AGREEMENT AND PLAN OF MERGER

Exhibit 2.1

AGREEMENT AND PLAN OF MERGER

COMET MERGER CORPORATION

and

NATIONAL MEDICAL HEALTH CARD SYSTEMS, INC.

Dated as of February 25, 2008

TABLE OF CONTENTS

Section 1. The Offer			2
Section 1.1 The Offer			2
Section 1.2 Company Actions			5
Section 1.3 Directors			6
Section 1.4 Top-Up Option			7
Section 1.5 Change in Structure Event			8
Section 2. The Merger			9
Section 2.1 The Merger; Effects of the Merger			9
Section 2.2 Closing			10
Section 2.3 Directors and Officers of the Surviving Corporation			10
Section 3. Conversion of Securities			10
Section 3.1 Conversion of Securities			10
Section 3.2 Dissenting Shares			10
Section 3.3 Company Options and Restricted Shares			11
Section 3.4 Exchange Procedures;			11
Section 3.5 Withholding			13
Section 3.6 Transfer Taxes			13
Section 3.7 Adjustments to Prevent Dilution			14
Section 3.8 No Fractional Shares			14
Section 3.9 Tax Treatment			14
Section 4. Representations and Warranties of the Company			14
Section 4.1 Organization and Qualification			15
Section 4.2 Authority			16
Section 4.3 Capitalization			17
Section 4.4 Company Subsidiaries			19
Section 4.5 SEC Filings; Financial Statements; Undisclosed Liabilities			19
Section 4.6 Absence of Certain Changes or Events			21
Section 4.7 Compliance with Laws			21
Section 4.8 Claims, Actions and Proceedings			22
Section 4.9 Contracts and Other Agreements			22
Section 4.10 Intellectual Property			23
Section 4.11 Property			24
Section 4.12 Insurance			24
Section 4.13 Tax Matters			24
Section 4.14 Employee Benefit Plans			26
Section 4.15 Labor Matters			27
Section 4.16 Environmental Matters			28
Section 4.17 No Breach			29
Section 4.18 Financial Advisor			29
Section 4.19 Disclosure Documents			29
Section 4.20 Affiliate Transactions			30
Section 4.21 Customers and Suppliers			30
Section 4.22 State Takeover Statutes			30
Section 4.23 No Other Representations or Warranties; Investigation by Parent and Merger Sub			31

Section 4.24 Good Faith			31
Section 5. Representations and Warranties of Parent, US Corp. and Merger Sub			31
Section 5.1 Organization			31
Section 5.2 Authority to Execute and Perform Agreement			32
Section 5.3 Capitalization			33
Section 5.4 Parent Subsidiaries			33
Section 5.5 No Conflict; Required Filings and Consents			33
Section 5.6 SEC Filings; Financial Statements			34
Section 5.7 Absence of Certain Changes or Events			35
Section 5.8 Compliance with Laws			35
Section 5.9 Claims, Actions and Proceedings			36
Section 5.10 Contracts and Other Agreements			36
Section 5.11 Intellectual Property			37
Section 5.12 Tax Matters			37
Section 5.13 Disclosure Documents			38
Section 5.14 Brokers			39
Section 5.15 Parent and Merger Sub			39
Section 5.16 Solvency			39
Section 5.17 Financing			40
Section 5.18 No Other Representations or Warranties; Investigation by the Company			41
Section 5.19 Good Faith			41
Section 6. Conduct of Business Pending the Merger; No Solicitation; Employee Matters			41
Section 6.1 Conduct of Business			41
Section 6.2 No Solicitation			44
Section 6.3 Employee Matters			47
Section 7. Additional Agreements			48
Section 7.1 Proxy Statement; Registration Statement			48
Section 7.2 Company Stockholders Meeting			49
Section 7.3 Access to Information; Confidentiality			50
Section 7.4 Regulatory Filings; Reasonable Best Efforts			51
Section 7.5 Directors and Officers Indemnification and Insurance			52
Section 7.6 Conduct of Parent’s Business			54
Section 7.7 Public Disclosure			55
Section 7.8 Registration Rights Agreement and other Affiliate Agreements			56
Section 7.9 Financing			56
Section 7.10 Stock Exchange Listing			57
Section 7.11 Takeover Laws			58
Section 7.12 Notification of Certain Matters			58
Section 7.13 Certificate of Amendment			58
Section 8. Conditions Precedent to the Obligation of the Parties to Consummate the Merger			58
Section 8.1 Conditions to Each Party’s Obligations to Effect the Merger			58
Section 8.2 Conditions to the Obligations of the Company to Effect the One Step Merger			59
Section 8.3 Conditions to the Obligations of Parent, US Corp. and Merger Sub to Effect the One Step Merger			60
Section 8.4 Frustration of Closing Conditions			61

Section 9. Termination, Amendment and Waiver			61
Section 9.1 Termination			61
Section 9.2 Effect of Termination			63
Section 9.3 Fees and Expenses			64
Section 9.4 Amendment			65
Section 9.5 Waiver			65
Section 10. Miscellaneous			65
Section 10.1 Entire Agreement			65
Section 10.2 No Survival			65
Section 10.3 Parent Guarantee			66
Section 10.4 Notices			66
Section 10.5 Binding Effect; No Assignment; No Third-Party Beneficiaries			67
Section 10.6 Severability			67
Section 10.7 Governing Law			67
Section 10.8 Submission to Jurisdiction; Waiver			67
Section 10.9 Specific Enforcement			68
Section 10.10 Interpretation			68
Section 10.11 No Waiver of Rights			69
Section 10.12 Counterparts; Facsimile Signatures			69
Section 10.13 Obligations of Subsidiaries			69
Index of Defined Terms		Annex A
Conditions of Offer		Annex B
Form of Stockholders Agreement		Annex C
Certificate of Amendment		Annex D

AGREEMENT AND PLAN OF MERGER

      THIS AGREEMENT AND PLAN OF MERGER (this “ Agreement ”), dated as of February 25, 2008, is by and among SXC Health Solutions Corp. (“ Parent ”), a corporation organized under the laws of Yukon Territory, Canada, SXC Health Solutions, Inc., a Texas corporation and wholly-owned subsidiary of Parent (“ US Corp. ”), Comet Merger Corporation (“ Merger Sub ”), a newly-formed Delaware corporation that is wholly-owned by US Corp. and is an indirect, wholly-owned subsidiary of Parent, and National Medical Health Card Systems, Inc. (the “ Company ”), a Delaware corporation.

      WHEREAS , the Board of Directors of the Company (the “ Company Board of Directors ”) has determined that it is advisable and in the best interests of the Company and the stockholders of the Company that the Company be acquired by Parent;

      WHEREAS, Merger Sub has agreed to commence an exchange offer (as it may be amended from time to time in accordance with this Agreement, the “ Offer ”) to acquire all of the outstanding shares of common stock of the Company, par value $0.001 per share (“ Company Common Stock ”), in which Offer each share of Company Common Stock validly tendered and not properly withdrawn would be exchanged for (a) $7.70 in cash, without interest and (b) such amount of a fully paid and non assessable common share of Parent (“ Parent Common Stock ”) equal to the Exchange Ratio (such amount of cash and Parent Common Stock, or any higher amount per share offered in Merger Sub’s sole and absolute discretion pursuant to the Offer in accordance with the terms of this Agreement, and subject to adjustment pursuant to Section 1.1(i) or 1.1(j), the “ Offer Price ”), on the terms and subject to the conditions set forth herein;

      WHEREAS, following the consummation of the Offer, the parties intend that, in accordance with the Delaware General Corporation Law (the “ DGCL ”), Merger Sub and the Company shall consummate a merger pursuant to which Merger Sub shall be merged with and into the Company (the “ Second Step Merger ”), and the Company shall continue as the surviving corporation of the Second Step Merger, and each share of Company Common Stock that is not validly tendered and accepted pursuant to the Offer will thereupon be cancelled and converted into the right to receive the Offer Price, on the terms and subject to the conditions set forth herein;

      WHEREAS , the parties have agreed that upon certain conditions, Merger Sub would terminate the Offer and the parties would instead seek to consummate the acquisition of the Company by Parent by a merger of Merger Sub with and into the Company (the “ One Step Merger ”, the One Step Merger or the Second Step Merger are each sometimes referred to as the “ Merger ”) whereby each issued and outstanding share of Company Common Stock as of the effective time of the One Step Merger would be converted into the right to receive the Merger Consideration, following adoption of this Agreement by the stockholders of the Company, all on the terms and subject to the conditions set forth herein;

      WHEREAS , the Company Board of Directors has (a) determined that it is in the best interests of the Company and the stockholders of the Company, and has adopted and approved, and declared it advisable for the Company to enter into, this Agreement with Parent, US Corp. and Merger Sub providing for the Offer, the Second Step Merger and the One Step Merger, upon the terms and subject to the conditions set forth herein, and (b) resolved to recommend that the stockholders of the Company accept the Offer and tender their shares of Company Common Stock in the Offer and adopt this Agreement;

      WHEREAS , the Boards of Directors of Parent, US Corp. and Merger Sub have each adopted and approved and declared it advisable to enter into this Agreement upon the terms and conditions set forth herein; and

      WHEREAS , as a material inducement to Parent to enter into this Agreement, and simultaneously with the execution of this Agreement, each of New Mountain Partners, L.P. and New Mountain Affiliated Investors, L.P. (each, a “ Stockholder Party ”) is entering into an agreement in the form of Annex C (each, a “ Stockholder Agreement ”); and

      WHEREAS , the Company, Parent, US Corp. and Merger Sub desire to make certain representations, warranties, covenants and agreements in connection with the Offer and the Merger and the other transactions contemplated hereby.

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

      Section 1.   The Offer.

          Section 1.1 The Offer

          (a) Provided that the Company shall have complied with its applicable obligations under Section 1.2 (other than clause (e)), Parent shall use its reasonable best efforts to cause Merger Sub to commence (within the meaning of Rule 14d-2 under the Exchange Act) the Offer at the Offer Price no later than March 24, 2008 (and in any event as promptly as practicable after the date hereof). For the avoidance of doubt, Parent may consummate the Offer through Merger Sub, its indirect wholly-owned Subsidiary.

          (b) The obligation of Merger Sub (and Parent’s obligation to cause Merger Sub) to accept for exchange, and exchange the Offer Price for, any shares of Company Common Stock tendered pursuant to the Offer shall be subject only to (i) the condition that there shall be validly tendered in accordance with the terms of the Offer (other than shares of Company Common Stock tendered by guaranteed delivery where actual delivery has not occurred), prior to the scheduled expiration of the Offer (as it may be extended hereunder) and not withdrawn, a number of shares of Company Common Stock that, together with any shares of Company Common Stock then directly or indirectly owned by Merger Sub, represents more than 9,600,000 shares of Company Common Stock (the “ Minimum Condition ”) and (ii) the other conditions set forth in Annex B (the Minimum Condition and such other conditions collectively referred to herein as the “ Offer Conditions ”). Parent, US Corp. and Merger Sub expressly reserve the right in their sole and absolute discretion to waive any of the Offer Conditions and to modify the terms of the Offer; provided, that unless previously approved in writing by the Company in the Company’s sole and absolute discretion, (i) the Minimum Condition may not be amended nor may it be waived if such waiver would result in Merger Sub purchasing less than a majority of the outstanding shares of Company Common Stock (for purposes of this clause (i) treating each share of the Company’s Series A 7% Convertible Preferred Stock, par value $0.10 per share (“ Company Convertible Preferred Stock ” and, together with the Company Common Stock, the “ Company Stock ”), as having been converted into a share of Company Common Stock pursuant to the Certificate of Designations), (ii) no change may be made that changes the form of consideration to be paid pursuant to the Offer or reduces the ratio of cash to Parent Common Stock, decreases the Offer Price or the number of shares of Company Common Stock sought in the Offer, amends or adds to the Offer Conditions, or otherwise modifies the Offer in any manner adverse to the stockholders of the Company, and (iii) except as set forth in Section 1.1(c), the Offer may not be extended nor may any change be made to the Offer that would require an extension of or delay in the then current expiration date of the Offer. Holders of shares of Company Common Stock will not be able to tender such shares by guaranteed delivery unless Merger Sub otherwise elects in its sole and absolute discretion to permit guaranteed delivery. For purposes of this Agreement, including for purposes of determining whether the Minimum Condition has been met, the shares of Company Common Stock issuable upon conversion of the Company Convertible Preferred Stock shall be deemed to have been validly tendered in the Offer and not withdrawn if the Tender

Documents referred to in Section 2.1 of each of the Stockholder Agreements are delivered to the depositary for the Offer in accordance with such Section 2.1 and not withdrawn.

          (c) Unless extended pursuant to and in accordance with the terms of this Agreement, the Offer shall expire at 10:00 a.m., New York City time, on the twenty-first (21st) business day (for this purpose calculated in accordance with Rule 14d-1(g)(3) under the Exchange Act) after the date that the Offer is commenced (the “ Initial Offer Period ”). Subject to the provisions of Section 1.5, and subject to the parties’ respective termination rights under Section 9 (if applicable), (i) if, at the scheduled or extended expiration date of the Offer, any Offer Condition has not been satisfied in Parent’s reasonable discretion or waived (if such waiver is permitted hereunder), Merger Sub shall extend the Offer until the earlier to occur of (x) the satisfaction or waiver of all of the Offer Conditions and (y) the End Date, and (ii) Merger Sub shall extend the Offer for any period required by any rule, regulation, interpretation or position of the Securities and Exchange Commission (the “ SEC ”) or its staff or the Nasdaq Market (including any successor exchange, “ Nasdaq ”) applicable to the Offer or any period required by applicable Law. Following the expiration of the Offer, Merger Sub may elect to provide one or more subsequent offering periods (each, a “ Subsequent Offering Period ”) in accordance with Rule 14d-11 of the Exchange Act and in compliance with all other provisions of applicable Law. Subject to the foregoing, including the requirements of Rule 14d-11 of the Exchange Act, and upon the terms and subject to the conditions of the Offer, Merger Sub shall as promptly as practicable following expiration of the Offer accept for payment and pay for all shares of Company Common Stock (A) validly tendered and not withdrawn pursuant to the Offer and/or (B) validly tendered in any such Subsequent Offering Period. The Offer Price payable in respect of each share of Company Common Stock validly tendered and not withdrawn pursuant to the Offer or validly tendered in any Subsequent Offering Period shall be paid net to the holder thereof in cash and shares of Parent Common Stock, subject to reduction for any applicable withholding Taxes.

          (d) Subject to the foregoing and applicable Law and upon the terms of and subject to the conditions of the Offer, Merger Sub shall accept for payment, as promptly as permitted under applicable securities Law, and pay for (after giving effect to any required withholding Tax), as promptly as practicable after the date on which Merger Sub first accepts shares of Company Common Stock for payment pursuant to the Offer (the date and time of such first acceptance, regardless of whether Parent and Merger Sub elect to provide for one or more Subsequent Offering Periods pursuant to Rule 14d-11 of the Exchange Act, the “ Acceptance Date ”), all shares of Company Common Stock validly tendered and not withdrawn pursuant to the Offer.

          (e) No fraction of a share of Parent Common Stock shall be issued in connection with the Offer, no dividends or other distributions with respect to Parent Common Stock shall be payable on or with respect to any such fractional share interest and such fractional share interests shall not entitle the owner thereof to vote or to any other rights of a stockholder of Parent. In lieu thereof, each tendering stockholder who would otherwise be entitled to a fractional share of Parent Common Stock (after aggregating all fractional shares of Parent Common Stock that otherwise would have been received by such stockholder) shall, upon surrender of his or her Certificate or Certificates or Book-Entry Shares (each as defined below), be entitled to receive an amount of cash (without interest) rounded to the nearest whole cent determined by multiplying (i) the closing price of a share of Parent Common Stock as reported on the Nasdaq on the Acceptance Date by (ii) the fractional share interest to which such holder would otherwise be entitled. The parties acknowledge that payment of the cash consideration in lieu of issuing fractional shares was not separately bargained for consideration, but merely represents a mechanical rounding off for purposes of simplifying the corporate and accounting complexities that would otherwise be caused by the issuance of fractional shares.

          (f) The Company agrees that no shares of Company Common Stock held by the Company or any of its Subsidiaries will be tendered pursuant to the Offer.

          (g) On the date of commencement of the Offer, Parent and Merger Sub shall file with the SEC (i) a Tender Offer Statement on Schedule TO with respect to the Offer (together with all amendments and supplements thereto and including exhibits thereto, the “ Schedule TO ”) that shall contain the Preliminary Prospectus, an offer to exchange, a form of related letter of transmittal and summary advertisement in respect of the Offer (collectively, together with any amendments or supplements thereto, the Registration Statement and such other ancillary documents as may be required, the “ Offer Documents ”) and (ii) a registration statement on Form F-4 (or Form S-4) to register the offer and sale of Parent Common Stock pursuant to the Offer and the Merger (the “ Registration Statement ”). The Registration Statement will include a preliminary prospectus containing the information required under Rule 14d-4(b) of the Exchange Act (the “ Preliminary Prospectus ”). Parent and Merger Sub agree to take all steps necessary to cause the Offer Documents to be disseminated to the Company’s stockholders as and to the extent required by applicable federal securities Laws. The Company shall promptly furnish to Parent and Merger Sub all information concerning the Company, its directors, officers and affiliates as may be required by applicable securities Law or reasonably requested by Parent or Merger Sub for inclusion in the Schedule TO, the Registration Statement or the other Offer Documents. Parent and Merger Sub shall use their reasonable best efforts to cause the Schedule TO, the Registration Statement and the other Offer Documents to comply in all material respects with applicable securities laws and to have the Registration Statement declared effective under the Securities Act as promptly as practicable after it is filed with the SEC and to keep the Registration Statement effective as long as necessary to complete the Offer and the Merger. Following the time the Registration Statement is declared effective, Parent shall file the final prospectus included therein under Rule 424(b) promulgated pursuant to the Securities Act. Each of Parent, Merger Sub and the Company agrees promptly to correct any information provided by it for use in the Schedule TO, the Registration Statement and the other Offer Documents if and to the extent that such information shall have become false or misleading in any material respect. Parent and Merger Sub agree to take all steps necessary to cause the Schedule TO and the Registration Statement as so corrected to be filed with the SEC and the Offer Documents as so corrected to be disseminated to the Company’s stockholders, in each case, as and to the extent required by applicable federal securities Law. The Company and its counsel shall be given a reasonable opportunity to review and comment on the Schedule TO, the Registration Statement and the other Offer Documents each time before any such document is filed with the SEC or disseminated to the Company’s stockholders, and Parent and Merger Sub shall give reasonable and good faith consideration to any comments made by the Company and its counsel. Parent and Merger Sub shall provide the Company and its counsel with (i) any comments or other communications, whether written or oral, that Parent, Merger Sub or their counsel may receive from time to time from the SEC or its staff with respect to the Schedule TO, the Registration Statement or the other Offer Documents promptly after receipt of such comments or other communications, and (ii) a reasonable opportunity to provide comments on that response (to which reasonable and good faith consideration shall be given).

