AGREEMENT AND PLAN OF MERGER

EXECUTION COPY

Exhibit 2.1

AGREEMENT AND PLAN OF MERGER

MALL ACQUISITION 2, INC.,

SARCOM, INC.

AND

CERTAIN STOCKHOLDERS OF SARCOM, INC.

August 17, 2007

ARTICLE I		DEFINITIONS		2
1.1	Terms Defined Elsewhere			2
1.2	Defined Terms			4
ARTICLE II		THE MERGER AND RELATED MATTERS		11
2.1	The Merger			11
2.2	Closing; Effective Time			12
2.3	Merger Consideration and Related Matters			12
2.4	Treatment of Derivative Securities of the Company			17
2.5	Dissenting Shares			17
2.6	Procedures for Exchange of Shares			17
2.7	Tax Withholding			18
2.8	Supplementary Action			19
2.9	Certificate of Incorporation and Bylaws of the Surviving Corporation			19
2.10	Directors and Officers of the Surviving Corporation			19
2.11	Closing Deliveries			19
2.12	Stockholder Representative			22
ARTICLE III		REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE MAJORITY STOCKHOLDERS		24
3.1	Organization, Qualification and Corporate Power			24
3.2	Capitalization			25
3.3	Authority; No Conflicts; Consent			26
3.4	Brokers			27
3.5	Books and Records			27
3.6	Subsidiaries			27
3.7	Financial Statements			27
3.8	Absence of Certain Changes or Events			27
3.9	Undisclosed Liabilities			29
3.10	Legal Compliance			29
3.11	Taxes			29
3.12	Title to Properties and Assets; Encumbrances; Condition and Sufficiency of Assets			32
3.13	Intellectual Property			33
3.14	Inventory			35

3.15	Material Contracts			35
3.16	Accounts Receivable			37
3.17	Bank Accounts; Powers of Attorney			37
3.18	Insurance			37
3.19	Litigation			38
3.20	Warranties			38
3.21	Employees and Labor Matters			38
3.22	Employee Benefit Plans; ERISA			40
3.23	Environmental			42
3.24	Affiliated Transactions and Certain Other Arrangements			43
3.25	Customers, Distributors and Suppliers			43
3.26	Certain Payments			44
3.27	Internal Controls			45
3.28	Letters of Credit			45
3.29	Board Approval			45
3.30	Delaware Takeover Statute			45
3.31	Disclosure			45
ARTICLE IV		REPRESENTATIONS AND WARRANTIES OF THE MAJORITY STOCKHOLDERS		45
4.1	Organization of Certain Majority Stockholders			45
4.2	Title to Company Shares			46
4.3	Authority; No Conflicts; Consent			46
4.4	Restricted Securities			46
4.5	Investment Representations			47
4.6	Legends			47
4.7	Brokers			47
4.8	United States Person			47
4.9	Representations Regarding Stock Payment			47
ARTICLE V		REPRESENTATIONS AND WARRANTIES OF THE BUYER AND THE MERGER SUB		47
5.1	Organization, Qualification and Corporate Power			48
5.2	Authority; No Conflicts; Consent			48
5.3	Brokers			49

5.4	Representations as to the Stock Payment			49
5.5	SEC Reports; Financial Statements; Absence of Certain Changes			49
5.6	Disclosure			50
ARTICLE VI		PRE-CLOSING COVENANTS		50
6.1	General			50
6.2	Notices and Consents			50
6.3	Interim Covenants of the Company and the Majority Stockholders			51
6.4	Full Access			53
6.5	Notification of Certain Matters			54
6.6	No Trading			54
6.7	Tax Matters			54
6.8	Closing Payoff Letters			54
6.9	Estimated Debt Repayment Amount			55
6.10	Repayment of Debt Prior to Closing			55
6.11	Exclusivity			55
6.12	Company Stockholder Approvals			57
6.13	Takeover Statutes			58
6.14	Termination of LLC Interest			58
ARTICLE VII		POST-CLOSING COVENANTS		58
7.1	General			59
7.2	Transition			59
7.3	Confidentiality			59
7.4	Tax Matters			60
7.5	Exculpation and Indemnification of Directors and Officers; Insurance			61
ARTICLE VIII		CONDITIONS TO OBLIGATION TO CLOSE		62
8.1	Conditions to Buyer’s and the Merger Sub’s Obligations			62
8.2	Conditions to Majority Stockholders’ and the Company’s Obligations			65
ARTICLE IX		REMEDIES FOR BREACHES OF THIS AGREEMENT		66
9.1	Survival of Representations, Warranties and Covenants			66
9.2	Indemnification			67
ARTICLE X		TERMINATION		72
10.1	Termination of Agreement			72
10.2	Effect of Termination			74

ARTICLE XI		MISCELLANEOUS		74
11.1	Press Releases and Public Announcements			74
11.2	No Third-Party Beneficiaries			74
11.3	Entire Agreement			74
11.4	Succession and Assignment			74
11.5	Counterparts			75
11.6	Headings and Section References			75
11.7	Notices			75
11.8	Amendments and Waivers			76
11.9	Severability			76
11.10	Expenses			76
11.11	Construction			76
11.12	Incorporation of Exhibits, Annexes, and Schedules			76
11.13	Effect of Due Diligence			76
11.14	Specific Performance			77
11.15	Governing Law			77
11.16	Submission to Jurisdiction			77
11.17	Acknowledgement			78

Exhibit 2.2 — Certificate of Merger
Exhibit 2.3(d)(i)(A) — January 2007 Balance Sheet
Exhibit 2.11(a)(ii) — Form of Registration Rights Agreement
Exhibit 2.11(a)(iii) — Form of Legal Opinion
Exhibit 2.11(a)(vii) — Form of General Release
Exhibit 2.11(a)(x) — Form of Noncompetition and Nonsolicitation Agreement
Exhibit 3.7 — Company Financial Statements
Exhibit 8.1(h) — Company Financial Projections
Schedule I — Stockholders
Schedule II — Designated Stockholder Payment Amounts
Annex I — Company Disclosure Schedule
Annex II — Buyer Disclosure Schedule

AGREEMENT AND PLAN OF MERGER

     This Agreement and Plan of Merger (this “ Agreement ”) is made and entered into as of August 17, 2007, by and among PC Mall, Inc., a Delaware corporation (the “ Buyer ”), Mall Acquisition 2, Inc., a Delaware corporation and wholly-owned subsidiary of the Buyer (the “ Merger Sub ”), Sarcom, Inc., a Delaware corporation (the “ Company ”), and each of the other persons listed on Schedule I to this Agreement under the heading “Majority Stockholders” (each a “ Majority Stockholder ” and collectively the “ Majority Stockholders ”). The Buyer, the Merger Sub, the Company and the Majority Stockholders are sometimes referred to collectively herein as the “ Parties .”

RECITALS

     WHEREAS, the respective boards of directors of the Buyer, the Merger Sub and the Company each have approved and declared advisable the merger of Merger Sub with and into the Company (the “ Merger ”) upon the terms and subject to the conditions set forth in this Agreement and in accordance with the General Corporation Law of the State of Delaware (the “ DGCL ”);

     WHEREAS, the board of directors of the Company has determined that this Agreement and the Merger are advisable, has approved this Agreement and the Merger and has recommended that the stockholders of the Company adopt and approve this Agreement and approve the Merger;

     WHEREAS, promptly following the execution and delivery of this Agreement by each of the Parties, the holders of a type and number of shares of capital stock of the Company, including the Majority Stockholders, as applicable, are duly executing and delivering written consents sufficient to adopt and approve this Agreement, the Merger and the certificate of incorporation of the Surviving Corporation, in each case as required under applicable Law, the Company’s certificate of incorporation and bylaws, and any applicable agreements between the Company, on the one hand, and any holders of its capital stock, on the other hand (the “ Stockholder Consent ”); and

     WHEREAS, in connection with the Merger and the consummation thereof, certain stockholders of the Company will be entitled to receive a portion of the Designated Stockholder Payment in accordance with the terms hereof and as set forth in the Prior Agreements.

AGREEMENT

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

ARTICLE I

DEFINITIONS

     1.1 Terms Defined Elsewhere . The following terms are defined elsewhere in this Agreement, as indicated below:

Defined Term		Location of Definition
280G Payments		Section 6.12(b)
Accounts Receivable		Section 3.16
Agreement		Preamble
Audited Financial Statements		Section 3.7
Buyer		Preamble
Buyer Devaluation Notice		Section 10.1(h)
Buyer Disclosure Documents		Section 5.5
Buyer Disclosure Schedule		Article V
Cash Payment		Section 2.3(a)(i)
Certificate of Merger		Section 2.2
Class A Voting Common Stock		Section 3.2(a)
Class B Non-Voting Common Stock		Section 3.2(a)
Closing		Section 2.2
Closing Balance Sheet		Section 2.3(d)(i)(A)
Closing Date		Section 2.4(a)
Closing Debt Repayment Amount		Section 2.3(c)(ii)
Closing Net Asset Value		Section 2.3(d)(i)(A)
Closing Payoff Letters		Section 6.8
COBRA		Section 3.22(e)
Company		Preamble
Company Common Stock		Section 3.2(a)
Company Disclosure Schedule		Article III
Company Permits and Certifications		Section 3.3(b)
Company Preferred Stock		Section 3.2(a)
Company Registered Intellectual Property Rights		Section 3.13(a)
Company Shares		Section 3.2(a)
Competing Party		Section 6.11
Competing Transaction		Section 6.11
Confidentiality Agreement		Section 7.3(a)
Debt Repayment Purchase Price Adjustment		Section 2.3(d)(ii)

Defined Term		Location of Definition
Designated Stockholder Payment		Section 2.3(c)(i)
DGCL		Recitals
Dispute Notice		Section 2.3(d)(iii)(A)
Disqualified Individuals		Section 6.12(b)
Dissenting Holder		Section 2.5(a)
Dissenting Shares		Section 2.5(a)
Effective Time		Section 2.2
Estimated Debt Repayment Amount		Section 6.9
Financial Statements		Section 3.7
Indemnitee		Section 9.2(e)
Indemnitor		Section 9.2(e)
Independent Accountant		Section 2.3(d)(iii)(B)
Information Statement		Section 6.12(a)
IRS		Section 3.22(c)
January 2007 Balance Sheet		Section 2.3(d)(i)(A)
January 2007 Net Asset Value		Section 2.3(d)(i)(A)
Majority Stockholder(s)		Preamble
Material Contract		Section 3.15(a)
Merger		Recitals
Merger Sub		Recitals
Merger Sub Common Stock		Section 2.3(b)(iii)
Most Recent Financial Statements		Section 3.7
Most Recent Fiscal Month End		Section 3.7
Most Recent Fiscal Year End		Section 3.7
Net Asset Value Purchase Price Adjustment		Section 2.3(d)(i)(A)
Notice Period		Section 10.1(j)
Parties		Preamble
Prior Agreements		Section 11.17
Purchase Price		Section 2.3(a)
Purchase Price Withholding Amount		Section 2.7
Real Property		Section 3.12(a)
Realty Leases		Section 3.12(a)
Restructuring Agreement		Section 11.17
Series A Preferred Stock		Section 3.2(a)
Stock Payment		Section 2.3(a)(ii)

Defined Term		Location of Definition
Stockholder Consent		Recitals
Stockholder Representative		Section 2.12(a)
Stockholders Agreement		Section 11.17
Superior Proposal		Section 6.11(c)
Surviving Corporation		Section 2.1
Tax Representations		Section 9.1(a)
Termination Date		Section 10.1(b)
Threshold Amount		Section 9.2(b)
Violation		Section 3.3(c)

     1.2 Defined Terms . As used in this Agreement, the terms below shall have the following meanings:

          (a) “ Accredited Investo r” has the meaning set forth in Rule 501(a) of Regulation D promulgated under the Securities Act.

