STOCK PURCHASE AGREEMENT

Stock Purchase Agreement

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ON ASSIGNMENT INC | VSS HOLDING, INC.

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Title: STOCK PURCHASE AGREEMENT
Governing Law: Delaware Date: 12/22/2006
Industry: Business Services Law Firm: Latham & Watkins LLP Sector: Services

Exhibit 2.1

STOCK PURCHASE AGREEMENT

BY AND AMONG

ON ASSIGNMENT, INC.

VSS HOLDING, INC.

AND

THE STOCKHOLDERS AND OPTIONHOLDERS
NAMED ON SCHEDULE I HERETO

December 20, 2006

TABLE OF CONTENTS

		Page
ARTICLE I	PURCHASE AND SALE OF COMPANY SECURITIES	1

1.1	Purchase and Sale of the Common Shares from the Stockholders	1
1.2	Further Assurances	1
1.3	The Closing	2
1.4	Actions at the Closing	2
1.5	Purchase Price for the Company Securities	2
1.6	Treatment of Company Stock Options	3
1.7	Adjustments to Purchase Price	4
1.8	Escrow	5
1.9	Earnout	6
1.10	Securityholders’ Representative	9
1.11	Currency	11
1.12	Withholding	11

ARTICLE II	REPRESENTATIONS AND WARRANTIES OF THE SELLING SECURITYHOLDERS REGARDING THE SELLING SECURITYHOLDERS AND THE COMPANY SECURITIES	11

2.1	Selling Securityholders Representations and Warranties	11

ARTICLE III	REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLING SECURITYHOLDERS REGARDING THE COMPANY	13

3.1	Organization, Qualification and Corporate Power	13
3.2	Capitalization	14
3.3	Authorization of Transaction	15
3.4	Noncontravention	15
3.5	Undisclosed Liabilities	16
3.6	Tax Matters	16
3.7	Assets	18
3.8	Owned Real Property	18
3.9	Real Property Leases	18
3.10	Intellectual Property	19
3.11	Contracts	19
3.12	Accounts Receivable	21
3.13	Powers of Attorney	21
3.14	Insurance	21
3.15	Litigation	21
3.16	Employees	21
3.17	Employee Benefits	23
3.18	Environmental Matters	25
3.19	Legal Compliance	25

3.20	Existing Customers and Suppliers	25
3.21	Permits	26
3.22	Certain Business Relationships With Affiliates, Officers and Directors	26
3.23	Books and Records	26
3.24	Brokers’ Fees	26
3.25	Financial Statements	26
3.26	Guarantees	27
3.27	Earnout Payments	27

ARTICLE IV	REPRESENTATIONS AND WARRANTIES OF THE BUYER	27

4.1	Organization, Qualification and Corporate Power	27
4.2	Authorization of Transaction	27
4.3	Noncontravention	27
4.4	Litigation	28
4.5	Investment Intent	28
4.6	Sophistication of the Buyer	28
4.7	Buyer Financial Capacity	28
4.8	SEC Filings; Financial Statements	28

ARTICLE V	COVENANTS	29

5.1	Closing Efforts	29
5.2	Governmental and Third-Party Notices and Consents	29
5.3	Operation of Business	29
5.4	Access to Information	32
5.5	Expenses	32
5.6	Director and Officer Indemnification	32
5.7	Employment Matters.	33
5.8	Company ESOP Matters	34
5.9	Tax Matters	35
5.10	FIRPTA	38
5.11	Withholding Forms	38
5.12	Financial Statements	38
5.13	Valid Issuance of Buyer Common Stock	39
5.14	Registration of Buyer Common Stock	39
5.15	Accounts Receivable	40
5.16	Guarantees	40
5.17	Professional Liability Insurance	40

ARTICLE VI	CONDITIONS TO CLOSING	40

6.1	Conditions to Obligations of the Buyer	40
6.2	Conditions to Obligations of the Company and the Selling Securityholders	42

ARTICLE VII	INDEMNIFICATION	43

7.1	Indemnification by the Selling Securityholders	43
7.2	Indemnification by the Buyer	43
7.3	Indemnification Claims	44
7.4	Survival	46
7.5	Limitations	47
7.6	Treatment of Indemnity Payments	49
7.7	Subrogation of Rights	49

ARTICLE VIII	TERMINATION	49

8.1	Termination of Agreement	49
8.2	Effect of Termination	50

ARTICLE IX	DEFINITIONS	50

ARTICLE X	MISCELLANEOUS	59

10.1	Press Releases and Announcements	59
10.2	Reliance	59
10.3	No Third Party Beneficiaries	60
10.4	Entire Agreement	60
10.5	Succession and Assignment	60
10.6	Counterparts and Facsimile Signature	60
10.7	Headings	60
10.8	Notices	60
10.9	Governing Law	61
10.10	Amendments and Waivers	61
10.11	Severability	62
10.12	Submission to Jurisdiction	62
10.13	Construction	62
10.14	Specific Performance	62

iii

Schedule I		List of Selling Securityholders

Schedule II		List of Employees of the Company

Schedule 1.7(a)		Estimated Closing Balance Sheet and Estimated Working Capital

Schedule 1.9		Earnout Calculation

Schedule 1.9(a)		Certain Earnout Distribution Arrangements

Schedule 1.9(c)		Budgeted EBITDA

Disclosure Schedule		Disclosures and Exceptions to Selling Securityholders and Company Representations and Warranties

STOCK PURCHASE AGREEMENT

This Stock Purchase Agreement (this “ Agreement ”) is made as of December 20, 2006 by and among On Assignment, Inc., a Delaware corporation (the “ Buyer ”), VSS Holding, Inc., a Nevada corporation (the “ Company ”), the stockholders of the Company listed on Schedule I attached hereto (individually, a “ Stockholder ” and, collectively, the “ Stockholders ”), who own all of the issued and outstanding capital stock of the Company, and each holder of a Company Stock Option (as defined herein) listed on Schedule I attached hereto (individually, an “ Optionholder ” and, collectively, the “ Optionholders ”). For purposes of this Agreement, the term “ Selling Securityholders ” shall refer to the Stockholders and the Optionholders, collectively.

PRELIMINARY STATEMENT

Each of the Stockholders owns the number of issued and outstanding shares of the capital stock of the Company (collectively, the “ Common Shares ”) set forth opposite his, her or its name on Schedule I attached hereto, which Common Shares in the aggregate represent all of the issued and outstanding shares of capital stock of the Company, and each Optionholder is the rightful holder of outstanding Company Stock Options representing the right to acquire the number of Common Shares upon exercise of such Company Stock Option set forth opposite his or her name on Schedule I attached hereto, which in the aggregate represent all outstanding Company Stock Options.

The Buyer desires to purchase, and the Selling Securityholders desire to sell, the Company Securities (as defined herein) for the consideration set forth below, subject to the terms and conditions of this Agreement.

Now, therefore, in consideration of the representations, warranties and covenants herein contained, the Parties agree as follows.

ARTICLE I
PURCHASE AND SALE OF COMPANY SECURITIES

1.1 Purchase and Sale of the Common Shares from the Stockholders . Subject to and upon the terms and conditions of this Agreement, at the Closing, each Stockholder shall sell, transfer, convey, assign and deliver to the Buyer, and the Buyer shall purchase, acquire and accept from each Stockholder, all of the Common Shares owned by such Stockholder, as set forth opposite such Stockholder’s name on Schedule I attached hereto. At the Closing, each Stockholder shall deliver to the Buyer appropriate evidence of the transfer of the Common Shares owned by such Stockholder to the Buyer.

1.2 Further Assurances . At any time and from time to time after the Closing, at the Buyer’s request and without further consideration, each of the Selling Securityholders shall promptly execute and deliver such instruments of sale, transfer, conveyance, assignment and confirmation, and take all such other action as the Buyer may reasonably request, more effectively to transfer, convey and assign to the Buyer, and to confirm the Buyer’s title to, all of the Common Shares owned by any Stockholder, to put the Buyer in actual possession and operating control of the assets, properties and business of the Company, to assist the Buyer in

exercising all rights with respect thereto and to carry out the purpose and intent of this Agreement and the transactions contemplated hereby.

1.3 The Closing . The Closing shall take place at the offices of Latham & Watkins LLP, 633 West Fifth Street, Suite 4000, Los Angeles, CA, commencing at 9:00 a.m. local time on the Closing Date.

1.4 Actions at the Closing . At the Closing:

(a) the Company and the Selling Securityholders shall deliver to the Buyer the various certificates, instruments and documents referred to in Section 6.1;

(b) the Buyer shall deliver to the Company the various certificates, instruments and documents referred to in Section 6.2;

(c) each of the Stockholders shall deliver to the Buyer all of his, her or its Common Shares, with appropriate instruments of transfer; and

(d) the Buyer shall make the deliveries provided in Section 1.5 and Section 1.6.