          (h) Parent and/or US Corp. shall provide or cause to be provided to Merger Sub on a timely basis the funds and shares of Parent Common Stock necessary to accept for payment, and pay for, any shares of Company Common Stock that Merger Sub becomes obligated to accept for payment, and pay for, pursuant to the Offer.

          (i) If, between the date hereof and the date on which any share of Company Common Stock is accepted for payment and paid for pursuant to the Offer, the outstanding shares of Company Stock are changed (or a record date for such change occurs) into a different number or class of shares by reason of any stock split, division or subdivision of shares, stock dividend, reverse stock split, consolidation of shares, reclassification, recapitalization or other similar transaction, then the Offer Price shall be appropriately and proportionately adjusted, taking into account the record and payment or effective dates, as the case may be, for such transaction.

          (j) If, between the date hereof and the date on which any share of Company Common Stock is accepted for payment and paid for pursuant to the Offer, the outstanding shares of Parent Common Stock are changed (or a record date for such change occurs) into a different number or class of shares by reason of any stock split, division or subdivision of shares, stock dividend, reverse stock split, consolidation of shares, reclassification, recapitalization or other similar transaction, then the Offer Price shall be appropriately and proportionately adjusted, taking into account the record and payment or effective dates, as the case may be, for such transaction.

          (k) Subject to Section 1.5, unless this Agreement is terminated pursuant to Section 9, Merger Sub shall not terminate or withdraw the Offer prior to any scheduled expiration date without the prior written consent of the Company in its sole and absolute discretion, except that in the event this Agreement is terminated pursuant to Section 9, Merger Sub shall promptly (and in any event within twenty-four (24) hours) following such termination irrevocably and unconditionally terminate the Offer and shall not acquire any shares of Company Common Stock pursuant thereto. If the Offer is terminated in accordance with this Agreement prior to the purchase of shares of Company Common Stock in the Offer, Merger Sub shall promptly return, or cause any depositary acting on behalf of Merger Sub to return, all tendered shares of Company Stock to the tendering stockholders.

          Section 1.2 Company Actions .

          (a) The Company hereby represents and warrants that the Company Board of Directors, at a meeting duly called and held prior to the execution of this Agreement at which all directors of the Company were present, duly and unanimously adopted resolutions (i) declaring that this Agreement and the transactions contemplated hereby, including the Offer and the Merger, are advisable to and in the best interests of the Company and its stockholders, (ii) approving this Agreement, the Stockholder Agreements and the transactions contemplated hereby, including the Offer and the Merger, and (iii) recommending that the Company’s stockholders accept the Offer, tender their shares of Company Common Stock in the Offer and, if required by applicable Law in order to consummate the Merger or in connection with the One Step Merger, adopt this Agreement (such recommendation, the “ Company Recommendation ”).

          (b) Provided that no Change in Recommendation shall have occurred in accordance with Section 6.2(c) or 6.2(d), the Company hereby consents to the inclusion of the Company Recommendation in the Offer Documents in a form and manner reasonably determined by the Company to be acceptable. The Company shall instruct its transfer agent to promptly furnish Parent with a true and correct list, as of the most recent practicable date, of the Company’s stockholders and their addresses, as well as mailing labels containing such names and addresses, and shall provide to Parent such additional information (including updated lists of stockholders, mailing labels and lists of securities positions) and such other assistance as Parent may reasonably request for purposes of communicating the Offer to the Company’s stockholders. Parent and Merger Sub shall hold all information furnished in accordance with this Section 1.2(b) in confidence in accordance with the terms and conditions of the confidentiality agreement, dated as of October 18, 2007, as amended or supplemented, between Parent and the Company (the “ Confidentiality Agreement ”), and shall use such information solely in connection with the communication and implementation of the Offer.

          (c) On the date the Schedule TO is first filed with the SEC, the Company shall file with the SEC and disseminate to the Company’s stockholders a Solicitation/Recommendation Statement on Schedule 14D-9 (together with any amendments or supplements thereto, the “ Schedule 14D-9 ”) that, unless a Change in Recommendation in accordance with Section 6.2(c) or 6.2(d) shall have occurred, shall contain the Company Recommendation. Each of Parent and Merger Sub shall promptly furnish to the Company in writing all information concerning Parent and Merger Sub that may be required by applicable Law or reasonably requested by the Company for inclusion in the Schedule 14D-9. Each of the Company, Parent and Merger Sub agrees promptly to correct any information provided by it for use in the Schedule 14D-9 if and to the extent that it shall have become

false or misleading in any material respect. The Company agrees to take all steps necessary to cause the Schedule 14D-9 as so corrected to be filed with the SEC and disseminated to the Company’s stockholders, in each case, as and to the extent required by applicable federal securities Laws. Parent, Merger Sub and their counsel shall be given a reasonable opportunity to review and comment on the Schedule 14D-9 each time before it is filed with the SEC, and the Company shall give reasonable and good faith consideration to any comments made by Parent, Merger Sub and their counsel. The Company shall promptly provide Parent, Merger Sub and their counsel with (i) any comments or other communications, whether written or oral, that the Company or its counsel may receive from time to time from the SEC or its staff with respect to the Schedule 14D-9 promptly after receipt of those comments or other communications, and (ii) a reasonable opportunity to provide comments on that response (to which reasonable and good faith consideration shall be given).

          (d) The Company agrees (i) to promptly upon Parent’s request provide all information about the Company required to be disclosed in the Offer Documents, (ii) to use reasonable best efforts to cause the Company’s accountants to promptly deliver to Parent a duly executed consent of the Company’s accountants to allow Parent to include in the Registration Statement the Company’s financial statements and such accountants’ report thereon, (iii) that all information provided by the Company for inclusion or incorporation by reference in the Offer Documents will not (at the respective times such materials, or any amendments or supplements thereto, are filed with the SEC, first published, sent or given to stockholders of the Company, the Offer expires or shares of Parent Common Stock are delivered in connection with the Offer, or at the Effective Time, as the case may be) contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading and (iv) to promptly correct any information provided by the Company for the Offer Documents if and to the extent that such information shall have become false or misleading in any material respect.

          (e) Prior to the Acceptance Date, to the extent necessary, the Company (acting through the entire Company Board of Directors or a special committee of the Company Board of Directors comprised solely of “independent directors” determined in accordance with Rule 14d-10(d)(2) of the Exchange Act) will take all steps that may be necessary or reasonably advisable to cause any employee agreement, plan or arrangement (whether in existence prior to or after the date hereof) pursuant to which consideration is or becomes payable to any officer, director or employee to be unanimously approved by the entire Company Board of Directors (or by such special committee) as an “employment compensation, severance or other employee benefit arrangement” within the meaning of Rule 14d-10(d)(2) of the Exchange Act and to take all actions otherwise necessary to satisfy the requirements of the non-exclusive safe harbor set forth in Rule 14d-10(d) of the Exchange Act.

          Section 1.3 Directors .

          (a) Effective upon the acceptance for payment of shares of Company Common Stock pursuant to the Offer, Parent shall be entitled to designate the number of directors, rounded up to the next whole number, on the Company Board of Directors that equals the product of (x) the total number of directors on the Company Board of Directors (giving effect to the election of any additional directors pursuant to this Section 1.3(a)), and (y) a fraction having a numerator equal to the aggregate number of shares of Company Common Stock beneficially owned by Merger Sub (including shares of Company Common Stock purchased pursuant to the Offer) and a denominator equal to the total number of shares of Company Common Stock then outstanding. At Parent’s request on or after the Acceptance Date, the Company shall cause Parent’s designees to be elected or appointed to the Company Board of Directors as promptly as possible, including increasing the number of directors and seeking and accepting resignations of incumbent directors. In connection with the designation by Parent of individuals to serve on the Company Board of Directors, the Company shall, at Parent’s request, cause individuals designated by Parent to constitute the number of members, rounded up to the next whole number, on (i) each committee of the

Company Board of Directors and (ii) each board of directors of each Subsidiary of the Company (and each committee thereof) that represents the same percentage as such individuals represent on the Company Board of Directors, in each case subject to any limitation imposed by applicable Law (including Nasdaq rules).

          (b) The Company’s obligations to appoint Parent’s designees to the Company Board of Directors shall be subject to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder. The Company shall promptly take all actions, and shall include in the Schedule 14D-9 such information with respect to the Company and its officers and directors, as Section 14(f) and Rule 14f-1 require in order to fulfill its obligations under this Section 1.3, so long as Parent has timely provided to the Company in writing any information with respect to itself and its nominees, officers, directors and affiliates required by Section 14(f) and Rule 14f-1. Parent shall promptly supply to the Company in writing, and shall be solely responsible for the accuracy and completeness of, all such information.

          (c) In the event that Parent’s designees are elected or appointed to the Company Board of Directors pursuant to Section 1.3(a), until the Effective Time, the Company Board of Directors shall have at least three (3) directors who are directors of the Company on the date hereof and who are neither officers of the Company nor stockholders, Affiliates, or associates (within the meaning of the federal securities Law) of Parent (“ Continuing Directors ”); provided that in such event, if the number of Continuing Directors shall be reduced below three (3), the remaining Continuing Director(s) shall be entitled to designate persons to fill such vacancies who shall be deemed to be Continuing Directors for purposes of this Agreement or, if no other Continuing Director then remains, the other directors shall be entitled to (and shall be directed by Parent to) designate directors to fill such vacancies who shall not be officers of the Company or stockholders, Affiliates or associates of Parent, and such Persons shall be deemed to be Continuing Directors for purposes of this Agreement.

          (d) Notwithstanding anything in this Agreement to the contrary, following the election or appointment of Parent’s designees to the Company Board of Directors pursuant to Section 1.3(a) and until the Effective Time, any termination of this Agreement by the Company, any amendment of this Agreement, any extension of time for performance of any obligation or action hereunder by Parent or Merger Sub, any waiver of compliance with any of the agreements or conditions contained herein for the benefit of the Company or its stockholders (other than Parent, Merger Sub or their Affiliates), officers, directors or employees, or of any right of the Company under this Agreement, any amendment of the Company’s certificate of incorporation or bylaws, any amendment or change to or any other consent or action by the Company Board of Directors with respect to this Agreement, the Offer or the Merger or any other transaction contemplated hereby or in connection herewith shall only be effected if there are in office one or more Continuing Directors and such action is approved by a majority of the Continuing Directors then in office (or by the sole Continuing Director if there shall be only one Continuing Director). The Continuing Directors shall have the authority to retain such counsel (which may include current counsel to the Company) and other advisors at the expense of the Company as determined by the Continuing Directors and shall have the authority to institute any action on behalf of the Company to enforce performance of this Agreement.

          Section 1.4 Top-Up Option .

          (a) The Company hereby grants to Merger Sub an irrevocable option (the “ Top Up Option ”), exercisable only upon the terms and conditions set forth in this Section 1.4, to purchase that number of shares of Company Common Stock (the “ Top Up Option Shares ”) equal to the lowest number of shares of Company Common Stock that, when added to the aggregate number of shares of Company Common Stock owned by Merger Sub at the time of such exercise, shall constitute one (1) share of Company Common Stock more than ninety percent (90%) of the outstanding shares of Company Common Stock immediately prior to the filing of the

certificate of ownership and merger to effect the Second Step Merger (giving effect to the issuance of the Top Up Option Shares), at a price per share equal to $11.00.

          (b) Merger Sub may exercise the Top Up Option, in whole but not in part, at any time on or following the Acceptance Date and prior to the tenth (10 ^th ) business day after the later of (i) the Acceptance Date or (ii) the expiration of the Subsequent Offering Period; provided , however , that Merger Sub agrees that it will exercise the Top Up Option if doing so would allow it to consummate the Merger pursuant to Section 253 of the DGCL. The obligation of Merger Sub to exercise the Top Up Option and of the Company to deliver the Top Up Option Shares on the exercise of the Top Up Option is subject to the conditions that (i) immediately prior to the filing of the certificate of ownership and merger to effect the Second Step Merger, the aggregate number of shares owned directly or indirectly by Merger Sub will constitute one (1) share of Company Common Stock more than ninety percent (90%) of the outstanding shares of Company Common Stock at such time (giving effect to the issuance of the Top Up Option Shares) and (ii) the number of Top Up Option Shares issued pursuant to the Top Up Option does not exceed the aggregate number of shares of Company Common Stock that are then authorized and unissued or held as treasury shares by the Company.

          (c) In the event Merger Sub wishes to exercise the Top Up Option, Merger Sub shall so notify the Company in writing, and shall set forth in such notice (the “ Top-Up Exercise Notice ”): (i) the aggregate number of outstanding shares of Company Common Stock that will be owned by Merger Sub immediately preceding the purchase of the Top Up Option Shares (provided the Company has provided Merger Sub with the number of outstanding shares of Company Common Stock as of the applicable date), and (ii) the place and time for the closing of the purchase of the Top Up Option Shares, which may be the same day as, but shall not be more than five (5) business days after, delivery of such notice (the “ Top Up Closing ”). At the Top Up Closing, Merger Sub shall pay the Company the aggregate purchase price for the Top Up Option Shares (calculated by multiplying the number of such Top Up Option Shares by $11.00) by wire transfer of same day funds to a bank designated by the Company in an amount equal to the aggregate par value of the Top Up Option Shares and a promissory note, bearing interest at a rate of five percent (5%) per annum, for the balance of the purchase price, and the Company shall cause to be issued to Merger Sub a certificate representing such Top Up Option Shares.

          (d) Parent and Merger Sub acknowledge that the Top Up Option Shares will not be registered under the Securities Act and will be issued in reliance upon an exemption thereunder for transactions not involving a public offering. Merger Sub agrees that the Top Up Option and the Top Up Option Shares to be acquired upon exercise of the Top Up Option are being and will be acquired by Merger Sub for the purpose of investment and not with a view to, or for resale in connection with, any distribution thereof (within the meaning of the Securities Act).

          (e) Upon the delivery by Merger Sub to the Company of the Top-Up Exercise Notice, and the tender of the consideration described in Section 1.4(c), Merger Sub shall be deemed to be the holder of record of the Top-Up Option Shares issuable upon that exercise, notwithstanding that the stock transfer books of the Company shall then be closed or that certificates representing those Top-Up Option Shares shall not then be actually delivered to Merger Sub or the Company shall have failed or refused to designate the bank account described in Section 1.4(c).

          Section 1.5 Change in Structure Event . At the earlier to occur of (a) the parties so agreeing in writing or (b) unless a Change in Recommendation shall have occurred, the date ten (10) business days after the expiration of the Initial Offer Period (or such later date as the parties agree in writing) if the Minimum Condition or the Short Form Condition is not then satisfied (a “ Change in Structure Event ”), (i) Merger Sub shall promptly (and in any event within twenty-four (24) hours) following such Change in Structure Event irrevocably and unconditionally terminate the Offer and shall not acquire any shares of Company Common Stock pursuant thereto, (ii) Parent shall

promptly amend the Registration Statement to reflect the Change in Structure Event and file as soon as practicable with the SEC the amended Registration Statement, (iii) the Company shall promptly prepare the Proxy Statement and file as soon as practicable with the SEC the Proxy Statement and (iv) the parties shall otherwise, upon the conditions and subject to the conditions of this Agreement, proceed to consummate a One Step Merger as contemplated by this Agreement. If the Offer is terminated in accordance with this Section 1.5 prior to the purchase of shares of Company Common Stock in the Offer, Merger Sub shall promptly return, or cause any depositary acting on behalf of Merger Sub to return, all tendered shares of Company Stock to the tendering stockholders.

      Section 2. The Merger .

     The Merger described in this Section 2 shall govern the Second Step Merger or, if a Change in Structure Event has occurred, the One Step Merger. The parties acknowledge that in the event of a Second Step Merger, the Company Convertible Preferred Stock shall have been converted into shares of Company Common Stock no later than immediately prior to the Acceptance Date and such shares of Company Common Stock, if the Stockholder Parties comply with the tendering procedures set forth in the Stockholder Agreements, shall have been validly tendered and not withdrawn in connection with the Offer. Notwithstanding anything in this Agreement to the contrary, if following the Offer and any Subsequent Offering Period and the exercise, if any, of the Top Up Option, the requirements of Section 253 of the DGCL are satisfied such that the Merger may be effected without a vote of stockholders of the Company, the parties hereto shall take all necessary and appropriate actions to cause the Merger to become effective as soon as practicable on such basis and in any event within one (1) business day after the Acceptance Date.

          Section 2.1 The Merger; Effects of the Merger

          (a) At the Closing, upon the terms and subject to the conditions of this Agreement, and in accordance with the DGCL and other applicable Delaware Law, the Company and Merger Sub shall file a certificate of merger or certificate of ownership and merger, as the case may be, in such form as required by, and executed and acknowledged by the necessary parties in accordance with, the relevant provisions of the DGCL (the “ Certificate of Merger ”). The Merger shall become effective at the time and date on which the Certificate of Merger has been duly filed with the Secretary of State of the State of Delaware or such later time and date as is agreed to by the parties hereto and specified in the Certificate of Merger, such time referred to herein as the “ Effective Time .” Parent, Merger Sub and the Company shall make all other filings or recordings required under the DGCL or other applicable Delaware Law in connection with the Merger.

