<SUBMISSION>
<ACCESSION-NUMBER>0000950137-04-004930
<TYPE>DEFM14A
<PUBLIC-DOCUMENT-COUNT>7
<FILING-DATE>20040617
<EFFECTIVENESS-DATE>20040617
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>ALTERNATIVE RESOURCES CORP
<CIK>0000920521
<ASSIGNED-SIC>7363
<IRS-NUMBER>382791069
<STATE-OF-INCORPORATION>DE
<FISCAL-YEAR-END>1231
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>DEFM14A
<ACT>34
<FILE-NUMBER>000-23940
<FILM-NUMBER>04867567
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>100 TRI STATE INTERNATIONAL
<STREET2>STE 300
<CITY>LINCOLNSHIRE
<STATE>IL
<ZIP>60069
<PHONE>8473171000
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>75 TRI STATE INTERNATIONAL
<STREET2>STE 100
<CITY>LINCOLNSHIRE
<STATE>IL
<ZIP>60069
</MAIL-ADDRESS>
</FILER>
<DOCUMENT>
<TYPE>DEFM14A
<SEQUENCE>1
<FILENAME>c86131ddefm14a.htm
<DESCRIPTION>DEFINITIVE PROXY STATEMENT
<TEXT>
<HTML>
<HEAD>
<TITLE>defm14a</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="center" style="font-size: 10pt"><B>UNITED STATES<BR>
SECURITIES AND EXCHANGE COMMISSION<BR>
Washington, D.C. 20549</B>


<P align="center" style="font-size: 10pt"><B>SCHEDULE 14A</B>



<P align="center" style="font-size: 10pt">Proxy Statement Pursuant to
Section&nbsp;14(a) of<BR>
the Securities Exchange Act of 1934 (Amendment No. &nbsp;&nbsp;)



<P align="left" style="font-size: 10pt">Filed by the Registrant&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="Wingdings">&#120;</FONT>


<P align="left" style="font-size: 10pt">Filed by a Party other than the Registrant&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="Wingdings">&#111;</FONT>


<P align="left" style="font-size: 10pt">Check the appropriate box:

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="90%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><FONT face="Wingdings">&#111;</FONT>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Preliminary Proxy Statement.</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><FONT face="Wingdings">&#111;</FONT>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>Confidential, For Use Of The Commission Only (As Permitted By Rule&nbsp;14a-6(e)(2))</B>.</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><FONT face="Wingdings">&#120;</FONT>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Definitive Proxy Statement.</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><FONT face="Wingdings">&#111;</FONT>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Definitive Additional Materials.</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><FONT face="Wingdings">&#111;</FONT>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Soliciting Material Pursuant to Section&nbsp;240.14a-12</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt"><B>ALTERNATIVE RESOURCES CORPORATION</B>



<P align="center" style="font-size: 10pt">(Name of Registrant as Specified In Its Charter)



<P align="center" style="font-size: 10pt">(Name of Person(s) Filing Proxy Statement, if other than the Registrant)



<P align="left" style="font-size: 10pt">Payment of Filing Fee (check the appropriate box):


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="90%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><FONT face="Wingdings">&#111;</FONT>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">No fee required.</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><FONT face="Wingdings">&#111;</FONT>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Fee computed on table below per Exchange Act Rules&nbsp;14a-6(i)(1) and 0-11.</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>



<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="9%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">1)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Title of each class of securities to which transaction applies:</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="9%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">2)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Aggregate number of securities to which transaction applies:</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="9%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">3)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule&nbsp;0-11 (set forth the amount on
which the filing fee is calculated and state how it was determined):</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="9%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">4)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Proposed maximum aggregate value of transaction:</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="9%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">5)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Total fee paid:</TD>
</TR>

</TABLE>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="9%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="86%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><FONT face="Wingdings">&#120;</FONT>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Fee paid previously with preliminary materials.</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><FONT face="Wingdings">&#111;</FONT>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Check box if any part of the fee is offset as provided by Exchange Act
Rule&nbsp;0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>



<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="9%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">1)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Amount Previously Paid:</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="9%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">2)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Form, Schedule or Registration Statement No.:</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="9%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">3)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Filing Party:</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="9%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">4)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Date Filed:</TD>
</TR>

</TABLE>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="8%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="87%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>Persons who are to respond to the collection of information
contained in this form are not required to respond unless the form
displays a currently valid OMB control number.</B></TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>




<P align="center" style="font-size: 10pt">
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center">
<IMG src="c86131dc8613100.gif" alt="(ARC LOGO)">
</DIV>

<P align="left">
<FONT size="2">Dear Fellow ARC Stockholders:
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Alternative Resources Corporation
(&#147;ARC&#148;) and Pomeroy IT Solutions, Inc.
(&#147;Pomeroy&#148;) have agreed on a merger transaction
whereby Pomeroy will acquire ARC. If we complete the merger, you
will be entitled to receive $0.70 in cash, without interest, for
each share of ARC common stock that you own.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We cannot complete the merger without the
approval of our stockholders. We have scheduled a special
meeting of our stockholders to obtain this approval. The special
meeting will be held at 600 Hart Road, Suite&nbsp;300,
Barrington, IL 60010 on Thursday, July&nbsp;22, 2004 at
10:00&nbsp;a.m., local time. <B>Whether or not you plan to
attend, please take the time to vote by completing and mailing
the enclosed proxy card to&nbsp;us.</B>
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The board of directors of ARC has unanimously
determined that the merger agreement and the merger are fair to
and in the best interests of ARC and its stockholders, has
unanimously approved the merger agreement and declared it
advisable and unanimously recommends that ARC stockholders vote
&#147;FOR&#148; approval and adoption of the merger agreement
and approval of the merger.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The accompanying proxy statement provides you
with detailed information about the proposed merger and the
special meeting. Please read the entire document, including the
appendices, carefully.
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Sincerely,
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <IMG src="c86131dpurcells.gif" alt="-s- STEVEN PURCELL"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">STEVEN PURCELL
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <I><FONT size="2">Senior Vice President, Chief Financial
    Officer,</FONT></I></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <I><FONT size="2">Secretary and Treasurer</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">This proxy statement is dated June&nbsp;17, 2004
and is first being mailed to ARC stockholders on or about
June&nbsp;17, 2004.
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="4">ALTERNATIVE RESOURCES CORPORATION</FONT></B>

<DIV align="center">
<B><FONT size="2">600 Hart Road</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">Suite&nbsp;300</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">Barrington, Illinois 60010</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">(847)&nbsp;381-6701</FONT></B>
</DIV>

<P align="center">
<B>NOTICE OF SPECIAL MEETING OF STOCKHOLDERS</B>

<DIV align="center">
<B>To Be Held July&nbsp;22, 2004</B>
</DIV>

<P align="left">
To the Stockholders of ALTERNATIVE RESOURCES CORPORATION

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Alternative Resources Corporation
(&#147;ARC&#148;) will hold a special meeting of its
stockholders on Thursday, July&nbsp;22, 2004, at
10:00&nbsp;a.m., local time, at 600 Hart Road, Suite&nbsp;300,
Barrington, IL 60010, for the following purposes:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">1.&nbsp;To consider and vote upon a proposal to
    approve and adopt the Agreement and Plan of Merger, dated as of
    May&nbsp;11, 2004, by and among ARC, Pomeroy IT Solutions, Inc.
    (&#147;Pomeroy&#148;) and Pomeroy Acquisition Sub, Inc., a
    wholly-owned subsidiary of Pomeroy (&#147;Pomeroy Sub&#148;),
    under which Pomeroy Sub will merge with ARC, as a result of
    which ARC will become a wholly-owned subsidiary of Pomeroy, and
    approve the merger contemplated by the merger agreement. A copy
    of the merger agreement is attached as Appendix&nbsp;A to the
    accompanying proxy statement.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">2.&nbsp;To transact such other business as may
    properly come before the special meeting or any adjournment or
    postponement of the meeting.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Only stockholders of record at the close of
business on the record date of June&nbsp;10, 2004 are entitled
to notice of, and to vote at, the special meeting and at any
adjournment or postponement of the special meeting. The approval
and adoption of the merger agreement and approval of the merger
requires the affirmative vote of the holders of a majority of
the outstanding shares of ARC common stock as of the record
date. At the close of business on the record date, there were
17,117,304&nbsp;shares of ARC common stock outstanding and
entitled to vote. All ARC stockholders of record are cordially
invited to attend the special meeting in person. Your vote is
important. Whether or not you plan to attend the special meeting
and regardless of the number of shares you own, please vote your
shares by one of the following methods: (1)&nbsp;marking,
signing, dating and returning the enclosed proxy card as
promptly as possible in the postage prepaid envelope enclosed
for that purpose or (2)&nbsp;calling the toll-free number listed
on your proxy card or (3)&nbsp;follow the instructions listed on
your proxy card to vote using the Internet. If you attend the
special meeting, you may vote in person even if you have
returned a proxy card. If your shares are held in the name of a
broker, bank or other nominee, you should direct that person how
to vote your shares and bring proof of your share ownership if
you wish to attend the special meeting. You may revoke your
proxy in the manner described in the accompanying proxy
statement at any time before the proxy has been voted at the
special meeting. Please note that if you abstain, do not vote or
do not instruct your broker, banker or nominee how to vote any
shares that it holds for you in its name, this will have the
same effect as a vote against the approval and adoption of the
merger agreement and approval of the merger.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">You are entitled to appraisal rights under
Delaware law in connection with the merger if you satisfy
certain conditions. See &#147;Appraisal Rights&#148; on page
<B>28</B> in, and Appendix&nbsp;C to, the accompanying proxy
statement for a description of these appraisal rights.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The accompanying proxy statement provides you
with detailed information about the proposed merger and the
special meeting. Please read the entire document, including the
appendices, carefully.
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Please do not send in your ARC stock certificates
at this time. After we complete the merger, a paying agent will
send you instructions for exchanging your ARC stock certificates
for the cash consideration payable in the merger.
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">By order of the ARC Board of Directors,
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <IMG src="c86131dpurcells.gif" alt="-s- STEVEN PURCELL"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">STEVEN PURCELL
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <I><FONT size="2">Senior Vice President, Chief Financial
    Officer,</FONT></I></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <I><FONT size="2">Secretary and Treasurer</FONT></I></TD>
</TR>

</TABLE>

<P align="left">
<FONT size="2">Barrington, Illinois
</FONT>

<DIV align="left">
<FONT size="2">June&nbsp;17, 2004
</FONT>
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left">

</DIV>

<DIV align="left">
<!-- TOC -->
</DIV>

<DIV align="left">
<A name="tocpage"></A>
</DIV>

<P align="center">
<B><FONT size="2">TABLE OF CONTENTS</FONT></B>

<CENTER>
<TABLE width="60%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="87%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Page</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#101'>QUESTIONS AND ANSWERS ABOUT
    THE MERGER</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#102'>SUMMARY</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#103'>The Parties</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#104'>ARC Stock Price</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#105'>Board Recommendation</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#106'>Our Reasons for the
    Merger</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#107'>The Special Meeting</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#108'>Fairness Opinion</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#109'>The Merger</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#110'>CAUTIONARY STATEMENT
    CONCERNING FORWARD-LOOKING STATEMENTS</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#111'>THE PARTIES TO THE MERGER</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#112'>ARC</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#113'>Pomeroy</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#114'>Pomeroy Sub</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#115'>THE SPECIAL MEETING OF
    STOCKHOLDERS</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#116'>Date, Time and Place of the
    Special Meeting</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#117'>Purpose of the Special
    Meeting</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#118'>Who Can Vote at the Special
    Meeting</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#119'>Quorum; Required Votes;
    Abstentions and Broker Non-Votes</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#120'>Proxies; Revocability of
    Proxies</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">13</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#121'>Solicitation of Proxies</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#122'>THE MERGER</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#123'>General Description of the
    Merger</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#124'>Background of the Merger</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#125'>ARC&#146;s Reasons for the
    Merger</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#126'>Recommendation of ARC&#146;s
    Board of Directors</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">19</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#127'>Opinion of ARC&#146;s
    Financial Advisor</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">19</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#128'>Treatment of Outstanding ARC
    Stock Options</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">25</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#129'>Interests of ARC&#146;s
    Directors and Officers in the Merger</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">25</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#130'>Material United States
    Federal Income Tax Consequences</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">27</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#131'>Appraisal Rights</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">28</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#132'>Cessation of Trading and
    Deregistration of ARC Stock after the Merger</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">30</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#133'>THE MERGER AGREEMENT</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">31</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#134'>Mutual Conditions to
    Consummation of the Merger</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">31</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#135'>Exchange Procedures</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">32</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#136'>Representations and
    Warranties</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">33</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#137'>Conduct of Business Pending
    the Merger</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">34</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#138'>Material Adverse Effect</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">36</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#139'>No Solicitation</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">37</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#140'>Termination</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">39</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#141'>Break-Up Fees</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">40</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#142'>Payment of Break-up Fee</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">41</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">i
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="60%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="87%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Page</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#143'>Expenses</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">41</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#144'>Amendment, Extension and
    Waiver</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">41</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#145'>ARC Certificate of
    Incorporation</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">41</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#146'>ARC By-Laws</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">41</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#147'>Wynnchurch Agreement</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">41</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#148'>RECENT MARKET PRICES OF, AND
    DIVIDENDS ON, ARC COMMON STOCK</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">42</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#149'>OTHER MATTERS</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">45</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#150'>FUTURE STOCKHOLDER
    PROPOSALS</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">45</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#151'>WHERE YOU CAN FIND MORE
    INFORMATION</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">46</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">APPENDICES
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#153'>Appendix&nbsp;A&nbsp;&#151;
    Agreement and Plan of Merger</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#154'>Appendix&nbsp;B&nbsp;&#151;
    Opinion of Updata Securities, Inc.</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">B-1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#155'>Appendix&nbsp;C&nbsp;&#151;
    Section&nbsp;262 of General Corporation Law of the State of
    Delaware&nbsp;&#151; Appraisal Rights</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">C-1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left">
<!-- /TOC -->
</DIV>

<P align="center"><FONT size="2">ii
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left">
<A name='101'></A>
</DIV>

<!-- link1 "QUESTIONS AND ANSWERS ABOUT THE MERGER" -->

<P align="center">
<B><FONT size="2">QUESTIONS AND ANSWERS ABOUT THE
MERGER</FONT></B>

<DIV>&nbsp;</DIV>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="2%"></TD>
    <TD width="1%"></TD>
    <TD width="97%"></TD>
</TR>

<TR>
    <TD valign="top">
    <B><FONT size="2">Q:</FONT></B></TD>
    <TD></TD>
    <TD valign="top">
    <B><FONT size="2">Why am I receiving this proxy
    statement?</FONT></B></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">A:
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">You are receiving this proxy statement in
    connection with our solicitation of proxies for our special
    meeting of stockholders to be held on July&nbsp;22, 2004. At the
    special meeting, you will be asked to vote upon a proposed
    merger transaction between us and Pomeroy.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B><FONT size="2">Q:</FONT></B></TD>
    <TD></TD>
    <TD valign="top">
    <B><FONT size="2">As a holder of ARC common stock, what will I
    receive in the merger?</FONT></B></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">A:
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">As a result of the merger, you will be entitled
    to receive $0.70 in cash, without interest, for each share of
    our common stock that you own. For example, if you own
    1,000&nbsp;shares of our common stock, you will receive $700.00.
    You can find a more detailed discussion of the terms of the
    merger in the section of this proxy statement entitled &#147;The
    Merger&#148; beginning on page&nbsp;15.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B><FONT size="2">Q:</FONT></B></TD>
    <TD></TD>
    <TD valign="top">
    <B><FONT size="2">Does the ARC board of directors recommend
    voting in favor of the merger proposal?</FONT></B></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">A:
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">Yes. After careful consideration, our board of
    directors has unanimously determined that the merger agreement
    and the merger is fair to and in the best interests of us and
    our stockholders, has unanimously approved the merger agreement
    and declared it advisable and unanimously recommends that you
    vote &#147;FOR&#148; approval and adoption of the merger
    agreement&nbsp;and approval of the merger.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B><FONT size="2">Q:</FONT></B></TD>
    <TD></TD>
    <TD valign="top">
    <B><FONT size="2">What vote is required to approve and adopt the
    merger agreement and approve the merger?</FONT></B></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">A:
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">Delaware law requires that the holders of a
    majority of the outstanding shares of our common stock as of the
    record date approve and adopt the merger agreement and approve
    the merger.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B><FONT size="2">Q:</FONT></B></TD>
    <TD></TD>
    <TD valign="top">
    <B><FONT size="2">What should I do now in order to vote on the
    merger proposal?</FONT></B></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">A:
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">After carefully reading and considering the
    information contained in this proxy statement, you should vote
    your shares of our common stock by one of the following methods:
    (1)&nbsp;mailing your completed, dated and signed proxy card to
    ARC in the enclosed postage paid envelope or (2)&nbsp;calling
    the toll-free number that appears on your proxy card or
    (3)&nbsp;follow the instructions listed on your proxy card to
    vote using the Internet, in any case as soon as possible so that
    your shares will be represented at the special meeting. If you
    abstain from voting or do not vote, it will have the same effect
    as voting against the merger proposal.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B><FONT size="2">Q:</FONT></B></TD>
    <TD></TD>
    <TD valign="top">
    <B><FONT size="2">If my ARC shares are held in &#147;street
    name&#148; by my broker, will my broker vote my shares for
    me?</FONT></B></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">A:
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">If you do not provide your broker with
    instructions on how to vote your shares, your shares will not be
    voted by your broker, which will have the same effect as voting
    against the merger proposal. You should follow the directions
    provided by your broker regarding how to instruct your broker to
    vote your shares. You should also bring proof of your share
    ownership if you wish to attend the special meeting.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B><FONT size="2">Q:</FONT></B></TD>
    <TD></TD>
    <TD valign="top">
    <B><FONT size="2">Can I change my vote?</FONT></B></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">A:
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">If you are a stockholder of record, you can
    change your vote in one of the following ways at any time before
    your proxy is voted at the special meeting: by written notice to
    our corporate secretary, stating that you would like to revoke
    your proxy; either by completing, signing and submitting a new,
    later-dated proxy card or following the instructions given for
    changing your vote by telephone; or by attending the special
    meeting and voting in person.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">If your shares are held in the name of a broker
    and you have directed that person to vote your shares, you must
    instruct that person if you want to change your vote.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B><FONT size="2">Q:</FONT></B></TD>
    <TD></TD>
    <TD valign="top">
    <B><FONT size="2">Should I send in my ARC stock certificates
    now?</FONT></B></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">A:
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">No, you should not send in your ARC stock
    certificates now. Pomeroy will appoint a paying agent who, after
    we complete the merger, will send you written instructions for
    exchanging your ARC stock certificates for the cash
    consideration payable in the merger.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">1
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV>&nbsp;</DIV>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="2%"></TD>
    <TD width="1%"></TD>
    <TD width="97%"></TD>
</TR>

<TR>
    <TD valign="top">
    <B><FONT size="2">Q:</FONT></B></TD>
    <TD></TD>
    <TD valign="top">
    <B><FONT size="2">What if I receive more than one proxy card for
    the special meeting?</FONT></B></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">A:
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">This may mean that your shares of our common
    stock are registered in different ways or are in more than one
    account. Please provide voting instructions for all proxy cards
    you receive to ensure that all of your shares of our common
    stock are voted at the special meeting.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <B><FONT size="2">Q:</FONT></B></TD>
    <TD></TD>
    <TD valign="top">
    <B><FONT size="2">When do you expect to complete the
    merger?</FONT></B></TD>
</TR>

</TABLE>

<DIV>&nbsp;</DIV>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="2%"></TD>
    <TD width="1%"></TD>
    <TD width="97%"></TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">A:
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">We are working toward completing the merger as
    quickly as possible after the special meeting.
    </FONT></TD>
</TR>

</TABLE>

<DIV>&nbsp;</DIV>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="2%"></TD>
    <TD width="1%"></TD>
    <TD width="97%"></TD>
</TR>

<TR>
    <TD valign="top">
    <B><FONT size="2">Q:</FONT></B></TD>
    <TD></TD>
    <TD valign="top">
    <B><FONT size="2">What if I have additional questions?</FONT></B></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    <FONT size="2">A:
    </FONT></TD>
    <TD></TD>
    <TD valign="top">
    <FONT size="2">If you have questions about the merger, the
    special meeting or where to send your proxy, or if you would
    like additional copies of this proxy statement, you should
    contact: Steven Purcell, our Chief Financial Officer either by
    writing to Alternative Resources Corporation, Attn: Chief
    Financial Officer, 600&nbsp;Hart Road, Suite&nbsp;300,
    Barrington, Illinois 60010, or calling (847)&nbsp;381-6701; or
    Georgeson Shareholder, our proxy solicitor, by calling
    (877)&nbsp;241-0724.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">2
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left">
<A name='102'></A>
</DIV>

<!-- link1 "SUMMARY" -->

<P align="center">
<B><FONT size="2">SUMMARY</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">This summary highlights selected information
from this proxy statement and does not contain all of the
information that may be important to you. To understand the
merger fully and for a more complete description of the legal
terms of the merger, you should read carefully this entire
document, including the documents attached as appendices. See
&#147;Where You Can Find More Information&#148; on page&nbsp;46.
We have included page references parenthetically to direct you
to more complete descriptions of the topics presented in this
summary.</FONT></I>

<DIV align="left">
<A name='103'></A>
</DIV>

<!-- link1 "The Parties" -->

<P align="left">
<B><FONT size="2">The Parties</FONT></B>

<P align="left">
<FONT size="2">Alternative Resources Corporation
<B>(page&nbsp;12)</B>
</FONT>

<DIV align="left">
<FONT size="2">600 Hart Road
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Suite&nbsp;300
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Barrington, Illinois 60010
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">(847)&nbsp;381-6701
</FONT>
</DIV>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">ARC is a leading provider of information
    technology services. ARC has developed a significant, high
    quality business in the IT staffing industry with an emphasis on
    Help Desk, Desktop Support, Technology Deployment Service, and
    Field Service offerings. ARC also has a consulting practice that
    supports those service offerings. ARC operates through
    8&nbsp;field offices with over 55&nbsp;personnel in field sales,
    supported by 35&nbsp;recruiters. The majority of ARC&#146;s
    sales and recruiting personnel operate from home, creating a
    virtual network. ARC serves Fortune&nbsp;1000 and mid-sized
    clients throughout the United States and Canada.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<FONT size="2">Pomeroy IT Solutions, Inc. <B>(page&nbsp;12)</B>
</FONT>

<DIV align="left">
<FONT size="2">1020 Petersburg Road, Hebron, Kentucky, 41048
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">(859)&nbsp;586-0600
</FONT>
</DIV>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">Pomeroy is a provider of enterprise-wide
    information technology solutions that leverage its comprehensive
    portfolio of professional services to create long term
    relationships. Pomeroy&#146;s mission is to offer its clients
    complete solutions that reduce their overall IT costs.
    Pomeroy&#146;s target markets include government and education,
    Fortune&nbsp;1000 and small and medium business clients. These
    clients fall into government and education, financial services,
    health care and other sectors. Pomeroy&#146;s clients are
    located throughout the United States with an emphasis in the
    Southeast and Midwest regions.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<FONT size="2">Pomeroy Acquisition Sub, Inc.
<B>(page&nbsp;12)</B>
</FONT>

<DIV align="left">
<FONT size="2">1020 Petersburg Road, Hebron, Kentucky, 41048
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">(859)&nbsp;586-0600
</FONT>
</DIV>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">Pomeroy Sub is a wholly-owned subsidiary of
    Pomeroy formed solely to facilitate Pomeroy&#146;s acquisition
    of ARC.
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left">
<A name='104'></A>
</DIV>

<!-- link1 "ARC Stock Price (page 42)" -->

<P align="left">
<B><FONT size="2">ARC Stock Price (page&nbsp;42)</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">ARC&#146;s common stock has been traded on the
OTC Bulletin Board under the symbol ALRC.OB since June&nbsp;20,
2001. Prior to that date, ARC&#146;s common stock was traded on
the NASDAQ National Market, but was delisted for failure to
satisfy the minimum price requirement for continued listing. On
May&nbsp;10, 2004, the last full trading day immediately
preceding the public announcement of the proposed merger, ARC
common stock closed at $0.34&nbsp;per share. On June&nbsp;7,
2004, which is the latest practicable date prior to the date of
this proxy statement, ARC common stock closed at $0.64&nbsp;per
share.
</FONT>

<DIV align="left">
<A name='105'></A>
</DIV>

<!-- link1 "Board Recommendation (page 19)" -->

<P align="left">
<B><FONT size="2">Board Recommendation (page&nbsp;19)</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The ARC board of directors has unanimously
determined that the merger is fair to and in the best interests
of ARC and our stockholders and approved the merger agreement
and the merger. The ARC board of directors therefore unanimously
recommends that you vote &#147;FOR&#148; the approval and
adoption of the merger agreement and approval of the merger.
</FONT>

<P align="center"><FONT size="2">3
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left">
<A name='106'></A>
</DIV>

<!-- link1 "Our Reasons for the Merger (page 17)" -->

<P align="left">
<B><FONT size="2">Our Reasons for the Merger
(page&nbsp;17)</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our board of directors, which includes two
members of senior management, consulted extensively with our
financial and legal advisors and considered a number of factors
in reaching its decision to approve the merger agreement and the
merger and to recommend that you vote &#147;FOR&#148; adoption
and approval of the merger agreement and approval of the merger.
Included among these factors were:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">our board of directors&#146; knowledge of the
    current state of our business, operations, assets, financial
    condition, results of operations, technology, management and
    competitive position;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">a review of our historical results of operations
    and financial condition and our business and earnings prospects
    as an independent entity, including our anticipated results of
    operations and financial condition for the remainder of fiscal
    2004;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">various alternatives to the merger, including
    remaining an independent entity, the risks associated with the
    alternatives and the likelihood of ultimately completing a sale
    to any other interested party at a higher price than the merger
    consideration;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">our current and historical market prices relative
    to the $0.70&nbsp;per share merger consideration;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the analysis presented by Updata Capital, Inc.
    and the fairness opinion of its subsidiary, Updata Securities,
    Inc. (together with Updata Capital, Inc., &#147;Updata
    Capital&#148;), delivered to our board of directors as described
    below under &#147;Opinion of ARC&#146;s Financial Advisor&#148;;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">our rights under the merger agreement to consider
    and negotiate other acquisition proposals and financings in
    certain circumstances, as well as the provisions in the merger
    agreement regarding the ability of our board of directors to
    change its recommendation, termination of the merger agreement
    and the payment of termination fees;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the fact that the merger consideration is all
    cash, which provides certainty of value to our stockholders
    compared to a transaction in which our stockholders would
    receive stock in another company;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the likelihood that the merger would be
    consummated, in light of the financial resources of Pomeroy;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the potential impact of the announcement of the
    merger on our employees, customers and strategic
    partners;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the interests that certain of our executive
    officers and directors may have with respect to the merger that
    are different from, or in addition to, their interests as
    stockholders of ARC generally as described below under &#147;The
    Merger&nbsp;&#151; Interests of ARC Directors and Officers in
    the Merger.&#148;
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left">
<A name='107'></A>
</DIV>

<!-- link1 "The Special Meeting" -->

<P align="left">
<B><FONT size="2">The Special Meeting</FONT></B>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Place, Date and Time and Purpose
    (page&nbsp;13)</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The special meeting will be held at 600&nbsp;Hart
Road, Suite&nbsp;300, Barrington, Illinois 60010, on
July&nbsp;22, 2004 at 10:00&nbsp;a.m., local time. At the
special meeting, you will be asked to approve and adopt the
merger agreement and approve the merger.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Record Date, Voting Rights and Votes
    Required (page&nbsp;13)</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">You are entitled to vote at the special meeting
if you owned ARC shares as of the close of business on the
record date of June&nbsp;10, 2004. On the record date, there
were approximately 17,117,304&nbsp;shares of ARC common stock
outstanding and entitled to vote at the special meeting.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Stockholders will have one vote at the special
meeting for each share of ARC common stock they owned on the
record date.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The affirmative vote of a majority of the shares
of ARC common stock outstanding as of the record date is
required to approve the merger proposal.
</FONT>

<P align="center"><FONT size="2">4
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left">
<A name='108'></A>
</DIV>

<!-- link1 "Fairness Opinion (page 19)" -->

<P align="left">
<B><FONT size="2">Fairness Opinion (page&nbsp;19)</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Updata Capital, as financial advisor to our board
of directors, has delivered its written opinion to our board of
directors that, as of May&nbsp;11, 2004 and based upon and
subject to the various qualifications and assumptions described
in such opinion, the consideration of $0.70&nbsp;per share in
cash, without interest, to be received by our stockholders in
the merger is fair from a financial point of view to our
stockholders. The full text of the opinion of Updata Capital is
attached as Appendix&nbsp;B to this proxy statement. We
encourage you to read the Updata Capital opinion carefully in
its entirety. Updata Capital&#146;s opinion is directed to our
board of directors and does not constitute a recommendation to
any of our stockholders as to how to vote in connection with the
merger.
</FONT>

<DIV align="left">
<A name='109'></A>
</DIV>

<!-- link1 "The Merger" -->

<P align="left">
<B><FONT size="2">The Merger</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The merger agreement is attached as
Appendix&nbsp;A to this proxy statement. We encourage you to
read the merger agreement because it is the legal document that
governs the merger. If the holders of a majority of the shares
of ARC common stock outstanding as of the record date approve
and adopt the merger agreement and approve the merger and all
other conditions to the merger are satisfied or waived, Pomeroy
Sub, a wholly-owned subsidiary of Pomeroy, will merge with and
into ARC and Pomeroy Sub&#146;s corporate existence will cease.
Pomeroy has reserved the right to modify the transaction
structure such that ARC would merge with and into Pomeroy Sub,
provided that such modification would not affect the merger
consideration to be paid to holders of ARC common stock,
materially impede the consummation of the merger or relieve
Pomeroy of any of its obligations under the merger agreement. In
either case, ARC would become a wholly-owned subsidiary of
Pomeroy.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">What You Will Receive
    (page&nbsp;15)</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If we complete the merger, you will be entitled
to receive $0.70 in cash, without interest, for each outstanding
share of ARC common stock that you own.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Treatment of Outstanding ARC Options
    (page&nbsp;25)</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If you are a holder of a vested ARC stock option
with an exercise price of less than $0.70, then promptly after
the effective time of the merger, Pomeroy will pay you an amount
of cash equal to the product of (A)&nbsp;the difference between
$0.70 and the per share exercise price of your option and
(B)&nbsp;the number of shares of ARC common stock covered by
your option, less applicable withholding taxes. ARC has the
right to vest all unvested ARC stock options issued under the
ARC stock option plans and outstanding at the effective time of
the merger, subject to the satisfaction of such conditions as
may be established by ARC. Simultaneously with the Merger, the
ARC stock option plans and each outstanding ARC stock option
under ARC stock option plans will be terminated.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Conditions to the Consummation of the
    Merger (page&nbsp;31)</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">ARC and Pomeroy.</FONT></I><FONT size="2"> The
obligations of ARC and Pomeroy to effect the merger are further
subject to the fulfillment of the following conditions, any of
which may be waived in whole or part by ARC or Pomeroy:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the holders of a majority of the outstanding
    shares of ARC common stock must have voted in favor of adopting
    the merger agreement;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the agreement with Wynnchurch Capital Partners,
    L.P. (&#147;Wynnchurch US&#148;), Wynnchurch Capital Partners,
    Canada, L.P. (&#147;Wynnchurch Canada&#148;), and Wynnchurch
    Capital, Ltd. (collectively, the &#147;Wynnchurch Parties&#148;)
    (described below; See &#147;The Merger&nbsp;&#151; Wynnchurch
    Agreement&#148;) shall have been executed and shall be in full
    force and effect;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">no laws shall have been adopted or promulgated,
    and no temporary restraining order, preliminary or permanent
    injunction or other order issued by a court or other legal
    restraint or prohibition that has the effect of preventing the
    completion of the merger is in effect;&nbsp;and
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">5
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">all governmental waivers, consents, orders and
    approvals legally required for the consummation of the merger
    shall have been obtained and in effect.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">ARC.</FONT></I><FONT size="2"> The obligations
of ARC to effect the merger are further subject to the
fulfillment of the following conditions, any of which may be
waived in whole or part by ARC:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Pomeroy and Pomeroy Sub shall have performed in
    all material respects their covenants contained in the merger
    agreement;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the representations and warranties of Pomeroy and
    Pomeroy Sub set forth in the merger agreement must be true and
    correct as of the date of the merger agreement, and must be true
    and correct as of the effective time of the merger as if made at
    and as of such time, except for representations and warranties
    relating to a time or times other than the effective time of the
    merger which were or will be true and correct at such time or
    times and except where the failure or failures of such
    representation and warranties to be so true and correct,
    individually or in the aggregate, does not result or would not
    result in a material adverse effect (without taking into
    consideration any materiality or knowledge qualifier that
    applies to such representation or warranty);
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Pomeroy shall have funded the payment of all
    amounts due and owing by ARC pursuant to ARC&#146;s Senior
    Subordinated Convertible Notes due January&nbsp;31, 2009 and the
    credit agreement with Fleet Bank;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Pomeroy shall have funded payment of all of
    ARC&#146;s severance obligations that are payable upon the
    merger and the cashless exercise consideration related to the
    cancellation of outstanding stock options.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Pomeroy.</FONT></I><FONT size="2"> The
obligations of Pomeroy to effect the merger are further subject
to the fulfillment of the following conditions, any of which may
be waived in whole or part by Pomeroy:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">ARC shall have performed in all material respects
    its covenants contained in the merger agreement;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the representations and warranties of ARC set
    forth in the merger agreement must be true and correct as of the
    date of the merger agreement, and must be true and correct as of
    the effective time of the merger as if made at and as of such
    time, except for representations and warranties relating to a
    time or times other than the effective time of the merger which
    were or will be true and correct at such time or times and
    except where the failure or failures of such representation and
    warranties to be so true and correct, individually or in the
    aggregate, does not result or would not result in a material
    adverse effect (without taking into consideration any
    materiality or knowledge qualifier that applies to such
    representation or warranty);
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">there shall not have occurred since the date of
    the merger agreement any change, effect, circumstance or event,
    which together with any other changes, effects, circumstances or
    events since the date or the merger agreement, has had or is
    reasonably likely to have a material adverse effect with respect
    to ARC;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">no more than 15% of the holders of ARC stock
    shall not vote in favor of, or consent in writing to, the merger
    and demand appraisal of their shares under Section&nbsp;262 of
    the Delaware General Corporation Law;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">all of the warrants issued by ARC to the
    Wynnchurch Parties shall have been sold to Pomeroy;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">ARC shall have received the written agreement of
    holders under ARC&#146;s Senior Subordinated Convertible Notes
    due January&nbsp;31, 2009 and ARC&#146;s senior lender under the
    Fleet Credit Agreement that upon payment in full of such
    obligations, they will release and terminate all liens filed
    against ARC and/or subsidiaries of ARC and, in addition, will
    release any collateral currently in such party&#146;s possession
    that had been pledged to such party by ARC and or subsidiaries
    of ARC;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">ARC shall have substantially completed its
    obligations regarding the filing of certain tax returns and
    corporate qualification matters.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">6
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Termination of the Merger Agreement
    (page&nbsp;39)</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Pomeroy and ARC may agree to terminate the merger
agreement by mutual written consent duly authorized by Pomeroy
and our boards of directors at any time before completing the
merger agreement. In addition, either party may terminate the
merger agreement if (1)&nbsp;any judgment, induction, order,
decree or action by any governmental entity of competent
authority preventing the consummation of the merger shall have
become final and non-appealable; (2)&nbsp;the merger has not
occurred on or before September&nbsp;30, 2004, provided,
however, that a party that has materially breached a
representation, warranty or covenant of such party set forth in
the merger agreement and not cured such breach by such date will
not be entitled to exercise its right to terminate the merger;
or (3)&nbsp;upon a vote at a duly held stockholder meeting, the
stockholders&#146; approval has not been obtained.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Pomeroy may terminate the merger agreement if:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">there shall exist a breach of any representation,
    warranty, covenant or agreement on the part of ARC set forth in
    the merger agreement, of if any representation or warranty of
    ARC shall have become untrue, in either case such that certain
    conditions to closing relating to (i)&nbsp;ARC&#146;s
    performance of covenants, (ii)&nbsp;the truth and accuracy of
    ARC&#146;s representations and warranties and
    (iii)&nbsp;delivery of a certificate signed by the CEO or CFO of
    ARC attesting to the fulfillment of such covenants and truth and
    accuracy of such representations and warranties would be
    incapable of being satisfied by September&nbsp;30, 2004 or if
    certain other conditions to closing would be incapable of being
    satisfied by September&nbsp;30, 2004;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">as of September&nbsp;30, 2004, the holders of
    more than fifteen percent (15%) of ARC&#146;s outstanding common
    stock have not voted in favor of, or consented in writing to,
    the merger agreement and have demanded appraisal rights with
    respect to such shares in accordance with the requirements of
    Section&nbsp;262 of the Delaware General Corporation Law;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">prior to the approval of the merger agreement at
    the special meeting, (A)&nbsp;the board of directors of ARC has
    withdrawn or modified in any manner adverse to Pomeroy or has
    failed to reaffirm (within three (3)&nbsp;days of its receipt of
    an acquisition proposal or a material equity financing) its
    approval or recommendation of the merger or the merger agreement
    in connection with, or approved or recommended, any acquisition
    proposal or material equity financing, or (B)&nbsp;ARC has
    entered into an agreement with respect to any acquisition
    proposal or material equity financing;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">a tender offer or exchange offer has been
    commenced and the board of directors of ARC fails to recommend
    against acceptance of such tender offer or exchange offer or
    elects to take no position with respect to the acceptance of
    such offer;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the special meeting has not been called prior to
    September&nbsp;30, 2004 through fault of&nbsp;ARC;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the board of directors of ARC does not publicly
    recommend in a proxy statement that ARC&#146;s stockholders
    approve and adopt the merger agreement;&nbsp;or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">after recommending in a proxy statement that
    stockholders approve and adopt the merger agreement, the board
    of directors of ARC withdraws, modifies or amends such
    recommendation in any manner adverse to Pomeroy, except in
    connection with the receipt of a superior proposal and the
    related procedures described below.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">ARC may terminate the merger agreement&nbsp;if:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">there shall exist a breach of any representation,
    warranty, covenant or agreement on the part of Pomeroy or
    Pomeroy Sub set forth in the merger agreement, or if any
    representation or warranty of Pomeroy or Pomeroy Sub shall have
    become untrue, in either case such that certain conditions to
    closing relating to (i)&nbsp;Pomeroy and Pomeroy Sub&#146;s
    performance of covenants, (ii)&nbsp;the truth and accuracy of
    Pomeroy and Pomeroy Sub&#146;s representations and warranties
    and (iii)&nbsp;the delivery of a certificate by the CEO or CFO
    of Pomeroy and Pomeroy Sub attesting to the fulfillment of such
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">7
</FONT>

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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD></TD>
    <TD align="left">
    <FONT size="2">covenants and truth and accuracy of such
    representations and warranties would be incapable of being
    satisfied by September&nbsp;30, 2004;&nbsp;or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the board of directors of ARC has delivered a
    termination notice in connection with the receipt of a superior
    proposal and the related procedures described below.
    </FONT></TD>
</TR>

</TABLE>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Break-Up Fees (page&nbsp;40)</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We must pay Pomeroy a break-up fee of $1,500,000
in the following circumstances:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the merger agreement is terminated by either
    party after failure to obtain ARC stockholder approval (and, in
    the case of such termination, Pomeroy has not materially
    breached its representations and warranties or covenants, or has
    cured such breach prior to the stockholders&#146; meeting) and,
    within one year after termination, ARC signs or closes an
    acquisition proposal for all of the company; provided, that ARC
    shall pay Pomeroy an amount equal to Pomeroy&#146;s out of
    pocket expenses incurred in connection with the merger in an
    amount not to exceed $250,000 within two days after failure to
    receive stockholder approval whether or not ARC signs or closes
    an acquisition proposal within such one year period.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the merger agreement is terminated for one of the
    reasons listed below and within one year after termination ARC
    signs or closes an acquisition proposal for all of the company,
    ARC signs or closes a material equity financing, or a tender
    offer is consummated: ARC terminates the merger agreement in
    connection with the receipt of a superior proposal in accordance
    with the procedures described below; ARC terminates the merger
    agreement because the merger has not occurred on or before
    September&nbsp;30, 2004, and, at the time of such termination,
    Pomeroy confirms that it remains ready, willing and able to
    proceed and ARC&#146;s conditions precedent to closing are
    satisfied or would be satisfied upon Pomeroy&#146;s performance
    of its obligations at closing; Pomeroy terminates the merger
    agreement because the merger has not occurred on or before
    September&nbsp;30, 2004, and, at the time of such termination,
    ARC&#146;s conditions precedent to closing are satisfied or
    would be satisfied upon Pomeroy&#146;s performance of its
    obligations at closing but ARC fails to close notwithstanding
    Pomeroy&#146;s confirmation that it remains ready, willing and
    able to proceed; or Pomeroy terminates the merger agreement
    because the merger has not occurred on or before
    September&nbsp;30, 2004, and (i)&nbsp;at the time of such
    termination, ARC&#146;s conditions precedent to closing are
    satisfied or would be satisfied upon Pomeroy&#146;s performance
    of its obligations at closing, (ii)&nbsp;ARC has materially
    breached its covenants such that certain conditions to
    Pomeroy&#146;s obligation to close are not satisfied, and
    (iii)&nbsp;Pomeroy confirms that it would be ready, willing and
    able to proceed but for such material breach by&nbsp;ARC.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the merger agreement is terminated for one of the
    reasons listed below and within one year after termination ARC
    signs or closes an acquisition proposal for all or part of the
    company, ARC signs or closes a material equity financing, or a
    tender offer is consummated: Pomeroy terminates the merger
    agreement after the board of directors of ARC fails to recommend
    against acceptance of certain tender offers or exchange offers
    or elects to take no position with respect to the acceptance of
    such offers; or Pomeroy terminates the merger agreement because
    (i)&nbsp;the special meeting has not been called by
    September&nbsp;30, 2004, (ii)&nbsp;the board of directors does
    not publicly recommend in a proxy statement that the ARC
    stockholders approve and adopt merger agreement or
    (iii)&nbsp;the board of directors withdraws, modifies or amends
    such recommendation in a manner adverse to Pomeroy.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the merger agreement is terminated by Pomeroy
    because the board of directors of ARC has withdrawn or modified
    in any manner adverse to Pomeroy or has failed to reaffirm
    (within (3)&nbsp;days of its receipt of an acquisition proposal
    or material equity financing) its approval or recommendation of
    the merger or the merger agreement in connection with, or
    approved or recommended, any acquisition proposal or material
    equity financing, or ARC has entered into any agreement with
    respect to any acquisition proposal for all of the company or a
    material equity financing without compliance with the processes
    outlined with respect to superior proposals.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">8
</FONT>

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<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">ARC Prohibited from Soliciting Other Offers
    (page&nbsp;37)</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have agreed that neither we nor any of our
directors, officers, or any of our investment bankers, attorneys
or accountants will, and that we will not authorize or knowingly
permit any of our employees or any other agents and
representatives to, directly or indirectly:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">solicit, initiate or knowingly facilitate or
    encourage the making of any inquiry, proposal or offer or other
    agreement that constitutes or would lead to any acquisition
    proposal (defined below);
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">participate or engage in discussions or
    negotiations concerning an acquisition proposal or furnish or
    disclose any information with respect to or in furtherance of
    any acquisition proposal or provide access to its properties,
    books and records or other information or data in furtherance of
    an acquisition proposal;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">grant any waiver or release under any
    confidentiality agreement, standstill agreement or similar
    agreement;&nbsp;or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">execute or enter into any agreement,
    understanding or arrangement with respect to any acquisition
    proposal.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">However, if we receive an unsolicited bona fide
acquisition proposal with respect to all of our outstanding
stock or all or substantially all of our assets or an
unsolicited bona fide proposal for a material equity financing
and, in the good faith judgment of our board of directors, such
transaction is reasonably likely to result in a transaction that
is more favorable to our stockholders than the merger, we are
permitted, subject to additional limitations, to provide
information and engage in discussions and negotiations with the
third party.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Interests of ARC&#146;s Directors and
    Officers in the Merger (page&nbsp;26)</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">When you consider our board of directors&#146;
recommendation that you vote in favor of the merger proposal,
you should be aware that a number of our directors and executive
officers have interests in the merger that may be different
from, or in addition to, your interests in the merger. These
interests include:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">upon consummation of the merger, each vested ARC
    stock option, including those held by directors and executive
    officers, will be converted into a right to receive the excess,
    if any, of the merger consideration over the exercise price of
    the stock option for each share of ARC common stock subject to
    the option;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Robert Stanojev, our President and CEO, and Gibbs
    Vandercook, our Executive Vice President&nbsp;&#151;
    Services&nbsp;&#38; Corporate Development, will not be
    continuing as employees of Pomeroy and are, accordingly,
    entitled to severance payments of $200,000 and $175,000,
    respectively;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Steve Purcell, our Senior Vice President, Chief
    Financial Officer, Secretary and Treasurer, Bill McLendon, our
    Senior Vice President, and Marino Petropoulos, our Vice
    President and Chief Accounting Officer, have entered into
    employment agreements with Pomeroy in connection with the merger;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">at the effective time of the merger, warrants to
    purchase ARC common stock owned by the Wynnchurch Parties will
    be sold to Pomeroy for a purchase price equal to the difference
    between the $0.70&nbsp;per share merger consideration and the
    exercise price of such warrants, and senior subordinated
    convertible notes held by the Wynnchurch Parties will be repaid
    in full without premium; four members of our board of directors
    have been designated by the Wynnchurch Parties;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Pomeroy will indemnify our directors to the same
    extent that they were indemnified prior to the merger under
    their existing indemnification agreements;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Pomeroy will provide directors and officers
    liability insurance to our directors in an amount comparable to
    that currently available to our current directors and officers
    for a period of three years following the consummation of the
    merger, provided that the annual cost for such coverage does not
    exceed $200,000.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">9
</FONT>

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<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Appraisal Rights
    (page&nbsp;28)</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Section&nbsp;262 of the Delaware General
Corporate Law provides you with appraisal rights in the merger.
This means that if you are not satisfied with the amount you are
receiving in the merger, you are entitled to have the value of
your shares determined by the Delaware Court of Chancery and to
receive payment based on that valuation. The ultimate amount you
receive as a dissenting stockholder in an appraisal proceeding
may be more or less than, or the same as, the amount you would
have received in the merger. To exercise your appraisal rights,
you must deliver a written objection to the merger to us at or
before the special meeting and you must not vote in favor of
approval and adoption of the merger agreement and approval of
the merger. Your failure to follow exactly the procedures
specified under Delaware corporate law will result in the loss
of your appraisal rights.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Material United States Federal Income Tax
    Considerations (page&nbsp;27)</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The merger will be a taxable transaction to you.
In general, for United States federal income tax purposes, your
receipt of cash in exchange for your shares of ARC common stock
will cause you to recognize a gain or loss measured by the
difference, if any, between the cash you receive in the merger
and your adjusted tax basis in your shares of ARC common stock.
Tax matters are very complicated, and the tax consequences of
the merger to you will depend on the facts of your particular
situation. We urge you to consult your own tax advisor as to the
specific tax consequences to you of the merger, including the
applicable federal, state, local and foreign tax consequences.
</FONT>

<P align="center"><FONT size="2">10
</FONT>

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<DIV align="left">
<A name='110'></A>
</DIV>

<!-- link1 "CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS" -->

<P align="center">
<B><FONT size="2">CAUTIONARY STATEMENT CONCERNING
FORWARD-LOOKING STATEMENTS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">ARC makes forward-looking statements from time to
time and desires to take advantage of the &#147;safe
harbor,&#148; which is afforded such statements under the
Private Securities Litigation Reform Act of 1995, when they are
accompanied by meaningful cautionary statements identifying
important factors that could cause actual results to differ
materially from those in the forward-looking statements. The
statements contained in this proxy statement, statements
contained in future filings with the Securities and Exchange
Commission and publicly disseminated press releases, and
statements which may be made from time-to-time in the future by
management of ARC in presentations to shareholders, prospective
investors, and others interested in the business and financial
affairs of ARC, which are not historical facts, are
forward-looking statements that involve risks and uncertainties
that could cause actual results to differ materially from those
set forth in the forward-looking statements. Any projections of
financial performance or statements concerning expectations as
to future developments should not be construed in any manner as
a guarantee that such results or developments will, in fact,
occur. There can be no assurance any forward-looking statement
will be realized or that actual results will not be
significantly different from that set forth in such
forward-looking statement. In addition to the risks and
uncertainties of ordinary business operations, the
forward-looking statements of ARC referred to above are also
subject to the following risks and uncertainties:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The possibility that the merger may adversely
    affect our results of operations, whether or not we complete the
    merger;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The merger may not be completed in a timely
    manner or at all, which may adversely affect our business;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The timing of, and legal and other conditions
    associated with, the completion of the merger;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">ARC&#146;s ability to attract and retain
    qualified information technology professionals;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">ARC&#146;s ability to recruit, train, integrate
    and retain qualified sales directors, account managers,
    recruiters and solutions design consultants;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Competition in the information services
    marketplace;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">ARC&#146;s continued ability to initiate and
    develop client relationships;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">ARC&#146;s ability to identify and respond to
    trends in information technology;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Unforeseen business trends in ARC&#146;s national
    accounts or other large clients;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Pricing pressures and/or wage inflation and the
    resulting impact on gross profit and net operating margins;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The ability to successfully enter new geographic
    markets;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">ARC&#146;s ability to successfully meet debt
    covenants;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The effects of changes in general economic
    conditions.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">11
</FONT>

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<DIV align="left">
<A name='111'></A>
</DIV>

<!-- link1 "THE PARTIES TO THE MERGER" -->

<P align="center">
<B><FONT size="2">THE PARTIES TO THE MERGER</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The parties to the merger agreement are ARC,
Pomeroy and Pomeroy Sub.
</FONT>

<DIV align="left">
<A name='112'></A>
</DIV>

<!-- link1 "ARC" -->

<P align="left">
<B><FONT size="2">ARC</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">ARC is a corporation organized under the laws of
Delaware, with its principal executive office located at 600
Hart Road, Suite&nbsp;300, Barrington, Illinois 60010. ARC is a
leading provider of information technology (&#147;IT&#148;)
services. ARC has developed a significant, high quality business
in the IT staffing industry with an emphasis on Help Desk,
Desktop Support, Technology Deployment Service, and Field
Service offerings. ARC also has a consulting practice that
supports those service offerings. ARC operates through 8 field
offices with over 55 personnel in field sales, supported by 35
recruiters. The majority of ARC&#146;s sales and recruiting
personnel operate from home, creating a virtual network. ARC
serves Fortune 1000 and mid-sized clients throughout the United
States and Canada.
</FONT>

<DIV align="left">
<A name='113'></A>
</DIV>

<!-- link1 "Pomeroy" -->

<P align="left">
<B><FONT size="2">Pomeroy</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Pomeroy is a corporation organized under the laws
of Delaware, with its principal office located at 1020
Petersburg Road, Hebron, Kentucky, 41048. Pomeroy is a premier
provider of enterprise-wide IT solutions that leverage its
comprehensive portfolio of professional services to create long
term relationships. Pomeroy&#146;s mission is to offer its
clients complete solutions that reduce their overall IT costs.
The strategy is to be the low cost provider of complete IT
solutions that are developed, integrated and managed for its
customers. These solutions are designed to maximize
clients&#146; financial and operational success. Pomeroy&#146;s
target markets include government and education, Fortune 1000
and small and medium business clients. These clients fall into
government and education, financial services, health care and
other sectors. Pomeroy&#146;s clients are located throughout the
United States with an emphasis in the Southeast and Midwest
regions.
</FONT>

