AGREEMENT AND PLAN OF MERGER

Exhibit 2.1

Execution Copy

AGREEMENT AND PLAN OF MERGER

by and among

CHARTER LCI CORPORATION,

THE PROVIDENCE SERVICE CORPORATION,

PRSC ACQUISITION CORPORATION

and

CLCI AGENT, LLC

Dated as of November 6, 2007

TABLE OF CONTENTS

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INDEX OF DEFINED TERMS

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AGREEMENT AND PLAN OF MERGER

THIS AGREEMENT AND PLAN OF MERGER (this “ Agreement ”) is made as of November 6, 2007, by and among Charter LCI Corporation , a Delaware corporation (the “ Company ”), The Providence Service Corporation , a Delaware corporation (“ Parent ”), PRSC Acquisition Corporation , a Delaware corporation and a direct, wholly-owned subsidiary of Parent (“ Merger Sub ”), and, only with respect to those Sections of this Agreement expressly applicable to it, CLCI Agent, LLC , a Delaware limited liability company, as the representative of the Sellers and certain other persons identified in Section 9 hereof (the “ Stockholders’ Representative ”).

Background

A. Merger Sub is a wholly owned subsidiary of Parent. Parent intends to acquire the Company on the terms and conditions set forth in this Agreement.

B. The stockholders, option holders and warrant holders of the Company are collectively referred to herein as the “ Sellers ”.

C. Each of Parent, Merger Sub and the Company desires to enter into a transaction whereby Merger Sub will merge with and into Company (the “ Merger ”), with the Company being the surviving entity. In the Merger, each issued and outstanding share of the Company’s Class A common stock, par value $.01 per share, and Class B Common Stock, par value $.01 per share (collectively, “ Company Common Stock ”), other than the Dissenting Shares (as defined in Section 2.7(a) hereof), will be converted into the right to receive a portion of the Merger Consideration (as defined in Section 1.5(a) hereof).

D. The respective Boards of Directors of Parent and the Company have each approved this Agreement and the Merger in accordance with the General Corporation Law of the State of Delaware (the “ DGCL ”), and determined that the Merger is advisable. Parent has adopted this Agreement and approved the Merger on behalf of Merger Sub, as the sole member of Merger Sub, and in accordance with the DGCL.

E. The Company’s Board of Directors has recommended the Merger and this Agreement for approval by the Company’s stockholders (the “ Company Recommendation ”), and the Company’s stockholders will adopt this Agreement and approve the Merger.

F. Certain senior executives of the Company have, simultaneously with the execution of this Agreement, entered into certain “Terms of Employment” agreements with the Surviving Entity, which agreements include confidentiality, noncompetition and nonsolicitation covenants, to be effective upon the Closing (as defined in Section 1.2 hereof) in consideration for the substantial and valuable consideration such senior executives will receive upon consummation of the transactions contemplated by this Agreement and to protect the goodwill and confidential, proprietary and trade secret information of the Surviving Entity (as defined in Section 1.1 hereof).

Agreement

NOW, THEREFORE, in consideration of the representations, warranties, covenants and agreements contained in this Agreement and intending to be legally bound hereby, the parties agree as follows:

1. The Merger .

1.1 Structure of the Merger . Upon the terms and subject to the conditions set forth in this Agreement, and in accordance with the DGCL, Merger Sub shall be merged with and into the Company, and the separate corporate existence of Merger Sub shall cease, at the Effective Time (as defined in Section 1.3 hereof). Following the Effective Time, the Company shall be the surviving entity (the “ Surviving Entity ”), shall become a direct, wholly-owned subsidiary of Parent, and all the rights and obligations of the Merger Sub shall be vested in the Company in accordance with the DGCL.

1.2 Closing . Subject to the satisfaction or waiver of all of the conditions to closing contained in Sections 5 and 6 hereof, the closing of the Merger (the “ Closing ”) will take place at 10:00 a.m. on a date to be specified by the parties (the “ Closing Date ”), which shall be no later than the second business day after satisfaction or waiver of the conditions set forth in Sections 5 and 6 (other than those conditions that by their nature are to be satisfied at the Closing, but subject to the fulfillment or waiver of those conditions), unless another time or date is agreed to by the parties hereto. The Closing will be held at the offices of Blank Rome LLP, Philadelphia, Pennsylvania or at such other location as is agreed to by the parties hereto.

1.3 Effective Time . At, and subject to, the Closing, the parties shall cause the Merger to be consummated by filing a certificate of merger in substantially the form attached to this Agreement as Exhibit A (the “ Certificate of Merger ”) executed in accordance with the relevant provisions of the DGCL. The Merger shall become effective at such time as the Certificate of Merger is duly filed with the Secretary of State of the State of Delaware, or at such subsequent date or time as Parent and the Company shall agree and as so specified in the Certificate of Merger (the time at which the Merger becomes effective being hereinafter referred to as the “ Effective Time ”).

1.4 Effects of the Merger . The Merger shall have the effects set forth in Section 259 of the DGCL. Without limiting the generality of the foregoing, at and after the Effective Time: (i) the Surviving Entity shall possess all of the rights, privileges, powers and franchises, and be subject to all the restrictions, disabilities and duties of each of the Merger Sub and the Company; (ii) all the rights, privileges, immunities, powers and franchises, of a public as well as of a private nature, and all property, real, personal and mixed, and all debts due on whatever account, including, without limitation, all choses in action, and all and every other interest of or belonging to or due to either the Merger Sub or the Company shall be taken and deemed to be transferred to, and vested in, the Surviving Entity without further act or deed; and all property, rights and privileges, immunities, powers and franchises and all and every other interest shall be thereafter as effectually the property of the Surviving Entity as they were of either Merger Sub or the Company prior to the Effective Time; and (iii) subject to the terms of this Agreement, all debts, liabilities, duties and obligations of the Company shall become the

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debts, liabilities, duties and obligations of the Surviving Entity, and the Surviving Entity shall thenceforth be responsible and liable for all the debts, liabilities, duties and obligations of the Company, and the rights of creditors of the Company shall not be impaired by the Merger, and may be enforced against the Surviving Entity.

1.5 Merger Consideration; Escrow Fund .

(a) Subject to adjustment as set forth in Sections 2.4 and 2.5 below, and payable in accordance with Section 1.5(h) , the aggregate merger consideration to be paid by Parent and Merger Sub at Closing for all the outstanding Company Common Stock, Company Stock Options and Company Warrants shall be an amount equal to the difference between (i) $220,000,000 and (ii) the sum of (1) the Closing Date Net Indebtedness (defined below) and (2) the Company Transaction Expenses (defined below). The result of the calculation in the preceding sentence shall be increased by the amount of the Estimated Working Capital Surplus, if any, or decreased by the amount of the Estimated Working Capital Deficit, if any (such consideration, in the aggregate and as adjusted, the “Merger Consideration” ).

(b) At the Effective Time, by virtue of the Merger and without any action on the part of the holders of shares of Company Common Stock or shares of capital stock of Merger Sub, said shares shall be converted as follows:

(c) Capital Stock of the Merger Sub . Each issued and outstanding share of the capital stock of the Merger Sub shall be converted into and become one fully paid and nonassessable share of Common Stock, $0.001 par value per share, of the Surviving Corporation, so that after the Effective Time, Parent shall be the holder of all of the issued and outstanding shares of the Surviving Corporation.

(d) Cancellation of Company-Owned Stock . Any shares of Company Common Stock that are owned by the Company shall be canceled and retired and shall cease to exist without any conversion thereof.

(e) Capital Stock of the Company . Each issued and outstanding share of Company Common Stock (other than shares to be canceled in accordance with Section 1.5(d) above and any Dissenting Shares) shall, by virtue of the Merger and without any action on the part of the holder thereof, be converted into the right to receive an amount equal to (i) the quotient of (A) the sum of (1) the Merger Consideration, plus (2) the aggregate exercise price of the Company Stock Options, plus (3) the aggregate exercise price of the Company Warrants, divided by (B) the sum of (1) the number of shares of Company Common Stock outstanding immediately prior to the Effective Time, plus (2) the number of shares of Company Common Stock issuable upon exercise of the Company Stock Options outstanding immediately prior to the Effective Time, plus (3) the number of shares of Company Common Stock issuable upon exercise of the Company Warrants outstanding immediately prior to the Effective Time (the “Common Stock Merger Consideration” ), and (ii) any additional amounts as may be payable pursuant to Sections 2.4 and 2.5 below. All such shares of Company Common Stock, when so converted, shall no longer be outstanding and shall automatically be canceled and retired and

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shall cease to exist, and each holder of a certificate representing any such shares shall cease to have any rights with respect thereto, except the right to receive (i) the Common Stock Merger Consideration ( less the pro rata portion of the Escrow Fund) in consideration therefor upon the surrender of such certificate in accordance with Section 2.1 hereof, plus (ii) any additional amounts as may be payable pursuant to Sections 2.4 and 2.5 below. Notwithstanding anything to the contrary set forth herein, in no event will the aggregate amounts paid to Sellers exceed the Merger Consideration plus any additional amounts as may be payable pursuant to Sections 2.4 and 2.5 below.