1.5 Purchase Price for the Company Securities .

(a) The aggregate purchase price to be paid by the Buyer in respect of all of the outstanding shares of capital stock of the Company and all of the outstanding Company Stock Options shall be Forty-One Million Dollars ($41,000,000) (the “ Purchase Price ”), subject to adjustment pursuant to Section 1.7 hereof. The Purchase Price shall be payable in the manner described in paragraph (b) of this Section 1.5 and, with respect to Company Stock Options outstanding immediately prior to the Closing Date, in the manner described in Section 1.6(b).

(b) At the Closing, the Buyer shall deliver:

(i) to each Stockholder, the portion of the Purchase Price (after reduction of the Purchase Price by the payments specified in (ii) through (vi) below) due to such Stockholder, based on the percentage set forth opposite each such person’s name on Schedule I attached hereto, by check or wire transfer of immediately available funds to be allocated among the accounts designated by each Stockholder at least two Business Days prior to Closing;

(ii) to the Escrow Agent, an amount in cash equal to $4,100,000 (the “ Escrow Cash ”), to be invested pursuant to the terms of the Escrow Agreement, as a reserve to satisfy all or part of any claims for indemnity pursuant to Article VII and any amounts owed to the Buyer under Section 1.7(b);

(iii) to the Persons designated for payment by the Securityholders’ Representative, the Estimated Closing Expenses;

(iv) to the account designated by, and accessible to, the holders’ Security Representative, the Representative Fund;

(v) to the account designated by Therus C. Kolff, the Settlement Amount; and

(vi) to the applicable debt holders, the Debt Repayment.

1.6 Treatment of Company Stock Options .

(a) Effective immediately prior to the Closing, each Company Stock Option then outstanding shall become fully vested and exercisable with respect to all Common Shares subject thereto and, at the Closing, each unexercised Company Stock Option (or portion thereof) then outstanding shall be cancelled, terminated and extinguished in exchange for the right to receive the consideration set forth in Section 1.6(b) below, subject to Section 1.12 below. Upon the cancellation of a Company Stock Option, each Optionholder shall cease to have any rights with respect to a Company Stock Option, except the right to receive the consideration payable with respect thereto pursuant to Section 1.6(b) below. Except as provided in Section 1.7(b)(iv) and Section 1.9(b)(iii), hereof, no interest will be paid or accrue on the cash payable upon surrender of any Company Stock Option. Prior to the Closing, the Board of Directors of the Company shall take all such actions as it deems necessary or desirable to effectuate the provisions of this Section 1.6(a) and to terminate the Company Stock Plan effective as of the Closing, including without limitation, obtaining any consents necessary to effectuate the foregoing.

(b) Each Optionholder shall, with respect to each unexercised Company Stock Option (or portion thereof) cancelled in accordance with Section 1.6(a), be entitled to receive, subject to Section 1.12 below: (i) from the Buyer at the Closing, the portion of the Purchase Price (after reduction of the Purchase Price by the payments specified in Section 1.5(b)(ii) through (vi)) due to such Optionholder, based on the percentage set forth opposite each such person’s name on Schedule I attached hereto, by check or wire transfer of immediately available funds to be allocated among the accounts designated at least two Business Days prior to Closing by each Optionholder; (ii) if, upon final determination, Closing Working Capital exceeds Estimated Closing Working Capital, on the date set forth in Section 1.7(b)(iv) hereof, such Optionholder’s Pro Rata Share of such excess, determined in accordance with Section 1.7(b)(iv) hereof; (iii) upon any disbursement of funds to Securityholders from the Escrow Fund pursuant to the Escrow Agreement, such Optionholder’s Pro Rata Share of such disbursement; (iv) such Optionholder’s Pro Rata Share of any disbursement of funds to Securityholders from the Representative Fund; and (v) at such time or times as any amounts become payable pursuant to Section 1.9 hereof, an amount equal to such Optionholder’s Pro Rata Share of any Earnout Amount paid thereunder.

1.7 Adjustments to Purchase Price .

(a) Closing Date Purchase Price Adjustment .

(i) Not later than three Business Days prior to the Closing Date, the Company shall provide the Buyer with an estimated balance sheet of the Company as of the closing of business on the Closing Date (the “ Estimated Closing Balance Sheet ”) and a statement of the estimated Closing Working Capital derived from the Estimated Closing Balance Sheet (“ Estimated Closing Working Capital ”). The Estimated Closing Balance Sheet and Estimated

Closing Working Capital shall be prepared by the Company in accordance with Schedule 1.7(a) attached hereto.

(ii) If Estimated Closing Working Capital is less than Target Working Capital, then the Purchase Price payable at Closing will be decreased by the positive difference between Estimated Closing Working Capital and Target Working Capital. If Estimated Closing Working Capital is greater than Target Working Capital, the Buyer shall retain the excess.

(b) Post-Closing Date Purchase Price Adjustment .

(i) Following the Closing, the Purchase Price shall be adjusted as provided herein to reflect the difference between Closing Working Capital and Estimated Closing Working Capital.

(ii) Within 30 days following the Closing Date, the Buyer shall deliver to the Securityholders’ Representative a balance sheet of the Company as of the closing of business on the Closing Date (the “ Closing Balance Sheet ”), reviewed by the Company’s accountants, and a statement of Closing Working Capital derived from the Closing Balance Sheet (the “ Closing Working Capital Statement ”). The Closing Balance Sheet and the Closing Working Capital Statement shall be prepared in accordance with GAAP and Schedule 1.7(a) attached hereto; provided, that, to the extent that Schedule 1.7(a) differs from GAAP, Schedule 1.7(a) shall govern. Immediately following delivery of the Closing Balance Sheet and the Closing Working Capital Statement, the Securityholders’ Representative (and its representative) shall have reasonable access to the books and records (including financial statements) of the Company during regular business hours to the extent necessary to verify the Buyer’s preparation of the Closing Balance Sheet and its computation of the Closing Working Capital Statement.

(iii) The Closing Balance Sheet and the Closing Working Capital Statement (and the computation of Closing Working Capital indicated thereon) delivered to the Securityholders’ Representative by the Buyer shall be conclusive and binding upon the parties unless the Securityholders’ Representative, within 30 days after delivery to the Securityholders’ Representative of the Closing Balance Sheet and the Closing Working Capital Statement, notifies the Buyer in writing that the Securityholders’ Representative disputes any of the amounts set forth therein, specifying the nature of the dispute and the basis therefor. The parties shall in good faith attempt to resolve any dispute and, if the parties so resolve all disputes, the Closing Balance Sheet and the Closing Working Capital Statement (and the computation of Closing Working Capital indicated thereon), as amended to the extent necessary to reflect the resolution of the dispute, shall be conclusive and binding on the parties. If the parties do not reach agreement in resolving the dispute within 30 days after notice is given by the Securityholders’ Representative to the Buyer pursuant to the second preceding sentence, the parties shall submit the dispute to a nationally recognized independent accounting firm which is mutually agreeable to the parties (the “ Arbiter ”) for resolution. If the parties cannot agree on the selection of an independent accounting firm to act as the Arbiter, the parties shall request the AAA to appoint such firm, and such appointment shall be conclusive and binding on the parties. Promptly, but no later than 20 days after acceptance of his or her appointment as the Arbiter, the Arbiter shall determine (it being understood that in making such determination, the Arbiter shall be functioning as an expert and not as an arbitrator), based solely on written submissions by the

Buyer and the Securityholders’ Representative, and not by independent review, only those issues in dispute and shall render a written report as to the resolution of the dispute and the resulting computation of the Closing Working Capital which shall be conclusive and binding on the parties absent manifest error. All proceedings conducted by the Arbiter shall take place in Salt Lake City, Utah. In resolving any disputed item, the Arbiter (x) shall be bound by the provisions of this Section 1.7 and (y) may not assign a value to any item greater than the greatest value for such items claimed by either party or less than the smallest value for such items claimed by either party. The fees, costs and expenses of the Arbiter shall be equally allocated to and borne by the Buyer and the Selling Securityholders.

(iv) Upon final determination of Closing Working Capital as provided in Section 1.7(b)(iii) above, (A) if Closing Working Capital is greater than Estimated Closing Working Capital, the Buyer shall retain the excess and (B) if Closing Working Capital is less than Estimated Closing Working Capital, the Purchase Price shall be decreased by the excess of Estimated Closing Working Capital over Closing Working Capital, and the Selling Securityholders shall pay to the Buyer the amount of such difference, together with interest thereon from the Closing Date to the date of payment thereof as determined below, out of the Escrow Cash as set forth in Section 1.7(b)(v). If such amount is in excess of the Escrow Cash, then each Selling Securityholder shall pay to the Buyer its Pro Rata Share of such excess. Interest shall be equal to the prime rate as set forth in The Wall Street Journal on the Closing Date.

(v) If an amount is payable to the Buyer pursuant to Section 1.7(b)(iv), such amount shall be paid to the Buyer within two Business Days after a final determination, first by the Escrow Agent from the Escrow Cash, and then any earnout payment due to the Selling Securityholders pursuant to Section 1.9 hereof shall be paid in cash directly to the Escrow Agent as Escrow Cash to the extent of the amount of any payment made to the Buyer by the Escrow Agent from the Escrow Cash pursuant to this Section 1.7(b)(v).

