellers shall make payments (the “Stay-On Bonuses”) under Retention Bonus Agreements in substantially the form of Exhibit E (the “Retention Bonus Agreements”) in accordance with the terms of such agreements and as set forth on Schedule 3.10.

ARTICLE IV

POST CLOSING COVENANTS

     4.1 Removal of Identification. Within three months after the Closing, Buyer shall remove from the Assets or otherwise conceal all visible usage of the Retained IP.

     4.2 Further Assurances. From time to time on and after the Closing and without further consideration except as provided in this Agreement, the parties shall each deliver or cause to be delivered to any other party at such times and places as shall be reasonably requested, such additional instruments as any of the others may reasonably request for the purpose of carrying out this Agreement and the Transactions. Sellers, also without further consideration, agree to cooperate with Buyer and to use their reasonable commercial efforts to have their officers and employees cooperate on and after the Closing Date in furnishing to Buyer or its advisors (a) information requested by Buyer with respect to the Assets and the Business, (b) information, evidence, testimony, and other assistance in connection with obtaining all necessary Permits and approvals and in connection with any third party actions, proceedings, arrangements or disputes of any nature with respect to matters pertaining to all periods prior to the Closing Date and (c) updated loss-claims related to the Business with respect to periods prior to the Closing Date and any resolution thereof; provided, however, that this obligation shall not apply to disputes among the parties, and that Sellers shall not be required to expend any sum of money toward that end beyond reasonable and typical overhead expenditures and outside counsel fees and costs. Buyer, also without further consideration, agrees to cooperate with Sellers and to use its reasonable commercial efforts to have its officers and employees cooperate on and after the Closing Date in furnishing to Sellers information, evidence, testimony, and other assistance (including reasonable access to the Assets, including the Land and the Leased Real Property) in connection with any third party actions, proceedings, arrangements or disputes of any nature with respect to matters pertaining to all periods prior to the Closing Date; provided, however, that this obligation shall not apply to disputes among the parties, and that Buyer shall not be required to expend any sum of money toward that end beyond reasonable and typical overhead expenditures and outside counsel fees and expenses.

     4.3 Billing, Cash Processing and Scale Software (TRUX) Services. For a period of up to 60 days following the Closing Date, at the request of Buyer, Sellers shall perform the billing, cash processing and scale software (TRUX) services relating to the Business for Buyer’s account and without additional consideration to Sellers. Sellers agree to perform the billing, cash processing and scale software (TRUX) services in accordance with past practices of Sellers. All payments made to Sellers on behalf of Buyer after the Closing and relating to the Assets shall be deemed to be the property of Buyer. The parties agree that after the Closing they will transfer

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and deliver to the other, from time to time and at least once per week, any cash, checks or other property that they may receive on or after the Closing which properly belongs to the other party. During such 60-day period, Buyer shall reimburse Sellers for their and their Affiliates’ reasonably documented out-of-pocket and internal costs in providing the services pursuant to this Section 4.3.

     4.4 Blanket Lien Releases. The Assets are encumbered by blanket liens in favor of various lenders to Sellers’ Affiliates (the “Blanket Liens”), all of which liens will be released concurrently with the Closing. Within 60 days after the Closing Date, Sellers shall deliver evidence to Buyer of the release of any security interests reflecting such Blanket Liens.

     4.5 Uniform Rental Agreement. Beginning on the first day of the first month following Closing and continuing on a month-to-month basis thereafter for the earlier of 12 months or the date Allied Waste Industries, Inc. — Southeast Region terminates the Uniform Contract, Buyer shall rent uniforms for the Business pursuant to that certain Cintas Corporation Multiple Location Rental Account Agreement, dated April 16, 2001, between Cintas Sales Corporation (“Cintas”) and Allied Waste Industries, Inc. — Southeast Region (the “Uniform Contract”). Buyer’s obligation to rent uniforms under the Uniform Contract shall extend to 4,950 uniforms (the “Minimum Uniforms”). Buyer may, but is not obligated to, rent uniforms under the Uniform Contract for more than the Minimum Uniforms. The rental expense and other terms for the uniform rental by Buyer shall not differ from the rental expense and other terms provided to Sellers under the Uniform Contract in effect as of the date of this Agreement. Notwithstanding anything to the contrary contained herein, if Cintas does not provide uniforms to Buyer (after Closing) in accordance with the terms of the Uniform Contract, Buyer shall not be required to pay Sellers for the uniforms that were not provided. Within 15 days following the end of each calendar month (beginning after the second calendar month following the Closing Date), Sellers shall provide Buyer with an invoice, including appropriate supporting documentation in reasonable detail, setting forth the charges for applicable uniform rentals for the Business during the previous calendar month. Buyer shall pay each invoice received from Sellers no later than 30 days after receipt of such invoice.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF SELLERS

     Sellers, jointly and severally, represent and warrant to Buyer that the statements contained in this Article V: (a) except as set forth in the Disclosure Schedules, are correct and complete as of the date of this Agreement; (b) will be correct and complete as of the Closing Date (as though made then and as though the Closing Date were substituted for the date of this Agreement throughout this Article V), subject to supplements to the Disclosure Schedules as provided in Section 7.7, and except for those representations and warranties that, by their terms or nature, speak as of a specific date that is not the Closing Date; and (c) shall survive the Closing in accordance with Section 11.1. Each matter referred to in any Disclosure Schedule shall be deemed to have been disclosed for all relevant purposes in all other parts or sections of all other Disclosure Schedules.

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     5.1 Organization; Authority; Ownership.

          (a) Each Seller is a corporation or limited liability company duly organized, validly existing and in good standing under the laws of the state of its incorporation or organization and is duly authorized, qualified and licensed under all Applicable Laws to carry on the Business in the places and in the manner in which the Business is presently conducted, except for where the failure to be so authorized, qualified and licensed would not have a material adverse effect on the Business.

          (b) Each Seller has all necessary power and authority to enter into this Agreement and the Ancillary Agreements to which it is a party, to consummate the Transactions and perform its obligations under this Agreement and the Ancillary Agreements to which it is a party.

     5.2 Binding Effect. At or before the Closing, the execution, delivery and performance of this Agreement and the Ancillary Agreements by Sellers will be within their respective corporate or limited liability company powers and will have been approved by all requisite action of Sellers, and no other proceedings on the part of Sellers will be necessary to authorize the execution and delivery of this Agreement and the Ancillary Agreements or the consummation by Sellers of the Transactions and the performance of their obligations under this Agreement and the Ancillary Agreements to which they are parties. This Agreement has been, and upon delivery, the Ancillary Agreements to which they are parties will be, duly executed and delivered by each Seller and, assuming the due authorization, execution and delivery by Buyer, constitutes and will constitute the valid and legally binding agreement of Sellers enforceable against Sellers in accordance with their respective terms.

     5.3 Permits. Sellers have all material Permits necessary to enable them to own the Assets and conduct the Business as currently conducted. To Sellers’ knowledge, except as set forth on Schedule 5.3, Sellers are and have been in material compliance with the terms and conditions of all Permits and all of the Permits are now valid, in good standing and in full force and effect. Sellers shall not undertake, following the Closing, any challenges to the Permits or applications for Permits.

     5.4 Assets; Personal Property.

          (a) Except for (i) the items listed on Schedule 5.4(a) and (ii) the Excluded Assets, the Assets include all the material properties, assets, rights, licenses, permits and contracts, wherever located (including any items located on a customer’s site), whether tangible or intangible, real, personal or mixed, that are currently used, owned by, leased by or in the possession of Sellers principally in connection with the Business.

          (b) All of the Assets are either owned by Sellers or leased by Sellers under an agreement set forth on Schedule 5.4(b) (the “Assumed Leases”). To Sellers’ knowledge, each Assumed Lease is in full force and effect and constitutes valid and binding obligations of the parties thereto and their successors. To Sellers’ knowledge, no default has occurred nor has there occurred an event or condition that with the passage of time or the giving of notice (or both) would constitute a default by Sellers or any other party to any Assumed Lease.

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          (c) At the Closing, Sellers shall have good and marketable title to the owned Assets and enforceable leasehold interest in the leased Assets, free and clear of all Encumbrances other than Permitted Exceptions and the Blanket Liens that will be released as provided in Section 4.4. By virtue of the grant, conveyance, sale, transfer, and assignment of the Assets under the Deeds and the Bill of Sale, Buyer shall receive good and marketable title to the Assets, free and clear of all Encumbrances other than Permitted Exceptions and Blanket Liens that will be released as provided in Section 4.4.

     5.5 Real Property.

          (a) Except as shown on the Title Commitments, Sellers have good and valid title in fee simple to the Land and a valid leasehold interest in the Leased Real Property, and at Closing good and valid fee simple title to the Land and a valid leasehold interest in the Leased Real Property shall be conveyed to Buyer free of all Encumbrances, subject to the Permitted Exceptions.

          (b) Except as set forth on Schedule 5.5(b):

               (i) There are no Proceedings pending and brought by, or to Sellers’ knowledge, threatened by, any third Person that would result in a change in the allowable uses of the Land or the Leased Real Property or that would modify the right of Buyer to use the Land or the Leased Real Property for its current uses after the Closing Date.

               (ii) Except for Permitted Exceptions, no Person except Sellers has a present or future right to possession or occupancy or use of all or any part of the Land.

               (iii) There are no Proceedings (including condemnation or eminent domain proceedings) pending or, to Sellers’ knowledge, threatened against all or any part of the Land.

               (iv) Sellers have not received any written notice of (A) any violation of any applicable zoning ordinance, building code, use or occupancy restriction, covenant, condition or restriction of record or any other violation of applicable law relating to the Land, the Leased Real Property or the improvements thereon or (B) any pending special assessments affecting all or any part of the Land (except as shown on the Title Commitments) or the Leased Real Property.

               (v) To Sellers’ knowledge, there are no unrecorded contracts, leases, easements or other agreements or claims of third parties affecting the use, title, occupancy or development of the Land, and no Person has any right of first refusal, option or the right to acquire, lease or otherwise use all or any part of the Land.

               (vi) To Sellers’ knowledge, no fact or condition exists which will result in the termination, restriction or modification of any currently existing access to or from the Land or the Leased Real Property and any public rights of ways and roads.

          (c) No Seller is a “foreign person” as the term is defined in Section 1445 of the Code and any applicable regulations promulgated thereunder.

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     5.6 Contracts.

          (a) Listed on Schedule 5.6 is a complete and accurate list of all (i) Customer Contracts that accounted for annual revenues in excess of $100,000 during the 12 months ended May 31, 2006 (“Material Customer Contracts”), (ii) Employee Contracts, and (iii) contracts to which Sellers are parties and by which the Assets are affected or bound (the “Other Contracts”) which: (A) are franchise agreements with a municipality or any governmental branch, agency or body; (B) relate to the ownership or use of real property (including the Land and the Leased Real Property); (C) relate to the purchase or lease of any fixed asset with respect to the Business, whether or not such purchase or lease was made in the ordinary course of business, for an aggregate price in excess of $100,000 in any 12 month period; (D) contain a covenant or agreement limiting the freedom of any of the parties thereto to compete in any line of business or in any location; or (E) have payment obligations (whether to or by Sellers) in excess of $100,000 in any 12 month period, in each case as of the date of this Agreement. True and complete copies of each such contract have been made available to Buyer. The disclosure of a contract on Schedule 5.6 shall not constitute a representation that such contract satisfies one or more of the foregoing criteria.

          (b) To Sellers’ knowledge, and except as set forth in Schedule 5.6, all Material Customer Contracts, Employee Contracts and Other Contracts are in full force and effect and are valid, binding and enforceable against the respective parties thereto in accordance with their respective provisions. To Sellers’ knowledge, no default has occurred nor has there occurred an event or condition which with the passage of time or the giving of notice (or both) would constitute a default by Sellers or any other party to any such contract. Except as set forth on Schedule 5.6, Sellers have not received any written notice that any Person intends or desires to modify, waive, amend, rescind, release, cancel or terminate any Material Customer Contract, Employee Contract and Other Contract.

     5.7 Employees; Compensation.

          (a) Attached as Schedule 5.7 is a complete and accurate list of (i) all Business Employees, (ii) their rate of compensation as of the date of delivery of the Disclosure Schedules, (iii) any bonus, incentive or compensation plans (other than plans subject to ERISA) in which they participate, (iv) any vacation plans, including accruals thereunder, and (v) any severance plans, agreements, arrangements or obligations relating to any such employee, including any amounts owed to any such employee thereunder as of the Closing Date or arising out of or in connection with the consummation of the Transactions or the performance of the parties’ respective obligations under this Agreement and the Ancillary Agreements.

          (b) Except (i) as otherwise contemplated by this Agreement or the Ancillary Agreements, (ii) as set forth on Schedule 5.7, and (iii) for employees governed by Employee Contracts, each Business Employee is an employee at will.

     5.8 Compliance with Law; No Conflicts.

          (a) Except as set forth in Schedule 5.8(a): (i) to Sellers’ knowledge, the Business is being operated in compliance in all material respects with all Applicable Laws; (ii)

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Sellers are not involved in any litigation or administrative proceeding relating to the Assets or the Business seeking to impose fines, penalties or other liabilities or seeking injunctive relief for violation of any Applicable Laws or Permits; and (iii) to Sellers’ knowledge there is no pending investigation or other form of review relating to Sellers (with respect to the Business) or the Assets with respect to any Applicable Law or Permit.

          (b) Except as set forth in Schedule 5.8(b), the execution, delivery and performance of this Agreement, the Ancillary Agreements, the consummation of the Transactions and the fulfillment of the terms of this Agreement and the Ancillary Agreements by Sellers do not and will not:

               (i) conflict with, or result in a breach or violation of the Certificate of Incorporation or Articles of Organization and Bylaws or Operating Agreement of Sellers;

               (ii) to Sellers’ knowledge, conflict with, or result in the creation or imposition of any Encumbrance on the Assets or Business pursuant to: (A) any Applicable Law to which Sellers or any of their respective properties are subject, or (B) any judgment, order or decree to which Sellers are bound or any of their respective property is subject; or

               (iii) except for the notices, consents or approvals required under any Material Customer Contracts, Employee Contracts and Other Contracts required to be listed on Schedule 5.6, the Permits and the Assumed Leases (collectively, the “Required Consents”), (A) require Sellers to provide notice to, or obtain the consent or approval of, any governmental authority or agency or other third Person, (B) constitute a default under or give rise to any right of termination, cancellation or acceleration of, or to a loss of any benefit to which a Seller is entitled under such Material Customer Contracts, Employee Contracts Other Contracts, Permits or Assumed Leases or (C) result in the creation or imposition of any Encumbrance on any Asset.

          (c) All of the Required Consents are listed on Schedule 5.8(c).

     5.9 Taxes. Except as set forth on Schedule 5.9, with respect to the Business:

          (a) Sellers, either separately or as members of an Affiliated Group, have completed and timely filed all Tax Returns required to be filed with any Tax authority, and have paid (or have had paid on their behalf) all Taxes shown as due and payable thereon. Such Tax Returns reflect all Taxes due and payable with respect to the periods covered by them. There is no Tax Return filed by Sellers, either separately or as a member of an Affiliated Group, and there are no outstanding assessments or Taxes otherwise due for any Pre-Closing Period, that will result, on or after the Closing Date, in any Taxes or other governmental charges upon the Assets or Buyer, whether as a transferee of the transferred assets or otherwise. There are no Encumbrances for Taxes on any of the Assets other than Encumbrances for Taxes not yet due and payable.

          (b) There is no actual pending or, to Sellers’ knowledge, threatened or expected claim, audit, investigation, dispute or other proceeding concerning any Taxes of Sellers that will result in a claim against any of the Assets.

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     5.10 Litigation. Except as set forth on Schedule 5.10, (a) there are no Proceedings pending or, to Sellers’ knowledge, threatened, against Sellers relating to the Assets or the Business or that could interfere with the consummation of the Transactions, at law or in equity, before any federal, state or local court or regulatory agency, or other governmental or private authority and (b) there are no existing orders, judgments or decrees of any governmental or private authority affecting any of the Assets or the Business.

     5.11 Financial Statements. Sellers have set forth in Schedule 5.11 true and complete copies of (a) the internal, unaudited, compiled balance sheets of Sellers relating to the Business and the Assets as of May 31, 2006 (the “Balance Sheet Date”), and the related internal, unaudited statements of income for the 12 months then ended (collectively, “Sellers’ Financial Statements”). Sellers’ Financial Statements are the financial statements used by Sellers to operate the Business, except that they do not include all intercompany transactions. Except as provided in Schedule 5.11, Sellers’ Financial Statements were prepared in accordance with GAAP, but because the Business are part of a larger organization, Sellers’ Financial Statements omit certain corporate level adjustments for assets, accruals or charges that would be required to be recorded if Sellers’ Financial Statements were prepared on a stand alone entity basis, including those set forth on Schedule 5.11. Sellers’ Financial Statements fairly present in all material respects the financial position of Sellers relating to the Business and Assets as of the dates thereof and the results of Sellers’ operations for the periods then ended.

     5.12 Conduct of Sellers’ Business. Since the Balance Sheet Date, except as disclosed on Schedule 5.12 or as contemplated by this Agreement, there has not been any:

          (a) sale or transfer of, or any agreement to sell or transfer, any of the Assets, or any plan, agreement or arrangement granting any preferential right to purchase or acquire any interest in any of the Assets, or requiring consent of any Person to the transfer and assignment of any of the Assets, in each case other than in the ordinary course of business;

          (b) waiver of any material rights or claims of Sellers related to the Assets;

          (c) material breach, amendment or termination of any Material Customer Contract, Employee Contract, Other Contract, Permit, Assumed Lease or Permit;

          (d) material transaction by Sellers outside the ordinary course of business with respect to the Assets or the Business; or

          (e) action by Sellers committing to do any of the foregoing.

     5.13 Environmental Compliance; Hazardous Materials; Disposal Sites.

          (a) Except as set forth in Schedule 5.13(a), to Sellers’ knowledge:

               (i) Since January 1, 2003, Sellers have never owned, leased, had an interest in, generated, transported, stored, handled, recycled, reclaimed, disposed of, or contracted for the disposal of, Hazardous Materials or solid waste in connection with the Business, except in material compliance with all Environmental Laws;

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               (ii) Since January 1, 2003, there have been no Releases of any Hazardous Materials into the environment or onto, under or about the Land in connection with the Business, except in compliance with all Environmental Laws;

               (iii) No portion of the Land is on a CERCLA or similar state or federal list and no Seller has been advised that it is a potentially responsible party with respect to the Assets; and

               (iv) No Encumbrances with respect to Environmental Damages have been imposed against Sellers (insofar as they relate to any of the Assets) or any of the Assets under CERCLA, any comparable state statute or other Applicable Law.

          (b) Except as set forth in Schedule 5.13(b), with respect to the Business, no Seller has received any written notice or other written communication from any federal, state or local governmental or regulatory authority or unaffiliated third Person alleging or relating to the investigation of any alleged (i) material violation of Environmental Law or (ii) material liability or potential liability for any Environmental Damages, other than those that have been fully resolved without further liability or obligation to Sellers.

          (c) Included on Schedule 5.13(c) is a complete list of the names and addresses of all disposal sites (including Hazardous Materials disposal sites) used currently or in the past by Sellers in connection with the Business.

     5.14 Corrupt Practices. Except in compliance with all Applicable Laws, neither Sellers nor any of their respective officers, directors, employees or agents, have, directly or indirectly, ever made, offered or agreed to offer anything of value to (a) any employees, representatives or agents of any customers of the Business for the purpose of attracting business or (b) with respect to the Business, any domestic governmental official, political party or candidate for government office or any of their employees, representatives or agents.

     5.15 Accounts Receivable. All Accounts Receivable represent, or will represent as of Closing, valid obligations from sales actually made or services actually performed by Sellers in the ordinary course of business, except that the Accounts Receivable may include certain pre-billed services. To Sellers’ knowledge, no Account Receivable is subject to a valid defense, set-off or counterclaim.

     5.16 Affiliates’ Relationships.

          (a) Schedule 5.16 contains an accurate and complete list of all material contractual arrangements between Sellers and any Affiliate thereof that (i) are currently in effect and (ii) relate to the Assets.

          (b) No Affiliates of Sellers other than Sellers are presently engaged in business activities in the Area.

     5.17 Performance Bonds; Letters of Credit; Financial Assurances. Set forth on Schedule 5.17 are all of the outstanding performance bonds, letters of credit and other financial assurances provided by or on behalf of Sellers with respect to the Assets.

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     5.18 Employment and Labor Matters.

          (a) Except as set forth in Schedule 5.18, with respect to the Business, Sellers are not a party to (i) any collective bargaining agreement, (ii) any material agreement respecting the employment of any Business Employee other than the Employee Contracts, or (iii) any material agreement for the provision of consulting or other professional services which is not cancelable without penalty on less than 30 days’ notice.

          (b) Except as set forth in Schedule 5.18, within the last five years Sellers have not experienced any material labor disputes, union organization attempts or any work stoppage due to labor disagreements in connection with the Business.

          (c) Except to the extent set forth in Schedule 5.18, with respect to the Business, (i) there is no unfair labor practice charge or complaint against Sellers pending or, to Sellers’ knowledge, threatened; (ii) there is no labor strike, dispute, request for representation, slowdown or stoppage actually pending or, to Sellers’ knowledge, threatened against or affecting Sellers nor any secondary boycott with respect to services of Sellers; (iii) no question concerning representation has been raised to Sellers or, to Sellers’ knowledge, is threatened respecting the Business Employees; and (iv) there are no administrative charges, court complaints or written threatened complaints against Sellers concerning alleged employment discrimination or other employment related matters pending or, to Sellers’ knowledge, threatened before the U.S. Equal Employment Opportunity Commission or any other governmental entity.

     5.19 No Other Representations. Sellers are not making any representations or warranties, expressed or implied, of any nature whatsoever except as specifically set forth in this Agreement.

ARTICLE VI

REPRESENTATIONS AND WARRANTIES OF BUYER

     Buyer represents and warrants to Sellers that the statements contained in this Article VI: (a) except as set forth in the Disclosure Schedules, are correct and complete as of the date of this Agreement; (b) will be correct and complete as of the Closing Date (as though made then and as though the Closing Date were substituted for the date of this Agreement throughout this Article VI), except for those representations and warranties that, by their terms or nature, speak as of a specific date that is not the Closing Date; and (c) shall survive the Closing in accordance with Section 11.1.

     6.1 Organization. Buyer is a corporation duly organized, validly existing and in good standing under the laws of the state of its incorporation and is duly authorized, qualified and licensed under all Applicable Laws to carry on the Business in the places and in the manner in which the Business are presently conducted, except for where the failure to be so authorized, qualified and licensed would not have a material adverse effect on the Business.

     6.2 Authority. Buyer has all necessary power and authority to enter into this Agreement and the Ancillary Agreements and to consummate the Transactions and perform its obligations under this Agreement and the Ancillary Agreements.

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     6.3 No Conflicts. The execution, delivery and performance of this Agreement, the Ancillary Agreements, the consummation of the Transactions and the fulfillment of the terms of this Agreement and the Ancillary Agreements by Buyer do not and will not:

          (a) conflict with, or result in a breach or violation of the Certificate of Incorporation or Bylaws of Buyer, or result in the creation or imposition of any Encumbrance on any properties of Buyer pursuant to: (i) any law or regulation to which either Buyer or any of its property is subject, or (ii) any judgment, order or decree to which either Buyer is bound or any of its property is subject; or

          (b) require Buyer to provide notice to, or to obtain the consent or approval of, any governmental authority or agency or any other third Person.

     6.4 Binding Effect. The execution, delivery and performance of this Agreement and the Ancillary Agreements by Buyer are within its powers and have been approved by all requisite action of Buyer, and no other proceedings on the part of Buyer are necessary to authorize the execution and delivery of this Agreement and the Ancillary Agreements, the consummation by Buyer of the Transactions and the performance of the parties’ respective obligations under this Agreement and the Ancillary Agreements. This Agreement has been, and upon delivery, the Ancillary Agreements will be, duly executed and delivered by Buyer and, assuming the due authorization, execution and delivery by Sellers, constitutes and will constitute the valid and legally binding agreement of Buyer enforceable against Buyer in accordance with their respective terms.

     6.5 Independent Investigation. Buyer has conducted an independent investigation of the Assets and the Business. Buyer acknowledges that, EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, (i) THE ASSETS AND THE BUSINESS ARE CONVEYED “AS IS, WHERE IS” AND “WITH ALL FAULTS,” AND (ii) SELLERS HAVE NOT MADE, AND SELLERS HEREBY EXPRESSLY DISCLAIM AND NEGATE, ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, OF ANY KIND OR NATURE WHATSOEVER RELATING TO THE ASSETS OR THE BUSINESS (INCLUDING ANY IMPLIED OR EXPRESSED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE). As of the date of this Agreement, Buyer is not aware of any breach of the representations or warranties made by Sellers in Article V.

ARTICLE VII

COVENANTS

     7.1 Access to Land and Records; Due Diligence Period.

          (a) After the date of this Agreement, Sellers will afford to or obtain for the officers and authorized representatives of Buyer reasonable access to the Land (including for the purpose of permitting Buyer to perform or cause to be performed, at Buyer’s sole risk and expense, all testing, inspections and other procedures reasonably considered desirable by Buyer), the Leased Real Property, the Assets, sites, and the books and records of Sellers related to the Business, all upon reasonable notice and conducted at times agreed to by Sellers, which

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agreement shall not be unreasonably withheld. Without limiting the generality of the foregoing, Buyer shall have the right to conduct Phase I environmental investigations of the Land and the right to conduct Phase II environmental investigations of the Land if the results of the Phase I environmental investigations indicate that a Phase II investigation is necessary or desirable. In the event that Buyer concludes that a Phase II environmental investigation of the Land is necessary or desirable, Sellers will allow access to Buyer and its consultants to the Land for the purposes of conducting such an investigation. Such access shall be granted in accordance with an access agreement to be agreed upon by the parties.

          (b) Between the date of this Agreement and the Closing or the earlier termination of this Agreement, Sellers shall furnish Buyer with such additional financial and operating data and other information as to the Business as Buyer may from time to time reasonably request, whether such information is in the possession of Sellers or any of their Affiliates.

