STOCKHOLDERS AGREEMENT

EXHIBIT  10.2

FORM OF
HOMESTORE, INC.

STOCKHOLDERS AGREEMENT

Dated as of November [__], 2005

TABLE OF CONTENTS

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STOCKHOLDERS AGREEMENT

          THIS STOCKHOLDERS AGREEMENT (this “ Agreement ”) is entered as of November [___], 2005, among Homestore, Inc. a Delaware corporation (the “ Company ”), Elevation Partners, L.P., a Delaware partnership (“ Elevation ”), and [Purchaser], a [                                          ] (“[                      ]” and, together with Elevation, an “ Investor Stockholder ”).

RECITALS

          WHEREAS, the Company and the Investor Stockholders have entered into a Preferred Stock Purchase Agreement, dated as of November 6, 2005 (the “ Preferred Stock Purchase Agreement ”), pursuant to which the Investor Stockholders purchased an aggregate of 100,000 shares (the “ Purchased Shares ”) of the Company’s Series B Preferred Stock (as defined below) for an aggregate purchase price of $100 million on the date hereof; and

          WHEREAS, the parties hereto desire to enter into certain arrangements relating to the Company, the Purchased Shares, the other Subject Shares (as defined below) and the Conversion Shares (as defined below).

          NOW, THEREFORE, in consideration of the foregoing recitals and of the mutual promises hereinafter set forth, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

          SECTION 1.1.   Certain Defined Terms . As used herein, the following terms shall have the following meanings:

          “ Acquisition ” means any acquisition (whether by merger, consolidation, tender offer, exchange offer, asset purchase or otherwise) of any security, asset or business of another Person.

          “ Agreement ” has the meaning assigned to such term in the preamble.

          “ Affiliate ” means, with respect to any Person, any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with, such specified Person, for so long as such Person remains so associated to the specified Person. For the avoidance of doubt, the National Association of Realtors, the Realtors Information Network and their respective Affiliates are not Affiliates of the Company or any of its Subsidiaries.

          “ Approved Transaction ” means an acquisition of the stock, assets or business of another Person by the Company or any of its Subsidiaries or a strategic alliance or commercial transaction entered into by the Company or any of its Subsidiaries with another Person, which has been approved by a majority of the disinterested Directors of the Board.

          “ Approved Stock Plan ” means any stock option plan, agreement or arrangement outstanding on the date hereof or any other stock option plan or other equity-based compensation plan of the Company, agreement or other arrangement that has been approved by the Board, which provides for the issuance of Equity Securities to the directors, officers, employees and consultants of the Company or its Subsidiaries for an exercise or purchase price of not less than 85% of the fair market value (as determined in such plan, agreement or arrangement) of the Common Stock on the date of grant or purchase, as the case may be.

          “ as converted ” means, with respect to any Equity Securities owned by any Investor Stockholder and its Affiliates that are convertible into, or exchangeable or exercisable for Common Stock, such Equity Securities on an as converted, exchanged or exercised basis.

          “ beneficial owner ” or “ beneficially own ” has the meaning given to such term in Rule 13d-3 under the Exchange Act, and a Person’s beneficial ownership of Common Stock or Preferred Stock or other Voting Securities of the Company shall be calculated in accordance with the provisions of such Rule; provided , however , that for purposes of determining beneficial ownership, a Person shall be deemed to be the beneficial owner of any security which may be acquired by such Person whether within 60 days or thereafter, upon the conversion, exchange or exercise of any warrants, options, rights or other securities.

          “ Board ” means the Board of Directors of the Company.

          “ Business Day ” means any day that is not a Saturday, a Sunday or other day on which banks are required or authorized by law to be closed in California.

          “ Bylaws ” means the Bylaws of the Company, as in effect on the date hereof and as the same may be amended, supplemented or otherwise modified from time to time in accordance with the terms thereof and the terms of the Restated Certificate.

          “ Capital Stock ” means any and all shares of capital stock of the Company, including without limitation, any and all shares of Common Stock and Preferred Stock.

          “ CALSTRS Agreement ” means the Stipulation and Agreement of Settlement between California State Teachers’ Retirement System and the Company, dated as of August 12, 2003.

          “ Certificate of Designation ” means the Certificate of Designation with respect to the Series B Preferred Stock.

          “ Claims ” has the meaning assigned to such term in Section 4.6(a).

          “ Confidentiality Agreement ” means the Confidentiality Agreement, dated April 19, 2005, between the Company and Elevation Associates, L.P.

          “ Committee Qualification Requirements ” has the meaning assigned to such term in Section 2.2.

          “ Common Stock ” means the Common Stock, par value $0.001 per share, of the Company and any securities issued in respect thereof, or in substitution therefor, in connection with any stock split, dividend or combination, or any reclassification, recapitalization, merger, consolidation, exchange or other similar reorganization.

