Preliminary Proxy Merger

shares common stock of American Surgical Holdings, Inc., consisting of (a) outstanding shares of common stock of American Surgical Holdings, Inc., (b) shares of common stock of American Surgical Holdings, Inc. underlying outstanding stock options with an exercise price less than the per share price, and (c) shares of common stock of American Surgical Holdings, Inc. underlying outstanding warrants with an exercise price less than the per share price.

(a) $2.87 per share, subject to adjustment as provided in the merger agreement, and (b) an amount per share equal to a final cash dividend, if any, equal to the cash on hand at closing of American Surgical Holdings, Inc., less certain minimum cash requirements as provided in the merger agreement, less the amount needed to pay any unpaid transaction and other expenses and less certain balance sheet adjustments as provided in the merger agreement, determined on a proportionate basis as provided in the merger agreement, and (c) a proportionate ownership interest in CMC Associates, LLC, an indirect wholly owned subsidiary of the Company that will be the beneficial owner of certain pending litigation and litigation rights, the value of which is unknown.

You are cordially invited to attend the special meeting of stockholders of American Surgical Holdings, Inc., a Delaware corporation (the “Company”), to be held on , 2011 at 10:00 a.m., Central Time, at the . The attached proxy statement provides information regarding the matters to be acted on at the special meeting, including at any adjournment or postponement thereof.

At the special meeting you will be asked to consider and vote upon a proposal to adopt and approve an Agreement and Plan of Merger dated December 20, 2010, by and among the Company, AH Holdings, Inc., a Delaware corporation (“Parent”), and AH Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Parent (“Merger Sub”), pursuant to which Merger Sub has agreed to merge with and into the Company, with the Company continuing as the surviving corporation in the merger, as a privately held entity (the “Surviving Corporation”). Parent and Merger Sub are both controlled by investment funds affiliated with Great Point Partners I, L.P., a private equity fund.

If holders of record of a majority of the Company’s outstanding common stock, as of , 2011 vote to adopt and approve the merger agreement and the consummation of the merger, and the conditions in the merger agreement are satisfied or waived and the merger is completed, then unless you properly perfect your appraisal rights under Delaware law, at the effective time of the merger (the “Effective Time”), each share of your common stock issued and outstanding immediately prior to the Effective Time (other than the Rollover Shares (as hereinafter defined)) shall be converted into and represent the right to receive a cash amount equal to $2.87 per share, subject to adjustment as provided in the merger agreement (the “Per Share Price”) and the Additional Per Share Merger Consideration (as hereinafter defined), without interest (and less applicable withholding taxes). The Per Share Price and the Additional Per Share Merger Consideration are referred to together as the “Merger Consideration.”

The Company intends to distribute the following as additional merger consideration to each of the Company’s stockholders (including the Rollover Stockholders) at closing, and to holders of the Company’s stock options and warrants, upon exercise thereof: (i) a final cash dividend, if any, equal to the Company’s cash on hand at closing, less certain minimum cash requirements, less the amount needed to pay any unpaid transaction and other expenses and less certain balance sheet adjustments, as provided in the merger agreement, determined on a proportionate basis as provided in the merger agreement; and (ii) a proportionate ownership interest (the “CMC Interests”) in CMC Associates, LLC (“CMC”), an indirect wholly owned subsidiary of the Company that will be the beneficial owner of certain pending litigation and litigation rights (together, the “Additional Per Share Merger Consideration”).

Contemporaneously with the execution of the merger agreement, certain stockholders of the Company (including certain members of the Company’s management and key employees) who collectively own over 60% of the outstanding shares of the Company’s common stock entered into Stockholder Voting Agreements with Parent, whereby such stockholders agreed to vote the shares of common stock owned by them in favor of the adoption and approval of the merger agreement and the merger.

The Company’s board of directors (based upon a recommendation from the special committee) has unanimously determined that the merger agreement and the merger are advisable and fair to and in the best interests of holders of the Company’s common stock, including to the holders of the Company’s stock

who are not Rollover Stockholders, as hereinafter defined (the “NonRollover Stockholders”), and has unanimously approved the merger agreement and the merger and recommends that the Company’s stockholders vote “FOR” the adoption and approval of the merger agreement and the merger. In arriving at their recommendation, the board and the special committee carefully considered a number of factors, which are described in the accompanying proxy statement, including the unanimous determination and recommendation of the special committee, comprised entirely of independent directors from the board.

When you consider the recommendation of the board to adopt and approve the merger agreement and the merger, you should be aware that some of the Company’s directors, executive officers and key employees have interests in the merger that are different from the interests of the Company’s NonRollover Stockholders. Contemporaneously with the execution of the merger agreement, Zak W. Elgamal and Jaime A. Olmo-Rivas, Jr. (together, the “Management Employees”) and certain other stockholders, who are key employees of the Company ( together with the Management Employees, the “Rollover Stockholders”) entered into exchange agreements, whereby immediately before the Effective Time, the Rollover Stockholders will exchange an aggregate of 2,234,707 shares of the Company’s common stock (which represents 22.5% of the shares owned by the Rollover Stockholders) (the “Rollover Shares”) for shares of the Parent’s Series A preferred stock representing, in the aggregate, approximately 14.92% of the outstanding shares of the Parent’s capital stock at closing. The remaining shares of the Company’s common stock owned by the Rollover Stockholders will be canceled and converted into the right to receive the Merger Consideration. In addition, both of the Management Employees have entered into employment agreements with Merger Sub providing that the Management Employees shall remain employed by the Surviving Corporation after the Effective Time and will each be granted stock options to purchase shares of common stock of the Parent. In addition, each of Jose Chapa, Jr. and Bland Chamberlain, III, key employees of the Company (the “Key Employees”) have entered into surgical assistant agreements with the Surviving Corporation.

YOUR VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES OF THE COMPANY’S COMMON STOCK YOU OWN. A FAILURE TO VOTE WILL COUNT AS A VOTE AGAINST THE MERGER. WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, YOU ARE REQUESTED TO PROMPTLY VOTE YOUR SHARES BY COMPLETING, SIGNING AND DATING THE ENCLOSED PROXY CARD AND RETURNING IT IN THE ENVELOPE PROVIDED AS SOON AS POSSIBLE TO MAKE SURE THAT YOUR SHARES ARE REPRESENTED AT THE SPECIAL MEETING. Voting in this manner will not prevent you from voting your shares of the Company’s common stock in person if you subsequently choose to attend the special meeting. If you submit a proxy, you may revoke it at any time before the vote is taken at the special meeting. To revoke your proxy, you must either provide a written notice of revocation to the Company’s Secretary, deliver a proxy dated after the date of the proxy you wish to revoke, or attend the special meeting and vote your shares of the Company’s common stock in person. Merely attending the special meeting will not constitute revocation of your proxy.

The accompanying proxy statement provides you with detailed information about the special meeting, the merger agreement and the merger. Please give this material your careful attention. The Company strongly recommends that you read the entire document carefully. You may also obtain more information about the Company from documents the Company has filed with the Securities and Exchange Commission.

Expenses incurred in the solicitation of proxies will be borne by the Company. Officers of the Company may make additional solicitations in person or by telephone.

As of , 2011, shares of the Company’s common stock were outstanding. These shares are the only shares entitled to vote at the special meeting. Each share is entitled to one vote on each matter to be voted upon at the special meeting.

The Company’s shares of common stock are listed on the OTC Bulletin Board under the trading symbol “ASRG.” On the close of trading on the date the merger agreement was executed, the closing price of the Company’s common stock was $1.32 per share.

NOTICE IS HEREBY GIVEN that a special meeting of the stockholders of American Surgical Holdings, Inc., a Delaware corporation (the “Company”), will be held on , 2011 at 10:00 a.m., Central Time, at , for the following purposes:

The accompanying proxy statement further describes the matters to be considered at the special meeting. A copy of the merger agreement has been included as Appendix A to the accompanying proxy statement.

The Company’s Board of Directors, based upon a recommendation of the special committee, has unanimously approved the merger agreement and the merger and recommends that the Company’s stockholders vote “FOR” the adoption and approval of the merger agreement and the merger.

The Company intends to distribute the following as additional merger consideration to each of the Company’s stockholders (including the Rollover Stockholders (as hereinafter defined)) and to holders of the Company’s stock options and warrants: (i) a final cash dividend, if any, equal to the Company’s cash on hand at closing, less certain minimum cash requirements, less the amount needed to pay any unpaid transaction and other expenses and less certain balance sheet adjustments, as provided in the merger agreement, determined on a proportionate basis as provided in the merger agreement; and (ii) a proportionate ownership interest (the “CMC Interests”) in CMC Associates, LLC (“CMC”), an indirect wholly owned subsidiary of the Company that will be the beneficial owner of certain pending litigation and litigation rights (together, the “Additional Per Share Merger Consideration”).

The board has set , 2011 as the record date for the special meeting. Only holders of record of the Company’s common stock at the close of business on the record date will be entitled to notice of and to vote at the special meeting and any adjournment or postponement thereof. All stockholders of record on the record date are cordially invited to attend the special meeting in person. However, to assure your representation at the special meeting in case you cannot attend, you are urged to vote your shares of the Company’s common stock by completing, signing, dating and returning the enclosed proxy card as promptly as possible in the postage prepaid envelope enclosed. Please submit your proxy promptly whether or not you expect to attend the special meeting.

Submitting a proxy now will not prevent you from being able to vote at the special meeting by attending in person and casting a vote. If you hold your shares in “street name” through a bank, broker or custodian, you must obtain a legal proxy from such custodian in order to vote in person at the special meeting.

The Company’s stockholders have the right to dissent from the merger and obtain payment in cash of the fair value of their shares of the Company’s common stock under applicable provisions of Delaware law. In order to perfect and exercise appraisal rights, stockholders must give a written demand for appraisal of their shares of the Company’s common stock before the vote on the merger is taken at the special meeting and must not vote in favor of the merger. A copy of the applicable Delaware statutory provisions is included as Appendix B to the accompanying proxy statement, and a summary of these provisions can be found under “Special Factors – Rights of Dissenting Stockholders; Appraisal Rights” in the accompanying proxy statement.

A majority of the outstanding shares of the Company’s common stock entitled to vote at the special meeting must be represented in person or by proxy at the special meeting to constitute a quorum. Regardless of the number of shares you own, your vote is very important. The adoption and approval of the merger agreement and the merger requires the affirmative vote by the holders of a majority of the issued and outstanding shares of the Company’s common stock as of the record date. Adjournment or postponement of the special meeting, if necessary to solicit additional proxies, requires the approval of a majority of the votes cast. If there are not sufficient votes to approve the proposed merger at the time of the special meeting, the special meeting may be adjourned or postponed in order to permit further solicitation by the Company. YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING IN PERSON AND REGARDLESS OF THE NUMBER OF SHARES OF THE COMPANY’S COMMON STOCK YOU OWN, PLEASE COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD PROMPTLY IN THE ENCLOSED PRE-ADDRESSED ENVELOPE AT YOUR EARLIEST CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. YOU MAY, OF COURSE, ATTEND THE SPECIAL MEETING, REVOKE YOUR PROXY AND VOTE IN PERSON EVEN IF YOU HAVE ALREADY RETURNED YOUR PROXY CARD.

Please do not send your stock certificates at this time. If the merger agreement is adopted and approved, you will be sent instructions regarding the surrender of your stock certificates.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THE TRANSACTION CONTEMPLATED IN THIS PROXY STATEMENT, PASSED UPON THE MERITS OR FAIRNESS OF THIS TRANSACTION, OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE INFORMATION CONTAINED IN THE ENCLOSED PROXY STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED IN THE ENCLOSED PROXY STATEMENT, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THE ENCLOSED PROXY STATEMENT DOES NOT CONSTITUTE A SOLICITATION OF A PROXY IN ANY JURISDICTION FROM ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE A PROXY SOLICITATION IN SUCH JURISDICTION.

THE COMPANY URGES YOU TO READ AND CONSIDER CAREFULLY THE ENCLOSED PROXY STATEMENT IN ITS ENTIRETY.

We are providing these proxy materials to you in connection with the solicitation of proxies by the Board of Directors of American Surgical Holdings, Inc. for a special meeting of stockholders to be held on , 2011 and for any adjournment or postponement thereof. This proxy statement provides information that you should read before you vote on the proposals that will be presented to you at the special meeting. The special meeting will be held on at 10:00 a.m., Central Time, at .

In this proxy statement, we refer to American Surgical Holdings, Inc. as the “Company,” “we” or “us.” We refer to AH Holdings, Inc. as “Parent,” and we refer to Great Point Partners I, L.P. as “GPP.” We refer to AH Merger Sub, Inc. as “Merger Sub.”

This proxy statement and a proxy card are first being mailed on or about , 2011 to people who owned shares of the Company’s common stock as of the close of business on , 2011.

This Summary Term Sheet and the “Questions and Answers About the Special Meeting” immediately following this Summary Term Sheet are intended only to highlight selected information contained elsewhere in this proxy statement and may not contain all the information that is important to you. To more fully understand the terms of the merger agreement and the related transactions therein, including the merger, you should read carefully this entire proxy statement, all of its appendices, and the documents incorporated by reference into this proxy statement before voting. See “Where You Can Find More Information.” The merger agreement is attached as Appendix A to this proxy statement. The Company encourages you to read the entirety of the merger agreement as it is the legal document that governs the merger. The Company has included section references to direct you to a more complete description of the topics described in this Summary Term Sheet. In this proxy statement, the term “the Company” refer to American Surgical Holdings, Inc. and its subsidiaries.

The Company, through its wholly owned subsidiaries, including American Surgical Assistants, Inc., or ASA, provides professional surgical assistant services to patients, surgeons, and healthcare institutions. The Company provides service in Houston, Corpus Christi and San Antonio, Texas, Lawton, Oklahoma, Suffolk, Virginia, Memphis, Tennessee and Augusta, Georgia. The Company’s principal executive offices are located at 10039 Bissonnet Street, Suite 250, Houston, Texas 77036-7852. The telephone number of the Company’s principal executive offices is (713) 779-9800 and its website address is www.asainc.us. Information contained on this website does not constitute part of this proxy statement. Please read the discussion under the headings “The Parties to the Merger – The Company” and “Other Important Information Regarding the Company.”

AH Holdings, Inc., or Parent, was formed as a corporation in Delaware on October 5, 2010 for the sole purpose of entering into the merger agreement and engaging in the merger. Parent was formed by entities affiliated with Great Point Partners I, L.P., or GPP, a private equity fund that specializes in providing capital to participants in the healthcare industry. Upon closing of the merger, the Company will be a wholly owned subsidiary of Parent. Parent’s principal office address is 165 Mason Street, 3^rd Floor, Greenwich, Connecticut 06830. Its telephone number is (203) 971-3300. Please read the discussion under the headings “The Parties to the Merger – Parent” and “Other Important Information Regarding Parent, Merger Sub and GPP and Its Affiliates.”

AH Merger Sub, Inc., or Merger Sub, is a wholly owned subsidiary of Parent and an affiliate of GPP and was formed as a corporation in Delaware on May 26, 2010 for the sole purpose of entering into the merger agreement and engaging in the merger. Merger Sub’s principal office address is 165 Mason Street, 3^rd Floor, Greenwich, Connecticut 06830 and its telephone number is (203) 971-3300. Please read the discussion under the headings “The Parties to the Merger – Merger Sub” and “Other Important Information Regarding Parent, Merger Sub and GPP and Its Affiliates.”

On December 20, 2010, the Company entered into the merger agreement with Parent and Merger Sub, which provides, among other things, for the merger, with the Company continuing as the surviving corporation, as a private entity. Please read the discussion under the heading “Proposal 1 – Approval of the Merger Agreement and the Merger.”

You are being asked to consider and vote on a proposal to adopt and approve the merger agreement and the merger. If holders of a majority of the Company’s outstanding shares of common stock approve the merger agreement and the merger and the other conditions to the closing of the merger are satisfied or waived, upon closing of the merger, the merger will be consummated. The Company’s stockholders (other than Zak W. Elgamal, Jaime A. Olmo-Rivas, Jr. Jose Chapa, Jr. and Bland Chamberlain, III, whom we refer to as the rollover stockholders) will no longer have a direct or indirect equity interest in the Company, and the Company’s common stock will no longer be listed on the OTC Bulletin Board or any other stock exchange as a result of the merger.

In connection with the merger agreement, the voting agreements, the exchange agreements, the employment agreements, the surgical assistant agreements and the assumption agreement have been executed. At the closing of the merger, the stockholders’ agreement and the formation agreement will also be executed. Please read the discussion under the heading “The Transaction Documents.”

Upon the closing of the transactions contemplated by the merger, each share of common stock, par value $0.001 per share, of the Company issued and outstanding immediately prior to the closing (other than (x) any common stock owned directly or indirectly by the Parent or the Company or any of their respective subsidiaries, including certain shares owned by the rollover stockholders, which we collectively refer to as the excluded shares and (y) any dissenting shares (as defined in the merger agreement)), shall be converted into and represent the right to receive an amount equal to $2.87 per share, in cash, subject to adjustment as provided in the merger agreement, which is referred to as the per share price, and the additional per share merger consideration, as defined in the merger agreement. The per share price and the additional per share merger consideration are together referred to as the “merger consideration.” Please read the discussion under the heading “Proposal 1 –Approval of the Merger Agreement and the Merger.”

In connection with the merger, the Company will distribute as additional merger consideration to each of the Company’s stockholders (including the rollover stockholders) and the holders of the Company stock options and Company warrants (A) an amount per share equal to (1) the final cash dividend, if any, which is anticipated to be equal to the maximum amount determined at least five business days but no more than eight business days prior to the closing based on the formula set forth in the merger agreement divided by (2) the number of shares of common stock plus the Cashless Exercise Option Shares (as defined in the merger agreement) plus the number of shares of common stock issuable upon exercise of the Company warrants each as outstanding as of the closing; and (B) a proportionate ownership interest in CMC Associates, LLC, or CMC, an indirect wholly owned

subsidiary of the Company that will be the beneficial owner of certain pending litigation and litigation rights, as described more fully below under “The Transaction Documents-Formation Agreement and Class Action Litigation.” The additional cash per share merger consideration and the additional equity per share merger consideration are together referred to as the additional per share merger consideration.

When evaluating the additional equity per share merger consideration, you should consider that the primary asset of CMC is its right to receive any settlement amounts upon a favorable resolution of certain pending and potential future class action litigation described herein and referred to as the assigned litigation. There can be no assurances as to the amounts, if any, that CMC will receive upon resolution of the assigned litigation. In view of this uncertainty, the Company is unable to determine the value of the CMC ownership interests at the present time and there can be no assurances that the CMC ownership interests will have any value in the future.

Each outstanding stock option to purchase common stock that is not exercised prior to the closing shall be canceled and converted into the right to receive an amount equal to (i) a cash payment equal to (A) the excess, if any, of (1) the per share price over (2) the exercise price per share of common stock subject to such Company stock option, multiplied by (B) the number of shares of common stock for which such Company stock option shall not theretofore have been exercised plus (ii) (A) the additional per share merger consideration multiplied by (B) the number of shares of common stock issuable upon exercise of the unexercised Company stock options if they were exercised on a cashless basis, which are referred to as the cashless exercise option shares. Please read the discussion under the heading “Proposal 1 – Approval of the Merger Agreement and the Merger.”

Each outstanding warrant to purchase common stock that is not exercised prior to the closing shall represent the right to receive (i) a cash payment equal to (A) the excess, if any, of (1) the per share price over (2) the exercise price per share of common stock subject to such Company warrant, multiplied by (B) the number of shares of common stock for which such Company warrant shall not theretofore have been exercised plus (ii) (A) the additional per share merger consideration multiplied by (B) the number of common shares for which such Company warrant shall not theretofore have been exercised, which is referred to as the warrant consideration.

Please read the discussion under the heading “Proposal 1 – Approval of the Merger Agreement and the Merger.”

Each share of the Company’s common stock owned by a rollover stockholder that is exchanged for shares of Parent’s Series A preferred stock pursuant to an exchange agreement, which we refer to as the rollover shares, will be converted into and represent the right to receive the additional per share merger consideration, which consideration shall be paid directly to the rollover stockholders. Accordingly, rollover stockholders will receive both Parent’s Series A preferred stock and additional per share merger consideration for rollover shares. Rollover stockholders will not receive the per share price for rollover shares.

Under the merger agreement, the Company is permitted to pay cash dividends on up to three occasions prior to closing in an amount equal to the Company’s cash on hand, less $1 million, less the amount needed to pay any unpaid transaction and other expenses, and less the amount of certain other balance sheet adjustments as computed in accordance with the merger agreement. A sample calculation of the permitted dividend amount is included as Exhibit E to the merger agreement. Assuming the Company is able to declare a dividend based upon this formula prior to the closing of the merger, the Company intends to consider doing so, assuming it does not otherwise have a business need for the excess cash. At present, the Company cannot predict whether its cash on

hand prior to closing will be sufficient such that it will be permitted to pay a dividend in accordance with the formula in the merger agreement. In addition, even if the Company is permitted to pay a dividend based on the merger agreement, it cannot predict whether it will have a business need for the cash that would prevent it from doing so. As a result there can be no assurances as to the amount, if any, of any cash dividends that may be paid by the Company prior to the closing. However, if the Company anticipates that it will have excess cash at closing, based upon the formula in the merger agreement, the Company anticipates that such cash will be paid as additional per share merger consideration. Thus, if the Company elects not to pay dividends prior to closing even though it is able to do so, this decision will likely increase the amount of the additional per share merger consideration paid at closing. Please read the discussion under the heading “Proposal 1 – Approval of the Merger Agreement and the Merger.”

In connection with the merger agreement, the rollover stockholders, who collectively own more than 60% of the issued and outstanding shares of the Company’s common stock, entered into voting agreements with the Parent whereby they have agreed to vote the shares of common stock owned by them in favor of the adoption of the merger agreement and the consummation of the merger. The voting agreements will terminate upon the closing or if the merger agreement is terminated in accordance with its terms. Please read the discussion under the heading “The Transaction Documents – Stockholder Voting Agreements.”

Contemporaneously with the execution of the merger agreement, the rollover stockholders have each entered into exchange agreements, whereby immediately before the closing, each of the rollover stockholders will exchange 22.5% of the shares of the Company’s common stock owned by them, or the rollover shares, for shares of Series A preferred stock of the Parent that will represent, in the aggregate, approximately 14.9% of the Parent’s outstanding shares of capital stock at the closing. The Series A preferred stock will be convertible into shares of the Parent’s voting common stock. Holders of the Series A preferred stock will be entitled to vote along with the Parent’s voting common stock on an as-converted basis. In addition, the holders of Series A preferred stock will vote as a class with the holders of the Parent’s Series B preferred stock. The transactions contemplated by the exchange agreements will not occur if the merger agreement is terminated in accordance with its terms.

By virtue of the exchange agreements, the rollover stockholders will also become parties to a stockholders’ agreement among Parent, GPP I-AH, LLC, a Delaware limited liability company and an affiliate of GPP, and each of the rollover stockholders. The stockholders’ agreement will, among other things, provide for restrictions on the transfer of Parent’s capital stock, create certain options with respect to such capital stock, and set forth certain corporate governance provisions applicable to Parent after the closing of the merger. The rights of all of the holders of the outstanding capital stock of Parent will be governed by the stockholders’ agreement and by the Amended and Restated Certificate of Incorporation of Parent, each of which will become effective only upon the occurrence of the closing. Please read the discussion under the heading “The Transaction Documents – Exchange Agreements” “The Transaction Documents – Amended and Restated Certificate of Incorporation of Parent” and “The Transaction Documents – Stockholders’ Agreement.”

Immediately prior to the closing, the Parent will file the Parent’s Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware, which shall provide for the rights, preferences and privileges following the merger of the holders of the Parent’s Series A preferred stock, Series B preferred stock and common stock, and other related matters. Please read the discussion under the heading “The Transaction Documents – Stockholders’ Agreement; Amended and Restated Certificate of Incorporation.”

As part of the transactions contemplated by the merger agreement, the Merger Sub has also entered into an employment agreement with each of Zak W. Elgamal and Jaime A. Olmo-Rivas, Jr. each of whom is currently an officer of the Company, and has entered into a surgical assistant agreement with each of Jose Chapa, Jr. and Bland Chamberlain, III each of whom is currently a key employee of the Company. These agreements will become effective only upon the occurrence of the closing and will replace each of their current employment and service agreements with the Company.

Each employment agreement will have an initial term commencing at the closing and expiring on the second anniversary of the end of the month in which the closing occurs. Each employment agreement will be automatically renewed for one additional one-year term unless notice of nonrenewal is given by either party at least 90 days prior to the expiration of the initial term. Compensation includes an annual base salary of $386,250, as adjusted from time to time by the board of directors of the Company following the merger, an annual incentive bonus of up to a maximum of 100% of base salary based on achievement of certain revenue and EBITDA (earnings before interest, taxes, depreciation and amortization) targets, and an additional business development incentive bonus equal to 12.5% of the increase in the Company’s EBITDA over the base EBITDA target.

Under each employment agreement, within 30 days of the closing, the employee will be granted an option to acquire 1.75% of the Parent’s voting common stock on such date. The option will vest 50% upon achievement of certain EBITDA targets during a twelve-month calendar year period provided such EBITDA target is achieved within 36 months of the closing and the remaining 50% will vest upon achievement of a second EBITDA target during a twelve-month calendar period provided such EBITDA target is achieved within 48 months of the closing.

Each surgical assistant agreement will have an initial term commencing at the closing and expiring on the second anniversary thereof. The surgical assistant agreements will automatically renew for one-year terms and may be terminated upon 15 days’ notice. Compensation includes an annual base salary and a discretionary annual bonus, as set forth in each agreement.

Each employment and surgical assistant agreement may be terminated for cause, without cause or for good reason. Also, each employment agreement and surgical assistant agreement contains a non-compete with respect to the businesses in which the Company and its subsidiaries are engaged in following the merger in Texas, Oklahoma and within 25 miles of any city in which the Company is engaged in business. Please read the discussion under the headings “The Transaction Documents – “Employment Agreements” and “The Transaction Documents – Surgical Assistant Agreements.”

As a condition precedent to the transactions contemplated by the merger agreement, ASA will transfer up to $100,000 in cash and assign its rights in claims under certain class action litigation in which ASA is currently or may become a class member and the right to participate in certain other potential class action litigation and all obligations and liabilities related to these transferred assets, whether known or unknown, contingent, absolute or otherwise, to CMC, a newly formed, wholly owned subsidiary of ASA. Prior to the closing, ASA will also transfer all of its ownership interests in CMC to the Company. At the closing of the merger, ASA will enter into a formation agreement with CMC and the ownership interests will be distributed as additional per share merger consideration in accordance with the merger agreement. The merger agreement provides that a proportionate portion of the CMC ownership interests will be held and not distributed to the extent that any stockholders may exercise their right to dissent from the merger and as payment of additional per share merger consideration upon the exercise of outstanding warrants. Please read the discussion under the heading “The Transaction Documents-Formation Agreement and Class Action Litigation.”

When evaluating the additional equity per share merger consideration, you should consider that the primary asset of CMC is its right to receive any settlement amounts upon a favorable resolution of the assigned litigation. There can be no assurances as to the amounts, if any, that CMC will receive upon resolution of the assigned litigation. In view of this uncertainty, the Company is unable to determine the value of the CMC ownership interests at the present time and there can be no assurances that the CMC ownership interests will have any value in the future.

Each party’s obligation to effect the merger is subject to the satisfaction or waiver of various conditions, which include, but are not limited to the following:

At any time before the merger, Parent and Merger Sub may waive the conditions applicable to the Company, and the Company may waive the conditions applicable to Parent and Merger Sub. While circumstances may change, the parties do not expect that any conditions will be waived. Please read the discussion under the heading “Proposal 1 – Approval of the Merger Agreement and the Merger – Conditions to Consummate the Merger.”

The merger agreement sets forth certain covenants relating to the operation of the Company’s business prior to the closing. These covenants, in general, require the Company to obtain the prior written consent of the Merger Sub, which consent shall not be unreasonably withheld or delayed, for a material deviation from the ordinary course operation of the Company’s business consistent with past practices. Under the terms of the merger agreement, prior to the closing the Company is permitted to pay cash dividends on up to three occasions in an amount equal to the Company’s cash on hand, less $1 million, less the amount required to pay certain transaction and other expenses, and less the amount of certain balance sheet adjustments, as computed in accordance with the merger agreement. A sample calculation of the permitted dividend amount is included as Exhibit E to the merger agreement. Assuming the Company is able to declare a dividend based upon this formula prior to the closing of the merger, the Company intends to consider doing so, assuming it does not otherwise have a business need for the excess cash. At present, the Company cannot predict whether its cash on hand prior to closing will be sufficient such that it will be permitted to pay a dividend in accordance with the formula in the merger agreement. In addition, even if the Company is permitted to pay a dividend based on the merger agreement, it cannot predict whether it will have a business need for the cash that would prevent it from doing so. As a result there can be no assurances as to the amount, if any, of any cash dividends that may be paid by the Company prior to the closing. However, if the Company anticipates that it will have excess cash at closing, based upon the formula in the merger agreement, the Company anticipates that such cash will be paid as additional per share merger consideration. Thus, if the Company elects not to pay dividends prior to closing even though it is able to do so, this decision will likely increase the amount of the additional per share merger consideration paid at closing. Please read the discussion under the heading “Proposal 1 – Approval of the Merger Agreement and the Merger – Conduct of the Business Pending the Merger.”

Pursuant to the merger agreement, the Company and its directors, officers, employees, financial advisors, legal counsel, accountants, consultants, agents and other representatives shall:

At any time prior to obtaining the adoption and approval of the merger agreement and the merger by the Company’s stockholders, the Company may, if (a) the Company receives a bona fide written Acquisition Proposal not involving a breach of the above-referenced non-solicitation restrictions, and (b) the board (upon receipt of a recommendation by the special committee) (i) determines in good faith, after consulting with its independent outside legal counsel, that such action is reasonably necessary to comply with its fiduciary duties to the Company’s stockholders under Delaware law; and (ii) determines in good faith, after consultation with

outside counsel and after receiving advice from a financial advisor experienced in such matters, that such Acquisition Proposal constitutes or would reasonably be expected to result in a Company Superior Proposal (as defined in “Proposal 1 – Approval of the Merger Agreement and the Merger – No Solicitation by the Company; Change of Recommendation – No Solicitation by the Company”):

The Company, as promptly as practicable, but in any event within 24 hours of a determination by the board that an Acquisition Proposal constitutes a Company Superior Proposal or a potential superior proposal (in each case, as defined in the merger agreement) will notify Parent of the proposal specifying in detail the terms and conditions of such proposal and the identity of the person making the proposal. The Company will promptly provide Merger Sub any non-public information provided to the person making such proposal, which was not previously provided to Merger Sub.

The merger agreement also grants the parties certain rights upon termination. The merger agreement may be terminated:

Please read the discussion under the heading “Proposal 1 – Approval of the Merger Agreement and the Merger – Termination of the Merger Agreement.”

It is possible the merger will not be completed if the Company’s stockholders do not approve and adopt the merger agreement and the merger, or if certain other conditions are not satisfied or waived or the merger agreement is terminated. The merger agreement provides for the payment of certain fees in certain circumstances when the merger agreement is terminated.

In the event that (a) any person makes a bona fide Acquisition Proposal, the merger agreement is terminated because the closing has not occurred by May 4, 2011, and within nine months of such termination, the Company enters into a definitive agreement or other agreement with respect to such Acquisition Proposal, (b) the merger agreement is terminated by Parent as a result of a Company Adverse Recommendation Change, or certain willful violations of the merger agreement by the Company or certain failures by the Company to comply with requirements related to the timely mailing of proxy materials or the holding of the special meeting, or (c) the merger agreement is terminated by the Company because the Company pursues another transaction as a result of an Acquisition Proposal, then the Company shall pay to Parent a termination fee in a cash amount equal to $1,500,000 no later than two business days following, in the case of (a), the Company’s execution of a definitive agreement with respect to an Acquisition Proposal, and in the case of (b) or (c), termination of the merger agreement.

In the event the Company does not pay the termination fee when due, the Company shall also be required to reimburse the Parent for any costs and expenses incurred by Parent and Merger Sub (including attorneys’ fees) in connection with the collection and enforcement of the termination fee. Please read the discussion under the heading “Proposal 1 – Approval of the Merger Agreement and the Merger – Effect of Termination of the Merger Agreement; Termination Fee.”

Each share of the Company’s common stock held by stockholders of record on the record date will be entitled to vote and is entitled to one vote. The adoption and approval of the merger agreement and the merger requires the affirmative vote of the holders of a majority of the shares of the Company’s common stock issued

and outstanding on the record date. The rollover stockholders, who collectively own more than 60% of the issued and outstanding shares of the Company’s common stock, have entered into voting agreements with the Parent whereby they have agreed to vote the shares of common stock owned by them in favor of the adoption of the merger agreement and the consummation of the merger. The Company’s stockholders should vote by completing, signing and dating their proxy card and sending it to the Company (which vote may be revoked at any time before the special meeting). Properly authenticated proxies voted “abstain” at the special meeting will have the effect of a vote against the adoption and approval of the merger agreement and the merger. In addition, shares of the Company’s common stock that are not voted at the special meeting, including shares of the Company’s common stock held in “street name” for which instructions are not given to the broker on how to vote, will have the effect of a vote against the adoption and approval of the merger agreement and the merger. Please see the discussion under the heading “Information Concerning the Special Meeting.”

The special meeting of the Company’s stockholders will be held on , 2011 at 10:00 a.m., Central Time, at the , to vote on the proposal to adopt and approve the merger agreement and the merger. Only the Company’s stockholders of record on the record date are entitled to receive notice of and vote at the special meeting. On the record date, there were shares of the Company’s common stock outstanding, which shares were held by approximately record holders. Please see the discussion under the heading “Information Concerning the Special Meeting.”

Certain of the Company’s officers and directors have interests in the merger that are different from the interests of the Company’s other stockholders. Accordingly, the Company’s board of directors formed a special committee comprised of Dr. Michael Kleinman and Dr. Charles Bailey, each of whom is a non-management independent director. The members of the special committee have no material interest in the merger that differs from the interests of the other stockholders (other than the rollover stockholders). The special committee was charged with reviewing, evaluating and, as appropriate, negotiating or rejecting the merger agreement or any alternative proposal in each case as the independent directors considered to be in the best interests of the Company and its stockholders (other than the rollover stockholders).

The special committee has unanimously determined that the merger agreement and the merger are advisable, fair to and in the best interests of the Company and its stockholders (other than the rollover stockholders), and recommended that the board adopt and approve the merger agreement and the merger and that the stockholders of the Company adopt and approve the merger agreement and the merger.

After considering many factors, including the unanimous recommendation of the special committee, the board has unanimously:

Accordingly, the special committee and the board, acting upon the recommendation of the special committee, after considering many factors, unanimously recommend that you vote “FOR” the adoption and approval of the merger agreement and the merger. Please see the discussion under the heading “Special Factors – Reasons for the Merger and Recommendation of the Special Committee and the Board.”

Each of the special committee and the board believes that the merger is both procedurally and substantively fair to the Company’s stockholders (other than the rollover stockholders). Their belief is based upon their knowledge and analysis of the Company, as well as the factors discussed in this proxy statement under the section entitled “Special Factors – Reasons for the Merger and Recommendation of the Special Committee and the Board.”

In connection with the merger, the special committee received an opinion from Howard Frazier Barker Elliott, Inc., or HFBE, to the effect that, as of December 19, 2010, and based upon the assumptions made, matters considered and limits of review set forth therein, the consideration, without interest, to be received by the Company’s stockholders (other than the rollover stockholders) was fair, from a financial point of view, to such holders. For purposes of its analysis, HFBE assumed the consideration to be paid to the NonRollover Stockholders in the merger would be $2.87 per share of the Company’s common stock. The full text of HFBE’s opinion, which sets forth the procedures followed, assumptions made, matters considered, limits of review undertaken and other matters considered by HFBE in preparing its opinion, is attached as Appendix C to this proxy statement. The Company strongly recommends that stockholders carefully read the full text of HFBE’s written opinion.

HFBE’s opinion addresses only the fairness, from a financial point of view, of the per share price to be received by the Company’s stockholders (other than the rollover stockholders) as of the date of such opinion and does not address any other aspect of the merger. HFBE’s opinion is not intended to be, and does not constitute, advice or a recommendation to the board, the special committee, or any stockholder as to how to act or vote with respect to the merger or related matters. Please read the discussion under the heading “Special Factors – Opinion of Howard Frazier Barker Elliott, Inc. to Special Committee.”

The Company and Parent are working to complete the merger as soon as possible. Subject to the approval of the merger agreement and the merger by the holders of a majority of the Company’s common stock outstanding on the record date, the Company anticipates completing the merger as soon as practicable following the satisfaction or waiver of the conditions set forth in the merger agreement. The Company expects that all such conditions will be satisfied or waived within 2 business days following the special meeting. The closing will occur upon the filing of a Certificate of Merger with the Secretary of State of the State of Delaware in accordance with Delaware law, or at such later time as is agreed to by the parties hereto and specified in the Certificate of Merger. See “Proposal 1 – Approval of the Merger Agreement and the Merger – Conditions to Consummate the Merger.”

If a stockholder of the Company fulfills several procedural requirements, including not voting in favor of the approval and adoption of the merger agreement and the merger, Delaware law entitles such stockholder to a judicial appraisal of the fair value of the shares of the Company’s common stock held by such stockholder. Please read the discussion under the heading “Special Factors – Rights of Dissenting Stockholders; Appraisal Rights.”

The following questions and answers are intended to address briefly some commonly asked questions regarding the merger, the merger agreement and the special meeting. These questions and answers may not address all questions that may be important to you as a stockholder of the Company. Please refer to the “Summary Term Sheet” and the more detailed information contained elsewhere in this proxy statement, the appendices to this proxy statement, and the documents incorporated by reference into this proxy statement, which you should read carefully and in their entirety.

A: You are receiving this proxy statement and proxy card because you are a record or beneficial holder of the Company’s common stock and consequently you are being asked to consider and vote upon important matters at the special meeting.

A: The special meeting will be held on , 2011 at 10:00 a.m., Central Time, at , Houston, Texas.

A: At the special meeting, you will be asked to consider and vote on the following:

A: Each of the special committee and the board has unanimously determined that the merger agreement and merger are advisable and fair to and in the best interests of the Company and the stockholders, including to the holders of the Company’s stock who are not rollover stockholders, and the special committee and the board have adopted and approved the merger agreement and the merger, and each recommends that the Company’s stockholders vote “FOR” the approval and adoption of the merger agreement and the merger. See “Special Factors – Reasons for the Merger and Recommendation of the Special Committee and the Board.” The board also recommends that you vote “FOR” the proposal to approve the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies in support of the merger agreement and merger proposal.

A: The Company believes that the merger will provide immediate and fair value to its stockholders (other than the rollover stockholders) for their interest in the Company. The Company and Parent believe that structuring the transaction as a merger is preferable to other transaction structures because it will enable Parent to acquire all of the equity of the Company at one time and provides the opportunity for the Company’s stockholders (other than the rollover stockholders) to receive fair value for their shares, payable in cash. Parent believes that it is best for the Company to operate as a privately held entity because the Company will have greater operating flexibility, allowing management to concentrate on long-term growth, reduce its focus on the quarter-to-quarter performance often emphasized by the public markets and pursue alternatives that the Company may not have as a public company. In addition, Parent believes that the Company’s future business prospects can be improved through GPP’s active participation in the strategic direction and operation of the Company. To review the reasons for the merger in greater detail, see “Special Factors – Background of Merger,” “Special

Factors – Reasons for the Merger and Recommendation of the Special Committee and the Board” and “The Merger – Purpose and Reasons for the Merger.”

A: All stockholders of record as of the close of business on the record date will be entitled to notice of, and to vote at, the special meeting.

A: The holders of a majority of all outstanding shares of the Company’s common stock must be present, in person or represented by proxy, at the special meeting in order to hold the special meeting and conduct business, which shall constitute a quorum. If you submit a properly executed proxy card, then your shares of the Company’s common stock will be counted as part of the quorum. Abstentions, shares of the Company’s common stock that are the subject of broker non-votes and shares of the Company’s common stock held in street name in a discretionary account will also be counted in determining the presence of a quorum.

A: The merger cannot be completed until certain conditions have been satisfied or waived, including among other things, the adoption and approval of the merger agreement and the merger by holders of a majority of the outstanding shares of the Company’s common stock. Unless the merger agreement has been terminated prior to the special meeting, the adoption and approval of the merger agreement will occur at the special meeting because the rollover stockholders, who collectively own more than 60% of the issued and outstanding shares of the Company’s common stock, entered into voting agreements with the Parent whereby they have agreed to vote the shares of common stock owned by them in favor of the adoption of the merger agreement and the consummation of the merger. The merger will become effective upon the later of the date and time of the filing of the certificate of merger with the Secretary of State of the State of Delaware or such later date and time as may be specified in the certificate of merger with the consent of the parties. The filing of the certificate of merger will occur as promptly as practicable after the conditions to completion of the merger have been satisfied or waived. The parties are working toward completing the merger as quickly as possible and anticipate closing the merger during the first quarter of 2011. See “Proposal 1 – Approval of the Merger Agreement and the Merger – Conditions to Consummate the Merger.”

A: As a stockholder (but not a rollover stockholder) of the Company, you will be entitled to receive the following for each share of your common stock of the Company issued and outstanding immediately prior to the closing:

A: The Company intends to pay a dividend at closing, which will be treated as additional per share merger consideration, if it has the excess cash to do so. Between five and eight business days prior to the closing, the

Company will prepare an estimated closing balance sheet. It will then determine if it has excess cash by subtracting $1 million plus the amount of certain unpaid transaction and other expenses from its estimated cash on hand at closing. The Company will also reduce its excess cash by any balance sheet adjustments it is required to make in accordance with the merger agreement based on its estimated closing balance sheet. If these calculations show that the Company has excess cash, it is anticipated that such excess cash will be paid as additional per share merger consideration pursuant to the terms of the merger agreement. If the Company is able to pay dividends prior to the closing and elects to do so, this will reduce the amount of any final dividend paid at closing. The purpose of the final dividend is to allow the Company to “sweep” the excess cash not required to remain in the Company at the time of the closing and pay this cash, if any, to stockholders as additional per share merger consideration. At present, the Company cannot predict whether it will have any excess cash and whether it will pay any dividend at closing. See “Proposal 1 – Approval of the Merger Agreement and the Merger.”

A: No. Because CMC is a limited liability company, the ownership interests in it do not need to be represented by stock certificates or any other type of certificate. Your ownership interest in CMC will initially be reflected by the merger agreement and the operating agreement of CMC and will only exist in electronic form. Following the closing, CMC will notify you of the percentage interest you own in it. The transfer of your interests in CMC will likely be restricted pursuant to CMC’s operating agreement. In the future, CMC may, but is not required to, issue certificates to represent its ownership interests. See “The Transaction Documents-Formation Agreement and Class Action Litigation.”

A: The merger consideration includes an ownership interest in CMC, an indirect wholly owned subsidiary of the Company that will be the beneficial owner of certain pending litigation and litigation rights. The pending litigation and litigation rights are three active cases, and rights to participate in a potential class action against one insurance company, related to the non-payment or underpayment for services rendered by the Company’s subsidiary prior to December 31, 2008. The beneficial ownership in any settlement from those cases will be transferred to CMC prior to the closing. All of the pending litigation and litigation rights relate to class actions. This means that the case must be resolved, and if resolved favorably, that the lump sum payment must have been allocated among class participants before the Company will know how much CMC will receive with respect to any class action lawsuit. At present, only one of the three active cases has been settled and the settlement proceeds have not yet been allocated among the class participants. As a result, the Company is unable to determine the value of an ownership interest in CMC at the present time and there can be no assurances that an interest in CMC will have any value in the future. See “The Transaction Documents-Formation Agreement and Class Action Litigation.”

A: After carefully reading this document, please indicate on your proxy card how you want to vote and sign and mail it in the enclosed return envelope, as soon as possible, so that your shares of the Company’s common stock may be represented at the special meeting.

A: Because the affirmative vote by the holders of a majority of the outstanding shares of the Company’s common stock is required to approve and adopt the merger agreement and the merger, if you fail to vote, it will have the same effect as if you voted “AGAINST” the merger.

A: If a broker holds your shares of the Company’s common stock for your benefit but not in your own name, your shares of the Company’s common stock are held in “street name.” In that case, your broker will send

you a voting instruction form to use in voting your shares of the Company’s common stock. Please follow the instructions on the voting instruction form your broker sends you. If your shares of the Company’s common stock are held in your broker’s name and you wish to vote in person at the special meeting, you must contact your broker and request a document called a “legal proxy.” You must bring this legal proxy to the special meeting. Brokers who hold shares of the Company’s common stock in street name for customers have the authority to vote on “routine” proposals when they have not received instructions from beneficial owners. However, brokers are precluded from exercising their voting discretion with respect to the approval of non-routine matters such as the approval and adoption of the merger agreement and the merger. As a result, without specific instructions from you, if your shares of the Company’s common stock are held in street name, your broker will not be able to vote your shares of the Company’s common stock (referred to as a “broker non-vote”). A broker non-vote will have the same effect as if you voted “AGAINST” the merger, but will have no effect on the proposal to adjourn the special meeting, if necessary or appropriate.