          (c) Between the date of this Agreement and the Closing or the earlier termination of this Agreement, Sellers shall use commercially reasonable efforts to cooperate with Buyer, its representatives, engineers, auditors and counsel in the preparation of any documents or other materials that may be reasonably required by any governmental agency. The parties shall cause all information obtained in connection with the negotiation of this Agreement to be treated as confidential in accordance with the provisions of Article XIII.

          (d) All access and testing shall be coordinated with Sellers, and Buyer and its agents and employees shall not enter the Land and perform inspections or meet with employees unless accompanied by a representative of Sellers. Sellers shall have the right to delay access or testing until such time that the access or testing, in the reasonable judgment of Sellers, will not materially interfere with the operations of the Business. Sellers shall have the right to require that access and testing be conducted on weekends or after hours, and shall have the right to limit access to employees to only those that are designated by Sellers.

          (e) Buyer agrees to return the Land and the Leased Real Property to its condition as of the date of this Agreement to the extent there are any alterations to the Land or the Leased Real Property attributable to its exercise of its rights pursuant to this Section 7.1, and Buyer shall indemnify and save harmless Sellers from all costs of returning the Land and the Leased Real Property to such condition. If Buyer does not promptly perform such work, Sellers shall have the right to perform, or cause to be performed, such work and to obtain reimbursement for the costs of such work (including legal and consulting fees) from Buyer, which costs shall be payable by Buyer to Sellers upon demand.

     7.2 Activities of Sellers Prior to Closing. Between the date of this Agreement and the Closing or the earlier termination of this Agreement, Sellers shall:

          (a) carry on the Business in the ordinary and usual course consistent with past practice; provided, however, that Sellers shall have no obligation to purchase any vehicles pursuant to this Section 7.2 or otherwise;

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          (b) maintain the Assets in as good working order and condition as at present, ordinary wear and tear excepted;

          (c) use commercially reasonable efforts to maintain their relationships with suppliers, customers, consultants, employees, independent contractors, government agencies, communities and others having business relations with Sellers in the operation of the Business, and promptly notify Buyer of the loss of any customer or group of customers material to the Business;

          (d) use commercially reasonable efforts to provide balance sheets and the related statements of income for the Business for each month following the date of this Agreement; and

          (e) provide all commercially reasonable assistance to Buyer to provide for an orderly transfer of the Assets and the Business from Sellers to Buyer.

     7.3 Prohibited Activities Prior to Closing. Between the date of this Agreement and the Closing or earlier termination of this Agreement, except as contemplated by this Agreement, Sellers shall not (as its relates to the Business), without the prior written consent of Buyer, which consent will not be unreasonably withheld:

          (a) engage in any practice, take any action, fail to take any action or enter into any transaction which could cause any representation or warranty of Sellers in this Agreement to be untrue or result in a breach of any covenant made by Sellers in this Agreement;

          (b) amend the current recycling contract with Miami-Dade County or enter into a new recycling contract with Miami-Dade County, except on terms materially consistent with the bid package previously submitted by Sellers to Miami-Dade County;

          (c) breach, amend (except in the ordinary course of business) or terminate any material Assumed Lease, Permit, Material Customer Contract (excluding the recycling contract with Miami-Dade County), Employee Contract or Other Contract;

          (d) enter into any transaction outside the ordinary course of the business of Sellers or otherwise prohibited under this Agreement;

          (e) sell, transfer, lease or otherwise dispose of any Assets, other than in the ordinary course of business; provided, however, that the foregoing restriction shall not prevent Sellers from selling scrap containers that have no net book value on Sellers’ Financial Statements;

          (f) except in the ordinary course of business, cause or, except in the ordinary course of business, permit to exist any Encumbrance, covenant, condition, restriction, assessment, easement, right of way, obligation, encroachment or liability (“Title Defect”) whatsoever with respect to the Land or the Leased Real Property;

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          (g) materially change or increase any compensation payable to, or benefits made available to, any Business Employees, except to the extent required by law or in the ordinary course of business consistent with past practice;

          (h) except in the ordinary course of business, relinquish, or seek to modify or amend any substantive term of, any Permit, other than in the ordinary course of business consistent with the past practice of the Business; or

          (i) agree to do any of the foregoing.

     7.4 Contact with Government Officials and Customers. Sellers shall use their commercially reasonable efforts to cooperate with Buyer in making contact with the appropriate governmental agencies and officials having information about or jurisdiction over Sellers, the Business, the Land, the Leased Real Property, the Assets or the obligations or rights of Sellers, including environmental and land use agencies and officials, to assist Buyer in completing its regulatory evaluation of the Business and the Assets and securing any consents necessary to transfer the Permits or in securing new permits. Buyer and Sellers shall use commercially reasonable efforts to obtain before Closing all consents necessary to transfer the Permits (or Buyer will use commercially reasonable efforts to obtain new permits for any non-transferable Permits), the Customer Contracts and the Assumed Leases to Buyer at the Closing. Buyer acknowledges and agrees that it shall not contact the Business Employees regarding the acquisition of the Business by Buyer and the treatment of such Business Employees in connection therewith, or any customers; in each case until the Closing.

     7.5 Public Announcements. Except as otherwise required by Applicable Law or the rules of the New York Stock Exchange or the Nasdaq Stock Market, the parties agree that: (a) except as provided below, no press release or other written communication shall be issued by Sellers, on the one hand, or Buyer, on the other hand, which makes reference in any way to the other party; (b) no press release or other written communication shall be issued by Sellers, on the one hand, or Buyer, on the other hand, containing information regarding this Agreement or the Transactions (including the fact that the Transactions are being discussed or the terms of the Transactions) without the prior written approval of both Sellers and Buyer, which approval may not be unreasonably withheld. The parties shall consult with each other concerning the means by which Sellers’ employees, customers and suppliers and others having dealings with Sellers will be informed of the Transactions. Nothing in this Section 7.5 shall restrict Buyer’s ability to contact the parties listed in Section 7.4 who are permitted to be contacted pursuant to Section 7.4 with respect to the Transactions.

     7.6 Standstill Agreement. Unless and until this Agreement is terminated pursuant to Article XII without the Closing having taken place, Sellers will not directly or indirectly (through a representative, agent, employee or otherwise) solicit or accept offers for the Assets or the Business or for a merger, stock sale, consolidation or other business combination involving the Assets or the Business, or respond to inquiries from, provide or share information with, negotiate with or in any way facilitate inquiries or offers from, third parties who express or who have expressed an interest in acquiring the Assets or the Business by merger, stock sale, consolidation or other business combination.

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     7.7 Supplements to Sellers’ Schedules. From time to time prior to the date five days prior to Closing, Sellers may supplement and update any of Sellers’ Disclosure Schedules delivered pursuant to this Agreement to make the information set forth therein complete and accurate, so long as such supplement or update does not disclose any event, fact or condition that, individually or in the aggregate, could result in Material Adverse Change. In the event such supplement or update discloses an event or condition that could result in Material Adverse Change, then Buyer may terminate this Agreement under Section 9.6.

     7.8 Employees and Employee Benefits.

          (a) Effective as of the Closing Date, Buyer shall offer employment to all Business Employees who on the Closing Date are actively at work and meet Buyer’s standard hiring criteria unless Buyer notifies Sellers that it does not intend to hire one or more Business Employees at least 30 days prior to the Closing Date (each, an “Active Employee”). For purposes of this Agreement, any Business Employee who is not actively at work on the Closing Date solely because of vacation, holiday, sick leave, maternity or paternity leave, military leave, jury duty, or bereavement leave, shall be deemed an Active Employee. Each Business Employee who accepts Buyer’s offer of employment is referred to as a “Transferred Employee.”

          (b) Sellers shall retain sole responsibility for all obligations, claims, liabilities and commitments under Sellers’ Plans and compensation practices, including severance benefits, if any, payable to Business Employees as a result of the Transactions and accrued vacation benefits, if any. Sellers shall retain all liabilities and obligations to Business Employees and their eligible dependents in respect of health insurance required by the Consolidated Omnibus Budget Reconciliation Act of 1985, the Health Insurance Portability and Accountability Act of 1996 and applicable state law.

          (c) Buyer agrees to use commercially reasonable efforts to cooperate with and assist Sellers in eliminating the need for Worker Adjustment and Retraining Notification Act (the “WARN Act”) notifications by offering employment to sufficient numbers of Business Employees in accordance with the following sentence. Such offers of employment will be subject to each such Business Employee satisfying Buyer’s standard hiring criteria, including drug testing, background check and driver safety criteria. To further assist in avoiding WARN notification requirements, Buyer will retain sufficient numbers of Business Employees hired pursuant to the preceding sentence for at least 90 days following the Closing unless terminated earlier for cause. If notwithstanding Buyer’s compliance with the preceding provisions of this Section 7.8(c) WARN notification is nonetheless required, Sellers agree to provide any required notice under the WARN Act, and any similar state or non-U.S. Applicable Law, and to otherwise comply with any such applicable law with respect to any “plant closing” or “mass layoff” (as defined in the WARN Act or any similar state or non-U.S. Applicable Law) or group termination or similar event affecting Business Employees occurring prior to or as a result of the consummation of the Transactions.

          (d) All Business Employees who are employed by Buyer from and after Closing shall be given credit for their years of service with Sellers in determining their entitlement to Buyer’s severance and other length-of-service related employee benefits.

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     7.9 HSR Approval. Sellers and Buyer undertake and agree to file as promptly as practicable following the execution of this Agreement all documents required under the HSR Act. Sellers and Buyer shall use commercially reasonable efforts to cooperate with each other with respect to such filing, and shall respond as promptly as reasonably practicable to any inquiries received from the FTC or the Antitrust Division for additional information or documentation and to all inquiries and requests received from any other local, state or federal governmental authority in connection therewith. Each party shall (a) subject to Applicable Laws, promptly notify the other party of any written communication to that party from the FTC, the Antitrust Division or any other governmental entity relating to this Agreement and, subject to Applicable Law, permit the other party to review in advance any proposed written communication to any of the foregoing relating to this Agreement; (b) to the extent permitted by Applicable Laws, not agree to participate in any substantive meeting or discussion with any governmental authority in respect of any filings, investigation or inquiry concerning this Agreement or the Transactions unless it consults with the other party in advance and, to the extent permitted by such governmental authority, gives the other party the opportunity to attend and participate thereat; and (c) to the extent permitted by Applicable Laws, furnish the other party with copies of all correspondence, filings, and communications between them and their Affiliates and their respective representatives on the one hand, and any government or regulatory authority or members or their respective staffs on the other hand, with respect to this Agreement and the Transactions.

     7.10 Recycling Contract Matters. If Sellers renew the current recycling contract with Miami-Dade County or enter into a new recycling contract with Miami-Dade County prior to the Closing, Buyer will: (a) reimburse Sellers at the Closing, as additional Purchase Price, for all capital expenditures made by Sellers prior to the Closing pursuant to the renewed or new recycling contract; and (b) with respect to the four new trucks being moved by Sellers to the Area, at Buyer’s option, either (i) pay Sellers the full purchase price for such trucks or, (ii) return such truck to Sellers at the Closing.

     7.11 City of Hialeah Settlement Agreement Matters. From and after Closing, Buyer shall cooperate with Sellers with respect to Sellers’ completion, at Sellers’ expense, of the matters required by the Settlement Agreement, dated May 2, 2003, between BFI Waste Systems of North America, Inc. and the City of Hialeah.

ARTICLE VIII

CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLERS

     The obligations of Sellers to consummate the Transactions are subject to the completion, satisfaction, or at their option, waiver, on or prior to the Closing Date, of each of the following conditions.

     8.1 Representations and Warranties. The representations and warranties of Buyer contained in this Agreement shall have been true and correct on and as of the date made and shall be true and correct in all material respects on and as of the Closing Date with the same effect as though such representations and warranties had been made on and as of such date. Buyer shall have delivered to Sellers a certificate of a duly authorized officer to the foregoing effect.

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     8.2 Covenants. Each and all of the terms, covenants and conditions of this Agreement to be complied with and performed by Buyer on or before the Closing Date shall have been duly complied with and performed in all material respects. Buyer shall have delivered to Sellers a certificate of a duly authorized officer to the foregoing effect.

     8.3 No Legal Prohibition. No injunction or order shall be in effect prohibiting consummation of the Transactions or which would make the consummation of the Transactions unlawful.

     8.4 No Adverse Proceeding. No Proceeding shall have been instituted and be pending before a court or any other governmental agency or body which seeks to restrain or prohibit any of the Transactions; provided, however, that the provisions of this Section 8.4 shall not apply if Sellers have directly or indirectly solicited or encouraged any such Proceeding.

     8.5 Deliveries. Buyer shall be prepared to make or cause to be made the deliveries described in Section 3.3 and Sections 3.4 through 3.8.

     8.6 Third Party Consents and Approvals. All materially necessary governmental, regulatory and third party consents and approvals shall have been obtained.

     8.7 Closing of Arizona Transaction. The Arizona Transaction shall be prepared to close simultaneously with the Closing of the Transactions.

     8.8 HSR Act. The waiting period (and any extension thereof) under the HSR Act applicable to the Transactions shall have expired or been earlier terminated by the FTC or the Antitrust Division.

ARTICLE IX

CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER

     The obligations of Buyer to consummate the Transactions are subject to the completion, satisfaction or, at their option, waiver, on or prior to the Closing Date, of each of the following conditions.

     9.1 Representations and Warranties. Subject to Section 7.7, the representations and warranties of Sellers contained in this Agreement shall have been true and correct on and as of the date made and shall be true and correct in all material respects on and as of the Closing Date with the same effect as though such representations and warranties had been made on and as of such date. Sellers shall have delivered to Buyer a certificate of a duly authorized officer to the foregoing effect.

     9.2 Covenants. Each and all of the terms, covenants and conditions of this Agreement to be complied with and performed by Sellers on or before the Closing Date shall have been duly complied with and performed in all material respects. Sellers shall have delivered to Buyer a certificate of a duly authorized officer to the foregoing effect.

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     9.3 No Legal Prohibition. No injunction or order shall be in effect prohibiting consummation of the Transactions or which would make the consummation of the Transactions unlawful.

     9.4 No Adverse Proceeding. No Proceeding shall have been instituted and be pending before a court or any other governmental agency or body which seeks to restrain or prohibit any of the Transactions; provided, however, that the provisions of this Section 9.4 shall not apply if Buyer has directly or indirectly solicited or encouraged any such Proceeding.

     9.5 Deliveries. Sellers shall be prepared to make or cause to be made the deliveries described in Section 3.2.

     9.6 No Material Adverse Change. No Material Adverse Change shall have occurred since May 31, 2006; provided, however, that (a) nothing disclosed in the Disclosure Schedules (without giving effect to any supplements or updates made by Sellers after the date of this Agreement) or the Sellers’ Financial Statements, individually or in the aggregate, shall be deemed to be a Material Adverse Change; (b) the failure of Sellers to obtain a new recycling contract, or extend the existing recycling contract, with Miami-Dade County shall not be deemed to be a Material Adverse Change, and (c) any decrease in volumes received at the transfer station as a result of Sellers’ non-renewal of that certain Waste Supply Agreement with Wheelabrator North Broward, Inc shall not be deemed to be a Material Adverse Change.

     9.7 Third Party Consents and Approvals. All materially necessary governmental, regulatory and third party consents and approvals shall have been obtained.

     9.8 Environmental Investigation Satisfactory. Buyer shall be satisfied in all respects with the results of Phase I (and Phase II, if undertaken by Buyer) environmental investigations respecting the Land; provided, however, that this condition shall be deemed satisfied if Buyer gives written notice to Sellers that Buyer objects to the results of a Phase I (or Phase II) environmental investigation and Sellers elect to and promptly complete a cure of the matters subject to the objection.

     9.9 Approval of Lenders. Buyer shall have obtained all necessary approvals of the Transactions from its lenders.

     9.10 Closing of Arizona Transaction. The Arizona Transaction shall be prepared to close simultaneously with the Closing of the Transactions.

     9.11 HSR Act. The waiting period (and any extension thereof) under the HSR Act applicable to the Transactions shall have expired or been earlier terminated by the FTC or the Antitrust Division.

ARTICLE X

LIABILITIES AND OBLIGATIONS

     10.1 Excluded Liabilities. Except as explicitly set forth in this Agreement, Buyer shall not, by the execution and performance of this Agreement or otherwise (including under theories

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of successor liability), assume, become responsible for or incur, and Sellers, jointly and severally, hereby expressly agree to pay and perform, any Liability or obligation of any nature of Sellers whatsoever arising, or relating to events occurring, on or prior to the Closing Date, whether legal or equitable, or matured or contingent (collectively, the “Excluded Liabilities”), including any Liability or obligation: (a) to any Affiliate of Sellers; (b) to current or former employees, consultants or others for salary, bonuses, other incentive compensation or benefits arising prior to the Closing Date, (c) for Taxes which (i) arise, are assessed or become payable or due on or prior to the Closing Date, or (ii) are payable by Sellers or any of their Affiliates as a result of purchases, sales or transfers as of or prior to the Closing Date; (d) with respect to the settlement of the matters referenced in Section 7.11 of this Agreement; and (e) for Environmental Damages arising out of events occurring on or prior to the Closing Date.

     10.2 Assumption of Obligations. Subject to the terms and conditions set forth in this Agreement, at the Closing Buyer shall assume from Sellers only the Liabilities described in the remainder of this Section 10.2 (the “Assumed Liabilities”).

          (a) Buyer shall assume all obligations under the Customer Contracts, Employee Contracts, Assumed Leases, Permits and other contracts included within the Assets, to the extent such obligations first arise and are related to periods subsequent to the Closing (provided that such obligations do not arise as a result of actions or omissions by Sellers thereof on or prior to Closing).

          (b) Within 30 days following the Closing, Buyer will post replacement performance bonds, letters of credit and other financial assurances for the performance bonds, letters of credit and other financial assurances of Sellers set forth on Schedule 5.17, and will promptly furnish to Sellers a copy of such replacement performance bond, letter of credit or other financial assurance as it is issued. Buyer will pay Sellers interest at 10% per annum on any performance bonds, letter of credit and other financial assurances not replaced within such 30-day period until the same are replaced.

          (c) Buyer agrees to assume and perform all obligations expressly required to be assumed by Buyer pursuant to Section 3.7.

          (d) Buyer agrees to assume the liability reflected on the balance sheet as of the Closing Date with respect to any capitalized leases assumed by Buyer, and all liabilities included in the Adjustment Amount.

          (e) Buyer agrees to assume and perform all other Liabilities which Sellers designate in writing prior to the Closing and which Buyer agrees to assume.

ARTICLE XI

INDEMNIFICATION

     11.1 Survival of Representations and Warranties and Covenants.

          (a) The representations and warranties of any party contained in this Agreement and the indemnification liabilities and obligations of the parties with respect thereto

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shall survive the Closing for a period of one year after the Closing Date; provided, however, that the representations and warranties in Sections 5.8, 5.9 and 5.13 and the indemnification liabilities and obligations of the parties with respect thereto shall survive the Closing for a period until the expiration of the applicable statute of limitations with respect thereto.

          (b) The covenants and agreements set forth in this Agreement and to be performed to any extent after the Closing Date shall survive until fully discharged and performed, and any claims for indemnification in respect of a breach of such covenants to be performed in any respect after the Closing Date may be made at any time within the applicable statute of limitations.

     11.2 Indemnification by Sellers. Sellers agree that they shall, jointly and severally, indemnify, defend (as to Third Party Claims only), protect and hold harmless Buyer, its officers, shareholders, directors, managers, divisions, subdivisions, Affiliates, subsidiaries, parent, agents, employees, successors and assigns at all times from and after the date of this Agreement from and against all liabilities, claims, damages, actions, suits, Proceedings, demands, assessments, adjustments, penalties, losses, costs and expenses whatsoever (including court costs, reasonable attorneys’ and expert witness fees and expenses and expenses of investigation) (collectively, “Liabilities”), whether equitable or legal, matured or contingent, known or unknown, foreseen or unforeseen, ordinary or extraordinary, patent or latent, whether arising out of occurrences prior to, at or after the date of this Agreement, incurred as a result of or incident to: (a) any breach of, or misrepresentation in, the representations and warranties by Sellers set forth in this Agreement, or in the Schedules, Exhibits, certificates, documents or agreements attached to this Agreement or delivered pursuant hereto by Sellers; (b) breach of any agreement or covenant on the part of Sellers made in this Agreement, or in the Schedules, Exhibits, certificates, documents or agreements attached to this Agreement or delivered pursuant hereto by Sellers; (c) any Excluded Liability; or (d) any Excluded Asset. Notwithstanding any other provision set forth in this Agreement, indemnifiable claims set forth in (a) through (d) of this Section 11.2 shall include any claim by a third Person that, if true, would mean that a condition for indemnification set forth in subsections (a) through (d) of this Section 11.2 had been satisfied.

     11.3 Indemnification by Buyer. Buyer agrees that it shall indemnify, defend (as to Third Party Claims only), protect and hold harmless Sellers and their respective officers, shareholders, directors, managers, divisions, subdivisions, Affiliates, subsidiaries, parent, agents, employees, successors and assigns at all times from and after the Closing Date from and against all Liabilities, whether equitable or legal, matured or contingent, known or unknown, foreseen or unforeseen, ordinary or extraordinary, patent or latent, incurred by Sellers as a result of or incident to: (a) any breach of, or misrepresentation in, the representations and warranties of Buyer set forth in this Agreement, or in the Schedules, Exhibits, certificates, documents or agreements attached to this Agreement or delivered pursuant hereto by Buyer; (b) breach of any agreement or covenant on the part of Buyer made in this Agreement, or in the Schedules, Exhibits, certificates, documents or agreements attached to this Agreement or delivered pursuant hereto by Buyer; and (c) any Assumed Liability. Notwithstanding any other provision set forth in this Agreement, indemnifiable claims set forth in (a) through (d) of this Section 11.3 shall include any claim by a third Person that, if true, would mean that a condition for indemnification set forth in subsections (a) through (c) of this Section 11.3 had been satisfied.

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     11.4 Limitation on Liability. The indemnification obligations set forth in Section 11.2(a) and 11.3(a) shall (a) apply only if a Closing occurs, (b) apply only after the aggregate amount of claims for indemnification from the Indemnifying Party under this Agreement exceeds an aggregate of $1,000,000 (the “Deductible”), and thereafter the Indemnifying Party shall be liable for only those indemnification obligations in excess of such Deductible; provided, however, that only claims, or series of related claims, equal to or in excess of $50,000 shall apply toward the Deductible; and (c) be limited to an aggregate amount not to exceed 35% of the aggregate Purchase Price actually paid under this Agreement by Buyer. Notwithstanding the foregoing, however, Tax Claims and Fraud Claims shall not be limited by subsection (b) or (c) of this Section 11.4.

     11.5 Indemnification Procedure Between Buyer and Sellers. Upon the occurrence of any claim for which indemnification is believed to be due under this Agreement, the Indemnified Party shall provide notice of such claim to the Indemnifying Party, stating in general terms the circumstances giving rise to the claim, specifying the amount of the claim (or an estimate thereof) and making a request for any payment then believed due (subject to the limitations in this Agreement). Upon receipt of any such notice, both the Indemnified Party and the Indemnifying Party shall use all reasonable efforts to cooperate and arrive at a mutually acceptable resolution of such dispute within the next 30 days. If a resolution is not reached within the 30-day period, either party may commence the dispute resolution procedures set forth in Article XVI. If the Indemnifying Party does not respond within such 30-day period, the claim for indemnification shall be deemed accepted by the Indemnifying Party. If all or a portion of such claim amount is owed to the Indemnified Party, the Indemnifying Party shall (subject to the terms of Section 11.4) within 10 days of such determination, pay the Indemnified Party such amount owed in cash.

     11.6 Procedure for Indemnification with Respect to Third-Party Claims.

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

          (b) Any Indemnifying Party will have the right to assume the defense of any claim or any litigation resulting therefrom, provided that (i) the counsel for the Indemnifying Party who shall conduct the defense of such claim or litigation shall be reasonably satisfactory to the Indemnified Party and (ii) the Indemnified Party may participate in such defense at such Indemnified Party’s expense. Except with the prior written consent of the Indemnified Party, no Indemnifying Party, in the defense of any such claim or litigation, shall consent to entry of any judgment or order, interim or otherwise, or enter into any settlement that provides for injunctive or other nonmonetary relief affecting the Indemnified Party or that does not include as an unconditional term thereof the giving by each claimant or plaintiff to such Indemnified Party of a

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release from all liability with respect to such claim or litigation. In the event that the Indemnified Party shall in good faith determine that the conduct of the defense of any claim subject to indemnification under this Agreement or any proposed settlement of any such claim by the Indemnifying Party might be expected to affect adversely the Indemnified Party, or that the Indemnified Party may have available to it one or more defenses or counterclaims that are inconsistent with one or more of those that may be available to the Indemnifying Party in respect of such claim or any litigation relating thereto, the Indemnified Party shall have the right at all times to take over and assume control over the defense, settlement, negotiations or litigation relating to any such claim at the sole cost of the Indemnifying Party, provided that if the Indemnified Party does so take over and assume control, the Indemnified Party shall not settle such claim or litigation without the written consent of the Indemnifying Party, such consent not to be unreasonably withheld or delayed. In the event that the Indemnifying Party does not accept the defense of any matter as above provided, the Indemnified Party shall have the full right to defend against any such claim or demand and shall be entitled to settle or agree to pay in full such claim or demand. In any event, the Indemnifying Party and the Indemnified Party shall cooperate in the defense of any claim or litigation subject to this Article XI and the records and personnel of each shall be reasonably available to the other with respect to such defense.

     11.7 Tax Treatment of Payment. Unless otherwise required by law or unless Sellers and Buyer otherwise mutually agree, any payment made under this Agreement (including Article XI) shall be treated as an adjustment to the Purchase Price.

     11.8 Exclusive Remedy. With the exception of Fraud Claims and other than equitable or injunctive relief or claims for specific performance, as applicable, the indemnification provided in this Article XI is the exclusive remedy of the parties with respect to this Agreement, the Schedules and Exhibits, and the certificates, documents or other agreements attached to this Agreement or delivered by a party pursuant hereto.

