AGREEMENT AND PLAN OF MERGER BY AND AMONG MSG WC HOLDINGS CORP., MSG WC ACQUISITION CORP., MOBILE SERVICES GROUP, INC. AND TARGET STOCKHOLDER REPRESENTATIVE

Exhibit 2.1

AGREEMENT AND PLAN OF MERGER

BY AND AMONG

MSG WC HOLDINGS CORP.,

MSG WC ACQUISITION CORP.,

MOBILE SERVICES GROUP, INC.

AND

TARGET STOCKHOLDER REPRESENTATIVE

May 24, 2006

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          AGREEMENT AND PLAN OF MERGER, dated as of May 24, 2006 (this “ Agreement ”), by and among MSG WC Holdings Corp., a Delaware corporation (the “ Parent ”) and MSG WC Acquisition Corp., a Delaware corporation and wholly-owned subsidiary of the Parent (the “ Merger Sub ”), on the one hand, and Mobile Services Group, Inc., a Delaware corporation (the “ Target ”), and the Target Stockholder Representative (as defined below), on the other hand.

RECITALS

          A. The respective Boards of Directors of the Parent, Merger Sub and the Target have each determined that the Merger (as defined below) is in the best interests of their respective stockholders and have approved the Merger upon the terms and subject to the conditions set forth in this Agreement;

          B. Pursuant to the terms and subject to the conditions set forth in this Agreement, the Target Preferred Stockholders (as defined below) shall be entitled to receive the Target Preferred Stockholder Merger Consideration (as defined below) and the Target Common Stockholders (as defined below) shall be entitled to receive the Target Common Stockholder Merger Consideration (as defined below);

          C . In order to effectuate the foregoing, Merger Sub, upon the terms and subject to the conditions of this Agreement and, in accordance with the Delaware General Corporation Law (the “ DGCL ”), will merge with and into the Target (the “ Merger ”);

          D. Simultaneously with the execution of this Agreement, the Windward Stockholders (as defined below) and certain of the other Target Stockholders are entering into non-competition, non-solicitation and confidentiality agreements with the Parent as mutually agreed by such Persons; and

          E. The Parent, Merger Sub, and the Target desire to make certain representations, warranties, covenants and agreements in connection with the Merger and also to prescribe various conditions to the Merger.

          NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth herein, and other valuable consideration, the sufficiency and receipt of which is hereby acknowledged, and intending to be legally bound hereby, the Parent, Merger Sub, the Target and Target Stockholder Representative (each, a “ Party ” and collectively, the “ Parties ”) hereto agree as follows:

ARTICLE I

DEFINITIONS

          1.1 Definitions . When used in this Agreement, the following terms shall have the meanings assigned to them in this Section 1 .l .

          “ Acquisition Amount ” means the amount equal to the sum of the purchase prices (including any holdback amounts) paid by Target or any of its Subsidiaries in connection with any Permitted Acquisitions between the date of this Agreement and the date immediately prior to the Closing Date, as set forth in the acquisition agreements related thereto.

          “ Acquisition Proposal ” means any offer, proposal or indication of interest in (a) the acquisition or recapitalization of the Target or any of its Subsidiaries, (b) a merger, consolidation or other business combination involving the Target or any of its Subsidiaries and (c) the acquisition of in excess of fifteen percent (15%) of the assets of the Target or the shares of Target Stock.

          “ Adjusted Current Assets ” means, with respect to the Target and its Subsidiaries, those current assets of the Target and its Subsidiaries, on a consolidated basis, that are included in the line item categories of current assets specifically identified in Target Disclosure Schedule 1.l(a) , in each case calculated in accordance with GAAP and in a manner in conformity with the accounting policies, procedures and principles used by the Target in the preparation of its Financial Statements. By way of example, Target Disclosure Schedule 1.1(a) sets forth a calculation of Adjusted Current Assets as of the Balance Sheet Date.

          “ Adjusted Current Liabilities ” means, with respect to the Target and its Subsidiaries, those current liabilities of the Target and its Subsidiaries, on a consolidated basis, that are included in the line item categories of current liabilities specifically identified in Target Disclosure Schedule 1.1(a) , in each case calculated in accordance with GAAP and in a manner in conformity with the accounting policies, procedures and principles used by the Target in the preparation of its Financial Statements. By way of example, Target Disclosure Schedule 1.1(a) sets forth a calculation of Adjusted Current Liabilities as of the Balance Sheet Date.

          “ Affiliate ” means, with respect to any specified Person, any other Person directly or indirectly controlling, controlled by or under common control with such specified Person. The term “control” (including with correlative meanings, the terms “controlled by” and “under common control with”), as applied to any Persons, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting or other securities, by contract or otherwise.

          “ Amended and Restated Subordinated Note Agreement ” means that certain Amended and Restated Subordinated Note Agreement, dated as of November 13, 2001, among Mobile Storage Group, Inc., The Northwestern Mutual Life Insurance Company, Capital d’Amerique CDPQ Inc., John Hancock Life Insurance Company, John Hancock Variable Life Insurance Company, Investors Partner Life Insurance Company, Signature 5 L.P. and New York Life Insurance Company, as amended by the First Amendment to Amended and Restated Subordinated Note Agreement, dated as of November 14, 2002, the Second Amendment to Amended and Restated Subordinated Note Agreement, dated as of December 15, 2003, the Third Amendment to Amended and Restated Subordinated

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Note Agreement, dated as of May 28, 2004 and the Fourth Amendment to Amended and Restated Subordinated Note Agreement dated as of December 21, 2005.

          “ Ancillary Agreements ” means any other agreements, instruments and documents delivered at the Closing in connection with the transactions contemplated by this Agreement.

          “ Authorization ” means any authorization, approval, consent, certificate, license, registration, permit or franchise of or from any Governmental Entity or pursuant to any Law.

          “ Available Cash ” means all cash and cash equivalents held by the Target and its Subsidiaries (net of restricted balances and any holdback amounts in connection with acquisitions by the Target or any of its Subsidiaries) as of the last Business Day immediately prior to the Closing Date, including cash and cash equivalents received by the Target and its Subsidiaries on such date but not reflected on the Target financial statements. For purposes of determining an estimate of Available Cash to be included in the Estimated Total Common Stock Merger Consideration, such amount shall be equal to the average cash receipts for Target and its Subsidiaries for the twenty-one (21) Business Days ending on the seventh Business Day prior to the Closing Date.

           “Balance Sheet Date ” means March 31, 2006.

           “Benefit Plan ” means any “employee benefit plan” within the meaning of section 3(3) of ERISA (whether or not subject to ERISA) and any other benefit plan, program or arrangement with respect to which the Target or any of its Subsidiaries could have Liability.

          “ Business Day ” means a day other than a Saturday, Sunday or other day on which banks located in Los Angeles, California are authorized or required by Law to close.

           “CapEx Actual Amount” means the amount of capital expenditures spent by the Target and its Subsidiaries from January 1, 2006 through the date immediately prior to the Closing Date. For purposes of this calculation, capital expenditures shall include amounts paid for so-called “tuck-in” acquisitions (i.e., acquisitions treated as capital expenditures for purposes of GAAP).

           “CapEx Adjustment” means the difference between the CapEx Actual Amount and the CapEx Budgeted Amount (and if the CapEx Actual Amount is less than the CapEx Budgeted Amount, such amount shall be negative); provided , however , that if the CapEx Actual Amount is equal to or greater than 90% of the CapEx Budgeted Amount and equal to or less than 110% of the CapEx Budgeted Amount, then the CapEx Adjustment shall be equal to zero.

          “ CapEx Budgeted Amount ” means the amount of capital expenditures budgeted to be spent by the Target and its Subsidiaries from January 1, 2006 through the date

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immediately prior to the Closing Date in accordance with Section 6.9 ; for purposes of this definition, in the event that the Closing Date is a date other than the first day of a calendar month, the CapEx Budgeted Amount shall be equal to the sum of the capital expenditures by the Target and its Subsidiaries budgeted to be spent from January 1, 2006 through the last day of the calendar month prior to the Closing Date, plus an amount equal to the amount of capital expenditures budgeted for the month in which the Closing Date occurs, multiplied by a fraction equal to (a) the number of days prior to the Closing Date commencing on the first day of the calendar month in which the Closing Date occurs, divided by (b) the total number of days in such month. The CapEx Budgeted Amount shall be increased by the amount, if any, by which cumulative sales of rental units from the rental fleet from June 1, 2006 through the Closing Date exceeds the Rental Unit Sales Cap.