A: It means that you have multiple accounts at the transfer agent and/or with brokers, banks or other nominees. Please sign and return all proxy cards that you receive to ensure that all your shares of the Company’s common stock are voted.

A: For the proposal to adopt and approve the merger agreement and the merger, you may vote “FOR,” “AGAINST” or “ABSTAIN.” If you abstain or do not vote on the proposal, it will have the same effect as if you voted “AGAINST” the merger agreement and the merger. In addition, if your shares are not represented at the special meeting or if your shares are held in the name of a broker, bank or other nominee, and your broker, bank or other nominee does not receive specific instructions from you on how to vote, it will have the effect of a vote “AGAINST” the merger agreement. See “Information Concerning the Special Meeting.”

A: The approval and adoption of the merger agreement and the merger requires the affirmative vote by the holders of a majority of the outstanding shares of the Company’s common stock as of the record date. Adjournment of the special meeting, if necessary to solicit additional proxies, requires the approval of a majority of the votes cast. The rollover stockholders, who collectively own more than 60% of the issued and outstanding shares of the Company’s common stock, have entered into voting agreements with the Parent whereby they have agreed to vote the shares of common stock owned by them in favor of the adoption of the merger agreement and the consummation of the merger. See “Transaction Documents – Stockholder Voting Agreements.”

A: The Company asks that you please vote by proxy, whether or not you plan on attending the special meeting in person. If your shares of the Company’s common stock are held in your name, you can submit your proxy by mail, by completing, signing, dating, and returning the enclosed proxy card in the enclosed postage-paid envelope before 9:00 a.m., Central Time, on , 2011. If you submit a proxy, but do not specify how you want your shares of the Company’s common stock to be voted, they will be voted “FOR” the adoption and approval of the merger agreement and the merger and “FOR” the proposal to adjourn the special meeting, if necessary or appropriate. If your shares of the Company’s common stock are registered differently or are in more than one account, you will receive more than one proxy card. Please complete and return all of the proxy cards you receive to ensure that all of your shares of the Company’s common stock are voted.

A: The directors of the Company have indicated that they intend to vote “FOR” adoption and approval of the merger agreement and the merger and “FOR” the proposal to adjourn the special meeting, if necessary or

appropriate. In addition, the rollover stockholders, who are parties to the voting agreements, own over 60% of the issued and outstanding shares of the Company’s common stock, and have agreed to vote their shares of the Company’s common stock “FOR” the adoption and approval of the merger agreement and the merger. See “The Transaction Documents – Stockholder Voting Agreements.”

A: You may revoke or change your proxy at any time prior to its use at the special meeting by giving a written direction to the Secretary of the Company to revoke your proxy, delivering a proxy dated after the date of the proxy you wish to revoke, or attending the special meeting and voting in person. See “Information Concerning the Special Meeting.”

A: A bank or trust company, mutually agreed to by Parent and the Company, will be engaged to act as paying agent for stockholders (other than with respect to the rollover shares owned by the rollover stockholders) and holders of Company warrants in connection with the merger. After the closing of the merger, the paying agent will send such stockholders and holders of Company warrants written instructions for surrendering their shares of the Company’s common stock or exercising their Company warrants. If you hold shares of the Company’s common stock or Company warrants in physical form, please do not send in your stock certificates or warrant exercise forms to the paying agent now. If you own Company stock options, you must surrender specific documentation to the Company and the Company will remit to you the option consideration less any required withholding taxes. See “Proposal 1 – Approval of the Merger Agreement and the Merger – Exchange Procedures.”

A: The paying agent will distribute to holders of the Company’s outstanding common stock (other than with respect to rollover shares owned by the rollover stockholders) a cash amount equal to the per share price and the cash portion of the additional per share merger consideration. Following the closing, CMC will notify you of the percentage interest you have received in CMC as a result of the merger. Each holder of unexercised Company stock options will receive for each share of the Company’s common stock issuable under such options, an amount equal to the difference between the per share price and the exercise price as well as the additional per share merger consideration. After the closing, each outstanding Company warrant will only represent the right to receive the warrant consideration. See “Summary Term Sheet – Merger Consideration” and “Proposal 1 –Approval of the Merger Agreement and the Merger.”

A: Yes. Under Delaware law, the Company’s stockholders are entitled to appraisal rights in connection with the merger. Any Company stockholder who wants to exercise appraisal rights must strictly comply with the rules governing the exercise of appraisal rights or else lose those appraisal rights. If a Company stockholder returns a signed proxy card not marked “AGAINST” or “ABSTAIN” with respect to the approval and adoption of the merger agreement and the merger, such proxy will be voted “FOR” the approval and adoption of the merger agreement and the merger and will result in that stockholder waiving his, her or its appraisal rights. The Company has described the procedures for exercising appraisal rights in this proxy statement and has attached the provisions of Delaware law that govern appraisal rights as Appendix B. See “Special Factors – Rights of Dissenting Stockholders; Appraisal Rights.”

A: The materials the paying agent will send you after completion of the merger will include the procedures that you must follow if you cannot locate your stock certificate or warrant certificate. This will include an affidavit that you will need to sign attesting to the loss of your certificate. You may also be required to provide a bond to the paying agent and the Company in order to cover any potential loss and follow other procedures. If you cannot locate your stock option agreement, you must contact the Company following the completion of the merger for instructions on how to proceed. See “Proposal 1 – Approval of the Merger Agreement and the Merger – Exchange Procedures.”

A: The record date for the special meeting is earlier than the date set for the special meeting and the date that the merger is expected to be completed. If you transfer your shares of the Company’s common stock after the record date, but before the special meeting, you will retain your right to vote at the special meeting, but will have transferred the right to receive the merger consideration in the merger. In order to become entitled to receive the merger consideration, you must hold your shares of the Company’s common stock through the closing. If the Company declares a dividend prior to the closing of the merger and you transfer your shares of the Company’s common stock after the record date for such dividend, but before the payment date of such dividend, you will have transferred to right to receive the dividend.

A: As a result of the proposed merger, the Company will cease to be a publicly traded company and will be owned directly by Parent and controlled by GPP. You, as a stockholder (other than as a rollover stockholder), will no longer have any interest in the Company’s future earnings or growth, and dividends, if any. In addition, upon consummation of the proposed merger, the Company’s common stock will no longer be listed on any exchange or quotation system.

A: Under specified circumstances, the Company may be required to pay Parent a termination fee equal to $1,500,000.

A: If the merger is not consummated, stockholders will not receive any payment for their shares in connection with the merger. Instead, the Company will remain an independent public company, investors will continue to hold the Company’s common stock and the Company’s common stock will continue to be listed and traded on the OTCBB. Thereafter, if you want to sell your shares of the Company’s common stock, you will need to sell that stock in the open market or in a privately negotiated transaction in compliance with applicable securities laws, and the price you would receive for that stock would be subject to market fluctuations.

A: The receipt of cash and property for the Company common stock pursuant to the merger, including as a result of the exercise of appraisal rights, will be a taxable transaction for United States federal income tax purposes. Generally, a beneficial holder of the Company’s common stock who receives cash and property in exchange for shares of the Company’s common stock pursuant to the merger will recognize a gain or loss for federal income tax purposes equal to the difference, if any, between the amount of cash received plus the fair

market value of the property received and the beneficial holder’s adjusted tax basis in the shares of the Company’s common stock surrendered pursuant to the merger. You should consult your tax advisor on how specific tax consequences of the Merger apply to you. See “Special Factors – Material U.S. Federal Income Tax Consequences of the Merger.”

A: The board knows of no business, other than as set forth in the attached Notice of Special Meeting, that will be presented at the special meeting. If any other proposal properly comes before the stockholders for a vote at the special meeting, the persons named in the proxy card that accompanies this proxy statement will, to the extent permitted by law and to the extent the Company was not notified of the proposal in a reasonable amount of time before the Company’s solicitation, vote your shares of the Company’s common stock in accordance with their judgment on such matter.

A: This proxy solicitation is being made and paid for by the Company. The Company’s directors, officers and employees may also solicit proxies by personal interview, mail, e-mail, telephone, facsimile or by other means of communication. These persons will not be paid additional remuneration for their efforts. The Company will also request brokers and other fiduciaries to forward proxy solicitation material to the beneficial owners of shares of the Company’s common stock that the brokers and fiduciaries hold of record.

A: You can find more information about the Company from various sources described under “Where You Can Find More Information.” If you have questions about the special meeting, where to send your proxy or other matters with respect to voting after reading this proxy statement, you should contact:

Since June 2009, the Board of Directors of the Company (the “Board”) has discussed from time to time the possibility of pursuing strategic alternatives for the Company in light of market, economic, industry, legislative, competitive and other conditions and developments, as well as the Company’s historical stock price and its relative illiquidity and the costs of operating as a public company.

On August 12, 2009, the Board ratified the creation of a Mergers and Acquisitions Committee (the “M&A Committee”) to explore strategic opportunities. Following initial discussions, the M&A Committee voted to interview and select a financial advisor to assist the Company in its review and consideration of various strategic options. The Board selected Henry Y. L. Toh, Zak W. Elgamal, and Jaime A. Olmo-Rivas, Jr., our lead independent director, our Chief Executive Officer and our Chief Operating Officer, respectively, to serve as members of the M&A Committee. The M&A Committee reviewed the qualifications of certain advisory firms to serve as the financial advisor to the Company in connection with a strategic transaction. After some discussion, the M&A Committee unanimously approved Polaris Group (“Polaris”) to serve as the Company’s financial advisor in connection with a review of strategic opportunities. The Company entered into an engagement letter with Polaris on July 10, 2009, which engagement was ratified by the Board on August 12, 2009. The M&A Committee discussed the advantages and disadvantages of strategic options including a widespread solicitation of market interest in the Company and determined, with Polaris’ advice, that Polaris should initiate a broad canvass of the market to solicit possible interest in an acquisition of the Company and/or other strategic options. The M&A Committee directed Polaris to begin preparation of the relevant materials and documents required to initiate a sale transaction process.

On December 2, 2009, the Board established a Special Committee of the Board (the “Special Committee”), which establishment was ratified and the duties of the Special Committee further clarified by the Board on September 23, 2010. After considering the independence of the members of the Special Committee and whether there existed any conflicts of interest or financial or other interests that might impair such member’s independence, Dr. Charles W. Bailey, Jr. and Dr. Michael H. Kleinman were appointed as members. The Special Committee members asked that Mr. Toh, as our lead independent director, act as an advisor to the Special Committee and as a liaison between the Special Committee, the M&A Committee, and the Company’s management. The Special Committee members were charged with and given the authority to: (i) direct the activities of Polaris and the M&A Committee on behalf of the Company in connection with any potential sale of the Company; (ii) negotiate the terms and conditions of any potential transaction involving the sale of the Company; (iii) approve and recommend to the Company’s stockholders, or reject, in its sole discretion, any proposal relating to a proposed transaction involving the sale of the Company; and (iv) engage and consult independent legal counsel and financial advisors. The Special Committee established general minimum requirements for the transactions the Company should consider, which primarily related to a minimum percentage of the Company to be sold in the transaction, the value to be received by minority stockholders at the closing of the transaction in relation to the majority stockholders of the Company, the circumstances under which equity would be an acceptable form of consideration in the transaction, and a desire not to consider proposals to purchase stock only from the management stockholders. Further, the Special Committee was charged with the responsibility of making recommendations to the Board at such time and in such manner as the Special Committee considered appropriate with respect to any such potential strategic transaction.

At its December 10, 2009 meeting, the Special Committee discussed the role of separate legal counsel in connection with performing its duties and fulfilling its responsibilities. The Special Committee considered law firms and attorneys with the appropriate experience and background to serve as independent legal counsel to the Special Committee and thereafter unanimously approved the retention of Thompson and Knight, LLP

(“Thompson Knight”) to serve as independent legal counsel to the Special Committee. Further, the Special Committee recommended that the Board approve separate legal counsel – Broad and Cassel – to represent the Company and the Board.

On December 12, 2009, the members of the Special Committee ratified the M&A Committee’s prior selection of Polaris and memorialized its decision to retain Polaris to advise on strategic options including a widespread solicitation of market interest in the Company and initiation of a broad search of the market to solicit possible interest in an acquisition of the Company and/or other strategic options.

Between late August 2009 and late-December 2009, Polaris, in its canvass of the marketplace, distributed “blind” summaries of the Company and its business, which summaries did not identify the Company by name, to 35 potential strategic and financial parties. Between late August 2009 and mid-December 2009, 24 recipients of the blind summaries, which included 10 possible strategic partners and 14 possible financial partners, requested additional information regarding the Company. Following receipt of executed non-disclosure and confidentiality agreements, Polaris contacted each interested party for initial discussions after which it distributed a more detailed information memorandum regarding the Company, its business, financial results and prospects to 14 parties, which included five possible strategic partners and nine possible financial partners. An additional six prospects expressed a high level of interest in the Company and its business sector but declined to pursue a transaction for a variety of reasons, including but not limited to: (i) the Company’s size; (ii) the Company’s regional concentration; (iii) concern over the requirements and costs of operating the Company as a public company; and (iv) concern over the Company’s ability to sustain its growth and gross margins. Various parties requested calls and/or meetings with the Company’s management. Four parties indicated interest in pursuing further discussions. Between September 2009 and November 2009, the Company held meetings with representatives of the four parties that indicated interest in pursuing further discussions. Following the discussions and meetings, each of the four parties submitted non-binding written proposals, one of which did not meet the general minimum structure set by the Special Committee as described above. Three parties submitted non-binding offers in the forms of letters of intent (“LOI”) or indications/expressions of interest (“IOI”) which met the general minimum requirements. Following additional calls and/or meetings with the Company’s management during November 2009, each of the three parties submitted revised LOI’s/IOI’s, as more fully described below. At its December 19, 2009 meeting, the Special Committee reviewed each of the three proposals and authorized Mr. Toh and Marshall G. Webb, a representative of Polaris, to engage in negotiations with each of the parties that submitted an LOI or IOI. During the period in which the Company pursued strategic alternatives, various other private equity firms and strategic buyers entered into confidentiality agreements and performed varying amounts of due diligence, and at times provided verbal indications of interest, none of which developed into or were confirmed in written offers, indications of interest or letters of intent as none was in a position to meet the Company’s minimum transaction requirements.

Following receipt of a blind summary from Polaris in August 2009 and an information memorandum in September 2009, a private equity firm (“Private Equity Firm A”) and the Company had preliminary discussions regarding a possible acquisition of the Company. Following discussions, Private Equity Firm A provided the Company with an initial list of due diligence questions on September 9, 2009. Throughout the remainder of September and October 2009, Private Equity Firm A requested additional information and held calls and meetings with Polaris and the Company’s management, including, requests for the Company’s current financial results and forecasts for growth.

In mid-November 2009, Private Equity Firm A submitted a non-binding offer in the form of an IOI to purchase 100% of the stock owned by the Company’s four principals, including shares underlying their stock options, at an aggregate price of $26.1 million, of which $13.0 million would be payable at closing for the purchase of 88.3% of the fully diluted shares owned by the four principals. The four principals would have a right to put their remaining 11.7% to Private Equity Firm A for either (i) an additional $13.1 million contingent upon the average 2010 and 2011 earnings before income taxes, depreciation and amortization (“EBITDA”)

equaling $10.5 million or more; or (ii) $7.0 million contingent upon the average 2010 and 2011 EBITDA equaling at least $7.5 million but less than $10.5 million. This transaction represented the purchase of approximately 64% of the stock of the Company, computed on a fully diluted basis. Polaris, on behalf of the Company, expressed that this was not the type of transaction that either the Company or its principal stockholders wished to consider as the Board was seeking a transaction for the benefit of all the stockholders. Late in November 2009, following additional discussions with Polaris and the Company’s management, Private Equity Firm A issued a modified non-binding offer in the form of an IOI to purchase newly issued preferred shares of the Company which would (a) be convertible into a 70% ownership interest in the Company post transaction but prior to giving effect to the issuance of common stock upon the exercise of outstanding warrants and options, (b) have an 8% dividend, and (c) have voting rights on an as converted basis. The offer was based on an assumed enterprise value of $27.5 million. Under the proposed terms of the IOI, Private Equity Firm A would invest $8.75 million in cash in the Company and would raise an additional $15.0 million in debt financing for the Company. The collective proceeds of the equity investment and debt financing would be paid as a dividend to the Company’s stockholders and the Company’s stockholders would retain a 30% ownership interest in the Company. The Special Committee considered this offer but determined that Polaris, on behalf of the Company, should further negotiate the terms of Private Equity Firm A’s offer in order to obtain a higher valuation for the Company’s stockholders. Following additional discussions and calls, Private Equity Firm A revised its proposal further and submitted a non-binding LOI early in January 2010. The LOI was a revision of Private Equity Firm A’s second IOI and increased the Company’s enterprise value to $46.0 million. The LOI increased the amount of Private Equity Firm A’s investment in the Company to $16.2 million. In addition, Private Equity Firm A would raise an additional $25.0 million in debt financing from a third party. The proceeds of Private Equity Firm A’s investment and the debt financing would be distributed as a dividend to the Company’s current stockholders, who would retain a 30% ownership interest in the Company. The LOI also provided for (a) an escrow of 10% of the purchase proceeds to secure the Company’s indemnification obligations to the purchaser, (b) a 90-day exclusivity period to negotiate the terms of a definitive agreement during which time the Company could not solicit or entertain offers from other potential acquirors, (c) the reimbursement of Private Equity Firm A’s transaction expenses in full on a monthly basis, and (d) the payment of a $1.0 million transaction fee at closing and a $500,000 annual management fee. Lastly, the LOI provided for a $1.84 million break-up fee in the event the Company entered into a superior transaction. The Special Committee considered this offer but authorized Mr. Webb to continue negotiating the terms of the LOI in an attempt to increase the amount of cash due to the Company’s stockholders in the event the transaction was completed. Private Equity Firm A modified the LOI late in January 2010 to provide for (a) the grant of registration rights to Private Equity Firm A for the shares being purchased, (b) the employment of Messrs. Elgamal and Olmo-Rivas at a base annual salary of $375,000 plus an annual bonuses based on EBITDA targets for each of Messrs. Elgamal and Olmo-Rivas, and (c) an exclusion from the acquisition of the amounts collected for the Company’s 2007 and 2008 accounts receivable.

Following receipt of a blind summary from Polaris in August 2009 and an information memorandum in September 2009, a strategic company (“Strategic Partner Company B”) and the Company had preliminary discussions regarding a possible acquisition of the Company on September 21, 2009. Following discussions, Strategic Partner Company B and its advisor provided the Company with an initial list of due diligence questions, which the Company responded to, and Strategic Partner Company B’s advisor participated in a number of telephone conferences with the Company’s management. The Company and Strategic Partner Company B’s executives met on two separate occasions during October and November 2009 as Strategic Partner Company B continued its due diligence review. Throughout the period between October and December 2009, Strategic Partner Company B and its advisor requested additional information and held calls with Polaris and the Company’s management regarding its interest in the Company. It also requested the Company’s current financial results and forecasts for growth.

In mid-December 2009, Strategic Partner Company B submitted a non-binding offer in the form of an IOI to acquire 65% of the Company’s fully diluted shares from Messrs. Elgamal and Olmo-Rivas for an aggregate of

$15.6 million, of which $7 million would be paid in cash at closing and the remaining $8.6 million would be payable in the form a 36-month note bearing interest at the rate of 5% per annum to be paid in installments due at 12, 24 and 36 months following closing. The offer was based on an enterprise value of $24.0 million. Strategic Partner Company B intended to utilize the Company as an acquisition vehicle to build a diversified staffing and professional services healthcare company. The IOI provided for an exclusivity period through February 28, 2010. Following additional calls between Strategic Partner Company B, its advisor and the Company and Polaris, in early January 2010, Strategic Partner Company B submitted a modified non-binding offer in the form of an IOI to acquire a 65% of the Company’s fully diluted shares from Messrs. Elgamal and Olmo-Rivas on the same terms as its earlier offer. Co-terminus with completion of a transaction, Strategic Partner Company B proposed to “reverse merge” its existing companies into the Company and utilize the Company as an acquisition vehicle to build a large diversified staffing and professional services healthcare company. The Company was to remain a publicly traded entity following the closing of the transaction proposed by Strategic Partner Company B.

In June 2009, Great Point Partners I, L.P. (“GPP”), based on its independent research, placed an unsolicited call to Mr. Elgamal, our Chief Executive Officer. Mr. Elgamal instructed the Company’s Chief Financial Officer to return this unsolicited call. As a result, after engaging in discussions with the Company’s Chief Financial Officer, and without the Board’s knowledge, GPP submitted a confidentiality agreement on June 16, 2009. Following receipt of the confidentiality agreement, the Company’s Chief Financial Officer referred GPP to the Company’s public filings for it to gain further knowledge regarding the Company. Thereafter, there was no further communications between GPP and any member of the Company’s management until September 2009. In late September 2009, subsequent to the Company’s engagement of Polaris, the Company disclosed to Polaris its earlier calls from GPP, following which Polaris and GPP held preliminary discussions regarding GPP’s interest in the Company. Following additional discussions with Polaris, GPP submitted an overview of its firm along with a written list of preliminary due diligence questions. In early October 2009, following discussions with the Company’s management, GPP delivered a non-binding indication of interest.

Between October 2009 and November 25, 2009, members of the Company’s management, Mr. Toh, Mr. Webb and representatives of GPP participated in several meetings and telephone conferences to discuss the Company’s business model and respond to GPP’s preliminary due diligence requests. On November 25, 2009, GPP submitted a draft non-binding LOI to the Company, which provided for the merger of the Company into a newly formed entity owned by GPP. Pursuant to the terms of the November 25^th LOI, the Company’s stockholders would receive $2.95 per share of common stock. Messrs. Elgamal, Olmo-Rivas, Chapa and Chamberlain (collectively, the “Rollover Stockholders”) were to receive 21% of the newly formed entity in exchange for approximately 30% of their shares of common stock of the Company (the “Rollover Shares”) and $2.95 per share for the remaining 70% of their shares. The LOI provided for an exclusivity period of 45 days during which the Company could not solicit or respond to proposals from other possible acquirors and required the Company to reimburse GPP for all of its reasonable costs, fees and expenses incurred in connection with the evaluation of the transaction in the event GPP was prepared to close the proposed transaction substantially upon the terms set forth in the LOI but the transaction was not completed with GPP.

Between November 25, 2009 and January 15, 2010, Mr. Toh, Mr. Webb and members of the Company’s management held various meetings and participated in various telephone conferences with representatives of GPP to negotiate the terms of the LOI received from GPP and considered by the Special Committee at its December 16, 2009 and December 19, 2009 meetings. In particular, negotiations related to the limitation on the reimbursement of GPP’s costs by the Company associated with the proposed transaction, including a limitation on the amounts the Company would be required to reimburse GPP for its out-of-pocket expenses and a limitation on the termination fee payable if the Company exercised its “fiduciary out” to terminate the LOI, compensation of certain managers whose employment was required by GPP as a condition to the closing of the transaction, and limitations on the “no shop and no solicitation” provisions of the GPP LOI. Following such discussions, on January 15, 2010, GPP presented a counter proposal to its November 25^th LOI, which provided the Board a

fiduciary out for the exclusivity period, capped the Company’s liability for reimbursement of GPP’s out-of-pocket expenses and the amount of the termination fee and provided employment terms for Messrs. Elgamal and Olmo-Rivas (the “Management Employees”). At its January 15, 2010 meeting, the Special Committee and its counsel considered GPP’s counter proposal setting forth a cap of $500,000 on the reimbursement of out-of-pocket expenses and a termination fee of $500,000 in the event the Company exercised its “fiduciary out” under the LOI. In addition, the Special Committee considered the proposed compensation being offered by GPP to the Management Employees. Lastly, the Special Committee reviewed the status of other potential offers. Mr. Webb on behalf of Polaris reported that he had sought indications of interest from over 35 institutional investors who appeared to be qualified purchasers. Mr. Webb further reported that although several indications of interest had been received, the offers from GPP and Private Equity Firm A represented the two best proposals. Following the meeting, Mr. Webb was instructed to continue negotiating the terms of the LOIs with GPP as well with Private Equity Firm A, in order to obtain the highest price possible for all of the Company’s stockholders and decrease the Company’s total exposure in the event a transaction was not completed.

Between January 15, 2010 and January 23, 2010, Thompson Knight and McDermott, Will & Emery, counsel to GPP (“MWE”), continued to exchange comments on and negotiate the provisions of the GPP LOI. On January 23, 2010, the Special Committee held a meeting at which it considered the most recent draft of the GPP LOI and the Private Equity Firm A LOI. The Special Committee’s legal counsel, Thompson Knight, and its financial advisor, Polaris, were present at the meeting. The GPP LOI presented to the Special Committee provided for an increase in the amount payable to the Company’s stockholders to $3.1655 per share. In addition, the GPP LOI (a) excluded from the acquisition the Company’s claims for payment related solely to services rendered prior to June 30, 2008, which had been previously denied or underpaid by insurance carriers, (b) provided a “fiduciary out” to the 45-day exclusivity period in the event the Board of Directors received an offer from another possible acquiror, and (c) capped the amount the Company would reimburse GPP for reasonable out-of-pocket expenses to $1.0 million. Lastly, the modified GPP LOI provided for the employment of Messrs. Elgamal and Olmo-Rivas pursuant to two-year employment agreements at a base annual salary of $375,000 and an annual bonus of 12.5% of any EBITDA generated in excess of certain set target EBITDA amounts for the 2010 and 2011 calendar year.

At the January 23, 2010 meeting of the Special Committee, Polaris also reported on the terms of the Private Equity Firm A LOI, which provided for the purchase of newly issued preferred shares of the Company which would (a) be convertible into a 70% ownership interest in the Company post transaction but prior to giving effect to the issuance of common stock upon exercise of outstanding options and warrants, (b) have an 8% dividend, and (c) have voting rights on an as converted basis. The offer was based on an enterprise value of $46.0 million and provided for an investment of $12.6 million by Private Equity Firm A with an additional $25.0 million in debt financing for the Company. The collective proceeds of the equity investment and debt financing by Private Equity Firm A would be paid as a dividend to the Company’s stockholders and the stockholders would retain a 30% ownership interest in the Company following the transaction. Private Equity Firm A LOI also provided for an escrow of 10% of the purchase proceeds to secure the Company’s indemnification obligations to the purchaser, a 90-day exclusivity period to negotiate the terms of a definitive agreement, reimbursement of Private Equity Firm A’s out-of-pocket expenses and a management fee. Lastly, Private Equity Firm A’s LOI provided for a $1.84 million break-up fee in the event the Company entered into a superior transaction.

The Special Committee discussed the terms of each letter as well as the ability of each potential purchaser to complete an acquisition of the Company. Thompson Knight explained the approval process to the Special Committee, the Special Committee’s fiduciary duty in approving this type of corporate transaction and also advised of the importance of obtaining a fairness opinion concerning the proposed transactions. Members of the Special Committee agreed that it appeared that the complete cash buy-out of the Company’s stockholders, other than the Rollover Stockholders, by GPP as compared to a purchase of 70% of the Company by Private Equity Firm A was more favorable to the non-management stockholders. The Special Committee also requested that Mr. Webb provide his impressions of the two competing offers. Mr. Webb advised that in his opinion a purchase of 100% of the Company for cash based on GPP’s proposed enterprise value was superior to a cash offer to

purchase only 70% of the Company, especially given that the remaining 30% stake in the Company to be retained by the stockholders would be junior to the preferred stock held by Private Equity Firm A under the terms of its proposal. After significant discussion, the Special Committee adopted and approved the GPP LOI in the form submitted by GPP to the Company on January 23, 2010 and recommended that the GPP LOI be submitted to the Board.

On January 25, 2010, the Board held a meeting at which it considered the GPP LOI and the Special Committee’s approval and recommendation of the GPP LOI. Representatives from Broad and Cassel and Thompson Knight were present at the request of the Board. Mr. Webb outlined the material terms of the GPP LOI and explained the changes made in this version of the LOI versus the prior version considered by the Special Committee. Mr. Webb then explained the material terms of the transaction. Mr. Webb also explained the terms of an alternative proposal submitted by Private Equity Firm A and why the Special Committee had determined that the GPP proposal was superior. Representatives of Thompson Knight, as counsel to the Special Committee, also explained the economic differences of the transaction proposed by Private Equity Firm A. Dr. Kleinman also reported to the Board on behalf of the Special Committee and explained how the Special Committee had evaluated the various proposals and why the Special Committee was recommending that the Company accept the GPP proposal. Lastly, Broad and Cassel reminded the Board of the issues it needed to consider in the proper exercise of its fiduciary duties and discussed the details of a memo it had previously circulated to the Board regarding its fiduciary obligations with respect to a transaction of this nature. After significant discussion, the Board unanimously approved the GPP LOI. On January 25, 2010, the Company and GPP entered into the GPP LOI for the acquisition of the Company by GPP on substantially the same terms as reviewed and recommended by the Special Committee at its meeting on January 23, 2010.

On February 3, 2010, GPP submitted its legal due diligence request list and its financial, regulatory and marketing due diligence checklist. In addition, on February 2, 2010, the Company’s management, Mr. Webb and representatives of GPP held a telephone conference to discuss GPP’s due diligence and business process, the timing of such due diligence process and the GPP advisors who would be involved in such process. Shortly thereafter, on February 4, 2010, the Company’s management, Mr. Webb, representatives of Broad and Cassel and Thompson Knight, representatives of GPP and representatives of MWE held an “all hands” telephone conference to discuss diligence, timing, and the GPP review process.

Through the month of February 2010, GPP and several of its advisors conducted an in-depth due diligence review of the Company and its legal and financial records. On February 17, 2010, representatives of GPP and its accounting and regulatory consultants held all day meetings with representatives of the Company, Polaris and Broad and Cassel to discuss business and due diligence issues. In late February 2010, members of the Company’s management team received a report from KPMG, GPP’s financial due diligence advisor, raising objections to certain of the Company’s revenue recognition policies. In particular, as a result of KPMG’s report, GPP was objecting to the inclusion of certain revenue recognized during the fiscal year ended December 31, 2009, which revenue related to services provided in prior years, which was not known or estimated as of the date of the close of such period and which was consistent with the Company’s revenue recognition policy. On March 9, 2010, Mr. Toh and Mr. Webb, on behalf of the Company, and Mr. Adam Dolder and Dr. Jeffrey R. Jay, on behalf of GPP, met to discuss the possible amendment of the GPP LOI to adjust the purchase price to better reflect the matching of revenues for the periods of service versus the format used in the Company’s recent income statements. On March 11, 2010, Mr. Dolder, on behalf of GPP, submitted an amended and restated letter of intent (the “Amended and Restated LOI”) to Mr. Webb and Mr. Toh, as representatives of the Special Committee. The Amended and Restated LOI provided for (a) a reduction in the price per share payable to the Company’s stockholders to $2.86 per share, (b) a decrease in the percentage of Parent that the Rollover Stockholders would receive from 21% to 14.9% in exchange for 22.5% of their Company common stock instead of 30%. In addition, the Amended and Restated LOI revised the EBITDA targets set for the bonuses payable to Messrs. Elgamal and Olmo-Rivas and added the grant of performance-based stock options equal to 1.75% of the fully diluted shares of Parent for Messrs. Elgamal and Olmo-Rivas, which options would vest based the achievement of certain EBITDA targets.

On March 12, 2010, the Special Committee held a meeting to discuss the Amended and Restated LOI. Mr. Webb also reported on the results of GPP’s due diligence review of the Company to date. Mr. Webb reported on the reasons for GPP’s request for an adjustment to the aggregate purchase price to be paid to the Company’s stockholders. Mr. Webb provided a summary of GPP’s requested changes to the LOI. In particular, he noted that the Amended and Restated LOI provided for a decrease in the purchase price to an aggregate of approximately $42.8 million as compared to an aggregate of approximately $47.5 million. In addition, he advised that the aggregate percentage to be received by the Rollover Stockholders in the buyer’s acquisition entity would be reduced to 14.9%. The Amended and Restated LOI also contained certain binding provisions, including a non-solicitation provision whereby the Company could not solicit alternative bidders for a period of 30 days from the effective date of the Amended and Restated LOI. The Special Committee discussed GPP’s due diligence process and the adjustments in the aggregate purchase price with its legal counsel and its financial advisor. Representatives of Thompson Knight, as counsel to the Special Committee, then reviewed the corporate approval process with the Special Committee, the legal aspects of the Amended and Restated LOI, and the process that would follow the approval of the Amended and Restated LOI. After significant discussion, the Special Committee approved the Amended and Restated LOI and recommended that the Amended and Restated LOI be submitted to the Board for approval.

At the March 12, 2010 Special Committee meeting, the Special Committee also discussed the role of an investment banking firm to render a fairness opinion to the Special Committee in connection with the proposed sale of the Company to GPP. Mr. Webb and representatives of Thompson Knight presented the background and their experience working with the various firms being considered. The Special Committee reviewed the qualifications of these investment banking firms and discussed the Company’s requirements with respect to the proposed transaction. Thereafter, the Special Committee unanimously approved the retention of Howard Frazier Barker Elliott, Inc. (“HFBE”) to serve as financial advisor to the Special Committee and authorized Mr. Toh and Mr. Webb to negotiate the final terms of HFBE’s retention. On March 25, 2010, HFBE was retained by the Company to render an opinion as to whether the consideration proposed by GPP was fair to the Company’s stockholders from a financial point of view. On May 18, 2010, the Company entered into a revised engagement letter with HFBE, pursuant to which HFBE would render an opinion as to whether the consideration proposed by GPP was fair to the Company’s stockholders, other than the Rollover Stockholders (the “NonRollover Stockholders”) from a financial point of view.

On March 18, 2010, the Board held a meeting to consider the approval of the Amended and Restated LOI. Broad and Cassel, as counsel to the Company, was present at the meeting. Mr. Webb provided the Board with a detailed summary of the changes to the original GPP LOI as well as the reasons for such requested changes. In addition, Mr. Webb advised the Board about GPP’s request for an extension of the exclusivity period and the negotiations regarding such request. After discussion, the Board approved the Amended and Restated LOI submitted by GPP and recommended by the Special Committee. On March 18, 2010, the Company executed the Amended and Restated LOI.

During the period from March 2010 to May 2010, the Company, its legal counsel, Broad and Cassel, the Special Committee and its counsel, Thompson Knight, and the Rollover Stockholders (in their individual capacity) with their counsel, Carl Norton, held several meetings to discuss and deliberate certain points related to the offer by GPP. MWE provided the Company and Broad and Cassel with first drafts of the key documents in March 2010 and the parties negotiated the agreement and plan of merger by and among the Company, AH Holdings, Inc., a Delaware corporation (“Parent”) and an affiliate of GPP, and AH Merger Sub, Inc., a Delaware corporation (“Merger Sub”) (the “Merger Agreement”), the exchange agreements between each of the Rollover Stockholders with Parent (the “Exchange Agreements”), including a dividend equal to 3% for the Series A preferred stock of Parent to be issued to the Rollover Stockholders pursuant to the Exchange Agreements, the stockholder voting agreements between each of the Rollover Stockholders and Parent (the “Voting Agreements”), the employment agreements between each of the Management Employees and Merger Sub (the “Employment Agreements”), the surgical assistant agreements between each of the Messrs. Chapa and Chamberlain (the “Key Employees”) and Merger Sub (the “Surgical Assistant Agreements”) and other related

definitive documents (the Merger Agreement, Exchange Agreements, Voting Agreements, Employment Agreements, Surgical Assistant Agreements and Formation Agreement, as hereafter defined, are collectively referred to as the “Transaction Documents”) with Mr. Dolder, Rohan Saikia, and Brett Carlson, as representatives of GPP, and its counsel, MWE. In late March, the Company’s management also began presentations to several possible lenders that GPP proposed it might use to finance its acquisition of the Company.

On April 27, 2010, the exclusivity period in the Amended and Restated LOI expired and was not extended by the parties.

On May 6, 2010, the Company learned from its litigation counsel that counterclaims had been filed in two of the cases that it was pursuing against certain insurance companies for the non-payment or underpayment of claims, which cases were included in the group of cases to be excluded from the acquisition of the Company by GPP. Upon learning of the counterclaims, GPP expressed its concern regarding the counterclaims and the Company and GPP discussed numerous options on how they might deal with the risks associated with the insurance litigation.

On June 2, 2010, the Special Committee held a meeting at which HFBE presented a draft of its proposed fairness opinion along with its presentation of facts, assumptions and analysis underlying the proposed opinion. The Special Committee also received an update from Broad and Cassel on the status of negotiations with GPP and issues relating to the insurance litigation being prosecuted by American Surgical Assistants, Inc., one of the Company’s subsidiaries (“ASA”), and the related counterclaims. Broad and Cassel also reported on GPP’s request that all issues relating to such litigation and counterclaims be resolved prior to the execution of the Merger Agreement. The Special Committee evaluated the various alternatives available to the Company to address the litigation and counterclaim issues raised by GPP, including a divisive merger, as presented by Thompson Knight. The Special Committee authorized Thompson Knight to have further discussions with GPP’s counsel regarding the alternatives. Following such discussion, HFBE made its presentation on the fairness from a financial point of view of the Per Share Price to the NonRollover Stockholders (as defined in “ – Certain Effects of the Merger”). HFBE provided an explanation of the valuation assumptions involved in evaluating the GPP transaction. HFBE advised it had used different valuation approaches and reported the results of each approach. HFBE further advised that numerous factors affected the valuations, including the relatively thin trading market for the Company’s common stock, prices recently paid for control of companies in similar lines of business through comparable transactions, the prevailing rates of return for equity and debt invested in similar business, and various assumptions underlying HFBE’s discounted cash flow analysis of the Company. HFBE further explained that although it had performed a market value analysis and considered the results, HFBE primarily relied on a discounted cash flow analysis of the Company in reaching its conclusion. HFBE concluded its presentation by advising the Special Committee that the HFBE analysis may need to be updated in the event of material changes to the final versions of the Merger Agreement and Transaction Documents. However, HFBE advised that, assuming no material changes to the proposed Merger Agreement or any other Transaction Documents reviewed by HFBE, HFBE was prepared to issue its fairness opinion to the Special Committee and the Board in the draft form presented to the Special Committee prior to the meeting stating that the consideration offered by GPP was fair from a financial point of view to the Company’s NonRollover Stockholders.

During the first two weeks of June 2010, the Company’s management, Mr. Webb and Mr. Toh, continued negotiations on the final open issues in the Merger Agreement, in particular the possible resolutions to the litigation and counterclaim issues. On June 18, 2010, the Special Committee held another meeting to discuss the status of the transaction. Mr. Toh provided a summary from the Company’s litigation counsel regarding the pending litigation and GPP’s continued request that all the pending litigation issues be resolved prior to the execution of the Merger Agreement. Mr. Toh reported that an acceptable resolution of these issues had not been reached with GPP. The members of the Special Committee discussed the alternatives available with respect to the litigation and the potential consequences of dismissing all the claims as requested by GPP. Following such discussion, the Special Committee determined that it was not in a position to dismiss or immediately settle all of the litigation and counterclaims in a manner that would be in the best interest of the Company and its stockholders as requested by GPP. Shortly thereafter, discussions with GPP were temporarily suspended.

From the period between mid-June 2010 and September 2010, the Company and its litigation counsel continued working towards the orderly resolution of the litigation and counterclaims involving the various insurance companies. Following the orderly settlement of the two cases that included counterclaims against the Company in September 2010, the Company, through its counsel, Broad and Cassel, reinitiated discussions with GPP as contemplated by the Amended and Restated LOI and the most recent drafts of the Transaction Documents negotiated with GPP through June 2010. Although GPP reiterated that all the insurance litigation needed to be satisfactorily resolved prior to executing the Merger Agreement, it indicated that it was willing to continue the negotiation of the final Transaction Documents while such litigation was resolved.

Between August 2010 and December 17, 2010, the Company, its legal counsel, Broad and Cassel, and the Special Committee and its counsel, Thompson Knight, held several meetings and telephone conferences to discuss and deliberate additional points related to the transaction with GPP. In particular, the Company felt that due to its improved financial performance and cash position, it should be able to declare dividends to stockholders both before signing the Merger Agreement and between the signing and closing of the Merger (as hereafter defined) and the other transactions contemplated by the Merger Agreement (the “Closing”). The Company’s counsel discussed this request with counsel for GPP as well as the ability to pay a final cash dividend at the Closing, as additional merger consideration, subject to compliance with certain terms to allow the Company to “sweep” its excess cash and pay it to the stockholders. The parties also discussed provisions that related to potential proposals by third parties to acquire the Company that might arise between the signing and the Closing, the elimination of the 3% dividend on the Series A preferred stock in exchange for an increase in the salaries to be received by the Management Employees pursuant to the terms of their respective Employment Agreements, and provisions relating to the spin-off (as opposed to dismissal or settlement) of certain of the insurance litigation to a newly formed subsidiary of the Company, the ownership of which could be distributed to the Company’s stockholders upon the Closing. The parties also negotiated additional revisions the Merger Agreement, the Exchange Agreements, the Voting Agreements, the Employment Agreements, the Surgical Assistant Agreements, the formation agreement between CMC Associates, LLC (“CMC”) and ASA (the “Formation Agreement”) and other related documents with Mr. Dolder, Mr. Saikia, and Mr. Carlson, as representatives of GPP and its counsel, MWE. During this time, the members of the Special Committee had several discussions with representatives of Thompson Knight and Broad and Cassel regarding open issues relating to “fiduciary outs” and other deal protection devices to be included in the Merger Agreement. In addition, Thompson Knight and Broad and Cassel kept the Special Committee and Board members informed with respect to all the changes being negotiated with respect to the Transaction Documents.

Because the exclusivity requirement with GPP had expired, between May 2010 and December 2010, the Company was also able to communicate with other parties that might have an interest in completing a strategic transaction with the Company. Because the Company believed that Polaris had previously contacted the most likely possible acquirors, it did not begin another broad-based solicitation, instead choosing to respond only to those potential parties that contacted it. During this time period, the Company was contacted by approximately six parties, two of which had previously contacted it before it signed the initial GPP LOI, one investment banking firm, one party in the United Kingdom and two potential financial partners. Polaris responded to these inquiries but none of these inquiries led to written offers.

On December 15, 2010, the Special Committee held a meeting at which representatives from Thompson Knight, Broad and Cassel, Polaris and HFBE were in attendance. During this meeting, the representatives of Broad and Cassel, together with Thompson Knight, provided a summary of the current status and certain terms of the proposed Merger Agreement (including the procedures for an alternative bidder to acquire the Company, the effects of termination of the Merger Agreement, and the circumstances in which a termination fee would be due and payable), and other related definitive documents negotiated with GPP. Broad and Cassel provided a report on certain revisions to previous versions of the proposed Transaction Documents, as well as an update on remaining open issues that related to pending litigation and the Employment Agreements. At the December 15, 2010 meeting, the representatives of HFBE presented an updated financial analysis to the Special Committee regarding the proposed Merger.

In its presentation on December 15, 2010, HFBE provided an explanation of the valuation assumptions involved in evaluating the GPP transaction and the changes to such assumptions since the presentation made by HFBE in June 2010. HFBE noted that it had not included the value of any Additional Per Share Merger Consideration (as defined in “ – Certain Effects of the Merger”) in its analysis given the uncertainty at the time of the value of such Additional Per Share Merger Consideration. HFBE further advised that numerous factors affected the valuation, including the relatively thin trading market for the Company’s common stock, prices recently paid for control of companies in similar lines of business through comparable transactions, the prevailing rates of return for equity and debt invested in similar business, and various assumptions underlying HFBE’s discounted cash flow analysis of the Company. HFBE further explained that although it had performed a market value analysis and considered the results, HFBE primarily relied on a discounted cash flow analysis of the Company in reaching its conclusion. HFBE concluded its presentation by advising the Special Committee that the HFBE analysis may need to be updated in the event of material changes to the final versions of the Merger Agreement and other Transaction Documents. However, HFBE advised that, assuming no material changes to the proposed Merger Agreement or any other Transaction Documents reviewed by HFBE, HFBE was prepared to issue its fairness opinion to the Special Committee and the Board in the draft form presented to the Special Committee prior to the meeting stating that the consideration offered by GPP was fair to the NonRollover Stockholders from a financial point of view.

Following HFBE’s presentation, Thompson Knight presented a draft of the proposed resolutions for consideration by the Special Committee in connection with approving the Merger Agreement, the Merger and the other related transactions. Given the existence of the open issues described by Broad and Cassel and Thompson Knight, the Special Committee determined to postpone any recommendation for approval of the Merger Agreement until such time as there was final resolution of the open issues. The Special Committee agreed to reconvene at a later date to discuss the resolution of the open items and make a final determination on the Merger Agreement.

