AGREEMENT AND PLAN OF MERGER

Exhibit 2.1

AGREEMENT AND PLAN OF MERGER

SELECT MEDICAL CORPORATION,

SLMC FINANCE CORPORATION,

CEDAR CLIFF ACQUISITION CORPORATION,

CORA HEALTH SERVICES, INC.

AND

BRAD C. ROUSH, AS STOCKHOLDERS’ AGENT

Dated as of October 1, 2007

TABLE OF CONTENTS

		Page
ARTICLE I. DEFINITIONS			2
ARTICLE II. DESCRIPTION OF TRANSACTION			10
2.1. Merger of Merger Sub into the Company			10
2.2. Effect of the Merger			10
2.3. Closing; Effective Time			10
2.4. Certificate of Incorporation and Bylaws; Directors and Officers			10
2.5. Conversion of Company Stock			11
2.6. Net Working Capital Adjustment			12
2.7. Closing of the Company’s Transfer Books			14
2.8. Exchange of Certificates; Escrow			15
2.9. Dissenting Shares			17
2.10. Further Action			18
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY			18
3.1. Organization of the Company			18
3.2. Authority			18
3.3. Capitalization			19
3.4. Subsidiaries			20
3.5. Capitalization of the Company Subsidiaries			20
3.6. Financial Statements			21
3.7. Undisclosed Liabilities			22
3.8. Accounts Receivable			22
3.9. Absence of Certain Changes or Events			22
3.10. Real Property; Title to Assets			24
3.11. Material Contracts			25
3.12. Intellectual Property			26
3.13. Litigation			28
3.14. Environmental Laws			28
3.15. Employee Benefit Plans			29

TABLE OF CONTENTS

(continued)

		Page
3.16. Compensation			31
3.17. Taxes			32
3.18. Insurance			33
3.19. Labor Relations and Employment			34
3.20. Medicare Participation/Accreditation			34
3.21. Cost Reports and Other Filings			35
3.22. Exclusion			36
3.23. Billing			36
3.24. Reimbursement Matters			36
3.25. No Criminal Proceedings			37
3.26. Licenses			37
3.27. Compliance with Laws			39
3.28. Visit and Payor Mix Reports			41
3.29. Transactions With Affiliates			41
3.30. Bank Accounts			41
3.31. Brokers or Finders			41
3.32. Information Statement			41
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF THE GUARANTOR, PARENT AND MERGER SUB			42
4.1. Organization of the Guarantor, Parent and Merger Sub			42
4.2. Authority			42
4.3. Litigation			43
ARTICLE V. CERTAIN COVENANTS OF THE PARTIES			43
5.1. Access and Investigation			43
5.2. Conduct of Business			43
5.3. Notification			46
5.4. No Solicitation			47
5.5. Other Information and Events			49

TABLE OF CONTENTS

(continued)

		Page
5.6. Tax Return Filing			49
5.7. Regulatory Approvals			49
5.8. Public Announcements			50
5.9. Satisfaction of Conditions			50
5.10. No Other Representations or Warranties			50
5.11. FIRPTA Matters			51
5.12. Indebtedness and Transaction Expenses			51
5.13. Cooperation Regarding Licenses			51
5.14. Stockholders’ Meeting			51
5.15. Information Statement			51
5.16. Payment of Appraisal Underpayment Amount			52
ARTICLE VI. CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT AND MERGER SUB			52
6.1. Representations and Warranties			52
6.2. Performance of the Company			52
6.3. No Restraints			53
6.4. Material Adverse Effect			53
6.5. Secretary’s Certificate			53
6.6. Good Standing Certificate			53
6.7. Organizational Documents			53
6.8. Legal Opinion			53
6.9. Consents			53
6.10. Licenses			53
6.11. Escrow Agreement			54
6.12. Non-Competition, Non-Solicitation and Confidentiality Agreements			54
6.13. Other Certificates			54
6.14. Resignations			54
6.15. No Legal Proceedings			54

TABLE OF CONTENTS

(continued)

		Page
6.16. FIRPTA Compliance			54
6.17. Stockholder Consent			54
ARTICLE VII. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY			54
7.1. Representations and Warranties			55
7.2. Performance by Parent and Merger Sub			55
7.3. No Restraints			55
7.4. Secretary’s Certificates			55
7.5. Escrow Agreement			55
7.6. Stockholder Consent			55
ARTICLE VIII. TERMINATION			55
8.1. Termination			55
8.2. Termination Fee			56
8.3. Procedures and Effect of Termination			57
8.4. Return of Documentation			57
ARTICLE IX. TAX MATTERS			57
9.1. Preparation of Tax Returns Following Closing			57
9.2. Tax Indemnification			58
9.3. Assistance and Records			58
9.4. Transfer Taxes			58
ARTICLE X. INDEMNIFICATION, ETC			59
10.1. Survival of Representations, Etc			59
10.2. Indemnification by the Stockholders			59
10.3. Indemnification by Parent and the Guarantor			61
10.4. Limitations on Indemnification Obligations			61
10.5. No Contribution			62
10.6. Demands			62
10.7. Right to Contest and Defend			63

TABLE OF CONTENTS

(continued)

		Page
10.8. Cooperation			64
10.9. Miscellaneous			64
ARTICLE XI. MISCELLANEOUS PROVISIONS			64
11.1. Schedules			64
11.2. Further Assurances			65
11.3. Fees and Expenses			65
11.4. Attorneys’ Fees			65
11.5. Notices			65
11.6. Confidentiality			66
11.7. Time of the Essence			66
11.8. Headings			67
11.9. Counterparts			67
11.10. Governing Law; Consent to Jurisdiction			67
11.11. Successors and Assigns			67
11.12. Remedies Cumulative; Specific Performance			67
11.13. Waiver			68
11.14. Waiver of Jury Trial			68
11.15. Amendments			68
11.16. Severability			68
11.17. Parties in Interest			68
11.18. Entire Agreement			68
11.19. Construction			69
ARTICLE XII. THE STOCKHOLDERS’ AGENT			69
12.1. Authorization of the Stockholders’ Agent			69
12.2. Compensation; Exculpation; Indemnity			71

EXHIBITS
Exhibit A		Stockholder Voting Agreement
Exhibit B		Letter of Transmittal
Exhibit C		Escrow Agreement
Exhibit D		Form of Opinion of Shumaker, Loop & Kendrick LLP
Exhibit E		Form of Non-Competition, Non-Solicitation and Confidentiality Agreement

DEFINED TERMS

		Page
ACMs			28
Acquisition Agreement			48
Acquisition Proposal			2
Actual Net Working Capital			12
Adverse Recommendation Change			48
Adverse Recommendation Change Notice			48
Affiliate			2
Aggregate Common Stock Preference			2
Aggregate Participation Amount			3
Aggregate Series A Preferred Stock Preference			3
Aggregate Series B Preferred Stock Preference			3
Aggregate Series C Preferred Stock Preference			3
Agreement			3
Appraisal Underpayment Amount			3
Balance Sheet			22
Balance Sheet Date			22
Basket Amount			62
Business			3
Business Day			3
Cap Amount			62
Closing			10
Closing Cash Merger Consideration			12
Closing Date			10, 24
Closing Date Balance Sheet			12
Closing Date Cash Amount			12
Closing Date Payment			15
Code			3
Common Stock			1
Company			1
Company Charter			3
Company Charter Documents			18
Company Pre-Closing Returns			49
Company Recommendation			51
Company Stock			1
Company Stock Certificate			14
Company Subsidiaries			19
Company Subsidiary			19

		Page
Company Subsidiary Shares			21
Confidentiality Agreement			43
Contracts			25
Damages			3
Development Projects			22
DGCL			10
DGCL Appraisal Procedures			17
Disputed Amounts			13
Dissenting Shares			17
DOL			29
Effective Time			10
Employee Plans			29
Encumbrance			3
Entity			4
Environmental Law			4
Environmental Permits			28
Equity Plans			31
ERISA			4
ERISA Affiliate			29
Escrow Agent			16
Escrow Agreement			16
Estimated Closing Balance Sheet			12
Estimated Net Working Capital			12
Facility			34
Filings			35
Financial Statements			21
Focused Review			4
GAAP			4
Governmental Body			4
Hazardous Substances			28
Health Care Program			40
Indebtedness			4
Indemnitees			5
Indemnitors			5
Indemnity Escrow Amount			16
Indemnity Escrow Funds			14
Independent Accounting Firm			5
Information Statement			41
Intellectual Property			26
Interim Balance Sheet			21
IRS			29
Knowledge			5
Leased Real Property			24
Legal Proceeding			5
Legal Requirement			5
Letter of Transmittal			15

		Page
Licenses			5
Litigation Conditions			63
LT Delivery Date			15
Management			28
Material Adverse Effect			5
Merger			1
Merger Consideration			5
Merger Consideration Escrow Amount			16
Merger Consideration Escrow Funds			14
Merger Stockholder			6
Merger Sub			1
Net Working Capital			6
Outstanding Shares			6
Parent			1
Parent Expiration Date			59
Parent Fundamental Representations			62
Parent Indemnitees			6
Parent Net Working Capital Calculation			12
Paying Agent			15
Payment			40
Per Share Common Stock Preference			6
Per Share Participation Amount			7
Per Share Post-Closing Stockholder Payment			7
Per Share Series A Preferred Stock Preference			7
Per Share Series B Preferred Stock Preference			7
Per Share Series C Preferred Stock Preference			7
Permitted Liens			7
Person			8
Post-Closing Decrease Amount			14
Post-Closing Increase Amount			14
Post-Closing Stockholder Payment			8
Pre-Closing Period			43
Preferred Stock			1
Pro Rata Share			8
Professional Employee			38
Real Property			24
Release			28
Released			28
Representatives			8
Requisite Stockholder Approvals			8
Series A Preferred Stock			1
Series B Preferred Stock			1
Series C Preferred Stock			1
Stark Act			39
State Health Care Program			40
Stockholder Expiration Date			59

		Page
Stockholder Fundamental Representations			62
Stockholder Indemnitees			8
Stockholder Voting Agreements			1
Stockholders			8
Stockholders’ Agent			69
Stockholders’ Agent Escrow Amount			16
Stockholders’ Agent Escrow Funds			16
Stockholders’ Meeting			51
Straddle Period			58
Subsidiary			8
Superior Proposal			9
Surviving Corporation			10
Target Net Working Capital			12
Tax			9
Tax Return			9
Taxing Authority			32
Termination Fee			56
Third Party Claim			62
Transaction Fees and Expenses			9
Unpaid Purchase Price Per Common Share			10
WARN Act			34

AGREEMENT AND PLAN OF MERGER

     This AGREEMENT AND PLAN OF MERGER is made and entered into as of October 1, 2007, by and among Select Medical Corporation, a Delaware corporation (the “ Guarantor ”), SLMC Finance Corporation, a Delaware corporation and wholly-owned subsidiary of the Guarantor (“ Parent ”), Cedar Cliff Acquisition Corporation, a Delaware corporation and wholly-owned subsidiary of Parent (“ Merger Sub ”), CORA Health Services, Inc., a Delaware corporation (the “ Company ”) and Brad C. Roush, as Stockholders’ Agent (as defined below). Certain other capitalized terms used in this Agreement are defined in Article I .