<DIV align="left">
<A name='114'></A>
</DIV>

<!-- link1 "Pomeroy Sub" -->

<P align="left">
<B><FONT size="2">Pomeroy Sub</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Pomeroy Sub is a corporation organized under the
laws of Delaware, with its principal office located at 1020
Petersburg Road, Hebron, Kentucky, 41048. Pomeroy Sub is a
wholly-owned subsidiary of Pomeroy formed solely to facilitate
Pomeroy&#146;s acquisition of ARC.
</FONT>

<P align="center"><FONT size="2">12
</FONT>

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<DIV align="left">
<A name='115'></A>
</DIV>

<!-- link1 "THE SPECIAL MEETING OF STOCKHOLDERS" -->

<P align="center">
<B><FONT size="2">THE SPECIAL MEETING OF STOCKHOLDERS</FONT></B>

<DIV align="left">
<A name='116'></A>
</DIV>

<!-- link1 "Date, Time and Place of the Special Meeting" -->

<P align="left">
<B><FONT size="2">Date, Time and Place of the Special
Meeting</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We are sending this proxy statement to you as
part of the solicitation of proxies by the ARC board of
directors for use at the special meeting, and any adjournment or
postponement of that special meeting, to be held at 600 Hart
Road, Suite&nbsp;300, Barrington, Illinois 60010, on
July&nbsp;22, 2004 at 10:00&nbsp;a.m., local time. We are first
mailing this proxy statement to stockholders on or about
June&nbsp;17, 2004.
</FONT>

<DIV align="left">
<A name='117'></A>
</DIV>

<!-- link1 "Purpose of the Special Meeting" -->

<P align="left">
<B><FONT size="2">Purpose of the Special Meeting</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At the special meeting, ARC stockholders will
consider and vote upon a proposal to approve and adopt the
Agreement and Plan of Merger, dated as of May&nbsp;11, 2004,
among ARC, Pomeroy and Pomeroy Sub under which Pomeroy Sub will
merge with and into ARC, with ARC continuing as a wholly-owned
subsidiary of Pomeroy. Pomeroy has reserved the right to modify
the transaction structure such that ARC would merge with and
into Pomeroy Sub, provided that such modification would not
affect the merger consideration to be paid to holders of ARC
common stock, materially impede the consummation of the merger
or relieve Pomeroy of any of its obligations under the merger
agreement. In either case, ARC would become a wholly-owned
subsidiary of Pomeroy.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The board of directors of ARC has determined that
the merger is advisable to and in the best interests of ARC and
its stockholders, has approved the merger agreement and the
merger and recommends that ARC stockholders vote &#147;FOR&#148;
approval and adoption of the merger agreement and approval of
the merger.
</FONT>

<DIV align="left">
<A name='118'></A>
</DIV>

<!-- link1 "Who Can Vote at the Special Meeting" -->

<P align="left">
<B><FONT size="2">Who Can Vote at the Special Meeting</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Only holders of record of ARC common stock at the
close of business on the record date for the special meeting,
June&nbsp;10, 2004, are entitled to notice of, and to vote at,
the special meeting. At the close of business on the record
date, there were 17,117,304&nbsp;shares of ARC common stock
outstanding held by approximately 215 holders of record. Each
holder of record of ARC common stock on the record date will be
entitled to one vote for each share held on all matters to be
voted upon at the special meeting.
</FONT>

<DIV align="left">
<A name='119'></A>
</DIV>

<!-- link1 "Quorum; Required Votes; Abstentions and Broker Non-Votes" -->

<P align="left">
<B><FONT size="2">Quorum; Required Votes; Abstentions and Broker
Non-Votes</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At the special meeting, the presence, in person
or by proxy, of the holders of a majority of the shares of ARC
common stock outstanding as of the record date will constitute a
quorum for purposes of conducting business. Abstentions and
broker non-votes, which are executed proxies returned by a
broker, bank or other nominee holding shares in &#147;street
name&#148; that indicate that such nominee has not received
voting instructions from the beneficial owner of the shares and
does not have discretionary authority to vote the shares with
respect to the approval of the merger proposal, will be counted
as shares present for purposes of determining whether a quorum
exists.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Approval of the merger proposal requires the
affirmative vote of a majority of the shares of ARC common stock
outstanding as of the record date. The failure to submit a vote,
abstentions and broker non-votes will have the same effect as
votes &#147;AGAINST&#148; the approval of the merger proposal.
</FONT>

<DIV align="left">
<A name='120'></A>
</DIV>

<!-- link1 "Proxies; Revocability of Proxies" -->

<P align="left">
<B><FONT size="2">Proxies; Revocability of Proxies</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">All shares of ARC common stock represented by
properly executed proxies received before or at the special
meeting will, unless the proxies are properly revoked, be voted
in accordance with the instructions indicated on those proxies.
If no directions are given and the proxy is signed and returned,
the proxy will be voted for the proposal to approve and adopt
the merger agreement and to approve the merger. You can also
vote your shares by calling the toll-free number on your proxy
card or follow the instructions listed on your proxy card to
vote using the Internet. If you vote by telephone or Internet,
please do not return a signed proxy card.
</FONT>

<P align="center"><FONT size="2">13
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">ARC does not expect any matter to be brought
before the special meeting other than the merger proposal. If
other matters are properly presented at the special meeting, the
persons named in the proxy card will vote in their discretion
with respect to those matters. However, if a proposal to adjourn
or postpone the meeting is properly presented to permit the ARC
board of directors to further solicit proxies, the persons named
in the proxy card will not have discretion to vote shares voted
against the merger proposal in favor of adjournment or
postponement to solicit additional proxies in favor of the
merger proposal.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If your shares are held in &#147;street
name&#148; in an account at a brokerage firm, bank or other
nominee, you should provide your broker, bank or other nominee
with instructions on how to vote your shares with respect to the
merger proposal. If you do not do so, your broker, bank or other
nominee will not be permitted to vote your shares, which will
result in a &#147;broker non-vote&#148; for your shares. Broker
non-voters will have the same effect as a vote
&#147;AGAINST&#148; the approval of the merger proposal.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If you receive more than one proxy card, it is
because you hold your ARC shares in different names. For
example, you may hold some of your ARC shares individually, some
jointly with your spouse and some in trust for your children, in
which case you should receive three separate proxy cards to
vote. Please complete, date, sign and return all of the proxy
cards.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As an ARC stockholder of record giving a proxy,
you have the power to revoke your proxy and change your vote by:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">sending a written notice to ARC&#146;s corporate
    secretary prior to the special meeting, stating that the
    stockholder would like to revoke its proxy;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">either completing, dating, signing and mailing
    another proxy card and having it received by ARC prior to the
    special meeting or following the instructions given for changing
    your vote by telephone prior to the special meeting;&nbsp;or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">attending the special meeting and voting in
    person.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Attendance at the special meeting will not in and
of itself constitute revocation of a proxy; you must cast an
actual vote. If your shares are held in the name of a bank,
broker or other fiduciary and you have directed that person to
vote your shares, you must instruct that person if you want to
change your vote.
</FONT>

<DIV align="left">
<A name='121'></A>
</DIV>

<!-- link1 "Solicitation of Proxies" -->

<P align="left">
<B><FONT size="2">Solicitation of Proxies</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">ARC will pay the cost of printing and mailing
this proxy statement. ARC has engaged Georgeson Shareholder, a
proxy solicitation firm, to assist in the solicitation of
proxies for the special meeting and will pay Georgeson
Shareholder a fee of $7,500 plus reimbursement of reasonable
out-of-pocket expenses for these services. Proxies may be
solicited by mail, telephone, fax or e-mail or in person by
directors, officers or other regular employees of ARC. No
additional compensation will be paid to directors, officers or
other regular employees for these services. ARC will request
brokers, banks and other nominees holding ARC common stock
beneficially owned by others to send this proxy statement to,
and obtain proxies from, the beneficial owners of the shares and
will reimburse the holders for their reasonable expenses in
doing so.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">You should not send in any ARC stock certificates
with your proxy card. Pomeroy will appoint a paying agent who
will mail a transmittal letter to you containing instructions
for the surrender of your ARC stock certificates as soon as
practicable after completion of the merger.
</FONT>

<P align="center"><FONT size="2">14
</FONT>

<!-- PAGEBREAK -->
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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left">
<A name='122'></A>
</DIV>

<!-- link1 "THE MERGER" -->

<P align="center">
<B><FONT size="2">THE MERGER</FONT></B>

<DIV align="left">
<A name='123'></A>
</DIV>

<!-- link1 "General Description of the Merger" -->

<P align="left">
<B><FONT size="2">General Description of the Merger</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If ARC stockholders approve the merger agreement
and all other conditions to the merger contained in the merger
agreement are satisfied or waived, Pomeroy Sub will merge with
and into ARC. Pomeroy has reserved the right to modify the
transaction structure such that ARC would merge with and into
Pomeroy Sub, provided that such modification would not affect
the merger consideration to be paid to holders of ARC common
stock, materially impede the consummation of the merger or
relieve Pomeroy of any of its obligations under the merger
agreement. In either case, ARC would become a wholly-owned
subsidiary of Pomeroy. The merger will be effective upon the
filing of a certificate of merger with the Secretary of State of
the State of Delaware in accordance with Delaware corporate law
(or at such later date or time as is specified in such
certificate of merger). The merger agreement provides that the
filing of the certificate of merger will be made at the Closing,
which shall be the first business day after satisfaction or
waiver of the conditions set forth in the merger agreement
unless another time is agreed to by ARC and Pomeroy. We are
working to complete the merger as quickly as possible after the
special meeting. We cannot, however, predict exactly when the
effective time of the merger will be. If we complete the merger,
you will be entitled to receive $0.70 in cash, without interest,
for each share of ARC common stock that you own.
</FONT>

<DIV align="left">
<A name='124'></A>
</DIV>

<!-- link1 "Background of the Merger" -->

<P align="left">
<B><FONT size="2">Background of the Merger</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On September&nbsp;12, 2003, representatives of
Updata Capital met with certain directors of ARC to discuss the
prospect of soliciting offers for the purchase of ARC.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On September&nbsp;18, 2003, representatives of
Updata Capital joined members of ARC&#146;s management in a
meeting with a prospective acquirer of ARC in Chicago
(&#147;Prospect A&#148;).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On September&nbsp;23, 2003, ARC signed an
engagement letter with Updata Capital to act as its financial
advisor in connection with a merger or other business
combination and Updata Capital began conducting due diligence on
the business of ARC.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On September&nbsp;24, 2003, certain members of
ARC&#146;s board of directors joined members of ARC&#146;s
management in a meeting with another prospective acquirer of ARC
at the Chicago O&#146;Hare Hilton (&#147;Prospect B&#148;).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During the period beginning in late September
2003 and ending in late October 2003, Updata Capital continued
conducting due diligence on the business of ARC, prepared a list
of potential acquirers for ARC, and assisted ARC&#146;s
management in the preparation of a business summary of the
Company.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">During the period from the middle of October 2003
until the middle of November 2003, Updata Capital contacted
seventy-two (72)&nbsp;parties to determine their interest in
acquiring ARC and ARC entered into fifteen (15) non-disclosure
agreements with parties that expressed an interest in receiving
additional information regarding ARC. Each party that entered
into a non-disclosure agreement with ARC was provided certain
business, operating and historical financial information of ARC,
and an overview of certain investment considerations that were
likely to be relevant to a party interested in acquiring ARC.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On October&nbsp;31, 2003, Updata Capital provided
Pomeroy a non-confidential summary of the business of ARC.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On November&nbsp;4, 2003, the board of directors
of ARC held a meeting at which representatives of Updata Capital
provided ARC an update regarding the solicitation of offers to
acquire ARC.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On November&nbsp;7, 2003, members of ARC&#146;s
management spoke with representatives of Prospect A to further
gauge Prospect A&#146;s interest in acquiring ARC.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On November&nbsp;14, 2003, representatives of
Updata Capital discussed with representatives of Pomeroy on a
&#147;no names&#148; basis the strategic business merits of an
acquisition of ARC and representatives of Pomeroy requested a
non-disclosure agreement for their review.
</FONT>

<P align="center"><FONT size="2">15
</FONT>

<!-- PAGEBREAK -->
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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On November&nbsp;17, 2003, Pomeroy returned an
executed copy of the non-disclosure agreement and Updata Capital
provided representatives of Pomeroy with business, operational
and historical financial information of ARC.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On November&nbsp;18, 2003, representatives of
Updata Capital and members of ARC&#146;s management met with
another prospective acquirer (&#147;Prospect C&#148;).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On December&nbsp;8, 2003, Updata Capital provided
Pomeroy with additional operating and financial information
prepared by ARC including its operating budget, for fiscal 2004.
Prior to this time, Updata Capital had also provided this
information to Prospect&nbsp;A, B and&nbsp;C.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On December&nbsp;12, 2003, representatives of
Updata Capital and members of ARC&#146;s management met with
Pomeroy at ARC&#146;s headquarters in Barrington, Illinois.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Early during the month of December, Updata
Capital informed all prospective buyers who had been initially
contacted and had indicated that they were still interested in a
potential transaction with ARC that they must transmit to Updata
Capital written indications of continued interest before
December&nbsp;24, 2003.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On December&nbsp;10, 2003, members of management
of ARC contacted Prospect C to follow-up and determine whether
Prospect C desired any further information that was not provided
at the meeting held November&nbsp;18, 2003.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On December&nbsp;19, 2003, representatives of
Pomeroy contacted Updata Capital to indicate its interest in
acquiring ARC for between $0.60 and $0.75&nbsp;per share in
cash, the assumption of ARC&#146;s senior debt and a cash
payment in settlement of ARC&#146;s senior subordinated debt.
Also on December&nbsp;19, 2003, Prospect B contacted ARC
indicating an interest in entering into a reverse merger
transaction with ARC in consideration for common stock of
Prospect B. Prospect B&#146;s stock was not publicly traded.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On December&nbsp;23, 2003, ARC was contacted by
Prospect C to indicate its interest in acquiring ARC for common
stock of Prospect C. Prospect C&#146;s indication of interest
placed an enterprise value on ARC of between $35&nbsp;million
and $40&nbsp;million.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On December&nbsp;30, 2003, representatives of
Updata Capital reviewed the indications of interest from
Pomeroy, and Prospects B and C with members of ARC&#146;s
management and certain members of the board of directors of ARC.
At the meeting, it was determined that Updata Capital would
contact each respective party to further determine each
respective party&#146;s intent.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On January&nbsp;5, 2004, Updata Capital discussed
with Pomeroy&#146;s investment banker, Bear Stearns, potential
timing in connection with an acquisition of ARC. Pomeroy
provided a due diligence request list to ARC.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On January&nbsp;6, 2004, representatives of
Updata Capital and members of ARC&#146;s management spoke with
representatives of Prospect C via a conference call to further
discuss the financial situation of ARC.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On January&nbsp;21, 2004, representatives of
Pomeroy visited ARC&#146;s offices to conduct further due
diligence on the business of ARC.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On January&nbsp;27, 2004, Prospect C increased
the amount of its offer and placed an enterprise value on ARC of
between $42 and $45&nbsp;million, with the proviso that ARC must
have at least $3&nbsp;million of working capital on its balance
sheet when Prospect C would consummate its acquisition of ARC.
Prospect C would assume ARC&#146;s senior debt, repay
approximately $4&nbsp;million of ARC&#146;s subordinated debt
and would refinance the remainder ARC&#146;s subordinated debt.
The same day, the board of directors of ARC met with
representatives of Updata Capital to review the status of all
indications of interest to acquire ARC.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On February&nbsp;2, 2004, ARC management visited
Pomeroy&#146;s offices in Hebron, Kentucky to assess
Pomeroy&#146;s operations and business culture and to discuss
the rationale for a potential merger.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On February&nbsp;18, 2004, Pomeroy submitted a
second indication of interest for the acquisition of ARC showing
a narrower offer price range, between $0.70 and $0.75&nbsp;per
share of ARC common stock.
</FONT>

<P align="center"><FONT size="2">16
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On March&nbsp;3, 2004, Pomeroy delivered to ARC
and ARC&#146;s counsel at McDermott Will&nbsp;&#38; Emery LLP
(&#147;McDermott&#148;) its first draft of a proposed merger
agreement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On March&nbsp;8, 2004, members of ARC&#146;s
management met with ARC&#146;s board of directors to provide an
update regarding the solicitation of offers to acquire ARC.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Between early March and early May, management of
ARC and Pomeroy, Updata Capital, McDermott, Bear Stearns, and
Lindhorst&nbsp;&#38; Dreidame Co., LPA, Pomeroy&#146;s legal
counsel (collectively, the &#147;Working Group&#148;),
negotiated terms of the merger agreement and discussed various
areas of due diligence.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On March&nbsp;16, 2004, members of the Working
Group held a conference call to review the status of merger
agreement and the related transaction agreements.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On March&nbsp;17, 2004, the Working Group held
another conference call to review year-to-date financials for
ARC. During the conference call, representatives of Pomeroy
confirmed their intent to offer $0.70&nbsp;per share of ARC
common stock.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On March&nbsp;30, 2004, Pomeroy and its
accountants visited ARC&#146;s offices in Barrington, Illinois
to conduct further due diligence.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On April&nbsp;15, 2004, a conference call was
held between representatives of Pomeroy and members of
ARC&#146;s management to review ARC&#146;s first quarter 2004
financial results.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On April&nbsp;22, 2004, the board of directors of
ARC met with members of ARC&#146;s management to discuss
progress toward signing of the merger agreement with Pomeroy.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On April&nbsp;28, 2004, certain key employees of
ARC met with management of Pomeroy and certain members of
ARC&#146;s board of directors to discuss employment contracts to
be entered into by such key employees and Pomeroy, to take
effect upon consummation of the merger.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On May&nbsp;11, 2004, the board of directors of
ARC met to review the merger and the merger agreement and
receive from Updata Capital its final fairness opinion.
Following the board of director&#146;s meeting, ARC and Pomeroy
entered into the merger agreement and publicly announced the
signing of the merger agreement.
</FONT>

<DIV align="left">
<A name='125'></A>
</DIV>

<!-- link1 "ARC&#146;s Reasons for the Merger" -->

<P align="left">
<B><FONT size="2">ARC&#146;s Reasons for the Merger</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The ARC board of directors has unanimously
determined that the merger is advisable and in the best
interests of ARC and its stockholders and approved the merger
agreement and the merger. The ARC board of directors therefore
unanimously recommends that you vote &#147;FOR&#148; the
approval of the merger proposal.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In making its recommendation, the ARC board of
directors, which includes two members of senior management,
consulted extensively with ARC&#146;s financial and legal
advisors and considered a number of factors, including, without
limitation, the following:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the board&#146;s knowledge of the current state
    of the business, operations, assets, financial condition,
    results of operations, technology, management and competitive
    position of ARC.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">a review of ARC&#146;s historical results of
    operations and financial condition and ARC&#146;s business and
    earnings prospects as an independent entity, including
    anticipated results of operations and financial condition for
    the remainder of fiscal 2004.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the possible alternatives to the merger
    (including the possibility of ARC continuing to operate as an
    independent entity), the range of possible benefits and risks to
    ARC and its stockholders of these alternatives, including risks
    associated with increasing competition in our industry,
    retaining major customers, liquidity issues, the potential
    dilutive impact of raising future capital to fund operations,
    expenses associated with generating future growth, and the
    timing and the likelihood of accomplishing the goals of any of
    these alternatives.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the $0.70&nbsp;per share merger consideration
    payable to ARC stockholders in the merger will provide ARC
    stockholders with cash representing a premium of 106% over the
    $0.34 closing price of ARC common
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">17
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD></TD>
    <TD align="left">
    <FONT size="2">stock on May&nbsp;10, 2004, the day before the
    ARC board of directors approved the merger, and also represents
    a 84% premium, a 75% premium, a 75% premium and a 71% premium
    over the closing price of ARC common stock on the 5th trading
    day, 10th trading day, 15th trading day and 20th trading day,
    respectively, prior to May&nbsp;10, 2004.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the financial presentation of Updata Capital and
    the oral opinion of Updata Capital, delivered on May&nbsp;11,
    2004, subsequently confirmed by delivery of a written opinion
    dated that same day, to the effect that as of the date of the
    written opinion, and based on and subject to the assumptions and
    factors set forth in the written opinion, the $0.70&nbsp;per
    share in cash to be received by ARC stockholders in the merger
    was fair to ARC stockholders from a financial point of view. A
    description of Updata Capital&#146;s opinion and analysis is
    included below under &#147;Opinion of ARC&#146;s Financial
    Advisor.&#148; A copy of Updata Capital&#146;s written opinion
    is attached as Appendix&nbsp;B to this proxy statement.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the historical and recent market prices for, and
    trading volume of, ARC&#146;s common stock compared to
    competitors in ARC&#146;s industry.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the financial and other terms of the merger
    agreement and the related transaction agreements, including the
    representations, warranties and covenants and the conditions to
    each party&#146;s obligations to complete the merger.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">an assessment that none of the alternatives to
    the merger were reasonably likely to present superior
    opportunities for ARC, or reasonably likely to create greater
    value for ARC&#146;s stockholders.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">ARC&#146;s rights under the merger agreement to
    consider and negotiate other acquisition proposals and
    financings in certain circumstances, as well as the provisions
    in the merger agreement regarding the ability of ARC&#146;s
    board of directors to change its recommendation, termination of
    the merger agreement and the payment of termination fees.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the fact that the merger consideration is all
    cash, which provides certainty of value to ARC&#146;s
    stockholders compared to a transaction in which ARC&#146;s
    stockholders would receive stock in another company.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the likelihood that the merger would be
    consummated, in light of the financial resources of Pomeroy.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The ARC board of directors also considered
potential negative consequences of entering into the merger,
including the following:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">that ARC will no longer exist as an independent
    company and our stockholders will no longer benefit from any
    future increase in the value of ARC.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the potential disruption of ARC&#146;s business
    that could result from the announcement and pendency of the
    merger, including potential loss of customers or strategic
    partners, inability to retain key management, strategic, sales
    and marketing, and technical personnel and the potential
    negative impact on the progress of certain projects.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the possibility that the merger will not be
    completed and the potentially negative impact on our revenues,
    sales, earnings, operating results, financial condition,
    business and stock price in the event the merger does not close
    following its public announcement.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the fact that gains from an all-cash transaction
    would be taxable to our stockholders for U.S.&nbsp;federal
    income tax purposes.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">certain terms of the merger agreement, including
    restrictions on operating our business until the merger is
    consummated or the merger agreement is terminated.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the interests that certain executive officers and
    directors of ARC may have with respect to the merger that are
    different from, or in addition to, their interests as
    stockholders of ARC generally as described below under &#147;The
    Merger&nbsp;&#151; Interests of ARC Directors and Officers in
    the Merger.&#148;
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">18
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">that if the merger does not close, we will have
    (1)&nbsp;expended extensive efforts attempting to complete the
    transaction, (2)&nbsp;experienced significant distraction from
    our work during the pendency of the transaction and
    (3)&nbsp;incurred substantial transaction costs that could
    negatively impact our operating results.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The foregoing discussion of the information and
factors considered and given weight by the ARC board of
directors is not intended to be exhaustive. In view of the wide
variety of factors considered in connection with our
board&#146;s evaluation and approval of the merger agreement and
the complexity of those matters, the ARC board did not find it
useful or practical to, and did not, quantify or otherwise
assign relative or specific weights to the specific factors
considered in reaching its determination. In addition,
individual members of the ARC board of directors may have
assigned different weights to different factors. The ARC board
of directors determined, however, that overall, the positive
consequences of the merger to ARC and its stockholders
outweighed the negative factors and risks of the merger.
</FONT>

<DIV align="left">
<A name='126'></A>
</DIV>

<!-- link1 "Recommendation of ARC&#146;s Board of Directors" -->

<P align="left">
<B><FONT size="2">Recommendation of ARC&#146;s Board of
Directors</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">After careful consideration, ARC&#146;s board of
directors has unanimously determined that the merger agreement
and the merger is fair to and in the best interests of ARC and
its stockholders, has unanimously approved the merger agreement
and declared it advisable and unanimously recommends that ARC
stockholders vote &#147;FOR&#148; approval and adoption of the
merger agreement and approval of the merger.
</FONT>

<DIV align="left">
<A name='127'></A>
</DIV>

<!-- link1 "Opinion of ARC&#146;s Financial Advisor" -->

<P align="left">
<B><FONT size="2">Opinion of ARC&#146;s Financial
Advisor</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">ARC engaged Updata Capital on September&nbsp;23,
2003 to act as its financial advisor in connection with a
potential merger or other business combination. Updata Capital
specializes in merger and acquisition advisory services to IT
companies and is continually engaged in valuing technology
businesses. At the May&nbsp;11, 2004 meeting of the ARC board of
directors, Updata Capital presented its analysis as described
below and delivered its oral opinion, subsequently confirmed by
delivery of its written opinion later that same day, to the
effect that as of such date and based on the matters described
in the opinion, the merger consideration to be received in the
transaction is fair, from a financial point of view, to the
holders of ARC common stock. Updata Capital was not requested
to, and did not, provide an update to its opinion to cover
periods after May&nbsp;11, 2004. Updata Capital&#146;s opinion
to the board of directors is dated and speaks only as of
May&nbsp;11, 2004. Updata Capital does not have any obligation
to update, revise or reaffirm its opinion including at the time
of the special meeting of the stockholders.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">The complete text of Updata Capital&#146;s
opinion is attached as Appendix&nbsp;B to this proxy statement.
We urge you to read the opinion carefully in its entirety for a
description of the procedures followed, the factors considered
and the assumptions made by Updata Capital. The following
summary of the analysis performed by Updata Capital in
connection with its opinion is qualified in its entirety by
reference to the opinion.</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Updata Capital&#146;s opinion to ARC&#146;s board
of directors addresses only the fairness of the merger, from a
financial point of view, to the holders of ARC common stock.
Updata Capital&#146;s opinion is not a recommendation to the
stockholders as to how they should vote with respect to the
transaction. Updata Capital&#146;s opinion does not address the
relative merits of the merger or any alternative potential
transaction that might be available to ARC or ARC&#146;s
underlying business decision to effect the transaction. Updata
Capital did not perform any independent appraisal of the assets
or liabilities of ARC. In connection with the preparation of its
opinion, Updata Capital made certain reviews, analyses and
inquiries as it deemed necessary and appropriate under the
circumstances. Among other things, Updata Capital:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">reviewed the most recent draft of the merger
    agreement and certain related documents and based its opinion on
    its understanding that the terms and conditions therein will not
    materially change;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">reviewed and analyzed publicly available
    financial statements and other business and financial
    information of ARC;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">reviewed and analyzed certain internal financial
    and operating information concerning ARC including certain
    projections relating to ARC prepared by its management;
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">19
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">discussed the operations, business strategy,
    financial performance and prospects of ARC with senior
    executives of ARC;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">discussed the strategic rationale for the merger
    with senior executives of ARC;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">reviewed certain financial performance and
    trading data regarding ARC and compared them with similar data
    regarding public companies that were comparable in whole or in
    part to ARC;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">reviewed historical reported closing prices and
    trading activity for ARC common stock on the OTC Bulletin Board
    and NASDAQ Stock Market;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">reviewed available information concerning other
    mergers and acquisitions of public companies deemed to be
    comparable in whole or in part to the merger;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">prepared a discounted cash flow analysis based on
    financial projections and assumptions provided by ARC;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">reviewed such other information, performed such
    other analyses and procedures, and considered such other factors
    as Updata Capital deemed appropriate for purposes of its opinion.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In rendering its opinion, Updata Capital relied
upon and assumed the accuracy and completeness of all the
financial and other information (including without limitation
the representations and warranties contained in the merger
agreement) that was publicly available or reviewed by it for
purposes of its opinion. Updata Capital has not assumed
responsibility to verify, and it has not independently verified
the accuracy or completeness of any such information. Updata
Capital further relied upon the assurances of management of ARC
that they are unaware of any facts that would make the
information provided incomplete or misleading in any material
respect. Updata Capital assumed that financial projections and
other information relating to the merger provided by ARC,
including without limitation certain estimates relating to
financial and operational benefits anticipated from the merger,
were reasonably prepared on bases reflecting the best available
estimates and good faith judgments of ARC management. Updata
Capital assumes no responsibility for and expresses no view as
to such forecasts or the assumptions on which they were based.
The forecasts and projections were based on numerous variables
and assumptions that are inherently uncertain, including,
without limitation, facts related to general economic and market
conditions. Accordingly, actual results could vary significantly
from those set forth in such forecasts and projections.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Updata Capital&#146;s opinion and financial
analyses were only one of many factors considered by our board
of directors in its evaluation of the transaction and should not
be viewed as determinative of the views of our board of
directors.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following is a summary description of some of
the sources of information and methodologies employed by Updata
Capital in rendering its opinion and reviewed with the ARC board
of directors on May&nbsp;11, 2004. This summary of financial
analyses includes information presented in tabular format. In
order to fully understand the financial analyses used by Updata
Capital, the tables must be read together with the text of each
summary. The tables alone do not constitute a complete
description of the financial analyses.
</FONT>

<P align="center"><FONT size="2">20
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Implied Transaction
Value.</FONT></I><FONT size="2"> Updata Capital calculated the
enterprise value implied by the merger consideration to be
$44.75&nbsp;million. This figure consisted of (i)&nbsp;the
merger consideration of $0.70&nbsp;per share times
24.75&nbsp;million ARC shares expected to be outstanding as of
the closing (including 17.12&nbsp;million shares outstanding and
7.63&nbsp;million shares to be issued pursuant to outstanding
in-the-money stock options and warrants calculated on a
&#147;cashless exercise&#148; basis), plus (ii)&nbsp;debt to be
paid by Pomeroy at the Closing of approximately
$27.42&nbsp;million. Updata Capital then compared the enterprise
value of the transaction to various operating statistics of ARC
to determine implied transaction multiples as follows: Implied
Transaction Multiples*
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="64%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Implied</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Enterprise</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">ARC Operating</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Value</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Statistic</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Multiple</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">CY2003 Revenue
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">=
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">138.15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">0.32x</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">LTM Revenue
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">=
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">130.43</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">0.34x</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">LQA Revenue
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">=
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">116.52</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">0.38x</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">CY2004 Revenue(1)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">=
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">130.01</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">0.34x</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">LTM EBITDA
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">=
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">NM</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">NM</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">LQA EBITDA
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">=
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">0.06</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">NM</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">CY2004 EBITDA(1)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="center" valign="top">
    <FONT size="2">=
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">2.65</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">16.9x</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">CY2004 based on Management&#146;s projections.
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="1%"></TD>
    <TD width="4%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">*</FONT></TD>
    <TD align="left">
    <FONT size="2">LTM = Last Twelve Months; LQA = Last Quarter
    Annualized; CY = Calendar Year; EBITDA = Earnings before
    Interest, Depreciation&nbsp;&#38; Amortization and Taxes
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">Implied Transaction Premium</FONT></B>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="67%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Offer Premium vs. ARC&#146;s</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Closing Price:</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">1&nbsp;Day</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">5&nbsp;Days</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">20&nbsp;Days</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><B><FONT size="1">Offer Price Per Share</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Prior</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Prior</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Prior</FONT></B></TD>
</TR>

<TR>
    <TD align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">$0.70
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">105.9</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">84.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">70.7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Analysis of Trading
History.</FONT></I><FONT size="2"> Updata Capital reviewed the
range of daily closing prices of ARC&#146;s common stock during
the twelve month period prior to May&nbsp;11, 2004, and observed
the following:
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="67%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">ARC&#146;s Closing Stock Prices</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Low</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Median</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">High</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">30 Trading Days prior to May&nbsp;11, 2004
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.32</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.38</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.52</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">60 Trading Days prior to May&nbsp;11, 2004
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.30</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.38</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.52</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">90 Trading Days prior to May&nbsp;11, 2004
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.30</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.38</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.52</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">12 Months prior to May&nbsp;11, 2004
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.22</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.35</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.75</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Updata Capital noted that the offer price of
$0.70&nbsp;per share was greater than any daily closing price
for ARC&#146;s stock during the 90 trading days prior to
May&nbsp;11, 2004 and was greater than the median of closing
daily stock prices for the prior twelve month period.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Analysis of Selected Publicly Traded
Companies.</FONT></I><FONT size="2"> Updata Capital reviewed
certain publicly available financial information of companies
deemed to be comparable to ARC in whole or in part. These public
companies included Analysts International Corporation, Butler
International Inc., Computer Horizons Corporation, Computer Task
Group, TechTeam Global Inc. and TSR Inc. The merger
consideration of $0.70&nbsp;per share was compared to a
valuation range derived by applying certain trading multiples of
this group of public companies to ARC&#146;s corresponding
financial statistics. For purposes of this analysis, Updata
Capital
</FONT>

<P align="center"><FONT size="2">21
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">analyzed the following financial multiples of the
comparable public companies (excluding outliers, not meaningful
or unavailable data):
</FONT>
</DIV>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Enterprise Value (defined as market
    capitalization plus total debt minus cash and cash equivalents)
    to last 12&nbsp;months (&#147;LTM&#148;) revenue;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Enterprise Value to LTM EBITDA (defined as
    earnings before interest, taxes and Depreciation&nbsp;&#38;
    Amortization, net of one-time charges);&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Enterprise Value to last quarter annualized
    (&#147;LQA&#148;) EBITDA (based on publicly available estimates).
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Updata Capital used closing share prices as of
May&nbsp;10, 2004 in its analysis. Updata Capital noted that ARC
had a negative EBITDA for the last 12&nbsp;months making the
Enterprise Value/ LTM EBITDA financial metric not meaningful. In
addition, Updata Capital noted that ARC had a negative EBITDA
for the last quarter annualized making the Enterprise Value/ LQA
EBITDA financial metric not meaningful. Since both of these
statistics were not meaningful, Updata Capital applied the
Enterprise Value/ LTM EBITDA multiples derived from the
comparable companies to ARC&#146;s expected CY2004 EBITDA of
$2.65&nbsp;million.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Updata Capital multiplied the relevant financial
statistics of ARC by the financial multiples observed in the
comparable companies to derive a range of implied enterprise
values for ARC. From this implied range of enterprise values,
Updata Capital calculated the implied range of share prices for
ARC&#146;s common stock and compared these to the merger
consideration of $0.70&nbsp;per share. Updata Capital noted that
the merger consideration was within or above the range of
implied share prices in each analysis. The following table shows
the range of share prices implied by the financial multiples of
the comparable companies as compared to the merger consideration:
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="52%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Implied Share Price of ARC</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Using the Financial Multiples</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">of the Comparable Companies</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Merger</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Low</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Median</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">High</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Consideration</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">EV/LTM Revenue
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">(0.09</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">0.62</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">1.08</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">0.70</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">EV/LTM EBITDA
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">NM</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">NM</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">NM</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">0.70</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">EV/LQA EBITDA
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">NM</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">NM</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">NM</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">0.70</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">EV/LTM EBITDA (CY2004)(1)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">0.08</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">0.10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">0.12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">0.70</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">EV/ EBITDA multiple of the comparable companies
    applied to ARC&#146;s projected CY2004 EBITDA
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Analysis of Selected
Acquisitions.</FONT></I><FONT size="2"> Updata Capital also
reviewed certain recent acquisitions of publicly traded IT
infrastructure and staffing companies which were deemed to be,
in whole or in part, comparable to the merger. These
transactions included (target/ acquirer):
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Hall Kinion&nbsp;&#38; Associates, Inc./ Kforce
    Inc.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Joule, Inc./ Management Group
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Skills Resource Training Center/ Barrett Business
    Services
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">SCB Computer Technology Inc./ CIBER Inc.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">OAO Technology Solutions Inc./ Terrapin Partners
    LLC
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Nims Associates Inc./ Keane Inc.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Digital Support Corp./TechTeam Global Inc.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Atlantic Data Services Inc./ Management Group
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">SOS Staffing Services Inc./ Hire Calling Holding
    Co.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">National Systems&nbsp;&#38; Research/ SCB
    Computer Technology Inc.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">22
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">AlphaNet Solutions Inc./ CIBER Inc.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The Judge Group/ Management Group
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Remtech Services/ SCB Computer Technology Inc.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">For each selected acquisition, Updata Capital
calculated the enterprise value (or equity value for deals in
which enterprise value data was not available) of the
transaction as a multiple of the target company&#146;s LTM
revenue and LTM EBITDA. Financial data regarding historical
transactions was taken from SEC filings, press releases,
institutional research and other publicly available sources.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">These transaction multiples were then aggregated
and used to derive a range of implied enterprise values for ARC
based on the relevant ARC financial statistic. Updata Capital
noted that ARC had a negative EBITDA for the last 12&nbsp;months
making the Enterprise Value/ LTM EBITDA financial metric not
meaningful. In addition, Updata Capital noted that ARC had a
negative EBITDA for the last quarter annualized making the
Enterprise Value/ LQA EBITDA financial metric not meaningful.
Since both of these statistics were not meaningful, Updata
Capital applied the Enterprise Value/ LTM EBITDA multiples
derived from the comparable companies to ARC&#146;s expected
CY2004 EBITDA of $2.65&nbsp;million.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">From the implied ranges of ARC enterprise value,
Updata Capital calculated the corresponding implied range of
ARC&#146;s share price and compared it to the merger
consideration of $0.70&nbsp;per share. The following chart shows
the range of ARC share prices implied by the transaction
multiples as compared to the merger consideration.
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="57%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Implied Share Price</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">of ARC Using the</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Transaction Multiples</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Merger</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Low</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Median</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">High</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Consideration</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">EV/LTM Revenue
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">(0.54</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">0.57</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">1.58</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">0.70</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">EV/LTM EBITDA
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">NM</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">NM</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">NM</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">0.70</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">EV/LTM EBITDA (CY2004)(1)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">(0.82</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">(0.35</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">0.40</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">0.70</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">EV/EBITDA multiple of the comparable companies
    applied to ARC&#146;s projected CY2004 EBITDA
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Updata Capital noted that the $0.70 offer price
per share is greater than the price implied by the median
Enterprise Value to LTM Revenue multiple of the selected
acquisitions.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Analysis of Premiums Paid in Selected
Acquisitions.</FONT></I><FONT size="2"> Updata Capital reviewed
24 selected acquisitions of U.S.&nbsp;publicly traded IT
Services and Software companies since January 2003 having
acquisition deal values at announcement of less than
$250&nbsp;million and with share prices of less than $5.00 prior
to announcement. For each transaction, Updata Capital calculated
the premium paid relative to the target&#146;s stock price at
periods of 1-day, 5-days, and 20-days prior to announcement. The
ranges of observed premiums were used to calculate ranges of
implied ARC share prices which were in turn compared to the
merger consideration of $0.70&nbsp;per share. The transactions
analyzed included (target/ acquirer):
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Joule, Inc./ Management Group
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Novadigm Inc./ Hewlett-Packard Co.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Optika Inc./ Stellent Inc.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Hall Kinion&nbsp;&#38; Associates, Inc./ Kforce
    Inc.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">SCB Computer Technology Inc./ CIBER Inc.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">ON Technology Corp./ Symantec Corporation
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Mercator Software, Inc./ Ascential Software
    Corporation
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">OAO Technology Solutions Inc./ Terrapin Partners
    LLC
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">23
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">N2H2 Inc./ Secure Computing Corp.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Brio Software, Inc./ Hyperion Solutions
    Corporation
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Atlantic Data Services Inc./ ADS Acquisition
    Company
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Comshare, Inc./ GEAC Computer Corp. Ltd.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Corel Corporation/ Vector Capital
    Partners&nbsp;II LLC
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Made2Manage Systems, Inc./ Battery Ventures LP
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Elevon, Inc./ SSA Global Technologies Inc.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Atlantic Data/ Management Group
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Speechworks International/ Scansoft Inc.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">AlphaNet Solutions Inc./ CIBER Inc.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Computer Horizons Corp./ Aquent LLC
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">The Judge Group/ Management Group
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">HTE, Inc./ SunGard Data Systems Inc.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Resonate Inc./ Gores Technology Group LLC
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Numerical Technologies Inc./ Synopsis Inc.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The charts below set forth the range of
transaction premiums for each of the stated periods, as well as
the price per share for ARC&#146;s common stock implied by such
premiums.
</FONT>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="51%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="4%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Premium</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Range of Transaction Premiums</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Represented by</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">the Merger</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Low</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Median</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">High</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Consideration</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">1 Trading Day Before Announcement
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.0%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">21.4%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">89.2%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">105.9%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">5 Trading Days Before Announcement
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2.0%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">22.6%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">89.2%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">84.2%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">20 Trading Days Before Announcement
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">-6.4%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">44.5%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">200.0%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">70.7%</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="58%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Implied Share Price</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">of ARC Using the</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><B><FONT size="1">Transaction Premiums</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="11" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Merger</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Low</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Median</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">High</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Consideration</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">1 Trading Day Before Announcement
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.34</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.41</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.64</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.70</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">5 Trading Days Before Announcement
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.39</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.47</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.72</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.70</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">20 Trading Days Before Announcement
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.38</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.59</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.23</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.70</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Updata Capital noted that the merger
consideration of $0.70&nbsp;per share is higher than the median
premium for each time period analyzed.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Discounted Cash Flow Analysis</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Updata Capital also reviewed a discounted cash
flow analysis and developed a valuation range based on five-year
discounted cash flows and a terminal value based on a multiple
of EBITDA and revenue in the fifth year. The analysis was
performed using ARC&#146;s 2004 operating plan with
2005&nbsp;&#151; 2008 projections developed from operating and
cash flow assumptions provided by ARC management. The five-year
projections used in this analysis were determined by ARC to be
reasonable in light of (i)&nbsp;historical norms for the Company
and industry and (ii)&nbsp;recent trends in the business and
industry. Industry average trading multiples were applied to
arrive at the terminal value of Enterprise Value/ LTM Revenue
and Enterprise Value/ LTM EBITDA. The analysis was also
performed for various discount rates. Based on the range of
multiples and discount rates,
</FONT>

<P align="center"><FONT size="2">24
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2">Updata Capital determined a range of low, median
and high implied values for ARC of $0.02, $0.47 and
$0.77&nbsp;per share respectively.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Updata Capital noted that merger consideration of
$0.70&nbsp;per share was within the range and above the median
of share prices derived from the discounted cash flow analysis.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">Conclusion.</FONT></I><FONT size="2"> The
summary set forth above does not purport to be a comprehensive
description of all the analyses and factors considered by Updata
Capital. The preparation of a fairness opinion is a complex
process that involves various determinations as to the most
appropriate and relevant methods of financial analysis and the
application of these methods to the particular circumstances and
therefore, such an opinion is not necessarily susceptible to
partial analysis or summary description. In arriving at its
opinion, Updata Capital considered the results of all of its
analyses as a whole and did not attribute any particular weight
to any analysis or factor considered by it. Updata Capital
believes that selecting any portion of its analyses, without
considering all analyses, would create an incomplete view of the
process underlying its opinion. The conclusions reached by
Updata Capital may involve significant elements of subjective
judgment and qualitative analysis. The ranges of valuations
resulting from any particular analysis described above should
not be taken to be Updata Capital&#146;s view of the actual
value of ARC. In performing its analyses, Updata Capital
considered general economic, market and financial conditions and
other matters, many of which are beyond the control of ARC. The
analyses supplied by Updata Capital and its opinion were among
several factors taken into consideration by ARC&#146;s board in
making its decision to enter into the merger agreement and
should not be considered as determinative of such decision. The
merger consideration reflected in the merger agreement was
determined through arm&#146;s-length negotiations between ARC
and Pomeroy and was approved by ARC&#146;s board. Updata
assisted ARC during these negotiations. Updata did not, however,
recommend any specific offer to ARC or that any specific offer
constituted the only appropriate offer for the merger.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Pursuant to an agreement with us arising out of
an engagement letter dated September&nbsp;23, 2003 ARC agreed to
pay Updata Capital a fee of $250,000 for the fairness opinion
rendered to ARC&#146;s board of directors, plus reimbursement of
its reasonable out-of-pocket expenses, including attorney&#146;s
fees and expenses. Such payments were not contingent upon the
closing of the merger. In addition, such payments were not
contingent upon the determination that the merger consideration
was fair, from a financial point of view, to ARC&#146;s
stockholders. The September&nbsp;23, 2003 letter also engaged
Updata Capital to provide financial advisory services to ARC in
connection with a sale or merger, and ARC agreed to pay a fee in
connection therewith, most of which is contingent upon
consummation of the proposed merger. The fee shall equal 4% of
the first $10,000,000 of aggregate value, plus 2% of the next
$40,000,000 of aggregate value and is estimated to be
$1,115,000. Upon signing this engagement letter, ARC agreed to
pay Updata Capital a retainer fee of $75,000, such amount to be
credited against the transaction fee described in the previous
sentence. ARC also agreed to reimburse Updata Capital for
reasonable out-of-pocket expenses associated with its advisory
services, including attorney&#146;s fees and expenses, and to
indemnify and hold harmless Updata Capital and its affiliates
and the partners, directors, agents and employees of Updata and
of its affiliates for losses, claims, damages and liabilities
relating to or arising out of services provided by Updata
Capital as ARC&#146;s financial advisor. The terms of the fee
arrangement with Updata Capital, which ARC and Updata Capital
believe are customary in transactions of this nature, were
negotiated at arm&#146;s-length.
</FONT>

<DIV align="left">
<A name='128'></A>
</DIV>

<!-- link1 "Treatment of Outstanding ARC Stock Options" -->

<P align="left">
<B><FONT size="2">Treatment of Outstanding ARC Stock
Options</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">All unvested ARC stock options issued under the
ARC stock option plans and outstanding at the effective time of
the merger will vest at such time. If you are a holder of a
vested ARC stock option with an exercise price of less than
$0.70, then promptly after the effective time of the merger,
Pomeroy will pay you an amount of cash equal to the product of
(A)&nbsp;the difference between $0.70 and the per share exercise
price of your option and (B)&nbsp;the number of shares of ARC
common stock covered by your option, less applicable withholding
taxes. ARC has the right to vest all unvested ARC stock options
issued under the ARC stock option plans and outstanding at the
effective time of the merger, subject to the satisfaction of
such conditions as may be established by ARC. Simultaneously
with the Merger, the ARC stock option plans and each outstanding
ARC stock option under ARC stock option plans will be terminated.
</FONT>

<P align="center"><FONT size="2">25
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left">
<A name='129'></A>
</DIV>

<!-- link1 "Interests of ARC&#146;s Directors and Officers in the Merger" -->

<P align="left">
<B><FONT size="2">Interests of ARC&#146;s Directors and Officers
in the Merger</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In considering the recommendation of the ARC
board of directors, and support of ARC executive officers, with
respect to the merger agreement, stockholders of ARC should be
aware that certain directors and executive officers of ARC have
interests in the merger that are different from, or in addition
to, their interests as stockholders of ARC generally. The ARC
board of directors was aware of these interests and considered
them, among other matters, in approving the merger agreement and
the merger.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Stock Options</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The merger agreement provides that, upon
completion of the merger, each vested ARC stock option,
including those held by directors and executive officers, will
be converted into the right to receive the excess, if any, of
the merger consideration over the exercise price of the stock
option for each share of ARC common stock subject to the option.
ARC has the right to vest all unvested stock options issued
under its stock option plans and outstanding at the effective
time of the merger, subject to the satisfaction of such
conditions as may be established by ARC.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Severance/ Change of Control
    Payments</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Robert Stanojev, our Chairman of the Board,
President and Chief Executive Officer, is entitled to receive
severance payments under certain circumstances in an amount
equal to one times his current annual compensation pursuant to
an existing arrangement with ARC. In the event of a change of
control of ARC, Mr.&nbsp;Stanojev is entitled to full payment of
the severance amount at the closing of the change of control
transaction if his employment as President and Chief Executive
Officer is terminated in connection with the transaction.
Mr.&nbsp;Stanojev will not be continuing as our President and
Chief Executive Officer following consummation of the merger.
Accordingly, he will receive a severance payment of $200,000 at
the effective time of the merger.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Gibbs Vandercook, our Executive Vice
President&nbsp;&#151; Services&nbsp;&#38; Corporate Development,
is also entitled to receive severance payments under certain
circumstances and additional payments in the event of a change
of control pursuant to his employment agreement with ARC. In the
event a Mr.&nbsp;Vandercook&#146;s employment with ARC is
terminated without cause, he is entitled to a severance payment
in an amount equal to six months of his existing base salary. If
a change of control occurs within the first year of
Mr.&nbsp;Vandercook&#146;s employment (which commenced on
February&nbsp;1, 2004), he is entitled to an additional $50,000
in connection with such termination. Mr.&nbsp;Vandercook will
not be continuing as our Executive Vice President&nbsp;&#151;
Services&nbsp;&#38; Corporate Development following consummation
of the merger. Accordingly, he will receive a severance payment
of $175,000 at the effective time of the merger.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Employment Agreements</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Steve Purcell, our Senior Vice President, Chief
Financial Officer, Secretary and Treasurer has accepted an offer
of employment with Pomeroy following consummation of the merger.
Mr.&nbsp;Purcell is also one of our directors. The term of
Mr.&nbsp;Purcell&#146;s employment agreement is one year, with
automatic annual renewals. Mr.&nbsp;Purcell will receive an
annual salary of $285,000 during the first year of his
employment, which will be increased to $300,000 for any renewal
term after the expiration of the initial one year term.
Mr.&nbsp;Purcell will also be eligible for an annual bonus of
$150,000 during the first year of his employment and of not less
than $150,000 for each of the next two years, subject to the
attainment of the goals, criteria, and benchmarks established by
Pomeroy. Mr.&nbsp;Purcell will also receive a signing bonus in
the form of options to acquire 30,000&nbsp;shares of Pomeroy
stock which will be 100% vested on the date of grant. As long as
Mr.&nbsp;Purcell remains employed by Pomeroy during the initial
term of his agreement, he will be awarded an option to acquire
30,000&nbsp;shares of Pomeroy stock on each of the first, second
and third anniversaries of the effective date of his employment
agreement. Half of such options will be 100% vested at the time
of grant and the remaining half will be subject to a three-year
vesting schedule. All of Mr.&nbsp;Purcell&#146;s options to
acquire ARC stock will be fully vested upon consummation of the
merger. Mr.&nbsp;Purcell is also entitled to receive certain
fringe benefits
</FONT>

<P align="center"><FONT size="2">26
</FONT>

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<DIV align="left">
<FONT size="2">including health insurance, vacation, retirement
benefits, an automobile and cellular phone allowance and life
insurance benefits.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Bill McLendon, our Senior Vice President, has
accepted an offer of employment with Pomeroy following
consummation of the merger. The term of Mr.&nbsp;McLendon&#146;s
employment agreement is one year. Mr.&nbsp;McLendon will receive
an annual salary of $200,000. Mr.&nbsp;McLendon will also be
eligible for an annual bonus of $100,000, subject to the
attainment of the goals, criteria, and benchmarks established by
Pomeroy. All of Mr.&nbsp;McLendon&#146;s options to acquire ARC
stock will be fully vested upon consummation of the merger.
Mr.&nbsp;McLendon is also entitled to receive certain fringe
benefits including health insurance, vacation, retirement
benefits, an automobile and cellular phone allowance and life
insurance benefits. If Pomeroy and Mr.&nbsp;McLendon agree to
extend the term of his employment agreement beyond the initial
one year term, Mr.&nbsp;McLendon will be entitled to receive an
option to acquire 45,000&nbsp;shares of Pomeroy stock in
connection with such extension.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Marino Petropoulos, our Vice President and Chief
Accounting Officer, has accepted an offer of employment with
Pomeroy following consummation of the merger. The term of
Mr.&nbsp;Petropoulos&#146; employment agreement is one year,
with automatic annual renewals. Mr.&nbsp;Petropoulos will
receive an annual salary of $115,000. Mr.&nbsp;Petropoulos will
also be eligible for an annual bonus equal to 20% of his base
salary, subject to the attainment of the goals, criteria, and
benchmarks established by Pomeroy. Mr.&nbsp;Petropoulos will
also receive a signing bonus in the form of options to acquire
10,000&nbsp;shares of Pomeroy stock which will be 100% vested on
the date of grant. As long as Mr.&nbsp;Petropoulos remains
employed by Pomeroy during the initial term of his agreement, he
will be awarded an option to acquire 5,000&nbsp;shares of
Pomeroy stock on the first anniversary of the effective date of
his employment agreement. Half of such options will be 100%
vested at the time of grant and the remaining half will be
subject to a three-year vesting schedule. All of
Mr.&nbsp;Petropoulos&#146; options to acquire ARC stock will be
fully vested upon consummation of the merger.
Mr.&nbsp;Petropoulos is also entitled to receive certain fringe
benefits including health insurance, vacation and retirement
benefits.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Wynnchurch Designees to Board of
    Directors</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Four members of our board of directors, namely
John Hatherly, Richard Renaud, Frank Hayes and Michael Hering,
have been designated to our board of directors by the Wynnchurch
Parties pursuant to existing agreements relating to their
investment in ARC. At the effective time of the merger, the
warrants to purchase ARC common stock owned by the Wynnchurch
Parties will be sold to Pomeroy and the Wynnchurch Parties&#146;
senior subordinated convertible notes will be repaid (see
&#147;Merger&nbsp;&#151; Wynnchurch Agreement&#148;). The
purchase price for the Wynnchurch Parties warrants is equal to
the difference between the $0.70&nbsp;per share merger
consideration and the exercise price of such warrants. The
Wynnchurch Parties&#146; senior subordinated convertible notes
will be repaid in full at the effective time of the merger
without premium.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Indemnification and Insurance</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If we complete the merger, Pomeroy will indemnify
our directors to the same extent they were indemnified prior to
the merger under their existing indemnification agreements.
Pomeroy will provide directors and officers liability insurance
in an amount comparable to that currently available to the
current directors and officers of ARC for a period of three
years following the consummation of the merger, provided the
annual cost for such coverage does not exceed $200,000.
</FONT>