          “ control ” (including the terms “ controlled by ” and “ under common control with ”), with respect to the relationship between or among two or more Persons, means the possession, directly or indirectly, of the power to direct or cause the direction of the affairs or management of a Person, whether through the ownership of voting securities, as trustee or executor, by contract or otherwise.

          “ controlling person ” has the meaning assigned to such term in Section 4.6(a).

          “ Conversion Shares ” means the shares of Common Stock that may be issued upon the conversion of the Subject Shares as provided for in the Certificate of Designation.

          “ Demand Party ” has the meaning assigned to such term in Section 4.2(a).

          “ Designated Stockholder ” means Elevation.

          “ Director ” means any member of the Board.

          “ Dispute ” has the meaning assigned to such term in Section 6.12(a).

          “ Divestiture ” means any sale, lease, license, assignment, encumbrance, transfer or disposition of any securities, assets (including any intellectual property) or business of the Company or any of its Subsidiaries (including but not limited to any spin-off or in-kind distribution).

          “ EBITDA ” means, with respect to the Company, on a consolidated basis, consolidated net income (as calculated in accordance with GAAP and using accounting policies, procedures and principles consistent with past practice) plus, to the extent deducted in determining consolidated net income, (a) income tax expense, (b) interest expense, (c) depreciation and amortization expense and (d) amortization of intangibles and organization costs, minus to the extent included in determining such consolidated net income, (i) interest income, (ii) extraordinary income, (iii) other non-cash income, for the trailing twelve months as of the date hereof, and (iv) unusual or non-recurring revenues or expenses that are calculated in a manner consistent with past practice and are reasonably demonstrable to be non-recurring in nature, based on the most recent quarterly, or if more recent, monthly financial statements provided pursuant to Section 2.4, for the trailing twelve months as of a specified date for the calculation thereof.

          “ Elevation Entity ” means any of: (i) Elevation, (ii) Elevation Employee Side Fund, LLC, (iii) Elevation Associates, L.P., the sole general partner of Elevation, (iv) Elevation Associates, LLC, the sole general partner of Elevation Associates, L.P. and of Elevation GP Participants, LP, (v) Elevation GP Participants, LP, a limited partner of Elevation Associates, L.P. and (vi) Elevation Management, LLC, the sole management company to Elevation, in each

case so long as, with respect to such entity, such entity is under common control with the other Elevation Entities.

          “ Equity Securities ” means any and all shares of Capital Stock of the Company, securities of the Company convertible into, or exchangeable or exercisable for, such shares, and options, warrants or other rights to acquire such shares (including the Subject Shares and the Conversion Shares).

          “ Exchange Act ” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

          “ GAAP ” means generally accepted accounting principles, as in effect in the United States of America from time to time.

          “ Holder ” means the Investor Stockholders (including any Transferees that have become Investor Stockholders) entitled to the rights of Article IV.

          “ HSR Act ” has the meaning assigned to such term in Section 5.2.

          “ incur ” means, directly or indirectly, to incur, refinance, create, assume, guarantee or otherwise become liable.

          “ Indebtedness ” means, with respect to any Person, any indebtedness of that Person in respect of borrowed money or evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof) or banker’s acceptances or representing capital lease obligations or the balance deferred and unpaid of the purchase price of any property or representing any hedging obligations, except any such balance that constitutes an accrued expense or trade payables and, to the extent not otherwise included, the guarantee by that Person of any Indebtedness of any other Person.

          “ Indemnified Parties ” has the meaning assigned to such term in Section 4.6(c).

          “ Investor Director ” means any Director designated or nominated for election to the Board by an Investor Stockholder pursuant to Section 2.1 of this Agreement.

          “ Investor Stockholder ” has the meaning assigned to such term in the preamble and includes each other Person that becomes an Investor Stockholder pursuant to Section 3.1(c).

          “ Junior Securities ” has the meaning assigned to such term in the Certificate of Designation.

          “ Junior Securities Basket ” has the meaning assigned to such term in Section 2.3(e).

          “ Law ” has the same meaning assigned to such term in the Preferred Stock Agreement.

          “ Maximum Number of Directors ” has the meaning assigned to such term in Section 2.1(a).

          “ NASDAQ ” means The NASDAQ National Market.

          “ NASD ” means the National Association of Securities Dealers, Inc.

          “ Permitted Representatives ” has the meaning assigned to such term in Section 2.5.