On December 19, 2010, the Special Committee held a meeting at which representatives from Broad and Cassel, Thompson Knight, Polaris and HFBE were in attendance. During this meeting, Broad and Cassel updated the Special Committee on the resolution of the open items previously discussed with the Special Committee at its December 15, 2010 meeting. Thompson Knight reviewed the fiduciary duties of the members of the Special Committee and the role of the Special Committee in recommending the approval of extraordinary transactions. HFBE updated the Special Committee on changes to its December 15, 2010 presentation based on the final resolution of the open issues. Following such updates to the December 15^th presentation, the Special Committee unanimously accepted the written fairness opinion proposed by HFBE, which stated that, based upon the assumptions made, matters considered and limits of review set forth in the written opinion, the Per Share Price to be received by the Company’s NonRollover Stockholders under the terms of the proposed Merger Agreement was fair, from a financial point of view, to the NonRollover Stockholders.

At the meeting on December 19, 2010, after deliberations by the Special Committee, the Special Committee unanimously resolved (a) that the Merger Agreement and the transactions contemplated thereby are advisable, fair to, and in the best interests of, the Company and its NonRollover Stockholders, (b) that the Special Committee authorize and approve the merger (the “Merger”) of Merger Sub with and into the Company with the Company continuing as the surviving corporation (the “Surviving Corporation”) and the transactions contemplated pursuant to terms of the Merger Agreement and related agreements, including the Merger Consideration (as defined in “ – Certain Effects of the Merger”) to be received by holders of the Company’s common stock (other than with respect to any Rollover Shares) and the Termination Fee (as defined in “ – Reasons for the Merger and Recommendation of the Special Committee and the Board – the Special Committee”), and the transactions contemplated by terms of the Voting Agreements, the Exchange Agreements, the Employment Agreements and the proposed management services agreement with an affiliate of GPP; (c) that the Special Committee recommend to the entire Board that (i) the Board authorize and approve the Merger, the Merger Agreement and the transactions contemplated therein and in the related agreements, (ii) the Board cause the Company to enter into the Merger Agreement and related agreements (to the extent the Company may be a

party), provided that consummation of the Merger shall be subject to stockholder approval; and (iii) that the Board duly call a special meeting of stockholders of the Company (the “Special Meeting”) to consider the adoption and approval of the Merger Agreement and the Merger and that the Board recommend the adoption and approval of the Merger Agreement and the Merger by the stockholders of the Company; and (d) that the Special Committee recommend that the stockholders of the Company vote for the approval and adoption of the Merger Agreement and the Merger.

Later on December 19, 2010, the Board held a meeting at which representatives from Broad and Cassel, Thompson Knight, Polaris and HFBE were in attendance.

During this meeting, the representatives from Broad and Cassel (a) updated the Board on the resolution of the remaining open issues and (b) reviewed with the Board members the fiduciary duties of the members of the Board and the role of the Board in negotiating and approving extraordinary corporate transactions. Also, the representatives from Broad and Cassel provided a summary of the proposed Merger Agreement, and the related definitive documents negotiated with GPP, including:

Also, at the meeting, the representatives of HFBE made a presentation to the Board regarding its financial analysis of the proposed Merger and provided an oral opinion, subsequently confirmed in writing, that, as of December 19, 2010, and based upon the assumptions made, matters considered and limits of review set forth in its written opinion, the Per Share Price to be received by the NonRollover Stockholders under the terms of the proposed Merger Agreement was fair, from a financial point of view, to the NonRollover Stockholders.

After deliberations of the Board, the Board unanimously resolved (a) that the Merger Agreement and the transactions contemplated by the Merger Agreement, including the Merger and the Merger Consideration to be received by the NonRollover Stockholders, be approved, (b) that the Merger Agreement and the transactions contemplated by the Merger Agreement, including the Merger, are advisable, fair to and in the best interests of the Company and its stockholders, including the NonRollover Stockholders, (c) that the Board approve, authorize and adopt the Merger Agreement and consummation of the Merger, and (d) that the Board recommend that the stockholders of the Company vote for the approval and adoption of the Merger Agreement and the Merger.

On December 20, 2010, the Company, Parent and Merger Sub executed the Merger Agreement and the related transaction documents to which any of them is a party. The Merger Agreement and Merger were announced by each of the Company and Parent on December 20, 2010.

Reasons for the Merger and Recommendation of the Special Committee and the Board

On December 2, 2009, the Board created the Special Committee to manage the process of evaluating strategic alternatives. The Board delegated to the Special Committee the power and authority to, among other things (a) consider, evaluate, investigate, and negotiate the terms and conditions of a potential sale of the Company to, or business combination of the Company with, third parties or another potential strategic transaction that may bring value to and be in the best interest of the Company’s stockholders, and (b) make such recommendations to the Board at such time and in such manner as the Special Committee considered appropriate with respect to any such potential strategic transaction. The Board approved such resolutions after considering the independence of the members of the Special Committee and whether there existed any conflicts of interest or financial or other interests that might impair such member’s independence. See “Special Factors – Background of the Merger” above for more information about the formation and authority of the Special Committee.

On March 25, 2010, the Special Committee retained HFBE for the purpose of providing its opinion as to the fairness, from a financial point of view, of the Per Share Price to be received by the Company’s Stockholders. On May 18, 2010, the Company executed a revised engagement letter with HFBE pursuant to which its opinion would be limited to the fairness, from a financial point of view, of the Per Share Price to be received by the Company’s NonRollover Stockholders pursuant to the Merger. On December 19, 2010, the Special Committee, after considering the presentations and advice of Thompson Knight, its legal counsel, Broad and Cassel, the Company’s and Board’s counsel, and the opinion of HFBE, unanimously resolved that the Merger Agreement and the transactions contemplated thereby are advisable, fair to, and in the best interests of, the Company and its NonRollover Stockholders and that the Special Committee recommend that the stockholders of the Company vote “FOR” the approval and adoption of the Merger Agreement and the Merger.

The Per Share Price to be paid in the Merger was determined through negotiations between the parties. HFBE did not make any recommendation with respect to the amount of the Per Share Price or the Additional Per Share Merger Consideration to be paid in the Merger.

In the course of reaching its decision to adopt and approve the Merger Agreement and the Merger and in making its recommendations, the Special Committee consulted with its counsel, the Company’s and the Board’s counsel and advisors, the Company’s management and outside financial and legal advisors, reviewed a significant amount of information, oversaw financial and legal due diligence, conducted an extensive review and evaluation of Parent’s proposal, conducted and coordinated extensive negotiations with Parent and its representatives both directly and through its advisors, and considered the following positive factors:

The Special Committee’s determination was further based on its view that (a) the Company did not receive many of the benefits associated with being a public company, due in part to the fact that the Company lacked research coverage and its shares of common stock were thinly traded and the Company had incurred and was expected to continue to face significant costs associated with remaining a public company, (b) the risk of uncertain continued strong returns to the Company’s stockholders from its business, operations, financial condition and prospects, (c) the potential changes to the regulations that govern the Company’s business, including the impact of existing and future healthcare reform legislation, (d) the time needed for the Company’s share price to reflect the success of its current operations, and (e) the risks and uncertainties associated with any strategic initiatives the Company may implement and with the timing thereof.

In the course of reaching the determinations and decisions, and making the recommendations described above, the Special Committee considered the following risks and potentially negative factors relating to the Merger Agreement, the Merger and the other transactions contemplated thereby:

In the course of reaching the determinations and decisions, and making the recommendations, described above, the Special Committee also considered the following factors relating to the procedural safeguards that the Special Committee believes were and are present to ensure the fairness of the Merger to the Company’s NonRollover Stockholders and to permit the Special Committee to represent the interests of the Company’s NonRollover Stockholders, each of which safeguards the Special Committee believes supported its decision and provided assurance of the fairness of the Merger to the Company and its NonRollover Stockholders:

The foregoing discussion of the information and factors considered by the Special Committee includes the material factors considered by the Special Committee. In view of the variety of factors considered in connection with its evaluation of the Merger, the Special Committee did not find it practicable to, and did not, quantify or otherwise assign relative weights to the specific factors considered in reaching its determination and recommendation. In addition, individual directors may have given different weights to different factors. The Special Committee approved and recommends the Merger Agreement and the Merger based upon the totality of the information presented to and considered by it.

The Board consists of five directors, two of whom, Messrs. Elgamal and Olmo-Rivas, along with Messrs. Chapa and Bland Chamberlain, are Rollover Stockholders and have interests in the Merger different from the interests of the Company and its NonRollover Stockholders. The Board established the Special Committee, consisting of two independent directors, and empowered it to study, review, evaluate, negotiate and, if appropriate, make a recommendation to the Board regarding the proposal from third parties, including GPP, and any unsolicited proposals that were received. On December 19, 2010, the Board met to consider the report and recommendation of the Special Committee. On the basis of the Special Committee’s recommendation and the other factors described below, the Board, unanimously:

In determining that the Merger Agreement is advisable, fair to, and in the best interests of, the Company and its stockholders, including the NonRollover Stockholders, and approving the Merger Agreement, and recommending that the Company’s stockholders vote for the adoption and approval of the Merger Agreement and the Merger, the Board considered the following material factors:

The Board and the Special Committee did not (a) retain an unaffiliated representative to act solely on behalf of the Company’s stockholders for purposes of negotiating the terms of the Merger Agreement, or (b) structure the transaction to require approval of at least a majority of the NonRollover Stockholders. Nevertheless the Board believes that taking into account the factors listed above and further taking into account the fact that the parties to the Voting Agreements will have the right to vote over 60% of the Company’s outstanding common stock, the absence of these two safeguards did not diminish the fairness of the process undertaken by the Board and the Special Committee.

The foregoing discussion of the information and factors considered by the Board includes the material factors considered by the Board. In view of the variety of factors considered in connection with its evaluation of the Merger, the Board did not find it practicable to, and did not, quantify or otherwise assign relative weights to the specific factors considered in reaching its determination and recommendation. In addition, individual directors may have given different weights to different factors. The Board approved and recommends the Merger Agreement and the Merger based upon the totality of the information presented to and considered by it. The Board also believes that the Merger is procedurally fair because, among other factors, the terms of the Merger Agreement require the affirmative vote of a majority of the outstanding shares of the Company’s common stock entitled to vote at the Special Meeting.

The Board recommends that you vote “FOR” the adoption and approval of the Merger Agreement and the Merger.

The Special Committee of the Company retained HFBE to render an opinion to the Special Committee as to the fairness, from a financial point of view, of the consideration to be received by the NonRollover Stockholders in connection with the Merger. For purposes of its analysis, HFBE assumed the consideration to be paid to the NonRollover Stockholders in the Merger would be $2.87 per share of the Company’s common stock. At the meeting of the Special Committee on December 15, 2010 and December 19, 2010, HFBE delivered an oral opinion that such consideration was fair, from a financial point of view, to the NonRollover Stockholders. On

December 19, 2010, HFBE delivered its written opinion to the Special Committee that stated, as of the date of the opinion and based upon and subject to various assumptions and limitations described in the opinion, the consideration to be received by the NonRollover Stockholders in the Merger was fair, from a financial point of view, to the NonRollover Stockholders. The Company does not believe there have been any material changes in the Company’s operations, performance or in any of the projections or assumptions upon which HFBE based its opinion since the delivery of the opinion and does not anticipate any material changes to occur before the Special Meeting.

The full text of HFBE’s written opinion to the Special Committee of the Company, which describes, among other things, the assumptions made, procedures followed, factors considered and limitations on the review undertaken, is attached as Appendix C to this proxy statement. The following summary of HFBE’s opinion is qualified in its entirety by reference to the full text of the opinion. HFBE delivered its opinion to the Special Committee of the Company for use in connection with the Special Committee’s evaluation of the consideration to be received by the NonRollover Stockholders in the Merger from a financial point of view. HFBE’s opinion does not address any other aspect of the Merger and does not constitute a recommendation to any stockholder as to how to vote with respect to the proposed Merger or any related matter. Holders of the Company’s common stock are encouraged to read HFBE’s opinion for a discussion of the procedures followed, factors considered, assumptions made and qualifications and limitations of the review undertaken by HFBE in connection with its opinion.

HFBE’s opinion was addressed to the Special Committee, and was directed only to the fairness, from a financial point of view, of the Per Share Price to be received by the NonRollover Stockholders of the Company in the Merger. It did not address any other aspect of the Merger. HFBE’s opinion was one of many factors taken into consideration by the Special Committee in making its determination to recommend and approve the Merger Agreement and the Merger. HFBE’s opinion does not address in any manner the merits of the underlying business decision of the Company to enter into the Merger Agreement or the Merger, the Company’s decision whether it should complete the Merger or any other alternatives to the Merger that might exist for the Company. HFBE’s opinion does not constitute a recommendation to the Company, the Board, the Special Committee, or any other committee, or the Company’s stockholders as to how such person should vote or as to the specific action that should be taken in connection with the Merger. HFBE expressed no opinion with respect to the fairness of the amount or nature of any consideration or compensation to any officers, directors, or employees of any party to the Merger, or any class of such persons, relative to the consideration to be received by the NonRollover Stockholders in the Merger. HFBE’s opinion does not address the fairness of any portion or aspect of the Merger to the holders of any class of securities, creditors or other constituencies of the Company, or to any other party, except as set forth in HFBE’s opinion. HFBE did not express any opinion as to the underlying valuation or future performance of the Company or the price at which its securities might trade at any time in the future. The financial terms and other terms of the Merger Agreement and the Merger were determined pursuant to arm’s-length negotiations between the Company, GPP, and each of their respective advisors and not pursuant to HFBE’s recommendations. The decision to enter into the Merger was solely determined by the Special Committee and the Board.

In connection with rendering its opinion and performing its related financial analyses, HFBE reviewed, among other things:

In addition, HFBE held discussions with members of the management of the Company regarding the business, operations, financial condition, and prospects of the Company. HFBE discussed with the Company’s management the financial projections provided by management listed above. HFBE also performed such other financial studies, analyses and investigations as it deemed appropriate.

HFBE, with the Special Committee’s permission, relied upon the accuracy and completeness of all information supplied or otherwise made available to it by the Company. HFBE assumed, with the Company’s consent, that the projections for the Company used in rendering its opinion had been reasonably prepared on bases reflecting the best currently available estimates and judgments of the Company’s management. HFBE expresses no opinion with respect to such projections or the assumptions on which such projections are based. HFBE was not engaged to and did not independently verify such information or assumptions, including any financial forecasts. Neither the Company nor HFBE or any other person assumes responsibility if future results are materially different from those discussed. HFBE did not undertake and was not provided with an independent evaluation or appraisal of the assets or liabilities (contingent or otherwise) of the Company. HFBE also relied upon and assumed, without independent verification, that the Merger will be consummated in a timely manner in accordance with the terms described in the Merger Agreement and documents provided to it by the Company, without any material amendments or modifications thereto.

HFBE was not requested to and did not solicit third party indications of interest in providing capital to or acquiring all or any part of the Company. The opinion of HFBE was just one of the several factors taken into account by the Special Committee in making its determination to approve the Merger, including those described elsewhere in this proxy statement.

The preparation of a fairness opinion involves various determinations as to the most appropriate and relevant quantitative and qualitative methods of financial analysis and the application of those methods to the particular circumstances and, therefore, such an opinion is not readily susceptible to partial analysis or summary description. Furthermore, in arriving at its opinion, HFBE did not attribute any particular weight to any analysis or factor that it considered, but rather made qualitative judgments as to the significance and relevance of each analysis or factor. Accordingly, HFBE believes that its analysis must be considered as a whole and that considering any portion of such analysis and of the factors considered, without considering all analyses and factors, could create a misleading or incomplete view of the process underlying its opinion. In its analyses HFBE made numerous assumptions with respect to the industry, general business and economic conditions and other matters, many of which are beyond the control of the Company or GPP. Any estimates contained in these analyses are not necessarily indicative of actual values or predictive of future results or values which may be significantly more or less favorable than as set forth therein. Accordingly, the analyses and estimates are inherently subject to substantial uncertainty and neither the Company nor HFBE assume responsibility if future results are materially different than those forecast. In addition, analyses relating to the value of the business do not purport to be appraisals or to reflect the prices at which businesses may actually be sold. Also, HFBE did not attempt to confirm whether the Company had good title to its assets.

The HFBE opinion is for the use and benefit of the Special Committee in connection with its consideration of the Merger. The HFBE opinion may not be used by any other person or for any other purpose without HFBE’s

prior written consent. HFBE’s opinion should not be construed as creating any fiduciary duty on its part to any party. HFBE’s opinion was based on economic, market, financial and other conditions as they existed as of the date of the opinion, and on the information made available to HFBE as of the date of the opinion. Although subsequent developments may affect the conclusion reached in the opinion, HFBE has no obligation to update, revise, or reaffirm its opinion. HFBE’s opinion has been reviewed and authorized for issuance by HFBE’s fairness committee.

The following represents a brief summary of the material financial analyses presented by HFBE to the Special Committee in connection with rendering its opinion. The summary set forth below does not purport to be a complete description of the analyses performed by HFBE nor does the order of the analyses described represent the relative importance or weight given to those analyses by HFBE. Certain of the summaries of the financial analyses include information set forth in tabular format. The tables must be read together with the full text of each summary in order to fully understand the financial analyses used by HFBE and are not alone a complete description of HFBE’s analyses. HFBE further believes that selecting portions of its analyses and the factors considered or focusing on information presented in tabular format, without considering all analyses and factors or the narrative description of the analyses, could create a misleading or incomplete view of the processes underlying HFBE’s analyses and opinion.

As of December 17, 2010, the Company had approximately 12.8 million shares of common stock outstanding with an aggregate equity market capitalization of $17 million based on the closing price per share of the Company’s common stock of $1.30. HFBE reviewed the average of the closing prices per share of the Company’s common stock, as well as the low and high closing price per share of the Company’s common stock, over the 10-day, 30-day, three-month, and one-year periods ending on December 17, 2010. The results of this review are noted in the table below.

For the purposes of its analysis, HFBE assumed the consideration to be paid to the NonRollover Stockholders in the Merger would be $2.87 per share of the Company’s common stock. Based on 14.8 million diluted shares (as determined using the treasury method) of the Company’s common stock outstanding as of December 17, 2010 and the Per Share Price of $2.87 per share of the Company’s common stock, the aggregate value of the consideration offered to the Company’s common stock was $42.6 million. After subtracting estimated net cash of $1.9 million (based on cash of $4.0 million as of September 30, 2010 adjusted downward by $2.1 million to account for the $0.16 per share dividend announced on December 2, 2010), the enterprise value of the Company implied in the Merger was approximately $40.7 million.

Discounted Cash Flow Analysis. HFBE performed a discounted cash flow analysis of the Company on a stand-alone basis using financial forecasts and estimates prepared by the Company’s management for fiscal years ending December 31, 2011 to 2014. HFBE performed a discounted cash flow analysis to generate reference ranges for the implied per share equity value of the Company common stock by calculating the total present value of estimated, stand-alone, unlevered, after-tax cash flows beginning on January 1, 2011 through December 31, 2014 using discount rates ranging from 13.5% to 16.4%. HFBE also calculated terminal values for

each of the cases for the Company, as of December 31, 2014, using unlevered, after-tax, cash flows and capitalization rates ranging from 8.5% to 13.4%. The capitalization rates were divided into projected, unlevered, after-tax cash flows for fiscal year ending December 31, 2015 to determine the estimated terminal values of the Company. The estimated terminal values were then discounted to present value as of August 31, 2010 using the discount rates ranging from 13.5% to 16.4%. For purposes of this analysis, HFBE used the number of diluted shares of the Company common stock as of December 17, 2010 calculated using the treasury method. The discounted cash flow analysis indicated the following implied equity value per share reference range of the Company’s common stock, as compared to the Per Share Price utilized by HFBE in its analysis:

Selected Company Analysis. HFBE deemed the selected companies to be relevant based upon such companies meeting one or more of the following general characteristics: (a) public company traded on a U.S. exchange; (b) healthcare company primarily focused on businesses reasonably similar to that of the Company; and (c) majority of revenues derived in the United States. Using publicly available information, HFBE compared selected financial information for the Company and the following four selected publicly traded companies in the healthcare industry:

All of the selected companies are larger than the Company both in terms of revenues, EBITDA (earnings before interest expense, tax expense, depreciation and amortization) and enterprise value, with latest twelve months ended September 30, 2010 (“LTM”) revenues ranging from approximately $29.9 million to approximately $2.8 billion, compared with the Company’s LTM revenues of approximately $24.8 million. The LTM EBITDA of the selected companies ranged from $8.2 million to $302.9 million, as compared to $6.3 million for the Company. Based on publicly available information as of December 17, 2010, the enterprise value for the selected companies ranged from approximately $43.7 million to approximately $2.9 billion, compared with the Company’s approximately $40.7 million (based on the enterprise value of the Company implied by the Per Share Price of $2.87 utilized in HFBE’s analysis).

For each of the selected companies, HFBE reviewed, among other things, the ratio of enterprise value, which was calculated as equity value based on closing stock prices as of December 17, 2010, plus debt, less cash and cash equivalents, as a multiple of the LTM and estimated 2011 (“2011E”) and 2012 (“2012E”) EBITDA. Estimated financial data of the selected publicly traded companies were based on publicly available research analysts’ estimates (any of which may or may not prove to be accurate), public filings, and other publicly available information. Estimated financial data of the Company were based on the Company management’s forecasts. The multiples and ratios for the Company were calculated based on using the Per Share Price of $2.87 of the Company’s common stock.

For the Company, HFBE applied a range of selected multiples derived from the selected companies based on LTM and estimated 2011 and 2012 EBITDA to corresponding financial data of the Company in order to derive implied per share equity value reference ranges for the Company’s common stock. This analysis indicated the following implied per share equity value reference ranges for the Company’s common stock, as compared to the Per Share Price:

No company utilized in the selected companies analysis is identical to the Company. Accordingly, an evaluation of the results of this analysis is not entirely mathematical. Rather, this analysis involves complex considerations and judgments concerning differences in financial and operating characteristics and other factors that could affect the enterprise values, calculated as described above or other values of the companies to which the Company was compared.

HFBE also reviewed, for informational purposes, certain other factors, including control premiums paid in selected precedent transactions involving companies with stock prices greater than $1 per share completed between January 1, 2000 and December 17, 2010.

The discussion set forth above is a summary of the material financial analyses presented by HFBE to the Special Committee in connection with its opinion and is not a comprehensive description of all analyses undertaken by HFBE in connection with its opinion. Subject to the limitations on the review undertaken by HFBE, the assumptions and qualitative judgments made by HFBE and other factors stated in its opinion and referred to above, the implied per share equity value reference ranges for the Company derived using the various valuation methodologies discussed above supported HFBE’s conclusion that the consideration to be received by the NonRollover Stockholders in the Merger was fair, from a financial point of view, to the NonRollover Stockholders.

HFBE is a nationally recognized investment banking and business valuation firm with expertise in, among other things, valuing businesses and securities and rendering fairness opinions. HFBE is continually engaged in the valuation of businesses and securities in connection with mergers and acquisitions, private placements of equity and debt, employee stock ownership plans, and other general corporate purposes. The Company determined to use the services of HFBE because it is a recognized investment banking firm that has substantial experience in similar matters. HFBE has received a customary fee in connection with the preparation and issuance of its opinion and will be reimbursed for its reasonable expenses, including attorneys’ fees. No additional fee or compensation for services will be paid to HFBE in connection with or upon completion of the Merger. Also, the Company has agreed to indemnify HFBE and related persons and entities for certain liabilities that may relate to, or arise out of, its engagement, including liabilities under federal securities laws. During the two years preceding the date of its opinion, HFBE has not provided any services to and has not received any compensation from the Company, GPP, or their respective affiliates. HFBE may in the future provide financial advisory, investment banking, or other services to the Company, GPP, or their respective affiliates for which it would expect to receive compensation.

If the proposed Merger is completed, the Company will become a wholly owned subsidiary of Parent. Merger Sub is a wholly owned subsidiary of Parent, which is an affiliate of GPP. For Parent and Merger Sub, the purpose of the transaction is to effectuate the transactions contemplated by the Merger Agreement. For GPP, the purpose of the Merger is to allow GPP to indirectly own a majority of the Company. The transaction has been structured as a cash merger in order to provide the Company’s NonRollover Stockholders with cash for their shares of the Company’s common stock and to provide a prompt and orderly transfer of ownership of the Company.

Parent, Merger Sub and GPP believe that it is best for the Company to operate as a privately held entity because, as such, GPP believes the Company will have greater operating flexibility, allowing management to concentrate on long-term growth, reduce its focus on the quarter-to-quarter performance often emphasized by the public markets and pursue alternatives that the Company may not have as a public company. In addition, Parent, Merger Sub and GPP believe that the Company’s future business prospects can be improved through GPP’s active participation in the strategic direction and operation of the Company. Parent, Merger Sub and GPP believe that there will be significant opportunities associated with GPP’s investment in the Company, but also realize that there are substantial risks, including the risks and uncertainties related to the Company’s prospects and operations.

Parent, Merger Sub and GPP believe that structuring the transaction as a merger is preferable to other transaction structures because it will enable Parent to acquire all of the equity of the Company at one time and provides the opportunity for the Company’s NonRollover Stockholders to receive fair value for their shares, payable in cash.

After the Merger, it is expected that the business and operations of the Surviving Corporation will be continued substantially as they are currently being conducted by the Company and its subsidiaries.

After the Merger, the board of directors of the Parent shall include seven members, designated as follows:

Parent and GPP have no present plans or proposals involving the Company or its subsidiaries that relate to or would result in an extraordinary corporate transaction, such as a merger, reorganization, or liquidation, or a purchase, sale, or transfer of a material amount of assets, or any other material change in their corporate structures or businesses.

After the Merger, the board of directors and management of the Surviving Corporation may review proposals relating to or may propose an acquisition or disposition of assets or other changes in the business, corporate structure, capitalization, or management of the Surviving Corporation or its subsidiaries and may develop new plans and proposals that they consider appropriate to maximize the value of the Surviving Corporation, and may undertake any of the foregoing actions if they are deemed desirable at any time following the Merger. GPP and Parent expressly reserve the right to make any changes they deem appropriate in light of

such evaluation and review or in light of future developments and opportunities, subject to approval by Mr. Elgamal and Mr. Olmo-Riva in certain instances, as long as each owns all of the shares of the Parent’s Series A preferred stock he acquires at the time of the Merger.

Interests of Certain of the Company’s Officers and Directors in the Merger

In considering the recommendation of the Special Committee and the Board with respect to the Merger, the Company’s NonRollover Stockholders should be aware that certain members of the Company’s Board, management and key employees have interests that are different from the interests of the Company’s NonRollover Stockholders, as more fully described below. These interests may create actual or potential conflicts of interest. As a result, the Board formed the Special Committee to evaluate the proposed Merger. The Special Committee is comprised solely of members of the Board who are not employees of the Company, who are deemed to be independent, and who have no commercial relationship with GPP, Parent, Merger Sub or their affiliates. The Special Committee and the Board were made aware of these interests and considered them when they adopted and approved the Merger Agreement and the Merger. These interests include the following:

Special Committee members are paid for their service on the Special Committee as follows:

If the Merger is consummated, Parent and the Rollover Stockholders, indirectly through their ownership in Parent, will benefit from any future earnings or growth of the Surviving Corporation and any increases in value of the Surviving Corporation. The NonRollover Stockholders will no longer have any interest in, and will not be stockholders of, the Company. Accordingly, the NonRollover Stockholders will not benefit from any future earnings or growth of the Company or from any increases in the value of the Company or any future dividends that may be paid, if any, and will no longer bear the risk of any decreases in value of the Company. Instead, each NonRollover Stockholder will have the right to receive, upon consummation of the Merger, the Merger Consideration, for each share of common stock held. The receipt of the Merger Consideration will generally be a taxable sale transaction for U.S. federal income tax purposes. See “– Material U.S. Federal Income Tax Consequences of the Merger.”

In connection with the negotiation of the terms of the Merger Agreement between the Company and GPP, the Company advised GPP that it believed that certain litigation it had filed that was pending against certain insurance companies had potential meaningful value to its stockholders. GPP was not prepared to increase its valuation of the Company based on the value of the litigation. GPP did not believe that the continued prosecution of such litigation was in the best interests of the ongoing business of the Company, and, as a result, GPP did not want active litigation (other than participation in standard class action litigation) to continue after the Closing of the Merger. The parties discussed several ways that the Company might retain the potential value of the litigation for its stockholders and finally agreed that the beneficial ownership in certain class action litigation could be transferred to a newly formed wholly owned subsidiary of the Company and distributed at the Effective Time as Additional Per Share Merger Consideration. As a result, the Company formed CMC and intends to distribute the ownership interests in CMC (the “CMC Interests”) as part of the Additional Per Share Merger Consideration at

the Effective Time. ASA, the Company’s subsidiary that is a party to the litigation, will transfer to CMC up to $100,000 in cash and assign its rights in claims under certain class action litigation in which ASA is currently or may become a class member and the right to participate in certain other potential class action litigation (the “Assigned Litigation”) and all obligations and liabilities related to these transferred assets, whether known or unknown, contingent, absolute or otherwise. At the Closing, the Company will enter into the Formation Agreement with CMC. The Formation Agreement also memorializes certain procedures with respect to the handling of the Assigned Litigation following the Effective Time as well as to describe how CMC will be formed. Please read the discussion under the heading “The Transaction Documents – Formation Agreement and Class Action Litigation.”

When evaluating the Additional Equity Per Share Merger Consideration, you should consider that the primary asset of CMC is its right to receive any settlement amounts upon a favorable resolution of the Assigned Litigation. There can be no assurances as to the amounts, if any, that CMC will receive upon resolution of the Assigned Litigation. In view of this uncertainty, the Company is unable to determine the value of the CMC Interests at the present time and there can be no assurances that the CMC Interests will have any value in the future.

In connection with the Merger Agreement, the Rollover Stockholders who collectively own more than 60% of the issued and outstanding shares of the Company’s common stock, entered into Voting Agreements with the Parent whereby they have agreed to vote the shares of common stock owned by them in favor of the adoption of the Merger Agreement and the consummation of the Merger. The Voting Agreements will terminate upon the Effective Time or if the Merger Agreement is terminated in accordance with its terms.

Contemporaneously with the execution of the Merger Agreement, the Rollover Stockholders entered into the Exchange Agreements, whereby immediately before the Effective Time, each of the Rollover Stockholders will exchange 22.5% of the shares of the Company’s common stock owned by them for shares of Series A preferred stock of the Parent that will represent, in the aggregate, approximately 14.9% of the Parent’s total outstanding shares of capital stock at the Effective Time. The Series A preferred stock will be convertible into shares of the Parent’s voting common stock. Holders of the Series A preferred stock will be entitled to vote along with the Parent’s voting common stock on an as-converted-basis. In addition, the holders of Series A preferred stock will vote as a class with the holders of the Parent’s Series B preferred stock. The transactions contemplated by the Exchange Agreements will not occur if the Merger Agreement is terminated in accordance with its terms.

By virtue of the Exchange Agreements, the Rollover Stockholders will also become parties to a Stockholders’ Agreement among Parent, GPP I-AH, LLC, a Delaware limited liability company and an affiliate of GPP (“GPP-I”), and each of the Rollover Stockholders. The Stockholders’ Agreement will, among other things, provide for restrictions on the transfer of Parent’s capital stock, create certain options with respect to such capital stock, and set forth certain corporate governance provisions applicable to Parent after the Closing of the Merger. The rights of all of the holders of the outstanding capital stock of Parent will be governed by the Stockholders’ Agreement and by the Amended and Restated Certificate of Incorporation of Parent, each of which will become effective only upon the occurrence of the Effective Time.

The following is a summary of material U.S. federal income tax considerations relevant to the stockholders whose shares of common stock are converted to the Merger Consideration in the Merger. This summary is based on laws, regulations, rulings, and decisions currently in effect, all of which are subject to change (possibly with retroactive effect). This summary applies only to stockholders who hold shares of common stock as capital assets

within the meaning of Section 1221 of the Internal Revenue Code of 1986, as amended, and may not apply to certain types of stockholders (such as insurance companies, tax-exempt organizations, and broker-dealers) who may be subject to special rules. This summary does not address the U.S. federal income tax consequences to a stockholder who, for U.S. federal income tax purposes, is a nonresident alien individual, a foreign corporation, a foreign partnership, or a foreign estate or trust, nor does it consider the effect of any foreign, state, or local tax laws.

Because individual circumstances may differ, each stockholder should consult his, her, or its own tax advisor to determine the applicability of the rules discussed below to his, her, or its tax situation and the particular tax effects to him, her or it of the Merger, including the application and effect of state, local, and other tax laws.

Without limiting the generality of the foregoing, if a partnership (or an entity or arrangement treated as a partnership for U.S. federal income tax purposes) is a stockholder, the tax treatment of a partner will generally depend on the status of the partner and the activities of the partnership.

The receipt of Merger Consideration (i.e., the Price Per Share and the Additional Per Share Merger Consideration) or, for shares of common stock that are held by a stockholder who is entitled to and who has properly demanded appraisal for such common stock (the “Dissenting Shares”), the amount received for the shares (the “Dissenting Shares Consideration”)) for shares of common stock pursuant to the Merger will be a taxable transaction for U.S. federal income tax purposes. In general, for U.S. federal income tax purposes, a stockholder will recognize capital gain or loss equal to the difference between the stockholder’s adjusted tax basis in the shares of common stock converted to cash in the Merger and the amount of Merger Consideration or the Dissenting Shares Consideration received. A stockholder’s adjusted basis in the shares of common stock generally should equal the stockholder’s purchase price for such shares of common stock, as adjusted to take into account stock dividends, stock splits, or similar transactions. The amount of Merger Consideration or Dissenting Shares Consideration received will equal the amount of cash received plus the fair market value of property received. Such property includes the Additional Equity Per Share Merger Consideration, for which the Company has not determined the fair market value. In determining the fair market value of such property, you should consult with your tax advisor.

Gain or loss must be determined separately for each block of common stock (i.e., shares of common stock acquired at the same cost in a single transaction) converted to Merger Consideration or Dissenting Shares Consideration.

While the Additional Cash Per Share Merger Consideration should be treated as part of the Merger Consideration, it is possible that the Additional Cash Per Share Merger Consideration will be treated as a dividend for tax purposes. While in general, for United States federal income tax purposes, a qualified dividend paid on or before December 31, 2012, will be taxed at a rate of no more than 15%, the entire amount of the dividend will be subject to tax (i.e., there will be no reduction for tax basis). While the basis can be applied against the part of the Merger Consideration that is not treated as a dividend (e.g., the Price Per Share), it is possible that such dividend treatment can result in a capital loss on the part of the Merger Consideration that is not treated as a dividend (as such part of the Merger Consideration may be less in amount than the basis). As explained below, there are several limits on the ability of a taxpayer to deduct capital losses.

Notwithstanding the above, if you are related, under applicable attribution rules, to a person deemed to own shares of the Parent after the Merger, all the Merger Consideration you receive might possibly be treated as a dividend of the Parent. If you are related to a person deemed to own shares after the Merger, you should consult with your tax advisor to determine your appropriate tax treatment of the Merger.

If you own a Company Stock Option or Company Warrant, the Option Consideration or the Warrant Consideration you receive or to which you are entitled to as a result of the Merger will likely be subject to tax as

of the date the Merger is consummated. The amount of tax will be based on the amount of such consideration and the ordinary income tax rates for U.S. federal income tax purposes. In addition, your receipt of such consideration or your right to receive such consideration may be subject to withholding. You should consult with your tax advisor to determine your appropriate tax treatment.

A stockholder’s gain or loss on the receipt of consideration for shares of common stock generally will be capital gain or loss. Net capital gain (i.e., generally, capital gain in excess of capital loss) recognized by individuals, estates, and trusts from the sale of property held more than one year would generally be taxed at a rate not to exceed 15% for U.S. federal income tax purposes; provided that, if the Merger is consummated after December 31, 2012, based on current law such gain would be taxed at a rate not to exceed 20% for U.S. federal income tax purposes. Net capital gain from property held for one year or less will be subject to tax at ordinary income tax rates. In addition, capital gains recognized by a corporate taxpayer will be subject to tax at the ordinary income tax rates applicable to corporations. In general, capital losses are deductible only against capital gains and are not available to offset ordinary income. However, individual taxpayers are allowed to offset a limited amount of capital losses against ordinary income.

A stockholder may, under certain circumstances, be subject to “backup withholding” with respect to “reportable payments” made to the stockholder, such as payments of cash for shares of common stock, unless the stockholder provides a taxpayer identification number or otherwise establishes an exemption. Backup withholding is not an additional U.S. federal income tax. Rather, any amount withheld under these rules will be creditable against the stockholder’s U.S. federal income tax liability, provided the required information is furnished to the Internal Revenue Service.

THE FOREGOING DISCUSSION OF CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES IS NOT TAX ADVICE. IN ADDITION, THE DISCUSSION DOES NOT ADDRESS TAX CONSEQUENCES WHICH MAY VARY WITH, OR ARE CONTINGENT ON, YOUR INDIVIDUAL CIRCUMSTANCES. MOREOVER, THE DISCUSSION DOES NOT ADDRESS ANY NON-INCOME TAX OR ANY FOREIGN, STATE, OR LOCAL TAX CONSEQUENCES OF THE MERGER. ACCORDINGLY, THE COMPANY STRONGLY RECOMMENDS THAT YOU CONSULT WITH YOUR TAX ADVISOR TO DETERMINE THE PARTICULAR U.S. FEDERAL, STATE, LOCAL, OR FOREIGN INCOME OR OTHER TAX CONSEQUENCES TO YOU OF THE MERGER.

The Merger is contingent on the Parent and Merger Sub obtaining funded debt financing of not less than $17.5 million, on terms and conditions satisfactory to Parent. To date Parent has obtained term sheets with respect to such debt financing. Parent currently expects to finance a total of $23.4 million, which will likely be comprised of a senior secured revolving term loan in the amount of $15.0 million and up to $8.4 million in a senior secured subordinated note. The debt financing is expected to be secured by first and second liens on all of the assets of the Company and have a maturity date of between four and five years.

The Company does not believe that any material federal or state regulatory approvals, filings, or notices are required in connection with the Merger other than approvals, filings or notices required under the federal securities laws, the filing of the certificate of merger with the Delaware Secretary of State upon consummation of the Merger, filings required by and approvals required under the rules and regulations of the OTCBB, and filings, waivers or approvals as may be required under any applicable healthcare laws.

Whether or not the Merger is consummated and except as otherwise provided in this proxy statement or the Merger Agreement, the Company shall be responsible for the reasonable out-of-pocket fees and expenses incurred by the Company, the Special Committee and the Rollover Stockholders in connection with the Merger and the transactions contemplated under the Merger Agreement, including the Employment Agreements. Estimated fees and expenses to be incurred by the Company in connection with the Merger are as follows:

The Board (including the Special Committee) has received the opinion of HFBE, dated as of December 19, 2010 (the “Fairness Opinion”), to the effect that, as of such date, and subject to the various assumptions, limitations, and qualifications set forth therein, the Per Share Price to be received by the NonRollover Stockholders is fair from a financial point of view to such holders.

No provision has been made to grant the NonRollover Stockholders access to the corporate files of the Company or its subsidiaries or the other parties to the Merger Agreement, or to obtain counsel or appraisal services at the expense of the Company or such other parties.

Under the DGCL, if you do not wish to accept the 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 shares of the Company’s common stock. The Company’s stockholders electing to exercise appraisal rights must comply with the provisions of Section 262 of the DGCL in order to perfect their rights. The Company will require strict compliance with the statutory procedures. A copy of Section 262 is attached to this proxy statement as Appendix B.

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 262 of the DGCL.

Section 262 requires that stockholders be notified that appraisal rights will be available not less than 20 days before the Special Meeting to vote on the Merger. A copy of Section 262 must be included with such notice. This proxy statement constitutes the Company’s notice to its stockholders of the availability of appraisal rights in connection with the Merger in compliance with the requirements of Section 262. If you wish to consider exercising your appraisal rights, you should carefully review the text of Section 262 contained in Appendix B since failure to timely and properly comply with the requirements of Section 262 will result in the loss of your appraisal rights under Delaware law.

If you elect to demand appraisal of your shares, you must satisfy each of the following conditions:

If you fail to comply with either of these conditions and the Merger is completed, you will be entitled to receive the Merger Consideration for your shares of the Company’s common stock, without interest (and less applicable withholding taxes), as provided for in the Merger Agreement, but you will have no appraisal rights with respect to your shares of the Company’s common stock.

All demands for appraisal should be addressed to the Secretary at American Surgical Holdings, Inc., 10039 Bissonnet Street, Suite 250, Houston, Texas 77036-7852, 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 your shares of Company common stock. The demand must reasonably inform the Company of the identity of the stockholder and the intention of the stockholder to demand appraisal of his, her or its shares.

To be effective, a demand for appraisal by a holder of the Company’s common stock must be made by, or in the name of, such registered stockholder, fully and correctly, as the stockholder’s name appears on his or her stock certificate(s) 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.

If your shares of the Company’s common stock 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 your 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 of the Company’s common stock as a nominee for others, may exercise his, her or its right of appraisal with respect to the shares of the Company’s common stock 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 of the Company’s common stock as to which appraisal is sought. Where no number of shares of the Company’s common stock is expressly mentioned, the demand will be presumed to cover all shares of the Company’s common stock held in the name of the record owner.

If you hold your shares of the Company’s common stock in “street name” through a bank, broker or custodian or in other nominee form and you wish to exercise appraisal rights, you should consult with your bank, broker, custodian or other nominee to determine the appropriate procedures for making a demand for appraisal by the nominee.

Within 10 days after the Effective Time, the Surviving Corporation must give written notice that the Merger has become effective to each Company 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 days after the Effective Time, 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, her or its shares of Company common stock. Within 120 days after the Effective Time, either the Surviving Corporation or any stockholder who has complied with the requirements of Section 262 may file a petition in the Delaware Court of Chancery (the “Chancery Court”) 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’s previously written demand for appraisal. In addition, within 120 days after the Effective Time of the Merger, any stockholder who has properly filed a written demand for appraisal and who did not vote in favor of the Merger Agreement, upon written request, will be entitled to receive from the Company, as the Surviving Corporation, a statement setting forth the aggregate number of shares not voted in favor of the Merger Agreement and the aggregate number of holders of shares for which demands for appraisal have been received. The statement must be mailed within 10 days after a written request therefor has been received by the Surviving Corporation or within 10 days after the expiration of the period for delivery of demands for appraisal, whichever is later. Notwithstanding the foregoing, a person who is the beneficial owner of shares of the Company’s common stock held either in a voting trust or by a nominee on behalf of such person may, in such person’s own name, file a petition or request from the Company such statement.

If a petition for appraisal is duly filed by a stockholder and a copy of the petition is delivered to the Surviving Corporation, the Surviving Corporation will then be obligated, within 20 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 of the Company’s common stock. 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 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 of the Company’s common stock 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.

After determination of the stockholders entitled to appraisal of their shares of the Company’s 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 of the Company’s common stock.

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 of the Company’s common stock determined under Section 262 could be more, the same, or less than the value that you are entitled to receive under the terms of the Merger Agreement. You should also be aware that an investment banking opinion as to fairness from a financial point of view is not necessarily an opinion as to fair value under Section 262. Although the Company believes that the merger consideration is fair, no representation is made as to the outcome of the appraisal of fair value as determined by the Chancery Court, and stockholders should recognize that such an appraisal could result in a determination of a value higher or lower than, or the same as, the merger consideration. Neither Parent nor the Company anticipate offering more than the applicable merger consideration to any stockholder of the Company exercising appraisal rights, and reserve the right to assert, in any appraisal proceeding, that for purposes of Section 262, the “fair value” of a share of the Company’s common stock is less than the applicable merger consideration. The Delaware courts have stated that the methods that are generally considered acceptable in the financial community and otherwise admissible in court may be considered in the appraisal proceedings. In addition, the Delaware courts have decided that the statutory appraisal remedy, depending on factual circumstances, may or may not be a dissenting stockholder’s exclusive remedy.

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, without limitation, reasonable attorneys’ fees and the fees and expenses of experts, to be charged pro rata against the value of all shares of the Company’s common stock entitled to appraisal. Any stockholder who had demanded appraisal rights will not, after the Effective Time, be entitled to vote shares of the Company’s common stock subject to that demand for any purpose or to receive payments of dividends or any other distribution with respect to those shares of the Company’s common stock, other than with respect to payment as of a record date prior to the Effective Time; however, if no petition for appraisal is filed within 120 days after the Effective Time, 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 days after the Effective Time, 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 Company common stock pursuant to the Merger Agreement. Any withdrawal of a demand for appraisal made more than 60 days after the Effective Time may only be made with the written approval of the Surviving Corporation and must, to be effective, be made within 120 days after the Effective Time.

In view of the complexity of Section 262, the Company’s stockholders who may wish to dissent from the Merger and pursue appraisal rights should consult their legal advisors.

Delisting and Deregistration of the Company’s Common Stock after the Merger

If the Merger is completed, the Company’s common stock will be delisted from the OTCBB and will be deregistered under the Exchange Act.