<DIV align="left">
<A name='130'></A>
</DIV>

<!-- link1 "Material United States Federal Income Tax Consequences" -->

<P align="left">
<B><FONT size="2">Material United States Federal Income Tax
Consequences</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following is a summary of United States
federal income tax consequences of the merger relevant to
beneficial holders of ARC common stock. The discussion is for
general information only and does not purport to consider all
aspects of federal income taxation that might be relevant to
beneficial holders of ARC common stock. The discussion is based
on current provisions of the Internal Revenue Code of 1986, as
amended, existing, proposed and temporary regulations
promulgated thereunder, rulings, administrative pronouncements
and judicial decisions, changes to which could materially affect
the tax consequences described in this proxy statement and could
be made on a retroactive basis. The discussion applies only to
beneficial holders of ARC
</FONT>

<P align="center"><FONT size="2">27
</FONT>

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<DIV align="left">
<FONT size="2">common stock in whose hands shares are capital
assets and may not apply to beneficial holders who acquired
their shares pursuant to the exercise of employee stock options
or other compensation arrangements with ARC or hold their shares
as part of a hedge, straddle or conversion transaction or who
are subject to special tax treatment under the Code (such as
dealers in securities, insurance companies, other financial
institutions, regulated investment companies, tax-exempt
entities, S&nbsp;corporations and taxpayers subject to the
alternative minimum tax). In addition, this discussion does not
discuss the federal income tax consequences to a beneficial
holder of ARC common stock who, for United States federal income
tax purposes, is a non-resident alien individual, a foreign
corporation, a foreign partnership or a foreign estate or trust,
nor does it consider the effect of any state, local or foreign
tax laws.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The receipt of cash for ARC common stock pursuant
to the merger will be a taxable transaction for United States
federal income tax purposes. In general, a beneficial holder who
receives cash in exchange for shares pursuant to the merger will
recognize gain or loss for federal income tax purposes equal to
the difference, if any, between the amount of cash received and
the beneficial holder&#146;s adjusted tax basis in the shares
surrendered for cash pursuant to the merger. Gain or loss will
be determined separately for each block of shares (i.e., shares
acquired at the same cost in a single transaction) surrendered
for cash pursuant to the merger. Such gain or loss will be
capital gain or loss, and will be long-term capital gain or loss
if the beneficial holder&#146;s holding period for such shares
is more than one year at the time of consummation of the merger.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Backup withholding at a 28% rate may apply to
cash payments a beneficial holder of shares receives pursuant to
the merger. Backup withholding generally will apply only if the
beneficial holder fails to furnish a correct taxpayer
identification number, or otherwise fails to comply with
applicable backup withholding rules and certification
requirements. Each beneficial holder should complete and sign
the substitute Form&nbsp;W-9 that will be part of the letter of
transmittal to be returned to the exchange agent in order to
provide the information and certification necessary to avoid
backup withholding, unless an applicable exemption exists and is
otherwise proved in a manner acceptable to the exchange agent.
Backup withholding is not an additional tax. Any amounts
withheld under the backup withholding rules will be allowable as
a refund or credit against a beneficial holder&#146;s United
States federal income tax liability, provided the required
information is furnished to the Internal Revenue Service.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Because individual circumstances may differ, each
beneficial holder of shares is urged to consult such beneficial
holder&#146;s own tax advisor as to the particular tax
consequences to such beneficial holder of the merger, including
the application and effect of state, local, foreign and other
tax laws.
</FONT>

<DIV align="left">
<A name='131'></A>
</DIV>

<!-- link1 "Appraisal Rights" -->

<P align="left">
<B><FONT size="2">Appraisal Rights</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under Delaware law, if you do not wish to accept
the cash payment provided for in the merger agreement, you have
the right to dissent from the merger and to receive payment in
cash for the fair value of your ARC common stock. ARC
stockholders electing to exercise appraisal rights must comply
with the provisions of Section&nbsp;262 of the Delaware General
Corporation Law in order to perfect their rights. ARC will
require strict compliance with the statutory procedures.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following is intended as a brief summary of
the material provisions of the Delaware statutory procedures
required to be followed by a stockholder in order to dissent
from the merger and perfect appraisal rights. This summary,
however, is not a complete statement of all applicable
requirements and is qualified in its entirety by reference to
Section&nbsp;262 of the Delaware General Corporation Law, the
full text of which appears in Appendix&nbsp;C of this proxy
statement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Section&nbsp;262 requires that stockholders be
notified that appraisal rights will be available not less than
20&nbsp;days before the special meeting to vote on the merger. A
copy of Section&nbsp;262 must be included with such notice. This
proxy statement constitutes ARC&#146;s notice to its
stockholders of the availability of appraisal rights in
connection with the merger in compliance with the requirements
of Section&nbsp;262. If you wish to consider exercising your
appraisal rights, you should carefully review the text of
Section&nbsp;262 contained in Appendix&nbsp;C because failure to
timely and properly comply with the requirements of
Section&nbsp;262 will result in the loss of your appraisal
rights under Delaware law.
</FONT>

<P align="center"><FONT size="2">28
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If you elect to demand appraisal of your shares,
you must satisfy each of the following conditions:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">You must deliver to ARC a written demand for
    appraisal of your shares before the vote with respect to the
    merger is taken. This written demand for appraisal must be in
    addition to, and separate from, any proxy or vote abstaining
    from or voting against approval and adoption of, the merger
    agreement and approval of the merger. Voting against or failing
    to vote for approval and adoption of the merger agreement and
    approval of the merger by itself does not constitute a demand
    for appraisal within the meaning of Section&nbsp;262.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">You must not vote in favor of approval and
    adoption of the merger agreement and approval of the merger. A
    vote in favor of the approval and adoption of the merger
    agreement and approval of the merger, by proxy or in person,
    will constitute a waiver of your appraisal rights with respect
    to the shares so voted and will nullify any previously filed
    written demands for appraisal.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If you fail to comply with either of these
conditions and we complete the merger, you will be entitled to
receive the cash payment for your shares of ARC common stock as
provided for in the merger agreement, and you will have no
appraisal rights with respect to your shares of ARC common stock.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">All demands for appraisal should be addressed to
the Secretary at 600 Hart Road, Suite&nbsp;300, Barrington,
Illinois 60010, before the vote on the merger is taken at the
special meeting, and should be executed by, or on behalf of, the
record holder of the shares of ARC common stock. The demand must
reasonably inform ARC of the identity of the stockholder and the
intention of the stockholder to demand appraisal of his, her or
its shares.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">To be effective, a demand for appraisal by a
holder of ARC common stock must be made by, or in the name of,
such registered stockholder and cannot be made by the beneficial
owner if he or she does not also hold the shares of record. The
beneficial holder must, in such cases, have the registered owner
submit the required demand in respect of those shares.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If shares are owned of record in a fiduciary
capacity, such as by a trustee, guardian or custodian, execution
of a demand for appraisal should be made in that capacity; and
if the shares are owned of record by more than one person, as in
a joint tenancy or tenancy in common, the demand should be
executed by or for all joint owners. An authorized agent,
including an authorized agent for two or more joint owners, may
execute the demand for appraisal for a stockholder of record;
however, the agent must identify the record owner or owners and
expressly disclose the fact that, in executing the demand, he or
she is acting as agent for the record owner. A record owner,
such as a broker, who holds shares as a nominee for others, may
exercise his or her right of appraisal with respect to the
shares held for one or more beneficial owners, while not
exercising this right for other beneficial owners. In that case,
the written demand should state the number of shares as to which
appraisal is sought. Where no number of shares is expressly
mentioned, the demand will be presumed to cover all shares held
in the name of the record owner.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If you hold your shares of ARC common stock in a
brokerage account or in other nominee form and you wish to
exercise appraisal rights, you should consult with your broker
or the other nominee to determine the appropriate procedures for
the making of a demand for appraisal by the nominee.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Within 10&nbsp;days after the consummation of the
merger, the surviving corporation must give written notice that
the merger has become effective to each ARC stockholder who has
properly filed a written demand for appraisal and who did not
vote in favor of the merger. At any time within 60&nbsp;days
after the consummation of the merger, any stockholder who has
demanded an appraisal has the right to withdraw the demand and
to accept the cash payment specified by the merger agreement for
his or her shares of ARC common stock. Within 120&nbsp;days
after the consummation of the merger, either the surviving
corporation or any stockholder who has complied with the
requirements of Section&nbsp;262 may file a petition in the
Delaware Court of Chancery demanding a determination of the fair
value of the shares held by all stockholders entitled to
appraisal. The surviving corporation has no obligation to file
such a petition in the event there are dissenting stockholders.
Accordingly, the failure of a stockholder to file such a
petition within the period specified could nullify the
stockholder&#146;s previously written demand for appraisal.
</FONT>

<P align="center"><FONT size="2">29
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If a petition for appraisal is duly filed by a
stockholder and a copy of the petition is delivered to the
corporation surviving the merger, the corporation surviving the
merger will then be obligated, within 20&nbsp;days after
receiving service of a copy of the petition, to provide the
Chancery Court with a duly verified list containing the names
and addresses of all stockholders who have demanded an appraisal
of their shares. After notice to dissenting stockholders, the
Chancery Court is empowered to conduct a hearing upon the
petition, and to determine those stockholders who have complied
with Section&nbsp;262 and who have become entitled to the
appraisal rights provided thereby. The Chancery Court may
require the stockholders who have demanded payment for their
shares to submit their stock certificates to the Register in
Chancery for notation thereon of the pendency of the appraisal
proceedings; and if any stockholder fails to comply with that
direction, the Chancery Court may dismiss the proceedings as to
that stockholder.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">After determination of the stockholders entitled
to appraisal of their shares of ARC common stock, the Chancery
Court will appraise the shares, determining their fair value
exclusive of any element of value arising from the
accomplishment or expectation of the merger, together with a
fair rate of interest. When the value is determined, the
Chancery Court will direct the payment of such value, with
interest thereon accrued during the pendency of the proceeding,
if the Chancery Court so determines, to the stockholders
entitled to receive the same, upon surrender by such holders of
the certificates representing those shares.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In determining fair value, the Chancery Court is
required to take into account all relevant factors. You should
be aware that the fair value of your shares as determined under
Section&nbsp;262 could be more, the same, or less than the value
that you are entitled to receive under the terms of the merger
agreement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Costs of the appraisal proceeding may be imposed
upon the surviving corporation and the stockholders
participating in the appraisal proceeding by the Chancery Court
as the Chancery Court deems equitable in the circumstances. Upon
the application of a stockholder, the Chancery Court may order
all or a portion of the expenses incurred by any stockholder in
connection with the appraisal proceeding, including reasonable
attorneys&#146; fees and the fees and expenses of experts, to be
charged pro rata against the value of all shares entitled to
appraisal. Any stockholder who had demanded appraisal rights
will not, after the consummation of the merger, be entitled to
vote shares subject to that demand for any purpose or to receive
payments of dividends or any other distribution with respect to
those shares, other than with respect to payment as of a record
date prior to the consummation of the merger. However, if no
petition for appraisal is filed within 120&nbsp;days after the
consummation of the merger, or if the stockholder delivers a
written withdrawal of his or her demand for appraisal and an
acceptance of the terms of the merger within 60&nbsp;days after
the consummation of the merger, then the right of that
stockholder to appraisal will cease and that stockholder will be
entitled to receive the cash payment for shares of his, her or
its ARC common stock pursuant to the merger agreement. Any
withdrawal of a demand for appraisal made more than 60&nbsp;days
after the consummation of the merger may only be made with the
written approval of the corporation surviving the merger and
must, to be effective, be made within 120&nbsp;days after the
consummation of the merger.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In view of the complexity of Section&nbsp;262,
ARC stockholders who may wish to dissent from the merger and
pursue appraisal rights should consult their own legal advisors.
</FONT>

<DIV align="left">
<A name='132'></A>
</DIV>

<!-- link1 "Cessation of Trading and Deregistration of ARC Stock After the Merger" -->

<P align="left">
<B><FONT size="2">Cessation of Trading and Deregistration of ARC
Stock After the Merger</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If the merger is completed, ARC common stock will
no longer be traded on the OTC Bulletin Board and will be
deregistered under the Securities Exchange Act of&nbsp;1934.
</FONT>

<P align="center"><FONT size="2">30
</FONT>

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<DIV align="left">
<A name='133'></A>
</DIV>

<!-- link1 "THE MERGER AGREEMENT" -->

<P align="center">
<B><FONT size="2">THE MERGER AGREEMENT</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following summary of the merger agreement is
qualified in its entirety by reference to the complete copy of
the merger agreement attached as Appendix&nbsp;A to this proxy
statement and incorporated in this proxy statement by reference.
We urge you to read the merger agreement carefully and in its
entirety.
</FONT>

<DIV align="left">
<A name='134'></A>
</DIV>

<!-- link1 "Mutual Conditions to Consummation of the Merger" -->

<P align="left">
<B><FONT size="2">Mutual Conditions to Consummation of the
Merger</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">ARC and
Pomeroy.</FONT></I></B><FONT size="2"> The obligations of ARC
and Pomeroy to effect the merger are further subject to the
fulfillment of the following conditions, any of which may be
waived in whole or part by ARC or Pomeroy:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the holders of a majority of the outstanding
    shares of ARC common stock must have voted in favor of adopting
    the merger agreement;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the agreement with the Wynnchurch Parties
    (described below; See &#147;The Merger&nbsp;&#151; Wynnchurch
    Agreement&#148;) shall have been executed and shall be in full
    force and effect;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">no laws shall have been adopted or promulgated,
    and no temporary restraining order, preliminary or permanent
    injunction or other order issued by a court or other legal
    restraint or prohibition that has the effect of preventing the
    completion of the merger is in effect;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">all governmental waivers, consents, orders and
    approvals legally required for the consummation of the merger
    shall have been obtained and in effect.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">ARC.</FONT></I></B><FONT size="2"> The
obligations of ARC to effect the merger are further subject to
the fulfillment of the following conditions, any of which may be
waived in whole or part by&nbsp;ARC:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Pomeroy and Pomeroy Sub shall have performed in
    all material respects their covenants contained in the merger
    agreement;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the representations and warranties of Pomeroy and
    Pomeroy Sub set forth in the merger agreement must be true and
    correct as of the date of the merger agreement, and must be true
    and correct as of the effective time of the merger as if made at
    and as of such time, except for representations and warranties
    relating to a time or times other than the effective time of the
    merger which were or will be true and correct at such time or
    times and except where the failure or failures of such
    representation and warranties to be so true and correct,
    individually or in the aggregate, does not result or would not
    result in a material adverse effect (without taking into
    consideration any materiality or knowledge qualifier that
    applies to such representation or warranty);
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Pomeroy shall have funded the payment of all
    amounts due and owing by ARC pursuant to ARC&#146;s Senior
    Subordinated Convertible Notes due January&nbsp;31, 2009 and the
    credit agreement with Fleet Bank;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Pomeroy shall have funded payment of all of
    ARC&#146;s severance obligations that are payable upon the
    merger and the cashless exercise consideration related to the
    cancellation of outstanding stock options.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Pomeroy.</FONT></I></B><FONT size="2"> The
obligations of Pomeroy to effect the merger are further subject
to the fulfillment of the following conditions, any of which may
be waived in whole or part by Pomeroy:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">ARC shall have performed in all material respects
    its covenants contained in the merger agreement;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the representations and warranties of ARC set
    forth in the merger agreement must be true and correct as of the
    date of the merger agreement, and must be true and correct as of
    the effective time of the merger as if made at and as of such
    time, except for representations and warranties relating to a
    time or times other than the effective time of the merger which
    were or will be true and correct at such time or times and
    except where the failure or failures of such representation and
    warranties to be so true and correct, individually or in the
    aggregate, does not result or would not result in a material
    adverse effect (without taking into consideration any
    materiality or knowledge qualifier that applies to such
    representation or warranty);
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">31
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">there shall not have occurred since the date of
    the merger agreement any change, effect, circumstance or event,
    which together with any other changes, effects, circumstances or
    events since the date or the merger agreement, has had or is
    reasonably likely to have a material adverse effect with respect
    to&nbsp;ARC;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">no more than 15% of the holders of ARC stock
    shall not vote in favor of, or consent in writing to, the merger
    and demand appraisal of their shares under Section&nbsp;262 of
    the Delaware General Corporation&nbsp;Law;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">all of the warrants issued by ARC to Wynnchurch
    shall have been sold to Pomeroy;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">ARC shall have received the written agreement of
    holders under ARC&#146;s Senior Subordinated Convertible Notes
    due January&nbsp;31, 2009 and ARC&#146;s senior lender under the
    Fleet Credit Agreement that upon payment in full of such
    obligations, they will release and terminate all liens filed
    against ARC and/or subsidiaries of ARC and, in addition, will
    release any collateral currently in such party&#146;s possession
    that had been pledged to such party by ARC and or subsidiaries
    of ARC;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">ARC shall have substantially completed its
    obligations regarding the filing of certain tax returns and
    corporate qualification matters.
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left">
<A name='135'></A>
</DIV>

<!-- link1 "Exchange Procedures" -->

<P align="left">
<B><FONT size="2">Exchange Procedures</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Pomeroy will appoint a paying agent for the
purpose of exchanging certificates representing shares of ARC
common stock for the cash consideration. Pomeroy will deposit
with its paying agent the funds sufficient to pay the aggregate
merger consideration to the ARC stockholders.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As soon as practicable after the consummation of
the merger, Pomeroy&#146;s paying agent will mail to each former
holder of record of ARC common stock a letter with instructions
on how to exchange stock certificates for the cash merger
consideration.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Please do not send in your stock certificates
until you receive the letter of transmittal and instructions
from the paying agent appointed by Pomeroy. Do not return your
ARC stock certificates with the enclosed proxy card. If your
shares of ARC common stock are held through a broker, your
broker will surrender your shares for cancellation.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">After you mail the letter of transmittal, duly
executed and completed in accordance with its instructions, and
your stock certificates to the exchange agent, the paying agent
appointed by Pomeroy will mail a check to you. The stock
certificates you surrender will be cancelled. After the
completion of the merger, there will be no further transfers of
our common stock, and stock certificates presented for transfer
after the completion of the merger will be cancelled and
exchanged for the cash merger consideration. If payment is to be
made to a person other than the registered holder of the shares
of ARC common stock, the certificate surrendered must be
properly endorsed or otherwise in proper form for transfer and
any transfer or other taxes must be paid by the person
requesting the payment or that person must establish to the
satisfaction of the paying agent appointed by Pomeroy that such
tax has been paid or is not payable.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If your ARC stock certificates have been lost,
stolen or destroyed, upon making an affidavit of that fact, and
if required by Pomeroy, posting a bond as indemnity against any
claim with respect to the certificates, Pomeroy&#146;s paying
agent will issue the cash consideration in exchange for your
lost, stolen, or destroyed stock certificates.
</FONT>

<P align="center"><FONT size="2">32
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left">
<A name='136'></A>
</DIV>

<!-- link1 "Representations and Warranties" -->

<P align="left">
<B><FONT size="2">Representations and Warranties</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The merger agreement contains customary
representations and warranties (all of which will expire upon
the consummation of the merger) relating to, among other things:
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">ARC&#146;s Representations and
    Warranties</FONT></I></B></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">corporate organization and similar matters;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">capital structure;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">subsidiaries;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">authorization, execution, delivery, performance
    and enforceability of, and required consents, approvals, orders
    and authorizations of governmental authorities and third parties
    relating to, the merger agreement and related matters;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">documents previously filed with the Securities
    and Exchange Commission, the accuracy of the financial
    statements and other information contained in such documents,
    compliance with the Sarbanes-Oxley Act and certification
    required thereby of such documents and the absence of
    undisclosed liabilities;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the absence of obligations to guaranty or assume
    any debt, dividend, or other obligation;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">absence of certain changes since
    December&nbsp;31, 2003;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">tax matters;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">compliance with applicable laws and permits;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">pending and threatened litigation;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">compliance with applicable agreements;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">accuracy of books and records;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">matters relating to employee benefits plans,
    employment agreements and labor relations;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">title to assets, properties and rights to
    leasehold interests;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">matters relating to accounts receivable;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">intellectual property;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">insurance policies;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">material contracts;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">environmental matters;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">absence of any liability to any governmental
    entity arising from a governmental investigation, contracts,
    claims, or illegal dealings with governmental entities;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">absence of any shareholder rights plans;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">accuracy of information supplied in connection
    with this proxy statement;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">broker and investment banker fees;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the receipt of a fairness opinion from Updata
    Capital;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">transactions with directors, officers, employees
    and other related parties;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the absence of any territorial restrictions;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">product liability matters;
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">33
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">compliance with immigration laws;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">preference payments under bankruptcy laws;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">minority business status;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">prior business acquisitions;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">absence of material misstatements or omissions.
    </FONT></TD>
</TR>

</TABLE>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Pomeroy and Pomeroy Sub&#146;s
    Representations and Warranties</FONT></I></B></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">corporate organization and similar matters;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">authorization, execution, delivery, performance
    and enforceability of, and required consents, approvals, orders
    and authorizations of governmental authorities and third parties
    relating to, the merger agreement and related matters;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">compliance with applicable agreements and
    governmental authorizations;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">capital structure;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">documents previously filed with the Securities
    and Exchange Commission, the accuracy of the financial
    statements and other information contained in such documents,
    compliance with the Sarbanes-Oxley Act and certification
    required thereby of such documents and the absence of
    undisclosed liabilities;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">financial statements
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">absence of undisclosed liabilities;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">absence of certain changes since January&nbsp;5,
    2004;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">pending and threatened litigation;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">accuracy of information supplied in connection
    with this proxy statement;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">broker and investment banker fees;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">organization and ownership of Pomeroy Sub;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">availability of financing to consummate
    merger;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">absence of material misstatements or omissions.
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left">
<A name='137'></A>
</DIV>

<!-- link1 "Conduct of Business Pending the Merger" -->

<P align="left">
<B><FONT size="2">Conduct of Business Pending the
Merger</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Pursuant to the merger agreement, ARC has agreed
that, except as permitted or contemplated by the merger
agreement or as consented to by Pomeroy in writing, during the
period from the date of the merger agreement to the completion
of the merger, ARC&nbsp;will:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">conduct its business in the ordinary and usual
    course of business and consistent with past practice;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">preserve intact its business organizations and
    good will, keep available the services of its present officers
    and key employees, preserve the goodwill and business
    relationships with customers, suppliers and others having
    business relationships with&nbsp;ARC;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">maintain with financially responsible insurance
    companies insurance on its tangible assets and its business in
    such amounts and against such risks and losses as are consistent
    with past practice;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">provide reasonable access to its personnel,
    properties, books, contracts, commitments and records;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">promptly advise Pomeroy in writing if ARC becomes
    aware of any change or occurrence of any event which would cause
    its representations and warranties in the merger agreement to be
    materially inaccurate;
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">34
</FONT>

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<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">use its reasonable best efforts to take all
    action and to do all things necessary, proper or advisable under
    applicable laws to consummate and make effective the
    transactions contemplated by the merger agreement;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">use commercially reasonable efforts to cooperate
    and assist Pomeroy to obtain all consents of any third parties
    that may be necessary for the consummation of the merger;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">take all action necessary in accordance with
    applicable law and its certificate of incorporation and by-laws
    to convene a meeting of the holders of ARC common stock, submit
    the merger for approval by its stockholders and recommend
    approval and adoption of the merger by its common stockholders
    at the stockholders&#146; meeting;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">contest and resist any action, including any
    legislative, administrative or judicial action, and have
    vacated, lifted, reversed or overturned any decree, judgment,
    injunction or other order (whether temporary, preliminary or
    permanent) that restricts, prevents or prohibits the
    consummation of the transactions contemplated by the merger
    agreement;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">maintain books, records and files.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, ARC has agreed that, among other
things and subject to limited exceptions, ARC may not, without
Pomeroy&#146;s written consent:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">issue, sell, pledge or dispose of any additional
    shares of, or any options, warrants or rights of any kind to
    acquire any shares of its or its subsidiaries&#146; capital
    stock, or any debt or equity securities convertible into,
    exchangeable for or exercisable for such capital stock, except
    for issuances of common stock pursuant to the exercise of rights
    or options outstanding as of the date of the merger agreement
    under the stock option plans outstanding as of the date of the
    merger agreement and except for issuance of common stock
    pursuant to the exercise of rights outstanding as of the date of
    the merger agreement under the warrants outstanding and except
    for equity issued in connection with a debt or equity financing
    (other than under ARC&#146;s revolving credit facility)
    resulting in net proceeds to ARC in an amount not to exceed
    $3,000,000 (&#147;interim additional financing&#148;) upon terms
    approved by Pomeroy (such approval not to be unreasonably
    withheld or delayed);
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">(i)&nbsp;incur or become contingently liable with
    respect to any indebtedness for borrowed money, except for
    indebtedness incurred under ARC&#146;s revolving credit facility
    in the ordinary course of business and debt issued under Interim
    Additional Financing upon terms approved by Pomeroy,
    (ii)&nbsp;redeem, purchase, acquire or offer to purchase or
    acquire any shares of its capital stock or any options, warrants
    or rights to acquire any of its capital stock or any security
    convertible into or exchangeable for its capital stock,
    (iii)&nbsp;make any acquisition of any assets or businesses or
    any other capital expenditures other than expenditures for fixed
    or capital assets in the ordinary course of business,
    (iv)&nbsp;sell, pledge, dispose of or encumber any assets or
    businesses other than sales in the ordinary course of business,
    (v)&nbsp;loan, advance funds or make any investment in or
    capital contribution to any other person other than to any
    subsidiary or to employees for travel and other business related
    expenses in the ordinary course of business, or (vi)&nbsp;enter
    into any contract, agreement, commitment or arrangement with
    respect to any of the foregoing;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">enter into any plan of complete or partial
    liquidation, dissolution, merger, consolidation, restructuring,
    recapitalization or other reorganization of ARC or its
    subsidiaries;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">alter, through merger, liquidation,
    reorganization, restructuring or any other fashion, the
    corporate structure or ownership of any subsidiaries;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">enter into any sale, lease or license or suffer
    to exist any lien in respect of any of its assets, other than
    (i)&nbsp;liens securing intercompany indebtedness,
    (ii)&nbsp;sales or dispositions of property or inventory in the
    ordinary course of business consistent with past practice,
    (iii)&nbsp;leases and licenses with a term of less than one year
    of property in the ordinary course of business consistent with
    past practice, (iv)&nbsp;leases and licenses with a term of at
    least one year of property in the ordinary course of business
    consistent with past practice and (v)&nbsp;sales, leases or
    licenses with respect to immaterial assets;
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">35
</FONT>

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<P>

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    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">enter into any material contract and/or any
    government contract in excess of $100,000 dollars or for a term
    in excess of one year, other than contracts with clients entered
    into in the ordinary course of business;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">except as required by generally accepted
    accounting principles, revalue in any material respect any of
    its assets, including writing down the value of inventory or
    writing-off notes or accounts receivables, or good will due to
    any impairment, other than in the ordinary course of business
    consistent with past practice;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">change any of the accounting principles or
    practices (except as required by GAAP), or restate, or become
    obligated to restate, the financial statements in its 10-K or
    10-Qs (except as required by GAAP or a governmental entity);
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">except as required by law or as is consistent
    with past practice, make or change any tax election, change any
    annual tax accounting period, adopt or change any method of tax
    accounting, extend or waive any applicable statute of
    limitations with respect to taxes, file any amended tax returns,
    enter into any closing agreement in respect of any tax claim,
    audit or assessment, or surrender any right to claim a tax
    refund, offset or other reduction in tax liability;&nbsp;or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">(i)&nbsp;grant any severance, retention or
    termination pay to, or amend any existing severance, retention
    or termination arrangement with, any current or former director,
    officer or employee, except for severance or termination pay
    that may be payable in accordance with existing severance or
    termination pay policies in the ordinary course of business,
    (ii)&nbsp;increase or accelerate the payment or vesting of,
    benefits payable under any existing severance, retention or
    termination pay policies or employment agreements
    (iii)&nbsp;enter into or amend any employment, consulting,
    deferred compensation or other similar agreement with any
    director, officer, consultant or employee other than consulting
    agreements with clients entered into in the ordinary course of
    business, (iv)&nbsp;establish, adopt or amend (except as
    required by applicable law) any collective bargaining agreement,
    bonus, profit-sharing, thrift, pension, retirement,
    post-retirement medical or life insurance, retention, deferred
    compensation, compensation, stock option, restricted stock or
    other benefit plan or arrangement covering any present or former
    director, officer or employee, or any beneficiaries thereof or
    (v)&nbsp;increase the compensation, bonus or other benefits
    payable to any director, officer or employee, except for salary
    increases as a result of employee promotions in the ordinary
    course of business or required by the terms of existing
    arrangements, policies or agreements.
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left">
<A name='138'></A>
</DIV>

<!-- link1 "Material Adverse Effect" -->

<P align="left">
<B><FONT size="2">Material Adverse Effect</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Several of ARC&#146;s representations and
warranties contained in the merger agreement are qualified by
reference to whether the item in question is reasonably likely
to have a &#147;material adverse effect&#148; on ARC.
Furthermore, (a)&nbsp;no material adverse effect on ARC must
have occurred between the signing of the merger agreement and
the consummation of the merger and (b)&nbsp;a condition to
Pomeroy being obligated to consummate the merger is that the
representations and warranties of ARC must generally be true and
correct in all respects, disregarding any materiality or
knowledge qualifiers, except as would not have a material
adverse effect on ARC. The merger agreement provides that a
&#147;material adverse effect&#148; means, when used in
connection with ARC, (a)&nbsp;any adverse change, circumstance,
fact, event or effect that, individually or in the aggregate
with all other adverse changes, circumstances, facts, events and
effects, is or is reasonably likely to be materially adverse to
the business, condition (financial or otherwise), assets or
results of operations of ARC and its subsidiaries taken as a
whole or (b)&nbsp;a material adverse effect on the ability of
ARC to perform its obligations under the merger agreement.
However, any change, circumstance, fact, event or effect
relating to the following, for purposes of clause&nbsp;(a)
above, will not be deemed to constitute a material adverse
effect on&nbsp;ARC:
</FONT>
<P>

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    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

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    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the securities markets in general;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the economy in general, except if such entity is
    adversely affected in a materially disproportionate manner as
    compared to similarly situated entities;
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">36
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<P>

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<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the industries in which ARC operates and not
    specifically relating to ARC, including changes in legal,
    accounting or regulatory changes, or conditions, except if ARC
    is adversely affected in a materially disproportionate manner as
    compared to other comparable participants in such industries;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the announcement of the merger and the
    performance of the obligations of ARC under the merger agreement
    (including any cancellations or delays in contract awards and
    any impact on relationships with customers, prime contractors,
    subcontractors or suppliers to the extent but only to the extent
    relating to the announcement of the merger or the performance of
    the obligations of ARC under the merger agreement);&nbsp;or
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The parties to the merger agreement specifically
agree that if upon the closing, four (4)&nbsp;or more of certain
key employees should die, become disabled or decline to continue
to be employed by ARC pursuant to the employment agreements
which have been executed with Pomeroy to take effect upon
consummation of the merger, such deaths, disabilities and/or
declinations of continued employment shall constitute a material
adverse effect.
</FONT>

<DIV align="left">
<A name='139'></A>
</DIV>

<!-- link1 "No Solicitation" -->

<P align="left">
<B><FONT size="2">No Solicitation</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have agreed that neither we nor any of our
directors, officers, or any of our investment bankers, attorneys
or accountants will, and that we will not authorize or knowingly
permit any of our employees or any other agents and
representatives to, directly or indirectly:
</FONT>
<P>

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    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">solicit, initiate or knowingly facilitate or
    encourage the making of any inquiry, proposal or offer or other
    agreement that constitutes or would lead to any acquisition
    proposal (defined below);
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">participate or engage in discussions or
    negotiations concerning an acquisition proposal or furnish or
    disclose any information with respect to or in furtherance of
    any acquisition proposal or provide access to its properties,
    books and records or other information or data in furtherance of
    an acquisition proposal;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">grant any waiver or release under any
    confidentiality agreement, standstill agreement or similar
    agreement;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">execute or enter into any agreement,
    understanding or arrangement with respect to any acquisition
    proposal.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The merger agreement provides that ARC will
notify Pomeroy promptly (and, in any event, within 24&nbsp;hours
of receipt) if any proposal or offer relating to an acquisition
proposal or material equity financing is received by, any
information is requested from, or any discussions or
negotiations are sought to be initiated or continued with, ARC
or any of its officers, directors, employees, agents or
representatives. The notice must be in writing and state the
identity of the person or group making such request or inquiry
or engaging in such negotiations or discussions and the material
terms (including in the event of an oral offer or proposal, a
writing that sets forth the material terms of such offer or
proposal) and conditions of any acquisition proposal or material
equity financing. Thereafter, ARC must keep Pomeroy fully
informed on a prompt bases (and, in any event within
48&nbsp;hours of receipt) of any material changes, additions or
adjustments to the terms of any such proposal or offer.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The merger agreement provides that ARC may not
enter into any agreement with respect to an acquisition proposal
or material equity financing during the term of the merger
agreement. However, prior to obtaining stockholder&#146;s
approval with respect the merger, the ARC board of directors may
terminate the merger agreement if it determines that an
acquisition proposal or a material equity financing is a
superior proposal; provided that:
</FONT>
<P>

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<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">ARC provides at least three (3)&nbsp;business
    days&#146; prior written notice to Pomeroy or its intention to
    terminate the merger agreement in the absence of any further
    action by Pomeroy;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">During such three (3)&nbsp;business day period
    (or longer period if extended by mutual agreement of ARC and
    Pomeroy), ARC agrees to negotiate in good faith with Pomeroy
    regarding such changes as
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">37
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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD></TD>
    <TD align="left">
    <FONT size="2">Pomeroy may propose to the terms of the merger
    agreement, which would make the terms of the merger agreement
    more favorable to the holders of ARC common stock than the
    acquisition proposal or material equity financing;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the board of directors of ARC determines (after
    receipt of advice from its outside legal counsel and an
    independent financial advisor) that the acquisition proposal or
    material equity financing is a superior proposal taking into
    account any modifications to the terms of the merger agreement
    proposed in writing by Pomeroy, and the board of directors of
    ARC determines in good faith that such actions are required by
    its fiduciary duties under Delaware law.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the event of termination of the merger
agreement, the merger agreement described herein will become
void and there will be no further obligation on the part of ARC,
Pomeroy, Pomeroy Sub or their respective officers or directors,
except that for any required termination payments (described
below) and that provisions relating to the confidentiality
agreement between ARC and Pomeroy, the payment of expenses
relating to the merger agreement and the payment of finders fees
to brokers will survive.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The merger agreement provides that ARC&#146;s or
its board of directors may, in response to a superior proposal:
</FONT>
<P>

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<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">take and disclose to ARC&#146;s stockholders a
    position contemplated by Rule&nbsp;14d-9 and Rule&nbsp;14e-2(a)
    promulgated under the Securities Exchange Act of 1934 (or any
    similar communication to stockholders required to be made by
    applicable statute, law, rule or regulation in connection with
    the making or amendment of a tender offer or exchange offer) or
    make any legally required disclosure to ARC stockholders with
    regard to any acquisition proposal (provided, that the board of
    directors of ARC may not withdraw, withhold, modify or change
    any recommendation regarding the merger agreement without
    terminating the merger agreement first after determining in good
    faith after receipt of advice of its legal counsel that such
    action is required by its fiduciary obligations under Delaware
    law);&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">provide information (pursuant to a
    confidentiality agreement in substantially the same form and on
    substantially the same terms as the confidentiality agreement
    between ARC and Pomeroy and which does not prevent ARC from
    complying with its obligations under the merger agreement) to or
    engage in negotiations or discussions with any person or group
    who has made a superior proposal.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The merger agreement provides that the term
&#147;acquisition proposal&#148; means any offer or proposal,
relating to any transaction or series of related transactions
involving:
</FONT>
<P>

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<TR>
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</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">any tender offer, merger, consolidation,
    recapitalization, reorganization, share exchange, business
    combination, liquidation, dissolution or similar transaction
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">any acquisition by a third party of any capital
    stock (other than in connection with an interim additional
    financing), any business or assets of ARC or its subsidiaries
    (other than acquisitions of a business or assets in the ordinary
    course of business that constitute less than 5% of the net
    revenues, net operating income and assets of ARC and its
    subsidiaries, taken as a whole), or any combination of the
    foregoing.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The merger agreement provides that the ARC board
of directors may approve, recommend and declare advisable any
superior proposal if:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">ARC&#146;s board of directors determines in good
    faith after receipt of advice from its outside legal counsel
    that such action is required by its fiduciary obligations under
    Delaware law;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">ARC terminates the merger agreement pursuant to
    the merger agreement&#146;s termination provisions.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The merger agreement provides that the term
&#147;superior proposal,&#148; with respect to ARC, means
(a)&nbsp;an unsolicited, bona fide acquisition proposal with
respect to all of the outstanding shares of capital stock
(whether by exchange offer, merger, consolidation or otherwise)
or all or substantially all of the assets of ARC or (b)&nbsp;an
unsolicited bona fide proposal for a material equity financing,
if, in the good faith judgment of the board of directors, taking
into account, among other things, the likelihood of consummation
and the other terms and conditions of such acquisition proposal
or material equity financing and after discussions with its
</FONT>

<P align="center"><FONT size="2">38
</FONT>

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<DIV align="left">
<FONT size="2">financial advisors, such acquisition proposal or
material equity financing is believed to be reasonably likely to
result in a transaction more favorable to the holders of ARC
common stock than the merger.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The merger agreement provides that the term
&#147;material equity financing&#148; means the issuance of
stock (or any debt instruments convertible into stock) of ARC
resulting in net proceeds to ARC in excess of $3,000,000.
</FONT>

<DIV align="left">
<A name='140'></A>
</DIV>

<!-- link1 "Termination" -->

<P align="left">
<B><FONT size="2">Termination</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Pomeroy and ARC can terminate the merger
agreement under certain circumstances, including:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">by mutual written consent of Pomeroy and ARC, by
    action of their respective boards of directors.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">by Pomeroy or ARC if: any judgment, induction,
    order, decree or action by any governmental entity of competent
    authority preventing the consummation of the merger shall have
    become final and non-appealable; the merger has not occurred on
    or before September&nbsp;30, 2004, provided, however, that a
    party that has materially breached a representation, warranty or
    covenant of such party set forth in the merger agreement and not
    cured such breach by such date will not be entitled to exercise
    its right to terminate the merger; or upon a vote at a duly held
    stockholder meeting, the stockholders&#146; approval has not
    been obtained.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">by ARC, if upon a breach of any representation,
    warranty, covenant or agreement on the part of Pomeroy or
    Pomeroy Sub set forth in the merger agreement, or if any
    representation or warranty of Pomeroy or Pomeroy Sub shall have
    become untrue, in either case such that certain conditions to
    closing relating to (i)&nbsp;ARC&#146;s performance of
    covenants, (ii)&nbsp;the truth and accuracy of ARC&#146;s
    representations and warranties and (iii)&nbsp;the delivery of a
    certificate by the CEO or CFO of Pomeroy and Pomeroy attesting
    to the fulfillment of such covenants and truth and accuracy of
    such representations and warranties would be incapable of being
    satisfied by September&nbsp;30, 2004; or the board of directors
    of ARC has delivered a termination notice in connection with the
    receipt of a superior proposal and the related procedures
    described above.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">by Pomeroy, if upon a breach of any
    representation, warranty, covenant or agreement on the part of
    Pomeroy or Pomeroy Sub set forth in the merger agreement, or if
    any representation or warranty of Pomeroy or Pomeroy Sub shall
    have become untrue, in either case such that certain conditions
    to closing relating to (i)&nbsp;Pomeroy and Pomeroy Sub&#146;s
    performance of covenants, (ii)&nbsp;the truth and accuracy of
    Pomeroy and Pomeroy Sub&#146;s representations and warranties
    and (iii)&nbsp;the delivery of a certificate by the CEO or CFO
    of Pomeroy and Pomeroy attesting to the fulfillment of such
    covenants and truth and accuracy of such representations and
    warranties would be incapable of being satisfied by
    September&nbsp;30, 2004 or if certain other conditions to
    closing would be incapable of being satisfied by
    September&nbsp;30, 2004; as of September&nbsp;30, 2004, the
    holders of more than fifteen percent (15%) of ARC&#146;s
    outstanding common stock have not voted in favor of, or
    consented in writing to, the merger and have demanded appraisal
    rights with respect to such shares in accordance with the
    requirements of Section&nbsp;262 of the Delaware General
    Corporation Law; prior to the approval of the merger agreement
    at the special meeting, (A)&nbsp;the board of directors of ARC
    has withdrawn or modified in any manner adverse to Pomeroy or
    has failed to reaffirm (within three (3)&nbsp;days of its
    receipt of an acquisition proposal or a material equity
    financing) its approval or recommendation of the merger or the
    merger agreement in connection with, or approved or recommended,
    any acquisition proposal or material equity financing, or
    (B)&nbsp;ARC has entered into an agreement with respect to any
    acquisition proposal or material equity financing; a tender
    offer or exchange offer has been commenced that, if consummated,
    would result in any person becoming the legal or beneficial
    owner of either (a)&nbsp;twenty-five percent (25%) or more of
    common stock or (y)&nbsp;ten percent (10%) or more of the common
    stock and such offer is made as a part of a transaction or
    series of transactions in which such person would acquire
    additional company common stock which in the aggregate
    constitutes more than fifty percent (50%) of the issued and
    outstanding ARC common stock; and the board of directors of ARC
    fails to recommend against acceptance of such tender offer or
    exchange offer or elects to take no position with respect to the
    acceptance of such offer; the special meeting has not been
    called prior to September&nbsp;30, 2004 through fault (whether
    commission or omission) of ARC; the board of directors of ARC
    does not
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">39
</FONT>

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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD></TD>
    <TD align="left">
    <FONT size="2">publicly recommend in a proxy statement that
    ARC&#146;s stockholders approve and adopt the merger agreement;
    or after recommending in a proxy statement that stockholders
    approve and adopt the merger agreement, the board of directors
    of ARC withdraws, modifies or amends such recommendation in any
    manner adverse to Pomeroy, except in connection with the receipt
    of a superior proposal and the related procedures described
    above.
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left">
<A name='141'></A>
</DIV>

<!-- link1 "Break-Up Fees" -->

<P align="left">
<B><FONT size="2">Break-Up Fees</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We must pay Pomeroy a break-up fee of $1,500,000
in the following circumstances:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the merger agreement is terminated by either
    party after failure to obtain ARC stockholder approval (and, in
    the case of such termination, Pomeroy has not materially
    breached its representations and warranties or covenants, or has
    cured such breach prior to the stockholders&#146; meeting) and,
    within one year after termination, ARC signs or closes an
    acquisition proposal for all of the company; provided, that ARC
    shall pay Pomeroy an amount equal to Pomeroy&#146;s out of
    pocket expenses incurred in connection with the merger in an
    amount not to exceed $250,000 within two days after failure to
    receive stockholder approval whether or not ARC signs or closes
    an acquisition proposal within such one year period.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the merger agreement is terminated for one of the
    reasons listed below and within one year after termination ARC
    signs or closes an acquisition proposal for all of the company,
    ARC signs or closes a material equity financing, or a tender
    offer is consummated: ARC terminates the merger agreement in
    connection with the receipt of a superior proposal in accordance
    with the procedures described below; ARC terminates the merger
    agreement because the merger has not occurred on or before
    September&nbsp;30, 2004, and, at the time of such termination,
    Pomeroy confirms that it remains ready, willing and able to
    proceed and ARC&#146;s conditions precedent to closing are
    satisfied or would be satisfied upon Pomeroy&#146;s performance
    of its obligations at closing; Pomeroy terminates the merger
    agreement because the merger has not occurred on or before
    September&nbsp;30, 2004, and, at the time of such termination,
    ARC&#146;s conditions precedent to closing are satisfied or
    would be satisfied upon Pomeroy&#146;s performance of its
    obligations at closing but ARC fails to close notwithstanding
    Pomeroy&#146;s confirmation that it remains ready, willing and
    able to proceed; or Pomeroy terminates the merger agreement
    because the merger has not occurred on or before
    September&nbsp;30, 2004, and (i)&nbsp;at the time of such
    termination, ARC&#146;s conditions precedent to closing are
    satisfied or would be satisfied upon Pomeroy&#146;s performance
    of its obligations at closing, (ii)&nbsp;ARC has materially
    breached its covenants such that certain conditions to
    Pomeroy&#146;s obligation to close are not satisfied, and
    (iii)&nbsp;Pomeroy confirms that it would be ready, willing and
    able to proceed but for such material breach by ARC.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the merger agreement is terminated for one of the
    reasons listed below and within one year after termination ARC
    signs or closes an acquisition proposal for all or part of the
    company, ARC signs or closes a material equity financing, or a
    tender offer is consummated: Pomeroy terminates the merger
    agreement after the board of directors of ARC fails to recommend
    against acceptance of certain tender offers or exchange offers
    or elects to take no position with respect to the acceptance of
    such offers; or Pomeroy terminates the merger agreement because
    (i)&nbsp;the special meeting has not been called by
    September&nbsp;30, 2004, (ii)&nbsp;the board of directors does
    not publicly recommend in a proxy statement that the ARC
    stockholders approve and adopt merger agreement or
    (iii)&nbsp;the board of directors withdraws, modifies or amends
    such recommendation in a manner adverse to Pomeroy.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the merger agreement is terminated by Pomeroy
    because the board of directors of ARC has withdrawn or modified
    in any manner adverse to Pomeroy or has failed to reaffirm
    (within three&nbsp;(3)&nbsp;days of its receipt of an
    acquisition proposal or material equity financing) its approval
    or recommendation of the merger or the merger agreement in
    connection with, or approved or recommended, any acquisition
    proposal or material equity financing, or ARC has entered into
    any agreement with respect to any acquisition proposal for all
    of the company or a material equity financing without compliance
    with the processes outlined with respect to superior proposals.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">40
</FONT>

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<DIV align="left">
<A name='142'></A>
</DIV>

<!-- link1 "Payment of Break-Up Fee" -->

<P align="left">
<B><FONT size="2">Payment of Break-Up Fee</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Generally, fifty-percent (50%) of any termination
payment shall be made within two (2)&nbsp;business days of
execution of a definitive agreement with respect to the
acquisition proposal, the material equity financing or tender
offer, and the remaining fifty percent (50%) shall be paid on
the earlier to occur of the closing of the acquisition proposal,
material equity financing or tender offer or six (6)&nbsp;months
after execution of the definitive agreement relating to any of
such transactions. However:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">In the event that merger agreement is terminated
    by Pomeroy or ARC because ARC did not receive stockholder
    approval for the merger and ARC signs or closes an acquisition
    proposal for all of the company within one year after
    termination, the expense reimbursement previously paid by ARC
    will be credited against the break-up fee, which shall be
    applied against the initial fifty percent (50%) that is due
    within two (2)&nbsp;business days of the execution of the
    definitive agreement with respect to the acquisition proposal.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">In the event that the merger agreement is
    terminated by Pomeroy pursuant to the last paragraph listed
    under &#147;Termination Payment&#148; above, then ARC must pay
    to Pomeroy the break-up fee within two (2)&nbsp;days of the
    occurrence of the event resulting in such termination.
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left">
<A name='143'></A>
</DIV>

<!-- link1 "Expenses" -->

<P align="left">
<B><FONT size="2">Expenses</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The merger agreement provides that regardless of
whether the merger is consummated, all expenses incurred by the
parties will be borne by the party incurring such expenses.
</FONT>

<DIV align="left">
<A name='144'></A>
</DIV>

<!-- link1 "Amendment, Extension and Waiver" -->

<P align="left">
<B><FONT size="2">Amendment, Extension and Waiver</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The merger agreement may be amended in writing
signed by all of the parties, by action taken or authorized by
their respective boards of directors, at any time.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">At any time prior to the consummation of the
merger, the parties to the merger agreement may: extend the time
for the performance of any of the obligations or other acts of
the other parties in the merger agreement;
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">waive any inaccuracies in the representations and
    warranties made to such party contained in the merger agreement
    or in any document delivered pursuant the merger
    agreement;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">waive compliance with any of the agreements or
    conditions for the benefit of such party contained in the merger
    agreement.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Any agreement on the part of a party to the
merger agreement to any such extension or waiver will be valid
only if set forth in an instrument in writing signed on behalf
of such party.
</FONT>

<DIV align="left">
<A name='145'></A>
</DIV>

<!-- link1 "ARC Certificate of Incorporation" -->

<P align="left">
<B><FONT size="2">ARC Certificate of Incorporation</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of the consummation of the merger, ARC&#146;s
certificate of incorporation will be amended and restated to be
substantially the same as the certificate of incorporation
attached to the merger agreement.
</FONT>

<DIV align="left">
<A name='146'></A>
</DIV>

<!-- link1 "ARC By-Laws" -->

<P align="left">
<B><FONT size="2">ARC By-Laws</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of the consummation of the merger, the by-laws
of ARC will be amended and restated to be identical to the
by-laws of Pomeroy Sub.
</FONT>

<DIV align="left">
<A name='147'></A>
</DIV>

<!-- link1 "Wynnchurch Agreement" -->

<P align="left">
<B><FONT size="2">Wynnchurch Agreement</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In connection with the merger agreement, on
May&nbsp;11, 2004, each of the Wynnchurch Parties and Pomeroy
entered into a Lockup and Purchase Agreement (the
&#147;Wynnchurch Agreement&#148;). Pursuant to the Wynnchurch
Agreement, in connection with the merger, and on condition that
the merger is consummated, the Wynnchurch Parties agreed to sell
and Pomeroy agreed to purchase all of the Wynnchurch
Parties&#146; warrants for the amount equal to the difference
between $0.70&nbsp;per share (or such higher price per share in
the
</FONT>