          “ Capital Stock ” means (a) in the case of a corporation, its shares of capital stock, (b) in the case of a partnership or limited liability company, its partnership or membership interests or units (whether general or limited), and (c) any other interest that confers on a Person the right to receive a share of the profits and losses of, or distribution of assets of, the issuing entity.

          “ Certificate ” means a certificate which immediately prior to the Effective Time represents outstanding shares of capital stock of a Party.

          “ Certificate of Incorporation ” means that certain certificate of incorporation of the Target, as amended to date.

          “ COBRA ” means Part 6 of Subtitle B of Title I of ERISA, section 4980B of the Code, and any similar state Law.

          “ Code ” means the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder.

          “ Contract ” means any written and, to the Knowledge of the Target, oral agreement, contract, commitment or arrangement.

          “ Credit Agreements ” means the US. Credit Agreement and the U.K. Credit Agreement.

          “ Enterprise Value ” means $605,000,000.

          “ Equity Securities ” means (a) shares of Capital Stock, (b) options, warrants or other rights convertible into, or exercisable or exchangeable for, directly or indirectly, or otherwise entitling any Person to acquire, directly or indirectly, shares of Capital Stock or any profit participation feature and (c) stock appreciation rights, phantom stock or similar rights.

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

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          “ ERISA Affiliate ” means any Person at any relevant time considered a single employer with the Target or any of its Subsidiaries under section 414 of the Code.

          “ Escrow Agreement ” means the Escrow Agreement, to be dated as of the Closing Date, by and among the Parent, the Target Stockholder Representative and an escrow agent mutually acceptable to the Parent and the Target Stockholder Representative, in form and substance reasonably satisfactory to the Parent and the Target Stockholder Representative.

          “ Escrow Amount ” means the amount deposited into the escrow account pursuant to the terms and conditions of the Escrow Agreement, equal to $25,000,000.

          “ Escrow Funds ” means the funds held in the escrow account pursuant to the terms and conditions of the Escrow Agreement.

          “ Estimated Total Common Stock Merger Consideration ” means a good faith estimate of the Total Common Stock Merger Consideration, as determined by the Target. In connection with determining the Estimated Total Common Stock Merger Consideration, the Target shall (i) use the actual (A) Enterprise Value, (B) Target Stockholder Representative Expense Amount, and (C) Preferred Redemption Amount, and (ii) estimate (A) the Working Capital Adjustment, (B) the CapEx Adjustment, (C) the Acquisition Amount, (D) the amount of Available Cash, (E) the Target Debt Amount, and (F) the amount of Target Transaction Expenses.

          “ Governmental Entity ” means any entity or body exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to United States federal, state or local government or any foreign, international, multinational or other government, including any department, commission, board, agency, bureau, official or other regulatory, administrative or judicial authority thereof, including any court having jurisdiction.

          “ Hazardous Substance ” means any chemical, material or substance for which liability or standards of conduct are imposed under any Environmental Law, including without limitation any substances which are defined as or included in the definition of “hazardous substances,” “hazardous wastes,” “hazardous materials,” “hazardous constituents,” “restricted hazardous materials,” “extremely hazardous substances,” “toxic substances,” “contaminants,” “pollutants,” “toxic pollutants,” or words of similar meaning and regulatory effect under any applicable Environmental Law, including petroleum, asbestos and polychlorinated biphenyls.

          “ HSR Act ” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder.

          “ In-the-Money Target Option ” means any Target Option whose exercise price is less than the Total Common Stock Per Share Merger Consideration.

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          “ Indebtedness ” means any of the following: (a) any indebtedness for borrowed money, including accrued and unpaid interest; (b) any obligations evidenced by bonds, debentures, notes or other similar instruments; (c) any obligations to pay the deferred purchase price of property or services, except trade accounts payable and other current liabilities arising in the ordinary course of business but including all seller notes and “earn out” payments; (d) any indebtedness created or arising under any conditional sale or other title retention agreement with respect to acquired property; (e) any prepayment penalties or premiums and any breakage costs incurred in connection with the payment of any of the foregoing prior to maturity thereof; (f) obligations under any interest rate, currency or other hedging agreements; (g) capitalized lease obligations (other than any amounts that are reflected in the definition of “Adjusted Current Liabilities”); (h) any indebtedness described in clauses (a)-(g) above that is incurred in connection with the acquisitions covered by the definition of “Acquisition Amount”; and (i) any guaranty of any of the foregoing.

          “ Knowledge of the Target ” or any similar phrase means the actual knowledge of the following persons after reasonable inquiry: Douglas Waugaman, Allan Villegas and Christopher Wilson.

          “ Law ” means any statute, law, any common law as of the date of this Agreement, order, ordinance, rule or regulation of any Governmental Entity.

          “ Lehman ” means Lehman Brothers Inc.

          “ Liabilities ” means liabilities, obligations or commitments of any nature whatsoever, asserted or unasserted, known or unknown, absolute or contingent, accrued or unaccrued, matured or unmatured or otherwise.

          “ Lien ” means, with respect to any property or asset, any mortgage, lien, pledge, charge, security interest, hypothecation, right of first refusal, option, restriction or any other encumbrance in respect of such property or asset.

          “ Losses ” means any loss, Liability, Action, cost, damage, deficiency, Tax, penalty, fine or expense, whether or not arising out of any claims by or on behalf of any party to this Agreement or any third party claims, including interest, reasonable attorneys’, consultants’ and experts’ fees and expenses and all amounts paid in investigation, defense or settlement of any of the foregoing; provided , however , that Losses shall not be deemed to include any indirect, special, incidental or consequential damages, but shall include punitive damages actually paid to any third party.

          “ Merger Notice ” means a letter from the Target to the Target Stockholders providing notice of the Merger and the Effective Date as well as instructions concerning the procedure for the exchange of the Target Common Stock and Target Preferred Stock, if any, owned by the Target Stockholders for the Total Common Stock Merger Consideration and/or the Preferred Redemption Amount, as the case may be, in form and substance mutually satisfactory to Parent and Target, and which Merger Notice shall contain the appropriate notice required under Section 262 of the DGCL.

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           “Mobile Storage Group” means Mobile Storage Group, Inc., a Delaware corporation, and wholly owned Subsidiary of the Target.

          “ Order ” means any award, injunction, judgment, decree, order, ruling, subpoena or verdict or other decision issued, promulgated or entered by or with any Governmental Entity of competent jurisdiction.

          “ Organizational Documents ” means, with respect to any entity, the certificate of incorporation, the articles of incorporation, by-laws, articles of organization, certificate of limited partnership, certificate of formation, partnership agreement, limited liability company agreement, formation agreement, joint venture agreement or other similar organizational documents of such entity (in each case, as amended through the date of this Agreement).

          “ Parent Material Adverse Effect ” means any material adverse effect on the ability of the Parent to perform its obligations under this Agreement and the Ancillary Agreements, as applicable.

           “Permitted Acquisitions” means any acquisitions by Target or any of its Subsidiaries of any Person (by way of merger, acquisition of voting securities of such Person, or acquisition of all or substantially all of such Person’s assets) which are permitted under this Agreement. Such term shall not include any “tuck-in” acquisitions (which shall be included under the CapEx Actual Amount).

          “ Permitted Liens ” means (a) Liens for Taxes that are not yet due and payable or that are being contested in good faith and for which appropriate reserves have been established in accordance with GAAP, (b) statutory Liens of landlords and workers’, carriers’, materialmens’, suppliers’ and mechanics’ Liens incurred in the ordinary course of business, which amounts related thereto are not yet due and payable or for which appropriate reserves have been established in accordance with GAAP, (c) Liens and encroachments which do not materially interfere with the present use or value of the properties they affect, (d) Liens that will be released prior to or as of the Closing, (e) Liens arising under this Agreement or any Ancillary Agreement, and (f) Liens that secure Liabilities (other than Target Debt) as set forth on Target Disclosure Schedule 1.1(b) .