          (b) The Merger shall have the effects set forth in the Certificate of Merger and in the applicable provisions of the DGCL and this Agreement. The Company shall be the surviving corporation of the Merger (sometimes hereinafter referred to as the “ Surviving Corporation ”). Without limiting the generality of the foregoing, at the Effective Time: (i) Merger Sub shall be merged with and into the Company, and the separate corporate existence of Merger Sub shall thereupon cease; (ii) the Surviving Corporation shall continue to be governed by the laws of the State of Delaware; (iii) the corporate existence of the Surviving Corporation with all its property, rights, privileges, immunities, powers and franchises shall continue unaffected by the Merger; and (iv) all the property, rights, privileges, immunities, powers and franchises of the Company and Merger Sub shall be vested in the Surviving Corporation, and all debts, liabilities and duties of the Company and Merger Sub shall become the debts, liabilities and duties of the Surviving Corporation.

          (c) The certificate of incorporation of the Company immediately prior to the Effective Time shall be the Certificate of Incorporation of the Surviving Corporation until thereafter amended in accordance with the provisions thereof and as provided by the DGCL or other applicable Law.

          (d) The bylaws of Merger Sub as in effect immediately prior to the Effective Time shall be the bylaws of the Surviving Corporation until thereafter amended as provided therein or by applicable Law; provided, however , that such bylaws shall be amended as necessary to comply with the obligations of the Surviving Corporation set forth in Section 7.5.

          Section 2.2 Closing . The closing of the Merger (the “ Closing ”) will take place at 10:00 a.m. (New York City time) on a date to be specified by the parties, such date to be no later than the second business day (or in the case of a Second Step Merger, one business day or such earlier time as determined by Parent) after satisfaction or waiver of all of the conditions set forth in Section 8 (other than those conditions that by their terms are to be satisfied at the Closing, but subject to the satisfaction or waiver of those conditions), at the offices of Sidley Austin LLP, One South Dearborn St., Chicago, Illinois 60603, unless another time, date and/or place is agreed to in writing by the parties hereto. The date on which the Closing occurs is referred to in this Agreement as the “ Closing Date .”

          Section 2.3 Directors and Officers of the Surviving Corporation . The directors of Merger Sub immediately prior to the Effective Time shall, from and after the Effective Time, be the directors of the Surviving Corporation, and the officers of Merger Sub immediately prior to the Effective Time shall, from and after the Effective Time, be the officers of the Surviving Corporation, in each case until their respective successors shall have been duly elected, designated or qualified, or until their earlier death, resignation or removal in accordance with the Surviving Corporation’s certificate of incorporation and bylaws.

      Section 3. Conversion of Securities .

          Section 3.1 Conversion of Securities . At the Effective Time, by virtue of the Merger and without any action on the part of Parent, the Company, Merger Sub or the holders of any shares of outstanding Company Common Stock and Company Convertible Preferred Stock, the following shall occur:

          (a) Conversion of Shares of Company Stock . Each issued and outstanding share of Company Stock (other than shares of Company Stock to be cancelled in accordance with Section 3.1(c) and Dissenting Shares (collectively, “ Excluded Shares ”)) shall be cancelled and converted into the right to receive (i) $7.70 in cash (the “ Cash Consideration ”) and (ii) 0.217 (the “ Exchange Ratio ”) of a validly issued, fully paid and nonassessable share of Parent Common Stock (the “ Stock Consideration ” and together with the Cash Consideration, the “ Merger Consideration ” provided that if the Offer Price is changed and shares of Company Common Stock are accepted for purchase pursuant to the Offer, a corresponding change shall be made to the Merger Consideration).

          (b) Merger Sub Common Stock . Each share of common stock, $0.01 par value per share, of Merger Sub issued and outstanding immediately prior to the Effective Time shall remain outstanding and shall constitute the only issued and outstanding capital stock of the Surviving Corporation.

          (c) Cancellation of Treasury Stock and Parent-Owned Stock . All shares of Company Common Stock and Company Convertible Preferred Stock that are owned by the Company as treasury stock and any shares of Company Common Stock owned by Parent, the Company, or Merger Sub or any of their Subsidiaries immediately prior to the Effective Time shall automatically be cancelled and shall cease to exist, and no consideration shall be delivered in exchange therefor.

          Section 3.2 Dissenting Shares

          (a) Notwithstanding anything in this Agreement to the contrary, shares of Company Stock that are issued and outstanding immediately prior to the Effective Time and which are held by holders of shares of

Company Stock who are entitled to demand and who have properly demanded and perfected their rights to be paid the fair value of such shares in accordance with Section 262 of the DGCL (the “ Dissenting Shares ”) shall not be converted into the right to receive the Merger Consideration and the holders thereof shall be entitled to only such rights as are granted by Section 262 of the DGCL; provided, however , that if any such holder shall fail to perfect or shall effectively waive, withdraw or lose such holder’s rights under Section 262 of the DGCL, such holder’s shares of Company Stock shall thereupon be deemed to have been converted, at the Effective Time, into the right to receive, subject to Section 3.5 and Section 3.6, the Merger Consideration as set forth in this Section 3.

          (b) The Company shall give Parent (i) prompt notice of any appraisal demands received by the Company, withdrawals thereof and any other instruments served pursuant to Section 262 of the DGCL and received by the Company and (ii) the opportunity to participate in all negotiations and proceedings with respect to the exercise of appraisal rights under Section 262 of the DGCL. Prior to the Effective Time, the Company shall not, without the prior written consent of Parent, voluntarily make any payment with respect to, or settle or offer to settle, any such demands, or agree to do any of the foregoing.

          Section 3.3 Company Options and Restricted Shares . Except to the extent otherwise agreed in writing by the Company and Parent prior to the Effective Time:

          (a) The Company shall use reasonable best efforts to ensure that, (i) immediately prior to the Effective Time, each outstanding option to acquire shares of Company Common Stock (“ Company Options ”) granted under the Company’s 1999 Stock Option Plan, as amended, and the Amended and Restated 2000 Restricted Stock Grant Plan (collectively, the “ Equity Incentive Plans ”), shall become fully vested and exercisable (without regard to whether the Company Options are then vested or exercisable) and (ii) at the Effective Time, all Company Options not theretofore exercised shall be cancelled and, in exchange therefor, converted into the right to receive a payment of the Merger Consideration calculated as follows: The excess, if any, of (A) the sum of (x) the Cash Consideration and (y) an amount equal to the Exchange Ratio multiplied by the closing price of a share of Parent Common Stock as reported on the Nasdaq on the last trading day immediately prior to the Effective Time (such sum, the “ Company Share Value ”) over (B) the exercise price of a Company Option will be multiplied by the number of shares subject to such Company Option and such product will be divided by the Company Share Value. Such quotient, rounded to the nearest whole number, is referred to herein as the “ Option Share Equivalent .” Each Option Share Equivalent shall be entitled to receive the Merger Consideration. Any Company Option with an exercise price equal to or greater than the Company Share Value shall not receive any Merger Consideration.

          (b) The Company shall use reasonable best efforts to ensure that, immediately prior to the Effective Time, each share of Company Common Stock subject to vesting or other lapse restrictions pursuant to any Equity Incentive Plan (collectively, “ Restricted Shares ”) which was granted prior to the date hereof and is outstanding immediately prior to the Effective Time shall vest and become free of such restrictions.

          (c) The Company shall use reasonable best efforts to ensure that, as of the Effective Time, (i) the Equity Incentive Plans remain in full force and effect and (ii) no person shall have any right under the Equity Incentive Plans, except as set forth herein.

          (d) At or promptly after the Effective Time, the Surviving Corporation shall, and Parent shall cause the Surviving Corporation to, deliver the applicable Merger Consideration to holders of Company Options without interest. Parent shall, and shall cause the Surviving Corporation to, at all times from and after the Effective Time maintain sufficient funds and shares of Parent Common Stock to satisfy its obligations to holders of Company Options in respect of the amounts payable pursuant to this Section 3.3.

          Section 3.4   Exchange Procedures; Exchange Agent .

          (a) Not less than three (3) business days prior to the earlier of the Acceptance Date and the Closing Date, Parent shall appoint a bank or trust company reasonably acceptable to the Company to act as exchange agent (the “ Exchange Agent ”) for the purpose of exchanging certificates which immediately prior to the Effective Time represented shares of Company Stock (the “ Certificates ”) or shares of Company Stock represented by book-entry (“ Book-Entry Shares ”) for the Merger Consideration.

          (b) Exchange Fund . At or immediately following the Effective Time, Parent and US Corp. shall or shall cause Merger Sub to deposit with the Exchange Agent, pursuant to an agreement providing for the matters set forth in this Section 3.4 and such other matters as may be appropriate and the terms of which shall be reasonably acceptable to Parent and the Company, an amount in cash and certificates representing shares of Parent Common Stock sufficient to effect the conversion of each share of the Company Stock (other than Excluded Shares) into the Merger Consideration. In addition, Parent and US Corp. shall or shall cause Merger Sub to deposit with the Exchange Agent, as necessary, cash in an amount sufficient for payment in lieu of fractional shares pursuant to Section 3.8 and any dividends or distributions to which holders of Company Stock become entitled pursuant to Section 3.4(d). All cash and shares of Parent Common Stock deposited with the Exchange Agent shall hereinafter be referred to as the “ Exchange Fund ”. The cash portion of the Exchange Fund shall be invested by the Exchange Agent as directed by Parent; provided however , that such investments shall be in obligations of or guaranteed by the United States of America or any agency or instrumentality thereof and backed by the full faith and credit of the United States of America, in commercial paper obligations rated A-1 or P-1 or better by Moody’s Investors Service, Inc. or Standard & Poor’s Corporation, respectively, or in certificates of deposit, bank repurchase agreements or banker’s acceptances of commercial banks with capital exceeding $1 billion (based on the most recent financial statements of such bank which are then publicly available). Any net profit resulting from, or interest or income produced by, such investments shall be payable to the Surviving Corporation. If for any reason the Exchange Fund is inadequate to pay the amounts to which holders of shares of Company Stock shall be entitled under this Section 3, Parent shall, or shall cause the Surviving Corporation to, promptly deposit additional cash and certificates with the Exchange Agent sufficient to make all payments of Merger Consideration, and Parent and the Surviving Corporation shall in any event be liable for payment thereof.

          (c) Exchange of Certificates . As soon as reasonably practicable after the Effective Time, the Surviving Corporation shall cause to be mailed to each (i) record holder, as of the Effective Time, of an outstanding Certificate or (ii) holder, as of the Effective Time, of Book-Entry Shares, a form of letter of transmittal (which shall be in customary form and agreed to by Parent and the Company prior to the Effective Time, shall contain instructions for wire transfer at the expense of such holder of the cash portion of the Merger Consideration, and shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon proper delivery of the duly executed transmittal materials, such other documents as may customarily be required by the Exchange Agent and, as applicable, any Certificates to the Exchange Agent). Upon surrender to the Exchange Agent of a Certificate or Book-Entry Shares for cancellation, together with such letter of transmittal, duly completed and validly executed in accordance with the instructions thereto, and such other documents as may customarily be required by the Exchange Agent, the holder of such Certificate or Book-Entry Shares shall be entitled to receive in exchange therefor the Merger Consideration for each share formerly represented by such Certificate or Book-Entry Shares and such Certificate or applicable book-entry shall then be cancelled. No interest shall be paid or accrued for the benefit of holders of the Certificates or Book-Entry Shares on the Merger Consideration payable in respect of the Certificates or Book-Entry Shares. Until surrendered for cancellation as contemplated by this Section 3.4(c), each Certificate and each Book-Entry Share shall be deemed at any time after the Effective Time to represent only the right to receive upon such surrender the Merger Consideration as contemplated by this Section 3.

          (d) Distributions with Respect to Unexchanged Shares . No dividends or other distributions with respect to shares of Parent Common Stock issuable with respect to the shares of Company Stock shall be paid

to the holder of any unsurrendered Certificates or Book-Entry Shares until those Certificates or Book-Entry Shares are surrendered as provided in this Section 3. Upon surrender, there shall be issued and/or paid to the holder of the shares of Parent Common Stock issued in exchange therefor, without interest, (i) at the time of surrender, the dividends or other distributions payable with respect to those shares of Parent Common Stock with a record date on or after the date of the Effective Time and a payment date on or prior to the date of this surrender and not previously paid and (ii) at the appropriate payment date, the dividends or other distributions payable with respect to those shares of Parent Common Stock with a record date on or after the date of the Effective Time but with a payment date subsequent to surrender.

          (e) Lost Certificates . If any Certificate has been lost, stolen, defaced or destroyed, upon the making of an affidavit of that fact by the person claiming such Certificate to be lost, stolen, defaced or destroyed, the Exchange Agent shall issue in exchange for such lost, stolen or destroyed Certificate (subject to the provisions of Section 3.2) the Merger Consideration with respect thereto without interest.

          (f) Transfer Books; No Further Ownership Rights in Shares of Company Stock . At the Effective Time, the stock transfer books of the Company with respect to the Company Common Stock and Company Convertible Preferred Stock will be closed and thereafter there will be no further registration of transfers of shares of Company Common Stock or Company Convertible Preferred Stock on the records of the Company. From and after the Effective Time, the holders of Certificates evidencing ownership of shares of Company Common Stock and Company Convertible Preferred Stock outstanding immediately prior to the Effective Time shall cease to have any rights with respect to such shares, except as otherwise provided for herein or by applicable Law. If, after the Effective Time, Certificates are presented to the Surviving Corporation for any reason, they shall (subject to the provisions of Section 3.2) be cancelled against delivery of the Merger Consideration as provided in this Section 3 without interest.

          (g) Termination of Exchange Fund . At any time following the date that is one (1) year after the Effective Time, the Surviving Corporation shall be entitled to require the Exchange Agent to deliver to it any funds (including any interest received with respect thereto) made available to the Exchange Agent and not disbursed (or for which disbursement is pending subject only to the Exchange Agent’s routine administrative procedures) to holders of Certificates or Book-Entry Shares, and thereafter such holders shall be entitled to look only to the Surviving Corporation (subject to abandoned property, escheat or similar Laws) only as general creditors thereof with respect to the Merger Consideration, cash in lieu of fractional shares and any dividends or distributions payable upon due surrender of their Certificates or Book-Entry Shares, without any interest thereon.

          (h) No Liability . None of Parent, US Corp., the Surviving Corporation or the Exchange Agent shall be liable to any holder of a Certificate for Merger Consideration delivered to a public official pursuant to any applicable abandoned property, escheat or similar Law.

          Section 3.5 Withholding . Each of Parent, US Corp., and the Surviving Corporation is entitled to deduct and withhold, or cause the Exchange Agent to deduct and withhold, from any amounts payable or otherwise deliverable pursuant to this Agreement to any holder or former holder of shares of Company Stock (including Restricted Shares) or Company Options such amounts as are required to be deducted or withheld therefrom under the Internal Revenue Code of 1986, as amended (the “ Code ”), or any provision of state, local or foreign Tax Law or under any other applicable legal requirement. 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.

          Section 3.6 Transfer Taxes . If payment of the Merger Consideration payable to a holder of shares of Company Stock pursuant to the Merger is to be made to a person other than the person in whose name the

surrendered Certificate is registered, it shall be a condition of payment that the Certificate so surrendered shall be properly endorsed or shall be otherwise in proper form for transfer and that the person requesting such payment shall have paid all transfer and other Taxes required by reason of the payment of the Merger Consideration to a person other than the registered holder of the Certificate surrendered (or shall have established to the reasonable satisfaction of Parent that such Tax either has been paid or is not applicable).

          Section 3.7 Adjustments to Prevent Dilution .

          (a) In the event that the Company changes (or establishes a record date for changing) the number of shares of Company Stock issued and outstanding prior to the Effective Time as a result of a stock split, stock dividend, recapitalization, subdivision, reclassification, combination, exchange of shares or similar transaction with respect to the outstanding shares of Company Stock at any time during the period from the date hereof to the Effective Time, then the Merger Consideration shall be appropriately adjusted, taking into account the record and payment or effective dates, as the case may be, for such transaction.

          (b) In the event that Parent changes (or establishes a record date for changing) the number of shares of Parent Common Stock issued and outstanding prior to the Effective Time as a result of a stock split, stock dividend, recapitalization, subdivision, reclassification, combination, exchange of shares or similar transaction with respect to the outstanding shares of Parent Common Stock at any time during the period from the date hereof to the Effective Time, then the Merger Consideration shall be appropriately adjusted, taking into account the record and payment or effective dates, as the case may be, for such transaction.

          Section 3.8 No Fractional Shares . No fractional shares of Parent Common Stock shall be issued in respect of shares of Company Stock that are to be converted in the Merger into the right to receive the Merger Consideration. Each holder of a Certificate (other than holders of Certificates representing Excluded Shares) or Book-Entry Share shall be entitled to receive in lieu of any fractional share of Parent Common Stock to which such holder would otherwise have been entitled pursuant to Section 3.1 an amount in cash (without interest), rounded to the nearest whole cent, equal to the fractional share interest to which such holder would otherwise be entitled by the closing price on the Nasdaq for a share of Parent Common Stock on the last trading day immediately preceding the Effective Time.

          Section 3.9 Tax Treatment.

     The parties agree that the Merger, together with (if applicable) the acceptance of Company Stock pursuant to the Offer, shall be treated for U.S. federal income tax purposes, and for applicable state, local, foreign and other income tax purposes, as a taxable purchase by US Corp. of the Company Stock converted in the Merger or accepted pursuant to the Offer, in exchange for the Merger Consideration or the Offer Price, as applicable. The separate corporate existence of Merger Sub, the promissory note delivered as consideration for the Top Up Option Shares and the Top Up Option Shares, for such purposes shall be disregarded. Each of the parties shall not, and shall not cause or permit its respective Affiliates to, take any tax position inconsistent with the treatment described in this Section 3.9.