<P align="center"><FONT size="2">41
</FONT>

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<DIV align="left">
<FONT size="2">event the merger agreement is amended to provide
for a higher merger consideration per share) and the respective
exercise price per share under the respective warrant
agreements, multiplied by the number of shares subject to the
warrants.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, the Wynnchurch Parties agreed
(i)&nbsp;to deliver to Pomeroy immediately prior to the closing
of the merger all of its notes in exchange for the payment by
Pomeroy of the principal balance outstanding plus accrued and
unpaid interest as of the effective date of the merger,
(ii)&nbsp;to cooperate with Pomeroy and Pomeroy Sub to
consummate the merger in accordance with the merger agreement
and (iii)&nbsp;to vote all shares of common stock owned by the
Wynnchurch Parties as a result of the exercise of any of the
warrants or the conversion of any of the notes in favor of the
merger.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Pursuant to the Wynnchurch Agreement, the
Wynnchurch Parties have further agreed to consent to the merger,
solely for purposes of the investment documents between various
Wynnchurch entities and ARC, such consent being expressly
conditioned upon and subject to (i)&nbsp;consummation
(concurrent with consummation of the merger) of the transactions
contemplated by the Wynnchurch Agreement, (ii)&nbsp;payment in
full by ARC of all amounts owed to the Wynnchurch Parties
pursuant to the investment documents between various Wynnchurch
entities and ARC (including without limitation, all guaranty
fees) and (iii)&nbsp;delivery of written documents terminating
the financing commitments of the Wynnchurch Parties to ARC (in
form and substance satisfactory to the Wynnchurch Parties)
including a letter from ARC terminating the Wynnchurch
Parties&#146; commitments to provide additional funding and
delivery of a release (in form and substance satisfactory to the
Wynnchurch Parties, as applicable) of all guaranties previously
provided by the Wynnchurch Parties in connection with
indebtedness of ARC and its subsidiaries, including a release by
Fleet Capital Corporation of all obligations of the Wynnchurch
Parties under the Guaranty Agreement, dated April&nbsp;14, 2003,
among ARC, Wynnchurch US, Wynnchurch Canada and Fleet Capital
Corporation, as amended.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Pursuant to the Wynnchurch Agreement, the
Wynnchurch Parties have agreed that until the earlier to occur
of (i)&nbsp;such date and time as the merger shall become
effective in accordance with the terms and provisions of the
merger agreement and (ii)&nbsp;such date and time as the merger
agreement shall be terminated in accordance with the termination
provisions of said merger agreement, they will not sell or
otherwise dispose of any of the securities of ARC or take any
action to exercise their remedies or enforce their rights with
respect to any existing or future event of default under the
investment documents between the various Wynnchurch entities and
ARC.
</FONT>

<DIV align="left">
<A name='148'></A>
</DIV>

<!-- link1 "RECENT MARKET PRICES OF, AND DIVIDENDS ON, ARC COMMON STOCK" -->

<P align="center">
<B><FONT size="2">RECENT MARKET PRICES OF, AND DIVIDENDS ON, ARC
COMMON STOCK</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">ARC common stock has been traded on the OTC
Bulletin Board under the symbol &#147;ALRC.OB&#148; since
June&nbsp;20, 2001. Prior to that date, ARC&#146;s common stock
was traded on the NASDAQ National Market, but was delisted for
failure to satisfy the minimum bid price requirement for
continued listing. No cash dividends have been paid on the
common stock since the initial trading in 1994, except as noted
below.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In conjunction with the refinancing of ARC&#146;s
revolving line of credit on January&nbsp;31, 2002, ARC&#146;s
Board of Directors redeemed all of the rights issued under its
stockholders&#146; rights plan. ARC paid a redemption payment of
$0.01&nbsp;per right to stockholders on February&nbsp;8, 2002 at
a total cost of approximately $171,000.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of June&nbsp;10, 2004, ARC had 215
stockholders of record and 17,117,304 outstanding shares of
common stock. The following table represents the reported high
and low sale prices of the common stock for the periods
indicated, during the years ended December&nbsp;31, 2003 and
2002:
</FONT>

<CENTER>
<TABLE width="80%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="68%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7"></TD>
    <TD></TD>
    <TD colspan="7"></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="7" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">High</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Low</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">High</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Low</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">First Quarter
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.47</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.23</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.83</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.46</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Second Quarter
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.36</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.20</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.67</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.33</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Third Quarter
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.45</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.24</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.58</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.35</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Fourth Quarter
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.03</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.25</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.48</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom"><FONT size="2">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.28</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">42
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">SECURITIES BENEFICIALLY OWNED BY PRINCIPAL
STOCKHOLDERS</FONT></B>

<DIV align="center">
<B><FONT size="2">AND MANAGEMENT</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Set forth in the following table are the
beneficial holdings (and the percentages of outstanding shares
represented by such beneficial holdings) as of April&nbsp;16,
2004, except as otherwise noted, of (i)&nbsp;each person
(including any &#147;group&#148; as defined in
Section&nbsp;13(d)(3) of the Securities Exchange Act of 1934
(the &#147;Exchange Act&#148;)) known by ARC to own beneficially
more than 5&nbsp;percent of its outstanding common stock,
(ii)&nbsp;each of our directors, (iii)&nbsp;each of our
executive officers and (iv)&nbsp;all directors and executive
officers as a group. Except as otherwise indicated, ARC believes
that the beneficial owners of the common stock listed below,
based on information provided by such owners, have sole
investment and voting power with respect to those shares,
subject to community property laws where applicable. Under
Rule&nbsp;13d-3 of the Exchange Act, (i)&nbsp;persons who have
the power to vote or dispose of common stock of ARC, either
alone or jointly with others, are deemed to be beneficial owners
of that common stock and (ii)&nbsp;persons who have the right to
acquire beneficial ownership of common stock of ARC within
60&nbsp;days are deemed to be the beneficial owners of that
common stock.
</FONT>

<P align="center"><FONT size="2">43
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="56%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="9%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="8%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Number of Shares</FONT></B></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><B><FONT size="1">Name</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Beneficially Owned</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Percent of Class</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Wynnchurch Capital Partners, L.P.(1)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17,666,667</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">50.79</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">150 Field Drive, Suite&nbsp;165<BR>
    Lake Forest, Illinois 60045
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">John Hatherly(2)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17,666,667</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">50.79</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <I><FONT size="2">Director<BR>
    </FONT></I><FONT size="2">150 Field Drive, Suite&nbsp;165<BR>
    Lake Forest, Illinois 60045
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Richard Renaud(3)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17,666,667</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">50.79</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <I><FONT size="2">Director<BR>
    </FONT></I><FONT size="2">150 Field Drive, Suite&nbsp;165<BR>
    Lake Forest, Illinois 60045
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Denny L. Robinson and Terry and Kathleen Olson,
    as a group(4)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">2,042,500</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11.93</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">53565 Hunters Crossing<BR>
    Shelby Township, MI 48315
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Larry Kane(5)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,577,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">9.21</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">2654 Kingston Drive<BR>
    Northbrook, IL 60062
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Alfred Shapiro(6)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1,090,900</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6.37</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">1530 Landaleier Road<BR>
    Elk Grove Village, IL 60007
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Robert P. Stanojev(7)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">146,424</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <I><FONT size="2">Chairman of the Board, President and Chief
    Executive Officer</FONT></I></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Steven Purcell(7)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">328,680</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.92</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <I><FONT size="2">Director, Senior Vice President, Chief
    Financial Officer, Secretary and Treasurer</FONT></I></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Bill McLendon(7)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">49,980</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <I><FONT size="2">Senior Vice President</FONT></I></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Marino Petropoulos(7)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14,900</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <I><FONT size="2">Vice President and Chief Accounting
    Officer</FONT></I></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Tracy Linne(7)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">57,120</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <I><FONT size="2">Senior Vice President of Sales</FONT></I></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Gibbs Vandercook(7)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.00</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <I><FONT size="2">Executive Vice President Service and
    Development</FONT></I></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">JoAnne Brandes(7)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">48,000</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <I><FONT size="2">Director</FONT></I></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Frank Hayes
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.00</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <I><FONT size="2">Director</FONT></I></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Syd N. Heaton(7)(8)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">127,455</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">*</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <I><FONT size="2">Director</FONT></I></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">Michael J. Hering
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">0.00</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <I><FONT size="2">Director</FONT></I></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">All directors and executive officers as a group
    (12&nbsp;persons)(1)(9)
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">18,439,226</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">52.46</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">%</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="1%"></TD>
    <TD width="4%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">*</FONT></TD>
    <TD align="left">
    <FONT size="2">Less than 1%.
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Based upon a Schedule&nbsp;13D/A filed with the
    Securities and Exchange Commission on May&nbsp;13, 2004.
    According to that Schedule&nbsp;13D/A, these shares include
    (i)&nbsp;4,920,208&nbsp;shares of Common Stock issuable upon
    exercise of a warrant issued to Wynnchurch Capital Partners,
    L.P. and 5,079,792&nbsp;shares of Common Stock issuable upon
    exercise of a warrant issued to Wynnchurch Capital Partners
    Canada, L.P.; (ii)&nbsp;3,280,139&nbsp;shares of Common Stock
    issuable upon conversion of a note issued to Wynnchurch Capital
    Partners, L.P., and 3,386,528&nbsp;shares of Common Stock
    issuable upon conversion of a note issued to
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">44
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD align="left">
    <FONT size="2">Wynnchurch Capital Partners Canada, L.P.; and
    (iii)&nbsp;492,021&nbsp;shares of Common Stock issuable upon
    exercise of a contingent warrant issued to Wynnchurch Capital
    Partners, L.P. and 507,979&nbsp;shares of Common Stock issuable
    upon exercise of a contingent warrant issued to Wynnchurch
    Capital Partners Canada, L.P. According to the
    Schedule&nbsp;13D/A, power is exercised through Wynnchurch
    Management, Inc., the sole general partner of Wynnchurch Capital
    Partners, L.P., and Wynnchurch GP Canada, Inc., the sole general
    partner of the sole general partner of Wynnchurch Capital
    Partners Canada, L.P.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(2)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Mr.&nbsp;Hatherly is the President, Treasurer and
    Director of Wynnchurch Management, Inc. and Wynnchurch GP
    Canada, Inc. and, as such, may be deemed to beneficially own the
    securities held by Wynnchurch Capital Partners, L.P.
    Mr.&nbsp;Hatherly has shared voting and dispositive power with
    Mr.&nbsp;Renaud over these shares. See footnote (1)&nbsp;above.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(3)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Mr.&nbsp;Renaud is the Chairman of the Board and
    director of each of Wynnchurch Management, Inc. and Wynnchurch
    GP Canada, Inc. and, as such, may be deemed to beneficially own
    the securities held by Wynnchurch Capital Partners, L.P.
    Mr.&nbsp;Renaud has shared voting and dispositive power with
    Mr.&nbsp;Hatherly over these shares. See footnote (1)&nbsp;above.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(4)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Based on a Schedule&nbsp;13D/A filed with the
    Securities and Exchange Commission on May&nbsp;30, 2002.
    According to that Schedule&nbsp;13D/A, Mr.&nbsp;Robinson has
    sole voting and dispositive power over 1,700,000&nbsp;shares
    held by him as Trustee of the Denny L. Robinson Revocable Living
    Trust, and Terry and Kathleen Olson have sole voting and
    dispositive power over 342,500&nbsp;shares.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(5)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Based upon a Schedule&nbsp;13G/A filed with the
    Securities and Exchange Commission on February&nbsp;6, 2004.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(6)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Based upon a Schedule&nbsp;13D/A filed with the
    Securities and Exchange Commission on May&nbsp;26, 2004.
    According to that Schedule&nbsp;13D/A, Mr.&nbsp;Shapiro has sole
    voting and dispositive power with respect to 761,000&nbsp;shares
    and shared voting and dispositive power with respect to
    505,570&nbsp;shares.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(7)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes 146,424&nbsp;shares (Mr.&nbsp;Stanojev),
    26,180&nbsp;shares (Mr.&nbsp;Purcell), 49,980&nbsp;shares
    (Mr.&nbsp;McLendon), 8,236&nbsp;shares (Mr.&nbsp;Petropoulos),
    57,120&nbsp;shares (Ms.&nbsp;Linne), 48,000&nbsp;shares
    (Ms.&nbsp;Brandes) and 30,000&nbsp;shares (Mr. Heaton) that are
    subject to presently exercisable options or options exercisable
    within 60&nbsp;days of April&nbsp;16, 2004.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(8)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes 3,000&nbsp;shares owned by
    Mr.&nbsp;Heaton&#146;s wife.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(9)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Includes an aggregate of 365,940&nbsp;shares that
    are subject to presently exercisable options or options
    exercisable within 60&nbsp;days of April&nbsp;16, 2004.
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left">
<A name='149'></A>
</DIV>

<!-- link1 "OTHER MATTERS" -->

<P align="center">
<B><FONT size="2">OTHER MATTERS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">You should rely only on the information contained
in this proxy statement to vote your shares at the special
meeting. We have not authorized anyone to provide you with
information that is different from what is contained in this
proxy statement. This proxy statement is dated June&nbsp;17,
2004. You should not assume that the information contained in
this proxy statement is accurate as of any date other than that
date, and the mailing of this document to stockholders is not
intended to create any implication to the contrary.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our board of directors does not intend to bring
before the special meeting of stockholders any matters other
than those set forth in this proxy statement, and has no present
knowledge that any other matters will or may be brought before
the special meeting of stockholders by others. If, however, any
other matters properly come before the special meeting of
stockholders, it is the intention of the persons named in the
enclosed form of proxy to vote the proxies in accordance with
their judgment.
</FONT>

<DIV align="left">
<A name='150'></A>
</DIV>

<!-- link1 "FUTURE STOCKHOLDER PROPOSALS" -->

<P align="center">
<B><FONT size="2">FUTURE STOCKHOLDER PROPOSALS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">ARC will hold its next annual meeting only if the
merger is not completed soon after the special meeting. If you
want to include a proposal in the proxy statement for ARC&#146;s
next annual meeting of stockholders (if held), please send the
proposal to us at ARC Corporation, 600 Hart Road,
Suite&nbsp;300, Barrington, Illinois 60010, Attn: Secretary.
Proposals submitted pursuant to SEC Rule&nbsp;14a-8 must be
received a reasonable time before we print and mail the proxy
statement for such meeting to be included in that proxy
statement.
</FONT>

<P align="center"><FONT size="2">45
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In order for a stockholder to nominate a
candidate for director at the next annual meeting, under
ARC&#146;s By-laws, timely notice of the nomination must be
given in writing to the Secretary of ARC. To be timely, any such
notice must be delivered or mailed by first class&nbsp;United
States mail, postage prepaid, to the Secretary at the address
listed above not less than 60 nor more than 90&nbsp;days prior
to the date of the annual meeting of stockholders or, if ARC
mails its notice and proxy to the stockholders less than
60&nbsp;days prior to the annual meeting, within 10&nbsp;days
after the notice and proxy is mailed. Such notice must describe
various matters regarding the nominee and the stockholder giving
the notice, including such information as name, address,
occupation and shares held.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In order for a stockholder to bring other
business before the stockholders meeting, timely notice must be
given to the Secretary of ARC within the time limits described
above. Such notice must include various matters regarding the
stockholder giving the notice and a description of the proposed
business. These requirements are separate from, and in addition
to, the requirements a stockholder must meet to have a proposal
included in ARC&#146;s proxy statement.
</FONT>

<DIV align="left">
<A name='151'></A>
</DIV>

<!-- link1 "WHERE YOU CAN FIND MORE INFORMATION" -->

<P align="center">
<B><FONT size="2">WHERE YOU CAN FIND MORE INFORMATION</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">ARC and Pomeroy each file annual, quarterly and
special reports, proxy statements and other information with the
SEC. You may read and copy any reports, statements or other
information that ARC or Pomeroy files at the SEC&#146;s public
reference room at Room&nbsp;1024, 450&nbsp;Fifth Street, N.W.,
Washington,&nbsp;D.C. 20549. Please call the SEC at
1-800-SEC-0330 for further information on the public reference
room in Washington,&nbsp;D.C. ARC and Pomeroy filings with the
SEC are also available to the public from commercial document
retrieval services and at the web site maintained by the SEC at
&#147;http:www.sec.gov.&#148;
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">By Order of the Board of Directors,
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <IMG src="c86131dpurcells.gif" alt="-s- STEVEN PURCELL"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">STEVEN PURCELL
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <I><FONT size="2">Senior Vice President, Chief Financial
    Officer,</FONT></I></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <I><FONT size="2">Secretary and Treasurer</FONT></I></TD>
</TR>

</TABLE>

<P align="left">
<FONT size="2">June&nbsp;17, 2004
</FONT>

<P align="center"><FONT size="2">46
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left">
<A name='153'></A>
</DIV>

<!-- link1 "APPENDIX A" -->

<P align="right">
<B><FONT size="2">APPENDIX&nbsp;A</FONT></B>

<P align="center">
<B><FONT size="2">AGREEMENT AND PLAN OF MERGER</FONT></B>

<P align="center">
<B><FONT size="2">May&nbsp;11, 2004</FONT></B>

<DIV>&nbsp;</DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">TABLE OF CONTENTS</FONT></B>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="14%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="76%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="7" align="center" valign="top">
    <FONT size="2">ARTICLE 1<BR>
     THE MERGER
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">1.1
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">The Merger
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">1.2
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Effective Time of the Merger
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">1.3
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Consummation
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">1.4
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Effects of the Merger
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">1.5
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Further Assurances
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="7"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="7" align="center" valign="top">
    <FONT size="2">ARTICLE 2<BR>
     THE SURVIVING CORPORATION AND PARENT
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2.1
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Certificate of Incorporation
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2.2
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">By-Laws
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">2.3
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Directors and Officers of Surviving Corporation
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="7"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="7" align="center" valign="top">
    <FONT size="2">ARTICLE 3<BR>
     CONVERSION OF SHARES
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">3.1
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Merger Consideration
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-2</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">3.2
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Acquisition Sub Shares
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">3.3
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Dissenting Shares
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">3.4
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Surrender and Payment
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-4</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">3.5
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Closing
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">3.6
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Withholding
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-5</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="7"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="7" align="center" valign="top">
    <FONT size="2">ARTICLE 4<BR>
     REPRESENTATIONS AND WARRANTIES OF COMPANY
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">4.1
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Organization, Standing, etc. of Company
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">4.2
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Capitalization
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">4.3
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Subsidiaries
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">4.4
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Authority; Non-Contravention; Approval
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">4.5
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">SEC Documents
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">4.6
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Financial Statements
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">4.7
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Absence of Undisclosed Liabilities
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">4.8
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">No Liabilities as Guarantor
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-9</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">4.9
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Absence of Certain Changes or Events
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">4.10
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Taxes and Tax Returns
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">4.11
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Compliance with Laws
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-11</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">4.12
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Litigation
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">4.13
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Compliance with Agreements
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">4.14
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Books and Records
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">4.15
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Employee Benefit Plans; ERISA
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">4.16
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Labor Matters
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-14</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">4.17
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Assets
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">4.18
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Accounts Receivable and Vendor Receivables
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">4.19
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Real Estate
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-15</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">4.20
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Tangible Personal Property Leases
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-16</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">A-i
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="14%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="76%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">4.21
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Intellectual Property
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-16</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">4.22
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Insurance
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">4.23
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Commercial Relationships
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">4.24
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Environmental Matters
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">4.25
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Contracts and Commitments; Suppliers and Customers
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-19</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">4.26
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Section 203 of the DGCL Not Applicable
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-20</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">4.27
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Government Contracts
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-20</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">4.28
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Relations with Governments
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-20</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">4.29
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Stockholder Rights Plan
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-20</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">4.30
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">No Existing Discussions
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-20</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">4.31
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Disclosure Documents
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-20</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">4.32
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Advisors&#146; Fees
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-21</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">4.33
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Opinion of Financial Advisor
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-21</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">4.34
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Certain Loans, Split Dollar Arrangements and
    Other Transactions
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-21</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">4.35
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Territorial Restrictions
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-21</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">4.36
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Product Liability
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-21</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">4.37
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Immigration Compliance
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-21</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">4.38
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Preference Payments
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-22</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">4.39
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Vote Required
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-22</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">4.40
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Minority Business Status
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-22</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">4.41
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Acquisitions
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-22</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">4.42
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Definition of Company&#146;s Knowledge
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-22</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">4.43
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">No Additional Representations
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-22</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">4.44
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Disclosure
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-22</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="7"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="7" align="center" valign="top">
    <FONT size="2">ARTICLE 5<BR>
     REPRESENTATIONS AND WARRANTIES OF PARENT
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">5.1
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Organization, Standing, etc. of Parent
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-23</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">5.2
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Authorization and Execution
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-23</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">5.3
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Absence of Conflicts; Governmental Authorizations
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-23</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">5.4
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Capitalization
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-24</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">5.5
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">SEC Reports
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-24</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">5.6
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Financial Statements
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-24</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">5.7
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Absence of Undisclosed Liabilities
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-24</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">5.8
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Absence of Adverse Changes
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-25</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">5.9
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Actions and Proceedings
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-25</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">5.10
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Proxy Statement and Registration Statement
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-25</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">5.11
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Advisors&#146; Fees
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-25</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">5.12
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Company Shares and Acquisition Sub Interests
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-25</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">5.13
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Definition of Parent&#146;s Knowledge
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-25</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">5.14
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Financing
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-25</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">5.15
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Disclosure
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-25</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">A-ii
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="14%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="76%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD colspan="7" align="center" valign="top">
    <FONT size="2">ARTICLE 6<BR>
     COVENANTS
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">6.1
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Conduct of Business by Company Pending the Merger
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-26</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">6.2
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Control of Operations
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-28</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">6.3
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">No Solicitation by Company
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-28</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">6.4
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Meeting of Company Stockholders
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-30</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">6.5
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Agreement to Cooperate
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-30</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">6.6
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Access to Information
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-31</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">6.7
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Proxy Statement
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-31</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">6.8
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Expenses and Fees
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-31</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">6.9
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Public Statements
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-32</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">6.10
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Company Employees
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-32</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">6.11
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Notification of Certain Matters; Supplemental
    Disclosure
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-32</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">6.12
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Reliance Upon Warranties, Representations and
    Agreements of Company
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-33</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">6.13
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Reliance Upon and Enforcement of Representations,
    Warranties and Agreements of Parent and Acquisition Sub
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-33</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">6.14
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Indemnification
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-33</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">6.15
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Maintenance of Company Records
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-34</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">6.16
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Stockholder Litigation
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-34</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">6.17
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Affiliates
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-35</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">6.18
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Resignations
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-35</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="7"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="7" align="center" valign="top">
    <FONT size="2">ARTICLE 7<BR>
     CONDITIONS
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">7.1
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Conditions to Each Party&#146;s Obligation to
    Effect the Merger
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-35</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">7.2
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Conditions to Obligation of Company to Effect the
    Merger
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-35</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">7.3
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Conditions to Obligations of Parent to Effect the
    Merger
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-36</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="7"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="7" align="center" valign="top">
    <FONT size="2">ARTICLE 8<BR>
     TERMINATION, AMENDMENT AND WAIVER
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">8.1
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Termination
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-37</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">8.2
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Effect of Termination
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-38</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">8.3
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Termination Payment by Company
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-38</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">8.4
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Amendment
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-40</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">8.5
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Waiver
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-40</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="7"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="7" align="center" valign="top">
    <FONT size="2">ARTICLE 9<BR>
     GENERAL PROVISIONS
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">9.1
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Non-Survival
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-40</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">9.2
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Brokers
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-40</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">9.3
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Notices
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-40</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">9.4
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Interpretation
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-41</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">9.5
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Miscellaneous
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-41</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">9.6
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Jurisdiction
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-41</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">9.7
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Counterparts
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-42</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">9.8
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Parties In Interest
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-42</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">9.9
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Severability
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-42</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">A-iii
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="90%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="14%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="76%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD></TD>
    <TD colspan="3"></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">9.10
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Entire Agreement
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-42</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">9.11
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Governing Law
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-42</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">9.12
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Section Headings; Construction
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-42</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">9.13
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Enforcement
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-42</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">9.14
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Rules of Construction
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-42</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">9.15
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top">
    <FONT size="2">Waiver of Trial by Jury
    </FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">A-43</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="center"><FONT size="2">A-iv
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<P align="center">
<B><FONT size="2">AGREEMENT AND PLAN OF MERGER</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">This Agreement and Plan of Merger (this
&#147;Agreement&#148;), dated as of May&nbsp;11, 2004, is made
by and among Pomeroy IT Solutions, Inc., a Delaware corporation
(&#147;Parent&#148;), Pomeroy Acquisition Sub, Inc., a Delaware
corporation and a wholly owned subsidiary of Parent
(&#147;Acquisition Sub&#148;) and Alternative Resources
Corporation, a Delaware corporation (&#147;Company&#148;).
</FONT>

<P align="center">
<B><FONT size="2">WITNESSETH:</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">WHEREAS, the Board of Directors of Company has
(i)&nbsp;unanimously determined that this Agreement, the Merger
and the transactions contemplated hereby are fair to, and in the
best interests of, Company and the stockholders of Company;
(ii)&nbsp;unanimously approved this Agreement and declared it
advisable; and (iii)&nbsp;unanimously resolved to recommend that
the stockholders of Company approve and adopt this Agreement,
the Merger and the transactions contemplated hereby;&nbsp;and
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">WHEREAS, the Board of Directors of Parent and
Acquisition Sub have approved the Merger on the terms set forth
in this Agreement;&nbsp;and
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">WHEREAS, for federal income tax purposes, it is
intended that the Merger be treated as a taxable transaction
under the Internal Revenue Code of 1986, as amended, and the
rules and regulations promulgated thereunder (the
&#147;Code&#148;);&nbsp;and
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">WHEREAS, concurrently with the execution and
delivery of this Agreement, to induce Parent to enter into this
Agreement, Wynnchurch Capital Partners, L.P., a Delaware limited
partnership (&#147;WCP&#148;), Wynnchurch Capital Partners,
Canada, L.P., a Canada limited partnership (&#147;WCPC&#148;)
and Wynnchurch Capital, Ltd., a Delaware corporation
(&#147;WCL&#148;) have entered into an agreement in the form
attached hereto as Exhibit &#147;A&#148; (the &#147;WCP, WCPC
and WCL Agreement&#148;).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">NOW, THEREFORE, in consideration of the mutual
representations, warranties and covenants set forth herein, and
intending to be legally bound, Parent, Acquisition Sub and
Company hereby agree as follows:
</FONT>

<P align="center">
<FONT size="2">ARTICLE&nbsp;1
</FONT>

<P align="center">
<FONT size="2"> THE MERGER
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">1.1 <I>The Merger.</I> Upon the terms and subject
to the conditions of this Agreement, at the Effective Time in
accordance with the Delaware General Corporation Law
<I>(&#147;DGCL&#148;)</I>, Acquisition Sub shall be merged with
and into Company and the separate existence of Acquisition Sub
shall thereupon cease (the &#147;Reverse Merger&#148;). Parent
may at any time change the method of effecting the combination
with Company (including, without limitation, the provisions of
this <I>Section&nbsp;1.1</I>) if and to the extent it deems such
change to be desirable, including without limitation, to provide
for a merger of Company with an into Acquisition Sub (the
&#147;Forward Merger&#148;); provided, however, that no change
shall (i)&nbsp;alter or change the Merger Consideration, as
herein after provided for in this Agreement,
(ii)&nbsp;materially impede or delay consummation of the
transactions contemplated by this Agreement, or
(iii)&nbsp;relieve Parent of any of its obligations hereunder.
The Reverse Merger and Forward Merger shall alternatively be
referred to as the (&#147;Merger&#148;). The Company (in the
case of a Reverse Merger), or Acquisition Sub (in the case of a
Forward Merger), as the surviving corporation after the Merger,
is hereinafter sometimes referred to as &#147;Surviving
Corporation.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">1.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Effective
Time of the Merger.</I> The Merger shall become effective at
such time (the &#147;Effective Time&#148;) as shall be stated in
the Certificate of Merger, in a form reasonably acceptable to
Parent, Company and Acquisition Sub, respectively, to be filed
with the Secretary of State of Delaware in accordance with the
DGCL (&#147;Merger Filing&#148;). The Merger Filing shall
provide for the effectiveness of the Merger immediately upon its
filing. The Merger Filing shall be made at the Closing.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">1.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Consummation.</I>
The parties acknowledge that it is their mutual desire and
intent to consummate the Merger as soon as practical after the
date hereof. Accordingly, the parties shall use their reasonable
efforts
</FONT>

<P align="center"><FONT size="2">A-1
</FONT>

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<DIV align="left">
<FONT size="2">to consummate, as soon as practical, the
transactions contemplated by this Agreement in accordance with
<I>Section&nbsp;3.5.</I>
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">1.4&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Effects of
the Merger.</I> The Merger shall have the effect set forth in
Section&nbsp;259 of the DGCL.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">1.5&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Further
Assurances.</I> If, at any time after the Effective Time, the
Surviving Corporation shall consider or be advised that any
further deeds, assignments or assurances in law or any other
actions are necessary, desirable or proper to vest, perfect or
confirm of record or otherwise in the Surviving Corporation, the
title of any property or rights of Acquisition Sub acquired or
to be acquired by reason of, or as a result of, the Merger (or
Company in the event of a Forward Merger), the Surviving
Corporation and Acquisition Sub (Company in the event of a
Forward Merger) agree that the Acquisition Sub and Surviving
Corporation (Company in the event of a Forward Merger) and their
proper officers and directors shall and will execute and deliver
all such proper deeds, assignments and assurances in law and to
do all things necessary, desirable or proper to vest, perfect or
confirm title to such property or rights in the Surviving
Corporation and otherwise to carry out the purpose of this
Agreement.
</FONT>

<P align="center">
<FONT size="2">ARTICLE&nbsp;2
</FONT>

<P align="center">
<FONT size="2">THE SURVIVING CORPORATION AND PARENT
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">2.1 <I>Certificate of Incorporation.</I> If the
Reverse Merger is consummated, the Certificate of Incorporation
of Company shall be amended at the Effective Time, to read in
its entirety as set forth on Exhibit &#147;B&#148; hereto and
shall be the Certificate of Incorporation after the Effective
Time, until thereafter amended in accordance with its terms as
provided in the DGCL.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If the Forward Merger is consummated, the
Certificate of Incorporation of Acquisition Sub as in effect
immediately prior to the Effective Time shall be the Certificate
of Incorporation of Surviving Corporation after the Effective
Time, until thereafter amended in accordance with its term and
as provided in DGCL, except that Article&nbsp;1 thereof shall be
amended at the Effective Time in accordance with the provisions
of Section&nbsp;251 of DGCL to read in its entirety as follows:
&#147;The name of the Corporation is &#147;Alternative Resources
Corporation&#145;&#146;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">2.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>By-Laws.</I>
The By-Laws of Acquisition Sub as in effect immediately prior to
the Effective Time shall be the By-Laws of Surviving Corporation
after the Effective Time, and thereafter may be amended in
accordance with their terms and as provided by the Certificate
of Incorporation of Surviving Corporation and the DGCL, except
that references in the By-Laws to the term Acquisition Sub shall
be changed to &#147;Alternative Resources Corporation&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">2.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Directors and
Officers of Surviving Corporation.</I> The Directors and
Officers of Acquisition Sub, in effect immediately prior to the
Effective Time shall be the Directors and Officers of Surviving
Corporation as of the Effective Time and thereafter such
Directors and Officers shall serve in accordance with the
By-Laws of the Surviving Corporation until their respective
successors are duly elected or appointed and qualified.
</FONT>

<P align="center">
<FONT size="2">ARTICLE&nbsp;3
</FONT>

<P align="center">
<FONT size="2">CONVERSION OF SHARES
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">3.1 <I>Merger Consideration.</I> The manner and
basis of converting the shares of Company Common Stock upon
consummation of the Merger shall be as set forth in this
<I>Section&nbsp;3.1.</I> At the Effective Time, by virtue of the
Merger and without any action on the part of Company,
Acquisition Sub or any holder of Company Capital Stock or holder
of capital stock of Acquisition Sub:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(a)&nbsp;Subject to the other provisions of this
    <I>Section&nbsp;3.1</I>, each share of common stock, par value
    $.01&nbsp;per share, of Company (the &#147;Company Common
    Stock&#148;) issued and outstanding immediately prior to the
    Effective Time (excluding any treasury shares, shares held by
    Parent, Acquisition Sub or any Subsidiary of Parent or
    Acquisition Sub and Dissenting Shares) shall be converted into
    the right to
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">A-2
</FONT>

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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">receive the Merger Consideration. The
    &#147;Merger Consideration&#148; shall mean cash in the amount
    of $.70, without interest
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(b)&nbsp;Each share of Company Common Stock held
    in the treasury of Company and each share of Company Common
    Stock owned by Parent, Acquisition Sub or any Subsidiary of
    Parent or Acquisition Sub immediately prior to the Effective
    Time shall be canceled and extinguished without any conversion
    thereof and no payment shall be made with respect thereto.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(c)&nbsp;At the Effective Time, all shares of
    Company Common Stock will no longer be outstanding and will
    automatically be canceled and retired, and each holder of a
    Company Certificate or Company Book-Entry Shares will cease to
    have any rights with respect thereto, except the right to
    receive the Merger Consideration applicable thereto.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(d)&nbsp;In connection with the Merger, each
    option (each, a &#147;Company Stock Option&#148; and
    collectively, the &#147;Company Stock Options&#148;) to purchase
    Company Common Stock under any employee or director stock option
    or stock purchase plan or arrangement or agreement of the
    Company listed on <I>Section&nbsp;3.1 </I>of the Company
    Disclosure Schedule, in the Company Reports or otherwise which
    is exercised by the holder of such Company Stock Option and each
    share of Company Common Stock issued incident to the exercise of
    a Company Stock Option shall be entitled to receive the Merger
    Consideration. Company shall use its best efforts to cause all
    vested Company Stock Options whose exercise price is equal to or
    in excess of $.70&nbsp;per share as of the Effective Time to be
    terminated. In the event any holder of a vested Company Stock
    Option whose exercise price is less than $.70&nbsp;per share
    fails to exercise such Company Stock Option prior to the
    Effective Time, a cashless exercise method shall automatically
    be implemented, on behalf of such Company Stock Option holder,
    and in lieu of the Company Common Stock to be issued pursuant to
    the cashless exercise, an amount per share shall be payable to
    such Company Stock Option holder by Company promptly after the
    Effective Time equal to the difference between the Merger
    Consideration and the exercise price under such Company Stock
    Option (the &#147;Cashless Exercise Consideration&#148;).
    Company shall be responsible for withholding all applicable
    federal, state or local withholding taxes relating to the
    exercise of Company Stock Options or the payment of Cashless
    Exercise Consideration. If the exercise price provided for any
    vested Company Stock Option is equal to or exceeds the Merger
    Consideration, and such Company Stock Option is not exercised
    prior to the Effective Time, no Company Common Stock shall be
    issued with respect to such Company Stock Option. Immediately
    following the Effective Time of the Merger, all outstanding
    Company Stock Options shall automatically be cancelled. The
    Company shall take all actions necessary to ensure that no
    Company Stock Options are granted after the date of this
    Agreement. Immediately after the Effective Time, the Company
    Stock Option Plans shall terminate and the provisions of any
    other plans, program or arrangement providing for the issuance
    or grant of any other interest in respect of the Company Capital
    Stock or any Subsidiary of Company shall be of no further force
    and effect and shall be deemed to be deleted and no holder of a
    Company Stock Option shall have any right thereunder to acquire
    any equity securities of the Company, Acquisition Sub, or any
    subsidiary thereof, or Parent.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(e)&nbsp;As of the Effective Time, each
    outstanding Company Warrant listed on <I>Section&nbsp;3.1 </I>of
    the Company Disclosure or the Company Reports, or otherwise,
    which is outstanding immediately prior to the Effective Time of
    the Merger, shall be sold and transferred by the owner of such
    Company Warrants to Parent free and clear of all Liens pursuant
    to the terms of the WCP, WCPC and WCL Agreement. Parent shall
    pay to the owner of each Company Warrant promptly after the
    Effective Time, an amount per share of Company Common Stock into
    which such Company Warrant is exercisable equal to the
    difference between $.70 and the exercise price under such
    Company Warrant of $.26. The total purchase price for the
    Company Warrants shall be $4,840,000.00 (11,000,000 Company
    Warrants &#215; $.44). If the exercise price per share provided
    for any Company Warrant is equal to or exceeds $.70, Parent
    shall not be required to pay to the owner of such Company
    Warrant, any amount with respect to such Company Warrant.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">3.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Acquisition
Sub Shares.</I> At the Effective Time, by virtue of the Merger
and without any action on the part of Parent as the sole
stockholder of Acquisition Sub, each issued and outstanding
share of common
</FONT>

<P align="center"><FONT size="2">A-3
</FONT>

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<DIV align="left">
<FONT size="2">stock, par value $.01&nbsp;per share, of
Acquisition Sub (&#147;Acquisition Sub Common Stock&#148;)
shall, in the case of a Reverse Merger, be converted into one
share of common stock, par value $.01&nbsp;per share, of the
Surviving Corporation and each issued and outstanding share of
common stock, par value .01&nbsp;per share, of Acquisition Sub,
shall, in the case of a Forward Merger, remain outstanding as
one share of common stock, .01&nbsp;per share, of the Surviving
Corporation.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">3.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Dissenting
Shares.</I> Notwithstanding anything in this Agreement to the
contrary, shares of Company Common Stock outstanding immediately
prior to the Effective Time and held by a holder who has not
voted in favor of the Merger or consented thereto in writing and
who has properly demanded appraisal for such Company Common
Stock in accordance with the requirements of Section&nbsp;262 of
the DGCL (the &#147;Dissenting Shares&#148;) shall not be
converted into the right to receive the Merger Consideration and
the holders thereof shall be entitled to only such rights as are
granted by the DGCL, unless such holder fails to perfect,
withdraws or otherwise loses the right to appraisal, in which
case such shares of Company Common Stock shall be treated as if
they had been converted as of the Effective Time into the right
to receive the Merger Consideration, as set forth in
<I>Section&nbsp;3.1</I>, without any interest thereon. Company
shall give Parent prompt notice of any demands received by
Company for appraisal of shares of Company Common Stock,
withdrawals of such demands, and any other instruments or
documents served pursuant to the DGCL and received by Company,
and Company shall give Parent the opportunity to direct all
negotiations and proceedings with respect to such demands.
Except with the prior written consent of Parent, Company shall
not make any payment with respect to, or offer to settle or
settle, any such demands. Each holder of Dissenting Shares who
becomes entitled to payment for such Dissenting Shares under the
provisions of Section&nbsp;262 of the DGCL, will receive payment
thereof from the Surviving Corporation and as of the Effective
Time such shares of Company Common Stock will no longer be
outstanding and will automatically be canceled and retired and
will cease to exist.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">3.4&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Surrender and
Payment.</I>
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(a)&nbsp;Parent shall authorize one or more
    Persons reasonably acceptable to the Company to act as Exchange
    Agent hereunder the &#147;Exchange Agent.&#148; Promptly after
    the Effective Time, Parent shall deliver to the Exchange Agent
    sufficient cash to satisfy the Merger Consideration. Promptly
    after the Effective Time, the Surviving Corporation shall cause
    to be mailed to each record holder, as of the Effective Time, of
    certificates representing outstanding shares of Company Common
    Stock (&#147;Company Certificates&#148;) or shares of Company
    Common Stock represented by book-entry (&#147;Company Book-Entry
    Shares&#148;) (other than Dissenting Shares), a letter of
    transmittal (which shall specify that delivery shall be
    effected, and risk of loss and title to the Company Certificates
    shall pass, only upon proper delivery of the Company
    Certificates to the Exchange Agent or, in the case of Company
    Book-Entry Shares, upon adherence to the procedures set forth in
    the letter of transmittal) and instructions for use in effecting
    the surrender of the Company Certificates or, in the case of
    Company Book-Entry Shares, the surrender of such shares for
    payment of the Merger Consideration therefor. After the
    Effective Time, upon surrender in accordance with this
    <I>Section&nbsp;3.4(a)</I>, to the Exchange Agent of a Company
    Certificate or Company Book-Entry Shares, together with such
    letter of transmittal, duly completed and validly executed in
    accordance with the instructions thereto, and such other
    documents as may be required pursuant to such instructions, the
    Exchange Agent shall promptly deliver to the holder of such
    Company Certificate or Company Book-Entry Shares in exchange
    therefor, the Merger Consideration to be received by the holder
    thereof pursuant to this Agreement. The Exchange Agent shall
    accept such Company Certificates or Company Book-Entry Shares
    upon compliance with such reasonable terms and conditions as the
    Exchange Agent may impose to effect an orderly exchange thereof
    in accordance with normal exchange practices. After the
    Effective Time, there shall be no further transfer on the
    records of Company or its transfer agent of shares of Company
    Common Stock and, if Company Certificates or Company Book-Entry
    Shares are presented to Company for transfer, they shall be
    canceled against delivery of the applicable Merger
    Consideration. If any Merger Consideration is to be issued in a
    name other than that in which the Company Certificate
    surrendered for exchange is registered, it shall be a condition
    of such exchange that the Company Certificate so surrendered
    shall be properly endorsed, with signature guaranteed, or
    otherwise in proper form for transfer, including compliance with
    all laws and that the
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">A-4
</FONT>

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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">person requesting such exchange shall pay to
    Company or its transfer agent any transfer or other taxes
    required by reason of the issuance of the Merger Consideration
    in a name other than that of the registered holder of the
    Company Certificate surrendered, or establish to the
    satisfaction of the Surviving Corporation that such tax has been
    paid or is not applicable. Until surrendered as contemplated by
    this <I>Section&nbsp;3.4(a)</I>, each Company Certificate and
    each Company Book-Entry Share shall be deemed at any time after
    the Effective Time to represent only the right to receive upon
    such surrender the Merger Consideration as contemplated by
    <I>Section&nbsp;3.1.</I>
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(b)&nbsp;The Merger Consideration paid upon the
    surrender for exchange of Company Certificates or Company
    Book-Entry Shares in accordance with the terms of this
    Article&nbsp;3 shall be deemed to have been issued (and paid) in
    full satisfaction of all rights pertaining to the shares of
    Company Common Stock so exchanged.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(c)&nbsp;At any time following the date which is
    nine months after the Effective Time, Parent shall be entitled
    to require the Exchange Agent to deliver to it any or funds
    (including any interest received with respect thereto) which
    have been made available to the Exchange Agent and which have
    not been disbursed to holders of Company Certificates or Company
    Book-Entry Shares and thereafter such holders shall be entitled
    to look to Parent and the Surviving Corporation (subject to
    abandoned property, escheat or other similar laws) only as
    general creditors thereof with respect to the applicable Merger
    Consideration payable upon due surrender of their Company
    Certificates or Company Book-Entry Shares. The Surviving
    Corporation shall pay all charges and expenses, including those
    of the Exchange Agent, in connection with the exchange of shares
    of Company Common Stock for the Merger Consideration. None of
    Parent, Surviving Corporation, any subsidiary or Affiliate of
    Parent or Surviving Corporation or the Exchange Agent shall be
    liable to any former holder of Company Common Stock for cash,
    pursuant to any applicable abandoned property, escheat or other
    similar laws.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(d)&nbsp;If any Company Certificate shall have
    been lost, stolen or destroyed, upon the making of an affidavit
    of that fact by the Person claiming such Company Certificate to
    be lost, stolen or destroyed and, if requested by the Surviving
    Corporation, the posting by such Person of a bond, in such
    reasonable amount as the Surviving Corporation may direct, as
    indemnity against any claim that may be made against it with
    respect to such Company Certificate, the Exchange Agent will
    pay, in exchange for such lost, stolen or destroyed Company
    Certificate, the Merger Consideration to be paid in respect of
    the shares of Company Common Stock represented by such Company
    Certificate.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">3.5&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Closing.</I>
The closing (the &#147;Closing&#148;) of the transactions
contemplated by this Agreement shall take place at the offices
of Parent, or such other location as shall be mutually agreeable
to Parent and Company on the first (1st) Business Day
immediately following the date on which the last of the
conditions set forth in Article&nbsp;7 (other than the delivery
of certificates, and other instruments and documents to be
delivered at the Closing, but subject to the delivery at the
Closing of such certificates, and other instruments and
documents) is fulfilled or waived, or at such other time and
place as Parent and Company shall agree (the date on which the
Closing occurs is referred to in this Agreement as the
&#147;Closing Date&#148;).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">3.6&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Withholding.</I>
Parent will be entitled to deduct and withhold from the
aggregate Merger Consideration otherwise payable to any former
holder of Company Common Stock all amounts required by law to be
deducted or withheld therefrom. To the extent that amounts are
so withheld by Parent or Acquisition Sub, such withheld amount
will be treated for all purposes of this Agreement as having
been paid to the holder of the shares of Company Common Stock in
respect of which such deduction and withholding was made by
Parent or Acquisition Sub.
</FONT>

<P align="center">
<FONT size="2">ARTICLE&nbsp;4
</FONT>

<P align="center">
<FONT size="2"> REPRESENTATIONS AND WARRANTIES OF COMPANY
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Except as set forth in the Company Disclosure
Schedule (with specific reference to the relevant sections of
the representations and warranties or covenants in this
Agreement or disclosure in such a way to make its relevance to
the information called for by the representations and warranties
or covenants readily apparent) or
</FONT>

<P align="center"><FONT size="2">A-5
</FONT>

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<DIV align="left">
<FONT size="2">in the Company Reports, or as otherwise expressly
contemplated by this Agreement, Company represents and warrants
to Parent and Acquisition Sub as follows:
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">4.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Organization,
Standing, etc. of Company.</I> Company is a corporation duly
incorporated, validly existing, and in good standing under the
laws of the jurisdiction of its incorporation, has the requisite
corporate power and authority to own its assets and to carry on
its businesses as presently conducted. The Company is duly
qualified as a foreign corporation to do business in and is in
good standing in each jurisdiction where it is presently engaged
in business and is required to be so qualified except for the
jurisdictions set forth in <I>Section&nbsp;4.1 </I>of the
Company Disclosure Schedule which Company is currently preparing
documentation to so qualify or where the failure to be so
qualified would not have a Material Adverse Effect on Company.
Company has delivered or made available to Parent and
Acquisition Sub true and complete copies of its Certificate of
Incorporation and all amendments thereto to the date hereof and
its Bylaws as presently in effect and the Certificate of
Incorporation and Bylaws (or other comparable documents).
Company has all requisite corporate power and authority to
execute and deliver, and perform its obligations under, this
Agreement and to consummate the transactions contemplated
hereby. <I>Section&nbsp;4.1 </I>of the Company Disclosure
Schedule sets forth a complete list of the jurisdictions in
which the Company is qualified to do business.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">4.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Capitalization.</I>
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(a)&nbsp;The authorized capital stock of Company
    consists of (a)&nbsp;50,000,000&nbsp;shares of Company Common
    Stock of which 17,117,304&nbsp;shares are issued and outstanding
    on the date hereof, 9,583,279&nbsp;shares have been reserved for
    issuance upon the conversion of the Company&#146;s Senior
    Subordinated Convertible Notes, 2,154,281&nbsp;shares have been
    reserved for issuance under Company Option Plans,
    11,000,000&nbsp;shares have been reserved for issuance under the
    Company Warrants, and 585,800&nbsp;shares of Company Common
    Stock are held in the treasury; and
    (b)&nbsp;1,000,000&nbsp;shares of Company Preferred Stock, of
    which 0&nbsp;shares are issued and outstanding on the date
    hereof. All of the outstanding shares of Company Common Stock
    and Company Preferred Stock have been duly authorized and are
    validly issued, fully paid and nonassessable and free of
    preemptive rights. Each outstanding share of capital stock (or
    other ownership interest) of each Subsidiary of Company is duly
    authorized, validly issued, fully paid and nonassessable, and is
    owned by Company or its Subsidiaries, free and clear of all
    Liens other than Permitted Liens. <I>Section&nbsp;4.2 </I>of the
    Company Disclosure Schedule sets forth the number and exercise
    price of all outstanding Company Stock Options on the date
    hereof. All shares of Company Common Stock subject to issuance
    upon exercise of the outstanding Company Stock Options described
    above will be, upon issuance on the terms specified in the
    option agreement, duly authorized, validly issued, fully paid
    and nonassessable.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(b)&nbsp;Except as set forth in
    <I>Section&nbsp;4.2 </I>of the Company Disclosure Schedule,
    there are no outstanding subscriptions, options, calls,
    contracts, commitments, understandings, restrictions,
    arrangements, stock appreciation rights (SARs), phantom stock,
    rights or warrants, including any right of conversion or
    exchange under any outstanding security, instrument or other
    agreement and also including any rights plan or other
    anti-takeover agreement, obligating Company to issue, deliver or
    sell, or cause to be issued, delivered or sold, additional
    shares of Company Capital Stock, or obligating Company to grant,
    extend or enter into any such agreement or commitment. There are
    no voting trusts, proxies or other agreements or understandings
    to which Company is a party or is bound with respect to the
    voting of any shares of Company Capital Stock.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(c)&nbsp;The Board of Directors of Company has
    not declared any dividend or distribution with respect to the
    Company Capital Stock the record or payment date for which is on
    or after the date of this Agreement.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(d)&nbsp;As of the date hereof, (i)&nbsp;no
    bonds, debentures, notes or other indebtedness of Company having
    the right to vote are issued or outstanding, and (ii)&nbsp;there
    are no outstanding contractual obligations of Company or any of
    its Subsidiaries to repurchase, redeem or otherwise acquire any
    shares of Company Capital Stock or any shares of capital stock
    of any Subsidiary of Company.
    </FONT></TD>
</TR>

</TABLE>

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<P>

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<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(e)&nbsp;The Company Common Stock is traded on
    the OTC Bulletin Board. No other securities of Company or any of
    its Subsidiaries are listed or quoted for trading on any United
    States domestic or foreign securities exchange.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">4.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Subsidiaries.</I>
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Except as set forth in <I>Section&nbsp;4.3 </I>of
the Company Disclosure Schedule,
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(a)&nbsp;Each Subsidiary of Company is a
    corporation (or other legal entity, as applicable) duly
    incorporated (or an entity duly formed) and organized, validly
    existing and in good standing under the laws of its jurisdiction
    of incorporation or organization, as the case may be, and has
    all corporate, partnership or other entity derived powers and
    all governmental licenses, authorizations, permits, consents and
    approvals required to carry on its business as now conducted,
    except for those licenses, authorizations, permits, consents and
    approvals the absence of which would not, individually or in the
    aggregate, have a Material Adverse Effect on Company.
    <I>Section&nbsp;4.3 </I>of the Company Disclosure Schedule sets
    forth each jurisdiction in which each Subsidiary is qualified to
    do business. No Subsidiary of Company is in default in any
    respect in the performance, observation or fulfillment of any
    provision of its Certificate or Articles of Incorporation or
    By-Laws (or similar organizational documents). Other than its
    Subsidiaries, Company does not beneficially own or control,
    directly or indirectly, 5% or more of any class of equity or
    similar securities of any corporation or other entity whether
    incorporated or unincorporated. No securities issued by any
    Subsidiary of Company are registered or required to be
    registered with the SEC under the Exchange Act and since
    January&nbsp;1, 2000, no securities issued by any Subsidiary of
    Company have been issued under a registration statement filed
    with the SEC under the Securities Act.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(b)&nbsp;All of the outstanding capital stock of,
    or other voting securities or ownership interests in, each
    Subsidiary of company is owned by Company, directly or
    indirectly, free and clear of any Lien and free of any other
    limitation or restriction (including, any restriction on the
    right to vote, sell or otherwise dispose of such capital stock
    or other voting securities or ownership interests), other than
    any restrictions imposed under the Securities Act. There are no
    outstanding (i)&nbsp;shares of capital stock or other voting
    securities or ownership interests in any of Company&#146;s
    Subsidiaries, (ii)&nbsp;securities of Company or any of its
    Subsidiaries convertible into or exchangeable for shares of
    capital stock or other voting securities or ownership interests
    in any of Company&#146;s Subsidiaries or (iii)&nbsp;options or
    other rights to acquire from Company or any of its Subsidiaries,
    or other obligation of Company or any of its Subsidiaries to
    issue any capital stock or other voting securities or ownership
    interests in, or any securities convertible into or exchangeable
    for any capital stock or other voting securities or ownership
    interests in any of Company&#146;s Subsidiaries. There are no
    outstanding obligations of Company of any of its Subsidiaries to
    repurchase, redeem or otherwise acquire any of the securities
    referred to in clauses&nbsp;(i), (ii)&nbsp;or (iii)&nbsp;of this
    <I>Section&nbsp;4.3(b).</I>
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">4.4&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Authority;
Non-Contravention; Approval.</I>
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Except as set forth in <I>Section&nbsp;4.4 </I>of
the Company Disclosure Schedule,
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(a)&nbsp;Company has full corporate power and
    authority to enter into this Agreement and, subject to the
    Stockholders&#146; Approval and the Company Required Statutory
    Approvals, to consummate the transactions contemplated hereby.
    The Board of Directors of Company has (i)&nbsp;unanimously
    determined that this Agreement, the Merger and the transactions
    contemplated hereby are fair to and in the best interests of
    Company and the Stockholders, (ii)&nbsp;unanimously approved
    this Agreement and declared it advisable and
    (iii)&nbsp;unanimously resolved to recommend that the
    Stockholders approve and adopt this Agreement, the Merger and
    the transactions contemplated hereby. No other corporate
    proceedings on the part of Company are necessary to authorize
    the execution and delivery of this Agreement or, except for the
    Stockholders&#146; Approval, the consummation by Company of the
    transactions contemplated hereby. Company has duly executed and
    delivered this Agreement and, assuming the due authorization,
    execution and delivery thereof by Parent and Acquisition Sub,
    this Agreement constitutes a valid and legally binding agreement
    of Company enforceable against Company in accordance with its
    terms, except as such enforcement may be limited by
    (i)&nbsp;bankruptcy, insolvency, reorganization, moratorium or
    other
    </FONT></TD>
</TR>