Certain statements in this proxy statement, the documents attached hereto and the documents incorporated by reference in this proxy statement are forward-looking statements. These include statements as to such things as the Company’s financial condition, results of operations, plans, objectives, future performance and business, as well as forward-looking statements relating to the Merger. Such forward-looking statements are based on facts and conditions as they exist at the time such statements are made. Forward-looking statements are also based on current expectations, estimates and projections about the Company’s business and the proposed Merger, the accurate prediction of which may be difficult and involve the assessment of events beyond the Company’s control. The forward-looking statements are further based on assumptions made by management. Forward-looking statements can be identified by forward-looking language, including words such as “believes,” “anticipates,” “expects,” “estimates,” “intends,” “may,” “plans,” “projects,” “will,” “continue,” “could,” “opportunity,” “future” and similar expressions, or the negative of these words. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. Readers of this proxy statement are cautioned to consider these risks and uncertainties and not to place undue reliance on any forward-looking statements.

Statements that are not historical facts are based on the Company’s current expectations, beliefs, assumptions, estimates, forecasts and projections for the Company’s business and the industry and markets in which the Company competes. Any forward-looking statements contained in this proxy statement are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed in such forward-looking statements. The Company cautions investors not to place undue reliance on the forward-looking statements contained in this proxy statement. These statements speak only as of the date of this proxy statement, and the Company does not undertake any obligation to update or revise them, except as required by law.

Set forth below are various risks related to the proposed Merger. The following is not intended to be an exhaustive list of the risks related to the Merger and these risks should be read in conjunction with the other information in this proxy statement:

If the Merger is not completed for any reason, the Company will continue to be subject to the risks and uncertainties associated with its continued operations discussed in the Risk Factors Section of our Annual Report on Form 10-K for the year ended December 31, 2009, which is included as Appendix D to this proxy statement and incorporated by reference herein. These risks included but are not limited to the following:

The Company believes that the assumptions on which the Company’s forward-looking statements are based are reasonable. However, the Company cannot assure you that the actual results or developments the Company anticipates will be realized or, if realized, that they will have the expected effects on the Company’s business or operations. All subsequent written and oral forward-looking statements concerning the Merger or other matters addressed in this proxy statement and attributable to the Company or any person acting on the Company’s behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Further, forward-looking statements speak only as of the date they are made and, except as required by applicable law or regulation, the Company undertakes no obligation to update these forward-looking statements to reflect future events or circumstances.

This proxy statement is being furnished to stockholders of the Company in connection with the solicitation of proxies on behalf of the Board for use at the Special Meeting to be held on , 2011 at 10:00 a.m., Central Time, at , Houston, Texas and at any adjournment or postponement of that meeting.

Acting on the recommendation of the Special Committee, the Board has determined that the Merger Agreement and the Merger are advisable, fair to, and in the best interests of, the Company and holders of the Company’s common stock, including the NonRollover Stockholders. Consequently, the Board has adopted and approved the Merger Agreement and the Merger, and recommends that the Company’s stockholders vote “FOR” the adoption and approval of the Merger Agreement and the Merger.

The Board has fixed the close of business on (the “Record Date”) as the record date to determine the Company’s stockholders entitled to receive notice of, and to vote at, the Special Meeting. As of the close of business on the Record Date, the Company had outstanding shares of the Company’s common stock held of record by registered holders. Each outstanding share of the Company’s common stock on the Record Date is entitled to one vote on all matters coming before the Special Meeting. The presence, either in person or by proxy, of a majority of the issued and outstanding shares of the Company’s common stock entitled to vote at the Special Meeting is necessary to constitute a quorum for the transaction of business at the Special Meeting.

Adoption and approval of the Merger Agreement and the Merger requires the affirmative vote of the holders of a majority of the outstanding shares of the Company’s common stock entitled to vote at the Special Meeting, or shares. Adjournment of the Special Meeting, if necessary to solicit additional proxies, requires the approval of a majority of the votes cast. Stockholders owning over 60% of the outstanding shares of the Company’s common stock have entered into the Voting Agreements and agreed to vote their respective shares of the Company’s common stock owned by such stockholders “FOR” the adoption and approval of the Merger Agreement and the Merger.

At the Special Meeting, the results of stockholder voting will be tabulated by the inspector of elections appointed for the Special Meeting. All shares of the Company’s common stock represented at the Special Meeting by properly executed or submitted proxies received prior to or at the Special Meeting, unless previously revoked, will be voted at the Special Meeting in accordance with the instructions on the proxies. Unless contrary instructions are indicated, proxies will be voted “FOR” the adoption and approval of the Merger Agreement and the Merger and “FOR” approval of the proposal to adjourn the Special Meeting, if necessary or appropriate.

Other than the Merger Agreement and the Merger and the proposal to adjourn the Special Meeting, if necessary and appropriate, the Board does not know of any matters that are to come before the Special Meeting. If any other matters are properly presented at the Special Meeting for action, the persons named in the enclosed proxy will have discretion to vote on such matters in accordance with their best judgment.

Properly authenticated proxies voted “AGAINST or “ABSTAIN” at the Special Meeting will be counted for purposes of determining whether a quorum has been achieved at the Special Meeting and will have the effect of a vote against the Merger Agreement and the Merger. Shares of the Company’s common stock that are not represented at the Special Meeting, or shares of the Company’s common stock that are held in “street name” or in the name of a broker for which voting instructions have not been given, will have the effect of a vote against the Merger Agreement and the Merger but will have no effect on any vote with respect to the adjournment of the meeting to solicit additional proxies in support of the proposal to adopt the Merger Agreement.

Giving a proxy does not preclude a stockholder’s right to vote in person if the stockholder giving the proxy so desires. A stockholder has the unconditional right to revoke his, her, or its proxy at any time prior to voting at the Special Meeting and may do so in any of the following ways:

Your attendance at the Special Meeting alone will not revoke any proxy. If you choose to change your vote, you must take the described action, and the applicable notice must be received, no later than the beginning of the Special Meeting.

If your shares of the Company’s common stock are held in an account with a broker or in the name of another nominee, you should contact your broker or other nominee to change your vote.

The enclosed proxy is solicited on behalf of the Board. The cost of preparing, assembling, and mailing this proxy statement, the Notice of Special Meeting and the enclosed proxy will be borne by the Company. The Company is requesting that banks, brokers and other custodians, nominees and fiduciaries forward copies of the proxy materials to their principals and request authority for the execution of proxies. The Company may reimburse these persons for their expenses in so doing. The directors, officers and employees of the Company and its subsidiaries may also solicit proxies by telephone, facsimile, electronic mail, telegram or in person. Such directors, officers, and employees will not be additionally compensated for this solicitation, but may be reimbursed for out-of-pocket expenses incurred.

The Company has not authorized any person to provide any information or make any representation not contained in this proxy statement. You should not rely on any such information or representation as having been authorized.

If the Merger Agreement and the Merger are approved and the Merger is consummated, holders of the Company’s common stock and Company Warrants will be sent instructions regarding the surrender of their certificates representing shares of the Company’s common stock and the exercise of their Company Warrants. Stockholders should not send their stock certificates or warrant certificates until they receive these instructions. For more information on the surrender of stock certificates, please see the section entitled “Proposal 1 – Approval of the Merger Agreement and the Merger – Exchange Procedures.”

If the Merger Agreement and the Merger are approved and the Merger is consummated, holders of the Company Stock Options will be entitled to receive the Option Consideration upon surrender to the Surviving Corporation of the original Company Stock Option agreement and an executed copy of the exercise notice in the form attached to their respective Company Stock Option agreement. The Surviving Corporation shall remit payment of the Option Consideration less applicable withholding taxes, no later than the fifth business day after receipt of the documentation outlined above.

The Company currently does not intend to propose adjournment at the Special Meeting if there are sufficient votes to approve the Merger Agreement and the Merger. If there are insufficient votes to approve the Merger Agreement and the Merger, the Special Meeting may be adjourned or postponed to another time or place if such proposal is approved by the affirmative vote of a majority of the shares of the Company common stock represented at the Special Meeting. If the Special Meeting is adjourned to a date more than 60 days later than the Record Date of the original Special Meeting, the Board is required to fix a new record date.

The Company, through its wholly owned subsidiaries, including ASA, provides professional surgical assistant services to patients, surgeons, and healthcare institutions. The Company provides service in Houston, Corpus Christi and San Antonio, Texas, Lawton, Oklahoma, Suffolk, Virginia, Memphis, Tennessee and Augusta, Georgia. The Company was incorporated in Delaware on July 22, 2003 under the name of Renfrew, Inc. On August 2, 2005, the Company filed Articles of Amendment with the State of Delaware, changing the name of the Company to ASAH Corp. On January 9, 2007, the Company filed Articles of Amendment with the State of Delaware changing the name of the Company to American Surgical Holdings, Inc. The Company’s principal executive offices are located at 10039 Bissonnet Street, Suite 250, Houston, Texas 77036-7852. The telephone number of the Company’s principal executive offices is (713) 779-9800 and its website address is www.asainc.us. Information contained on this website does not constitute a part of this proxy statement

Parent was formed as a corporation in Delaware on October 5, 2010 for the sole purpose of entering into the Merger Agreement and engaging in the Merger. Parent was formed by entities affiliated with GPP, a private equity fund that specializes in providing capital to participants in the healthcare industry. Upon Closing of the Merger, the Company will be a wholly owned subsidiary of Parent. Parent’s principal office address is 165 Mason Street, 3^rd Floor, Greenwich, Connecticut 06830. Its telephone number is (203) 971-3300.

The following is a brief summary of the material provisions of the Merger Agreement. This summary is not a complete statement of all applicable provisions in the Merger Agreement and the description in this summary and elsewhere in this proxy statement is qualified in its entirety by reference to the Merger Agreement, a copy of which is attached as Appendix A to this proxy statement and is incorporated by reference into this proxy statement. The Merger Agreement has been included to provide you with information regarding its terms and the legal relationship and risk allocation between the Company, Parent and Merger Sub as the contracting parties. It is not intended to provide any other factual information about the parties. Such information can be found elsewhere in this proxy statement and in other public filings the Company makes with the SEC, which are available without charge at www.sec.gov. The Company encourages you to read the Merger Agreement carefully and in its entirety, as it is the legal document that governs the Merger before deciding to approve the Merger Agreement and the Merger.

The representations and warranties described below and included in the Merger Agreement were made by the parties to each other as of specific dates. The assertions embodied in those representations and warranties were made solely for purposes of the Merger Agreement and may be subject to important qualifications and limitations agreed to by the parties in connection with negotiating its terms. Moreover, the representations and warranties may be subject to a contractual standard of materiality that may be different from what may be viewed as material to stockholders, or may have been used for the purpose of allocating risk between the parties rather than establishing matters as facts. The Merger Agreement is described in this proxy statement and included as Appendix A only to provide you with information regarding its terms and conditions, and not to provide any other factual information regarding the parties or their respective businesses.

In connection with the Merger Agreement, the Company entered into certain of the Transaction Documents, each of which is described in more detail under “The Transaction Documents.”

Subject to the terms and conditions of the Merger Agreement and in accordance with Delaware law, Merger Sub will merge with and into the Company, and the Company will survive as the Surviving Corporation, as a private entity and as a wholly owned subsidiary of Parent.

After the conditions to completion of the Merger have been satisfied or waived, the Merger will become effective upon the later of the date and time of the filing of the certificate of merger with the Secretary of State of the State of Delaware or such later date and time as may be specified in the certificate of merger with the consent of the parties.

The certificate of incorporation and the bylaws of Merger Sub will become effective and will be the certificate of incorporation and bylaws, respectively, of the Surviving Corporation as a result of the Merger.

Directors and Executive Officers of the Surviving Corporation Following the Merger

The directors and officers of the Merger Sub immediately prior to the Effective Time shall, from and after the Effective Time, be the directors and officers of the Surviving Corporation until their successors have been duly elected or appointed and qualified or until their earlier death, resignation or removal in accordance with the certificate of incorporation and the bylaws of the Surviving Corporation and applicable Law.

Upon the Closing, each share of common stock, par value $0.001 per share, of the Company issued and outstanding immediately prior to the Closing (other than (x) any Excluded Shares and (y) any Dissenting Shares), shall be converted into and represent the right to receive the Per Share Price and the Additional Per Share Merger Consideration.

The Per Share Price will be adjusted in the event that subsequent to the date of the Merger Agreement but prior to the Effective Time any one or more of the following occurs:

Any adjustments to the Per Share Price as described above will be aggregated and then such aggregated amount will be rounded down to the nearest whole cent ($0.01) before adding such amount to the $2.87 per share amount.

In connection with the Merger, the Company will distribute as additional merger consideration to each of the Company’s stockholders (including the Rollover Stockholders) and the holders of the Company Stock Options and Company Warrants (A) an amount per share equal to the Additional Cash Per Share Merger Consideration; and (B) the Additional Equity Per Share Merger Consideration.

Each outstanding Company Stock Option to purchase common stock that is not exercised prior to the Closing shall be canceled and converted into the right to receive (i) the Parent Option Consideration plus (ii) (A) the Additional Per Share Merger Consideration multiplied by (B) the Cashless Exercise Option Shares.

Each outstanding Company Warrant to purchase common stock that is not exercised prior to the Closing shall represent the right to receive (i) the Parent Warrant Consideration plus (ii) (A) the Additional Per Share Merger Consideration multiplied by (B) the number of shares of the common stock for which such Company Warrant shall not theretofore have been exercised.

Each Rollover Share owned by a Rollover Stockholder will be converted into and represent the right to receive the Additional Per Share Merger Consideration, which consideration shall be paid directly to the Rollover Stockholders.

Prior to the Effective Time, the Parent or the Merger Sub and the Company shall mutually appoint a bank or trust company (the “Paying Agent”) to act as agent for the holders of the common stock and the Company Warrants in connection with the Merger to receive and distribute the cash portion of the Merger Consideration in exchange for the certificates representing the common stock or upon exercise of the Company Warrants, as applicable. At or prior to the Effective Time, Parent or Merger Sub shall deposit with the Paying Agent an amount equal to the following: (a) the number of outstanding shares of common stock of the Company, less the Excluded Shares and less the Dissenting Shares, multiplied by the Per Share Price, plus (b) the Parent Warrant Consideration. The Parent will deposit additional amounts as needed to make these payments, if required.

Prior to the Effective Time, the Company shall deposit with the Paying Agent cash in an aggregate amount equal to the sum of (x) the product of (i) the number of shares of the Company’s common stock issued and outstanding immediately prior to the Effective Time (other than the Dissenting Shares) multiplied by (ii) the Additional Cash Per Share Merger Consideration, plus (y) the cash portion of the Company Warrant Consideration.

At the Effective Time, the Parent shall also deposit with the Surviving Corporation cash in an aggregate amount equal to the Parent Option Consideration for the benefit of the holders of the Company Stock Options.

Promptly following the consummation of the Merger, the Surviving Corporation will instruct the Paying Agent to mail a letter to each former NonRollover Stockholder of record of the Company’s common stock and each holder of a Company Warrant with instructions on how to exchange stock certificates and how to exercise Company Warrants for the Merger Consideration and the Warrant Consideration, respectively.

Following the consummation of the Merger, upon surrender to the Surviving Corporation of the original Company Stock Option agreement and an executed copy of the exercise notice in the form attached to the Company Stock Option, the Parent shall cause the Surviving Corporation to promptly deliver the Option Consideration less any required withholding taxes.

Please do not send in your stock certificates, Company Warrant certificates and/or any other instruments evidencing your ownership of the Company’s common stock or Company Warrants until you receive the letter of transmittal and instructions from the Paying Agent. Please do not send your Company Stock Option documentation to the Surviving Corporation until after the Closing of the Merger. Do not return your Company stock certificates, Company Stock Option documentation and/or any other instruments evidencing your ownership of the Company’s common stock or Company Warrants with the enclosed proxy card. If your shares of the Company’s common stock or Company Warrants are held through a broker, your broker will surrender your shares or Company Warrants for cancellation or exercise, as the case may be.

After you mail the letter of transmittal, duly executed and completed in accordance with its instructions, and your stock certificates and/or instruments evidencing your ownership of shares of the Company’s common stock or your exercise of the Company Warrants to the Paying Agent, the Paying Agent will mail a check to you. The stock certificates you surrender will be canceled. After the completion of the Merger, there will be no further public trading of the Company’s common stock, and stock certificates and/or other instruments evidencing ownership of shares of the Company’s common stock or Company Warrants, presented for transfer or exercise, as the case may be, after the completion of the Merger will be canceled and exchanged for the Merger Consideration or the Warrant Consideration, as the case may be. If payment is to be made to a person other than the registered holder of your shares of the Company’s common stock or Company Warrants, the certificate surrendered (or the Company Warrant exercise documents) 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 Paying Agent’s satisfaction that such tax has been paid or is not payable. Company Stock Options may not be transferred and the Option Consideration can only be paid to the registered owner of the Company Stock Option.

If your Company stock certificates or warrant certificates have been lost, stolen or destroyed, upon the making of an affidavit of that fact, and if required by Parent or the Paying Agent, the posting of a bond as an indemnity against any claim with respect to the certificates, the Paying Agent will issue the Merger Consideration or the Warrant Consideration, as the case may be, in exchange for your lost, stolen, or destroyed stock certificates and/or other instruments evidencing ownership of shares of the Company’s common stock or Company Warrant. If you have lost the agreement representing your Company Stock Option, you will need to contact the Surviving Corporation regarding the documents and procedures required to receive the Option Consideration.

Upon receiving written notice from the Parent that the Effective Time shall have occurred and that a Rollover Stockholder has delivered certificates representing the Rollover Shares to Parent in accordance with the Exchange Agreement, the Paying Agent shall deliver to such Rollover Stockholder the Additional Cash Per Share Merger Consideration, less any required withholding taxes, payable to such Rollover Stockholder with respect to such Rollover Shares. No interest or dividends shall accrue or be payable to any holder of shares of the Company’s common stock, Company Warrants or Company Stock Options on any consideration payable hereunder.

The Merger Agreement contains representations and warranties made by the parties solely for the benefit of each other and for the purposes of the Merger Agreement. Some of those representations and warranties were made as of a specified date or may have been used for the purpose of allocating risk between the parties to the Merger Agreement. The statements contained in those representations and warranties are qualified by information in the disclosure schedules that the parties have exchanged in connection with the execution and delivery of the Merger Agreement, which qualify and create exceptions to those representations and warranties. The disclosure schedules are attached to the Merger Agreement. The disclosure schedules contain information that modifies, qualifies and creates exceptions to the representations and warranties set forth in the Merger Agreement. Accordingly, you should not rely on the representations and warranties as characterizations of the actual state of facts without considering the disclosure schedules as well, since the representations and warranties are modified in important part by the underlying disclosure schedules.

The representations and warranties of the Company relate to, among other things:

Several of the Company’s representations and warranties contained in the Merger Agreement are qualified by reference to whether the item in question has or would reasonably be expected to have a Company Material Adverse Effect. The Merger Agreement defines “Company Material Adverse Effect,” with respect to the Company and any of its subsidiaries, as any fact, circumstance, event, change, effect, development or occurrence that, either individually or in the aggregate is or could reasonably be expected to be, materially adverse to the business, financial condition or results of operations of the Company and its subsidiaries, taken as a whole, but shall not include the effect of any facts, circumstances, events, changes, effects, developments or occurrences (A) generally affecting the economy or the financial or securities markets or generally affecting the healthcare industry, including general changes to laws across the industry (but only to the extent such fact, circumstance, event, change, effect, development or occurrence in each case does not materially and disproportionately adversely affect the Company and its subsidiaries, taken as a whole); or (B) resulting from (I) any acts of terrorism or war (whether or not declared) or any escalation or worsening thereof (other than to the extent any of the foregoing materially impacts the surgical assistant employees’ ability to perform their job duties for, the Company or any of its subsidiaries); (II) the announcement of the Merger Agreement or the transactions contemplated by the Merger Agreement; (III) changes in accounting principles generally accepted in the United States (“GAAP”) or accounting standards; (IV) change, in and of itself, in the market price or trading volume of the Company’s common stock (it being understood that the facts, circumstances, events, changes, effects, developments or occurrences giving rise or contributing to any such changes may be taken into account in determining whether there has been, or would reasonably be expected to be, a Company Material Adverse Effect); (V) any matter of which Parent or Merger Sub has knowledge on the date of execution of the Merger Agreement; or (VI) the failure, in and of itself, by the Company to meet any expected or projected financial or operating performance target, whether internal or published for any period ending on or after the date of the

Merger Agreement (it being understood that the facts, circumstances, events, changes, effects, developments or occurrences giving rise or contributing to such failure may be taken into account in determining whether there has been, or would reasonably be expected to be, a Company Material Adverse Effect). Notwithstanding the generality of the foregoing, each of the following shall constitute a “Company Material Adverse Effect”: (I) the resignation, firing or other termination of the employment of either of the Key Employees, (II) the failure of the Company’s EBITDA for the 12 month period ending on the last day of the last full month prior to Closing to exceed $7.1 million; or (III) any fact, circumstance, change, effect, event or occurrence, excluding a force majeure event (as defined in the Merger Agreement), that, individually or in the aggregate, has had, or would reasonably be expected to have or result in a reduction in the aggregate annualized EBITDA of the Company and its subsidiaries, taken as a whole, in excess of $2.0 million during the 12 month period following the Closing.

The representations and warranties of Parent and Merger Sub relate to, among other things:

Several of Parent’s and Merger Sub’s representations and warranties contained in the Merger Agreement are qualified by reference to whether the item in question has or would reasonably be expected to have a Merger Sub Material Adverse Effect. The Merger Agreement defines “Merger Sub Material Adverse Effect” as an event or circumstance that would individually or in the aggregate, reasonably be expected to materially hinder, impair or delay the ability of Parent and Merger Sub to consummate the Merger and the other transactions contemplated by the Merger Agreement and the Exchange Agreements.

Pursuant to the Merger Agreement, the Company has agreed that, except (i) with the prior written consent of Merger Sub, which will not to be unreasonably withheld or delayed, (ii) as expressly contemplated, required or permitted by the Merger Agreement, (iii) as required by applicable law, or (iv) with respect to the formation and capitalization of, and distribution of the Assigned Litigation to, CMC and the distribution of the CMC Interests to the Company’s stockholders, in each case in accordance with the Formation Agreement, the Company will, and will cause each of its subsidiaries to:

Pursuant to the Merger Agreement, the Company shall not, and shall not permit any of its subsidiaries to, directly or indirectly:

Prior to the Closing, the Company may pay bonuses to its directors and employees, including the Rollover Stockholders (the “Permitted Bonuses”) and Permitted Dividends, subject to compliance with the terms of the Merger Agreement. If the Closing occurs within 45 days from the date of the execution of the Merger Agreement, the Company is permitted to pay Permitted Bonuses and Permitted Dividends on only one occasion: at the Closing. However, if the Closing occurs more than 45 days from the date of execution of the Merger Agreement, the Company is permitted to pay Permitted Bonuses and Permitted Dividends on up to three occasions. The amount of the Permitted Dividends and Permitted Bonuses may not exceed the permitted payment amount, which is an amount equal to the Company’s cash on hand, less $1 million, less the amount required to pay certain transaction and other expenses, and less the amount of certain balance sheet adjustments, as computed in accordance with the Merger Agreement. A sample calculation of the permitted payment amount is included as Exhibit E to the Merger Agreement.

Assuming the Company is able to declare a Permitted Dividend based upon this formula prior to the Closing of the Merger, the Company intends to consider doing so, assuming it does not otherwise have a business need for the excess cash. At present, the Company cannot predict whether its cash on hand prior to Closing will be sufficient such that it will be permitted to pay a Permitted Dividend in accordance with the formula in the Merger Agreement. In addition, even if the Company is permitted to pay a Permitted Dividend based on the Merger Agreement, it cannot predict whether it will have a business need for the cash that would prevent it from doing so. As a result there can be no assurances as to the amount, if any, of any Permitted Dividends that may be paid by the Company prior to the Closing. However, if the Company anticipates that it will have excess cash at Closing, based upon the formula in the Merger Agreement, the Company anticipates that such cash will be paid as Additional Per Share Merger Consideration. Thus, if the Company elects not to pay Permitted Dividends prior to Closing even though it is able to do so, this decision will likely increase the amount of the Additional Per Share Merger Consideration paid at Closing.

At least three business days prior to the earlier of declaring or announcing the declaration of or agreeing to pay any Permitted Bonus or Permitted Dividend, the Company must deliver to Parent a statement prepared by the Company in good faith, and to the extent applicable consistent with the preparation of the Company’s balance sheet contained in its Form 10-Q for the period ended September 30, 2010. Such statement must set forth (a) an estimated unaudited balance sheet of the Company and its subsidiaries as of the date that the Company anticipates paying the Permitted Bonus or the Permitted Dividend, (b) a reasonably detailed listing of certain closing and pre-closing expenses and balance sheet adjustments as required by the Merger Agreement, (c) a calculation of the permitted payment amount as of the projected date to pay the Permitted Bonus or Permitted Dividend, (d) the proposed amount of the Permitted Bonus or Permitted Dividend, if any, and (e) if the Company is proposing to pay a Permitted Bonus, a list of the persons to whom the Company anticipates paying a Permitted Bonus and the amount of the bonus to be paid to each such person. During the three business day period after delivery of the statement prepared by the Company, Parent will have the opportunity to review and comment on the statement.

Pursuant to the Merger Agreement, the Company and its directors, officers, employees, financial advisors, legal counsel, accountants, consultants, agents and other representatives shall:

At any time prior to obtaining the approval of the Merger and the Merger Agreement by a majority of the outstanding shares of the Company’s common stock (the “Company Stockholder Approval”) the Company may, if (a) the Company receives a bona fide written Acquisition Proposal not involving a breach of the above-referenced non-solicitation restrictions, and (b) the Board (upon receipt of a recommendation by the Special Committee) (i) determines in good faith, after consulting with its independent outside legal counsel, that such action is reasonably necessary to comply with its fiduciary duties to the Company’s stockholders under Delaware law; and (ii) determines in good faith, after consultation with outside counsel and after receiving advice from financial advisor experienced in such matters, that such Acquisition Proposal constitutes or would reasonably be expected to result in a Company Superior Proposal (as hereafter defined):

The Company, as promptly as practicable, but in any event within 24 hours of a determination by the Board that an Acquisition Proposal constitutes a Company Superior Proposal or a Potential Superior Proposal (as hereafter defined) will notify Parent of the proposal specifying in detail the terms and conditions of such proposal and the identity of the person making the proposal. The Company will promptly provide Merger Sub any non-public information provided to the person making such proposal, which was not previously provided to Merger Sub.

The Merger Agreement defines “Acquisition Proposal” as any inquiry, proposal or offer from any person other than Parent and Merger Sub relating to any (A) direct or indirect acquisition or purchase, in one transaction or a series of related transactions, of 30% or more of the net revenues or assets of the Company and its subsidiaries on a consolidated basis, (B) direct or indirect acquisition or purchase, in one transaction or a series of related transactions, of 30% or more of any class of equity securities of the Company, (C) tender offer or exchange offer that if consummated would result in any person beneficially owning 30% or more of any class of equity securities of the Company, (D) merger, consolidation, business combination, recapitalization, liquidation, dissolution, binding share exchange or similar transaction involving the Company, other than the transactions contemplated by the Merger Agreement, or (E) any combination of the foregoing.

The Merger Agreement defines “Company Superior Proposal” as an Acquisition Proposal that is a bona fide written proposal made by a third party to acquire, directly or indirectly, at least 75% of the equity securities or assets of the Company, pursuant to a tender or exchange offer, a merger, a sale of assets or a similar transaction that the Board (acting upon receipt of a recommendation by the Special Committee) determines in good faith, after consultation with outside counsel and receiving advice from its financial advisors, is, if consummated, more favorable to the Company’s stockholders (in their capacities as such) than the Merger, taking into account at the time of determination all of the terms and conditions of such proposal and of the Merger Agreement, any adjustment to the terms and conditions of the Merger Agreement proposed by Parent in writing in response to any such proposal, any other factors deemed relevant by the Company’s Board, and the assessed ability of the

person making the Acquisition Proposal to consummate the transactions contemplated by such proposal or offer (taking into account, among other things, the legal, financial, regulatory, financing and other aspects of such proposal and the identity of the person submitting such a proposal).

The Merger Agreement defines a “Potential Superior Proposal” as an Acquisition Proposal which the Board (upon receipt of a recommendation by the Special Committee) determines, in good faith after consultation with outside counsel and receiving advice from a financial advisor experienced in such matters, constitutes or would reasonably be expected to result in a Company Superior Proposal.

From the date of the Merger Agreement until the earlier of (a) the Effective Time and (b) the date the Merger Agreement is terminated (the “Termination Date”), neither the Board nor any committee thereof (including the Special Committee) shall (i) withdraw or modify, or publicly propose to withdraw or modify, in a manner adverse to Merger Sub, the approval or recommendation by the Board of the Merger Agreement or the transactions contemplated thereby or its recommendation to the Company’s stockholder that they adopt and approve the Merger Agreement and the Merger, (ii) approve, recommend or declare advisable or publicly propose to approve, or recommend or declare advisable any Acquisition Proposal, (iii) resolve to do any of the foregoing, or (iv) permit the Company to enter into any agreement (including, but not limited to, a letter of intent) with respect to any Acquisition Proposal (other than a confidentiality agreement with respect to a Company Superior Proposal or Potential Superior Proposal entered into in compliance with the non-solicitation provisions included in the Merger Agreement) (an “Acquisition Agreement”). Any of the actions described in clause (i), (ii), (iii) or (iv) above are referred to as a “Company Adverse Recommendation Change”.

Notwithstanding the foregoing, at any time prior to obtaining the Company’s Stockholders Approval but following the expiration of the five business day period or such shorter period as may be possible in the event the special meeting of the stockholders is scheduled to occur within such five business day period described below, the Board (acting upon receipt of a recommendation by the Special Committee) may withdraw or modify its recommendation of the adoption and approval of the Merger Agreement and the Merger or approve or recommend or declare advisable an Acquisition Proposal or enter into an Acquisition Agreement with respect to an Acquisition Proposal if the Board determines in good faith, (i) after consulting with its independent outside counsel and of its independent financial advisor, that such Acquisition Proposal constitutes a Company Superior Proposal and (ii) after consultation with its independent outside legal counsel that such action is reasonably necessary for the Board to comply with its fiduciary duties to the Company’s stockholders under applicable law.

The Company may only terminate the Merger Agreement with respect to a Company Superior Proposal prior to obtaining the Company Stockholder Approval if (i) the Company has provided Parent and Merger Sub written notice that it intends to terminate the Merger Agreement, identifying the Company Superior Proposal then determined to be most favorable and including a copy of the definitive Acquisition Agreement for such Company Superior Proposal in the form to be entered into, (ii) Parent and Merger Sub do not propose, within five (5) business days following the receipt the Company’s notice expressing its intent to terminate the Merger Agreement or two (2) business days following an Amendment Notice (as defined below), adjustments in the terms and conditions of the Merger Agreement (or if Parent or Merger Sub propose adjustments to the terms and conditions of the Merger Agreement, the Board (acting upon receipt of a recommendation by the Special Committee) determines in good faith (after receiving the advice of its financial advisors and its outside counsel) that the Merger Agreement, after giving effect to such proposed adjustments, is less favorable to the Company’s stockholders than such Company Superior Proposal) and (iii) the Company delivers to Parent and Merger Sub (A) an irrevocable written notice of termination of the Merger Agreement pursuant to the Merger Agreement and (B) a wire transfer of same day funds in the amount of the Termination Fee.

The Company agrees that, after any material amendment or modification to any Company Superior Proposal (it being agreed and understood that any change in price will constitute a material amendment or modification),

the Company will deliver within 24 hours a new written notice to Parent and Merger Sub that describes in reasonable detail such material amendment or modification (and shall include a copy of such proposed modification or amendment) to the Company Superior Proposal (the “Amendment Notice”) and the five business day period described above shall continue for two business days after receipt by the Parent of such Amendment Notice. The Company agrees, during such time period, to negotiate (and to cause its advisors to negotiate) in good faith with Parent and Merger Sub to allow Parent and Merger Sub to match or better such Company Superior Proposal.

Except if the Company has entered into an Acquisition Agreement or a Company Adverse Recommendation Change has occurred and is still in effect, the Merger Agreement requires the Company to, as soon as reasonably practicable after the date of the Merger Agreement, and in any event within 15 days after such date, prepare and file with the SEC this proxy statement, use reasonable best efforts to clear comments, if any, received from the SEC and cause this proxy statement to be mailed to the Company’s stockholder as promptly as reasonably practicable, but in no event later than five days after it is cleared by the SEC.

Except if the Company has entered into an Acquisition Agreement or a Company Adverse Recommendation Change has occurred and is still in effect, the Merger Agreement also requires the Company to call a meeting of its stockholders for the purpose of obtaining the Company Stockholder Approval, to be held as soon as reasonably practicable, and in any event within 30 days after the mailing of this proxy statement to the Company’s stockholders, and to use all reasonable efforts to solicit proxies from the Company’s stockholders in favor of the adoption of the Merger Agreement. Except if the Company has entered into an Acquisition Agreement or a Company Adverse Recommendation Change has occurred and is still in effect, the Company proxy statement shall include the recommendation of the Board in favor of the adoption and approval of the Merger Agreement and the Merger.

The parties to the Merger Agreement have agreed to cooperate with each other and use (and will cause their respective subsidiaries to use) all reasonable best efforts to promptly take all actions necessary to cause the conditions to closing the Merger to be satisfied as promptly as practicable and to consummate the Merger, including, among other things, to obtain all approvals, consents, registrations, permits, authorizations and other confirmations from any third party or governmental authority necessary to consummate the transactions contemplated by the Merger.

All rights to indemnification, advancement of expenses and exculpation from liabilities for acts or omissions occurring at or prior to the Effective Time existing in favor of the current or former directors or officers of the Company and its subsidiaries (collectively, the “Indemnified Parties”) as provided in their respective certificates of incorporation or bylaws (or comparable organizational documents) and any indemnification or other agreements of the Company or any of its subsidiaries as in effect on the date of the Merger Agreement (in each case, to the extent copies of which have been furnished or made available to Parent and Merger Sub prior to the date hereof) shall be assumed by the Surviving Corporation in the Merger, without further action, at the Effective Time, and shall survive the Merger and shall continue in full force and effect without amendment, repeal or other modification for a period of six years following the Closing Date, and Parent shall cause the Surviving Corporation to comply with and honor the foregoing obligations; provided that such obligations shall be subject to any limitation imposed from time to time under applicable Law. From the Effective Time through the sixth (6th) anniversary of the date on which the Effective Time occurs, the certificate of incorporation and bylaws of the Surviving Corporation shall contain, and Parent shall cause the certificate of incorporation and bylaws of the Surviving Corporation to contain, provisions no less favorable with respect to indemnification, advancement of

expenses and exculpation of present and former directors and officers of the Company and its Subsidiaries for acts or omissions occurring at or prior to the Effective Time than are presently set forth in the Company’s certificate of incorporation and bylaws in effect on the date of the Merger Agreement, and such provisions shall not be amended, repealed, or otherwise modified in any manner that would reasonably be expected to adversely affect the rights thereunder of any Indemnified Party.

The Company may purchase, prior to the Effective Time, and if the Company does not so purchase, Parent shall or shall cause the Surviving Corporation to purchase promptly after the Effective Time, a six year “tail” prepaid policy on the Company’s directors’ and officers’ liability insurance policy covering each person currently covered by the Company’s directors’ and officers’ liability insurance policy, on terms with respect to such coverage and amounts no less favorable than those of such policy in effect on the date hereof.

Each party’s obligation to effect the Merger is subject to the satisfaction or waiver of various conditions, which include the following:

In addition to the conditions set forth above, the obligation of each of Parent and Merger Sub to effect the Merger is subject to the satisfaction or waiver of various conditions, which include the following:

In addition to the above, the obligation of the Company to effect the Merger is subject to the satisfaction or waiver of various conditions, which include the following:

At any time before the Merger, Parent and Merger Sub may waive the conditions applicable to the Company, and the Company may waive the conditions applicable to Parent and Merger Sub. While circumstances may change, the parties do not expect that any conditions will be waived.

The Merger Agreement also grants the parties certain rights upon termination. The Merger Agreement may be terminated:

It is possible the Merger will not be completed if the Company’s stockholders do not approve and adopt the Merger Agreement and the Merger, or if certain other conditions are not satisfied or waived or the Merger Agreement is terminated. The Merger Agreement provides for the payment of certain fees if the Merger Agreement is terminated.

In the event that (a) (i) any person makes a bona fide Acquisition Proposal, (ii) the Merger Agreement is terminated because the Effective Time has not occurred by the End Date, and (iii) within nine months of such termination, the Company enters into a definitive agreement or other agreement with respect to such Acquisition Proposal, (b) the Merger Agreement is terminated by Parent as a result of (i) a Company Adverse Recommendation Change, or (ii) a Company Willful Violation or (c) the Merger Agreement is terminated by the Company pursuant to an Alternative Transaction, then the Company shall pay to Parent a Termination Fee in a cash amount equal to $1,500,000 no later than two business days following, in the case of (a), the Company’s execution of a definitive agreement with respect to an Acquisition Proposal, and in the case of (b) or (c), termination of the Merger Agreement.

In the event the Company does not pay the Termination Fee when due, the Company shall also be required to reimburse the Parent for any costs and expenses incurred by Parent and Merger Sub (including attorneys’ fees) in connection with the collection and enforcement of the Termination Fee.

Pursuant to the terms of the Merger Agreement, at any time prior to the Effective Time, subject to the provisions of applicable law, the Merger Agreement may be modified or amended by written agreement executed and delivered by duly authorized officers of Parent and Company. Furthermore, at any time prior to the Effective Time, any party may, subject to applicable law, (a) waive any inaccuracies in the representations and warranties of any other party set forth in the Merger Agreement, (b) extend the time for the performance of any of the obligations or acts of any other party pursuant to the Merger Agreement or (c) waive compliance by any other party with any of the agreements set forth in the Merger Agreement. The Board does not believe it would or would be required to re-solicit stockholder proxies as a result of any such waiver, although any final decision on that issue would have to be made at the time of any such waiver based on the facts and circumstances then prevailing.

The following is a brief summary of the material provisions of the Transaction Documents entered into by the Company and/or its management and key employees in connection with the Merger and the Merger Agreement. This summary is not a complete statement of all applicable provisions in the Transaction Documents and the description in this summary and elsewhere in this proxy statement is qualified in its entirety by reference to the corresponding Transaction Documents, a copy of each of which is filed with the SEC in the Company’s Current Report on Form 8-K, dated on December 20, 2010 and filed on December 23, 2010 and in each case incorporated by reference into this proxy statement. The Transaction Documents have been filed with the SEC to provide you with information regarding their terms and the legal relationship and risk allocation between the contracting parties. The Transaction Documents are not intended to provide any other factual information about the parties. Such information can be found elsewhere in this proxy statement and in other public filings the Company makes with the SEC, which are available without charge at www.sec.gov. The Company encourages you to read the Transaction Documents carefully.

The representations and warranties described below and included in the Transaction Documents were made by the parties to each other as of specific dates. The assertions embodied in those representations and warranties were made solely for purposes of the corresponding Transaction Documents and may be subject to important qualifications and limitations agreed to by the parties in connection with negotiating their terms. Moreover, the representations and warranties may be subject to a contractual standard of materiality that may be different from what may be viewed as material to stockholders, or may have been used for the purpose of allocating risk between the parties rather than establishing matters as facts. The Transaction Documents are described in this proxy statement and included in the Company’s Current Report on Form 8-K dated December 20, 2010 and filed on December 23, 2010 only to provide you with information regarding their terms and conditions, and not to provide any other factual information regarding the parties or their respective businesses.

In connection with the Merger Agreement, the Company and/or certain of its management and key employees entered into the following documents:

The Company from time to time has had disputes with certain insurers resulting from what the Company considers to be underpayments or non-payments from these insurers. As a result, ASA has opted in to, or is contemplating opting in to, certain class action lawsuits that have been filed or may be filed against these insurance carriers and that relate to claims that ASA is entitled to certain payments for services it provided on or before December 31, 2008. Pursuant to the Merger Agreement, ASA will transfer its rights and obligations in connection with certain of these present and future class action lawsuits, as well as certain rights to join certain other class actions, to a newly formed Delaware limited liability company known as CMC. CMC has been formed as a wholly owned subsidiary of ASA for the purpose of supervising this Assigned Litigation following the Closing of the Merger. In connection with the Merger, the CMC Interests will be distributed to the Company’s stockholders as Additional Per Share Merger Consideration.

The class action litigation and litigation rights that we anticipate ASA will transfer to CMC are described below:

The foregoing Assigned Litigation, the beneficial rights to which will be transferred to CMC, will include the right to receive any amounts received in settlement of any of the Assigned Litigation. The amounts of the individual claims vary substantially and at present we are unable to predict whether we will recover settlement proceeds in some or all of the Assigned Litigation and how much we will likely recover. As a result, we have not placed any value on these claims in the Company’s financial statements.

Because in class action litigation such as the matters described above there are multiple plaintiffs that may submit claims in amounts unknown to us, even if liability is established or a settlement is reached, it is not possible to determine the amount, if any, of any recovery to which ASA or CMC may be entitled. There can be no assurances that CMC will receive any cash recoveries in connection with the litigation transferred and, as a result, the CMC Interests may have no value. Further, even in the event of a cash recovery by CMC, it is impossible to predict the amount of any such recovery that would be available for distribution to the holders of the CMC Interests because the legal fees and costs associated with the pursuit of, and any recovery under, the transferred litigation cannot be estimated at this time.

CMC is a newly formed, wholly owned subsidiary of ASA, whose managers are Zak W. Elgamal, Jaime A. Olmo-Rivas, Henry Y.L. Toh and Dr. Charles W. Bailey, Jr. CMC has been formed for the sole purpose of managing the foregoing litigation following the consummation of the Merger, assisting the attorneys engaged by ASA to conduct the litigation, and pursuing collection of any judgments or settlement amounts.

The transfer of the beneficial interests in the above-described litigation matters will be effected pursuant to a Formation Agreement to be entered into between ASA and CMC prior to Closing. A copy of the form of

Formation Agreement is attached to this Proxy Statement as Exhibit C to the Merger Agreement included as Appendix A. In accordance with the Formation Agreement, prior to the Effective Time, ASA and CMC will execute a General Assignment, Bill of Sale and Assumption of Liabilities pursuant to which ASA will sell, transfer, convey, assign and deliver to CMC, and CMC will accept, assume and receive:

The Formation Agreement further provides that any rights, proceeds, recoveries of money and other value arising out of or in connection with any agreement entered into by ASA or any of its subsidiaries that relate to the ongoing business operations of ASA or any of its subsidiaries on or after the date the Formation Agreement is entered into by the parties (even if such agreement is entered into in connection with the settlement or other resolution of any of the litigation transferred to CMC) or arising out of or in connection with any services to be provided by ASA or its subsidiaries after the date of the Formation Agreement; and all interests, rights and properties of ASA and its subsidiaries not specifically included in the assets to be transferred to CMC, will be expressly reserved and retained by ASA.

In addition, prior to the Effective Time, ASA will transfer, convey and assign to CMC, and CMC will accept, assume and agree to pay, satisfy, perform and fully discharge when due, all of ASA’s and its subsidiaries’ obligations and liabilities relating to or arising in connection with the Assigned Litigation. These liabilities will include the obligation to pay the fees and expenses of counsel in accordance with the fee agreements entered into with each law firm engaged to handle the Assigned Litigation.

The transferred assets and the transferred liabilities will be a Contribution by ASA to the capital of CMC and will constitute the initial capitalization of ASA and the sole consideration to be delivered by ASA for the CMC Interests. There can be no assurances that the cash to be contributed as described above will be sufficient to pay any expenses required to be paid by CMC prior to receipt of any cash recoveries, and no party to the Formation Agreement is required to contribute additional funding should the initial cash be insufficient.

Under the Formation Agreement, CMC will have the right to direct counsel to take action to submit claims, respond to questions from any claims administrator, the court or third party, and collect payments in each matter transferred. CMC will have the authority to take such actions to further pursue the claims in the transferred matters, except that CMC may only take any such action as a class member (but not as a named or lead plaintiff), in good faith and in compliance with all applicable Laws (as defined in the Merger Agreement).

In the unlikely event that any claims administrator or court with respect to the Assigned Litigation determines that the Formation Agreement compromises ASA’s claims in any manner whatsoever, then the transfer of the rights to the Assigned Litigation will not occur and, instead, ASA will retain the rights to the Assigned Litigation and the Formation Agreement provides that ASA will compensate CMC by cash payment in an amount equal to the amount of the funds received by ASA.

Distribution of CMC Interests as Additional Per Share Merger Consideration

Following the completion of the Contribution but prior to the Closing of the Merger, ASA will distribute 100% of the CMC Interests to the Company, ASA’s sole shareholder, and at the Effective Time, the Company will distribute 100% of the CMC Interests pursuant to the terms of the Merger Agreement in accordance with the terms of written directions provided by CMC. After the Effective Time, neither ASA nor the Company will have any further obligations or liabilities (including any liability for failure to correctly distribute the CMC Interests) other than the obligation to complete the distribution of the CMC Interests.