      Section 4. Representations and Warranties of the Company .

          The Company hereby makes the representations and warranties to Parent, US Corp. and Merger Sub set forth in this Section 4, except (i) as set forth in the disclosure schedule delivered by the Company to Parent on the date hereof (the “ Company Disclosure Schedule” ); provided, however , that disclosure of any item in any section or subsection of the Company Disclosure Schedule shall be deemed disclosure with respect to any other section or subsection only if the relevance of such item is reasonably apparent on the face of such disclosure, or (ii)

as disclosed in any Company SEC Report filed prior to the date hereof and available on the Electronic Data Gathering, Analysis and Retrieval System of the SEC; provided, however , that all disclosures under “Business – Government Regulation,” “Risk Factors” and “Forward-Looking Statements” and similar forward looking disclosure shall not be deemed to qualify the representations and warranties in this Section 4; provided, further, that any disclosures in such Company SEC Reports that are not the subject of the first proviso of this clause (ii) shall only be deemed to qualify a representation or warranty if the relevance of such disclosure to such representation or warranty is reasonably apparent on the face of such disclosure; provided, further, that the disclosures in the Company SEC Reports shall not be deemed to qualify any representations or warranties made in Section 4.3.

          Section 4.1 Organization and Qualification .

          (a) Each of the Company and each subsidiary of the Company (collectively, the “ Company Subsidiaries ”) is a corporation or other legal entity duly organized, validly existing and in good standing (with respect to jurisdictions that recognize the concept of good standing) under the Laws of its jurisdiction of organization and has the requisite corporate or similar power and authority to own, lease and operate its properties and assets it purports to own and to carry on its business as now being conducted, except as would not, individually or in the aggregate, have a Company Material Adverse Effect. The Company and each Company Subsidiary are qualified or otherwise authorized to transact business as a foreign corporation or other organization in all jurisdictions where the nature of their business or the ownership, leasing or operation of their properties make such qualification or authorization necessary, except for jurisdictions in which the failure to be so qualified or authorized would not, individually or in the aggregate, have a Company Material Adverse Effect. “ Company Material Adverse Effect ” shall mean any event, circumstance, development, change or effect that, individually or in the aggregate with all other events, circumstances, developments, changes and effects, is, or would be, materially adverse to the business, assets, financial condition or results of operations of the Company and its Subsidiaries, taken as a whole; provided, however , that none of the following shall constitute, or shall be considered in determining whether there has occurred, and no event, circumstance, change or effect resulting from or arising out of any of the following shall constitute, a Company Material Adverse Effect: (A) the announcement of the execution of this Agreement (including the threatened or actual impact on relationships with customers, vendors, suppliers, distributors, landlords or employees (including the threatened or actual loss, termination, suspension, modification or reduction of, or adverse change in, such relationships) but only, in each case, to the extent caused by the announcement of the execution of this Agreement) or any litigation brought by any holder of Company Stock (other than any Stockholder Party) arising or resulting therefrom, (B) changes in the national or world economy or national or foreign securities, credit or financial markets or changes in general economic conditions that affect the industries in which the Company and its Subsidiaries, or their customers, conduct their business (but only, in each case, to the extent that such changes do not disproportionately affect the Company, its Subsidiaries or their customers as compared to other companies in the industries in which the Company and its Subsidiaries operate), (C) any change in applicable Law or GAAP or interpretation thereof (but only, in each case, to the extent that such changes do not disproportionately affect the Company or its Subsidiaries as compared to other companies in the industries in which the Company and its Subsidiaries operate), (D) any failure by the Company to meet any published or internally prepared budgets or estimates of revenues, earnings or financial projections prepared prior to the date of this Agreement (it being understood and agreed that any events, circumstances, developments, changes and effects which cause the failure to meet such budgets, estimates or projections may, except as provided in subsections (A), (B), (C), (E), (F), (G), (H) or (I) of this definition, constitute or be taken into account in determining whether there has been or would be a Company Material Adverse Effect), (E) any outbreak or escalation of war or hostilities, any occurrence or threats of terrorist acts or any armed hostilities associated therewith and any national or international calamity, disaster or emergency or any escalation thereof (but only if, in each case, such matters do not disproportionately affect the Company

or its Subsidiaries as compared to other companies in their industries), (F) any earthquake, hurricane or natural disaster (but only, in each case, to the extent that such changes do not disproportionately affect the Company or its Subsidiaries as compared to other companies in such industries), (G) a decline in the price, or a change in the trading volume, of the Company Common Stock on the Nasdaq (it being understood and agreed that any events, circumstances, developments, changes and effects which cause such decline or change may, except as provided in subsections (A), (B), (C), (D), (E), (F), (H) or (I) of this definition, constitute or be taken into account in determining whether there has been or would be a Company Material Adverse Effect), (H) taking or not taking any actions with the prior written consent of Parent or (I) compliance with the terms of, and taking any action required by, this Agreement (other than with respect to Section 4.17, the lead in to Section 6.1 and Section 6.1(a)). For purposes of this Agreement, (i) “ Laws ” means any federal, state, local or foreign laws, statutes, rules, orders, decrees or regulations of any Governmental Entity and (ii) “ Governmental Entity ” means any nation, government (foreign, supranational or domestic), state or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of, or pertaining to, government or any self regulating authority.

          (b) The Company has made available to Parent true, correct and complete copies of the certificate of incorporation and bylaws, or other organizational documents, of the Company and each Company Subsidiary. The Company is not in violation of its certificate of incorporation or bylaws. The Company Subsidiaries are not in violation, in any material respect, of their respective certificates of incorporation or bylaws or other organizational documents.

          Section 4.2 Authority . On or prior to the date hereof, the Company Board of Directors has unanimously (a) declared this Agreement, the Offer and the Merger advisable and fair to and in the best interests of the Company and its stockholders, (b) approved and adopted this Agreement and the Stockholder Agreements in accordance with the DGCL, (c) made the Company Recommendation and (d) approved this Agreement, the Stockholder Agreements and the Offer and the Merger and the other transactions contemplated hereby and thereby for purposes of Section 203 of the DGCL such that no stockholder approval (other than, if Parent and Merger Sub do not own ninety percent (90%) of the outstanding shares of Company Common Stock immediately prior to the Merger, the Company Stockholder Approval) shall be required to consummate the Merger or the other transactions contemplated by this Agreement and the Stockholder Agreements or to permit the Company and the Stockholder Parties to perform their respective obligations hereunder and thereunder, which resolutions have not (unless the Company Board of Directors or a committee thereof has made a Change in Recommendation in accordance with Section 6.2(c) or 6.2(d)) been subsequently rescinded, modified or withdrawn in any way. The Company has all necessary corporate power and authority to enter into, execute and deliver this Agreement, the Stockholder Agreements and each instrument required hereby or thereby to be executed and delivered by it at the Closing and to perform its obligations hereunder and thereunder and consummate the transactions contemplated hereby, including the Offer and the Merger, subject in the case of performing the Merger if Parent and Merger Sub do not own ninety percent (90%) of the outstanding shares of Company Common Stock immediately prior to the Merger, to obtaining the approval and adoption of this Agreement by the requisite vote of the Company Common Stock and Company Convertible Preferred Stock by the Company Requisite Vote (the “ Company Stockholder Approval ”). The execution, delivery and performance of this Agreement, the Stockholder Agreements and each instrument required hereby or thereby to be executed and delivered at the Closing by the Company and the consummation by the Company of the Offer and Merger and the other transactions contemplated hereby and thereby have been duly and validly authorized by all necessary corporate action and no other corporate proceedings on the part of the Company are necessary to authorize this Agreement or the Stockholder Agreements or to consummate the Offer and the Merger and the other transactions contemplated hereby (other than with respect to the Merger, the Company Stockholder Approval (if Parent and Merger Sub do not own ninety percent (90%) of the outstanding shares of Company Common Stock immediately prior to the Merger) and the filing with the Secretary of State of the State of Delaware of the Certificate of Merger as required by the DGCL) or thereby. This Agreement and the Stockholder Agreements have been duly and validly executed and delivered by the Company and, assuming the due

authorization, execution and delivery hereof by the other parties thereto, constitutes a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except to the extent that enforcement of the rights and remedies created hereby is subject to bankruptcy, insolvency, reorganization, moratorium and other similar Laws of general application affecting the rights and remedies of creditors and to general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at Law). The affirmative vote of a majority of outstanding Company Common Stock and Company Convertible Preferred Stock (with each share of Company Convertible Preferred Stock deemed to represent 0.8364 of a share of Company Common Stock) voting together as a single class (collectively, the “ Company Requisite Vote ”) is required to approve and adopt this Agreement if Parent and Merger Sub do not own ninety percent (90%) of the outstanding shares of Company Common Stock immediately prior to the Merger. No other vote of the holders of any securities of the Company or any of the Company Subsidiaries is required by Law, the terms of such securities, the by-laws of the Company, or the certificate of incorporation of the Company for the Company to consummate the Offer or the Merger and the other transactions contemplated hereby. On or prior to the date hereof, the Company Board of Directors and the holders of the Company Convertible Preferred Stock have adopted and approved the Amendment to the Certificate of Designations, Preferences and Rights of the Company Convertible Preferred Stock as set forth on Annex D hereto (the “ Certificate of Amendment ”).

          Section 4.3 Capitalization .

          (a) The authorized capital stock of the Company consists of (i) 35,000,000 shares of Company Common Stock, of which, as of the close of business on February 25, 2008, 5,863,713 shares (including an aggregate of 304,842 Restricted Shares for which the restrictions have not lapsed) were issued and outstanding and 4,639,900 shares were held in the treasury of the Company, and (ii) 15,000,000 shares of preferred stock of the Company, of which, as of the close of business on February 25, 2008, 6,956,522 were designated Company Convertible Preferred Stock, 6,956,522 shares of which were issued and outstanding and no shares of which were held in the treasury of the Company. All of the issued and outstanding shares of such Company Common Stock and Company Convertible Preferred Stock are duly authorized, validly issued, fully paid and nonassessable, and, other than as set forth in the Company’s certificate of incorporation (including the Designations, Preferences and Rights of the Company Convertible Preferred Stock, as amended (the “ Certificate of Designations ”)), were issued free of any preemptive (or similar) rights. No shares of Company Stock have been issued in violation of any preemptive (or similar) rights.

          (b) As of the close of business on February 25, 2008, the Company has reserved 5,550,000 shares of Company Common Stock for issuance pursuant to all of the Equity Incentive Plans, of which Company Options to purchase 881,357 shares of Company Common Stock were outstanding as of February 25, 2008, and 1,727,805 shares remained available for grant as of such date. Section 4.3(b) of the Company Disclosure Schedule contains a true, complete and accurate list as of the date of this Agreement of (i) each outstanding Company Option, including the holder, date of grant, exercise price, number of shares of Company Common Stock subject thereto and vesting schedule and (ii) each Restricted Share award, including the holder, date of grant, number of shares of Company Common Stock subject thereto and vesting schedule. All shares of Company Common Stock reserved for issuance as specified above shall be, upon issuance on the terms and conditions specified in the instruments pursuant to which they are issuable, duly authorized, validly issued, fully paid and nonassessable and will not be issued subject to any preemptive (or similar) rights. The Equity Incentive Plans are the only Plans under which securities of the Company or any Company Subsidiary may be issued.

          (c) Except for (i) shares of Company Common Stock indicated in Section 4.3(a) as issued and outstanding as of February 25, 2008, and (ii) shares issued upon the exercise of Company Options indicated in Section 4.3(b) as outstanding as of the close of business on February 25, 2008 or upon the conversion of the

Company Convertible Preferred Stock outstanding as of the close of business on February 25, 2008, as of the date hereof there are not any shares of Company Stock or other equity or voting securities of the Company issued and outstanding, reserved for issuance pursuant to outstanding equity or other awards or, except for the shares of Company Common Stock indicated in Section 4.3(b) as being reserved for issuance pursuant to Equity Incentive Plans, reserved for issuance. Except for (i) shares of Company Common Stock (including Restricted Shares) indicated in Section 4.3(a) as issued and outstanding as of February 25, 2008, (ii) Restricted Stock Units of the Company under its Equity Incentive Plans which will be granted by the Company in accordance with Section 6.1(b), and (iii) shares issued upon the exercise of Company Options indicated in Section 4.3(b) as outstanding as of the close of business on February 25, 2008 or upon the conversion of the Company Convertible Preferred Stock outstanding as of the close of business on February 25, 2008, as of immediately prior to the Effective Time there will not be any shares of Company Stock or other equity or voting securities of the Company issued and outstanding or reserved for issuance. No Company Options or Restricted Shares or other equity awards of the Company have been issued since the close of business on February 25, 2008 to the date hereof.

          (d) Except as set forth in this Section 4.3, there are not authorized or outstanding any subscriptions, options, conversion or exchange rights, warrants, calls, repurchase or redemption agreements, or other agreements, instruments, contracts, claims or commitments obligating the Company or any Company Subsidiary to issue, transfer, deliver, sell, repurchase or redeem, or cause to be issued, transferred, delivered, sold, repurchased or redeemed, additional shares of the Company Common Stock or other securities of the Company or to make payments with respect to the value of any of the foregoing or obligating the Company or any Company Subsidiary to grant, extend or enter into any such agreement or commitment. There are no stockholder agreements, voting trusts, proxies or other agreements or instruments with respect to the voting of the capital stock of the Company to which the Company is a party and, to the knowledge of the Company, no other person is a party to any stockholder agreements, voting trusts, proxies or other agreements or instruments with respect to the voting of the capital stock of the Company.

          (e) Neither the Company nor any Company Subsidiary has any outstanding bonds, debentures, notes or other indebtedness that have the right to vote (or which are convertible into, or exchangeable for, securities having the right to vote) on any matters on which stockholders may vote or is obligated to issues any such instruments.

          (f) The Company Common Stock constitutes the only class of securities of the Company registered under the Securities Exchange Act of 1934, as amended (together with the rules and regulations promulgated thereunder, the “ Exchange Act ”).

          (g) As of the date of this Agreement, neither the Company nor any Company Subsidiary has any outstanding indebtedness for borrowed money.

          (h) As of the date of this Agreement, security holders whose last address as shown on the books of the Company is in Canada hold less than 10 percent of the outstanding (i) shares of Company Common Stock and (ii) shares of Company Convertible Preferred Stock and the Company reasonably believes that security holders in Canada beneficially own less than 10 percent of the outstanding (A) shares of Company Common Stock and (B) shares of Company Convertible Preferred Stock.

          (i) Each of (i) the Loan and Security Agreement, dated as of January 29, 2002, as amended, between NMHC Funding, LLC, a Delaware limited liability company, and HFG Healthco-4 LLC, a Delaware limited liability company and (ii) the Receivables Purchase and Transfer Agreement, dated as of January 29, 2002, as amended, between the Company, the other providers named therein and NMHC Funding, LLC, as purchaser, has

been terminated and is no longer in full force and effect and there are no outstanding liabilities or other obligations of the Company or any of its Affiliates thereunder.

          (j) As of December 31, 2007, the amount of accrued and unpaid dividends on the Company Convertible Preferred Stock was $2,847,918.09.

          (k) As of the date hereof and as of immediately prior to the earlier of the Acceptance Date or the Closing Date, the aggregate amount owed by the Company and its Subsidiaries pursuant to the Contract set forth on Section 4.3(k) of the Company Disclosure Schedule is and shall be less than the amount set forth in Section 4.3(k) of the Company Disclosure Schedule.

          Section 4.4 Company Subsidiaries .

          (a) Section 4.4(a) of the Company Disclosure Schedule sets forth a complete list of the name and jurisdiction of organization of each Company Subsidiary. All issued and outstanding shares or other equity interests of each Company Subsidiary have been duly authorized and validly issued, are fully paid and nonassessable and are owned directly or indirectly by the Company free and clear of any pledges, charges, liens, encumbrances, restrictions on transfer, voting or dividend rights, rights of first offer or first refusal, security interests or adverse rights or claims (“ Liens ”), except for Permitted Liens. None of the Company Subsidiaries own any shares of Company Common Stock or Company Convertible Preferred Stock.

          (b) There are no authorized or outstanding subscriptions, options, conversion or exchange rights, warrants, calls, repurchase or redemption agreements, or other agreements, instruments, claims, contracts or commitments obligating the Company or any Company Subsidiary to issue, transfer, deliver, sell, register, repurchase or redeem, or cause to be issued, transferred, delivered, sold, repurchased or redeemed, shares of the capital stock or other securities of any Company Subsidiary or to make payments with respect to the value of any of the foregoing or obligating the Company or any Company Subsidiary to grant, extend or enter into any such agreement.

          (c) Except for the Company Subsidiaries, neither the Company nor any Company Subsidiary owns any capital stock or equity interest in any other Person.

          Section 4.5 SEC Filings; Financial Statements; Undisclosed Liabilities .

          (a) The Company has filed all forms, reports, registrations, statements, certifications and other documents required to be filed by it with, or furnished by the Company to, the SEC for all periods beginning on or after July 1, 2004 (the “Company SEC Reports ”). The Company SEC Reports complied in all material respects with the requirements of, and were prepared in accordance with, the applicable requirements of the Exchange Act and the Securities Act of 1933, as amended (together with the rules and regulations promulgated thereunder, the “ Securities Act ”), and did not, as of their respective filing dates, contain any untrue statement of a material fact or omit to state a material fact required to be stated or incorporated by reference therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. As of the date of this Agreement, there are no outstanding or unresolved comments in comment letters received from the SEC. To the knowledge of the Company, as of the date hereof, none of the Company or any Company SEC Reports is the subject of ongoing SEC review. No Company Subsidiary is required to file or furnish any form, report, registration, statement or other document with the SEC.