          (b) “ Actual Debt Repayment Amount ” means the positive or negative dollar amount, if any, obtained by subtracting (x) from (y), where (x) is the Company’s Debt as of the Closing Date that is not reflected or accounted for in a Closing Payoff Letter and (y) is the amount of the Company’s cash and cash equivalents as of the Closing Date, in each case as derived from the Closing Balance Sheet.

          (c) “ Affiliate ” has the meaning set forth in Rule 12b-2 promulgated under the Exchange Act.

          (d) “ Affiliated Group ” means any affiliated group within the meaning of Section 1504(a) of the Code or any similar group defined under a similar provision of state, local or foreign law.

          (e) “ Breach ” means any untruthfulness, misrepresentation or inaccuracy in any representation or warranty in, or any failure to perform or comply with any covenant, obligation or other provision of, this Agreement or any instrument delivered hereunder.

          (f) A “ Buyer Devaluation ” shall be deemed to have occurred if, at any time from the date hereof through the Closing, the average closing price of shares of the Buyer Stock on the Nasdaq Global Market for a period of twenty (20) consecutive trading days, as reported by The Nasdaq Stock Market LLC, is less than $7.497 per share.

          (g) “ Buyer Parties ” means the Buyer and its respective Affiliates (including, after the Closing, the Surviving Corporation, but excluding the Majority Stockholders and their respective other Affiliates) and their respective Representatives, successors and assigns.

          (h) “ Buyer Stock ” means the Buyer’s common stock, par value $0.001 per share.

          (i) “ Closing Date 20-Day Trailing Average ” means the average closing price of shares of the Buyer Stock on the Nasdaq Global Market for the period of twenty (20) consecutive trading days immediately preceding the Closing Date, as reported by The Nasdaq Stock Market LLC.

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

          (k) “ Company Intellectual Property ” means all Intellectual Property Rights held by the Company or used in its business, whether owned or controlled, licensed, owned or controlled by or for, licensed to, or otherwise held by or for the benefit of the Company, including without limitation the Company Registered Intellectual Property Rights.

          (l) “ Company Net Asset Value ” means (i) the sum of the Company’s accounts receivable and inventory, minus (ii) all long- and short-term liabilities of the Company (not including (x) any Debt to be repaid at or prior to the Closing pursuant to the terms of this Agreement, (y) L/Cs (up to a maximum aggregate face amount of all such L/Cs of $3,150,000), and (z) capital lease obligations of the Company).

          (m) “ Confidential Information ” means all Trade Secrets and other confidential and/or proprietary information of a Person, including without limitation information derived from reports, investigations, research, work in progress, codes, marketing and sales programs, financial projections, cost summaries, pricing formula, Contract analyses, financial information, projections, confidential filings with any state or federal agency, and all other confidential concepts, methods of doing business, ideas, materials or information prepared or performed for, by or on behalf of such Person by its Representatives or consultants that is not generally known to the public.

          (n) “ Contract ” means any agreement, contract, consensual obligation, promise, understanding, arrangement, commitment or undertaking of any nature (whether written or oral and whether express or implied), whether or not legally binding.

          (o) “ Copyrights ” means all copyrights, including in and to works of authorship and all other rights corresponding thereto throughout the world, including any moral rights, whether published or unpublished, including rights to prepare, reproduce, perform, display and distribute copyrighted works and copies, compilations and derivative works thereof.

          (p) “ Debt ” means all long- and short-term liabilities of the Company, including without limitation (i) all restructuring or prepayment fees (including, without limitation, fees payable to any lender or any stockholder of the Company or any Affiliate of such a stockholder), (ii) the Company’s costs incurred in connection with the transactions contemplated by and in this Agreement (including, without limitation, finders’ fees and fees of the Company’s Representatives) and (iii) the aggregate Guaranteed Amount payable pursuant to the Prior Agreements; provided, however, that Debt shall exclude trade payables, Taxes, accrued expenses, deferred revenue, capital leases and the L/Cs (but only up to a maximum aggregate

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face amount of all such L/Cs of $3,150,000), each as incurred in the Ordinary Course of Business.

          (q) “ Designated Stockholders ” means all holders of Company capital stock other than the Patriarch Stockholders and the Management Stockholders.

          (r) “ Encumbrance ” means any lien, pledge, mortgage, security interest, claim, charge, easement, limitation, commitment, encroachment, restriction (other than a restriction on transferability imposed by federal or state securities laws), preemptive rights, any other encumbrance of any kind or nature whatsoever (whether absolute or contingent) or any other adverse claims of any third party.

          (s) “ Environmental Laws ” means any applicable federal, state, territorial, provincial, foreign or local law, common law, rule, order, decree, judgment, injunction, license, permit or regulation relating to (i) environmental matters, including those pertaining to land use, air, soil, surface water, ground water (including the protection, cleanup, removal, remediation or damage thereof), or (ii) any other laws relating to emissions, discharges, releases or threatened releases of any pollutant or contaminant including, without limitation, medical, chemical, biological, biohazardous or radioactive waste and materials, into ambient air, land, surface water, groundwater, personal property or structures, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transportation, discharge or handling of any contaminant, including, without limitation, the Federal Water Pollution Control Act, the Clean Air Act and the Toxic Substances Control Act, as such laws have been amended and are in effect as of the date hereof and any analogous present state or local laws, statutes and regulations promulgated thereunder as are in effect as of the date hereof.

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

          (u) “ ERISA Affiliate ” means any Person that, together with the Company as of any relevant date was or is required to be treated as a single employer under ERISA or Section 414 of the Code.

          (v) “ Exchange Act ” means the Securities Exchange Act of 1934, as amended.

          (w) “ Fundamental Representations ” means the representations and warranties contained in Section 4.2 (Title to Shares), Section 4.3(a) (Authority), Section 4.7 (Brokers), Section 3.1 (Organization), Section 3.2 (Capitalization), Section 3.3(a) (Authorization), Section 3.4 (Brokers), Section 3.6 (Subsidiaries) and Section 3.11 (Taxes).

          (x) “ GAAP ” means United States generally accepted accounting principles as in effect from time to time, consistently applied for and throughout the periods presented.

          (y) “ Governmental Entity ” means any international, national, state, municipal, local or foreign government, any instrumentality, subdivision, court, administrative agency or commission or other authority thereof, or any quasi-governmental or private body exercising any regulatory, taxing, or other governmental or quasi-governmental authority.

          (z) “ Guaranteed Amount ” has the meaning assigned to such term in the Restructuring Agreement.

          (aa) “ Hart-Scott-Rodino Act ” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

          (bb) “ Hazardous Wastes ” means (i) any substances defined in or regulated as toxic or hazardous under or as to which liability or standards of conduct are imposed by the Comprehensive Environmental Response, Compensation and Liability Act, as amended, and the regulations promulgated thereunder, the Resource Conservation and Recovery Act, as amended, and the regulations promulgated thereunder, or any other Environmental Law; (ii) friable or damaged asbestos or asbestos-containing material; (iii) petroleum and petroleum products, including crude oil and fractions thereof; and (iv) polychlorinated biphenyls (PCBs).

          (cc) “ Intellectual Property Rights ” means any or all rights in and to intellectual property and intangible industrial property rights, including, without limitation, Patents, Trade Secrets, Copyrights, Mask Works, Trademarks, and any and all rights similar, corresponding or equivalent to any of the foregoing anywhere in the world, together with (i) all registrations and applications for registrations therefor and (ii) all rights to any of the foregoing (including: (a) all rights received under any license or other arrangement with respect to the foregoing, (b) all rights or causes of action for infringement or misappropriation (past, present or future) of any of the foregoing and (c) all rights to apply for or register any of the foregoing).

          (dd) “ Knowledge ” means actual knowledge after reasonable investigation.

          (ee) “ Law ” means any federal, state, local or foreign statute, code, ordinance, rule, treaty, regulation, order, judgment, writ, stipulation, award, injunction, and any enforceable judicial or administrative interpretation thereof, including any judicial or administrative order, consent decree, judgment, stipulation, injunction, permit, authorization, policy, opinion, or agency requirement, in each case having the force and effect of law.

          (ff) “ L/Cs ” means any letters of credit (commercial, standby or otherwise) or similar arrangements issued on behalf of the Company for the benefit of vendors, surety bonding companies or other Persons.

          (gg) “ Liability ” and “ Liabilities ” mean any liability or obligation of any kind or nature (whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, and whether due or to become due), including any liability for Taxes.

          (hh) “ Lien ” means any mortgage, pledge, lien, Encumbrance, charge, or other security interest, other than (i) liens for Taxes not yet due and payable, (ii) liens for Taxes that the taxpayer is contesting in good faith through appropriate proceedings and for which appropriate reserves have been established in accordance with GAAP, (iii) liens in respect of pledges or deposits under workers’ compensation Laws or similar legislation, (iv) liens imposed by Law and incurred in the Ordinary Course of Business for obligations not past due or which are being contested in good faith by appropriate proceedings and as to which appropriate reserves (to the extent required by GAAP) have been established in the books and records of the

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Company (including, without limitation, mechanics’, materialmen’s, carriers’, warehousemen’s, landlord’s, and similar liens), and (v) liens, Encumbrances and defects in title, that in each case do not and could not reasonably be expected to materially detract from the value or use of the property or assets subject thereto.

          (ii) “ Losses ” means any loss, liability, demand, claim, action, cost, damage, penalty, Tax, fine or expense (including interest, penalties, reasonable attorneys’ fees and expenses and all reasonable amounts paid in investigation or defense, and all amounts paid in settlement, of any of the foregoing); provided however, that Losses shall not include punitive, exemplary or special damages, or incidental or consequential damages (other than (i) any such punitive, exemplary, special, incidental and consequential damages relating to any breach of Section 6.11 or Section 7.3 hereof that are reasonably foreseeable or (ii) any such punitive, exemplary, special, incidental and consequential damages incurred as a result of a third party claim for such damages against an Indemnitee).