The CMC Interests will be distributed to the stockholders of the Company upon the Closing of the Merger as Additional Per Share Merger Consideration. Initially, the CMC Interests will be distributed in electronic form only and will not be certificated. The Company anticipates that it will act as its own transfer agent with respect to the CMC Interests. The Company does not intend to list the CMC Interests on any market or exchange for trading. In general, it is anticipated that the CMC Interests will not be assignable or transferable except by the Company (upon the exercise of Company Warrants or to Dissenting Stockholders), by operation of law, including the laws of descent and distribution, or with the consent of the managers of CMC. The CMC Interests will not pay any dividends or bear any stated rate of interest and will have no voting or other stockholder rights. The CMC Interests will represent only the contingent right to receive a portion of the net cash recovery, if any, with respect to the Assigned Litigation.

CMC currently anticipates making cash payments to the holders of the CMC Interests as promptly as possible following the receipt of amounts paid upon the resolution of the Assigned Litigation. These cash payments will be net of all liabilities incurred by CMC, including the fees and expenses of the managers of CMC and the persons engaged by CMC to perform transfer agent, accounting and tax services, and the fees and expenses of counsel to CMC. CMC will also be required to maintain not less than $25,000 received from the first settlement or other resolution of Assigned Litigation as restricted cash in the event any claims for indemnification are made against it by ASA. It is currently anticipated that the counsel engaged by ASA in connection with the Assigned Litigation will remain as counsel to CMC in these matters. The fee agreements with each such firm currently in effect provide for contingent legal fees payable from any amounts received in settlement or from a judgment in the amount of 50% of the amounts received. Upon the resolution of all litigation matters transferred or if CMC’s assets have been exhausted, CMC’s activities will be wound down and CMC will be dissolved in accordance with Delaware law. The managers of CMC will provide, in their discretion or as otherwise required by applicable law, periodic reports to the holders of the CMC Interests as to the status of the Assigned Litigation, the timing and amount of expected payments, if any, and the termination of CMC’s activities.

In connection with the Merger Agreement, Zak Elgamal, Jaime Olmo-Rivas, Jose Chapa and Bland Chamberlain, all of whom are stockholders of the Company who collectively own more than 60% of the issued and outstanding shares of the Company’s common stock, entered into Voting Agreements with the Parent whereby they have agreed to vote the shares of common stock owned by them in favor of the adoption of the Merger Agreement and the consummation of the Merger. The Voting Agreements will terminate upon the Effective Time or if the Merger Agreement is terminated in accordance with its terms.

Contemporaneously with the execution of the Merger Agreement, the Rollover Stockholders have each entered into Exchange Agreements, whereby immediately before the Effective Time, the Rollover Stockholders will exchange an aggregate of 22.5% of the shares of the Company’s common stock owned by them for shares of Series A preferred stock of the Parent that will represent, in the aggregate, approximately 14.9% of the Parent’s total capital stock at the Effective Time. The Series A preferred stock will be convertible into shares of the

Parent’s voting common stock. Holders of the Series A preferred stock will be entitled to vote along with the Parent’s voting common stock on an as-converted-basis. In addition, the holders of Series A preferred stock will vote as a class with the holders of the Parent’s Series B preferred stock. The transactions contemplated by the Exchange Agreements will not occur if the Merger Agreement is terminated in accordance with its terms.

Immediately prior to the Closing, the Parent will file the Parent’s Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware, which shall provide for the rights, preferences and privileges following the Merger of the holders of the Parent’s Series A preferred stock, Series B preferred stock and common stock, and other related matters. Pursuant to the terms of its Amended and Restated Certificate of Incorporation, the Parent shall be authorized to issue 28,000 shares of common stock and 13,500 shares of preferred stock, of which 1,500 shares have been designated as Series A preferred stock and 10,000 shares have been designated as Series B preferred stock. The Series A preferred stock and the Series B preferred stock shall be convertible into the Parent’s common stock. The holders of the Series A preferred stock and the Series B preferred stock are entitled to receive a liquidation preference equal to the original issue price per share of the Series A preferred stock and the Series B preferred stock, respectively. In addition, the holders of the Series B preferred stock shall be entitled to receive a cumulative dividend of 8% per annum compounded quarterly. The holders of the Series A preferred stock are not entitled to a dividend. Upon consummation of the Merger, GPP-I shall own 8,508 shares of the Parent’s Series B preferred stock, which will represent 85.1% of the Parent’s capital stock outstanding at the Closing. The Rollover Stockholders shall own 1,492 shares of the Parent’s Series A preferred stock, which will represent 14.9% of the Parent’s capital stock outstanding at the Closing. The aggregate value of the Series A preferred stock will be calculated at the Closing and will be equal to (a) the aggregate amount of equity invested by GPP-I in Parent divided by 8,508 shares of Series B preferred stock to be issued to GPP-I, multiplied by (b) 1,492 shares of Series A preferred stock issued to the Rollover Stockholders, which means that the Series A preferred stock to be owned by the Rollover Stockholders will have an initial approximate aggregate liquidation value of $ , or $ per Rollover Share.

By virtue of the Exchange Agreements, the Rollover Stockholder will also become parties to the Stockholder’s Agreement among Parent, GPP-I, and each of the Rollover Stockholders. The Stockholders’ Agreement provides that the stockholders of the Parent agree to, among other things, vote their respective voting securities of the Parent owned beneficially or of record by such stockholders in favor of electing such members of the board of directors of the Parent as are designated in accordance with the Stockholders’ Agreement. After the Effective Time, GPP-I may designate five members of the Parent’s board of directors. After the Effective Time, so long as Mr. Elgamal owns all of the shares of the Parent’s Series A preferred stock he acquires at the time of the Merger (not including shares of preferred stock transferred pursuant to a Permitted Transfer, as defined in the Stockholders’ Agreement), Mr. Elgamal may designate one member of the Parent’s board of directors. After the Effective Time, so long as Mr. Olmo-Rivas owns all of the shares of the Parent’s Series A preferred stock he acquires at the time of the Merger (not including shares of preferred stock transferred pursuant to a Permitted Transfer, as defined in the Stockholders’ Agreement), Mr. Olmo-Rivas may designate one member of the Parent’s board of directors.

The Stockholders’ Agreement provides for restrictions on transfer and grants certain right of first refusal, tag along and drag along rights for stockholders. In addition, the stockholders have certain demand and piggy-back registration rights.

As part of the transactions contemplated by the Merger Agreement, the Merger Sub entered into the Employment Agreements with each of Mr. Elgamal and Mr. Olmo-Rivas, each of whom is currently an officer of

the Company. The Employment Agreements become effective only upon the Effective Time and will replace each of the current employment agreements between the Company and each Management Employee. The Employment Agreements will not be effective and will have no force or effect in the event the Merger Agreement is terminated in accordance with its terms.

Unless otherwise noted below for either of the Management Employees, each of the Employment Agreements has the following similar terms:

Employment may be terminated by (a) the Company (i) upon employee’s death or mental or physical disability or incapacity, (ii) upon employee’s resignation, or (iii) with or without Cause (as defined in the Employment Agreement); or (b) by employee for Good Reason (as defined in the Employment Agreement).

If the employment period is terminated by the Company with Cause or if the employee resigns for any reason other than Good Reason, then the employee will only be entitled to receive his base salary, through the date of termination or resignation.

If the employment period is terminated upon employee’s death or mental or physical disability or incapacity, the employee (or in the case of employee’s death, employee’s beneficiary and/or estate) will be entitled to receive his base salary through the date of termination and, if such termination occurs after March 31 of such year, then within 30 days after such termination the Company shall pay employee (or his estate) a pro-rated Annual Incentive Bonus for the year in which the termination occurs, plus, if such termination occurs during the two year period following the effective date, a pro-rated Business Development Bonus for the applicable Measurement Period (as defined in the Employment Agreement) in which the termination occurs, in each case, based on (i) the portion of such fiscal year (or Measurement Period in the case of the Business Development Bonus) that employee was employed and (ii) the results of the Company during the period prior to such termination.

If the employee’s employment with the Company is terminated during the employment period by the Company without Cause or by the employee with Good Reason, and, in either case, employee executes a general release in favor of the Company, the employee will be entitled to receive (a) his base salary for a period equal to either 12 months after the date of termination or the remainder of the initial term under the Employment Agreement, whichever is greater (the “Severance Period”), and (b) a pro rata portion of his Annual Incentive Bonus and Business Development Bonus for the year in which the termination occurs, based on the period of months employee was employed by the Company during such fiscal year (or, in the case of the Business Development Bonus, the portion of the Measurement Period). If employee has been employed at least three months during such fiscal year (or during the Measurement Period in the case of the Business Development Bonus) then the amount of the bonus (prior to the pro ration based on the time employee was employed) shall be calculated on the basis of annualizing the Company’s performance during the period Employee was employed by the Company. If Employee was not employed at least three months during such fiscal year (or during the Measurement Period in the case of the Business Development Bonus) then the amount of the bonus (prior to the pro ration based on the time Employee was employed) shall be determined after completion of the fiscal year (or the Measurement Period in the case of the Business Development Bonus) based on the Company’s actual performance during such period.

The Employment Agreements contain a non-compete covenant applicable to any competitive activities with respect to businesses in which the Company and its subsidiaries are engaged when the employee’s employment with the Company is terminated. The non-compete period applies during the term of employment and for two years thereafter. The non-compete provision applies upon any termination of the respective Management Employee’s respective Employment Agreement.

The other Rollover Stockholders, Messrs. Chapa and Chamberlain, have executed the Surgical Assistant Agreements with the Merger Sub as part of the transactions contemplated by the Merger. The Surgical Assistant Agreements become effective only upon the Effective Time and will not be effective and will have no force or effect in the event the Merger Agreement is terminated in accordance with its terms. The Surgical Assistant Agreements provide for an annual base salary of $250,000 and $175,000 for Mr. Chapa and Mr. Chamberlain, respectively, and a discretionary annual bonus of up to $100,000 and $50,000 for Mr. Chapa and Mr. Chamberlain, respectively, with the exact amount to be determined by the Board of Directors in its sole discretion. The term of employment pursuant to the Surgical Assistant Agreements is for two years and may be terminated upon 15 days’ notice. The Surgical Assist Agreements also include non-compete provisions which apply during the term of employment and for two years after employment is terminated.

On December 1, 2010, the Company declared a dividend of $0.16 per share for each share of the Company’s common stock. The dividend was paid on December 23, 2010 to stockholders of record on December 17, 2010.

The following table sets forth selected historical financial data as of the dates and for the periods indicated with respect to the Company and its subsidiaries. The selected historical financial data for the years ended December 31, 2009, 2008 and 2007 were derived from the Company’s audited consolidated financial statements, which are included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2009, a copy of which is attached as Appendix D to this proxy statement and incorporated herein by reference.

The unaudited consolidated financial information for the nine months ended September 30, 2010 and 2009 is derived from the Company’s unaudited consolidated financial statements, which, in the Company’s opinion, include all adjustments (consisting of normal recurring adjustments) necessary for a fair statement of the Company’s financial position and results of operations for such periods. Interim results for the nine months ended September 30, 2010 and 2009 are not necessarily indicative of, and are not projections for, the results to be expected for the full year ending December 31, 2010. The unaudited consolidated financial statements for the nine months ended September 30, 2010 and 2009 were included in the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2010, a copy of which is attached as Appendix E to this proxy statement and incorporated herein by reference.

The selected historical financial data below should be read in conjunction with the consolidated financial statements and their accompanying notes, which are incorporated by reference in this proxy statement.

The following table contains certain revenue and expense amounts of the Company for the years ended December 31, 2009, 2008 and 2007 and for the nine months ended September 30, 2010 and 2009:

Our common stock is currently listed on the OTCBB under the symbol “ASRG.OB.” Our common stock was approved for quotation on the OTCBB on December 14, 2006 under the symbol “ASAO.” On January 31, 2007, our symbol was change to “ASUH” based upon our name change to American Surgical Holdings, Inc. Trading commenced in our common stock on the OTCBB on March 1, 2007. On April 25, 2007, our symbol was changed to “ASRG.”

The table below sets forth our high and low bid prices per share of common stock. These prices represent inter-dealer quotations without retail markup, markdown or commission and may not necessarily represent actual transactions.

On December 20, 2010, the last full trading day immediately preceding the public announcement of the proposed Merger, the Company’s common stock on the OTCBB closed at $1.32 per share, and the Company had approximately 111 stockholders of record.

On the Record Date, the number of holders of record of the Company’s common stock was .

On , 2011, which is the latest practicable date prior to the date of this proxy statement, the Company’s common stock closed at $ per share.

Set forth below are the names, positions held and business experience, including during the past five years, of the Company’s directors and the Company’s executive officers.

American Surgical Assistants, Inc. in Houston, Texas, which was founded to contract with hospitals for the services of surgical assistants. From 1983 to 1999, he was also the President of C.S.A. Services, Inc. in Houston, Texas, which was the General Partner of American Surgical Assistants, L.L.P. Mr. Elgamal received his M.D. degree (M.B., B.Ch.) from the Faculty of Medicine at Ain-Shams University in Cairo, Egypt in 1972. He also received his graduate training in Healthcare Management in Cairo, Egypt. He is a Vanguard member of the American College of Physician Executives, a member of the American College of Healthcare Administrators, an affiliate member of the American College of Surgeons, a member of the Advisory Council of The Joint Commission on Staffing, and a member of the sub-committee on Allied Health at Memorial Hospital Healthcare System, Southwest.

Jaime A. Olmo-Rivas, Executive Director and Vice President of American Surgical Assistants, Inc.

Mr. Olmo-Rivas has been an Executive Director and is the Vice President of our wholly owned subsidiary, ASA, since October 31, 2003. Mr. Olmo-Rivas is a trained cardio-vascular surgical assistant with very special capabilities in endoscopic vein harvesting and open heart surgery. In addition to performing surgical assisting duties, he is responsible for everyday management and supervision of all our surgical assistants working in the field. Mr. Olmo-Rivas graduated from medical school in the Dominican Republic in 1980. He is the past President and a member of the American Board of Surgical Assistants.

Mr. Henry Toh has served as our Lead Independent Director since March 2007. In addition, Mr. Toh currently serves as a member of the Board of Directors of four other publicly traded companies. Since 2001, Mr. Toh has served as a director of Teletouch Communications Inc., a telecommunications service provider. Since 1992, Mr. Toh has served as an officer and director of C2 Global Technologies Inc., a publicly held voice-over-IP company. Since December 1998, Mr. Toh has served as a director of Idna Inc., a specialized finance and entertainment company. Since February 2008, Mr. Toh has served as Vice Chairman of the Board and EVP of NuGen Holdings, Inc., formerly InovaChem, Inc., a company specializing in the research, development and manufacture of permanent magnetic electric motors. From 2004 to 2009, Mr. Toh has served as a director of Isolagen, Inc., currently renamed as Fibrocell Science Inc., an aesthetic and therapeutic development stage company. Mr. Toh has served as an officer and director of Four M International, Inc., a privately held offshore investment entity since 1992. Since 1992, Mr. Toh has been a principal of Amerique Investments International Corp., a real estate investment and management company. From 1980 through 1992, Mr. Toh was employed by KPMG Peat Marwick, where he specialized in international taxation and mergers and acquisitions. Mr. Toh is a graduate of Rice University.

Dr. Bailey received his law degree from the South Texas School of Law in 1980 and received his Medical Degree from the University of Texas Medical Branch in Galveston, Texas. Dr. Bailey has been in private practice in plastic surgery since 1973. He is listed in Best Doctors in America for the Central Region and was named by Town & Country Magazine as one of the top cosmetic surgeons in the United States. From 1980 to the present, Dr. Bailey has also been a medico-legal consultant to various law firms and insurance companies, providing medical record review and evaluations. From 1972 through 1993, he held various teaching appointments with the University of Texas Medical School in Houston, South Texas College of Law, and Baylor College of Medicine. Dr. Bailey has published over 45 papers, and has held various positions, including most recently President of the Texas Medical Association in 2003 and 2004. He is a current Delegate to the American Medical Association. Dr. Bailey is also a member of the Mediation Panel for Federal District Courts, Southern District of Texas.

practice in Houston, Texas. He is also a Clinical Assistant Professor of Surgery at Baylor University and at the University of Texas, Physician Liaison for Memorial Care System, and a Fellow of the American College of Surgeons. Dr. Kleinman is also a member of the American Society of General Surgeons, the Society of American Gastrointestinal Laparoscopic Surgery, Houston Surgical Society, Harris County Medical Society, and the American Medical Association and a past member of Texas Medical Association, International College of Surgeons, American College of Physician Executives, and the American Board of Utilization Review Physicians. He has received the Physicians Recognition Award 2003, and 2006.

Bland Chamberlain has been employed as one of our surgical assistants since November 2005. In addition, Mr. Chamberlain assists with billing and personnel matters on behalf of ASA, and as such, is a key employee. He has been a certified surgical assistant since 1985 and is licensed in the State of Texas. He assisted in the legislative process that resulted in the recognition and licensure of surgical assistants in the State of Texas and serves on the Surgical Assistant Advisory Committee of the Texas Medical Board. From 1996 to 2005, Mr. Chamberlain was part owner of Surgical Assistant Services, Inc.

Jose Chapa has been employed as one of our surgical assistants since November 2005. In addition, Mr. Chapa coordinates scheduling at various hospitals and represents ASA in personnel matters and contract negotiations, and as such, is a key employee. He is a certified and licensed surgical assistant in the State of Texas and an affiliate member of the American College of Surgeons. From 1996 to 2005, Mr. Chapa was part owner of Surgical Assistant Services, Inc. He received his M.D. degree from the Universidad Autonoma de Cuidad Juarez in Juarez, Mexico in 1984.

James A. Longaker, our Chief Financial Officer, was hired in November 2007 and became of Chief Financial Officer in December 2007. Prior to joining us, Mr. Longaker worked from October 2006 to November 2007 as an independent consultant. From May 2005 to October 2006, Mr. Longaker was the Chief Financial Officer of Trulite, Inc., a research and development company. From December 2001 to May 2005, Mr. Longaker was a partner at the Forte Group, LLC a management consulting firm that specialized in emerging businesses. From February 1999 to December 2001, Mr. Longaker worked as a consultant with Glass and Associates serving as an interim Chief Financial Officer for companies. From 1990 to 1999, Mr. Longaker had his own consulting business. Mr. Longaker received his Bachelor’s Degree from Louisiana Polytechnic Institute in 1967 and a Master’s Degree in Business Administration in 1969 from Louisiana State University. Mr. Longaker is a Certified Public Accountant and a Certified Fraud Examiner, CFE.

The following table sets forth the number and percentage of shares of our common stock owned as of December 20, 2010 by all persons: (i) known to us who beneficially own more than 5% of the outstanding number of such shares, (ii) by each of our directors and officers, and (iii) by all officers and directors as a group. Unless otherwise indicated, each of the stockholders has sole voting and investment power with respect to the shares beneficially owned.

Mr. Bland Chamberlain loaned the Company $150,000 at 15% interest on June 12, 2008. The loan was renewed on September 12, 2008 with a maturity date of June 15, 2009. In March 2009, all principal and interest on the note was repaid in full.

Parent is a wholly owned subsidiary of GPP-I and was formed as a corporation in Delaware on October 5, 2010 for the sole purpose of entering into the Merger Agreement, and engaging in the Merger. Parent’s principal office address is 165 Mason Street, 3^rd Floor, Greenwich, Connecticut 06830. Its telephone number is (203) 971-3300. Parent has not conducted any activities to date other than activities incidental to its formation and in connection with the transactions contemplated by the Merger Agreement and engaging in the Merger.

Merger Sub is a wholly owned subsidiary of Parent and an affiliate of GPP and was formed as a corporation in Delaware on May 26, 2010 for the sole purpose of entering into the Merger Agreement and engaging in the Merger. Merger Sub’s principal office address is 165 Mason Street, 3^rd Floor, Greenwich, Connecticut 06830 and its telephone number is (203) 971-3300. Merger Sub has not conducted any activities to date other than activities incidental to its formation and in connection with the transactions contemplated by the Merger Agreement and engaging in the Merger.

GPP-I is a Delaware limited liability company that was formed for the specific purpose of consummating the Merger and the other transactions contemplated by the Merger Agreement. GPP is the manager of and controls GPP-I. The principal office of GPP-I is located at 165 Mason Street, 3^rd Floor, Greenwich, Connecticut 06830.

GPP is a Greenwich-based healthcare focused investment firm that specializes in completing recapitalization transactions with middle-market companies and entrepreneurs. The managing members of GPP are Dr. Jeffrey R. Jay and Mr. David Kroin. Dr. Jay and Mr. Kroin have served as the managing members of GPP and other related entities for the last five years. None of Dr. Jay, Mr. Kroin, any other general partner of GPP, GPP or any of their respective affiliates is an affiliate of the Company.

Great Point Partners I GP, LLC is a Delaware limited liability company and is the general partner of GPP. Its principal business is as a private equity management company. Its principal office is located at 165 Mason Street, 3^rd Floor, Greenwich, Connecticut 06830.

Dr. Jeffrey R. Jay, M.D. is the senior managing member of Great Point Partners I GP, LLC, and David E. Kroin is the special managing member of Great Point Partners I GP, LLC. The business address of each of Dr. Jay, Mr. Kroin and Mr. Dolder is 165 Mason Street, 3rd Floor, Greenwich, Connecticut 06830.

None of the persons or entities named above (1) was convicted in a criminal proceeding during the past five years (excluding traffic violations or similar misdemeanors) or (2) has been a party to any judicial or administrative proceeding during the past five years (except for matters that were dismissed without sanction or settlement) that resulted in a judgment, decree or final order enjoining the person from future violations of, or prohibiting activities subject to, federal or state securities laws, or a finding of any violation of federal or state securities laws. Each individual named above is a U.S. citizen.

The business address for each of the persons listed above is 165 Mason Street, 3^rd Floor, Greenwich, Connecticut 06830. The telephone number for each of the persons listed above is (203) 971-3300.

Except pursuant to the Exchange Agreements and Voting Agreements, at the Effective Time, none of Parent, Merger Sub, or GPP may be deemed to beneficially own any shares of the Company’s common stock.

PROPOSAL 2 – APPROVAL OF THE ADJOURNMENT OF THE SPECIAL MEETING, IF NECESSARY OR APPROPRIATE, TO SOLICIT ADDITIONAL PROXIES

We may ask our stockholders to vote on a proposal to adjourn the Special Meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the adjournment to adopt the Merger Agreement. We currently do not intend to propose adjournment at the Special Meeting if there are sufficient votes to adopt the Merger Agreement. If our stockholders approve this proposal, we may adjourn the Special Meeting and use the additional time to solicit additional proxies, including proxies from our stockholders who have previously voted against adoption of the Merger Agreement.

The approval of a majority of the votes cast is required to approve the adjournment of the Special Meeting for the purpose of soliciting additional proxies. Accordingly, abstentions will have no impact on the outcome of Proposal 2. Proxy cards submitted by registered stockholders without voting instructions will be voted “FOR” approval of the adjournment of the Special Meeting to solicit additional proxies. Stockholders who hold their shares in “street name” and do not give instructions to their bank or brokerage firm will not be considered present at the Special Meeting, but the failure to provide instructions will have no effect on the outcome of Proposal 2.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE “FOR” THE APPROVAL OF THE ADJOURNMENT OF THE SPECIAL MEETING, IF NECESSARY OR APPROPRIATE, TO SOLICIT ADDITIONAL PROXIES.

You should rely only on the information contained in this proxy statement to vote your shares at the Special Meeting. The Company has not authorized anyone to provide you with information that is different from what is contained in this proxy statement. This proxy statement is dated , 2011. The information contained in this proxy statement is accurate as of the date of the proxy statement. If any statements set forth in this proxy statement become materially inaccurate before the date of the Special Meeting, the Company will update these proxy materials through filings of additional definitive materials with the SEC, which will be sent to stockholders or otherwise made available to them as set forth below in the section entitled “Where You Can Find More Information.”

If the Merger is completed, the Company will not hold a 2011 Annual Meeting of Stockholders. If the Merger is not completed, you will continue to be entitled to attend and participate in the Company’s stockholder meetings and the Company will hold its next annual meeting at such time as the Board determines in its sole discretion to elect directors and to attend to such other matters as may properly come before the annual meeting. Stockholder proposals will be eligible for consideration for inclusion in the proxy statement and form of proxy for the next annual meeting in accordance with Rule 14a-8 under the Exchange Act. The Company will notify the Company’s stockholders of the date of the next annual meeting, if any, in accordance with the rules and regulations promulgated by the SEC. Since the Company did not hold an annual meeting in 2010, in order to be considered for inclusion in the Company’s proxy materials, proposals of stockholders intended to be presented at the next annual meeting must be received by the Company a reasonable time before the Company begins to print and mail the Company’s proxy materials for the next annual meeting.

The Board knows of no other business which may come before the Special Meeting. If any other matters are properly presented at the Special Meeting, the persons named in the proxy will vote upon them in accordance with their best judgment.

WHETHER OR NOT YOU EXPECT TO ATTEND THE SPECIAL MEETING, PLEASE SIGN THE PROXY CARD AND RETURN IT IN THE ENCLOSED ENVELOPE AT YOUR EARLIEST CONVENIENCE.

The Company files annual, quarterly and current reports, and other information with the SEC. You may read and copy this information at the following location of the SEC:

Please call the SEC at 1-800-SEC-0330 for further information on the public reference rooms. You may also obtain copies of this information by mail from the Public Reference Section of the SEC, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, at prescribed rates. The Company’s public filings are also available to the public from document retrieval services, and the Company’s public filings are available to the public at the Internet website maintained by the SEC at http://www.sec.gov.

Attached to this proxy statement as Appendix D and Appendix E , respectively, are the following filings made by the Company with the SEC: Annual Report on Form 10-K for the fiscal year ended December 31, 2009, and Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2010. These documents contain important information regarding the Company that you should review in connection with considering the proposals contained in this proxy statement.

THIS PROXY STATEMENT DOES NOT CONSTITUTE THE SOLICITATION OF A PROXY IN ANY JURISDICTION FROM ANY PERSON FROM WHOM IT IS UNLAWFUL TO MAKE SUCH PROXY SOLICITATION IN THAT JURISDICTION. YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN, ATTACHED TO, OR INCORPORATED BY REFERENCE INTO THIS PROXY STATEMENT. THE COMPANY HAS NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT FROM WHAT IS CONTAINED IN, ATTACHED TO, OR INCORPORATED BY REFERENCE INTO THIS PROXY STATEMENT. THIS PROXY STATEMENT IS DATED , 2011. 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 PROXY STATEMENT TO STOCKHOLDERS DOES NOT CREATE ANY IMPLICATION TO THE CONTRARY.

Only one copy of this proxy statement has been sent to multiple stockholders of the Company who share the same address and last name, unless the Company has received contrary instructions from one or more of those stockholders. This procedure is referred to as “householding.” In addition, the Company has been notified that certain intermediaries, such as brokers or banks, will household proxy materials. The Company will deliver promptly, upon oral or written request, a separate copy of this proxy statement to any stockholder at the same address. If you wish to receive a separate copy of this proxy statement, you may write to Attn: Secretary, American Surgical Holdings, Inc., 10039 Bissonnet Street, Suite 250, Houston, Texas or call (713) 779-9800. You can contact your broker or bank to make a similar request. Stockholders sharing an address who now receive multiple copies of proxy statements may request delivery of a single copy by writing or calling the Company at the above address or phone number or by contacting their broker or bank, provided they have determined to household proxy materials.

AGREEMENT AND PLAN OF MERGER (this “Agreement”) is entered into as of December 20, 2010, by and among American Surgical Holdings, Inc., a Delaware corporation (the “Company”), AH Holdings, Inc., a Delaware corporation (the “Parent”), and AH Merger Sub, Inc., a Delaware corporation, and a wholly owned subsidiary of the Parent (the “Merger Sub”).

WHEREAS, the Special Committee of the Board of Directors of the Company has (i) approved and declared advisable this Agreement and determined that this Agreement is in the best interests of the Company’s stockholders (other than the Rollover Holders (as hereafter defined) as to which no determination has been made), (ii) has approved and declared advisable the merger of Merger Sub with and into the Company, with the Company being the surviving corporation (the “Merger”), on the terms and subject to the conditions provided for in this Agreement and determined that the Merger is in the best interests of the Company’s stockholders (other than the Rollover Holders as to which no determination has been made), (iii) has reviewed the terms of the Merger and determined that such terms are fair and (iv) has recommended that the Board of Directors of the Company approve and declare advisable this Agreement and the Merger;

WHEREAS, Parent has acquired 1,000 shares of stock of the Merger Sub, representing 100% of the issued and outstanding shares of stock of Merger Sub, in exchange for cash as part of an overall plan that includes the merger of Merger Sub with and into the Company in consideration for cash;

WHEREAS, the Merger is one of several related transactions involving the contribution of cash or property to Parent or Merger Sub in exchange for cash and capital stock of Parent as part of an overall plan that includes the acquisition of all of the outstanding capital stock of the Company in exchange for cash and stock of Parent via a statutory merger of Merger Sub with and into the Company, with the Company as the surviving corporation and a wholly owned subsidiary of Parent as a result of the merger (collectively, the cash and Company common stock exchanged with Parent are the “Contributions,” and for federal income tax purposes, it is intended that the Contributions and the other related exchange transactions with Parent shall qualify as exchanges under the provisions of Section 351 of the Internal Revenue Code of 1986, as amended (the “Code”) and the rules and regulations promulgated thereunder;

WHEREAS, the respective Boards of Directors of the Company, the Parent and the Merger Sub have unanimously determined that the Merger, upon the terms and subject to the conditions set forth in this Agreement, would be advisable and in the best interests of their respective companies and their stockholders, and have unanimously approved this Agreement and the Merger;

WHEREAS, the Board of Directors of the Company has unanimously resolved to recommend that the Company’s stockholders adopt this Agreement and approve the Merger; and

WHEREAS, the Company, the Parent and the Merger Sub desire to make certain representations, warranties, covenants and agreements in connection with the Merger.

WHEREAS, concurrently with the execution of this Agreement, and as a condition and inducement to Parent’s and Merger Sub’s willingness to enter into this Agreement, Parent and certain beneficial owners listed on Exhibit D (the “Rollover Holders”) of Common Stock are entering into Exchange Agreements (the “Exchange Agreements”), pursuant to which the Rollover Holders are agreeing, among other things, to contribute the portion of their Common Stock set forth therein (such shares, collectively, the “Rollover Shares”) to Parent immediately prior to the Effective Time of the Merger;

Common Stock are entering into Voting Agreements substantially in the from attached as Exhibit A (the “Voting Agreements”);

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

1.1 The Merger. Upon the terms and subject to the conditions set forth in this Agreement and in accordance with the General Corporation Law of the State of Delaware (the “DGCL”), at the Effective Time (as defined herein), the Merger Sub shall be merged with and into the Company. The Company shall be the surviving corporation in the Merger (sometimes hereinafter referred to as the “Surviving Corporation”) and shall continue to be governed by the DGCL. The Merger shall have the effects specified in the DGCL.

1.2 Closing. The closing of the Merger (the “Closing”) shall take place electronically, or, at Parent’s election, at McDermott Will & Emery, 227 West Monroe, Chicago, Illinois at 10:00 AM CDT on or before the second (2nd) Business Day after the satisfaction or waiver (in accordance with the terms of this Agreement) of the conditions to the obligations of the parties to consummate the transaction contemplated hereby set forth in Article VI (other than those conditions that by their terms are to be satisfied at the Closing, but subject to the satisfaction or waiver of those conditions) or at such other place and time as the Parent and the Company may mutually agree in writing. The date on which the Closing occurs is referred to in this Agreement as the “Closing Date”.

1.3 Effective Time. At the Closing, the Company and the Merger Sub shall cause a Certificate of Merger (the “Certificate of Merger”) to be executed and filed with the Secretary of State of the State of Delaware as provided in the DGCL. The Merger shall become effective at such time as the Certificate of Merger is duly filed with the Secretary of State of the State of Delaware or at such later time as Parent and the Company shall agree and specify in the Certificate of Merger (the “Effective Time”). Without limiting the foregoing, at the Effective Time, all the property, rights, privileges, powers and franchises of the Merger Sub and the Company shall vest in the Surviving Corporation, and all debts, liabilities and duties of the Merger Sub and the Company shall become the debts, liabilities and duties of the Surviving Corporation. The Surviving Corporation may, at any time after the Effective Time, take any action in the name of and on behalf of either the Company or the Merger Sub that is reasonably necessary in order to carry out and effectuate the Merger consistent with the provisions of this Agreement.

1.4 Certificate of Incorporation. The certificate of incorporation of the Merger Sub in effect immediately prior to the Effective Time shall be the certificate of incorporation of the Surviving Corporation (the “Certificate”), until thereafter amended as provided therein and in accordance with applicable Law; provided, however, that Article FIRST of the Certificate shall be amended as of the Effective Time to change the name of the Merger Sub to “American Surgical Holdings, Inc.”

1.5 Bylaws. The bylaws of the Merger Sub in effect at the Effective Time shall be the bylaws of the Surviving Corporation (the “Bylaws”), until thereafter amended as provided therein and in accordance with applicable Law; provided, however, that the Bylaws shall be amended as of the Effective Time to change the name of the Merger Sub to “American Surgical Holdings, Inc.”

1.6 Directors and Officers. The directors and officers of the Merger Sub immediately prior to the Effective Time shall, from and after the Effective Time, be the directors and officers of the Surviving Corporation until

their successors have been duly elected or appointed and qualified or until their earlier death, resignation or removal in accordance with the Certificate, the Bylaws and applicable Law.

2.1 Effect on Outstanding Securities. At the Effective Time, as a result of the Merger and without any action on the part of the Company, the Parent, the Merger Sub or any holder of any capital stock of the Company:

(a) Merger Consideration; Option Consideration; Warrant Consideration; Additional Per Share Merger Consideration.

(i) Each share of common stock, par value $0.001 per share, of the Company (the “Common Shares”) issued and outstanding immediately prior to the Effective Time (other than (x) any Common Shares owned directly or indirectly by the Parent or the Company or any of their respective Subsidiaries, including the Rollover Shares (the “Excluded Shares”) and (y) any Dissenting Shares), shall be converted into and represent the right to receive an amount equal to $2.87 per share, in cash, subject to adjustment as provided in Section 2.3 (the “Per Share Price”) and the Additional Per Share Merger Consideration (as hereinafter defined). The Per Share Price and the Additional Per Share Merger Consideration are together referred to as the “Merger Consideration.”

(ii) Each outstanding Company Stock Option that is not exercised prior to the Effective Time will be canceled on the Effective Time in accordance with Section 2.4 in exchange for the Option Consideration (as hereafter defined), as applicable. Each outstanding Company Warrant that is not exercised prior to the Effective Time shall represent the right to receive only the Warrant Consideration (as hereafter defined) until such time as the Company Warrant expires.

(iii) Each Rollover Share will be converted into and represent the right to receive the Additional Per Share Merger Consideration, which consideration shall be paid directly to the Rollover Holders.

(b) Cancellation of Certain Common Shares and Excluded Shares. All of the Common Shares (including the Excluded Shares and the Dissenting Shares) shall no longer be outstanding and shall automatically be canceled and retired and shall cease to exist, and (i) the certificates (the “Certificates”) formerly representing Common Shares (other than the Excluded Shares and the Dissenting Shares) shall be converted into and represent the right to receive the Merger Consideration multiplied by the number of Common Shares formerly represented by such Certificate, in accordance with and subject to the terms and conditions of this Agreement, and (ii) no holder of an Excluded Share shall be entitled to any consideration therefore except that the certificates formerly representing the Rollover Shares will be converted into and represent the right to receive the Additional Per Share Merger Consideration multiplied by the number of Common Shares formerly represented by such certificates, in accordance with and subject to the terms and conditions of this Agreement.

(c) Appraisal Rights. Notwithstanding anything in this Agreement to the contrary, any Common Shares that are issued and outstanding immediately prior to the Effective Time that are held by a stockholder who is entitled to and who has properly demanded appraisal for such Common Shares (the “Dissenting Shares”) in accordance with Section 262 of the DGCL shall not be converted into the right to receive the Merger Consideration at the Effective Time, but shall represent and become the right to receive such consideration as may be determined to be due to such Dissenting Stockholder pursuant to the Laws of the State of Delaware, unless and until such holder fails to perfect or withdraws or otherwise loses such holder’s right to appraisal and payment under the DGCL. If such holder fails to perfect or withdraws or otherwise loses such holder’s right to

appraisal, the Dissenting Shares held by such holder shall be treated as if they had been converted as of the Effective Time into a right to receive the Merger Consideration, without any interest or dividends thereon, in accordance with Section 2.1(a). The Company shall give Parent (i) prompt notice of any written demand for appraisal, any attempted withdrawal of such demand, any other instruments served pursuant to applicable Law and any other written communications that are received by the Company relating to stockholders’ rights of appraisal and (ii) the right to participate in and direct all negotiations, discussions and proceedings with respect to such demands for appraisal under the DGCL. The Company shall not, except with the prior written consent of Parent, voluntarily make any payment with respect to any demands for appraisal, offer to settle or settle any such demands, approve any withdrawal of any such demands or agree to do any of the foregoing.

(d) Merger Sub. Each share of stock of Merger Sub issued and outstanding immediately prior to the Effective Time shall be converted into one share of common stock of the Surviving Corporation. Each certificate that, immediately prior to the Effective Time, represented issued and outstanding shares of Merger Sub stock shall be deemed to represent the same number of shares of Surviving Corporation common stock.

(e) Parent. Each common share of Parent issued and outstanding immediately prior to the Effective Time shall remain issued and outstanding and shall not be affected by the Merger.

(a) Depositary for Merger Consideration and Warrant Consideration. Prior to the Effective Time, (i) the Parent or the Merger Sub and the Company shall mutually agree upon and designate a bank or trust company (the “Depositary”) to act as agent for the holders of the Common Shares and Company Warrants in connection with the Merger to receive and distribute the Payment Fund (as defined below), for the benefit of such holders, in exchange for the certificates representing the Common Shares and the Company Warrants in accordance with the terms of this Agreement and (ii) Parent and the Company shall enter into an agreement with the Depositary providing for the matters set forth in this Section 2.2.

(1) At or prior to the Effective Time, the Merger Sub or Parent shall deposit, or cause to be deposited, with the Depositary cash in an aggregate amount equal to the sum of (x) the product of (i) the number of Common Shares issued and outstanding immediately prior to the Effective Time (other than the Excluded Shares and the Dissenting Shares) multiplied by (ii) the Per Share Price, plus (y) the Parent Warrant Consideration (the “Parent Payment Fund”), for the benefit of the holders of such Common Shares and Company Warrants.

(2) At or prior to the Effective Time, the Company shall deposit with the Depositary cash in an aggregate amount equal to the sum of (x) the product of (i) the number of Common Shares issued and outstanding immediately prior to the Effective Time (other than the Dissenting Shares) multiplied by (ii) the Additional Cash Per Share Merger Consideration, plus (y) the Company Warrant Cash Consideration (the “Company Payment Fund” and collectively with the Parent Payment Fund, the “Payment Fund”).

In the event the amount of the Parent Payment Fund deposited with the Depositary shall be insufficient to make the payments contemplated by Sections 2.1(a), Parent and/or Merger Sub shall promptly deposit, or cause to be deposited, additional funds with the Depositary in an amount that is equal to the amount of such deficiency required to make such payment. In the event the amount of the Company Payment Fund deposited with the Depositary shall be insufficient to make the cash payments contemplated by Sections 2.5 (other than amounts payable with respect to Company Stock Options), the Company shall promptly deposit, or cause to be deposited, additional funds with the Depositary in an amount that is equal to the amount of such deficiency required to make such cash payment. The Depositary shall cause the Payment Fund to be (i) held for the benefit of the holders of the Company’s Common Shares and Company Warrants, and (ii) applied promptly to making the payments pursuant to Sections 2.1(a) and 2.5 (except with respect to Company Stock Options). The Payment Fund shall not be used for any purpose that is not provided for herein.

(b) Option Consideration. At the Effective Time, the Parent shall deposit, or cause to be deposited, with the Surviving Corporation cash in an aggregate amount equal to the Parent Option Consideration (as hereafter defined) for the benefit of the holders of the Company Stock Options.

(c) Exchange Procedures. As soon as reasonably practicable after the Effective Time, and in no event later than five (5) Business Days after the Effective Time, the Parent or the Surviving Corporation shall cause the Depositary to mail to each holder of record of outstanding Common Shares immediately prior to the Effective Time (other than the Excluded Shares and the Dissenting Shares) and each holder of record of a Company Warrant immediately prior to the Effective Time (i) a letter of transmittal (which shall specify that delivery shall be effected and risk of loss and title to the Certificates and Company Warrants shall pass only upon delivery of the Certificates or the Company Warrants to the Depositary) and (ii) instructions for use in effecting the surrender of the Certificates or exercise of the Company Warrants in exchange for the Merger Consideration and Warrant Consideration, as applicable. Upon surrender of a Certificate for cancellation or Company Warrant for exercise (accompanied by an executed notice of exercise) to the Depositary, together with a letter of transmittal, duly completed and executed, and such other documents as may reasonably be required by the Depositary, the Depositary shall pay the holder of such Certificate the cash portion of the Merger Consideration in respect of such Certificate and shall pay the holder of each Company Warrant the cash portion of the Warrant Consideration in respect of the exercise of such Company Warrants, in each case less any required withholding taxes, and the Certificate and/or Company Warrants so surrendered or exercised shall forthwith be canceled. If any portion of the cash portion of the Merger Consideration or Warrant Consideration is to be paid to a person other than the registered holder of the Common Shares represented by the Certificate or Certificates surrendered in exchange therefor or the holder of the Company Warrants surrendered in exchange therefor, it shall be a condition to such payment that the Certificate or Certificates or Company Warrants so surrendered shall be properly endorsed or otherwise be in proper form for transfer and that the person requesting such payment shall pay to the Depositary any transfer or other taxes required as a result of such payment to a person other than the registered holder of such Common Shares or Company Warrants or establish to the satisfaction of the Depositary that such tax has been paid or is not payable. Until surrendered as contemplated by this Section 2.2(c), each Certificate (other than Certificates representing Excluded Shares or Dissenting Shares) and each Company Warrant shall be deemed at any time after the Effective Time to represent only the right to receive the Merger Consideration or Warrant Consideration, as applicable, upon such surrender or exercise. Upon receiving written notice from the Parent that the Effective Time shall have occurred and that a Rollover Holder has delivered certificates representing Rollover Shares to Parent in accordance with the Exchange Agreement the Depository shall deliver to such Rollover Holder the Additional Cash Per Share Merger Consideration, less any required withholding taxes, payable to such Rollover Holder with respect to such Rollover Shares. No interest or dividends shall accrue or be payable to any holder of Common Shares, Company Warrants or Company Stock Options on any consideration payable hereunder.

(d) No Further Ownership Rights in Common Shares or Warrants. All Merger Consideration paid upon the surrender of Certificates (or affidavits of loss in lieu thereof) in accordance with the terms of this Article II shall be deemed to have been paid in full satisfaction of all rights pertaining to the Common Shares previously represented by such Certificates (or affidavits of loss in lieu thereof). The Warrant Consideration paid upon exercise of the Company Warrants (or affidavits of loss in lieu thereof) in accordance with the terms of this Article II shall be deemed to have been paid in full satisfaction of all rights pertaining to the Company Warrants. If, after the Effective Time, Company Warrants (together with an executed notice of exercise) or Certificates (or affidavits of loss thereof) are presented to the Surviving Corporation or the Depositary for any reason, they shall be canceled and exchanged as provided in this Article II, except as otherwise provided by Law.

(e) Unclaimed Funds. Any portion of the Payment Fund made available to the Depositary that remains unclaimed by holders of the Certificates or the Company Warrants for nineteen (19) months after the Effective Time shall be delivered to the Surviving Corporation, and any holders of Certificates or Company Warrants who have not previously complied with this Article II shall thereafter look only to the Surviving Corporation (subject to abandoned property, escheat or similar laws) for payment of their claim for the Merger Consideration or

Warrant Consideration, as applicable, without any interest thereon. Any such amounts remaining unclaimed by such holders at such time at which such amounts would otherwise escheat to or become property of any governmental authority shall become, to the extent permitted by applicable Law, the property of the Surviving Corporation, subject to any and all claims or interest of any Person previously entitled thereto.

(f) No Liability. None of the Parent, the Surviving Corporation, the Company or the Depositary shall be liable to any person in respect of any portion of the Payment Fund delivered to a public official pursuant to any applicable abandoned property, escheat or similar Law.

(g) Investment of Funds. The Payment Fund shall be invested by the Depositary in accordance with the instructions of the Parent or the Surviving Corporation but only in obligations issued or guaranteed by the United Stated government (or agencies thereof) maturing in thirty (30) days or less and certificates of deposit or repurchase agreements maturing in thirty (30) days or less of domestic United States banks having capital and surplus of $250,000,000 or more and having a rating of A or better from Moody’s Investors Services, Inc. and A or better from Standard & and Poor’s Corporation. The Payment Fund shall not be invested or reinvested, directly or indirectly, by the Depositary in any other manner. All earnings on the Payment Fund shall be paid to the Surviving Corporation.