          (b) The consolidated financial statements contained in the Company SEC Reports (including the related notes, where applicable) (the “ Financial Statements ”) (i) present fairly, in all material respects, the

consolidated financial condition and results of operations and cash flows and statements of stockholders equity of the Company and its consolidated Subsidiaries as of and for the periods presented therein (subject, in the case of unaudited quarterly financial statements, to normal year-end adjustments), (ii) have been prepared in all material respects in accordance with United States generally accepted accounting principles (“ GAAP ”) applied on a consistent basis throughout the periods involved, except as otherwise indicated therein or, in the case of the unaudited quarterly financial statements, as permitted by Form 10-Q, and (iii) when filed complied as to form in all material respects with the rules and regulations of the SEC with respect thereto. Since June 30, 2007, there has been no material change in the Company’s accounting methods or principles that would be required to be disclosed in the Company’s Financial Statements in accordance with GAAP. The management of the Company has implemented and maintains disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) to ensure that material information relating to the Company, including the consolidated Company Subsidiaries, is made known to the chief executive officer and the chief financial officer of the Company by others within those entities, and the Company’s principal executive officer and principal financial officer have disclosed, based on their most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company Board of Directors (or persons performing the equivalent functions): (A) all significant deficiencies and material weaknesses within their knowledge in the design or operation of internal control over financial reporting which are reasonably likely to materially adversely affect the Company’s ability to record, process, summarize and report financial information; and (B) any fraud that involves management or other employees who have a significant role in the Company’s internal control over financial reporting. The Company and its Subsidiaries have designed and maintain a system of internal controls over financial reporting (as defined in Rules 13a, 15(f) and 15d, 15(f) of the Exchange Act) sufficient to provide reasonable assurances regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. The Company’s principal executive officer and principal financial officer have made, with respect to the Company SEC Reports, all certifications required by the Sarbanes-Oxley Act of 2002 and any related rules and regulations promulgated by the SEC. As of the date hereof, the Company has not identified any material weaknesses in the design or operation of the internal controls over financial reporting. As of the date hereof, neither the Company nor any of the Company Subsidiaries has outstanding, or has arranged any outstanding, “extensions of credit” to directors or executive officers of the Company within the meaning of Section 402 of the Sarbanes-Oxley Act of 2002.

          (c) Neither the Company nor any Company Subsidiary has any liabilities, whether accrued, absolute, contingent or otherwise, that would be required by GAAP to be reflected on a balance sheet, other than liabilities and obligations (i) to the extent reflected or reserved against on the consolidated balance sheet of the Company and its consolidated Subsidiaries as of June 30, 2007 (including the notes thereto) included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2007, (ii) incurred in connection with the transactions expressly contemplated herein that, individually or in the aggregate, would not have a Company Material Adverse Effect or (iii) incurred since June 30, 2007 in the ordinary course of business that, individually or in the aggregate, have not had and would not have a Company Material Adverse Effect.

          (d) Neither the Company nor any Company Subsidiary is a party to, or has a legally binding commitment to enter into, any joint venture, off balance sheet partnership or any similar contract (including any contract or arrangement relating to any transaction or relationship between or among the Company or the Company Subsidiary, on the one hand, and any unconsolidated affiliate, including any structured finance, special purpose or limited purpose entity or person, on the other hand, or any “off balance sheet arrangements” (as defined in Item 303(a) of Regulation S-K under the Exchange Act)), where the purpose or intended effect of such contract or arrangement is to avoid disclosure of any material transaction involving, or material liabilities of, the Company or any Company Subsidiary in the Company’s published financial statements or other Company SEC Reports.

          Section 4.6 Absence of Certain Changes or Events . Since June 30, 2007, there have not been any events, circumstances, developments, changes or effects of which the Company has knowledge that, individually or in the aggregate, has had or would have a Company Material Adverse Effect. Since June 30, 2007 through the date hereof, (i) the Company and each Company Subsidiary have conducted their respective businesses in the ordinary course of business in all material respects and (ii) neither the Company or any Company Subsidiary has taken any action that if taken after the date hereof would be prohibited by Section 6.1(b)(iv), (b)(vii), (b)(viii), (b)(xiii) or (b)(xiv) nor have any of them resolved to, agreed to or otherwise obligated any of them to take any such actions.

          Section 4.7 Compliance with Laws .

          (a) The Company and the Company Subsidiaries have each federal, state, local or foreign governmental consent, license, permit, registration, order, grant or other authorization of a Governmental Entity (collectively referred to herein as, the “ Permits ”) that is required for the operation of the business of the Company or any of the Company Subsidiaries or the ownership or leasing of any interest in any of their respective properties, except where the failure to have, or the suspension or cancellation of, any such Permit would not, individually or in the aggregate, have a Company Material Adverse Effect. Except as would not, individually or in the aggregate, have a Company Material Adverse Effect, (i) all of such Permits are valid and in full force and effect and neither the Company nor any Company Subsidiary has violated the terms of such Permits, and (ii) no proceeding is pending or, to the knowledge of the Company, threatened in writing to revoke, suspend, cancel, terminate, or adversely modify any such Permit.

          (b) The Company and the Company Subsidiaries are, and since July 1, 2004, have been, in compliance with all applicable Laws, including, to the extent applicable, (i) rules and regulations of the Medicare and Medicaid programs; and any other federal health care program; (ii) federal and state Laws relating to health care fraud and abuse; (iii) state Laws relating to Medicaid or any other state health care or health insurance programs; (iv) federal or state Laws relating to billing or claims for reimbursement submitted to any third-party payor; (v) any other federal or state Laws relating to fraudulent, abusive or unlawful practices connected in any way with the provision of health care items or services, or the billing for or claims for reimbursement for such items or services provided to a beneficiary of any state, federal or other governmental health care or health insurance program or any private payor; (vi) state Laws relating to insurance and risk sharing products, services and arrangements; and (vii) Laws with respect to matters relating to patient or individual health care information, including, without limitation, the Health Insurance Portability and Accountability Act of 1996, as amended, and any rules or regulations promulgated thereunder, except where any failure to be in compliance, individually or in the aggregate, would not have a Company Material Adverse Effect. Since July 1, 2004, no third-party payment program has imposed a fine, penalty or other sanction on the Company or the Company Subsidiaries, except where any such imposition would not have, individually or in the aggregate, a Company Material Adverse Effect.

          (c) Since January 1, 2006 and, to the knowledge of the Company, at any time from January 1, 2001 and prior to January 1, 2006, neither the Company, any Company Subsidiary, nor any director or executive officer of the Company or any Company Subsidiary with respect to actions taken on behalf of the Company or any Company Subsidiary, (i) has been assessed a civil money penalty under Section 1128A of the Social Security Act or any regulations promulgated thereunder, (ii) has been excluded from participation in any federal health care program or state health care program (as such terms are defined by the Social Security Act), or (iii) has been convicted of any criminal offense relating to the delivery of any item or service under a federal health care program relating to the unlawful manufacture, distribution, prescription, or dispensing of a prescription drug or a controlled substance.

          (d) The Company has made available to Parent a summary of all material complaints or concerns made since July 1, 2006 through the Company’s whistleblower hot-line or equivalent system for receipt of

employee concerns regarding possible violations of Law. No attorney representing the Company or any of its Subsidiaries, whether or not employed by the Company or any of its Subsidiaries, has reported evidence of a violation of securities laws, breach of fiduciary duty or similar violation by the Company or any of its officers, directors, employees or agents to the Company’s chief legal officer, audit committee (or other committee designated for the purpose) of the Company Board of Directors or the Company Board of Directors pursuant to the rules adopted pursuant to Section 307 of the Sarbanes-Oxley Act or in any Company policy contemplating such reporting, including in instances not required by those rules.

          Section 4.8 Claims, Actions and Proceedings . There are no outstanding orders, writs, judgments, injunctions, decrees or other requirements of any Governmental Entity against the Company, any Company Subsidiary or any of their securities, assets or properties (“ Existing Orders ”) that, individually or in the aggregate, would have a Company Material Adverse Effect or prevent or materially delay the consummation of the Offer or the Merger or the other transactions contemplated by this Agreement. There are no actions, suits, claims, arbitrations, investigations or proceedings (collectively, “ Actions ”) or, to the knowledge of the Company, any governmental investigations or inquiries pending or overtly threatened against the Company or any Company Subsidiary or any of their assets or properties that, individually or in the aggregate, would have a Company Material Adverse Effect or would prevent or materially delay the consummation of the Offer or the Merger or the other transactions contemplated by this Agreement (provided that no representation or warranty is being made in this Agreement as to any Existing Orders issued, or any Actions commenced, after the date hereof challenging this Agreement or the transactions contemplated hereby, or seeking to prohibit the Offer or the Merger).

          Section 4.9 Contracts and Other Agreements .

          (a) Except for this Agreement, none of the Company nor any Company Subsidiary is a party to or bound by any note, bond, mortgage, indenture, contract, agreement, arrangement, understanding, Permit, lease or other instrument or obligation (each, a “ Contract ”): (i) that would be required to be filed by the Company as a “material contract” pursuant to Item 601(b)(10) of Regulation S-K under the Securities Act or disclosed on Form 8-K; (ii) that would obligate the Company or any Company Subsidiary to file a registration statement under the Securities Act, which filing has not yet been made; (iii) relating to (A) indebtedness for borrowed money, guarantees of indebtedness for borrowed money, lines of credit (whether or not drawn), letters of credit or (B) capitalized leases or surety bonds having an outstanding principal amount in excess of $500,000 in the aggregate; (iv) that involves the acquisition or disposition, directly or indirectly (by merger or otherwise), of assets or capital stock or other voting securities or equity interests of another person or the Company that involves continuing or contingent obligations of the Company or the Company Subsidiaries; (v) under which the Company or any Company Subsidiary has advanced or loaned any funds in excess of $500,000 or has guaranteed any obligations of another Person in excess of $500,000, other than extensions of credit to customers or vendors in the ordinary course of business consistent with past practice, (vi) that relates to any single or series of related capital expenditures by the Company in excess of $500,000 (other than purchase orders for the purchase of inventory or real property leases in the ordinary course of business consistent with past practice); (vii) evidencing the formation of a general or limited partnership, a limited liability company or a joint venture (whether limited liability or other organizational form) or alliance or similar arrangement that is material to the business of the Company and the Company Subsidiaries, taken as a whole; (viii) that (1) materially limits or restricts where the Company or any of its Affiliates may conduct business or the right of the Company or any of its Affiliates to sell or distribute any products or services to any Person, (2) (A) individually or in the aggregate with all other Contracts of the type described in this clause (2) (x) is material to the operations or the business of the Company or any Company Subsidiary and/or (y) may subject the Company or any Company Subsidiary to a material claim, action or lawsuit if a breach or default occurred thereunder and (B) contains any covenant or provision prohibiting the Company or any of its Affiliates from engaging in any line or type of business, (3) (A) individually or in the aggregate with all other Contracts of the type described in this clause (3) (x) is material

to the operations or the business of the Company or any Company Subsidiary and/or (y) may subject the Company or any Company Subsidiary to a material claim, action or lawsuit if a breach or default occurred thereunder and (B) grants any exclusive rights to make, sell or distribute the Company’s or any of its Affiliates’ products or services, (4) (A) individually or in the aggregate with all other Contracts of the type described in this clause (4) (x) is material to the operations or the business of the Company or any Company Subsidiary and/or (y) may subject the Company or any Company Subsidiary to a material claim, action or lawsuit if a breach or default occurred thereunder and (B) grants “most favored nation” status to any other Person, (5) contains “requirements” provisions or other provisions obligating the Company or any Company Subsidiary to purchase or obtain a minimum or specified amount of any product or service from any Person in excess of $500,000 in any fiscal year, (6) contains minimum sales or volume provisions in excess of $500,000 in any fiscal year; or (ix) that involves the obligation or potential obligation of the Company or any Company Subsidiary to make any “earn-out” or similar payments to any Person. Each Contract required to be described in any of clauses (i) through (ix) or any Contract with a Person referenced in the letter referred to in Section 4.21 is referred to herein as a “ Material Contract .”

          (b) Except as would not, individually or in the aggregate, have a Company Material Adverse Effect, each of the Material Contracts is in full force and effect and is valid and binding on the Company and each Company Subsidiary party thereto and, to the knowledge of the Company, each other party thereto, enforceable against such parties in accordance with their terms, except to the extent that enforcement of the rights and remedies created thereby is subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws of general application affecting the rights and remedies of creditors and to general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at Law).

          (c) Except as would not, individually or in the aggregate, have a Company Material Adverse Effect, (i) neither the Company nor any Company Subsidiary has breached, is in default under, or has received written notice of any breach of or default under, any Material Contract, and no event has occurred that with the lapse of time or the giving of notice or both would constitute a default thereunder by the Company or any Company Subsidiary, and (ii) to the Company’s knowledge, no other party to any Material Contract to which the Company or any Company Subsidiary is a party is in breach or violation of, or default under, such Material Contract. A complete and correct copy of each Material Contract has previously been made available by the Company to Parent or filed by the Company with the SEC.

          Section 4.10 Intellectual Property . “ Intellectual Property ” means all U.S. and foreign (i) patents and all patent applications, (ii) trademarks, service marks, trade names, trade dress, domain names, brand names, certification marks, corporate names and other indications of origin, together with all goodwill related to the foregoing, (iii) copyrights and designs and all rights associated therewith and the underlying works of authorship, (iv) inventions, trade secrets, processes, formulae, methods, schematics, drawings, blue prints, technology, know-how, software, discoveries, ideas and improvements, (v) registrations of any of the foregoing and applications therefor, and (vi) other proprietary rights and confidential information and materials. Except as would not, individually or in the aggregate, have a Company Material Adverse Effect: (a) either the Company or a Company Subsidiary owns, or is licensed or otherwise possesses legally enforceable and adequate rights to use, all Intellectual Property used in their respective businesses as currently conducted (the “ Company Intellectual Property ”), (b) the execution and delivery of this Agreement by the Company and the consummation of the transactions contemplated by this Agreement will not alter, encumber, impair or extinguish any Company Intellectual Property or any of the Company’s and the Company Subsidiaries’ rights therein, (c) except for Company Intellectual Property that is licensed to the Company or any Company Subsidiary by a third party, there are no restrictions on the disclosure, use, license or transfer by the Company or any Company Subsidiary of the Company Intellectual Property (d) there are no claims, actions, suits, investigations or proceedings pending or, to the knowledge of the Company, overtly threatened by any person alleging infringement, misappropriation or violation by the Company or any of the

Company Subsidiaries for their use of Intellectual Property, (e) the conduct of the business of the Company and the Company Subsidiaries does not infringe, misappropriate or violate any Intellectual Property of any person, and (f) neither the Company nor any of the Company Subsidiaries has made any written claim of infringement, misappropriation or violation by others of its rights to or in connection with the Company Intellectual Property in the last three (3) years. To the knowledge of the Company, no person is infringing, misappropriating or violating any Intellectual Property owned by or licensed exclusively to the Company or any of the Company Subsidiaries. The Company and the Company Subsidiaries take commercially reasonable actions to protect the confidentiality of the Company Intellectual Property and the security of their software, systems and networks. Except as would not, individually or in the aggregate, have a Company Material Adverse Effect, the Company and the Company Subsidiaries have commercially reasonable procedures in place designed to provide that all Intellectual Property conceived by their employees as a result of performing their duties for the Company and the Company Subsidiaries and third parties performing research and development for them have been assigned or are required to be assigned to the Company or any of the Company Subsidiaries. To the knowledge of the Company, the Company and the Company Subsidiaries are in compliance in all material respects with all confidentiality agreements and other protective agreements to which they are a party that protect the Intellectual Property of third parties.

          Section 4.11 Property . Except as would not, individually or in the aggregate, have a Company Material Adverse Effect, the Company or a Company Subsidiary owns and has good title to all its personal property and has valid leasehold interests in all of its leased properties, sufficient to conduct their respective businesses as currently conducted, free and clear of all Liens (other than (i) Liens for current Taxes not yet past due or being contested in good faith, (ii) inchoate Liens for construction in progress, (iii) mechanics’, materialmen’s, workmen’s, repairmen’s, warehousemen’s and carriers’ Liens arising in the ordinary course of business of the Company or such Company Subsidiary for sums not yet delinquent or being contested in good faith by appropriate proceedings, (iv) Liens imposed or granted pursuant to or in connection with the Company’s existing credit facilities or other indebtedness, (v) Liens with respect to tenant personal property, fixtures and/or leasehold improvements at the subject premises arising under state statutes and/or principles of common law and Liens otherwise imposed by applicable Law and (vi) Liens that would not have, individually or in the aggregate, a Company Material Adverse Effect (collectively, “ Permitted Liens ”)).

          Section 4.12 Insurance . Except as would not have, individually or in the aggregate, a Company Material Adverse Effect, (i) the Company and the Company Subsidiaries maintain insurance in such amounts and against such risks as is sufficient to comply with applicable Law, (ii) all policies or binders of material fire, liability, product liability, workers’ compensation, vehicular, directors’ and officers’ and other material insurance held by or on behalf of the Company and the Company Subsidiaries (collectively, the “ Company Insurance Policies ”) are (a) except for policies that have expired under their terms, in full force and effect, and (b) to the knowledge of the Company, valid and enforceable in accordance with their terms, (iii) neither the Company nor any Company Subsidiary is in breach or default with respect to any provision contained in any such policy or binder and (iv) neither the Company nor any Company Subsidiary has (a) received notice of actual or threatened modification or termination of any material Company Insurance Policy, or (b) received notice of cancellation or non-renewal of any such Company Insurance Policy, other than in connection with ordinary renewals.