          “ Person ” means an individual, a corporation, a partnership, a limited liability company, a trust, an unincorporated association, a Governmental Entity or any agency, instrumentality or political subdivision of a Governmental Entity, or any other entity or body.

          “ Post-Closing Adjustment ” means (x) the Total Common Stock Merger Consideration as finally determined in accordance with Section 2.9 , minus (y) the Estimated Total Common Stock Merger Consideration.

          “ Post-Closing Period ” means any taxable period or portion thereof beginning after the Closing Date. If a taxable period begins on or before the Closing Date and ends

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after the Closing Date, then the portion of the taxable period that begins on the day following the Closing Date shall constitute a Post-Closing Period.

          “ Pre-Closing Period ” means any taxable period or portion thereof ending on or before the Closing Date. If a taxable period begins on or before the Closing Date and ends after the Closing Date, then the portion of the taxable period to the end of the Closing Date shall constitute a Pre-Closing Period.

          “ Preferred Redemption Amount ” means the cumulative amounts paid to the holders of the Preferred Stock equal to their respective redemption prices as determined in accordance with the Certificate of Incorporation and in accordance with their respective ownership of Target Preferred Stock as set forth on Schedule 2.3(b) .

          “ Prime Rate ” means “prime rate” as published in The Wall Street Journal , Eastern Edition in effect from time to time during the period from the Closing Date to the date of payment of the applicable amount. Such interest shall be calculated daily on the basis of a year of 365 days and the actual number of days elapsed, without compounding.

          “Real Property Transfer Taxes ” means the real property transfer Taxes which may be imposed by any Governmental Authority in connection with the consummation of the Merger as they become due and payable with respect to the Owned Real Property set forth on Target Disclosure Schedule 4.9(a) (or Owned Real Property that is required to be set forth on Target Disclosure Schedule 4.9(a) ).

          “ Rental Unit Sales Cap ” means $l,300,000 per calendar month from June 1, 2006 through the Closing Date (provided that if the Closing Date occurs on a date other than the first day of a calendar month, the amount for such calendar month shall be an amount equal to $1,300,000 multiplied by a fraction equal to (a) the number of days prior to the Closing Date commencing with the first day of the month in which the Closing Date occurs divided by (b) the total number of days in such month).

          “ Requisite Stockholder Approval ” means the approval of holders holding at least a majority in interest of the Target Common Stock.

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

          “ Series B Preferred Stock ” means the shares of Series B 10% Cumulative Preferred Stock, par value $0.001 per share, of the Target.

          “ Series C Preferred Stock ” means the shares of Series C 8.5% Cumulative Preferred Stock, par value $0.001 per share, of the Target.

          “ Series E Preferred Stock ” means the shares of Series E 8.5% Convertible Cumulative Preferred Stock, par value $0.001 per share, of the Target.

          “ Series G Preferred Stock ” means the shares of Series G Preferred Stock, par value $0.001 per share, of the Target.

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          “ Series H Preferred Stock ” means the shares of Series H 10% Convertible Cumulative Preferred Stock, par value $0.001 per share, of the Target.

          “ Series I Preferred Stock ” means the shares of Series I 10% Convertible Cumulative Preferred Stock, par value $0.001 per share, of the Target.

          “ Series J Preferred Stock ” means the shares of Series J 10% Convertible Cumulative Preferred Stock, par value $0.001 per share, of the Target.

          “ Series K Preferred Stock ” means the shares of Series K Convertible Preferred Stock, par value $0.001 per share, of the Target.

          “ Subsidiary ” or “ Subsidiaries ” means, with respect to any Person, any corporation, partnership, limited liability company, joint venture or other legal entity of any kind of which (i) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof, or (ii) if a limited liability company, partnership, association or other business entity, a majority of the partnership or other similar ownership interest thereof is at the time owned or controlled, directly or indirectly, by any Person or one or more Subsidiaries of that Person or a combination thereof.

          “ Target Common Stock ” means the shares of Common Stock, par value $0.001 per share, of the Target.

          “ Target Common Stockholder ” means a holder of Target Common Stock.

          “ Target Debt ” means all Indebtedness of the Target and its Subsidiaries as of the Closing Date other than the Indebtedness set forth on Target Disclosure Schedule 1.1(c) .

          “ Target Debt Amount ” means that amount necessary to satisfy in full all payment obligations with respect to the Target Debt.

          “ Target Material Adverse Effect ” means any change or effect that is materially adverse to the assets, liabilities, business, financial condition or results of operations of the Target and its Subsidiaries, taken as a whole, other than any such effect or change, directly or indirectly, (a) resulting from or arising in connection with (i) general political, economic, financial, capital market or industry-wide conditions, (ii) this Agreement, the transactions contemplated hereby or the announcement or other disclosure of this Agreement or the transactions contemplated hereby, (iii) any condition described in the Target Disclosure Schedule as it exists on the date of this Agreement (but excluding any material worsening or deterioration of such condition), (iv) any breach by the Parent of this Agreement, or (v) the taking of any action or the omission to take any action expressly required by this Agreement, or (b) attributable to the fact that the prospective owner of the Target and its Subsidiaries is the Parent or any Affiliate of the Parent.

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          “ Target Option ” means each option to purchase Target Common Stock, including each option issued pursuant to the Target Stock Option Plans, outstanding immediately prior to the Effective Time (and not exercised for Target Common Stock prior to the Closing).

           “Target Preferred Stock” means, collectively, the Series B Preferred Stock, the Series C Preferred Stock, the Series E Preferred Stock, the Series G Preferred Stock, the Series H Preferred Stock, the Series I Preferred Stock, the Series J Preferred Stock and Series K Preferred Stock.

          “ Target Preferred Stockholder ” means a holder of Target Preferred Stock.

          “ Target Stock ” means any Target Preferred Stock and/or any Target Common Stock.

          “ Target Stock Option Plans ” mean (i) the 2005 Stock Option Plan of the Target and (ii) the 2005 Stock Incentive Plan of the Target.

          “ Target Stockholder ” means any Target Preferred Stockholder or any Target Common Stockholder.

          “ Target Transaction Expenses ” means, without duplication, the collective amount payable by the Target or any of its Subsidiaries for all out-of-pocket costs and expenses incurred by the Target or on behalf of the Target Stockholders in connection with the sale of the Target or any of its Subsidiaries (whether pursuant to this Agreement or any alternative transaction the Target or the Target Stockholders have considered or any auction process related thereto), which shall be set forth on Target Disclosure Schedule 2.3(a) for inclusion in the calculation of the Estimated Total Common Stock Merger Consideration, including without limitation (A) all brokers’ or finders’ fees, (B) fees and expenses of counsel, advisors, consultants, investment bankers, accountants, and auditors and experts, (C) all sale, “stay-around,” retention, or similar bonuses or payments to current or former directors, officers, employees and consultants paid as a result of or in connection with the transactions contemplated hereby agreed to by the Target or any of its Subsidiaries prior to the Closing Date, including the Transaction Incentive Plan listed in the Target Disclosure Schedule, and (D) one-half of the amount of Real Property Transfer Taxes.

          “ Tax ” or “ Taxes ” means (i) all federal, state, local or foreign net or gross income, profits, franchise, gross receipts, environmental, customs duty, capital stock, severance, stamp, payroll, sales, employment, unemployment, disability, use, personal and real property, withholding, excise, production, transfer, alternative minimum, value added, ad valorem, occupancy and other taxes, assessments, duties, fees, levies or other governmental charges of any nature whatsoever, whether or not disputed, together with any interest, penalties, additions to tax or additional amounts with respect thereto; (ii) amounts described in clause (i) for which the Target or any of its Subsidiaries becomes liable under consolidated return or similar principles; and (iii) amounts described in

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clauses (i) or (ii) for which the Target or any of its Subsidiaries becomes liable as a transferee or successor, by contract or otherwise.