          “ Permitted Transferee ” means (i) an Elevation Entity’s directors and officers, (ii) any Elevation Entity, (iii) any corporation, partnership or limited liability company which is and continues to be a controlled Affiliate of any Elevation Entity, and (iv) after the 18-month anniversary of the Closing Date, any partner or member of an Elevation Entity in connection with a pro rata distribution or similar Transfer to, as the case may be, its partners or members. In the event that such a corporation, partnership or limited liability company subsequent to a Transfer hereunder ceases to be such a controlled Affiliate, or in the event that any Elevation Entity ceases to meet the definition thereof as described in clause (ii) above, such event shall be considered a Transfer and shall be subject to the terms hereof with respect thereto, including Section 3.1.

          “ Person ” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, governmental authority or other entity.

          “ Pre-Emptive Amount ” has the meaning assigned to such term in Section 5.1(c).

          “ Pre-Emptive Right ” has the meaning assigned to such term in Section 5.1(a).

          “ Pre-Emptive Rights Notice ” has the meaning assigned to such term in Section 5.1(b).

          “ Preferred Stock ” means the shares of preferred stock, par value $0.001 per share, of the Company and any securities issued in respect thereof, or in substitution therefor, in connection with any stock split, dividend or combination, or any reclassification, recapitalization, merger, consolidation, exchange or other similar reorganization.

          “ Preferred Stock Purchase Agreement ” has the meaning assigned to such term in the recitals.

          “ Pro Forma Debt and Preferred Stock Ratio ” means, after giving effect to a transaction or a series of related transactions, the ratio of (x) the pro forma aggregate principal and accrued interest of indebtedness of the Company and its Subsidiaries, plus the pro forma aggregate liquidation preference and accrued dividends of Preferred Stock of the Company and its Subsidiaries (including the Series A Preferred Stock and Series B Preferred Stock), to (y) the pro forma EBITDA as of the consummation of such transaction or such series of related transactions, with only those adjustments permitted or required by Regulation S-X promulgated by the SEC.

          “ Public Offering ” means a public offering of shares of Common Stock pursuant to an effective registration statement (other than on Form S-4, Form S-8 or their equivalent) under the Securities Act.

          “ Purchased Shares ” has the meaning assigned to such term in the recitals.

          “ Registrable Securities ” means the Conversion Shares held by any Holder and any Common Stock which may be issued in respect thereof, or in substitution therefor, in connection with any stock split, dividend or combination, or any recapitalization, reclassification, merger, consolidation, exchange or other similar reorganization with respect to the Conversion Shares. As to any particular Registrable Securities, once issued, such Registrable Securities shall cease to be Registrable Securities when (i) a registration statement with respect to the sale by the Holder of such securities shall have become effective under the Securities Act and such securities shall have been disposed of in accordance with such registration statement, (ii) such securities shall have been distributed to the public pursuant to Rule 144 (or any successor provision) under the Securities Act, or (iii) such securities shall have ceased to be outstanding. For purposes of this Agreement, any required calculation of the amount of, or percentage of, Registrable Securities shall be based on the number of shares of Common Stock which are Registrable Securities, including shares issuable upon the conversion, exchange or exercise of any security convertible, exchangeable or exercisable into Common Stock.

          “ Registration Expenses ” means any and all expenses incident to performance of or compliance with Article IV of this Agreement, including (i) all SEC and securities exchange or NASD registration and filing fees (including, if applicable, the fees and expenses of any “qualified independent underwriter,” as such term is defined in Section 2720 of the bylaws of the NASD, and of its counsel), (ii) all fees and expenses of complying with securities or blue sky laws (including fees and disbursements of counsel for the underwriters in connection with blue sky qualifications of the Registrable Securities and any escrow fees), (iii) all printing, messenger and delivery expenses, (iv) all fees and expenses incurred in connection with the listing of the Registrable Securities on any securities exchange or NASD pursuant to Section 4.3(g)(i) and all rating agency fees, (v) the fees and disbursements of counsel for the Company and of its independent public accountants, including the expenses of any special audits and/or “cold comfort” letters required by or incident to such performance and compliance, (vi) the reasonable fees and disbursements of counsel for the Company, (vii) the reasonable fees and disbursements of counsel selected pursuant to Section 4.8 not to exceed $60,000 in connection with any registration statement, (viii) any fees and disbursements of underwriters customarily paid by the issuers, including liability insurance if the Company so desires, but excluding fees and disbursements customarily paid by sellers of securities who are not issuers of such securities, underwriting discounts, commissions and transfer taxes, if any, and (ix) the expenses incurred in connection with any road show undertaken pursuant to Section 4.3(q) (including the reasonable out-of-pocket expenses of any Holder).

          “ Representatives ” has the meaning assigned to such term in Section 5.5.

          “ Restated Certificate ” means the Restated Certificate of Incorporation (including the Certificate of Designation) of the Company, as in effect on the date hereof and as the same

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may be amended, supplemented or otherwise modified from time to time in accordance with the terms thereof and the terms of this Agreement.