</TABLE>

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<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">similar laws affecting or relating to enforcement
    of creditors&#146; rights generally and (ii)&nbsp;general
    equitable principles.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(b)&nbsp;The execution and delivery of this
    Agreement by Company does not violate, conflict with or result
    in a breach of any provision of, or constitute a default (or an
    event which, with notice or lapse of time or both, would
    constitute a default) under, or result in the termination of, or
    accelerate the performance required by, or result in a right of
    termination or acceleration under, or give rise to any
    obligation to make payments or provide compensation under, or
    result in the creation of any Lien upon any of the properties or
    assets of Company under any of the terms, conditions or
    provisions of (i)&nbsp;the respective charters, by-laws,
    partnership agreements, trust declarations, operating
    agreements, or other similar organizational instruments of
    Company or any of its Subsidiaries, (ii)&nbsp;any statute, law,
    ordinance, rule, regulation, judgment, decree, order,
    injunction, writ, permit or license of any court or governmental
    authority applicable to Company or any of its Subsidiaries or
    any of their respective properties or assets or (iii)&nbsp;any
    note, bond, mortgage, indenture, deed of trust, license,
    franchise, permit, concession, contract, lease, partnership
    agreement, joint venture agreement or other instrument,
    obligation or agreement of any kind to which Company or any of
    its Subsidiaries is now a party or by which Company or any of
    its Subsidiaries or any of their respective properties or assets
    may be bound or affected. The consummation by Company of the
    transactions contemplated by this Agreement will not result in
    any violation, conflict, breach, termination, acceleration or
    creation of Liens under any of the terms, conditions or
    provisions described in clauses&nbsp;(i) through (iii)&nbsp;of
    the preceding sentence, subject (A)&nbsp;in the case of the
    terms, conditions or provisions described in clause&nbsp;(ii)
    above, to obtaining (prior to the Effective Time) Company
    Required Statutory Approvals, the Stockholders&#146; Approval
    and (B)&nbsp;in the case of the terms, conditions or provisions
    described in clause&nbsp;(iii) above, to obtaining (prior to the
    Effective Time) consents from lessors or other third parties
    that are listed in <I>Section&nbsp;4.4(b) </I>of the Company
    Disclosure Schedule. Excluded from the foregoing two sentences
    of this paragraph&nbsp;(b), insofar as they apply to the terms,
    conditions or provisions two described in clauses&nbsp;(ii) and
    (iii)&nbsp;of the first sentence of this
    paragraph&nbsp;(b)&nbsp;are such violations, conflicts,
    breaches, defaults, termination, accelerations, payments,
    compensations or creations of Liens that, individually or in the
    aggregate, would not have a Material Adverse Effect on Company.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(c)&nbsp;Except for the Company Required
    Statutory Approvals, no declaration, filing or registration
    with, or notice to, or authorization, consent or approval of,
    any governmental or regulatory body or authority is necessary
    for the execution and delivery of this Agreement by Company or
    the consummation by Company of the transactions contemplated
    thereby. Excluded from the foregoing sentence are such
    declarations, filings, registrations, notices, authorizations,
    consents or approvals which, if not made or obtained, as the
    case may be, would not, individually or in the aggregate, have a
    Material Adverse Effect on Company.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(d)&nbsp;The affirmative vote of the holders of a
    majority of the shares of outstanding Company Common Stock (the
    &#147;Stockholders&#146; Approval&#148;) is the only vote of the
    holders of any class or series of Company Capital Stock
    necessary to approve the Merger and the consummation of the
    transactions contemplated hereby.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">4.5&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>SEC
Documents.</I>
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(a)&nbsp;Company has previously delivered (except
    to the extent such filings are publicly available on the EDGAR
    system) to Parent and Acquisition Sub each registration
    statement, report, proxy statement or information statement
    (other than preliminary materials) filed by Company with the SEC
    since January&nbsp;1, 1999 each in the form (including exhibits
    and any amendments thereto) filed with the SEC prior to the date
    hereof, and except as set forth in <I>Section&nbsp;4.5 </I>of
    the Company Disclosure Schedule, Company has timely filed all
    forms, reports and documents required to be filed by it with the
    SEC pursuant to relevant securities statutes, regulations,
    policies and rules since January&nbsp;1, 1999 (collectively, the
    &#147;Company Reports&#148;). As of their respective dates (or,
    if amended, supplemented or superseded by a filing prior to the
    date of this Agreement, as of the date so amended, supplemented
    or superseded), the Company Reports (i)&nbsp;complied in all
    materials respects with the applicable requirements of the
    </FONT></TD>
</TR>

</TABLE>

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<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Securities Act, the Exchange Act and the rules
    and regulations thereunder and complied with the requirements
    thereof including all of the then applicable accounting
    requirements and (ii)&nbsp;did not contain any untrue statement
    of a material fact or omit to state a material fact required to
    be stated therein or necessary to make the statements made
    therein, in the light of the circumstances under which they were
    made, not misleading. The principal executive officer of Company
    and the principal financial officer of Company (and each former
    principal executive officer or principal financial officer of
    Company) have made the certifications required by
    Sections&nbsp;302 and 906 of the Sarbanes-Oxley Act of 2002 (the
    &#147;Sarbanes-Oxley Act&#148;), and the rules and regulations
    of the SEC promulgated thereunder with respect to the Company
    Reports filed since such certifications have been required. For
    purposes of the preceding sentence, &#147;principal executive
    officer&#148; and &#147;principal financial officer&#148; shall
    have the meanings given to such terms in the Sarbanes-Oxley Act.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(b)&nbsp;Company maintains disclosure controls
    and procedures required by Rule 13a-15 or 15d-15 under the
    Exchange Act; such controls and procedures are effective for
    gathering, analyzing and disclosing the information the Company
    is required to disclose in its reports filed under the Exchange
    Act. Since January&nbsp;1, 1999, Company has not received notice
    from the SEC or any other Governmental Entity that any of its
    accounting policies or practices are the subject of any review,
    inquiry, investigation or challenge other than comments from the
    SEC on Company filings which comments have either been satisfied
    or withdrawn by the SEC.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">4.6&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Financial
Statements.</I> Each of the consolidated balance sheets of the
Company included in or incorporated by reference into the
Company Reports (including, in each case, any related notes) and
schedules fairly presents in all material respects the
consolidated financial position of the Company and its
Subsidiaries as of its date and each of the consolidated
statements of operations, shareholders&#146; equity and cash
flows of the Company and its Subsidiaries included in or
incorporated by reference into the Company Reports (including,
in each case, any related notes) fairly presents in all material
respects the consolidated financial position, results of
operations or cash flows, as the case may be, of the Company and
its Subsidiaries for the periods set forth therein (subject, in
the case of unaudited statements, to normal year-end audit
adjustments which in the aggregate were not or will not be
material in amount or effect), in each case in accordance with
GAAP consistently applied during the periods involved, except as
may be noted therein. <I>Section&nbsp;4.6 </I>of the Company
Disclosure Schedule sets forth the outstanding balance of the
Company&#146;s indebtedness owed to WCP, WCPC and WCL as of
March&nbsp;31, 2004 (including fees and accrued interest through
such date).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">4.7&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Absence of
Undisclosed Liabilities.</I> Except as set forth in the Company
Reports or in <I>Section&nbsp;4.7 </I>of the Company Disclosure
Schedule, as of December&nbsp;31, 2003, the Company and its
Subsidiaries had no material liabilities of any nature, whether
accrued, absolute, contingent or otherwise (including without
limitation, liabilities as guarantor or otherwise with respect
to obligations of others or liabilities for taxes due or then
accrued or to become due), required to be reflected or disclosed
in the balance sheet dated December&nbsp;31, 2003 (or the notes
thereto) in accordance with GAAP included in the Company&#146;s
audited financial statements for such year and/or the Company
10-K (&#147;the Company Balance Sheet&#148;) that were not
adequately reflected or reserved against on the Company Balance
Sheet. Except as set forth in <I>Section&nbsp;4.7 </I>of the
Company Disclosure Schedule, the Company has no material
liabilities of any nature, whether accrued, absolute, contingent
or otherwise required to be reflected or disclosed on the
Company Balance Sheet prepared in accordance with GAAP, other
than liabilities (i)&nbsp;adequately reflected or reserved
against on the Company Balance Sheet, (ii)&nbsp;incurred since
December&nbsp;31, 2003 in the ordinary course of business, or
(iii)&nbsp;that would not, individually or in the aggregate,
have a Material Adverse Effect on Company. As of the Closing
Date, Company shall have accrued or made provisions in
accordance with GAAP, for certain obligations of Company in the
aggregate amount of $375,000.00 relating to the specific items
set forth in <I>Section&nbsp;4.7 </I>of the Company Disclosure
Schedule pertaining to this accrual and for any other
employee(s) set forth on Exhibit&nbsp;B who is/are due severance
whose termination of employment has occurred on or prior to
Closing.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">4.8&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>No
Liabilities as Guarantor.</I> Except as set forth in
<I>Section&nbsp;4.8 </I>of the Company Disclosure Schedule,
neither Company nor any of its Subsidiaries are directly or
indirectly obligated to guaranty or assume any debt, dividend,
or other obligation of any Person, corporation, association,
partnership, or other
</FONT>

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<DIV align="left">
<FONT size="2">entity (other than the Company or its
Subsidiaries), except endorsements made in the ordinary course
of business in connection with the deposit of items for
collection.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">4.9&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Absence of
Certain Changes or Events.</I> Since December&nbsp;31, 2003,
Company and its Subsidiaries have conducted their businesses
only in the ordinary course and, to the knowledge of Company, in
a manner consistent with past practice, and there has not been:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(a)&nbsp;any event, change, effect or development
    that, individually or in the aggregate, would have a Material
    Adverse Effect on Company;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(b)&nbsp;any declaration, setting aside or
    payment of any dividend or distribution in respect of any
    capital stock (or ownership interests) of Company, or any
    redemption, purchase or other acquisition of its securities;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(c)&nbsp;any split, combination or
    reclassification of any shares of Company or any issuance or
    authorization of any issuance of any other securities in
    exchange or in substitution for shares of Company;&nbsp;or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(d)&nbsp;any acquisition by Company or any of its
    Subsidiaries (including by merger, consolidation, or acquisition
    of stock or assets or any other business combination) of any
    entity or any division thereof or any material amount of assets.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">4.10&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Taxes and
Tax Returns.</I> Except as set forth in <I>Section&nbsp;4.10
</I>of the Company Disclosure Schedule:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(a)&nbsp;Company and each of its Subsidiaries
    have duly filed in all material respects all Tax Returns and
    will cause to be filed prior to Closing all the Tax Returns set
    forth on <I>Section&nbsp;4.10 </I>of the Company Disclosure
    Schedule and have duly paid or caused to be duly paid in full or
    made provision in accordance with GAAP for the payment in all
    material respects of all Taxes for all periods or portions
    thereof ending prior to the date hereof including, but not
    limited to, all Taxes, for the Tax Returns set forth on
    <I>Section&nbsp;4.10 </I>of the Company Disclosure Schedule,
    except to the extent that all such failures to file or make
    payments in full, taken together, would not have a Material
    Adverse Effect. All such Tax Returns accurately reflect in all
    material respects all liability for Taxes for the periods
    covered thereby and all such Tax Returns are true, correct and
    complete in all material respects. Company has made available to
    Parent and Acquisition Sub complete and correct copies of all
    federal income Tax Returns filed by Company and each of its
    Subsidiaries for the three most recent taxable years for which
    such Tax Returns have been filed prior to the date of this
    Agreement. Neither Company nor any of its Subsidiaries has
    received written notice of any claim made by a Tribunal in a
    jurisdiction where neither Company nor its Subsidiaries files
    Tax Returns that Company or its Subsidiaries is or may be
    subject to taxation by that jurisdiction that, individually or
    in the aggregate, which would have a Material Adverse Effect on
    Company.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(b)&nbsp;<I>Section&nbsp;4.10 </I>of the Company
    Disclosure Schedule lists all income Tax Returns of Company or
    any of its Subsidiaries for the prior three (3) fiscal years
    that have been audited, and indicates those Tax Returns that
    currently are the subject of audit. The applicable statutes of
    limitation for the assessment of Federal income taxes for all
    taxable periods ending on or prior to December&nbsp;31, 1997
    have expired, and no material deficiencies were asserted as a
    result of such examinations that have not been resolved or fully
    paid or provided for in accordance with GAAP. There is no
    material dispute or claim concerning any Tax liability of
    Company or of any of its Subsidiaries either claimed or raised
    by any taxing authority in writing.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(c)&nbsp;Neither Company nor any of its
    Subsidiaries (i)&nbsp;has waived any statute of limitations in
    respect of Taxes or agreed to any extension of time with respect
    to a Tax assessment or deficiency, (ii)&nbsp;is a party to any
    material tax sharing, tax indemnity or other agreement or
    arrangement with any Person not included in Company&#146;s
    consolidated financial statements most recently filed by Company
    with the SEC, (iii)&nbsp;has made an election under former
    Section&nbsp;341(f) of the Code, (iv)&nbsp;is a party to or
    bound by any closing agreement or offer in compromise with any
    taxing authority, (v)&nbsp;has any excess loss account (as
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">A-10
</FONT>

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    <TD align="left">
    <FONT size="2">defined in Treasury Regulations
    Section&nbsp;1.1502-19), (vi)&nbsp;has any deferred intercompany
    gains (as defined in Treasury Regulations
    Section&nbsp;1.1502-13), or (vii)&nbsp;is a party to any
    agreement, contract, arrangement or plan that has resulted or
    would result, separately or in the aggregate, in the payment of
    any &#147;excess parachute payments&#148; within the meaning of
    Section&nbsp;280G of the Code or any similar provision of
    foreign, state or local law.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(d)&nbsp;There is no material Tax lien against
    the assets of Company or any of its Subsidiaries except for
    Permitted Liens.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

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    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(e)&nbsp;None of the assets of Company or any of
    its Subsidiaries is (i)&nbsp;&#147;tax exempt use property&#148;
    within the meaning of Section&nbsp;168(h) of the Code,
    (ii)&nbsp;subject to any lease made pursuant to
    Section&nbsp;168(f)(8) of the Internal Revenue Code of 1954 or
    (iii)&nbsp;directly or indirectly secures any debt the interest
    on which is tax exempt under Section&nbsp;103(a) of the Code.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(f)&nbsp;Company and each of its Subsidiaries is
    a &#147;United States Person&#148; within the meaning of
    Section&nbsp;7701(a)(30) of the Code.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(g)&nbsp;Company and each of its Subsidiaries
    have disclosed on their federal income Tax Returns all positions
    taken therein that could give rise to a substantial
    understatement of federal income Tax within the meaning of
    Section&nbsp;6662 of the Code.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(h)&nbsp;Neither Company nor any of its
    Subsidiaries (i)&nbsp;has been a member of an Affiliated Group
    filing a consolidated federal income Tax Return (other than a
    group the common parent of which was Company) or (ii)&nbsp;has
    any liability for the Taxes of any Person (other than Company or
    its Subsidiaries) under Treasury Regulations
    Section&nbsp;1.1502-6 (or any similar provisions of state, local
    or foreign law), as a transferee or successor, by contract or
    otherwise.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(i)&nbsp;Neither Company nor any of its
    Subsidiaries is a partnership or disregarded entity for federal
    income tax purposes.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(j)&nbsp;Neither Company nor any of its
    Subsidiaries has been a United States real property holding
    corporation within the meaning of Section&nbsp;897(c)(2) of the
    Code during the applicable period specified in
    Section&nbsp;897(c)(1)(A)(ii) of the Code.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(k)&nbsp;Neither Company nor any of its
    Subsidiaries has, with respect to any open taxable period,
    applied for and been granted permission to adopt a change in its
    method of accounting requiring adjustments under
    Section&nbsp;481 of the Code or comparable state, local or
    foreign law.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(l)&nbsp;Neither Company nor any of its
    Subsidiaries have taken any deduction or received any tax
    benefit arising from participation in a &#147;tax shelter&#148;
    as defined for purposes of Section&nbsp;6111(c) of the Code or
    have &#147;participated&#148; in a &#147;reportable
    transaction&#148; as defined in Treasury Regulations
    Section&nbsp;1.6011-4(b) or (c)(3) or Treasury Regulations
    Section&nbsp;1.6011-4T(a) and (b).
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(m)&nbsp;Except as reflected or reserved against
    in the Company Balance Sheet as of December&nbsp;31, 2003,
    Company as of such date had no deferred tax liabilities of any
    material nature and Company represents and warrants that it does
    not know nor does it have any reasonable grounds to know of any
    basis for any deferred tax liability in any material amount not
    fully reflected or reserved against in its consolidated balance
    sheet as of December&nbsp;31, 2003.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(n)&nbsp;All deductions taken on Company&#146;s
    and its Subsidiaries&#146; Tax Returns have been properly
    deducted by Company and such Subsidiaries in all material
    respects pursuant to pertinent provisions of the Code.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">4.11&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Compliance
with Laws.</I>
</FONT>
<P>

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    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

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    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(a)&nbsp;Except as set forth in
    <I>Section&nbsp;4.11 </I>of the Company Disclosure Schedule or
    as would not, individually or in the aggregate, have a Material
    Adverse Effect on Company: (i)&nbsp;the Company and its
    Subsidiaries have all licenses, permits, authorizations,
    franchises, orders or approvals of any Governmental Entity
    (collectively, &#147;Permits&#148;) material to the conduct of
    their respective businesses as presently
    </FONT></TD>
</TR>

</TABLE>

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    <FONT size="2">conducted; (ii)&nbsp;such Permits are in full
    force and effect; and (iii)&nbsp;no proceeding is pending or, to
    the knowledge of the Company, threatened to revoke or limit any
    Permit.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(b)&nbsp;<I>No Violation of Law.</I> Neither
    Company nor any of its Subsidiaries is in violation of or has
    been given notice or been charged with any violation of, any
    law, statute, order, rule, regulation, ordinance or judgment of
    any governmental or regulatory body or authority, except for
    violations which, individually or in the aggregate, would not
    have a Material Adverse Effect on Company.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">4.12&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Litigation.</I>
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(a)&nbsp;Other than matters existing or arising
    under Regulatory Laws in connection with the transactions
    contemplated by this Agreement which are to be dealt with as
    provided in <I>Section&nbsp;6.5</I>, there are no claims, suits,
    actions or proceedings pending or, to the knowledge of Company,
    threatened against, relating to or affecting Company or any of
    its Subsidiaries before any court, governmental department,
    commission, agency, instrumentality or authority or any
    arbitrator that seek to restrain or enjoin the consummation of
    the Merger or seek other relief or remedy and which would
    reasonably be expected, either alone or in the aggregate with
    all such claims, actions or proceedings not otherwise disclosed
    in <I>Section&nbsp;4.12 </I>of the Company Disclosure Schedule,
    to have a Material Adverse Effect on Company. Except as set
    forth in the initial clause of the preceding sentence, as of the
    date hereof, neither Company nor any of its Subsidiaries is
    subject to any judgment, decree, injunction, rule or order of
    any court, governmental department, commission, agency,
    instrumentality or authority, or any arbitrator, which
    (i)&nbsp;prohibits or restricts the consummation of the
    transactions contemplated by this Agreement or (ii)&nbsp;which
    would reasonably be expected, either alone or in the aggregate
    with all judgments, decrees, injunctions, rules or orders, to
    have a Material Adverse Effect on Company, or (iii)&nbsp;which
    restricts the conduct of the business of Company or any of its
    Subsidiaries or the ability of Company or any of its
    Subsidiaries to compete freely with any other Person. Except as
    disclosed in <I>Section&nbsp;4.12 </I>of the Company Disclosure
    Schedule, there are no (i)&nbsp;claims, suits, actions or
    proceedings pending against Company or any of its Subsidiaries,
    or (ii)&nbsp;to the knowledge of Company, material
    investigations or threatened material claims, suits, actions or
    proceedings against Company or any of its Subsidiaries, in
    either case, which would reasonably be expected either alone or
    in the aggregate, to result in a Material Adverse Effect on the
    Company.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(b)&nbsp;<I>Section&nbsp;4.12 </I>of the Company
    Disclosure Schedule sets forth each action, suit, proceeding or,
    to the knowledge of the Company, investigation pending as of the
    date of this Agreement against Company or any Subsidiary of
    Company, or, to the knowledge of the Company, any director,
    officer or employee of Company or any Subsidiary of Company
    alleging any violation of federal or state securities laws, the
    DGCL or the rules or regulations of NASDAQ or any other
    securities exchange governing Company.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">4.13&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Compliance
with Agreements.</I> Except as set forth in <I>Section&nbsp;4.13
</I>of the Company Disclosure Schedule, neither Company nor any
of its Subsidiaries is in breach or violation of or in default
in the performance or observance of any term or provision of,
and no event has occurred which, with lapse of time or action by
a third party, could result in a default under, (a)&nbsp;the
charter or by-laws of Company or (b)&nbsp;the contracts,
commitments, agreements, leases, licenses, and other instruments
of Company or its Subsidiaries, except, in the case of
clause&nbsp;(b) above, for breaches, violations and defaults
which, alone or in the aggregate, would not have a Material
Adverse Effect on Company.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">4.14&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Books and
Records.</I> The minute books of the Company have been made
available to Parent and Acquisition Sub, contain or will contain
at Closing in all material respects accurate records of all
meetings and accurately reflect in all material respects all
other corporate action of the shareholders and directors and any
committees of the Company board of directors.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">4.15&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Employee
Benefit Plans; ERISA.</I>
</FONT>
<P>

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    <TD width="3%"></TD>
    <TD width="97%"></TD>
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<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(a)&nbsp;(1) <I>Section&nbsp;4.15 </I>of the
    Company Disclosure Schedule lists (A) each plan, program,
    arrangement, practice and policy under which one, or more than
    one, current or former officer, employee or director of Company
    or a Subsidiary of Company has any right to employment, to
    purchase or receive any stock or other securities of Company or
    a Subsidiary of Company or to receive any compensation
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">A-12
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    <TD align="left">
    <FONT size="2">(whether in the form of cash or stock or
    otherwise) or benefits of any kind or description whatsoever in
    any material amount or under which Company or a Subsidiary of
    Company has any material liability and (B)&nbsp;each employee
    benefit plan within the meaning set forth in Section&nbsp;3(3)
    of ERISA under which the Company or a Subsidiary has any
    liability.
    </FONT></TD>
</TR>

</TABLE>
<P>

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<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(2)&nbsp;Each plan, program, arrangement,
    practice and policy described in <I>Section&nbsp;4.15(a)(1)
    </I>shall be referred to individually as a &#147;Union
    Plan&#148; and shall be referred to collectively as the
    &#147;Union Plans&#148; if described in Section&nbsp;414(f) of
    the Code, and each other plan, program, arrangement, practice
    and policy described in <I>Section&nbsp;4.15(a)(1) </I>shall be
    referred to individually as a &#147;Company Plan&#148; and
    collectively as the &#147;Company Plans&#148;.
    </FONT></TD>
</TR>

</TABLE>
<P>

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    <TD width="3%"></TD>
    <TD width="97%"></TD>
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    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(b)&nbsp;The Company has delivered or made
    available to Parent (i)&nbsp;a current, complete and accurate
    copy of each Company Plan which is set forth in writing (and any
    related trust, insurance contract or other funding arrangement)
    and a written summary of each Company Plan which is not set
    forth in writing and (ii)&nbsp;a copy of the most recent Annual
    Report (Form&nbsp;5500) and all related exhibits and reports)
    for each Company Plan which is subject to ERISA.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(c)&nbsp;No Company Plan is subject to
    Title&nbsp;IV of ERISA or Section&nbsp;412 of the Code, and no
    Company Plan is a multiemployer plan within the meaning of
    Section&nbsp;414(f) of the Code or a plan described in
    Section&nbsp;413(c) of the Code. Neither the Company nor any
    Subsidiary has any liability for any withdrawal or partial
    withdrawal from any Union Plan and, based on information
    provided by each Union Plan subject to Title&nbsp;IV of ERISA,
    the Company has no reason to believe that either the Company or
    any Subsidiary would have any liability under Title&nbsp;IV of
    ERISA to any Union Plan if the Company or any of its
    Subsidiaries incurred a withdrawal or partial withdrawal from
    such Union Plan.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(d)&nbsp;There have been no prohibited
    transactions within the meaning of Section&nbsp;406 or
    Section&nbsp;407 of ERISA or Section&nbsp;4975 of the Code with
    respect to any of the Company Plans that could result in
    penalties, taxes, liabilities or indemnification obligations
    which, individually or in the aggregate, could have a Material
    Adverse Effect on Company, and there has been no other event, or
    more than one other event, with respect to any Company Plan that
    could result in any liability for the Company or any Subsidiary
    related to any excise Taxes under the Code or to any liabilities
    under ERISA which could have a Material Adverse Effect on
    Company.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(e)&nbsp;Each Company Plan which is intended to
    be qualified under Section&nbsp;401 (a)&nbsp;of the Code has
    received a favorable determination letter from the Internal
    Revenue Service on the plan as currently in effect or has
    pending an application for such a determination letter from the
    Internal Revenue Service on the plan as currently in effect, and
    the Company is not aware of any reason likely to result in the
    revocation of any favorable determination letter which has been
    received or in the Internal Revenue Service declining to issue a
    favorable determination letter on a pending application. The
    Company has provided to Parent a copy of the most recent
    Internal Revenue Service favorable determination letter with
    respect to each such Company Plan and, if such letter does not
    cover a Company Plan as currently in effect, a copy of the
    application to the Internal Revenue Service for such a letter.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(f)&nbsp;Each Company Plan has been maintained
    and administered in substantial compliance with its terms and
    with the requirements prescribed by any and all statutes,
    orders, rules and regulations, including but not limited to
    ERISA and the Code, which are applicable to such Company Plan or
    to the Company or any Subsidiary as a sponsor, a plan
    administrator or a fiduciary of such Company Plan. If a former
    Company Plan has been terminated by or all or any part of the
    liabilities of the Company or any Subsidiary for any current or
    former Company Plan or Union Plan have been transferred to
    another employer, such termination or transfer was properly
    effected and neither Company nor any of its Subsidiaries has any
    further liability with respect to such termination or transfer.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(g)&nbsp;Except as set forth in
    <I>Section&nbsp;4.15 </I>of the Company Disclosure Schedule,
    neither the requisite corporate or stockholder approval of, nor
    the consummation of, the transactions contemplated by this
    Agreement will (either alone or together with any other event,
    including, any termination of employment) entitle any current or
    former officer, employee, director or other independent
    contractor of the
    </FONT></TD>
</TR>

</TABLE>

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    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Company or a Subsidiary to any change in control
    payment or benefit, transaction bonus or similar benefit or
    severance pay or accelerate the time of payment or vesting or
    trigger any payment or funding (through a grantor trust or
    otherwise) of compensation or benefits under, increase the
    amount payable or trigger any other material obligation pursuant
    to, any Company Plan.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(h)&nbsp;Except as set forth in
    <I>Section&nbsp;4.15 </I>of the Company Disclosure Schedule,
    neither the Company nor any of its Subsidiaries have any
    material liability in respect of post-retirement health, medical
    or life insurance benefits for any current or former officer,
    employee, director or independent contractor except as required
    to avoid excise Tax under Section&nbsp;4980B of the Code.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(i)&nbsp;All contributions and other payment due
    from the Company or any of its Subsidiaries with respect to each
    Company Plan and each Union Plan (other than for routine and
    reasonable claims for benefits made in the ordinary course of
    the Company Plan&#146;s operations) have been made or paid in
    full or are shown in the Company Reports, and all of the assets
    which have been set aside in a trust, escrow account or
    insurance company separate account to satisfy any obligations
    under any Company Plan are shown on the books and records of
    each such trust or account at their current fair market value as
    of the most recent valuation date for such trust or account, and
    the fair market value of all such assets as of each such
    valuation date equals or exceeds the present value of any
    obligation under any Company Plan.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(j)&nbsp;There are no pending or, to the
    knowledge of the Company, threatened claims with respect to a
    Company Plan (other than routine and reasonable claims for
    benefits made in the ordinary course of the plan&#146;s
    operations) or with respect to the terms and conditions of
    employment or termination of employment of any current or former
    officer, employee or independent contractor of the Company or
    any Subsidiary, which claims could result in any material
    liability to the Company or any of its Subsidiaries, and no
    audit or investigation by any domestic or foreign governmental
    or other law enforcement agency is pending or, to the knowledge
    of the Company or a Subsidiary, has been proposed with respect
    to any Company Plan.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(k)&nbsp;<I>Section&nbsp;4.15 </I>of the Company
    Disclosure Schedule sets forth the number of individuals who
    were performing services for Company on December&nbsp;31, 2003
    who were classified by Company as independent contractors. Each
    individual who performs, or has performed, services for the
    Company or any Subsidiary of Company as an employee or as an
    independent contractor is, or has been, properly classified as
    an employee or as an independent contractor, except where
    failure to properly classify such individual(s) would not,
    individually or in the aggregate, have a Material Adverse Effect
    on Company.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(l)&nbsp;Vesting for options which are
    outstanding under Company Stock Option Plans, including
    accelerated vesting which may occur at the Effective Time, has
    been or will be effected in accordance with the terms of the
    Company plans. Except as set forth in <I>Section&nbsp;4.16
    </I>of the Company Disclosure Schedule, the interests in or
    shares available for issuance under each such Company Stock
    Option Plan are properly registered pursuant to the Securities
    Act on a Form&nbsp;S-8.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">4.16&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Labor
Matters.</I>
</FONT>
<P>

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    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(a)&nbsp;<I>Section&nbsp;4.16(a) </I>of the
    Company Disclosure Schedule, lists (i)&nbsp;the corporate
    officers, corporate employees and non-corporate executives of
    the Company and its Subsidiaries who, upon termination of their
    employment by reason of the Merger are entitled to payments for
    severance or other similar payments, (ii)&nbsp;any written
    agreements regarding such payments and (iii)&nbsp;any other
    severance agreements with current or former employees or
    directors of the Company or any of its Subsidiaries:
    (A)&nbsp;that provide (in the case of each such agreement) for
    severance payments in excess of $30,000.00 or (B)&nbsp;where the
    current or former employee or director is otherwise entitled to
    receive annual base salary or annual fees from the Company or
    any of its Subsidiaries in excess of $30,000.
    <I>Section&nbsp;4.16(a) </I>of the Company Disclosure Schedule
    sets forth the standard severance policy of the Company
    applicable to employees generally.
    </FONT></TD>
</TR>

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    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(b)&nbsp;Except as set forth in
    <I>Section&nbsp;4.16 </I>of the Company Disclosure Schedule,
    neither the Company nor any of its Subsidiaries is a party to,
    or bound by, any collective bargaining agreement, contract or
    other agreement or understanding with a domestic labor union or
    domestic labor union organization. There is no
    </FONT></TD>
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    <TD align="left">
    <FONT size="2">unfair labor practice or labor arbitration
    proceeding or grievance pending or, to the Company&#146;s
    knowledge, threatened against the Company or any of its
    Subsidiaries relating to their business that would, individually
    or in the aggregate, have a Material Adverse Effect on Company,
    and no such proceeding or grievance has occurred within the past
    three years. There is no labor strike, dispute, request for
    representation, slowdown or stoppage pending or, to the
    Company&#146;s knowledge, threatened against the Company or any
    of its Subsidiaries that would, individually or in the
    aggregate, have a Material Adverse Effect on Company, and no
    such labor strike, dispute, request for representation, slowdown
    or stoppage has occurred within the past three years. To the
    Company&#146;s knowledge, there are no organizational efforts
    with respect to the formation of a collective bargaining unit
    presently being made or threatened involving employees of
    Company or any of its Subsidiaries. The Company and each of its
    Subsidiaries have complied in all material respects with all
    labor and employment Laws, including provisions thereof relating
    to wages, hours, equal opportunity, collective bargaining and
    the payment of social security and other Taxes, except as would
    not, individually or in the aggregate, have a Material Adverse
    Effect on Company. Except as set forth in <I>Section&nbsp;4.16
    </I>of the Company Disclosure Schedule, neither Company nor any
    Company Subsidiary is delinquent in any material payment to any
    of its current or former officers, directors, employees or
    agents for any wages, salaries, commissions, bonuses or
    severance.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">4.17&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Assets.</I>
Except as provided in <I>Section&nbsp;4.17 </I>of the Company
Disclosure Schedule, Company and each Subsidiary of Company have
good title to all of their respective assets and properties,
including, but not limited to, those assets and properties
reflected in Company&#146;s Balance Sheet, except only for
assets subsequently disposed of in the ordinary course of
business, free and clear of all Liens, except (a)&nbsp;as
specifically reflected thereon, or (b)&nbsp;for Permitted Liens.
To the knowledge of Company, all Company&#146;s and each
Subsidiary&#146;s tangible and other operating assets, property
and equipment, except those no longer carried on Company&#146;s
books, are generally in good operating condition and repair in
light of their age, free of structural or material mechanical
defects (it being acknowledged that at any time certain of such
assets may be in disrepair or needing replacement in the
ordinary course) and to Company&#146;s knowledge conform with
all applicable laws and regulations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">4.18&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Accounts
Receivable and Vendor Receivables.</I> All Accounts Receivable
and Vendor Receivables of Company and each Subsidiary which have
arisen in connection with the businesses or otherwise and which
are reflected on Company&#146;s Balance Sheet, and all such
receivables which will have arisen since December&nbsp;31, 2003
have arisen only from bona fide transactions in the ordinary
course of business and represent valid, collectible (net of any
bad debt reserves) and existing claims. Except as set forth on
<I>Section&nbsp;4.18 </I>of the Company Disclosure Schedule, and
subject to customer credits, the payment of each Account
Receivable and Vendor Receivable will not, as of the Closing
Date, to the knowledge of the Company, be subject to any known
defense, counterclaim or condition (other than Company&#146;s
performance in the ordinary course of business) whatsoever.
<I>Section&nbsp;4.18 </I>of the Company Disclosure Schedule
hereto accurately lists, as of a date within five (5)&nbsp;days
of execution of this Agreement, and will list, as of a date
within five (5)&nbsp;days of the Closing Date, all receivables
arising out of or relating to the businesses, the amount owing
and the aging of such Accounts Receivable and Vendor
Receivables. Company has provided Parent and Acquisition Sub the
opportunity to review complete and correct copies of all
instruments, documents and agreements evidencing such Accounts
Receivable and Vendor Receivables and of all instruments,
documents or agreements, if any, creating security therefor.
Company represents and warrants that the bad debt reserves
established for its Accounts Receivables and Vendor Receivables
are sufficient to cover the risk of loss resulting from the
uncollectability of such Accounts Receivables and Vendor
Receivables.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">4.19&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Real
Estate.</I>
</FONT>
<P>

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    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(a)&nbsp;The Company owns no real property.
    </FONT></TD>
</TR>

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    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(b)&nbsp;<I>Section&nbsp;4.19 </I>of the Company
    Disclosure Schedule sets forth the address of all material real
    property in which Company or any Subsidiary of Company holds a
    leasehold or subleasehold estate (the &#147;Leased Real
    Property&#148;; the leases or subleases for such Leased Real
    Property being referred to as the &#147;Leases&#148;). With
    respect to each of the Leases: (i)&nbsp;Company or such
    Subsidiary, as applicable, holds good and marketable title to
    the leasehold or subleasehold interest thereunder;
    (ii)&nbsp;neither Company nor
    </FONT></TD>
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    <TD align="left">
    <FONT size="2">any Subsidiary has assigned, subleased,
    mortgaged, deeded in trust or otherwise transferred or
    encumbered such Lease, or any interest therein, except as set
    forth in <I>Section&nbsp;4.19 </I>of the Company Disclosure
    Schedule; and (iii)&nbsp;neither Company nor any Subsidiary is
    in default under the terms of such Leases, except for such
    defaults which would not, individually or in the aggregate,
    result in a Material Adverse Effect on the Company.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">4.20&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Tangible
Personal Property Leases.</I>
</FONT>
<P>

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    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(a)&nbsp;<I>Section&nbsp;4.20 </I>of the Company
    Disclosure Schedule sets forth a list, that is accurate in all
    material respects, of all Tangible Property that is leased or
    subleased by Company and/or Subsidiary (each, a &#147;Tangible
    Property Lease&#148;). Company and each Subsidiary of Company
    has been in peaceable possession of the Tangible Property
    covered by such Tangible Property Lease since the commencement
    of the term thereof.
    </FONT></TD>
</TR>

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    <TD>&nbsp;</TD>
</TR>

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    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(b)&nbsp;Each of the Tangible Property Leases is
    in full force and effect, except as the same would not,
    individually or in the aggregate, have a Material Adverse Effect
    on Company. Company and/or its Subsidiaries have complied with
    all commitments and obligations on their part to be performed or
    observed under each of the Tangible Property Leases, except for
    such noncompliance which would not, individually or in the
    aggregate, have a Material Adverse Effect on Company. The
    Company has not received any written notice of a default, offset
    or counterclaim under any of the Tangible Property Leases.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">4.21&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Intellectual
Property.</I>
</FONT>
<P>

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    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(a)&nbsp;To the Company&#146;s knowledge, the
    Company and any Subsidiary of Company own or are licensed to
    use, or otherwise have the right to use all patents, and all
    registrations of the foregoing, or applications therefor, that
    are material to their respective businesses as presently
    conducted (collectively, the &#147;Patents&#148;). Except as
    would not, individually or in the aggregate, have a Material
    Adverse Effect on Company, the Company and any Subsidiary of
    Company own or are licensed to use, or otherwise have the right
    to use all trademarks, service marks, trade names, brand names,
    domain names, trade secrets, franchises, inventions, copyrights,
    and all other technology, intellectual property and intangible
    property, all registrations of the foregoing, or applications
    therefor, that are material to their respective businesses as
    presently conducted (collectively with the Patents, the
    &#147;Proprietary Rights&#148;). To the Company&#146;s
    knowledge, all patents, registered trademarks and copyrights
    referred to above which are registered in the name of the
    Company are valid. The Company has provided Parent with
    schedules of any Taxes or maintenance fees related to filings
    with the U.S.&nbsp;Patent and Trademark Office or
    U.S.&nbsp;Copyright Office, falling due within 180&nbsp;days
    after the date of this Agreement, and any expirations of patents
    or registered trademarks or copyrights scheduled to occur within
    three years after the date of this Agreement.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(b)&nbsp;Except as disclosed in the Company
    Reports filed prior to the date of this Agreement or
    <I>Section&nbsp;4.21(b) </I>of the Company Disclosure Schedule,
    there are no claims pending or, to the Company&#146;s knowledge,
    threatened, that the businesses of the Company or any of its
    Subsidiaries infringe upon the proprietary rights of others,
    nor, to the Company&#146;s knowledge, is there any existing or
    threatened infringement by any third party on, or any competing
    claim of right to use or own any of, the Proprietary Rights, in
    each case, except as would not, individually or in the
    aggregate, have a Material Adverse Effect on Company.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(c)&nbsp;Except as disclosed in
    <I>Section&nbsp;4.21(c) </I>of the Company Disclosure Schedule,
    to the knowledge of the Company, the Company and its
    Subsidiaries have the right to sell their products and services
    (whether now offered for sale or under development) free from
    any royalty or other obligations to third parties. To the
    knowledge of Company, none of the activities of the employees of
    the Company or any Subsidiary of Company on behalf of such
    entity violates any agreement or arrangement which any such
    employees have with former employers.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(d)&nbsp;To the knowledge of the Company, none of
    the Company or any of its Subsidiaries is in material breach of,
    or has failed to perform in any material respect under, any of
    the contracts, licenses and agreements listed in
    <I>Section&nbsp;4.21(c) </I>of the Company Disclosure Schedule,
    and, to the Company&#146;s
    </FONT></TD>
</TR>

</TABLE>

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    <TD align="left">
    <FONT size="2">knowledge, no other party to any such contract,
    license or agreement is in material breach thereof or has failed
    to perform in any material respect thereunder.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">4.22&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Insurance.</I>
</FONT>
<P>

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    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(a)&nbsp;Except as set forth in
    <I>Section&nbsp;4.22(a) </I>of the Company Disclosure Schedule,
    the Company has made available to Parent and Acquisition Sub all
    current material insurance policies and binders (&#147;Insurance
    Policies&#148;) (i)&nbsp;insuring the business or properties of
    the Company or the Subsidiaries of Company or (ii)&nbsp;which
    provides insurance for any director, officer, employee,
    fiduciary or agent of the Company or any Subsidiaries of
    Company, that is held by or on behalf of the Company or any
    Subsidiary of Company.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(b)&nbsp;All policies or binders of insurance
    held by or on behalf of the Company and the Subsidiaries of
    Company are in full force and effect and are in conformity, in
    all material respects, with the requirements of all leases or
    other agreements to which the Company or the relevant Subsidiary
    is a party and are valid and enforceable in accordance with
    their terms, in each case, except as would not, individually or
    in the aggregate, have a Material Adverse Effect on the Company.
    Neither the Company nor any Subsidiary is in default with
    respect to any provision contained in such policy or binder nor
    has the Company or any Subsidiary of Company failed to give any
    notice or present any claim under any such policy or binder in
    due and timely fashion, except as would not, individually or in
    the aggregate, have a Material Adverse Effect on Company. There
    are no outstanding unpaid material claims under any such policy
    or binder. Except as set forth in <I>Section&nbsp;4.22(b) </I>of
    the Company Disclosure Schedule, neither the Company nor any
    Subsidiary of Company has received written notice of
    cancellation or non-renewal of any such policy or binder or
    disclaiming coverage or reserving rights with respect to any
    claim or any such policy or binder in general.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">4.23&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Commercial
Relationships.</I>
</FONT>
<P>

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    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(a)&nbsp;<I>Schedule&nbsp;4.23(a) </I>of the
    Company Disclosure Schedule sets forth the top ten customers of
    the Company and the Subsidiaries of Company in the year ended
    December&nbsp;31, 2003 measured in terms of aggregate sales
    volume. (each a &#147;Customer&#148;). Except as set forth in
    <I>Section&nbsp;4.23(a) </I>of the Company Disclosure Schedule,
    prior to the date of this Agreement, none of the Company or any
    Subsidiaries of Company has received any written notice of any
    intent of a Customer to terminate, cancel or materially alter
    its business relationship with the Company or any of the
    Subsidiaries of Company.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(b)&nbsp;To the knowledge of the Company, except
    as set forth in <I>Section&nbsp;4.23(b) </I>of the Company
    Disclosure Schedule, prior to the date of this Agreement, none
    of the Company or any Subsidiaries of Company has received from
    any of its top ten (10)&nbsp;suppliers measured in terms of
    aggregate purchase volume from its suppliers in the year ended
    December&nbsp;31, 2003 (each a &#147;Supplier&#148;) any written
    notice of any intent of a Supplier to terminate, cancel or
    materially alter its business relationship with the Company or
    any of the Subsidiaries of Company.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">4.24&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Environmental
Matters.</I>
</FONT>
<P>

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    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(a)&nbsp;<I>Definitions.</I>
    </FONT></TD>
</TR>

</TABLE>
<P>

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    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I><FONT size="2">&#147;Environmental
    Law&#148;</FONT></I><FONT size="2"> means any applicable
    Federal, state, local or foreign laws, relating to (a)&nbsp;the
    protection, preservation or restoration of the environment
    (including, air, water vapor, surface water, groundwater,
    drinking water supply, surface land, subsurface land, plant and
    animal life or any other natural resource) or (b)&nbsp;the
    exposure to, or the use, storage, recycling, treatment,
    generation, transportation, processing, handling, labeling,
    production, release or disposal of, Hazardous Substances, in
    each case as amended and as in effect on the date hereof.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I><FONT size="2">&#147;Hazardous
    Substance&#148;</FONT></I><FONT size="2"> means any substance
    listed, defined, designated or classified as hazardous, toxic,
    radioactive, or dangerous, or otherwise regulated, under any
    Environmental Law. Hazardous Substance includes any substance
    for which exposure is regulated by any government authority or
    any Environmental Law including, any toxic waste, pollutant,
    contaminant, hazardous substance, toxic substance, hazardous
    waste, special waste, petroleum or any derivative or by-
    </FONT></TD>
</TR>

</TABLE>

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    <FONT size="2">product thereof, radon, radioactive material,
    asbestos, or asbestos containing material, urea formaldehyde
    foam insulation, lead or polychlorinated byphenyls.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I><FONT size="2">&#147;Contamination&#148;</FONT></I><FONT size="2">
    (or <I>&#147;Contaminated&#148;</I>) means the known presence of
    Hazardous Substances in, on or under the soil, groundwater,
    surface water or other environmental media if any investigatory,
    remedial, removal reporting or other response action is required
    or legally could be required by a Governmental Entity under any
    Environmental Law with respect to such presence of Hazardous
    Substances.
    </FONT></TD>
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</TABLE>
<P>

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<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(b)&nbsp;<I>Environmental Conditions.</I>
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(i)&nbsp;each of the Company and the Subsidiaries
    of Company is and has been in compliance with all applicable
    Environmental Laws, including without limitation, the possession
    of or having applied for all Permits required under applicable
    Environmental Laws, and compliance with their terms and
    conditions, except as would not, individually or in the
    aggregate, have a Material Adverse Effect on Company. Each of
    the Company and the Subsidiaries of Company has made all reports
    and given all notices required by Environmental Laws, except as
    would not, individually or in the aggregate, have a Material
    Adverse Effect on Company;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(ii)&nbsp;No civil, criminal or administrative
    suit, claim, action or proceeding is pending, and to the
    Company&#146;s knowledge, there is no pending investigation by
    any Governmental Entity, under any Environmental Law relating to
    any operations, property or facility owned, operated or leased,
    or previously owned, operated or leased, by the Company or any
    Subsidiary of Company or any location at or to which the Company
    or any Subsidiary of Company has disposed of, transported or
    arranged for the disposal of Hazardous Substances that,
    individually or in the aggregate, would have a Material Adverse
    Effect on Company. There are no outstanding orders, judgments or
    decrees of any court or of any Governmental Entity under any
    Environmental Law which specifically apply to any of the Company
    and the Subsidiaries of Company or any of their respective
    assets or operations and that, individually or in the aggregate,
    would be material to the business of the Company and the
    Subsidiaries of Company taken as a whole;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(iii)&nbsp;In the last three years, none of the
    Company or the Subsidiaries of Company with operations in the
    United States has received from any Governmental Entity or any
    other Person notice that it has been named as a responsible or
    potentially responsible party under any Environmental Law for
    any site Contaminated by Hazardous Substances nor has the
    Company or any Subsidiary of Company received a request for
    information about any such site;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(iv)&nbsp;To the knowledge of the Company, except
    as disclosed in environmental reports and documents that have
    been made available to Parent and Acquisition Sub and are listed
    in <I>Section&nbsp;4.24(b)(iv) </I>of the Company Disclosure
    Schedule or as would not, individually or in the aggregate, have
    a Material Adverse Effect on Company, no portion of any property
    currently owned, leased or occupied by the Company or any
    Subsidiary of Company is Contaminated, and no Contamination
    occurred during the Company&#146;s or any Subsidiary of
    Company&#146;s prior ownership, lease or occupancy of other
    property;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(v)&nbsp;Except as would not, individually or in
    the aggregate, have a Material Adverse Effect on Company, none
    of the Company or any Subsidiary of Company has been notified by
    any Governmental Entity that it is currently liable under the
    Comprehensive Environmental Response, Compensation and Liability
    Act or any comparable state or federal Environmental Law for
    investigation, remedial, removal or other response costs,
    natural resources damages or other claims (including
    administrative orders) arising out of the release or threatened
    release of any Hazardous Substance;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(vi)&nbsp;To the Company&#146;s knowledge, none
    of the Company or any Subsidiary of Company has expressly
    assumed the liability of any other Person for, and has not
    agreed to indemnify any other Person against, claims arising out
    of the release of Hazardous Substances into the environment or
    other claims under Environmental Laws, except for any agreement
    to indemnify a lessor of real
    </FONT></TD>
</TR>

</TABLE>

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</FONT>

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    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">property contained in the lease between such
    lessor and the Company or any Subsidiary of Company;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(vii)&nbsp;Except as would not, individually or
    in the aggregate, have a Material Adverse Effect on Company,
    during the past three years, no Governmental Entity has issued
    any citation or notice of violation or noncompliance under any
    Environmental Law to the Company or any Subsidiary of Company;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(viii)&nbsp;The Company or any Subsidiary of
    Company has not released any insurance policies, or waived or
    fully released all rights under insurance policies, that may
    provide coverage for liabilities under Environmental Laws or
    liabilities or damages otherwise arising out of the release of
    Hazardous Substances into the environment;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(ix)&nbsp;Except as would not, individually or in
    the aggregate, have a Material Adverse Effect on Company, none
    of the Company or any Subsidiary of Company owns or operates any
    of the following and none of the following are located on any
    property owned, leased or occupied by the Company or any
    Subsidiary of Company: (A)&nbsp;underground storage tank
    (whether or not in use or decommissioned and whether not
    regulated or exempt from regulation); (B)&nbsp;underground
    injection well as defined under any Environmental Law;
    (C)&nbsp;surface impoundment or lagoon; (D)&nbsp;landfill
    (unless legally closed); (E)&nbsp;hazardous waste treatment,
    storage or disposal unit or facility regulated under the
    Resource Conservation and Recovery Act as amended (RCRA)&nbsp;or
    any comparable Environmental Law; or (F)&nbsp;any radioactive
    material for which a license or permit (including general
    permits and permits by rule) is required under any Environmental
    Law;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(x)&nbsp;The Company has made available to Parent
    and Acquisition Sub copies of material reasonably available
    reports, studies, investigations and audits in the possession of
    the Company pertaining to environmental matters relating to the
    Company or any Subsidiary of Company, its present operations or
    any property currently owned, leased or occupied by the Company
    or any Subsidiary of Company, including without limitation
    compliance with Environmental Laws, employee safety or
    Contamination.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">4.25&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Contracts
and Commitments.</I>
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(a)&nbsp;Except for contracts, commitments,
    agreements, leases, licenses, and other instruments disclosed in
    <I>Section&nbsp;4.25 </I>of the Company Disclosure Schedule
    (collectively, the &#147;Material Contracts&#148;), neither
    Company nor any of its Subsidiaries is a party to or bound by:
    (a)&nbsp;any agreements with any present employee, officer or
    director (or former employee, officer or director to the extent
    there remain at the date hereof obligations to be performed by
    Company or any of its Subsidiaries), other than individual
    non-competition and/or confidentiality agreements with employees
    entered into in the ordinary course of business; (b)&nbsp;any
    material agreements with a consultant, sales representative,
    agent or dealer not terminable upon 30&nbsp;days written notice;
    (c)&nbsp;agreements or indentures relating to the borrowing of
    money or the deferred purchase price of property (in either case
    whether or not secured in any way), or any guarantee of any of
    the foregoing, having a remaining balance on the date hereof in
    an amount exceeding $100,000 or in respect of which Company or
    one of its Subsidiaries is not authorized to prepay the related
    indebtedness on 30&nbsp;days or less advance notice;
    (d)&nbsp;any partnership, joint venture, profit-sharing or
    similar agreement; (e)&nbsp;contracts, not entered into in the
    ordinary course of business on an arm&#146;s-length basis, that
    are material to Company; (f)&nbsp;any collective bargaining
    agreements, memoranda or understanding, settlements or other
    labor agreements with any union or labor organization applicable
    to Company, its Affiliates or their employees; (g)&nbsp;any
    agreements or arrangements for the acquisition or sale of any
    business of Company entered into since January&nbsp;1, 2001 (or,
    without regard to such date, to the extent any indemnification
    or similar obligations of Company or any of its Subsidiaries
    exist as of the date of this Agreement) or any such agreement or
    arrangement, regardless of when such agreement or arrangement
    was entered into, that has not yet been consummated or in
    respect of which Company or any of its Subsidiaries has any
    remaining obligations (whether by merger, sale or purchase of
    assets or stock, consolidation, share exchange or otherwise);
    (h)&nbsp;any agreement which imposes non-competition or
    non-solicitation restrictions, or any &#147;exclusivity&#148; or
    similar provision or covenant, including any organizational
    </FONT></TD>
</TR>