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

          “ Total Common Stock Merger Consideration ” means (i) the Enterprise Value, plus (ii) the Working Capital Adjustment (which may be a negative number), plus (iii) the CapEx Adjustment (which may be a negative number), plus (iv) the Acquisition Amount, plus (v) the amount of Available Cash, minus (vi) the Target Debt Amount, minus (vii) the amount of Target Transaction Expenses, minus (viii) the Target Stockholder Representative Expense Amount, minus (ix) the Preferred Redemption Amount. The Total Common Stock Merger Consideration shall be determined in accordance with Section 2.9 .

          “ Total Common Stock Per Share Merger Consideration ” means, with respect to each share of Target Common Stock, an amount equal to the quotient of (a) the sum of (x) Total Common Stock Merger Consideration and (y) the aggregate exercise price of all In-the-Money Target Options, divided by (b) the sum of (i) Total Target Common Stock and (ii) the total number of shares of Target Common Stock issuable upon the exercise of all In-the-Money Target Options.

          “ Total Target Common Stock ” means the total number of shares of Target Common Stock outstanding as of the Effective Time, not including any Target Options.

          “ Transfer Taxes ” means sales, use, transfer, real property transfer, recording, documentary, stamp, registration and stock transfer Taxes and any similar Taxes imposed by any Governmental Authority in connection with the consummation of the Merger; provided, however, that Transfer Taxes shall not include any Real Property Transfer Taxes.

          “ U.K. Credit Agreement ” means that certain Credit Agreement, dated as of December 30, 2005, by and among Mobile Storage Group, Ravenstock MSG Limited and Bank of America, N.A.

          “ U.S. Credit Agreement ” means that certain Amended and Restated Credit Agreement, dated as of December 30, 2005, among Mobile Storage Group, Bank of America, N.A., Banc of America Securities, LLC and the financial institutions named therein.

          “ Windward ” means Windward Capital Management, LLC, a Delaware limited liability company.

          “ Windward Stockholders ” means, collectively, Windward Capital LP II, L.L.C., Windward Capital Partners II, L.P., Windward/MSG Co-Invest II, LLC and Windward/MSG Co-Invest, LLC.

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          “ Working Capital Adjustment ” means (i) the amount by which the Working Capital Amount as of the close of business on the day immediately prior to the Closing Date exceeds $20,000,000 or (ii) the amount by which the Working Capital Amount as of the close of business on the day immediately prior to the Closing Date is less than $17,000,000, in each case, if applicable; provided, that any amount which is calculated pursuant to clause (ii) above shall be deemed to be a negative number. In the event that the Working Capital Amount is greater than or equal to $17,000,000 and less than or equal to $20,000,000, then the amount of the Working Capital Adjustment shall be zero.

          “ Working Capital Amount ” means, as of any date, the Adjusted Current Assets minus the Adjusted Current Liabilities.

          “ $ ” means United States dollars.

          1.2 Other Defined Terms . The following terms have the meanings assigned to such terms in the Sections of the Agreement set forth below:

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          1.3 Construction . For the purposes of this Agreement, except as otherwise expressly provided herein or unless the context otherwise requires: (a) the meaning assigned to each term defined herein shall be equally applicable to both the singular and the plural forms of such term and vice versa, and words denoting either gender shall include both genders as the context requires; (b) where a word or phrase is defined herein, each of its other grammatical forms shall have a corresponding meaning; (c) the terms “hereof”, “herein”, “hereunder”, “hereby” and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole and not to any particular provision of this Agreement; (d) when a reference is made in this Agreement to an Article, Section, paragraph, Exhibit or Schedule, such reference is to an Article, Section, paragraph, Exhibit or Schedule to this Agreement unless otherwise specified; (e) the word “include”, “includes”, and “including” when used in this Agreement shall be deemed to be followed by the words “without limitation”, unless otherwise specified; and (f) a reference to any party to this Agreement or any other agreement or document shall include such party’s predecessors, successors and permitted assigns.

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ARTICLE II

THE MERGER

          2.1 The Merger . At the Effective Time (as defined in Section 2.2 ) and subject to and upon the terms and conditions of this Agreement and the applicable provisions of the DGCL, the Merger shall be effectuated as follows: (i) Merger Sub shall be merged with and into the Target, (ii) the separate corporate existence of Merger Sub shall cease, and (iii) the Target shall be the surviving corporation. The Target as the surviving corporation after the Merger is hereinafter sometimes referred to as the “ Surviving Corporation .”

          2.2 Closing; Effective Time . The closing of the Merger and the other transactions contemplated hereby (the “ Closing ”) will take place following the satisfaction of all conditions set forth herein on the date mutually agreed to by the Parent and the Target, but in no event later than September 30, 2006 (the “ Closing Date ”). The Closing shall take place at the offices of Paul, Hastings, Janofsky & Walker LLP, 515 South Flower Street, Twenty-Fifth Floor, Los Angeles, CA 90071, or at such other location as the Parent and the Target shall mutually agree. At the Closing, the Parties shall cause the Merger to be consummated by filing a certificate of merger in the form of Exhibit A hereto (the “ Certificate of Merger ”) with the Secretary of State of the State of Delaware, in accordance with the relevant provisions of the DGCL (the time of such filing, or such later time as may be agreed in writing by the parties and specified in the Certificate of Merger, being the “ Effective Time ”).

          2.3 Payments at Closing .

                    (a) At the Closing, based upon the calculation of the Estimated Total Common Stock Merger Consideration (including the components thereof), Parent shall pay, or cause to be paid, the following amounts by wire transfer of immediately available funds: (i) an amount equal to the Target Debt Amount to the Target (or its designees) for payment of all amounts outstanding pursuant to the Target Debt; (ii) $250,000 (the “ Target Stockholder Representative Expense Amount ”) to the Target Stockholder Representative in accordance with Section 3.7(c) of this Agreement; (iii) the Target Transaction Expenses to the Persons to whom such Target Transaction Expenses are owed; (iv) the Preferred Redemption Amount to the holders of the Target Preferred Stock; and (v) the Estimated Total Common Stock Merger Consideration, less the Escrow Amount, to the Target Common Stockholders in accordance with their respective ownership of Target Common Stock set forth on Target Disclosure Schedule 2.3(c) , and to the holders of Target Options in accordance with Section 3.1 below. Target Disclosure Schedule 2.3(c) shall be subject to amendment prior to the Closing in accordance with Section 6.5 .

                    (b) At the Closing, the Escrow Amount shall be contributed to the Escrow Agent in accordance with the terms of the Escrow Agreement. The portion of the Escrow Amount allocated to each share of Target Common Stock shall equal the quotient of (i) the Escrow Amount, divided by (ii) the sum of (x) the total shares of Target

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Common Stock and (y) the total number of shares of Target Common Stock into which the In-the-Money Target Options are exercisable (such amount, the “ Escrow Contribution Per Share Amount ”). The portion of the Escrow Amount allocated to each In-the-Money Target Option shall equal the lesser of (a) the Escrow Contribution Per Share Amount and (b) the difference between the (x) Target Common Stock Per Share Merger Consideration and (y) the per share exercise price of such In-the-Money Target Option. In the event that (a) the Escrow Contribution Per Share Amount for any In-the-Money Target Option is greater than (b) the difference between the (x) Target Common Stock Per Share Merger Consideration and (y) the per share exercise price of any In-the-Money Target Option, the amount of the difference between (a) and (b) will be contributed to the Escrow Amount by Windward Capital Partners II, L.P. (96.35% of the difference) and Windward Capital LP II, LLC (3.65% of the difference).

                    (c) Any distributions from the Escrow Funds shall be made by the Escrow Agent in accordance with the terms of the Escrow Agreement. Any distributions will be made in accordance with the respective contributions of each holder of Target Common Stock and each holder of In-the-Money Target Options to the Escrow Amount in accordance with Target Disclosure Schedule 2.3(d) , which schedule shall be subject to amendment prior to the Closing in accordance with Section 6.5 .