1.8 Escrow . On the Closing Date, the Buyer shall deliver to the Escrow Agent the Escrow Cash for the purpose of securing the indemnification obligations of the Selling Securityholders set forth in Article VII of this Agreement and the payment of any amounts owed to the Buyer under Section 1.7(b). The Escrow Cash shall be held as a trust fund and shall not be subject to any lien, attachment, trustee process or any other judicial process of any creditor of any Party, and shall be held and disbursed solely for the purposes and in accordance with the terms of the Escrow Agreement.

1.9 Earnout .

(a) Earnout Payment . In addition to the Purchase Price payable to the Selling Securityholders pursuant to Sections 1.5, 1.6 and 1.7 hereof, but subject to Schedule 1.9(a) attached hereto (provided, that the Buyer will have no liability to any third party as a result of such payments), each Selling Securityholder shall be entitled to receive its Pro Rata Share of any Earnout Amount paid hereunder. Such amounts shall be paid by the Buyer to each Selling Securityholder in (i) cash and (ii) at the Buyer’s option, up to a maximum of 40% of such amount to be paid to each Selling Securityholder (without considering the portion of the Earnout Amount, if any, paid to the Escrow Agent as Escrow Cash pursuant to Section 1.7(b)(v)) may be

paid in Buyer Common Stock (at the Buyer Common Stock Price), provided , that , any payment to the ESOP Stockholder pursuant to this Section 1.9 shall be made by the Buyer in cash. No Other Selling Securityholder shall be required to accept more than 40% of its Pro Rata portion of the Earnout Amount (without considering the portion of the Earnout Amount, if any, paid to the Escrow Agent as Escrow Cash pursuant to Section 1.7(b)(v)) in Buyer Common Stock.

(b) Time for Determination .

(i) Within 30 days following the completion of the audited financial statements of the Buyer for each of the Earnout Periods, the Buyer shall determine the Earnout EBITDA for such Earnout Period (the “ Applicable Earnout EBITDA ”) and the Earnout Amount for such Earnout Period (the “ Applicable Earnout Amount ”) and deliver to the Securityholders’ Representative a copy of such computations. Such computations delivered to the Securityholders’ Representative by the Buyer shall be conclusive and binding upon the parties, unless the Securityholders’ Representative, within 30 days after delivery to the Securityholders’ Representative of such computations, notifies the Buyer in writing that the Securityholders’ Representative disputes any of the amounts set forth therein, specifying the nature of the dispute and the basis therefor. Immediately following delivery of the computations of the Applicable Earnout EBITDA and the Applicable Earnout Amount, the Securityholders’ Representative and its representatives shall have reasonable access to the books and records (including financial statements) of the Company during regular business hours to the extent necessary to verify the Buyer’s computation of the Applicable Earnout EBITDA and the Applicable Earnout Amount.

(ii) The parties shall in good faith attempt to resolve any dispute and, if the parties so resolve all disputes, the computations of the Applicable Earnout EBITDA and the Applicable Earnout Amount, as amended to the extent necessary to reflect the resolution of the dispute, shall be conclusive and binding on the parties. If the parties do not reach agreement in resolving the dispute within 30 days after notice is given by the Securityholders’ Representative to the Buyer pursuant to Section 1.9(b)(i) above, the parties shall submit the dispute to a nationally recognized independent accounting firm which is mutually agreeable to the parties (the “ Earnout Arbiter ”) for resolution. If the parties cannot agree on the selection of an independent accounting firm to act as the Earnout Arbiter, the parties shall request the AAA to appoint such firm, and such appointment shall be conclusive and binding on the parties. Promptly, but no later than 20 days after acceptance of his or her appointment as Earnout Arbiter, the Earnout Arbiter shall determine (it being understood that in making such determination, the Earnout Arbiter shall be functioning as an expert and not as an arbitrator), based solely on written submissions by the Buyer and the Securityholders’ Representative, and not by independent review, only those issues in dispute and shall render a written report as to the resolution of the dispute and the resulting computation of the Applicable Earnout Amount, which shall be conclusive and binding on the parties absent manifest error. All proceedings conducted by the Earnout Arbiter shall take place in Salt Lake City, Utah. In resolving any disputed item, the Earnout Arbiter (x) shall be bound by the provisions of this Section 1.9(b)(ii) and (y) may not assign a value to the Applicable Earnout Amount greater than the greatest value for such item claimed by either party or less than the smallest value for such item claimed by either party. The fees, costs and expenses of the Earnout Arbiter shall be equally allocated to and borne by the Buyer and the Selling Securityholders.

(iii) The Applicable Earnout Amount shall be paid to the Selling Securityholders according to each Selling Securityholder’s Pro Rata Share as follows: (A) as to any amounts that are not subject to dispute as set forth in a notice of the Securityholders’ Representative pursuant to Section 1.9(b)(ii) above, within five Business Days after the expiration of the time during which the Securityholders’ Representative may object to the Buyer’s calculation of the Applicable Earnout Amount; and (B) as to any amounts that are subject to dispute as set forth in a notice of the Securityholders’ Representative pursuant to Section 1.9(b)(ii) above, within five Business Days following the date that the determination of the disputed portion of the Applicable Earnout Amount shall become binding and conclusive in accordance with Sections 1.9(b)(i) or 1.9(b)(ii) above, as the case may be, and in each case together with interest thereon from the date payment is due following computations and resolutions of disputes to the date of payment thereof. Interest shall be equal to the prime rate as set forth in the Wall Street Journal on the date the payment is due.

(c) The Parties hereto acknowledge that the payment of the Applicable Earnout Amount is contingent upon the future operations of the Acquired Companies. Accordingly, the Buyer will act in good faith to operate the Acquired Companies in a manner consistent with its Ordinary Course of Business (except as otherwise contemplated by this Agreement) and during the Earnout Periods shall:

(i) operate the Acquired Companies as a distinct division, with separate books and records, including periodic financial statements;

(ii) not take funds from the Acquired Companies so that they have inadequate capital to conduct their business; and

(iii) the Buyer shall permit the Company to have access to funds, as may be required by the Company from time to time in the Ordinary Course of Business, from the Buyer or under the credit arrangements obtained by the Buyer if, during any applicable Earnout Period, such credit arrangements by the Buyer have contractually limited or precluded the Company from obtaining financing separate and apart from the Buyer.

Notwithstanding the foregoing, upon an Acceleration Event, the Buyer shall pay the Selling Securityholders, upon five Business Days notice, the Liquidated Earnout Amount in cash.

For purposes of this Section 1.9(c), each of the following terms shall have the meaning set forth below:

“ Acceleration Event ” means the occurrence of any of the following events: (i) the Buyer materially changes the business plan or operations of the Acquired Companies in a manner that could reasonably be expected to impair the ability of the Company to reach the applicable Earnout Amount; (ii) at any time the Buyer is in material breach of Sections 1.9(c)(i), 1.9(c)(ii), or 1.9(c)(iii) and such breach has not been cured within 30 days of receipt by the Buyer of notice of such breach; or (iii) a Change of Control in Buyer occurs.

“ Change in Control ” means the occurrence of any of the following:

a merger or consolidation in which the Buyer is not the surviving entity, except for a transaction the principal purpose of which is to change the state of the Company’s incorporation or a transaction in which 50% or more of the surviving entity’s outstanding voting stock following the transaction is held by holders who held 50% or more of the Buyer’s outstanding voting stock prior to such transaction; or

the sale, transfer or other disposition of all or substantially all of the assets of the Buyer; or

any reverse merger in which the Buyer is the surviving entity, but in which 50% or more of the Buyer’s outstanding voting stock is transferred to holders different from those who held the stock immediately prior to such merger; or

the acquisition by any person (or entity) directly or indirectly of 50% or more of the combined voting power of the outstanding shares of Buyer capital stock; or

individuals who constitute the Board at the date of this Agreement cease for any reason to constitute a majority thereof; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Buyer’s stockholders, was approved by a vote of at least a majority of the directors then comprising the Board on the date hereof (the “ Incumbent Board ”) shall be considered as though such individual were a member of the Incumbent Board, but excluding, for purposes of this proviso, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board.

“ Earnout Liquidation Factor ” means (a) in the event of an Acceleration Event occurring after June 30, 2007, the average of (i) the quotient of the last fiscal quarter’s actual EBITDA divided by that fiscal quarter’s budgeted EBITDA and (ii) the quotient of the second to the last fiscal quarter’s actual EBITDA divided by that fiscal quarter’s budgeted EBITDA (but not greater than 1.0) or (b) in the event of an Acceleration Event occurring prior to June 30, 2007, the quotient of the first quarter 2007’s actual EBITDA divided by the first quarter 2007’s budgeted EBITDA (but not greater than 1.0). “Last fiscal quarter” and “second to last fiscal quarter” as used herein shall be in relation to the time of the Acceleration Event and “budgeted EBITDA” shall be the quarterly budgeted EBITDA amounts for 2007 and 2008 set forth on Schedule 1.9(c) hereto, unless and until modified by agreement of the Buyer and the Securityholders’ Representative.