          Section 4.13 Tax Matters . For purposes of this Agreement, the term “ Tax ” (and, with correlative meaning, “ Taxes ” and “ Taxable ”) means all federal, state and local, and all foreign, income, profits, franchise, gross receipts, payroll, transfer, sales, employment, social security, unemployment insurance, workers’ compensation, use, property, excise, value added, ad valorem, stamp, alternative or add-on minimum, recapture, environmental, capital gain, withholding taxes and any other taxes, fees, assessments, levies, charges, customs, duties, tariffs, impositions or assessments in the nature of taxes, together with all interest, penalties, fines and additions imposed on or with respect to such amounts. “ Tax Return ” (and, with correlative meaning, “ Tax

Returns ”) means any return, declaration, report, claim for refund or information return or similar statement filed or required to be filed with any taxing authority or any other Governmental Entity in connection with Taxes, including any attachments thereto and any amendments thereof.

          (a) Except as would not, individually or in the aggregate, have a Company Material Adverse Effect:

          (i) All Tax Returns required to be filed by or with respect to the Company and the Company Subsidiaries have been or will be timely filed with the appropriate Tax authority. All such Tax Returns are true, correct and complete and all Taxes owed by the Company or the Company Subsidiaries, whether or not shown on any Tax Return, have been timely paid except for Taxes being contested in good faith and for which adequate reserves have been established on the Financial Statements, in accordance with GAAP, or, if arising after the date of the most recent Financial Statements, on the Company’s or the appropriate Company Subsidiary’s books and records.

          (ii) There are no Liens with respect to Taxes upon any of the assets or properties of the Company or the Company Subsidiaries, other than Permitted Liens.

          (iii) No audit, assessment, examination, dispute, investigation or judicial or administrative proceeding is currently pending with respect to any Taxes of the Company or, to the Company’s knowledge, the Company Subsidiaries with respect to which the Company or a Company Subsidiary has been notified in writing. No deficiency for any Taxes has been proposed or assessed in writing against the Company or the Company Subsidiaries, except for deficiencies which have been paid, settled or withdrawn or which are being contested in good faith and for which adequate reserves have been established on the Financial Statements, in accordance with GAAP, or if arising after the date of the most recent Financial Statements, on the Company’s or the appropriate Company Subsidiary’s books and records.

          (iv) Neither the Company nor any of the Company Subsidiaries is a party to any indemnification, allocation, sharing or similar agreement with respect to Taxes that would give rise to a material payment or indemnification obligation, other than agreements among the Company and the Company Subsidiaries, customary Tax indemnities contained in credit or other commercial agreements the primary purpose of which do not relate to Taxes and agreements with customers, vendors, lessors or similar persons entered into in the ordinary course of business.

          (b) There are no material outstanding requests, agreements, waivers or arrangements extending the statutory period of limitation applicable to any claim for, or the period for the collection or assessment of, Taxes due from or with respect to the Company or the Company Subsidiaries for any taxable period.

          (c) All withholding and payroll Tax requirements required to be complied with by the Company and the Company Subsidiaries (including requirements to deduct, withhold and pay over amounts to any Tax authority and to comply with associated reporting and record keeping requirements) have been satisfied or accrued.

          (d) Neither the Company nor any Company Subsidiary has any liability for the Taxes of any other person (other than the Company and the Company Subsidiaries) under Treasury Regulation 1.1502-6 (or any similar provision of Law) or as a transferee or successor.

          (e) Neither the Company nor any Company Subsidiary has participated in a “listed transaction” that has given rise to a disclosure obligation under Section 6011 of the Code and Treasury Regulations promulgated thereunder and that has not been disclosed in the relevant Tax Return of the Company or relevant Company Subsidiary.

          (f) The Company has delivered or made available to Parent complete copies of all material Tax Returns of the Company and the Company Subsidiaries with respect to the Company’s tax years ended June 30, 2005 and June 30, 2006.

          (g) Neither the Company nor any Company Subsidiary has distributed the stock of another company in a transaction that was purported or intended to be governed by Section 355(a)(1)(A) or Section 361 of the Code in a transaction occurring within the past five years.

          Section 4.14 Employee Benefit Plans .

          (a) With respect to each pension, savings, profit sharing, retirement, deferred compensation, employment, welfare, fringe benefit, insurance, short and long term disability, medical, death benefit, incentive, bonus, stock, other equity-based, vacation pay, severance pay, cafeteria plan and other material plan, program or arrangement for the benefit of any current or former employee, director or officer of the Company or any Company Subsidiary, or their beneficiaries, including each “employee benefit plan” (as that term is defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ ERISA ”)), that is sponsored or maintained by Company and/or by one or more Company Subsidiaries or to which the Company and/or one or more Company Subsidiaries has any present or future liability or contingent liability (each, a “ Plan ”), the Company has delivered or made available to Parent current, accurate and complete copies of each of the following together with, when applicable, all amendments: (i) the Plan, or, if the Plan has not been reduced to writing, a written summary of its material terms, (ii) if the Plan is subject to the disclosure requirement of Title I of ERISA, the summary plan description, and in the case of each other Plan, any similar employee summary, (iii) if the Plan is intended to be qualified under Section 401(a) of the Code, the most recent determination letter (or opinion letter upon which the Company is entitled to rely) issued by the Internal Revenue Service (“ IRS ”), (iv) if the Plan is subject to the requirement that a Form 5500 series annual report/return be filed, the three most recently filed annual reports/returns, (v) all related trust agreements, group annuity contracts and administrative services agreements, (vi) for each Plan that is funded, the three most recent financial statements and actuarial reports for each such Plan, and (vii) any correspondence with the IRS, the Department of Labor or any governmental entity with respect to any audit or examination of any Plan since June 30, 2005. The Company Disclosure Schedule sets forth a list of all material Plans.

          (b) Except as would not, individually or in the aggregate, have a Company Material Adverse Effect, (i) each Plan has been established and administered in accordance with its terms and the provisions of applicable Law, including ERISA and the Code (and the rules and regulations thereunder), (ii) none of the Plans is currently under examination by the IRS or the U.S. Department of Labor, (iii) all contributions, premiums and expenses, if any, due under each Plan have been timely made, (iv) each Plan intended to be qualified under Section 401(a) of the Code has received a favorable determination letter (or opinion letter upon which the Company may rely) from the IRS that it is so qualified, and to the knowledge of the Company nothing has occurred since the date of such letter that adversely affected the qualified status of such Plan, (v) each trust created under any such Plan is exempt from tax under Section 501(a) of the Code, (vi) no Plan nor any other plan maintained by a member of the Company’s “Controlled Group” (defined as any organization that is a member of a controlled group of organizations within the meaning of Sections 414 (b), (c), (m) or (o) of the Code) is or has been subject to Section 302 of ERISA or Section 412 of the Code, and (vii) to the knowledge of the Company, no event has occurred and no condition exists that would subject the Company or any Company Subsidiary, either directly or by reason of their

affiliation with any member of their Controlled Group, to any Tax or other liability imposed by ERISA, the Code or other applicable Laws.

          (c) Except for continuation of health coverage described in Section 4980B of the Code or Section 601 et seq. of ERISA, no Plan provides for medical, dental, life insurance coverage or any other welfare benefits after termination of employment or for other post-employment welfare benefits.

          (d) No Action (other than routine claims for benefits in the ordinary course) is pending or, to the knowledge of the Company, overtly threatened against any Plan (including any audit or other administrative proceeding by the U.S. Department of Labor, the IRS or other governmental agencies), except as would not have, individually or in the aggregate, a Company Material Adverse Effect.

          (e) Neither the Company nor any member of the Company’s Controlled Group has ever maintained, sponsored, contributed to, been required to contribute to, or incurred any liability under any defined benefit pension plan subject to Title IV of ERISA, including without limitation any multi-employer plan as defined in Section 3(37) or Section 4001(a)(3) of ERISA or any multiple employer plan as defined in Section 413(c) of the Code, or any plan that has two (2) or more contributing sponsors at least two (2) of whom are not under common control, within the meaning of Section 4063(a) of ERISA.

          (f) Neither the Company nor any Company Subsidiary, nor, to the knowledge of the Company, any other “disqualified person” or “party in interest” (as defined in Section 4975(e)(2) of the Code and Section 3(14) of ERISA, respectively) has engaged in any transactions in connection with any Plan that would result in the imposition on the Company of a penalty pursuant to Section 502 of ERISA, damages pursuant to Section 409 of ERISA or a tax pursuant to Section 4975 of the Code, which would have, individually or in the aggregate, a Company Material Adverse Effect.

          (g) Except as required by applicable Law, no Plan exists that, as a result of the execution of this Agreement, stockholder approval of this Agreement, or the transactions contemplated by this Agreement, would (i) result in severance pay or any increase in severance pay upon any termination of employment after the date of this Agreement, (ii) except as contemplated by Section 3.3 with respect to Company Options and Restricted Shares, accelerate the time of payment or vesting or result in any payment or funding (through a grantor trust or otherwise) of compensation or benefits under, or increase the amount payable or result in any other material obligation pursuant to, any Plan, or (iii) limit or restrict the right of the Company to merge, amend or terminate any of the Plans. Neither the Company nor any Company Subsidiary is a party to any agreement, contract or arrangement that could result, separately or in the aggregate, in the payment of any “parachute payments” within the meaning of Section 280G of the Code.

          (h) The Company has delivered to Parent a letter dated the date hereof and identified as being the letter referred to in this Section 4.14(h), which letter contains a list as of the date hereof of each employee of the Company and the Company Subsidiaries, his or her name, start date and present salary.

          Section 4.15 Labor Matters . The Company and each Company Subsidiary are in compliance with all applicable Laws respecting employment and employment practices, terms and conditions of employment and wages and hours and have not engaged, and are not engaging, in any unfair labor practice with respect to employees of the Company or any of the Company Subsidiaries except in each case where the failure to be in compliance would not have, individually or in the aggregate, a Company Material Adverse Effect. Neither the Company nor any of the Company Subsidiaries is a party to, or bound by, any collective bargaining agreement or other similar agreement or understanding with a labor union or labor organization. Neither the Company nor any of the Company Subsidiaries is subject to a dispute, strike or work stoppage except as would not, individually or in the

aggregate, have a Company Material Adverse Effect. To the knowledge of the Company, there are no organizational efforts with respect to the formation of a collective bargaining unit presently being made or threatened involving employees of the Company or any of the Company Subsidiaries. Since July 1, 2006, there have been no material labor or employment claims or proceedings between the Company or any of the Company Subsidiaries and any of such applicable entity’s employees.

          Section 4.16 Environmental Matters .

          (a) Except as would not have, individually or in the aggregate, a Company Material Adverse Effect, (i) none of the Company or any of the Company Subsidiaries is in violation of any Environmental Law, (ii) to the knowledge of the Company, there is and has been no Release by the Company or any Company Subsidiary of Hazardous Substances that requires response action under applicable Environmental Law at, on or under any of the properties currently owned, leased or operated by the Company or any of the Company Subsidiaries or, during the period of the Company’s or the Company Subsidiaries’ ownership, lease or operation thereof, that would reasonably be expected to result in a liability to the Company or any of the Company Subsidiaries; (iii) the Company and the Company Subsidiaries possess and are in compliance with all required Environmental Permits; and (iv) there are no actions, orders, written claims or written notices pending or, to the knowledge of the Company, issued to or threatened against the Company or any of the Company Subsidiaries alleging violations of or liability under any Environmental Law or otherwise concerning the Release or management of Hazardous Substances.

          (b) For purposes of this Agreement:

          (i) “ Environmental Laws ” means any Laws (including common law) of the United States federal, state, local, non-United States, or any other Governmental Entity, relating to (A) Releases or threatened Releases of Hazardous Substances or materials containing Hazardous Substances; (B) the manufacture, handling, transport, use, treatment, storage, emission, discharge, or disposal of Hazardous Substances or materials containing Hazardous Substances; or (C) pollution or protection of the environment or of human health and safety as such is affected by Hazardous Substances or materials containing Hazardous Substances.

          (ii) “ Environmental Permits ” means any permit, consent, license, registration, approval, notification or any other authorization pursuant to Environmental Law.

          (iii) “ Hazardous Substances ” means (A) those substances, materials or wastes defined as toxic, hazardous, acutely hazardous, pollutants or contaminants, in, or regulated under, the following United States federal statutes and any analogous foreign or state statutes, and all regulations thereunder: the Hazardous Materials Transportation Act, the Resource Conservation and Recovery Act, the Comprehensive Environmental Response, Compensation and Liability Act, the Clean Water Act, the Safe Drinking Water Act, the Atomic Energy Act, the Federal Insecticide, Fungicide, and Rodenticide Act and the Clean Air Act; (B) petroleum and petroleum products, including crude oil and any fractions thereof; (C) natural gas, synthetic gas, and any mixtures thereof; and (D) polychlorinated biphenyls, asbestos, molds that would reasonably be expected to have an adverse effect on human health and urea formaldehyde foam insulation.

          (iv) “ Release ” means any release, spilling, leaking, pumping, pouring, discharging, emitting, emptying, escaping, leaching, injecting, dumping, disposing or migrating into or through the indoor or outdoor environment.

          Section 4.17 No Breach . The execution, delivery and performance by the Company of this Agreement, the Stockholder Agreements and the consummation by the Company of the transactions contemplated hereby and thereby and compliance with the terms hereof do not and will not (whether with or without notice or lapse of time, or both) (i) violate any provision of the certificate of incorporation or bylaws of the Company or the comparable organizational documents of any Company Subsidiary, (ii) violate, conflict with or result in the breach of any of the terms or conditions of, result in any (or the right to make any) modification of or the cancellation or loss of a benefit under, require any notice, consent or action under, or otherwise give any other contracting party the right to terminate, accelerate obligations under or receive payment or additional rights under, or constitute a default under, any Contract, (iii) violate any Law applicable to the Company or the Company Subsidiaries or by which any of the Company’s or the Company Subsidiaries’ assets or properties is bound or (iv) except for (a) compliance with any applicable requirements of the Securities Act, the Exchange Act and any other applicable state or federal securities laws, (b) filings pursuant to the DGCL as contemplated herein, (c) the filing of a pre-merger notification report under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “ HSR Act ”) and (d) filings and approvals required by the Nasdaq rules and regulations, require any registration or filing with, notice to, or Permit, order, authorization, consent or approval of, any Governmental Entity, excluding in the case of clause (ii), violations, conflicts, breaches, accelerations, rights or entitlements, and defaults which would not, individually or in the aggregate, have a Company Material Adverse Effect or prevent or materially delay the Offer or the Merger or the consummation of the other transactions contemplated by this Agreement.

          Section 4.18 Financial Advisor .

          (a) The Company Board of Directors has received the oral opinion of J.P. Morgan Securities Inc. substantially to the effect that, as of the date hereof, and based upon and subject to the factors and assumptions set forth therein, the consideration to be received in the Offer and the Merger by the holders of shares of Company Common Stock pursuant to this Agreement is fair from a financial point of view to such holders. A signed copy of the written opinion will be delivered to the Company and a copy thereof will be shown to Parent promptly after it is available following the date hereof. It is agreed and understood that such opinion is for the benefit of the Company Board of Directors and may not be relied on by Parent or Merger Sub.

          (b) Other than J.P. Morgan Securities Inc., whose engagement letter has been provided to Parent, no broker, investment banker, financial advisor, finder, agent or similar intermediary has acted on behalf of the Company or any Company Subsidiary in connection with this Agreement or the transactions contemplated hereby, and there are no other brokerage commissions, finders’ fees, financial advisor’s fees or similar fees or commissions payable in connection herewith based on any agreement, arrangement, commitment or understanding with the Company or any Company Subsidiary, or any action taken by or on behalf of the Company or any Company Subsidiary.

          Section 4.19 Disclosure Documents .

          (a) None of the information supplied or to be supplied by the Company in writing for inclusion or incorporation by reference in (i) the Schedule TO or the Registration Statement, including the Prospectus, will, at the time they are filed with the SEC, and the Offer Documents at the time they are distributed or disseminated, and at the time of the consummation of the Offer, and, in the case of the Registration Statement, including the Prospectus, at the time it becomes effective under the Securities Act, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading or (ii) the prospectus included in the Registration Statement relating to the issuance of shares of Parent Common Stock in connection with the Offer and the Merger (together with any amendments or supplements thereto, the “ Prospectus ”), and if applicable, the proxy statement relating to the Company Stockholders Meeting (together with any amendments or supplements

thereto, the “ Proxy Statement ” (it being understood and agreed that if a Change in Structure Event occurs, the Prospectus and Proxy Statement shall be combined in one document and shall be referred to as the Proxy Statement) will, at the date of mailing to stockholders and at the time of the Company Stockholders Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The Proxy Statement, at the time mailed, will comply as to form in all material respects with the applicable requirements of the Exchange Act. The representations and warranties contained in this Section 4.19 will not apply to statements included in or omissions from the Proxy Statement based upon information furnished in writing to the Company by Parent or Merger Sub for inclusion in the Proxy Statement.

          (b) The Schedule 14D-9, at the time filed with the SEC and at the time distributed or disseminated, and the Information Statement, as supplemented or amended, if applicable, at the time filed with the SEC and at the time mailed to stockholders of the Company and at the time such stockholders vote, or otherwise act, on adoption of this Agreement, will comply as to form and substance in all material respects with the applicable requirements of the Exchange Act and, at the time of such filing, at the time of such distribution or dissemination, and at the time of consummation of the Offer, will not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements made therein, in the light of the circumstances under which they were made, not misleading; provided that this representation and warranty will not apply to statements or omissions included in the Schedule 14D-9 and the Information Statement based upon information furnished to the Company in writing by Parent or Merger Sub specifically for use therein.

          Section 4.20 Affiliate Transactions . No executive officer or director of the Company or any Company Subsidiary or any person owning 5% or more of the Company Common Stock or the Company Convertible Preferred Stock or, to the Company’s knowledge, any affiliate or family member of any such officer, director or owner is a party to any Contract with or binding upon the Company or any Company Subsidiary or has any material interest in any property or assets owned by the Company or any Company Subsidiary or has engaged within the last twelve (12) months in any transaction (other than those related to employment or incentive arrangements) with the Company, in each case, that is material to the Company or is of the type that would be required to be disclosed under Item 404 of Regulation S-K under the Securities Act.