(f) Company Stock Options . At the Effective Time, each then outstanding option to purchase Company Common Stock, whether vested or unvested (a “Company Stock Option” ), will be cancelled and exchanged into the right to receive, immediately after the Effective Time, the Option Consideration, which shall be payable immediately after the Effective Time by delivery of (i) shares of common stock of Parent, par value $.001 per share (the “ Parent Common Stock ”), as further described on Exhibit B and (ii) any additional amounts as may be payable pursuant to Sections 2.4 and 2.5 below. Following the Effective Time, there shall be no outstanding Company Stock Options. For purposes of this Agreement, the term “Option Consideration” means an amount equal to (i) the Common Stock Merger Consideration multiplied by the number of shares of Company Common Stock issuable upon exercise of the Company Stock Options outstanding immediately prior to the Effective Time, less (ii) the aggregate exercise price of such Company Stock Options for such shares.

(g) Company Warrants . At the Effective Time, each then outstanding warrant to purchase Company Common Stock (a “Company Warrant” ), will be cancelled in exchange for the right to receive an amount equal to (i) the Common Stock Merger Consideration multiplied by the number of shares of Company Common Stock issuable upon exercise of the Company Warrants outstanding immediately prior to the Effective Time, less (ii) the aggregate exercise price of such Company Warrants for such shares (the “ Warrant Consideration ”), and (iii) any additional amounts as may be payable pursuant to Sections 2.4 and 2.5 below. Following the Effective Time, there shall be no outstanding Company Warrants and any payment required pursuant to this Section 1.5(g) in connection with any Company Warrants shall constitute a part of the Merger Consideration.

(h) An amount equal to (1) the Merger Consideration less (2) the Option Consideration shall be payable in cash at the Closing.

(i) $11,178,000 in cash of the Merger Consideration payable to holders of Company Common Stock and Company Warrants (the “Escrow Fund” ), shall be deposited at the Closing with Wells Fargo Bank, National Association as escrow agent (the “Escrow Agent” ) in accordance with an escrow agreement dated as of the Closing Date in substantially the form attached hereto as Exhibit C (the “Escrow Agreement” ) by and among Parent, the Escrow Agent and the Stockholders’ Representative.

(j) For purposes of the Agreement, the following terms have the following meanings:

(i) “Closing Date Indebtedness” means the Indebtedness (as defined in Section 3.12(c) hereof) of the Company and its Subsidiaries on a consolidated basis as of the close of business on the day immediately preceding the Closing Date.

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(ii) “Closing Date Net Indebtedness” means the difference between (a) the Closing Date Indebtedness and (b) cash and cash equivalents (but not including any restricted cash) of the Company and its Subsidiaries on a consolidated basis as of the close of business on the day immediately preceding the Closing Date.

(iii) “Company Transaction Expenses” means the unpaid out-of-pocket costs and expenses incurred by the Company in furtherance of this Agreement and the Merger, including Brokers’ Fees (as defined below), the D&O Tail Premium, the fees and expenses of Company counsel, and transaction fees or transaction bonuses (whether retention bonuses, parachute payments, bonus payments or similar items) payable to any Seller (including any Medicare Taxes arising from any amounts paid pursuant to the Company’s Transaction Incentive Bonus Plan in connection with the transactions contemplated by this Agreement), any employee or consultant of the Company and its Subsidiaries upon consummation of the Merger. “ Company Transaction Expenses ” shall not include any Management Transaction Expenses.

1.6 Certificate of Incorporation and Bylaws of the Surviving Entity . The certificate of incorporation and the bylaws of Merger Sub, as in effect immediately prior to the Effective Time, shall be the certificate of incorporation and the bylaws of the Surviving Entity until thereafter changed or amended as provided therein or by applicable Law (as defined in Section 3.1 hereof).

1.7 Directors and Officers . The directors of Merger Sub shall, from and after the Effective Time, become the directors of the Surviving Entity until their successors shall have been duly elected, appointed or qualified or until their earlier death, resignation or removal in accordance with the certificate of formation and operating agreement of the Surviving Entity. The officers of the Company shall, from and after the Effective Time, become the officers of the Surviving Entity until their successors shall have been duly elected, appointed or qualified or until their earlier death, resignation or removal in accordance with the certificate of formation and operating agreement of the Surviving Entity.

1.8 Pre-Closing Delivery of Information . No later than two business days prior to the scheduled Closing Date, the Company shall deliver to Parent a true and correct schedule detailing the Company’s calculation of the Merger Consideration payments in Section 1.5 hereof (including the Merger Consideration payable to each Seller) to be made at Closing (the “ Merger Consideration Statement ”). Such statement shall be attached to this Agreement as Schedule 1.8 of the Disclosure Schedule.

1.9 Recalculation of Merger Consideration . Within 10 days after the final determination of the 2008 Audited Financial Statements and the statement of 2008 Adjusted EBITDA, if the Earn-Out Payment (or any portion thereof) is earned, then the amount of such payment to be paid to each Seller pursuant to Section 2.5 shall be determined in accordance with Schedule 1.9 of the Disclosure Schedule.

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2. Certain Effects of the Merger; Post Closing Adjustments.

2.1 Exchange Procedures.

(a) Parent will deposit, on or before the Effective Time with the Stockholders’ Representative, cash sufficient to pay immediately following the Effective Time (the “Exchange Fund” ), and Parent shall instruct the Stockholders’ Representative to timely pay, the aggregate Merger Consideration payable at the Closing (net of the amount required to be contributed to the Escrow Fund). At Parent’s sole discretion, the Stockholders’ Representative shall invest any cash included in the Exchange Fund so long as such investment would not delay payment to any Seller. Parent shall be required to restore any loss to the Exchange Fund resulting from such investments of cash and any interest and other income resulting from such investments shall be paid to Parent or its designee.

(b) Parent shall cause the Stockholders’ Representative to deliver, at the Effective Time, to each holder of record of a certificate(s) which immediately prior to the Effective Time represented outstanding shares of Company Common Stock (“ Company Stock Certificates ”) whose shares are to be converted into the right to receive the Merger Consideration pursuant to this Section 2.1 , and to each holder of a Company Warrant: (i) a letter of transmittal in substantially the form attached to this Agreement as Exhibit D (the “ Transmittal Letter ”), and (ii) instructions for use in surrendering the Company Stock Certificate(s) and the warrant agreements, or for providing separate stock powers to the extent that such Company Stock Certificates are already in the Company’s possession, in exchange for the allocable portion of the Merger Consideration to be paid in consideration therefor upon surrender of such certificate. No interest shall accrue on the Merger Consideration payable upon the surrender of the Company Stock Certificates or warrant agreements for the benefit of, or be paid to, the holders of the Company Stock Certificates or holders of Company Warrants, as the case may be. Parent and the Company shall reasonably cooperate to facilitate delivery of Transmittal Letters and related instructions to the Company (which the Company may disseminate to its stockholders) sufficiently in advance of Closing so as to enable the Company’s stockholders and warrant holders to deliver completed materials to the Stockholders’ Representative within such a time frame as will permit receipt by such stockholders of any cash payments due on the Closing Date.

(c) Upon surrender to the Stockholders’ Representative of its Company Stock Certificate(s), accompanied by a properly completed Transmittal Letter, (i) a holder of Company Common Stock will be entitled to receive, promptly after the Effective Time, the Merger Consideration, without interest, in respect of the shares of Company Common Stock represented by its Company Stock Certificate(s). Until so surrendered, each such Company Stock Certificate shall represent after the Effective Time, for all purposes, only the right to receive the allocable portion of the Merger Consideration to be paid in consideration therefor upon surrender of such certificate(s). If requested by any holder of shares of Company Common Stock, the Stockholders’ Representative shall make the foregoing cash payment by wire transfer on the Closing Date, if the Stockholders’ Representative shall have received the materials required by this Section and otherwise within two business days after receipt of the required materials by the Stockholders’ Representative.