RECITALS

     A. Parent, Merger Sub and the Company intend to effect a merger of Merger Sub with and into the Company in accordance with this Agreement and the Delaware General Corporation Law (the “ Merger ”). Upon consummation of the Merger, Merger Sub will cease to exist, and the Company will continue as a wholly-owned subsidiary of Parent.

     B. The Guarantor is the sole registered and beneficial owner of all of the outstanding shares of the capital stock of Parent and has agreed to guarantee the performance of Parent’s obligations under this Agreement;

     C. This Agreement has been approved by the respective boards of directors of Parent, Merger Sub and the Company.

     D. The Company’s authorized capital stock consists of Common Stock, par value $0.001 per share (the “ Common Stock ”), Series A Convertible Preferred Stock, par value $0.001 per share (the “ Series A Preferred Stock ”), Series B Convertible Preferred Stock, par value $0.001 per share (the “ Series B Preferred Stock ”) and Series C Convertible Preferred Stock, par value $0.001 per share (the “ Series C Preferred Stock ,” and together with the Series A Preferred Stock and the Series B Preferred Stock, the “ Preferred Stock ”). The Common Stock and the Preferred Stock are sometimes collectively referred to herein as the “ Company Stock ”.

     E. As a condition and inducement to Parent entering into this Agreement, concurrently with the execution and delivery of this Agreement, Parent and certain Stockholders of the Company have entered into a Voting Agreement, dated as of the date hereof in the form of Exhibit A hereto (the “ Stockholder Voting Agreement ”), providing that, among other things, such Stockholders will vote their shares of Company Stock in favor of this Agreement, the Merger and the other transactions contemplated by this Agreement.

     NOW, THEREFORE, in consideration of the premises and the mutual promises contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties to this Agreement agree as follows:

ARTICLE I.

DEFINITIONS

     As used in this Agreement and the Exhibits, Schedules and documents delivered pursuant to this Agreement, the following terms shall have the following meanings:

     “ Acquisition Proposal ” shall mean any inquiry, proposal or offer from any Person or group of Persons (other than as contemplated by this Agreement) relating to, or that could reasonably be expected to lead to, any transaction involving:

          (a) the sale, license or disposition by the Company or the acquisition by any Person (other than Parent or Merger Sub) of all or any portion of the Company’s or any Company Subsidiary’s business or assets that constitute 15% or more of the revenues, net income or assets of the Company and the Company Subsidiaries, taken as a whole;

          (b) the issuance or disposition by the Company or any Company Subsidiary or acquisition by any Person (other than Parent or Merger Sub) of (i) 15% or more of any class of capital stock or other equity security of the Company or any Company Subsidiary, (ii) any option, call, warrant or right (whether or not immediately exercisable) to acquire 15% or more of any class of capital stock or other equity security of any of the Company or any Company Subsidiary or (iii) any security, instrument or obligation that is or may become convertible into or exchangeable for 15% or more of any class of capital stock or other equity security of the Company or any Company Subsidiary;

          (c) any tender offer or exchange offer that, if consummated, would result in any Person beneficially owning more than 15% of any class of capital stock or other equity security of the Company or any Company Subsidiary;

          (d) any merger, consolidation, business combination, reorganization or similar transaction involving the Company or any Company Subsidiary pursuant to which any Person or the stockholders of any Person would own 15% or more of any class of capital stock or other equity security of the Company or any Company Subsidiary, other than the transactions contemplated hereby; or

          (e) any other transaction the consummation of which could reasonably be expected to impede, interfere with, prevent or materially delay the Merger or that could reasonably be expected to dilute materially the benefits to Parent of the transactions contemplated hereby.

     “ Affiliate ” shall mean, with respect to any Person, any Person directly or indirectly controlling, controlled by or under common control with such Person.

     “ Aggregate Common Stock Preference ” means the Per Share Common Stock Preference multiplied by the number of shares of Common Stock outstanding immediately prior to the Effective Time, but excluding shares of Common Stock to be cancelled pursuant to Section 2.5(a)(vi) .

     “ Aggregate Participation Amount ” means the excess, if any, of the Closing Cash Merger Consideration over the sum of (a) the Aggregate Series A Preferred Stock Preference, (b) the Aggregate Series B Preferred Stock Preference, (c) the Aggregate Series C Preferred Stock Preference and (d) the Aggregate Common Stock Preference.

     “ Aggregate Series A Preferred Stock Preference ” means the Per Share Series A Preferred Stock Preference multiplied by the number of shares of Series A Preferred Stock outstanding immediately prior to the Effective Time, but excluding shares of Series A Preferred Stock to be cancelled pursuant to Section 2.5(a)(vi) .

     “ Aggregate Series B Preferred Stock Preference ” means the Per Share Series B Preferred Stock Preference multiplied by the number of shares of Series B Preferred Stock outstanding immediately prior to the Effective Time, but excluding shares of Series B Preferred Stock to be cancelled pursuant to Section 2.5(a)(vi) .

     “ Aggregate Series C Preferred Stock Preference ” means the Per Share Series C Preferred Stock Preference multiplied by the number of shares of Series C Preferred Stock outstanding immediately prior to the Effective Time, but excluding shares of Series C Preferred Stock to be cancelled pursuant to Section 2.5(a)(vi) .

     “ Agreement ” shall mean this Agreement and Plan of Merger, including the Exhibits and the Schedules attached hereto, as it may be amended from time to time.

     “ Appraisal Underpayment Amount ” shall mean in the case of any Legal Proceeding brought by any Stockholder pursuant to Section 262 of the DGCL, the excess, if any, of the applicable portion of the Merger Consideration that would have been payable to such Stockholder pursuant to the terms of this Agreement had such Stockholder not brought such Legal Proceeding over the amount of any Damages paid or payable by Parent or the Company in connection with such Legal Proceeding (including any costs or expenses incurred by Parent or the Company in connection with such Legal Proceeding).

     “ Business ” shall mean the business of the Company and Company Subsidiaries as currently conducted.

     “ Business Day ” shall mean any day other than a Saturday, Sunday, federal holiday or other day on which the Federal Reserve Bank of New York is closed for the entirety of the day.

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

     “ Company Charter ” shall mean the Amended and Restated Certificate of Incorporation of the Company, as filed with the Secretary of State of the State of Delaware on February 27, 2001.

     “ Damages ” shall include any loss, damage, injury, liability, claim, demand, settlement, judgment, award, fine, penalty, cost or expense (including reasonable attorneys’ fees), including in respect of enforcement of indemnity rights hereunder.

     “ Encumbrance ” shall mean any lien, pledge, hypothecation, charge, mortgage, security interest, encumbrance, claim, infringement, option, right of first refusal, preemptive right,

community property interest or restriction (including any restriction on the voting of any security, any restriction on the transfer of any security or other asset, any restriction on the receipt of any income derived from any asset, any restriction on the use of any asset and any restriction on the possession, exercise or transfer of any other attribute of ownership of any asset).

     “ Entity ” shall mean any corporation (including any non-profit corporation), general partnership, limited partnership, limited liability partnership, joint venture, estate, trust, company (including any limited liability company or joint stock company), firm or other enterprise, association, organization or entity.

     “ Environmental Law ” shall mean any federal, state or local Legal Requirement relating to pollution or protection of human health or the environment (including ambient air, surface water, ground water, land surface or subsurface strata), including any law or regulation relating to emissions, discharges, Releases or threatened Releases of Hazardous Substances or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Substances.

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

     “ Focused Review ” shall mean a pre-payment utilization review process implemented by a Medicare contractor to assess outpatient coverage and billing compliance with Medicare reimbursement regulations.

     “ GAAP ” shall mean United States generally accepted accounting principles consistently applied.

     “ Governmental Body ” shall mean any (a) nation, state, commonwealth, province, territory, county, municipality, district or other jurisdiction of any nature, (b) federal, state, local, municipal, foreign or other government or (c) governmental or quasi-governmental authority of any nature (including any governmental division, department, agency, commission, instrumentality, official organization, unit, body or Entity and any court or other tribunal).

     “ Indebtedness ” shall mean, without duplication and excluding accounts and other obligations owed by the Company to any wholly owned Company Subsidiary or owed by a wholly owned Company Subsidiary to the Company and/or one or more wholly owned Company Subsidiaries, (a) all obligations of the Company and the Company Subsidiaries for borrowed money; (b) all obligations under interest rate and currency hedging agreements, including swap breakage or associated fees; (c) all obligations evidenced by notes, bonds, debentures, or other similar instruments; (d) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to acquired property; (e) all reimbursement obligations, contingent or otherwise, under a drawn acceptance, letter of credit or a similar facility; (f) all other long-term liabilities, other than any deferred income tax liabilities; (g) all guarantees of any of the foregoing; (h) obligations under leases required in accordance with GAAP to be recorded as capital leases; (i) all obligations to pay the deferred purchase price of property or services (including the earned portion of any so-called “earn-out” obligations) but excluding trade

account payables in the ordinary course of business; or (j) any accrued interest, prepayment or penalties relating to any of the foregoing.

     “ Indemnitees ” shall mean the Parent Indemnitees or the Stockholder Indemnitees, as the case may be.

     “ Indemnitors ” shall mean Parent or the Merger Stockholders, as the case may be.

     “ Independent Accounting Firm ” means such independent, nationally recognized certified public accounting firm or valuation firm as Parent and the Stockholders’ Agent shall mutually agree upon; provided, however , if Parent and the Stockholders’ Agent cannot agree upon such a firm, such firm shall be jointly selected by an independent accounting firm chosen by each of Parent and Stockholders’ Agent; provided that, neither of the independent accounting firms selected by Parent or Stockholders’ Agent shall serve as the Independent Accounting Firm.