          (jj) “ made available to the Buyer ” means that (i) (A) the applicable item is posted as of the date hereof in the virtual data room hosted by Merrill Corporation in connection with the transactions contemplated by this Agreement and (B) the Buyer and its requested Representatives have been provided full access to the applicable item in such virtual data room or (ii) (A) the applicable item is included in the Company’s tax, financial accounting or employment records and (B) the Buyer and its requested Representatives have been provided full access to the applicable item during site visits to the Company.

          (kk) “ Majority Stockholder Parties ” means the Majority Stockholders and their respective Affiliates, Representatives, successors and assigns.

          (ll) “ Majority Stockholders ” means the Patriarch Stockholders and the Management Stockholders.

          (mm) “ Management Stockholders ” means Charles E. Sweet, Robert F. Angart & Company, John R. Strauss, Daniel A. Schneider and Howard Schapiro.

          (nn) “ Mask Works ” means all mask works, mask work registrations and applications therefor, and any equivalent or similar rights in semiconductor masks, layouts, architectures or topology.

          (oo) “ Material Adverse Effect ” means, with respect to any Person, any effect or change that, individually or in the aggregate with other effects or changes, would be materially adverse to the business, assets, financial condition or operating results of the Person, or on the ability of the Person, if they are a Party to this Agreement, to timely consummate the transactions contemplated hereby.

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

          (qq) “ Ordinary Course of Business ” means the ordinary course of business consistent with past custom and practice (including, if applicable, with respect to quantity and frequency).

          (rr) “ Participation Percentage ” means the percentage of the aggregate Purchase Price payable to the Majority Stockholders hereunder (as holders of Series A Preferred Stock) to be received by the applicable Majority Stockholder in connection with the transactions contemplated hereby, as set forth on Schedule I hereto.

          (ss) “ Patents ” means all United States and foreign patents and utility models and applications therefor and all reissues, divisions, re-examinations, renewals, extensions, provisionals, continuations and continuations-in-part thereof, and equivalent or similar rights anywhere in the world in inventions and discoveries.

          (tt) “ Patriarch Stockholders ” means Zohar CDO 2003-1, Limited and Zohar II 2005-1, Limited.

          (uu) “ Person ” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, any other legal entity, or a governmental entity (or any department, agency, or political subdivision thereof).

          (vv) “ Plan ” means (i) each of the “employee benefit plans” (as such term is defined in Section 3(3) of ERISA) that covers any employee or former employee of the Company and with respect to which the Company or any ERISA Affiliate is or within the past six years was a sponsor or participating employer or as to which the Company or any ERISA Affiliate makes or within the past six years made contributions or is or within the past six years was required to make contributions or under which the Company or any ERISA Affiliate has any obligation or Liability (contingent or otherwise), and (ii) any employment, severance, change in control or other Contract, agreement, arrangement, plan or policy of the Company or any ERISA Affiliate (whether written or oral) providing for compensation or benefits to employees or other service providers of the Company, including, without limitation, health, life, vision or dental insurance coverage (including self-insured arrangements), workers’ compensation, disability benefits, supplemental unemployment benefits, vacation benefits, retirement benefits, fringe benefits, profit sharing, deferred compensation, bonuses, stock options, stock appreciation, stock purchase or other forms of equity or incentive compensation, or post-employment insurance, compensation or benefits.

          (ww) “ Proceeding ” means any action, suit, litigation, arbitration, proceeding (including any civil, criminal, administrative, investigative or appellate proceeding), prosecution, contest, hearing, inquiry, inquest, audit, examination or investigation that is, has been or may in the future be commenced, brought, conducted or heard at law or in equity or before any Governmental Entity or any arbitrator, arbitration panel, mediator or mediation panel.

          (xx) “ Registered Intellectual Property Rights ” means all United States, international and foreign: (i) Patents, including applications therefor; (ii) registered Trademarks, applications to register Trademarks, including intent-to-use applications, or other registrations or applications related to Trademarks; (iii) Copyright registrations and applications to register Copyrights; (iv) Mask Work registrations and applications to register Mask Works; and (v) any other Intellectual Property Right that is the subject of an application, certificate, filing,

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registration or other document issued by, filed with, or recorded by, any state, government or other public legal authority at any time.

          (yy) “ Registration Rights Agreement ” means that certain Registration Rights Agreement to be entered into among the Parties, in the form attached as Exhibit 2.11(a)(ii), with respect to any Stock Payment.

          (zz) “ Representative ” means, as to any Person, such Person’s stockholders, partners or members, as the case may be, directors, officers, employees, accountants, lawyers, brokers, financial advisors and any other agents or representatives of such Person or any of its Affiliates.

          (aaa) “ Securities Act ” means the Securities Act of 1933, as amended.

          (bbb) “ Subsidiary ” means, with respect to any Person, any corporation, limited liability company, partnership, association, or other business entity of which (i) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof or (ii) if a limited liability company, partnership, association, or other business entity (other than a corporation), a majority of partnership or other similar ownership interest thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more Subsidiaries of that Person or a combination thereof and for this purpose, a Person or Persons own a majority ownership interest in such a business entity (other than a corporation) if such Person or Persons shall be allocated a majority of such business entity’s gains or losses or shall be or control any managing director or general partner of such business entity (other than a corporation). The term “Subsidiary” shall include all Subsidiaries of such Subsidiary.

          (ccc) “ Tax ” means any federal, state, local, or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental (including taxes under Section 59A of the Code), customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated, escheat, unclaimed or abandoned property, or other tax of any kind whatsoever, including any interest, penalty, or addition thereto, whether disputed or not and including any obligations to indemnify or otherwise assume or succeed to the Tax liability of any other Person.

          (ddd) “ Tax Period ” means any period prescribed by any Governmental Entity for which a Tax Return is required to be filed or a Tax is required to be paid.

          (eee) “ Tax Return ” means any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.

          (fff) “ Trade Secrets ” means all trade secrets under applicable law and other rights in know-how and confidential or proprietary information, processing, manufacturing or marketing information, including new developments, inventions, processes, ideas or other

proprietary information that provide the Company with advantages over competitors who do not know or use it and documentation thereof (including related papers, blueprints, drawings, chemical compositions, formulae, diaries, notebooks, specifications, designs, methods of manufacture and data processing software, compilations of information) and all claims and rights related thereto.

          (ggg) “ Trademarks ” means any and all trademarks, service marks, logos, trade names, corporate names, or other indicators of identification of origin, Internet domain names and addresses and general-use e-mail addresses, and all goodwill associated therewith throughout the world.

ARTICLE II

THE MERGER AND RELATED MATTERS

     2.1 The Merger . Subject to the terms and conditions of this Agreement, at the Effective Time, the Merger Sub shall be merged with and into the Company, which shall be the surviving corporation (the “ Surviving Corporation ”) in the Merger, and the separate existence of the Merger Sub shall thereupon cease. The name of the Surviving Corporation shall remain “Sarcom, Inc.” Without limiting the generality of the foregoing, at the Effective Time, all property, rights, powers, privileges and franchises of the Company and the Merger Sub shall vest in the Surviving Corporation, and all debts, liabilities and duties of the Company and the Merger Sub shall become the debts, liabilities and duties of the Surviving Corporation.

     2.2 Closing; Effective Time . The closing of the transactions contemplated by this Agreement (the “ Closing ”) shall take place, unless this Agreement is earlier terminated pursuant to Article X, at the offices of Morrison & Foerster LLP, located at 19900 MacArthur Blvd., Irvine, California 92612, at 10:00 a.m. (local time) on the second business day after the satisfaction or (to the extent permitted by applicable Law and this Agreement) waiver of each of the conditions set forth in Article VIII, other than those conditions to be satisfied or waived at the Closing, or at such other time and place as the Parties may agree. Subject to the provisions of Article X, failure to consummate the Closing at the time and place determined pursuant to this Section 2.2 shall not result in the termination of this Agreement and shall not relieve any Party hereto of any obligation under this Agreement. The date on which the Closing occurs is referred to herein as the “ Closing Date . In connection with the Closing, the Parties shall cause the Merger to be consummated by duly filing a properly executed certificate of merger in substantially the form attached hereto as Exhibit 2.2 (the “ Certificate of Merger ”), together with any required officers’ certificates, with the Secretary of State of the State of Delaware, in accordance with the relevant provisions of the DGCL. When used in this Agreement, the term “ Effective Time ” shall mean the later of: (i) the date and time at which the Certificate of Merger have been accepted for filing by the Secretary of State of the State of Delaware or (ii) such later time as is provided in the Certificate of Merger. All actions to be taken at the Closing shall be deemed to occur simultaneously, and the Closing shall be deemed to have been completed at the Effective Time.

     2.3 Merger Consideration and Related Matters .

          (a) Aggregate Purchase Price . The aggregate purchase consideration payable by the Buyer in connection with the Merger (the “ Purchase Price ”) shall be the sum of the following:

               (i) $47,500,000, as the same may be adjusted pursuant to any applicable Net Asset Value Purchase Price Adjustment and Debt Repayment Purchase Price Adjustment, payable wholly in cash (the “ Cash Payment ”); plus

               (ii) $7,500,000, payable at the Buyer’s election in its sole and absolute discretion either (x) in unregistered shares of the Buyer Stock valued at the Closing Date 20-Day Trailing Average (such shares of the Buyer Stock, the “ Stock Payment ”), (y) in cash or (z) in any combination thereof; provided, however, that in no event shall the Stock Payment exceed five percent (5%) of the issued and outstanding common stock of the Buyer (calculated after such issuance of the Stock Payment).

Notwithstanding anything in this Section 2.3(a) to the contrary: (A) if the Stockholder Representative delivers to the Buyer a Buyer Devaluation Notice and this Agreement is not terminated pursuant to Section 10.1, the Buyer shall pay the entire Purchase Price in cash without the issuance of any Stock Payment; and (B) if the Buyer elects or is required to make the payment specified in Section 2.3(a)(ii) entirely in cash, then the amount payable pursuant to such Section 2.3(a)(ii) shall be $7,000,000 instead of $7,500,000.

          (b) Effect of the Merger on Shares of the Merger Sub and the Company . Subject to the terms and provisions of this Agreement, at the Effective Time, automatically by virtue of the Merger and without any action on the part of any Person, all shares of Class A Voting Common Stock, Class B Non-Voting Common Stock and Series A Preferred Stock, in each case other than any Dissenting Share (which shall be treated pursuant to Section 2.5), and all shares of Merger Sub Common Stock, shall be cancelled or converted as follows, in each case aggregating all shares of each class held by each holder thereof and rounding any fractional shares held up or down to the nearest whole share:

               (i) Each share of Class A Voting Common Stock and Class B Non-Voting Common Stock issued and outstanding immediately prior to the Effective Time shall be cancelled and cease to be outstanding, and, based on the representation and warranty set forth in Section 3.2(b), no consideration shall be provided in exchange therefor.