(h) Lost Certificates. In the event that any Certificate, Company Option or Company Warrant shall have been lost, stolen or destroyed, upon the making of an affidavit (in form and substance satisfactory to the Depositary and the Surviving Corporation) of that fact by the person claiming such Certificate, Company Option or Company Warrant to be lost, stolen or destroyed and, if required by the Depositary or the Surviving Corporation, the posting of a bond or the granting of an indemnity reasonably satisfactory to the Depositary and the Surviving Corporation against any claim that may be made against either of them with respect to such Certificate, Company Option or Company Warrant, the Depositary or the Company, as the case may be, will issue, in exchange for such lost, stolen or destroyed Certificate, Company Option or Company Warrant, the portion of the Payment Fund with respect to such Certificate or Company Warrant, or the Option Consideration with respect to such Company Option, to which such person is entitled pursuant hereto.

(i) Transfer Books. At the close of business on the day on which the Effective Time occurs, the stock and warrant transfer books of the Company shall be closed and thereafter there shall be no further registration of transfers of shares of Common Stock or Company Warrants on the records of the Surviving Corporation.

2.3 Adjustment of Per Share Price. In the event that subsequent to the date of this Agreement but prior to the Effective Time any one or more of the following shall occur, the Per Share Price shall be adjusted.

(a) If less than all of the Company Stock Options and Company Warrants (other than the Designated Warrants) shall have been exercised as of the Effective Time, the Per Share Price shall increase by an amount equal to: (i) the aggregate exercise price of all unexercised Company Stock Options and Company Warrants (other than the Designated Warrants) divided by (ii) the number of outstanding Common Shares plus the number of Common Shares underlying the unexercised Company Stock Options and Company Warrants, in each case outstanding as of the Effective Time.

(b) If some or all of the Company Warrants (other than the Designated Warrants) are exercised on a cashless basis in accordance with their respective terms, the Per Share Price shall increase by an amount equal to: (i) the difference between (A) $42,848,042 and (B) $2.87 multiplied by the number of outstanding Common Shares plus the number of Common Shares underlying the unexercised Company Stock Options and Company Warrants, in each case outstanding as of the Effective Time divided by (ii) the number of outstanding Common Shares plus the number of Common Shares underlying the unexercised Company Stock Options and Company Warrants, in each case outstanding as of the Effective Time.

Provided, however, that any adjustments to the Per Share Price required pursuant to clauses (a) and (b) shall be aggregated and then such aggregated amount shall be rounded down to the nearest whole cent ($0.01) before adding such amount to the $2.87 per share amount contemplated by Section 2.1(a).

(c) In the event the outstanding Common Shares shall have been changed into a different number of shares or a different class as a result of a stock split, reverse stock split, stock dividend, subdivision, reclassification, split, combination, exchange, recapitalization or other similar transaction, the Per Share Price shall be appropriately adjusted.

(a) At the Effective Time, each Company Stock Option outstanding (whether or not vested or exercisable) that has a per share exercise price less than the Per Share Price (each a “Cash Pay Option”) shall be canceled and converted into the right to receive (i) a cash payment equal to (A) the excess, if any, of (1) the Per Share Price over (2) the exercise price per Common Share subject to such Company Stock Option, multiplied by (B) the number of Common Shares for which such Company Stock Option shall not theretofore have been exercised (the “Parent Option Consideration”) plus (ii) (A) the Additional Per Share Merger Consideration multiplied by (B) the number of Cashless Exercise Option Shares represented by such Company Stock Option (the “Company Option Consideration” and collectively with the Parent Option Consideration, the “Option Consideration”). Each Cash Pay Option when so converted shall cease to be outstanding and each holder of a Cash Pay Option shall cease to have any rights with respect to such Cash Pay Options. Commencing at the Effective Time and continuing until the Company Warrants expire, each Company Warrant outstanding shall only represent the right to receive (i) a cash payment equal to (A) the excess, if any, of (1) the Per Share Price over (2) the exercise price per Common Share subject to such Company Warrant, multiplied by (B) the number of Common Shares for which such Company Warrant shall not theretofore have been exercised (the “Parent Warrant Consideration”) plus (ii) (A) the Additional Per Share Merger Consideration multiplied by (B) the number of Common Shares for which such Company Warrant shall not theretofore have been exercised (the “Company Warrant Consideration” and collectively with the Parent Warrant Consideration, the “Warrant Consideration”). For each Company Warrant (other than the Designated Warrants) that has not been exercised as of the Effective Date, an amount equal to the Additional Cash Per Share Merger Consideration multiplied by the number of Commons Shares for which such Company Warrant shall not theretofore have been exercised, is referred to as the “Company Warrant Cash Consideration”. Upon surrender to the Surviving Corporation of the original Company Stock Option agreement and an executed copy of the exercise notice in the form attached to the Company Stock Option (collectively, the “Option Documentation”), the Parent hereby agrees to cause the Surviving Corporation to promptly deliver (but in all cases not later than the fifth business day after the later of the Closing Date and the date of receipt of the Option Documentation) to the registered holder of such Company Stock Options (as indicated in the records of the Company), the cash portion of the Option Consideration less any required withholding taxes. At the Effective Time each Company Stock Option outstanding as of the Effective Time shall be canceled and each holder of a certificate representing such canceled Company Stock Option shall cease to have any rights with respect to such Company Stock Option and shall not be entitled to receive any payment with respect thereto other than the Option Consideration.

(b) The Board of Directors of the Company (or, if appropriate, any committee administering the Stock Plans) shall adopt such resolutions and the Company and the Board of Directors shall take all other actions as are required to (i) give effect to the transactions contemplated by this Section 2.4 and (ii) cause the Stock Plans and each Company Stock Option to be terminated as of the Effective Time and cause any provision in any other agreement, arrangement or benefit plan providing for the issuance, transfer or grant of any capital stock of the Company or any interest in respect of any capital stock of the Company to be deleted as of the Effective Time and (iii) ensure that no person has any rights under any Stock Plan and Company Stock Option, or such other agreement, arrangement or benefit plan to acquire any capital stock of the Surviving Corporation or the Parent (other than rights under the Exchange Agreements by and between the Parent and the Rollover Holders) and that the Parent and the Surviving Corporation will not have any further obligation or liability under any of the

foregoing Stock Plans and Company Stock Options and the Company Warrants or other such agreements, except as specifically contemplated by this Section 2.4.

(c) For purposes of this Agreement (i) the term “Stock Plan” means any stock option, restricted stock or equity incentive plan, program or arrangement including, but not limited to the Company’s Equity Incentive Plan, (ii) the term “Company Stock Option” means each outstanding unexercised option or other right to purchase shares of Common Stock, whether or not then vested or fully exercisable, granted to any person by the Company, whether under any Stock Plan or otherwise, and (iii) the term “Company Warrant” means each outstanding warrant to purchase capital stock of the Company.

2.5 Additional Merger Consideration. The term “Additional Per Share Merger Consideration” shall mean: (a) a cash amount equal to (i) the Final Dividend (as defined in Section 5.1), if any, payable by the Company in accordance with Section 5.1 below divided by (ii) the sum of the number of outstanding Common Shares plus the number of Common Shares that would be issuable upon exercise of the unexercised Company Stock Options if they were exercised on a cashless basis in accordance with the terms of the Company Stock Options, assuming the Per Share Price shall be the “fair market value” of the Common Shares for purposes of such calculation (the “Cashless Exercise Option Shares”) plus the number of Common Shares issuable upon exercise of the unexercised Company Warrants, in each case outstanding as of the Effective Time (the “Additional Cash Per Share Merger Consideration”) plus (b) an ownership interest in CMC equal to (i) 100% of the membership interest in CMC divided by (ii) the sum of the number of outstanding Common Shares plus the Cashless Exercise Option Shares plus the number of Common Shares issuable upon exercise of the unexercised Company Warrants, in each case outstanding as of the Effective Time, which interest shall be represented by the Operating Agreement of CMC and this Agreement (the “Additional Equity Per Share Merger Consideration”). The Additional Per Share Merger Consideration shall be payable by the Company and all Additional Cash Per Share Merger Consideration payable with respect to the Common Shares (other than Dissenting Shares) and Company Warrants (other than the Designated Warrants) shall be deposited by the Company with the Depositary in accordance with Section 2.2(a). The Additional Cash Per Share Merger Consideration payable to the holders of the Company Stock Options shall remain with the Surviving Company following the Effective Time and shall be payable by the Surviving Corporation in accordance with Section 2.2(b). Claims Management Co shall be responsible for calculating the amount of the Additional Equity Per Share Merger Consideration to be issued promptly following Closing to holders of Common Shares (other than Dissenting Shares), Company Stock Options and Company Warrants and shall provide such information to the Parent or the Surviving Corporation for inclusion in the letter of transmittal provided for in Section 2.2(c). CMC shall issue to the Surviving Company promptly following the Closing a percentage membership interest in CMC equal to (x) the Additional Equity Per Share Merger Consideration multiplied by (y) the sum of the number of Dissenting Shares plus the number of Common Shares underlying any unexercised Company Warrants as of the Effective Date.

2.6 Withholding Rights. Parent, the Surviving Corporation and the Depositary shall be entitled to deduct and withhold from the consideration otherwise payable pursuant to this Agreement to any former holder of Common Shares, Company Warrants or Company Stock Options, such amounts as Parent, the Surviving Corporation or the Depositary is required to deduct and withhold with respect to the making of such payment under the Code or any provision of state, local or foreign Tax law. To the extent that amounts are so withheld by Parent, the Surviving Corporation or the Depositary, such withheld amounts shall be paid over to the appropriate taxing authority and shall be treated for all purposes of this Agreement as having been paid to the applicable former holder of Common Shares, Company Warrants or Company Stock Options.

Except as disclosed (i) in the Company’s Form 10-K filed with the SEC for the fiscal year ended December 31, 2009 (excluding the exhibits and schedules thereto, any disclosures set forth exclusively in any

risk factor section thereof or in any forward-looking statements contained therein) (the “2009 Form 10-K”) or (ii) in the relevant section of the disclosure schedule delivered by the Company to Parent and Merger Sub immediately prior to the execution of this Agreement (the “Company Disclosure Schedule”); provided, however, that any information set forth in one section of the Company Disclosure Schedule will be deemed to apply to other sections of this Agreement and the Company Disclosure Schedule to the extent such disclosure is made in a way as to make its relevance to such other section readily apparent from the face of such disclosure, the Company represents and warrants to Parent and Merger Sub as follows:

(a) Each of the Company and its Subsidiaries is a legal entity duly organized, validly existing and, in good standing under the Laws of its respective jurisdiction of organization and has all requisite corporate or similar power and authority to own, lease and operate its properties and assets and to carry on its business as presently conducted and is qualified to do business and is in good standing as a foreign entity in each jurisdiction where the ownership, leasing or operation of its assets or properties or conduct of its business requires such qualification, except where the failure to be so organized, validly existing, qualified or in good standing, or to have such power or authority, would not reasonably be expected to have a Company Material Adverse Effect. As used in this Agreement, “Company Material Adverse Effect” means any fact, circumstance, event, change, effect, development or occurrence that, either individually or in the aggregate is or could reasonably be expected to be, materially adverse to the business, financial condition or results of operations of the Company and its Subsidiaries, taken as a whole, but shall not include the effect of any facts, circumstances, events, changes, effects, developments or occurrences (A) generally affecting the economy or the financial or securities markets or generally affecting the healthcare industry, including general changes to Laws across the industry (but only to the extent such fact, circumstance, event, change, effect, development or occurrence in each case does not materially and disproportionately adversely affect the Company and its Subsidiaries, taken as a whole); or (B) resulting from (I) any acts of terrorism or war (whether or not declared) or any escalation or worsening thereof (other than to the extent any of the foregoing materially impacts the surgical assistant employees’ ability to perform their job duties for, the Company or any of its Subsidiaries); (II) the announcement of this Agreement or the transactions contemplated hereby; (III) changes in accounting principles generally accepted in the United States (“GAAP”) or accounting standards; (IV) change, in and of itself, in the market price or trading volume of the Common Shares (it being understood that the facts, circumstances, events, changes, effects, developments or occurrences giving rise or contributing to any such changes may be taken into account in determining whether there has been, or would reasonably be expected to be, a Company Material Adverse Effect); (V) any matter of which Parent or Merger Sub has Knowledge on the date hereof; or (VI) the failure, in and of itself, by the Company to meet any expected or projected financial or operating performance target, whether internal or published for any period ending on or after the date of this Agreement (it being understood that the facts, circumstances, events, changes, effects, developments or occurrences giving rise or contributing to such failure may be taken into account in determining whether there has been, or would reasonably be expected to be, a Company Material Adverse Effect). Notwithstanding the generality of the foregoing, each of the following shall constitute a “Company Material Adverse Effect”: (I) the resignation, firing or other termination of the employment of either of the Key Employees, (II) the failure of the Company’s EBITDA for the twelve (12) month period ending on the last day of the last full month prior to Closing to exceed $7.1 million; or (III) any fact, circumstance, change, effect, event or occurrence, excluding a Force Majeure Event, that, individually or in the aggregate, has had, or would reasonably be expected to have or result in a reduction in the aggregate annualized EBITDA of the Company and its Subsidiaries, taken as a whole, in excess of $2.0 million during the twelve month period following the Closing. The Company has made available to Merger Sub prior to the date of this Agreement a true and complete copy of the Company’s Amended Certificate of Incorporation and Amended Bylaws, each as amended through the date of this Agreement (such certificate of incorporation, the “Company Certificate” and such bylaws, the “Company Bylaws”) and true and complete copies of the organizational or governing documents of each Subsidiary of the Company. The Company is not in violation of any of the provisions of the Company Certificate or the Company Bylaws, and no Subsidiary of the Company is in violation of any of the provisions of its organizational or governing documents.

(b) Section 3.1(b) of the Company Disclosure Schedule sets forth the name and jurisdiction of incorporation or organization of each Subsidiary of the Company and the name of each of its shareholder(s) or owner(s) and the capital stock or other equity interests of such Subsidiary held by each such person. Other than with respect to the Subsidiaries of the Company set forth in Section 3.1(b) of the Company Disclosure Schedule, the Company does not own, directly or indirectly, any capital stock or other equity securities of any person or have any direct or indirect equity or ownership interest in any person or business.

(a) The authorized capital stock of the Company consists of 100,000,000 Common Shares and 10,000,000 preferred shares, $0.001 par value (“Company Preferred Shares”). As of December 8, 2010, (i) 12,821,928 Common Shares were issued and outstanding, (ii) no Common Shares were held in treasury, (iii) 3,000,000 Common Shares were reserved for issuance under the equity incentive plan of the Company (the “Company Share Plans”), (iv) there were Options to purchase 1,786,112 Common Shares outstanding and Warrants to purchase 315,215 Common Shares outstanding, and (v) no Company Preferred Shares were issued or outstanding. All outstanding Common Shares, and all Common Shares reserved for issuance as noted in clauses (iii) and (iv), when issued in accordance with the respective terms thereof, are or will be duly authorized, validly issued, fully paid and non-assessable and free of pre-emptive or similar rights and issued in compliance in all material respects with all applicable securities Laws. All Company Stock Options and Company Warrants are evidenced by stock option or warrant agreements, true and correct copies of each outstanding Company Stock Option and Company Warrant have been delivered to Merger Sub and a true and correct copy of the form of Warrant has been delivered to Merger Sub. All outstanding Company Warrants are in the same form as the form of Warrant that has been delivered to Merger Sub. Section 3.2(a) of the Company Disclosure Schedule sets forth a true, complete and correct list of all persons who hold outstanding Company Stock Options or Company Warrants indicating, with respect to each Company Stock Option and Company Warrant, the number of shares of Common Shares subject to such Company Stock Option or Company Warrant, and the exercise price, date of grant, vesting schedule and expiration date thereof. There are no Company Stock Options intended to qualify as an “incentive stock option” under Section 422 of the Code.

(b) At Closing, the Company will not have any shares of capital stock issued or outstanding other than the 12,821,928 Common Shares referred to in Section 3.2(a) above or that have become outstanding after December 8, 2010 upon exercise of Company Stock Options or Company Warrants set forth in Section 3.2(a) of the Disclosure Schedule above. Except as set forth in Section 3.2(b) of the Company Disclosure Schedule, there are no outstanding subscriptions, options, warrants, calls, convertible securities or other rights, agreements or commitments relating to the issuance of capital stock or other equity interests to which the Company or any of its Subsidiaries is a party obligating the Company or any of its Subsidiaries to (A) issue, transfer or sell any shares of capital stock or other equity interests of the Company or any of its Subsidiaries or securities convertible into or exchangeable for such shares or equity interests, (B) grant, extend or enter into any such subscription, option, warrant, call, convertible securities or other similar right, agreement or arrangement, (C) redeem or otherwise acquire, or vote or dispose of, any such shares of capital stock or other equity interests, or (D) provide any funds to, or make any investment (in the form of a loan, capital contribution or otherwise) in, any person. There are no outstanding or authorized stock appreciation, phantom stock, profit participation or other similar rights with respect to the Company or any of its Subsidiaries.

(c) Neither the Company nor any of its Subsidiaries has outstanding bonds, debentures, notes or other obligations, the holders of which have the right to vote (or which are convertible into or exercisable for securities having the right to vote) with the shareholders of the Company on any matter.

(d) There are no shareholder agreements, voting trusts or other agreements or understandings to which the Company or any of its Subsidiaries or to the Knowledge of the Company any other Person is a party with respect to the voting, transfer or registration of the capital stock or other equity interests of the Company or any of its Subsidiaries or granting any Person the right to elect, designate or nominate a director to the Board.

(e) All outstanding shares of capital stock of, or other equity interests in, each Subsidiary of the Company are duly authorized, validly issued, fully paid and nonassessable and free of pre-emptive or similar rights. All the outstanding shares of capital stock of, or other equity interests in, each Subsidiary of the Company are owned by the Company or a wholly-owned Subsidiary of the Company free and clear of all liens, claims, mortgages, encumbrances, pledges, security interests, equities or charges of any kind or nature whatsoever (each, a “Lien”).

(a) The Company has the requisite corporate power and authority to enter into this Agreement and, subject to receipt of the Company Shareholder Approval, to consummate the Transactions. The execution and delivery of this Agreement and the consummation of the Transactions have been duly and validly authorized by the Board of Directors acting upon a receipt of a recommendation by the Special Committee and, except for (i) the Company Shareholder Approval and (ii) the filing of the Certificate of Merger with the Secretary of State of the State of Delaware, no other corporate proceedings on the part of the Company are necessary to authorize this Agreement or the consummation of the Transactions. As of the date of this Agreement, the Board of Directors, acting upon a receipt of a recommendation by the Special Committee, has unanimously (w) approved this Agreement and the Merger and the other Transactions in accordance with the DGCL; (x) determined that this Agreement and the Transactions are fair to, and in the best interests of, the Company and its stockholders (other than the Rollover Holders as to which no determination has been made) and approved and declared advisable this Agreement and the Transactions; (y) agreed to propose this Agreement and the Transactions for approval and adoption by the Company’s stockholders and (z) recommended that the Company’s stockholders approve and adopt this Agreement and the Transactions (the “Company Board Recommendation”), and such resolutions pursuant to which such actions were taken have not been rescinded or modified. This Agreement has been duly and validly executed and delivered by the Company and, assuming this Agreement constitutes the valid and binding agreement of Parent and Merger Sub, constitutes the legal, valid and binding agreement of the Company, enforceable against the Company in accordance with its terms subject to (i) applicable bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium or similar Laws from time to time in effect affecting creditors’ rights generally, and (ii) general principles of equity, whether such principles are considered in a proceeding at Law or in equity.

(b) The Special Committee of the Board of Directors of the Company, at a meeting duly called and held, has unanimously (i) determined that this Agreement and the Transactions, including the Merger, are fair to and in the best interests of the stockholders of the Company (other than the Rollover Holders as to which no determination has been made), (ii) approved and declared advisable this Agreement and the Transactions, including the Merger, and (iii) recommended that the Company’s Board of Directors approve and declare advisable this Agreement and the Transactions, including the Merger.

(c) Other than (i) the filing of the Certificate of Merger with the Secretary of State of the State of Delaware pursuant to the DGCL, (ii) the filing with the SEC of the Proxy Statement and such other filings, if any, required under and in compliance with other applicable requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and (iii) other approvals set forth on Section 3.3(c) of the Company Disclosure Schedule (collectively, the “Company Approvals”), no material authorization, consent, permit, action or approval of, or material filing with, or material notification to, any United States federal, state or local or foreign governmental or regulatory agency, commission, court, body, entity or authority or arbitral tribunal (each, a “Governmental Entity”) is necessary, under applicable Law, for the consummation by the Company of the Transactions.

(d) The execution and delivery by the Company of this Agreement does not, and, except as described in Section 3.3(c)or in Section 3.3(d)of the Company Disclosure Schedule, the consummation of the Transactions and compliance with the provisions of this Agreement by the Company will not (i) result in any violation of, or default (with or without notice or lapse of time, or both) under, or impair the Company’s or any of its

Subsidiaries’ rights or alter the rights or obligations of any third party under, or give rise to a right of termination, amendment, cancellation or acceleration of, or result in the creation of a Lien (other than a Permitted Lien) on any of the properties or assets of the Company or any of its Subsidiaries under, or require any notice or payment under, any of the terms, conditions or provisions of any material note, bond, mortgage, indenture, lease, license, contract, agreement, arrangement or understanding or other instrument or obligation to which the Company or any of its Subsidiaries is a party or by which any of them or any of their respective properties or assets may be bound (the “Company Agreements”), (ii) conflict with or result in any violation of any material provision of the Company Certificate, the Company Bylaws or the organizational or governing documents of any Subsidiary of the Company or (iii) conflict with or violate in any material respect any applicable Laws.

(a) The Company has filed or furnished all forms, documents, statements, reports, exhibits and other documents required to be filed or furnished by it with the Securities and Exchange Commission (the “SEC”) since December 31, 2009 (including documents filed on a voluntary basis on Form 8-K and in each case including all exhibits and schedules thereto and documents incorporated by reference therein, the “Company SEC Documents”). As of their respective dates, or, if amended, as of the date of the last such amendment, (i) the Company SEC Documents complied in all material respects with the requirements of the Securities Act of 1933, as amended, the Exchange Act and the Sarbanes-Oxley Act, as the case may be, and the applicable rules and regulations promulgated thereunder, and (ii) none of the Company SEC Documents contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. None of the Company SEC Documents (as revised, amended, supplemented or superseded by a later-filed Company SEC Document) contains any untrue statement of a material fact or omits 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. There are no amendments or modifications to any Company SEC Documents that are required to be filed with or furnished to the SEC that have not yet been so filed or furnished. The Company has made available to Parent true, correct and complete copies of all comment letters, written inquiries and enforcement correspondence between the Company (and its Subsidiaries) and the SEC occurring since January 1, 2007, and will, as promptly as practicable, make available to Parent any such correspondence sent or received after the date hereof. None of the Company SEC Documents is subject to any ongoing SEC review or outstanding SEC comment. None of the Excluded Assets are included as assets on the balance sheets included in the 2009 Form 10-K.

(b) The consolidated financial statements (including all related notes and schedules) of the Company included in the Company SEC Documents fairly present in all material respects the consolidated financial position of the Company and its consolidated Subsidiaries, as at the respective dates thereof, and the consolidated results of their operations and their consolidated cash flows for the respective periods then ended (subject, in the case of the unaudited statements, to normal year-end audit adjustments and to any other adjustments described therein, including the notes thereto) in conformity with GAAP (except, in the case of the unaudited statements, as permitted by the SEC) applied on a consistent basis during the periods involved (except as may be indicated therein or in the notes thereto).

(a) The Company has established and maintains disclosure controls and procedures and internal control over financial reporting (as such terms are defined in paragraphs (e) and (f), respectively, of Rule 13a-15 under the Exchange Act) as required by Rule 13a-15 under the Exchange Act. The Company’s disclosure controls and procedures are reasonably designed to ensure that all material information required to be disclosed by the Company in the reports that it files or furnishes under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that all such material information is accumulated and communicated to the Company’s management as appropriate to allow timely

decisions regarding required disclosure and to make the certifications required pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”). The Company has disclosed, based on its most recent evaluation prior to the date of this Agreement, to the Company’s auditors and the audit committee of the Board of Directors and Merger Sub (A) any significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect in any material respect the Company’s ability to record, process, summarize and report financial information and (B) any fraud, whether or not material, that involves executive officers or employees who have a significant role in the Company’s internal control over financial reporting. Since January 1, 2009, the Company has not identified any material weaknesses in the design or operation of internal control over financial reporting. There are no outstanding loans made by the Company or any of its Subsidiaries to any executive officer (as defined in Rule 3b-7 under the Exchange Act) or director of the Company.

(b) Since January 1, 2009, neither the Company nor any of its Subsidiaries nor any of their respective directors or officers, has received or otherwise had or obtained knowledge of any complaint, allegation, assertion or claim, whether written or oral, regarding any improper accounting or auditing practices, procedures, methodologies or methods of the Company or any of its Subsidiaries or their respective internal accounting controls, including any complaint, allegation, assertion or claim that the Company or any of its Subsidiaries has engaged in questionable accounting or auditing practices. Since January 1, 2008, no attorney representing the Company or any of its Subsidiaries, whether or not employed by the Company or any of its Subsidiaries, has reported evidence of a material violation of securities Laws, breach of fiduciary duty or similar violation by the Company or any of its officers, directors, employees or agents to the Board of Directors of the Company or any committee thereof or to any director or officer of the Company.

3.6 No Undisclosed Liabilities. Except (a) as reflected or reserved against in the Company’s consolidated balance sheets (or the notes thereto) included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009, (b) for liabilities and obligations incurred in the ordinary course of business consistent with past practice since December 31, 2009, (c) for contractual liabilities and obligations with respect to executory contracts not required to be disclosed in financial statements prepared in accordance with GAAP, (d) as set forth in Section 3.6 of the Company Disclosure Schedule or (e) as expressly contemplated by this Agreement, neither the Company nor any Subsidiary of the Company has any material debt, liabilities or obligations of any nature, whether or not accrued, contingent or otherwise, whether known or unknown and whether due or to become due.

(a) Except as set forth in Section 3.7(a) of the Company Disclosure Schedule, (i) the Company and each of its Subsidiaries are, and since December 31, 2007 have been, in compliance with all applicable federal, state, local or foreign laws, statutes, ordinances, rules, regulations, judgments, orders, injunctions, decrees or requirements of any Governmental Entity (collectively, “Laws” and each, a “Law”) and (ii) since December 31, 2007, no written notice, charge, claim, action or assertion has been received by the Company or any of its Subsidiaries or has been filed, commenced or, to the knowledge of the Company, threatened in writing against the Company or any of its Subsidiaries alleging any material violation of any applicable Law.

(b) The Company and its Subsidiaries are in possession of all material franchises, grants, authorizations, licenses, permits, easements, variances, clearances, exceptions, consents, certificates, approvals and orders of any Governmental Entity or other Person necessary for the Company and its Subsidiaries to own, lease and operate their respective properties and assets and to carry on their respective businesses as they are now being conducted (the “Company Permits”). All Company Permits (including, without limitation, its certification from The Joint Commission) are in full force and effect and no suspension or cancellation of any of the Company Permits is pending or, to the knowledge of the Company, threatened, and the Company and its Subsidiaries are not in material default or violation of the terms of the Company Permits. The Company has not received any written notice in the past three (3) years to the effect that the Company or any of its Subsidiaries is not in compliance, in all material respects, with the terms of Company Permits.

(c) The Company and its Subsidiaries have not engaged and do not currently employ or otherwise contract with any individual (“Professional”) to practice a profession or engage in an activity that requires a license, certificate, credential, registration or other approval of a Governmental Entity, Carrier Program or customer’s Medical Staff (“Professional License”) who lacks such Professional License. The Company has not received any written notice in the past (3) years to the effect that any employed or contracted Professional is not in compliance with the terms and conditions of his or her Professional License, or is subject to or threatened with the revocation, limitation or suspension of his or her Professional License or professional liability insurance coverage.

(d) The Company and its Subsidiaries are (and since January 1, 2007 have been) in compliance in all material respects with the Federal Health Care Program anti-kickback statute (42 U.S.C. 1320a-7b(b)) and all other state and federal Laws regulating any compensation arrangements, ownership interests or other financial relationships between a referral source and a referral recipient applicable to them, any of their properties or other assets or any of their businesses (collectively, the “Fraud and Abuse Laws”). To the knowledge of the Company no officer, employee or agent of the Company or any of its Subsidiaries, nor any other person or entity acting on behalf of the Company or any of its Subsidiaries, acting alone or together, has offered or given, directly or indirectly, any economic benefit, including, without limitation, payments, material rebates, other discounts, commission or promotional allowances, to a hospital, surgeon or other referral source which violates any Fraud and Abuse Law.

(e) Except as disclosed in Section 3.7(e) of the Company Disclosure Schedule, the Company and its Subsidiaries do not participate in the Medicare program, state Medicaid programs and such other similar federal, state or local governmental programs (“Governmental Programs”). On the date hereof the Company has delivered to Parent a complete list of all private health benefit plans and programs which have paid claims submitted by the Company or its Subsidiaries since January 1, 2010 (each a “Carrier Program”). The Company’s and its Subsidiaries’ surgical assistants are properly credentialed to work as surgical assistants in the Company’s and its Subsidiaries’ hospital customers. Except as disclosed in Section 3.7(e) of the Company Disclosure Schedule, neither the Company nor any of its Subsidiaries has been notified in writing that it has any liability (nor, to the knowledge of the Company, is there any such liability) under any Government Programs or under any Carrier Programs for any refund, overpayment, discount or adjustment that has not been properly accounted for under the Company’s normal and historical accounting practices. The Company and each of its Subsidiaries have paid or caused to be paid all undisputed refunds, or overpayments to Government Programs and Carrier Programs.

(f) Since January 1, 2009, the Company and each Subsidiary have, in all material respects, filed all claims, billings and reports required to be filed by them prior to the date hereof in order to receive reimbursement for items and services rendered to patients from the Carrier Programs. Such claims and reports are complete and accurate in all material respects and have been prepared in compliance with all applicable Laws governing reimbursement and payment of claims. To the knowledge of the Company, except as disclosed on Section 3.7(f) of the Company Disclosure Schedule, there are no other claims, billing and reports required to be filed by the Company or any of its Subsidiaries as a condition precedent to reimbursement under the Carrier Programs for services rendered, except for claims or billings not yet due.

(a) Since December 31, 2007, the Company and its Subsidiaries have conducted their respective businesses in material compliance with all applicable Environmental Laws, and to the knowledge of the Company, none of the properties owned, leased or operated by the Company or any of its Subsidiaries contains any Hazardous Substance in amounts exceeding the levels permitted by applicable Environmental Laws as a result of any activity of the Company or any of its Subsidiaries. Since December 31, 2007, neither the Company nor any of its Subsidiaries has received any written notices, demand letters or requests for information from any federal, state, local or foreign Governmental Entity indicating that the Company or any of its Subsidiaries may be

in violation of, or liable under, any Environmental Law in connection with the ownership or operation of its businesses. Since December 31, 2007, no Hazardous Substance has been disposed of, released or transported in violation of any applicable Environmental Law, or in a manner which is reasonably likely to give rise to any material liability under Environmental Law, from any properties owned, leased or operated by the Company or any of its Subsidiaries as a result of any activity of the Company or any of its Subsidiaries during the time such properties were owned, leased or operated by the Company or any of its Subsidiaries. To the knowledge of the Company, neither the Company, its Subsidiaries nor any of their respective properties are subject to any liabilities relating to any suit, settlement, court order, administrative order, judgment or written claim that has been asserted or arising under any Environmental Law.

(b) As used herein, “Environmental Law” means any Law relating to 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).

(c) As used herein, “Hazardous Substance” means any substance presently listed, defined, designated or classified as hazardous, toxic, radioactive, or dangerous, or otherwise regulated, under any Environmental Law. Hazardous Substance includes any substance to which exposure is regulated by any Governmental Entity or any Environmental Law including any toxic waste, pollutant, contaminant, hazardous substance, toxic substance, hazardous waste, special waste, industrial substance or petroleum or any derivative or byproduct thereof, radon, radioactive material, asbestos, or asbestos containing material, urea formaldehyde, foam insulation or polychlorinated biphenyls.

(a) Section 3.9(a) of the Company Disclosure Schedule contains a true and complete list of each material deferred compensation, bonus, incentive compensation, stock purchase, stock option and other equity compensation plan, program, agreement or arrangement currently in effect; each material severance or termination pay, medical, surgical, hospitalization, life insurance and other “welfare” plan, fund or program (within the meaning of Section 3(1) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”)) currently in effect; each material profit sharing, stock bonus or other “pension” plan, fund or program (within the meaning of Section 3(2) of ERISA) currently in effect; each material employment, termination or severance agreement currently in effect; and each other material employee benefit plan, fund, program, agreement or arrangement currently in effect, in each case, that is sponsored, maintained or contributed to or required to be contributed to by the Company or any Subsidiary of the Company or by any trade or business, whether or not incorporated (an “ERISA Affiliate”), that together with the Company or any Subsidiary of the Company would be deemed a “single employer” within the meaning of Section 4001(b) of ERISA, or to which the Company or an ERISA Affiliate is a party, whether written or oral, for the benefit of any employee or former employee of the Company or any Subsidiary of the Company (the “Company Benefit Plans”). Neither the Company, any Subsidiary of the Company nor any ERISA Affiliate has any commitment or formal plan to create any additional employee benefit plan or modify or change any existing Company Benefit Plan that would affect any employee or former employee of the Company or any Subsidiary of the Company.

(b) With respect to each Company Benefit Plan, the Company has heretofore delivered or made available to Merger Sub true and complete copies of each of the following documents: (i) a copy of the Company Benefit Plan and any amendments thereto (or if the Company Benefit Plan is not a written Company Benefit Plan, a description thereof); (ii) a copy of the two most recent annual reports, if required under ERISA, and, if applicable, the most recent report prepared with respect thereto in accordance with Statement of Financial Accounting Standards No. 87; (iii) a copy of the most recent Summary Plan Description if required under ERISA with respect thereto; (iv) if the Company Benefit Plan is funded through a trust or any third party funding vehicle, a copy of the trust or other funding agreement and the latest financial statements thereof; and (v) the most recent determination or opinion letter received from the Internal Revenue Service with respect to each Company Benefit Plan intended to qualify under Section 401 of the Code.

(c) None of the Company, any of its Subsidiaries, or any of their ERISA Affiliates maintain or contribute to, nor have they maintained or contributed to during the past six (6) years, any pension plan subject to Title IV of ERISA or Sections 412 of the Code or 302 of ERISA.

(d) All material contributions required to be made with respect to any Company Benefit Plan on or prior to the date hereof have been timely made or are reflected on the 2009 Form 10-K. There has been no amendment to, written interpretation of or announcement (whether or not written) by the Company or any Subsidiary of the Company relating to, or change in employee participation or coverage under, any Company Benefit Plan that would increase materially the expense of maintaining such Company Benefit Plan above the level or expense incurred in respect thereof for the most recent fiscal year ended prior to the date hereof.

(e) Neither the Company nor any Subsidiary of the Company, any Company Benefit Plan nor any trust created thereunder has engaged in a transaction in connection with which the Company or any Subsidiary of the Company, any Company Benefit Plan, or any such trust reasonably could be subject to either a material civil penalty assessed pursuant to Section 409 or 502(i) of ERISA or a material tax imposed pursuant to Section 4975 or 4976 of the Code.

(f) Each Company Benefit Plan has been operated and administered in all material respects in accordance with its terms and applicable Law, including but not limited to ERISA and the Code.

(g) Each Company Benefit Plan intended to be “qualified” within the meaning of Section 401(a) of the Code is so qualified and the trusts maintained thereunder are exempt from taxation under Section 501(a) of the Code. Each Company Benefit Plan intended to satisfy the requirements of Section 501(c)(9) has satisfied such requirements in all material respects.

(h) Except as disclosed in Section 3.9(h) of the Company Disclosure Schedule, no Company Benefit Plan provides medical, surgical, hospitalization, death or similar benefits (whether or not insured) for employees or former employees of the Company or any Subsidiary of the Company for periods extending beyond their retirement or other termination of service, other than (i) coverage mandated by applicable Law, (ii) death benefits under any “pension plan,” or (iii) benefits the full cost of which is borne by the current or former employee (or his beneficiary). No condition exists that would prevent the Company or any Subsidiary of the Company from amending or terminating any Company Benefit Plan providing health or medical benefits in respect of any active employee of the Company or any Subsidiary of the Company other than limitations imposed under the respective terms of the Company Benefit Plans set forth in Section 3.9(a) of the Company Disclosure Schedule.

(i) Except as disclosed in Section 3.9(i) of the Company Disclosure Schedule, the consummation of the transactions contemplated by this Agreement will not, either alone or in combination with another event, (i) entitle any current or former employee or officer of the Company, any Subsidiary of the Company or any ERISA Affiliate to severance pay or any other similar material payment, except as expressly provided in this Agreement, or (ii) accelerate the time of payment or vesting of benefits under any Company Plan, or materially increase the amount of compensation due any such employee or officer, except as expressly provided in this Agreement or as disclosed in Section 3.9(i) of the Company Disclosure Schedule.

(j) There are no pending or, to the knowledge of the Company, material claims threatened under any Company Benefit Plan, by any employee or beneficiary covered under any such Company Benefit Plan, or otherwise involving any such Company Benefit Plan (other than routine claims for benefits).

(k) All Company stock options have been granted with an exercise price per share no lower than the “fair market value” (as defined in the applicable plan) of one Common Share on the date of the corporate action effectuating the grant.

(l) Except as set forth in Section 3.9(l) of the Company Disclosure Schedule, the Company has not made any payments, is not obligated to make any payments, and is not a party to any agreement that under

certain circumstances could obligate it to make any payments that will not be deductible under Section 280G of the Code. All plans, arrangements and agreements of the Company that are subject to Section 409A of the Code have been administered in all material respects, in good faith compliance with the applicable requirements of Section 409A of the Code.

(a) Except as set forth in Section 3.10(a) of the Company Disclosure Schedule or in the Company SEC Documents filed with the SEC since January 1, 2010, the businesses of the Company and its Subsidiaries have been conducted in all material respects in the ordinary course of business consistent with past practice, and there has not been any action or event that, if taken or occurring on or after the date of this Agreement without Merger Sub’s consent, would violate any of the provisions of Section 5.1.

(b) Since December 31, 2009, there has not been any Company Material Adverse Effect or any fact, circumstance, event, change, effect, development or occurrence that would reasonably be expected to have a Company Material Adverse Effect.

3.11 Investigations; Litigation. (a) There is no (and since January 1, 2009 there has been no) investigation or review pending or, to the knowledge of the Company, threatened by any Governmental Entity with respect to the Company or any of its Subsidiaries, and (b) except as set forth in Section 3.11 of the Company Disclosure Schedules, there are no (and since January 1, 2009 there have been no) material claims, actions, suits or proceedings pending (or, to the knowledge of the Company, threatened against the Company or any of its Subsidiaries, or any of their respective properties at Law or in equity before, and there are no orders, judgments or decrees of, or before, any Governmental Entity binding upon the Company or any of its Subsidiaries, or any of their respective properties.

3.12 Proxy Statement; Other Information. None of the information included in the Proxy Statement will (a) at the time of filing the definitive Proxy Statement, as supplemented, if applicable, with the SEC, (b) at the time of the mailing of the Proxy Statement, as amended or supplemented, if applicable and (c) at the time of the Company Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The Proxy Statement, as amended or supplemented, and any other documents to be filed by the Company with the SEC in connection with the Transactions, will comply in all material respects with the provisions of the Exchange Act. The letter to shareholders, notice of meeting, proxy statement (including any amendments and supplements thereto) and form of proxy to be filed with the SEC and distributed to shareholders in connection with the Merger are collectively referred to herein as the “Proxy Statement”. Notwithstanding the foregoing, the Company makes no representation or warranty with respect to the information supplied by Parent or Merger Sub or any of their respective Representatives in writing specifically for inclusion in the Proxy Statement.

(a) (i) The Company and each of its Subsidiaries has timely filed (taking into account any extension of time within which to file) all material Tax Returns required to be filed by it, and each such material Tax Return has been prepared in material compliance with all applicable Laws and is true, correct and complete in all material respects; (ii) the Company and each of its Subsidiaries has timely paid (or the Company has timely paid on its Subsidiaries’ behalf) all Taxes due and payable with respect to such returns and all other material Taxes except such Taxes as are currently being contested in good faith and for which adequate reserves, as applicable, have been established in accordance with GAAP in the Company’s consolidated financial statements included in the 2009 Form 10-K; (iii) the consolidated financial statements included in the 2009 Form 10-K reflect, in accordance with GAAP, an adequate reserve for all material Taxes payable by the Company and its Subsidiaries

for all taxable periods and portions thereof through the date of such consolidated financial statements; and (iv) neither the Company nor any of its Subsidiaries has incurred any material liability for Taxes subsequent to the date of such most recent consolidated financial statements other than in the ordinary course of the Company’s or such Subsidiary’s business.

(b) (i) No material Tax Return of the Company or any of its Subsidiaries is under audit or examination by any Taxing Authority, no written notice of such an audit or examination or any other audit or examination with respect to a material amount of Taxes has been received by the Company or any of its Subsidiaries, and no material deficiencies for Taxes have been claimed, proposed, assessed or, to the knowledge of the Company, threatened in writing against the Company or any of its Subsidiaries by any Taxing Authority; (ii) each material deficiency resulting from any audit or examination relating to Taxes by any Taxing Authority has been paid, except for deficiencies currently being contested in good faith and for which adequate reserves, as applicable, have been established in the financial statements included in the 2009 Form 10-K in accordance with GAAP; (iii) there are no Liens for Taxes upon the assets of the Company or any of its Subsidiaries except Liens relating to current Taxes not yet due and payable; (iv) all material Taxes which the Company or any of its Subsidiaries are required by Law to withhold or to collect for payment have been duly withheld and collected and any such amounts that are required to be remitted to any Taxing Authority have been duly remitted; (v) none of the Company or any of its Subsidiaries has consented to extend the time in which any Tax may be assessed or collected by any Taxing Authority; (vi) no claim has been made against the Company or any of its Subsidiaries by any Taxing Authority in a jurisdiction where the Company or any of its Subsidiaries does not file Tax Returns that the Company or any of its Subsidiaries is or may be subject to taxation in that jurisdiction; and (vii) no power of attorney that would be in force after the Closing Date has been granted by the Company or any of its Subsidiaries with respect to Taxes.

(c) There is no contract or arrangement, plan or agreement by or with the Company or any of its Subsidiaries covering any person that, individually or collectively, could give rise to the payment of any amount by the Company or any of its Subsidiaries that would not be deductible by the Company or such Subsidiary by reason of Section 162(m) of the Code.

(d) None of the Company or any of its Subsidiaries (i) 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 the Company), (ii) is a party to or bound by any Tax allocation, sharing or indemnification agreement or other similar arrangement with any person other than the Company and its Subsidiaries or (iii) has any liability for the Taxes of any person (other than any of the Company or its Subsidiaries) under Treas. Reg. §1.1502-6 (or any similar provision of Law), as a transferee or successor, by contract, or otherwise.

(e) Neither the Company nor any of its Subsidiaries has constituted a “distributing corporation” or a “controlled corporation” in a distribution of stock purported to or intended to be governed by Section 355 or Section 361 of the Code.

(f) Neither the Company nor any of its Subsidiaries has participated in, or is currently participating in, a “reportable transaction” within the meaning of Treas. Reg. § 1.6011-4(b) or any transaction requiring disclosure under a corresponding or similar provision of state, local or foreign Law.

(g) The Company is not a “United States real property holding corporation” within the meaning of Section 897(c)(2) of the Code and has not been (and will not be) such a United States real property holding corporation during the five (5) year period ending on the Closing Date.

(h) Neither the Company nor any of its Subsidiaries will be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Effective Time because of: (i) any intercompany transactions or excess loss account described in Treasury Regulations under Section 1502 of the Code (or any corresponding or similar provision of state, local or foreign

Law relating to Taxes) that occurred or existed on or prior to the Effective Time; (ii) any installment sale or open transaction disposition made on or prior to the date hereof; (iii) any prepaid amount received on or prior to the Effective Time or (iv) Section 481(a) of the Code (or an analogous provision of state, local, or foreign Law), by reason of a change in accounting method made prior to the Effective Time.

(i) The Company has not (A) obtained any Tax rulings, (B) requested any Tax rulings or (C) applied for a change in accounting methods or closing agreements, that would reasonably be expected to affect liabilities for Taxes of the Company or any of its Subsidiaries for the current Tax period or for any period after the Effective Time.

(j) As used in this Agreement, (i) “Tax” (and, with correlative meaning, “Taxes” and “Taxable”) means (A) any income, alternative or add-on minimum tax, gross income, estimated, gross receipts, sales, use, ad valorem, value added, transfer, franchise, capital stock, profits, license, registration, withholding, payroll, social security (or equivalent), employment, unemployment, disability, excise, severance, stamp, occupation, premium, property (real, tangible or intangible), environmental or windfall profit, custom duty or other tax, governmental fee or other like assessment or charge of any kind whatsoever (including, for the avoidance of doubt, any amounts owed to any Governmental Entity or other person in respect of unclaimed property or escheat laws), together with any interest or any penalty, addition to tax or additional amount (whether disputed or not) imposed by any Governmental Entity responsible for the imposition of any such tax (domestic or foreign) (each, a “Taxing Authority”), (B) any liability for the payment of any amounts of the type described in clause (A) of this sentence as a result of being a member of an affiliated, consolidated, combined, unitary or aggregate group for any taxable period and (C) any liability for the payment of any amounts of the type described in clause (A) or (B) of this sentence as a result of being a transferee of or successor to any person or as a result of any express or implied obligation to assume such Taxes or to indemnify any other person, and (ii) “Tax Return” shall mean any return, statement, report, form or other document (including estimated Tax returns and reports, withholding Tax returns and reports, any schedule or attachment, information returns and reports and any amendment to any of the foregoing) filed or required to be filed with a Taxing Authority with respect to Taxes.