          2.4 Deliveries at the Closing . At the Closing:

                    (a) The Target shall deliver to the Parent the various certificates, instruments, and documents referred to in Section 9.2 below.

                    (b) The Parent (or its designee) shall make the payments contemplated by Section 2.3 above as follows and shall also deliver the following documents:

                              (i) to the holders of the Target Debt, the Target Debt Amount;

                              (ii) to the Persons to whom the Target Transaction Expenses are owed, the Target Transaction Expenses;

                              (iii) to the Target (or its designees), the various certificates, instruments and documents referred to in Section 9.3 below;

                              (iv) to the Target Preferred Stockholders, the Preferred Redemption Amount as provided under Section 3.3(b) below;

                              (v) to the Target Common Stockholders, the Target Common Stock Merger Consideration, less the applicable portion of the Escrow Amount, as provided under Section 3.3(a) below;

                              (vi) to Target for payment to the holders of Target Options, the payments set forth in Section 3.1 below, less the applicable portion of the Escrow Amount;

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                              (vii) to the Escrow Agent, the Escrow Amount; and

                              (viii) to the Target Stockholder Representative, the Target Stockholder Representative Expense Amount.

          2.5 Effects of the Merger . The effects of the Merger shall be as provided in this Agreement, the Certificate of Merger and the applicable provisions of the DGCL. Without limiting the foregoing, at the Effective Time all the property, rights, privileges, powers and franchises of Merger Sub and the Target shall vest in the Surviving Corporation, and all debts, liabilities and duties of Merger Sub and the Target shall become the debts, liabilities and duties of the Surviving Corporation. The Surviving Corporation may, at any time after the Effective Time, take any action (including executing and delivering any document) in the name and on behalf of either the Target or Merger Sub that is reasonably necessary in order to carry out and effectuate the Merger consistent with the provisions of this Agreement.

          2.6 Certificate of Incorporation; Bylaws .

                    (a) Subject to Section 7.2 below, the certificate of incorporation of the Surviving Corporation shall be amended and restated at and as of the Effective Time to read as did the certificate of incorporation of Merger Sub immediately prior to the Effective Time (except that the name of the Surviving Corporation will remain unchanged).

                    (b) Subject to Section 7.2 below, the bylaws of the Surviving Corporation shall be amended and restated at and as of the Effective Time to read as did the bylaws of Merger Sub immediately prior to the Effective Time (except that the name of the Surviving Corporation will remain unchanged).

          2.7 Directors and Officers of the Surviving Corporation . The directors and officers of Merger Sub immediately prior to the Effective Time shall serve as the directors and officers of the Surviving Corporation, until their respective successors are duly elected or appointed and qualified.

          2.8 Determination of Estimated Total Common Stock Merger Consideration . No later than five (5) Business Days prior to the Closing Date, the Target shall deliver to the Parent the calculation of the Estimated Total Common Stock Merger Consideration, including any supporting detail reasonably requested by the Parent. The Estimated Total Common Stock Merger Consideration shall be subject to review by the Parent and shall be reasonably acceptable to the Parent.

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          2.9 Adjustments to Merger Consideration .

                    (a) Preliminary Closing Date Calculations; Adjustment; Total Common Stock Merger Consideration .

                              (i) Within sixty (60) days after the Closing Date, the Parent shall cause the Surviving Corporation to prepare and deliver to the Target Stockholder Representative: (A) a proposed calculation of the Working Capital Adjustment (the “ Preliminary Working Capital Adjustment ”), (B) a proposed calculation of the CapEx Adjustment (the “ Preliminary CapEx Adjustment ”), (C) a proposed calculation of the Acquisition Amount (the “ Preliminary Acquisition Amount ”), (D) a proposed calculation of the Available Cash (the “ Preliminary Available Cash ”), (E) a proposed calculation of the Target Debt Amount (the “ Preliminary Target Debt Amount ”), and (F) a proposed calculation of the Target Transaction Expenses (the “ Preliminary Target Transaction Expenses ”) and, in each case, the components thereof. The Preliminary Working Capital Adjustment, the Preliminary CapEx Adjustment, the Preliminary Acquisition Amount, the Preliminary Available Cash, the Preliminary Target Debt Amount and the Preliminary Target Transaction Expenses shall collectively be referred to herein from time to time as the “ Preliminary Closing Date Calculations .”

                              (ii) The Target Stockholder Representative shall have thirty (30) days following receipt thereof from Parent to review the Preliminary Closing Date Calculations (the “ Review Period ”). The Parent (i) shall provide the Target Stockholder Representative and its agents or representatives with any information reasonably requested by it and (ii) shall give the Target Stockholder Representative access, during normal business hours and upon reasonable notice, to the personnel, accountants, properties, books and records of the Surviving Corporation and its Subsidiaries (and, if necessary, the work papers of the accountants retained by the Parent) for such purpose. The Target Stockholder Representative may, on or prior to the last day of the Review Period, deliver a written notice to the Parent (the “ Notice of Objection ”), which sets forth its specific objections to the Parent’s calculation of the Preliminary Closing Date Calculations. Any Notice of Objection shall specify those items or amounts with which the Target Stockholder Representative disagrees, together with a detailed written explanation of the reasons for disagreement with each such item or amount, and shall set forth the Target Stockholder Representative’s calculation of the Preliminary Closing Date Calculations based on such objections. To the extent not set forth in the Notice of Objection, the Target Stockholder Representative shall be deemed to have agreed with the Parent’s calculation of all other items and amounts contained in the Preliminary Closing Date Calculations.

                              (iii) Unless the Target Stockholder Representative delivers the Notice of Objection to the Parent on or prior to the last day of the Review Period, the Target Stockholders shall be deemed to have accepted the Parent’s calculation of the Preliminary Closing Date Calculations and such calculations shall be final, conclusive and binding. If the Target Stockholder Representative delivers the Notice of Objection to the Parent on or prior to the last day of the Review Period, the Target Stockholder

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Representative and the Parent shall, during the thirty (30) day period following such delivery or any mutually agreed extension thereof, endeavor in good faith and use their commercially reasonable efforts to reach agreement on the disputed items and amounts in order to determine the amount of the Preliminary Closing Date Calculations. If, at the end of such period or any mutually agreed extension thereof, the Target Stockholder Representative and the Parent are unable to resolve their disagreements, they shall jointly retain and refer their disagreements to a nationally recognized accounting firm which has no material relationship with the Parent, the Target Stockholder Representative or any Target Stockholder or any of their respective Affiliates or any other material conflict of interest, mutually acceptable to the Target Stockholder Representative and the Parent (the “ Independent Expert ”). The parties shall instruct the Independent Expert to review promptly this Section 2.9 (and the corresponding defined terms) and to determine solely with respect to the disputed items and amounts so submitted whether and to what extent, if any, the Preliminary Closing Date Calculations require adjustment. The Independent Expert shall base its determination solely on written submissions by the Target Stockholder Representative and the Parent and not on an independent review. The Target Stockholder Representative and the Parent shall make available to the Independent Expert all relevant books and records and other items reasonably requested by the Independent Expert. As promptly as practicable but in no event later than forty-five (45) days after its retention, the Independent Expert shall deliver to the Target Stockholder Representative and the Parent a report which sets forth its resolution of the disputed items and amounts and its calculation of the Preliminary Closing Date Calculations. The final determination made by the Independent Expert with respect to each item of the Preliminary Closing Date Calculations in dispute shall be no more than nor more less than the amount claimed by the Target Stockholder Representative, on the one hand, and the Parent, on the other hand. The decision of the Independent Expert shall be final, conclusive and binding on the parties. The costs and expenses of the Independent Expert shall be borne one-half by the Parent and one-half by the Target Stockholders from the Target Stockholder Representative Expense Amount. On the Business Day following final determination of any adjustments to the Preliminary Closing Date Calculations pursuant to this Section 2.9(a)(iii) , the Parent and the Target Stockholder Representative shall recalculate and confirm the Total Common Stock Merger Consideration by using the items of the Preliminary Closing Date Calculations, as so adjusted, and the actual Enterprise Value, Target Stockholder Representative Expense Amount and Preferred Redemption Amount.