          Section 4.21 Customers and Suppliers . The Company has delivered to Parent a letter dated as of the date hereof and identified as being the letter referred to in this Section 4.21, which letter contains a list of the Company’s and Company Subsidiaries’ current ten (10) largest customers (measured by gross profit), pharmacy manufacturers (measured by rebates paid) and pharmacy suppliers (measured by pharmacy sales) for the fiscal year ended June 30, 2007 and, with respect to customers only, the five largest (measured by gross profit) for the six month period ended December 31, 2007. Since June 30, 2007, there has been no actual, or to the knowledge of the Company, threatened termination, cancellation, material limitation of, or material adverse modification or change in, the business relationship of the Company and its Subsidiaries with any one or more of such customers, brokers or suppliers.

          Section 4.22 State Takeover Statutes . Assuming the accuracy of the representations and warranties made by Parent and Merger Sub in Section 5.15, the Company Board of Directors has taken all action necessary to exempt Parent, its Subsidiaries and Affiliates, this Agreement, the Stockholder Agreements, the Offer and the Merger and the other transactions contemplated by this Agreement or the Stockholder Agreements from the restrictions on business combinations with interested stockholders set forth in Section 203 of the DGCL. To the knowledge of the Company, no “moratorium,” “control share,” “fair price” or other anti-takeover law or regulation, other than Section 203 of the DGCL (collectively, “ Takeover Laws ”), is applicable to this Agreement, the

Stockholder Agreements, the Merger or the other transactions contemplated hereby or by the Stockholder Agreements.

          Section 4.23 No Other Representations or Warranties; Investigation by Parent and Merger Sub . Parent and Merger Sub each acknowledges and agrees that (a) it has had an opportunity to discuss the business of the Company and the Company Subsidiaries with the Company, (b) it has had full access to the books and records of the Company and the Company Subsidiaries, (c) it has been afforded the opportunity to ask questions of and receive answers from the Company and (d) except for the representations and warranties contained in Section 4, the letter described in Section 4.14(h) and 4.21 (the “ Company Letter ”) and the certificate described in Section 8.3(a) (collectively, the “ Company Representations ”) the Company makes no representations or warranties. Moreover, neither the Company nor any Company Subsidiary will have or be subject to any liability or obligation to Parent, Merger Sub or any Parent Subsidiary resulting from the distribution to Parent or Merger Sub, or Parent’s or Merger Sub’s use of, any such information, including any information, documents, projections, forecasts or other material made available to Parent or Merger Sub in management presentations in connection with the transactions contemplated by this Agreement, unless any such information is expressly included in the Company Representations.

          Section 4.24 Good Faith . The Company and its Affiliates have acted and will act in good faith in the negotiation, delivery and performance of this Agreement and the Stockholder Agreements and in connection with the transactions contemplated hereby and thereby.

      Section 5. Representations and Warranties of Parent, US Corp. and Merger Sub . Parent, US Corp. and Merger Sub hereby make the representations and warranties to the Company set forth in this Section 5, except (i) as set forth in the disclosure schedule delivered by Parent to the Company on the date hereof (the “ Parent Disclosure Schedule ”); provided, however , that disclosure of any item in any section or subsection of the Parent Disclosure Schedule shall be deemed disclosure with respect to any other section or subsection only if the relevance of such item is reasonably apparent on the face of such disclosure, or (ii) as disclosed in any Parent SEC Report filed prior to the date hereof and available on the Electronic Data Gathering, Analysis and Retrieval System of the SEC; provided, however , that all disclosures under “Business — Government Regulation,” “Risk Factors” and “Forward-Looking Statements” and similar forward looking disclosure shall not be deemed to qualify the representations and warranties in this Section 5; provided, further, that any disclosures in such Parent SEC Reports that are not the subject of the first proviso of this clause (ii) shall only be deemed to qualify a representation or warranty if the relevance of such disclosure to such representation or warranty is reasonably apparent on the face of such disclosure; provided , further , that the disclosures in the Parent SEC Reports shall not be deemed to qualify any representations or warranties made in Section 5.3

          Section 5.1 Organization .

          (a) Each of Parent and each significant subsidiary of Parent (as determined under Rule 1-02(w) of Regulation S-X) (all such Parent subsidiaries being, collectively, the “ Parent Subsidiaries ”) is a corporation or other legal entity duly organized, validly existing and in good standing (with respect to jurisdictions that recognize the concept of good standing) under the Laws of its jurisdiction of organization and has the requisite corporate or similar power and authority to own, lease and operate its properties and assets it purports to own and to carry on its business as now being conducted, except as would not, individually or in the aggregate, have a Parent Material Adverse Effect. Parent and each Parent Subsidiary are qualified or otherwise authorized to transact business as a foreign corporation or other organization in all jurisdictions where the nature of their business or the ownership, leasing or operation of their properties make such qualification or authorization necessary, except for jurisdictions in which the failure to be so qualified or authorized would not, individually or in the aggregate, have a Parent Material Adverse Effect. “Parent Material Adverse Effect” shall mean any event, circumstance, development, change or

effect that, individually or in the aggregate with all other events, circumstances, developments, changes and effects, is, or would be, materially adverse to the business, assets, financial condition or results of operations of the Parent and its Subsidiaries, taken as a whole; provided, however, that none of the following shall constitute, or shall be considered in determining whether there has occurred, and no event, circumstance, change or effect resulting from or arising out of any of the following shall constitute, a Parent Material Adverse Effect: (A) the announcement of the execution of this Agreement (including the threatened or actual impact on relationships with customers, vendors, suppliers, distributors, landlords or employees (including, the threatened or actual loss, termination, suspension, modification or reduction of, or adverse change in, such relationships) but only, in each case, to the extent caused by the announcement of the execution of this Agreement) or any litigation brought by any holder of Parent Common Stock arising or resulting therefrom, (B) changes in the national or world economy or national or foreign securities, credit or financial markets or changes in general economic conditions that affect the industries in which Parent and its Subsidiaries, or their customers, conduct their business (but only, in each case, to the extent that such changes do not disproportionately affect Parent, its Subsidiaries or their customers as compared to other companies in such industries), (C) any change in applicable Law or GAAP or interpretation thereof (but only, in each case, to the extent that such changes do not disproportionately affect Parent or its Subsidiaries as compared to other companies in such industries), (D) any failure by Parent to meet any published or internally prepared budgets or estimates of revenues, earnings or other financial projections, prepared prior to the date of this Agreement (it being understood and agreed that any events, circumstances, developments, changes and effects which cause the failure to meet such budgets, estimates or projections may, except as provided in subsections (A), (B), (C), (E), (F), (G), (H) or (I) of this definition, constitute or be taken into account in determining whether there has been or would be a Parent Material Adverse Effect), (E) any outbreak or escalation of war or hostilities, any occurrence or threats of terrorist acts or any armed hostilities associated therewith and any national or international calamity, disaster or emergency or any escalation thereof (but only if, in each case, such matters do not disproportionately affect Parent or its Subsidiaries as compared to other companies in their industries), (F) any earthquake, hurricane or natural disaster (but only, in each case, to the extent that such changes do not disproportionately affect Parent or its Subsidiaries as compared to other companies in such industries), (G) a decline in the price, or a change in the trading volume, of the Parent Common Stock on the Nasdaq (it being understood and agreed that any events, circumstances, developments, changes and effects which cause such decline or change may, except as provided in subsections (A), (B), (C), (D), (E), (F), (H) or (I) of this definition, constitute or be taken into account in determining whether there has been or would be a Parent Material Adverse Effect), (H) taking or not taking any actions with the prior written consent of the Company or (I) compliance with the terms of, and taking any action required by, this Agreement (other than with respect to Section 5.5, the lead in to Section 7.6 and Section 7.6(a)).

          (b) Parent has made available to the Company true, correct and complete copies of the certificate of incorporation and bylaws, or other organizational documents, of Parent and each Parent Subsidiary. Parent is not in violation of its certificate of incorporation or bylaws. The Parent Subsidiaries are not in violation, in any material respect, of their respective certificates of incorporation or bylaws or other organizational documents.

          Section 5.2 Authority to Execute and Perform Agreement . Parent and Merger Sub have the necessary corporate power and authority to enter into, execute and deliver this Agreement, the Stockholder Agreements and each instrument required hereby to be executed and delivered by Parent and/or Merger Sub at the Closing and to perform their obligations hereunder and thereunder and consummate the transactions contemplated hereby including the Offer and the Merger. The execution, delivery and performance of this Agreement, the Stockholder Agreements and each instrument required hereby to be executed and delivered by Parent and/or Merger Sub at the Closing by Parent and Merger Sub and the consummation of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action on the part of the respective boards of directors of Parent and Merger Sub, and immediately following the execution and delivery of this Agreement will be duly authorized by all necessary corporate action on the part of Parent as the sole stockholder of Merger Sub. This

Agreement and the Stockholder Agreements have been duly and validly executed and delivered by Parent and Merger Sub and, assuming the due authorization, execution and delivery hereof by the Company, constitutes a legal, valid and binding obligation of Parent and Merger Sub, enforceable against them in accordance with its terms, except to the extent that enforcement of the rights and remedies created hereby is subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws of general application affecting the rights and remedies of creditors and to general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at Law). No vote of holders of capital stock of Parent is necessary to approve this Agreement, the Stockholder Agreements, the Offer, the Merger and the other transactions contemplated hereby. The Board of Directors of Parent has approved the issuance of shares of Parent Common Stock in connection with the Offer and the Merger (the “ Parent Share Issuance ”).

          Section 5.3 Capitalization .

          (a) The authorized capital stock of Parent consists of an unlimited number of shares of Parent Common Stock, of which, as of the close of business on February 25, 2008, 20,994,108 shares were issued and outstanding. All of the issued and outstanding shares of such Parent Common Stock are, and all shares of Parent Common Stock that may be issued pursuant to this Agreement will, when issued in accordance with the terms hereof, be, duly authorized, validly issued, fully paid and nonassessable, and were or will be issued free of any preemptive (or similar) rights. No shares of Parent Common Stock have been issued in violation of any preemptive (or similar) rights.

          (b) As of the close of business on February 25, 2008, Parent has reserved 4,037,500 shares of Parent Common Stock for issuance pursuant to all of its equity plans (including Parent’s employee stock purchase plan), of which options to purchase 1,978,427 shares of Parent Common Stock were outstanding as of February 25, 2008, and 456,311 shares remained available for grant as of such date. All shares of Parent Common Stock reserved for issuance as specified above shall be, upon issuance on the terms and conditions specified in the instruments pursuant to which they are issuable, duly authorized, validly issued, fully paid and nonassessable and will not be issued subject to any preemptive (or similar) rights.

          (c) Except for shares of Parent Common Stock indicated in Section 5.3(a) as issued and outstanding as of February 25, 2008 and as set forth in Section 5.3(b), as of the date hereof there are not any shares of Parent Common Stock or other equity or voting securities of Parent issued and outstanding or reserved for issuance. No options to purchase shares of Parent Common Stock have been issued or granted since the close of business on February 25, 2008 to the date hereof.

          (d) Except with respect to equity securities under Parent equity plans (including Parent’s employee stock purchase plan), as of the date hereof there are not authorized or outstanding any subscriptions, options, conversion or exchange rights, warrants, calls, repurchase or redemption agreements, or other agreements, instruments, contracts, claims or commitments obligating Parent to issue, transfer, deliver, sell, repurchase or redeem, or cause to be issued, transferred, delivered, sold, repurchased or redeemed, additional shares of the Parent Common Stock or other securities of Parent or to make payments with respect to the value of any of the foregoing or obligating Parent or any Parent Subsidiary to grant, extend or enter into any such agreement or commitment.

          Section 5.4 Parent Subsidiaries . All issued and outstanding shares or other equity interests of each Parent Subsidiary have been duly authorized and validly issued, are fully paid and nonassessable and are owned directly or indirectly by Parent free and clear of any Liens, except for Permitted Liens.

          Section 5.5 No Conflict; Required Filings and Consents . The execution, delivery and performance by Parent and Merger Sub of this Agreement do not, and the consummation by Parent and Merger Sub

of the transactions contemplated hereby and compliance with the terms hereof will not (whether with or without notice or lapse of time, or both), (i) violate any provision of the certificate of incorporation or bylaws of Parent or Merger Sub or the comparable organization documents of any Parent Subsidiary, (ii) violate, conflict with or result in the breach of any of the terms or conditions of, result in any (or the right to make any) modification of or the cancellation or loss of a benefit under, require any notice, consent or action under, or otherwise give any other contracting party the right to terminate, accelerate obligations under or receive payment or additional rights under, or constitute a default under, any Parent Material Contract, (iii) violate any Law applicable to Parent or the Parent Subsidiaries or by which any of Parent’s or the Parent Subsidiaries’ assets or properties is bound or (iv) except for (a) compliance with any applicable requirements of the Securities Act, the Exchange Act and any other applicable state, provincial, federal or Canadian securities laws, (b) filings pursuant to the DGCL as contemplated herein, (c) the filing of a pre-merger notification report under the HSR Act and (d) filings and approvals required by the Nasdaq or Toronto Stock Exchange rules and regulations, require any registration or filing with, notice to, or Permit, order, authorization, consent or approval of, any Governmental Entity, excluding violations, conflicts, breaches, accelerations, rights or entitlements, and defaults which would not, individually or in the aggregate, have a Parent Material Adverse Effect or prevent or materially delay the Offer or the Merger or the consummation of the other transactions contemplated by this Agreement.

          Section 5.6 SEC Filings; Financial Statements .

          (a) Parent has filed all forms, reports, registrations, statements, certifications and other documents required to be filed by it with, or furnished by Parent to, the SEC for all periods beginning on or after June 22, 2006 (the “ Parent SEC Reports ”). The Parent SEC Reports complied in all material respects with the requirements of, and were prepared in accordance with, the applicable requirements of the Exchange Act and the Securities Act, and did not, as of their respective filing dates, contain any untrue statement of a material fact or omit to state a material fact required to be stated or incorporated by reference therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. As of the date of this Agreement, there are no outstanding or unresolved comments in comment letters received from the SEC. To the knowledge of Parent, as of the date hereof, none of Parent or any Parent SEC Reports is the subject of ongoing SEC review. No Parent Subsidiary is required to file or furnish any form, report, registration, statement or other document with the SEC.

          (b) The consolidated financial statements contained in the Parent SEC Reports (including the related notes, where applicable) (the “Parent Financial Statements ”) (i) present fairly, in all material respects, the consolidated financial condition and results of operations and cash flows and statements of stockholders equity of Parent and its consolidated Subsidiaries as of and for the periods presented therein (subject, in the case of unaudited quarterly financial statements, to normal year-end adjustments), (ii) have been prepared in all material respects in accordance with Canadian generally accepted accounting principles (“ Canadian GAAP ”) or GAAP (as applicable) applied on a consistent basis throughout the periods involved, except as otherwise indicated therein or, in the case of the unaudited quarterly financial statements, as permitted by Form 10-Q or other applicable filing, and (iii) when filed complied as to form in all material respects with the rules and regulations of the SEC with respect thereto. Since December 31, 2006, there has been no material change in Parent’s accounting methods or principles that would be required to be disclosed in the Parent Financial Statements in accordance with Canadian GAAP or GAAP (as applicable). Except as would not, individually or in the aggregate, have a Parent Material Adverse Effect, (i) the management of Parent has implemented and maintains disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) to ensure that material information relating to Parent, including the consolidated Parent Subsidiaries, is made known to the chief executive officer and the chief financial officer of Parent by others within those entities, and (ii) Parent’s principal executive officer and principal financial officer have disclosed, based on their most recent evaluation of internal control over financial reporting, to Parent’s auditors and the audit committee

of the Board of Directors of Parent (or persons performing the equivalent functions): (A) all significant deficiencies and material weaknesses within their knowledge in the design or operation of internal control over financial reporting which are reasonably likely to materially adversely affect Parent’s ability to record, process, summarize and report financial information; and (B) any fraud that involves management or other employees who have a significant role in Parent’s internal control over financial reporting. Parent’s principal executive officer and principal financial officer have made, with respect to Parent SEC Reports, all certifications required by the Sarbanes-Oxley Act of 2002 and any related rules and regulations promulgated by the SEC. As of the date hereof, Parent has not identified any material weaknesses in the design or operation of the internal controls over financial reporting. As of the date hereof, neither Parent nor any of Parent Subsidiaries has outstanding, or has arranged any outstanding, “extensions of credit” to directors or executive officers of Parent within the meaning of Section 402 of the Sarbanes-Oxley Act of 2002.

          (c) Neither Parent nor any Parent Subsidiary has any liabilities, whether accrued, absolute, contingent or otherwise, that would be required by Canadian GAAP to be reflected on a balance sheet, other than liabilities and obligations (i) to the extent reflected or reserved against on the consolidated balance sheet of Parent and its consolidated Subsidiaries as of December 31, 2006 (including the notes thereto) included in Parent’s Annual Report on Form 40-F for the fiscal year ended December 31, 2006, (ii) incurred in connection with the transactions expressly contemplated herein or (iii) incurred since December 31, 2006 in the ordinary course of business that, individually or in the aggregate, have not had and would not have a Parent Material Adverse Effect.

          (d) Neither the Parent nor any Parent Subsidiary is a party to, or has a legally binding commitment to enter into, any joint venture, off balance sheet partnership or any similar contract (including any contract or arrangement relating to any transaction or relationship between or among the Parent or the Parent Subsidiary, on the one hand, and any unconsolidated affiliate, including any structured finance, special purpose or limited purpose entity or person, on the other hand, or any “off balance sheet arrangements” (as defined in Item 303(a) of Regulation S-K under the Exchange Act)), where the purpose or intended effect of such contract or arrangement is to avoid disclosure of any material transaction involving, or material liabilities of, the Parent or any Parent Subsidiary in the Parent’s published financial statements or other Parent SEC Reports.