(a) 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 labor union or labor organization, and no employees of the Company or any of its Subsidiaries are represented by any labor organization with respect to their employment with the Company or its Subsidiaries.

(b) No representation, election, petition or application for certification has been filed by any employees of the Company or any of its Subsidiaries, and no such petition or application is pending with the National Labor Relations Board or any other labor relations tribunal or authority. To the knowledge of the Company, there are no material activities or proceedings of any labor union to organize any of the employees of the Company or any of its Subsidiaries. There is no pending or, to the knowledge of the Company, threatened, material labor dispute, strike, walkout, work stoppage, slowdown, lockout or other collective labor action involving employees of the Company or any of its Subsidiaries, and no such action has occurred within the past three (3) years.

(c) The Company and each of its Subsidiaries has been since December 31, 2007 and are in material compliance with all applicable local, state, federal and foreign Laws relating to employment and employment practices, including Laws relating to employment discrimination, terms and conditions of employment, hours of work and the payment of wages, classification of employees and independent contractors, health and safety, disability rights or benefits, equal opportunity, workers’ compensation and labor relations, and there are no actions, lawsuits, claims, labor disputes, grievances, charges or controversies pending or, to the knowledge of the Company, threatened against the Company or any of its Subsidiaries brought by or on behalf of any applicant for employment, any current or former employee or any class of the foregoing, relating to any such Law, or alleging breach of any express or implied contract of employment, wrongful termination of employment, or alleging any

other discriminatory, wrongful or tortious conduct in connection with the employment relationship. Neither the Company nor any of its Subsidiaries has received any written notice of the intent of the Equal Employment Opportunity Commission or any other Governmental Entity responsible for the enforcement of labor or employment Laws to conduct any material investigation with respect to or relating to the Company or any of its Subsidiaries, and no such investigation is in progress.

(d) The Company and each of its Subsidiaries are and have been since December 31, 2007 in compliance with all notice and other requirements of the Worker Adjustment and Retraining Notification Act of 1988, as amended (the “WARN Act”), and any similar state, local or foreign Law relating to plant closings and layoffs.

(e) To the Company’s knowledge, no employee of the Company or any of its Subsidiaries is in violation of any term of any employment contract, non-disclosure agreement, non-competition agreement, non-solicitation agreement, or any restrictive covenant to a former employer relating (i) to the right of any such employee to be employed by the Company or any of its Subsidiaries because of the nature of the business conducted by the Company or any of its Subsidiaries or (ii) to the use of trade secrets or proprietary information of others.

3.15 Intellectual Property. Except as disclosed in Section 3.15 of the Company Disclosure Schedule or as would not reasonably be expected to have a Company Material Adverse Effect, either the Company or a Subsidiary of the Company owns, or is licensed or otherwise possesses legally enforceable rights to use, free and clear of all Liens, except Permitted Liens, all material trademarks, trade names, service marks, service names, domain names, logos, assumed names, copyrights, patents, and all applications and registrations for any of the foregoing, trade secrets, know-how, technology, computer software and other tangible and intangible proprietary information and intellectual property rights used in their respective businesses as currently conducted (collectively, the “Intellectual Property”). Section 3.15 of the Company Disclosure Schedule sets forth a true and complete list of all U.S. and material foreign registrations and applications for registration for Intellectual Property owned or held for use by the Company or any of its Subsidiaries, including as applicable, the record owner, jurisdiction and registration and/or application number, and date issued (or filed) for each (the “Registered IP”). Except as disclosed in Section 3.15 of the Company Disclosure Schedule, the Company or a Subsidiary of the Company is the sole and exclusive record and beneficial owner of the Registered IP. All such Registered IP is subsisting, in full force and effect, and, to the knowledge of the Company, has not been cancelled, expired, or abandoned. There are no (y) pending or, to the knowledge of the Company, claims threatened by any person alleging infringement by the Company or any of its Subsidiaries of such person’s intellectual property or (z) pending or claims threatened by the Company or any of its Subsidiaries alleging infringement by any person of any Intellectual Property of the Company or any of its Subsidiaries. The conduct of the business of the Company and its Subsidiaries does not infringe any intellectual property rights of any person, and, to the knowledge of the Company, no person is materially infringing any Intellectual Property of the Company or any of its Subsidiaries.

(a) Except as set forth in Section 3.16(a) of the Company Disclosure Schedule, (i) the Company and the Subsidiaries of the Company have good and valid title to, or, in the case of leased properties and assets, valid leasehold interests in, all of their material tangible properties and assets, real and personal, used or held for use in their businesses as currently conducted or shown on the most recent consolidated balance sheet of the Company included in the Company SEC Documents prior to the date hereof or acquired thereafter (except for properties and assets disposed of in the ordinary course of business consistent with past practice after the date of such balance sheet), free and clear of any Liens, except Permitted Liens, (ii) the assets and properties of the Company and its Subsidiaries, taken as a whole, whether owned or leased, constitute all of the material assets and properties which are necessary to conduct the business and operations of the Company and its Subsidiaries as currently conducted and (iii) all of the material property, plant and equipment of the Company and each of its

Subsidiaries has been maintained in reasonable operating condition and repair, ordinary wear and tear excepted, and is sufficient to permit the Company and its Subsidiaries to conduct their operations as currently conducted.

(b) Neither the Company nor any Subsidiary of the Company owns in fee any real property (“Owned Real Property”).

(c) Section 3.16(c) of the Company Disclosure Schedule sets forth a complete and correct list of all material real property leased, subleased or licensed by the Company or any Subsidiary of the Company (collectively, the “Leased Real Property” or, the “Real Property”). The Company has heretofore made available to Merger Sub true and complete copies of all leases, subleases, licenses and other agreements under which the Company and/or any Subsidiary of the Company uses or occupies or has the right to use or occupy, now or in the future, any Leased Real Property, including all modifications, amendments and supplements thereto (collectively, the “Real Property Leases”). With respect to the Leased Real Property, except as disclosed in Section 3.16(c) of the Company Disclosure Schedule or as would not reasonably be expected to have a Company Material Adverse Effect: (i) the Company or the applicable Subsidiary of the Company enjoys peaceful and undisturbed possession of the premises leased pursuant to each Real Property Lease; (ii) the current use of the premises leased, subleased or licensed under each Real Property Lease complies with the terms of such Real Property Lease; (iii) no Real Property Lease has been assigned, mortgaged, hypothecated or otherwise encumbered; and (iv) neither the Company nor any Subsidiary of the Company has, nor, to the Company’s knowledge, has any other party thereto (including the lessor or sublessor thereunder) waived in writing any material terms or conditions of any Real Property Lease.

(d) Section 3.16(d) of the Company Disclosure Schedule sets forth a true, correct and complete list of each material lease, sublease, license or other agreement executed by the Company or any Subsidiary of the Company granting to any third party a right to the use, occupancy or enjoyment of any Real Property or any portion thereof (the “Real Property Subleases”). The Company has heretofore made available to Merger Sub true and complete copies of all Real Property Subleases (including all amendments, modifications, supplements, and extensions thereof).

3.17 Opinion of Financial Advisor. The Board of Directors (including the Special Committee) has received the opinion of Howard Frazier Barker Elliott, Inc. (“HFBE”), dated as of December 18, 2010 (the “Fairness Opinion”), to the effect that, as of such date, and subject to the various assumptions, limitations, and qualifications set forth therein, the Merger Consideration to be received by the holders of the Common Shares (other than Parent and the Rollover Holders ), is fair from a financial point of view to such holders (other than the holders of the Dissenting Shares). A correct and complete copy of the Fairness Opinion has been delivered to Parent. The Company has been authorized by HFBE to permit the inclusion of the Fairness Opinion and references thereto in the Proxy Statement subject to approval of all statements in the Proxy Statement relating to HFBE or the Fairness Opinion.

3.18 Required Vote of the Company Stockholders. The affirmative vote of the holders of a majority of the outstanding Common Shares on the record date for the Company Meeting is the only vote of holders of securities of the Company which is required to approve and adopt this Agreement, the Merger and the other Transactions (the “Company Shareholder Approval”).

3.19 Takeover Statutes. Except for Section 203 of the DGCL, no “fair price,” “moratorium,” “control share acquisition” or other similar anti-takeover statute or regulation (each, a “Takeover Statute”) or any anti-takeover provision in the Company Certificate or Company Bylaws is applicable to the Agreement or the Transaction. The Company Board has taken all actions necessary to render inapplicable to this Agreement and the Transactions the restrictions set forth in Section 203 of the DGCL.

(a) Section 3.20 of the Company Disclosure Schedule lists each of the Company Agreements of the following types which are in effect as of the date hereof (the Company Agreements described by the immediately

following clauses, whether or not listed on Section 3.20 of the Company Disclosure Schedule, and the Real Property Leases are collectively referred to herein as the “Company Material Contracts”):

(i) any “material contract” (as such term is defined in Item 601(b)(10) of Regulation S-K of the SEC);

(ii) any collective bargaining agreement or other agreement with any union or other labor organization;

(iii) any agreement or note evidencing any indebtedness for borrowed money or any guaranty of any such indebtedness of another person or creating any Lien (other than a Permitted Lien);

(iv) any agreement which purports to materially limit the manner in which, or the localities in which, the Company, any of its Subsidiaries is entitled to conduct any material portion of its business;

(vi) any agreement granting or obtaining any right to use any rights under any material Intellectual Property to which the Company or any of its Subsidiaries is a party or otherwise bound;

(vii) any agreement executed on or after December 31, 2006 involving the acquisition or disposition by the Company or any of its Subsidiaries of assets not in the ordinary course of business or pursuant to which the Company or any of its Subsidiaries has any ownership interest in any other person or other business enterprise other than the Company’s Subsidiaries;

(viii) any agreement with a Person required to be listed on Section 3.24 of the Company Disclosure Schedule; and

(ix) any agreement with any Affiliate of the Company any employee of the Company or any of its Subsidiaries or any Affiliate of any such employees.

(b) The Company has made available to Merger Sub a true and complete copy of each Company Material Contract. Each Company Material Contract is a valid and binding obligation of the Company and/or any of its Subsidiaries party thereto (and to the knowledge of the Company, each other party thereto) and is in full force and effect. Neither the Company or any of its Subsidiaries nor, to the knowledge of the Company, any other party thereto, is in material breach of or default under any Company Material Contact. Neither the Company nor any of its Subsidiaries has received written notice of, or to the knowledge of the Company, knows of, the existence of any event or condition which constitutes, or, after notice or lapse of time or both, will constitute, a material default on the part of the Company or any of its Subsidiaries, or to the knowledge of the Company, any other party thereto, under any Company Material Contract.

3.21 Finders or Brokers. Except for the Polaris Group and HFBE, neither the Company nor any of its Subsidiaries has employed any investment banker, financial advisor, broker or finder in connection with the transactions contemplated by this Agreement who is entitled to any investment banking, financial advisor, brokerage, finder’s or similar fee or commission in connection with or upon consummation of the Transactions. The Company has made available to Merger Sub a true and complete copy of the applicable engagement letters (and all amendments or supplements thereto) with the Polaris Group.

3.22 Insurance. The Company and its Subsidiaries own or hold policies of insurance in amounts providing reasonably adequate coverage against all risks customarily insured against by companies in similar lines of business as the Company and its Subsidiaries. The Company and its Subsidiaries are in compliance in all material respects with the terms of such policies, and the Company has not received written notice of any threatened

termination of, or premium increase with respect to, any such policy, except in accordance with the terms thereof. Neither the Company nor any of its Subsidiaries maintains any material self-insurance or co-insurance programs.

3.23 Related Party Transactions. To the Knowledge of the Company, no shareholder who owns 5% or more of the Company’s Common Shares, officer, director, employee or Affiliate or family member of any of the foregoing (i) owns any property or right, tangible or intangible, which is used in the business of the Company or any of its Subsidiaries, (ii) has any claim or cause of action against the Company or any of its Subsidiaries, (iii) owes any money to, or is owed any money by, the Company or any of its Subsidiaries other than for salary and benefits obligations arising in the ordinary course of business and reflected in the Company’s financial statements, except as set forth in Section 3.20 of the Disclosure Schedule, or (iv) is a party to any contract, agreement or other arrangement (written or oral) with the Company or any of its Subsidiaries other than any Material Contract described in Section 3.20 of the Disclosure Schedule.

3.24 Customers and Suppliers. Section 3.24 of the Company Disclosure Schedule lists each customer, network, third party administrator or hospital or group of affiliated Persons with which the Company and its Subsidiaries do business that represented more than 10% of the Company’s 2009 annual consolidated revenues and the amount of 2009 revenue generated by the Company from such Person or group of affiliated Persons. Since January 1, 2009, there has been no termination, cancellation or material curtailment of the business relationship of the Company or any of its Subsidiaries with any such Person or any supplier or group of affiliated Persons or suppliers nor, to the Company’s knowledge, has any such Person or supplier or group of affiliated Persons or suppliers threatened to so terminate, cancel or materially curtail such business relationships.

3.25 No Restrictions on Business. As of the date of this Agreement, there is no order, injunction or decree that has been entered (and no action has been commenced or, to the knowledge of the Company, threatened, seeking such order, injunction or decree) against or which is or would be binding by its terms upon the Company or any of its Subsidiaries or either Key Employee and no contract, agreement or arrangement exists which has or would reasonably be expected to have the effect of prohibiting or impairing any business practice of the Company or any of its Subsidiaries or the conduct of business by the Company or any of its Subsidiaries as currently conducted.

3.26 No Other Representations or Warranties. Except for the representations and warranties contained in this Article III, neither the Company nor any other Person acting on behalf of the Company makes any express or implied representation or warranty with respect to the Company or with respect to any other information provided to Parent or Merger Sub in connection with the Transaction. Except in the case of fraud, neither the Company nor any other Person will have or be subject to any liability to Parent or Merger Sub or any other Person resulting from the distribution to Parent or Merger Sub, or Parent’s and Merger Sub’s use of, any such information, including any information, documents, projections, forecasts or other material made available to Parent or Merger Sub or management presentations in expectation of the Transactions contemplated by this Agreement, unless any such information is expressly included in a representation or warranty in this Article III.

Except as disclosed in the disclosure schedule delivered by Parent and Merger Sub to the Company immediately prior to the execution of this Agreement (the “Merger Sub Disclosure Schedule”), Parent and Merger Sub each hereby represents and warrants to the Company as follows:

4.1 Qualification; Organization, Subsidiaries, etc. (i) Parent is a legal entity duly organized, validly existing and in good standing under the Laws of the State of Delaware; (ii) Merger Sub is a legal entity duly organized,

validly existing and in good standing under the Laws of the State of Delaware and (iii) each of them has all requisite corporate or similar power and authority to own, lease and operate its respective properties and assets and to carry on its respective business as presently conducted and is qualified to do business and is in good standing as a foreign corporation in each jurisdiction where the ownership, leasing or operation of its assets or properties or conduct of its business requires such qualification, except where the failure to be so qualified or in good standing as a foreign corporation would not, individually or in the aggregate, reasonably be expected to materially hinder, impair or delay the ability of Parent and Merger Sub to consummate the Merger and the other transactions contemplated by this Agreement and the Exchange Agreement in accordance with the respective terms thereof (a “Merger Sub Material Adverse Effect”).

(a) No vote of holders of capital stock of the Parent is necessary to approve this Agreement, the Merger or the other Transactions. Each of Parent and Merger Sub has all requisite corporate power and authority to enter into this Agreement and to consummate the Transactions. The execution and delivery of this Agreement and the consummation of the Transactions have been duly and validly authorized by the board of directors of Parent and Merger Sub and by the shareholders of Merger Sub, and, except for the filing of the Certificate of Merger with the Secretary of State of the State of Delaware, no other corporate proceedings on the part of Merger Sub are necessary to authorize the consummation of the Transactions. This Agreement has been duly and validly executed and delivered by Parent and Merger Sub and is the legal, valid and binding agreement of Parent and Merger Sub, enforceable against each in accordance with its terms subject to (i) applicable bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium or similar Laws from time to time in effect affecting creditors’ rights generally, and (ii) general principles of equity, whether such principles are considered in a proceeding at Law or in equity.

(b) Other than the filing of the Certificate of Merger with the Secretary of State of the State of Delaware pursuant to the DGCL and such other filings, if any, required under, and in compliance with applicable requirements of the Exchange Act (collectively, the “Merger Sub Approvals”), no authorization, consent, permit, action or approval of, or filing with, or notification to, any Governmental Entity is necessary for the consummation by Parent or Merger Sub of the transactions contemplated by this Agreement, except for such authorizations, consents, approvals, permits, actions, filings or notifications, that, if not obtained or made, would not reasonably be expected to have a Merger Sub Material Adverse Effect.

(c) The execution and delivery by Parent and Merger Sub of this Agreement do not, and the consummation of the transactions contemplated hereby and compliance with the provisions of this Agreement by Parent and Merger Sub will not (i) result in any violation of, or default (with or without notice or lapse of time, or both) under, or impair Parent or Merger Sub’s rights or alter the rights or obligations of any third party under, or give rise to a right of termination, amendment, cancellation or acceleration of, or result in the creation of a Lien on any of the properties or assets of Parent or Merger Sub under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, lease, license, contract, agreement, arrangement or understanding or other instrument or obligation to which Parent or Merger Sub is a party or by which either of them or any of their respective properties or assets may be bound, (ii) conflict with or result in any violation of any provision of the certificate of incorporation, or bylaws or other equivalent organizational document, in each case as amended, of Parent or Merger Sub or (iii) conflict with or violate any applicable Laws, other than, in the case of clauses (i) and (iii), any such violation, impairment, right, conflict, default, termination, amendment, cancellation or acceleration that would not reasonably be expected to have a Merger Sub Material Adverse Effect.

4.3 Proxy Statement; Other Information. None of the information provided by Parent or Merger Sub to be included in the Proxy Statement will (a) at the time of filing the definitive Proxy Statement with the SEC, (b) at the time of the mailing of the Proxy Statement or any amendments or supplements thereto, and (c) at the time of the Company 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. Notwithstanding the foregoing, neither Parent nor Merger Sub makes any representation or warranty with respect to any information supplied by the Company or any of its Representatives that is contained or incorporated by reference in the Proxy Statement.

4.4 Capitalization of Merger Sub. As of the date of this Agreement, the authorized capital stock of Merger Sub consists of 1,000 common shares, par value $0.001, of which 1,000 are validly outstanding and issued to Parent. Merger Sub has outstanding no option, warrant, right, or any other agreement pursuant to which any person may acquire any equity security of Merger Sub. Merger Sub has not conducted any business prior to the date of this Agreement and has, and prior to the Effective Time will have, no assets, liabilities, contracts or obligations of any nature other than those incident to its formation and pursuant to this Agreement and the Merger and the other Transactions and the financing related thereto. Merger Sub has made available to the Company a complete copy of its organizational and governing documents, each as amended to date (the “Merger Sub Organizational Documents”). The Merger Sub Organizational Documents are in full force and effect. Merger Sub is not in violation of any of its Merger Sub Organizational Documents.

4.5 Finders or Brokers. Neither the Parent nor any of its Subsidiaries, including Merger Sub, and their respective officers, directors or employees has employed any broker or finder or incurred any liability for any brokerage fees, commissions or finders’ fees in connection with the Merger or the other transactions contemplated by this Agreement.

4.6 No Other Representations or Warranties. Except for the representations and warranties contained in this Article IV, neither Parent nor Merger Sub makes any express or implied representation or warranty with respect to Parent or Merger Sub.

5.1 Conduct of the Business. From and after the date of this Agreement and prior to the Effective Time or the date, if any, on which this Agreement is earlier terminated pursuant to Section 7.1 (the “Termination Date”), and except (i) with the prior written consent of Merger Sub (not to be unreasonably withheld or delayed), (ii) as expressly contemplated, required or permitted by this Agreement, (iii) as required by applicable Law, or (iv) with respect to the formation and capitalization of, and distribution of the Excluded Assets to, CMC and the distribution of its securities to the Company’s stockholders, in each case in accordance with the Formation Agreement:

(a) the Company shall, and shall cause each of its Subsidiaries to, (i) conduct its business in the ordinary course consistent with past practice in all material respects and (ii) use commercially reasonable efforts to maintain intact its business organization in all material respects, keep available the services of its current officers and key employees and to use its reasonable best efforts to preserve its relationships with its customers, payors, suppliers, employees and others having business dealings with it in all material respects.

(b) except as disclosed in Section 5.1(b) of the Company Disclosure Schedule, the Company shall not, and shall not permit any of its Subsidiaries to, directly or indirectly:

(i) declare, authorize or pay any dividends on or make any distribution with respect to its outstanding shares of capital stock (whether in cash, assets, shares or other securities of the Company or its Subsidiaries), except for (x) cash dividends paid by wholly-owned Subsidiaries of the Company to the Company or another wholly-owned Subsidiary of the Company in the ordinary course of business consistent with past practice, (y) the payment of dividends publicly announced prior to the date of this Agreement, and (z) the

declaration and payment of dividends which, together with all Permitted Bonuses, do not exceed the Permitted Payment Amount (the “Permitted Dividend”);

(ii) adjust, split, combine or reclassify, or otherwise amend the terms of, any of its capital stock or other equity securities or issue or authorize or propose the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock or equity securities, except for the issuance of capital stock upon the exercise of Company Stock Options or Company Warrants outstanding on the date of this Agreement in accordance with their terms;

(iii) except as required by existing written agreements or Company Benefit Plans, or as otherwise required by applicable Law (including Section 409A of the Code), (A) increase in any manner the compensation or other benefits payable or provided to the Company’s employees, directors, consultants, independent contractors or service providers or pay or agree to pay any bonus to any employee, officer or director (other than (x) increases in the salaries or bonuses of employees who are not Rollover Holders that do not exceed $50,000 in the aggregate and (y) bonuses paid to directors, employees and Rollover Holders that, together with all Permitted Dividends, do not exceed the Permitted Payment Amount (the “Permitted Bonuses”), (B) pay any pension, severance or retirement benefits not required by any existing plan or agreement to any such employees, directors, consultants, independent contractors or service providers (other than “stay” bonuses as may be mutually agreed upon in writing by Merger Sub and the Company), (C) enter into, amend, alter (other than amendments that are immaterial to the participants or employees, directors, consultants, independent contractors or service providers who are party thereto and do not materially increase the cost to the Company or any of its Subsidiaries of maintaining the applicable compensation or benefit program, policy, arrangement or agreement), adopt, implement or otherwise commit itself to any compensation or benefit plan, program, policy, arrangement or agreement including any pension, retirement, profit-sharing, bonus or other employee benefit or welfare benefit plan, policy, arrangement or agreement or employment or consulting agreement with or for the benefit of any employee, director, consultant, independent contractor or service provider (other than “stay” bonuses as may be mutually agreed upon in writing by Merger Sub and the Company), (D) cause the funding of any rabbi trust or similar arrangement or take any action to fund or in any other way secure the payment of compensation or benefits under any Company Benefit Plan, or (E) materially change any actuarial or other assumptions used to calculate funding obligations with respect to any Company Benefit Plan or change the manner in which contributions to such plans are made or the basis on which such contributions are determined;

(iv) implement or adopt any material change in its Tax or financial accounting principles, policies, procedures or practices or any of its methods of reporting income, deductions or other material items for Tax or financial accounting purposes, except as required by GAAP or SEC rule or policy or applicable Law;

(v) enter into any closing agreement with respect to Taxes, settle or compromise any material liability for Taxes, make, revoke or change any material Tax election unless required by Law, agree to any adjustment of any material Tax attribute, file or surrender any claim for a material refund of Taxes, execute or consent to any waivers extending the statutory period of limitations with respect to the collection or assessment of Taxes, file any amended Tax Return or obtain any Tax ruling;

(vi) amend or waive any provision of its certificate of incorporation or its bylaws, partnership agreement, operating agreement or other equivalent organizational documents or, in the case of the Company, enter into any agreement with any of its shareholders in their capacity as such;

(vii) grant, issue, deliver, sell, pledge, dispose of or encumber, or authorize the grant, issuance, delivery, sale, pledge, disposition or encumbrance of, any shares of its capital stock or other ownership interest or any securities convertible into or exchangeable for any such shares or ownership interest, or any subscriptions, rights, warrants or options to acquire or with respect to any such shares of capital stock, ownership interest or convertible or exchangeable securities, other than issuances of Common Shares upon the exercise of Company Stock Options or Company Warrants outstanding on the date of this Agreement in accordance with their terms;

(viii) purchase, redeem or otherwise acquire, any shares of its capital stock or other ownership interest or any securities convertible into or exchangeable for any such shares or ownership interest, or any subscriptions, rights, warrants or options to acquire or with respect to any such shares of capital stock, ownership interest or convertible or exchangeable securities;

(ix) incur, assume, guarantee, prepay or otherwise become liable for any indebtedness for borrowed money (directly, contingently or otherwise), issue or sell any debt securities or options, warrants, calls or other rights to acquire any debt securities of the Company or any of its Subsidiaries; guarantee, endorse or otherwise become liable for any debt of another person; enter into any “keep well” or other agreement to maintain any financial statement condition of any other person (other than any wholly-owned Subsidiary of the Company);

(x) sell, lease, license, transfer, exchange or swap, mortgage or otherwise encumber (including securitizations), or subject to any Lien (other than Permitted Liens) or otherwise dispose of any properties or assets with a fair market value in excess of $25,000, individually or in the aggregate;

(xi) (A) modify, amend, terminate, waive or fail to enforce any rights under any Company Material Contract in a manner which is materially adverse to the Company other than in the ordinary course of business consistent with past practice, or (B) enter into any contract, agreement, arrangement or understanding that would be required to be set forth in Section 3.20 of the Company Disclosure Schedule other than in the ordinary course of business consistent with past practice;

(xii) at any time during the 90 days before the Closing Date, without complying with the notice and other requirements of the WARN Act and any similar state, local or foreign Law relating to plant closings and layoffs, effectuate (A) a “plant closing” (as defined in the WARN Act or any similar state, local or foreign Law) affecting any site of employment or one or more facilities or operating units within any site of employment or facility of the Company and/or any of its Subsidiaries, or (B) a “mass layoff” (as defined in the WARN Act or any similar state, local or foreign Law) affecting any site of employment or facility of the Company and/or any of its Subsidiaries;

(xiii) make any capital expenditures having an aggregate value in excess of $25,000;

(xiv) enter into any material capital or operating leases or acquire any material properties or assets other than (A) capital expenditures subject to the limitations set forth in (xiii) above, and (B) purchases of components, inventory, or supplies in the ordinary course of business consistent with past practice;

(xv) make any material acquisition of, or investment in, or loan or advance to, another person or business, whether by purchase of assets, stock or securities, contributions to capital, property transfers or otherwise;

(xvi) initiate or threaten to initiate any lawsuit, arbitration or proceeding or waive, release, assign, settle or compromise any claim, action or proceeding against the Company or any of the Subsidiaries, other than waivers, releases, assignments, settlements or compromises that involve only the payment of monetary damages not in excess of the applicable deductible under the Company’s insurance policy (excluding amounts to be paid under existing insurance policies) or otherwise pay, discharge or satisfy any claims, liabilities or obligations in excess of such amount, in each case, other than in the ordinary course of business consistent with past practice;

(xvii) take or omit to take any action that is intended or would reasonably be expected to, individually or in the aggregate, result in any of the conditions to the Merger set forth in Article VI not being satisfied in violation of this Agreement or satisfaction of those conditions being materially delayed in violation of any provision of this Agreement, unless such action or inaction is required by applicable Law;

(xviii) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of such entity (other than with respect to the Company, this Agreement and the Merger); or

(xix) agree to take, make any commitment to take, or adopt any resolutions of its Board of Directors (or any committee thereof) in support of, any of the actions prohibited by this Section 5.1(b).

At least three (3) Business Days prior to the earlier of declaring or announcing the declaration of or agreeing to pay any Permitted Dividend or Permitted Bonus, and at least five (5) Business Days but no more than eight (8) Business Days prior to the Closing, the Company shall deliver to Parent a statement (each, a “Permitted Payment Statement” with the Permitted Payment Statement that is delivered at least five (5) Business Days prior to the Closing also being referred to as the “Closing Statement”) prepared by the Company in good faith, and to the extent applicable consistent with the preparation of the balance sheet contained in its Form 10-Q for the period ended September 30, 2010. Each Permitted Payment Statement shall set forth (a) an estimated unaudited balance sheet of the Company and its Subsidiaries (the “Projected Balance Sheet”) as of the date that the Company anticipates paying the Permitted Dividend or Permitted Bonus (or as of the Closing with respect to the Closing Statement (the “Projected Payment Date”), (b) a reasonably detailed listing of the Designated Pre-Closing Expenses and the Balance Sheet Adjustments, (c) a calculation of the Permitted Payment Amount as of the Projected Payment Date, (d) the proposed amount of the Permitted Dividend or Permitted Bonus, if any, and (e) if the Company is proposing to pay a Permitted Bonus a list of the Persons to whom the Company anticipates paying a Permitted Bonus and the amount of the bonus to be paid to each such Person. During such three (3) Business Day period after the Company delivers a Permitted Payment Statement (and during the five (5) Business Day period after the Company delivers the Closing Statement), Parent shall be given the opportunity to review and comment on such Permitted Payment Statement. Set forth on Exhibit E is a sample calculation of the Balance Sheet Adjustments and Permitted Payment Amount as of September 30, 2010. Any dividend which is declared in accordance with this Section 5.1, but not paid prior to Closing is referred to as a “Final Dividend” and will be paid as Additional Per Share Merger Consideration in accordance with Section 2.5.

If the Closing occurs within 45 days of the date hereof then (a) the Company shall only be permitted to pay Permitted Dividends and Permitted Bonuses one time and shall therefore only be permitted to deliver one Permitted Payment Statement, and (b) the Projected Payment Date for such Permitted Bonuses and Final Dividend shall be the Closing Date. If the Closing does not occur within 45 days of the date hereof then (i) the Company shall be permitted to make Permitted Dividends and Permitted Bonuses on up to three different dates, (ii) the first Projected Payment Date on which the Company can pay either a Permitted Dividend or Permitted Bonuses shall be at least 45 days after the date hereof, (iii) the second Projected Payment Date on which the Company can pay either a Permitted Dividend or Permitted Bonuses shall be at least 45 days after the payment date for the first Permitted Dividend and/or Permitted Bonuses and (iii) the last Projected Payment Date on which the Company can pay either a Final Dividend or Permitted Bonuses shall be the Closing with any Final Dividend paid as Additional Per Share Merger Consideration.

(a) During the period prior to the earlier of the Effective Time and the Termination Date and subject to any applicable Laws or as would reasonably be expected to violate or result in a loss of the attorney-client or work product privilege, the Company shall (i) provide to Merger Sub and to its officers, directors, employees, accountants, consultants, legal counsel, financial advisors and agents and other (collectively, “Representatives”), upon not less than one (1) Business Day’s notice, reasonable access during normal business hours to the properties, books, records, customers, payors, personnel and contracts of the Company and its Subsidiaries, (ii) furnish to Merger Sub and its Representatives such financial and operating data and other information as such persons may reasonably request, and (iii) instruct the Representatives of the Company and its Subsidiaries to cooperate reasonably with Merger Sub in its investigation of the Company and its Subsidiaries. Any investigation pursuant to this Section 5.2(a) shall be conducted in such manner as not to interfere unreasonably with the

conduct of the business of the Company or its Subsidiaries. No information or knowledge obtained by Merger Sub in any investigation pursuant to this Section 5.2(a) shall affect or be deemed to modify any representation or warranty made by the Company in Article III. Except for disclosures permitted by the terms of the Confidentiality Agreement between the Company and Great Point Partners I, L.P. dated June 16, 2009 (the “GPP Confidentiality Agreement”), prior to Closing, Parent shall hold information received from the Company pursuant to this Section 5.2 in confidence in accordance with the terms of the GPP Confidentiality Agreement.

(b) Parent and Merger Sub shall use their reasonable best efforts to consummate the debt financing they require to consummate the Merger and the Transactions (the “Debt Financing”) on a timely basis and to satisfy the condition to Closing set forth in Section 6.3(m). Prior to the Closing, the Company shall (and the Company shall cause each of its Subsidiaries to) provide, and shall cause the Representatives to provide, all cooperation reasonably requested by Parent in connection with the arrangement of the Debt Financing, including (a) assisting with the preparation of materials for bank information memoranda and similar documents required in connection with the Debt Financing; provided that any such memoranda and similar documents need not be issued by the Company or its Subsidiaries; provided, further, that, any such memoranda shall contain disclosure and financial statements with respect to the Company and the Subsidiaries reflecting the Company and its Subsidiaries as the obligor, but only subsequent to the Closing, provided that, the foregoing notwithstanding, no obligations of the Company or its Subsidiaries or the Representatives under any such agreement, certificate, document or instrument shall be effective until the Closing (b) executing and delivering customary guarantee, pledge and security documents and related officer certificates or other documents as may be reasonably requested by Parent and otherwise reasonably facilitating the guaranteeing of obligations and the pledging of collateral, provided that, the foregoing notwithstanding, no obligations of the Company or its Subsidiaries or the Representatives under any such agreement, certificate, document or instrument shall be effective until the Closing and the foregoing documents shall be held in escrow pending Closing, (c) furnishing Parent and its financing sources with financial and other pertinent information regarding the Company and its Subsidiaries as may be reasonably requested by Parent or its financing sources, including information related to the Company and its Subsidiaries required by regulatory authorities including under applicable “know your customer” and anti-money laundering rules and regulations, including the PATRIOT Act, (d) permitting the prospective lenders involved in the Debt Financing to evaluate and appraise the Company’s and its Subsidiaries’ current assets and liabilities, cash management and accounting systems, policies and procedures relating thereto for the purpose of establishing collateral arrangements; provided that, the foregoing notwithstanding, no obligations of the Company or its Subsidiaries or the Representatives under any such agreement, certificate, document or instrument shall be effective until the Closing, and (e) participating in meetings, presentations, road shows, due diligence sessions, and drafting sessions. The provisions of this Section 5.2(b) shall not require such cooperation to the extent it would interfere unreasonably with the business or operations of the Company or any of its Subsidiaries. Neither the Company nor any of its Subsidiaries shall be required to pay any commitment fee or similar fee or incur any liability with respect to the Debt Financing prior to the Closing and Parent or Merger Sub shall bear all costs and reimburse the officers and directors of the Company and its Subsidiaries for any out-of-pocket expenses they may incur in complying with this Section 5.2(b), including expenses associated with attending meetings, presentations, road shows and due diligence presentations. Notwithstanding anything to the contrary in this Section 5.2(b), the Company shall not have any liability upon the termination of this Agreement prior to Closing for any actions taken or documents executed pursuant to this Section 5.2(b) and shall not be required to take any actions or execute any documents that indicate otherwise. In addition no officer or director of the Company shall be required to execute any documents other than in his capacity as an officer of the Company. The Company hereby consents to the use of its and its Subsidiaries’ logos in connection with the Debt Financing.

(a) The Company agrees that it shall immediately cease and cause its Representatives to cease all existing activities, discussions, negotiations and communications with any persons with respect to any Acquisition Proposal (including, but not limited to, access to any electronic or other data room) and shall request the return or destruction of all confidential information previously furnished. Except as provided in

Section 5.3(b), from the date of this Agreement until the earlier of the Termination Date or the Effective Time, the Company and its affiliates shall not and shall not authorize or permit its Representatives to, directly or indirectly (i) initiate, solicit or encourage, or take any action which could be reasonably expected to facilitate, an Acquisition Proposal, or the making of any inquiry, offer or proposal relating to, or that may reasonably be expected to lead to, any possible Acquisition Proposal or (ii) engage in discussions, negotiations or communications with, or provide any information or data concerning the Company or any of its Subsidiaries (provided that this provision shall not be deemed to prohibit the Company from filing the Proxy Statement with the SEC, mailing the Proxy to its Stockholders and the holders of Company Stock Options and Company Warrants and making such other filings with the SEC as required by applicable law and regulations) to, any person (other than Parent, Merger Sub or their respective Representatives) relating to, or that may reasonably be expected to lead to, an Acquisition Proposal, (iii) grant a waiver under Section 203 of the DGCL or enter into any agreement, arrangement or understanding with respect to or that may reasonably be expected to lead to any Acquisition Proposal, or otherwise endorse, any Acquisition Proposal, or (iv) resolve to do any of the foregoing.

(b) Notwithstanding the foregoing, at any time after the date hereof and prior to the earlier of the Termination Date or obtaining the Company Shareholder Approval, in the event that the Company receives a bona fide written Acquisition Proposal without any violation of this Section 5.3, the Company may furnish information with respect to the Company and its Subsidiaries to the person submitting such Acquisition Proposal and negotiate and participate in discussions and negotiations with such person concerning such Acquisition Proposal if, but only if (x) the Board of Directors (upon receipt of a recommendation by the Special Committee), determines in good faith, after consultation with its independent outside legal counsel, that such action is reasonably necessary for the Board of Directors to comply with its fiduciary duties to the Company’s stockholders under applicable Law, and in good faith after consultation with outside counsel and receiving advice from a financial advisor experienced in such matters that such Acquisition Proposal constitutes or would reasonably be expected to result in a Company Superior Proposal (a “Potential Superior Proposal”), and (y) prior to furnishing such information to, or engaging in discussion or negotiations with, such Person, the Company and such Person enter into a confidentiality agreement containing terms no less favorable to the Company than those contained in the GPP Confidentiality Agreement. As promptly as practical, and in any event within 24 hours, upon determination by the Board of Directors (or any committee thereof) that an Acquisition Proposal constitutes a Company Superior Proposal or a Potential Superior Proposal the Company shall notify Parent that the Board of Directors has received a Company Superior Proposal or a Potential Superior Proposal, as the case may be, specifying in detail the terms and conditions of such proposal and the identity of the Person making such proposal. The Company shall promptly provide to Merger Sub any non-public information provided to any person making a Company Superior Proposal or Potential Superior Proposal which was not previously provided to Merger Sub, such additional information to be provided no later than the date of provision of such information to such other Person.

(c) Except as expressly permitted by this Section 5.3(c), from the date of this Agreement until the earlier of the Effective Time and the Termination Date, neither the Board of Directors nor any committee thereof (including the Special Committee) shall (i) withdraw or modify, or publicly propose to withdraw or modify, in a manner adverse to Merger Sub, the approval or recommendation by the Board of Directors (or any committee thereof) of this Agreement or the Transactions or its recommendation to the Company’s Shareholders that they give the Company Shareholder Approval, (ii) approve, recommend or declare advisable or publicly propose to approve, or recommend or declare advisable any Acquisition Proposal, (iii) resolve to do any of the foregoing, or (iv) permit the Company to enter into any agreement (including, but not limited to, a letter of intent) with respect to any Acquisition Proposal (other than a confidentiality agreement with respect to a Company Superior Proposal or Potential Superior Proposal entered into in compliance with Section 5.3(b)) (an “Acquisition Agreement”). Any of the action described in clause (i),(ii), (iii) or (iv) is referred to as a “Company Adverse Recommendation Change”. Notwithstanding the foregoing, at any time after the date hereof and prior to obtaining the Company Shareholder Approval, if the Company is entitled to furnish information to, or engage in discussions or negotiations with, any Person pursuant to Section 5.3(b) the Board may (acting upon receipt of a recommendation by the Special Committee), prior to obtaining the Company Shareholder Approval, withdraw or

modify its recommendation of this Agreement or the Merger, approve or recommend or declare advisable an Acquisition Proposal, or enter into an Acquisition Agreement with respect to an Acquisition Proposal, but only if (x) the Board of Directors determines in good faith after consultation with its independent outside legal counsel and its independent financial advisor that such Acquisition Proposal constitutes a Company Superior Proposal, and (y) the Board of Directors determines in good faith after consultation with its independent outside legal counsel, that such action is reasonably necessary for the Board of Directors to comply with its fiduciary duties to the Company’s stockholders under applicable Law; provided, however, that the Company shall not enter into an Acquisition Agreement with respect to a Company Superior Proposal unless the Company has complied with Section 5.3(d). Furthermore, the Company will give Parent at least five (5) Business Days advance notice prior to making any Company Adverse Recommendation Change, unless the Company Meeting is scheduled to occur during that five (5) Business Day period in which case the Company will give Parent as much advance notice as possible. No withdrawal, modification or change of the recommendation of the Board of Directors (or any committee thereof), approval or recommendation or declaration of advisability or proposed approval or recommendation or declaration of advisability of any Company Superior Proposal or entry by the Company into any Acquisition Agreement shall change the approval of the Board of Directors for purposes of Section 203 of the DGCL or cause any state takeover statute or similar Law not applicable to the Merger as a result of such Board of Directors’ approval to become applicable to the Merger or other transactions contemplated by this Agreement.

(d) Notwithstanding the foregoing, the Company may only enter into an Acquisition Agreement or terminate this Agreement with respect to a Company Superior Proposal prior to obtaining Company Shareholder Approval and only if (i) the Company has provided Parent and Merger Sub written notice that it intends to terminate this Agreement pursuant to this Section 5.3(d) (the “Intention Notice”), identifying the Company Superior Proposal then determined to be most favorable and including a copy of the definitive Acquisition Agreement for such Company Superior Proposal in the form to be entered into, (ii) within a period of five (5) Business Days following the receipt by Parent of the Intention Notice, or within two Business Days following receipt by Parent of any Amendment Notice (as hereafter defined)(collectively, the “Adjustment Period”), Parent and Merger Sub do not propose in writing adjustments to the terms or conditions of this Agreement or if Parent and Merger Sub propose in writing adjustments to the terms or condition of this Agreement the Board of Directors (acting upon receipt of a recommendation by the Special Committee) determines in good faith (after receiving the advice of its financial advisors and its outside counsel), that this Agreement, giving effect to such proposed adjustments, is less favorable to the Company’s shareholders than such Company Superior Proposal (as amended), and (iii) the Company shall have delivered to Parent and Merger Sub (A) an irrevocable written notice of termination of this Agreement pursuant to this Section 5.3(d) (the “Termination Notice”) following the end of the Adjustment Period, and (B) a wire transfer of same day funds in the amount of the Termination Fee within the time period specified in Section 7.2(a). The Company agrees that after any material amendment or modification to any Company Superior Proposal (it being agreed and understood that any change in price shall constitute a material amendment or modification) the Company shall as promptly as practical and in any event with 24 hours deliver a new written notice to Parent and Merger Sub which shall describe in reasonable detail such material amendment or modification (and shall include a copy of such proposed modification or amendment) to the Company Superior Proposal (the “Amendment Notice”) and the Adjustment Period shall continue for two Business Days after receipt by the Parent of such Amendment Notice. The Company agrees to comply with the terms of this Section 5.3(d) during any Adjustment Period and during any Adjustment Period the Company will negotiate (and to cause its advisors to negotiate) in good faith with Parent and Merger Sub to allow Parent and Merger Sub to match or better such Company Superior Proposal (as amended). The Company shall not submit any Acquisition Proposal or Company Superior Proposal to a vote of the stockholders prior to the termination of this Agreement; provided that this sentence shall not be construed to limit the Company’s other rights under Sections. 5.3 and 5.4 hereof.

(e) Subject to Parent’s and Merger Sub’s rights under Article VII, nothing contained in this Section 5.3 shall prohibit the Board of Directors from taking and disclosing to the shareholders a position contemplated by Rules 14d-9 and 14e-2(a) promulgated under the Exchange Act, if in the good-faith judgment of the Board of

Directors, after consultation with outside counsel, such action is required by applicable Law or necessary for the Board of Directors to comply with its fiduciary duties to the Company’s stockholders under applicable Law; provided that any such disclosure relating to an Acquisition Proposal (other than a “stop, look and listen” communication pursuant to Rule 14d-9(f) under the Exchange Act) shall be deemed to be a Company Adverse Recommendation Change unless the Board of Directors reaffirms its unanimous approval and recommendation of this Agreement and the Transactions and its unanimous recommendation that the stockholders approve and adopt this Agreement and the Merger in such disclosure.

(f) The Company shall as promptly as practical, and in any event within one (1) Business Day (and not less than one Business Day prior to providing any such person with any information or entering into any such confidentiality agreement), notify Parent and Merger Sub of the receipt of any Acquisition Proposals or any inquiry with respect to, or that could reasonably be expected to lead to, any Acquisition Proposal (including any request for information or for access to the properties, books or records of the Company) or any request to engage in negotiations or discussions in connection with a possible Acquisition Proposal. Such notice shall identify the name of the person making such Acquisition Proposal, proposal, offer, inquiry or request or seeking such negotiations or discussions and the terms and conditions of any offer, inquiry, request or proposal. The Company shall keep Parent fully informed on a current basis of the status and details of any Acquisition Proposal, request or inquiry and shall as promptly as practical notify Parent orally and in writing of any modification or proposed modification to the financial or other terms of such Acquisition Proposal, request or inquiry and shall as promptly as practical provide to Parent a copy of all written material or correspondence (including e-mail) subsequently provided to or by the Company or its Representatives in connection with such Acquisition Proposal or inquiry. The Company obligations pursuant to this Section 5.3(f) are in addition to its obligations pursuant to Section 5.3(c).