          “ SEC ” means the U.S. Securities and Exchange Commission or any other federal agency then administering the Securities Act or the Exchange Act and other federal securities laws.

          “ Securities Act ” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

          “ Seller Indemnified Parties ” has the meaning assigned to such term in Section 4.6(a).

          “ Series A Preferred Stock ” means the Preferred Stock of the Company that is designated as Series A Preferred Stock and any securities issued in respect thereof, or in substitution therefor, in connection with any stock split, dividend or combination, or any reclassification, recapitalization, merger, consolidation, exchange or other similar reorganization (other than the Common Stock upon conversion thereof as contemplated by the Restated Certificate).

          “ Series B Preferred Stock ” means the Preferred Stock of the Company that is designated as Series B Convertible Participating Preferred Stock and any securities issued in respect thereof, or in substitution therefor, in connection with any stock split, dividend or combination, or any reclassification, recapitalization, merger, consolidation, exchange or other similar reorganization (other than the Conversion Shares upon conversion thereof as contemplated by the Certificate of Designation).

          “ Significant Subsidiary ” has the meaning given to that term in Rule 1-02 of Regulation S-X promulgated by the SEC.

          “ Subject Shares ” means (i) the Purchased Shares and (ii) the shares of Series B Preferred Stock issued for the payment of in-kind dividends on the Purchased Shares as provided for in the Certificate of Designation with respect to the Series B Preferred Stock.

          “ Subsidiary ” means, with respect to a party, any corporation, partnership, trust, limited liability company or other entity in which such party (or another Subsidiary of such party) holds stock or other ownership interests representing (A) more that 50% of the voting power of all outstanding stock or ownership interests of such entity, (B) the right to receive more than 50% of the net assets of such entity available for distribution to the holders of outstanding stock or ownership interests upon a liquidation or dissolution of such entity or (C) a general or managing partnership interest or similar position in such entity.

          “ Transfer ” means, directly or indirectly, to sell, transfer, assign, pledge, encumber, hypothecate or similarly dispose of, either voluntarily or involuntarily, or to enter into any contract, option or other arrangement or understanding with respect to the sale, transfer, assignment, pledge, encumbrance, hypothecation or similar disposition of, any shares of Equity Securities beneficially owned by a Person or any interest in any shares of Equity Securities beneficially owned by a Person and an event described in the last sentence of the definition of

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Permitted Transferee. For purposes of clarity, a conversion of the Subject Shares into Conversion Shares is not a Transfer.

          “ Transferee ” means any Person to whom any Investor Stockholder or any Transferee thereof Transfers Equity Securities of the Company in accordance with the terms hereof.

          “ Voting Securities ” means, at any time, shares of any class of Equity Securities of the Company which are then entitled to vote in the election of Directors.

          SECTION 1.2.   Other Capitalized Terms . Capitalized terms used but not defined herein shall have the meanings given to them in the Preferred Stock Purchase Agreement.

ARTICLE II

CORPORATE GOVERNANCE AND INFORMATION RIGHTS

          SECTION 2.1.   Board Representation .

          (a) Effective as of the Closing, the Board shall be comprised of no more than eleven (11) Directors; provided that the size of the Board may be decreased to the extent that the Designated Stockholder’s right to designate the maximum number of Directors pursuant to this Section 2.1(a) is not prejudiced by application of the first proviso at the end of this Section 2.1(a); provided further that the size of the Board may be increased pursuant to Section 2.1(d). The Designated Stockholder shall have the right to designate or nominate (as applicable) a maximum of either two (2) Directors or one (1) Director to the Board as follows:

     (i) For so long as the Investor Stockholders hold at least two-thirds of the Purchased Shares issued on the Closing Date (as adjusted for stock splits, combinations, reclassifications and similar transactions but not conversion), the Designated Stockholder shall have the right to designate no more than two (2) Directors to the Board that the holders of Series B Preferred Stock are entitled to elect pursuant to Section 4(c) of the Certificate of Designation;

     (ii) For so long as the Investor Stockholders hold at least one-third, but less than two-thirds, of the Purchased Shares issued on the Closing Date (as adjusted for stock splits, combinations, reclassifications and similar transactions but not conversion), the Designated Stockholder shall have the right to designate no more than one (1) Director to the Board that the holders of Series B Preferred Stock are entitled to elect pursuant to Section 4(c) of the Certificate of Designation;

     (iii) Following the conversion of any Purchased Shares into Conversion Shares (and without duplication of the Board seats provided in clause (i) or (ii) above), for so long as the Investor Stockholders hold at least a number of Conversion Shares equal to two-thirds of the Purchased Shares issued on the Closing Date on an as-converted basis (as adjusted for stock splits, combinations, reclassifications and similar transactions), the Designated Stockholder shall have the right to nominate two (2) Directors for election to

the Board (and no more than a maximum of two (2) Directors giving effect to any rights exercised under clause (i) or (ii) above); and