               (ii) Each share of Series A Preferred Stock issued and outstanding immediately prior to the Effective Time shall be converted into the right to receive:

                    A. a cash payment (rounded to the nearest cent) equal to (x) divided by (y) where: (x) equals the Cash Payment minus the Designated Stockholder Payment minus the Closing Debt Repayment Amount plus any Estimated Debt Repayment Amount and (y) equals the aggregate number of shares of Series A Preferred Stock issued and outstanding immediately prior to the Effective Time; plus

                    B. a cash payment (rounded to the nearest cent) and/or the Stock Payment (rounded to the nearest whole share), depending on and in accordance with the Buyer’s election pursuant to Section 2.3(a)(ii), equal to (x) divided by (y) where: (x) equals $7,500,000 and (y) equals the aggregate number of shares of Series A Preferred Stock issued and outstanding immediately prior to the Effective Time.

               (iii) Each share of common stock, par value $0.01 per share, of the Merger Sub (the “ Merger Sub Common Stock ”) issued and outstanding immediately prior to the Effective Time shall be converted into and continue as one (1) share of common stock, par value $0.01 per share, of the Surviving Corporation.

Following the Effective Time, no share of Company Common Stock or Company Preferred Stock outstanding prior to the Effective Time shall be deemed to be outstanding or to have any rights other than those set forth in this Agreement.

          (c) Other Closing Payments .

               (i)  Designated Stockholder Payments . At or promptly following the Closing, the Surviving Corporation shall pay to each Person listed on Schedule II hereto the amount set forth beside such Person’s name on Schedule II in satisfaction of the “Minimum Value” under the terms of the Restructuring Agreement. The aggregate of all such amounts is referred to herein as the “ Designated Stockholder Payment .” Notwithstanding anything herein to the contrary, the Designated Stockholder Payment (and the liabilities of the Company it is intended to satisfy) shall be excluded from the Closing Balance Sheet and shall not be reflected in any Net Asset Value Purchase Price Adjustment or Debt Repayment Purchase Price Adjustment (it being the intent of the Parties that the Designated Stockholder Payment shall instead be deducted from the Purchase Price payable by the Buyer to the holders of Series A Preferred Stock at the Closing pursuant to the terms hereof). Notwithstanding anything herein to the contrary, if and to the extent any Person listed on Schedule II hereto is a Dissenting Holder as of the Effective Time, the amount that would otherwise be paid to such Person pursuant to this Section 2.3(c)(i) shall be withheld by the Surviving Corporation until such Person’s rights to appraisal are finally adjudicated or otherwise determined and, as applicable, offset against amounts owed to such Person pursuant to their rights as a Dissenting Holder.

               (ii)  Closing Debt Payments . At or promptly following the Closing, the Company (or, as applicable, the Surviving Corporation) shall pay to each Person identified in the Closing Payoff Letters the full amount (the aggregate sum thereof, the “Closing Debt Repayment Amount”) set forth in such applicable Closing Payoff Letters. Notwithstanding anything herein to the contrary, the Closing Debt Repayment Amount (and the liabilities of the Company it is intended to satisfy) shall be excluded from the Closing Balance Sheet and shall not be reflected in any Net Asset Value Purchase Price Adjustment or Debt Repayment Purchase Price Adjustment (it being the intent of the Parties that the Closing Debt Repayment Amount shall instead be deducted from the Purchase Price payable by the Buyer to the holders of Series A Preferred Stock at the Closing pursuant to the terms hereof).

          (d) Purchase Price Adjustments .

               (i)  Net Asset Value Adjustment .

                    A. The Purchase Price shall be subject to adjustment (a “ Net Asset Value Purchase Price Adjustment ”), on a dollar-for-dollar basis, if and to the extent that the Company Net Asset Value as reflected on the Company’s balance sheet as of January 27, 2007 attached hereto as Exhibit 2.3(d)(i)(A) (the “ January 2007 Balance Sheet ”), which equals $19,615,000 (the “ January 2007 Net Asset Value ”), is greater or less than the Company Net Asset Value as of the Closing Date (the “ Closing Net Asset Value ”), as reflected on a balance sheet dated as of the Closing (the “ Closing Balance Sheet ”) which shall be prepared by the Surviving Corporation and delivered to the Buyer and the Stockholder Representative within thirty (30) days following the Closing. The Closing Balance Sheet shall be prepared in accordance with GAAP and on a basis consistent with the most recent audited balance sheets of the Company, and shall be subject to the reasonable review and approval of the Buyer and the Stockholder Representative before it is deemed to be finally determined. The Surviving Corporation shall prepare the Closing Balance Sheet such that it accurately reflects and quantifies both the Closing Net Asset Value and the Closing Debt Repayment Amount.

                    B. If the January 2007 Net Asset Value is less than the Closing Net Asset Value, then (i) the Purchase Price shall be increased on a dollar-for-dollar basis in an amount equal to the difference, and in satisfaction thereof (ii) the Buyer shall as soon as practicable (and in any event within three (3) business days after the final determination of the Closing Net Asset Value) wire the difference in immediately available funds to the Majority Stockholders in proportion to their respective Participation Percentages.

                    C. If the January 2007 Net Asset Value is greater than the Closing Net Asset Value, then (i) the Purchase Price shall be decreased on a dollar-for-dollar basis in an amount equal to the difference and (ii) the Buyer shall be entitled to receive as soon as practicable (and in any event within three (3) business days after the final determination of the Closing Net Asset Value) an amount equal to the difference, payable by the Majority Stockholders on a pro rata basis in proportion to the Participation Percentage of the respective Majority Stockholder, either (at the election of the applicable Majority Stockholder) (I) in Buyer Stock from the applicable Majority Stockholder, to the extent received and still owned by such Majority Stockholder, which Buyer Stock shall be valued at the average closing price of shares of the Buyer Stock on the Nasdaq Global Market for the period of twenty (20) consecutive trading days ending on the date such shares of Buyer Stock are tendered by the applicable Majority Stockholder in accordance herewith, or (II) in cash.

               (ii)  Debt Repayment Adjustment . The Purchase Price shall be subject to further adjustment (a “ Debt Repayment Purchase Price Adjustment ”), if and to the extent that the Estimated Debt Repayment Amount is greater or less than the Actual Debt Repayment Amount, as follows:

                    A. If the Estimated Debt Repayment Amount is less than the Actual Debt Repayment Amount, then (i) the Purchase Price shall be increased on a dollar-for-dollar basis in an amount equal to the difference, and in satisfaction thereof (ii) the Buyer shall as

soon as practicable (and in any event within three (3) business days after the final determination of the Actual Debt Repayment Amount) wire the difference in immediately available funds to the Majority Stockholders in proportion to their respective Participation Percentages; and

                    B. If the Estimated Debt Repayment Amount is greater than the Actual Debt Repayment Amount, then (i) the Purchase Price shall be decreased on a dollar-for-dollar basis in an amount equal to the difference and (ii) the Buyer shall be entitled to receive as soon as practicable (and in any event within three (3) business days after the final determination of the Actual Debt Repayment Amount) an amount equal to the difference, payable by the Majority Stockholders on a pro rata basis in proportion to the Participation Percentage of the respective Majority Stockholder, either (at the election of the applicable Majority Stockholder) (I) in Buyer Stock from the applicable Majority Stockholder, to the extent received and still owned by such Majority Stockholder, which Buyer Stock shall be valued at the average closing price of shares of the Buyer Stock on the Nasdaq Global Market for the period of twenty (20) consecutive trading days ending on the date such shares of Buyer Stock are tendered by the applicable Majority Stockholder in accordance herewith, or (II) in cash.

                    C. For the avoidance of doubt, any Debt that is accounted for in the Debt Repurchase Price Adjustment shall not be included in the Net Asset Value Purchase Price Adjustment.

               (iii)  Disagreements Regarding the Closing Balance Sheet .

                    A. If, within five (5) business days following delivery of the Closing Balance Sheet in accordance with Section 2.3(d)(i), neither the Buyer nor the Stockholder Representative have given written notice (a “ Dispute Notice ”) to the other of their objection as to the preparation of or information set forth on the Closing Balance Sheet, then the Closing Balance Sheet as so delivered shall be binding and conclusive on the Parties and shall be used in computing the Net Asset Value Purchase Price Adjustment and the Debt Repayment Purchase Price Adjustment, if any. The Buyer and the Stockholder Representative may each waive such five (5) business day period by providing written notice thereof to the other party.

                    B. Upon the timely delivery of any Dispute Notice (which Dispute Notice shall state in reasonable detail the basis of the applicable party’s objection), the Buyer and the Stockholder Representative shall use commercially reasonable efforts to resolve any disputes raised by and in the Dispute Notice or in connection with the resolution thereof, and the parties shall provide any reasonably requested information to one another relating to the items under dispute. The Stockholder Representative shall have reasonable access to the corporate records and employees of the Company for such purposes. If the parties fail to fully resolve all outstanding disagreements related to the preparation of and information contained on the Closing Balance Sheet within thirty (30) days following delivery of the Dispute Notice, then the Buyer and the Stockholder Representative shall jointly select a mutually satisfactory independent auditor (who is not rendering, and who has not rendered within the past three (3) years, any services to the Company, the Majority Stockholders or the Buyer, or any of their respective Affiliates) to resolve any such remaining disagreements. If the Buyer and the Stockholder Representative fail to so select a mutually satisfactory independent auditor within five (5) business days thereafter, each of the Buyer and the Stockholder Representative shall

select an independent auditor (who is not rendering, and who has not rendered within the past three (3) years, any services to the Company, the Majority Stockholders or the Buyer, or any of their respective Affiliates), and the two selected independent auditors shall jointly select a third independent auditor (who is not rendering, and who has not rendered within the past three (3) years, any services to the Company, the Majority Stockholders or the Buyer, or any of their respective Affiliates) (such independent auditor or auditors, whether selected pursuant to this sentence or the immediately preceding sentence, the “ Independent Accountant ”) to resolve any such remaining issues. If issues are submitted to the Independent Accountant for resolution: (i) the Parties shall each furnish or cause to be furnished to the Independent Accountant such work papers and other documents and information related to the disputed issues as the Independent Accountant may reasonably request and are available to that party or its agents and shall be afforded the opportunity to present to the Independent Accountant any information related to the disputed issues and to discuss the issues with the Independent Accountant; and (ii) the determination by the Independent Accountant, as set forth in a written notice to be delivered to each of the parties subject to the dispute within fifteen (15) business days after submission of the disputed issues to the Independent Accountant for resolution, shall be final, binding and conclusive on the parties. The Independent Accountant shall determine the allocation between the Buyer, on one hand, and the Majority Stockholders, on the other hand, of the costs and expenses of its engagement based upon the proportion of the aggregate amounts the Independent Accountant determined to be properly disputed by a party in relation to the aggregate amounts actually disputed by such party. For example, if the aggregate amount of the Closing Balance Sheet disputed by the Majority Stockholders in the Dispute Notice is $1,000, and if the Buyer contests only $500 of the amount disputed by the Majority Stockholders, and if the Independent Accountant ultimately resolves the dispute by finding that the Buyer properly disputed $300 of the $500, then the costs and expenses of the Independent Accountant will be allocated 60% (i.e., 300 ÷ 500) to the Majority Stockholders (on a pro rata basis in proportion to their Participation Percentages) and 40% (i.e., 200 ÷ 500) to the Buyer.