“ Liquidated Earnout Amount ” means an amount equal to the amount derived by applying Schedule 1.9 assuming, (a) for an Acceleration Event occurring in 2007, that (i) the 2007 Earnout EBITDA equals the product of (x) the 2007 Maximum Target and (y) the Earnout Liquidation Factor and (ii) the 2008 Earnout EBITDA equals the product of (x) the 2008 Maximum Target and (y) the Earnout Liquidation Factor and (b) for an Acceleration Event occurring in 2008, that (i) the 2008 Earnout EBITDA equals the product of (x) the total budgeted EBITDA for 2008 as agreed upon in good faith by the Buyer and the Securityholder’s Representative and (y) the Earnout Liquidation Factor. “EBITDA” as used in this definition

shall be determined in a manner consistent with the calculation of “Earnout EBITDA” in Schedule 1.9 .

(d) Acknowledgement of the Parties . The Buyer, the Company and the Selling Securityholders acknowledge that: (i) the payment of the Applicable Earnout Amount hereunder is an integral part of the consideration to be received by the Stockholders and the Optionholders pursuant to this Agreement and the transactions contemplated hereby (and that the Applicable Earnout Amount could be zero); (ii) the Applicable Earnout Amount is not dependent upon the operating results of the Buyer or any subsidiary or Affiliate of the Buyer (other than the Acquired Companies); (iii) the right of the Selling Securityholders to a portion of the Applicable Earnout Amount is not transferable other than by operation of Law; (iv) the right of the Selling Securityholders to a portion of the Applicable Earnout Amount shall not be represented by a certificate or other instrument, shall not represent an ownership interest in the Buyer and shall not entitle any Selling Securityholder to any rights common to any holder of Buyer Common Stock; and (v) the right of the Selling Securityholders to payment of the Applicable Earnout Amount shall not bear any interest other than in accordance with Section 1.9(b)(iii).

1.10 Securityholders’ Representative .

(a) The Selling Securityholders hereby appoint, authorize and empower Mark S. Brouse (Mr. Brouse in such capacity and any successor appointed pursuant to or in accordance with Section 1.10(b), the “ Securityholders’ Representative ”) to act on behalf of each Selling Securityholder in connection with, and to facilitate the consummation of the transactions under, this Agreement, which shall include the power and authority (i) to make all decisions relating to the determination of any adjustments to the Purchase Price, (ii) to take all action necessary in connection with the waiver of any condition to the obligations of the Selling Securityholders to consummate the transactions contemplated hereby, or the defense and/or settlement of any claims for which the Selling Securityholders may be required to indemnify the Buyer pursuant to Article VII hereof, provided, that the settlement affects the Selling Securityholders on a proportionate basis with no individual Selling Securityholder becoming liable for more than his or her Pro Rata Share of any claim, (iii) to give and receive all notices required to be given under this Agreement, copies of which shall be promptly provided to each Selling Securityholder, (iv) to execute and deliver the Escrow Agreement, (v) to designate and determine amounts to be paid and recipients of the Estimated Closing Expenses, (vi) to make payment of the Representative Expenses, (vii) collect and/or sell any receivable transferred to the Selling Securityholders pursuant to the terms of this Agreement and to distribute the proceeds thereof to the Selling Securityholders and (viii) to take any and all additional action as is contemplated to be taken by or on behalf of the Selling Securityholders by the terms of this Agreement.

(b) In the event that the Securityholders’ Representative dies, becomes unable to perform his responsibilities hereunder or resigns from such position, (i) Kathryn Hoffman-Abby or (ii) in her absence, such person selected by a majority of the Selling Securityholders, shall fill such vacancy and shall be deemed to be the Securityholders’ Representative for all purposes of this Agreement.

(c) All decisions and actions by the Securityholders’ Representative, including any agreement between the Securityholders’ Representative and the Buyer relating to the

determination of any adjustments to the Purchase Price, the defense or settlement of any claims for which the Selling Securityholders may be required to indemnify the Buyer pursuant to Article VII hereof or the payment of the Estimated Closing Expenses or the Representative Expenses shall be binding upon all of the Selling Securityholders, and no Selling Securityholder shall have the right to object, dissent, protest or otherwise contest the same.

(d) By their execution of this Agreement, the Selling Securityholders agree that:

(i) the Buyer shall be able to rely conclusively on the instructions and decisions of the Securityholders’ Representative as to the determination of any adjustments to the Purchase Price, the settlement of any claims for indemnification by the Buyer pursuant to Article VII hereof, the payment of the Estimated Closing Expenses or the Representative Expenses or any other actions required to be taken by the Securityholders’ Representative hereunder, and no Party hereunder shall have any cause of action against the Buyer or the Securityholders’ Representative for any action taken by the Buyer in reliance upon the instructions or decisions of the Securityholders’ Representative;

(ii) all actions, decisions and instructions of the Securityholders’ Representative shall be conclusive and binding upon all of the Selling Securityholders, and no Selling Securityholder shall have any cause of action against the Securityholders’ Representative for any action taken, decision made or instruction given by the Securityholders’ Representative under this Agreement, except for fraud or intentional breach of this Agreement by the Securityholders’ Representative;

(iii) the provisions of this Section 1.10 are independent and severable, are irrevocable and coupled with an interest and shall be enforceable notwithstanding any rights or remedies that any Selling Securityholder may have in connection with the transactions contemplated by this Agreement;

(iv) remedies available at law for any breach of the provisions of this Section 1.10 are inadequate; therefore, the Buyer, the Securityholders’ Representative and the Company shall be entitled to temporary and permanent injunctive relief without the necessity of proving damages if any such Party brings an action to enforce the provisions of this Section 1.10; and

(v) the provisions of this Section 1.10 shall be binding upon the executors, heirs, legal representatives and successors of each Selling Securityholder, and any references in this Agreement to a Selling Securityholder or to the Selling Securityholders shall mean and include the successors to the Selling Securityholders’ rights hereunder, whether pursuant to testamentary disposition, the laws of descent and distribution or otherwise.

(e) In connection with any material determinations or decisions hereunder, as determined in the good faith discretion of the Securityholders’ Representative, the Securityholders’ Representative shall consult with the ESOP Stockholder regarding such determinations or decisions.

(f) The Securityholders’ Representative may incur reasonable out-of-pocket expenses (including reasonable attorney’s fees and court costs) on behalf of the Selling Securityholders in his capacity as the Securityholders’ Representative (collectively, the “ Representative

Expenses ”). If not paid directly to the Securityholders’ Representative by the Selling Securityholders, the Representative Expenses will be paid out of the Representative Fund and thereafter the Representative Expenses may be recovered from any Escrow Cash to be distributed to the Selling Securityholders following the termination of the Escrow Agreement, provided, that, the Securityholders’ Representative shall have delivered a notice to the Buyer and the Escrow Agent not less than five Business Days prior to the termination of the Escrow Agreement setting forth the amount of such Representative Expenses to be paid to the Securityholders’ Representative, and such recovery will be made from the Selling Securityholders according to their respective Pro Rata Share. The Securityholders’ Representative shall cause any balance remaining in the Representative Fund at the termination of the Escrow Agreement to be promptly distributed to the Selling Securityholders according to their Pro Rata Share; provided that the Securityholders’ Representative shall be entitled to retain any portion of the Representative Fund required to fund Representative Expenses related to unresolved Expected Claim Notices or Claim Notices.

1.11 Currency . All references herein to “Dollars” and amounts preceded by a “$” shall be construed as references to United States dollars.

1.12 Withholding . The Buyer shall be entitled to deduct and withhold from the consideration otherwise payable pursuant to this Agreement to any Selling Securityholder such amounts as the Buyer is required to deduct and withhold under the Code, or any provisions of foreign, state or local Tax Law, with respect to the making of such payment. To the extent that amounts are so withheld by the Buyer, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the Selling Securityholder, in respect of whom such deduction and withholding was made by the Buyer.

ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLING SECURITYHOLDERS REGARDING THE SELLING SECURITYHOLDERS AND THE COMPANY SECURITIES

2.1 Selling Securityholders Representations and Warranties . Each Selling Securityholder severally represents and warrants to the Buyer that, except as set forth in the Disclosure Schedule, the statements contained in this Section 2.1 are true and correct as of the date of this Agreement, except to the extent such representations and warranties are specifically made as of a particular date (in which case such representations and warranties will be true and correct as of such date).

(a) Title to Shares . Such Selling Securityholder holds beneficially and of record and has good and marketable title to the Common Shares which are to be transferred to the Buyer by such Selling Securityholder pursuant hereto and/or the Company Stock Options which are to become fully vested and exercisable or cancelled, free and clear of any and all covenants, conditions, restrictions, voting trust arrangements, options, Security Interests, and adverse claims or rights whatsoever (“ Encumbrances ”), other than restrictions on transferability under the applicable federal and state securities Laws. Such Selling Securityholder is not a party to any voting trust, proxy or other agreement or understanding with respect to the voting of any capital

stock of the Company. Schedule I to this Agreement sets forth a true and correct description of all Company Securities owned or held by such Selling Securityholder.

(b) Organization of Certain Selling Securityholders . If such Selling Securityholder is a corporation, trust or other legal entity, it is duly organized, validly existing, and in good standing under the laws of the jurisdiction of its incorporation or other formation.