     (iv) Following the conversion of any Purchased Shares into Conversion Shares (and without duplication of the Board seats provided in clauses (i) and (ii) above), for so long as the Investor Stockholders hold a number of Conversion Shares equal to less than two-thirds but at least one-third of the Purchased Shares issued on the Closing Date (as adjusted for stock splits, combinations, reclassifications and similar transactions) on an as-converted basis, the Designated Stockholder shall have the right to nominate one (1) Director for election to the Board (and no more than a maximum of two (2) Directors giving effect to any rights exercised under clause (i) or (ii) above);

provided that notwithstanding the foregoing, the rights of the Designated Stockholder in this Section 2.1(a) shall be subject to applicable NASDAQ rules to the extent required such that the Common Stock shall continue to be listed on NASDAQ; provided , further , that in connection with an Approved Transaction pursuant to which the Company issues shares of Common Stock as consideration in the transaction, the maximum number of Investor Directors that the Designated Stockholder is entitled to designate or nominate immediately prior to such transaction (the “ Maximum Number of Directors ”) may be reduced following the consummation of such transaction, at the election of the Company, to a number of Investor Directors (rounded to the nearest whole number) equal to (x) the Maximum Number of Directors multiplied by (y) the aggregate percentage ownership of the Company following the consummation of such transaction owned on a fully diluted basis by the holders of Capital Stock of the Company immediately prior to such transaction ( provided that in no event may the Maximum Number of Directors be reduced to below one (1) Investor Director by application of this proviso although it shall remain subject to reduction pursuant to clauses (i) through (iv) of Section 2.1(a)); and provided , further , that in any event such rights shall terminate on the seventh (7 ^th ) anniversary of the date hereof.

          (b) For so long as the Designated Stockholder has the right to designate or nominate at least one (1) director pursuant to Section 2.1(a), the Company at all times shall take such action as may be required under applicable Law, NASDAQ rules, the Restated Certificate and the Bylaws to cause the Board to consist of the number of Directors specified in clause (a) and, subject to the Designated Stockholder’s compliance with Section 2.1(e) to include on the Board or in the slate of nominees recommended by the Board such persons designated or nominated, as the case may be, by the Designated Stockholder pursuant to this Section 2.1.

          (c) For so long as the Designated Stockholder has the right to designate or nominate at least one (1) director pursuant to Section 2.1(a), in the event that a vacancy is created at any time by the death, disability, retirement, resignation or removal (with or without cause) of any Investor Director, the Designated Stockholder may designate or nominate, as applicable, another individual to be elected to fill the vacancy created thereby, and the Company hereby agrees to take, at any time and from time to time, all actions necessary to accomplish the same.

          (d) For so long as the Designated Stockholder has the right to designate or nominate at least one (1) director pursuant to Section 2.1(a), without the prior written consent of

the Designated Stockholder, the Company agrees not to take any action that would cause the number of Directors constituting the entire Board to be greater than 11; provided that the entire Board may be increased to the extent the Company is obligated to designate or nominate one or more Directors to the Board pursuant to an Approved Transaction. Thereafter, the number of Directors may be established by the Board in accordance with the Restated Certificate, By-Laws and applicable Law.

          (e) Any Director designated or nominated by the Designated Stockholder shall be, at all times during which such Person serves as a Director, a present or former full-time general partner, managing director or principal of Elevation Management, LLC, shall not be (or be a representative of or otherwise Affiliated with) a competitor of the Company as determined in good faith by the Board, and shall otherwise be reasonably acceptable to the Company’s Governance and Nominating Committee as determined in good faith. The initial Investor Directors shall be Roger McNamee (as a Class I Director until the declassification of the Board in 2008) and Fred Anderson (as a Class II Director until the declassification of the Board in 2008) and shall be required to stand for re-election at the Company’s 2006 or 2007 annual general meeting of stockholders, as the case may be. The Designated Stockholder shall notify the Company of each proposed Investor Director, in writing, a reasonable time in advance of the mailing of any proxy statement, information statement or registration statement in which any Board nominee or Board member of the Company would be named (which in the event of any proxy statement relating to an annual meeting of stockholders of the Company shall be no later than 30 days prior to the first anniversary of the mailing of the proxy statement related to the previous year’s annual meeting of stockholders), together with all information concerning such nominee reasonably requested by the Company, so that the Company may determine whether such nominee complies with the above qualifications and so that the Company can comply with applicable disclosure rules; provided that in the absence of such notice, the Designated Stockholder shall be deemed to have designated or nominated the same Investor Directors as set forth in the most recent notice delivered to the Company pursuant to this Section 2.1(e).