                              (iv) Following the Closing, the Parent shall not take any action with respect to the accounting books and records of the Target and its Subsidiaries on which the Preliminary Closing Date Calculations are to be based that are not consistent with the accounting principles, practices, methodologies and policies used in the preparation of the Financial Statements.

                    (b) Final Adjustment to Total Common Stock Merger Consideration .

                              (i) If the Post-Closing Adjustment is a positive amount, the Parent (or its designee) will pay to the Target Stockholder Representative such positive

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amount by wire transfer or delivery of other immediately available funds, in each case, within three (3) Business Days after the date on which the Total Common Stock Merger Consideration is finally determined pursuant to this Section 2.9 , together with interest thereon calculated from and including the Closing Date to but excluding the date of payment, at a rate per annum equal to the Prime Rate. The Target Stockholder Representative (or its designee) shall distribute such amount in accordance with Schedule 2.9(b) .

                              (ii) If the Post-Closing Adjustment is a negative amount, the Target Stockholder Representative will instruct the Escrow Agent to make payment out of the Escrow Funds of such negative amount to the Parent by wire transfer or delivery of other immediately available funds, in each case, within three (3) Business Days after the date on which the Total Common Stock Merger Consideration is finally determined pursuant to this Section 2.9 , together with interest thereon calculated from and including the Closing Date to but excluding the date of payment at a rate per annum equal to the Prime Rate.

          2.10 Rollover Shares or Options . To the extent that any Target Stockholder or any holder of In-the-Money Target Options, with the consent of Parent, elects to “roll over” all or any portion of its shares of Target Common Stock or In-the-Money Target Options into the Equity Securities of Parent, then the portion of the Total Common Stock Merger Consideration which such Person would have received therefor shall be deducted from the Total Common Stock Merger Consideration and the value of such amount shall be allocated to such Person in the form of Equity Securities of Parent on such terms and conditions as such Person and Parent may agree.

ARTICLE III

EFFECT OF THE MERGER

          3.1 Cancellation and Exercise of Target Options . The Target shall take all actions necessary so that (i) immediately prior to the Effective Time, each outstanding unexercised Target Option shall become fully vested and exercisable and (ii) at the Effective Time, such Target Options shall be cancelled. In consideration of such cancellation, each holder of In-the-Money Target Options shall be entitled to receive at the Effective Time from the Target a cash payment equal to the Total Common Stock Per Share Merger Consideration, minus the per share exercise price for the applicable In-the-Money Target Option, minus the lesser of (a) the Escrow Contribution Per Share Amount and (b) the difference between (x) the Total Common Stock Per Share Merger Consideration and (y) the per share exercise price for the applicable In-the-Money Target Option, subject to any required withholding Taxes. Target Disclosure Schedule 3.1 sets forth (a) the name of each holder of In-the-Money Target Options, (b) the number of In-the-Money Target Options held by such holder, and (c) the per share exercise price for such In-the-Money Target Options. Target Disclosure Schedule 3.1 shall be subject to amendment at least five (5) Business Days prior to the Closing in accordance with Section 6.5 .

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          3.2 Effect on Capital Stock of Merger Sub and the Target . As of the Effective Time, by virtue of the Merger and without any action on the part of the holder of any shares of Capital Stock of the Target or any shares of Capital Stock of Merger Sub:

                    (a) Capital Stock of Merger Sub . Each issued and outstanding share of common stock of Merger Sub shall be converted into and become one fully paid and nonassessable share of common stock, par value $.0001per share, of the Surviving Corporation.

                    (b) Cancellation of Treasury Stock . Each share of Target Common Stock and Target Preferred Stock that is owned by the Target shall automatically be cancelled and retired and shall cease to exist, and no consideration shall be delivered in exchange therefor.

                    (c) Conversion of Target Common Stock . Each share of Target Common Stock (other than those shares set forth in Section 3.2(b) and Dissenting Shares) shall be converted into the right to receive the Total Common Stock Per Share Merger Consideration subject to the terms in Section 3.3(a) . As of the Effective Time, all shares of Target Common Stock (other than those shares set forth in Section 3.2(b) and Dissenting Shares) shall no longer be outstanding and shall automatically be cancelled and retired and shall cease to exist, and each holder of any shares of Target Common Stock (other than those shares set forth in Section 3.2(b) and Dissenting Shares) shall cease to have any rights with respect thereto, except the right to receive the Total Common Stock Per Share Merger Consideration.

                    (d) Conversion of Preferred Stock . Each share of Target Preferred Stock (other than those shares set forth in Section 3.2(b) ) shall be converted into the right to receive the portion of the Preferred Redemption Amount, subject to the terms in Section 3.3(b) . As of the Effective Time, all shares of Target Preferred Stock shall no longer be outstanding and shall automatically be cancelled and retired and shall cease to exist, and each holder of any shares of Target Preferred Stock (other than those shares set forth in Section 3.2(b) ) shall cease to have any rights with respect thereto, except the right to receive the portion of the Preferred Redemption Amount.

                    (e) Exchange Procedures for Target Stock .

                              (i) Prior to the Effective Time, the Target shall deliver to each Target Stockholder the Merger Notice. At the Effective Time, other than with respect to Dissenting Shares, each Target Stockholder shall surrender to the Target for cancellation either: (A) Certificates representing all of the shares of Target Common Stock or Target Preferred Stock, as the case may be, for which such Target Stockholder is the beneficial owner and an accompanying stock power endorsed in blank or accompanied by duly executed assignment documents or (B) an affidavit and any other documents specified under Section 3.4 below.

                              (ii) Target Preferred Stockholders shall be entitled to receive in exchange for surrendered Certificates representing shares of Target Preferred Stock or

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such affidavit or other document specified in Section 3.4 below, and the Parent (or its designee) shall cause to be delivered to such Target Preferred Stockholder, as soon as reasonably practicable after the delivery by such Target Preferred Stockholder of such Certificates or affidavits for cancellation, the portion of the Preferred Redemption Amount that such Target Preferred Stockholder shall be entitled to receive pursuant to Section 3.3(b) below. Any Certificates representing Target Preferred Stock so surrendered shall forthwith be cancelled. Until so surrendered, each outstanding Certificate that, prior to the Effective Time, represented shares of Target Preferred Stock will be deemed from and after the Effective Time, for all purposes, to evidence the portion of the Preferred Redemption Amount for which such shares of Target Preferred Stock shall have been so converted pursuant to Section 3.3(b) below. In the event that a holder of Target Preferred Stock surrenders Certificates or affidavits representing Target Preferred Stock to the Surviving Corporation after the Effective Time, the Surviving Corporation shall promptly notify the Parent of such surrender and the Parent (or its designee) shall promptly deliver to such Target Preferred Stockholder the portion of the Preferred Redemption Amount, if any, to which such Target Preferred Stockholder is entitled to receive pursuant to Section 3.3(b) below.

                              (iii) Target Common Stockholders shall be entitled to receive in exchange for surrendered Certificates representing shares of Target Common Stock or such affidavit or other document specified in Section 3.4 below, and the Parent (or its designee) shall cause to be delivered to such Target Common Stockholder, as soon as reasonably practicable after the delivery by such Target Common Stockholder of such Certificates or affidavits for cancellation, the portion of the Total Common Stock Merger Consideration that such Target Common Stockholder shall be entitled to receive pursuant to Section 3.3(a) below. Any Certificates representing Target Common Stock so surrendered shall forthwith be cancelled. Until so surrendered, each outstanding Certificate that, prior to the Effective Time, represented shares of Target Common Stock will be deemed from and after the Effective Time, for all purposes, to evidence the portion of the Total Common Stock Merger Consideration into which such shares of Target Common Stock shall have been so converted pursuant to Section 3.3(a) below. In the event that a holder of Target Common Stock surrenders Certificates or affidavits representing Target Common Stock to the Surviving Corporation after the Effective Time, the Surviving Corporation shall promptly notify the Parent of such surrender and the Parent (or its designee) shall promptly deliver to such Target Common Stockholder the portion of the Total Common Stock Merger Consideration, if any, which such Target Common Stockholder is entitled to receive pursuant to Section 3.3(a) below.