     “ Knowledge ” shall mean the actual knowledge of Dennis R. Smith, Brad C. Roush, Pier C. Borra and Brian Barth, with respect to the Company and the Company Subsidiaries after reasonable inquiry, except as specifically provided otherwise in Section 3.10 and Section 3.14 herein where no investigation or inquiry is required.

     “ Legal Proceeding ” shall mean any action, suit, litigation, arbitration, proceeding (including any civil, criminal, administrative, investigative or appellate proceeding), hearing, inquiry, audit, examination or investigation commenced, brought, conducted or heard by or before or otherwise involving, any court or other Governmental Body or any arbitrator or arbitration panel.

     “ Legal Requirement ” shall mean any federal, state, local, municipal, foreign or other law, statute, constitution, principle of common law, resolution, ordinance, code, edict, decree, order, rule, regulation, ruling or requirement issued, enacted, adopted, promulgated, implemented or otherwise put into effect by or under the authority of any Governmental Body.

     “ Licenses ” shall mean all licenses, permits, certifications, registrations, certificates of need, certificates of occupancy, Drug Enforcement Administration registrations, franchises, approvals, consents, waivers, exemptions and authorizations from state and federal healthcare programs and Governmental Bodies.

     “ Material Adverse Effect ” shall mean any material and adverse effect on (a) the financial condition, properties, assets, liabilities, business or results of operations of the Company and the Company Subsidiaries, taken as a whole, (b) the ability of the Company to perform its obligations under this Agreement or to consummate the transactions contemplated by this Agreement or (c) the ability of the Company and the Company Subsidiaries to continue to operate the Business after the Closing in substantially the same manner as the Business was operated prior to the Closing.

     “ Merger Consideration ” shall mean the sum of (a) the Aggregate Series A Preferred Stock Preference, plus (b) the Aggregate Series B Preferred Stock Preferred Stock Preference, plus (c) the Aggregate Series C Preferred Stock Preference, plus (d) the Aggregate Common

Stock Preference, plus (e) the Aggregate Participation Amount, plus (f) the amount of any Post-Closing Stockholder Payment.

     “ Merger Stockholder ” shall mean each Stockholder of Company at the Effective Time other than a Stockholder who (a) holds Dissenting Shares (and then only with respect to any Dissenting Shares held), and (b) has not waived, withdrawn or lost the right to receive payment of the fair value of such Dissenting Shares under the DGCL Appraisal Procedures.

     “ Net Working Capital ” shall mean (x) all consolidated current assets of the Company and the Company Subsidiaries as at the Closing, less (y) all consolidated current liabilities of the Company and the Company Subsidiaries as at the Closing, in each case as determined in accordance with GAAP consistent with the manner in which GAAP was applied in the preparation of the Balance Sheet; provided, however, that (a) the foregoing amounts in (x) and (y) shall exclude all deferred Tax assets (including Tax assets attributable to net operating loss carryforwards) and deferred Tax liabilities, (b) the foregoing amount in (y) shall include any liabilities for the employer portion of withholding taxes due in connection with payments on account of Options or restricted stock, (c) the foregoing amounts in (y) shall exclude all outstanding Indebtedness and any unpaid Transaction Fees and Expenses to the extent such Indebtedness and Transaction Fees and Expenses are deducted pursuant to clause (z) of Section 2.5(c)(ii) in determining the Closing Date Cash Amount, but shall include any amount by which such outstanding Indebtedness and unpaid Transaction Fees and Expenses as of the Closing exceed the amount thereof used to calculate the Closing Date Cash Amount pursuant to clause (z) of Section 2.5(c)(ii) , (d) the foregoing amounts in (y) shall include any retention bonuses, success fees or similar officer or employee retention payments and any severance obligations and related costs arising from agreements entered into or obligations incurred by the Company or any Company Subsidiary as of or prior to the Closing that any officer or employee of the Company or any Company Subsidiary would be entitled to receive upon termination of employment as a result of or in connection with the transactions contemplated hereby, and (e) the foregoing amounts in (y) shall include an accrual, determined in accordance with GAAP, for incurred but not reported claims.

     “ Outstanding Shares ” shall mean the aggregate number of shares of Company Stock outstanding immediately prior to the effective time, but excluding shares of Company Stock to be cancelled pursuant to Section 2.5(a)(vi) .

     “ Parent Indemnitees ” shall mean the following Persons: (a) Parent; (b) Parent’s current and future Affiliates (including the Guarantor, Merger Sub, and, following the Merger, the Surviving Corporation); (c) the respective Representatives of the Persons referred to in clauses (a) and (b) above; and (d) the respective successors and assigns of the Persons referred to in clauses (a), (b) and (c) above; provided, however , that the Stockholders shall not be deemed to be Parent Indemnitees.

     “ Per Share Common Stock Preference ” means, with respect to each outstanding share of Common Stock, an amount equal to the lesser of (a) $.50, and (b) the quotient obtained by dividing (i) the excess, if any, of the Closing Cash Merger Consideration over the sum of (x) the Aggregate Series A Preferred Stock Preference, (y) the Aggregate Series B Preferred Stock Preference and (z) the Series C Preferred Stock Preference by (ii) the number of shares of

Common Stock outstanding immediately prior to the Effective Time, but excluding shares of Common Stock to be cancelled pursuant to Section 2.5(a)(vi) .

     “ Per Share Participation Amount ” means the quotient obtained by dividing (a) the Aggregate Participation Amount by (b) the number of Outstanding Shares.

     “ Per Share Post-Closing Stockholder Payment ” means, for any holder of a share of Company Stock, the additional amount per share of Company Stock that such Merger Stockholder would have received had the amount of any Post-Closing Stockholder Payment been included in the calculation of the Closing Date Cash Amount at the time of the Closing, taking into account any previous adjustments and payments.

     “ Per Share Series A Preferred Stock Preference ” means, with respect to each outstanding share of Series A Preferred Stock, an amount equal to the lesser of (a) $1.00, and (b) the quotient obtained by dividing (i) the Closing Cash Merger Consideration by (ii) the number of shares of Series A Preferred Stock outstanding immediately prior to the Effective Time, but excluding shares of Series A Preferred Stock to be cancelled pursuant to Section 2.5(a)(vi) .

     “ Per Share Series B Preferred Stock Preference ” means, with respect to each outstanding share of Series B Preferred Stock, an amount equal to the lesser of (a) $1.00, and (b) the quotient obtained by dividing (i) the excess, if any, of the Closing Cash Merger Consideration over the Aggregate Series A Preferred Stock Preference by (ii) the number of shares of Series B Preferred Stock outstanding immediately prior to the Effective Time, but excluding shares of Series B Preferred Stock to be cancelled pursuant to Section 2.5(a)(vi) .

     “ Per Share Series C Preferred Stock Preference ” means, with respect to each outstanding share of Series C Preferred Stock, an amount equal to the lesser of (a) $1.00, and (b) the quotient obtained by dividing (i) the excess, if any, of the Closing Cash Merger Consideration over the sum of (x) the Aggregate Series A Preferred Stock Preference and (y) the Series B Preferred Stock Preference by (ii) the number of shares of Series C Preferred Stock outstanding immediately prior to the Effective Time, but excluding shares of Series C Preferred Stock to be cancelled pursuant to Section 2.5(a)(vi) .

     “ Permitted Liens ” shall mean (a) any Encumbrances disclosed on the Balance Sheet or Schedule 1.1 hereto, (b) liens for Taxes, assessments or charges of any Governmental Body which are not yet due and payable or which are being contested by the Company or a Company Subsidiary in good faith, (c) liens incurred in connection with workers’ compensation, unemployment insurance and other types of social security benefits, (d) mechanics’, carriers’, workmens’, repairmens’ or other like liens arising or incurred in the ordinary course of business which are not overdue for a period of more than 90 days or which are being contested in good faith by appropriate proceedings, (e) any statutory or common law landlord’s liens created pursuant to or arising with respect to a lease, sublease or license by the Company or a Company Subsidiary of Leased Real Property arising or incurred in the ordinary course of business which are not overdue, (f) mortgages or deeds of trust or other like security instruments granted by an owner of Leased Real Property and encumbering only the fee simple title to Leased Real Property, (g) the terms, provisions, restrictions and limitations of any lease, sublease or license agreement for the lease, sublease or license by the Company or a Company Subsidiary of Leased

Real Property and set forth on Schedule 3.10(a) , (h) the terms, provisions, restrictions and limitations of any personal property lease to the extent that such terms, provisions, restrictions and limitations do not materially impair the operation of the business at the facility at which such leased personal property is located, (i) deposits to secure the performance of bids, contracts (other than for borrowed money), leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of like nature incurred in the ordinary course of business and (j) such imperfections or irregularities of title, easements (including, without limitation, reciprocal easement agreements and utility agreements), rights of way, encroachments, restrictive covenants, variances and other similar restrictions, charges or encumbrances (whether or not recorded) that do not, individually or in the aggregate, materially detract from the value and do not, individually or in the aggregate, materially interfere with the present use of the property or leased assets affected thereby and do not otherwise materially impair the Business.

     “ Person ” shall mean any individual, Entity or Governmental Body.

     “ Post-Closing Stockholder Payment ” shall mean any payment made to the Stockholders’ Agent on behalf of the Merger Stockholders pursuant to this Agreement arising from (a) any Post-Closing Increase Amount, (b) any Appraisal Underpayment Amount, (c) any distribution to the Merger Stockholders from the Stockholders’ Agent Escrow Funds, Merger Consideration Escrow Funds or the Indemnity Escrow Funds, or (d) any payment made by Parent for indemnification pursuant to Section 10.3 hereof.

     “ Pro Rata Share ” shall mean for each Merger Stockholder, the fraction (expressed as a percentage), the numerator of which is the amount of consideration payable at Closing to such Merger Stockholder with respect to such holder’s shares of Company Stock as a result of the Merger in accordance with the terms of this Agreement, and the denominator of which is the total amount of consideration payable at Closing to all holders of Outstanding Shares other than Dissenting Shares as a result of the Merger in accordance with the terms of this Agreement.

     “ Representatives ” shall mean officers, directors, employees, agents, attorneys, accountants, advisors and representatives.