          (f) All obligations of the Company pursuant to Section 2.1 shall terminate, and, unless otherwise requested by the Board (which request shall not be deemed to affect the termination of the right to nominate or designate Investor Directors pursuant to Section 2.1(a)), the Designated Stockholder shall cause all of the Investor Directors to resign promptly from the Board, immediately when the Designated Stockholder no longer has the right to designate or nominate at least one (1) director pursuant to Section 2.1(a). In addition, the Designated Stockholder shall cause any excess Investor Directors to resign promptly at any time that there exist more Investor Directors than the Designated Stockholder is entitled to nominate or designate pursuant to Section 2.1(a), unless otherwise requested by the Board (which request shall not be deemed to affect the termination of the right to nominate or designate Investor Directors pursuant to Section 2.1(a)). Without prejudice to the foregoing, at any such time, no Investor Directors shall vote or exercise any other rights or powers of office during the period pending resignation. Any vacancy created by such resignation may be filled by the Board of Directors or the stockholders of the Company in accordance with the Restated Certificate, the By-Laws and applicable Law. The Company may implement this provision by requiring the execution and delivery of resignation letters subject to termination of designation or nomination rights.

          SECTION 2.2.   Board Committees . Subject to the requirements of applicable Law, NASDAQ rules, the CALSTRS Agreement and Committee Qualification Requirements, for as long as the Designated Stockholder is entitled to designate or nominate at least one (1) Investor Director pursuant to Section 2.1(a): (a) at least one (1) Investor Director shall be entitled to serve on each regular committee of the Board, and (b) where the requirements of applicable Law, NASDAQ rules, the CALSTRS Agreement or Committee Qualification Requirements prohibit such service on a regular committee of the Board, the Designated Stockholder shall be entitled to have at least one (1) Investor Director be a Board observer on such Board committee. Notwithstanding any such observer status, any committee may hold executive sessions at which the observer is not permitted to be present and may withhold information from the observer in order to avoid any conflict of interest or in light of corporate governance concerns, or to comply with applicable Laws, NASDAQ rules and the CALSTRS Agreement, in each case as reasonably determined by such committee. For purposes of this Section 2.2, “ Committee Qualification Requirements ” shall mean that the Investor Director shall, in the good faith judgment of the Board, meet at all times during the Investor Director’s service on a particular committee: (i) all independence requirements applicable to companies listed for quotation on the NASDAQ National Market (or stock exchange if the Company’s shares are listed on a stock exchange) for members of the particular committee, (ii) be free of any relationship that, in the opinion of the Board, would interfere with the exercise of independent judgment as a member of the particular committee, and (iii) in the case of the Management Development and Compensation Committee, be a “non-employee director” (within the meaning of Rule 16b-3 promulgated under the Exchange Act) and an “outside director” (within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended, and the regulations thereunder).

          SECTION 2.3.   Consent Rights . For as long as the Designated Stockholder is entitled to designate or nominate at least one (1) Investor Director pursuant to Section 2.1(a)(i) or 2.1(a)(ii), in addition to any vote or consent of the stockholders of the Company required by Law, NASDAQ rules, the Restated Certificate or the Bylaws, the consent in writing of the Designated Stockholder shall be necessary for authorizing, effecting or validating the following actions by the Company:

          (a) the incurrence of additional Indebtedness by the Company or any of its Subsidiaries in excess of an amount equal to 2 times EBITDA as of such incurrence; provided , however , that in connection with an Acquisition that is an Approved Transaction, the Company or any of its Subsidiaries may incur Indebtedness of up to 3 times EBITDA as of the consummation of such Acquisition that is an Approved Transaction; and provided , further , that notwithstanding the foregoing, the Company may incur (i) Indebtedness to refinance, replace or restructure existing Indebtedness in an amount not in excess of the principal, plus premium, if any, and accrued interest on such existing Indebtedness and (ii) up to $25,000,000 in Indebtedness, in the aggregate, for corporate purposes (provided that the Indebtedness incurred pursuant to the foregoing clause (ii) will be included in the calculations of this clause (a));

          (b) any Acquisition, Divestiture, recapitalization, reclassification of the securities of, or reorganization of the Company or any of its Subsidiaries, if such Acquisition, Divestiture, recapitalization, reclassification, or reorganization, after giving effect to such transaction or series of related transactions, would result in the greater of (i) a Pro Forma Debt

and Preferred Stock Ratio in excess of 5:1 and (ii) a Pro Forma Debt and Preferred Stock Ratio that is in excess of 5:1 and is greater than the Pro Forma Debt and Preferred Stock Ratio immediately prior to such transaction or series of related transactions; provided that such consent shall not apply in the event that in connection with such transaction or transactions, the Company is required to make a “Change in Control Offer,” as defined in Section 7(a) of the Certificate of Designation;