(c) Authorization of Transaction . Such Selling Securityholder has the full right, power and authority to execute and enter into this Agreement, the Escrow Agreement, the Non-Competition Agreement and all other agreements contemplated hereby to which it is a party, to perform its obligations hereunder and thereunder and to transfer, convey and sell to the Buyer at the Closing the Common Shares to be sold by such Selling Securityholder hereunder and, upon consummation of the purchase contemplated hereby, the Buyer will acquire from such Selling Securityholder good and marketable title to such Common Shares, free and clear of any and all Encumbrances, other than any Encumbrances created by the Buyer and any restrictions on transferability under applicable federal and state securities Laws. If such Selling Securityholder is a corporation, trust or other legal entity, the execution and delivery by such Selling Securityholder of the Escrow Agreement, this Agreement and all other agreements contemplated hereby to which it is a party, and the consummation by such Selling Securityholder of the transactions contemplated hereby and thereby have been duly and validly authorized by all necessary corporate, trust or other action on the part of such Selling Securityholder. This Agreement, the Escrow Agreement, the Non-Competition Agreement and all other agreements contemplated hereby to which it is a party, have each been, or when executed and delivered by such Selling Securityholder shall be, duly and validly executed and delivered by such Selling Securityholder and each constitutes a valid and binding obligation of such Selling Securityholder, enforceable against such Selling Securityholder in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar Laws affecting creditors’ rights and remedies generally and to general principles of equity.

(d) Noncontravention . Subject to compliance with the applicable requirements of the Securities Act, and any applicable state securities and antitrust and trade regulation Laws, such Selling Securityholder is not a party to, subject to or bound by any agreement or any judgment, order, writ, prohibition, injunction or decree of any Governmental Entity which would prevent the execution, delivery or performance of this Agreement by such Selling Securityholder or the transfer, conveyance and sale of the Common Shares to be sold by such Selling Securityholder to the Buyer pursuant to the terms hereof. Neither the execution and delivery by such Selling Securityholder of this Agreement, nor the consummation by such Selling Securityholder of the transactions contemplated hereby, will (i) conflict with or violate any provision of the formation or similar documents of such Selling Securityholder, (ii) require on the part of the Selling Securityholder any notice to or filing with, or any permit, authorization, consent or approval of, any Governmental Entity, (iii) conflict with, result in a breach of, constitute (with or without due notice or lapse of time or both) a default under, result in the acceleration of obligations under, create in any party the right to terminate, accelerate, modify or cancel, or require any notice, consent or waiver under, any contract or instrument to which the Selling Securityholder is a party or by which the Selling Securityholder is bound or to which its assets are subject, except for (A) any conflict, breach, default, acceleration, termination, modification or cancellation which

would not have a material adverse effect upon the consummation of the transactions contemplated hereby or result in any liability to the Company or (B) any notice, consent or waiver the absence of which would not have a material adverse effect upon the consummation of the transactions contemplated hereby or result in any liability to the Company, or (iv) violate any constitution, judgment, ruling, charge, order, writ, injunction, decree, statute, rule or regulation, or other restriction of any Governmental Entity applicable to the Selling Securityholder.

(e) Powers of Attorney . There are no outstanding powers of attorney executed on behalf of such Selling Securityholder relating to any Common Shares, this Agreement, the Escrow Agreement and all other agreements contemplated hereby, other than any power of attorney, including any stock powers, required to be executed by such Selling Securityholder in connection with the transactions contemplated hereby and delivered to the Buyer at Closing.

(f) No Claims Against the Company . Such Selling Securityholder has not at any time instituted any claim, proceeding, action, suit or cause of action against the Company or any of its Affiliates, or any of their respective predecessors or Affiliates in its capacity as a holder of securities of the Company, and is not aware of any grounds for any such claim or proceeding in its capacity as a holder of securities of the Company.

ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLING SECURITYHOLDERS REGARDING THE COMPANY

The ESOP Stockholder, severally and not jointly, represents and warrants to the Buyer and each of the Company and the Other Selling Securityholders, jointly and severally, represents and warrants to the Buyer that, except as set forth in the Disclosure Schedule, the statements contained in this Article III are true and correct as of the date of this Agreement, except to the extent such representations and warranties are specifically made as of a particular date (in which case such representations and warranties will be true and correct as of such date). For purposes of this Article III , the phrase “ to the knowledge of the Company and the Selling Securityholders ” or “ of which the Company is aware ” or any variation of any of the foregoing or phrase of similar import shall be deemed to refer to the actual knowledge of one or more of the Selling Securityholders of a particular fact, circumstance, event or other matter.

3.1 Organization, Qualification and Corporate Power .

(a) Section 3.1 of the Disclosure Schedule contains a list for each Acquired Company of its name, its jurisdiction of formation, other jurisdictions in which it is authorized to do business, and its capitalization. Each Acquired Company is duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is organized, with full power and authority to conduct its business as it is now being conducted and to own, lease or use the properties and assets that it purports to own, lease or use. Each Acquired Company is duly qualified or licensed to do business as a foreign corporation and is in corporate and tax good standing (where such concepts are recognized under applicable Law) in each state or other jurisdiction where either the ownership or use of the properties owned or used by it, or the nature of the activities conducted by it, requires such qualification.

(b) Sellers have delivered or made available to Buyer copies of the Organizational Documents of each Acquired Company, as currently in effect.

3.2 Capitalization .

(a) The authorized capital stock of the Company consists of 5,000,000 Common Shares, of which 196,750 shares are issued and outstanding.

(b) Schedule I and Section 3.2 of the Disclosure Schedule set forth a list, as of the date of this Agreement, of all the holders of capital stock of the Company, showing the number of shares of such capital stock held by each Stockholder. All of the outstanding equity securities and other securities of each Acquired Company (other than the Company) are owned of record and beneficially by one or more of the Acquired Companies, free and clear of all Encumbrances. All of the issued and outstanding shares of capital stock of, or other equity interests in, each of the Acquired Companies have been duly authorized and validly issued and are fully paid and nonassessable. Other than contracts relating to Company Stock Options, there are no unfulfilled contracts relating to the issuance, sale, or transfer of any equity securities or other securities of any Acquired Company. All of the issued and outstanding shares of capital stock, or other equity interests in, each of the Acquired Companies have been offered, issued and sold in material compliance with all applicable federal and state securities Laws.

(c) Section 3.2(c) of the Disclosure Schedule sets forth a list, as of the date of this Agreement of: (i) (A) the number of Common Shares issued to date under each Company Stock Plan, (B) the number of Common Shares subject to outstanding Company Stock Options under each Company Stock Plan, and (C) the number of Common Shares reserved for future issuance under each Company Stock Plan; and (ii) all Optionholders and, with respect to each such Optionholder’s outstanding Company Stock Options, (A) the number of Common Shares subject to such Company Stock Options, (B) the exercise price, the date of grant, the vesting schedule (including any acceleration provisions with respect thereto) applicable to such Company Stock Options, and (C) whether such Company Stock Options are intended to qualify as incentive stock options (within the meaning of Section 422 of the Code). The Company has delivered or made available to the Buyer copies of the Company Stock Plan and each form of stock option agreement evidencing the grant of any outstanding Company Stock Option. All Company Stock Options have been granted in material compliance with applicable federal and state tax and securities Laws and the terms of the applicable Company Stock Plan.

(d) (i) No subscription, warrant, option, convertible security or other right (contingent or otherwise) to purchase or acquire any shares of capital stock of any Acquired Company is authorized or outstanding, (ii) no Acquired Company has an obligation (contingent or otherwise) to issue any subscription, warrant, option, convertible security or other such right or to issue or distribute to holders of any shares of its capital stock any evidence of indebtedness or assets of any Acquired Company, (iii) no Acquired Company has any obligation (contingent or otherwise) to purchase, redeem or otherwise acquire any shares of its capital stock or any interest therein or to pay any dividend or to make any other distribution in respect thereof, and (iv) there are no outstanding or authorized stock appreciation, phantom stock, restricted stock, profit participation or other rights based on or measured by the value of any equity security of, or interest in, any Acquired Company.

(e) There is no agreement, written or oral, between any Acquired Company and any holder of its securities, or, to the Company’s and the Selling Securityholders’ knowledge, among any holders of its securities, relating to the sale or transfer (including agreements relating to rights of first refusal, co sale rights or “drag along” rights), registration under the Securities Act, or voting, of the capital stock of such Acquired Company.

3.3 Authorization of Transaction . The Company has all requisite power and authority to execute and deliver this Agreement and all other agreements contemplated hereby to which the Company is a party and to perform its obligations hereunder and thereunder. The execution and delivery by the Company of this Agreement and all other agreements contemplated hereby to which the Company is a party, and the consummation by the Company of the transactions contemplated hereby and thereby, have been duly and validly authorized by all necessary corporate action on the part of the Company. This Agreement and all other agreements contemplated hereby to which the Company is a party, have each been, or when executed and delivered by the Company will be, duly and validly executed and delivered by the Company and each constitutes a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar Laws affecting creditors’ rights and remedies generally and to general principles of equity.