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(d) If any portion of the Merger Consideration is to be paid to a person other than the person in whose name a Company Stock Certificate so surrendered is registered, it shall be a condition to such payment that such Company Stock Certificate shall be properly endorsed or otherwise be in proper form for transfer, and the person requesting such payment shall pay to the Stockholders’ Representative any transfer or other similar taxes required as a result of such payment to a person other than the registered holder of such Company Stock Certificate, or establish to the reasonable satisfaction of the Stockholders’ Representative that such tax has been paid or is not payable. Parent or the Stockholders’ Representative shall be entitled to deduct and withhold from the Merger Consideration otherwise payable pursuant to this Agreement to any holder of Company Common Stock such amounts as Parent, the Company or the Stockholders’ Representative are required to deduct and withhold under the United States Internal Revenue Code of 1986, as amended (the “ Code ”), or any provision of state, local or foreign tax Law, with respect to the making of such payment. To the extent the amounts are so withheld by Parent or the Stockholders’ Representative, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the holder of shares of Company Common Stock in respect of whom such deduction and withholding was made by Parent or the Stockholders’ Representative.

(e) After the Effective Time, there shall be no further registration of transfers of shares of Company Common Stock. If, after the Effective Time, Company Stock Certificates are presented to the Surviving Entity, they shall be cancelled and exchanged for the allocable portion of the Merger Consideration, without interest, in accordance with the procedures set forth in this Section 2 .

(f) At any time following the six month anniversary of the Effective Time, Parent shall be entitled to require the Stockholders’ Representative to deliver to it any remaining portion of the Exchange Fund that was deposited with the Stockholders’ Representative at the Effective Time (including any interest received with respect thereto and other income resulting from investments by the Stockholders’ Representative, as directed by Parent pursuant to Section 2.1(a) above), and stockholders shall be entitled to look only to Parent (subject to abandoned property, escheat or other similar Laws) with respect to the Merger Consideration payable upon due surrender of their Company Stock Certificates, without any interest thereon. Notwithstanding the foregoing, neither Parent nor the Stockholders’ Representative shall be liable to any holder of a Company Stock Certificate for Merger Consideration (or dividends or distributions with respect thereto) or cash from the Exchange Fund in each case delivered to a public official pursuant to any applicable abandoned property, escheat or similar Law.

(g) In the event any Company Stock Certificates shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming such Company Stock Certificate(s) to be lost, stolen or destroyed and upon agreeing to indemnify Parent against any claim that may be made against it or the Surviving Entity with respect to such Company Stock Certificate(s), the Stockholders’ Representative will issue the Merger Consideration, without interest, deliverable in respect of the shares of Company Common Stock represented by such lost, stolen or destroyed Company Stock Certificates.

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(h) At the Effective Time, each Company Stock Option shall have been cancelled and exchanged into Parent Company Stock as described on Exhibit B attached hereto.

(i) At the Effective Time, subject to the delivery of an appropriate Transmittal Letter, each holder of Company Warrants shall receive from the Stockholders’ Representative the applicable Warrant Consideration ( less the pro rata portion of the Escrow Fund) into which the Company Warrants shall have been converted pursuant, and subject to, the provisions of Section 1.5(f) hereof.

2.2 Registration of Parent Common Stock . The shares of Parent Common Stock to be issued in connection with the Earn-Out Payment (as defined in Section 2.5 hereof), if any, will be issued in a transaction exempt from registration under the Securities Act of 1933, as amended (the “ Securities Act ”), by reason of Section 4(2) thereof. So long as shares of Parent Common Stock having an aggregate value in excess of $1,000,000 are issued in connection with the Earn-Out Payment, Parent shall use commercially reasonable efforts to prepare and file as promptly as practicable, and, in any event, within 30 days following the Earn-Out Payment Date, a registration statement (the “ Registration Statement ”) with the Securities and Exchange Commission (the “ SEC ”) covering the resale of such shares of Parent Common Stock issued in connection with the Earn-Out Payment, and Parent shall use commercially reasonable best efforts to cause the Registration Statement to become effective as promptly as practicable after filing; provided that Parent may (i) postpone (one-time only) filing of the Registration Statement for a period not to exceed 60 days if required in order for Parent to satisfy the SEC’s financial statement requirements for the Registration Statement and (ii) postpone (one-time only) effectiveness of the Registration Statement for a period not to exceed 60 days after the date it has been advised by the SEC that it has no further comments on the Registration Statement if the board of directors of Parent determines in good faith that such effectiveness would materially and adversely affect Parent. Notwithstanding the foregoing, Parent shall have no obligation to register any shares of Parent Common Stock under this Section 2.2 if (i) such shares are eligible for sale pursuant to Rule 144(k) of the Securities Act, or any successor rule, without any limitation as to volume or (ii) such shares have been publicly sold. Parent’s obligation in the preceding sentence to file the Registration Statement within 30 days is subject to the condition that the holders of Company Common Stock provide Parent promptly, but in no event more than five days after the Earn-Out Payment Date, all information relating to them requested by Parent for inclusion in the Registration Statement, and such obligation of Parent to file the Registration Statement shall be postponed to the extent of any delay in providing such information. Parent shall pay all costs and expenses incident to the performance of its obligations pursuant to this Section 2.2 (other than the costs of any advisors to the holders of Parent Common Stock). Parent shall indemnify and hold harmless each holder of the shares of Parent Common Stock to be registered pursuant to this Section 2.2 (and each of such holder’s officers, directors, agents, employees and each person controlling such holder) against all claims, losses, damages and liabilities (including reimbursement of legal expenses) arising out of or based on any untrue statement of a material fact contained in the Registration Statement (or any amendment thereto) and any prospectus contained therein (or amendment or supplement thereto), or based on any omission to state therein a material fact required to be stated therein or necessary to make the statements therein in light of the circumstances in which they were made not misleading

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( provided, however, that Parent will not be liable in any such case to the extent that (i) any such claim, loss, damage, liability or expense arises out of or is based on any untrue statement or omission based upon written information furnished to Parent by an instrument duly executed by such holder and stated to be specifically for use therein), (ii) use of a prospectus during a period after Parent has notified the holders of Parent Common Stock in writing of the suspension of the use of such prospectus, (iii) failure of such holder to deliver a prospectus, as then amended or supplemented, as required by applicable laws; provided that Parent shall have delivered to such holder such prospectus, as then amended or supplemented, or (iv) any loss, liability, claim, damage or expense which, in the case of this clause (iv) , is finally judicially determined to have resulted from the gross negligence, willful misconduct or bad faith of any such party seeking indemnification. Each holder of Parent Common Stock, severally, but not jointly, agrees to indemnify and hold harmless Parent, (and each of Parent’s officers, directors, agents, employees and each person controlling Parent) against all claims, losses, damages and liabilities (including reimbursement of legal expenses) described in the indemnity described above but only with respect to untrue statements or omissions, or alleged untrue statements or omissions, made in the Registration Statement (or any amendment thereto) or any prospectus included therein (or any amendment or supplement thereto) in reliance upon and in conformity with written information with respect to such holder furnished to Parent by or on behalf of such holder expressly for use in the Registration Statement (or any amendment thereto) or such prospectus (or any amendment or supplement thereto); provided , however , that no such holder shall be liable for any claims hereunder in excess of the amount of net proceeds received by such holder from the sale of Parent Common Stock pursuant to such Registration Statement. Each indemnified party shall give notice as promptly as reasonably practicable to each indemnifying party of any action or proceeding commenced against it in respect of which indemnity may be sought hereunder, but failure to so notify an indemnifying party shall not relieve such indemnifying party from any liability hereunder to the extent it is not materially prejudiced as a result thereof and in any event shall not relieve it from any liability which it may have otherwise than on account of this indemnity agreement. In case any such action, claim, suit, investigation or proceeding shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and to assume the defense thereof; provided , however , that in the event that any such action, claim, suit, investigation or proceeding includes both an indemnified party and the indemnifying party, and such indemnified party reasonably concludes that there may be legal defenses available to it or other indemnified parties that are different from or in addition to those available to the indemnifying party, or if the indemnifying party fails to assume the defense of the action, claim, suit, investigation or proceeding, in either case in a timely manner, then such indemnified party may employ separate counsel to represent or defend it in any such action, claim, suit, investigation or proceeding and the indemnifying party will pay the reasonable fees and disbursements of such counsel; provided, further, that the indemnifying party will not be required to pay the fees and disbursements of more than one counsel for all indemnified parties (and one separate local counsel). In any action, claim, suit, investigation or proceeding the defense of which the indemnifying party assumes, the indemnified party will have the right to participate in such litigation and to retain its own counsel at such indemnified party’s own expense. No indemnifying party shall (i) without the prior written consent of the indemnified parties (which consent shall not be unreasonably withheld), settle or compromise or consent to the entry of any judgment with respect to any litigation, or any investigation or proceeding by

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any governmental agency or body, commenced or threatened, or any claim whatsoever in respect of which indemnification or contribution could be sought under this Section 2.2 (whether or not the indemnified parties are actual or potential parties thereto), unless such settlement, compromise or consent (1) includes an unconditional release of each indemnified party from all liability arising out of such litigation, investigation, proceeding or claim and (2) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party or (ii) be liable for any settlement of any such action effected without its prior written consent (which consent shall not be unreasonably withheld). If the indemnification provided for in this Section 2.2 is for any reason unavailable to or insufficient to hold harmless an indemnified party in respect of any losses, liabilities, claims, damages or expenses referred to therein, then each indemnifying party shall contribute to the aggregate amount of such losses, liabilities, claims, damages and expenses incurred by such indemnified party, as incurred, in such proportion as is appropriate to reflect the relative fault of Parent on the one hand and the holders on the other hand in connection with the statements or omissions which resulted in such losses, liabilities, claims, damages or expenses, as well as any other relevant equitable considerations. The relative fault of Parent on the one hand and the holders on the other hand shall be determined by reference to, among other things, whether any such untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by Parent, or by the holders and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission as well as any other relevant equitable considerations. In no event shall any holder of Parent Common Stock be liable pursuant to this Section 2.2 for an amount in excess of the amount of net proceeds received by such holder from the sale of Parent Common Stock pursuant to such Registration Statement, unless Parent is liable for such excess amount as a result of an untrue statement or omission based upon written information furnished to Parent by such holder and stated to be specifically for use in such Registration Statement.