</TABLE>

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</FONT>

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<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">conflict of interest prohibition, restriction,
    representation, warranty or notice provision or any other
    restriction on future contracting set forth in Company&#146;s
    Government Contracts, other than non-solicitation restrictions
    relating to clients&#146; or the Company&#146;s employees
    contained in the Company&#146;s contracts entered into in the
    ordinary course of business; (i)&nbsp;any employment, severance
    or other similar agreement which contains a change of control or
    &#147;golden parachute&#148; provision; and (j)&nbsp;any other
    agreements to which Company or any of its Subsidiaries is a
    party or by which they or any of their assets are bound and
    which involves consideration or other obligation in excess of
    $250,000.00 annually.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">4.26&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Section&nbsp;203
of the DGCL Not Applicable.</I> The Board of Directors of
Company has approved the Merger, this Agreement and transactions
contemplated hereby and thereby, and such approval is sufficient
to render inapplicable to the Merger and the other transactions
contemplated hereby the restrictions contained in
Section&nbsp;203 of the DGCL, and no other antitakeover or
similar statute or regulation of the State of Delaware or any
other state or jurisdiction applies or purports to apply to any
such transactions.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">4.27&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Government
Contracts.</I> Except as set forth in <I>Section&nbsp;4.27
</I>of the Company Disclosure Schedule, to the knowledge of
Company, with respect to services rendered to a Governmental
Entity pursuant to any Government Contracts, there is, as of the
date of this Agreement, no (a)&nbsp;civil fraud or criminal
investigation of any Governmental Entity that, individually or
in the aggregate, has had or would have a Material Adverse
Effect on Company, (b)&nbsp;suspension or debarment proceeding
(or equivalent proceeding) against Company or any of its
Subsidiaries that, individually or in the aggregate, has had or
would have a Material Adverse Effect on Company,
(c)&nbsp;request by a Governmental Entity for a contract price
adjustment based on a claimed disallowance by the Defense
Contract Audit Agency (or other applicable Governmental Entity)
or claim of defective pricing in excess of $25,000,
(d)&nbsp;dispute between Company or any of its Subsidiaries and
a Governmental Entity which, since December&nbsp;31, 2000, has
resulted in a government contracting officer&#146;s final
decision where the amount in controversy exceeds or is expected
to exceed $50,000 or (e)&nbsp;claim or request for equitable
adjustment by Company or any of its Subsidiaries against a
Governmental Entity in excess of $25,000.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">4.28&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Relations
with Governments.</I> To the knowledge of Company, neither
Company nor any of its Subsidiaries, nor any director, officer,
agent or employee of Company or any of its Subsidiaries, has
(a)&nbsp;used any funds for unlawful contributions, gifts,
entertainment or other unlawful expenses related to political
activity, (b)&nbsp;made any unlawful payment or offered anything
of value to foreign or domestic government officials or
employees or to foreign or domestic government officials or
employees or to foreign or domestic political parties or
campaigns, (c)&nbsp;made any other unlawful payment, or
(d)&nbsp;violated any applicable export control, money
laundering or anti-terrorism law or regulation, nor have any of
them otherwise taken any action which would cause Company or any
of its Subsidiaries to be in violation of the Foreign Corrupt
Practices Act of 1977, as amended, or any applicable law of
similar effect.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">4.29&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Stockholder
Rights Plan.</I> As of the date of this Agreement, Company does
not have any stockholder rights plan in effect.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">4.30&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>No Existing
Discussions.</I> As of the date of this Agreement, Company is
not engaged, directly or indirectly, in any negotiations or
discussions with any other party with respect to an Acquisition
Proposal.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">4.31&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Disclosure
Documents.</I> None of the information supplied or to be
supplied by Company for inclusion or incorporation by reference
in the Proxy Statement or any amendment or supplement thereto
shall, at the date the Proxy Statement or any such amendment or
supplement is first mailed to the Company Common Stockholders or
at the time of the Stockholders&#146; Approval contain any
untrue statement of a material fact or omit any material fact
necessary in order to make the statements therein, in light of
the circumstances under, which they were made, not misleading.
No representation or warranty is made by Company in this
<I>Section&nbsp;4.31 </I>with respect to statements made or
incorporated by reference therein based on information that was
not supplied by Company or its Subsidiaries for inclusion or
incorporation by reference in the Proxy Statement. The Proxy
Statement will comply as to form in all material respects with
the requirements of the Exchange Act.
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">4.32&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Advisors&#146;
Fees.</I> Except for Updata Capital, a copy of whose engagement
agreement has been made available to Parent prior to the date of
this Agreement, there is no investment banker, broker, finder,
financial advisor or other intermediary that has been retained
by or is authorized to act on behalf of Company or any of its
Subsidiaries who might be entitled to any fee from Company or
any of its Subsidiaries (including, after the consummation of
the Merger from Parent or Acquisition Sub) in connection with
the Merger or any of the other transactions contemplated by this
Agreement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">4.33&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Opinion of
Financial Advisor.</I> Company has received the opinion of
Updata Capital, financial advisor to Company, to the effect that
as of the date of this Agreement, the Merger Consideration is
fair to the Stockholders from a financial point of view.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">4.34&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Certain
Loans, Split Dollar Arrangements and Other Transactions.</I> No
present or former director, officer or employee (or Person
affiliated with any such director, officer or employee) of
Company or any of its Subsidiaries owes money to Company or any
of its Subsidiaries pursuant to a loan or other arrangement.
Except as set forth in Company Reports, since January&nbsp;1,
2000, no event has occurred that would be required to be
reported as a &#147;Certain Relationship or Related
Transaction&#148; disclosure pursuant to Item&nbsp;404 of
Regulation&nbsp;S-K promulgated by the SEC. As of the date of
this Agreement, neither Company nor any of its Subsidiaries have
any loan or any split dollar arrangement in existence that is in
violation of the applicable provisions of the Sarbanes-Oxley Act.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">4.35&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Territorial
Restrictions.</I> Except as described in <I>Section&nbsp;4.35
</I>of the Company Disclosure Schedule, neither Company nor any
Subsidiary of Company is restricted by any written agreement or
understanding with any other Person (excluding applicable laws
of Governmental Entities) from carrying on the businesses
anywhere in the world.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">4.36&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Product
Liability.</I> To the Company&#146;s knowledge, there are no
material product liability claims against Company or any
Subsidiary of Company, either potential or existing, which are
not fully covered by product liability insurance coverage or
which are not covered by any manufacturer&#146;s warranty
provided to Company or any Subsidiary of Company, which, if
determined adversely to Company or any Subsidiary of Company,
could have a Material Adverse Effect on Company.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">4.37&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Immigration
Compliance.</I>
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(a)&nbsp;Company and each Subsidiary of Company
    are in compliance in all material aspects with all applicable
    federal, state and local laws, rules, directives and regulations
    relating to the employment authorization of their respective
    employees (including, without limitation, the Immigration Reform
    and Control Act of 1986, as amended and supplemented, and
    Section&nbsp;212(n) and 274A of the Immigration and Nationality
    Act, as amended and supplemented, and all implementing
    regulations relating thereto), and Company and its Subsidiaries
    have not, to the knowledge of the Company, employed nor are any
    such entities currently employing, to the knowledge of the
    Company, any unauthorized aliens (as such term is defined under
    8&nbsp;CFR 274a.1(a)).
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(b)&nbsp;Neither Company nor any Subsidiary of
    Company has received any notice from the Immigration and
    Naturalization Service (the &#147;INS&#148;) or the United
    States Department of Labor (the &#147;DOL&#148;) of the
    disapproval or denial of any visa petition or entry permit
    pending before the INS or labor certification pending before the
    DOL on behalf of any employee or prospective employee of Company
    or any Subsidiary of Company.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(c)&nbsp;Since the approval of each of their
    respective visa petitions, there has been no material change in
    the terms and conditions of employment of any employees of
    Company or any Subsidiary of Company who are employed on visas.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(d)&nbsp;Company shall have delivered or made
    available to Parent and Acquisition Sub true, accurate and
    complete copies of all visa petitions, entry permits and visa
    applications (and all supporting documents) submitted to the INS
    for all foreign employees and prospective foreign employees of
    Company and any Subsidiary of Company.
    </FONT></TD>
</TR>

</TABLE>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">4.38&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Preference
Payments.</I> Neither Company nor any Subsidiary of Company has
received any payments from any third party creditor presently
seeking protection under Chapter&nbsp;11 or Chapter&nbsp;7 of
the Bankruptcy Code that could be set aside as a preference item
within the meaning of Section&nbsp;547 of the Bankruptcy Code,
as such section may hereafter be amended that individually or in
the aggregate has had or would have a Material Adverse Effect on
Company.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">4.39&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Vote
Required.</I> The affirmative votes of holders of greater than
fifty percent (50%) of the outstanding shares of Company Common
Stock entitled to vote thereon are the only votes of the holders
of any class or series of Company Capital Stock necessary to
approve this Agreement and the transactions contemplated by this
Agreement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">4.40&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Minority
Business Status.</I> Neither Company nor any Subsidiary of
Company is certified as a minority business enterprise under any
federal, state or local certification process and none of the
businesses of Company or any Subsidiary of Company has been
awarded as a result, or predicated upon, Company&#146;s or any
Subsidiary of Company&#146;s certification of being a minority
business supplier.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">4.41&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Acquisitions.</I>
<I>Section&nbsp;4.41 </I>of the Company Disclosure Schedule sets
forth all the acquisitions of other businesses made by Company
and/or any Subsidiary of Company during the past ten
(10)&nbsp;years. Company represents that no claims for
indemnification against Company or Subsidiary or any other
liability emanating out of said transactions may be asserted
against Company or any Subsidiary of Company that could have a
Material Adverse Effect on Company.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">4.42&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Definition
of Company&#146;s Knowledge.</I> As used in this Agreement, the
phrase &#147;to the knowledge of Company&#148; or any similar
phrase means the actual knowledge of the individuals identified
in <I>Section&nbsp;4.42 </I>of the Company Disclosure Schedule.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">4.43&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>No
Additional Representations.</I> Company acknowledges that
neither Parent nor Acquisition Sub, nor any other Person
advising or acting on behalf of Parent, Acquisition Sub, or any
Affiliate of Parent or Acquisition Sub, has made any
representation or warranty, express or implied, as to the
accuracy or completeness of any information regarding Parent or
Acquisition Sub or the business conducted by Parent or
Acquisition Sub, in each case, except as expressly set forth in
this Agreement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">4.44&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Disclosure.</I>
None of the representations and warranties made by Company
herein, or made in any certificate furnished or to be furnished
by it, pursuant to the requirements of this Agreement, including
any disclosures made in the Company Disclosure Schedule,
contains or will contain any untrue statement of a material fact
or omits or will omit any material fact, an omission of which
could, in light of the circumstances in which it was made, be
misleading. Company has no knowledge of any factors materially
adversely affecting the future prospect of the business of the
Company and its Subsidiaries, taken as a whole, which has not
been disclosed in this Agreement and the Company Disclosure
Schedule, other than any change, circumstance, fact, event or
effect relating to (i)&nbsp;the securities markets in general,
(ii)&nbsp;the economy in general, except if the Company and its
Subsidiaries is adversely affected in a materially
disproportionate manner as compared to similarly situated
entities, (iii)&nbsp;the industries in which the Company and its
subsidiaries operate and not specifically relating to the
Company and its Subsidiaries, including changes in legal,
accounting or regulatory changes, or conditions, except if the
Company and its Subsidiaries is adversely affected in a
materially disproportionate manner as compared to other
comparable participants in such industries, or (iv)&nbsp;the
announcement of the Merger and the performance of the
obligations of the parties under this Agreement (including any
cancellations or delays in contract awards and any impact on
relationships with customers, prime contractors, subcontractors
or suppliers to the extent but only to the extent relating to
the announcement of the Merger or the performance of the
obligations of the parties hereunder).
</FONT>

<P align="center">
<FONT size="2">ARTICLE&nbsp;5
</FONT>

<P align="center">
<FONT size="2">REPRESENTATIONS AND WARRANTIES OF PARENT AND
ACQUISITION SUB
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Except as set forth in the Parent Disclosure
Schedule (with specific reference to the relevant sections of
the representations and warranties or covenants in this
Agreement or disclosure in such a way to make its
</FONT>

<P align="center"><FONT size="2">A-22
</FONT>

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<DIV align="left">
<FONT size="2">relevance to the information called for by the
representations and warranties or covenants readily apparent) or
in the Parent SEC Reports, or as otherwise expressly
contemplated by this Agreement, Parent and Acquisition Sub
represent and warrant to Company as follows:
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">5.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Organization,
Standing, etc. of Parent and Acquisition Sub.</I> Each of Parent
and Acquisition Sub are corporations duly incorporated, validly
existing, and in good standing under the laws of the
jurisdiction of their incorporation, have the requisite
corporate power and authority to own their assets and to carry
on their businesses as presently conducted. Each of Parent and
Acquisition Sub is duly qualified as a foreign corporation to do
business in and is in good standing in each jurisdiction where
it is presently engaged in business and is required to be so
qualified except where the failure to be so qualified would not
have a Material Adverse Effect on Parent or Acquisition Sub.
Parent and Acquisition Sub have delivered or made available to
Company true and complete copies of its respective Certificates
of Incorporation and all amendments thereto to the date hereof
and its Bylaws as presently in effect on the date of this
Agreement, including all amendments thereto.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">5.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Authorization
and Execution.</I> Parent and Acquisition Sub have full
corporate power and authority to enter into this Agreement and
to consummate the transactions contemplated hereby and thereby.
This Agreement has been approved by the respective Boards of
Directors of Parent and Acquisition Sub and by Parent as the
sole stockholder of Acquisition Sub and no other corporate
proceedings on the part of Parent or Acquisition Sub are
necessary to authorize the execution and delivery of this
Agreement and the consummation by Parent and Acquisition Sub of
the transactions contemplated hereby. This Agreement has been
duly executed and delivered by Parent and Acquisition Sub and,
assuming the due authorization, execution and delivery thereof
by Company, constitutes a valid and legally binding Agreement of
Parent and Acquisition Sub enforceable against each of them in
accordance with its term, except as such enforcement may be
limited by (i)&nbsp;bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting or relating to
enforcement of creditor rights generally, and (ii)&nbsp;general
equitable principles.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">5.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Absence of
Conflicts; Governmental Authorizations.</I>
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(a)&nbsp;The execution and delivery of this
    Agreement by Parent and Acquisition Sub does not violate,
    conflict with or result in a breach of any provision of, or
    constitute a default (or an event which, with notice or lapse of
    time or both, would constitute a default) under, or result in
    the termination of, or accelerate the performance required by,
    or result in a right of termination or acceleration under, or
    give rise to any obligation to make payments or provide
    compensation under, or result in the creation of any Lien upon
    any of the properties or assets of Parent and Acquisition Sub
    under any of the terms, conditions or provisions of (i)&nbsp;the
    respective charters, by-laws, partnership agreements, trust
    declarations, operating agreements, or other similar
    organizational instruments of Parent and Acquisition Sub or any
    of their Subsidiaries, (ii)&nbsp;any statute, law, ordinance,
    rule, regulation, judgment, decree, order, injunction, writ,
    permit or license of any court or governmental authority
    applicable to Parent and Acquisition Sub or any of their
    Subsidiaries or any of their respective properties or assets or
    (iii)&nbsp;any note, bond, mortgage, indenture, deed of trust,
    license, franchise, permit, concession, contract, lease,
    partnership agreement, joint venture agreement or other
    instrument, obligation or agreement of any kind to which Parent
    and Acquisition Sub or any of their Subsidiaries is now a party
    or by which Parent and Acquisition Sub or any of their
    Subsidiaries or any of their respective properties or assets may
    be bound or affected. The consummation by Parent and Acquisition
    Sub of the transactions contemplated by this Agreement will not
    result in any violation, conflict, breach, termination,
    acceleration or creation of Liens under any of the terms,
    conditions or provisions described in clauses&nbsp;(i) through
    (iii) of the preceding sentence. Excluded from the foregoing two
    sentences of this paragraph&nbsp;(b), insofar as they apply to
    the terms, conditions or provisions two described in
    clauses&nbsp;(ii) and (iii) of the first sentence of this
    paragraph&nbsp;(b) are such violations, conflicts, breaches,
    defaults, termination, accelerations, payments, compensations or
    creations of Liens that, individually or in the aggregate, would
    not have a Material Adverse Effect on Parent and Acquisition Sub.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(b)&nbsp;Except for the Parent and Acquisition
    Sub Required Statutory Approvals, no declaration, filing or
    registration with, or notice to, or authorization, consent or
    approval of, any governmental or regulatory
    </FONT></TD>
</TR>

</TABLE>

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</FONT>

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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">body or authority is necessary for the execution
    and delivery of this Agreement by Parent or Acquisition Sub or
    the consummation by Parent or Acquisition Sub of the
    transactions contemplated thereby. Excluded from the foregoing
    sentence are such declarations, filings, registrations, notices,
    authorizations, consents or approvals which, if not made or
    obtained, as the case may be, would not, individually or in the
    aggregate, have a Material Adverse Effect on Parent or
    Acquisition Sub.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">5.4&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Capitalization.</I>
(a)&nbsp;The authorized capital stock of Parent consists of
20,000,000&nbsp;shares of Parent Common Stock and
2,000,000&nbsp;shares of Parent Preferred Stock. As of
May&nbsp;5, 2004, the only shares of capital stock of Parent
that are issued and outstanding are 12,258,186&nbsp;shares of
Parent Common Stock, all of which were validly issued, and are
fully paid and nonassessable and free of preemptive rights.
(b)&nbsp;The authorized capital stock of Acquisition Sub
consists of 1500&nbsp;shares of Acquisition Sub Common Stock, of
which 100&nbsp;shares are issued and outstanding as of the date
hereof. All the shares of Acquisition Sub that are issued and
outstanding were validly issued and are fully paid,
nonassessable and free of preemptive rights.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">5.5&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>SEC
Reports.</I> The Company has had access through
publicly-available information to (i)&nbsp;Parent&#146;s Annual
Report on Form&nbsp;10-K for the year ended January&nbsp;5,
2004, as filed with the SEC (the &#147;Parent 10-K&#148;),
(ii)&nbsp;its quarterly report on Form&nbsp;10-Q for the quarter
ended October&nbsp;5, 2003, as filed with the SEC (the
&#147;Parent 10-Q&#148;), (iii)&nbsp;all proxy statements
relating to Parent&#146;s meetings of shareholders held, and
(iv)&nbsp;all other documents filed by Parent with the SEC under
the Exchange Act or the Securities Act since January&nbsp;5,
2000 (the &#147;Parent SEC Reports&#148;). As of their
respective dates, such documents complied, and all documents
filed by Parent with the SEC under the Exchange Act or the
Securities Act between the date of this Agreement and the
Closing Date will comply, in all material respects with
applicable SEC requirements and did not, or in the case of
documents filed on or after the date hereof will not, contain
any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under
which they were made, not misleading. Except as set forth in
<I>Section&nbsp;5.5 </I>of the Parent Disclosure Schedule, all
Parent SEC Reports have been timely filed with the SEC and
constitute all forms, reports and documents required to be filed
by Parent under the Exchange Act and the Securities Act since
January&nbsp;5, 2000. Between the date of this Agreement and the
Closing Date, Parent will timely file with the SEC all documents
required to be filed by it under the Exchange Act or the
Securities Act. No Parent Subsidiary is required to file any
form, report or other document with the SEC. The certifications
of the chief executive officer and chief financial officer of
Parent required by Rules&nbsp;13a-14 and 15d-14 of the Exchange
Act with respect to the Parent SEC Reports, as applicable, are
true and correct as of the date of this Agreement, as they
relate to a particular Parent SEC Report, as though made as of
the date of this Agreement. Parent has established and maintains
disclosure controls and procedures, has conducted the procedures
in accordance with their terms and has otherwise operated in
compliance with the requirements under Rules&nbsp;13a-15 and
15d-15 of the Exchange Act.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">5.6&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Financial
Statements.</I> Each of the consolidated balance sheets of
Parent included in or incorporated by reference into the Parent
SEC Reports (including, in each case, any related notes) fairly
presents in all material respects the consolidated financial
position of Parent and the Parent Subsidiaries as of its date
and each of the consolidated statements of income,
shareholders&#146; investment and cash flows of Parent included
in or incorporated by reference into the Parent SEC Reports
(including, in each case, any related notes) fairly presents in
all material respects the consolidated financial position,
results of operations or cash flows, as the case may be, of
Parent and the Parent Subsidiaries for the periods set forth
therein (subject, in the case of unaudited statements, to normal
year-end audit adjustments which in the aggregate were not or
will not be material in amount or effect), in each case in
accordance with GAAP consistently applied during the periods
involved, except as may be noted therein.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">5.7&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Absence of
Undisclosed Liabilities.</I> Except as set forth in the Parent
SEC Reports or in <I>Section&nbsp;5.7 </I>of the Parent
Disclosure Schedule, as of January&nbsp;5, 2004, Parent and the
Parent Subsidiaries had no material liabilities of any nature,
whether accrued, absolute, contingent or otherwise (including,
without limitation, liabilities as guarantor or otherwise with
respect to obligations of others or liabilities for taxes due or
then accrued or to become due), required to be reflected or
disclosed in the balance sheet dated January&nbsp;5, 2004(or the
notes thereto) included in the Parent 10-K (the &#147;Parent
Balance Sheet&#148;) that were not adequately reflected or
reserved against on the Parent Balance Sheet. Except as set
forth in <I>Section&nbsp;5.7 </I>of the Parent
</FONT>

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</FONT>

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<DIV align="left">
<FONT size="2">Disclosure Schedule, Parent has no material
liabilities of any nature, whether accrued, absolute, contingent
or otherwise, other than liabilities (i)&nbsp;adequately
reflected or reserved against on the Parent Balance Sheet,
(ii)&nbsp;incurred since January&nbsp;5, 2004 in the ordinary
course of business, or (iii)&nbsp;that would not, individually
or in the aggregate, have a Material Adverse Effect on Parent.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">5.8&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Absence of
Adverse Changes.</I> Since January&nbsp;5, 2004, there has not
been any change, event or circumstance that has had, or would
have, a Material Adverse Effect on Parent.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">5.9&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Actions and
Proceedings.</I> Except as set forth in the Parent SEC Reports
or in <I>Section&nbsp;5.9 </I>of the Parent Disclosure Schedule,
there are no actions, suits or claims or legal, administrative
or arbitration proceedings pending or, to the knowledge of
Parent, threatened against Parent or Acquisition Sub that,
individually or in the aggregate, would have a Material Adverse
Effect on Parent. Except as set forth in <I>Section&nbsp;5.9
</I>of the Parent Disclosure Schedule, there is no writ, order,
injunction, judgment or decree in effect or, to the knowledge of
Parent, threatened that is applicable to Parent or Acquisition
Sub or by which any of their respective properties or assets is
bound and that, individually or in the aggregate, would be
material to the business of Parent and Acquisition Sub taken as
a whole.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">5.10&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Proxy
Statement.</I> None of the information supplied by Parent
specifically for inclusion or incorporation by reference in the
Proxy Statement will, at the date it is first mailed to holders
of Company Common Stock or at the time of the Company
Shareholders Meeting (except as supplemented by Parent to
reflect changes in information so supplied at the time of such
meeting), contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">5.11&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Advisors&#146;
Fees.</I> Except for Bear Stearns, there is no investment
banker, broker, finder, financial advisor or other intermediary
that has been retained by or is authorized to act on behalf of
Parent or Acquisition Sub who might be entitled to any fee from
Parent or Acquisition Sub (including, after the consummation of
the Merger from Parent or Acquisition Sub) in connection with
the Merger or any of the other transactions contemplated by this
Agreement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">5.12.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Company
Shares and Acquisition Sub Interests.</I>
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(a)&nbsp;Except as set forth in
    <I>Section&nbsp;5.12 </I>of the Parent Disclosure Schedule,
    neither Parent nor Acquisition Sub beneficially owns any Company
    Shares. With respect to the Company Shares held by Parent or
    Acquisition Sub as set forth in <I>Section&nbsp;5.12 </I>of the
    Parent Disclosure Schedule, (i)&nbsp;neither Parent nor
    Acquisition Sub acquired any such Company Shares in connection
    with or in contemplation of the Merger and (ii)&nbsp;Parent and
    Acquisition Sub acquired such Company Shares more than two years
    prior to the date of this Agreement.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(b)&nbsp;Acquisition Sub currently is, and at all
    times since its formation has been, organized as a corporation
    under the laws of the State of Delaware. Parent currently is,
    and at all times since the formation of Acquisition Sub has
    been, the sole owner of 100% of the outstanding stock of
    Acquisition Sub.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">5.13&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Definition
of Parent&#146;s Knowledge.</I> As used in this Agreement, the
phrase &#147;to the knowledge of Parent&#148; or any similar
phrase means the actual knowledge of the individuals identified
in <I>Section&nbsp;5.13 </I>of the Parent Disclosure Schedule.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">5.14&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Financing.</I>
Parent has obtained all necessary financing commitments and
unconditional approvals necessary to consummate the transactions
contemplated hereby.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">5.15&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Disclosure.</I>
None of the representations or warranties made by Parent herein,
or made in any certificate furnished or to be furnished by it,
pursuant to the requirements of this Agreement, including any
disclosures made in the Parent Disclosure Schedule, contain or
will contain any untrue statement of a material fact or omits or
will omit any material fact, an omission of which could, in
light of the circumstances in which it was made, be misleading.
Parent has no knowledge of any factors materially adversely
affecting the future prospect of Parent&#146;s business which
has not been disclosed in this Agreement and the Disclosure
Schedule, other than any change, circumstance, fact, event or
effect relating to (i)&nbsp;the securities markets in general,
</FONT>

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<DIV align="left">
<FONT size="2">(ii)&nbsp;the economy in general, except if the
Parent and its Subsidiaries is adversely affected in a
materially disproportionate manner as compared to similarly
situated entities, (iii)&nbsp;the industries in which the Parent
and its Subsidiaries operate and not specifically relating to
the Parent and its Subsidiaries, including changes in legal,
accounting or regulatory changes, or conditions, except if the
Parent and its Subsidiaries is adversely affected in a
materially disproportionate manner as compared to other
comparable participants in such industries, or (iv)&nbsp;the
announcement of the Merger and the performance of the
obligations of the parties under this Agreement (including any
cancellations or delays in contract awards and any impact on
relationships with customers, prime contractors, subcontractors
or suppliers to the extent but only to the extent relating to
the announcement of the Merger or the performance of the
obligations of the parties hereunder).
</FONT>
</DIV>

<P align="center">
<FONT size="2">ARTICLE&nbsp;6
</FONT>

<P align="center">
<FONT size="2">COVENANTS
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">6.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Conduct of
Business by Company Pending the Merger.</I> After the date
hereof and except as set forth in <I>Section&nbsp;6.1 </I>of the
Company Disclosure Schedule, prior to the Closing Date or
earlier termination of this Agreement, unless Parent shall
otherwise agree in writing (which consent shall not be
unreasonably withheld or delayed), Company shall, and shall
cause its Subsidiaries, subject to restrictions imposed by
applicable law, to:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(a)&nbsp;conduct its business in the ordinary and
    usual course of business and consistent with past practice;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(b)&nbsp;not (i)&nbsp;amend or propose to amend
    its certificate of incorporation or by-laws, (ii)&nbsp;split,
    combine or reclassify its outstanding capital stock,
    (iii)&nbsp;declare, set aside or pay any dividend or
    distribution payable in stock or property, or
    (iv)&nbsp;repurchase, redeem or otherwise acquire any of its
    outstanding share of capital stock;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(c)&nbsp;not issue, sell, pledge or dispose of,
    or agree to issue, sell, pledge or dispose of, any additional
    shares of, or any options, warrants or rights of any kind to
    acquire any shares of its or its Subsidiaries&#146; capital
    stock, or any debt or equity securities convertible into,
    exchangeable for or exercisable for such capital stock, or enter
    into any contract, agreement, commitment or arrangement with
    respect to any of the foregoing, except for issuances of Company
    Common Stock pursuant to the exercise of rights or options
    outstanding as of the date of this Agreement under the Company
    Stock Option Plans outstanding as of the date of this Agreement
    and except for issuance of Company Common Stock pursuant to the
    exercise of rights outstanding as of the date of this Agreement
    under the Company Warrants outstanding as of the date of this
    Agreement and except for equity to be issued under Interim
    Additional Financing upon terms approved by Parent, such
    approval not to be unreasonably withheld or delayed;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(d)&nbsp;not (i)&nbsp;incur or become
    contingently liable with respect to any indebtedness for
    borrowed money, except for indebtedness incurred under the
    Company&#146;s revolving credit facility from time to time in
    the ordinary course of business, and except for debt to be
    issued under Interim Additional Financing upon terms approved by
    Parent, such approval not to be unreasonably withheld or
    delayed, (ii)&nbsp;redeem, purchase, acquire or offer to
    purchase or acquire any shares of its capital stock or any
    options, warrants or rights to acquire any of its capital stock
    or any security convertible into or exchangeable for its capital
    stock, (iii)&nbsp;make any acquisition of any assets or
    businesses or any other capital expenditures other than
    expenditures for fixed or capital assets in the ordinary course
    of business, (iv)&nbsp;sell, pledge, dispose of or encumber any
    assets or businesses other than sales in the ordinary course of
    business, (v)&nbsp;loan, advance funds or make any investment in
    or capital contribution to any other Person other than to any
    Subsidiary or to employees for travel and other business related
    expenses in the ordinary course of business, or (vi)&nbsp;enter
    into any contract, agreement, commitment or arrangement with
    respect to any of the foregoing;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(e)&nbsp;use commercially reasonable efforts to
    preserve intact its business organizations and goodwill, keep
    available the services of its present officers and key
    employees, preserve the goodwill and business relationships with
    customers, suppliers and others having business relationships
    with Company and,
    </FONT></TD>
</TR>

</TABLE>

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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">except as permitted pursuant to
    <I>Section&nbsp;6.3</I>, not engage in any action, directly or
    indirectly, with the intent to adversely impact the transactions
    contemplated by this Agreement;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(f)&nbsp;use commercially reasonable efforts to
    maintain with financially responsible insurance companies
    insurance on its tangible assets and its business in such
    amounts and against such risks and losses as are consistent with
    past practice;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(g)&nbsp;not enter into any plan of complete or
    partial liquidation, dissolution, merger, consolidation,
    restructuring, recapitalization or other reorganization of
    Company or any of its Subsidiaries (other than the transactions
    contemplated by this Agreement);
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(h)&nbsp;not alter, through merger, liquidation,
    reorganization, restructuring or any other fashion, the
    corporate structure or ownership of any of Company&#146;s
    Subsidiaries;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(i)&nbsp;not enter into any sale, lease or
    license or suffer to exist any Lien (except for Permitted Liens)
    in respect of any of its assets, other than (i)&nbsp;Liens
    securing intercompany indebtedness, (ii)&nbsp;sales or
    dispositions of property or inventory in the ordinary course of
    business consistent with past practice, (iii)&nbsp;leases and
    licenses with a term of less than one year of property in the
    ordinary course of business consistent with past practice,
    (iv)&nbsp;leases and licenses with a term of at least one year
    of property in the ordinary course of business consistent with
    past practice and (v)&nbsp;sales, leases or licenses with
    respect to immaterial assets;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(j)&nbsp;not enter into any Material Contract
    and/or any Government Contract in excess of
    $100,000.00&nbsp;Dollars or for a term in excess of 1&nbsp;year,
    other than contracts with clients entered into in the ordinary
    course of business.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(k)&nbsp;except as required by generally accepted
    accounting principles, not revalue in any material respect of
    any of its assets, including writing down the value of inventory
    or writing-off notes or accounts receivables, or good will due
    to any impairment, other than in the ordinary course of business
    consistent with past practice;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(l)&nbsp;change any of the accounting principles
    or practices used by it (except as required by GAAP, in which
    case written notice shall be provided to Parent and Acquisition
    Sub prior to any such change), or restate, or become obligated
    to restate, the financial statements in the Company&#146;s 10-K
    or Company&#146;s 10-Qs (except as required by GAAP or a
    Governmental Entity, in which case written notice shall be
    provided to Parent and Acquisition Sub prior to any such
    restatement);
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(m)&nbsp;except as required by law or as is
    consistent with past practice, not make or change any Tax
    election, change any annual Tax accounting period, adopt or
    change any method of Tax accounting, extend or waive any
    applicable statute of limitations with respect to Taxes, file
    any amended Tax Returns, enter into any closing agreement in
    respect of any Tax claim, audit or assessment, or surrender any
    right to claim a Tax refund, offset or other reduction in Tax
    liability;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(n)&nbsp;not (i)&nbsp;grant any severance,
    retention or termination pay to, or amend any existing
    severance, retention or termination arrangement with, any
    current or former director, officer or employee of Company or
    any of its Subsidiaries, except for severance or termination pay
    that may be payable in accordance with the Company&#146;s
    existing severance or termination pay policies as set forth in
    <I>Section&nbsp;4.16 </I>of the Company Disclosure Schedule in
    the ordinary course of business, (ii)&nbsp;increase or
    accelerate the payment or vesting of, benefits payable under any
    existing severance, retention or termination pay policies or
    employment agreements except that Company may elect to
    accelerate the vesting of the Company Stock Options,
    (iii)&nbsp;enter into or amend any employment, consulting,
    deferred compensation or other similar agreement with any
    director, officer, consultant or employee of Company or any of
    its Subsidiaries other than consulting agreements with clients
    entered into in the ordinary course of business,
    (iv)&nbsp;establish, adopt or amend (except as required by
    applicable law) any collective bargaining agreement, bonus,
    profit- sharing, thrift, pension, retirement, post-retirement
    medical or life insurance, retention, deferred compensation,
    compensation, stock option, restricted stock or other benefit
    plan or arrangement covering any present or former director,
    officer or employee, or any beneficiaries thereof, of
    </FONT></TD>
</TR>

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    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Company or any of its Subsidiaries or
    (v)&nbsp;increase the compensation, bonus or other benefits
    payable to any director, officer or employee of Company or any
    of its Subsidiaries, except for salary increases as a result of
    employee promotions in the ordinary course of business
    consistent with past practice or required by the terms of
    existing arrangements, policies or agreements set forth in the
    Company Disclosure Schedule;&nbsp;or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(o)&nbsp;enter into or authorize an agreement
    with respect to any of the foregoing actions, or commit to take
    any action to effect any of the foregoing actions.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">6.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Control of
Operations.</I> Nothing contained in this Agreement shall give
to Parent or Acquisition Sub, directly or indirectly, rights to
control or direct the operations of Company prior to the
Effective Time. Prior to the Effective Time, Company shall
exercise, consistent with the terms and conditions of this
Agreement, complete control and supervision of its and its
Subsidiaries&#146; operations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">6.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>No
Solicitation by Company.</I>
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(a)&nbsp;Company agrees that it and its
    Subsidiaries will not (and Company will not permit its or its
    Subsidiaries&#146; officers, directors, employees, agents or
    representatives, including any investment banker or other
    financial advisor, attorney, consultant, accountant or other
    Person retained by Company or any of its Subsidiaries, to):
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(i)&nbsp;directly or indirectly, solicit,
    initiate or knowingly facilitate or encourage the making by any
    Person (other than Parent and its Subsidiaries) of any inquiry,
    proposal or offer or other agreement (including any proposal or
    offer to Company&#146;s Stockholders) that constitutes or would
    lead to, a proposal for any tender offer, merger, consolidation,
    recapitalization, reorganization, share exchange, business
    combination, liquidation, dissolution or similar transaction
    involving Company or any of its Subsidiaries and a third party,
    or any acquisition by a third party of any Company Capital Stock
    (other than Company Common Stock issued by the Company upon the
    exercise of the Company Stock Options and/or the Company
    Warrants that are outstanding on the date hereof in accordance
    with their terms and other than in connection with any Interim
    Additional Financing) or any business or assets of Company or
    any of its Subsidiaries (other than acquisitions of a business
    or assets in the ordinary course of business that constitute
    less than 5% of the net revenues, net operating income and
    assets of Company and its Subsidiaries, taken as a whole), or
    any combination of the foregoing, in a single transaction or a
    series of related transactions (in each case, an
    &#147;Acquisition Proposal&#148;);
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(ii)&nbsp;directly or indirectly, participate or
    engage in discussions or negotiations concerning an Acquisition
    Proposal (and Company, its Subsidiaries and all such Persons
    shall immediately cease and cause to be terminated any existing
    discussions or negotiations with any third parties conducted
    heretofore with respect to any Acquisition Proposal), or furnish
    or disclose to any Person any information with respect to or in
    furtherance of any Acquisition Proposal, or provide access to
    its properties, books and records or other information or data
    to any Person with respect to or in furtherance of any
    Acquisition Proposal;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(iii)&nbsp;grant any waiver or release under any
    confidentiality agreement, standstill agreement or similar
    agreement with respect to Company or any of its
    Subsidiaries;&nbsp;or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(iv)&nbsp;execute or enter into any agreement,
    understanding or arrangement with respect to any Acquisition
    Proposal, or approve or recommend or propose to approve or
    recommend any Acquisition Proposal or any agreement,
    understanding or arrangement relating to any Acquisition
    Proposal (or resolve or authorize or propose to agree to do any
    of the foregoing actions).
    </FONT></TD>
</TR>

</TABLE>
<P>

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    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(b)&nbsp;Nothing contained in the foregoing
    <I>Section&nbsp;6.3(a) </I>shall prevent Company or its Board of
    Directors, at any time prior to receipt of Stockholders&#146;
    Approval with respect to the Merger, from (i)&nbsp;taking and
    disclosing to the Stockholders a position contemplated by
    Rule&nbsp;14d-9 and Rule&nbsp;14e-2(a) promulgated under the
    Exchange Act (or any similar communication to stockholders
    required to be made by applicable statute, law, rule or
    regulation in connection with the making or amendment of a
    </FONT></TD>
</TR>

</TABLE>

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    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">tender offer or exchange offer) or from making
    any legally required disclosure to Stockholders with regard to
    any Acquisition Proposal; provided, however, that neither
    Company nor the Board of Directors of Company shall, except as
    specifically permitted by <I>Section&nbsp;6.4(b)</I>, withdraw,
    withhold, modify or change any recommendation regarding this
    Agreement, the Merger or the other transactions contemplated
    hereby or approve, recommend or declare advisable any
    Acquisition Proposal, and (ii)&nbsp;providing information
    (pursuant to a confidentiality agreement in substantially the
    same form and on substantially the same terms as the
    Confidentiality Agreement and which does not prevent Company
    from complying with its obligations under this Agreement) to or
    engaging in any negotiations or discussions with any Person or
    group who has made (A)&nbsp;an unsolicited bona fide Acquisition
    Proposal with respect to all of the outstanding shares of
    capital stock of Company (whether by tender or exchange offer,
    merger, consolidation or otherwise) or all or substantially all
    of the assets of Company if, with respect to such actions, or
    (B)&nbsp;an unsolicited bona fide proposal for a Material Equity
    Financing (x)&nbsp;in the good faith judgment of the Board of
    Directors of Company, taking into account, among other things,
    the likelihood of consummation and the other terms and
    conditions of such Acquisition Proposal or Material Equity
    Financing and after discussions with its financial advisors,
    such Acquisition Proposal or Material Equity Financing is
    believed to be reasonably likely to result in a transaction more
    favorable to the holders of Company Common Stock than the Merger
    (a <I>&#147;Superior Proposal&#148;</I>) and (y)&nbsp;the Board
    of Directors of Company (after consultation with outside legal
    counsel) believes that that failure to do so would violate its
    fiduciary duties.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(c)&nbsp;Company agrees that it will notify
    Parent promptly (and in any event within <I>twenty-four hours
    </I>of receipt) if any proposal or offer relating to or
    constituting an Acquisition Proposal or Material Equity
    Financing is received by, any information is requested from, or
    any discussions or negotiations are sought to be initiated or
    continued with, Company or any of its officers, directors,
    employees, agents or representatives. The notice shall be in
    writing and state the identity of the Person or group making
    such request or inquiry or engaging in such negotiations or
    discussions and the material terms (including in the event of an
    oral offer or proposal, a writing that sets forth the material
    terms of such oral offer or proposal) and conditions of any
    Acquisition Proposal or Material Equity Financing. Thereafter,
    Company shall keep Parent fully informed on a prompt basis (and
    in any event within <I>forty-eight hours </I>of receipt) of any
    material changes, additions or adjustments to the terms of any
    such proposal or offer.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(d)&nbsp;Nothing in this <I>Section&nbsp;6.3
    </I>shall permit Company to enter into any agreement with
    respect to an Acquisition Proposal or Material Equity Financing
    during the term of this Agreement, it being agreed that, during
    the term of this Agreement, Company shall not enter into any
    agreement with any Person with respect to or that provides for,
    or in any way facilitates, an Acquisition Proposal or Material
    Equity Financing, other than a confidentiality agreement
    permitted by <I>Section&nbsp;6.3(b).</I>
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(e)&nbsp;Notwithstanding any other provision of
    this Agreement, if, prior to obtaining Stockholders&#146;
    Approval with respect to the Merger, the Board of Directors of
    Company determines, in its good faith judgment, that an
    Acquisition Proposal or Material Equity Financing is a Superior
    Proposal, the Board of Directors of Company may terminate this
    Agreement (subject to Company&#146;s obligations under
    <I>Article&nbsp;8</I>); provided, that
    </FONT></TD>
</TR>

</TABLE>
<P>

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    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(i)&nbsp;Company provides at least three
    (3)&nbsp;business days&#146; prior written notice to the Parent
    of its intention to terminate this Agreement in the absence of
    any further action by Parent,
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(ii)&nbsp;during such three (3)&nbsp;Business Day
    period (or longer period if extended by the mutual agreement of
    Company and Parent), Company agrees to negotiate in good faith
    with Parent regarding such changes as Parent may propose to the
    terms of this Agreement, which would make the terms of this
    Agreement more favorable to the holders of Company Common Stock
    than the Superior Proposal;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(iii)&nbsp;the Board of Directors of Company
    determines (after receipt of advice from its outside legal
    counsel and an independent financial advisor) that the
    Acquisition Proposal or Material Equity Financing is a Superior
    Proposal taking into account any modifications to the terms of
    this Agreement proposed in writing by Parent, and the Board of
    Directors of Company determines in
    </FONT></TD>
</TR>

</TABLE>

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    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">good faith that such actions are required by its
    fiduciary duties under Delaware law. In the event of termination
    of this Agreement as provided in this
    <I>Section&nbsp;6.3(e)</I>, this Agreement shall forthwith
    become void and there shall be no further obligation on the part
    of Company, Parent, Acquisition Sub or their respective officers
    or directors, except as provided in <I>Section&nbsp;8.3 </I>and
    except that in the case of any such termination,
    <I>Section&nbsp;6.6(b)</I>, <I>Section&nbsp;6.8 </I>and
    <I>Section&nbsp;9.2 </I>shall survive.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<FONT size="2">Nothing in this <I>Section&nbsp;6.3(e) </I>shall
relieve Company from liability for any willful or intentional
breach of this Agreement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">6.4&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Meeting of
Company Stockholders.</I>
</FONT>
<P>

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    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(a)&nbsp;Subject to <I>Section&nbsp;6.7
    </I>hereof, Company will take all action necessary in accordance
    with applicable law and its certificate of incorporation and
    bylaws to convene as promptly as reasonably practicable after
    the date hereof a meeting (the &#147;Stockholders&#146;
    Meeting&#148;) of the holders of Company Common Stock (the
    &#147;Company Common Stockholders&#148;) and shall submit the
    Merger for approval by the Company Common Stockholders at such
    meeting or any adjournment thereof.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(b)&nbsp;Subject to <I>Section&nbsp;6.3</I>,
    Company, through its Board of Directors, shall recommend
    approval and adoption of the Merger by the Company Common
    Stockholders at the Stockholders&#146; Meeting or any
    adjournment thereof; provided that the Board of Directors of
    Company may at any time prior to receipt of the
    Stockholders&#146; Approval with respect to the Merger approve,
    recommend and declare advisable any Superior Proposal, if the
    Board of Directors of Company determines in good faith after
    receipt of advice from its outside legal counsel that such
    action is required by its fiduciary obligations under Delaware
    law and Company terminates this Agreement as provided for in
    <I>Section&nbsp;8.1(b)(ii).</I>
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(c)&nbsp;For the avoidance of doubt and
    notwithstanding anything to the contrary contained in this
    Agreement, Company shall not be required to hold the
    Stockholders&#146; Meeting if this Agreement is terminated.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">6.5&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Agreement to
Cooperate.</I>
</FONT>
<P>

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</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(a)&nbsp;Subject to the terms and conditions
    herein provided, each of the parties hereto shall use its
    reasonable best efforts to take, or cause to be taken, all
    action and to do, or cause to be done, all things necessary,
    proper or advisable under applicable laws to consummate and make
    effective the transactions contemplated by this Agreement,
    subject, however, to the requisite vote of the Company Common
    Stockholders. Prior to the Effective Time, (i)&nbsp;Parent shall
    plan and adopt procedures that will expedite, to the fullest
    extent reasonably and commercially practical: (A)&nbsp;the
    process in <I>Section&nbsp;3.4(a) </I>to deliver and otherwise
    provide to the Stockholders the Merger Consideration, and
    (B)&nbsp;procedures for the exercise of Company Stock Options
    and the purchase of the Company Warrants by Parent; and
    (ii)&nbsp;Company shall, to the fullest extent commercially
    practical, cooperate with Parent in connection with the
    foregoing and assist Parent in such efforts. Prior to the
    Effective Time, Company shall use commercially reasonable
    efforts, and Parent and Acquisition Sub shall use their
    commercially reasonable efforts to cooperate and assist Company,
    to obtain all consents of any third parties that may be
    necessary for the consummation of the Merger.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(b)&nbsp;Each of Parent and Company undertake to
    contest and resist any action, including any legislative,
    administrative or judicial action, and to have vacated, lifted,
    reversed or overturned any decree, judgment, injunction or other
    order (whether temporary, preliminary or permanent) that
    restricts, prevents or prohibits the consummation of the
    transactions contemplated by this Agreement, provided, however,
    that neither party is required to contest or appeal any such
    order issued by a United States Court of Appeals.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(c)&nbsp;Notwithstanding anything in this
    Agreement to the contrary, neither Parent nor any of its
    Affiliates shall be under any obligation to make proposals,
    execute or carry out agreements or submit to orders providing
    for the sale or other disposition or holding separate (through
    the establishment of a trust or otherwise) of any assets or
    categories of assets of the Parent, any of its Affiliates, or
    Company or any of its Affiliates, or seeking to impose any
    material limitation on the ability of Parent or any of its
    Affiliates to
    </FONT></TD>
</TR>

</TABLE>

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    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">conduct their business or own such assets or to
    acquire, hold or exercise full rights of ownership of Company.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">6.6&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Access to
Information.</I>
</FONT>
<P>

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<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(a)&nbsp;Company has given and will continue to
    give to Parent and its accountants, counsel, financial advisors
    and other representatives (the &#147;Parent
    Representatives&#148;), reasonable access in accordance with the
    terms of the Confidentiality Agreement during normal business
    hours to its personnel, properties, books, contracts,
    commitments and records; provided, however, that no
    investigation pursuant to this <I>Section&nbsp;6.6(a)</I> shall
    amend or modify any representations or warranties made herein or
    the conditions to the obligations of the respective parties to
    consummate the Merger; provided, further, that the foregoing
    right of access shall not require furnishing information that
    would, in the reasonable opinion of counsel, violate any laws,
    or any confidentiality agreements with respect to such
    information.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(b)&nbsp;The Confidentiality Agreement shall
    remain in full force and effect until Closing and, if this
    Agreement is terminated pursuant to <I>Article&nbsp;8</I>, such
    Confidentiality Agreement shall continue in accordance with its
    terms. The Company hereby waives the provisions of the
    Confidentiality Agreement as and to the extent necessary to
    permit the consummation of the Merger.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(c)&nbsp;Company shall promptly advise Parent in
    writing when the Company becomes aware of any change or the
    occurrence of any event after the date of this Agreement having,
    or which, insofar as can reasonably be foreseen, in the future
    may have, a Material Adverse Effect on Company.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">6.7&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Proxy
Statement.</I>
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(a)&nbsp;Company shall prepare as promptly as
    practicable, the proxy statement pursuant to Regulation&nbsp;14A
    under the Exchange Act with respect to the Stockholders&#146;
    Meeting (the &#147;Proxy Statement&#148;). Company shall use its
    reasonable best efforts to have the Proxy Statement cleared by
    the SEC on or prior to eight (8)&nbsp;weeks after the execution
    of this Agreement. Company shall, as promptly as practicable
    after receipt thereof, provide Parent with copies of any written
    comments, and advise it of any oral comments or communications
    regarding the Proxy Statement received from the SEC. Company
    shall cooperate and provide Parent with a reasonable opportunity
    to review and comment on any amendment or supplement to the
    Proxy Statement prior to filing the same with the SEC, and will
    provide Parent with a copy of all such filings made with the SEC.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(b)&nbsp;Company will use its reasonable best
    efforts to cause the Proxy Statement to be mailed to the Company
    Common Stockholders as promptly as practicable after the
    execution of this Agreement but in no event later than one week
    after the receipt of clearance by Company from the SEC of the
    Proxy Statement. Company shall furnish all information
    concerning it and the holders of its capital stock as may be
    reasonably requested in connection with any such action. Company
    will advise Parent, promptly after it receives notice thereof,
    of any request by the SEC for amendment of the Proxy Statement.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(c)&nbsp;Company agrees that the information
    provided by it for inclusion in the Proxy Statement and each
    amendment or supplement thereto, at the time of mailing thereof
    and at the time of the Stockholders&#146; Meeting, will not
    include an untrue statement of a material fact or omit to state
    a material fact required to be stated therein or necessary to
    make the statements therein, in light of the circumstances under
    which they were made, not misleading. If at any time prior to
    the Stockholders&#146; Meeting, there shall occur any event with
    respect to Company or its Subsidiaries, or with respect to any
    information provided by Company for inclusion in the Proxy
    Statement, which event is required to be described in an
    amendment of or supplement to the Proxy Statement, such
    amendment or supplement shall be promptly filed with the SEC, as
    required by applicable law, and disseminated to the Company
    Common Stockholders.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">6.8&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Expenses and
Fees.</I> Except as may be otherwise expressly provided in this
Agreement, all costs and expenses incurred in connection with
this Agreement and the transactions contemplated thereby shall
be paid by the party incurring such expenses, whether or not the
Merger is consummated. WCP, WCPC and WCL shall be solely
responsible for paying all their costs and expenses incurred in
connection with this
</FONT>