3.4 Noncontravention . Subject to compliance with the applicable requirements of the Securities Act, and any applicable state securities and antitrust and trade regulation Laws, neither the execution and delivery by the Company of this Agreement, nor the consummation by the Company of the transactions contemplated hereby, will (a) conflict with or violate any provision of the Organizational Documents of any Acquired Company, (b) require on the part of any Acquired Company any notice to or filing with, or any permit, authorization, consent or approval of, any Governmental Entity, (c) conflict with, result in a breach of, constitute (with or without due notice or lapse of time or both) a default under, result in the acceleration of obligations under, create in any party the right to terminate, accelerate, modify or cancel, or require any notice, consent or waiver under, any contract or instrument set forth on Section 3.10(d), 3.11 or 3.17(a) of the Disclosure Schedule, (d) result in the imposition of any Security Interest upon any assets of the Acquired Company, or (e) violate any order, writ, injunction, decree, statute, rule or regulation applicable to any Acquired Company or any of the properties or assets of any Acquired Company.

3.5 Undisclosed Liabilities . Except for (a) liabilities that are reflected, or for which reserves were established, on the Most Recent Balance Sheet, (b) liabilities incurred in the Ordinary Course of Business from and after the Most Recent Balance Sheet Date and (c) liabilities arising under this Agreement and the transactions contemplated hereby, the Company has no liabilities of any nature that would be required to be reflected on a balance sheet for the Company prepared in accordance with GAAP or that would be reasonably be expected to have a Company Material Adverse Effect. At the Closing, the Company will have no debt for borrowed money outstanding.

3.6 Tax Matters .

(a) Filing of Tax Returns . Each Acquired Company has timely filed with the appropriate Governmental Entities all material Tax Returns required to be filed under any applicable Laws. All such Tax Returns are complete and accurate in all material respects. The Acquired Companies are not currently the beneficiary of any extension of time within which to file any Tax Return. No written claim has ever been made by any Governmental Entity in a jurisdiction where any Acquired Company does not file Tax Returns that it is or may be subject to taxation by that jurisdiction.

(b) Payment of Taxes . All Taxes due and owing by the Acquired Companies and any of their predecessors or affiliates (whether or not shown on any Tax Returns) have been paid on a timely basis. The unpaid Taxes of the Acquired Companies did not, (i) as of the date of the Most Recent Balance Sheet, exceed the accruals and reserve for Tax liability (excluding any reserve for deferred Taxes established to reflect timing differences between book and Tax income) set forth on the face of the Most Recent Balance Sheet (rather than in any notes thereto), and (ii) will not exceed that reserve as adjusted for operations and transactions through the Closing Date in accordance with past custom and practice of such Acquired Companies in filing its Tax Returns.

(c) Audits, Investigations or Claims . No deficiencies for Taxes of the Acquired Companies have been claimed or proposed or assessed in writing by any Governmental Entity. There are no pending or, to the knowledge of the Selling Securityholders or the Acquired Companies, threatened audits, assessments or other actions for or relating to any liability in respect of Taxes of the Acquired Companies (or their predecessors or affiliates), and there are no matters under discussion with any governmental authorities, or known to the Selling Securityholders or the Acquired Companies, with respect to Taxes that are likely to result in an additional liability for Taxes with respect to the Acquired Companies (or their predecessors or affiliates). The Company has delivered or made available to Buyer complete and accurate copies of foreign, federal, state and local Tax Returns of the Acquired Companies (and their respective predecessors and affiliates) for the years ended December 31, 2000, 2001, 2002, 2003, 2004 and 2005, and complete and accurate copies of all examination reports and statements of deficiencies assessed against or agreed to by any Acquired Company (and their respective predecessors) since December 31, 2001. The Tax Returns of the Acquired Companies have been audited by the IRS or the prescribed Governmental Entity in the relevant jurisdiction or are closed by the statute of limitations for all taxable years through the taxable years specified for such Tax Returns in Section 3.6(c) of the Disclosure Schedule. The Acquired Companies have not (nor has any predecessor or affiliate) waived any statute of limitations in respect of Taxes or agreed to any extension of time with respect to a Tax assessment or deficiency, nor has any request been made in writing for any such extension or waiver. No power of attorney (other than powers of attorney authorizing employees of the Company to act on behalf of the Company) with respect to any Taxes has been executed or filed with any Tax authority or other Governmental Entity.

(d) Tax Elections . All material elections with respect to Taxes affecting any Acquired Company as of the date hereof are set forth on Section 3.6(d) of the Disclosure Schedule. No Acquired Company (i) has agreed, and is not required, to make any adjustment under Section 481(a) of the Code by reason of a change in accounting method or otherwise;

(ii) has elected at any time to be treated as an S corporation within the meaning of Sections 1361 or 1362 of the Code; or (iii) has made any of the foregoing elections and is not required to apply any of the foregoing rules under any comparable state or local Tax provision.

(e) Tax Sharing and Pre-Filing Agreements . There are no Tax-sharing, indemnity, allocation, pre-filing, or advance pricing agreements or similar arrangements with respect to or involving any Acquired Company, and, after the Closing Date, no Acquired Company shall be bound by any such agreements or similar arrangements or have any liability thereunder for amounts due in respect of periods prior to the Closing Date.

(f) Other Entity Liability . No Acquired Company has ever been a member of an affiliated group filing a consolidated federal income Tax Return (other than a group the common parent of which is the Company). No Acquired Company has any liability for the Taxes of any Person (other than Taxes of the Company) (i) under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local, or foreign law), (ii) as a transferee or successor, (iii) by contract, or (iv) otherwise.

(g) USRPHC . No Acquired Company has ever been a United State real property holding corporation within the meaning of Section 897(c)(2) of the Code during the applicable period specified in section 897(c)(1)(A)(ii) of the Code.

(h) Partnerships and Single Member LLCs . No Acquired Company (i) is a partner for Tax purposes with respect to any joint venture, partnership, or other arrangement or contract which is treated as a partnership for Tax purposes, or (ii) owns a single member limited liability company which is treated as a disregarded entity.

(i) Disallowance of Interest Deductions . None of the outstanding indebtedness of the Acquired Companies constitutes indebtedness with respect to which any interest deductions may be disallowed under Sections 163(i) or 163(l) or 279 of the Code or under any other provision of applicable Law.

(j) Tax Shelters . The Acquired Companies have not entered into any transaction identified as a “ listed transaction ” for purposes of Treasury Regulations Sections 1.6011-4(b)(2) or 301.6111-2(b)(2). If any Acquired Company has entered into any transaction such that, if the treatment claimed by it were to be disallowed, the transaction would constitute a substantial understatement of federal income tax within the meaning of Code Section 6662, then it believes that it has either (x) substantial authority for the tax treatment of such transaction or (y) disclosed on its Tax Return the relevant facts affecting the tax treatment of such transaction.

(k) Spin-Offs . The Acquired Companies have not distributed the stock of any corporation in a transaction satisfying the requirements of Section 355 of the Code since December 31, 2004, and the stock of the Acquired Companies has not been distributed in a transaction satisfying the requirements of Section 355 of the Code since December 31, 2004.

3.7 Assets .

(a) Each Acquired Company has good and marketable title to all of the material assets (tangible or intangible) purported to be owned by such Acquired Company, free and clear

of all Security Interests. Each Acquired Company owns or leases all tangible assets sufficient for the conduct of its business as presently conducted. Such tangible assets, taken as a whole, have been maintained in accordance with normal industry practice, are in functional operating condition and repair (subject to normal wear and tear) and are suitable for the purposes for which they are presently used.

(b) Section 3.7(b) of the Disclosure Schedule sets forth a list of all equipment, motor vehicles and assets which have a fair market value of over $25,000 as of the date hereof and which are leased by the Company. Each item of equipment, motor vehicle and other asset that any Acquired Company has possession of pursuant to a lease agreement or other contractual arrangement is in such condition that, if such item of equipment, motor vehicle or other asset were returned to its lessor or owner on the Closing Date in accordance with the applicable lease or contract, the Acquired Company would not be charged any additional payments due to the condition of such item of equipment, motor vehicle or other asset.

3.8 Owned Real Property . The Company does not currently own, and has not at any time during its existence owned, any Owned Real Property.

3.9 Real Property Leases . Section 3.9 of the Disclosure Schedule lists all Leases to which any Acquired Company is a party. The Company has made available to the Buyer copies of the Leases. With respect to each Lease:

(a) such Lease is in full force and effect, and such Lease affords the applicable Acquired Company a valid leasehold interest to the real property that is the subject of the Lease;

(b) the transactions contemplated by this Agreement do not require the consent of any other party to such Lease, will not result in a breach of or default under such Lease, and will not otherwise cause such Lease to cease to be in full force and effect immediately following the Closing in accordance with the terms thereof as in effect immediately prior to the Closing;

(d) no Acquired Company nor, to the knowledge of the Company or the Selling Securityholders, any other party, is in breach or violation of, or default under, any such Lease, and no event has occurred, is pending (including the transactions contemplated hereby) or, to the knowledge of the Company and the Selling Securityholders, is threatened, which, after the giving of notice, with lapse of time, or otherwise, would permit the termination, modification or acceleration of rent under such Lease or would constitute a breach or default by the applicable Acquired Company or, to the knowledge of the Company and the Selling Securityholders, any other party under such Lease.