          3.3 Surrender of Target Stock .

                    (a) Target Common Stock . Except as set forth in Section 3.4 and subject to the terms and conditions of this Agreement, in exchange for Certificates and/or affidavits representing all of its outstanding Target Common Stock (other than Dissenting Shares) delivered at or prior to the Closing, each Target Common Stockholder (other than Dissenting Stockholders) shall be entitled to receive an amount equal to the product of the Total Common Stock Per Share Merger Consideration multiplied by the number of

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shares of Target Common Stock held by such Target Common Stockholder less such stockholder’s Escrow Contribution Per Share Amount (subject, in the case of certain of the Windward Stockholders, to adjustment in accordance with Section 2.3(b) ) and the Parent (or its designee) shall, at the Closing, transfer such amount via wire transfer in immediately available funds.

                    (b) Target Preferred Stock . Except as set forth in Section 3.4 and subject to the terms and conditions of this Agreement, in exchange for Certificates and/or affidavits representing all of its outstanding Target Preferred Stock delivered at or prior to the Closing, each Target Preferred Stockholder shall be entitled to receive an amount in cash equal to that portion of the Preferred Redemption Amount and the Parent (or its designee) shall, at the Closing, transfer such amount via wire transfer in immediately available funds.

          3.4 Lost, Stolen or Destroyed Certificates . Subject to Section 3.1 and Section 3.2 , in the event that any Certificates shall have been lost, stolen or destroyed, in respect of such lost, stolen or destroyed Certificates, the holder shall deliver an affidavit of that fact; provided , however , that the Parent may, in its sole and absolute discretion, and as a condition precedent to the payment thereof, require the owner of a lost, stolen or destroyed Certificate representing shares of Target Common Stock or Target Preferred Stock, as the case may be, to deliver an indemnity in an amount equal to the portion of the Total Common Stock Merger Consideration and/or the Preferred Redemption Amount, as the case may be, to which such owner would be entitled in accordance with this Article III in respect of the shares of Target Common Stock or Target Preferred Stock, as the case may be, that is the subject of such affidavit of loss, theft or destruction as indemnity against any claim that may be made against the Parent with respect to the Certificates alleged to have been lost, stolen or destroyed.

          3.5 Appraisal Rights; Dissenting Shares . Any Target Common Stockholder who has properly demanded an appraisal and perfected the right to dissent under the DGCL and who has not effectively withdrawn or lost such rights as of the Effective Time (the “ Dissenting Shares ”) shall not be entitled to receive such Target Common Stockholder’s portion of the Total Common Stock Merger Consideration pursuant to Section 3.3(a) , and the holders thereof shall be entitled only to such rights as are granted by the DGCL in accordance with the terms of the DGCL. The Target shall give the Parent prompt notice upon receipt by the Target of any such written demands for payment of the fair value of such shares of Target Common Stock and of withdrawals of such demands and any other instruments provided by any Target Common Stockholder pursuant to the DGCL (any stockholder duly making such demands being hereafter called a “ Dissenting Stockholder ”). Any payments made in respect of Dissenting Shares shall be made by the Parent (or its Designee). If any Dissenting Stockholder shall effectively withdraw or lose (through failure to perfect or otherwise) his or its right to such payment at or prior to the Effective Time, such holder’s shares of Target Common Stock shall be converted into a right to receive such holder’s portion of the Total Common Stock Merger Consideration pursuant to Section 3.3(a) .

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          3.6 No Further Ownership Rights in Target Capital Stock . The Total Common Stock Merger Consideration and the Preferred Redemption Amount delivered in accordance with the terms of this Agreement shall be deemed to have been issued in full payment and satisfaction of all rights pertaining to the Target’s Equity Securities. At the Effective Time, there shall be no further registration of transfers on the stock transfer books of the Surviving Corporation of the shares of capital stock of the Target which were outstanding immediately prior to the Effective Time. If, after the Effective Time, Certificates representing shares of Target Common Stock or Target Preferred Stock, as the case may be, are presented to the Surviving Corporation for any reason, they shall be cancelled and converted into the right to receive the portion of the Total Common Stock Merger Consideration or the Preferred Redemption Amount, as the case may be, represented by such Certificate as provided in this Article III , except as otherwise provided by Applicable Law.

          3.7 Target Stockholder Representative .

                    (a) Windward has been appointed as and constitutes the “ Target Stockholder Representative ” and as such shall serve as and have all powers as agent and attorney-in-fact of each Target Stockholder, for and on behalf of such Target Stockholders for purposes of this Agreement, including without limitation: to give and receive notices and communications; to have the authority to calculate, negotiate and agree to the Total Common Stock Merger Consideration (including the components thereof) in accordance with Section 2.9 ; to sign receipts, consents or other documents and to effect the transactions contemplated hereby; to make (or cause to be made) distributions to the Target Common Stockholders and holders of In-the-Money Target Options and to take all actions it deems necessary or appropriate for the accomplishment of the foregoing, including without limitation retaining any attorneys, accountants or other advisors (collectively, “ Advisors ”) as Target Stockholder Representative sees fit. The Target Stockholder Representative may resign such position for any reason upon at least thirty (30) days prior written notice delivered to the Parent and the Target Stockholders. In such event, the Target Stockholders who held at least a majority of the Target Common Stock as of the Closing shall, by written notice to the Parent, appoint a successor Target Stockholder Representative within such thirty (30) day period. Notice or communications to or from any Target Stockholder Representative shall constitute notice to or from each of the Target Stockholders.

                    (b) The Target Stockholder Representative shall only be liable for any action taken or not taken as a Target Stockholder Representative solely to the extent such Target Stockholder Representative’s action constitutes gross negligence, fraud or willful misconduct. No bond shall be required of the Target Stockholder Representative, and the Target Stockholder Representative shall not receive compensation for its services. The Target Stockholder Representative shall incur no Liability with respect to any action taken or suffered by it in reliance upon any notice, direction, instruction, consent, statement or other document reasonably believed by it to be genuine and to have been signed by the proper person, nor for any other action or inaction, except to the extent caused by its own gross negligence, fraud or willful misconduct.

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                    (c) The Target Stockholder Representative shall be entitled to reimburse itself from the Target Stockholder Representative Expense Amount for any costs and expenses (“ Target Stockholder Representative Costs ”) incurred by the Target Stockholder Representative, including for the retention of Advisors. The Target Stockholder Representative shall maintain the Target Stockholder Representative Expense Amount until such time as the Target Stockholder Representative reasonably believes that it will not incur any additional Target Stockholder Representative Costs in order to satisfy its obligations hereunder (the “ Target Stockholder Representative Completion Date ”). As promptly as practicable following the Target Stockholder Representative Completion Date, the Target Stockholder Representative shall (i) provide each Target Stockholder with a written accounting of all Target Stockholder Representative Costs reimbursed to the Target Stockholder Representative from the Target Stockholder Representative Expense Amount and (ii) distribute to each Target Stockholder all remaining amounts, if any, of the Target Stockholder Representative Expense Amount in the same proportions that the Total Common Stock Merger Consideration was distributed to the Target Common Stockholders and the holders of Target Options in Section 2.3 and Section 3.1 above.

                    (d) A decision, act, consent or instruction of the Target Stockholder Representative shall constitute a decision of all the Target Stockholders, and shall be final, binding and conclusive upon each of the Target Stockholders, and the Parent, Merger Sub, Surviving Corporation and the Target may rely upon any decision, act, consent or instruction of the Target Stockholder Representative as being the decision, act, consent or instruction of each and all of the Target Stockholders. The Parent, Merger Sub and Surviving Corporation are relieved from any Liability to any Target Stockholder or any other Person for any acts done by them in accordance with such decision, act, consent or instruction of the Target Stockholder Representative.