     2.4 Treatment of Derivative Securities of the Company . No options, warrants or other derivative securities of the Company will be assumed by the Buyer or the Surviving Corporation in connection with the Merger and the other transactions contemplated by this Agreement. The Company shall, and the Majority Stockholders shall cause the Company to, cause any and all outstanding or authorized options, warrants, purchase rights, subscription rights, conversion rights, exchange rights, or other Contracts or commitments that could require the Company to issue, sell, or otherwise cause to become outstanding any of its capital stock to be terminated concurrently with or prior to the Closing.

     2.5 Dissenting Shares .

               (a) If any holder of Company Shares is entitled to dissent from the Merger and demand appraisal of any or all of such holder’s Company Shares under applicable law (each person electing to exercise such rights, a “ Dissenting Holder ”), any Company Shares held by a Dissenting Holder as to which appraisal has been so demanded in accordance with applicable law (“ Dissenting Shares ”) shall not be exchanged as described in Section 2.3(b), but shall from and after the Effective Time represent only the right to receive such consideration as may be determined to be due such Dissenting Holder pursuant to applicable law; provided, however, that Dissenting Shares held by a Dissenting Holder who shall, after the Effective Time, withdraw its

demand for appraisal or lose its rights of appraisal with respect to such shares, in either case pursuant to applicable law, shall not be deemed Dissenting Shares, but shall be deemed to be, as of the Effective Time, either cancelled or converted into the right to receive the consideration, if any, otherwise payable to such holder in accordance with this Agreement.

          (b) The Company shall give the Buyer (i) prompt notice of any written demands for appraisal of any Company Shares in connection with this Agreement and the transactions contemplated hereby, withdrawals of such demands or failures to perfect appraisal rights resulting in a loss of such rights, and any other instruments received by the Company which relate to any such demand for appraisal, and (ii) a reasonable opportunity to participate in all negotiations and proceedings which take place prior to the Effective Time with respect to demands or potential demands for appraisal.

     2.6 Procedures for Exchange of Shares .

          (a) Immediately after the Effective Time, each holder of certificates that immediately prior to the Effective Time represented Company Shares shall surrender to the Buyer any such certificates for cancellation and/or exchange in accordance with the terms hereof (subject to Section 2.6(c) below).

          (b) From and after the Effective Time, there shall be no transfers on the stock transfer books of the Company of Company Shares which were outstanding immediately prior to the Effective Time. If, after the Effective Time, any stock certificates representing Company Shares are presented to the Surviving Corporation for any reason, they shall be cancelled and exchanged as provided in this Article II.

          (c) In the event that any certificate that immediately prior to the Effective Time represented Company Shares shall have been lost, stolen or destroyed, the Buyer will issue or cause to be issued certificates representing Buyer Stock, if any, in exchange for such lost, stolen or destroyed certificate in accordance with the terms and provisions of this Agreement in respect of properly presented certificates formerly representing Company Shares; provided, however, that the Buyer may, in its reasonable discretion, and as a condition precedent to the issuance thereof, require the holder to provide the Buyer a bond in such sum as it may reasonably direct as indemnity, or such other form of indemnity as it shall reasonably direct, against any claim that may be made against the Buyer or the Surviving Corporation with respect to the certificate alleged to have been lost, stolen or destroyed.

          (d) If any certificate representing Buyer Stock is to be issued in a name other than that in which the certificate representing Series A Preferred Stock surrendered in exchange therefor is registered, it shall be a condition of such exchange that the Person requesting such exchange shall (i) pay to the Buyer any transfer or other Taxes required by reason of the issuance of certificates representing Buyer Stock for such securities in a name other than that of the registered holder of the Series A Preferred Stock certificate surrendered, or (ii) establish to the reasonable satisfaction of the Buyer that such Taxes have been paid or are not applicable.

          (e) Notwithstanding anything herein to the contrary, neither the Buyer nor any other Party hereto shall be liable to any holder of Company Shares immediately prior to the

Effective Time for any amount properly delivered to a Governmental Entity pursuant to applicable abandoned property, escheat or similar Laws.

          (f) The shares of Buyer Stock, if any, issued in connection with this Agreement and the transactions contemplated hereby will be issued by the Buyer without registration under the Securities Act and without qualification and/or registration under applicable state securities laws, and such shares cannot thereafter be resold, transferred, or otherwise disposed of without registration and/or qualification under the Securities Act and applicable state securities laws unless the sale or other disposition is made in compliance with exemptions from such registration and qualification requirements.

          (g) The payment of the Purchase Price paid in respect of the surrender for exchange of Company Shares in accordance with the terms hereof shall be deemed to be in full satisfaction of all rights pertaining to such shares.

     2.7 Tax Withholding . Notwithstanding anything in Section 2.3 to the contrary, any amounts otherwise required to be paid under Section 2.3 to any Management Stockholder shall be net of any applicable federal, state, local or other income or employment tax withholding obligation arising as a result of the consummation of the transactions contemplated by this Agreement with respect to such Management Stockholder (“ Purchase Price Withholding Amounts ”). An amount equal to the Purchase Price Withholding Amounts in respect of required Tax withholding on compensation for services deemed paid by the Company as a result of the consummation of such transactions, shall be paid directly by the Buyer to the Company at the Closing and shall be deemed to satisfy, in full, an equal amount of the Purchase Price that would otherwise have been due and payable to such Management Stockholder by the Buyer pursuant to Section 2.3. The Company shall deliver to the Buyer no later than five (5) business days prior to the Closing a true and complete list of all Purchase Price Withholding Amounts in respect of employment tax withholding on compensation for services deemed paid by the Company as a result of the consummation of the transactions contemplated by this Agreement, accompanied by reasonably detailed backup documentation, in form and substance reasonably satisfactory to the Buyer; provided, however, that if the Company fails to deliver such information in accordance herewith then the Purchase Price Withholding Amounts shall be calculated based on the maximum statutory withholding rates. Notwithstanding the foregoing, no Purchase Price Withholding Amount made by the Buyer in accordance herewith shall relieve any Party hereto of its obligations hereunder with respect to Taxes or otherwise.

     2.8 Supplementary Action . If at any time after the Effective Time any further assignments or assurances in law or any other things or actions are necessary or desirable to vest or to perfect or confirm of record in the Surviving Corporation the title to any property or rights of either the Company or the Merger Sub, or otherwise to carry out the provisions of this Agreement, the officers and directors of the Surviving Corporation are hereby authorized and empowered on behalf of the Company and the Merger Sub, in the name of and on behalf of either the Company or the Merger Sub, as appropriate, to execute and deliver any and all things necessary or proper to vest or to perfect or confirm title to such property or rights in the Surviving Corporation, and otherwise to carry out the purposes and provisions of this Agreement.

     2.9 Certificate of Incorporation and Bylaws of the Surviving Corporation .

          (a) At the Effective Time, the certificate of incorporation of the Company shall be amended and restated to read in its entirety as set forth in Exhibit A to the Certificate of Merger until thereafter amended as provided by the DGCL and such certificate of incorporation, as so amended and restated.

          (b) At the Effective Time, the bylaws of the Merger Sub as in effect immediately prior to the Effective Time shall become the bylaws of the Surviving Corporation until thereafter amended in accordance with the provisions thereof, the certificate of incorporation of the Surviving Corporation and the DGCL.

     2.10 Directors and Officers of the Surviving Corporation . The directors of the Company and the officers specified in Section 2.11(a)(ix) shall resign effective as of the Effective Time. The directors of the Merger Sub immediately prior to the Effective Time shall be the initial directors of the Surviving Corporation, each to hold office in accordance with the certificate of incorporation and bylaws of the Surviving Corporation, and the officers of the Merger Sub immediately prior to the Effective Time shall be the initial and only officers of the Surviving Corporation, in each case until their respective successors are duly elected or appointed and qualified.

     2.11 Closing Deliveries .

          (a) Company and Majority Stockholder Deliveries . At or prior to the Closing, the Company and the Majority Stockholders shall deliver or cause to be delivered to the Buyer:

               (i)  Share Certificates . Certificates representing all outstanding shares of Series A Preferred Stock, free and clear of any Encumbrance.

               (ii)  Registration Rights Agreement . The Registration Rights Agreement, in the form attached hereto as Exhibit 2.11(a)(ii), duly executed by each Majority Stockholder, if the Buyer elects to make the Stock Payment pursuant to Section 2.3(a)(ii).

               (iii)  Legal Opinion . Opinions of counsel to the Company and the Patriarch Stockholders, in each case substantially in the form attached hereto as Exhibit 2.11(a)(iii).

               (iv)  Payment of Designated Stockholder Payment . A complete and accurate list of the name and address, as reflected in the Company’s books and records, of each Person that is entitled to a portion of the Designated Stockholder Payment.

               (v)  W-8 or W-9 . A completed IRS Form W-8 or W-9 for each Majority Stockholder, as applicable.

               (vi)  FIRPTA . The Company shall, prior to the Closing Date, provide Buyer with a properly executed Foreign Investment and Real Property Tax Act of 1980 (“ FIRPTA ”) Notification Letter, which states that shares of Company capital stock do not constitute “United States real property interests” under Section 897(c) of the Code, for purposes

of satisfying the Buyer’s obligations under Treasury Regulation Section 1.1445-2(c)(3) and a form of notice to the Internal Revenue Service in accordance with the requirements of Treasury Regulation Section 1.897-2(h)(2), along with written authorization for the Buyer to deliver such notice form to the Internal Revenue Service on behalf of the Company.

               (vii)  Releases . Releases in the form attached hereto as Exhibit 2.11(a)(vii), duly executed by each Majority Stockholder and by Patriarch Partners Agency Services, LLC.

               (viii)  Director Resignations . Written resignations of each member of the Company’s board of directors, in a form reasonably satisfactory to the Buyer.

               (ix)  Officer Resignations . Written resignations of the Company’s (A) Chairman and Chief Executive Officer and (B) President and Chief Financial Officer, from all positions held by such Persons with the Company and evidence that all obligations (including, without limitation, all salary, bonuses, accrued vacation, commissions or other legal or contractual obligations) due and owing by the Company or its Affiliates, or that may become due and owing by the Company or its Affiliates, to such Persons (as a result of, or in connection with, the transactions contemplated hereby or otherwise) have been terminated or satisfied in full, in each case in forms reasonably satisfactory to the Buyer. The Buyer shall also receive reasonably satisfactory evidence (i) of the termination of that certain Independent Contractor Agreement, dated February 25, 2007, by and between the Company and Robert F. Angart & Company and (ii) that all obligations due and owing by the Company or its Affiliates, or that may become due and owing by the Company or its Affiliates, thereunder have been terminated or satisfied in full. Nothing in this provision shall limit such officers’ rights to indemnification from the Company under the Company’s organizational documents in such officer’s capacity as a director of officer of the Company (subject to Section 9.2(g) hereof).