          (c) unless the Board determines, after consultation with outside counsel, that an action is reasonably required in order for the Board to comply with its fiduciary duties under applicable Law taking into account, to the extent required, the Company’s creditors (including the holders of Preferred Stock), (A) any voluntary filing, or voluntary consent by answer or otherwise to the filing against the Company or any of its Subsidiaries of, a petition for relief or reorganization or arrangement or any other petition in bankruptcy, for liquidation or to take advantage of any bankruptcy, insolvency, reorganization, moratorium or other similar Law of any jurisdiction, (B) any assignment for the benefit of the creditors of the Company or any of its Subsidiaries, (C) any consent to the appointment of a custodian, receiver, trustee or liquidator with similar powers with respect to it or with respect to any substantial part of its property, or (D) any corporate action for the purpose of any of the foregoing;

          (d) enter into any direct or indirect transaction or series of related transactions in excess of $100,000 other than on arms-length terms by the Company or any of its Subsidiaries with an Affiliate of the Company or a family member or an Affiliate thereof or any entity in which an Affiliate has an interest as a director, officer, or greater than 5% stockholder (including without limitation, the purchase, sale, lease or exchange of any property, or rendering of any service or modification or amendment of any existing agreement or arrangement), but excluding transactions that (i) are available to the employees or stockholders generally, (ii) involve employee benefit plans, executive compensation, director compensation, indemnification agreements, or similar transactions, (iii) reimbursement and advancement of business expenses, relocation expenses and similar expenses incurred by directors or employees in the ordinary course of business, and (iv) the reimbursement of expenses and similar payments pursuant to agreements or arrangements with employees to the extent disclosed in the Company’s proxy statement on Schedule 14A filed on May 24, 2005 (including renewals and extensions thereof on substantially similar terms as adjusted for inflation);

          (e) any (A) declaration, setting side or payment of any dividends on, or making any other distributions (whether in cash, securities or other property) in respect of, any Junior Securities or (B) repurchase, redemption or other acquisition of any Junior Securities, except that clauses (A) and (B) shall not apply until the sum of such declarations, settings aside, payments, repurchases, redemptions or acquisitions, since the date hereof, equals at least $10 million (the “ Junior Securities Basket ”); provided that clause (A) and the Junior Securities Basket shall not apply to a dividend of solely Common Stock or Junior Securities of the Company; provided , further , that clause (B) and the Junior Securities Basket shall not apply to (i) repurchases of the Company’s Common Stock pursuant to any publicly announced share repurchase program approved by the Board, in the aggregate, of up to $20 million, (ii) repurchases of the Company’s Common Stock pursuant to any Approved Stock Plan and (iii) the issuance of rights pursuant to a shareholder rights plan adopted by the Board (provided that any

Common Stock issuable upon conversion of the Series B Preferred Stock would be entitled to such rights) or the redemption of rights issued pursuant to such a shareholder rights plan;

          (f) unless the Board determines, after consultation with outside counsel, that an action is reasonably required in order for the Board to comply with its fiduciary duties under applicable Law, taking into account, to the extent required, the Company’s creditors (including the holders of Preferred Stock), any dissolution, liquidation or winding-up of the Company; and

          (g) any authorization of, entering into an agreement for, or the commitment to agree to take any of, any of the foregoing actions.

Notwithstanding the foregoing, the rights of the Designated Stockholder in this Section 2.3 shall be subject to applicable NASDAQ rules to the extent required such that the Common Stock shall continue to be listed on NASDAQ.

          SECTION 2.4.   Information Rights . (a) For so long as the Designated Stockholder is entitled to designate or nominate at least one (1) Investor Director pursuant to Section 2.1(a) or the Investor Stockholders hold at least one-sixth of the Purchased Shares issued on the Closing Date (as adjusted for stock dividends, splits, combinations and similar events, but not for conversion), the Company will deliver to such Investor Directors (or if none, the Designated Stockholder) the following information for distribution by such Investor Directors to the Designated Stockholder, in such manner and form as customarily provided to the Board:

     (i) on an annual basis and as soon as available (but no later than the Company’s December Board meeting or, if such meeting is not held or scheduled in December, at least 20 days before the beginning of each fiscal year), (A) an annual budget of the Company, (B) a business plan of the Company, and (C) financial forecasts for the next fiscal year of the Company, in each case in such manner and form customarily provided to the Board;

     (ii) on an annual basis and as soon as available (but no later than 60 days after the end of each fiscal year), annual financial and operating reports of the Company, in such manner and form customarily provided to the Board;

     (iii) on a quarterly basis and as soon as available (but in no event later than 35 days after the end of each quarter), quarterly financial and operating reports of the Company, in such manner and form customarily provided to the Board;

     (iv) on a monthly basis and as soon as available (but in no event later than 30 days after each month), monthly management and operating reports of the Company, in such manner and form customarily provided to the Board or, if not provided to the Board, in such manner and form customarily provided to the Company’s senior management; and

     (v) such other financial, management and operating reports reasonably requested by the Designated Stockholder.