ARTICLE XII

TERMINATION OF AGREEMENT

     12.1 Termination by Buyer. Buyer may, by written notice in the manner provided in Section 15.6 on or before the Closing Date, terminate this Agreement in the event of a material breach by Sellers (a) of the representations and warranties of Sellers or (b) in the observance, or in the due and timely performance of any of the covenants or agreements contained in this Agreement on their part to be performed, and such breach shall not have been cured, after written notice thereof, on or before the Closing Date. In addition, Buyer, by notice in the manner provided in Section 15.6, may terminate this Agreement if (i) any of the conditions set forth in Article IX shall become incapable of fulfillment (other than due to acts or omissions of Buyer or its Affiliates) on or before the Closing Date and shall not have been waived by Buyer or (ii) in the circumstances described in Section 3.5.

     12.2 Termination by Sellers. Sellers may, by written notice in the manner provided in Section 15.6 on or before the Closing Date, terminate this Agreement in the event of a material breach by Buyer (a) of the representations and warranties of Buyer or (b) in the observance, or in the due and timely performance of any of the covenants or agreements contained in this

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Agreement on its part to be performed, and such breach shall not have been cured, after written notice thereof, on or before the Closing Date. In addition, Sellers, by notice in the manner provided in Section 15.6, may terminate this Agreement if any of the conditions in Article VIII shall become incapable of fulfillment (other than due to acts or omissions of Sellers or their Affiliates) by or before the Closing Date and shall not have been waived by Sellers.

     12.3 Termination Date. This Agreement may be terminated by either party by notice to the other party if the Transactions shall not have been consummated by 5:00 p.m. (MST) on October 31, 2006 (other than as a result of a breach of this Agreement by the party giving such notice or by its Affiliates), unless such date shall be extended by the mutual written consent of Sellers and Buyer.

     12.4 Effect of Termination. If this Agreement is validly terminated pursuant to Section 12.1, 12.2 or 12.3, this Agreement shall thereafter become null and void, and there shall be no liability or obligation on the part of any of the parties (or any other their respective officers, director, employees, agents or other representatives or Affiliates), except that (a) the provisions of Section 7.1(e), Article XIII, Section 15.6 and Article XVI shall survive such termination, (b) such termination shall not relieve any party of any liability for any willful material breach of this Agreement, and (c) such termination shall not relieve Buyer of its obligations under Section 12.5, if applicable.

     12.5 Certain Consequences of Termination. If this Agreement is terminated by Buyer because the condition set forth in Section 9.9 was not satisfied, then Buyer shall promptly pay Sellers $2,500,000 as a termination fee, which shall be Sellers’ sole and exclusive remedy on account of such termination.

ARTICLE XIII

NONDISCLOSURE AND NONSOLICITATION

     13.1 Nondisclosure by Buyer. Buyer recognizes and acknowledges that it has in the past, currently has, and prior to the Closing Date, will have access to confidential information of Sellers, including lists of customers, operational policies, and pricing and cost policies that are valuable, special and unique assets of Sellers. Buyer agrees that it will not, except as may be required by law or valid legal process, disclose such confidential information to any Person for any purpose or reason whatsoever, prior to the Closing Date, except to authorized representatives of Sellers, unless such information is or becomes known to the public generally through no fault of Buyer. In connection with the foregoing, the parties acknowledge and agree that they are competitors in the waste collection, hauling, disposal and recycling business in the markets serviced by Sellers and the Business, and that nothing contained herein shall be interpreted to preclude Buyer from providing waste collection, hauling, disposal or recycling services in such markets or elsewhere. The provisions of this Section 13.1 shall apply at all times prior to the Closing Date and for a period of one year following the first to occur of (i) the Closing Date and (ii) termination of this Agreement without a Closing having occurred.

     13.2 Confidential Information. Neither Sellers (nor any of their respective Affiliates) shall at any time subsequent to the Closing, except as explicitly requested by Buyer or as

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otherwise provided in this Agreement, use for any purpose, disclose to any Person, or keep or make copies of any records and files containing, any confidential information relating primarily to the Business, the Assets or the Assumed Liabilities, all such information being deemed to be transferred to Buyer under this Agreement. For purposes of this Agreement, “confidential information” shall mean information relating primarily to the Business, the Assets or the Assumed Liabilities, including all customer and vendor lists and related information, all information concerning the Business’ processes, products, costs, prices, sales, marketing and distribution methods, properties and assets, Assumed Liabilities, and other information not previously disclosed to the public directly by Sellers. The foregoing provisions shall not apply to any information which is or relates primarily to an Excluded Asset or which is or relates primarily to the Excluded Liabilities, or which relates to Tax matters. Both Sellers and Buyer shall maintain confidential information that relates to both Assumed Liabilities and Excluded Liabilities in duplicate. If at any time after the Closing, Sellers should discover that they are in possession of any records and files containing the confidential information of Buyer, then the party making such discovery shall immediately turn such records and files over to Buyer, which shall upon request make available to the surrendering party any information contained therein which is not confidential information. Sellers agree that they will not assert a waiver of loss of confidential or privileged status of the information based upon such possession or discovery.

     13.3 Non-Solicitation. Sellers agree that for a period of five years following the Closing Date, they will not, and will cause their Affiliates not to, solicit or accept business from any customer of the Business during the 12 month period ending on the Closing Date in the area serviced by the Business during such 12 month period; provided, however, that Sellers shall be permitted to service any National Account within such markets if (a) pursuant to the terms of the relevant National Account agreement, and despite their commercially reasonable efforts, Sellers are unable to subcontract or assign the services to Buyer and (b) Sellers are not in violation of the National Account Subcontract.

     13.4 Equitable Relief for Violations. The parties acknowledge that an irreparable injury may result to the non-violating party and its Business in the event of a breach by the violating party of any provision in this Article XIII. The parties also acknowledge and agree that the damages or injuries that a non-violating party sustains as a result of such a breach are difficult to ascertain and money damages alone may not be an adequate remedy to a non-violating party. The parties therefore expressly agree that if a controversy arises concerning the rights or obligations of a party under this Article XIII, such rights or obligations shall be enforceable by a court decree of specific performance and a non-violating party shall also be entitled to any injunctive relief from the court pursuant to Article XVI necessary to prevent or restrain any such breach. Such relief shall be granted without the necessity of a showing of irreparable harm and without the posting of a bond or other security. Such relief, however, shall be cumulative and non-exclusive and shall be in addition to any other remedy to which the parties may be entitled in accordance with this Agreement.

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ARTICLE XIV

TAX MATTERS

     14.1 Transaction Taxes. Buyer shall be responsible for and shall remit to Seller at Closing all sales, transfer, conveyance or other Taxes associated with the transfer of the Assets to Buyer pursuant to this Agreement. Seller shall promptly remit such Taxes to the applicable taxing authority.

ARTICLE XV

GENERAL

     15.1 Assignment; Binding Effect; Amendment. This Agreement and the rights of the parties under it may not be assigned (except by operation of law) without the prior consent of the others; provided, however, that Buyer may assign any and all of its rights, interests and obligations under this Agreement as security for obligations to its lenders. This Agreement shall be binding upon and shall inure to the benefit of the parties and their successors and permitted assigns. This Agreement may be modified or amended only by a written instrument executed by all parties.

     15.2 Entire Agreement. This Agreement, together with its exhibits and schedules, is the final, complete and exclusive statement and expression of the agreement among the parties with relation to the subject matter of this Agreement. This Agreement supersedes, and cannot be varied, contradicted or supplemented by evidence of, any prior or contemporaneous discussions, correspondence, or oral or written agreements of any kind.

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

     15.4 No Brokers. Sellers represent and warrant to Buyer, and Buyer represents and warrants to Sellers, that the warranting party has had no dealings with any broker or agent so as to entitle such broker or agent to a commission or fee in connection with the Transactions. If for any reason a commission or fee shall become due, the party dealing with such agent or broker shall pay such commission or fee and agrees to indemnify and save harmless each of the other parties from all claims for such commission or fee and from all attorneys’ fees, litigation costs and other expenses relating to such claim.

     15.5 Expenses of Transaction. Except as otherwise provided in this Agreement, whether or not the Transactions shall be consummated:

          (a) Buyer will pay the fees, expenses and disbursements of Buyer and its agents, representatives, accountants and counsel incurred in connection with the subject matter of this Agreement and any amendments to it and all other costs and expenses incurred in the performance and compliance with all conditions to be performed by Buyer under this Agreement;

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          (b) Sellers will pay the fees, expenses and disbursements of Sellers and their respective agents, representatives, accountants and counsel incurred in connection with the subject matter of this Agreement and any amendments to it and all other costs and expenses incurred in the performance and compliance with all conditions to be performed by Sellers under this Agreement; and

          (c) Nothing in this Section 15.5 shall limit the rights of a non-breaching party to recover damages, including fees and expenses if so awarded, in connection with any claim against a party in breach under this Agreement.

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

(a) If to Buyer, addressed to it at:

c/o Waste Services, Inc.
1122 International Boulevard, Suite 601
Burlington, Ontario
L7L 6Z8 Canada
Attn: David Sutherland-Yoest, Chairman and Chief Executive Officer

with a copy to:

Waste Services, Inc.
1122 International Boulevard, Suite 601
Burlington, Ontario
L7L 6Z8 Canada
Attn: Ivan R. Cairns, Executive Vice President and General Counsel

(b) If to Sellers, addressed to them at:

Allied Waste Industries, Inc.
15880 N. Greenway-Hayden Loop
Suite 100
Scottsdale, Arizona 85260
Attn: Nicholas Skaff

with a copy to:

Allied Waste Industries, Inc.
15880 N. Greenway-Hayden Loop
Suite 100
Scottsdale, Arizona 85260
Attn: Steven M. Helm, Executive Vice President and General Counsel

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and a copy to:

Fennemore Craig, P.C.
3003 N. Central Avenue, Suite 2600
Phoenix, Arizona 85012
Attn: Karen C. McConnell

Notice shall be deemed given and effective the day personally delivered, the day after being sent by overnight courier, subject to signature verification, and three Business Days after the deposit in the U.S. mail of a writing addressed as above and sent first class mail, registered or certified, return receipt requested. Any party may change the address for notice by notifying the other parties of such change in accordance with this Section 15.6. Notwithstanding the foregoing, if to Sellers, copies of notices and other communications regarding title and survey matters shall also be provided to Virginia M. Perry, Fennemore Craig, P.C., 3003 N. Central Avenue, Suite 2600, Phoenix, Arizona 85012.

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

     15.8 Captions. The headings of this Agreement are inserted for convenience only, shall not constitute a part of this Agreement or be used to construe or interpret any of its provisions.

     15.9 No Third Party Beneficiaries. Except for the provisions of Article XI relating to indemnified parties, nothing contained in this Agreement is intended or shall confer upon any other Person, including any employee or former employee of any Seller, any legal or equitable right, benefit or remedy of any nature whatsoever, including any rights of employment for any specified period, under or by reason of this Agreement.

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

     15.11 Construction. The parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement. Any reference to any federal, state, local or foreign statute shall be deemed to refer to such statute as amended and to all rules and regulations promulgated thereunder, unless the context requires otherwise. The word “include” or “including” means

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include or including, without limitation. All references in this Agreement to Articles, Sections, Exhibits and Schedules shall be deemed references to Articles and Sections of, and Exhibits and Schedules to, this Agreement unless the context shall otherwise require.

ARTICLE XVI

DISPUTE RESOLUTION

     16.1 General. Except with respect to disputes regarding the Actual Adjustment Amount (which shall be governed by Section 2.2), the parties agree that any disputes arising out of or related in any way to this Agreement, including a breach of this Agreement, shall be brought exclusively in the state or federal courts located in Wilmington, Delaware. By execution and delivery of this Agreement, with respect to any dispute, each of the parties knowingly, voluntarily and irrevocably: (a) consents, for itself and in respect of its property, to the exclusive jurisdiction of these courts; (b) waives any immunity or objection, including any objection to personal jurisdiction or the laying of venue or based on the grounds of forum non conveniens, which it may have from or to the bringing of the dispute in such jurisdiction; (c) waives any personal service of any summons, complaint or other process that may be made by any other means permitted by the State of Delaware; (d) waives any right to trial by jury; (e) agrees that any such dispute will be decided by court trial without a jury; (f) understands that it is giving up valuable legal rights under this provision, including the right to trial by jury, and that it voluntarily and knowingly waives those rights; and (g) agrees that any party to this Agreement may file an original counterpart or a copy of this Section 16.1 with any court as written evidence of the consents, waivers and agreements of the parties set forth in this Section 16.1.

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

     16.3 Attorneys’ Fees. Should any litigation be commenced under this Agreement, the successful party in such litigation shall be entitled to recover, in addition to such other relief as the court may award, its reasonable attorneys’ fees, expert witness fees, litigation related expenses, and court or other costs incurred in such litigation or proceeding. For purposes of this clause, the term “successful party” means the net winner of the dispute, taking into account the claims pursued, the claims on which the pursuing party was successful, the amount of money sought, the amount of money awarded, and offsets or counterclaims pursued (successfully or unsuccessfully) by the other party. If a written settlement offer is rejected and the judgment or award finally obtained is equal to or more favorable to the offeror than an offer made in writing to settle, the offeror is deemed to be the successful party from the date of the offer forward.

[SIGNATURES ON NEXT PAGE]

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     IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.

BUYER: Waste Services, Inc.
By:	/s/ Ivan R. Cairns
	Its: Vice President
SELLERS: BFI Waste Systems of North America, Inc.
By:	/s/ Nicholas A. Skaff
	Its: Authorized Officer
E Leasing Company, LLC
By:	/s/ Nicholas A. Skaff
	Its: Authorized Officer
S Leasing Company, LLC
By:	/s/ Nicholas A. Skaff
	Its: Authorized Officer

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LIST OF EXHIBITS AND SCHEDULES

Exhibit A	Sellers and Operations to be Sold
Exhibit B-1	Land
Exhibit B-2	Leased Real Property
Exhibit C	Definitions
Exhibit D	National Account Subcontract
Exhibit E	Retention Bonus Agreement
Schedule 1.1(b)	Permits
Schedule 1.1(c)	Equipment
Schedule 1.1(d)	Rolling Stock
Schedule 1.1(f)	Inventory
Schedule 1.1(g)	Business Names
Schedule 5.3	Permits
Schedule 5.4(a)	Totality of Assets
Schedule 5.4(b)	Assumed Leases
Schedule 5.5(b)	Real Property Disclosure
Schedule 5.6	Contracts
Schedule 5.7	Employees; Exceptions to “at will” Employment
Schedule 5.8(a)	Compliance with Law
Schedule 5.8(b)	Conflicts
Schedule 5.8(c)	Required Consents
Schedule 5.9	Taxes
Schedule 5.10	Litigation
Schedule 5.11	Financial Statements
Schedule 5.12	Conduct of Business
Schedule 5.13(a)	Hazardous Materials
Schedule 5.13(b)	Notices Relating to the Environment
Schedule 5.13(c)	List of Disposal Sites
Schedule 5.16	Affiliate Relationships
Schedule 5.17	Performance Bonds; Letters of Credit; Financial Assurances
Schedule 5.18	Employment and Labor Matters

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EXHIBIT A
SELLERS AND OPERATIONS TO BE SOLD

Seller	Operations to be Sold
BFI Waste Systems of North America, Inc.	South Florida Assets: Miami MRF, BFI Waste Systems of Miami (Miami TS and Dade Hauling/Miami)
E Leasing Company LLC	Equipment and Rolling Stock
S Leasing Company LLC	Equipment and Rolling Stock

A-1

EXHIBIT B-1
LAND

Lots 4 through 23, Block 1, all of Amended Plat of Melrose Gardens,
according to the Plat thereof, recorded in Plat Book 7, Page 94,
Public Records of Miami-Dade County, Florida;

TOGETHER WITH:

Lots 1 through 10, Lot 14, and Lots 17 through 26, Block 2, all of
Amended Plat of Melrose Gardens, according to the Plat thereof,
recorded in Plat Book 7, Page 94, Public Records of Miami-Dade
County, Florida;

TOGETHER WITH:

Lots 1 through 4, the South 25 feet of Lot 7, Lots 8 through 10, and
Lots 18 through 21, less the Easterly 10 feet of said Lots 18
through 21, and Lot 26, Block 5; and

TOGETHER WITH:

The abandoned and vacated portion of Southeast 12^th Street
lying between Block 1 on the north and Block 2 on the south, all of
Amended Plat of Melrose Gardens, according to the Plat thereof, recorded
in Plat Book 7, Page 94, Public Records of Miami-Dade County, Florida

B-1

EXHIBIT B-2
LEASED REAL PROPERTY

7450 NW 63rd Street, Miami, Florida

B-2

EXHIBIT C
DEFINITIONS

     “Accounts Receivable” means all accounts receivable of Sellers as of the Closing Date arising from the operation of the Business.

     “Active Employee” has the meaning specified in Section 7.8(a).

     “Actual Adjustment Amount” has the meaning specified in Section 2.2(a)(ii).

     “Adjustment Amount” has the meaning specified in Section 2.2(a)(i).

     “Affiliate” means, with respect to any specified Person, a Person controlled by, controlling or under common control with such Person.

     “Affiliated Group” means an affiliated group as defined in Code Section 1504(a) or any similar group defined under a similar provision of state or local Tax law.

     “Agreement” has the meaning specified in the introductory paragraph of the Agreement.

     “Ancillary Agreements” means the Deeds, the Bill of Sale, the National Accounts Subcontract, Buyer’s Assumption Agreements, the Assignment, Assumption and Consent to Leased Land and the other documents and agreements delivered by the parties pursuant to the terms of this Agreement.

     “Antitrust Division” means the Antitrust Division of the United States Department of Justice.

     “Applicable Laws” means all federal, state and local statutes, laws, rules, regulations, orders, ordinances, permits (including zoning restrictions and land use requirements and Environmental Laws and regulations) and licenses and all administrative and judicial judgments, rulings, decisions and orders applicable to Sellers, Buyer, the Assets or the Business.

     “Area” has the meaning specified in Recital A.

     “Arizona Transaction” means the purchase by certain Affiliates of Sellers of the Arizona landfill, transfer stations and hauling operations of certain Affiliates of Buyer pursuant to an Asset Purchase Agreement of even date with the Agreement.

     “Assets” has the meaning specified in Section 1.1.

     “Assignment, Assumption and Consent to Leased Land” means an assignment, in form and substance reasonably satisfactory to Buyer, for each parcel of Leased Real Property of all of Sellers’ rights, title and interest under each the real estate lease with respect thereto, together with the consent of the landlord to such assignment if required by the applicable lease or by law.

     “Assumed Contracts” has the meaning specified in Section 1.1(h).

C-1

     “Assumed Leases” has the meaning specified in Section 5.4(b).

     “Assumed Liabilities” has the meaning specified in Section 10.2.

     “Balance Sheet Date” has the meaning specified in Section 5.11.

     “Bill of Sale” means a General Conveyance, Assignment and Bill of Sale in form and substance reasonably satisfactory to Buyer and Sellers, providing for the conveyance, sale, transfer and assignment to Buyer of all of the Assets (other than the Land).

     “Blanket Liens” shall have the meaning specified in Section 4.4.

     “Business” has the meaning specified in Recital A.

     “Business Day” means any day that is not a Saturday, a Sunday or other day in which banks are authorized or required by law to be closed in Phoenix, Arizona.

     “Business Employees” means all employees of Sellers or their Affiliates employed in the Business.

     “Business Names” means names and the right to use such names and all similar names in the state(s) listed on Schedule 1.1(g).

     “Buyer” has the meaning specified in the introductory paragraph of the Agreement.

     “Buyer’s Assumption Agreements” means assumption agreements in form and substance reasonably satisfactory to Buyer and Sellers, providing for the assumption by Buyer of the Assumed Liabilities.

     “CERCLA” means the Comprehensive Environmental Response, Compensation and Liability Act of 1980.

     “Cintas” has the meaning specified in Section 4.5.

     “Closing” and “Closing Date” have the meanings specified in Section 3.1(a).

     “Code” means the Internal Revenue Code of 1986.

     “Customer Contracts” means all contractual rights of Sellers with Sellers’ customers (whether oral or in writing) exclusively relating to the Business, except the National Accounts.

     “Deductible” has the meaning specified in Section 11.4.

     “Deed” means a special warranty deed.

     “Disclosure Schedules” means the schedules to the specific Sections of the Agreement delivered by Sellers to Buyer, as supplemented pursuant to Section 7.7.

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     “Employee Contracts” means the employment contracts that apply to Business Employees.

     “Encumbrances” means liens, security interests, encumbrances, adverse claims, leases, including operating leases, rights of repurchase or purchase, rights of first refusal, pledges, voting trusts, equities and other restrictions, limitations or conditions on transfer of any nature whatsoever.

     “Environmental Damages” means obligations to pay the amount of any judgment or settlement, the cost of complying with any settlement, judgment or order for injunctive or other equitable relief, the cost of compliance or corrective action in response to any notice, demand or request from any federal, state or local governmental or regulatory authority, including a notice inviting comment, the amount of any civil penalty or criminal fine, and any court costs and amounts for attorney’s fees, fees for witnesses and experts, and costs of investigation and preparation for defense of any notice, claim or proceeding, regardless of whether such proceeding is threatened, pending or completed, that may be or have been asserted against or imposed upon Sellers or the Land and arise out of: (a) failure of Sellers to comply at any time with all Environmental Laws; (b) presence of any Hazardous Materials on, in, under, at, migrating or threatening to migrate from, or in any way affecting the Land at any time; (c) identification of Sellers as potentially responsible parties under CERCLA or as a Person responsible for damages under any Environmental Law; or (d) any and all claims for injury or damage to Persons or property arising out of exposure to Hazardous Materials originating at the Land or result from operation thereof or located at the Land.

     “Environmental Laws” means all Applicable Laws relating to pollution or protection of human health or the environment (including ambient air, surface water, ground water, land surface or subsurface strata), including laws and regulations relating to workplace or worker safety and health or emissions, discharges, Releases or threatened Releases of Hazardous Materials or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials.

     “Equipment” means all machinery, equipment, including containers, used or held for use principally in connection with the Business.

     “Estimated Adjustment Amount” has the meaning specified in Section 2.2(b)(ii).

     “Estoppel Certificate” means an estoppel certificate from the landlord of any Leased Real Property, in form and substance reasonably acceptable to Buyer, certifying as to matters reasonably requested by Buyer.

     “Excluded Assets” has the meaning specified in Section 1.2.

     “Excluded Liabilities” has the meaning specified in Section 10.1.

     “Fraud Claims” means indemnity claims based upon a willful, fraudulent or intentional misrepresentation of any party contained this Agreement, or in the Schedules, Exhibits, certificates, documents or agreements attached to this Agreement or delivered pursuant hereto.

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     “FTC” means the United States Federal Trade Commission.

     “GAAP” means United States generally accepted accounting principles applied on a consistent basis.

     “Hazardous Materials” means any chemicals, pollutants, contaminants, wastes and toxic substances, including: (a) the presence of which requires reporting, investigation, removal or remediation under any Environmental Law; (b) that is defined as a “hazardous waste,” “hazardous substance,” “pollutant” or “contaminant” under any Environmental Law; (c) that is toxic, explosive, corrosive, flammable, ignitable, infectious, radioactive, reactive, carcinogenic, mutagenic or otherwise hazardous and is regulated as such under any Environmental Law; (d) the presence of which poses a hazard to the health or safety of Persons; or (e) that contains gasoline or any other petroleum product or byproduct, polychlorinated biphenyls, asbestos and urea formaldehyde.

     “HSR Act” means the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended.

     “Indemnified Party” means a party seeking indemnification under Article XI.

     “Indemnifying Party” means a party from whom indemnification is sought under Article XI.

     “Inventory” means all inventory of supplies, fuel, parts, tires, accessories and other tangible assets of every kind, nature and description (and interests in any of the foregoing) used, or held for use, principally in connection with the Business.

     “Knowledge”, whether capitalized or not, of Sellers means the actual knowledge of the following persons, without inquiry: Nicholas Skaff, Juan Carlos Romero and Ed Hood.

     “Land” has the meaning specified in Recital C.

     “Leased Real Property” means all rights as lessee or tenant in respect of all real property leased by any Seller as more particularly described on Exhibit B, together with all rights and interests relating or appurtenant thereto and all buildings, structures, fixtures and other fixed assets or improvements of every nature located on or annexed, attached or affixed, constructively or actually, thereto.

     “Liabilities” has the meaning specified in Section 11.2.

     “Material Adverse Change” means a material adverse change in the business, financial condition, and results of operations of the Business, taken as a whole.

     “Material Customer Contracts” has the meaning specified in Section 5.6(a).

     “Minimum Uniforms” has the meaning specified in Section 4.5.

     “National Account Subcontract” has the meaning specified in Section 3.2(d).

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     “National Accounts” means customer accounts that involve a broader area than the area served by the Business and that are managed by a Seller or by an Affiliate of a Seller pursuant to a national or regional account program.

     “Neutral Auditor” has the meaning specified in Section 2.2(b)(iii).

     “Net Working Capital” has the meaning specified in Section 2.2(a)(ii).

     “Other Contracts” has the meaning specified in Section 5.6(a).

     “Permits” means all permits, filings, notices of intent, exemptions, licenses, authorizations, registrations, franchises, consents, approvals and related applications of every kind held by a Seller in connection with the Business from or with any federal, state, local or foreign government or regulatory authorities or industrial bodies, including all FCC radio licenses or call signs.

     “Permitted Exceptions” means: (a) zoning ordinances and regulations which do not materially adversely affect Buyer’s use or marketability of the Land for its current uses; (b) real estate taxes and assessments, both general and special, which are a lien but are not yet due and payable at the Closing Date; and (c) easements, Encumbrances, covenants, conditions, reservations and restrictions of record, if any, as have been approved in writing by Buyer before the Closing Date.

     “Person” means any individual, firm, partnership, association, trust, corporation, joint venture, unincorporated organization, limited liability company, governmental body or other entity.