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</FONT>

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<DIV align="left">
<FONT size="2">Agreement and the transactions contemplated
thereby that are applicable to them. None of such costs and
expenses shall be paid by Company, Parent or Acquisition Sub.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">6.9&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Public
Statements.</I> Company, on the one hand, and Parent and
Acquisition Sub, on the other hand, agree that, from the date
hereof through the Closing Date, no public release or
announcement concerning the transactions contemplated hereby
shall be issued or made by any party without the prior consent
of the other party or parties (which consent shall not be
unreasonably withheld), except (a)&nbsp;as such release or
announcement may be required by law or the rules or regulations
of any United States securities exchange, in which case the
party required to make the release or announcement shall allow
the other party or parties reasonable time to comment on such
release or announcement in advance of such issuance, and
(b)&nbsp;that each of Parent, Acquisition Sub and Company and
their respective Affiliates may make such an announcement to
their respective employees after consultation with the other
parties.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">6.10&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Company
Employees, Employee Benefit Plan Transition, Etc.</I>
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(a)&nbsp;Surviving Corporation shall honor,
    maintain and perform on or after the Effective Time and for a
    period of thirty (30)&nbsp;days thereafter (or such longer
    period as may be necessary to take into account any applicable
    enrollment dates under the Parent Employee Plans), as may be
    extended by Parent for any reason without deductions,
    counterclaims, interruptions or deferment (other than
    withholding under applicable law or expressly authorized by a
    Company Employee Plan), all of Company and Company
    Subsidiary&#146;s obligations under Company Employee Plans as
    such Company Employee Plans are in effect as of the Effective
    Time. Nothing in this section shall be construed to require the
    accrual of any benefit under any Company Employee Plans past the
    applicable date set forth above or preclude Parent from amending
    or terminating any such Company Employee Plans effective on or
    after the applicable date set forth above.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(b)&nbsp;Commencing as of the applicable date set
    forth above in <I>Section&nbsp;6.10(a)</I>, Parent shall cause
    the continuing Company Employees of Surviving Corporation, while
    employed by Surviving Corporation, to be able to participate in
    the Parent Employee Plans and provide employee benefits
    (including, but not limited to, pension, welfare, incentive
    compensation, severance, and vacation pay benefits) that
    similarly situated Parent employees participate in.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(c)&nbsp;Parent and its Subsidiaries shall cause
    the Parent Employee Plans that cover the continuing Company
    Employees or any of their dependents or their beneficiaries to
    treat the employment and service of the continuing Company
    Employees with the Company and Company&#146;s Subsidiaries
    through the Effective Time as employment and service with Parent
    and its subsidiaries for all purposes under Parent Employee
    Plans that cover the continuing Company Employees.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">6.11&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Notification
of Certain Matters; Supplemental Disclosure.</I>
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(a)&nbsp;Each of Company, Parent and Acquisition
    Sub agrees to give prompt notice to each other of, and to use
    their respective commercially reasonable efforts to prevent or
    promptly remedy, (i)&nbsp;the occurrence or failure to occur or
    the impending or threatened occurrence or failure to occur, of
    any event which occurrence or failure to occur would be likely
    to cause any of its representations or warranties in this
    Agreement to be untrue or inaccurate in any material respect at
    any time from the date hereof to the Effective Time and
    (ii)&nbsp;any material failure on its part to comply with or
    satisfy any covenant, condition or agreement to be complied with
    or satisfied by it hereunder; provided, however, that the
    delivery of any notice pursuant to this <I>Section&nbsp;6.11
    </I>shall not limit or otherwise affect the remedies available
    hereunder to the party receiving such notice.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(b)&nbsp;Until the Closing, Parent and Company
    shall have the continuing obligation to promptly supplement the
    information contained in their respective disclosure schedules
    attached hereto with respect to any material matter hereafter
    arising or discovered which, if in existence on the date hereof
    and known at the date of this Agreement, would have been
    required to be set forth or described in such disclosure
    schedules.
    </FONT></TD>
</TR>

</TABLE>

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</FONT>

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<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(c)&nbsp;Neither the supplementation of the
    disclosure schedules pursuant to the obligation in
    <I>Section&nbsp;6.11(b) </I>nor any disclosure after the date
    hereof of the untruth of any representation and warranty made in
    this Agreement shall operate as a cure of the failure to
    disclose the information, or a cure of any representation or
    warranty made herein, which representation or warranty was
    untrue as of the date hereof.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">6.12&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Reliance
Upon and Enforcement of Warranties, Representations and
Agreements of Company.</I> Company hereby agrees that,
notwithstanding any right of Parent or Acquisition Sub to fully
investigate the affairs of Company and the Subsidiaries of
Company, and notwithstanding any knowledge of facts determined
or determinable by Parent and/or Acquisition Sub pursuant to
such investigation or right of investigation, Parent and
Acquisition Sub have the right to rely fully upon the
representations, covenants, warranties and agreements of Company
contained in this Agreement, and upon the accuracy of any
document, schedule, certificate or exhibit given or delivered to
Parent and Acquisition Sub pursuant to the provisions of this
Agreement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">6.13&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Reliance
Upon and Enforcement of Representations, Warranties and
Agreements of Parent and Acquisition Sub.</I> Parent and
Acquisition Sub hereby agree that, notwithstanding any right of
Company to fully investigate the affairs of Parent and
Acquisition Sub and notwithstanding any knowledge of facts
determined or determinable by Company pursuant to such
investigation or right of investigation, Company has the right
to fully rely upon the representations, covenants, warranties
and agreements of Parent and Acquisition Sub contained in this
Agreement and upon the accuracy of any document, certificate or
exhibit given or delivered to Company pursuant to the provisions
of this Agreement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">6.14&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Indemnification.</I>
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(a)&nbsp;Subject to the occurrence of the
    Effective Time, until the three year anniversary of the date on
    which the Effective Time occurs (provided, however, that all
    rights and indemnification with respect of any claim asserted or
    made within such period shall continue until the final
    disposition of such claim), Parent and the Surviving Corporation
    agree that all rights to indemnification or exculpation now
    existing in favor of each present and former employee, agent,
    fiduciary, director or officer of the Company and the
    Subsidiaries of Company (the &#147;Indemnified Parties&#148;) as
    provided in the respective charters or by-laws or otherwise in
    effect as of the date hereof shall survive and remain in full
    force and effect. From and after the Effective Time, Parent and
    the Surviving Corporation also agree to indemnify and hold
    harmless the present and former officers and directors of the
    Company and the Subsidiaries of Company in respect of acts or
    omissions occurring prior to the Effective Time to the extent
    provided in any written indemnification agreements between the
    Company and/or one or more Subsidiaries of Company and such
    officers and directors and listed in <I>Section&nbsp;6.14 </I>of
    the Company Disclosure Schedule. Nothing contained in this
    <I>Section&nbsp;6.14 </I>shall diminish the rights of the
    present and former officers and directors of the Company and the
    Subsidiaries of the Company pursuant to such indemnification
    agreements and, in the case any of the provisions of this
    <I>Section&nbsp;6.14 </I>conflict with the terms of such
    indemnification agreements, the terms of such indemnification
    agreements shall control.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(b)&nbsp;In the event of any threatened or actual
    claim, action, suit, demand, proceeding or investigation,
    whether civil, criminal or administrative, including, without
    limitation, any such claim, action, suit, demand, proceeding or
    investigation in which any person who is now, or has been at any
    time prior to the date hereof, or who becomes prior to the
    Effective Time, an Indemnified Party is, or is threatened to be,
    made a party based in whole or in part on, or arising in whole
    or in part out of, or pertaining to (i)&nbsp;the fact that he or
    she is or was a director, officer, employee, fiduciary or agent
    of the Company or any of the Subsidiaries of Company, or is or
    was serving at the request of the Company or any of the
    Subsidiaries of Company as a director, officer, employee,
    trustee, partner, fiduciary or agent of another corporation,
    partnership, joint venture, trust, pension or other employee
    benefit plan or other enterprise, or (ii)&nbsp;the negotiation,
    execution or performance of this Agreement or any of the
    transactions contemplated hereby, whether in any case asserted
    or arising before or after the Effective Time, the parties
    hereto agree to cooperate and use their commercially reasonable
    best efforts to defend against and respond thereto. It is
    understood and agreed that the Company shall indemnify and hold
    harmless, and after the Effective
    </FONT></TD>
</TR>

</TABLE>

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</FONT>

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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Time the Surviving Corporation and Parent shall
    indemnify and hold harmless, as and to the full extent permitted
    by applicable law, each Indemnified Party against any losses,
    claims, damages, liabilities, costs, expenses (including
    reasonable attorneys&#146; fees and expenses), judgments, fines
    and amounts paid in settlement in connection with any such
    threatened or actual claim, action, suit, demand, proceeding or
    investigation, and in the event of any such threatened or actual
    claim, action, suit, demand, proceeding or investigation
    (whether asserted or arising before or after the Effective
    Time), (A)&nbsp;the Company, and the Surviving Corporation and
    Parent after the Effective Time, shall promptly pay reasonable
    expenses in advance of the final disposition of any claim, suit,
    proceeding or investigation to each Indemnified Party to the
    full extent permitted by law, (B)&nbsp;the Indemnified Parties
    may retain one counsel (plus one local counsel) reasonably
    satisfactory to them and Parent, and the Company and the
    Surviving Corporation shall pay all fees and expenses of such
    counsel for the Indemnified Parties within 30&nbsp;days after
    statements therefor are received; and (C)&nbsp;the Company,
    Parent, the Surviving Corporation and the Indemnified Parties
    shall use their respective commercially reasonable best efforts
    to assist in the vigorous defense of any such matter; provided
    that none of the Company, the Surviving Corporation or Parent
    shall be liable for any settlement effected without its prior
    written consent (which consent shall not be unreasonably
    withheld); and provided further that the Surviving Corporation
    and Parent shall have no obligation hereunder to any Indemnified
    Party when and if a court of competent jurisdiction shall
    ultimately determine, and such determination shall become final
    and non-appealable, that indemnification of such Indemnified
    Party in the manner contemplated hereby is prohibited under
    applicable law (whereupon any advances received shall be repaid
    to Parent or the Surviving Corporation). Any Indemnified Party
    wishing to claim indemnification under this
    <I>Section&nbsp;6.14(b)</I>, upon learning of any such claim,
    action, suit, demand, proceeding or investigation, shall
    promptly notify the Company and, after the Effective Time, the
    Surviving Corporation and Parent; provided that the failure to
    so notify shall not affect the obligations of the Company, the
    Surviving Corporation and Parent except to the extent such
    failure to notify materially prejudices such party.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(c)&nbsp;Prior to the Effective Time, the Company
    shall purchase an extended reporting period endorsement under
    the Company&#146;s existing directors&#146; and officers&#146;
    liability insurance coverage for the Company&#146;s directors
    and officers in a form acceptable to the Company which shall
    provide such directors and officers with coverage for three
    (3)&nbsp;years following the Effective Time of not less than the
    existing coverage under, and have other terms not materially
    less favorable on the whole to, the insured persons than the
    directors&#146; and officers&#146; liability insurance coverage
    presently maintained by the Company, so long as the annual cost
    is $200,000.00 or less. In the event that $200,000.00 is
    insufficient for such coverage, the Company may spend up to that
    amount to purchase as much coverage as is commercially
    obtainable. Parent shall, and shall cause the Surviving
    Corporation to, maintain such policies in full force and effect,
    and continue to honor the obligations thereunder. Company shall
    have the right, but not the obligation, to substitute therefor
    policies of at least the same coverage and amounts containing
    terms and conditions which are not materially less favorable
    than such policy.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(d)&nbsp;In the event Parent or any of its
    successors or assigns (i)&nbsp;consolidates with or merges into
    any other Person and shall not be the continuing or surviving
    corporation or entity of such consolidation or merger, or
    (ii)&nbsp;transfers or conveys all or substantially all of its
    properties and assets to any Person, then, and in each such
    case, to the extent necessary, proper provision shall be made so
    that the successors and assigns of Parent assume the obligations
    set forth in this <I>Section&nbsp;6.14.</I>
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(e)&nbsp;The provisions of this
    <I>Section&nbsp;6.14 </I>are intended to be for the benefit of,
    and shall be enforceable by, each Indemnified Party and his or
    her heirs and representatives.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">6.15&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Maintenance
of Company Records.</I> Parent and its Subsidiaries shall
maintain the books, records and files of Company which exist at
the Effective Time and which become subject to the direct or
indirect control of Parent pursuant to the Merger in accordance
with Parent&#146;s document retention policies as they exist
from time to time.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">6.16&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Stockholder
Litigation.</I> Company shall keep Parent informed of, and
cooperate with Parent in connection with, any stockholder
litigation or claim against Company and/or its directors or
officers relating to
</FONT>

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<DIV align="left">
<FONT size="2">the Merger or the other transactions contemplated
by this Agreement; provided, however, that no settlement in
connection with such stockholder litigation shall be agreed to
without Parent&#146;s prior written consent, which consent shall
not be unreasonably withheld, conditioned or delayed; provided,
further, that all obligations in this <I>Section&nbsp;6.16
</I>shall be subject to the obligations of Company under
applicable laws relating to attorney-client communication and
privilege.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">6.17&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Affiliates.</I>
Prior to the Closing Date, Company shall deliver to Parent a
letter identifying all Persons that, to Company&#146;s
knowledge, are at the time this Agreement is submitted for
adoption by the Company Common Stockholders,
&#147;affiliates&#148; of Company for purposes of Rule&nbsp;145
under the Securities Act. Company shall use its reasonable best
efforts to cause each such Person to deliver to Parent on or
prior to the Closing Date a written agreement containing
customary and reasonable terms and conditions relating to
resales by such affiliates of Parent Common Stock acquired in
the Merger.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">6.18&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Resignations.</I>
Upon the written request of Parent, Company shall cause any or
all of the officers of the Company and all of the officers and
directors of each Company Subsidiary to resign or be removed or,
ask the officers to resign or be terminated, effective as of the
Closing. In addition, Company and each Company Subsidiary shall
request all directors to resign at Closing, except to the extent
otherwise indicated by Parent.
</FONT>

<P align="center">
<FONT size="2">ARTICLE&nbsp;7
</FONT>

<P align="center">
<FONT size="2"> CONDITIONS
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">7.1 <I>Conditions to Each Party&#146;s Obligation
to Effect the Merger.</I> The respective obligations of each
party to effect the Merger shall be subject to the fulfillment
at or prior to the Closing Date of the following conditions:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(a)&nbsp;this Agreement and the transactions
    contemplated hereby shall have been approved and adopted by the
    requisite vote of the Company Common Stockholders under
    applicable law;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(b)&nbsp;the Agreement with WCP, WCPC and WCL
    shall have been executed and be in full force and effect;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(c)&nbsp;no laws shall have been adopted or
    promulgated, and no temporary restraining order, preliminary or
    permanent injunction or other order issued by a court or other
    Governmental Entity of competent jurisdiction shall be in
    effect, having the effect of making the Merger illegal or
    otherwise prohibiting consummation of the Merger; provided,
    however, that the provisions of this <I>Section&nbsp;7.1(c)
    </I>shall not be available to any party whose failure to fulfill
    its obligations pursuant to <I>Section&nbsp;6.5 </I>shall have
    been the cause of, or shall have resulted in, such order or
    injunction;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(d)&nbsp;all governmental waivers, consents,
    orders and approvals legally required for the consummation of
    the Merger and the transactions contemplated hereby shall have
    been obtained and be in effect on the Closing Date, other than
    those, the failure of which to be obtained would not have,
    individually or in the aggregate, a Material Adverse Effect on
    Parent;
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">7.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Conditions to
Obligation of Company to Effect the Merger.</I> Unless waived in
writing by Company, the obligation of Company to effect the
Merger shall be subject to the fulfillment at or prior to the
Closing Date of the following additional conditions:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(a)&nbsp;Parent and Acquisition Sub shall have
    performed in all material respects their covenants contained in
    this Agreement required to be performed at or prior to the
    Effective Time.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(b)&nbsp;the representations and warranties of
    Parent and Acquisition Sub contained in this Agreement shall be
    true and correct when made, and the representations and
    warranties set forth in Article&nbsp;V above shall be true and
    correct as of the Effective Time as if made at and as of such
    time, except as expressly contemplated or permitted by this
    Agreement, except for representations and warranties relating to
    a time or times other than the Effective Time which were or will
    be true and correct at such time or times and except where the
    failure or failures of such representations and warranties to be
    so true and correct,
    </FONT></TD>
</TR>

</TABLE>

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</FONT>

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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">individually or in the aggregate, does not result
    or would not result in a Material Adverse Effect without taking
    into consideration any materiality or knowledge qualifier that
    applies to such representation or warranty.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(c)&nbsp;Parent and Acquisition Sub shall have
    furnished Company a certificate dated the date of the Closing,
    signed on its behalf by the Chief Executive Officer, President
    or Chief Financial Officer of Parent and Acquisition Sub, as
    applicable, to the best of their knowledge and belief after due
    inquiry, that the conditions set forth in
    <I>Section&nbsp;7.2(a)</I>and <I>Section&nbsp;7.2(b) </I>above
    have been satisfied.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(d)&nbsp;Parent shall have funded the payment in
    full of all amounts due and owing by the Company pursuant to the
    Company&#146;s Senior Subordinated Convertible Notes due
    January&nbsp;31, 2009 and the Fleet Credit Agreement and for the
    purchase of the Company Warrants set forth in
    <I>Section&nbsp;3.1(e).</I>
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(e)&nbsp;Parent shall have funded the payment of
    all of the Company&#146;s severance payment obligations which
    are payable upon the Merger and the Cashless Exercise
    Consideration as set forth in <I>Section&nbsp;3.1(d).</I>
    Company acknowledges that it is the Closing of the Merger that
    shall trigger any severance payment obligations, and not the
    execution of this Agreement.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">7.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Conditions to
Obligations of Parent to Effect the Merger.</I> Unless waived in
writing by Parent, the obligations of Parent and Acquisition Sub
to effect the Merger shall be subject to the fulfillment at or
prior to the Closing Date of the additional following conditions:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(a)&nbsp;Company shall have performed in all
    material respects its covenants contained in this Agreement
    required to be performed at or prior to the Effective Time.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(b)&nbsp;The representations and warranties of
    Company contained in this Agreement shall be true and correct
    when made and the representations and warranties set forth in
    Article&nbsp;IV above shall be true and correct as of the
    Effective Time as if made on and as of such time, except as
    expressly contemplated or permitted by this Agreement, except
    for the representations and warranties relating to a time or
    times other than the Effective Time which were or will be true
    and correct at such time or times and except where the failure
    or failures of such representations and warranties to be so true
    and correct, individually or in the aggregate, does not result
    or would not result in a Material Adverse Effect without taking
    into consideration any materiality or knowledge qualifier that
    applies to such representation or warranty.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(c)&nbsp;Company shall furnish Parent and
    Acquisition Sub a certificate dated the date of the Closing
    signed on its behalf by the Chief Executive Officer, President
    or Chief Financial Officer of Company that, to the best of their
    knowledge and belief after due inquiry, the conditions set forth
    in <I>Section&nbsp;7.3(a)</I>, and <I>Section&nbsp;7.3(b)
    </I>above have been satisfied.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(d)&nbsp;There shall not have occurred since the
    date of this Agreement any change, effect, circumstance or
    event, which together with any other changes, effects,
    circumstances or events since the date hereof, has had or is
    reasonably likely to have a Material Adverse Effect with respect
    to Company;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(e)&nbsp;The Dissenting Shares shall not
    constitute more than fifteen percent (15%) of the issued and
    outstanding Company Common Stock;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(f)&nbsp;The Company Warrants shall have been
    sold to the Parent. Company shall have received the written
    agreement of holders under Company&#146;s Senior Subordinated
    Convertible Notes due January&nbsp;31, 2009 and Company&#146;s
    senior lender under the Fleet Credit Agreement that upon payment
    in full of such obligations, they will release and terminate all
    UCC liens filed against Company and/or any Company Subsidiaries
    and in addition will release any collateral currently in such
    party&#146;s possession that had been pledged to such party by
    Company or any of Company&#146;s Subsidiaries.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(g)&nbsp;Company shall have substantially
    completed its obligations regarding the filing of Tax Returns
    and corporate qualification matters set forth in
    <I>Sections&nbsp;4.1 </I>and <I>4.10</I>, respectively.
    </FONT></TD>
</TR>

</TABLE>

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</FONT>

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<P align="center">
<FONT size="2">ARTICLE&nbsp;8
</FONT>

<P align="center">
<FONT size="2"> TERMINATION, AMENDMENT AND WAIVER
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">8.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Termination.</I>
This Agreement may be terminated as set forth below at any time
prior to the Closing Date, whether before or after the
Stockholders&#146; Approval has been obtained:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(a)&nbsp;by mutual written consent of Parent and
    Company, by action of their respective boards of
    directors;&nbsp;or
    </FONT></TD>
</TR>

</TABLE>
<P>

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<TR>
    <TD width="6%"></TD>
    <TD width="4%"></TD>
    <TD width="90%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">(b)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">by Company, if
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(i)&nbsp;upon a breach of any representation,
    warranty, covenant or agreement on the part of Parent or
    Acquisition Sub set forth in this Agreement, or if any
    representation or warranty of Parent or Acquisition Sub shall
    have become untrue, in either case such that the conditions set
    forth in <I>Section&nbsp;7.2(a), (b)&nbsp;and (c)</I>, as the
    case may be, would be incapable of being satisfied by
    September&nbsp;30, 2004 (as otherwise extended by mutual written
    agreement by Company, Parent and Acquisition Sub (the
    &#147;Outside Date&#148;));
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(ii)&nbsp;the Board of Directors of Company shall
    have delivered a termination notice, provided that Company may
    terminate this Agreement under this clause&nbsp;(ii) only if it
    has complied with all the provisions of <I>Section&nbsp;6.3.</I>
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(c)&nbsp;by Parent, if
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(i)&nbsp;Company shall breach any representation,
    warranty, covenant or agreement on the part of Company set forth
    in this Agreement, or if any representation or warranty of
    Company shall have become untrue, in either case such that the
    conditions set forth in <I>Section&nbsp;7.3(a)</I>,
    <I>(b)&nbsp;and (c)</I>, would be incapable of being satisfied
    by the Outside Date or if the conditions set forth in
    <I>Section&nbsp;7.3(d), (f)&nbsp;or (g)</I> would be incapable
    of being satisfied by the Outside Date;&nbsp;or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(ii)&nbsp;the condition set forth in
    <I>Section&nbsp;7.3(e) </I>is not satisfied by the Outside Date;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(iii)&nbsp;prior to the approval of this
    Agreement at the Stockholders Meeting, (A)&nbsp;the Board of
    Directors of Company shall have withdrawn or modified in any
    manner adverse to Parent or has failed to reaffirm (within three
    (3)&nbsp;days of its receipt of an Acquisition Proposal or a
    Material Equity Financing) its approval or recommendation of the
    Merger or this Agreement in connection with, or approved or
    recommended, any Acquisition Proposal or Material Equity
    Financing, or (B)&nbsp;Company shall have entered into any
    agreement with respect to any Acquisition Proposal or Material
    Equity Financing;&nbsp;or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(iv)&nbsp;a tender offer or exchange offer shall
    have been commenced that, if consummated, would result in any
    Person becoming the legal or beneficial owner of either
    (x)&nbsp;twenty-five percent (25%) or more of the Company Common
    Stock or (y)&nbsp;ten percent (10%) or more of the Company
    Common Stock and such offer is made as a part of a transaction
    or series of transactions in which such Person shall acquire
    additional Company Common Stock which in the aggregate
    constitutes more than fifty percent (50%) of the issued and
    outstanding Company Common Stock; and the Board of Directors of
    Company fails to recommend against acceptance of such tender
    offer or exchange offer or elects to take no position with
    respect to the acceptance of such offer;&nbsp;or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(v)
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="10%"></TD>
    <TD width="90%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(a)&nbsp;the Stockholder Meeting shall not have
    been called prior to September&nbsp;30, 2004 through fault
    (whether commission or omission) of Company;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(b)&nbsp;the Board of Directors of Company does
    not publicly recommend in the proxy statement that the Company
    stockholders approve and adopt this Agreement;&nbsp;or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(c)&nbsp;after recommending in the proxy
    statement that such stockholders approve and adopt this
    Agreement, the Board of Directors of Company shall have
    withdrawn, modified or
    </FONT></TD>
</TR>

</TABLE>

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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="10%"></TD>
    <TD width="90%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">amended such recommending in any manner adverse
    to Parent, except in compliance with and pursuant to
    <I>Section&nbsp;6.3.</I>
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;by either Parent
    or Company,&nbsp;if
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(i)&nbsp;any judgment, injunction, order, decree
    or action by any Governmental Entity of competent authority
    preventing the consummation of the Merger shall have become
    final and non-appealable;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(ii)&nbsp;the Merger shall not have occurred on
    or before the Outside Date provided, however, that a party that
    has materially breached a representation, warranty or covenant
    of such party set forth in this Agreement and not cured such
    breach by the Outside Date shall not be entitled to exercise its
    right to terminate under this
    <I>Section&nbsp;8.1(d)(ii)</I>;&nbsp;or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(iii)&nbsp;upon a vote at a duly held Stockholder
    Meeting, the Stockholders Approval shall not have been obtained
    as required by <I>Section&nbsp;4.4(d)</I>.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">8.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Effect of
Termination.</I> In the event of termination of this Agreement
by either Parent or Company, as provided in
<I>Section&nbsp;8.1</I>, this Agreement shall forthwith become
void and there shall be no further obligation on the part of
Company, Parent, Acquisition Sub or their respective officers or
directors, except as provided in <I>Section&nbsp;8.3 </I>and
except that in the case of any such termination, this
<I>Section&nbsp;8.2 </I>and <I>Section&nbsp;6.6(b)</I>,
<I>Section&nbsp;6.8, Section&nbsp;6.9 </I>and
<I>Section&nbsp;9.2 </I>shall survive. Nothing in this
<I>Section&nbsp;8.2 </I>shall relieve any party from liability
for any willful or intentional breach of this Agreement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">8.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Termination
Payment by Company.</I>
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(a)&nbsp;Company agrees that if this Agreement is
    terminated pursuant to <I>Section&nbsp;8.1(d)(iii) </I>(and in
    the case of any such termination, Parent has not materially
    breached its representations and warranties or covenants (or has
    cured any such breach prior to the date of the Stockholders
    Meeting)), Company shall pay Parent an amount equal to
    Parent&#146;s actual out-of-pocket expenses incurred in
    connection with this Agreement and the transactions contemplated
    hereby in an amount not to exceed $250,000.00 (the &#147;Expense
    Amount&#148;) no later than two (2)&nbsp;days after the
    occurrence of the event set forth in
    <I>Section&nbsp;8.1(d)(iii).</I> In addition, if Company signs
    or closes an Acquisition Proposal for all the Company within one
    year after termination, Company shall pay to Parent, or as
    directed by Parent, fifty percent (50%) of the Parent Break-Up
    Fee, no later than two (2)&nbsp;business days after the
    execution of a definitive agreement with respect to the
    Acquisition Proposal and the remaining fifty percent (50%) shall
    be paid on the earlier to occur of the closing of the
    Acquisition Proposal for all of the Company or six
    (6)&nbsp;months after execution of the definitive agreement for
    the Acquisition Proposal. The Expense Amount paid by Company to
    Parent within two (2)&nbsp;days of the termination under
    <I>Section&nbsp;8.1(d)(iii)</I> shall be credited against any
    Parent Break-Up Fee owed hereunder, which credit shall be
    applied against the initial fifty percent (50%) that is due
    within two (2)&nbsp;business days of the execution of the
    definitive agreement with respect to the Acquisition Proposal.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(b)&nbsp;Company agrees that if this Agreement is
    terminated pursuant to <I>Section&nbsp;8.1(b)(ii) </I>and
    Company signs or closes an Acquisition Proposal for all of the
    Company within one year, or signs or closes a Material Equity
    Financing within one (1)&nbsp;year, or a tender offer is
    consummated within one (1)&nbsp;year, Company shall pay to
    Parent, or as directed by Parent, the Parent Break-Up Fee. Fifty
    percent (50%) of any Parent Break-Up Fee shall be made, within
    two (2)&nbsp;business days of the execution of the definitive
    agreement with respect to the Acquisition Proposal, the Material
    Equity Financing, or tender offer, and the remaining fifty
    percent (50%) shall be paid on the earlier to occur of the
    closing of the Acquisition Proposal, Material Equity Financing
    or tender offer or six (6)&nbsp;months after execution of the
    definitive agreement relating to any of such transactions.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(c)&nbsp;Company agrees that if this Agreement is
    terminated pursuant to <I>Section&nbsp;8.1(c)(iv) </I>or
    <I>8.1(c)(v) </I>and within one (1)&nbsp;year after any such
    termination Company signs or closes an Acquisition Proposal or a
    Material Equity Financing, or a tender offer is consummated,
    Company shall pay to Parent, or as directed by Parent, the
    Parent Break-Up Fee. Fifty percent (50%) of any Parent Break-Up
    Fee shall be made within two (2)&nbsp;business days of execution
    of a definitive agreement with respect to the
    </FONT></TD>
</TR>

</TABLE>

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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Acquisition Proposal, Material Equity Financing
    or tender offer and the remaining fifty percent (50%) shall be
    paid on the earlier to occur of closing of that Acquisition
    Proposal, Material Equity Financing or tender offer, or six
    (6)&nbsp;months after execution of a definitive agreement
    relating to such transaction.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(d)&nbsp;Company agrees that if (i)&nbsp;this
    Agreement is terminated by Company pursuant to
    <I>Section&nbsp;8.1(d)(ii) </I>notwithstanding Parent&#146;s
    confirmation that it remains ready, willing and able to proceed,
    (ii)&nbsp;at the time of such termination, the conditions
    precedent to Closing set forth in <I>Section&nbsp;7.2 </I>are
    satisfied or would be satisfied upon Parent&#146;s performance
    of its obligations at Closing and (iii)&nbsp;within one
    (1)&nbsp;year after any such termination Company signs or closes
    an Acquisition Proposal for all of Company, or signs or closes a
    Material Equity Financing within one year, or a tender offer is
    consummated within one (1)&nbsp;year, Company shall pay to
    Parent, or as directed by Parent, the Parent Break-Up Fee. Fifty
    percent (50%) of any Parent Break-Up Fee shall be made within
    two (2)&nbsp;business days of execution of a definitive
    agreement with respect to the Acquisition Proposal, the Material
    Equity Financing or tender offer and the remaining fifty percent
    (50%) shall be paid on the earlier to occur of closing of that
    Acquisition Proposal, Material Equity Financing or tender offer,
    or six (6)&nbsp;months after execution of a definitive agreement
    relating to any of such transactions.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(e)&nbsp;Company agrees that if (i)&nbsp;this
    Agreement is terminated by Parent pursuant to
    <I>Section&nbsp;8.1(d)(ii)</I>, (ii)&nbsp;at the time of such
    termination, the conditions precedent to Closing set forth in
    <I>Section&nbsp;7.2 </I>are satisfied or would be satisfied upon
    Parent&#146;s performance of its obligations at Closing but the
    Company fails to close notwithstanding Parent&#146;s
    confirmation that it remains ready, willing and able to proceed
    and (iii)&nbsp;within one (1)&nbsp;year after any such
    termination Company signs or closes an Acquisition Proposal for
    all of Company, or signs or closes a Material Equity Financing
    within one year, or a tender offer is consummated within one
    (1)&nbsp;year, Company shall pay to Parent, or as directed by
    Parent, the Parent Break-Up Fee. Fifty percent (50%) of any
    Parent Break-Up Fee shall be made within two (2)&nbsp;business
    days of execution of a definitive agreement with respect to the
    Acquisition Proposal, Material Equity Financing or tender offer
    and the remaining fifty percent (50%) shall be paid on the
    earlier to occur of closing of that Acquisition Proposal,
    Material Equity Financing or tender offer, or six
    (6)&nbsp;months after execution of a definitive agreement
    relating to any of such transactions.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(f)&nbsp;Company agrees that if (i)&nbsp;this
    Agreement is terminated by Parent pursuant to
    <I>Section&nbsp;8.1(d)(ii)</I>, (ii)&nbsp;at the time of such
    termination, the conditions precedent to Closing set forth in
    <I>Section&nbsp;7.2 </I>are satisfied or would be satisfied upon
    Parent&#146;s performance of its obligations at Closing,
    (iii)&nbsp;the Company shall have materially breached its
    covenants such that the conditions set forth in
    <I>Section&nbsp;7.3(a)</I>, <I>Section&nbsp;7.3(f) </I>or in
    <I>Section&nbsp;7.3(g) </I>are not satisfied (iv)&nbsp;Parent
    confirms that it would be ready, willing and able to proceed but
    for such material breach by the Company, and (v)&nbsp;within one
    (1)&nbsp;year after any such termination, Company signs or
    closes an Acquisition Proposal for all of Company, or signs or
    closes a Material Equity Financing within one (1)&nbsp;year, or
    a tender offer is consummated within one (1)&nbsp;year, Company
    shall pay to Parent, or as directed by Parent, the Parent
    Break-Up Fee. Fifty percent (50%) of any Parent Break-Up Fee
    shall be made within two (2)&nbsp;business days of execution of
    a definitive agreement with respect to the Acquisition Proposal,
    the Materials Equity Financing or tender offer, and the
    remaining fifty percent (50%) shall be paid on the earlier to
    occur of closing of that Acquisition Proposal, Material Equity
    Financing or tender offer or six (6)&nbsp;months after execution
    of a definitive agreement relating to any of such transactions.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(g)&nbsp;Company agrees that if this Agreement
    (i)&nbsp;is terminated pursuant to
    <I>Section&nbsp;8.1(c)(iii)(A) </I>or <I>8.1(c)(iii)(B)</I>,
    without compliance with the processes outlined in the provisions
    contained in <I>Section&nbsp;6.3</I>, Company shall pay to
    Parent, the Parent Break-Up Fee hereunder no later than two
    (2)&nbsp;days after the occurrence of the applicable event set
    forth in <I>Section&nbsp;8.1(c)(iii)(A) </I>or
    <I>Section&nbsp;8.1(c)(iii)(B)</I>.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(h)&nbsp;For purposes of this Agreement, the
    Parent Break-Up Fee shall be an amount equal to $1,500,000.00.
    The Parent Break-Up Fee and expense reimbursement shall be
    payable by wire transfer of immediately accessible funds.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(i)&nbsp;In the event the Parent Break-Up Fee or
    Expense Amount contemplated by <I>Section&nbsp;8.3(a)
    </I>through <I>8.03(g) </I>is/are not paid when due, such
    payments shall bear interest at a rate equal to the prime
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">A-39
</FONT>

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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">rate announced from time to time by JP Morgan
    Chase Bank plus 2%&nbsp;per annum, and in addition to being
    obligated to pay such applicable amounts and interest thereon,
    Company shall pay or reimburse Parent&#146;s costs and expenses
    (including but not limited to reasonable legal fees and
    expenses) solely to the extent incurred in connection with any
    action, including but not limited to the filing of any lawsuit
    or other legal action to collect payment of such amounts and any
    interest thereon.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">8.4&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Amendment.</I>
This Agreement may not be amended except by action taken by the
parties&#146; respective boards of directors or duly authorized
committees thereof or pursuant to authority granted by such
boards of directors or duly authorized committees thereof and
then only by an instrument in writing signed on behalf of each
of the parties hereto and in compliance with applicable&nbsp;law.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">8.5&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Waiver.</I>
At any time prior to the Effective Time, the parties hereto may
(a)&nbsp;extend the time for the performance of any of the
obligations or other acts of the other parties hereto,
(b)&nbsp;waive any inaccuracies in the representations and
warranties contained herein or in any document delivered
pursuant thereto and (c)&nbsp;waive compliance with any of the
agreements or conditions contained herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be
valid if set forth in an instrument in writing signed on behalf
of such party.
</FONT>

<P align="center">
<FONT size="2">ARTICLE&nbsp;9
</FONT>

<P align="center">
<FONT size="2">GENERAL PROVISIONS
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">9.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Non-Survival.</I>
None of the representations and warranties in this Agreement
shall survive the Merger, and after the Effective Time, no
person or entity shall have any further obligation, nor shall
any claim be asserted or action be brought, with respect
thereto. None of the covenants and other agreements in this
Agreement or in any instrument delivered pursuant to this
Agreement, including any rights arising out of any breach of
such covenants and other agreements, shall survive the Effective
Time, except for those covenants and agreements contained herein
and therein that by their terms apply or are to be performed in
whole or in part after the Effective Time, and this
<I>Article&nbsp;9</I>.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">9.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Brokers.</I>
Each of the parties hereto agrees to hold each of the other
parties hereto harmless from and against any finders&#146; fees
in connection with the Merger contemplated by this Agreement
based upon arrangements made by or on behalf of such arranging
party.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">9.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Notices.</I>
All notices and other communications hereunder shall be in
writing and shall be deemed duly given if delivered personally,
delivered by UPS or other nationally recognized overnight
courier service or sent via facsimile to the parties at the
following addresses (or at such other address for a party as
shall be specified by like notice) or two Business Days after
being sent by registered or certified mail (postage prepaid,
return receipt requested) as follows:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">(a)&nbsp;If to Parent or Acquisition Sub to:
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Pomeroy IT Solutions, Inc.
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">1020 Petersburg Road
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Hebron, KY 41048
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Attention: Mr.&nbsp;Stephen E. Pomeroy
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Telephone No.: 859-586-0600
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Telecopier No.: 859-334-5350
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">with copies to (which shall not constitute
    notice):
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Lindhorst&nbsp;&#38; Dreidame Co., LPA
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">312 Walnut Street, Suite&nbsp;2300
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Cincinnati, Ohio 45202
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Attention: James H. Smith,&nbsp;III,&nbsp;Esq.
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Telephone No.: 513-421-6630
    </FONT></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Telecopier No.: 513-421-0212
    </FONT></TD>
</TR>

</TABLE>

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</FONT>

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<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">(b)&nbsp;If to Company, to:
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<FONT size="2">Alternative Resources Corporation
</FONT>

<DIV align="left">
<FONT size="2">600 Hart Road, Suite&nbsp;300
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Barrington, IL 60010
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Attention: Robert P. Stanojev
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Telephone No.: 847-381-6701
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Telecopier No.: 847-381-6604
</FONT>
</DIV>

<P align="left">
<FONT size="2">with copies to (which shall not constitute
notice):
</FONT>

<P align="left">
<FONT size="2">McDermott, Will&nbsp;&#38; Emery
</FONT>

<DIV align="left">
<FONT size="2">227 West Monroe Street
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Chicago, IL 60606
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Attention: Neal J. White
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Telephone No.: 312-984-7579
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Telecopier No.: 312-984-3669
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">All such communications shall be deemed to have
been duly given: (A)&nbsp;in the case of a notice delivered by
hand, when personally delivered; (B)&nbsp;in the case of a
notice sent by facsimile, upon transmission subject to telephone
and automated confirmation of receipt; and (C)&nbsp;in the case
of a notice sent by overnight courier service, the date
delivered at the designated address, in each case given or
addressed as aforesaid.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">9.4&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Interpretation.</I>
The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. In this Agreement, unless a
contrary intention appears, (a)&nbsp;the words
&#147;herein,&#148; &#147;hereof&#148; and &#147;hereunder&#148;
and other words of similar import refer to this Agreement as a
whole and not to any particular Article, Section or other
subdivision, (b)&nbsp;the word &#147;including&#148; means
&#147;including without limitation&#148; and is intended by the
parties to be by way of example rather than limitation and
(c)&nbsp;reference to any Article or Section means such Article
or Section hereof. No provision of this Agreement shall be
interpreted or construed against any party hereto solely because
such party or its legal representative drafted such provision.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">9.5&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Miscellaneous.</I>
This Agreement (including the documents and instruments referred
to herein) (a)&nbsp;constitutes the entire agreement and
supersedes all other prior agreements and understandings, both
written and oral, among the parties, or any of them, with
respect to the subject matter hereof, (b)&nbsp;is not intended
to confer upon any other person any rights or remedies
hereunder, except for rights of indemnified parties under
<I>Section&nbsp;6.14 </I>as herein provided and (c)&nbsp;shall
not be assigned by operation of law or otherwise, except that on
or prior to the mailing of the Proxy Statement, Acquisition Sub
may assign this Agreement to a wholly-owned Subsidiary of
Parent, but no such assignment shall relieve Acquisition Sub of
its obligations hereunder. THIS AGREEMENT SHALL BE GOVERNED IN
ALL RESPECTS, INCLUDING VALIDITY, INTERPRETATION AND EFFECT, BY
THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO CONTRACTS
EXECUTED AND TO BE PERFORMED WHOLLY WITHIN SUCH STATE WITHOUT
GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">9.6&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Jurisdiction.</I>
Each of Company, Parent and Acquisition Sub hereby irrevocably
and unconditionally consents to submit to the exclusive
jurisdiction of the courts of the State of Delaware and of the
United States of America located in the State of Delaware (the
&#147;Relevant Courts&#148;) for any litigation arising out of
or relating to this Agreement and the transactions contemplated
hereby (and agrees not to commence any litigation relating
thereto except in such courts), waives any objection to the
laying of venue of any such litigation in the Relevant Courts
and agrees not to plead or claim in any Relevant Court that such
litigation brought therein has been brought in an inconvenient
forum; provided, however, that nothing in this
<I>Section&nbsp;9.6 </I>is intended to waive the right of any
party to remove any such action or proceeding commenced in any
such state court to an appropriate federal court to the extent
the basis for such removal exists under applicable law. Parent
and the Subsidiaries hereby irrevocably (a)&nbsp;appoint CT
Corporation System (the &#147;Process Agent&#148;), with an
office on the date hereof in Wilmington, Delaware as their agent
to receive on behalf of either of them service of copies of the
summons and complaint and any other process which may be served
in any such
</FONT>

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</FONT>

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<DIV align="left">
<FONT size="2">litigation, (b)&nbsp;agree that service of
process may be made on Parent or Acquisition Sub by mailing, by
certified mail, a copy of such summons, complaint or other
process to Parent or Acquisition Sub in care of the Process
Agent at the Process Agent&#146;s above address, with a copy to
Parent or Acquisition Sub, as applicable, at its address for
notice specified herein, and (c)&nbsp;authorizes and directs the
Process Agent to accept such service on their behalf. Company
hereby irrevocably (i)&nbsp;appoints the Process Agent as its
agent to receive on its behalf service of copies of the summons
and complaint and any other process which may be served in any
such litigation, (ii)&nbsp;agrees that service of process may be
made on Company by mailing, by certified mail, a copy of such
summons, complaint or other process to Company in care of the
Process Agent at the Process Agent&#146;s above address, with a
copy to Company at its address for notice specified herein, and
(iii)&nbsp;authorizes and directs the Process Agent to accept
such service on behalf of Company. As an alternative method of
service, the parties further agree that the mailing by certified
or registered mail, return receipt requested, of any process
required by such courts, to the address specified in
<I>Section&nbsp;9.3</I>, shall constitute valid and lawful
service of process against them, without necessity for service
by any other means provided by statute or rule of court.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">9.7&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Counterparts.</I>
This Agreement may be executed in two or more counterparts, each
of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">9.8&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Parties In
Interest.</I> This Agreement shall be binding upon and inure
solely to the benefit of each party hereto and, except as set
forth in the exception to <I>Section&nbsp;9.5(b)</I>, nothing in
this Agreement, express or implied, is intended to confer upon
any other person any rights or remedies of any nature whatsoever
under or by reason of this Agreement. Notwithstanding the
foregoing, the provisions of <I>Section&nbsp;6.14 </I>are
intended to benefit each person who is a beneficiary of
Company&#146;s current directors&#146; and officers&#146;
insurance and indemnification policy and related arrangements,
and each such person shall have the right to enforce the
obligations of Parent under <I>Section&nbsp;6.14</I>.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">9.9&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Severability.</I>
Should any provision of this Agreement be judicially declared to
be invalid, unenforceable or void, such decision will not have
the effect of invalidating or voiding the remainder of this
Agreement, and the part or parts of this Agreement so held to be
invalid, unenforceable or void will be deemed to have been
stricken herefrom, and the remainder will have the same force
and effectiveness as if such stricken part or parts had never
been included herein.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">9.10&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Entire
Agreement.</I> This Agreement, together with the exhibits and
schedules hereto, contains the entire agreement between the
parties with respect to the Merger and related transactions, and
supersede all prior agreements, written or oral, between the
parties with respect thereto, other than the Confidentiality
Agreement (excluding the provisions of the agreement dated
November&nbsp;17, 2003 between Parent and the Company), which
shall survive execution of this Agreement and any termination of
this Agreement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">9.11&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Governing
Law.</I> This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without regard
to its conflicts of law provisions.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">9.12&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Section&nbsp;Headings;
Construction.</I> The headings of Sections in this Agreement are
provided for convenience only and will not affect its
construction or interpretation. All references to
&#147;Section&#148; or &#147;Sections&#148; refer to the
corresponding Section or Sections of this Agreement. All words
used in this Agreement will be construed to be of such gender or
number as the circumstances require. Unless otherwise expressly
provided, the word &#147;including&#148; does not limit the
preceding words or terms.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">9.13&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Enforcement.</I>
The parties recognize and agree that if for any reason any of
the provisions of this Agreement are not performed in accordance
with their specific terms or are otherwise breached, immediate
and irreparable harm or injury would be caused for which money
damages would not be an adequate remedy. Accordingly, each party
agrees that in addition to other remedies the other party shall
be entitled to an injunction restraining any violation or
threatened violation of the provisions of this Agreement and to
specific performance of any of the provisions of this Agreement.
In the event that any action shall be brought in equity to
enforce the provisions of the Agreement, neither party will
allege, and each party hereby waives the defense, that there is
an adequate remedy at&nbsp;law.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">9.14&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Rules of
Construction.</I> The parties hereto agree that they have been
represented by counsel during the negotiation and execution of
this Agreement and, therefor, waive the application of any law,
</FONT>

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<DIV align="left">
<FONT size="2">regulation, holding or ruling of construction
providing that ambiguities in an agreement or other document
will be construed against the party drafting such agreement or
document.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">9.15&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Waiver of
Trial by Jury.</I> EACH PARTY TO THIS AGREEMENT WAIVES ANY RIGHT
TO A TRIAL BY JURY IN ANY ACTION TO ENFORCE OR DEFEND ANY RIGHT
UNDER THIS AGREEMENT OR ANY AMENDMENT, INSTRUMENT, DOCUMENT OR
AGREEMENT DELIVERED, OR WHICH IN THE FUTURE MAY BE DELIVERED, IN
CONNECTION WITH THE MERGER OR THE OTHER TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT, AND AGREES THAT ANY SUCH ACTION
SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">9.16&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Consent to
Granting of a Security Interest in Acquisition Documents.</I>
Parent and Surviving Corporation agree that upon the Closing of
this transaction, the Surviving Corporation shall have the right
to grant to GE&nbsp;Commercial Distribution Finance Corporation,
formerly known as Deutsche Financial Services Corporation, as
Administrative Agent for the benefit of various lenders under a
Credit Facilities Agreement, and Surviving Corporation and
various Affiliates of such parties, a first priority security
interest and lien on all of Surviving Corporation&#146;s rights,
remedies, claims and interests under all the acquisition
documents for this transaction.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">IN WITNESS WHEREOF, Parent, Acquisition Sub and
Company have caused this Agreement and Plan of Merger to be
signed by their respective officers as of the date first written
above.
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">POMEROY IT SOLUTIONS, INC.
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="2%"></TD>
    <TD width="58%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">By:&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">/s/ STEPHEN E. POMEROY
    </FONT></TD>
</TR>

</TABLE>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <HR size="1" align="left" noshade></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Name:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stephen
    E. Pomeroy
    </FONT></TD>
</TR>

</TABLE>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="8%"></TD>
    <TD width="52%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">Title:</FONT></TD>
    <TD align="left">
    <FONT size="2">President
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">POMEROY ACQUISITION SUB, INC.
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="2%"></TD>
    <TD width="58%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">By:&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">/s/ STEPHEN E. POMEROY
    </FONT></TD>
</TR>

</TABLE>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <HR size="1" align="left" noshade></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Name:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stephen
    E. Pomeroy
    </FONT></TD>
</TR>

</TABLE>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="8%"></TD>
    <TD width="52%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">Title:</FONT></TD>
    <TD align="left">
    <FONT size="2">President
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">ALTERNATIVE RESOURCES CORPORATION
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="2%"></TD>
    <TD width="58%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">By:&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">/s/ ROBERT P. STANOJEV
    </FONT></TD>
</TR>

</TABLE>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <HR size="1" align="left" noshade></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Name:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Robert
    P. Stanojev
    </FONT></TD>
</TR>

</TABLE>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="40%"></TD>
    <TD width="8%"></TD>
    <TD width="52%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">Title:</FONT></TD>
    <TD align="left">
    <FONT size="2">Chairman of the Board, CEO
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">A-43
</FONT>

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<DIV align="center">
<B><FONT size="2">APPENDIX&nbsp;A</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">DEFINITIONS&nbsp;&#151; REFERENCE
TABLE</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Accounts
Receivable&#148;</FONT></I><FONT size="2"> means all notes and
accounts receivable held by Company or any Subsidiary of
Company, or of which Company or any Subsidiary of Company is the
beneficial holder and all notes, bonds and other evidences of
indebtedness of and rights to receive payments from any Person
held by Company or any Subsidiary of Company.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Acquisition
Proposal&#148;</FONT></I><FONT size="2"> has the meaning
assigned to such term in <I>Section&nbsp;6.3(a)(i)</I>.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Acquisition Sub Common
Stock&#148;</FONT></I><FONT size="2"> has the meaning assigned
to such term in <I>Section&nbsp;3.2</I>.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Acquisition
Sub&#148;</FONT></I><FONT size="2"> has the meaning assigned to
such term in the Preamble.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Affiliate&#148;</FONT></I><FONT size="2">
means any Person that directly, or indirectly through one or
more intermediaries, controls, is controlled by, or is under
common control with, the Person specified.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Agreement&#148;</FONT></I><FONT size="2">
has the meaning assigned to such term in the Preamble.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Bid&#148;</FONT></I><FONT size="2">
means any quotation, bid or proposal by Company or any of its
Affiliates which, if accepted or awarded, would lead to a
contract with a Governmental Entity, or a prime contractor or a
higher-tier subcontractor to a Governmental Entity, for the sale
of goods or the provision of services by Company, any Subsidiary
of Company or a contracting team of which Company is a member.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Business
Day&#148;</FONT></I><FONT size="2"> means a day, other than
Saturday, Sunday or any other day on which commercial banks in
Cincinnati, Ohio are authorized or required by law to close.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Cashless Exercise
Consideration&#148;</FONT></I><FONT size="2"> has the meaning
assigned to such term in <I>Section&nbsp;3.1(e)</I>.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Closing&#148;</FONT></I><FONT size="2">
has the meaning assigned to such term in <I>Section&nbsp;3.5</I>.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Closing
Date&#148;</FONT></I><FONT size="2"> has the meaning assigned to
such term in <I>Section&nbsp;3.5</I>.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Code&#148;</FONT></I><FONT size="2"> has
the meaning assigned to such term in the Recitals.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Company&#148;</FONT></I><FONT size="2">
has the meaning assigned to such term in the Preamble.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Company Balance
Sheet&#148;</FONT></I><FONT size="2"> has the meaning assigned
to such term in <I>Section&nbsp;4.7</I>.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Company Book-Entry
Shares&#148;</FONT></I><FONT size="2"> has the meaning assigned
to such term in <I>Section&nbsp;3.4(a)</I>.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Company Capital
Stock&#148;</FONT></I><FONT size="2"> means the capital stock of
Company.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Company
Certificates&#148;</FONT></I><FONT size="2"> has the meaning
assigned to such term in <I>Section&nbsp;3.4(a)</I>.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Company Common
Stock&#148;</FONT></I><FONT size="2"> has the meaning assigned
to such term in <I>Section&nbsp;3.1(a)</I>.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Company Common
Stockholders&#148;</FONT></I><FONT size="2"> has the meaning
assigned to such term in <I>Section&nbsp;6.4(a)</I>.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Company Disclosure
Schedule&#148;</FONT></I><FONT size="2"> shall mean, with
respect to the Company and its Subsidiaries, the schedules
delivered by Company to the Parent and Acquisition Sub in
connection with the execution and delivery of this Agreement
setting forth, among other things, items the disclosure of which
is required under this Agreement either in response to an
express disclosure requirement contained in a provision of this
Agreement or as an exception to one or more of the
representations, warranties or covenants contained in this
Agreement; provided that the mere inclusion of an item in the
Company Disclosure Schedule as an exception to a representation
or warranty will not be deemed an admission by the Company that
such item (or any non-disclosed item or information of
comparable or greater significance) is required by the terms
hereof to be disclosed or represents a material exception or
fact, event or circumstance or that such item has had, or is
reasonably expected to have, a Material Adverse Effect on
Company.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Company
Employees&#148;</FONT></I><FONT size="2"> has the meaning
assigned to such term in <I>Section&nbsp;6.10</I>.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Company&#146;s
Knowledge&#148;</FONT></I><FONT size="2"> has the meaning
assigned to such term in <I>Section&nbsp;4.42</I>.
</FONT>