2.3 Taking of Necessary Action; Further Action . If, at any time after the Effective Time, any further action is necessary or desirable to carry out the purposes of this Agreement and to vest the Surviving Corporation with full right, title and possession to all assets, property, rights, privileges, powers and franchises of the Company, the officers and directors of the Company and the Surviving Entity are fully authorized in the name of their respective corporations or otherwise to take, and will take, all such lawful and necessary action, so long as such action is not inconsistent with this Agreement.

2.4 Adjustment to Merger Consideration.

(a) For purposes of this Section 2.4 :

(i) “ Closing Date Net Working Capital ” means (1) the current assets of the Company and its Subsidiaries on a consolidated basis (including any restricted cash but excluding any other cash and cash equivalents or short-term deferred Tax assets) less (2) the current liabilities of the Company and its Subsidiaries on a consolidated basis (not including any accrued interest payable, accrued income taxes payable (other than state and local franchise taxes payable which will be deemed a current liability for determination of Closing Date Net Working Capital), revolving credit, short-term portion of senior term loan, short-term capital lease

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obligations or any other Closing Date Indebtedness) as of the close of business on the day immediately preceding the Closing Date in accordance with the guidelines set forth on Exhibit E and GAAP (as defined in Section 3.12(c) hereof) and as determined in the Final Closing Statement.

(ii) “ Estimated Working Capital Deficit ” means the amount, if any, that the Estimated Closing Date Net Working Capital is less than the Target Net Working Capital.

(iii) “ Estimated Working Capital Surplus ” means the amount, if any, that the Estimated Closing Date Net Working Capital is greater than the Target Net Working Capital.

(iv) “ Working Capital Deficit ” means the amount, if any, by which the Closing Date Net Working Capital is less than the Estimated Closing Date Net Working Capital, as reflected on the Final Closing Statement.

(v) “ Working Capital Surplus ” means the amount, if any, by which the Closing Date Net Working Capital is greater than the Estimated Closing Date Net Working Capital, as reflected on the Final Closing Statement.

(vi) “ Target Net Working Capital ” means an amount equal to negative twenty-two million five-hundred thousand dollars (-$22,500,000).

(b) No later than five days prior to the Closing Date, the Company shall cause to be prepared and delivered to Parent an estimated closing statement of the Company as of the Closing Date (the “ Estimated Closing Statement ”), which shall include a calculation of the Estimated Closing Date Net Working Capital (the “ Estimated Closing Date Net Working Capital ”). The Company shall provide Parent and its representatives such books and records reasonably requested by them to verify the information contained in the Estimated Closing Statement. The Company shall make appropriate revisions to the Estimated Closing Statement as are mutually agreed upon by Parent and the Company.

(c) No later than 60 days following the Closing Date, the Company’s auditor shall prepare and deliver to the Stockholders’ Representative the draft closing statement of the Company as of the Closing Date (the “ Proposed Closing Statement ”) which shall include a calculation of each of the Closing Date Net Working Capital, the Working Capital Surplus, if any, and the Working Capital Deficit, if any. Parent shall cause to be provided to the Stockholders’ Representative such books and records reasonably requested by them to verify the information contained in the Proposed Closing Statement. The Proposed Closing Statement shall be prepared in accordance with (i) the guidelines set forth on Exhibit E and (ii) GAAP on a basis consistent with the Audited Closing Financial Statements.

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(d) Parent and the Stockholders’ Representative shall have 30 days following receipt of the Proposed Closing Statement during which to notify the other party of any dispute of any item contained in the Proposed Closing Statement, which notice shall set forth in reasonable detail the basis for such dispute.

(e) If the Stockholders’ Representative or Parent does not notify the other party of any such dispute within such 30-day period, the Proposed Closing Statement shall be deemed to be the “ Final Closing Statement .”

(f) If either the Stockholders’ Representative or Parent does notify the other party of any such dispute within such 30-day period, the Final Closing Statement shall be resolved as follows:

(i) Parent and the Stockholders’ Representative shall cooperate in good faith to resolve any such dispute as promptly as possible.

(ii) In the event Parent and the Stockholders’ Representative are unable to resolve any such dispute within 15 days (or such longer period as Parent and the Stockholders’ Representative shall mutually agree in writing) of notice of such dispute, such dispute shall be submitted to, and all issues having a bearing on such dispute shall be resolved by a national accounting firm that has not performed work for either the Company or Parent within the past four years (any such firm, an “ Uninterested Accounting Firm ”), (1) the initial Uninterested Accounting Firm of which shall be Grant Thornton LLP or BDO Seidman, LLP or (2) in the event such accounting firm identified in (A) is unable or unwilling to take such assignment, another Uninterested Accounting Firm mutually agreed upon by Parent and the Stockholders’ Representative (such identified Uninterested Accounting Firm shall be referred to herein as the ” Arbitrator ”). Such resolution shall be final and binding on the parties and shall be deemed the Final Closing Statement. The Arbitrator shall use commercially reasonable efforts to complete its work within 30 days following its engagement. The fees, costs and expenses of the Arbitrator shall be paid one-half by Parent and one-half by the Sellers.

(iii) Parent and the Stockholders’ Representative jointly shall revise the Proposed Closing Statement and the calculation of Closing Date Net Working Capital, the Working Capital Surplus, if any, and the Working Capital Deficit, if any, as appropriate to reflect the resolution of the objections (as agreed upon by Parent and the Stockholders’ Representative or as determined by the Arbitrator) and deliver it to Parent and the Stockholders’ Representative within 10 days after the resolution of such objections. Such revised balance sheet shall be deemed the Final Closing Statement.

(g) For purposes of determining the information on the Final Closing Statement, the parties may take into consideration all facts which are known prior to the final determination of the Final Closing Statement.

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(h) To the extent there is a Working Capital Deficit on the Final Closing Statement, Parent shall be entitled to recover the amount of the Working Capital Deficit from Sellers (on a several and not joint basis). Any such Working Capital Deficit shall be paid to Parent by the Sellers, on a several and not joint basis.

(i) To the extent there is a Working Capital Surplus on the Final Closing Statement, Parent shall pay the Stockholders’ Representative, on behalf of the Sellers, the amount of the Working Capital Surplus by wire transfer of immediately available funds within two business days after the delivery of the Final Closing Statement to the Stockholders’ Representative to an account designated by the Stockholders’ Representative. Upon such payment, the Stockholders’ Representative or Stockholders’ Representative, as applicable, shall disburse promptly such amount to the Sellers in accordance with their pro rata ownership in the Company immediately prior to the Closing.

2.5 Earn-Out Payment .

(a) For purposes of this Section 2.5 :

(i) “ 2007 Adjusted EBITDA ” means, for the fiscal year ending December 31, 2007, the total of the following for the Surviving Entity and its Subsidiaries, determined on a consolidated basis, in each case as set forth in the 2007 Audited Financial Statements: net income; plus interest expense; plus income taxes; plus depreciation and amortization; plus amounts allocated to, or paid or payable by, the Surviving Entity or any of its Subsidiaries by or to Parent or any of its Affiliates for any corporate overhead costs; plus any incremental costs related to or arising from services or products provided by Parent or from procedures and practices required by Parent; plus costs and expenses incurred in connection with, related to, or arising from, the Merger or the other transactions contemplated by this Agreement, including the payment of transaction bonuses, sales bonuses or similar payments; plus extraordinary losses, including losses related to or arising from any asset sale; plus severance payments, severance benefits or similar payments paid or payable to current and former directors, officers and employees of the Surviving Entity or any of its Subsidiaries; plus any non-cash compensation charges related to equity compensation; less extraordinary gains, and gains related to or arising from any asset sale.