     “Pre-Closing Period” means any Tax period or portion thereof ending on or before the Closing Date (including the portion of any Straddle Period ending on the Closing Date).

     “Proceedings” means any claim, investigation, litigation, action, suit or proceeding, formal arbitration, informal arbitration or mediation, administrative, judicial or otherwise.

     “Purchase Price” has the meaning specified in Section 2.1.

     “Release” means any “release” as defined in CERCLA or in any Environmental Law.

     “Required Consents” has the meaning specified in Section 5.8(b)(iii).

     “Retained IP” has the meaning specified in Section 1.1(g).

     “Retention Bonus Agreements” has the meaning specified in Section 3.10.

     “Rights” means the intangible assets identified in Schedule 1.1(g).

     “Rolling Stock” means all of the motor vehicles used or held for use principally in connection with the Business and all attachments, accessories and materials handling equipment now located in or on such motor vehicles, including all radios and the radio base station, if any.

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     “Sellers” has the meaning specified in the introductory paragraph of the Agreement.

     “Sellers’ Financial Statements” has the meaning specified in Section 5.11.

     “Stay-On Bonuses” has the meaning specified in Section 3.10.

     “Straddle Period” means any Tax period beginning before and ending after the Closing Date.

     “Survey” has the meaning specified in Section 3.6.

     “Surveyor” means a surveyor in Florida acceptable to Sellers and Buyer.

     “Tax” or “Taxes” means any federal, state, local, foreign, and other income, gross receipts, sales, use, ad valorem, transfer, franchise, real property, profits, payroll, withholding, unemployment, excise, customs, duties and other taxes, fees, assessments and charges of any kind whatsoever, together with any interest and any penalties and additions to tax with respect thereto.

     “Tax Claims” means indemnity claims made in respect of Taxes.

     “Tax Returns” means any report, statement, form, return or other document or information required to be supplied to a taxing authority in connection with Taxes.

     “Third Party Claim” has the meaning specified in Section 11.6(a).

     “Title Commitment” means a preliminary title commitment in respect of each parcel comprising the Land.

     “Title Company” means First American Title Insurance Company.

     “Title Defect” has the meaning specified in Section 7.3(f).

     “Transactions” means the transactions contemplated by this Agreement.

     “Transferred Employee” has the meaning specified in Section 7.8(a).

     “Uniform Contract” has the meaning specified in Section 4.5.

     “Unpermitted Exception” means any defect in the title of any of the Land or any other matter unacceptable to Buyer in Buyer’s reasonable discretion, other than Permitted Exceptions.

     “WARN Act” has the meaning specified in Section 7.8(c).

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EXHIBIT D
NATIONAL ACCOUNT SUBCONTRACT

     THIS NATIONAL ACCOUNT SUBCONTRACT (this “Agreement”) is executed and delivered effective as of ___, 2006 between BFI Waste Systems of North America, Inc., a Delaware corporation (“Contractor”), and Waste Services of Florida, Inc., a Delaware corporation (“Subcontractor”).

RECITALS

     A. Contractor has contracted to perform materials recovery, materials recycling, and/or waste collection, transportation and disposal services (the “Services”) for the customers listed on Exhibit A (the “Customers”).

     B. Contractor desires to engage Subcontractor to perform the Services for the Customers at the locations or in the areas listed on Exhibit A, and Subcontractor desires to be so engaged, on the terms and conditions set forth in this Agreement.

     Accordingly, for good and valuable consideration, the receipt and sufficiency of which are acknowledged, the parties agree as follows:

TERMS AND CONDITIONS

     1. Subcontract. Subcontractor hereby agrees to perform the Services for the Customers at the locations or in the areas as specified on Exhibit A. Contractor represents and warrants that the information set forth on Exhibit A conforms to the terms of the contracts between Contractor and the Customers (the “Master Contracts”), and contains the information that is necessary to enable Subcontractor to perform the Services that are provided for under such Master Contracts for the Customers’ locations specified on Exhibit A. Subcontractor agrees that it will provide the Services described on Exhibit A in accordance with the terms of this Agreement and all applicable federal, state and local laws.

     2. Term. The term of this Agreement shall commence on the date of this Agreement and shall continue until such time as the Services under this Agreement are terminated as set forth in this Agreement or all of the Master Contracts terminate (inclusive of any and all renewal periods), subject to extension as provided in Section 8. Notwithstanding the foregoing, however, the term for any particular Services shall commence on the date of this Agreement and terminate (i) when the Master Contract under which such Services are provided terminates (inclusive of any and all renewal periods) or (ii) when such Services are terminated as set forth in this Agreement.

     3. Rights and Obligations. Except as otherwise expressly provided in this Agreement, all rights and privileges of Contractor pursuant to the Master Contracts with respect to the Services at the locations or in the areas listed on Exhibit A are intended to be available to Subcontractor. Contractor shall promptly deliver to Subcontractor any notice that Contractor receives from any Customer relating to the Services provided by Subcontractor that threatens or

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asserts any right of termination or other action under the Master Contracts relating to the Services or that requests any change in the Services provided pursuant to this Agreement.

     4. Breach by Subcontractor. If Contractor determines that Subcontractor is in breach of any material term or provision of this Agreement, or if Contractor receives notice from any Customer that Subcontractor has breached the terms of a Master Contract, Contractor shall notify Subcontractor in writing of such breach and Subcontractor shall have the right to cure the breach within 10 days thereafter. If Subcontractor fails to cure the breach of the terms of a Master Contract within such period, Contractor may immediately terminate this Agreement with respect to the applicable Master Contract then in breach and hire another subcontractor to provide the Services to such Customer. If Contractor terminates this Agreement with respect to any Customer, Subcontractor shall not be entitled to compensation for Services provided to such Customer by the replacement subcontractor. This Agreement will continue as to those Services under those Master Contracts not in breach. If Subcontractor fails to cure the breach of any material term or provision of this Agreement, Contractor may immediately terminate this entire Agreement and hire another subcontractor to provide all Services under this Agreement. If Contractor terminates this entire Agreement, Subcontractor shall not be entitled to compensation for Services provided to any Customer by the replacement subcontractor.

     5. Indemnification.

     (a) Indemnification by Subcontractor. Subcontractor shall indemnify, defend and hold harmless Contractor and its shareholders, partners, members, directors, officers, managers, affiliates, employees and agents (the “Contractor Indemnified Parties”) for, from and against any and all claims, actions, proceedings, costs, fines, assessments, penalties, damages, liabilities and expenses, including reasonable attorneys’ fees (collectively, “Losses”), suffered or incurred by any of the Contractor Indemnified Parties arising out of (i) any breach of a representation, warranty or covenant of Subcontractor under this Agreement, or (ii) any act or omission of Subcontractor in the performance of the Services from and after the date of this Agreement.

     (b) Indemnification by Contractor. Contractor shall indemnify, defend and hold harmless Subcontractor and its shareholders, partners, members, directors, officers, managers, affiliates, employees and agents (the “Subcontractor Indemnified Parties”) for, from and against any and all Losses suffered or incurred by any of the Subcontractor Indemnified Parties arising out of (i) any breach of a representation, warranty or covenant of Contractor under this Agreement, (ii) any act or omission of Contractor and its employees and agents in the performance of work under the Master Contracts before the date of this Agreement or (iii) any act or omission of any replacement subcontractor appointed by Contractor to perform any Services.

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     6. Insurance. During the term of this Agreement, Subcontractor shall maintain the following insurance coverages:

Workers’ Compensation:
Coverage A	Statutory
Coverage B — Employer’s Liability	$1,000,000 each Bodily Injury by Accident $1,000,000 policy limit Bodily Injury by Disease $1,000,000 each occurrence Bodily Injury by Disease
Automobile Liability:
Bodily Injury/Property Damage	$2,000,000
Combined — Single Limit	Coverage applies to all owned, non-owned, hired and leased vehicles (including trailers)
Commercial General Liability:
Bodily Injury/Property Damage	$2,000,000 each occurrence
Combined — Single Limit	$3,000,000 general aggregate
Pollution Legal Liability:	$1,000,000

All such insurance policies will be primary without the right of contribution from any insurance coverage maintained by Contractor. Except with respect to the workers’ compensation policy, the Contractor Indemnified Parties shall be shown as an additional insured under each of the above policies. The fact that insurance is obtained by Subcontractor shall not be deemed to release or diminish the liability of Subcontractor including liability under the indemnity provisions of this Agreement. Subcontractor agrees to waive any and all rights of subrogation it may have against Contractor by virtue of any claims that may arise as a result under this Agreement, and all policies of insurance required by this Agreement shall be so endorsed. Subcontractor agrees to obtain from its insurance carrier(s) a wavier of subrogation in favor of Contractor. All policies required by this Agreement shall be written by insurance carriers with a rating of A.M. Bests of at least “A-”, with a financial size category of at least VIII, and lawfully authorized to do business in the states where the Services are performed. Insurance certificates evidencing the above requirements shall be furnished by Subcontractor concurrently with the execution of this Agreement and provide for not less than 30 days prior notice to Contractor of any cancellation or non-renewal of the policies. In addition, the following requirements apply:

• The commercial general liability policy must include contractual liability coverage specifically covering Subcontractor’s indemnification of Contractor pursuant to Section 5.

• Coverage must be provided for products/completed operations.

• The policy shall also contain a cross liability/severability of interests provision assuring that the acts of one insured do not affect the applicability of coverage to another insured.

     7. Modification of Master Contracts. If during the term hereof, the terms of a Master Contract are modified in a manner that affects the Services, modifies the price to be paid for the Services, or the terms on which the Services are to be performed, Contractor will give written notice to Subcontractor of such modifications. In the event of any such modification, Exhibit A shall be amended as necessary to set forth any such new terms. If, without the consent of Subcontractor, the price terms of a Master Contract are reduced from those in effect on the

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date of this Agreement, or the price terms become materially less favorable to Subcontractor than the terms in effect on the date of this Agreement, Subcontractor may terminate the Services related to such Master Contract by written notice to Contractor within 30 days following reduction of the price terms. Any such termination shall be effective 30 days after Contractor’s receipt of notice thereof. Notwithstanding the foregoing, Contractor shall not agree to any modifications which relate solely to the Customers’ locations to which this Agreement relates and which would materially affect the terms on which the Services are rendered, unless (i) such modifications are required to be made pursuant to the terms of the applicable Master Contract, or (ii) Subcontractor consents in advance to such modifications.

     8. New Master Contracts. If the term of a Master Contract expires and Contractor and the applicable Customer enter into a new contract (or agree to extend the applicable Master Contract), then this Agreement shall expire as to the Services being provided under the affected Master Contract.

     9. Compensation.

          (a) General. Contractor shall pay Subcontractor for the Services at the rates specified in Exhibit A, which rates Contractor represents and warrants are not less than the compensation received by Contractor for the Services under the Master Contracts; provided, however, that the parties acknowledge and agree that Contractor may continue to receive from any Customer and retain any separate management fee which is payable by any Customer to Contractor for administering such Customer’s account to the extent that such fee does not reduce the consideration payable to Subcontractor as provided on Exhibit A; and provided further, that any such management fee shall not be increased unless there is a simultaneous increase in the rates payable to Subcontractor for the Services and the percentage increase in the Subcontractor rates is equal to or greater than the percentage increase in the management fee.

          (b) Invoices. Subcontractor shall prepare and deliver to Contractor on a monthly basis a separate invoice for each Customer for the Services performed by Subcontractor during the preceding month. Such invoice shall be sent to: [[BFI NASSC — [Insert Customer] P.O. Box 3151 Houston, TX 77253] or [___ — [Insert Customer and Address]]. Except as otherwise specified in Exhibit A, Contractor shall pay the invoices within 30 days after receipt thereof. Subcontractor acknowledges that it will have no rights to invoice or collect payment directly from any Customer any amounts for Services provided to such Customer pursuant to this Agreement. If any Customer files bankruptcy or a bankruptcy petition is filed against any Customer, Contractor will not be responsible for paying Subcontractor until Contractor has received payment from such Customer; provided, however, that in the event of any such bankruptcy, Subcontractor may, in its sole discretion, terminate this Agreement with respect to the bankrupt Customer upon delivery of 10 days prior written notice to Contractor of its intention to do so.

          (c) Payment Defaults. If Contractor fails to make timely payment to Subcontractor for the Services provided by Subcontractor, Subcontractor may, at its option, take one or both of the following actions: (i) terminate this Agreement or (ii) continue to provide services under this Agreement and charge Contractor interest on the unpaid amount equal to

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6.5% per annum until such amount and the interest thereon is paid in full or this Agreement has been terminated in accordance with clause (i) above.

     10. Confidentiality; Publicity. Subcontractor agrees to maintain the confidentiality of the identity and addresses of the Customers it services under this Agreement, any data concerning the nature and quantity of each Customer’s waste and recycling materials, the prices and other terms and conditions of this Agreement, and any other confidential information of any Customer or Contractor. Subcontractor also agrees not to use any Customer’s name or Contractor’s name in any advertising, promotional activities, or publicity releases without Contractor’s prior written consent, and to direct its employees to refrain from making any reference to any Customer, Contractor or the existence of this Agreement in the solicitation of business.

     11. Assignment. This Agreement, and the rights, duties and obligations may not be assigned or assumed, in whole or part, without the prior written consent of the other party; provided, however, that either party may assign (whether by operation of law, merger or otherwise) this Agreement, and its rights and obligations under this Agreement, to any affiliate, subsidiary, and/or successor of such party.

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

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

c/o Waste Services, Inc.
1122 International Boulevard, Suite 601
Burlington, Ontario
L7L 6Z8 Canada
Attn: David Sutherland-Yoest, Chairman and Chief Executive Officer

with a copy to:

Waste Services, Inc.
1122 International Boulevard, Suite 601
Burlington, Ontario
L7L 6Z8 Canada
Attn: Ivan R. Cairns, Executive Vice President and General Counsel

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

c/o Allied Waste Industries, Inc.
15880 N. Greenway-Hayden Loop
Suite 100
Scottsdale, Arizona 85260
Attn: Nicholas Skaff

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with a copy to:

Allied Waste Industries, Inc.
15880 N. Greenway-Hayden Loop
Suite 100
Scottsdale, Arizona 85260
Attn: Steven M. Helm, Executive Vice President and General Counsel

and a copy to:

Fennemore Craig, P.C.
3003 N. Central Avenue, Suite 2600
Phoenix, Arizona 85012
Attn: Karen C. McConnell

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

     13. General.

          (a) Independent Contractor. Subcontractor shall perform its obligations under this Agreement as an independent contractor, and as such, shall maintain control over its employees and agents during the performance of their obligations. Neither Subcontractor, nor its employees or agents shall be, represent, act, purport to act, or be deemed, the agent of Contractor.

          (b) Entire Agreement. This Agreement, together with its annexes, exhibits and schedules, is the final, complete and exclusive statement and expression of the agreement among the parties with relation to the subject matter of this Agreement. This Agreement supersedes, and cannot be varied, contradicted or supplemented by evidence of, any prior or contemporaneous discussions, correspondence, or oral or written agreements of any kind.

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

          (d) Expenses. Except as otherwise provided in this Agreement, each party shall pay the fees, expenses and disbursements of it and its agents, representatives, accountants and counsel incurred in connection with the subject matter of this Agreement and any amendments to it and all other costs and expenses incurred in the performance and compliance with all conditions to be performed by such party under this Agreement.

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

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

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

          (h) Construction. The parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement. Any reference to any federal, state, local or foreign statute shall be deemed to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise. The word “include” or “including” means include or including, without limitation. All references in this Agreement to Articles, Sections, Exhibits and Schedules shall be deemed references to Articles and Sections of, and Exhibits and Schedules to, this Agreement unless the context shall otherwise require.

     14. Disputes and Governing Law.

          (a) Disputes Generally. The parties agree that any disputes arising out of or related in any way to this Agreement, including a breach of this Agreement, shall be brought exclusively in the state or federal courts located in Wilmington, Delaware. By execution and delivery of this Agreement, with respect to any dispute, each of the parties knowingly, voluntarily and irrevocably: (i) consents, for itself and in respect of its property, to the exclusive jurisdiction of these courts; (ii) waives any immunity or objection, including any objection to personal jurisdiction or the laying of venue or based on the grounds of forum non conveniens, which it may have from or to the bringing of the dispute in such jurisdiction; (iii) waives any personal service of any summons, complaint or other process that may be made by any other means permitted by the State of Delaware; (iv) waives any right to trial by jury; (v) agrees that any such dispute will be decided by court trial without a jury; (vi) understands that it is giving up valuable legal rights under this provision, including the right to trial by jury, and that it voluntarily and knowingly waives those rights; and (vii) agrees that any party to this Agreement may file an original counterpart or a copy of this Section 14 with any court as written evidence of the consents, waivers and agreements of the parties set forth in this Section 14.

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

          (c) Attorneys’ Fees. Should any litigation be commenced under this Agreement, the successful party in such litigation shall be entitled to recover, in addition to such other relief as the court may award, its reasonable attorneys’ fees, expert witness fees, litigation related expenses, and court or other costs incurred in such litigation or proceeding. For purposes of this clause, the term “successful party” means the net winner of the dispute, taking into account the claims pursued, the claims on which the pursuing party was successful, the amount of money sought, the amount of money awarded, and offsets or counterclaims pursued (successfully or unsuccessfully) by the other party. If a written settlement offer is rejected and the judgment or award finally obtained is equal to or more favorable to the offeror than an offer made in writing to settle, the offeror is deemed to be the successful party from the date of the offer forward.

[SIGNATURES ARE ON THE FOLLOWING PAGE]

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

SUBCONTRACTOR: Waste Services of Florida, Inc., a Delaware corporation
By:	/s/
	Its:
CONTRACTOR: BFI Waste Systems of North America, Inc., a Delaware corporation
By:	/s/
	Its:

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EXHIBIT A

TERMS OF PROVISION OF THE SERVICES

Name of Customer:

Location:

Type of Service and Container Provided:

Frequency of Service:

Pricing:

Total Monthly Charges:

Provisions for Price Increases:

Non-standard Provisions:

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EXHIBIT E
RETENTION BONUS AGREEMENT

     To provide an incentive to you to continue in your current position for at least 90 days after the Miami-Dade County, Florida operations of Allied Waste Industries, Inc. and/or its subsidiaries (collectively, “Allied Waste”), are sold to a third party (the “Purchaser”), Allied Waste will cause the Purchaser to pay you, _______________  (“Employee”), a retention bonus in the amount of (a) $_________  plus (b) the prorated portion of the amount that you would have earned under Allied Waste’s 2006 Management Incentive Plan had you been employed by Allied Waste on December 31, 2006, if applicable, on the 91^st day following the closing of the acquisition (the “Payment Date”), provided:

     1. You do not resign from your current position, you accept a similar position with the Purchaser, and you continue to faithfully perform the responsibilities of your position, from the date hereof through the Payment Date;

2. You are not discharged for “cause” prior to the Payment Date;

     3. The Purchaser does, in fact, complete its acquisition of the Miami-Dade County, Florida operations of Allied Waste at which you are primarily employed on or before ___, 2006; and

     4. You do not disclose the existence of this Agreement or its terms to anyone other than your personal advisors (provided they are bound to keep such terms confidential).

     For purposes of this agreement, a discharge for “cause” shall be a termination of your employment after (1) you are convicted of a crime (other than a minor traffic offense); (2) you fail or refuse to perform any of your assigned duties; (3) you perform your assigned duties in an unacceptable manner; (4) you engage in conduct, the result of which causes injury (financial or otherwise) to the Purchaser, or which exposes the Purchaser to risk of such injury; or (5) you disclose the existence of this Agreement or its terms to anyone other than your personal advisors (provided they are bound to keep such terms confidential).

     In addition, nothing in this agreement will modify the at-will nature of your employment with Allied Waste (if applicable) or with the Purchaser, nor constitute a contract of employment for any particular period of time. Either you or the Purchaser may terminate your employment with or without “cause” or notice. If you terminate your employment with Allied Waste or the Purchaser for any reason prior to payment of the retention bonus, you will forfeit any rights to the retention bonus. If the Purchaser terminates your employment without “cause” before payment of the retention bonus, the Purchaser will pay the full amount of the retention bonus as a severance payment on the date of your termination. This severance payment shall be reduced by any other payment or benefits from the Purchaser in the nature of severance pay or benefits. If you are entitled to any notice or payment in lieu of any notice or termination of employment required by Federal, state or local law, including but not limited to the Worker Adjustment and Retraining Notification Act, the severance payment will also be reduced by the amount of any payment in lieu of such a notice.

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     The payment of the retention bonus shall be conditioned upon your execution of a valid release, to be prepared by the Purchaser, in which you release Allied Waste, the Purchaser and their respective affiliates, to the maximum extent permitted by law, from any claims that you may have against any of them, except such claims arising under this agreement and any employee benefit plan that is not a severance plan.

     All payments to you under this agreement will be subject to withholding for all applicable employment and income taxes.

     This agreement shall be construed in accordance of the laws of the State of Florida to the extent not preempted by the Employee Retirement Income Security Act of 1974, as amended.

     To accept this offer, you must sign below and return it to __________________ no later than __________________, 2006.

Date	/s/ Employee
Date	/s/ Allied Waste Industries, Inc.

E-2

EX-10.21

Exhibit 10.21

ASSET PURCHASE AGREEMENT

     THIS ASSET PURCHASE AGREEMENT (the “Agreement”) is executed and delivered as of July 19, 2006, among Allied Waste Transfer Services of Arizona, LLC, a Delaware limited liability company (“Buyer”); and those entities set forth as Sellers on Exhibit A (“Sellers”).

RECITALS

     A. Sellers and Cactus Waste Systems, LLC, an Arizona limited liability company (the “Company”), own and operate hauling operations, transfer station operations, and landfill operations (collectively, the “Business”) in the State of Arizona (the “Area”).

     B. Buyer desires to purchase and acquire substantially all of the assets, properties and contractual rights used by Sellers in connection with the Business, including the membership interests of the Company (the “Membership Interests”), and Sellers desire to sell such assets, properties, contractual rights and Membership Interests to Buyer, all in accordance with the terms and conditions set forth in this Agreement.

     C. The assets and properties used by Sellers and the Company in connection with the Business include the real property described on Exhibit B-1 (the “Land”) and the leased real property described on Exhibit B-2 (the “Leased Real Property”).

     D. Except as the context otherwise requires, capitalized terms used in this Agreement shall have the meanings assigned to them in Exhibit C.

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

ARTICLE I

SALE OF ASSETS

     1.1 Sale of Assets by Sellers. On the terms and subject to the conditions set forth in this Agreement, at the Closing Sellers shall grant, convey, sell, transfer and assign to Buyer, and Buyer shall purchase from Sellers, all of Sellers’ right, title and interest in and to the following assets used in the Business, including the following assets owned by the Company which Buyer will acquire by virtue of its acquisition of the Membership Interests (but excluding the Excluded Assets), free and clear of all Encumbrances except Permitted Exceptions and Blanket Liens:

          (a) the Land, including all structures, improvements, fixtures, easements and other rights and interests relating thereto, and all leases with respect to the Leased Real Property;

          (b) subject to Section 1.3, all Permits held by Sellers in connection with the Business, including the Permits listed on Schedule 1.1(b);

          (c) all Equipment, including the Equipment listed on Schedule 1.1(c);

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          (d) all Rolling Stock, including the Rolling Stock described on Schedule 1.1(d);

          (e) all computer hardware and related basic operating systems used, or held for use, principally in connection with the Business;

          (f) all Inventory, including the Inventory listed on Schedule 1.1(f);

          (g) all intangible property owned by Sellers and used principally in connection with the Business, including all symbols, trademarks, service marks, logos and trade names, including the Business Names listed on Schedule 1.1(g), except (subject to Section 4.1) those symbols, trademarks, service marks, logos and trade names that include the names of or otherwise identify “Waste Services” (the “Retained IP”);

          (h) all Customer Contracts, Assumed Leases and Other Contracts (collectively, the “Assumed Contracts”);

          (i) the telephone numbers used principally in the conduct of the Business;

          (j) all shop tools, nuts and bolts used principally in connection with the Business;

          (k) all books and records relating principally to the Business, including customer lists and vendor lists of Sellers and the Company, and including the entity record books, Tax records and personnel records of the Company;

          (l) to the extent relating to the Business, all prepaid expenses and deposits, including any such expenses and deposits with respect to leases, rentals and utilities;

          (m) all Accounts Receivable, except for the Accounts Receivable relating to the Top Grade contract;

          (n) all furniture, fixtures and office equipment used principally in connection with the Business;

          (o) to the extent relating principally to the Business, all rights under agreements with employees and other third Persons concerning confidentiality and assignment of inventions;

          (p) the Membership Interests; and

          (q) all goodwill of the Business.

All of the foregoing assets of Sellers described in this Section 1.1 are referred to as the “Assets”. For greater certainty, the various schedules to this Section 1.1 also list the relevant assets of the Company, and such assets of the Company are included within the definition of “Assets” in this Agreement.

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     1.2 Excluded Assets. The parties agree that certain assets of Sellers and the Company shall remain the property of Sellers and shall not be sold to Buyer at the Closing (the “Excluded Assets”). To the extent any of the Excluded Assets are owned or held by the Company, prior to the Closing the Company shall transfer such Excluded Assets to Sellers or to any other Person designated by Sellers as provided in Section 10.1. The Excluded Assets are: (a) all assets that are not used or held for use in, owned by, leased by or in the possession of Sellers or their Affiliates, including the Company, principally in connection with the Business; (b) records which relate primarily to Excluded Assets or Excluded Liabilities, including (with respect to Sellers but not the Company) files relating to Taxes and personnel files; (c) the stock and corporate record books of Sellers; (d) the rights which accrue or will accrue to Sellers under this Agreement; (e) any inter-company receivables from Sellers or their Affiliates; (f) all present and future refunds relating to Taxes of Sellers; (g) all insurance policies and all rights with respect thereto; (h) all litigation rights to which Sellers are plaintiffs and all causes of action and claims of every nature, kind and description; (i) all billing, route management and other software programs other than basic operating systems; (j) all petty and other cash and cash equivalents on hand or in a bank; (k) all bank accounts; (l) all escrow accounts; (m) all right, title and interest in any financial responsibility, financial assurance or similar mechanisms; (n) all other real property and all buildings on and fixtures to all real property of Sellers and their Affiliates, including the Company, not described on Exhibit B; (o) all time clocks and GPS systems; (p) any assets sold by Sellers in accordance with Section 7.3(d); (q) the assets listed on Schedule 1.2; (r) all other assets that do not constitute Assets; (s) the Employee Contracts; and (t) letter of intent, dated March 22, 2006 from United Site Services, Inc. to Arizona Waste Services regarding the acquisition of portable toilet assets of Waste Services of Arizona, Inc.