     “ Requisite Stockholder Approvals ” shall mean the affirmative approval of this Agreement and the Merger by (a) a majority of the votes represented by all outstanding shares of Common Stock, Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock, voting together as a single class, and (b) a majority of the votes represented by all outstanding shares of Common Stock, Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock, each voting as a separate class, pursuant to and in accordance with the applicable provisions of the DGCL and the Company Charter.

     “ Stockholder Indemnitees ” shall mean the following Persons: (a) the Merger Stockholders; (b) the current and future Affiliates of the Merger Stockholders and the Stockholders’ Agent; (c) the respective Representatives of the Persons referred to in clauses (a) and (b) above; and (d) the respective successors and assigns of the Persons referred to in clauses (a), (b) and (c) above.

     “ Stockholders ” shall mean the holders of the Company Stock.

     “ Subsidiary ” shall mean, when used with respect to any party, any Entity of which such party directly or indirectly owns or controls at least a majority of the securities or other interests having by their terms ordinary voting power to elect a majority of the board of directors or others performing similar functions with respect to such Entity, or any Entity of which such party is a general partner.

     “ Superior Proposal ” means any Acquisition Proposal (but changing the references to “15% or more” in the definition of “Acquisition Proposal” to “50% or more”) that the board of directors of the Company determines in good faith (after having received the advice of its financial advisors), to be (a) more favorable to the Stockholders from a financial point of view than the Merger (taking into account all the terms and conditions of such proposal and this Agreement (including any termination fees, expense reimbursement provisions and conditions to consummation and any changes to the financial terms of this Agreement proposed by Parent in response to such offer or otherwise)) and (b) reasonably capable of being completed without undue delay taking into account all financial, legal, regulatory and other aspects of such proposal.

     “ Tax ” shall mean any tax (including, but not limited to, any income tax, franchise tax, capital gains tax, gross receipts tax, value-added tax, surtax, excise tax, ad valorem tax, transfer tax, stamp tax, sales tax, use tax, property tax, business tax, unclaimed property tax, withholding tax or payroll tax), levy, assessment, tariff, duty (including any customs duty), deficiency or fee, and any related charge or amount (including any fine, penalty or interest), imposed, assessed or collected by or under the authority of any Governmental Body.

     “ Tax Return ” shall mean any return (including any information return), report, statement, indentation, estimate, schedule, notice, notification, form, election, certificate or other document or information filed with or submitted to or required to be filed with or submitted to, any Governmental Body in connection with the determination, assessment, collection or payment of any Tax or in connection with the administration, implementation or enforcement of or compliance with any Legal Requirement relating to any Tax.

     “ Transaction Fees and Expenses ” shall mean all fees, costs and expenses (including legal fees and accounting fees) that have been incurred or that are incurred by the Company, Company Subsidiaries and Stockholders in connection with the transactions contemplated by this Agreement, including all fees, costs and expenses incurred in connection with or by virtue of (a) the negotiation, preparation and review of this Agreement (including the Exhibits and Schedules hereto) and all agreements, certificates, opinions and other instruments and documents delivered or to be delivered in connection with the transactions contemplated by this Agreement, (b) the preparation and submission of any filing or notice required to be made or given in connection with any of the transactions contemplated by this Agreement, and the obtaining of any consent required to be obtained in connection with any of such transactions, and (c) the consummation of the transactions contemplated by this Agreement, including the fees due to any financial advisor and any retention bonuses, “success” fees, change of control payments, severance payments and any other payment obligations arising from agreements entered into as or obligations incurred by the Company or any Company Subsidiary as of or prior to the Closing and payable to employees

or any other Person as a result of or related to the consummation of the transactions contemplated by this Agreement. For purposes of this Agreement, all of the fees payable at the Closing to the Paying Agent and one-half of any fees payable at the Closing to the Escrow Agent shall be considered Transaction Fees and Expenses.

     “ Unpaid Purchase Price Per Common Share ” means with respect to each share of Common Stock, the amount of purchase price on such share of Common Stock which remains unpaid immediately prior to the Effective Time (it being understood that the amount of any indebtedness owed to the Company or any Company Subsidiary that was incurred by the holder of such share of Common Stock in connection with the issuance of such Common Stock shall be considered unpaid purchase price).

ARTICLE II.

DESCRIPTION OF TRANSACTION

     2.1. Merger of Merger Sub into the Company . Upon the terms and subject to the conditions set forth in this Agreement, at the Effective Time (as defined in Section 2.3 ), Merger Sub shall be merged with and into the Company, and the separate existence of Merger Sub shall cease. The Company will continue as the surviving corporation in the Merger (the “ Surviving Corporation ”).

     2.2. Effect of the Merger . The Merger shall have the effect set forth in this Agreement and in the applicable provisions of the Delaware General Corporation Law (the “ DGCL ”).

     2.3. Closing; Effective Time . The consummation of the transactions contemplated by this Agreement (the “ Closing ”) shall take place at the offices of Dechert LLP, Cira Centre, 2929 Arch Street, Philadelphia, PA 19104 at 10:00 a.m. on the third day (or the next business day if the third day is not a business day) after satisfaction or waiver of the latest to occur of the conditions set forth in Articles VI and VII , except for those conditions which are only capable of being performed at the Closing. The date on which the Closing actually takes place is referred to in this Agreement as the “ Closing Date .” For purposes of this Agreement (including with respect to any calculation of the Actual Net Working Capital), the Closing shall be deemed to have occurred 12:01 a.m. on the Closing Date. Contemporaneously with or as promptly as practicable after the Closing, a properly executed certificate of merger conforming to the requirements of the DGCL shall be filed with the Secretary of State of the State of Delaware. The Merger shall become effective at the time the certificate of merger is filed with and accepted by the Secretary of the State of the State of Delaware (such time, the “ Effective Time ”).

     2.4. Certificate of Incorporation and Bylaws; Directors and Officers . Unless otherwise determined by Parent, with advance written notice to the Company, prior to the Effective Time:

          (a) the Certificate of Incorporation of Merger Sub, as in effect immediately prior to the Effective Time, shall be the Certificate of Incorporation of the Surviving Corporation, until thereafter altered, amended or repealed;

          (b) the Bylaws of Merger Sub, as in effect immediately prior to the Effective Time, shall be the Bylaws of the Surviving Corporation, until thereafter altered, amended or repealed; and

          (c) the directors and officers of the Surviving Corporation immediately after the Effective Time shall be the individuals designated by Parent prior to the Closing.

     2.5. Conversion of Company Stock .

          (a) Subject to Section 2.9 , at the Effective Time, by virtue of the Merger and without any further action on the part of Parent, Merger Sub, the Company or any Stockholder:

               (i) each share of Series A Preferred Stock issued and outstanding immediately prior to the Effective Time, other than shares of Series A Preferred Stock to be cancelled pursuant to Section 2.5(a)(vi) and any Dissenting Shares, shall be converted solely into the right to receive an amount equal to the Per Share Series A Preferred Stock Preference plus the Per Share Participation Amount, if any, plus the right to receive any Per Share Post-Closing Stockholder Payment, if any, payable in cash to the holder thereof, without interest thereon, upon surrender of the Company Stock Certificate formerly representing such share of Series A Preferred Stock, all in accordance with Section 2.8 ;

               (ii) each share of Series B Preferred Stock issued and outstanding immediately prior to the Effective Time, other than shares of Series B Preferred Stock to be cancelled pursuant to Section 2.5(a)(vi) and any Dissenting Shares, shall be converted solely into the right to receive an amount equal to the Per Share Series B Preferred Stock Preference plus the Per Share Participation Amount, if any, plus the right to receive any Per Share Post-Closing Stockholder Payment, if any, payable in cash to the holder thereof, without interest thereon, upon surrender of the Company Stock Certificate formerly representing such share of Series B Preferred Stock, all in accordance with Section 2.8 ;

               (iii) each share of Series C Preferred Stock issued and outstanding immediately prior to the Effective Time, other than shares of Series C Preferred Stock to be cancelled pursuant to Section 2.5(a)(vi) and any Dissenting Shares, shall be converted solely into the right to receive an amount equal to the Per Share Series C Preferred Stock Preference plus the Per Share Participation Amount, if any, plus the right to receive any Per Share Post-Closing Stockholder Payment, if any, payable in cash to the holder thereof, without interest thereon, upon surrender of the Company Stock Certificate formerly representing such share of Series C Preferred Stock, all in accordance with Section 2.8 ;

               (iv) each share of the Common Stock issued and outstanding immediately prior to the Effective Time, other than any shares of Common Stock to be canceled pursuant to Section 2.5(a)(vi) and any Dissenting Shares, shall be converted solely into the right to receive an amount equal to the Per Share Common Stock Preference plus the Per Share Participation Amount, if any, minus the applicable Unpaid Purchase Price Per Common Share, if any, plus the right to receive any Per Share Post-Closing Stockholder Payment, if any, payable in cash to the holder thereof, without interest thereon, upon surrender of the Company Stock

Certificate formerly representing such share of Common Stock, all in accordance with Section 2.8 ;

               (v) the issued and outstanding shares of common stock, par value $.01 per share, of Merger Sub, all of which are held by Parent, shall remain outstanding and, following the Merger, shall represent all of the issued and outstanding capital stock of the Surviving Corporation; and

               (vi) each share of Company Stock held by the Company or any Company Subsidiary immediately prior to the Effective Time shall be canceled and extinguished without any conversion thereof, and no cash, securities of Parent or other consideration shall be delivered in exchange therefor.

          (b) For purposes of this Agreement, the “ Closing Cash Merger Consideration ” shall mean a cash amount equal to the Closing Date Cash Amount, plus (i) the amount by which the Net Working Capital of the Company as of the Closing (the “ Actual Net Working Capital ”) is greater than $8,373,976 (the “ Target Net Working Capital ”), or minus (ii) the amount by which the Actual Net Working Capital is less than the Target Net Working Capital.

          (c) For purposes of this Agreement, the “ Closing Date Cash Amount ” shall mean (i) $46,000,000, minus (ii) the sum of (w) the Merger Consideration Escrow Amount (as defined in Section 2.8(c) ), (x) the Indemnity Escrow Amount (as defined in Section 2.8(c) ), (y) the Stockholders’ Agent Escrow Amount (as defined in Section 2.8(c) ), and (z) the amount necessary to repay in cash and discharge in full all Indebtedness of the Company and the Company Subsidiaries as of the Closing (including any prepayment fees or premiums, breakage costs or any other costs and expenses) and any unpaid Transaction Fees and Expenses of the Company as of the Closing.