               (x)  Non-Competition Agreements . Each of Charles E. Sweet and Robert F. Angart (and Robert F. Angart & Company) shall execute and deliver to the Buyer a Noncompetition and Nonsolicitation Agreement in the form attached hereto as Exhibit 2.11(a)(x).

               (xi)  Consents and Approvals . Copies of all notices to and permits, consents or approvals of third parties or Governmental Entities, the providing or granting of which are necessary for the consummation of the transactions contemplated hereby by the Majority Stockholders or the Company, or for preventing the termination or impairment (or potential termination or impairment) of any material right, privilege, license, permit, certificate, agreement or Contract of the Company upon the consummation of the transactions contemplated hereby.

               (xii)  Landlord Estoppels . Duly executed (i) estoppel certificates, in form and content reasonably satisfactory to the Buyer, from all landlords, licensors and sublessors under each lease or sublease applicable to the Real Property, and (ii) consents, in form and content reasonably satisfactory to the Buyer, from the landlord of each facility in which the Company’s inventory is located as of the Closing, permitting (subject to customary terms and

conditions) the Buyer’s senior secured lender access to such facility for purposes of executing on its security interest in such inventory after the Closing.

               (xiii)  Good Standing Certificate . A good standing certificate for the Company issued by the Secretary of State of the State of Delaware, dated as of a date no more than three (3) business days prior to the Closing Date.

               (xiv)  Wire Instructions . Wire transfer instructions for each Majority Stockholder with respect to cash payments entitled to be received by such Majority Stockholder pursuant to Section 2.3(b), which wire transfer instructions shall be delivered to the Buyer at least two (2) business days prior to the Closing Date.

               (xv)  Auditor Consents . The consent and certification of an independent registered public accounting firm with respect to the Audited Financial Statements, as well as any updated consents and certifications, as may be reasonably necessary in the Buyer’s discretion in order for the Buyer to comply with applicable Law, including any Laws which may require audited financial statement disclosure related to the Company following the Closing if the Company would be deemed (in the Buyer’s discretion) a “significant subsidiary” (as defined in Rule 1-02 of Regulation S-X promulgated under the Exchange Act) of the Buyer upon the Closing.

               (xvi)  Compliance Certificates . The certificates required by Section 8.1(a), (b)(i) and (b)(ii).

               (xvii)  Certificate of Merger . The Certificate of Merger, duly executed by the Company.

               (xviii)  Purchase Price Withholding Amounts . A true and complete list of all required Purchase Price Withholding Amounts, which list shall have been delivered to the Buyer at least five (5) business days prior to the Closing and shall be in form and substance reasonably satisfactory to the Buyer.

               (xix)  Certified Stock Ledger . A true and complete copy of the Company’s stock ledger, reflecting all transfers of record through the date thereof with respect to each class of Company’s outstanding and formerly-outstanding capital stock, certified by the Secretary of the Company.

               (xx)  Termination of LLC Interest . Evidence reasonably satisfactory to the Buyer that the Company’s equity interest in TopNoggin, LLC, an Ohio limited liability company, has been fully liquidated or otherwise terminated and all liabilities of the Company with respect thereto, if any, have been satisfied in full.

               (xxi)  Other Documents . Such additional certificates, documents, information and materials as the Buyer may reasonably request.

          (b) Buyer Deliveries . At or prior to the Closing, the Buyer shall deliver or cause to be delivered to the Majority Stockholders:

               (i)  Closing Payments . The payments specified in Section 2.3(b), including certificates representing any Stock Payment, free and clear of any Encumbrance, in the names of each applicable Majority Stockholder in accordance with the terms hereof.

               (ii)  Registration Rights Agreement . The Registration Rights Agreement, duly executed by the Buyer, if the Buyer elects to make the Stock Payment pursuant to Section 2.3(a)(ii).

               (iii)  Consents and Approvals . Copies of all notices to and permits, consents or approvals of third parties or Governmental Entities, the providing or granting of which are necessary for the consummation of the transactions contemplated hereby by the Buyer.

               (iv)  Compliance Certificate . The certificates required by Section 8.2(a) and (b)(i).

               (v)  Releases . A release in the form attached hereto as Exhibit 2.11(a)(vii) with respect to each Majority Stockholder and Patriarch Partners Agency Services, LLC, duly executed by the Buyer.

               (vi)  Certificate of Merger . The Certificate of Merger, duly executed by the Merger Sub.

               (vii)  Other Documents . Such additional certificates, documents, information and materials as the Stockholder Representative may reasonably request.

     2.12 Stockholder Representative .

          (a) Each Majority Stockholder hereby designates Patriarch Partners Agency Services, LLC (the “ Stockholder Representative ”) to represent the interests of and take action for and on behalf of such Majority Stockholder individually and the Majority Stockholders collectively in giving consents and approvals hereunder and making those determinations hereunder that are specifically reserved to the Stockholder Representative by the terms hereof, consummating or causing to be consummated the transactions contemplated by this Agreement, executing and delivering on behalf of each Majority Stockholder any amendment or waiver under this Agreement, and doing each and every act and exercising any and all other rights which such Majority Stockholder or Majority Stockholders are permitted or required to do or exercise under this Agreement and the other agreements, documents and certificates executive and performed in connection herewith. The Stockholder Representative hereby agrees to act upon the express conditions contained herein. If the Person serving as the Stockholder Representative ceases to serve in the capacity of the Stockholder Representative, for any reason, the Majority Stockholders collectively shall promptly (and in any event within ten (10) business days) appoint a successor Stockholder Representative and shall promptly (and in any event within two (2) business days thereof) provide written notice of such appointment to the Buyer. The Stockholder Representative may resign at any time upon written notice delivered to the Majority Stockholders and the Buyer or assign any and all of its rights and obligations hereunder as Stockholder Representative to any of its Affiliates upon written notice delivered to the Majority Stockholders and the Buyer, and the Stockholder Representative may be removed at any time by the Majority Stockholders holding a majority of the Company Shares held by such

Majority Stockholders at such time (or immediately prior to the Closing if such time is after the Closing) upon written notice delivered to the Stockholder Representative and the Buyer, and the concurrent appointment of a successor Stockholder Representative by such holders. The Stockholder Representative may execute any of its duties hereunder by or through third parties, agents, employees or attorneys in fact without the consent of the Majority Stockholders and shall be entitled to advice of counsel concerning all matters pertaining to such duties.

          (b) Each of the Majority Stockholders hereby agrees that any action taken on behalf of the Majority Stockholders to enforce the rights of the Majority Stockholders under this Agreement, and any action taken with respect to any indemnification claim pursuant to Article IX (including any action taken to object to, defend, compromise or agree to the payment of such claim), shall be effective if approved in writing by the Stockholder Representative, and that each and every such action so taken shall be binding and conclusive on every Majority Stockholder, whether or not such Majority Stockholder had notice of, or approved, such action.

          (c) Notwithstanding anything in this Section 2.12 to the contrary, the Stockholder Representative agrees with each of the Management Stockholders that it will not, without the written consent of Management Stockholders holding at least a majority of the aggregate Participation Percentages of the Management Stockholders collectively, approve any amendment or waiver under this Agreement as such amendment or waiver applies to any such Management Stockholders; provided , however , that any such amendment or waiver duly consented to by the Management Stockholders pursuant to the terms hereof and approved by the Stockholder Representative in accordance herewith shall be binding and conclusive on every such Management Stockholder, whether or not such Management Stockholder had notice of, or approved, such amendment or waiver.

          (d) A decision, act, consent or instruction of the Stockholder Representative in accordance herewith shall constitute a decision of each and all of the Majority Stockholders, and shall be final, binding and conclusive upon each of the Majority Stockholders. The Buyer and the Company shall be entitled to rely upon any decision, act, consent or instruction of the Stockholder Representative as being the decision, act, consent or instruction of each and all of the Majority Stockholders. The Buyer and the Company are relieved from any Liability to any person for any acts done by them in accordance with such decision, act, consent or instruction of the Stockholder Representative made in accordance herewith. Although the Stockholder Representative shall not be obligated to obtain instructions from the Majority Stockholders prior to any decision, act, consent or instruction except as specifically set forth herein, if, and to the extent that, the Stockholder Representative receives any written instructions from the Majority Stockholders collectively holding a majority of the aggregate Participation Percentages of all the Majority Stockholders, the Stockholder Representative shall comply with such instructions.

          (e) The Stockholder Representative may, in all questions arising under or related to this Agreement, rely upon any communication, instrument or document reasonably believed by it to be genuine and correct and to have been signed or sent by the proper Persons and may rely on the advice of counsel or any other advisor, and shall not be liable to the Majority Stockholders or any other Person for any action taken or not taken, or any decision made or not made, by the Stockholder Representative in its capacity as the Stockholder Representative, in the absence of such Stockholder Representative’s willful misconduct, fraud or gross negligence. In

performing its functions and duties hereunder, the Stockholder Representative shall act solely as an agent of the Majority Stockholders and does not assume any obligation or relationship of agency or trust with the Buyer. Each Majority Stockholder severally agrees to indemnify the Stockholder Representative and its Affiliates for and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature which may be asserted against the Stockholder Representative or its Affiliates in exercising its powers, rights and remedies or performing its duties as the Stockholder Representative hereunder. The Majority Stockholders shall pay (or reimburse the Stockholder Representative for), on a pro rata basis in accordance with their respective Participation Percentage, the reasonable fees and expenses of any counsel or other advisors retained by the Stockholder Representative in connection with the performance of the Stockholder Representative’s duties hereunder.

ARTICLE III

REPRESENTATIONS AND WARRANTIES
OF THE COMPANY AND THE MAJORITY STOCKHOLDERS

     Except as set forth on the disclosure schedule jointly delivered by the Company and the Majority Stockholders to the Buyer and the Merger Sub on the date hereof (the “ Company Disclosure Schedule ”), which sets forth with particularity any and all exceptions to the representations and warranties contained in this Article III and in Article IV and also contains certain matters required to be disclosed pursuant to this Agreement, which exceptions and disclosures correspond to the numbered and lettered sections hereof, the Company and each of the Majority Stockholders jointly and severally represent and warrant to the Buyer and the Merger Sub as set forth in this Article III. The Company Disclosure Schedule is attached as Annex I hereto.