     1.3 Commercially Reasonable Efforts to Assign. To the extent that the sale or assignment of any Customer Contract, Assumed Lease or Permit included within the Assets shall require the consent of any third party, Sellers and Buyer shall each use commercially reasonable efforts to obtain the consent of such other party to such assignment to Buyer both before and after the Closing.

ARTICLE II

PURCHASE PRICE

     2.1 Purchase Price. Subject to adjustment as provided in this Article II and Section 11.7, Buyer shall pay to Sellers $53,000,000 at the Closing (the “Purchase Price”), by wire transfer of immediately available funds.

     2.2 Purchase Price Adjustments.

          (a) Adjustment for Certain Assumed Obligations. The Purchase Price payable at the Closing pursuant to Section 2.1 shall be reduced on a dollar-for-dollar basis for the liability reflected on the balance sheet as of the Closing Date with respect to capitalized equipment leases, if any, assumed by Buyer under Section 10.2.

          (b) Working Capital Adjustment.

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               (i) The following capitalized terms used in this Agreement shall have the following meanings:

                    (1) “Adjustment Amount” means an amount (which may be positive or negative) equal to the actual amount of Net Working Capital as of Closing.

                    (2) “Net Working Capital” means (A) the aggregate current assets included in the Assets, less (B) the aggregate current liabilities of Sellers assumed by Buyer under Section 10.2, in each case determined in accordance with GAAP on a basis consistent with the balance sheet dated May 31, 2006 included within Sellers’ Financial Statements. For greater certainty, Sellers are retaining the Top Grade Accounts Receivable, which will not be included in current assets for purposes of the Net Working Capital calculation.

               (ii) At least five Business Days prior to the Closing Date, Sellers shall deliver to Buyer a worksheet setting forth their good faith estimate of the Net Working Capital of the Business as of the Closing Date and a computation of the estimated Adjustment Amount (the “Estimated Adjustment Amount”). The worksheet shall be prepared by Sellers and shall be subject to the approval of Buyer, which shall not be unreasonably withheld. If the worksheet is not acceptable to Buyer, Buyer shall promptly submit its comments on the worksheet to Sellers, and Buyer and Sellers shall endeavor in good faith to address such comments so as not to delay the Closing. If the Estimated Adjustment Amount is a positive number, the Purchase Price payable at Closing shall be increased in an amount equal to the positive Estimated Adjustment Amount. If the Estimated Adjustment Amount is a negative number, the Purchase Price payable at Closing shall be decreased in an amount equal to the negative Estimated Adjustment Amount.

               (iii) Within 45 days after the Closing, Buyer shall prepare a computation of the actual Net Working Capital and the actual Adjustment Amount as of the Closing Date (the “Actual Adjustment Amount”) and deliver such computation to Sellers. If within 20 days following delivery of such computation Sellers do not deliver a written objection thereto to Buyer, then the Actual Adjustment Amount shall be as reflected on the computation provided pursuant to the preceding sentence. If Sellers timely object to the computation, then Buyer and Sellers shall negotiate in good faith and attempt to resolve their disagreement. Should such negotiations not result in an agreement within 20 days after delivery of such written objection, then the matter shall be submitted to KPMG LLP (the “Neutral Auditor”). All fees and expenses relating to the work, if any, performed by the Neutral Auditor will be borne equally by Buyer and Sellers. The Neutral Auditor will deliver to Buyer and Sellers a written determination (such determination to include a worksheet setting forth all material calculations used in arriving at such determination and to be based solely on information provided to the Neutral Auditor by Buyer and Sellers, or their respective Affiliates) of the disputed items within 30 days of receipt of the disputed items, which determination will be final, binding and conclusive on the parties.

               (iv) Promptly following agreement on or delivery of the final, binding and conclusive computation setting forth the Actual Adjustment Amount, Buyer and Sellers shall account to each other as provided for in this Section 2.2(b)(iv). If the Estimated Adjustment Amount less the Actual Adjustment Amount is a positive number, then Sellers shall

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pay Buyer a cash payment equal to such excess as a decrease in the Purchase Price. If the Estimated Adjustment Amount less the Actual Adjustment Amount is a negative number, then Buyer shall pay Sellers a cash payment equal to such deficit as an increase in the Purchase Price. Any such excess or deficit payment shall be due and payable within 10 days after the final determination of the Actual Adjustment Amount pursuant to Section 2.2(b)(iii) and shall be paid in immediately available funds by wire transfer to an account designated by Buyer or Sellers, as applicable.

     2.3 Allocation of Purchase Price. The Purchase Price (including any liabilities that are considered to be an increase to the Purchase Price for federal income tax purposes) shall be allocated among the Assets in the manner agreed to by Sellers and Buyer, in accordance with the requirements of Code Section 1060 and based on the fair market value of the Assets as determined by arm’s length negotiations. Within 30 days after the Actual Adjustment Amount is finally determined pursuant to Section 2.2, Sellers will propose a Purchase Price allocation to Buyer, and the parties shall work in good faith to agree to the same. The parties agree to file (or cause to be filed) (i) all required federal Forms 8594, Asset Acquisition Statement under Section 1060, and (ii) all other Tax returns (including amended Tax returns and claims for refund) in a manner consistent with such allocation of the Purchase Price described in this Section 2.3, and to use their commercially reasonable efforts to sustain such allocation in any subsequent Tax audit or Tax dispute.

ARTICLE III

CLOSING

     3.1 Time and Place of Closing.

          (a) Generally. The purchase and sale provided for in this Agreement (the “Closing”) shall take place at the offices of Fennemore Craig, P.C., 3003 North Central Avenue, Suite 2600, Phoenix, Arizona 85012 at 9:00 a.m., local time, as promptly as practicable (but in any event within 10 Business Days) following the date on which the last of the conditions set forth in Article VIII and Article IX are fulfilled, satisfied or waived or at such other time or place as the parties shall agree in writing. The date on which the Closing occurs is referred to as the “Closing Date.” The Closing shall be effective for all purposes at 12:01, a.m., Eastern Time, on the date subsequent to the Closing Date. The parties shall use commercially reasonable efforts to cause the Closing to occur on or before September 30, 2006. At the Closing, the sale and conveyance of the Land and the assignment of the leases for the Leased Real Property shall be consummated through an escrow established at the Title Company, although actual payment of the Purchase Price allocable to the Land shall not be paid through the escrow (unless required to cure an Unpermitted Exception for which Sellers are obligated or have elected to cure).

          (b) Permit Transfer Issues. If, despite the parties’ commercially reasonable efforts, the Closing cannot occur as of the relevant date on account of Permit transfer issues or governmental approvals, and the parties are unable to consummate the Closing under an operating agreement mutually satisfactory to the parties, then with the mutual consent of Sellers and Buyer the aspects of the Business affected by such Permit or governmental approval may be carved out by way of an amendment to this Agreement (including an appropriate adjustment to

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the Purchase Price) and the Closing shall occur forthwith. The transfer of the affected aspects of the Business shall close as soon as practicable after the Closing when the Permit transfer issues are resolved or the governmental approvals are obtained, as the case may be.

     3.2 Deliveries by Sellers. At the Closing, Sellers shall deliver or cause to be delivered to Buyer, all duly and properly executed (where applicable):

          (a) subject to Section 3.8, Deeds conveying to Buyer indefeasible, fee simple title to each parcel of Land subject only to the Permitted Exceptions, in form and substance reasonably satisfactory to Buyer;

          (b) a Bill of Sale;

          (c) a sworn affidavit from each Seller stating, under penalty of perjury, that such Seller is not a “foreign person” as defined under Section 1445(f)(3) of the Code and other appropriate evidence or documents necessary to relieve Buyer of any obligation to withhold any portion of the Purchase Price under Section 1445(a) of the Code or any other withholding provision of any other Tax law;

          (d) an Assignment, Assumption and Consent to Leased Real Property for each parcel of Leased Real Property, and an Estoppel Certificate (which may be included within the Assignment, Assumption and Consent to Leased Real Property) for each parcel of Leased Real Property (provided, however, that if any real estate lease does not require the owner of the Leased Real Property to provide estoppel certificates, and if Sellers cannot obtain an Estoppel Certificate from the owner through reasonable efforts, then Sellers shall not be required under this subsection to deliver an Estoppel Certificate with respect to such real estate lease);

          (e) a letter from Sellers’ (or their Affiliate’s) lenders confirming that all Blanket Liens on the Assets will be released concurrently with the Closing and that evidence thereof shall be delivered within 60 days following the Closing Date and evidence reasonably satisfactory to Buyer of satisfaction of all Encumbrances encumbering the Assets other than Permitted Exceptions; and

          (f) an assignment of the Membership Interests in a form acceptable to Buyer; and

          (g) such other separate documents or instruments of sale, assignment, or transfer as Buyer shall reasonably request, including titles and registrations for the Rolling Stock.

     3.3 Deliveries by Buyer. At the Closing, Buyer shall deliver or cause to be delivered to Sellers, all duly and properly executed (where applicable):

          (a) the Purchase Price specified in Section 2.1, as adjusted as provided in Section 2.2, by wire transfer of immediately available funds to the account specified by Sellers;

          (b) the Buyer’s Assumption Agreements;

          (c) the Assignment, Assumption and Consent to Leased Real Property; and

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          (d) such other separate documents or instruments of sale, assignment, transfer or assumption as Sellers shall reasonably request.

     3.4 Title Policies and Documents.

          (a) As soon as reasonably practicable after execution of this Agreement, Sellers shall provide Buyer with (i) a complete legal description and/or tax parcel numbers for each parcel of the Land, (ii) for each parcel of Land, a copy of any title policy, title commitment or any certificate of title that Sellers possess, evidencing title to each parcel of Land as of the date of the applicable certificate, commitment or policy, and (iii) complete and legible copies of all instruments and documents affecting title to the Land that Sellers possess.

          (b) Promptly thereafter and based on the legal descriptions and/or tax parcel numbers provided, Sellers shall cause the Title Company to issue one or more Title Commitments for standard owner’s title insurance insuring fee simple title in the name of Buyer for the Land. Buyer shall cause the Title Company to deliver to Sellers duplicate copies of Title Commitments and Schedule B items thereto. In addition, within two Business Days after receipt of a written request from Buyer, Sellers will execute and deliver authorizations that may be sent by Buyer to governmental and other public authorities that authorize such authorities to reveal to Buyer all information, if any, in any files the authorities have on the Land, or any part thereof, provided such authorizations do not authorize or request inspections with respect to the Land in each case to the extent such authorizations are required of Sellers. All costs attributable to the issuance of the Title Commitments, endorsements, modifications, title searches, title policies, or new title opinions ordered in accordance with the foregoing shall be borne by Buyer. Sellers agree at their cost to execute all customary affidavits, in reasonable form, and other reasonable documents, in order to obtain any title opinions or title policies, including a “non-imputation” endorsement, if available, to the effect that title defects known to the officers, directors, and stockholders of the owner prior to the Closing shall not be deemed “facts known to the insured” for purposes of the policies.

          (c) The value of the Land for title insurance, transfer tax, documentary stamps and other relevant purposes will equal the fair value of each parcel as determined by the relevant governmental assessor, as adjusted by the multiplier covering such assessor, as determined by Deloitte & Touche, LLP.

     3.5 Title Review/Permitted Exceptions. Buyer shall have 10 days after receipt of (i) all of the Title Commitments and title searches ordered by Sellers in accordance with Section 3.4(b), (ii) complete and legible copies of items listed as exceptions to title on the Title Commitments or title searches and (iii) a Survey for each tract of Land, to notify Sellers in writing of any Unpermitted Exceptions. Sellers shall have 10 days after notice of any Unpermitted Exception is delivered by Buyer within which Sellers shall deliver notice to Buyer in writing as to whether Sellers elect to cure, or insure around at Sellers’ expense, any such matter; provided, however, that Sellers shall be required to cure at Sellers’ expense any monetary Unpermitted Exception (i.e., an exception which can be deleted as an exception upon the delivery of sufficient funds to the Title Company) at or prior to Closing. Except with respect to a monetary Unpermitted Exception, failure to notify Buyer in writing within such period of their election to cure or insure around shall be deemed Sellers’ election not to cure or insure around.

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Buyer shall have 10 days following receipt of Sellers’ notice or deemed notice electing not to cure or insure around in which to (a) elect to waive its objection to any Unpermitted Exception that Sellers do not elect to cure or insure around, (b) remove the Land subject to the Unpermitted Exception from the Assets, which shall result in a mutually-agreeable reduction of the Purchase Price, or (c) terminate this Agreement in accordance with Article XII, but only if the existence of the Unpermitted Exception and the removal of the Land pursuant to clause (b) would result in a Material Adverse Change if the rights, benefits or privileges under such title exception(s) are asserted or enforced. If Buyer fails to notify Sellers in writing of Buyer’s election within such 10-day period, Buyer shall be deemed to have elected to proceed in accordance with clause (a) of the preceding sentence.

     3.6 Surveys. As soon as reasonably practicable after execution of this Agreement, Sellers shall deliver to Buyer any surveys of the Land, or any part thereof, that Sellers possess. In addition, Sellers shall cause a survey to be prepared by the Surveyor and the costs and expenses thereof shall be borne by Buyer. Sellers shall deliver to Buyer a duplicate copy of any survey that Sellers receive. For purposes of this Agreement, any survey that satisfies the Title Company in connection with the issuance of the Title Policy shall be referred to as a “Survey”.

     3.7 Prorations and Charges. All Taxes relating to the Land for any tax year prior to the real estate tax year in which the Closing occurs shall be paid in full by Sellers on or before the Closing Date or an amount sufficient to fully discharge the same shall be deposited in escrow with the Title Company for payment to the relevant Tax authority. Real property Taxes for the current tax year shall be prorated between Sellers and Buyer as of the Closing Date on a daily, pro-rata basis based upon the latest available estimates of the amount thereof or the actual amount of such Taxes. If the pro rata amounts are not known as of the Closing Date, adjustments shall be made post-Closing at such time as they are known to the parties. Buyer and Sellers shall each pay one-half of the escrow fees and cancellation fees to the Title Company. The following costs shall be paid by Buyer: (a) all costs attributable to the issuance of the Title Commitments and any amendments or modifications thereto, endorsements, title searches and title policies ordered in accordance with Section 3.4(b); (b) the costs and expenses of the Survey pursuant to Section 3.6; and (c) documentary, transfer or stamp fees and other customary Closing costs, such as recording fees.

     3.8 Post-Closing Title and Survey Work. Notwithstanding anything in this Agreement to the contrary, if as of the Closing Date, through no fault of Buyer, (a) the Title Company is not prepared to issue title insurance, and/or (b) Buyer has not had the time permitted under Section 3.5 to review Title Commitments or title searches, title exception documents and Surveys, and/or (c) Buyer has not obtained a Survey, then Buyer shall have the right, in its sole discretion, to either (i) elect to close under this Agreement, provided Sellers agree in writing at the Closing to provide such missing items promptly after the Closing; or (ii) delay the Closing with respect to such parcel of Land only and close with respect to such Land when the missing items are obtained and approved by Buyer in accordance with this Agreement, with (x) Buyer and Sellers to execute an agreement at Closing regarding the delay of payment of the Purchase Price attributable to such Land and the use of such Land by Buyer until the extended Closing Date, and (y) the representations, warranties and covenants of Seller with respect to the applicable Land continuing until the extended Closing Date.

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     3.9 Condemnation or Casualty. If prior to Closing, the Land or any part thereof is subject to an eminent domain or condemnation proceeding or any improvement thereon is damaged by fire, flood or other casualty, Sellers shall give written notice thereof to Buyer, and Buyer shall be entitled, contingent upon the Closing occurring, to any condemnation award or insurance proceeds resulting from any such event. At the Closing Sellers shall execute and deliver all documents reasonably requested of Buyer to effectuate such assignment. The assignment of a condemnation award or insurance proceeds shall be Buyer’s sole remedy as a result of the occurrence of any of the foregoing events, and all risk of collection with respect thereto shall be on Buyer and not Sellers.

     3.10 Stay-On Bonuses. Sellers shall make payments (the “Stay-On Bonuses”) under Retention Bonus Agreements in substantially the form of Exhibit D (the “Retention Bonus Agreements”) in accordance with the terms of such agreements and as set forth on Schedule 3.10.

ARTICLE IV

POST CLOSING COVENANTS

     4.1 Removal of Identification. Within three months after the Closing, Buyer shall remove from the Assets or otherwise conceal all visible usage of the Retained IP.

     4.2 Further Assurances. From time to time on and after the Closing and without further consideration except as provided in this Agreement, the parties shall each deliver or cause to be delivered to any other party at such times and places as shall be reasonably requested, such additional instruments as any of the others may reasonably request for the purpose of carrying out this Agreement and the Transactions. Sellers, also without further consideration, agree to cooperate with Buyer and to use their reasonable commercial efforts to have their officers and employees cooperate on and after the Closing Date in furnishing to Buyer or its advisors (a) information requested by Buyer with respect to the Assets and the Business, (b) information, evidence, testimony, and other assistance in connection with obtaining all necessary Permits and approvals and in connection with any third party actions, proceedings, arrangements or disputes of any nature with respect to matters pertaining to all periods prior to the Closing Date and (c) updated loss-claims related to the Business with respect to periods prior to the Closing Date and any resolution thereof; provided, however, that this obligation shall not apply to disputes among the parties, and that Sellers shall not be required to expend any sum of money toward that end beyond reasonable and typical overhead expenditures and outside counsel fees and costs. Buyer, also without further consideration, agrees to cooperate with Sellers and to use its reasonable commercial efforts to have its officers and employees cooperate on and after the Closing Date in furnishing to Sellers information, evidence, testimony, and other assistance (including reasonable access to the Assets, including the Land and the Leased Real Property) in connection with any third party actions, proceedings, arrangements or disputes of any nature with respect to matters pertaining to all periods prior to the Closing Date; provided, however, that this obligation shall not apply to disputes among the parties, and that Buyer shall not be required to expend any sum of money toward that end beyond reasonable and typical overhead expenditures and outside counsel fees and expenses.

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     4.3 Billing, Cash Processing and Scale Software (TRUX) Services. For a period of up to 60 days following the Closing Date, at the request of Buyer, Sellers shall perform the billing, cash processing and scale software (TRUX) services relating to the Business for Buyer’s account and without additional consideration to Sellers. Sellers agree to perform the billing, cash processing and scale software (TRUX) services in accordance with past practices of Sellers. All payments made to Sellers on behalf of Buyer after the Closing and relating to the Assets shall be deemed to be the property of Buyer. The parties agree that after the Closing they will transfer and deliver to the other, from time to time and at least once per week, any cash, checks or other property that they may receive on or after the Closing which properly belongs to the other party. During such 60-day period, Buyer shall reimburse Sellers for their and their Affiliates’ reasonably documented out-of-pocket and internal costs in providing the services pursuant to this Section 4.3.

     4.4 Blanket Lien Releases. The Assets are encumbered by blanket liens in favor of various lenders to Sellers’ Affiliates (the “Blanket Liens”), all of which liens will be released concurrently with the Closing. Within 60 days after the Closing Date, Sellers shall deliver evidence to Buyer of the release of any security interests reflecting such Blanket Liens.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF SELLERS

     Sellers, jointly and severally, represent and warrant to Buyer that the statements contained in this Article V: (a) except as set forth in the Disclosure Schedules, are correct and complete as of the date of this Agreement; (b) will be correct and complete as of the Closing Date (as though made then and as though the Closing Date were substituted for the date of this Agreement throughout this Article V), subject to supplements to the Disclosure Schedules as provided in Section 7.7, and except for those representations and warranties that, by their terms or nature, speak as of a specific date that is not the Closing Date; and (c) shall survive the Closing in accordance with Section 11.1. Each matter referred to in any Disclosure Schedule shall be deemed to have been disclosed for all relevant purposes in all other parts or sections of all other Disclosure Schedules.

     5.1 Organization; Authority; Ownership.

          (a) Each Seller is a corporation duly organized, validly existing and in good standing under the laws of the state of its incorporation and is duly authorized, qualified and licensed under all Applicable Laws to carry on the Business in the places and in the manner in which the Business is presently conducted, except for where the failure to be so authorized, qualified and licensed would not have a material adverse effect on the Business.

          (b) Each Seller has all necessary power and authority to enter into this Agreement and the Ancillary Agreements to which it is a party, to consummate the Transactions and perform its obligations under this Agreement and the Ancillary Agreements to which it is a party.

     5.2 Binding Effect. At or before the Closing, the execution, delivery and performance of this Agreement and the Ancillary Agreements by Sellers will be within their

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respective corporate powers and will have been approved by all requisite action of Sellers, and no other proceedings on the part of Sellers will be necessary to authorize the execution and delivery of this Agreement and the Ancillary Agreements or the consummation by Sellers of the Transactions and the performance of their obligations under this Agreement and the Ancillary Agreements to which they are parties. This Agreement has been, and upon delivery, the Ancillary Agreements to which they are parties will be, duly executed and delivered by each Seller and, assuming the due authorization, execution and delivery by Buyer, constitutes and will constitute the valid and legally binding agreement of Sellers enforceable against Sellers in accordance with their respective terms.

     5.3 Permits. Sellers and the Company have all material Permits necessary to enable them to own the Assets and conduct the Business as currently conducted. To Sellers’ knowledge, except as set forth on Schedule 5.3, Sellers and the Company are and have been in material compliance with the terms and conditions of all Permits and all of the Permits are now valid, in good standing and in full force and effect. Sellers shall not undertake, following the Closing, any challenges to the Permits or applications for Permits.

     5.4 Assets; Personal Property.

          (a) Except for (i) the items listed on Schedule 5.4(a) and (ii) the Excluded Assets, the Assets include all the material properties, assets, rights, licenses, permits and contracts, wherever located (including any items located on a customer’s site), whether tangible or intangible, real, personal or mixed, that are currently used, owned by, leased by or in the possession of Sellers or the Company principally in connection with the Business.

          (b) All of the Assets are either owned by Sellers or the Company or leased by Sellers or the Company under an agreement set forth on Schedule 5.4(b) (the “Assumed Leases”). To Sellers’ knowledge, each Assumed Lease is in full force and effect and constitutes valid and binding obligations of the parties thereto and their successors. To Sellers’ knowledge, no default has occurred nor has there occurred an event or condition that with the passage of time or the giving of notice (or both) would constitute a default by Sellers or the Company, as the case may be, or any other party to any Assumed Lease.

          (c) At the Closing, Sellers or the Company, as applicable, shall have good and marketable title to the owned Assets and enforceable leasehold interest in the leased Assets, free and clear of all Encumbrances other than Permitted Exceptions and the Blanket Liens that will be released as provided in Section 4.4. By virtue of the grant, conveyance, sale, transfer, and assignment of the Assets under the Deeds and the Bill of Sale, Buyer shall receive good and marketable title to the Assets, free and clear of all Encumbrances other than Permitted Exceptions and Blanket Liens that will be released as provided in Section 4.4.

     5.5 Real Property.

          (a) Except as shown on the Title Commitments, Sellers or the Company, as applicable, have good and valid title in fee simple to the Land and a valid leasehold interest in the Leased Real Property, and at Closing good and valid fee simple title to the Land and a valid

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leasehold interest in the Leased Real Property shall be conveyed to Buyer or retained by the Company, as the case may be,free of all Encumbrances, subject to the Permitted Exceptions.

          (b) Except as set forth on Schedule 5.5(b):

               (i) There are no Proceedings pending and brought by, or to Sellers’ knowledge, threatened by, any third Person that would result in a change in the allowable uses of the Land or the Leased Real Property or that would modify the right of Buyer to use the Land or the Leased Real Property for its current uses after the Closing Date.

               (ii) Except for Permitted Exceptions, no Person except Sellers or the Company has a present or future right to possession or occupancy or use of all or any part of the Land.

               (iii) There are no Proceedings (including condemnation or eminent domain proceedings) pending or, to Sellers’ knowledge, threatened against all or any part of the Land.

               (iv) Neither Sellers nor the Company have received any written notice of (A) any violation of any applicable zoning ordinance, building code, use or occupancy restriction, covenant, condition or restriction of record or any other violation of applicable law relating to the Land, the Leased Real Property or the improvements thereon or (B) any pending special assessments affecting all or any part of the Land (except as shown on the Title Commitments) or the Leased Real Property.

               (v) To Sellers’ knowledge, there are no unrecorded contracts, leases, easements or other agreements or claims of third parties affecting the use, title, occupancy or development of the Land, and no Person has any right of first refusal, option or the right to acquire, lease or otherwise use all or any part of the Land.

               (vi) To Sellers’ knowledge, no fact or condition exists which will result in the termination, restriction or modification of any currently existing access to or from the Land or the Leased Real Property and any public rights of ways and roads.

          (c) Neither Seller nor the Company is a “foreign person” as the term is defined in Section 1445 of the Code and any applicable regulations promulgated thereunder.

     5.6 Contracts.

          (a) Listed on Schedule 5.6 is a complete and accurate list of all (i) Customer Contracts that accounted for annual revenues in excess of $100,000 during the 12 months ended May 31, 2006 (“Material Customer Contracts”), (ii) Employee Contracts, and (iii) contracts to which Sellers or the Company are parties and by which the Assets are affected or bound (the “Other Contracts”) which: (A) are franchise agreements with a municipality or any governmental branch, agency or body; (B) relate to the ownership or use of real property (including the Land and the Leased Real Property); (C) relate to the purchase or lease of any fixed asset with respect to the Business, whether or not such purchase or lease was made in the ordinary course of business, for an aggregate price in excess of $100,000 in any 12 month

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period; (D) contain a covenant or agreement limiting the freedom of any of the parties thereto to compete in any line of business or in any location; or (E) have payment obligations (whether to or by Sellers or the Company) in excess of $100,000 in any 12 month period, in each case as of the date of this Agreement. True and complete copies of each such contract have been made available to Buyer. The disclosure of a contract on Schedule 5.6 shall not constitute a representation that such contract satisfies one or more of the foregoing criteria.