          (d) The amount payable to any Merger Stockholder pursuant to this Section 2.5 shall be rounded to the nearest one cent ($0.01), provided that all shares of Company Stock held by a Merger Stockholder shall be aggregated for purposes of such calculations.

     2.6. Net Working Capital Adjustment .

          (a) At least three (3) business days prior to the Closing, the Company shall, in good faith and in consultation with Parent, prepare and deliver to Parent a good faith estimate of the Actual Net Working Capital (the “ Estimated Net Working Capital ”), together with an estimated balance sheet of the Company, on a consolidated basis, as of the Closing (the “ Estimated Closing Balance Sheet ”), prepared in accordance with GAAP consistent with the manner in which GAAP was applied in the preparation of the Balance Sheet. The Estimated Closing Balance Sheet shall be prepared as if the Closing Date was the last day of the Company’s fiscal year. The Estimated Net Working Capital shall be calculated based on the Estimated Closing Balance Sheet. Parent shall have the opportunity to review and comment upon the Estimated Closing Balance Sheet and the Company’s calculation of the Estimated Net Working Capital, both of which shall be subject to Parent’s reasonable approval. Until the Actual Net Working Capital is finally determined in accordance with this Section 2.6 , the

Closing Cash Merger Consideration shall be determined using the Estimated Net Working Capital instead of the Actual Net Working Capital.

          (b) Within ninety (90) days after the Closing, Parent shall, in good faith, cause to be prepared and delivered to the Stockholders’ Agent (i) a balance sheet of the Company and its consolidated subsidiaries as of the Closing (the “ Closing Date Balance Sheet ”) and (ii) a reasonably detailed calculation (the “ Parent Net Working Capital Calculation ”) of the Actual Net Working Capital. The Closing Date Balance Sheet shall be prepared in accordance with this Agreement and GAAP consistent with the manner in which GAAP was applied in the preparation of the Balance Sheet. The Closing Date Balance Sheet shall be prepared as if the Closing Date was the last day of the Company’s fiscal year. Following the delivery of the Closing Date Balance Sheet and Parent Net Working Capital Calculation to the Stockholders’ Agent, Parent shall, and Parent shall cause the Surviving Corporation to, afford the Stockholders’ Agent and its Representatives the opportunity to examine the calculation of the Closing Date Balance Sheet, the Parent Net Working Capital Calculation and such underlying records and work papers as are reasonably necessary and appropriate. Parent shall cooperate reasonably promptly with the Stockholders’ Agent and its Representatives in such examination.

          (c) The Stockholders’ Agent may, on behalf of the Merger Stockholders, dispute any amounts reflected in the Parent Net Working Capital Calculation but only on the basis that such amounts were not calculated in accordance with this Agreement or that such calculations are mathematically inaccurate; provided, that the Stockholders’ Agent shall notify Parent in writing of each disputed amount and shall specify the amount thereof in dispute (in the aggregate, the “ Disputed Amounts ”), within thirty (30) days of Parent’s delivery of the Parent Net Working Capital Calculation. If the Stockholders’ Agent does not dispute any amounts reflected in the Parent Net Working Capital Calculation within such thirty (30) day period, the Parent Net Working Capital Calculation shall be deemed to be and shall be final, binding and conclusive on the parties hereto.

          (d) In the event of such a dispute, Parent and the Stockholders’ Agent shall attempt in good faith to reconcile their differences and any resolution by them as to any Disputed Amounts shall be in writing and shall be final, binding and conclusive on the parties, and shall be used to determine the Actual Net Working Capital. If Parent and the Stockholders’ Agent are unable to reach a resolution with respect to all Disputed Amounts within thirty (30) days of the Stockholders’ Agent’s written notice of dispute to Parent, Parent and the Stockholders’ Agent shall submit the remaining Disputed Amounts for resolution to the Independent Accounting Firm which shall be requested to determine and report to the parties upon such remaining Disputed Amounts within thirty (30) days after submission, and such report shall be final, binding and conclusive on the parties hereto, and shall determine the Actual Net Working Capital. The Independent Accounting Firm will have exclusive jurisdiction over the parties hereto against one another or any other Person with respect to disputes over the calculation of Actual Net Working Capital. Each party will furnish to the Independent Accounting Firm such work papers and other documents and information relating to the disputed issues as the Independent Accounting Firm may request and are reasonably available to that party or its Subsidiaries (or its independent public accountants) and will be afforded the opportunity to present to the Independent Accounting Firm (to the extent permitted by the Independent Accounting Firm) any material relating to the determination of the matters in dispute and to discuss such determination with the

Independent Accounting Firm. The fees and expenses of the Independent Accounting Firm shall be allocated between Parent and the Merger Stockholders (such allocation to be finally determined by the Independent Accounting Firm) in such a way that Parent shall be responsible for that portion of the fees and expenses equal to the total amount of such fees and expenses multiplied by a fraction, the numerator of which is the Disputed Amounts submitted to the Independent Accounting Firm that are resolved against Parent, and the denominator of which is the Disputed Amounts so submitted, and the Stockholders’ Agent shall be responsible for the remainder of such fees and expenses.

          (e) If the Actual Net Working Capital, as finally determined pursuant to this Section 2.6 , exceeds the Estimated Net Working Capital, the Merger Consideration shall be increased by an amount equal to such excess (such excess being the “ Post-Closing Increase Amount ”). If the Actual Net Working Capital, as finally determined pursuant to this Section 2.6 , is less than the Estimated Net Working Capital, the Merger Consideration shall be decreased by an amount equal to such shortfall (such shortfall being the “ Post-Closing Decrease Amount ”). If the Actual Net Working Capital exceeds the Estimated Net Working Capital, (i) Parent shall pay to the Stockholders’ Agent on behalf of the Merger Stockholders an amount equal to (x) the Post-Closing Increase Amount plus (y) interest on such Post-Closing Increase Amount (for the period commencing on the Closing Date and ending on the date of payment) at a rate equal to the average interest rate earned on the Merger Consideration Escrow Amount during such period and (ii) Parent and the Stockholders’ Agent shall execute and the Stockholders’ Agent shall deliver to the Escrow Agent an instruction to release the Merger Consideration Escrow Amount and any interest earned thereon (the “ Merger Consideration Escrow Funds ”) to the Stockholders’ Agent on behalf of the Merger Stockholders in accordance with the Escrow Agreement. If the Estimated Net Working Capital exceeds the Actual Net Working Capital, Parent and the Stockholders’ Agent shall execute and Parent shall deliver to the Escrow Agent an instruction (i) to release an amount of the Merger Consideration Escrow Funds equal to the Post-Closing Decrease Amount plus any interest earned on such amount to Parent and (ii) to release the remaining (after application of clause (i) of this sentence) Merger Consideration Escrow Funds, if any, to the Stockholders’ Agent on behalf of the Merger Stockholders in accordance with the Escrow Agreement. In the event that the Post-Closing Decrease Amount exceeds the Merger Consideration Escrow Funds, Parent shall be entitled to recover from the Indemnity Escrow Amount and any interest earned thereon (the “ Indemnity Escrow Funds ”) (x) such excess plus (y) interest on such excess (for the period commencing on the Closing Date and ending on the date of recovery) at a rate equal the average interest rate earned on the Merger Consideration Escrow Amount during such period. If the balance of the Indemnity Escrow Fund available for payment is not sufficient to satisfy in full the remaining obligations of the Merger Stockholders pursuant to this Section 2.6(e) , each Merger Stockholder shall be responsible for such Merger Stockholder’s Pro Rata Share of any difference between the amount available from the Indemnity Escrow Fund and the remaining amount owed to Parent pursuant to this Section 2.6(e) . Each of the items to be paid or delivered pursuant to this Section 2.6(e) shall be so paid or delivered within three (3) business days of the final determination of the Actual Net Working Capital.

     2.7. Closing of the Company’s Transfer Books . At the Effective Time, the stock transfer books of the Company shall be closed with respect to all shares of such capital stock outstanding immediately prior to the Effective Time. No further transfer of any such shares of

the Company’s capital stock shall be made on such stock transfer books after the Effective Time. If, after the Effective Time, a valid certificate previously representing any of such shares of the Company’s capital stock (a “ Company Stock Certificate ”) is presented to the Surviving Corporation or Parent, such Company Stock Certificate shall be canceled and shall be exchanged as provided in Section 2.8 .

     2.8. Exchange of Certificates; Escrow .

          (a) At the Closing, Parent shall pay to The Bank of New York, as paying agent, or, if The Bank of New York shall not agree to serve as paying agent, to such other bank or trust company as may be mutually agreed by Parent and the Company (the “ Paying Agent ”), pursuant to a Paying Agent Agreement by and among Parent, the Company, the Stockholders’ Agent and the Paying Agent, in customary form to be agreed upon by the parties, an amount equal to the Closing Cash Merger Consideration less the portion of the Closing Cash Merger Consideration applicable to any Dissenting Shares (such amount, the “ Closing Date Payment ”). The Paying Agent will acknowledge in writing to Parent the receipt of the Closing Date Payment simultaneously with receipt thereof and the delivery by Parent of the Closing Date Payment to the Paying Agent shall be deemed delivery to the Merger Stockholders for purposes of this Agreement.

          (b) At the Closing, the Paying Agent shall, for each Merger Stockholder who surrenders a Company Stock Certificate for cancellation to Parent, together with the letter of transmittal in the form attached hereto as Exhibit B (“ Letter of Transmittal ”), duly completed and validly executed to the satisfaction of Parent in accordance with the instructions thereto, and such other documents as may be required pursuant to such instructions, pay to each such Merger Stockholder, without interest, for each share of Company Stock previously represented by such Company Stock Certificate, the following (which shall be determined using the Estimated Net Working Capital instead of the Actual Net Working Capital):

               (i) in exchange for each share of Series A Preferred Stock, an amount equal to the sum of the Per Share Series A Preferred Stock Preference plus the Per Share Participation Amount, if any;

               (ii) in exchange for each share of Series B Preferred Stock, an amount equal to the sum of the Per Share Series B Preferred Stock Preference plus the Per Share Participation Amount, if any;

               (iii) in exchange for each share of Series C Preferred Stock, an amount equal to the sum of the Per Share Series C Preferred Stock Preference plus the Per Share Participation Amount, if any; and

               (iv) in exchange for each share of Common Stock, an amount equal to the sum of the Per Share Common Stock Preference plus the Per Share Participation Amount, if any, minus the applicable Unpaid Price Per Common Share, if any.