3.10 Intellectual Property .

(a) Section 3.10(a) of the Disclosure Schedule lists each registration or application for registration for copyrights and each registered trademark and service mark and any application for registration therefore and each active registered Internet domain name of any Acquired Company. No Acquired Company has any patents or patent applications.

(b) To the knowledge of the Company and the Selling Securityholders, each Acquired Company owns or has the right to use all Intellectual Property necessary to conduct the business of such Acquired Company as presently conducted. Each item of Company Intellectual Property will be owned or available for use by the Buyer immediately following the Closing on substantially identical terms and conditions as it was immediately prior to the Closing. To the knowledge of the Company and the Selling Securityholders, no other person or entity is, as of the date hereof, infringing, violating or misappropriating any of the Company Intellectual Property.

(c) To the knowledge of the Company and the Selling Securityholders, the use of the Company Intellectual Property by the Acquired Companies does not infringe or violate, or constitute a misappropriation of, any Intellectual Property rights of any person or entity. Section 3.10(c) of the Disclosure Schedule lists each written complaint, claim or notice, or written threat thereof, received by any Acquired Company alleging any such infringement, violation or misappropriation since January 1, 2004. The Acquired Company has made available to the Buyer a summary of all written documentation in the Company’s possession relating to claims or disputes known to the Company concerning any Company Intellectual Property owned by any Acquired Company.

(d) Section 3.10(d) of the Disclosure Schedule identifies each license or other agreement currently in effect pursuant to which any Acquired Company has licensed, distributed or otherwise granted any rights to any third party with respect to, any Company Intellectual Property.

(e) Section 3.10(e) of the Disclosure Schedule identifies each item of Company Intellectual Property that is owned by a party other than any Acquired Company, and the license or agreement pursuant to which any Acquired Company uses it, if any (excluding non-customized, off the shelf software programs licensed by any Acquired Company pursuant to “ shrink wrap ” or “ click-through ” licenses).

3.11 Contracts .

(a) Section 3.11 of the Disclosure Schedule lists the following agreements (written or oral) to which any Acquired Company is a party as of the date of this Agreement:

(i) any agreement for the lease of personal property from or to third parties providing for lease payments by any Acquired Company in excess of $25,000 per annum;

(ii) any agreement for the purchase of products or for the receipt of services which involves the payment by any Acquired Company of more than the sum of $25,000 per annum;

(iii) any partnership, joint venture or limited liability company agreement;

(iv) any agreement under which any Acquired Company has created, incurred, assumed or guaranteed (or may create, incur, assume or guarantee) indebtedness for borrowed money or any capitalized lease obligation, or under which any Acquired Company has imposed (or may impose) a Security Interest on any of its assets, tangible or intangible;

(v) any agreement for the acquisition of a business or entity, or substantially all of the assets of a business or entity (including by merger or consolidation);

(vi) any agreement concerning noncompetition or nonsolicitation, or an agreement that otherwise materially restricts the ability of any Acquired Company to compete, to which any Acquired Company is a party;

(vii) any agreement for the employment of any individual on a full-time, part-time, consulting or other basis that is not terminable at will by the applicable Acquired Company and without the payment of severance, termination or similar compensation or benefits (other than required by Law) and which agreement requires payment of amounts after the date hereof in excess of $75,000 of base pay per annum;

(viii) any agreement under which any Acquired Company has advanced or loaned any amount to any of its directors, officers, and employees outside the Ordinary Course of Business;

(ix) any agreement in which any current or former officer, director or stockholder of the Company is directly or indirectly interested, including any agreement subject to Section 5.17;

(x) any settlement, conciliation or similar agreement, the performance of which will involve payment after the Closing Date of consideration in excess of $25,000; and

(xi) any agreement (other than agreements of the type described in subclauses (i) through (x) above) that involves aggregate future payments by any Acquired Company in excess of $50,000 per annum, other than an agreement entered into in the Ordinary Course of Business.

(b) The Company has made available to the Buyer a copy of each written agreement listed in Section 3.10 or Section 3.11 of the Disclosure Schedule (the “Scheduled Agreements”). As of the date hereof, neither any Acquired Company nor, to the knowledge of the Company or the Selling Securityholders, any other party, is in material breach or default under, any Scheduled Agreement, and no event has occurred, is pending (including the transactions contemplated hereby) or, to the knowledge of the Company and the Selling Securityholders, is threatened, which, after the giving of notice, with lapse of time, or otherwise, would constitute a material breach or default by any Acquired Company or, to the knowledge of the Company and the Selling Securityholders, any other party under a Scheduled Agreement.

3.12 Accounts Receivable . All accounts receivable of any Acquired Company reflected on the Most Recent Balance Sheet (other than those collected since such date) are valid receivables and are not subject to material setoffs or counterclaims, except as reflected in reserves on the Most Recent Balance Sheet. All accounts receivable (including receivables on the Closing Balance Sheet) of any Acquired Company that have arisen since the Most Recent Balance Sheet Date are valid receivables and are not subject to setoffs or counterclaims, are current and collectible, and will be collected in accordance with their terms within 120 days of Closing at their recorded amounts, except as reflected in reserves for uncollectible accounts in such Acquired Company’s books and records.

3.13 Powers of Attorney . There are no outstanding powers of attorney executed on behalf of any Acquired Company.

3.14 Insurance . Section 3.14 of the Disclosure Schedule lists each insurance policy (including medical malpractice, fire, theft, casualty, comprehensive general liability, workers’ compensation, business interruption, environmental, product liability and automobile insurance policies and bond and surety arrangements) to which any Acquired Company is a party, all of which are in full force and effect. To the knowledge of the Company and the Selling Securityholders, there is no material claim pending under any such policy as to which coverage has been questioned, denied or disputed by the underwriter of such policy. All premiums due and payable under all such policies have been paid or reflected in the Financial Statements (unless such premiums became due after the date of the Financial Statements), no Acquired Company is liable for retroactive premiums, and each Acquired Company is otherwise in compliance in all material respects with the terms of such policies. No Acquired Company, nor to the knowledge of the Company and the Selling Securityholders, any other party to such policy is in material breach or default and no event has occurred that, with the notice or the lapse of time, would constitute such a material breach or default, or permit termination, modification, or acceleration under the policy and, to the knowledge of the Company and the Selling Securityholders, no party has repudiated any provision of any such policy. The Company has no knowledge of any threatened termination of, or premium increase with respect to, any such policy. Each such policy will continue to be in full force and effect immediately following the Closing in accordance with the terms thereof as in effect immediately prior to the Closing. Unless a different level of medical malpractice insurance is required to be maintained by the Company by a particular State or individual facility, the Company has, as of the date of this Agreement, professional liability insurance coverage of $1,000,000 per claim, with a per claim deductible of $100,000.

3.15 Litigation . Section 3.15 of the Disclosure Schedule sets forth each instance in which any Acquired Company is party or, to the knowledge of the Company and the Selling Securityholders, is threatened to be made a party to any action, suit, proceeding, hearing, or investigation of, in, or before any Governmental Entity. There are no injunctions, judgments, orders or decrees outstanding against any Acquired Company on the date hereof.

3.16 Employees .

(a) Section 3.16(a) of the Disclosure Schedule contains a list of all current employees of the Acquired Companies whose annual base salary exceeds $50,000 per year, along with the position and the annual rate of compensation of each such person. As of the date hereof, no Acquired Company employee at the Vice President level or higher has provided notice of such employee’s intent to terminate employment with such Acquired Company and, as of the date hereof, to the knowledge of the Company, no such employee presently plans to terminate employment with such Acquired Company.

(b) No Acquired Company is now or has been a party to or bound by any collective bargaining or similar agreement, nor during the past five years has any Acquired Company experienced any strikes, slowdowns, work stoppages, grievances, lockouts, claims of unfair labor practices or other collective bargaining disputes and, to the knowledge of the Company, no such

strikes, slowdowns, work stoppages, grievances, lockouts, claims of unfair labor practices or other collective bargaining disputes are threatened. There are no labor unions or other organizations, either currently or within the past five years, representing, purporting to represent or, to the knowledge of the Company, attempting to represent any employees of any Acquired Company.

(c) No Acquired Company has violated any law, order, judgment or arbitration award of any court, arbitrator or government authority regarding the terms and conditions of employment of employees, former employees or prospective employees or other labor related matters, including any laws, orders, judgments or awards relating to wrongful discharge, discrimination, personal rights, leaves of absence, wages, hours, collective bargaining, fair labor standards or occupational health and safety.

(d) Each Acquired Company has properly classified all of its service providers as either employees or independent contractors. Each Acquired Company has withheld and paid to the appropriate governmental authority all amounts required to be withheld from compensation paid to its employees and is not liable for any arrears of taxes, penalties or other sums for failure to withhold and pay applicable taxes. Each Acquired Company has paid in full to its employees or adequately accrued for in accordance with GAAP all wages, salaries, commissions, bonuses, benefits and other compensation due to or on behalf of such employees. There is no claim in dispute against any Acquired Company with respect to payment of wages, salary or overtime pay that has been asserted or is now pending or threatened with respect to any current or former service providers of such Acquired Company.