          (b) To Sellers’ knowledge, and except as set forth in Schedule 5.6, all Material Customer Contracts, Employee Contracts and Other Contracts are in full force and effect and are valid, binding and enforceable against the respective parties thereto in accordance with their respective provisions. To Sellers’ knowledge, no default has occurred nor has there occurred an event or condition which with the passage of time or the giving of notice (or both) would constitute a default by Sellers or the Company, as the case may be, or any other party to any such contract. Except as set forth on Schedule 5.6, neither Sellers nor the Company have received any written notice that any Person intends or desires to modify, waive, amend, rescind, release, cancel or terminate any Material Customer Contract, Employee Contract and Other Contract.

          (c) Except as set forth on Schedule 5.6(c), neither Sellers nor the Company have any unfulfilled obligations to sellers under the various purchase agreements pursuant to which they acquired the Assets, including any obligations to pay additional purchase price, royalties or other amounts. Neither Sellers nor the Company are parties to any contract which would permit the other party thereto to put assets to the Company at any time. Neither Sellers nor the Company are parties to any disposal agreements that are not listed on Schedule 5.6.

     5.7 Employees; Compensation.

          (a) Attached as Schedule 5.7 is a complete and accurate list of (i) all Business Employees, (ii) their rate of compensation as of the date of delivery of the Disclosure Schedules, (iii) any bonus, incentive or compensation plans (other than plans subject to ERISA) in which they participate, (iv) any vacation plans, including accruals thereunder, and (v) any severance plans, agreements, arrangements or obligations relating to any such employee, including any amounts owed to any such employee thereunder as of the Closing Date or arising out of or in connection with the consummation of the Transactions or the performance of the parties’ respective obligations under this Agreement and the Ancillary Agreements.

          (b) Except (i) as otherwise contemplated by this Agreement or the Ancillary Agreements, (ii) as set forth on Schedule 5.7, and (iii) for employees governed by Employee Contracts, each Business Employee is an employee at will.

     5.8 Compliance with Law; No Conflicts.

          (a) Except as set forth in Schedule 5.8(a): (i) to Sellers’ knowledge, the Business is being operated in compliance in all material respects with all Applicable Laws; (ii) neither Sellers nor the Company are involved in any litigation or administrative proceeding relating to the Assets or the Business seeking to impose fines, penalties or other liabilities or seeking injunctive relief for violation of any Applicable Laws or Permits; and (iii) to Sellers’

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knowledge there is no pending investigation or other form of review relating to Sellers (with respect to the Business), the Company or the Assets with respect to any Applicable Law or Permit.

          (b) Except as set forth in Schedule 5.8(b), the execution, delivery and performance of this Agreement, the Ancillary Agreements, the consummation of the Transactions and the fulfillment of the terms of this Agreement and the Ancillary Agreements by Sellers do not and will not:

               (i) conflict with, or result in a breach or violation of the Certificate of Incorporation and Bylaws of Sellers or the Articles of Organization and Operating Agreement of the Company;

               (ii) to Sellers’ knowledge, conflict with, or result in the creation or imposition of any Encumbrance on the Assets or Business pursuant to: (A) any Applicable Law to which Sellers or the Company or any of their respective properties are subject, or (B) any judgment, order or decree to which Sellers or the Company are bound or any of their respective property is subject; or

               (iii) except for the notices, consents or approvals required under any Material Customer Contracts, Employee Contracts and Other Contracts required to be listed on Schedule 5.6, the Permits and the Assumed Leases (collectively, the “Required Consents”), (A) require Sellers or the Company to provide notice to, or obtain the consent or approval of, any governmental authority or agency or other third Person, (B) constitute a default under or give rise to any right of termination, cancellation or acceleration of, or to a loss of any benefit to which a Seller or the Company is entitled under such Material Customer Contracts, Employee Contracts Other Contracts, Permits or Assumed Leases or (C) result in the creation or imposition of any Encumbrance on any Asset.

          (c) All of the Required Consents are listed on Schedule 5.8(c).

     5.9 Taxes. Except as set forth on Schedule 5.9, with respect to the Business:

          (a) Sellers and the Company, either separately or as members of an Affiliated Group, have completed and timely filed all Tax Returns required to be filed with any Tax authority, and have paid (or have had paid on their behalf) all Taxes shown as due and payable thereon. Such Tax Returns reflect all Taxes due and payable with respect to the periods covered by them. There is no Tax Return filed by Sellers or the Company, either separately or as a member of an Affiliated Group, and there are no outstanding assessments or Taxes otherwise due for any Pre-Closing Period, that will result, on or after the Closing Date, in any Taxes or other governmental charges upon the Assets or Buyer, whether as a transferee of the transferred assets or otherwise. There are no Encumbrances for Taxes on any of the Assets other than Encumbrances for Taxes not yet due and payable.

          (b) There is no actual pending or, to Sellers’ knowledge, threatened or expected claim, audit, investigation, dispute or other proceeding concerning any Taxes of Sellers or the Company that will result in a claim against any of the Assets.

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     5.10 Litigation. Except as set forth on Schedule 5.10, (a) there are no Proceedings pending or, to Sellers’ knowledge, threatened, against Sellers or the Company relating to the Assets or the Business or that could interfere with the consummation of the Transactions, at law or in equity, before any federal, state or local court or regulatory agency, or other governmental or private authority and (b) there are no existing orders, judgments or decrees of any governmental or private authority affecting any of the Assets or the Business.

     5.11 Financial Statements. Sellers have set forth in Schedule 5.11 true and complete copies of (a) the internal, unaudited, compiled balance sheets of Sellers and the Company relating to the Business and the Assets as of May 31, 2006 (the “Balance Sheet Date”), and the related internal, unaudited statements of income for the 12 months then ended (collectively, “Sellers’ Financial Statements”). Sellers’ Financial Statements are the financial statements used by Sellers and the Company to operate the Business, except that they do not include all intercompany transactions. Except as provided in Schedule 5.11, Sellers’ Financial Statements were prepared in accordance with GAAP, but because the Business are part of a larger organization, Sellers’ Financial Statements omit certain corporate level adjustments for assets, accruals or charges that would be required to be recorded if Sellers’ Financial Statements were prepared on a stand alone entity basis, including those set forth on Schedule 5.11. Sellers’ Financial Statements fairly present in all material respects the financial position of Sellers and the Company relating to the Business and Assets as of the dates thereof and the results of Sellers’ and the Company’s operations for the periods then ended.

     5.12 Conduct of Sellers’ Business. Since the Balance Sheet Date, except as disclosed on Schedule 5.12 or as contemplated by this Agreement, there has not been any:

          (a) sale or transfer of, or any agreement to sell or transfer, any of the Assets, or any plan, agreement or arrangement granting any preferential right to purchase or acquire any interest in any of the Assets, or requiring consent of any Person to the transfer and assignment of any of the Assets, in each case other than in the ordinary course of business;

          (b) waiver of any material rights or claims of Sellers or the Company related to the Assets;

          (c) material breach, amendment or termination of any Material Customer Contract, Employee Contract, Other Contract, Permit, Assumed Lease or Permit;

          (d) material transaction by Sellers or the Company outside the ordinary course of business with respect to the Assets or the Business; or

          (e) action by Sellers or the Company committing to do any of the foregoing.

     5.13 Environmental Compliance; Hazardous Materials; Disposal Sites.

          (a) Except as set forth in Schedule 5.13(a), to Sellers’ knowledge:

               (i) Since January 1, 2003, neither Sellers nor the Company have ever owned, leased, had an interest in, generated, transported, stored, handled, recycled, reclaimed,

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disposed of, or contracted for the disposal of, Hazardous Materials or solid waste in connection with the Business, except in material compliance with all Environmental Laws;

               (ii) Since January 1, 2003, there have been no Releases of any Hazardous Materials into the environment or onto, under or about the Land in connection with the Business, except in compliance with all Environmental Laws;

               (iii) No portion of the Land is on a CERCLA or similar state or federal list and neither Sellers nor the Company has been advised that they are a potentially responsible party with respect to the Assets; and

               (iv) No Encumbrances with respect to Environmental Damages have been imposed against Sellers or the Company (insofar as they relate to any of the Assets) or any of the Assets under CERCLA, any comparable state statute or other Applicable Law.

          (b) Except as set forth in Schedule 5.13(b), with respect to the Business, neither Sellers nor the Company have received any written notice or other written communication from any federal, state or local governmental or regulatory authority or unaffiliated third Person alleging or relating to the investigation of any alleged (i) material violation of Environmental Law or (ii) material liability or potential liability for any Environmental Damages, other than those that have been fully resolved without further liability or obligation to Sellers or the Company. Without limiting the generality of the foregoing, neither Sellers nor the Company are subject to any outstanding notice of violation issued by a regulatory authority with respect to the Business or Assets.

          (c) Included on Schedule 5.13(c) is a complete list of the names and addresses of all disposal sites (including Hazardous Materials disposal sites) used currently or in the past by Sellers or the Company in connection with the Business.

     5.14 Corrupt Practices. Except in compliance with all Applicable Laws, neither Sellers nor the Company nor any of their respective officers, directors, employees or agents, have, directly or indirectly, ever made, offered or agreed to offer anything of value to (a) any employees, representatives or agents of any customers of the Business for the purpose of attracting business or (b) with respect to the Business, any domestic governmental official, political party or candidate for government office or any of their employees, representatives or agents.

     5.15 Accounts Receivable. All Accounts Receivable represent, or will represent as of Closing, valid obligations from sales actually made or services actually performed by Sellers or the Company in the ordinary course of business, except that the Accounts Receivable may include certain pre-billed services. To Sellers’ knowledge, no Account Receivable is subject to a valid defense, set-off or counterclaim.

     5.16 Affiliates’ Relationships.

          (a) Schedule 5.16 contains an accurate and complete list of all material contractual arrangements between Sellers and any Affiliate thereof that (i) are currently in effect and (ii) relate to the Assets.

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          (b) No Affiliates of Sellers other than Sellers and the Company are presently engaged in business activities in the Area.

     5.17 Performance Bonds; Letters of Credit; Financial Assurances. Set forth on Schedule 5.17 are all of the outstanding performance bonds, letters of credit and other financial assurances provided by or on behalf of Sellers or the Company with respect to the Assets.

     5.18 Employment and Labor Matters.

          (a) Except as set forth in Schedule 5.18, with respect to the Business, neither Sellers nor the Company are a party to (i) any collective bargaining agreement, (ii) any material agreement respecting the employment of any Business Employee other than the Employee Contracts, or (iii) any material agreement for the provision of consulting or other professional services which is not cancelable without penalty on less than 30 days’ notice.

          (b) Except as set forth in Schedule 5.18, within the last five years neither Sellers nor the Company have experienced any material labor disputes, union organization attempts or any work stoppage due to labor disagreements in connection with the Business.

          (c) Except to the extent set forth in Schedule 5.18, with respect to the Business, (i) there is no unfair labor practice charge or complaint against Sellers or the Company pending or, to Sellers’ knowledge, threatened; (ii) there is no labor strike, dispute, request for representation, slowdown or stoppage actually pending or, to Sellers’ knowledge, threatened against or affecting Sellers or the Company nor any secondary boycott with respect to services of Sellers or the Company; (iii) no question concerning representation has been raised to Sellers or the Company or, to Sellers’ knowledge, is threatened respecting the Business Employees; and (iv) there are no administrative charges, court complaints or written threatened complaints against Sellers or the Company concerning alleged employment discrimination or other employment related matters pending or, to Sellers’ knowledge, threatened before the U.S. Equal Employment Opportunity Commission or any other governmental entity.

     5.19 The Company. With respect to the Company, Sellers represent and warrant as follows:

          (a) The Company is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Arizona and is duly authorized, qualified and licensed under all Applicable Laws to carry on the Business in the places and in the manner in which the Business is presently conducted, except for where the failure to be so authorized, qualified and licensed would not have a material adverse effect on the Business.

          (b) The Company does not own or control (directly or indirectly) any equity interest or investment in any corporation, partnership, joint venture, association or other business organization. The Company has no subsidiaries.

          (c) Waste Services, Inc. owns all of the membership interests in the Company free and clear of any adverse claim of any other Person, including any Encumbrances, except for general restrictions on transferability imposed by applicable securities laws and Blanket Liens.

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          (d) There are no outstanding (i) subscriptions, options, calls, puts, contracts, commitments, understandings, restrictions, arrangements, rights or warrants, including any right of conversion or exchange under any outstanding security, debenture, instrument or other agreement obligating the Company or Sellers to issue, deliver or sell, or cause to be issued, delivered or sold, additional membership interests in the Company or obligating the Company or Sellers to grant, extend or enter into any such agreement or commitment, or (ii) obligations of the Company to repurchase, redeem or otherwise acquire any securities referred to in clause (i) above. There are no voting trusts, proxies or other agreements or understandings to which the Company is a party or is bound with respect to the voting of the membership interests of the Company.

          (e) As of the Closing, the Company will have no assets other than the Assets set forth in Section 1.1, nor any obligations or liabilities other than obligations and liabilities expressly assumed by Buyer as described in Section 10.2. Any assets other than those set forth in Section 1.1 shall be transferred prior to the Closing to Sellers or their designee, and any obligations or liabilities other than those assumed by Buyer as described in Section 10.2 shall be assumed by Sellers prior to the Closing.

     5.20 No Other Representations. Sellers are not making any representations or warranties, expressed or implied, of any nature whatsoever except as specifically set forth in this Agreement.

ARTICLE VI

REPRESENTATIONS AND WARRANTIES OF BUYER

     Buyer represents and warrants to Sellers that the statements contained in this Article VI: (a) except as set forth in the Disclosure Schedules, are correct and complete as of the date of this Agreement; (b) will be correct and complete as of the Closing Date (as though made then and as though the Closing Date were substituted for the date of this Agreement throughout this Article VI), except for those representations and warranties that, by their terms or nature, speak as of a specific date that is not the Closing Date; and (c) shall survive the Closing in accordance with Section 11.1.

     6.1 Organization. Buyer is a limited liability company duly organized, validly existing and in good standing under the laws of the state of its organization and is duly authorized, qualified and licensed under all Applicable Laws to carry on the Business in the places and in the manner in which the Business are presently conducted, except for where the failure to be so authorized, qualified and licensed would not have a material adverse effect on the Business.

     6.2 Authority. Buyer has all necessary power and authority to enter into this Agreement and the Ancillary Agreements and to consummate the Transactions and perform its obligations under this Agreement and the Ancillary Agreements.

     6.3 No Conflicts. The execution, delivery and performance of this Agreement, the Ancillary Agreements, the consummation of the Transactions and the fulfillment of the terms of this Agreement and the Ancillary Agreements by Buyer do not and will not:

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          (a) conflict with, or result in a breach or violation of the Articles of Organization or Operating Agreement of Buyer, or result in the creation or imposition of any Encumbrance on any properties of Buyer pursuant to: (i) any law or regulation to which either Buyer or any of its property is subject, or (ii) any judgment, order or decree to which either Buyer is bound or any of its property is subject; or

          (b) require Buyer to provide notice to, or to obtain the consent or approval of, any governmental authority or agency or any other third Person.

     6.4 Binding Effect. The execution, delivery and performance of this Agreement and the Ancillary Agreements by Buyer are within its powers and have been approved by all requisite action of Buyer, and no other proceedings on the part of Buyer are necessary to authorize the execution and delivery of this Agreement and the Ancillary Agreements, the consummation by Buyer of the Transactions and the performance of the parties’ respective obligations under this Agreement and the Ancillary Agreements. This Agreement has been, and upon delivery, the Ancillary Agreements will be, duly executed and delivered by Buyer and, assuming the due authorization, execution and delivery by Sellers, constitutes and will constitute the valid and legally binding agreement of Buyer enforceable against Buyer in accordance with their respective terms.

     6.5 Independent Investigation. Buyer has conducted an independent investigation of the Assets and the Business. Buyer acknowledges that, EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, (i) THE ASSETS AND THE BUSINESS ARE CONVEYED “AS IS, WHERE IS” AND “WITH ALL FAULTS,” AND (ii) SELLERS HAVE NOT MADE, AND SELLERS HEREBY EXPRESSLY DISCLAIM AND NEGATE, ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, OF ANY KIND OR NATURE WHATSOEVER RELATING TO THE ASSETS OR THE BUSINESS (INCLUDING ANY IMPLIED OR EXPRESSED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE). As of the date of this Agreement, Buyer is not aware of any breach of the representations or warranties made by Sellers in Article V.

ARTICLE VII

COVENANTS

     7.1 Access to Land and Records; Due Diligence Period.

          (a) After the date of this Agreement, Sellers will afford to or obtain for the officers and authorized representatives of Buyer reasonable access to the Land (including for the purpose of permitting Buyer to perform or cause to be performed, at Buyer’s sole risk and expense, all testing, inspections and other procedures reasonably considered desirable by Buyer), the Leased Real Property, the Assets, sites, and the books and records of Sellers related to the Business, all upon reasonable notice and conducted at times agreed to by Sellers, which agreement shall not be unreasonably withheld. Without limiting the generality of the foregoing, Buyer shall have the right to conduct Phase I environmental investigations of the Land and the right to conduct Phase II environmental investigations of the Land if the results of the Phase I

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environmental investigations indicate that a Phase II investigation is necessary or desirable. In the event that Buyer concludes that a Phase II environmental investigation of the Land is necessary or desirable, Sellers will allow access to Buyer and its consultants to the Land for the purposes of conducting such an investigation. Such access shall be granted in accordance with an access agreement to be agreed upon by the parties.

          (b) Between the date of this Agreement and the Closing or the earlier termination of this Agreement, Sellers shall furnish Buyer with such additional financial and operating data and other information as to the Business as Buyer may from time to time reasonably request, whether such information is in the possession of Sellers or any of their Affiliates.

          (c) Between the date of this Agreement and the Closing or the earlier termination of this Agreement, Sellers shall use commercially reasonable efforts to cooperate with Buyer, its representatives, engineers, auditors and counsel in the preparation of any documents or other materials that may be reasonably required by any governmental agency. The parties shall cause all information obtained in connection with the negotiation of this Agreement to be treated as confidential in accordance with the provisions of Article XIII.

          (d) All access and testing shall be coordinated with Sellers, and Buyer and its agents and employees shall not enter the Land and perform inspections or meet with employees unless accompanied by a representative of Sellers. Sellers shall have the right to delay access or testing until such time that the access or testing, in the reasonable judgment of Sellers, will not materially interfere with the operations of the Business. Sellers shall have the right to require that access and testing be conducted on weekends or after hours, and shall have the right to limit access to employees to only those that are designated by Sellers.

          (e) Buyer agrees to return the Land and the Leased Real Property to its condition as of the date of this Agreement to the extent there are any alterations to the Land or the Leased Real Property attributable to its exercise of its rights pursuant to this Section 7.1, and Buyer shall indemnify and save harmless Sellers from all costs of returning the Land and the Leased Real Property to such condition. If Buyer does not promptly perform such work, Sellers shall have the right to perform, or cause to be performed, such work and to obtain reimbursement for the costs of such work (including legal and consulting fees) from Buyer, which costs shall be payable by Buyer to Sellers upon demand.

     7.2 Activities of Sellers Prior to Closing. Between the date of this Agreement and the Closing or the earlier termination of this Agreement, Sellers shall, or shall cause the Company to, as appropriate:

          (a) carry on the Business in the ordinary and usual course consistent with past practice; provided, however, that Sellers shall have no obligation to purchase any vehicles pursuant to this Section 7.2 or otherwise;

          (b) maintain the Assets in as good working order and condition as at present, ordinary wear and tear excepted;

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          (c) use commercially reasonable efforts to maintain their relationships with suppliers, customers, consultants, employees, independent contractors, government agencies, communities and others having business relations with Sellers in the operation of the Business, and promptly notify Buyer of the loss of any customer or group of customers material to the Business;

          (d) use commercially reasonable efforts to provide balance sheets and the related statements of income for the Business for each month following the date of this Agreement; and

          (e) provide all commercially reasonable assistance to Buyer to provide for an orderly transfer of the Assets and the Business from Sellers to Buyer.

     7.3 Prohibited Activities Prior to Closing. Between the date of this Agreement and the Closing or earlier termination of this Agreement, except as contemplated by this Agreement, Sellers shall not (as its relates to the Business), and shall cause the Company not to, without the prior written consent of Buyer, which consent will not be unreasonably withheld:

          (a) engage in any practice, take any action, fail to take any action or enter into any transaction which could cause any representation or warranty of Sellers in this Agreement to be untrue or result in a breach of any covenant made by Sellers in this Agreement;

          (b) breach, amend (except in the ordinary course of business) or terminate any material Assumed Lease, Permit, Material Customer Contract, Employee Contract or Other Contract;

          (c) enter into any transaction outside the ordinary course of the business of Sellers or otherwise prohibited under this Agreement;

          (d) sell, transfer, lease or otherwise dispose of any Assets, other than in the ordinary course of business; provided, however, that the foregoing restriction shall not prevent Sellers from selling scrap containers that have no net book value on Sellers’ Financial Statements;

          (e) except in the ordinary course of business, cause or, except in the ordinary course of business, permit to exist any Encumbrance, covenant, condition, restriction, assessment, easement, right of way, obligation, encroachment or liability (“Title Defect”) whatsoever with respect to the Land or the Leased Real Property;

          (f) materially change or increase any compensation payable to, or benefits made available to, any Business Employees, except to the extent required by law or in the ordinary course of business consistent with past practice;

          (g) except in the ordinary course of business, relinquish, or seek to modify or amend any substantive term of, any Permit, other than in the ordinary course of business consistent with the past practice of the Business; or

          (h) agree to do any of the foregoing.

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     7.4 Contact with Government Officials and Customers. Sellers shall use their commercially reasonable efforts to cooperate with Buyer in making contact with the appropriate governmental agencies and officials having information about or jurisdiction over Sellers, the Business, the Land, the Leased Real Property, the Assets or the obligations or rights of Sellers, including environmental and land use agencies and officials, to assist Buyer in completing its regulatory evaluation of the Business and the Assets and securing any consents necessary to transfer the Permits or in securing new permits. Buyer and Sellers shall use commercially reasonable efforts to obtain before Closing all consents necessary to transfer the Permits (or Buyer will use commercially reasonable efforts to obtain new permits for any non-transferable Permits), the Customer Contracts and the Assumed Leases to Buyer at the Closing. Buyer acknowledges and agrees that it shall not contact the Business Employees regarding the acquisition of the Business by Buyer and the treatment of such Business Employees in connection therewith, or any customers; in each case until the Closing.

     7.5 Public Announcements. Except as otherwise required by Applicable Law or the rules of the New York Stock Exchange or the Nasdaq Stock Market, the parties agree that: (a) except as provided below, no press release or other written communication shall be issued by Sellers, on the one hand, or Buyer, on the other hand, which makes reference in any way to the other party; (b) no press release or other written communication shall be issued by Sellers, on the one hand, or Buyer, on the other hand, containing information regarding this Agreement or the Transactions (including the fact that the Transactions are being discussed or the terms of the Transactions) without the prior written approval of both Sellers and Buyer, which approval may not be unreasonably withheld. The parties shall consult with each other concerning the means by which Sellers’ and the Company’s employees, customers and suppliers and others having dealings with Sellers and the Company will be informed of the Transactions. Nothing in this Section 7.5 shall restrict Buyer’s ability to contact the parties listed in Section 7.4 who are permitted to be contacted pursuant to Section 7.4 with respect to the Transactions.

     7.6 Standstill Agreement. Unless and until this Agreement is terminated pursuant to Article XII without the Closing having taken place, Sellers will not, and will cause the Company not to, directly or indirectly (through a representative, agent, employee or otherwise) solicit or accept offers for the Assets or the Business or for a merger, stock sale, consolidation or other business combination involving the Assets or the Business, or respond to inquiries from, provide or share information with, negotiate with or in any way facilitate inquiries or offers from, third parties who express or who have expressed an interest in acquiring the Assets or the Business by merger, stock sale, consolidation or other business combination.

     7.7 Supplements to Sellers’ Schedules. From time to time prior to the date five days prior to Closing, Sellers may supplement and update any of Sellers’ Disclosure Schedules delivered pursuant to this Agreement to make the information set forth therein complete and accurate, so long as such supplement or update does not disclose any event, fact or condition that, individually or in the aggregate, could result in Material Adverse Change. In the event such supplement or update discloses an event or condition that could result in Material Adverse Change, then Buyer may terminate this Agreement under Section 9.6.

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     7.8 Employees and Employee Benefits.

          (a) Effective as of the Closing Date, Buyer shall offer employment to all Business Employees who on the Closing Date are actively at work and meet Buyer’s standard hiring criteria unless Buyer notifies Sellers that it does not intend to hire one or more Business Employees at least 30 days prior to the Closing Date (each, an “Active Employee”). For purposes of this Agreement, any Business Employee who is not actively at work on the Closing Date solely because of vacation, holiday, sick leave, maternity or paternity leave, military leave, jury duty, or bereavement leave, shall be deemed an Active Employee. Each Business Employee who accepts Buyer’s offer of employment is referred to as a “Transferred Employee.”

          (b) Sellers shall retain sole responsibility for all obligations, claims, liabilities and commitments under Sellers’ Plans and compensation practices, including severance benefits, if any, payable to Business Employees as a result of the Transactions and accrued vacation benefits, if any. Sellers shall retain all liabilities and obligations to Business Employees and their eligible dependents in respect of health insurance required by the Consolidated Omnibus Budget Reconciliation Act of 1985, the Health Insurance Portability and Accountability Act of 1996 and applicable state law.