     3.1 Organization, Qualification and Corporate Power . The Company is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware. The Company is duly authorized to conduct business and is in good standing under the laws of each other jurisdiction where such qualification is required, except where the failure to so qualify could not reasonably be expected to have a Material Adverse Effect on the Company. The Company has full corporate power and authority and all licenses, permits, and authorizations necessary to carry on the business in which it is engaged and to own and use the properties owned and used by it, except where the failure to have such power or authority or licenses, permits and authorizations could not reasonably be expected to have a Material Adverse Effect on the Company. Section 3.1 of the Company Disclosure Schedule lists each of the directors and officers of the Company as of the date hereof. The Company has made available to the Buyer correct and complete copies of the certificate of incorporation and bylaws of the Company, in each case as amended to date. The minute books (containing the records of meetings of the stockholders, the board of directors, and any committees of the board of directors), the stock certificate books, and the stock record books of the Company are correct and complete in all material respects and have been made available to the Buyer. The Company is not in default under or in violation of any provision of its certificate of incorporation or bylaws as in effect on the date hereof.

     3.2 Capitalization .

          (a) The entire authorized capital stock of the Company consists of 10,100,000 shares, of which 10,000,000 shares are designated Common Stock, $0.01 par value per share (the “ Company Common Stock ”), and 100,000 shares are designated Preferred Stock, $0.01 par value per share (the “ Company Preferred Stock ,” and with the Company Common Stock, the “ Company Shares ”). Of the authorized shares of Company Common Stock, 9,000,000 of such shares are designated Class A Voting Common Stock, $0.01 par value per share (the “ Class A Voting Common Stock ”), and 1,000,000 of such shares are designated as Class B Non-Voting Common Stock, $0.01 par value per share (the “ Class B Non-Voting Common Stock ”). 40,000 shares of the authorized Company Preferred Stock are designated Series A Preferred Stock, $0.01 par value per share (the “ Series A Preferred Stock ”). The only Company Shares that are outstanding are 5,591,404 shares of Class A Voting Common Stock and 40,000 shares of Series A Preferred Stock. No Company Shares are held in treasury. All of the issued and outstanding Company Shares have been duly authorized, are validly issued, fully paid, and nonassessable, and are held of record (in the number and class of shares) by the respective Persons as set forth on Schedule I hereto. Except as disclosed in Section 3.2(a) of the Company Disclosure Schedule, there are no outstanding or authorized options, warrants, purchase rights, subscription rights, conversion rights, exchange rights, or other Contracts or commitments that could require the Company to issue, sell, or otherwise cause to become outstanding any of its capital stock. There are no outstanding or authorized stock appreciation, phantom stock, profit participation, or similar rights with respect to the Company. Except as disclosed in Section 3.2(a) of the Company Disclosure Schedule, there are no voting trusts, proxies, or other agreements or understandings with respect to the voting of the capital stock of the Company.

          (b) The Purchase Price is insufficient to permit the payment of cash consideration to the holders of outstanding Series A Preferred Stock in an amount equal to such holders’ aggregate liquidation preference and accumulated but unpaid dividends attributable to such shares of Series A Preferred Stock pursuant to the Company’s certificate of incorporation, and is insufficient to permit the payment of any cash consideration to the holders of Class A Voting Common Stock or Class B Non-Voting Common Stock pursuant to the Company’s certificate of incorporation after such liquidation and dividend payments due and payable to the holders of outstanding Series A Preferred Stock.

     3.3 Authority; No Conflicts; Consent .

          (a) The Company has all requisite power and authority to enter into this Agreement and to perform its obligations hereunder. This Agreement has been duly executed and delivered by the Company and, assuming this Agreement constitutes the valid and binding obligation of the other Parties hereto, constitutes a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium and similar laws relating to or affecting creditors generally and by general equity principles. The execution and delivery of this Agreement by the Company and the consummation by the Company of the transactions contemplated by this Agreement have been duly and validly authorized by all necessary corporate action on the part of the Company, and following receipt of the Stockholder Consent, no other corporate proceedings on the part of the Company are or will be necessary to authorize

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and approve this Agreement or to authorize and consummate the transactions contemplated hereby. The affirmative vote or written consent of the holders of a majority of the outstanding shares of Class A Voting Common Stock is the only vote of any class or series of the Company’s capital stock needed to authorize and approve this Agreement or to authorize and consummate the transactions contemplated hereby. The affirmative vote or written consent of the holders of a majority of the outstanding shares of each class of Company Shares is the only vote of any class or series of the Company’s capital stock needed to authorize and approve the adoption of the Company’s amended and restated certificate of incorporation as set forth in the Certificate of Merger in accordance with Section 2.9(a).

          (b) Except (i) as set forth in Section 3.3(b)(i) of the Company Disclosure Schedule, (ii) as may be required under the Hart-Scott-Rodino Act, (iii) for the filing of the Certificate of Merger in the State of Delaware, and (iv) as have been obtained or made, no consent, approval, order or authorization of, or registration, declaration or filing with, any Governmental Entity or other Person is required by the Company in connection with the execution and delivery of this Agreement by the Company or the consummation by the Company of the transactions contemplated hereby. Section 3.3(b)(ii) of the Company Disclosure Schedule sets forth an accurate and complete list of all material permits, licenses, approvals, certifications (including vendor certifications) and similar arrangements necessary for the continued operation of the Company’s business as presently conducted.

          (c) Except as set forth in Section 3.3(c) of the Company Disclosure Schedule, neither the execution and delivery by the Company of this Agreement, nor the consummation of the transactions contemplated hereby (subject to the prior receipt of the Stockholder Consent), will (i) conflict with, or result in any violation of, or constitute a material default (with or without notice or lapse of time, or both) under, or give rise to a right of consent, termination, amendment, cancellation or acceleration of any material obligation or the loss of any material property, right or benefit under, or the creation of a Lien on any material assets (any such conflict, violation, default, right of consent, termination, amendment, cancellation or acceleration, loss or creation, a “ Violation ”) of the Company under, (A) the certificate of incorporation or bylaws of the Company, (B) any Material Contract or (C) any Law applicable to Company or its properties or assets, or (ii) create an Encumbrance on any of the capital stock of the Company.

     3.4 Brokers . The Company has not retained, and has no Liability or obligation to pay any fees, commissions or other payments to, any broker, finder, or agent with respect to the transactions contemplated by this Agreement, except for Mesirow Financial, Inc.

     3.5 Books and Records . The accounting books and records, minute books, stock record books, and other books and records of the Company have been made available to the Buyer. Such books and records as made available to the Buyer are true and complete in all material respects. At the Closing, all books and records (including any originals thereof) of the Company and each of its predecessors and former Subsidiaries will be in the Company’s possession.

     3.6 Subsidiaries . The Company has no direct or indirect Subsidiaries. Except as set forth in Section 3.6 of the Company Disclosure Schedule, the Company does not own (of record

or beneficially) any stock, partnership interests, limited liability company interests, joint venture interests or other equity interests in any other Person.

     3.7 Financial Statements . Attached hereto as Exhibit 3.7 are the following financial statements (collectively, including the notes thereto, the “ Financial Statements ”): (i) audited consolidated balance sheets and statements of income, and cash flow as of and for each of the fiscal years ended December 31, 2004, December 31, 2005 and December 31, 2006 (the “ Most Recent Fiscal Year End ”) for the Company (collectively, including the notes thereto, the “ Audited Financial Statements ”); and (ii) unaudited consolidated balance sheets and statements of income and cash flow (the “ Most Recent Financial Statements ”) as of and for the six (6) months ended June 30, 2007 (the “ Most Recent Fiscal Month End ”) for the Company. The Financial Statements have been prepared in accordance with GAAP applied in accordance with past practice (except that the Most Recent Financial Statements may not contain footnotes and are subject to normal year-end adjustments), present fairly, the consolidated financial condition of the Company as of such dates and the consolidated results of operations of the Company for such periods, are correct and complete in all material respects, and are consistent, in all material respects, with the books and records of the Company. During the periods covered by the Financial Statements and since the Most Recent Fiscal Year End, there has been no material change in the Company’s accounting policies. The Company does not have any off-balance sheet financing arrangements. Since December 31, 2004, the Company’s accounting firm has not informed the Company that it has any material challenges or disagreements regarding or pertaining to the Company’s accounting policies or practices. The Company has made available to the Buyer copies of each management letter or other letter delivered to the Company by its accounting firm in connection with the Financial Statements or relating to any review by such accounting firm of the internal controls of the Company.

     3.8 Absence of Certain Changes or Events . Except as set forth in Section 3.8 of the Company Disclosure Schedule, since June 30, 2007:

          (a) there has not been any Material Adverse Effect with respect to the Company and no event has occurred, and no circumstance exists, that could reasonably be expected to result in a Material Adverse Effect with respect to the Company;

          (b) the Company has not sold, leased, transferred, or assigned any of its assets (tangible or intangible) other than in the Ordinary Course of Business;

          (c) the Company has not entered into any Contract (or series of related Contracts) involving more than $100,000 (other than purchase orders involving less than $300,000) or outside the Ordinary Course of Business;

          (d) no party (including the Company) has accelerated, terminated, modified, or cancelled any Contract (or series of related Contracts) involving more than $100,000 to which the Company is a party or by which it or any of its assets are bound;

          (e) the Company has not imposed, or suffered the imposition by any third party of, any Liens upon any of its assets;

          (f) the Company has not made any capital expenditure (or series of related capital expenditures) involving more than $50,000 individually, $100,000 in the aggregate, or outside the Ordinary Course of Business;

          (g) the Company has not made any investment in, any loan to, or any acquisition of the securities or assets of, any other Person;

          (h) the Company has not issued any note, bond, or other debt security or created, incurred, assumed, or guaranteed any indebtedness for borrowed money or capitalized lease obligation involving more than $50,000 individually or $100,000 in the aggregate;

          (i) the Company has not delayed or postponed the payment of accounts payable or other Liabilities outside the Ordinary Course of Business;

          (j) the Company has not delayed, postponed or reduced the level of its sales or marketing efforts, or the level of resources devoted thereto, outside the Ordinary Course of Business;

          (k) the Company has not cancelled, compromised, waived, or released any right or claim (or series of related rights and claims) involving more than $50,000 individually or $100,000 in the aggregate;

          (l) the Company has not transferred, assigned, or granted any license or sublicense of any rights under or with respect to any Intellectual Property;

          (m) there has been no change made or authorized in the certificate of incorporation or bylaws of the Company;

          (n) the Company has not issued, sold, or otherwise disposed of any of its capital stock or other securities, or granted any options, warrants, or other rights to purchase or obtain (including upon conversion, exchange, or exercise) any of its capital stock or other securities;

          (o) the Company has not declared, set aside, or paid any dividend or made any distribution with respect to its capital stock (whether in cash or in kind) or redeemed, purchased, or otherwise acquired any of its capital stock;

          (p) the Company has not experienced any material damage, destruction, or loss (whether or not covered by insurance) to its assets;

          (q) the Company has not made any loan to, or entered into any other transaction with, any of its directors, officers and employees or other Affiliates;

          (r) the Company has not entered into any employment Contract or collective bargaining agreement or modified the terms of any such Contract or collective bargaining agreement;

          (s) the Company has not granted any increase in the base or other compensation of any of its directors or officers, and the Company has not granted any increase in the base or other compensation of any other employees or independent contractors outside the Ordinary Course of Business;

          (t) the Company has not adopted, amended, modified, or terminated any bonus, profit sharing, incentive, severance, or other Plan, Contract, or commitment for the benefit of any of its directors, officers, employees or independent contractors (or taken any such action with respect to the foregoing);

          (u) the Company has not made any other change in employment or engagement terms for any of its directors, officers, employees and independent contractors outside the Ordinary Course of Business; and

          (v) the Company has not committed to or agreed to do any of the foregoing.