<P align="center"><FONT size="2">A-44
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Company
Plans&#148;</FONT></I><FONT size="2"> has the meaning assigned
to such term in <I>Section&nbsp;4.16(a)</I>.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Company Preferred
Stock&#148;</FONT></I><FONT size="2"> has the meaning assigned
to such term in <I>Section&nbsp;6.14</I>.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Company
Reports&#148;</FONT></I><FONT size="2"> has the meaning assigned
to such term in <I>Section&nbsp;4.5(a)</I>.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Company Required Statutory
Approvals&#148;</FONT></I><FONT size="2"> means the making of
the Merger Filing with the Secretary of State of the State of
Delaware in connection with the Merger.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Company Stock
Option&#148;</FONT></I><FONT size="2"> has the meaning assigned
to such term in <I>Section&nbsp;3.1(d)</I>.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Company Stock Option
Plans&#148;</FONT></I><FONT size="2"> has the meaning assigned
to such term in <I>Section&nbsp;3.1(d)</I>.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Company Subordinated Convertible Notes
Due January&nbsp;31, 2009</FONT></I><FONT size="2">&#148; has
the meaning assigned to such term in <I>Section&nbsp;7.2(d)</I>.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Company Senior Secured Revolving Credit
Facility&#148;</FONT></I><FONT size="2"> has the meaning
assigned to such term in <I>Section&nbsp;7.2(d)</I>.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Company
Warrants&#148;</FONT></I><FONT size="2"> has the meaning
assigned to such term in <I>Section&nbsp;3.1(e)</I>.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Confidentiality
Agreement&#148;</FONT></I><FONT size="2"> means the
confidentiality agreement dated effective as of
November&nbsp;17, 2003, between Company and Parent, as the same
may be amended from time to time.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Consent&#148;</FONT></I><FONT size="2">
means any consent, approval, authorization, waiver, permit,
grant, franchise, concession, agreement, license, exemption or
order of, registration, certificate, declaration or filing with,
or report or notice to, any Person.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Contaminated&#148;</FONT></I><FONT size="2">
has the meaning assigned to such term in
<I>Section&nbsp;4.24(a)</I>.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;DGCL&#148;</FONT></I><FONT size="2"> has
the meaning assigned to such term in <I>Section&nbsp;1.1</I>.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Dissenting
Shares&#148;</FONT></I><FONT size="2"> has the meaning assigned
to such term in <I>Section&nbsp;3.3</I>.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;DOL&#148;</FONT></I><FONT size="2"> has
the meaning assigned to such term in <I>Section&nbsp;4.37(b)</I>.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Effective
Time&#148;</FONT></I><FONT size="2"> has the meaning assigned to
such term in <I>Section&nbsp;1.2</I>.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Environmental
Law&#148;</FONT></I><FONT size="2"> has the meaning assigned to
such term in <I>Section&nbsp;4.24(a)</I>.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;ERISA&#148;</FONT></I><FONT size="2">
means the Employee Retirement Income Security Act of 1974, as
amended.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Exchange
Act&#148;</FONT></I><FONT size="2"> means the Securities
Exchange Act of 1934, as amended.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Exchange
Agent&#148;</FONT></I><FONT size="2"> has the meaning assigned
to such term in <I>Section&nbsp;3.4(a)</I>.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Expense
Amount&#148;</FONT></I><FONT size="2"> has the meaning assigned
to such term in <I>Section&nbsp;8.3(a)</I>.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Forward
Merger&#148;</FONT></I><FONT size="2"> has the meaning assigned
to such term in <I>Section&nbsp;1.1</I>.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;GAAP&#148;</FONT></I><FONT size="2">
means United States generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial
Accounting Standards Board.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Government
Contracts&#148;</FONT></I><FONT size="2"> means any prime
contract, subcontract, teaming agreement or arrangement, joint
venture, basic ordering agreement, blanket purchase agreement,
letter agreement, purchase order, delivery order, task order,
grant, cooperative agreement, Bid, change order or other
commitment or funding vehicle between Company or any Subsidiary
of Company and (a)&nbsp;a Governmental Entity, (b)&nbsp;any
prime contractor to a Governmental Entity or (c)&nbsp;any
subcontractor with respect to any contract described in
clause&nbsp;(a) or (b).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Governmental
Entity&#148;</FONT></I><FONT size="2"> means any government or
any agency, bureau, board, commission, court, department,
official, political subdivision, tribunal or other
instrumentality of any government, whether federal, state or
local, domestic or foreign, as well as any corporations owned or
chartered by any such
</FONT>

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</FONT>

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<DIV align="left">
<FONT size="2">governmental agency, bureau, board, commission,
court, department, official, political subdivision, tribunal or
other instrumentality.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Hazardous
Substance&#148;</FONT></I><FONT size="2"> has the meaning
assigned to such term in <I>Section&nbsp;4.24(a)</I>.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;HSR Act&#148;</FONT></I><FONT size="2">
means the Hart-Scott-Rodino Antitrust&nbsp;Improvements Act of
1976, as amended.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Indemnified
Parties&#148;</FONT></I><FONT size="2"> has the meaning assigned
to such term in <I>Section&nbsp;6.14(a)</I>.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;INS&#148;</FONT></I><FONT size="2"> has
the meaning assigned to such term in <I>Section&nbsp;4.37(b)</I>.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Insurance
Policies&#148;</FONT></I><FONT size="2"> has the meaning
assigned to such term in <I>Section&nbsp;4.22</I>.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Interim Additional
Financing&#148;</FONT></I><FONT size="2"> means a debt or equity
financing other than under the Company&#146;s revolving credit
facility resulting in net proceeds to the Company in an amount
not to exceed $3,000,000.00.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Knowledge&#148;</FONT></I><FONT size="2">
has the meaning assigned to such term in <I>Sections&nbsp;4.42
and 5.12</I>.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Laws&#148;</FONT></I><FONT size="2">
means all foreign, federal, state and local statutes, laws,
ordinances, regulations, rules, resolutions, orders, tariffs,
determinations, writs, injunctions, awards (including, awards of
any arbitrator), judgments and decrees applicable to the
specified Person and to the businesses and assets thereof
(including, laws relating to the protection of classified
information; the sale, leasing, ownership or management of real
property; employment practices, terms and conditions, and wages
and hours; building standards, land use and zoning; and safety,
health and fire prevention.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Leased Real
Property&#148;</FONT></I><FONT size="2"> has the meaning
assigned to such term in <I>Section&nbsp;4.21(b)</I>.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Leases&#148;</FONT></I><FONT size="2">
has the meaning assigned to such term in
<I>Section&nbsp;4.21(b)</I>.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Liens&#148;</FONT></I><FONT size="2">
means, with the exception of Permitted Liens, a mortgage,
pledge, hypothecation, right of others, claim, security
interest, encumbrance, lease, sublease, license, occupancy
agreement, adverse claim or interest, easement, covenant,
encroachment, burden, title defect, title retention agreement,
voting trust agreement, interest, equity, option, lien, right of
first refusal, charge or other restrictions or limitations of
any nature whatsoever, including, without limitation, such that
may arise under any Material Contracts and/or Governmental
Contracts.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Material Adverse
Effect&#148;</FONT></I><FONT size="2"> means, with respect to
any entity, (a)&nbsp;any adverse change, circumstance, fact,
event or effect that, individually or in the aggregate with all
other adverse changes, circumstances, facts, events and effects,
is or is reasonably likely to be materially adverse to the
business, condition (financial or otherwise), assets or results
of operations of such entity and its Subsidiaries taken as a
whole, other than any change, circumstance, fact, event or
effect relating to (i)&nbsp;the securities markets in general,
(ii)&nbsp;the economy in general, except if such entity is
adversely affected in a materially disproportionate manner as
compared to similarly situated entities, (iii)&nbsp;the
industries in which Parent or Company operate and not
specifically relating to Parent or Company, including changes in
legal, accounting or regulatory changes, or conditions, except
if such entity is adversely affected in a materially
disproportionate manner as compared to other comparable
participants in such industries, or (iv)&nbsp;the announcement
of the Merger and the performance of the obligations of the
parties under this Agreement (including any cancellations or
delays in contract awards and any impact on relationships with
customers, prime contractors, subcontractors or suppliers to the
extent but only to the extent relating to the announcement of
the Merger or the performance of the obligations of the parties
hereunder), or (b)&nbsp;a material adverse effect on the ability
of such entity to perform its obligations under this Agreement.
For purposes hereof, changes in the trading price of Parent
Common Stock or Company Common Stock, as reported on NASDAQ or
OTC Bulletin Board, will not alone constitute a Material Adverse
Effect, whether occurring at any time or from time to time. The
parties specifically agree that if upon the Closing Date, four
(4)&nbsp;or more of the seven (7) individuals identified on
Exhibit&nbsp;C, should die, become disabled which renders such
individual unable to perform his/her duties under his/her
Employment Agreement for a period of sixty (60)&nbsp;consecutive
days or for an aggregate of ninety (90)&nbsp;days or more during
any twelve (12)&nbsp;month period or decline to continue to be
employed by Company, pursuant to the Employment Agreements
identified on such Exhibit&nbsp;C, such deaths, disabilities
and/or declinations of
</FONT>

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<DIV align="left">
<FONT size="2">continued employment shall constitute a Material
Adverse Effect that will allow, but not obligate, Parent to
terminate this transaction pursuant to the provisions of Section
<I>7.3(d) of this Agreement.</I>
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Material
Contracts&#148;</FONT></I><FONT size="2"> has the meaning
assigned to such term in <I>Section&nbsp;4.25(a).</I>
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Merger
Consideration&#148;</FONT></I><FONT size="2"> has the meaning
assigned to such term in <I>Section&nbsp;3.1(a).</I>
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Material Equity
Financing&#148;</FONT></I><FONT size="2"> means the issuance by
the Company of stock (or any debt instruments convertible into
stock) of the Company for net proceeds to the Company in excess
of $3,000,000.00.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Merger
Filing&#148;</FONT></I><FONT size="2"> has the meaning assigned
to such term in <I>Section&nbsp;1.2.</I>
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Merger&#148;</FONT></I><FONT size="2">
has the meaning assigned to such term in <I>Section&nbsp;1.1.</I>
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;OTC Bulletin
Board&#148;</FONT></I><FONT size="2"> has the meaning assigned
to such term in <I>Section&nbsp;4.2(e).</I>
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Outside
Date&#148;</FONT></I><FONT size="2"> has the meaning assigned to
such term in <I>Section&nbsp;8.1(b)(i).</I>
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Parent&#148;</FONT></I><FONT size="2">
has the meaning assigned to such term in the Preamble.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Parent
10-K&#148;</FONT></I><FONT size="2"> has the meaning assigned to
such term in <I>Section&nbsp;5.5.</I>
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Parent
10-Q&#148;</FONT></I><FONT size="2"> has the meaning assigned to
such term in <I>Section&nbsp;5.5.</I>
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Parent Balance
Sheet&#148;</FONT></I><FONT size="2"> has the meaning assigned
to such term in <I>Section&nbsp;5.7.</I>
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Parent Break-Up
Fees&#148;</FONT></I><FONT size="2"> has the meaning assigned to
such term in <I>Section&nbsp;8.3(a).</I>
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Parent Common
Stock&#148;</FONT></I><FONT size="2"> has the meaning assigned
to such term in <I>Section&nbsp;5.4.</I>
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Parent Disclosure
Schedule&#148;</FONT></I><FONT size="2"> shall mean, with
respect to the Parent and its Subsidiaries, the Schedule
delivered by Parent and Acquisition Sub to Company in connection
with the execution and delivery of this Agreement setting forth,
among other things, items the disclosure of which is required
under this Agreement either in response to an express disclosure
requirement contained in a provision of this Agreement or as an
exception to one or more of the representations, warranties or
covenants contained in this Agreement; provided that the mere
inclusion of an item in the Parent Disclosure Schedule as an
exception to a representation or warranty will not be deemed an
admission by Parent and Acquisition Sub that such item (or any
non-disclosed item or information of comparable or greater
significance) is required by the terms hereof to be disclosed or
represents a material exception or fact, event or circumstance
or that such item has had, or is reasonably expected to have, a
Material Adverse Effect on Parent and Acquisition Sub.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Parent Preferred
Stock&#148;</FONT></I><FONT size="2"> has the meaning assigned
to such term in <I>Section&nbsp;5.4.</I>
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Parent Benefit
Plans&#148;</FONT></I><FONT size="2"> has the meaning assigned
to such term in <I>Section&nbsp;6.10(b).</I>
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Parent
Representatives&#148;</FONT></I><FONT size="2"> has the meaning
assigned to such term in <I>Section&nbsp;6.6(a).</I>
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Parent and Acquisition Sub Required
Statutory Approvals&#148;</FONT></I><FONT size="2"> means the
making of the Merger Filing with the Secretary of State of the
State of Delaware.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Parent SEC
Reports&#148;</FONT></I><FONT size="2"> has the meaning assigned
to such term in <I>Section&nbsp;5.5.</I>
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Permits&#148;</FONT></I><FONT size="2">
has the meaning assigned to such term in
<I>Section&nbsp;4.11(a).</I>
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Permitted
Liens&#148;</FONT></I><FONT size="2"> means (a)&nbsp;Liens that
do not interfere with the value, marketability or use of the
assets in the operations or business of the Company,
(b)&nbsp;Liens for Taxes not yet due and payable or which are
being contested in good faith and by appropriate proceedings if
adequate reserves with respect thereto are maintained on
Company&#146;s books in accordance with generally accepted
accounting principles, (c)&nbsp;Liens which do not secure
monetary liabilities of any Person and that, individually or in
the aggregate, do not and would not materially detract from the
value or marketability of any of the assets of Company or
materially interfere with the use thereof as currently used and
(d)&nbsp;Liens in favor of carriers, warehousemen, mechanics,
materialmen and landlords granted in the ordinary course of
business for amounts not overdue or being
</FONT>

<P align="center"><FONT size="2">A-47
</FONT>

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<DIV align="left">
<FONT size="2">diligently contested in good faith by appropriate
proceedings and/or which adequate reserves in accordance with
generally accepted accounting principles shall have been set
aside on its books.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Person&#148;</FONT></I><FONT size="2">
means any individual, partnership, joint venture, corporation,
limited liability company, trust, unincorporated organization or
other entity and a government or any department or agency
thereof.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Process
Agent&#148;</FONT></I><FONT size="2"> has the meaning assigned
to such term in <I>Section&nbsp;9.6.</I>
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Proprietary
Rights&#148;</FONT></I><FONT size="2"> has the meaning assigned
to such term in <I>Section&nbsp;4.21(a).</I>
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Proxy
Statement&#148;</FONT></I><FONT size="2"> has the meaning
assigned to such term in <I>Section&nbsp;6.7(a).</I>
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Regulatory
Law&#148;</FONT></I><FONT size="2"> means the Sherman Act, as
amended, the Clayton Act, as amended, the HSR Act, the Federal
Trade Commission Act, as amended, and all other federal, state
and foreign statutes, rules, regulations, orders, decrees,
administrative and judicial doctrines and other laws that are
designed or intended to prohibit, restrict or regulate actions
having the purpose or effect of monopolization or restraint of
trade or lessening of competition, through merger or acquisition.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Relevant
Courts&#148;</FONT></I><FONT size="2"> has the meaning assigned
to such term in <I>Section&nbsp;9.6.</I>
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Reverse
Merger&#148;</FONT></I><FONT size="2"> has the meaning assigned
to such term in <I>Section&nbsp;1.1.</I>
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Sarbanes-Oxley
Act&#148;</FONT></I><FONT size="2"> has the meaning assigned to
such term in <I>Section&nbsp;4.5(a).</I>
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;SEC&#148;</FONT></I><FONT size="2"> has
the meaning assigned to such term in <I>Section&nbsp;4.5(a).</I>
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Securities
Act&#148;</FONT></I><FONT size="2"> means the Securities Act of
1933, as amended.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Stockholders&#146;
Approval&#148;</FONT></I><FONT size="2"> has the meaning
assigned to such term in <I>Section&nbsp;4.4(d).</I>
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Stockholders&#146;
Meeting&#148;</FONT></I><FONT size="2"> has the meaning assigned
to such term in <I>Section&nbsp;6.4(a).</I>
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Stockholders&#148;</FONT></I><FONT size="2">
means the Stockholders of Company.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Subsidiary&#148;</FONT></I><FONT size="2">
shall mean, when used with reference to any person or entity,
any corporation, partnership, limited liability company,
business trust, joint venture or other entity of which such
person or entity (either acting alone or together with its other
Subsidiaries) owns, directly or indirectly, 50% or more of the
stock or other voting interests, the holders of which are
entitled to vote for the election of a majority of the board of
directors or any similar governing body of such corporation,
partnership, limited liability company, business trust, joint
venture or other entity.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Superior
Proposal&#148;</FONT></I><FONT size="2"> has the meaning
assigned to such term in <I>Section&nbsp;6.3(b).</I>
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Supplier&#148;</FONT></I><FONT size="2">
has the meaning assigned to such term in
<I>Section&nbsp;4.23(b).</I>
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Surviving
Corporation&#148;</FONT></I><FONT size="2"> has the meaning
assigned to such term in <I>Section&nbsp;1.1.</I>
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Tangible Property
Leases&#148;</FONT></I><FONT size="2"> has the meaning assigned
to such term in <I>Section&nbsp;4.22.</I>
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Taxes&#148;</FONT></I><FONT size="2">
means all taxes, including, income, estimated income, gross
receipts, excise, property, sales, withholding, social security,
occupation, use, service, service use, license, payroll,
franchise, transfer and recording taxes, fees and charges,
windfall profits, severance, customs, import, export, employment
or similar taxes, charges, fees, levies or other assessments
imposed by the United States, or any state, local or foreign
government or subdivision or agency thereof, whether computed on
a separate, consolidated, unitary, combined or any other basis,
and such term shall include any interest, fines, penalties or
additional amounts and any interest in respect of any additions,
fines or penalties attributable or imposed on or with respect to
any such taxes, charges, fees, levies or other assessments, and
any obligation to indemnify or otherwise assume or succeed to
the Tax liability of any other Person.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Tax
Return&#148;</FONT></I><FONT size="2"> means any return, report
or other document or information required to be supplied to a
taxing authority in connection with Taxes.
</FONT>

<P align="center"><FONT size="2">A-48
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Tribunal&#148;</FONT></I><FONT size="2">
means any government, any arbitration panel, any court or any
governmental department, commission, board, bureau, agency or
instrumentality of any state or the United States.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Union
Plans&#148;</FONT></I><FONT size="2"> has the meaning assigned
to such term in <I>Section&nbsp;4.5(a).</I>
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;Vendor Receivables&#148;
</FONT></I><FONT size="2">means any amounts owing to Company or
any Subsidiary of Company from vendors of goods and products
used in the business resulting from discounts for prompt
payment, volume discounts, promotional programs or similar
vendor special pricing and term arrangements.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;WCP,&#148;
&#147;WCPC&#148;</FONT></I><FONT size="2"> and &#147;WCL&#148;
have the meanings assigned to such terms in the recitals.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">&#147;WCP, WCPC and WCL
Agreement&#148;</FONT></I><FONT size="2"> shall have the meaning
assigned to such term in the recitals.
</FONT>

<P align="center"><FONT size="2">A-49
</FONT>

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<DIV align="left">
<A name='154'></A>
</DIV>

<!-- link1 "APPENDIX B" -->

<DIV align="right">
<B><FONT size="2">APPENDIX&nbsp;B</FONT></B>
</DIV>

<P align="right">
<IMG src="c86131dupdata.gif" alt="(UPDATA SECURITIES LOGO)">

<P align="left">
<FONT size="2">May&nbsp;11, 2004
</FONT>

<P align="left">
<I><FONT size="2">CONFIDENTIAL</FONT></I>

<P align="left">
<FONT size="2">Board of Directors
</FONT>

<DIV align="left">
<FONT size="2">Alternative Resources Corporation
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">600 Hart Road
</FONT>
</DIV>

<DIV align="left">
<FONT size="2">Barrington, IL 60010
</FONT>
</DIV>

<P align="left">
<FONT size="2">Dear Members of the Board:
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We understand that Alternative Resources
Corporation (&#147;ARC&#148; or the &#147;Company&#148;),
Pomeroy IT Solutions, Inc., (&#147;Pomeroy&#148;) and a wholly
owned subsidiary of Pomeroy (&#147;Acquisition Sub&#148;) have
entered into an Agreement and Plan of Merger (the
&#147;Agreement&#148;) pursuant to which Acquisition Sub shall
merge with and into ARC, or at the election of Pomeroy, ARC
shall merge with and into Acquisition Sub (in either case, the
&#147;Merger&#148;). Pursuant to the Agreement, and subject to
the terms and conditions set forth therein, we understand that
at the Effective Time (as defined in the Agreement), each issued
and outstanding share of common stock of ARC (&#147;ARC Common
Stock&#148;), other than shares held by Pomeroy, Acquisition Sub
or any subsidiary of Pomeroy or Acquisition Sub and shares of
common stock held by stockholders who perfect their appraisal
rights under Delaware law, will be converted into the right to
receive $0.70 per share in cash (the &#147;Merger
Consideration&#148;). Each in-the-money ARC stock option
outstanding immediately prior to the Merger, shall become vested
and shall be entitled to be exercised for ARC Common Stock which
will in turn be eligible to receive the Merger Consideration.
Any in-the-money ARC stock options that are not exercised prior
to the Merger will be automatically subject to a &#147;cashless
exercise&#148; whereby the holder of such ARC stock option shall
be entitled to receive cash equal to the amount by which the
Merger Consideration exceeds the exercise price of such ARC
stock option. All outstanding Company Warrants (as defined in
the Agreement) will be purchased by Pomeroy at the Effective
Time at a price equal to $0.44 per warrant (Merger Consideration
minus the exercise price of each Company Warrant of $0.26). At
the time of the Merger, Pomeroy will fund the payment of all
existing ARC debt obligations under the Fleet Credit Agreement
and the Senior Subordinated Convertible Notes Due
January&nbsp;31, 2009. The terms and conditions of the
above-described Merger are more fully detailed in the Agreement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">You have requested our opinion as to whether the
Merger Consideration to be received by ARC shareholders in the
Merger is fair, from a financial point of view, to ARC
shareholders.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Updata Securities, Inc. is a wholly owned
subsidiary of Updata Capital, Inc. (collectively
&#147;Updata&#148;), which focuses on providing merger and
acquisition advisory services to information technology
(&#147;IT&#148;) companies. In this capacity, Updata is
continually engaged in valuing such businesses, and maintains an
extensive database of IT&nbsp;mergers and acquisitions for
comparative purposes. Pursuant to a letter dated
September&nbsp;23, 2003 (the &#147;Engagement Letter&#148;), we
are engaged as financial advisors to the Company in connection
with a sale of ARC, and will receive a fee upon consummation of
the Merger, a significant portion of which is contingent upon
such consummation of the Merger. The Engagement Letter further
specifies that ARC has engaged us to render a fairness opinion
to ARC&#146;s Board of Directors in connection with a sale of
ARC and we will receive a separate fee upon delivery of this
opinion. ARC has agreed to indemnify us for certain liabilities
arising out of our engagement and to reimburse us for certain
out-of-pocket expenses.
</FONT>

<P align="center">
<B><FONT size="2">Updata Securities, Inc.</FONT></B>

<DIV align="center">
<I><FONT size="2">Member NASD/ SIPC</FONT></I>
</DIV>

<DIV align="center">
<FONT size="2">125 Half Mile Road, Red Bank, NJ
07701&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;732-945-1000&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Fax
732-945-1001
</FONT>
</DIV>

<DIV align="center">
<FONT size="2">2100 Reston Parkway, Suite&nbsp;430, Reston, VA
20191&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;703-736-0020&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Fax
703-736-0022
</FONT>
</DIV>

<P align="center"><FONT size="2">B-1
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In rendering our opinion, we have among other
things:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">1.&nbsp;reviewed the most recent draft of the
    Agreement and certain related documents and based our opinion on
    our understanding that the terms and conditions therein will not
    materially change;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">2.&nbsp;reviewed and analyzed certain publicly
    available financial statements and other business and financial
    information of ARC;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">3.&nbsp;reviewed and analyzed certain internal
    financial and operating information concerning ARC, including
    certain projections, relating to ARC prepared by its management;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">4.&nbsp;discussed the operations, business
    strategy, financial performance and prospects of ARC with senior
    executives of the Company;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">5.&nbsp;discussed the strategic rationale for the
    Merger with senior executives of the Company;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">6.&nbsp;reviewed certain financial performance
    and trading data regarding ARC and compared them with similar
    data regarding public companies we deemed comparable in whole or
    in part to the Company;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">7.&nbsp;reviewed historical reported closing
    prices and trading activity for ARC Common Stock on the OTC
    Bulletin Board and NASDAQ Stock Market;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">8.&nbsp;reviewed available information concerning
    other mergers and acquisitions of public companies we deemed
    comparable in whole or in part to the Merger:
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">9.&nbsp;prepared a discounted cash flow analysis
    based on financial projections and assumptions provided by the
    Company; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">10.&nbsp;reviewed such other information,
    performed such other analyses and procedures, and considered
    such other factors as we deemed appropriate for purposes of this
    opinion.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In rendering our opinion, we have relied upon and
assumed the accuracy and completeness of all the financial and
other information (including without limitation the
representations and warranties contained in the Agreement) that
was publicly available or reviewed by us for purposes of this
opinion. We have not assumed responsibility to verify, and we
have not independently verified the accuracy or completeness of
any such information. We have further relied upon the assurances
of management of the Company that they are unaware of any facts
that would make the information provided incomplete or
misleading in any material respect. We have assumed that
financial projections and other information relating to the
Merger provided to us by ARC, including without limitation
certain estimates relating to financial and operational benefits
anticipated from the Merger, were reasonably prepared on bases
reflecting the best available estimates and good faith judgments
of ARC management. We assume no responsibility for and express
no view as to such forecasts or the assumptions on which they
were based. The forecasts and projections were based on numerous
variables and assumptions that are inherently uncertain,
including, without limitation, facts related to general economic
and market conditions. Accordingly, actual results could vary
significantly from those set forth in such forecasts and
projections.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have further assumed that the assumptions on
which the foregoing are based were reasonable and that there has
been no material change in the assets, financial condition or
business prospects of ARC since the date of the most recent
financial statements made available to us. We have neither made
nor obtained an independent appraisal or valuation of any of the
assets, liabilities or solvency of ARC, we have not been
furnished with any such appraisals, nor have we been requested
to do, make or review any such valuation.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">For purposes of this opinion, we have assumed
that ARC is not currently involved in any material transaction
other than the Merger and those activities undertaken in the
ordinary course of conducting its business. Our opinion is
necessarily based upon market, economic, financial and other
conditions as they exist and can be evaluated as of the date of
this opinion. Any change in such conditions may impact this
opinion.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">It is understood that this letter is for the
information of the Board of Directors of ARC in connection with
its consideration of the Merger, is confidential, and may not be
used or reproduced in whole or in part for any other purpose
without our prior written consent, except that this letter may
be included in its entirety in a
</FONT>

<P align="center"><FONT size="2">B-2
</FONT>

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<DIV align="left">
<FONT size="2">proxy statement in respect of the Merger filed
with the Securities and Exchange Commission and mailed by ARC to
its stockholders. It is also understood that we are not
expressing a view as to the business merits of the Merger, or as
to the merits of the Merger over any other alternative
transactions that may be available to ARC. Our opinion is
limited to the fairness, from a financial point of view, to the
holders of the ARC Common Stock of the Merger Consideration and
we express no opinion as to the underlying decision of the
Company&#146;s Board of Directors to recommend the Merger.
Furthermore, this opinion does not constitute a recommendation
to any of ARC&#146;s stockholders as to how any such stockholder
should vote on the Merger.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Based upon and subject to the foregoing, we are
of the opinion that the Merger Consideration to be received by
holders of ARC Common Stock in the Merger is fair, from a
financial point of view, to such holders.
</FONT>
<P>

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    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">Sincerely,
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <IMG src="c86131dupdatsig.gif" alt="(Updata Securities, Inc. Signature)"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">UPDATA SECURITIES, INC.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">B-3
</FONT>

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<A name='155'></A>
</DIV>

<!-- link1 "APPENDIX C DELAWARE GENERAL CORPORATION LAW SECTION 262 -- APPRAISAL RIGHTS 262. APPRAISAL RIGHTS." -->

<DIV align="right">
<B><FONT size="2">APPENDIX&nbsp;C</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">DELAWARE GENERAL CORPORATION LAW</FONT></B>

<DIV align="center">
<B><FONT size="2">SECTION&nbsp;262&nbsp;&#151; APPRAISAL
RIGHTS</FONT></B>
</DIV>

<P align="left">
<B><FONT size="2">262.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;APPRAISAL
RIGHTS.</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">(a)&nbsp;Any stockholder of a corporation of this
State who holds shares of stock on the date of the making of a
demand pursuant to subsection&nbsp;(d)&nbsp;of this section with
respect to such shares, who continuously holds such shares
through the effective date of the merger or consolidation, who
has otherwise complied with subsection&nbsp;(d)&nbsp;of this
section and who has neither voted in favor of the merger or
consolidation nor consented thereto in writing pursuant to $228
of this title shall be entitled to an appraisal by the Court of
Chancery of the fair value of the stockholder&#146;s shares of
stock under the circumstances described in subsections
(b)&nbsp;and (c) of this section. As used in this section, the
word &#147;stockholder&#148; means a holder of record of stock
in a stock corporation and also a member of record of a nonstock
corporation; the words &#147;stock&#148; and &#147;share&#148;
mean and include what is ordinarily meant by those words and
also membership or membership interest of a member of a nonstock
corporation; and the words &#147;depository receipt&#148; mean a
receipt or other instrument issued by a depository representing
an interest in one or more shares, or fractions thereof, solely
of stock of a corporation, which stock is deposited with the
depository.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">(b)&nbsp;Appraisal rights shall be available for
the shares of any class or series of stock of a constituent
corporation in a merger or consolidation to be effected pursuant
to &#167;251 (other than a merger effected pursuant to
&#167;251(g) of this title), &#167;252, &#167;254, &#167;257,
&#167;258, &#167;263 or &#167;264 of this title:
</FONT>
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    <FONT size="2">(1)&nbsp;Provided, however, that no appraisal
    rights under this section shall be available for the shares of
    any class or series of stock, which stock, or depository
    receipts in respect thereof, at the record date fixed to
    determine the stockholders entitled to receive notice of and to
    vote at the meeting of stockholders to act upon the agreement of
    merger or consolidation, were either (i)&nbsp;listed on a
    national securities exchange or designated as a national market
    system security on an interdealer quotation system by the
    National Association of Securities Dealers, Inc. or
    (ii)&nbsp;held of record by more than 2,000 holders; and further
    provided that no appraisal rights shall be available for any
    shares of stock of the constituent corporation surviving a
    merger if the merger did not require for its approval the vote
    of the stockholders of the surviving corporation as provided in
    subsection&nbsp;(f) of &#167;251 of this title.
    </FONT></TD>
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    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(2)&nbsp;Notwithstanding paragraph&nbsp;(1) of
    this subsection, appraisal rights under this section shall be
    available for the shares of any class or series of stock of a
    constituent corporation if the holders thereof are required by
    the terms of an agreement of merger or consolidation pursuant to
    &#167;&#167;251, 252, 254, 257, 258, 263 and 264 of this title
    to accept for such stock anything except:
    </FONT></TD>
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    <FONT size="2">a.&nbsp;Shares of stock of the corporation
    surviving or resulting from such merger or consolidation, or
    depository receipts in respect thereof;
    </FONT></TD>
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    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">b.&nbsp;Shares of stock of any other corporation,
    or depository receipts in respect thereof, which shares of stock
    (or depository receipts in respect thereof) or depository
    receipts at the effective date of the merger or consolidation
    will be either listed on a national securities exchange or
    designated as a national market system security on an
    interdealer quotation system by the National Association of
    Securities Dealers, Inc. or held of record by more than 2,000
    holders;
    </FONT></TD>
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    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">c.&nbsp;Cash in lieu of fractional shares or
    fractional depository receipts described in the foregoing
    subparagraphs&nbsp;a. and b. of this paragraph;&nbsp;or
    </FONT></TD>
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    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">d.&nbsp;Any combination of the shares of stock,
    depository receipts and cash in lieu of fractional shares or
    fractional depository receipts described in the foregoing
    subparagraphs&nbsp;a., b. and c. of this paragraph.
    </FONT></TD>
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<P align="center"><FONT size="2">C-1
</FONT>

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    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(3)&nbsp;In the event all of the stock of a
    subsidiary Delaware corporation party to a merger effected under
    &#167;253 of this title is not owned by the parent corporation
    immediately prior to the merger, appraisal rights shall be
    available for the shares of the subsidiary Delaware corporation.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">(c)&nbsp;Any corporation may provide in its
certificate of incorporation that appraisal rights under this
section shall be available for the shares of any class or series
of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the
corporation is a constituent corporation or the sale of all or
substantially all of the assets of the corporation. If the
certificate of incorporation contains such a provision, the
procedures of this section, including those set forth in
subsections (d)&nbsp;and (e)&nbsp;of this section, shall apply
as nearly as is practicable.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">(d)&nbsp;Appraisal rights shall be perfected as
follows:
</FONT>
<P>

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    <FONT size="2">(1)&nbsp;If a proposed merger or consolidation
    for which appraisal rights are provided under this section is to
    be submitted for approval at a meeting of stockholders, the
    corporation, not less than 20&nbsp;days prior to the meeting,
    shall notify each of its stockholders who was such on the record
    date for such meeting with respect to shares for which appraisal
    rights are available pursuant to subsection&nbsp;(b) or (c)
    hereof that appraisal rights are available for any or all of the
    shares of the constituent corporations, and shall include in
    such notice a copy of this section. Each stockholder electing to
    demand the appraisal of such stockholder&#146;s shares shall
    deliver to the corporation, before the taking of the vote on the
    merger or consolidation, a written demand for appraisal of such
    stockholder&#146;s shares. Such demand will be sufficient if it
    reasonably informs the corporation of the identity of the
    stockholder and that the stockholder intends thereby to demand
    the appraisal of such stockholder&#146;s shares. A proxy or vote
    against the merger or consolidation shall not constitute such a
    demand. A stockholder electing to take such action must do so by
    a separate written demand as herein provided. Within
    10&nbsp;days after the effective date of such merger or
    consolidation, the surviving or resulting corporation shall
    notify each stockholder of each constituent corporation who has
    complied with this subsection and has not voted in favor of or
    consented to the merger or consolidation of the date that the
    merger or consolidation has become effective;&nbsp;or
    </FONT></TD>
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    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(2)&nbsp;If the merger or consolidation was
    approved pursuant to &#167;228 or &#167;253 of this title, then
    either a constituent corporation before the effective date of
    the merger or consolidation or the surviving or resulting
    corporation within 10&nbsp;days thereafter shall notify each of
    the holders of any class or series of stock of such constituent
    corporation who are entitled to appraisal rights of the approval
    of the merger or consolidation and that appraisal rights are
    available for any or all shares of such class or series of stock
    of such constituent corporation, and shall include in such
    notice a copy of this section. Such notice may, and, if given on
    or after the effective date of the merger or consolidation,
    shall, also notify such stockholders of the effective date of
    the merger or consolidation. Any stockholder entitled to
    appraisal rights may, within 20&nbsp;days after the date of
    mailing of such notice, demand in writing from the surviving or
    resulting corporation the appraisal of such holder&#146;s
    shares. Such demand will be sufficient if it reasonably informs
    the corporation of the identity of the stockholder and that the
    stockholder intends thereby to demand the appraisal of such
    holder&#146;s shares. If such notice did not notify stockholders
    of the effective date of the merger or consolidation, either
    (i)&nbsp;each such constituent corporation shall send a second
    notice before the effective date of the merger or consolidation
    notifying each of the holders of any class or series of stock of
    such constituent corporation that are entitled to appraisal
    rights of the effective date of the merger or consolidation or
    (ii)&nbsp;the surviving or resulting corporation shall send such
    a second notice to all such holders on or within 10&nbsp;days
    after such effective date; provided, however, that if such
    second notice is sent more than 20&nbsp;days following the
    sending of the first notice, such second notice need only be
    sent to each stockholder who is entitled to appraisal rights and
    who has demanded appraisal of such holder&#146;s shares in
    accordance with this subsection. An affidavit of the secretary
    or assistant secretary or of the transfer agent of the
    corporation that is required to give either notice that such
    notice has been given shall, in the absence of fraud, be prima
    facie evidence of the facts stated therein. For purposes of
    determining the stockholders entitled to receive either notice,
    each constituent corporation may fix, in advance, a record date
    that shall be not more than 10&nbsp;days prior to the date the
    notice is given, provided, that if the notice is given on or
    after the effective date of the merger or consolidation, the
    record date shall
    </FONT></TD>
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<P align="center"><FONT size="2">C-2
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    <FONT size="2">be such effective date. If no record date is
    fixed and the notice is given prior to the effective date, the
    record date shall be the close of business on the day next
    preceding the day on which the notice is given.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">(e)&nbsp;Within 120&nbsp;days after the effective
date of the merger or consolidation, the surviving or resulting
corporation or any stockholder who has complied with
subsections&nbsp;(a) and (d) hereof and who is otherwise
entitled to appraisal rights, may file a petition in the Court
of Chancery demanding a determination of the value of the stock
of all such stockholders. Notwithstanding the foregoing, at any
time within 60&nbsp;days after the effective date of the merger
or consolidation, any stockholder shall have the right to
withdraw such stockholder&#146;s demand for appraisal and to
accept the terms offered upon the merger or consolidation.
Within 120&nbsp;days after the effective date of the merger or
consolidation, any stockholder who has complied with the
requirements of subsections&nbsp;(a) and (d) hereof, upon
written request, shall be entitled to receive from the
corporation surviving the merger or resulting from the
consolidation a statement setting forth the aggregate number of
shares not voted in favor of the merger or consolidation and
with respect to which demands for appraisal have been received
and the aggregate number of holders of such shares. Such written
statement shall be mailed to the stockholder within 10&nbsp;days
after such stockholder&#146;s written request for such a
statement is received by the surviving or resulting corporation
or within 10&nbsp;days after expiration of the period for
delivery of demands for appraisal under subsection&nbsp;(d)
hereof, whichever is later.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">(f)&nbsp;Upon the filing of any such petition by
a stockholder, service of a copy thereof shall be made upon the
surviving or resulting corporation, which shall within
20&nbsp;days after such service file in the office of the
Register in Chancery in which the petition was filed a duly
verified list containing the names and addresses of all
stockholders who have demanded payment for their shares and with
whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the
petition shall be filed by the surviving or resulting
corporation, the petition shall be accompanied by such a duly
verified list. The Register in Chancery, if so ordered by the
Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the
surviving or resulting corporation and to the stockholders shown
on the list at the addresses therein stated. Such notice shall
also be given by 1 or more publications at least 1&nbsp;week
before the day of the hearing, in a newspaper of general
circulation published in the City of Wilmington, Delaware or
such publication as the Court deems advisable. The forms of the
notices by mail and by publication shall be approved by the
Court, and the costs thereof shall be borne by the surviving or
resulting corporation.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">(g)&nbsp;At the hearing on such petition, the
Court shall determine the stockholders who have complied with
this section and who have become entitled to appraisal rights.
The Court may require the stockholders who have demanded an
appraisal for their shares and who hold stock represented by
certificates to submit their certificates of stock to the
Register in Chancery for notation thereon of the pendency of the
appraisal proceedings; and if any stockholder fails to comply
with such direction, the Court may dismiss the proceedings as to
such stockholder.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">(h)&nbsp;After determining the stockholders
entitled to an appraisal, the Court shall appraise the shares,
determining their fair value exclusive of any element of value
arising from the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to
be paid upon the amount determined to be the fair value. In
determining such fair value, the Court shall take into account
all relevant factors. In determining the fair rate of interest,
the Court may consider all relevant factors, including the rate
of interest which the surviving or resulting corporation would
have had to pay to borrow money during the pendency of the
proceeding. Upon application by the surviving or resulting
corporation or by any stockholder entitled to participate in the
appraisal proceeding, the Court may, in its discretion, permit
discovery or other pretrial proceedings and may proceed to trial
upon the appraisal prior to the final determination of the
stockholder entitled to an appraisal. Any stockholder whose name
appears on the list filed by the surviving or resulting
corporation pursuant to subsection&nbsp;(f) of this section and
who has submitted such stockholder&#146;s certificates of stock
to the Register in Chancery, if such is required, may
participate fully in all proceedings until it is finally
determined that such stockholder is not entitled to appraisal
rights under this section.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">(i)&nbsp;The Court shall direct the payment of
the fair value of the shares, together with interest, if any, by
the surviving or resulting corporation to the stockholders
entitled thereto. Interest may be simple or
</FONT>

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<DIV align="left">
<FONT size="2">compound, as the Court may direct. Payment shall
be so made to each such stockholder, in the case of holders of
uncertificated stock forthwith, and the case of holders of
shares represented by certificates upon the surrender to the
corporation of the certificates representing such stock. The
Court&#146;s decree may be enforced as other decrees in the
Court of Chancery may be enforced, whether such surviving or
resulting corporation be a corporation of this State or of any
state.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">(j)&nbsp;The costs of the proceeding may be
determined by the Court and taxed upon the parties as the Court
deems equitable in the circumstances. Upon application of a
stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the
appraisal proceeding, including, without limitation, reasonable
attorney&#146;s fees and the fees and expenses of experts, to be
charged pro rata against the value of all the shares entitled to
an appraisal.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">(k)&nbsp;From and after the effective date of the
merger or consolidation, no stockholder who has demanded
appraisal rights as provided in subsection&nbsp;(d) of this
section shall be entitled to vote such stock for any purpose or
to receive payment of dividends or other distributions on the
stock (except dividends or other distributions payable to
stockholders of record at a date which is prior to the effective
date of the merger or consolidation); provided, however, that if
no petition for an appraisal shall be filed within the time
provided in subsection&nbsp;(e) of this section, or if such
stockholder shall deliver to the surviving or resulting
corporation a written withdrawal of such stockholder&#146;s
demand for an appraisal and an acceptance of the merger or
consolidation, either within 60&nbsp;days after the effective
date of the merger or consolidation as provided in
subsection&nbsp;(e) of this section or thereafter with the
written approval of the corporation, then the right of such
stockholder to an appraisal shall cease. Notwithstanding the
foregoing, no appraisal proceeding in the Court of Chancery
shall be dismissed as to any stockholder without the approval of
the Court, and such approval may be conditioned upon such terms
as the Court deems just.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">(l)&nbsp;The shares of the surviving or resulting
corporation to which the shares of such objecting stockholders
would have been converted had they assented to the merger or
consolidation shall have the status of authorized and unissued
shares of the surviving or resulting corporation.
</FONT>

<P align="center"><FONT size="2">C-4
</FONT>
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<DIV style="font-family: 'Times New Roman',Times,serif">


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    <TD valign="top" style="border-top: 4px solid #a50063"><DIV style="margin-left:0px; text-indent:-0px"><B>Proxy &#151; Alternative Resources Corporation</B></DIV></TD>
</TR>

<TR style="font-size: 1px" valign="bottom">
    <TD nowrap align="left" colspan="3" style="border-top: 4px solid #a50063">&nbsp;</TD>
</TR>

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</DIV>



<div align="left" style="font-size: 10pt"><B>Meeting Details<BR>
600 Hart Road, Suite&nbsp;300, Barrington, Illinois 60010<BR>
Proxy Solicited by Board of Directors for Special Meeting &#150; July&nbsp;22, 2004.</B></div>

<P align="left" style="font-size: 10pt">The undersigned, having read the Notice of Special Meeting of Stockholders and
the Proxy Statement dated June&nbsp;17, 2004, receipt of which are hereby
acknowledged, hereby appoint(s) Robert Stanojev and Steven Purcell and each of
them, with full power and authority to act without the other and with full
power of substitution, as proxies to represent and vote, as directed herein,
all shares the undersigned is entitled to vote at the special meeting of
stockholders of Alternative Resources Corporation (&#147;ARC&#148;) to be held at 600
Hart Road, Suite&nbsp;300, Barrington, Illinois 60010 on July&nbsp;22, 2004 at 10:00
a.m., local time, and all continuations, adjournments or postponements thereof.

<P align="left" style="font-size: 10pt">You are encouraged to specify your choices by marking the appropriate boxes.
Unless otherwise marked, the proxies are appointed with the power and authority
to vote the undersigned&#146;s shares &#147;FOR&#148; the proposals described on this proxy
card. Please complete your voting selection, date, sign and mail your proxy
card in the envelope provided as soon as possible.

<P align="left" style="font-size: 10pt">(Continued and to be voted on reverse side.)


<P align="left" style="font-size: 10pt"><B>Internet and Telephone Voting Instructions<BR>
You can vote by telephone OR Internet! Available 24 hours a day 7&nbsp;days a week!</B>

<P align="left" style="font-size: 10pt">Instead of mailing your proxy, you may choose one of the two voting methods outlined below to vote your proxy.

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
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    <TD width="2%">&nbsp;</TD>
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    <TD width="39%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="39%">&nbsp;</TD>
</TR>


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<TR style="font-size: 10pt" valign="top">
    <TD nowrap align="left" colspan="3"><IMG SRC="c86131dc8613110.gif" ALT="(TO VOTE USING THE TELEPHONE)"></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" nowrap align="left"><IMG SRC="c86131dc8613111.gif" ALT="(TO VOTE USING THE INTERNET)"></TD>
</TR>

<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&#149;</DIV></TD>
    <TD align="left" valign="top">Call toll free 1-866-502-0648 in the United States or Canada any time
on a touch tone telephone. There is <B>NO CHARGE </B>to you for the call.
</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&#149;</TD>
    <TD align="left" valign="top">Go to the following web site:<br>
<B>WWW.COMPUTERSHARE.COM/US/PROXY</B></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
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    <TD>&nbsp;</TD>
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</TR>

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    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
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<!-- End Table Body -->
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<P align="left" style="font-size: 10pt"><B>If you vote by telephone or the Internet, please DO NOT mail back this proxy card.<BR>
Proxies submitted by telephone or the Internet must be received by 12:01&nbsp;a.m., Central Time, on July&nbsp;22, 2004.<BR>
THANK YOU FOR VOTING</B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;00CJYB

<P align="left" style="font-size: 10pt"><HR size="1" noshade width="100%" align="left">


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="right" style="font-size: 10pt"><B>&#043;</B>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="60%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">000000 0000000000 0 0000<br></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B>Alternative Resources Corporation</B><br>
<br>
<br>
<br>
MR A SAMPLE<br>
DESIGNATION (IF ANY)<br>
ADD 1<br>
ADD 2<br>
ADD 3<br>
ADD 4<br>
ADD 5<br>
ADD 6<br>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">000000000.000 ext<br>
000000000.000 ext<br>
000000000.000 ext<br>
000000000.000 ext<br>
000000000.000 ext<br>
000000000.000 ext<br>
000000000.000 ext<br></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">C1234567890 J N T<br></TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="35%">&nbsp;</TD>
    <TD width="25%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="28%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT face="Wingdings">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Mark this box with an X if you have made changes to your name or
address details above.</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="5" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="100%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="color: #000000; background: #F7BDDE">
    <TD valign="top" style="border-top: 4px solid #a50063"><DIV style="margin-left:0px; text-indent:-0px"><B>Special Meeting Proxy Card</B></DIV></TD>
</TR>

<TR style="font-size: 1px" valign="bottom">
    <TD nowrap align="left" colspan="3" style="border-top: 4px solid #a50063">&nbsp;</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>




<P align="center" style="font-size: 10pt"><B>PLEASE REFER TO THE REVERSE SIDE FOR INTERNET AND TELEPHONE VOTING INSTRUCTIONS.</B>



<P align="left" style="font-size: 10pt"><B>A&nbsp;Issues</B>



<P align="left" style="font-size: 10pt">The Board of Directors recommends a vote FOR the following proposal.


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="45%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><b>For</b>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><b>Against</b>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><b>Abstain</b></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">1.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">To approve and adopt the Agreement and Plan of Merger,
dated as of May&nbsp;11, 2004, by and among ARC, Pomeroy IT
Solutions, Inc. (&#147;Pomeroy&#148;) and Pomeroy Acquisition Sub,
Inc., a wholly-owned subsidiary of Pomeroy (&#147;Pomeroy
Sub&#148;), under which Pomeroy Sub will merge with
ARC, as a result of which ARC will become a wholly-owned
subsidiary of Pomeroy, and approve the merger
contemplated by the merger agreement.
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT face="Wingdings">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT face="Wingdings">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT face="Wingdings">&#111;</FONT></TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>



<P align="left" style="font-size: 10pt"><b>B</b>&nbsp;<B>Authorized Signatures &#151; Sign Here &#151; This section must be completed for your instructions to be executed.</B>


<P align="left" style="font-size: 10pt">NOTE: Please sign your name(s) EXACTLY as your name(s) appear(s) on this proxy. All joint holders must sign. When signing as attorney, trustee, executor,
administrator, guardian or corporate officer, please provide your FULL title.

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="35%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Signature 1 &#151; Please keep signature within the box
<HR size="1" noshade width="100%" align="left">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Signature 2 &#151; Please keep signature within the box
<HR size="1" noshade width="100%" align="left">
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Date (mm/dd/yyyy)<BR>
<HR size="1" noshade width="100%" align="left"></TD>
</TR>

<tr>
   <TD>&nbsp;</TD>
</TR>

<tr>
   <TD>&nbsp;</TD>
</TR>

<tr>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;/&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;/</TD>
    </tr>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><HR size="1" noshade width="100%" align="left"></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><HR size="1" noshade width="100%" align="left"></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><HR size="1" noshade width="100%" align="left"></TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="35%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">

<TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
<font style="background: #000000"><B>&#111;&#111;</B></font></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">2&nbsp;U&nbsp;P&nbsp;X &nbsp; HHH &nbsp; P&nbsp;P&nbsp;P&nbsp;P &nbsp; 0036711</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top"><B>+</B></TD>
</TR>

<TR>
<TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR>
<TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">001CD40001</DIV></TD>
    <TD align="left" valign="top">00CJXB</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top"><B>&nbsp;</B></TD>
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