(e) In the three years prior to the date hereof, no Acquired Company has effectuated (i) a “ plant closing ” (as defined in the Worker Adjustment and Retraining Notification Act (the “ WARN Act ”) or any similar state, local or foreign Law) affecting any site of employment or one or more facilities or operating units within any site of employment or facility of any Acquired Company, or (ii) a “ mass layoff ” (as defined in the WARN Act, or any similar state, local or foreign law) affecting any site of employment or facility of any Acquired Company. No Acquired Company has material liabilities, whether contingent or absolute, relating to workers’ compensation benefits that are not fully insured against by a bona fide third-party insurance carrier to the extent required by applicable Law. With respect to each state workers’ compensation arrangement that is funded wholly or partially through an insurance policy or public or private fund, all premiums required to have been paid to date under such insurance policy or fund have been paid.

(f) Section 3.16(f) of the Disclosure Schedule sets forth any and all indebtedness in excess of $10,000 owed by any current or former employee, consultant or director of any Acquired Company to any Acquired Company.

3.17 Employee Benefits .

(a) Section 3.17(a) of the Disclosure Schedule contains a complete and accurate list of all Company Plans. Complete and accurate copies of (i) all Company Plans which have been reduced to writing (including all amendments thereto), (ii) written summaries of all unwritten Company Plans, (iii) all related current trust agreements, insurance contracts and summary plan

descriptions and material written employee communications distributed generally to employees within 12 months preceding the date hereof regarding such Company Plans, (iv) the most recent annual reports filed on IRS Form 5500 (including all exhibits and attachments thereto) for each Company Plan, (v) if a Company Plan is intended to qualify under Section 401(a) of the Code, the most recent IRS determination or opinion letter applicable to such Company Plan, and (vi) all material, non-routine communications with any governmental entity or agency, including the U.S. Department of Labor, the IRS and the Pension Benefit Guaranty Corporation, within the three years preceding the date hereof and relating to a Company Plan have been made available to Buyer. Except as necessary to comply with applicable Laws, none of the Acquired Companies has made any plan or commitment to create any new or additional Company Plan or to modify any existing Company Plan that would result in a material increase in the compensation or benefits provided to any current or former employee, consultant or director of any Acquired Company or the spouses, beneficiaries or other dependents thereof.

(b) Each of the Acquired Companies has, in all material respects, (i) timely made or, to the extent not yet due, accrued on its consolidated financial statements, all required contributions (including all employer contributions and employee salary reduction contributions) thereto, and (ii) timely paid all premiums and expenses to or in respect of such Company Plan. Each of the Acquired Companies and each Company Plan are in compliance in all material respects with the applicable provisions of ERISA, the Code and foreign law applicable to any Company Plan and any regulations thereunder. Except as set forth on Section 3.17(b) of the Disclosure Schedule, no Company Plan or related trust holds assets that include securities issued by any Acquired Company.

(c) With respect to each Company Plan, (i) no breaches of fiduciary duty or other failures to act or comply in connection with the administration or investment of the assets of a Company Plan in connection with which any Acquired Company or a fiduciary could reasonably be expected to incur a material liability have occurred; and (ii) no non-exempt prohibited transaction within the meaning of Section 406 of ERISA or Section 4975 of the Code that could reasonably be expected to result in material liability to any Acquired Company has occurred; and (iii) no lien has been imposed under the Code, ERISA or any comparable foreign law.

(d) There are no Legal Proceedings (including without limitation any audits or investigation by the IRS, the U.S. Department of Labor, the Pension Benefit Guaranty Corporation or any other federal, state or foreign Governmental Authority), except claims for benefits payable in the normal operation of the Company Plans, pending or, to the knowledge of the Company, threatened, against, by, on behalf of, relating to or involving any Company Plan.

(e) Each Company Plan that is intended to be qualified under Section 401(a) of the Code has received a favorable determination or opinion letter from the IRS on which each Acquiring Company that is a participating employer in such Company Plan is entitled to rely and (i) no prototype plan has been modified or amended such that the plan would be considered an individually designed plan, (ii) no such determination or opinion letter has been revoked and revocation has not been threatened, and (iii) no act or omission has occurred that would reasonably be expected to adversely affect the qualification of such Company Plan. Each Company Plan that is intended to qualify under any law of any foreign jurisdiction has received any required approval of a governmental authority of a foreign jurisdiction which approval has

not been revoked and, to the knowledge of the Company, no event or circumstance exists that has adversely affected or is likely to adversely affect such qualification or approval.

(f) No Company Plan is, and no Acquired Company nor any ERISA Affiliate maintains, contributes to, or, in the six years preceding the date of this Agreement, has maintained or been obligated to contribute to an Employee Benefit Plan subject to Section 412 of the Code, Title IV of ERISA or comparable funding obligations imposed under the laws of any foreign jurisdiction.

(g) At no time in the six years preceding the date of this Agreement has any Acquired Company or any ERISA Affiliate been obligated to contribute to any “ multiemployer plan ” (as defined in Section 4001(a)(3) of ERISA) or “ multiple employer plan ” (as defined in Section 413(c) of the Code).

(h) No Acquired Company has obligations under any Company Plan or otherwise to provide benefits after termination of employment or service to any current or former employees, consultants or directors of any Acquired Company (or to any spouse, dependent or beneficiary of any of the foregoing), including but not limited to obligations to provide health, accident, disability or life insurance coverage, but excluding continuation of health coverage required to be continued under Section 4980B of the Code or other applicable law and insurance conversion privileges provided under state law. There has been no communication to any current or former employee, consultant or director or any retiree of any Acquired Company, or the spouses, dependents or beneficiaries of any of the foregoing, that would reasonably be expected to promise or guarantee any such health, accident, disability or life insurance coverage.

(i) Neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated hereby, either alone or in combination with another event (whether contingent or otherwise) will (i) entitle any current or former employee, consultant or director of any Acquired Company or any group of such employees, consultants or directors to any payment or benefit; (ii) increase the amount of compensation or benefits due to any such employee, consultant or director; or (iii) accelerate the vesting, funding or time of payment of any compensation, equity award or other benefit.

(j) Each Company Plan that is a nonqualified deferred compensation plan subject to Code Section 409A has been operated and administered in good faith compliance with Code Section 409A from the period beginning January 1, 2005 through the date hereof.

(k) With respect to each Company Plan providing compensation or benefits to any employee or former employee of any Acquired Company (or any dependent or beneficiary thereof) which is subject to the laws of any jurisdiction outside of the United States (the “ Foreign Plans ”): (i) such Foreign Plan has been maintained in all material respects in accordance with all applicable requirements and all applicable laws, (ii) if intended to qualify for special tax treatment, such Foreign Plan meets all requirements for such treatment, (iii) if intended or required to be funded and/or book-reserved, such Foreign Plan has been funded and/or book reserved, as appropriate, based upon reasonable actuarial assumptions, and (iv) no material liability exists or reasonably could be imposed upon the assets of any Acquired Company by reason of such Foreign Plan.

(l) Each Acquired Company is in compliance in all material respects with (i) the requirements of the applicable health care continuation and notice provisions of Section 4980B of the Code, as amended, and the regulations (including proposed regulations) thereunder and any similar state law, and (ii) the applicable requirements of the Health Insurance Portability and Accountability Act of 1996, as amended, and the regulations (including the proposed regulations) thereunder.

(m) Neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated hereby, either alone or in combination with another event (whether contingent or otherwise) will result in any “parachute payment” under Code Section 280G (whether or not such payment is considered to be reasonable compensation for services rendered).

(n) ESOP Stockholder .

(i) The ESOP Stockholder and the ESOP Stockholder Trust have been operated and administered at all times in compliance with their terms and with the provisions of applicable Law, including without limitation, applicable provisions of ERISA and the Code. Since inception, (A) the ESOP Stockholder and the ESOP Stockholder Trust have been tax-qualified and tax-exempt, and (B) the ESOP Stockholder has constituted a valid “employee stock ownership plan” (within the meaning of Code Section 409).

(ii) No Person has made an election under Section 1042(a)(1) of the Code with respect to any Common Shares or other securities held by the ESOP Stockholder Trust.

(iii) In connection with the transactions contemplated by this Agreement, the ESOP Stockholder has retained the services of the Independent Fiduciary. The Independent Fiduciary is an “investment manager” (within the meaning of Section 3(38) of ERISA) of the ESOP Stockholder and has full discretionary investment management authority with respect to the Common Shares held by the ESOP Stockholder Trust. The Independent Fiduciary has sole authority, power and responsibility to determine whether the ESOP Stockholder will participate in the transactions contemplated by this Agreement and to direct the ESOP Stockholder Trustee to so participate. The Independent Fiduciary has obtained an opinion rendered to the Independent Fiduciary by Duff & Phelps, an “independent appraiser” (within the meaning of Code Section 401(a)(28)

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