(ii) “ 2007 Audited Financial Statements ” means the consolidated audited balance sheet of the Surviving Entity, and the related consolidated audited statements of income, stockholders’ equity and cash flows of the Company, including information relating to each of its consolidated Subsidiaries, together with all related notes and schedules thereto, for the fiscal year beginning January 1, 2007 and ending December 31, 2007, prepared in accordance with GAAP applied on a basis consistent with the past practices of the Company immediately prior to the Effective Time.

(iii) “ 2008 Adjusted EBITDA ” means, for the fiscal year ending December 31, 2008, the total of the following for the Surviving Entity and its

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Subsidiaries, determined on a consolidated basis, in each case as set forth in the 2008 Audited Financial Statements: net income; plus interest expense; plus income taxes; plus depreciation and amortization; plus amounts allocated to, or paid or payable by, the Surviving Entity or any of its Subsidiaries by or to Parent or any of its Affiliates for any corporate overhead costs; plus any incremental costs related to or arising from services or products provided by Parent or from procedures and practices required by Parent; plus costs and expenses incurred in connection with, related to, or arising from, the Merger or the other transactions contemplated by this Agreement, including the payment of transaction bonuses, sales bonuses or similar payments; plus extraordinary losses, including losses related to or arising from any asset sale; plus severance payments, severance benefits or similar payments paid or payable to current and former directors, officers and employees of the Surviving Entity or any of its Subsidiaries; plus any non-cash compensation charges related to equity compensation; plus “start-up” losses arising from or related to new contracts; less extraordinary gains, and gains related to or arising from any asset sale.

(iv) “ 2008 Audited Financial Statements ” means the consolidated audited balance sheet of the Surviving Entity, and the related consolidated audited statements of income, stockholders’ equity and cash flows of the Surviving Entity, including information relating to each of its consolidated Subsidiaries, together with all related notes and schedules thereto, for the fiscal year beginning January 1, 2008 and ending December 31, 2008, prepared in accordance with GAAP applied on a basis consistent with the past practices of the Company immediately prior to the Effective Time.

(v) “ Change of Control ” means any transaction that results in any person or group directly acquiring legal or beneficial ownership of (i) equity securities of the Surviving Entity possessing the majority of the voting power under normal circumstances to elect a majority of directors or similar governing body (whether by merger, consolidation or sale or transfer of the equity securities of the Surviving Entity) or (ii) all or substantially all of the Surviving Entity’s and its Subsidiaries’ assets, determined on a consolidated basis.

(vi) “ Earn-Out Payment ” means an amount equal to the product of (i) 9.0 and (ii) the difference between (1) 2008 Adjusted EBITDA and (2) 110% of 2007 Adjusted EBITDA; provided that in no event shall the Earn-Out Payment exceed $40,000,000.

(b) No later than March 16, 2008, Parent shall deliver to the Stockholders’ Representative the 2007 Audited Financial Statements, together with a statement of 2007 Adjusted EBITDA prepared at the direction of the Surviving Entity’s chief financial officer. Parent shall provide the Stockholders’ Representative with reasonable access, during normal business hours, to any books and records reasonably requested by it to verify the information contained in such statements, subject to the Stockholders’ Representative executing in advance of any review a mutually agreeable confidentiality agreement. The Stockholders’ Representative shall have 45 days following receipt of the 2007 Audited Financial Statements and the statement of 2007 Adjusted EBITDA during which to notify Parent in writing of any

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dispute of any item contained in such statements, which written notice shall set forth in reasonable detail the basis for such dispute. If the Stockholders’ Representative does not notify Parent in writing of any such dispute, detailing in the written notice, the basis of such dispute, within such 45-day period, the 2007 Audited Financial Statements and the statement of 2007 Adjusted EBITDA shall be deemed to be final and binding upon the parties. If the Stockholders’ Representative does notify Parent in writing of any such dispute within such 45-day period, Parent and the Stockholders’ Representative shall cooperate in good faith to resolve any such dispute as promptly as possible. In the event Parent and the Stockholders’ Representative are unable to resolve any such dispute within 15 days (or such longer period as Parent and the Stockholders’ Representative shall mutually agree in writing) of written notice of such dispute, such dispute shall be submitted to, and all issues having a bearing on such dispute shall be resolved by, the Arbitrator. Such resolution shall be final and binding on the parties. The Arbitrator shall use commercially reasonable efforts to complete its work within 30 days following its engagement. The fees, costs and expenses of the Arbitrator shall be paid one-half by Parent and one-half by the Sellers. Parent and the Stockholders’ Representative jointly shall revise, to the extent applicable, the statement of 2007 Adjusted EBITDA as appropriate to reflect the resolution of the objections (as agreed upon by Parent and the Stockholders’ Representative or as determined by the Arbitrator) and deliver such statement to Parent and the Stockholders’ Representative within 10 days after the final resolution of such objections.

(c) No later than March 16, 2009, Parent shall cause the Surviving Entity’s auditor to prepare and deliver to the Stockholders’ Representative the 2008 Audited Financial Statements, together with a statement of 2008 Adjusted EBITDA prepared at the direction of the Surviving Entity’s chief financial officer. Parent shall provide the Stockholders’ Representative with reasonable access, during normal business hours, to any books and records reasonably requested by it to verify the information contained in such statements, subject to the Stockholders’ Representative executing in advance of any review a mutually agreeable confidentiality agreement. The Stockholders’ Representative shall have 45 days following receipt of the 2008 Audited Financial Statements and the statement of 2008 Adjusted EBITDA during which to notify Parent in writing of any dispute of any item contained in such statements, which written notice shall set forth in reasonable detail the basis for such dispute. If the Stockholders’ Representative does not notify Parent in writing of any such dispute within such 45-day period, the 2008 Audited Financial Statements and the statement of 2008 Adjusted EBITDA shall be final and binding upon the parties. If the Stockholders’ Representative does notify Parent in writing of any such dispute within such 45-day period, Parent and the Stockholders’ Representative shall cooperate in good faith to resolve any such dispute as promptly as possible. In the event Parent and the Stockholders’ Representative are unable to resolve any such dispute within 15 days (or such longer period as Parent and the Stockholders’ Representative shall mutually agree in writing) of written notice of such dispute, such dispute shall be submitted to, and all issues having a bearing on such dispute shall be resolved by, the Arbitrator. Such resolution shall be final and binding on the parties. The Arbitrator shall use commercially reasonable efforts to complete its work within 30 days following its engagement. The fees, costs and expenses of the Arbitrator shall be paid one-half by Parent and one-half by the Sellers. Parent and the Stockholders’ Representative jointly shall revise, to the extent applicable, the statement of 2008 Adjusted EBITDA as appropriate to reflect the resolution of the objections (as agreed upon by Parent and the Stockholders’ Representative or as determined by the Arbitrator) and deliver such statement to Parent and the Stockholders’ Representative within 10 days after the final resolution of such objections.

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(d) The Earn-Out Payment shall be paid by Parent in cash; provided that, subject to Parent obtaining the approval of its stockholders of such issuance in accordance with Nasdaq Marketplace Rule 4350 (the “ Necessary Approval ”), each Seller shall have the right to elect to receive up to 50% of its pro rata share of the Earn-Out Payment (as set forth on Schedule 1.9 of the Disclosure Schedule) in the form of shares of Parent Common Stock. Parent agrees to use all commercially reasonable efforts to obtain the Necessary Approval at the first meeting of the stockholders of Parent following the date of this Agreement. If Parent fails to obtain the Necessary Approval and a Seller elects to receive a portion of such Seller’s pro rata share of the Earn-Out Payment in the form of shares of Parent Common Stock, then Parent shall pay such portion of the Earn-Out Payment to such Seller in cash in an amount equal to the product of (i) the number of shares of Parent Common Stock such Seller would have received if the Necessary Approval had been obtained by Parent, multiplied by (ii) the volume weighted average of the price per share of the Parent’s Common Stock for the 20 trading days immediately preceding the Earn Out Payment Date (such closing price, the “ Earn Out Payment Per Share Price ”), provided, however, that the Earn Out Payment Per Share Price shall not exceed the product of (i) 2.0, multiplied by (ii) the Signing Per Share Price. Each Seller shall, within 10 days after final determination of the 2008 Audited Financial Statements and the statement of 2008 Adjusted EBITDA, notify the Stockholders’ Representative in writing as to such Seller’s election. Parent shall, within two business days following the expiration of such 10-day period (the “Earn-Out Payment Date” ), (i) pay an amount equal to the aggregate cash portion of the Earn-Out Payment by wire transfer of immediately available funds to such bank account or accounts designated by the Stockholders’ Representative and (ii) provide notice to the transfer agent for Parent to deliver to each Seller who has made an election to receive a portion of its Earn-Out Payment in shares of Parent Common Stock certificates representing such shares. Upon the receipt of the cash payment referred to in clause (i) above, the Stockholders’ Representative shall disburse promptly such amount to the Sellers in accordance with their respective pro rata ownership in the Company immediately prior to the Closing. For the purposes of this Section 2.5 , the value of each share of Parent Common Stock shall be equal to $31.42 (the “ Signing Per Share Price ”).