          (b) In the event that the Company is no longer obligated to file an annual report on Form 10-K or quarterly report on Form 10-Q with the SEC but the Investor Directors are at such time entitled to receive information pursuant to Section 2.4(a), the Company shall deliver the following to the Investor Directors in such manner and form as customarily provided to the Board:

     (i) as soon as practicable after the end of each fiscal year of the Company, and in any event within ninety (90) days thereafter, (A) a consolidated balance sheet of the Company and its Subsidiaries as of the end of such fiscal year and consolidated statements of income and cash flows of the Company and its Subsidiaries for such year, prepared in accordance with GAAP and setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail and followed promptly thereafter (to the extent not available) such financial statements shall be accompanied by the opinion of independent public accountants of recognized national standing selected by the Company’s Audit Committee, and (B) the Company’s business plan for the upcoming fiscal year and, if not previously provided, the prior fiscal year, in each case as approved by the Board; and

     (ii) as soon as practicable after the end of the first, second and third quarterly accounting periods in each fiscal year of the Company, and in any event within forty-five (45) days thereafter, an unaudited consolidated balance sheet of the Company and its Subsidiaries as of the end of each such quarterly period, and unaudited consolidated statements of income and cash flows of the Company and its Subsidiaries for such period and for the current fiscal year to date, prepared in accordance with GAAP and setting forth in comparative form the figures for the corresponding periods of the previous fiscal year, subject to changes resulting from normal year-end audit adjustments, all in reasonable detail and certified by the principal financial or accounting officer of the Company, except that such financial statements need not contain the notes required by GAAP.

          SECTION 2.5.   Confidentiality . Each Investor Stockholder agrees to (i) keep confidential all proprietary and non-public information regarding the Company and its Subsidiaries received pursuant to Section 2.4 and all Evaluation Material (as defined in the Confidentiality Agreement), whether through the Investor Directors or otherwise, and not to disclose or reveal any such information to any person other than those of its directors, general partner and officers (“ Permitted Representatives ”) who need to know such information for the purpose of evaluating, monitoring or taking any other action with respect to the investment by the Investor Stockholder in the Subject Shares or Conversion Shares and to cause those Permitted Representatives to observe the terms of this Section 2.5, (ii) not to use such proprietary and non-public information for any purpose other than in connection with evaluating, monitoring or taking any other action with respect to the investment by the Investor Stockholder in the Subject Shares or Conversion Shares, and (iii) not to use such proprietary and non-public information in a manner that is competitive against or otherwise harmful to the Company; provided that nothing herein shall prevent such Investor Stockholder from disclosing any such information that (a) is or becomes generally available to the public in accordance with Law other than as a result of a disclosure by such Investor Stockholder or its Permitted Representatives or its Affiliates or subsidiaries or in violation of this Section 2.5 or any other confidentiality

agreement between the Company and such Person or any other legal or fiduciary duty of such Person, (b) was within the Investor Stockholder’s possession or developed by it prior to being furnished with such information ( provided that the source of such information was not known after reasonable inquiry by the Investor Stockholder to be bound by a confidentiality agreement with, or other contractual, legal or fiduciary obligation of confidentiality to, the Company with respect to such information); (c) becomes available to the Investor Stockholder on a non-confidential basis from a source other than the Company ( provided that such source is not known after reasonable inquiry by the Investor Stockholder to be bound by a confidentiality agreement with, or other contractual, legal or fiduciary obligation of confidentiality to, the Company with respect to such information); or (d) is required to be disclosed by Law or Order ( provided that prior to such disclosure, such Investor Stockholder shall, unless prohibited by Law or Order, promptly notify the Company of any such disclosure). To the extent that this Section 2.5 conflicts with the Confidentiality Agreement, this Section 2.5 shall govern, and the Confidentiality Agreement shall not apply.

          SECTION 2.6.   Investor Director Expenses . The Company shall reimburse each Investor Director for their reasonable out-of-pocket expenses incurred for the purpose of attending meetings of the Board or committees thereof in accordance with the Company’s current reimbursement policy.

          SECTION 2.7.   D&O Insurance . During the period that an Investor Director is a Director of the Board, such Investor Director shall be entitled to benefits under any director and officer insurance policy maintained by the Company to the same extent as any similarly situated Directors.

          SECTION 2.8.   Election of Directors; Quorum .

          (a) At every meeting of the stockholders of the Company, called, and at every postponement or adjournment thereof, each Investor