          Section 5.7 Absence of Certain Changes or Events . Since December 31, 2006, there have not been any events, circumstances, developments, changes or effects of which Parent has knowledge that would, individually or in the aggregate, have a Parent Material Adverse Effect. Since December 31, 2006 through the date hereof, (i) Parent and each Parent Subsidiary have conducted their respective businesses in the ordinary course of business except when the failure to do so would not have, individually or in the aggregate, a Parent Material Adverse Effect, and (ii) neither Parent nor any Parent Subsidiary has taken any action that, if taken after the date hereof, would be prohibited by Section 7.6(b)(iii) nor have any of them resolved to, agreed to or otherwise obligated any of them to take any such actions.

          Section 5.8 Compliance with Laws .

          (a) Parent and the Parent Subsidiaries have each Permit that is required for the operation of the business of Parent or any of the Parent Subsidiaries or the ownership or leasing of any interest in any of their respective properties, except where the failure to have, or the suspension or cancellation of, any such Permit would not, individually or in the aggregate, have a Parent Material Adverse Effect. Except as would not, individually or in the aggregate, have a Parent Material Adverse Effect, (i) all of such Permits are valid and in full force and effect and neither Parent nor any Parent Subsidiary has violated the terms of such Permits, and (ii) no proceeding is pending or, to the knowledge of the Parent, threatened in writing to revoke, suspend, cancel, terminate, or adversely modify any such Permit.

          (b) Parent and the Parent Subsidiaries are, and since December 31, 2004, have been, in compliance with all applicable Laws, including, to the extent applicable, (i) rules and regulations of the Medicare and Medicaid programs and any other federal health care program; (ii) federal and state Laws relating to health care fraud and abuse; (iii) state Laws relating to Medicaid or any other state health care or health insurance programs; (iv) federal or state Laws relating to billing or claims for reimbursement submitted to any third-party payor; (v) any other federal or state Laws relating to fraudulent, abusive or unlawful practices connected in any way with the provision of health care items or services, or the billing for or claims for reimbursement for such items or services provided to a beneficiary of any state, federal or other governmental health care or health insurance program or any private payor; (vi) state Laws relating to insurance and risk sharing products, services and arrangements, and (vii) Laws with respect to matters relating to patient or individual health care information, including, without limitation, the Health Insurance Portability and Accountability Act of 1996, as amended, and any rules or regulations promulgated thereunder, except where any failure to be in compliance, individually or in the aggregate, would not have a Parent Material Adverse Effect. Since December 31, 2004, no third-party payment program has imposed a fine, penalty or other sanction on Parent or the Parent Subsidiaries, except where any such imposition would not have, individually or in the aggregate, a Parent Material Adverse Effect.

          (c) Since January 1, 2006 and, to the knowledge of Parent, at any time from January 1, 2001 and prior to January 1, 2006, neither Parent, any Parent Subsidiary, nor any director or executive officer of Parent or any Parent Subsidiary with respect to actions taken on behalf of Parent or any Parent Subsidiary, (i) has been assessed a civil money penalty under Section 1128A of the Social Security Act or any regulations promulgated thereunder, (ii) has been excluded from participation in any federal health care program or state health care program (as such terms are defined by the Social Security Act), or (iii) has been convicted of any criminal offense relating to the delivery of any item or service under a federal health care program relating to the unlawful manufacture, distribution, prescription, or dispensing of a prescription drug or a controlled substance.

          (d) Parent has made available to the Company a summary of all material complaints or concerns made since December 31, 2006 through Parent’s whistleblower hot-line or equivalent system for receipt of employee concerns regarding possible violations of Law. No attorney representing Parent or any of its Subsidiaries, whether or not employed by Parent or any of its Subsidiaries, has reported evidence of a violation of securities laws, breach of fiduciary duty or similar violation by Parent or any of its officers, directors, employees or agents to Parent’s chief legal officer, audit committee (or other committee designated for the purpose) of the Board of Directors of Parent or the Board of Directors of Parent pursuant to the rules adopted pursuant to Section 307 of the Sarbanes-Oxley Act or in any Parent policy contemplating such reporting, including in instances not required by those rules.

          Section 5.9 Claims, Actions and Proceedings . There are no outstanding orders, writs, judgments, injunctions, decrees or other requirements of any Governmental Entity against Parent, any Parent Subsidiary or any of their securities, assets or properties that, individually or in the aggregate, would have a Parent Material Adverse Effect. There are no Actions or, to the knowledge of Parent, any governmental investigations or inquiries pending or overtly threatened against the Parent or any Parent Subsidiary or any of their assets or properties that, individually or in the aggregate, would have a Parent Material Adverse Effect (provided that no representation or warranty is being made in this Agreement as to any Actions commenced after the date hereof challenging this Agreement or the transactions contemplated hereby, or seeking to prohibit the Offer or Merger).

          Section 5.10 Contracts and Other Agreements .

          (a) “ Parent Material Contract ” means Contracts to which Parent or any Parent Subsidiary is a party or by which any of them is bound that (i) would be required to be filed by Parent as a “material” Contract pursuant to Item 601(b)(10) of Regulation S-K under the Securities Act or (ii) is with one of Parent’s ten (10) largest

customers (based on revenue to Parent) for the fiscal year ended December 31, 2007 or Parent’s ten (10) largest vendors (based on expense incurred by Parent).

          (b) Except as would not, individually or in the aggregate, have a Parent Material Adverse Effect, each of the Parent Material Contracts is in full force and effect and is valid and binding on the Parent and each Parent Subsidiary party thereto and, to the knowledge of the Parent, each other party thereto, enforceable against such parties in accordance with their terms, except to the extent that enforcement of the rights and remedies created thereby is subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws of general application affecting the rights and remedies of creditors and to general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at Law).

          (c) Except as would not, individually or in the aggregate, have a Parent Material Adverse Effect, (i) neither Parent nor any Parent Subsidiary has breached, is in default under, or has received written notice of any breach of or default under, any Parent Material Contract, and no event has occurred that with the lapse of time or the giving of notice or both would constitute a default thereunder by Parent or any Parent Subsidiary, and (ii) to Parent’s knowledge, no other party to any Parent Material Contract to which Parent or any Parent Subsidiary is a party is in breach or violation of, or default under, such Parent Material Contract. A complete and correct copy of each Parent Material Contract has previously been made available by Parent to the Company or filed by Parent with the SEC.

          Section 5.11 Intellectual Property . Except as would not, individually or in the aggregate, have a Parent Material Adverse Effect, either Parent or a Parent Subsidiary owns, or is licensed or otherwise possesses adequate rights to use, all Intellectual Property used in their respective businesses as currently conducted. Except as would not, individually or in the aggregate, have a Parent Material Adverse Effect, (i) there are no claims pending or, to the knowledge of Parent, overtly threatened by any person alleging infringement by Parent or any of the Parent Subsidiaries for their use of the Intellectual Property of Parent or any of the Parent Subsidiaries, (ii) to the knowledge of Parent, the conduct of the business of Parent and the Parent Subsidiaries does not infringe any intellectual property rights of any person, (iii) neither Parent nor any of the Parent Subsidiaries has made any claim of a violation or infringement by others of its rights to or in connection with the Intellectual Property of Parent or any of the Parent Subsidiaries in the last five (5) years, (iv) to the knowledge of the Parent, no person is infringing any Intellectual Property of Parent or any of the Parent Subsidiaries and (v) Parent takes reasonable actions to protect the security of its software, systems and networks.

          Section 5.12 Tax Matters .

          (a) Except as would not, individually or in the aggregate, have a Parent Material Adverse Effect:

          (i) All Tax Returns required to be filed by or with respect to the Parent and the Parent Subsidiaries have been or will be timely filed with the appropriate Tax authority. All such Tax Returns are true, correct and complete and all Taxes owed by the Parent or the Parent Subsidiaries, whether or not shown on any Tax Return, have been timely paid except for Taxes being contested in good faith and for which adequate reserves have been established on the Parent Financial Statements, in accordance with Canadian GAAP, or, if arising after the date of the most recent Parent Financial Statements, on the Parent’s or the appropriate Parent Subsidiary’s books and records.

          (ii) There are no Liens with respect to Taxes upon any of the assets or properties of the Parent or the Parent Subsidiaries, other than Permitted Liens.

          (iii) No audit, assessment, examination, dispute, investigation or judicial or administrative proceeding is currently pending with respect to any Taxes of the Parent or, to the Parent’s knowledge, the Parent Subsidiaries with respect to which the Parent or a Parent Subsidiary has been notified in writing. No deficiency for any Taxes has been proposed or assessed in writing against the Parent or the Parent Subsidiaries, except for deficiencies which have been paid, settled or withdrawn or which are being contested in good faith and for which adequate reserves have been established on the Parent Financial Statements, in accordance with Canadian GAAP, or if arising after the date of the most recent Parent Financial Statements, on the Parent’s or the appropriate Parent Subsidiary’s books and records.

          (iv) Neither the Parent nor any of the Parent Subsidiaries is a party to any indemnification, allocation, sharing or similar agreement with respect to Taxes that would give rise to a material payment or indemnification obligation, other than agreements among the Parent and the Parent Subsidiaries, customary Tax indemnities contained in credit or other commercial agreements the primary purpose of which do not relate to Taxes and agreements with customers, vendors, lessors or similar persons entered into in the ordinary course of business.

          (v) All withholding and payroll Tax requirements required to be complied with by the Parent and the Parent Subsidiaries (including requirements to deduct, withhold and pay over amounts to any Tax authority and to comply with associated reporting and record keeping requirements) have been satisfied or accrued.

          (b) Neither the Parent nor any Parent Subsidiary has distributed the stock of another company in a transaction that was purported or intended to be governed by Section 355(a)(1)(A) or Section 361 of the Code in a transaction occurring within the past five years.

          Section 5.13 Disclosure Documents .

          (a) None of the information supplied or to be supplied by Parent in writing for inclusion or incorporation by reference in (i) the Schedule 14D-9 will, at the time filed with the SEC, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading or (ii) Proxy Statement will, at the date of mailing to stockholders and at the time of the Company Stockholders Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The Registration Statement and the Schedule TO, at the time filed, will comply as to form in all material respects with the applicable requirements of the Securities Act and the Exchange Act and the Schedule TO at the time it is filed, and the Registration Statement at the time it becomes effective under the Securities Act, will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The representations and warranties contained in this Section 5.13 will not apply to statements included in or omissions from the Schedule TO or the Registration Statement based upon information furnished to Parent in writing by the Company for inclusion in the Registration Statement.

          (b) The information with respect to Parent and any of its Subsidiaries that Parent furnishes to the Company specifically for use by the Company in the Schedule 14D-9 or the Information Statement will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading, (i) in the case of the Schedule 14D-9, at

the time of the filing of the Schedule 14D-9 and at the time of any distribution or dissemination thereof and at the consummation of the Offer and (ii) in the case of the Information Statement, as supplemented or amended, if applicable, at the time of the filing of such Information Statement or any amendment or supplement thereto or at the time it is first mailed to stockholders of the Company and at the time such stockholders vote, or otherwise act, on adoption of this Agreement.

          Section 5.14 Brokers . Other than Houlihan Lokey Howard & Zukin, no broker, finder, agent or similar intermediary has acted on behalf of Parent or Merger Sub in connection with this Agreement or the transactions contemplated hereby, and there are no brokerage commissions, finders’ fees or similar fees or commissions payable in connection herewith based on any agreement, arrangement or understanding with Parent or Merger Sub or any of their respective affiliates, or any action taken by Parent or Merger Sub or any of their respective affiliates.

          Section 5.15 Parent and Merger Sub .

          (a) Merger Sub has been formed solely for the purpose of engaging in the transactions contemplated hereby and prior to the Effective Time will have engaged in no other business activities and will have incurred no liabilities or obligations other than as contemplated herein.

          (b) As of the date hereof and through and including the Effective Time, Parent shall directly own all of the equity of US Corp. and Parent shall indirectly own all of the equity securities of Merger Sub.

          (c) As of immediately prior to entering into this Agreement and the Stockholder Agreements, none of Parent, US Corp. or Merger Sub, alone or together with any other person, was at any time, or became, an “interested stockholder” under the applicable provisions of the DGCL or has taken any action that would cause the restrictions on business combinations with interested stockholders set forth in Section 203 of the DGCL to be applicable to this Agreement, the Merger or any of the transactions contemplated hereby. None of Parent, US Corp. or Merger Sub owns (directly or indirectly, beneficially or of record) or is a party to any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of, in each case, any shares of capital stock of the Company (other than as contemplated by this Agreement or the Stockholder Agreements).

          (d) To the knowledge of Parent, no “moratorium,” “control share,” “fair price” or other anti-takeover law or regulation is applicable to this Agreement, the Offer or Merger or the other transactions contemplated hereby which would require action by the Board of Directors of Parent.

          Section 5.16 Solvency . Assuming the accuracy of the representations and warranties of the Company (without giving effect to any qualifications as to knowledge of the Company, materiality, Company Material Adverse Effect or similar qualifications or any disclosures in the Company SEC Reports or the Company Disclosure Schedule) as of the earlier of the Acceptance Date or the Closing, immediately after giving effect to all of the transactions contemplated by this Agreement, including, without limitation, the payment of the aggregate Cash Consideration and payment of all related fees and expenses, the Surviving Corporation and Parent will be Solvent. For purposes of this Section 5.16, the term “ Solvent ” with respect to the Surviving Corporation and Parent means that, as of any date of determination, (a) the amount of the fair saleable value of the assets of Parent and the Surviving Corporation and their respective Subsidiaries, taken as a whole, exceeds, as of such date, the sum of (i) the value of all liabilities of Parent and the Surviving Corporation and their respective Subsidiaries, taken as a whole, including contingent and other liabilities, as of such date, as such terms are generally determined in accordance with the applicable Delaware, Canadian or federal Laws governing determinations of the solvency of debtors, and (ii) the amount that will be required to pay the probable liabilities of Parent, the Surviving Corporation and their respective Subsidiaries, taken as a whole, on their existing debts (including contingent liabilities) as such debts become

absolute and matured; (b) Parent and the Surviving Corporation will not have, as of such date, an unreasonably small amount of capital for the operation of the businesses in which they are engaged or proposed to be engaged following such date; (c) Parent and the Surviving Corporation will be able to pay their respective liabilities, including contingent and other liabilities, as they mature in the ordinary course of business; and (d) any other solvency requirement set forth in the DGCL or pursuant to Delaware or Canadian or federal Laws applicable to Parent or the Surviving Corporation has been satisfied.

          Section 5.17 Financing . Parent has delivered to the Company a true and complete copy of the executed commitment letter (the “ Debt Commitment Letter ”) from GE Capital Corporation (the “ Lender ”) to provide debt financing in an aggregate amount set forth therein (the “ Debt Financing ”). Other than as permitted pursuant to Section 7.9, the Debt Commitment Letter has not been amended or modified, no such amendment or modification is contemplated, and, as of the date hereof, the commitments contained in such letter have not been withdrawn or rescinded in any respect. There are no conditions precedent or other contingencies related to the funding of the full amount of the Debt Financing, other than as set forth in the Debt Commitment Letter (the “ Disclosed Conditions ”), and no Person has any right to impose, and none of Parent, US Corp. or Merger Sub has any obligation to accept, (i) any condition precedent to such funding other than the Disclosed Conditions nor (ii) any reduction to the aggregate amount available under the Debt Commitment Letter below an amount that when combined with Parent’s other cash and/or cash equivalents will be sufficient to pay the Transaction Amount on the earlier of the Acceptance Date or the Closing (or any term or condition not included in the Debt Commitment Letter which would have the effect of reducing the aggregate amount under the Debt Commitment Letter below an amount that when combined with Parent’s other cash and/or cash equivalents will be sufficient to pay the Transaction Amount on the earlier of the Acceptance Date or the Closing). Parent, US Corp. or Merger Sub has fully paid any and all commitment fees or other fees in connection with the Debt Commitment Letter that are payable on or prior to the date hereof and, as of the date hereof, the Debt Commitment Letter (or, if applicable, any alternative debt commitment letter entered into pursuant to Section 7.9) is in full force and effect and is the valid, binding and enforceable obligation of US Corp. and, to the knowledge of Parent, the other parties thereto. The Debt Commitment Letter may, in accordance with the provisions of this Agreement, be superseded at the option of Parent after the date of this Agreement but prior to the earlier of the Acceptance Date or the Effective Time by an instrument (the “ New Debt Commitment Letter ”) replacing the existing Debt Commitment Letter, provided that the terms of the New Debt Commitment Letter shall not (A) expand upon the conditions precedent to the Debt Financing set forth in the Debt Commitment Letter as of the date hereof, (B) delay the earlier of the Acceptance Date or the Closing or (C) reduce the aggregate amount available under the Debt Commitment Letter below an amount that when combined with Parent’s other cash and/or cash equivalents will be sufficient to pay the Transaction Amount on the earlier of the Acceptance Date or the Closing (or include any term or condition not in the Debt Commitment Letter which would have the effect of reducing the aggregate amount under the Debt Commitment Letter below an amount that when combined with Parent’s other cash and/or cash equivalents will be sufficient to pay the Transaction Amount on the earlier of the Acceptance Date or the Closing). In such event, the term “Debt Commitment Letter” as used herein shall be deemed to be to the New Debt Commitment Letter to the extent then in effect. Assuming the Debt Financing is funded and assuming the accuracy of the representations and warranties set forth in Section 4.3 and compliance with Section 6.1(b) in all material respects, the net proceeds contemplated by the Debt Commitment Letter together with Parent’s other cash and/or cash equivalents will in the aggregate be sufficient for Parent, US Corp. and Merger Sub to pay the aggregate cash to be paid pursuant to the Offer, the Cash Consideration and any other payments contemplated in this Agreement to be paid by Parent on the Acceptance Date and the Closing Date and to pay all fees and expenses of Parent and the Parent Subsidiaries and the Company and the Company Subsidiaries related to the Debt Financing, the Merger or any other transactions contemplated by this Agreement (such amount, the “ Transacti