If a Merger Stockholder delivers his, her or its Company Stock Certificate and Letter of Transmittal to Parent (including wire transfer instructions if applicable), duly completed and validly executed to the satisfaction of Parent in accordance with the instructions thereto, and

such other documents as may be required pursuant to such instructions, at least five (5) Business Days prior to the Closing Date (the “ LT Delivery Date ”), the Paying Agent shall pay the applicable consideration specified in Section 2.8(b)(i)-(iv) above for the number of shares of Company Stock previously represented by such Company Stock Certificate to such Merger Stockholder as set forth in the Letter of Transmittal promptly following the Effective Time, but in no event later than two Business Days after the Closing Date. At least two (2) Business Days prior to the Closing Date, the Company and Parent will jointly execute and deliver written instructions to the Paying Agent that list: (i) the names of each Merger Stockholder who has delivered a Company Stock Certificate and duly completed and validly executed Letter of Transmittal to Parent at least five (5) Business Days prior to the Closing Date, (ii) the number of shares of Company Stock previously represented by such Company Stock Certificate, (iii) the portion of the Merger Consideration to be paid to each such Merger Stockholder and (iv) the payment instructions for each such Merger Stockholder. If any Merger Stockholder fails to surrender a Company Stock Certificate or Letter of Transmittal to Parent at least five (5) Business Days prior to the Closing Date, the Paying Agent shall not pay the portion of the Merger Consideration applicable to the related shares of Company Stock at or immediately following the Effective Time and the Paying Agent shall deposit such portion of the Merger Consideration in the designated account maintained by the Paying Agent for the benefit of the Merger Stockholders. If a Company Stock Certificate and Letter of Transmittal are delivered any time after the LT Delivery Date, within five (5) Business Days of delivery of such Company Stock Certificate and Letter of Transmittal to Parent, duly completed and validly executed to the satisfaction of Parent in accordance with the instructions thereto, and such other documents as may be required pursuant to such instructions, Parent shall deliver to the Paying Agent a written instruction containing the information set forth in clauses (i) through (iv) above and shall cause the Paying Agent to pay to such Merger Stockholder, without interest, the applicable consideration specified in Section 2.8(b)(i)-(iv) above for the number of shares of Company Stock previously represented by such Company Stock Certificate, payable as set forth in the Letter of Transmittal. Parent may, in its sole and reasonable discretion, waive the requirement of a Company Stock Certificate or Letter of Transmittal for any or all such Merger Stockholders. Any and all interest and other amounts earned with respect to the Closing Date Payment shall accrue for the benefit of Parent and shall be released to Parent in accordance with the terms of Section 2.8 hereof.

          (c) At the Closing, Parent shall deliver to The Bank of New York, as escrow agent, or, if The Bank of New York shall not agree to serve as escrow agent, to such other bank or trust company as may be mutually agreed by Parent and the Company (the “ Escrow Agent ”), pursuant to an Escrow Agreement substantially in the form attached hereto as Exhibit C , subject to reasonable changes required by Escrow Agent and reasonably acceptable to Parent, the Company and the Stockholders’ Agent (the “ Escrow Agreement ”), (i) $4,600,000, (the “ Indemnity Escrow Amount ”), (ii) $420,000 (the “ Merger Consideration Escrow Amount ”) and (iii) $25,000 (the “ Stockholders’ Agent Escrow Amount ”), each by wire transfer of immediately available funds. The Stockholders’ Agent may pay (or seek reimbursement for) costs, fees and expenses incurred for the benefit of the Merger Stockholders by the Stockholders’ Agent after the Closing Date from the Stockholders’ Agent Escrow Amount and any interest earned thereon (the “ Stockholders’ Agent Escrow Funds ”), and the Indemnity Escrow Funds (but only if and when the Indemnity Escrow Funds are distributed to the Stockholder’s Agent by the Escrow

Agent for the benefit of the Merger Stockholders in accordance with the terms of the Escrow Agreement).

          (d) Until surrendered as contemplated by this Section 2.8 , each Company Stock Certificate shall be deemed, from and after the Effective Time, to represent only the right to receive the applicable consideration specified in Section 2.8(b)(i)-(iv) above. If any Company Stock Certificate shall have been lost, stolen or destroyed, Parent may, in its discretion and as a condition precedent to the delivery of the applicable consideration specified in Section 2.8(b)(i)-(iv) above to the owner of such Company Stock Certificate, require the owner of such lost, stolen or destroyed Company Stock Certificate to make an affidavit of that fact and to deliver an appropriate indemnity or surety bond as security against any claim that may be made against Parent or the Surviving Corporation with respect to such Company Stock Certificate.

          (e) Each of the Parent, the Surviving Corporation and the Paying Agent shall be entitled to deduct and withhold from any consideration payable or otherwise deliverable to any holder or former holder of capital stock of the Company pursuant to this Agreement such amounts as Parent, the Surviving Corporation or the Paying Agent is required to deduct or withhold therefrom under the Code or under any provision of state, local or foreign tax law. To the extent such amounts are so deducted or withheld, such amounts shall be treated for all purposes under this Agreement as having been paid to the Person to whom such amounts would otherwise have been paid.

          (f) At any time following the sixth month anniversary of the Effective Time, Parent shall be entitled to cause the Paying Agent to deliver to it any funds which had been made available to the Paying Agent and not disbursed to the Merger Stockholders (including all interest and other income received by the Paying Agent in respect of all funds made available to it), and, thereafter, any Merger Stockholder that has not yet received its applicable portion of the Merger Consideration shall be entitled to look to Parent and the Surviving Corporation (subject to abandoned property, escheat and other similar Laws) with respect to any Merger Consideration that may be payable upon due surrender of the Company Stock Certificates held by such Merger Stockholder and delivery of a Letter of Transmittal to Parent, duly completed and validly executed to the satisfaction of Parent in accordance with the instructions thereto, and such other documents as may be required pursuant to such instructions. Notwithstanding the foregoing, neither Parent, the Company, the Surviving Corporation nor the Paying Agent shall be liable to any holder or former holder of capital stock of the Company for any cash amounts delivered to any public official pursuant to any applicable abandoned property, escheat or similar law.

     2.9. Dissenting Shares . Notwithstanding anything to the contrary contained in this Agreement, any shares (“ Dissenting Shares ”) of Company Stock that are outstanding immediately prior to the Effective Time and that are held by any Person who is entitled to demand and properly demands payment of the fair value of such Dissenting Shares pursuant to, and who complies in all respects with, Section 262 of the DGCL (the “ DGCL Appraisal Procedures ”) shall not be converted into or be exchangeable for the right to receive the applicable consideration specified in Section 2.5(a)(i)-(iv) above, but rather the holders of Dissenting Shares shall be entitled to payment of the fair value of such Dissenting Shares in accordance with the DGCL Appraisal Procedures; provided, however , that if any such holder

shall fail to perfect or otherwise shall waive, withdraw or lose the right to receive payment of the fair value of such holder’s Dissenting Shares under the DGCL Appraisal Procedures, then the right of such holder to be paid the fair value of such holder’s Dissenting Shares shall cease and such Dissenting Shares shall be deemed to have been converted as of the Effective Time into, and to have become exchangeable solely for the right to receive the applicable consideration specified in Section 2.5(a)(i)-(iv) above. The Company shall give prompt notice to Parent and Merger Sub of any demands received by the Company for payment of the fair value of any shares of Company Stock (including a copy of each demand). Prior to the Effective Time, the Company shall not, without the prior written consent of Parent, make any payment with respect to or settle or offer to settle, any such demands or agree to do any of the foregoing.

     2.10. Further Action . If, at any time after the Effective Time, any further action is determined by Parent to be necessary or desirable to carry out the purposes of this Agreement or to vest the Surviving Corporation or Parent with full right, title and possession of and to all rights and property of Merger Sub and the Company, the officers and directors of the Surviving Corporation and Parent shall be fully authorized (in the name of Merger Sub, in the name of the Company and otherwise) to take such action.

ARTICLE III.

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     The Company represents and warrants to and for the benefit of Parent and Merger Sub as follows:

     3.1. Organization of the Company .

          (a) The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware with requisite corporate power and authority to (i) execute, deliver and (subject to receipt of the Requisite Stockholder Approvals) perform this Agreement, (ii) perform its obligations under all oral and written agreements, legally binding commitments, contracts, subcontracts, leases, promissory notes, option agreements, warranties, purchase orders, licenses or sublicenses (including all amendments thereto) by which it is bound, (iii) own, lease and operate its properties and (iv) carry on its business as now being conducted therein, and is duly qualified to do business as a foreign corporation in each jurisdiction in which the nature of the business transacted by it or the character of the properties owned or leased by it require such qualification, except where the failure to be so qualified would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

          (b) True and complete copies of the Company Charter and the Bylaws of the Company (together, the “ Company Charter Documents ”) as in effect on the date of this Agreement have been made available for inspection by Parent prior to the date of this Agreement, which copies are complete and correct and include all amendments, modifications or supplements thereto. The Company Charter Documents are in full force and effect and the Company is in full compliance with all of the terms and provisions of the Company Charter Documents.

     3.2. Authority .

          (a) The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby by the Company have been duly authorized by all requisite corporate action, and no other acts or other proceedings on the part of the Company are necessary to authorize this Agreement or the transactions contemplated hereby by the Company, other than the Requisite Stockholder Approvals. This Agreement has been duly executed by the Company and constitutes the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights in general, or by general principles of equity.

          (b) Except as set forth on Schedule 3.2(b) , neither the execution and delivery by the Company of this Agreement nor the consummation of the transactions contemplated hereby by the Company nor compliance with any of the provisions hereof by the Company will (i) violate or conflict with any provision of the Company Charter Documents or the certificate of incorporation, bylaws or other similar organizational and operational documents of any of the direct or indirect Subsidiaries of the Company (each, a “ Company Subsidiary ” and collectively, the “ Company Subsidiaries ”), (ii) violate or conflict with, or result in a breach of or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in or permit the termination of, loss of any right under or acceleration of the performance required by, or result in the creation or imposition of any Encumbrance upon any of the assets of the Company or any Company Subsidiary under, any of the terms, conditions or provisions of any Contract disclosed or required to be disclosed on Schedule 3.11(a) or (iii) violate, in any material respect, any order, writ, injunction, decree, statute, rule or regulation applicable to the Company, any Company Subsidiary or any of their respective assets. Except as set forth on Schedule 3.2(b) , no consent or approval by, notice to or registration with any Governmental Body, other than the filing of the Certificate of Merger required by the DGCL, is required on the part of the Company or any Company Subsidiary prior to the Closing Date in connection with the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby.