          (c) Buyer agrees to use commercially reasonable efforts to cooperate with and assist Sellers in eliminating the need for Worker Adjustment and Retraining Notification Act (the “WARN Act”) notifications by offering employment to sufficient numbers of Business Employees in accordance with the following sentence. Such offers of employment will be subject to each such Business Employee satisfying Buyer’s standard hiring criteria, including drug testing, background check and driver safety criteria. To further assist in avoiding WARN notification requirements, Buyer will retain sufficient numbers of Business Employees hired pursuant to the preceding sentence for at least 90 days following the Closing unless terminated earlier for cause. If notwithstanding Buyer’s compliance with the preceding provisions of this Section 7.8(c) WARN notification is nonetheless required, Sellers agree to provide any required notice under the WARN Act, and any similar state or non-U.S. Applicable Law, and to otherwise comply with any such applicable law with respect to any “plant closing” or “mass layoff” (as defined in the WARN Act or any similar state or non-U.S. Applicable Law) or group termination or similar event affecting Business Employees occurring prior to or as a result of the consummation of the Transactions.

          (d) All Business Employees who are employed by Buyer from and after Closing shall be given credit for their years of service with Sellers in determining their entitlement to Buyer’s severance and other length-of-service related employee benefits.

     7.9 HSR Approval. Sellers and Buyer undertake and agree to file as promptly as practicable following the execution of this Agreement all documents required under the HSR Act. Sellers and Buyer shall use commercially reasonable efforts to cooperate with each other with respect to such filing, and shall respond as promptly as reasonably practicable to any inquiries received from the FTC or the Antitrust Division for additional information or documentation and to all inquiries and requests received from any other local, state or federal governmental authority in connection therewith. Each party shall (a) subject to Applicable Laws, promptly notify the other party of any written communication to that party from the FTC,

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the Antitrust Division or any other governmental entity relating to this Agreement and, subject to Applicable Law, permit the other party to review in advance any proposed written communication to any of the foregoing relating to this Agreement; (b) to the extent permitted by Applicable Laws, not agree to participate in any substantive meeting or discussion with any governmental authority in respect of any filings, investigation or inquiry concerning this Agreement or the Transactions unless it consults with the other party in advance and, to the extent permitted by such governmental authority, gives the other party the opportunity to attend and participate thereat; and (c) to the extent permitted by Applicable Laws, furnish the other party with copies of all correspondence, filings, and communications between them and their Affiliates and their respective representatives on the one hand, and any government or regulatory authority or members or their respective staffs on the other hand, with respect to this Agreement and the Transactions.

     7.10 Termination of Contracts. Prior to the Closing, Sellers shall terminate that certain Loaned Equipment Agreement & Supply Contract with Canyon State Oil Co., Inc. for the facilities located at 1500 S. 7th Street, Phoenix, Arizona, and that certain Loaned Equipment Agreement & Supply Contract with Canyon State Oil Co., Inc. for the facilities located at Hwy 79 & Deepwell Ranch, Florence, Arizona.

     7.11 City of Phoenix Settlement. From and after the Closing, Buyer will cooperate with Sellers with respect to Sellers’ completion, at Sellers’ expense, of the improvements to the 7^th Street transfer station currently being negotiated by Sellers with the City of Phoenix.

ARTICLE VIII

CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLERS

     The obligations of Sellers to consummate the Transactions are subject to the completion, satisfaction, or at their option, waiver, on or prior to the Closing Date, of each of the following conditions.

     8.1 Representations and Warranties. The representations and warranties of Buyer contained in this Agreement shall have been true and correct on and as of the date made and shall be true and correct in all material respects on and as of the Closing Date with the same effect as though such representations and warranties had been made on and as of such date. Buyer shall have delivered to Sellers a certificate of a duly authorized officer to the foregoing effect.

     8.2 Covenants. Each and all of the terms, covenants and conditions of this Agreement to be complied with and performed by Buyer on or before the Closing Date shall have been duly complied with and performed in all material respects. Buyer shall have delivered to Sellers a certificate of a duly authorized officer to the foregoing effect.

     8.3 No Legal Prohibition. No injunction or order shall be in effect prohibiting consummation of the Transactions or which would make the consummation of the Transactions unlawful.

     8.4 No Adverse Proceeding. No Proceeding shall have been instituted and be pending before a court or any other governmental agency or body which seeks to restrain or

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prohibit any of the Transactions; provided, however, that the provisions of this Section 8.4 shall not apply if Sellers have directly or indirectly solicited or encouraged any such Proceeding.

     8.5 Deliveries. Buyer shall be prepared to make or cause to be made the deliveries described in Section 3.3 and Sections 3.4 through 3.8.

     8.6 Third Party Consents and Approvals. All materially necessary governmental, regulatory and third party consents and approvals shall have been obtained.

     8.7 Closing of Florida Transaction. The Florida Transaction shall be prepared to close simultaneously with the Closing of the Transactions.

     8.8 HSR Act. The waiting period (and any extension thereof) under the HSR Act applicable to the Transactions shall have expired or been earlier terminated by the FTC or the Antitrust Division.

     8.9 Approval of Lenders. Sellers shall have obtained all necessary approvals of the Transactions from its lenders.

     8.10 Release From Obligations. Effective as of the Closing, Sellers and their affiliates shall be released from obligations to pay any royalties or other amounts to the Cactus Landfill Sellers under the Cactus Landfill Royalty Agreement or the Cactus Landfill Purchase Agreement.

ARTICLE IX

CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER

     The obligations of Buyer to consummate the Transactions are subject to the completion, satisfaction or, at their option, waiver, on or prior to the Closing Date, of each of the following conditions.

     9.1 Representations and Warranties. Subject to Section 7.7, the representations and warranties of Sellers contained in this Agreement shall have been true and correct on and as of the date made and shall be true and correct in all material respects on and as of the Closing Date with the same effect as though such representations and warranties had been made on and as of such date. Sellers shall have delivered to Buyer a certificate of a duly authorized officer to the foregoing effect.

     9.2 Covenants. Each and all of the terms, covenants and conditions of this Agreement to be complied with and performed by Sellers on or before the Closing Date shall have been duly complied with and performed in all material respects. Sellers shall have delivered to Buyer a certificate of a duly authorized officer to the foregoing effect.

     9.3 No Legal Prohibition. No injunction or order shall be in effect prohibiting consummation of the Transactions or which would make the consummation of the Transactions unlawful.

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     9.4 No Adverse Proceeding. No Proceeding shall have been instituted and be pending before a court or any other governmental agency or body which seeks to restrain or prohibit any of the Transactions; provided, however, that the provisions of this Section 9.4 shall not apply if Buyer has directly or indirectly solicited or encouraged any such Proceeding.

     9.5 Deliveries. Sellers shall be prepared to make or cause to be made the deliveries described in Section 3.2.

     9.6 No Material Adverse Change. No Material Adverse Change shall have occurred since May 31, 2006; provided, however, that nothing disclosed in the Disclosure Schedules (without giving effect to any supplements or updates made by Sellers after the date of this Agreement) or the Sellers’ Financial Statements, individually or in the aggregate, shall be deemed to be a Material Adverse Change.

     9.7 Third Party Consents and Approvals. All materially necessary governmental, regulatory and third party consents and approvals shall have been obtained.

     9.8 Environmental Investigation Satisfactory. Buyer shall be satisfied in all respects with the results of Phase I (and Phase II, if undertaken by Buyer) environmental investigations respecting the Land; provided, however, that this condition shall be deemed satisfied if Buyer gives written notice to Sellers that Buyer objects to the results of a Phase I (or Phase II) environmental investigation and Sellers elect to and promptly complete a cure of the matters subject to the objection.

     9.9 Royalty Agreement for Cactus Landfill. Buyer shall have negotiated and entered into, effective at Closing, a new royalty agreement with the Cactus Landfill Sellers on terms and conditions satisfactory to Buyer, in its sole discretion, and the obligations to the Cactus Landfill Sellers from which Sellers are being released pursuant to Section 8.10 shall have been terminated.

     9.10 Closing of Florida Transaction. The Florida Transaction shall be prepared to close simultaneously with the Closing of the Transactions.

     9.11 HSR Act. The waiting period (and any extension thereof) under the HSR Act applicable to the Transactions shall have expired or been earlier terminated by the FTC or the Antitrust Division.

ARTICLE X

LIABILITIES AND OBLIGATIONS

     10.1 Excluded Liabilities. Except as explicitly set forth in this Agreement, Buyer shall not, by the execution and performance of this Agreement or otherwise (including under theories of successor liability), assume, become responsible for or incur, and Sellers, jointly and severally, hereby expressly agree to pay and perform, any Liability or obligation of any nature of Sellers or the Company whatsoever arising, or relating to events occurring, on or prior to the Closing Date, whether legal or equitable, or matured or contingent (collectively, the “Excluded Liabilities”), including any Liability or obligation: (a) to any Affiliate of Sellers or the

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Company; (b) to current or former employees, consultants or others for salary, bonuses, other incentive compensation or benefits arising prior to the Closing Date, (c) for Taxes which (i) arise, are assessed or become payable or due on or prior to the Closing Date, or (ii) are payable by Sellers or the Company or any of their Affiliates as a result of purchases, sales or transfers as of or prior to the Closing Date; (d) with respect to the settlement of any disputes with Top Grade; and (e) for Environmental Damages arising out of events occurring on or prior to the Closing Date. Without limiting the generality of the foregoing, all Excluded Liabilities of the Company shall be assumed by Sellers prior to the Closing pursuant to an instrument comparable to Buyer’s Assumption Agreements.

     10.2 Assumption of Obligations. Subject to the terms and conditions set forth in this Agreement, at the Closing Buyer shall assume from Sellers and the Company shall retain, as the case may be, only the Liabilities described in the remainder of this Section 10.2 (the “Assumed Liabilities”).

          (a) Buyer shall assume (or the Company shall retain) all obligations under the Customer Contracts, Employee Contracts, Assumed Leases, Permits and other contracts included within the Assets, to the extent such obligations first arise and are related to periods subsequent to the Closing (provided that such obligations do not arise as a result of actions or omissions by Sellers or the Company thereof on or prior to Closing).

          (b) Within 30 days following the Closing, Buyer will post replacement performance bonds, letters of credit and other financial assurances for the performance bonds, letters of credit and other financial assurances of Sellers set forth on Schedule 5.17, and will promptly furnish to Sellers a copy of such replacement performance bond, letter of credit or other financial assurance as it is issued. Buyer will pay Sellers interest at 10% per annum on any performance bonds, letter of credit and other financial assurances not replaced within such 30-day period until the same are replaced.

          (c) Buyer agrees to assume and perform all obligations expressly required to be assumed by Buyer pursuant to Section 3.7.

          (d) Buyer agrees to assume the liability reflected on the balance sheet as of the Closing Date with respect to any capitalized leases assumed by Buyer, and all liabilities included in the Adjustment Amount.

          (e) Buyer agrees to assume and perform all other Liabilities which Sellers designate in writing prior to the Closing and which Buyer agrees to assume.

ARTICLE XI

INDEMNIFICATION

     11.1 Survival of Representations and Warranties and Covenants.

          (a) The representations and warranties of any party contained in this Agreement and the indemnification liabilities and obligations of the parties with respect thereto shall survive the Closing for a period of one year after the Closing Date; provided, however, that

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the representations and warranties in Sections 5.8, 5.9, 5.13 and 5.19 and the indemnification liabilities and obligations of the parties with respect thereto shall survive the Closing for a period until the expiration of the applicable statute of limitations with respect thereto.

          (b) The covenants and agreements set forth in this Agreement and to be performed to any extent after the Closing Date shall survive until fully discharged and performed, and any claims for indemnification in respect of a breach of such covenants to be performed in any respect after the Closing Date may be made at any time within the applicable statute of limitations.

     11.2 Indemnification by Sellers. Sellers agree that they shall, jointly and severally, indemnify, defend (as to Third Party Claims only), protect and hold harmless Buyer, its officers, shareholders, directors, managers, divisions, subdivisions, Affiliates, subsidiaries, parent, agents, employees, successors and assigns at all times from and after the date of this Agreement from and against all liabilities, claims, damages, actions, suits, Proceedings, demands, assessments, adjustments, penalties, losses, costs and expenses whatsoever (including court costs, reasonable attorneys’ and expert witness fees and expenses and expenses of investigation) (collectively, “Liabilities”), whether equitable or legal, matured or contingent, known or unknown, foreseen or unforeseen, ordinary or extraordinary, patent or latent, whether arising out of occurrences prior to, at or after the date of this Agreement, incurred as a result of or incident to: (a) any breach of, or misrepresentation in, the representations and warranties by Sellers set forth in this Agreement, or in the Schedules, Exhibits, certificates, documents or agreements attached to this Agreement or delivered pursuant hereto by Sellers; (b) breach of any agreement or covenant on the part of Sellers made in this Agreement, or in the Schedules, Exhibits, certificates, documents or agreements attached to this Agreement or delivered pursuant hereto by Sellers; (c) any Excluded Liability; or (d) any Excluded Asset. Notwithstanding any other provision set forth in this Agreement, indemnifiable claims set forth in (a) through (d) of this Section 11.2 shall include any claim by a third Person that, if true, would mean that a condition for indemnification set forth in subsections (a) through (d) of this Section 11.2 had been satisfied.

     11.3 Indemnification by Buyer. Buyer agrees that it shall indemnify, defend (as to Third Party Claims only), protect and hold harmless Sellers and their respective officers, shareholders, directors, managers, divisions, subdivisions, Affiliates, subsidiaries, parent, agents, employees, successors and assigns at all times from and after the Closing Date from and against all Liabilities, whether equitable or legal, matured or contingent, known or unknown, foreseen or unforeseen, ordinary or extraordinary, patent or latent, incurred by Sellers as a result of or incident to: (a) any breach of, or misrepresentation in, the representations and warranties of Buyer set forth in this Agreement, or in the Schedules, Exhibits, certificates, documents or agreements attached to this Agreement or delivered pursuant hereto by Buyer; (b) breach of any agreement or covenant on the part of Buyer made in this Agreement, or in the Schedules, Exhibits, certificates, documents or agreements attached to this Agreement or delivered pursuant hereto by Buyer; and (c) any Assumed Liability. Notwithstanding any other provision set forth in this Agreement, indemnifiable claims set forth in (a) through (d) of this Section 11.3 shall include any claim by a third Person that, if true, would mean that a condition for indemnification set forth in subsections (a) through (c) of this Section 11.3 had been satisfied.

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     11.4 Limitation on Liability. The indemnification obligations set forth in Section 11.2(a) and 11.3(a) shall (a) apply only if a Closing occurs, (b) apply only after the aggregate amount of claims for indemnification from the Indemnifying Party under this Agreement exceeds an aggregate of $841,269 (the “Deductible”), and thereafter the Indemnifying Party shall be liable for only those indemnification obligations in excess of such Deductible; provided, however, that only claims, or series of related claims, equal to or in excess of $42,063 shall apply toward the Deductible; and (c) be limited to an aggregate amount not to exceed 35% of the aggregate Purchase Price actually paid under this Agreement by Buyer. Notwithstanding the foregoing, however, Tax Claims and Fraud Claims shall not be limited by subsection (b) or (c) of this Section 11.4.

     11.5 Indemnification Procedure Between Buyer and Sellers. Upon the occurrence of any claim for which indemnification is believed to be due under this Agreement, the Indemnified Party shall provide notice of such claim to the Indemnifying Party, stating in general terms the circumstances giving rise to the claim, specifying the amount of the claim (or an estimate thereof) and making a request for any payment then believed due (subject to the limitations in this Agreement). Upon receipt of any such notice, both the Indemnified Party and the Indemnifying Party shall use all reasonable efforts to cooperate and arrive at a mutually acceptable resolution of such dispute within the next 30 days. If a resolution is not reached within the 30-day period, either party may commence the dispute resolution procedures set forth in Article XVI. If the Indemnifying Party does not respond within such 30-day period, the claim for indemnification shall be deemed accepted by the Indemnifying Party. If all or a portion of such claim amount is owed to the Indemnified Party, the Indemnifying Party shall (subject to the terms of Section 11.4) within 10 days of such determination, pay the Indemnified Party such amount owed in cash.

     11.6 Procedure for Indemnification with Respect to Third-Party Claims.

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

          (b) Any Indemnifying Party will have the right to assume the defense of any claim or any litigation resulting therefrom, provided that (i) the counsel for the Indemnifying Party who shall conduct the defense of such claim or litigation shall be reasonably satisfactory to the Indemnified Party and (ii) the Indemnified Party may participate in such defense at such Indemnified Party’s expense. Except with the prior written consent of the Indemnified Party, no Indemnifying Party, in the defense of any such claim or litigation, shall consent to entry of any judgment or order, interim or otherwise, or enter into any settlement that provides for injunctive or other nonmonetary relief affecting the Indemnified Party or that does not include as an unconditional term thereof the giving by each claimant or plaintiff to such Indemnified Party of a

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release from all liability with respect to such claim or litigation. In the event that the Indemnified Party shall in good faith determine that the conduct of the defense of any claim subject to indemnification under this Agreement or any proposed settlement of any such claim by the Indemnifying Party might be expected to affect adversely the Indemnified Party, or that the Indemnified Party may have available to it one or more defenses or counterclaims that are inconsistent with one or more of those that may be available to the Indemnifying Party in respect of such claim or any litigation relating thereto, the Indemnified Party shall have the right at all times to take over and assume control over the defense, settlement, negotiations or litigation relating to any such claim at the sole cost of the Indemnifying Party, provided that if the Indemnified Party does so take over and assume control, the Indemnified Party shall not settle such claim or litigation without the written consent of the Indemnifying Party, such consent not to be unreasonably withheld or delayed. In the event that the Indemnifying Party does not accept the defense of any matter as above provided, the Indemnified Party shall have the full right to defend against any such claim or demand and shall be entitled to settle or agree to pay in full such claim or demand. In any event, the Indemnifying Party and the Indemnified Party shall cooperate in the defense of any claim or litigation subject to this Article XI and the records and personnel of each shall be reasonably available to the other with respect to such defense.

     11.7 Tax Treatment of Payment. Unless otherwise required by law or unless Sellers and Buyer otherwise mutually agree, any payment made under this Agreement (including Article XI) shall be treated as an adjustment to the Purchase Price.

     11.8 Exclusive Remedy. With the exception of Fraud Claims and other than equitable or injunctive relief or claims for specific performance, as applicable, the indemnification provided in this Article XI is the exclusive remedy of the parties with respect to this Agreement, the Schedules and Exhibits, and the certificates, documents or other agreements attached to this Agreement or delivered by a party pursuant hereto.

ARTICLE XII

TERMINATION OF AGREEMENT

     12.1 Termination by Buyer. Buyer may, by written notice in the manner provided in Section 15.6 on or before the Closing Date, terminate this Agreement in the event of a material breach by Sellers (a) of the representations and warranties of Sellers or (b) in the observance, or in the due and timely performance of any of the covenants or agreements contained in this Agreement on their part to be performed, and such breach shall not have been cured, after written notice thereof, on or before the Closing Date. In addition, Buyer, by notice in the manner provided in Section 15.6, may terminate this Agreement if (i) any of the conditions set forth in Article IX shall become incapable of fulfillment (other than due to acts or omissions of Buyer or its Affiliates) on or before the Closing Date and shall not have been waived by Buyer or (ii) in the circumstances described in Section 3.5.

     12.2 Termination by Sellers. Sellers may, by written notice in the manner provided in Section 15.6 on or before the Closing Date, terminate this Agreement in the event of a material breach by Buyer (a) of the representations and warranties of Buyer or (b) in the observance, or in the due and timely performance of any of the covenants or agreements contained in this

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Agreement on its part to be performed, and such breach shall not have been cured, after written notice thereof, on or before the Closing Date. In addition, Sellers, by notice in the manner provided in Section 15.6, may terminate this Agreement if any of the conditions in Article VIII shall become incapable of fulfillment (other than due to acts or omissions of Sellers or their Affiliates) by or before the Closing Date and shall not have been waived by Sellers.

     12.3 Termination Date. This Agreement may be terminated by either party by notice to the other party if the Transactions shall not have been consummated by 5:00 p.m. (MST) on October 31, 2006 (other than as a result of a breach of this Agreement by the party giving such notice or by its Affiliates), unless such date shall be extended by the mutual written consent of Sellers and Buyer.

     12.4 Effect of Termination. If this Agreement is validly terminated pursuant to Section 12.1, 12.2 or 12.3, this Agreement shall thereafter become null and void, and there shall be no liability or obligation on the part of any of the parties (or any other their respective officers, director, employees, agents or other representatives or Affiliates), except that (a) the provisions of Section 7.1(e), Article XIII, Section 15.6 and Article XVI shall survive such termination, (b) such termination shall not relieve any party of any liability for any willful material breach of this Agreement, and (c) such termination shall not relieve Buyer of its obligations under Section 12.5, if applicable.

     12.5 Certain Consequences of Termination. If this Agreement is terminated by Sellers because the condition set forth in Section 8.9 was not satisfied, then Sellers shall promptly pay Buyer $2,500,000 as a termination fee, which shall be Buyer’s sole and exclusive remedy on account of such termination.

ARTICLE XIII

NONDISCLOSURE AND NONSOLICITATION

     13.1 Nondisclosure by Buyer. Buyer recognizes and acknowledges that it has in the past, currently has, and prior to the Closing Date, will have access to confidential information of Sellers and the Company, including lists of customers, operational policies, and pricing and cost policies that are valuable, special and unique assets of Sellers and the Company. Buyer agrees that it will not, except as may be required by law or valid legal process, disclose such confidential information to any Person for any purpose or reason whatsoever, prior to the Closing Date, except to authorized representatives of Sellers, unless such information is or becomes known to the public generally through no fault of Buyer. In connection with the foregoing, the parties acknowledge and agree that they are competitors in the waste collection, hauling, and disposal business in the markets serviced by Sellers and the Business, and that nothing contained herein shall be interpreted to preclude Buyer from providing waste collection, hauling, or disposal services in such markets or elsewhere. The provisions of this Section 13.1 shall apply at all times prior to the Closing Date and for a period of one year following the first to occur of (i) the Closing Date and (ii) termination of this Agreement without a Closing having occurred.

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     13.2 Confidential Information. Neither Sellers (nor any of their respective Affiliates) shall at any time subsequent to the Closing, except as explicitly requested by Buyer or as otherwise provided in this Agreement, use for any purpose, disclose to any Person, or keep or make copies of any records and files containing, any confidential information relating primarily to the Business, the Assets or the Assumed Liabilities, all such information being deemed to be transferred to Buyer under this Agreement. For purposes of this Agreement, “confidential information” shall mean information relating primarily to the Business, the Assets or the Assumed Liabilities, including all customer and vendor lists and related information, all information concerning the Business’ processes, products, costs, prices, sales, marketing and distribution methods, properties and assets, Assumed Liabilities, and other information not previously disclosed to the public directly by Sellers or the Company. The foregoing provisions shall not apply to any information which is or relates primarily to an Excluded Asset or which is or relates primarily to the Excluded Liabilities, or which relates to Tax matters of Sellers (but not of the Company). Both Sellers and Buyer shall maintain confidential information that relates to both Assumed Liabilities and Excluded Liabilities in duplicate. If at any time after the Closing, Sellers should discover that they are in possession of any records and files containing the confidential information of Buyer, then the party making such discovery shall immediately turn such records and files over to Buyer, which shall upon request make available to the surrendering party any information contained therein which is not confidential information. Sellers agree that they will not assert a waiver of loss of confidential or privileged status of the information based upon such possession or discovery.

     13.3 Non-Solicitation. Sellers agree that for a period of five years following the Closing Date, they will not, and will cause their Affiliates not to, solicit or accept business from any customer of the Business during the 12 month period ending on the Closing Date in the area serviced by the Business during such 12 month period.

     13.4 Equitable Relief for Violations. The parties acknowledge that an irreparable injury may result to the non-violating party and its Business in the event of a breach by the violating party of any provision in this Article XIII. The parties also acknowledge and agree that the damages or injuries that a non-violating party sustains as a result of such a breach are difficult to ascertain and money damages alone may not be an adequate remedy to a non-violating party. The parties therefore expressly agree that if a controversy arises concerning the rights or obligations of a party under this Article XIII, such rights or obligations shall be enforceable by a court decree of specific performance and a non-violating party shall also be entitled to any injunctive relief from the court pursuant to Article XVI necessary to prevent or restrain any such breach. Such relief shall be granted without the necessity of a showing of irreparable harm and without the posting of a bond or other security. Such relief, however, shall be cumulative and non-exclusive and shall be in addition to any other remedy to which the parties may be entitled in accordance with this Agreement.

ARTICLE XIV

TAX MATTERS

     14.1 Transaction Taxes. Buyer shall be responsible for and shall remit to Seller at Closing all sales, transfer, conveyance or other Taxes associated with the transfer of the Assets to

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Buyer pursuant to this Agreement. Seller shall promptly remit such Taxes to the applicable taxing authority.

ARTICLE XV

GENERAL

     15.1 Assignment; Binding Effect; Amendment. This Agreement and the rights of the parties under it may not be assigned (except by operation of law) without the prior consent of the others; provided, however, that Buyer may assign any and all of its rights, interests and obligations under this Agreement as security for obligations to its lenders. This Agreement shall be binding upon and shall inure to the benefit of the parties and their successors and permitted assigns. This Agreement may be modified or amended only by a written instrument executed by all parties.

     15.2 Entire Agreement. This Agreement, together with its exhibits and schedules, is the final, complete and exclusive statement and expression of the agreement among the parties with relation to the subject matter of this Agreement. This Agreement supersedes, and cannot be varied, contradicted or supplemented by evidence of, any prior or contemporaneous discussions, correspondence, or oral or written agreements of any kind.

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

     15.4 No Brokers. Sellers represent and warrant to Buyer, and Buyer represents and warrants to Sellers, that the warranting party has had no dealings with any broker or agent so as to entitle such broker or agent to a commission or fee in connection with the Transactions. If for any reason a commission or fee shall become due, the party dealing with such agent or broker shall pay such commission or fee and agrees to indemnify and save harmless each of the other parties from all claims for such commission or fee and from all attorneys’ fees, litigation costs and other expenses relating to such claim.