(e) During the period from the Effective Time until December 31, 2008, subject to Parent’s policies, procedures and practices generally applicable to all of its subsidiaries, and in the absence of the Company’s and its Subsidiaries’ EBITDA for any two consecutive calendar quarters being less than 80% of the budgeted EBITDA for such calendar quarters, each of Parent and the Surviving Entity will (except with respect to borrowed Indebtedness (including, without limitation, any convertible debt), tax reporting and payments, the provision of services or products provided by Parent generally for the benefit of its subsidiaries and operations resulting from an integration plan between Parent, the Company and its Subsidiaries, the development of which is participated in by the chief executive officer of the Company), (i) operate the business of the Surviving Entity and its Subsidiaries in the ordinary course of business consistent with the past practice of the Company and (ii) refrain from removing material assets or material contracts from the business of the Surviving Corporation or any of its Subsidiaries consistent with the past practice of the Company. Parent shall refrain from intentionally taking any actions intended to reduce 2008 Adjusted EBITDA for the purpose of reducing the amount of the Earn-Out Payment.

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(f) If a Change of Control occurs during the period from the Effective Time until the Earn-Out Payment Date which ascribes an enterprise value to the Company of in excess of $220,000,000, then, regardless as to whether the Earn-Out Payment would otherwise be payable, Parent shall pay to the Stockholders’ Representative (for prompt disbursement by the Stockholders’ Representative to the Sellers in accordance with their respective pro rata ownership in the Company immediately prior to the Closing) the full amount of the Earn-Out Payment ($40,000,000). For the avoidance of doubt, the occurrence of a Change of Control at an enterprise value of less than $220,000,000 shall not release Parent of its obligations under this Section 2.5 if the Earn-Out Payment otherwise becomes due and payable.

(g) Promptly following any acquisition by Parent of any entity engaged in the transportation brokerage business during the period from the Closing Date until December 31, 2008, Parent hereby agrees that its Board of Directors shall, in good faith, recalculate the original performance targets (the “ New Performance Targets ”) used to determine the Earn-Out Payment to appropriately reflect such acquisition, with such New Performance Targets to be subject to the approval of the Stockholders’ Representative, such approval not to be unreasonably withheld, conditioned or delayed. If the Stockholders Representative disapproves of the New Performance Targets, a dispute will be deemed to exist and Parent may submit the New Performance Targets to the Arbitrator and all such disputes with respect to the New Performance Targets shall be resolved in accordance with the procedures set forth in Section 2.5(c) .

2.6 Seller Matters . By his, her or its execution of this Agreement, each Seller executing this Agreement, in his, her or its capacity as a stockholder of the Company, hereby approves and adopts this Agreement and authorizes the Company, its directors and officers to take all actions necessary for the consummation of the Merger and the other transactions contemplated hereby pursuant to the terms of this Agreement and its Exhibits. Such execution shall be deemed to be action taken by the written consent of each Seller for purposes of Section 228 of the DGCL. As a result of this approval, each Seller also confirms that he, she or it is no longer entitled to any appraisal rights pursuant to the DGCL.

2.7 Appraisal Rights.

(a) Notwithstanding any provision of this Agreement to the contrary, any shares of Company Common Stock held by a holder who has exercised such holder’s appraisal rights in accordance with Section 262 of the DGCL, and who, as of the Effective Time, has not effectively withdrawn or lost such appraisal rights ( “Dissenting Shares” ), shall not be converted into or represent a right to receive the applicable Merger Consideration, but the holder of the Dissenting Shares shall only be entitled to such appraisal rights as are granted pursuant to the DGCL.

(b) Notwithstanding the provisions of Section 2.7(a) above, if any holder of shares of Company Common Stock who demands his, her or its appraisal rights with

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respect to such shares shall effectively withdraw or lose (through failure to perfect or otherwise) his, her or its rights to receive payment for the fair market value of such shares under Section 262 of the DGCL, then, as of the later of the Effective Time or the occurrence of such event, such holder’s shares shall automatically be converted into and represent only the right to receive the applicable Merger Consideration upon surrender of the certificate(s) representing such shares.

3. Representations and Warranties of the Company and Sellers . The Company and each of the Sellers, on a several and not joint basis, hereby represent and warrant to Parent and Merger Sub that, except as set forth on the Company’s Disclosure Schedule furnished on or before the date hereof (the “ Disclosure Schedule ”), the following statements in this Section 3 are true and correct:

3.1 Organization, Good Standing and Qualification . The Company is a corporation duly organized, validly existing and in good standing under the Laws of the State of Delaware. LogistiCare, Inc. (“ LogistiCare ”) is a corporation duly organized, validly existing and in good standing under the Laws of the State of Delaware. LogistiCare Solutions, LLC (“ Solutions ”) is a limited liability company duly formed, validly existing and in good standing under the Laws of the State of Delaware. Each of the Company and the Subsidiaries (as defined in Section 3.4 hereof) has all requisite corporate or limited liability company power, as the case may be, and authority to carry on such entity’s business as now conducted. Each of the Company and the Subsidiaries is duly qualified to transact business and is in good standing in each jurisdiction in which the failure to so qualify would, individually or in the aggregate, be materially adverse to the Company and its Subsidiaries, taken as a whole. For all purposes under this Agreement, “ Material Adverse Effect ” shall mean any occurrence, event, fact, condition, effect or change, whether determined individually or in the aggregate, that does, or is reasonably likely to, (a) have a material adverse effect on the business (as presently conducted), operations, results of operations, properties or financial condition of the Company and the Subsidiaries, taken as a whole, other than any occurrence, event, fact, condition, effect or change (i) resulting from performance in accordance with the express terms of this Agreement by the parties of their respective covenants contained herein; (ii) impacting the economy, securities markets, or financial markets generally; (iii) impacting the Company’s and the Subsidiaries’ industry in general and not specific to the Company or the Subsidiaries; (iv) resulting from the announcement or existence of this Agreement or the transactions contemplated hereby; or (v) attributable to any natural disaster or any acts of terrorism, sabotage, military action or war (whether or not declared); or (b) materially impair the ability of the Company to perform its respective obligations under this Agreement. For all purposes under this Agreement, “ Law ” means any federal, state, local or foreign law, statute, ordinance, rule, regulation, order, judgment or decree of a Governmental Authority.

3.2 Capitalization and Voting Rights of the Company . The authorized capital of the Company consists of, as of the date of this Agreement:

(a) Company Common Stock . 1,000,000 shares of Company Common Stock are authorized (700,000 shares of Class A common stock and 300,000 shares of Class B common stock), of which 590,197 shares of Class A common stock and 56,601 shares of Class B common stock are issued and outstanding and the rights, privileges and preferences of which are as stated in the Company’s Certificate of Incorporation.

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(b) The outstanding securities of the Company are owned as of the date hereof by the securityholders and in the numbers specified on Schedule 3.2(b) of the Disclosure Schedule.

(c) The outstanding shares of Company Common Stock are all duly and validly authorized and issued, fully paid and nonassessable, and were issued in accordance with the registration or qualification provisions of applicable securities Laws, or pursuant to valid exemptions therefrom.

(d) Except as set forth on Schedule 3.2(e) of the Disclosure Schedule, there are no options, warrants, rights, convertible or exchangeable securities, “phantom” stock rights, stock appreciation rights, stock-based performance units, commitments, Contracts (as defined in Section 3.12(a) hereof) or undertakings of any kind to which the Company or any Subsidiary is a party or by which any of them is bound (i) obligating the Company or any Subsidiary to issue, deliver or sell, or cause to be issued, delivered or sold, (1) additional shares of capital stock or other equity interests in, or any security convertible or exercisable for or exchangeable into any capital stock of or other equity interest in, the Company or (2) any bonds, debentures, notes or other Indebtedness (as defined in Section 3.12(c) hereof) of the Company having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) on any matters on which holders of Company Common Stock may vote, (ii) obligating the Company or any Subsidiary to issue, grant, extend or enter into any such option, warrant, call, right, security, commitment, Contract or undertaking with respect to shares of capital stock or other equity interests in, or any security convertible or exercisable for or exchangeable into any capital stock of or other equity interest in, the Company, or (iii) that give any person the right to receive any economic benefit or right similar to, or derived from, the economic benefits and rights occurring to holders of Company Common Stock. Neither the Company nor any of the Knowledgeable Sellers (as defined below) is a party or subject to any agreement or understanding, and to the Knowledge of the Knowledgeable Sellers, there is no agreement or understanding between any persons and/or entities, which affects or relates to the voting or giving of written consents with respect to any security or the voting or giving of written consents by a director of the Company. For all purposes under this Agreement, the term “ To the Knowledge of ” or “ Knowledge ” and similar phrases means in the case of an individual, knowledge of a particular fact or matter, actually known or that which could reasonably be expected to be known after reasonable inquiry. For purposes of this Agreement, the term “Knowledgeable Sellers” means each of John L. Shermyen, Albert Cortina, Thomas E. Oram, Herman M. Schwarz, M. Chinta Gaston, Robert Cornell and each member of the Company’s Board of Directors.