                    (e) The Target Stockholders agree to take any and all action as may be reasonably required by the Target Stockholder Representative (including, without limitation, the execution of certificates, transfer documents, receipts, instruments, consents or similar documents) to effectuate the purposes of this Agreement.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES CONCERNING THE TARGET

          The Target represents and warrants to the Parent that each statement contained in this Article IV is true and correct, except as set forth in the disclosure schedule accompanying this Agreement, which is attached to this Agreement and is designated therein as being the “Target Disclosure Schedule” (the “ Target Disclosure Schedule ”). The Target Disclosure Schedule has been arranged, for purposes of convenience only, in sections corresponding to the Sections of this Article IV . Each section of the Target Disclosure Schedule shall be deemed to incorporate by reference all information disclosed in any other section of the Target Disclosure Schedule to the extent that the

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relevance of such information with respect to such other sections is reasonably clear or where specifically cross referenced.

          4.1 Organization, Good Standing, Authority and Enforceability .

                    (a) The Target is a corporation duly organized, validly existing and in good standing under the Laws of the State of Delaware, has all requisite corporate power to own, lease and operate its properties and assets and to carry on its business as now being conducted, and is duly qualified to do business and is in good standing as a foreign corporation in each jurisdiction in which it owns or leases property or assets or conducts any business so as to require such qualification, except where the failure to be so qualified would not, individually or in the aggregate, reasonably be expected to have a Target Material Adverse Effect.

                    (b) The Target has the requisite corporate power and authority to enter into this Agreement and each of the Ancillary Agreements to which it is or will be a party and to consummate the transactions contemplated hereby and thereby. The execution, delivery and performance by the Target of this Agreement and each of the Ancillary Agreements to which it is a party have been duly authorized by all necessary corporate action on the part of the Target, subject to the Requisite Stockholder Approval. This Agreement has been duly executed and delivered by the Target and when delivered, each of the Ancillary Agreements to which the Target is a party will be duly executed and delivered by the Target. Assuming due authorization; execution and delivery by the Parent, Merger Sub and each other party thereto, this Agreement constitutes, and when executed each of the Ancillary Agreements to which the Target is a party will constitute, the valid and binding obligation of the Target, enforceable against the Target in accordance with its terms, except as such enforceability may be limited by (a) bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to or affecting creditors’ rights generally, (b) the effect of general principles of equity, whether enforcement is considered in a proceeding in equity or at law, and (c) the unenforceability under certain circumstances under law or court decisions of provisions providing for the indemnification of or contribution to a party with respect to a liability where such indemnification or contribution is contrary to public policy.

          4.2 Capitalization . The authorized Capital Stock of the Target consists of 1,200,000 shares of Target Common Stock, of which 220,011.3537 shares are issued and outstanding, and 6,229,000 shares of Target Preferred Stock, of which (i) 2,100,000 shares are designated as Series B Preferred Stock, 1,534,777.6531 shares of which are issued and outstanding, (ii) 500,000 shares are designated as Series C Preferred Stock, 10,000 shares of which shares are issued and outstanding, (iii) 300,000 shares are designated as Series E Preferred Stock, 237,762.9995 shares of which are issued and outstanding, (iv) 2,329,000 shares are designated as Series G Preferred Stock, of which no shares are issued and outstanding, (v) 150,000 shares are designated as Series H Preferred Stock, 57,029.008 shares of which are issued and outstanding, (vi) 200,000 shares are designated as Series I Preferred Stock, 100,226.3549 shares of which are

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issued and outstanding, (vii) 300,000 shares are designated as Series J Preferred Stock, 216,912.2590 shares of which are issued and outstanding, and (iv) 350,000 shares are designated as Series K Preferred Stock, of which no shares are issued and outstanding. All of the outstanding shares of Target Common Stock and Target Preferred Stock have been duly authorized, validly issued and fully paid and are nonassessable, and have been issued and transferred free and clear of any preemptive or similar rights. Target Disclosure Schedule 4.2 sets forth a correct and complete description of the outstanding Equity Securities of the Target. Except as set forth on Target Disclosure Schedule 4.2 , there are no (i) outstanding obligations of the Target (contingent or otherwise) to repurchase, redeem or otherwise acquire or retire any of its Equity Securities, (ii) voting trusts, proxies or other agreements among the Target’s stockholders with respect to the voting or transfer of the Target’s Equity Securities, or (iii) outstanding instruments of Indebtedness having the right to vote on any matters on which the Target’s stockholders may vote. As of the date hereof, there are options to acquire 26,860 shares of Target Common Stock outstanding under the Target Stock Option Plans.

          4.3 Subsidiaries of the Target .

                    (a) Each Subsidiary of the Target is duly organized, validly existing and in good standing (and with respect to any Subsidiary located in the United Kingdom, has complied with all material legal requirements in its jurisdiction of organization) under the Laws of the jurisdiction of its organization or formation, has all requisite corporate or other organizational power to own, lease and operate its properties and assets and to carry on its business as now being conducted, and is duly qualified to conduct business and is in good standing in each jurisdiction in which it owns or leases property or assets or conducts any business so as to require such qualification, which jurisdictions are set forth on Target Disclosure Schedule 4.3(a) , except where the failure to be so qualified would not, individually or in the aggregate, reasonably be expected to have a Target Material Adverse Effect.

                    (b) The Target Disclosure Schedule contains a true and complete list of the Subsidiaries of the Target and sets forth, with respect to each such Subsidiary, the jurisdiction of organization or formation, the authorized and outstanding Capital Stock of such Subsidiary and the beneficial and record owner(s) of record of such outstanding Capital Stock. All of the outstanding shares of Capital Stock of the Subsidiaries of the Target (collectively, the “ Subsidiary Shares ”) are duly authorized, validly issued, fully paid and nonassessable, and are owned, either directly or indirectly, by the Target free and clear of all Liens other than Permitted Liens.

                    (c) Other than the Subsidiary Shares set forth in the Target Disclosure Schedule , no Subsidiary of the Target has outstanding any shares of Capital Stock or any other Equity Securities.

          4.4 No Conflicts; Consents .

                    (a) The execution, delivery and performance of this Agreement and the Ancillary Agreements by the Target do not, and the consummation of the transactions

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contemplated hereby will not, (i) violate any of the provisions of any of the Organizational Documents of the Target or any of its Subsidiaries, (ii) assuming compliance by the Target with the matters referred to Section 4.4(b) , violate or conflict with any Law, Authorization or Order applicable to the Target or any of its Subsidiaries, (iii) result in the creation of any Liens (other than any Permitted Lien or any Lien created by or through the Parent or Merger Sub) upon any of the assets or properties owned or used by the Target or any of its Subsidiaries, or (iv) conflict with, or result in any breach of, any of the terms or conditions of, or constitute (whether with or without the passage of time, the giving of notice or both) a default or give rise to any right of termination, cancellation or acceleration under any provision of any Contract to which the Target or any if its Subsidiaries is a party, except, in the case of clauses (ii) and (iv) above, where such violation or conflict is set forth on the Target Disclosure Schedule or would not, individually or in the aggregate, reasonably be expected to have a Target Material Adverse Effect.

                    (b) No Authorization or Order of, registration, declaration or filing with, or notice to any Governmental Entity or other Person is required by the Target or any of its Subsidiaries in connection with the execution, delivery and performance of this Agreement and the Ancillary Agreements and the consummation of the transactions contemplated hereby and thereby except for the notification and/or approval requirements of the HSR Act and for such Authorizations, Orders, registrations, declarations, filings and notices the failure to obtain which would not, individually or in the aggregate, reasonably be expected to be material to the Target and its Subsidiaries, taken as a whole.

          4.5 Financial Statements . True and complete copies of (i) the audited consolidated balance sheets of the Target and its consolidated Subsidiaries as of December 31, 2004 and December 31, 2005, and the related audited statements of income and cash flows for the respective twelve-month periods then ended, together with a copy of Ernst & Young LLP’s unqualified opinions with respect thereto and (ii) the unaudited consolidated balance sheet of the Target and its consolidated Subsidiaries as at the Balance Sheet Date, together with consolidated statements of income and cash flows for the three-month period ended on the Balance Sheet Date, are included in the Target Disclosure Schedule (such financial statements are collectively re