     15.5 Expenses of Transaction. Except as otherwise provided in this Agreement, whether or not the Transactions shall be consummated:

          (a) Buyer will pay the fees, expenses and disbursements of Buyer and its agents, representatives, accountants and counsel incurred in connection with the subject matter of this Agreement and any amendments to it and all other costs and expenses incurred in the performance and compliance with all conditions to be performed by Buyer under this Agreement;

          (b) Sellers will pay the fees, expenses and disbursements of Sellers and their respective agents, representatives, accountants and counsel incurred in connection with the subject matter of this Agreement and any amendments to it and all other costs and expenses incurred in the performance and compliance with all conditions to be performed by Sellers under this Agreement; and

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          (c) Nothing in this Section 15.5 shall limit the rights of a non-breaching party to recover damages, including fees and expenses if so awarded, in connection with any claim against a party in breach under this Agreement.

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

(a) If to Buyer, addressed to it at:

c/o Allied Waste Industries, Inc.
15880 N. Greenway-Hayden Loop
Suite 100
Scottsdale, Arizona 85260
Attn: Nicholas Skaff

with a copy to:

c/o Allied Waste Industries, Inc.
15880 N. Greenway-Hayden Loop
Suite 100
Scottsdale, Arizona 85260
Attn: Steven M. Helm, Executive Vice President and General Counsel

and a copy to:

Fennemore Craig, P.C.
3003 N. Central Avenue, Suite 2600
Phoenix, Arizona 85012
Attn: Karen C. McConnell

(b) If to Sellers, addressed to them at:

c/o Waste Services, Inc.
1122 International Boulevard, Suite 601
Burlington, Ontario
L7L 6Z8 Canada
Attn: David Sutherland-Yoest, Chairman and Chief Executive Officer

with a copy to:

Waste Services, Inc.
1122 International Boulevard, Suite 601
Burlington, Ontario
L7L 6Z8 Canada
Attn: Ivan R. Cairns, Executive Vice President and General Counsel

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Notice shall be deemed given and effective the day personally delivered, the day after being sent by overnight courier, subject to signature verification, and three Business Days after the deposit in the U.S. mail of a writing addressed as above and sent first class mail, registered or certified, return receipt requested. Any party may change the address for notice by notifying the other parties of such change in accordance with this Section 15.6. Notwithstanding the foregoing, if to Buyer, copies of notices and other communications regarding title and survey matters shall also be provided to Virginia M. Perry, Fennemore Craig, P.C., 3003 N. Central Avenue, Suite 2600, Phoenix, Arizona 85012.

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

     15.8 Captions. The headings of this Agreement are inserted for convenience only, shall not constitute a part of this Agreement or be used to construe or interpret any of its provisions.

     15.9 No Third Party Beneficiaries. Except for the provisions of Article XI relating to indemnified parties, nothing contained in this Agreement is intended or shall confer upon any other Person, including any employee or former employee of any Seller, any legal or equitable right, benefit or remedy of any nature whatsoever, including any rights of employment for any specified period, under or by reason of this Agreement.

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

     15.11 Construction. The parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement. Any reference to any federal, state, local or foreign statute shall be deemed to refer to such statute as amended and to all rules and regulations promulgated thereunder, unless the context requires otherwise. The word “include” or “including” means include or including, without limitation. All references in this Agreement to Articles, Sections, Exhibits and Schedules shall be deemed references to Articles and Sections of, and Exhibits and Schedules to, this Agreement unless the context shall otherwise require.

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ARTICLE XVI

DISPUTE RESOLUTION

     16.1 General. Except with respect to disputes regarding the Actual Adjustment Amount (which shall be governed by Section 2.2), the parties agree that any disputes arising out of or related in any way to this Agreement, including a breach of this Agreement, shall be brought exclusively in the state or federal courts located in Wilmington, Delaware. By execution and delivery of this Agreement, with respect to any dispute, each of the parties knowingly, voluntarily and irrevocably: (a) consents, for itself and in respect of its property, to the exclusive jurisdiction of these courts; (b) waives any immunity or objection, including any objection to personal jurisdiction or the laying of venue or based on the grounds of forum non conveniens, which it may have from or to the bringing of the dispute in such jurisdiction; (c) waives any personal service of any summons, complaint or other process that may be made by any other means permitted by the State of Delaware; (d) waives any right to trial by jury; (e) agrees that any such dispute will be decided by court trial without a jury; (f) understands that it is giving up valuable legal rights under this provision, including the right to trial by jury, and that it voluntarily and knowingly waives those rights; and (g) agrees that any party to this Agreement may file an original counterpart or a copy of this Section 16.1 with any court as written evidence of the consents, waivers and agreements of the parties set forth in this Section 16.1.

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

     16.3 Attorneys’ Fees. Should any litigation be commenced under this Agreement, the successful party in such litigation shall be entitled to recover, in addition to such other relief as the court may award, its reasonable attorneys’ fees, expert witness fees, litigation related expenses, and court or other costs incurred in such litigation or proceeding. For purposes of this clause, the term “successful party” means the net winner of the dispute, taking into account the claims pursued, the claims on which the pursuing party was successful, the amount of money sought, the amount of money awarded, and offsets or counterclaims pursued (successfully or unsuccessfully) by the other party. If a written settlement offer is rejected and the judgment or award finally obtained is equal to or more favorable to the offeror than an offer made in writing to settle, the offeror is deemed to be the successful party from the date of the offer forward.

[SIGNATURES ON NEXT PAGE]

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     IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.

BUYER: Allied Waste Transfer Services of Arizona, LLC
By:	/s/ Nicholas A. Skaff
	Its: Authorized Officer
SELLERS: Waste Services, Inc.
By:	/s/ Ivan R. Cairns
	Its: Executive Vice President and General
	Counsel
Waste Services of Arizona, Inc.
By:	/s/ Ivan R. Cairns
	Its: Vice President

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LIST OF EXHIBITS AND SCHEDULES

Exhibit A	Sellers and Operations to be Sold
Exhibit B-1	Land
Exhibit B-2	Leased Real Property
Exhibit C	Definitions
Exhibit D	Retention Bonus Agreement
Schedule 1.1(b)	Permits
Schedule 1.1(c)	Equipment
Schedule 1.1(d)	Rolling Stock
Schedule 1.1(f)	Inventory
Schedule 1.1(g)	Business Names
Schedule 1.2	Excluded Assets
Schedule 5.3	Permits
Schedule 5.4(a)	Totality of Assets
Schedule 5.4(b)	Assumed Leases
Schedule 5.5(b)	Real Property Disclosure
Schedule 5.6	Contracts
Schedule 5.7	Employees; Exceptions to “at will” Employment
Schedule 5.8(a)	Compliance with Law
Schedule 5.8(b)	Conflicts
Schedule 5.8(c)	Required Consents
Schedule 5.9	Taxes
Schedule 5.10	Litigation
Schedule 5.11	Financial Statements
Schedule 5.12	Conduct of Business
Schedule 5.13(a)	Hazardous Materials
Schedule 5.13(b)	Notices Relating to the Environment
Schedule 5.13(c)	List of Disposal Sites
Schedule 5.16	Affiliate Relationships
Schedule 5.17	Performance Bonds; Letters of Credit; Financial Assurances
Schedule 5.18	Employment and Labor Matters

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EXHIBIT A
SELLERS AND OPERATIONS TO BE SOLD

Seller	Operations to be Sold
Waste Services of Arizona, Inc.	Downtown Transfer Station, Phoenix, Arizona Arizona Transfer Station, Mesa, Arizona Hauling Operations, Arizona
Waste Services, Inc.	Membership Interests of Cactus Waste Systems, LLC, which owns and operates Cactus Landfill

A-1

EXHIBIT B-1
OWNED REAL PROPERTY

1.	Cactus Landfill:	Pinal County, Arizona
	Purchase Date:	September 22, 2003
	Purchase Price:	$1,207,560
	Owners Title Policy:	Cactus Waste Systems, LLC Policy No. 27-31-92-265757 Issued by: Fidelity National Amount: $1,207,560

     West half of Section 28; and the west half of Section 33, all within Township 7 South and Range 10 East of the Gila and Salt River Base and Meridian, Pinal County, Arizona and Lots three (3) and four (4); and the South half of Northwest Quarter of Section 4, Township 8 South of Range 10 East of the Gila and Salt River Base and Meridian, Pinal County, Arizona. (Southeast Regional Landfill).

2.	Mesa Transfer Station:	218 W. Hampton, Ste 1, Mesa, Arizona
	Purchase Date:	August 31, 2004
	Purchase Price:	$430,010
	Owners Title Policy:	Cactus Waste Systems, LLC Policy No. 286277 Issued by: Transnational Amount: $400,000

A parcel of land known as the Southwest corner of Section 36, Township 1 South, Range 7 East of the Gila and Salt River Base and Meridian, Maricopa County, Arizona and an easement for drainage as set forth in Reciprocal Drainage Easement dated July 31, 2003. (Mesa Transfer Station).

3. Lots 112-33-043 and 044 at back of Hail property recently purchased for $85,000. (505 and 509 East Yuma Street).

B-1

EXHIBIT B-2
LEASED REAL PROPERTY

1. Lease agreement dated May 5, 2004, between Capital Property Resources, LLC and Waste Services of Arizona, Inc., guaranteed by Waste Services, Inc. and Waste Services (CA) Inc.

Property:	1500 S. 7th Street, Phoenix, Arizona
Deposit:	$120,000
Term:	to May 4, 2012 — 180 day advance renewal notice

2. Month to month lease of premises at 2501 West Houston Street, Apache Junction, Arizona with Jerry Nickel & Laura Nickel.

3. Month to month lease at 2915 West Pima, Arizona for container storage.

B-2

EXHIBIT C
DEFINITIONS

     “Accounts Receivable” means all accounts receivable of Sellers and the Company as of the Closing Date arising from the operation of the Business.

     “Active Employee” has the meaning specified in Section 7.8(a).

     “Actual Adjustment Amount” has the meaning specified in Section 2.2(a)(ii).

     “Adjustment Amount” has the meaning specified in Section 2.2(a)(i).

     “Affiliate” means, with respect to any specified Person, a Person controlled by, controlling or under common control with such Person.

     “Affiliated Group” means an affiliated group as defined in Code Section 1504(a) or any similar group defined under a similar provision of state or local Tax law.

     “Agreement” has the meaning specified in the introductory paragraph of the Agreement.

     “Ancillary Agreements” means the Deeds, the Bill of Sale, Buyer’s Assumption Agreements, the Assignment, Assumption and Consent to Leased Land and the other documents and agreements delivered by the parties pursuant to the terms of this Agreement.

     “Antitrust Division” means the Antitrust Division of the United States Department of Justice.

     “Applicable Laws” means all federal, state and local statutes, laws, rules, regulations, orders, ordinances, permits (including zoning restrictions and land use requirements and Environmental Laws and regulations) and licenses and all administrative and judicial judgments, rulings, decisions and orders applicable to Sellers, the Company, Buyer, the Assets or the Business.

     “Area” has the meaning specified in Recital A.

     “Assets” has the meaning specified in Section 1.1.

     “Assignment, Assumption and Consent to Leased Land” means an assignment, in form and substance reasonably satisfactory to Buyer, for each parcel of Leased Real Property of all of Sellers’ rights, title and interest under each the real estate lease with respect thereto, together with the consent of the landlord to such assignment if required by the applicable lease or by law.

     “Assumed Contracts” has the meaning specified in Section 1.1(h).

     “Assumed Leases” has the meaning specified in Section 5.4(b).

     “Assumed Liabilities” has the meaning specified in Section 10.2.

     “Balance Sheet Date” has the meaning specified in Section 5.11.

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     “Bill of Sale” means a General Conveyance, Assignment and Bill of Sale in form and substance reasonably satisfactory to Buyer and Sellers, providing for the conveyance, sale, transfer and assignment to Buyer of all of the Assets (other than the Land and the Assets held and retained by the Company).

     “Blanket Liens” shall have the meaning specified in Section 4.4.

     “Business” has the meaning specified in Recital A.

     “Business Day” means any day that is not a Saturday, a Sunday or other day in which banks are authorized or required by law to be closed in Phoenix, Arizona.

     “Business Employees” means all employees of Sellers or their Affiliates employed in the Business.

     “Business Names” means names and the right to use such names and all similar names in the state(s) listed on Schedule 1.1(g).

     “Buyer” has the meaning specified in the introductory paragraph of the Agreement.

     “Buyer’s Assumption Agreements” means assumption agreements in form and substance reasonably satisfactory to Buyer and Sellers, providing for the assumption by Buyer of the Assumed Liabilities.

     “Cactus Landfill Sellers” means Mark Cooley, Fred Ferreira, Steven D. Ferreira, Kristin L. Ferreira, Michele O. Miller, Robert H. Steelhammer, and LJM Interests, Ltd. (or their predecessors).

     “Cactus Landfill Purchase Agreement” means the Purchase Agreement dated July 3, 2003, as amended, among Waste Services, Inc., Capital Environmental Resource, Inc. and the Cactus Landfill Sellers.

     “Cactus Landfill Royalty Agreement” means the Royalty Agreement dated July 3, 2003, as amended, among the Company, Waste Services, Inc., Capital Environmental Resource, Inc., and the Cactus Landfill Sellers (or their predecessors).

     “CERCLA” means the Comprehensive Environmental Response, Compensation and Liability Act of 1980.

     “Closing” and “Closing Date” have the meanings specified in Section 3.1(a).

     “Code” means the Internal Revenue Code of 1986.

     “Company” has the meaning specified in Recital A.

     “Customer Contracts” means all contractual rights of Sellers or the Company with Sellers’ customers or the Company’s customers (whether oral or in writing) exclusively relating to the Business.

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     “Deductible” has the meaning specified in Section 11.4.

     “Deed” means a special warranty deed.

     “Disclosure Schedules” means the schedules to the specific Sections of the Agreement delivered by Sellers to Buyer, as supplemented pursuant to Section 7.7.

     “Employee Contracts” means the employment contracts that apply to Business Employees.

     “Encumbrances” means liens, security interests, encumbrances, adverse claims, leases, including operating leases, rights of repurchase or purchase, rights of first refusal, pledges, voting trusts, equities and other restrictions, limitations or conditions on transfer of any nature whatsoever.

     “Environmental Damages” means obligations to pay the amount of any judgment or settlement, the cost of complying with any settlement, judgment or order for injunctive or other equitable relief, the cost of compliance or corrective action in response to any notice, demand or request from any federal, state or local governmental or regulatory authority, including a notice inviting comment, the amount of any civil penalty or criminal fine, and any court costs and amounts for attorney’s fees, fees for witnesses and experts, and costs of investigation and preparation for defense of any notice, claim or proceeding, regardless of whether such proceeding is threatened, pending or completed, that may be or have been asserted against or imposed upon Sellers, the Company, or the Land and arise out of: (a) failure of Sellers or the Company to comply at any time with all Environmental Laws; (b) presence of any Hazardous Materials on, in, under, at, migrating or threatening to migrate from, or in any way affecting the Land at any time; (c) identification of Sellers or the Company as potentially responsible parties under CERCLA or as a Person responsible for damages under any Environmental Law; or (d) any and all claims for injury or damage to Persons or property arising out of exposure to Hazardous Materials originating at the Land or result from operation thereof or located at the Land.

     “Environmental Laws” means all Applicable Laws relating to pollution or protection of human health or the environment (including ambient air, surface water, ground water, land surface or subsurface strata), including laws and regulations relating to workplace or worker safety and health or emissions, discharges, Releases or threatened Releases of Hazardous Materials or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials.

     “Equipment” means all machinery, equipment, including containers, used or held for use principally in connection with the Business.

     “Estimated Adjustment Amount” has the meaning specified in Section 2.2(b)(ii).

     “Estoppel Certificate” means an estoppel certificate from the landlord of any Leased Real Property, in form and substance reasonably acceptable to Buyer, certifying as to matters reasonably requested by Buyer.

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     “Excluded Assets” has the meaning specified in Section 1.2.

     “Excluded Liabilities” has the meaning specified in Section 10.1.

     “Florida Transaction” means the purchase by certain Affiliates of Sellers of the South Florida transfer station, recycling operation and hauling operation of certain Affiliates of Buyer pursuant to an Asset Purchase Agreement of even date with the Agreement.

     “Fraud Claims” means indemnity claims based upon a willful, fraudulent or intentional misrepresentation of any party contained this Agreement, or in the Schedules, Exhibits, certificates, documents or agreements attached to this Agreement or delivered pursuant hereto.

     “FTC” means the United States Federal Trade Commission.

     “GAAP” means United States generally accepted accounting principles applied on a consistent basis.

     “Hazardous Materials” means any chemicals, pollutants, contaminants, wastes and toxic substances, including: (a) the presence of which requires reporting, investigation, removal or remediation under any Environmental Law; (b) that is defined as a “hazardous waste,” “hazardous substance,” “pollutant” or “contaminant” under any Environmental Law; (c) that is toxic, explosive, corrosive, flammable, ignitable, infectious, radioactive, reactive, carcinogenic, mutagenic or otherwise hazardous and is regulated as such under any Environmental Law; (d) the presence of which poses a hazard to the health or safety of Persons; or (e) that contains gasoline or any other petroleum product or byproduct, polychlorinated biphenyls, asbestos and urea formaldehyde.

     “HSR Act” means the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended.

     “Indemnified Party” means a party seeking indemnification under Article XI.

     “Indemnifying Party” means a party from whom indemnification is sought under Article XI.

     “Inventory” means all inventory of supplies, fuel, parts, tires, accessories and other tangible assets of every kind, nature and description (and interests in any of the foregoing) used, or held for use, principally in connection with the Business.

     “Knowledge”, whether capitalized or not, of Sellers means the actual knowledge of the following persons, without inquiry: Mark Pytosh, Mark Cooley, Robert Berres and Shawn McCash.

     “Land” has the meaning specified in Recital C.

     “Leased Real Property” means all rights as lessee or tenant in respect of all real property leased by any Seller as more particularly described on Exhibit B, together with all rights and interests relating or appurtenant thereto and all buildings, structures, fixtures and other fixed

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assets or improvements of every nature located on or annexed, attached or affixed, constructively or actually, thereto.

     “Liabilities” has the meaning specified in Section 11.2.

     “Material Adverse Change” means a material adverse change in the business, financial condition, and results of operations of the Business, taken as a whole.

     “Material Customer Contracts” has the meaning specified in Section 5.6(a).

     “Membership Interests” has the meaning specified in Recital B.

     “Neutral Auditor” has the meaning specified in Section 2.2(b)(iii).

     “Net Working Capital” has the meaning specified in Section 2.2(a)(ii).

     “Other Contracts” has the meaning specified in Section 5.6(a).

     “Permits” means all permits, filings, notices of intent, exemptions, licenses, authorizations, registrations, franchises, consents, approvals and related applications of every kind held by a Seller or the Company in connection with the Business from or with any federal, state, local or foreign government or regulatory authorities or industrial bodies, including all FCC radio licenses or call signs.

     “Permitted Exceptions” means: (a) zoning ordinances and regulations which do not materially adversely affect Buyer’s use or marketability of the Land for its current uses; (b) real estate taxes and assessments, both general and special, which are a lien but are not yet due and payable at the Closing Date; and (c) easements, Encumbrances, covenants, conditions, reservations and restrictions of record, if any, as have been approved in writing by Buyer before the Closing Date.

     “Person” means any individual, firm, partnership, association, trust, corporation, joint venture, unincorporated organization, limited liability company, governmental body or other entity.

     “Pre-Closing Period” means any Tax period or portion thereof ending on or before the Closing Date (including the portion of any Straddle Period ending on the Closing Date).

     “Proceedings” means any claim, investigation, litigation, action, suit or proceeding, formal arbitration, informal arbitration or mediation, administrative, judicial or otherwise.

     “Purchase Price” has the meaning specified in Section 2.1.

     “Release” means any “release” as defined in CERCLA or in any Environmental Law.

     “Required Consents” has the meaning specified in Section 5.8(b)(iii).

     “Retained IP” has the meaning specified in Section 1.1(g).

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     “Retention Bonus Agreements” has the meaning specified in Section 3.10.

     “Rights” means the intangible assets identified in Schedule 1.1(g).

     “Rolling Stock” means all of the motor vehicles used or held for use principally in connection with the Business and all attachments, accessories and materials handling equipment now located in or on such motor vehicles, including all radios and the radio base station, if any.

     “Sellers” has the meaning specified in the introductory paragraph of the Agreement.

     “Sellers’ Financial Statements” has the meaning specified in Section 5.11.

     “Stay-On Bonuses” has the meaning specified in Section 3.10.

     “Straddle Period” means any Tax period beginning before and ending after the Closing Date.

     “Survey” has the meaning specified in Section 3.6.

     “Surveyor” means a surveyor in Arizona acceptable to Sellers and Buyer.

     “Tax” or “Taxes” means any federal, state, local, foreign, and other income, gross receipts, sales, use, ad valorem, transfer, franchise, real property, profits, payroll, withholding, unemployment, excise, customs, duties and other taxes, fees, assessments and charges of any kind whatsoever, together with any interest and any penalties and additions to tax with respect thereto.

     “Tax Claims” means indemnity claims made in respect of Taxes.

     “Tax Returns” means any report, statement, form, return or other document or information required to be supplied to a taxing authority in connection with Taxes.

     “Third Party Claim” has the meaning specified in Section 11.6(a).

     “Title Commitment” means a preliminary title commitment in respect of each parcel comprising the Land.

     “Title Company” means First American Title Insurance Company.

     “Title Defect” has the meaning specified in Section 7.3(e).

     “Transactions” means the transactions contemplated by this Agreement.

     “Transferred Employee” has the meaning specified in Section 7.8(a).

     “Unpermitted Exception” means any defect in the title of any of the Land or any other matter unacceptable to Buyer in Buyer’s reasonable discretion, other than Permitted Exceptions.

     “WARN Act” has the meaning specified in Section 7.8(c).

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EXHIBIT D
RETENTION BONUS AGREEMENT

     To provide an incentive to you to continue in your current position for at least 90 days after the Arizona operations of Waste Services, Inc. and/or its subsidiaries (collectively, “Waste Services”), are sold to a third party (the “Purchaser”), Waste Services will cause the Purchaser to pay you, ___(“Employee”), a retention bonus in the amount of $___on the 91^st day following the closing of the acquisition (the “Payment Date”), provided:

     1. You do not resign from your current position, you accept a similar position with the Purchaser, and you continue to faithfully perform the responsibilities of your position, from the date hereof through the Payment Date;

2. You are not discharged for “cause” prior to the Payment Date;

     3. The Purchaser does, in fact, complete its acquisition of the Maricopa County, Arizona operations of Waste Services at which you are primarily employed on or before ___, 2006; and

     4. You do not disclose the existence of this Agreement or its terms to anyone other than your personal advisors (provided they are bound to keep such terms confidential).

     For purposes of this agreement, a discharge for “cause” shall be a termination of your employment after (1) you are convicted of a crime (other than a minor traffic offense); (2) you fail or refuse to perform any of your assigned duties; (3) you perform your assigned duties in an unacceptable manner; (4) you engage in conduct, the result of which causes injury (financial or otherwise) to the Purchaser, or which exposes the Purchaser to risk of such injury; or (5) you disclose the existence of this Agreement or its terms to anyone other than your personal advisors (provided they are bound to keep such terms confidential).

     In addition, nothing in this agreement will modify the at-will nature of your employment with Waste Services (if applicable) or with the Purchaser, nor constitute a contract of employment for any particular period of time. Either you or the Purchaser may terminate your employment with or without “cause” or notice. If you terminate your employment with Waste Services or the Purchaser for any reason prior to payment of the retention bonus, you will forfeit any rights to the retention bonus. If the Purchaser terminates your employment without “cause” before payment of the retention bonus, the Purchaser will pay the full amount of the retention bonus as a severance payment on the date of your termination. This severance payment shall be reduced by any other payment or benefits from the Purchaser in the nature of severance pay or benefits. If you are entitled to any notice or payment in lieu of any notice or termination of employment required by Federal, state or local law, including but not limited to the Worker Adjustment and Retraining Notification Act, the severance payment will also be reduced by the amount of any payment in lieu of such a notice.

     The payment of the retention bonus shall be conditioned upon your execution of a valid release, to be prepared by the Purchaser, in which you release Waste Services, the Purchaser and

D-1

their respective affiliates, to the maximum extent permitted by law, from any claims that you may have against any of them, except such claims arising under this agreement and any employee benefit plan that is not a severance plan.

     All payments to you under this agreement will be subject to withholding for all applicable employment and income taxes.

     This agreement shall be construed in accordance of the laws of the State of Arizona to the extent not preempted by the Employee Retirement Income Security Act of 1974, as amended.

     To accept this offer, you must sign below and return it to ___no later than ___, 2006.

Date	/s/ Employee
Date	/s/ Waste Services, Inc.

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EX-31.1

Exhibit 31.1

CERTIFICATION

I, David Sutherland-Yoest, certify that:

     1. I have reviewed this quarterly report on Form 10-Q of Waste Services, Inc.

     2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.

     3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report.

     4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in the Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

     (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

     (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

     (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

     (d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

     5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

     (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

     (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

	By:	/s/ DAVID SUTHERLAND-YOEST
		David Sutherland-Yoest
Date: August 1, 2006		Chief Executive Officer

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EX-31.2

Exhibit 31.2

CERTIFICATION

I, Mark A. Pytosh, certify that:

     1. I have reviewed this quarterly report on Form 10-Q of Waste Services, Inc.

     2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.

     3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report.

     4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in the Exchange Act Rules 13a-15(f)) and 15d-15(f)) for the registrant and have:

     (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

     (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

     (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

     (d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

     5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

     (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

     (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

	By:	/s/ MARK A. PYTOSH
		Mark A. Pytosh
Date: August 1, 2006		Chief Financial Officer

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EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     In connection with the quarterly report of Waste Services, Inc. (“the Company”) on Form 10-Q for the period ended June 30, 2006 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, David Sutherland-Yoest, Chief Executive Officer, and Mark A. Pytosh, Chief Financial Officer, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of our knowledge:

     (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

     (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

	By:	/s/ DAVID SUTHERLAND-YOEST
		David Sutherland-Yoest
		Chief Executive Officer
	By:	/s/ MARK A. PYTOSH
		Mark A. Pytosh
Date: August 1, 2006		Chief Financial Officer

50