(e) Schedule 3.2(e) of the Disclosure Schedule sets forth the name of each holder of a Company Stock Option, together with the grant date, exercise price and the number and type of shares of Company Common Stock issuable upon exercise of each such Company Stock Option.

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3.3 Capitalization and Voting Rights of the Subsidiaries .

(a) Capitalization and Voting Rights of LogistiCare . The authorized capital of LogistiCare consists of 1,000 shares of common stock, par value $.01 per share, of which 100 shares are issued and outstanding. The Company owns all outstanding shares of LogistiCare. The rights and privileges of the common stock of LogistiCare are as stated in its Certificate of Incorporation. The issued and outstanding securities of LogistiCare are all duly and validly authorized and issued and fully paid and nonassessable, and were issued in accordance with all applicable securities Laws, rules and regulations, or pursuant to valid exemptions therefrom. LogistiCare is not a party or subject to any agreement, and to the Knowledge of the Knowledgeable Sellers, there is no agreement between any persons and/or entities, which affects or relates to the voting or giving of written consents with respect to any security or the voting or giving of written consents by a director of LogistiCare.

(b) Capitalization and Voting Rights of Other Subsidiaries . Schedule 3.3(b) of the Disclosure Schedule sets forth the outstanding equity interests of each Subsidiary other than LogistiCare and, in the event of a corporation, the number of shares of stock outstanding as of the date hereof. The outstanding capital stock or membership interests or other equity interests in the Subsidiaries identified on Schedule 3.3(b) of the Disclosure Schedule were issued in accordance with all applicable securities laws, rules and regulations, or pursuant to valid exemptions therefrom. No Subsidiary identified on Schedule 3.3(b) of the Disclosure Schedule is a party or subject to any agreement, and there is no agreement between any persons, which affects or relates to the voting or giving of written consents with respect to any security or the voting or giving of written consents by a manager, director or similar person or member, stockholder or other equity owner of any Subsidiary identified on Schedule 3.4 of the Disclosure Schedule.

(c) Other Matters . There are no options, warrants, rights, convertible or exchangeable securities, “phantom” stock rights, stock appreciation rights, stock-based performance units, commitments, Contracts or undertakings of any kind to which the Company or any Subsidiary is a party or by which any of them is bound (i) obligating the Company or any Subsidiary to issue, deliver or sell, or cause to be issued, delivered or sold, (1) additional shares of capital stock or other equity interests in, or any security convertible or exercisable for or exchangeable into any capital stock of or other equity interest in, any Subsidiary or (2) any bonds, debentures, notes or other Indebtedness of the Company or the Subsidiaries having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) on any matters on which holders of any Subsidiary’s capital stock or other equity interests may vote, (ii) obligating the Company or any Subsidiary to issue, grant, extend or enter into any such option, warrant, call, right, security, commitment, Contract or undertaking with respect to shares of capital stock or other equity interests in, or any security convertible or exercisable for or exchangeable into any capital stock of or other equity interest in, any Subsidiary or (iii) that give any person the right to receive any economic benefit or right similar to, or derived from, the economic benefits and rights occurring to holders of capital stock or other equity interests in any Subsidiary.

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3.4 Subsidiaries . Schedule 3.4 of the Disclosure Schedule lists each direct and indirect subsidiary of the Company (collectively, the “ Subsidiaries ”). The Company does not presently (i) control, directly or indirectly, any other person or (ii) own, directly or indirectly, any capital stock, membership interest, partnership interest, joint venture interest or other equity interest in any other person. None of the Subsidiaries presently (i) controls, directly or indirectly, any other person or (ii) owns, directly or indirectly, any capital stock, membership interest, partnership interest, joint venture interest or other equity interest in any person, except as shown on Schedule 3.4 of the Disclosure Schedule. None of the Company or any of the Subsidiaries is a participant in any joint venture (except as set forth on Schedule 3.4 of the Disclosure Schedule), legal partnership or similar arrangement.

3.5 Authority, Authorization and Enforceability . The Company has the corporate power and authority to execute and deliver this Agreement, the Escrow Agreement and the other agreements set forth on Schedule 3.5 of the Disclosure Schedule, (the Escrow Agreement and such other agreements are referred to as the “ Ancillary Agreements ”) and to consummate the Merger and the other transactions contemplated hereby and thereby, subject in the case of the consummation of the Merger to the filing and recordation of the Certificate of Merger. All corporate action on the part of the Company and its officers, directors and stockholders necessary for the authorization, execution and delivery of this Agreement and the Ancillary Agreements, and the performance of all obligations of the Company, hereunder and thereunder, has been taken or, with respect to the matters set forth on Schedule 3.5 of the Disclosure Schedule, will be taken prior to Closing. The Board of Directors of the Company has unanimously made the Company Recommendation. This Agreement has been duly and validly executed and delivered by the Company and each Ancillary Agreement to which the Company will become a party to on or prior to Closing, will be, when executed by the Company, duly and validly executed and delivered by the Company, and, in each case, assuming due authorization, execution and delivery by the other parties hereto and thereto, constitutes or will constitute a valid and legally binding agreement of the Company, enforceable against it in accordance with its terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, and other Laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by Laws relating to the availability of specific performance, injunctive relief, or other equitable remedies, and (iii) to the extent the indemnification provisions may be limited as a matter of public policy under applicable federal or state securities Laws.

3.6 Governmental Consents . No consent, notice, approval, order or authorization of, or registration, qualification, or filing with, any government or governmental, administrative or regulatory body thereof, or any subdivision thereof, whether foreign, federal, state, or local, or any agency, instrumentality or authority thereof, or any court or arbitrator (public or private) (“ Governmental Authority ”) on the part of the Company or any of the Subsidiaries is required in connection with the execution, delivery and performance of this Agreement by the Company or the consummation of the transactions contemplated by this Agreement (including the Merger), except (i) the filing of the Certificate of Merger with the Secretary of State of Delaware; (ii) the filing required by the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “ HSR Act ”); or (iii) the consents and notices specified on Schedule 3.6 of the Disclosure Schedule.

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3.7 Litigation . Except as set forth on Schedule 3.7 of the Disclosure Schedule, there is no action, suit, proceeding, inquiry, claim, complaint, charge or investigation materially adverse to the Company and its Subsidiaries, taken as a whole (each, an “ Action ”) pending or, to the Knowledge of the Knowledgeable Sellers, threatened against or affecting the Company or any of the Subsidiaries, or any Action that questions the validity of this Agreement or any Ancillary Agreement or the right of the Company to enter into such agreements, or to consummate the transactions contemplated hereby (including the Merger) or thereby, nor, to the Knowledge of the Knowledgeable Sellers, is there any basis for the foregoing. Except as set forth on Schedule 3.7 of the Disclosure Schedule, none of the Company or any of the Subsidiaries (nor, to the Knowledge of the Knowledgeable Sellers, any of their respective employees or consultants) is a party or subject to the provisions of any order, writ, injunction, judgment or decree of any court or government agency. There is no Action by the Company or any of the Subsidiaries currently pending or that the Company or any of the Subsidiaries intends to initiate (other than routine collection of accounts in the ordinary course of business and consistent with past practices).

3.8 Confidentiality and Intellectual Property Assignment Agreements . All persons who have materially contributed to the development of any part of any Owned Intellectual Property (as defined in Section 3.9(i) hereof) (each, an “ Intellectual Property Contributor ”) have executed a confidential information and inventions assignment agreement or similar agreement in substantially the form provided to Parent or Parent’s counsel (each, an “ Intellectual Property Assignment Agreement ”). Each such Intellectual Property Assignment Agreement is forth on Schedule 3.8 to the Disclosure Schedule. To the Knowledge of the Knowledgeable Sellers, no Intellectual Property Contributor is in violation of any material term of any Intellectual Property Assignment Agreement.