          (c) The Company’s board of directors has (i) unanimously determined that the Merger is advisable and in the best interests of the Company and its Stockholders, (ii) unanimously recommended the approval and adoption of this Agreement by the holders of Company Stock entitled to vote thereon and (iii) to the extent necessary, adopted a resolution having the effect of causing the Company not to be subject to any state takeover law or similar Legal Requirement that might otherwise apply to the Merger or any of the other transactions contemplated by this Agreement.

     3.3. Capitalization . The authorized, issued and outstanding capital stock of the Company is as set forth on Schedule 3.3 hereto. Set forth on Schedule 3.3 is a list of all of the Stockholders and the capital stock and other equity securities of the Company owned by each such Stockholder. The shares of Company Stock set forth on Schedule 3.3 constitute all of the outstanding shares of capital stock of the Company. All such outstanding shares of capital stock of the Company have been duly authorized and are validly issued, fully paid and non-assessable and have not been issued in violation of the preemptive or similar rights of any Stockholder

arising by operation of securities laws or the Company Charter Documents. The designations, powers, preferences, rights, qualifications, limitations and restrictions in respect of each class and series of authorized capital stock of the Company are as set forth in the Company Charter Documents, and all such designations, powers, preferences, rights, qualifications, limitations and restrictions are valid, binding and enforceable and in accordance with all applicable laws. The Conversion Price (as defined in the Company Charter) is equal to $1.00 per share, and each share of Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock is convertible into one share of Common Stock under the terms of the Company Charter, as currently in effect. Except as set forth on Schedule 3.3 , there is no existing subscription, option, warrant, call, commitment or other right or agreement to which the Company is bound requiring, and there are no convertible or exchangeable securities of the Company outstanding which upon conversion or exercise would require, the issuance of any additional shares of capital stock or other securities convertible into shares of capital stock of the Company. Except as set forth on Schedule 3.3 and for the Stockholder Voting Agreement, there are no agreements concerning the issuance, voting, transfer, acquisition or disposition of shares of capital stock of the Company to which the Company or any Stockholder is a party.

     3.4. Subsidiaries .

          (a) Schedule 3.4(a) contains a true and complete list of all of the Company Subsidiaries and the respective ownership interest of the Company and other Persons in each such Subsidiary. Except as set forth on Schedule 3.4(a) , the Company does not own, directly or indirectly, any capital stock, equity securities or other equity interests of any Person. Except as set forth on Schedule 3.4(a) , the Company is not a party to any agreement to own or control, nor does the Company have the direct or indirect right to acquire, any Subsidiary or ownership interest in any other Person.

          (b) Each of the Company Subsidiaries is a corporation duly organized, validly existing and in good standing under the laws of the state of its jurisdiction with requisite corporate power and authority to (i) perform its obligations under all oral and written agreements, legally binding commitments, contracts, subcontracts, leases, promissory notes, option agreements, warranties, purchase orders, licenses or sublicenses (including all amendments thereto) by which it is bound, (ii) own, lease and operate its properties and (iii) carry on its business as now being conducted therein, and is duly qualified to do business as a foreign corporation in each jurisdiction in which the nature of the business transacted by it or the character of the properties owned or leased by it require such qualification, except where the failure to be so qualified could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

          (c) True and complete copies of the certificate of incorporation, bylaws and other similar organizational and operational documents, as applicable, as in effect on the date hereof for each Company Subsidiary have been made available for inspection by Parent prior to the date of this Agreement, which copies are complete and correct and include all amendments, modifications or supplements thereto. The certificate of incorporation and bylaws or other organizational documents of each Company Subsidiary are in full force and effect and each Company Subsidiary is in full compliance with all of the terms and provisions of such documents.

     3.5. Capitalization of the Company Subsidiaries .

          (a) The authorized, issued and outstanding capital stock, equity securities or other equity interests of the Company Subsidiaries is set forth on Schedule 3.5(a ). All such shares have been duly authorized and are validly issued, fully paid and non-assessable.

          (b) Except as set forth on Schedule 3.5(b) , the Company or one of the Company Subsidiaries has good and valid title to all shares, equity securities or other equity interests of the Company Subsidiaries (the “ Company Subsidiary Shares ”) and all of the Company Subsidiary Shares are owned directly by the Company or one of the Company Subsidiaries, beneficially and of record, free and clear of all Encumbrances. The Company or a Company Subsidiary directly has full voting power over the Company Subsidiary Shares, subject to no proxy, stockholders’ agreement, voting trust or other agreement relating to the voting of any Company Subsidiary Shares.

          (c) No Person has any preemptive right to purchase any shares of a Company Subsidiary. There is no existing subscription, option, warrant, call, commitment or other right or agreement to which any Company Subsidiary is bound requiring, and there are no convertible securities of any Company Subsidiary outstanding which upon conversion or exercise would require, the issuance of any additional shares of capital stock, equity securities or other equity interests or other securities convertible or exchangeable into shares of capital stock, equity securities or other equity interests of any Company Subsidiaries. There are no agreements concerning the issuance, transfer, acquisition or disposition of shares of capital stock or other equity interests of any Company Subsidiary to which the Company or any Company Subsidiary or any Stockholder is a party.

     3.6. Financial Statements .

          (a) True and complete copies of the (i) audited consolidated balance sheets of the Company and its consolidated subsidiaries as of December 31, 2006, 2005 and 2004, and the related statements of income and cash flows for the fiscal year ended December 31, 2006, 2005 and 2005 and (ii) unaudited consolidated balance sheet of the Company and its consolidated subsidiaries as of June 30, 2007 (the “ Interim Balance Sheet ”), and the related consolidated statement of income and cash flows for the six-month periods ended June 30, 2007 are attached hereto as Schedule 3.6(a) (together with the footnotes thereto, collectively, the “ Financial Statements ”). The Financial Statements, present fairly, in all material respects, the financial position of the Company and its consolidated subsidiaries and the consolidated results of their operations as of the respective dates and for the respective periods indicated therein and have been prepared in accordance with GAAP, except that the unaudited statements may not contain all footnotes required by GAAP and are subject to normal year-end audit adjustments, none of which are expected to be material in amount or nature. The financial statements set forth in subsection (i) above have been audited by Ernst & Young LLP, independent public accountants, and the Company has provided Parent with true and correct copies of the auditor’s reports relating thereto. The Financial Statements have been prepared from and are in accordance with the books and records of the Company and the Company Subsidiaries.

          (b) Except as set forth on Schedule 3.6(b) , neither the Company nor any Company Subsidiary has or has guaranteed any Indebtedness.

          (c) There are no “earn-out” obligations of the Company or any Company Subsidiary arising pursuant to the acquisition of any facilities or businesses.

          (d) Set forth on Schedule 3.6(d) is a list that presents fairly, in all material respects, the total amount of net cash collections from patients and third party payors by the Company and Company Subsidiaries, on both a consolidated and consolidating (by legal entity) basis, for services rendered to patients for each of the four quarters of the fiscal year ended December 31, 2006 and each of the first two quarters of the fiscal year ended December 31, 2007.

          (e) Set forth on Schedule 3.6(e) is true and complete list of all facility development or expansion projects of the Company or any Company Subsidiary (collectively, the “ Development Projects ”), setting forth as to each Development Project (i) the location or proposed location of such Development Project, (ii) any certificates of need that have been applied for in connection with such Development Project and the status of all such applications and (iii) any letters of intent, partnership agreements or joint venture agreements relating to such Development Project.

     3.7. Undisclosed Liabilities . Neither the Company nor any Company Subsidiary has any material liabilities or obligations (whether absolute, accrued contingent or otherwise), except (a) as and to the extent reflected or reserved against in the audited balance sheet of the Company and its consolidated subsidiaries (the “ Balance Sheet ”) as of December 31, 2006 (the “ Balance Sheet Date ”), (b) for liabilities which have been incurred since the Balance Sheet Date in the ordinary course of business consistent with past practices, (c) for liabilities under this Agreement, (d) for executory obligations under Contracts and (e) for liabilities for Transaction Fees and Expenses incurred in connection with the transactions contemplated hereby. Neither the Company nor any Company Subsidiary has any contractual obligation to provide uncompensated care to any patient.

     3.8. Accounts Receivable . All accounts receivable of the Company and the Company Subsidiaries reflected on the Balance Sheet included in the Financial Statements (net of the reserves reflected thereon), and all accounts receivable which have arisen since December 31, 2006, net of reserves computed in accordance with GAAP, are valid and have arisen only from bona fide arm’s length transactions in the ordinary course of the business of the Company and the Company Subsidiaries. The accounts receivable, net of reserves computed consistently with past practices, set forth on the Interim Balance Sheet are presented fairly on such Interim Balance Sheet in accordance with GAAP.

     3.9. Absence of Certain Changes or Events . Since the Balance Sheet Date, the Company and Company Subsidiaries have conducted their business in the ordinary course consistent with past practice and there has not been any event, change, condition, state of facts or development that, individually or in the aggregate, has had or would reasonably be expected to have a Material Adverse Effect. In addition, and without limiting the foregoing, except as set

forth on Schedule 3.9 or otherwise expressly permitted or expressly required by the terms of this Agreement, the Company and Company Subsidiaries have not, since the Balance Sheet Date:

          (a) experienced any material damage, destruction or loss to or of any of their material assets which are used in the operation or conduct of the Business;

          (b) except as may be required under existing agreements or in the ordinary course of business consistent with past practice, made or agreed to make any increase in or establishment of any bonus, insurance, severance, deferred compensation, pension, retirement, profit sharing, stock option, stock purchase or other employee benefit plan, or any other increase in the compensation of any executive officer, director or employee;

          (c) sold, purchased or transferred any material assets, other than in the ordinary course consistent with past practice;

          (d) paid (or committed to pay) any management fee or made (or committed to make) any loan or distribution of their property or assets to any Stockholder, or declared, paid or set aside for payment any dividend or distribution with respect to the Company Stock, or purchased or redeemed (or committed to purchase or redeem) any shares of Company Stock;

          (e) written down or cancelled any material receivables or debt, or waived or released any material right or claim, except for cancellations, waivers and releases in the ordinary course of business and consistent with past practice;

          (f) suffered any material judgment with respect to, or made any material settlement of, any Legal Proceeding;

          (g) effected any material change in accounting practices and procedures, other than changes as a result of changes in GAAP; or

          (h) made or authorized any capital expenditures in excess of $25,000 individually or $100,000 in the aggregate;

          (i) consummated any transaction with any Affiliate (other than the Company or a Company Subsidiary);

          (j) (i) made, changed or revoked any material election in respect of Taxes or taken any action or failed to take any action which action or failure to act has or will result in a change to the classification of any Company or Company Subsidiary for U.S. federal income tax purposes, (ii) prepared any Tax Returns in a manner which is not consistent in all material respects with the past practice of the Company and the Company Subsidiaries with respect to the treatment of items on such Tax Returns, (iii) filed any amendment to a Tax Return that will or may increase the Tax liability of the Company or any Company Subsidiaries after the Closing, (iv) incurred any liability for Taxes other than in the ordinary course of business, or (v) settled any claim or assessment in respect of Taxes that will increase the Tax liability of the Company or Company Subsidiaries or will otherwise adversely affect the Parent, Merger Sub, the Company or the Company Subsidiaries;

          (k) made or entered into any acquisitions or dispositions of any facilities or businesses, other than the opening or establishment of new facilities or businesses;

          (l) except in the ordinary course of business, mortgaged, pledged or have imposed any Encumbrance on any material assets, except for Permitted Liens; or

          (m) agreed to do any of the foregoing.