     3.9 Undisclosed Liabilities . The Company has no Liability except for (i) Liabilities set forth on the face of the Most Recent Balance Sheet (rather than in any notes thereto) and (ii) Liabilities which have arisen after the Most Recent Fiscal Month End in the Ordinary Course of Business that do not, individually or in the aggregate, exceed $100,000.

     3.10 Legal Compliance . The Company has complied, and is in compliance, in all material respects with all applicable Laws, and except as set forth on Section 3.10 of the Company Disclosure Schedule, no action, suit, Proceeding, hearing, investigation, charge, complaint, claim, demand, or notice has been filed or commenced against the Company alleging any failure so to comply.

     3.11 Taxes .

          (a) All references in this Section 3.11 to the Company shall include Sarcom Desktop Solutions, Inc., Sarcom Desktop Solutions, LLC, Sarcom Enterprise Educational Services, Inc., and Sarcom Enterprise Educational Services, LLC.

          (b) The Company has timely filed with the appropriate Governmental Entity all federal and other material Tax Returns required to be filed by it. All Tax Returns filed by the Company are complete and accurate in all material respects. All Taxes due and payable by the Company (whether or not shown on any Tax Return) have been fully paid, or are being contested in good faith through appropriate proceedings and adequate reserves therefor have been established in the Most Recent Financial Statements.

          (c) Except as disclosed in Section 3.11(c) of the Company Disclosure Schedule, there are no pending, ongoing or, to the Knowledge of the Company, threatened audits, assessments or other actions or claims for or relating to any Liability for Taxes of the Company, and there are no matters under discussion with any Governmental Entity with respect to Taxes of the Company or known to any of the Majority Stockholders or the Company with respect to Taxes. Section 3.11(c) of the Company Disclosure Schedule identifies all Tax Returns or Tax Periods of the Company that have been audited by the relevant Governmental Entity since January 1, 2000. The Company has made available to the Buyer complete and accurate copies of

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all filed federal income and other material Tax Returns of the Company relating to all Tax Periods ending after January 1, 2003, and all other Tax Returns requested by the Buyer to be made available, and complete and accurate copies of all examination reports and statements of deficiencies assessed against or agreed to by the Company with respect to Taxes of the Company for taxable periods beginning on or after January 1, 2000. The Company has not agreed to any waiver of any statute of limitations in respect of Taxes which remains in effect, or agreed to (or become the beneficiary of) any extension of time with respect to a Tax assessment or deficiency which remains in effect, nor has any request been made in writing (or otherwise to the Knowledge of the Company) for any such extension or waiver. No power of attorney with respect to any Taxes of the Company has been executed or filed with any Governmental Entity and is currently in force.

          (d) There are no Liens with respect to Taxes on the property or assets of the Company.

          (e) The Company has not (i) agreed, nor is it required, to make any adjustment under Section 481(a) of the Code by reason of a change in accounting method or otherwise, (ii) made an election to treat any of its assets as owned by another Person for Tax purposes under former Section 168(f)(8) of the Code, as in effect prior to amendment by the Tax Equity and Fiscal Responsibility Act of 1982, or (iii) made any of the foregoing elections, and is not required to apply any of the foregoing rules under any comparable Law regarding Taxes.

          (f) Except as disclosed in Section 3.11(f) of the Company Disclosure Schedule, there are no tax-sharing, indemnity, allocation or similar agreements or arrangements in effect with respect to or involving the Company, and, immediately after the Closing Date, the Company shall not be bound by any such tax-sharing, indemnity, allocation or similar agreements or arrangements or have any Liability thereunder for amounts due in respect of periods prior to the Closing Date.

          (g) Except as set forth in Section 3.11(g) of the Company Disclosure Schedule, the Company is not and has never been a member of an Affiliated Group filing a consolidated, combined or unitary Tax Return for federal, state, local or foreign Tax purposes, other than an Affiliated Group of which Sarcom, Inc. was at all times the common parent. Except as disclosed in Section 3.11(g) of the Company Disclosure Schedule, the Company has no Liability by Contract or otherwise for the Taxes of any other Person, including without limitation (i) under Treasury Regulations Section 1.1502-6 (or any similar Laws), or (ii) as a transferee or successor.

          (h) The Company is not and has never been a United States real property holding corporation within the meaning of Section 897(c)(2) of the Code.

          (i) Except as disclosed in Section 3.11(i) of the Company Disclosure Schedule, the Company (i) is not and has never been since January 1, 2002 a partner for Tax purposes with respect to any joint venture, partnership, or other arrangement or Contract which is treated as a partnership for Tax purposes, (ii) is not and has never been since January 1, 2002 an owner of an interest in a single member limited liability company which is treated as a disregarded entity, (iii) is not and has never been a “United States shareholder” (within the

meaning of section 951 of the Code) of a “controlled foreign corporation” as defined in Section 957 of the Code, (iv) is not and has never been a “personal holding company” as defined in Section 542 of the Code, and (v) is not and has never been a shareholder of a “passive foreign investment company” within the meaning of Section 1297 of the Code.

          (j) None of the outstanding indebtedness of the Company constitutes indebtedness with respect to which any interest deductions may be disallowed under Sections 163(i), 163(j), 163(l) or 279 of the Code.

          (k) The Company has not entered into any transaction identified as a “reportable transaction” for purposes of Treasury Regulations Section 1.6011-4(b)(1) that was or is required to be reported in a disclosure statement pursuant to Treasury Regulations Section 1.6011-4(a)(or under any similar provision of Law). No Tax Return filed by or on behalf of the Company has contained a disclosure statement under Section 6662 of the Code (or any similar provision of Law), and no Tax Return has been filed by or on behalf of the Company with respect to which the preparer of such Tax Return advised consideration of inclusion of such a disclosure, which disclosure was not made.

          (l) The Company has not distributed the stock of any corporation in a transaction reported on any Tax Return as satisfying the requirements of Section 355 of the Code, and the stock of the Company has not been distributed in a transaction reported on any Tax Return as satisfying the requirements of Section 355 of the Code.

          (m) Since the Most Recent Fiscal Year End, the Company has not taken any action not in accordance with past practice that would have the effect of deferring a measure of Tax from a Tax Period (or portion thereof) ending on or before the Closing Date to a Tax Period (or portion thereof) beginning after the Closing Date. The Company has no deferred income or Tax Liability arising out of any transaction, except to the extent adequately reserved for on its Most Recent Financial Statements, as a result of any (i) intercompany transaction (as defined in Treasury Regulations Section 1.1502-13), (ii) disposition of any property in a transaction accounted for under the installment method pursuant to Section 453 of the Code, (iii) excess loss account (as defined in Treasury Regulations Section 1.1502-19), (iv) use of the long-term contract method of accounting, or (v) receipt of any prepaid amount on or before the Closing Date.

     3.12 Title to Properties and Assets; Encumbrances; Condition and Sufficiency of Assets .

          (a) Section 3.12(a) of the Company Disclosure Schedule contains a true and complete list by address of all real property leased or operated by the Company (collectively, the “ Real Property ”). The Company does not own, and has not owned, any real property. True and complete copies of all leases and subleases (including all amendments, extensions, modifications, renewals and guarantees thereof or with respect thereto), and all other Contracts, with respect to the Real Property (collectively, the “ Realty Leases ”) have been made available to the Buyer. No litigation, condemnation, expropriation, eminent domain or similar Proceeding affecting all or any material portion of any Real Property is pending or, to the Knowledge of the Company, threatened. There are no oral agreements or arrangements between the Company and

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any other party with respect to any Real Property. Except as set forth in Section 3.12(a) of the Company Disclosure Schedule, no option to extend, renew or purchase with respect to any Real Property and which will take effect on or after the date hereof has been exercised. Other than the Realty Leases, no guaranty or other undertaking with respect to the performance of any obligation arising under any agreement or document related to the Real Property has been delivered or made by the Company. The Real Property includes all real property necessary to conduct the business and operations of the Company in the manner currently conducted. All buildings, structures, fixtures, building systems and equipment included in the Real Property are in good condition and repair (ordinary wear and tear excepted) and sufficient for the operation of the Company’s business in the manner currently conducted.

          (b) The Company is in compliance with each Realty Lease in all material respects and, to the Knowledge of the Company, holds a valid leasehold interest in the Real Property subject thereto free of any Liens.

          (c) With respect to each Realty Lease, (i) such Realty Lease is legal, valid, binding, enforceable against the Company and, to the Knowledge of the Company, each other party thereto, and in full force and effect; (ii) the Company’s possession and quiet enjoyment of the Real Property subject to such Realty Lease has not been disturbed, and to the Knowledge of the Company, there are no disputes with respect to such Realty Lease; (iii) neither the Company, nor to the Knowledge of the Company any other party to the Realty Lease, is in breach or default, and, to the Knowledge of the Company, no event has occurred which, with notice or lapse of time or both, would constitute such a breach or default or permit termination, modification or acceleration under such Realty Lease; and (iv) except with respect to the Debt to be repaid at the Closing, the Company has not assigned, transferred, conveyed, mortgaged, deeded in trust or encumbered any interest in such Realty Lease.

          (d) The Company owns all of the material properties and assets (whether real, personal, or mixed and whether tangible or intangible) reflected as owned in the books and records of the Company or the audited balance sheets as of the Most Recent Fiscal Year End (except for assets held under capitalized leases and personal property sold since the Most Recent Fiscal Year End in the Ordinary Course of Business), and all of the material properties and assets purchased or otherwise acquired by the Company since the Most Recent Fiscal Year End (except for personal property acquired and sold since the Most Recent Fiscal Year End in the Ordinary Course of Business). All material properties and assets reflected in the balance sheets for the Most Recent Fiscal Month End are free and clear of all Liens.

          (e) All tangible assets of the Company are in good operating condition and repair (ordinary wear and tear excepted), are adequate for the uses to which they are being put and sufficient for the continued conduct of the Company’s business immediately after the Closing in substantially the same manner as it is currently conducted.

          (f) Section 3.12(f) of the Company Disclosure Schedule sets forth a true and correct list of (i) all Liens and Encumbrances on the assets and capital stock of the Company and (ii) all guarantees by the Company of the Liabilities (including indebtedness) of any other Person.

     3.13 Intellectual Property .

          (a) Section 3.13(a) of the Company Disclosure Schedule lists all material Company Intellectual Property, specifying in each case whether such Company Intellectual Property is owned or controlled by or for, license