3.9 Intellectual Property and Technology.

(a) Schedule 3.9(a) of the Disclosure Schedule sets forth a true, correct and complete list of all registrations or applications included in the Owned Intellectual Property. The Company and the Subsidiaries, as applicable, have sufficient title and ownership of, licenses for, or other valid rights to use, all Intellectual Property used in their respective businesses as presently conducted. Except as set forth on Schedule 3.9(a) of the Disclosure Schedule, the Company and the Subsidiaries are the sole and exclusive owners of the Owned Intellectual Property, and except as set forth on Schedule 3.9(a) of the Disclosure Schedule, there are no outstanding options, licenses, agreements, claims, encumbrances or shared ownership of interests of any kind with any third party relating to any Owned Intellectual Property.

(b) The conduct of the business of the Company and the Subsidiaries as presently conducted does not infringe, misappropriate or otherwise violate any Intellectual Property of any third party, except for such infringements, misappropriations or violations which would not be materially adverse to the Company and its Subsidiaries, taken as a whole. To the Knowledge of the Knowledgeable Sellers, neither the Company nor any of the Subsidiaries has received any material claim or demand, and no material Action is pending or, to the Knowledge of the Knowledgeable Sellers, threatened against the Company or any of the Subsidiaries, (i) alleging that the Company or any of the Subsidiaries has infringed, misappropriated or otherwise violated any Intellectual Property owned by a third party or (ii) challenging the validity, registrability, enforceability or ownership of, or the right of the Company or the Subsidiaries to use, any Owned Intellectual Property.

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(c) To the Knowledge of the Knowledgeable Sellers, no third party is infringing, misappropriating or otherwise violating any Owned Intellectual Property. Since January 1, 2006, neither the Company nor any Subsidiary has brought or threatened a material claim against any third party (i) alleging that such third party is infringing, misappropriating or otherwise violating any Owned Intellectual Property or (ii) challenging such third party’s ownership or use, or the validity, registrability, or enforceability, of such third party’s Intellectual Property.

(d) Schedule 3.9(d) of the Disclosure Schedule sets forth a true, correct and complete list, and brief description of, all material Software included in the Owned Intellectual Property. To the Knowledge of the Knowledgeable Sellers, the Software is sufficient to operate the business of the Company and its Subsidiaries without material disruption as of the date hereof.

(e) To the Knowledge of the Knowledgeable Sellers, none of the Company’s or the Subsidiaries’ respective Key Employees is obligated under any Contract, or subject to any judgment, decree or order of any court or administrative agency or industry organization or association, that would materially interfere with the use of his or her best efforts to promote the interests of the Company or the Subsidiaries, or that would materially conflict with the Company’s current business or the business of any of the Subsidiaries as presently conducted. For all purposes of this Agreement, “Key Employee” means an employee of the Company or its Subsidiary whose annual base salary is in excess of $100,000.

(f) The Company and each of the Subsidiaries maintain commercially reasonable policies, procedures and security measures with respect to the physical and electronic security and privacy of the data, trade secrets and other confidential or proprietary information owned or used by the Company and the Subsidiaries. The Company and the Subsidiaries have, since January 1, 2006, been in material compliance with such policies and procedures, and such policies and procedures comply in all material respects with all applicable Laws. To the Knowledge of the Knowledgeable Sellers, there have been no breaches or violations of any such security measures, or any unauthorized access of any data, trade secrets and other confidential or proprietary information owned or used by the Company and the Subsidiaries which would be materially adverse to the Company and its Subsidiaries, taken as a whole. No suit or action is pending against the Company or any Subsidiary relating to any such policy, procedure or measure, or any breach or alleged breach thereof, nor has the Company or any Subsidiary received any written notice (or, to the Knowledge of the Knowledgeable Sellers, any oral notice) of any threatened material claim with respect to such matters.

(g) There are no settlements, forbearances to sue, consents, judgments, or orders or similar obligations which (i) materially restrict the Company’s or any of the Subsidiaries’ rights to use any Intellectual Property or (ii) permit any third party to use any Owned Intellectual Property.

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(h) Except as set forth on Schedule 3.9(h) of the Disclosure Schedule, the execution of this Agreement (including the consummation of the transactions contemplated hereby) shall not (i) result in the loss or impairment of the Company’s or any of the Subsidiaries’ rights to or under any of the Owned Intellectual Property (ii) give rise to a right to terminate any agreement under which the Company or any of the Subsidiaries obtains the rights to use any Licensed Intellectual Property (as defined in Section 3.9(i)(ii) hereof), or (iii) result in payment obligations under any Intellectual Property Contracts which are materially in excess of the amounts payable prior to the Closing Date.

(i) For purposes of this Section 3.9 , the following terms have the following meanings:

(i) “ Intellectual Property ” means all patents and patent applications, registered, unregistered and applications to register trademarks, service marks, trade names, trade dress, including all goodwill associated with the foregoing, registered, unregistered and applications to register copyrights, together with translations, adaptations, derivations and combinations thereof, trade secrets, know-how, Software (including data and related documentation), domain names and all improvements thereto, and all other similar material intellectual property rights.

(ii) “ Licensed Intellectual Property ” means Intellectual Property owned by a third party and used in and material to the business of the Company and the Subsidiaries as presently conducted and for which the Company or a Subsidiary has secured a use license pursuant to a valid and enforceable written agreement, of which a true and complete copy has been provided to Parent or Parent’s counsel.

(iii) “ Owned Intellectual Property ” means Intellectual Property that is material to the business of the Company and the Subsidiaries and presently used in the business of the Company or any of the Subsidiaries as presently conducted, but not including Licensed Intellectual Property.

(iv) “ Software ” means all (1) computer programs (including “off-the-shelf” software), whether in source code or object code form, (2) data, database specifications, designs and compilations and (3) all documentation relating to any of the foregoing.

3.10 Compliance with Other Instruments and Laws . Except as set forth on Schedule 3.10 of the Disclosure Schedule and except for such violations or defaults which would not be materially adverse to the Company and its Subsidiaries, taken as a whole, since January 1, 2006 (i) the Company has not been, and is not, in violation or default of any provision of its certificate of incorporation, or bylaws, or in violation or default of any material instrument, judgment, order, writ, decree or Contract to which it is a party or by which it is bound; and (ii) the Company has not been, and is not in, violation or default of any Law of any Governmental

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Authority or rule or regulation applicable to such entity. Except as set forth on Schedule 3.10 of the Disclosure Schedule and except for such violations or defaults which would not be materially adverse to the Company and its Subsidiaries, taken as a whole, (1) none of the Subsidiaries is in violation or default of any provision of such entity’s respective Certificate of Incorporation or Bylaws (or similar organizational documents), or in violation or default of any material instrument, judgment, order, writ, decree or Contract to which such entity is a party or by which such entity is bound, and (2) none of the Subsidiaries is in violation or default of any Law or rule or regulation applicable to such entity. Except as set forth on Schedule 3.10 of the Disclosure Schedule and except for such violations or defaults which would not be materially adverse to the Company and its Subsidiaries, taken as a whole, the execution, delivery and performance of this Agreement and the Ancillary Agreements to which the Company is a party, and the consummation of the Merger and the other transactions contemplated hereby and thereby, will not result in any such violation or default or be in conflict with or constitute, with or without the passage of time and giving of notice or both, either a default (or give rise to a right of termination, cancellation or acceleration of any obligation or loss of a material benefit) under any such instrument, judgment, order, writ, decree or Contract, including any Material Contract (as defined in Section 3.12(a) hereof), or an event that requires a consent or waiver or any other action by any person under, or requires the payment of a penalty in connection with, any Contract binding upon the Company or any Subsidiary or results in the creation of any Encumbrance upon any assets of the Company or any of the Subsidiaries or the suspension, revocation, impairment, forfeiture, or nonrenewal of any Permit (as defined in Section 3.11 hereof) applicable to the Company or any of the Subsidiaries, except for any of the foregoing which would not be materially adverse to the Company and its Subsidiaries, taken as a whole.

3.11 Permits .

(a) Each of the Company and the Subsidiaries has, and for the past three years has had, all material franchises, permits, certifications, registrations, licenses, approvals and any similar authority necessary for the conduct of its business as now being conducted by it (including all those required by any Governmental Authorities engaged in the regulation of the business of the Company or any of the Subsidiaries) (collectively, “ Permits ”). All such Permits are current and valid, and each such entity, as applicable, is in good standing with the appropriate Governmental Authorities in each state and other jurisdiction in which such entity does business, except where the failure to be current or valid or to be in good standing would not be materially adverse to the Company and its Subsidiaries, taken as a whole.

(b) The Closing and the consummation of the transactions hereby contemplated will not result in any material default or material loss of good standing with respect to any Permit material to the conduct of the Company’s business or the business of any Subsidiary as now conducted. All material filings required to be made with or approvals required to be