     3.10. Real Property; Title to Assets .

          (a) The Company or a Company Subsidiary owns good and marketable fee title to the real property owned (as opposed to leased) and operated by the Company and the Company Subsidiaries in the operation of conduct of the Business, together with all improvements, buildings and fixtures located thereon or therein (the “ Fee Real Property ”). The Company and the Company Subsidiaries own good and valid leasehold interests in and to all real property leases to which the Company or any Company Subsidiary are a party or by which the Company or any Company Subsidiary are bound, which leases are listed on Schedule 3.10(a) (the “ Leased Real Property ,” and, together with the Fee Real Property, the “ Real Property ”). To the Knowledge of the Company, without investigation or inquiry, there are no real estate or similar Taxes due and payable with respect to the Real Property that have not been paid in the ordinary course of the Company’s business, and no leasehold or other interest of the Company or any Subsidiary in Real Property is subject or subordinate to any Lien, except Permitted Liens, whether such lien is on the leasehold estate or fee estate.

          (b) Neither the Company nor any Company Subsidiary has received written notice of an outstanding violation of any applicable Legal Requirement relating to any material part of the Real Property or the operation thereof or written notice of public improvements, annexation, special assessments, zoning or subdivision changes, or other claims or charges with respect thereto. To the Knowledge of the Company, without investigation or inquiry, each use of the Real Property by the Company and the Company Subsidiaries is and has been valid, permitted and conforming uses in accordance with the current zoning classification of the Real Property, and there are no outstanding variances or special use permits affecting the Real Property or its uses. To the Knowledge of the Company, without investigation or inquiry, the Real Property either is freely accessible directly from all public streets on which it abuts, or uses adjoining private land to access the same in accordance with valid public easements and there is no condition which would result in the termination of such access. To the Knowledge of the Company, without investigation or inquiry, water, gas, sewer, drainage facilities, telephone, electrical service and all other necessary utility connections are readily available to the Real Property without assessment in all material respects other than annual maintenance and use charges, and all such connections currently in place are operable and adequate for their present usage in all material respects.

          (c) Schedule 3.10(a) sets forth a true, correct and complete list of all contracts or agreements under which the Company and Company Subsidiaries are lessee, sublessee or licensee of any Real Property, the parties to the lease and the current expiration date of the lease. The Company and Company Subsidiaries have the right to quiet enjoyment of the real properties leased by it as tenant for the full term of the lease thereof to the extent provided in each such

lease. Each lease or other contract or agreement referred to in Schedule 3.10(a) is a legal, valid and binding obligation of the Company and Company Subsidiaries, as applicable, enforceable against the Company and Company Subsidiaries in accordance with its terms, except as enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights in general, or by general principles of equity. There are no outstanding options or rights of any third person to acquire the Company’s or any Company Subsidiary’s leasehold interests in any such Leased Real Property. All leases, ground leases, subleases, licenses, options or other agreements of the Company and Company Subsidiaries, as applicable, as set forth in Schedule 3.10(a) are in full force and effect, and neither the Company nor any Company Subsidiary, as applicable, is in default under any such leases, ground leases, subleases, licenses, options or other agreements, and, no condition exists which (with notice or lapse of time or both) could constitute a default thereunder in each case. True and complete copies of all leases or other contracts or agreements listed on Schedule 3.10(a) (including any amendments, modifications and renewal letters) have been made available for inspection by Parent prior to the date of this Agreement.

          (d) The Company and each of the Company Subsidiaries has good title to all of its assets, including the assets reflected in the Balance Sheet, except those disposed of by it since the date of the Balance Sheet, free and clear of all Encumbrances except for Permitted Liens. The Company and each of the Company Subsidiaries leases, owns or has the right to use all assets used in the operation of the Business as currently conducted.

     3.11. Material Contracts .

          (a) Schedule 3.11(a) contains a complete list of the following leases, contracts, commitments and agreements, oral or written (“ Contracts ”) to which the Company or any Company Subsidiary is party or by which any of its assets or properties is bound:

               (i) all contracts, agreements plans or arrangements required to be listed on Schedule 3.16 ;

               (ii) each management agreement, operating agreements, services agreement and other agreements pertaining to the operation and maintenance of any Facility with annual payments in excess of $50,000 and that is not terminable by the Company or any Company Subsidiary within a 90-day period without substantial cost or penalty;

               (iii) all collective bargaining or other labor or union contracts or agreements;

               (iv) all instruments relating to Indebtedness, including any note, bond, deed of trust, mortgage, indenture or agreement to borrow money, any agreement relating to the extension of credit or the granting of an Encumbrance (other than a Permitted Lien within the meaning of clause (f), clause (g), clause (h) or clause (i) of the definition thereof), or any agreement of guarantee in favor of any Person other than the Company;

               (v) each agreement, commitment or outstanding purchase order relating to capital expenditures that involves total remaining payments by the Company or any Company Subsidiary of more than $25,000 individually or $100,000 in the aggregate;

               (vi) all agreements relating to the future disposition or acquisition of any interest in any business enterprise (whether through the purchase or sale of assets or stock or by merger, consolidation or other business combination) for a purchase price of more than $50,000;

               (vii) each contract, agreement or commitment (including any lease for Leased Real Property) which (A) provides for annual aggregate payments to or from the Company or any Company Subsidiary in excess of $25,000 or (B) does not expire or is not terminable without substantial cost or penalty at the option of the Company or the Company Subsidiary within a 90-day period, excluding purchase orders made in the ordinary course of business consistent with past practice and contracts;

               (viii) all contracts or agreements which expressly restrict the ability of the Company or Company Subsidiaries to conduct business of any type or in any location;

               (ix) all material powers of attorney;

               (x) all licenses or agreements required to be listed on Schedule 3.12(c) ;

               (xi) all bonus, profit-sharing, compensation, stock option, pension, retirement, deferred compensation, accrued vacation pay, group insurance, welfare agreements or other plans, agreements, trusts or arrangements for the benefit of employees;

               (xii) all partnership or joint venture agreements;

               (xiii) all agreements, arrangements or understandings with any Affiliate of the Company or any Company Subsidiary; and

               (xiv) all material agreements, contracts or commitments for any charitable or political contribution.

          (b) True, correct and complete copies of the agreements set forth on Schedule 3.11(a) have been made available for inspection by Parent prior to the date of this Agreement. All Contracts set forth on Schedule 3.11(a) are in full force and effect. Neither the Company nor any Company Subsidiary, as applicable, is in default in any material respect, has done any act or failed to do any required act which constitutes a default in any material respect, has received written notice of such a default, or has received written notice of an event or occurrence of which with the giving of notice or the lapse of time could constitute a default in any material respect under any covenant or condition under any Contract set forth on or required to be set forth on Schedule 3.11(a) , and, to the Knowledge of the Company, no other party to any such Contract is in default in any material respect thereunder.

     3.12. Intellectual Property .

          (a) As used herein, the term “ Intellectual Property ” shall mean all worldwide intellectual property rights, including, without limitation, all rights arising under patents, trademarks, service marks, trade dress, trade names, Internet domain names, copyrights, and all

registrations and applications for any of the foregoing, know-how, trade secrets, computer software programs and development tools, proprietary information, technologies, and processes, and all documentation and media describing or relating to any of the foregoing.

          (b) Schedule 3.12(b) contains a complete list of all United States and foreign trademarks, service marks and trade names (whether registered or not) and registrations and applications for registration thereof, patents and patent applications, domain name registrations, and registered and material unregistered copyrights, including without limitation computer software or sui generis databases, owned by or used by the Company or any Company Subsidiary that are material to the Business, other than off-the-shelf commercial software licensed to the Company or any Company Subsidiary for less than $5,000.

          (c) There are no material licenses, sublicenses, consents and other agreements (whether written or otherwise) (i) pertaining to any Intellectual Property (other than standard, commercially available off-the-shelf software) used or held for use by the Company or any Company Subsidiary, or (ii) by which the Company or any Company Subsidiary licenses or otherwise authorizes a third party to use Intellectual Property.

          (d) All of the patents, patent applications, trademark and service mark registrations and applications, copyright registrations and applications for copyright registration, and domain name registrations owned by the Company or any Company Subsidiary are valid and in full force, are held of record in the name of the Company or the applicable Company Subsidiary, and are not the subject of any cancellation or reexamination proceeding or any other proceeding challenging their extent or validity. No opposition, extension of time to oppose, interference, rejection, or refusal to register has been received in connection with any such application. To the Knowledge of the Company, there is no infringement, misuse or misappropriation, actual or claimed, by the Company or any Company Subsidiary of any Intellectual Property owned by others, or by others of any Intellectual Property owned by the Company or any Company Subsidiary. All Intellectual Property used in or necessary for the operation of the Business as currently conducted or proposed to be conducted is either (i) owned by the Company or a Company Subsidiary, free and clear of any title defects or Encumbrances (other than Permitted Liens), and, to the Knowledge of the Company, no third party has claimed rights adverse to the Company or any Company Subsidiary therewith, or (ii) the subject of a license or agreement pursuant to which the Company or Comp