(g) Any violation of this Section 5.3, including by any of the Company’s authorized Representatives, shall be deemed to be a breach of this Agreement by the Company.

(h) As used in this Agreement, the following terms shall have the following meanings:

(i) “Acquisition Proposal” means any inquiry, proposal or offer from any person other than Parent and Merger Sub relating to any (A) direct or indirect acquisition or purchase, in one transaction or a series of related transactions, of 30% or more of the net revenues or assets of the Company and its Subsidiaries on a consolidated basis, (B) direct or indirect acquisition or purchase, in one transaction or a series of related transactions, of 30% or more of any class of equity securities of the Company, (C) tender offer or exchange offer that if consummated would result in any person beneficially owning 30% or more of any class of equity securities of the Company, (D) merger, consolidation, business combination, recapitalization, liquidation, dissolution, binding share exchange or similar transaction involving the Company, other than the transactions contemplated by this Agreement, or (E) any combination of the foregoing; and

(ii) “Company Superior Proposal” means an Acquisition Proposal that is a bona fide written proposal made by a third party to acquire, directly or indirectly, at least 75% of the equity securities or assets of the Company, pursuant to a tender or exchange offer, a merger, a sale of assets or a similar transaction that the Board of Directors (acting upon receipt of a recommendation of the Special Committee) determines in good faith, after consultation with outside counsel and receiving advice from its financial advisors, to be, if consummated, more favorable to the Company’s shareholders (in their capacities as such) than the Merger, taking into account at the time of determination all of the terms and conditions of such proposal and of this Agreement, any adjustment to the terms and conditions thereof proposed by Parent in writing in response to any such proposal, any other factors deemed relevant by the Company’s Board of Directors, and the assessed ability of the person making the Acquisition Proposal to consummate the transactions contemplated by such proposal or offer (taking into account, among other things, the legal, financial, regulatory, financing and other aspects of such proposal and the identity of the person submitting such a proposal).

(a) Unless either (i) the Company has entered into an Acquisition Agreement or (ii) a Company Adverse Recommendation Change shall have occurred and such Company Adverse Recommendation Change is still in effect, then (x) as promptly as reasonably practicable following the date of this Agreement, but in no event later than 15 days hereafter, the Company shall prepare and file with the SEC the Proxy Statement relating to the Merger and the other Transactions, (y) the Company shall use its reasonable best efforts to respond to any comments of the SEC and to cause the Proxy Statement to be cleared by the SEC as promptly as possible and (z) the Company shall cause the Proxy Statement to be mailed to the Company’s shareholders as promptly as reasonably practicable, but in no event later than five (5) days after the Proxy Statement is cleared by the SEC. Parent and Merger Sub shall provide the Company with any information for inclusion in the Proxy Statement which may be required under applicable Law and/or which is reasonably requested by the Company. The Company shall promptly notify Parent or Merger Sub of the receipt of comments from the SEC and of any request from the SEC for amendments or supplements to the Proxy Statement or for additional information, and will promptly supply Parent or Merger Sub with copies of all correspondence between the Company or its Representatives, on the one hand, and the SEC or members of its staff, on the other hand, with respect to the Proxy Statement or the Merger. If at any time prior to the Company Meeting any event should occur which is required by applicable Law to be set forth in an amendment of, or a supplement to, the Proxy Statement, the Company will promptly inform Parent or Merger Sub. In such case, the Company, with the cooperation of Parent and Merger Sub, will promptly prepare and file such amendment or supplement with the SEC to the extent required by applicable Law and will mail such amendment or supplement to the Company’s shareholders to the extent required by applicable Law. Notwithstanding the foregoing, prior to filing or mailing the preliminary or definitive Proxy Statement (or any amendment or supplement thereto) or responding to the comments of the SEC with respect thereto, the Company shall (i) consult with Parent and Merger Sub, (ii) afford Parent, Merger Sub or their Representatives a reasonable opportunity to review and comment on such document or response, and (iii) include in such document or response all reasonable comments proposed by Parent.

(b) Subject to the other provisions of this Agreement, the Company shall (i) take all action necessary in accordance with the DGCL and the Company Certificate and Company Bylaws to duly call, give notice of, convene and hold a meeting of its stockholders as promptly as reasonably practicable following the date hereof for the purpose of obtaining the Company Shareholder Approval (the “Company Meeting”), and, subject to the last sentence of this Section 5.4(b), in no event later than 30 days after the mailing of the Proxy Statement to the stockholders of the Company (as such 30-day period may be extended by the amount of time during which any Company Adverse Recommendation Change is in effect), and (ii) use all reasonable efforts to solicit from its stockholders proxies in favor of the adoption of this Agreement. The Company, through the Board of Directors, shall recommend to its stockholders that they give the Company Shareholder Approval, except to the extent that the Board of Directors shall have withdrawn its approval or recommendation as permitted by Section 5.3(c). The Company’s obligations pursuant to the first sentence of this Section 5.4(b) shall not be affected by the commencement, public proposal, public disclosure or communication to the Company of any Acquisition Proposal unless the Company shall have entered into an Acquisition Agreement or a Company Adverse Recommendation Change shall have occurred and such Company Adverse Recommendation Change is still in effect, in which case the Company shall not be required to comply with the first sentence of this Section 5.4(b) but the Parent shall be permitted to terminate this Agreement pursuant to Section 7.1(h).

(a) Prior to the Effective Time, the Company and/or the Board of Directors shall use reasonable best efforts to make such adjustments and amendments to or make such determinations with respect to Company Stock Options as are necessary to ensure that the treatment of Company Stock Options as provided in this Section 5.5 extinguishes all rights of participants under the Company Share Plans and that following the Effective Time, no such participant shall have any right thereunder to acquire equity securities of the Surviving

Corporation or any of its Subsidiaries; provided that, except as expressly provided in this Section 5.5, the Company shall not pay or commit to pay any consideration in connection therewith.

(b) Prior to the Effective Time, the Company shall take all necessary steps to cause dispositions of Company Stock Options pursuant to the transactions contemplated by this Agreement by each individual who is a director or officer of the Company to be exempt under Rule 16b-3 promulgated under the Exchange Act in accordance with that certain No-Action Letter to Skadden Arps Slate Meagher & Flom LP dated January 12, 1999 issued by the SEC regarding such matters.

(a) Subject to the terms and conditions set forth in this Agreement, each of the parties hereto shall use its reasonable best efforts (subject to, and in accordance with, applicable Law) to take promptly, or cause to be taken promptly, all actions, and to do promptly, or cause to be done promptly, and to assist and cooperate with the other parties in doing, all things necessary, proper or advisable under applicable Laws to consummate and make effective the Merger and the other transactions contemplated by this Agreement, including (i) obtaining all necessary actions or nonactions, waivers, consents and approvals, including the Company Approvals, from Governmental Entities and making all necessary registrations and filings and taking all steps as may be necessary to obtain an approval or waiver from, or to avoid an action or proceeding by, any Governmental Entity, (ii) obtaining all necessary consents, approvals or waivers from third parties, (iii) defending any lawsuits or other legal proceedings, whether judicial or administrative, challenging this Agreement or the consummation of the Merger and the other transactions contemplated by this Agreement, (iv) causing the conditions to Closing to be satisfied as promptly as practicable, and (v) executing and delivering any additional instruments necessary to consummate the Merger and the other transactions contemplated by this Agreement.

(b) Each party hereto shall promptly consult (which shall include a reasonable opportunity to review and comment on any filings) with the other parties hereto with respect to, provide any necessary information with respect to, and provide the other (or its counsel) copies of, all filings made by such party with any Governmental Entity or any other information supplied by such party to a Governmental Entity in connection with this Agreement and the transactions contemplated by this Agreement. Each party hereto shall promptly inform the other of any material communication from any Governmental Entity regarding any of the transactions contemplated by this Agreement unless otherwise prohibited by Law. If any party hereto receives a request for additional information or documentary material from any such Government Entity with respect to the transactions contemplated by this Agreement, then such party shall endeavor in good faith to make, or cause to be made, as soon as reasonably practicable and after consultation with the other party, an appropriate response in compliance with such request.

(c) Parent, Merger Sub and their respective Affiliates shall not acquire or agree to acquire by merging or consolidating with, or by purchasing a substantial portion of the assets of or equity in, or by another other manner, any entity or portion thereof, or otherwise acquire or agree to acquire any assets, if the entering into a definitive agreement relating to or the consummation of such acquisition, merger or consolidation would reasonably be expected to (i) impose any delay in the obtaining of, or increase the risk of not obtaining, debt financing Parent and Merger Sub require in order to consummate the Merger and the Transactions, or (ii) otherwise delay the consummation of the Merger and the Transactions.

5.7 Takeover Statute. If any “fair price,” “moratorium,” “control share acquisition” or other form of antitakeover statute or regulation shall become applicable to the transactions contemplated hereby, each of the Company, Parent, Merger Sub and the members of their respective boards of directors shall grant such approvals and take such actions as are reasonably necessary so that the transactions contemplated hereby may be consummated as promptly as practicable on the terms contemplated hereby and otherwise act to eliminate or minimize the effects of such statute or regulation on the transactions contemplated hereby.

5.8 Public Announcements. Each of the parties hereto agrees that, promptly following the execution of this Agreement, each of the Company and Parent shall issue a press release in a form reasonably and mutually agreed to by Parent and the Company announcing the execution of this Agreement. Additionally, the Company shall file a current report with the SEC on Form 8-K attaching the press release issued by the Company. Thereafter, the parties agree to consult with each other regarding, and provide each other the reasonable opportunity to review and comment upon, any press release or other public statement or comment relating to this Agreement or the transactions contemplated by this Agreement prior to the issuance of such press release or other public statement or comment and shall not issue any such press release or other public statement or comment prior to such consultation and review, which consultation and review shall not be unreasonably delayed, except as may be required by applicable Law or by the rules or regulations of the SEC or any national securities exchange. Merger Sub and the Company agree to issue a joint press release announcing this Agreement.

(a) All rights to indemnification, advancement of expenses and exculpation from liabilities for acts or omissions occurring at or prior to the Effective Time existing in favor of the current or former directors or officers of the Company and its Subsidiaries (collectively, the “Indemnified Parties”) as provided in their respective certificates of incorporation or bylaws (or comparable organizational documents) and any indemnification or other agreements of the Company or any of its Subsidiaries as in effect on the date of this Agreement (in each case, to the extent copies of which have been furnished or made available to Parent and Merger Sub prior to the date hereof) shall be assumed by the Surviving Corporation in the Merger, without further action, at the Effective Time, and shall survive the Merger and shall continue in full force and effect without amendment, repeal or other modification for a period of six (6) years following the Closing Date, and Parent shall cause the Surviving Corporation to comply with and honor the foregoing obligations; provided that such obligations shall be subject to any limitation imposed from time to time under applicable Law. From the Effective Time through the sixth (6th) anniversary of the date on which the Effective Time occurs, the certificate of incorporation and bylaws of the Surviving Corporation shall contain, and Parent shall cause the certificate of incorporation and bylaws of the Surviving Corporation to contain, provisions no less favorable with respect to indemnification, advancement of expenses and exculpation of present and former directors and officers of the Company and its Subsidiaries for acts or omissions occurring at or prior to the Effective Time than are presently set forth in the Company Certificate and Company Bylaws in effect on the date of this Agreement, and such provisions shall not be amended, repealed, or otherwise modified in any manner that would reasonably be expected to adversely affect the rights thereunder of any Indemnified Party.

(b) The Company may purchase, prior to the Effective Time, and if the Company does not so purchase, Parent shall or shall cause the Surviving Corporation to purchase promptly after the Effective Time, a six (6)-year “tail” prepaid policy on the Company’s directors’ and officers’ liability insurance policy covering each person currently covered by the Company’s directors’ and officers’ liability insurance policy, on terms with respect to such coverage and amounts no less favorable than those of such policy in effect on the date hereof.

(c) This Section 5.9 shall survive the consummation of the Merger indefinitely and is intended to be for the benefit of, and shall be enforceable by, the Indemnified Parties referred to herein, their heirs, legal representatives, successors, assigns and personal representatives and shall be binding on the Surviving Corporation and its successors and assigns. In the event that the Surviving Corporation or any of its successors or assigns or transfers or conveys all or a majority of its properties or assets to any person, then, and in each such case, proper provision shall be made so that the successors and assigns of the Surviving Corporation shall succeed to the obligations set forth in this Section 5.9. The provisions of this Section 5.9 are in addition to, and not in substitution for, any other rights to indemnification that the Indemnified Parties, their heirs and personal representatives may have by contract or otherwise.

5.10 Notification of Certain Matters. The Company shall give prompt notice to Parent and Merger Sub, and Parent and Merger Sub shall give prompt notice to the Company, of (a) any notice or other communication

received by such party from any Governmental Entity in connection with the Merger or the other Transactions or from any person alleging that the consent of such person is or may be required in connection with the Merger or the other Transactions, (b) any actions, suits, investigations or proceedings commenced or, to such party’s knowledge, threatened against, relating to or involving such party or any of its Subsidiaries, (c) any representation or warranty made by it in this Agreement to be untrue in any material respect, (d) any failure of such party to comply with or satisfy, any covenant, condition or agreement to be complied with or satisfied by it hereunder, and (e) the discovery of any fact or circumstance that, or the occurrence or non-occurrence of any event which would, cause or result in any of the conditions to the Merger set forth in Article VI not being satisfied or satisfaction of those conditions being materially delayed; provided, however, that the delivery of any notice pursuant to this Section 5.9 shall not (i) cure any breach of, or non-compliance with, any other provision of this Agreement or (ii) limit the remedies available to the party receiving such notice.

(a) The Company shall keep Parent informed on a timely and current basis of all material developments relating to any stockholder litigation against the Company or its directors relating to the Transactions. In addition, the Company shall give Parent the reasonable opportunity to consult with it concerning the defense or settlement of any stockholder litigation against the Company or its directors relating to the Transactions, and no such settlement shall be agreed to without Parent’s prior written consent, unless such settlement (a) is covered by the Company’s insurance policy (and such coverage has not been denied by the applicable insurance carrier) and (b) involves only the payment of monetary damages and such monetary damages are not in excess of the applicable policy limits under such insurance policy.

(b) The Company shall keep Parent informed on a timely and current basis of all developments relating to the matters described on Schedule 3.11 as “Pending Lawsuits” (the “Pending Litigation”) and shall give Parent the reasonable opportunity to consult with it concerning the settlement or prosecution of any such litigation and no such settlement shall be agreed to without Parent’s prior written consent, unless such settlement includes a full release of the Company and its Subsidiaries and involves no actions or commitments by the Company except the receipt of monetary damages, if applicable. The Company (i) shall take steps toward achieving an orderly resolution and dismissal of any such Pending Litigation that is not class action litigation in a manner reasonably believed to be in the best interest of the Company, based on its ownership after the Effective Time, (ii) shall not actively prosecute the Pending Litigation, other than with respect to class action litigation and prosecution permitted by (i), and (iii) not take any action which CMC would be prohibited from taking if the Formation Agreement had been executed and was in effect.

5.12 Rollover Holders. Immediately prior to the Closing, each issued and outstanding Common Share set forth in Exhibit D (the “Rollover Shares”) shall immediately before the Effective Time be contributed by each of the Rollover Holders to Parent in exchange solely for the number of validly issued shares of stock of Parent set forth in, and in accordance with, the Exchange Agreements (the “Exchange”) and such Rollover Shares shall be cancelled at the Effective Time in accordance with Section 2.1(b). As of the Effective Time, all such Rollover Shares when so cancelled, shall no longer be issued and outstanding and shall automatically cease to exist, and each Rollover Holder shall cease to have any rights with respect thereto, except the right to receive the shares of Parent stock as set forth in the Exchange Agreement.

6.1 Conditions to Each Party’s Obligation to Effect the Merger. The respective obligations of each party to effect the Merger shall be subject to the fulfillment (or waiver by all parties) at or prior to the Effective Time of the following conditions:

(b) No order issued by any court of competent jurisdiction and no Law which restrains, enjoins or otherwise prohibits the consummation of the Merger shall have been entered, enacted or promulgated and shall continue to be in effect.

6.2 Conditions to Obligation of the Company to Effect the Merger. The obligation of the Company to effect the Merger is further subject to the satisfaction (or waiver by the Company) of each of the following conditions:

(a) The representations and warranties of Parent and Merger Sub set forth in this Agreement shall be true and correct (disregarding any limitation as to “materiality,” “Merger Sub Material Adverse Effect” or similar qualifiers set forth therein) both at and as of the date of this Agreement and at and as of the Closing Date with the same force and effect as if made on the Closing Date (except that those representations and warranties that are made as of a particular date or period must be true and correct only as of such date or period), except where the failure of such representations and warranties to be so true and correct would not, individually or in the aggregate, have a Merger Sub Material Adverse Effect; provided, however, that the representations and warranties of the Parent and the Merger Sub contained in Sections 4.2 and 4.4 shall be true and correct in all material respects both at and as of the date of this Agreement and at and as of the Closing Date with the same force and effect as if made on the Closing Date.

(b) Parent and Merger Sub shall have, in all material respects, performed and complied with their respect covenants and agreements required by this Agreement to be performed or complied with by each of them prior to the Effective Time.

(c) Since the date hereof, there shall not have occurred any fact, circumstance, event, change, effect, development or occurrence which, individually or in the aggregate, has had, or would reasonably be expected to have, a Merger Sub Material Adverse Effect.

(d) Parent and Merger Sub shall have delivered to the Company a certificate, dated the Effective Time and signed by a duly authorized officer or principal of Parent and by Merger Sub’s President, certifying to the effect that the conditions set forth in Sections 6.2(a), 6.2(b) and 6.2(c) have been satisfied.

(e) Parent shall have executed and delivered the Exchange Agreements to the respective Rollover Holders.

6.3 Conditions to Obligations of Parent and Merger Sub to Effect the Merger. The obligations of Parent and Merger Sub to effect the Merger are further subject to the satisfaction (or waiver by the Parent and Merger Sub) of each of the following conditions:

(a) The representations and warranties of the Company set forth in this Agreement shall be true and correct (disregarding any limitation as to “materiality,” “Company Material Adverse Effect” or similar qualifiers set forth therein, except with respect to such “materiality” qualifier included in Section 3.2(a)) both at and as of the date of this Agreement and at and as of the Closing Date with the same force and effect as if made on the Closing Date (except that those representations and warranties that are made as of a particular date or period must be true and correct only as of such date or period), except where the failure of such representations and warranties to be so true and correct would not, individually or in the aggregate, have a Company Material Adverse Effect; provided, however, that the representations and warranties of the Company contained in Sections 3.2(a) and 3.2(b) shall be true and correct in all respects and that the representations and warranties of the Company contained in Section 3.3(a) shall be true and correct in all material respects both at and as of the date of this Agreement and at and as of the Closing Date with the same force and effect as if made on the Closing Date.

(b) The Company shall have, in all material respects, performed all obligations and complied with all covenants and agreements required by this Agreement to be performed or complied with by it prior to the Effective Time.

(d) The Company shall have delivered to Merger Sub a certificate, dated the Effective Time and signed by its Chief Executive Officer and Chief Financial Officer, certifying to the effect that the conditions set forth in Sections 6.3(a), 6.3(b), 6.3(c), 6.3(l) and 6.3(m) have been satisfied.

(e) Each of the Exchange Agreements and the Voting Agreements shall be in full force and effect, each of the parties to the Exchange Agreements and the Voting Agreements (other than the Parent or the Merger Sub, if applicable) shall have performed in all material respects all of their obligations and complied with all of their covenants in such agreements required to be performed or complied with prior to the Effective Time (including, but not limited to, delivery of the Rollover Shares to Parent).

(f) (1) Each of the Employment Agreements shall be in full force and effect as of the Closing and the terms thereof shall not have been amended or waived without the prior written consent of Parent, and (2) each of Key Employees shall be employed by the Company and neither of the Key Employees shall have resigned or been terminated or indicated they intend to resign;

(g) The total number of Dissenting Shares shall not exceed ten percent (10%) of the outstanding Common Shares as of the Effective Time.

(h) Parent shall have received written resignation letters from each of the members of the respective board of directors of the Company and its Subsidiaries, effective as of the Effective Time which resignations shall confirm that all director fees and similar amounts payable by the Company or any of its Subsidiaries to such director for services rendered prior to or at Closing have been paid;

(i) The Company shall have obtained all material consents or approvals required under any Company Material Contract in connection with the execution, delivery and performance of this Agreement and the Transactions contemplated hereby;

(j) Each Company Stock Option shall be either exercised or cancelled and terminated at the Effective Time into the right to receive a cash amount equal to the Option Consideration;

(k) The Surviving Corporation and CMC shall have entered into the Formation Agreement;

(l) The Company’s certification from The Joint Commission shall not have been suspended or revoked;

(m) The Company shall have cash or cash equivalents in an amount equal or greater than the sum of (i) $1 million plus (ii) the amount of any of the Company’s Designated Pre-Closing Expenses that remain unpaid as of Closing and the Company shall have delivered a schedule of such unpaid Designated Pre-Closing Expenses to Parent, which schedule lists the name of the Person to whom any Designated Pre-Closing Expense is owed and the amount of unpaid Company Designated Pre-Closing Expenses due to each such person or entity listed on such schedule;

(n) The Parent and Merger Sub shall have obtained, on terms and conditions satisfactory to Parent, funded debt financing of not less than $17.5 million; and

(o) The total payments required to be made by Parent and Merger Sub pursuant to this Agreement are equal to or less than (i) $42,848,042 minus (ii) the Per Share Price multiplied by the number of Rollover Shares.

6.4 Frustration of Closing Conditions. Neither the Company, on the one hand, nor Parent or Merger Sub, on the other, may rely, either as a basis for not consummating the Merger or terminating this Agreement and

abandoning the Merger, on the failure of any condition set forth in Sections 6.1, 6.2 or 6.3, as the case may be, to be satisfied if such failure was caused by such party’s breach of any provision of this Agreement or failure to use its reasonable best efforts to consummate the Merger and the other transactions contemplated hereby, as required by and subject to Section 5.6.

7.1 Termination and Abandonment. Notwithstanding anything contained in this Agreement to the contrary, this Agreement may be terminated and abandoned at any time prior to the Effective Time, whether before or (except as provided below) after receipt of the Company Shareholder Approval:

(b) by either the Company or Parent if the Effective Time shall not have occurred on or before May 4, 2011 (the “End Date”) provided however that the right to terminate this Agreement pursuant to this Section 7.1(b) shall not be available to a party whose failure to perform any of its obligations under this Agreement has been the primary cause of, or resulted in, the failure of the Merger to be consummated on or before the End Date;

(c) by either the Company or Parent if a Governmental Entity shall have issued or entered a judgment, order, injunction or decree or taken any other action permanently restraining, enjoining or otherwise prohibiting the consummation of the Merger and such judgment, order, injunction or decree or any other action shall have become final and non-appealable; provided that the party seeking to terminate this Agreement pursuant to this Section 7.1(c) shall have used its reasonable best efforts to have such injunction lifted;

(d) by either the Company or Parent if the Company Meeting (including the final postponement or adjournment thereof, if applicable) shall have concluded and the Company Shareholder Approval shall not have been obtained; provided that the right to terminate this Agreement pursuant to this Section 7.1(d) shall not be available to the Company if the Company has breached in any material respect its obligations under Sections 5.4 or 5.6;

(e) by the Company, if Parent or Merger Sub shall have breached or failed to perform any of their respective representations, warranties, covenants or agreements contained in this Agreement or any of such representations and warranties shall become untrue after the date of this Agreement and on or before the Closing Date (in each case, a “Parent Terminating Breach”) and such Parent Terminating Breach (i) would result in a failure of a condition set forth in Section 6.2 (assuming the date of such determination is the Closing Date) and (ii) cannot be or has not been cured within 10 days after the giving of written notice to the Parent of such breach;

(f) by the Company, prior to obtaining the Company Shareholder Approval, pursuant to and in compliance with Section 5.3(d) provided that the Company shall have complied with all of the provisions of Section 5.3;

(g) by Parent, if the Company shall have breached or failed to perform any of its representations, warranties, covenants or agreements contained in this Agreement, or any of such representations and warranties shall become untrue after the date of this Agreement and on or before the Closing Date (in either case a “Company Terminating Breach”) and such Company Terminating Breach (i) would result in a failure of a condition set forth in Section 6.3 (assuming the date of such determination is the Closing Date) and (ii) cannot be or has not been cured within 10 days after the giving of written notice to the Company of such breach;

(i) by Parent if (A) the Company or any of its Representatives shall have intentionally breached any of Section 5.3(a), any of the penultimate sentence of Section 5.3(b) or any of Section 5.4, (B) for any reason the Company shall have failed to convene and complete the Company Meeting within 45 days of the date that the Proxy Statement is cleared by the SEC unless the Company has entered into an Acquisition Agreement or a Company Adverse Recommendation Change has occurred, or (C) the Company shall have entered into an Acquisition Agreement; and

(j) by Parent if (A) the Company settles any stockholder litigation against the Company or its directors relating to the Transactions without Parent’s prior written consent and (B) such settlement either (I) is not covered by the Company’s insurance policy (or such coverage is denied by the applicable insurance carrier), (II) does not involve only the payment of monetary damages, or (III) involves only the payment of money damages, but such payment is in excess of the policy limits under such insurance policy.

(a) In the event that (i) (A) any person makes a bona fide Acquisition Proposal, (B) this Agreement is terminated by either Parent or the Company pursuant to Section 7.1(b), and (C) within nine months following the date of such termination the Company enters into a definitive agreement or other agreement with respect to such Acquisition Proposal, then the Company shall pay to Merger Sub a fee of $1,500,000 (the “Termination Fee”), which amount shall be payable by wire transfer of same day funds, within two (2) Business Days following the date the Company enters into the definitive agreement with respect to such Acquisition Proposal. In the event that (ii) this Agreement is terminated by Parent pursuant to Section 7.1(h) or Section 7.1(i), or (iii) this Agreement is terminated by the Company pursuant to Section 7.1(f), then the Company shall pay the Termination Fee to Merger Sub, which amount shall be payable by wire transfer of same day funds, within two (2) Business Days following the Termination Date.

(b) The Company acknowledges that the agreements contained in this Section 7.2 are an integral part of the transactions contemplated by this Agreement, and that, without these agreements, Parent and Merger Sub would not enter into this Agreement. If the Company shall fail to pay the Termination Fee when due, the Termination Fee shall be deemed to include the costs and expenses incurred by Parent or Merger Sub (including fees and expenses of counsel) in connection with the collection under and enforcement of this Section 7.2. In the event of termination of this Agreement pursuant to Section 7.1, this Agreement shall terminate (except for the provisions of this Section 7.2, Section 5.8 and Article VIII which shall survive such termination), and there shall be no other liability on the part of the Company, Parent or Merger Sub to the other except (i) as provided in this Section 7.2 and (ii) the payment of the Termination Fee as set forth in Section 7.2(a) and the related costs and expenses as set forth in this Section 7.2(b). Notwithstanding the foregoing, to the extent that such termination results from the willful and material breach by a party of any representation or warranty set forth in this Agreement or from the willful and material breach by a party of any covenant or agreement set forth in this Agreement, then such party shall be liable for any damages incurred or suffered by the other party as a result of such breach.

8.1 No Survival. The representations, warranties, covenants and agreements set forth in this Agreement and any certificates delivered pursuant hereto shall terminate at the Effective Time or, except as otherwise provided in Section 7.2, upon the termination of this Agreement pursuant to Section 7.1, as the case may be, except that the agreements set forth in Article II, Section 5.8 and Section 7.2 and this Article VIII, shall survive indefinitely. The GPP Confidentiality Agreement shall (i) survive termination of this Agreement in accordance with its terms and (ii) terminate as of the Effective Time.

8.2 Transaction Expenses. Except as provided in Section 7.2, all Transaction Expenses shall be paid by the party incurring such Transaction Expenses, whether or not the Merger is consummated. Notwithstanding the foregoing, if the Merger is consummated, the Surviving Corporation shall, within ten Business Days after Parent’s request for such reimbursement, reimburse Parent for all Parent Expenses, if such expenses were not reimbursed prior to the Effective Time.

8.3 Notices. Any notice, request, instruction or other document to be given hereunder by any party to the others shall be in writing and delivered personally or sent by registered or certified mail, postage prepaid, or by facsimile:

or to such other persons or addresses as may be designated in writing by the party to receive such notice as provided above.

8.4 Amendments. Subject to the provisions of applicable Law, at any time prior to the Effective Time the parties hereto may modify or amend this Agreement by written agreement executed and delivered by duly authorized officers of Parent and the Company.

8.5 Waiver of Conditions. The conditions to each of the parties’ obligations to consummate the Merger are for the sole benefit of such party and may be waived by such party, but only in writing, in whole or in part to the extent permitted by applicable Law. At any time prior to the Effective Time, any party may, subject to applicable

Law (a) waive any inaccuracies in the representations and warranties of any other party hereto, (b) extend the time for the performance of any of the obligations or acts of any other party hereto, or (c) waive compliance by the other party with any of the agreements contained herein.

8.6 Assignment. Neither his Agreement nor any of the rights, interests or obligations hereunder shall be assignable without the prior written consent of the other parties Any purported assignment made in contravention of this Agreement shall be null and void; provided, however, that Parent or Merger Sub may make a collateral assignment of its rights and interests under this Agreement to its lenders and other financing sources, provided further, that no assignment shall limit the assignor’s obligations hereunder. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of, and be enforceable by, the parties and their respective permitted successors and assigns.

8.7 Governing Law. This Agreement shall be construed in accordance with and governed by the law of the State of Delaware without giving effect to the principles of conflicts of laws thereof.

8.8 Entire Agreement. This Agreement (including any exhibits hereto and the agreements referred to herein or contemplated hereby) and the GPP Confidentiality Agreement constitute the entire agreement, and supersede all other prior agreements, understandings, representations and warranties both written and oral, among the parties, with respect to the subject matter hereof, including the Letter of Intent between the Company and Great Point Partners I, L.P., dated March 16, 2010, which shall terminate and be of no further force and effect.

8.9 No Third Party Beneficiaries. Except as provided in Section 5.9 (Indemnification), the rights of the holders of the Common Shares and Company Warrants, after the Effective Time, to receive their respective portions of the Payment Fund, and the rights of the holders of the Company Stock Options to receive the Option Consideration, this Agreement is solely for the benefit of the Company, the Parent and the Merger Sub and is not intended to and does not confer upon any person other than the parties hereto any rights, remedies, claims or causes of action of any nature whatsoever.

8.10 Severability. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof. If any provision of this Agreement, or the application thereof to any person or any circumstance, is invalid or unenforceable, (a) a suitable and equitable provision shall be substituted therefor in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid or unenforceable provision and (b) the remainder of this Agreement and the application of such provision to other persons or circumstances shall not be affected by such invalidity or unenforceability, nor shall such invalidity or unenforceability affect the validity or enforceability of such provision, or the application thereof, in any other jurisdiction.

8.11 Interpretation. The table of contents and Article, Section, Subsection and Paragraph headings herein are for convenience of reference only, do not constitute part of this Agreement and shall not be deemed to limit or otherwise affect any of the provisions hereof.

8.12 Counterparts. This Agreement may be signed in any number of counterparts, each of which shall be deemed to be an original instrument, and all such counterparts shall together constitute the same agreement.

8.13 Definitions. As used in this Agreement the following terms shall have the following meanings:

“Affiliates” shall mean, as to any person, any other person which, directly or indirectly, controls, or is controlled by, or is under common control with, such person.

“Balance Sheet Adjustments” means the greater of (a) if the accounts receivable of the Company and its Subsidiaries reflected on the Projected Balance Sheet (the “Projected A/R”) are less than an amount equal to net sales of the Company and its Subsidiaries during the most recent trailing twelve calendar month period

completed not less than 45 days prior to the Projected Payment Date (the “LTM Sales”) divided by 365 multiplied by 50 (the “Baseline A/R”) then an amount equal to the amount by which the Projected A/R is less than the Baseline A/R, (b) if the accounts payable of the Company and its Subsidiaries reflected on the Projected Balance Sheet (the “Projected Current Payables”) is greater than the LTM Sales divided by 365 and multiplied by 1 (the “Baseline Current Liabilities”) then an amount equal to the amount by which the Projected Current Payables exceeds the Baseline Current Payables, or (c) if the Net Working Capital of the Company and its Subsidiaries reflected on the Projected Balance Sheet (the “Projected NWC”) is less than 11% of LTM Sales (the “Baseline NWC”), then an amount equal to the amount by which the Projected NWC is less than the Baseline NWC.

“Business Day” shall mean any day other than a Saturday, Sunday or a day on which the banks in Delaware are authorized by Law or executive order to be closed. References in this Agreement to specific laws or to specific provisions of laws shall include all rules and regulations promulgated thereunder. Any statute defined or referred to herein or in any agreement or instrument referred to herein shall mean such statute as from time to time amended, modified or supplemented, including by succession of comparable successor statutes.

“CMC” shall mean CMC Associates, LLC, a Delaware limited liability company and wholly owned subsidiary of the Company which will be formed and capitalized by the Company pursuant to the Formation Agreement solely by the assignment of the Excluded Assets.

“Control” (including, with its correlative meanings, “controlled by” and “under common control with”) shall mean the possession, directly or indirectly, of the power to direct or cause the direction of management or policies of a person, whether through the ownership of securities or partnership or other ownership interests, by contract or otherwise. References in this Agreement (except as specifically otherwise defined) to “person” shall mean an individual, a corporation, a partnership, a limited liability company, an association, a trust or any other entity, group (as such term is used in Section 13 of the Exchange Act) or organization, including, a Governmental Entity, and any permitted successors and assigns of such person.

“Designated Pre-Closing Expenses” means (a) all unpaid Transaction Expenses (including Transaction Expenses that will be incurred after the date of measurement but on or prior to the Closing), (b) the amount of cash to be contributed to CMC, (c) all unpaid director fees or bonuses payable to directors of the Company or its Subsidiaries, in each case related to the period ending on or prior to the Closing or the completion of the Transactions (including any such fee and bonuses that will be payable after the date of measurement), (d) all bonuses payable to officers, directors or employees of the Company or any of its Subsidiaries (including any bonuses payable or contingent upon the completion of any of the Transactions) and any taxes payable by the Company or any of its Subsidiaries with respect to such bonuses and (e) all previously declared, but unpaid, dividends.

“EBITDA” means the Company’s (prior to the Closing) or the Surviving Corporation’s (after the Closing) earnings before interest, taxes, depreciation and amortization, and also excluding (a) all transaction fees related to the Merger and the Transactions and monitoring fees payable to any third party by the Surviving Corporation; and (b) any EBITDA generated from any Acquired Business (as defined in the Employment Agreements) subsequent to the Closing by the Surviving Corporation unless the Key Employees (or either of them) are involved in the operation or management of such newly acquired business, in which case, the EBITDA generated therefrom shall be included in EBITDA.

“Employment Agreements” means the Employment Agreements between the Company and each of the Key Employees, dated the date hereof and attached hereto as Exhibit B.

“Excluded Assets” means a cash amount of not more than $100,000 and the Company’s and its Subsidiaries’ right to and beneficial interest in any proceeds under the pending lawsuits listed in Section 8.13 of the Company Disclosure Schedules.

“Force Majeure” means acts of God (including fire, flood, earthquake, storm, hurricane or other natural disaster), war, invasion, act of foreign enemies, hostilities (regardless of whether war is declared), civil war, rebellion, revolution, insurrection, military or usurped power or confiscation, terrorist activities, nationalisation, government sanction, blockage, embargo, labor dispute, strike, lockout or interruption or failure of electricity or telephone service or similar event that is outside of the control of the Company.

“Formation Agreement” means the Formation Agreement between the Company and CMC in the form attached hereto as Exhibit C.

“Knowledge” means (i) with respect to Parent or Merger Sub, the actual knowledge after reasonable inquiry of the executive officers of Parent or Merger Sub, and (ii) with respect to the Company, the actual knowledge after reasonable inquiry of either of the Key Employees, or James Longaker.

“Net Working Capital” shall mean the current assets of the Company and its Subsidiaries (excluding cash) minus the current liabilities of the Company and its Subsidiaries, in each case determined in accordance with GAAP.

“Parent Expenses” shall mean all of the out-of-pocket fees and expenses (including all fees and expenses of counsel, accountants, financial advisors and investment bankers and all fees and expenses related to any financing , including any commitment fees) incurred by the Parent or on its behalf in connection with or related to the authorization, preparation, negotiation, execution and performance of this Agreement, the Voting Agreement, the Exchange Agreements, the filing of any required notices under regulations and any and all other matters related to the Merger and the other Transactions

“Permitted Liens” shall mean any such Lien (A) for Taxes or governmental assessments, charges or claims of payment not yet due or which are being contested in good faith and for which adequate accruals or reserves have been established in the Company’s financial statements in accordance with GAAP, (B) which is a carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other similar Lien arising in the ordinary course of business for amounts not yet due and payable or which are being contested in good faith through appropriate proceedings, (C) which is disclosed on the most recent consolidated balance sheet of the Company or notes thereto and (D) all other title exceptions, defects, encumbrances and other matters, whether or not of record, which do not materially affect the continued use of the property for the purposes for which the property is currently being used by the Company or a Subsidiary of the Company as of the date of this Agreement.

“Permitted Payment Amount” means (a) the Company’s reasonable estimate of the amount of cash that the Company and its Subsidiaries will have on hand on the Projected Payment Date as set forth on the Projected Balance Sheet minus (b) $1,000,000, minus (c) all unpaid Designated Pre-Closing Expenses minus (d) the Balance Sheet Adjustments, if any.

“Subsidiaries” of any party shall mean any corporation, partnership, association, trust or other form of legal entity of which (i) more than 50% of the outstanding voting securities are on the date of this Agreement directly or indirectly owned by such party, or (ii) such party or any Subsidiary of such party is a general partner (excluding partnerships in which such party or any Subsidiary of such party does not have a majority of the voting interests in such partnership).

“Transaction Expenses” shall mean all of the Company’s out-of-pocket fees and expenses (including all fees and expenses of the Company’s counsel (including counsel to the Special Committee), counsel for the Key Employees, the Company’s accountants, financial advisors (including advisors to the Special Committee) and investment bankers), incurred by the Company or on its behalf in connection with or related to the authorization, preparation, negotiation, execution and performance of this Agreement, the Voting Agreement, the Exchange Agreements, the filing of any required notices under regulations and any and all other matters related to the Merger and the other Transactions.

“Transactions” refers collectively to this Agreement and the transactions contemplated hereby (including the Merger), and the Voting Agreements, the Formation Agreement, the Employment Agreements and the Exchange Agreements and the transactions contemplated thereby.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.

This STOCKHOLDER VOTING AGREEMENT (this “Agreement”) dated as of December 20, 2010 between AH Holdings, Inc. (“Parent”), a Delaware corporation, and Zak W. Elgamal (the “Stockholder”).

WHEREAS, Parent, AH Merger Sub, Inc., a Delaware corporation (“Sub”), and American Surgical Holdings, Inc. (the “Company”), are entering into an Agreement and Plan of Merger dated as of the date hereof (as the same may be amended, modified or supplemented or restated, the “Merger Agreement”; capitalized terms used but not defined herein shall have the meanings set forth in the Merger Agreement);

WHEREAS, Stockholder owns the number of Common Shares set forth opposite his, her or its name on Schedule A hereto (such Common Shares, together with any other shares of capital stock of the Company acquired by such Stockholder after the date hereof and during the term of this Agreement, being collectively referred to herein as the “Subject Shares” of such Stockholder);

WHEREAS, Stockholder owns the number of Options to acquire Common Shares set forth opposite his, her or its name on Schedule A hereto (the “ Subject Options”)

WHEREAS, Stockholder and Parent are parties to that certain Exchange Agreement dated as of the date hereof (the “Exchange Agreement”); and

WHEREAS, as a condition to its willingness to enter into the Merger Agreement, Parent and Sub have required that Stockholder enter into this Agreement and the Stockholder desires to enter into this Agreement to induce Parent and Sub to enter into the Merger Agreement.

SECTION 1. Representations and Warranties of Stockholder. Stockholder hereby represents and warrants to Parent as of the date hereof as follows:

(a) Authority; Execution and Delivery; Enforceability. The Stockholder has all requisite power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. The Stockholder has duly authorized, executed and delivered this Agreement, and this Agreement constitutes the legal, valid and binding obligation of the Stockholder, enforceable against the Stockholder in accordance with its terms, except as such enforceability may be limited by (a) bankruptcy, insolvency, reorganization, moratorium or similar laws of general applicability affecting the enforcement of creditors’ rights and (b) the application of general principles of equity, whether such enforceability is considered in a proceeding in equity in law. The execution and delivery by the Stockholder of this Agreement does not, and the consummation of the transactions contemplated hereby and compliance with the terms hereof will not, conflict with, or result in any violation of, or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or to loss of a material benefit under, or to increased, additional, accelerated or guaranteed rights or entitlements of any person under, or result in the creation of any lien upon any of the properties or assets of the Stockholder under (i) any provision of any contract, lease, license, indenture, agreement, note, bond, permit, license, concession, franchise or other instrument (“Contract”) to which the Stockholder is a party or by which any properties or assets of the Stockholder are bound; or (ii) subject to the filings and other matters referred to in the next sentence, any provision of any order, judgment or Law applicable to the Stockholder or the properties or assets of the Stockholder. No Consent of, or registration, declaration or filing with, any Governmental Entity or other Person is required to be obtained or made by or with respect to the Stockholder in connection with the execution, delivery and performance of this Agreement or the consummation of the transactions contemplated hereby, other than such reports under Sections 13(d) and 16 of the Exchange Act as may be required in connection with this Agreement and the transactions

contemplated hereby. If the Stockholder is married and the Subject Shares of the Stockholder constitute community property this Agreement constitutes a valid and binding agreement of the Stockholder’s spouse, enforceable against such spouse in accordance with its terms. No trust of which the Stockholder is a trustee requires the consent of any beneficiary to the execution and delivery of this Agreement or to the consummation of the transactions contemplated hereby. The Stockholder hereby acknowledges that it has received and reviewed a copy of the Merger Agreement.

(b) The Subject Shares. The Stockholder is the owner of, and, except for any Subject Shares held in “street name” and identified on Schedule A, the record owner of the Subject Shares set forth on Schedule A attached hereto. The Stockholder has good and marketable title to the Subject Shares set forth on Schedule A free and clear of any Liens, other than those liens set forth on Schedule A. The Stockholder does not own, of record or beneficially, any shares of capital stock of the Company other than the Subject Shares set forth on Schedule A attached hereto. The Stockholder has the sole right and authority to vote and dispose of the Subject Shares, and the Stockholder is not a party or bound by, and neither the Stockholder nor the Subject Shares is subject to any voting trust or other agreement, option, warrant, proxy, arrangement or restriction with respect to the voting or disposition of the Subject Shares, except as contemplated by this Agreement.

(c) Reliance. The Stockholder understands and acknowledges that the Parent and Sub are entering into the Merger Agreement in reliance upon Stockholder’s execution and delivery of this Agreement.

SECTION 2. Representations and Warranties of Parent. Parent hereby represents and warrants to Stockholder as follows: Parent has all requisite corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. The execution and delivery by Parent of this Agreement and consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of Parent. Parent has duly executed and delivered this Agreement, and this Agreement constitutes the legal, valid and binding obligation of Parent, enforceable against Parent in accordance with its terms, except as such enforceability may be limited by (a) bankruptcy, insolvency, reorganization, moratorium or similar laws of general applicability affecting the enforcement of creditors’ rights and (b) the application of general principles of equity, whether such enforceability is considered in a proceeding in equity or at law. The execution and delivery by Parent of this Agreement do not, and the consummation of the transactions contemplated hereby and compliance with the terms hereof will not, conflict with, or result in any violation of, or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or to loss of a material benefit under, or result in the creation of any lien upon any of the properties or assets of Parent under (i) the certificate of incorporation or bylaws of Parent, (ii) any provision of any Contract to which Parent is a party or by which any properties or assets of Parent are bound or (iii) subject to the reports under Sections 13(d) and 16 of the Exchange Act as may be required in connection with this Agreement and the transactions contemplated hereby, any provision of any Judgment or Law applicable to Parent or the properties or assets of Parent.

SECTION 3. Covenants of Stockholder. Stockholder covenants and agrees as follows:

(a) At any meeting of the stockholders of the Company called to vote on the Merger, the Merger Agreement or the other Transactions or at any adjournment thereof, or in any other circumstances upon which a vote, consent or other approval (including by written consent) with respect to the Merger, the Merger Agreement or the other Transactions is sought, the Stockholder shall, (i) when a meeting is held, appear at such meeting or otherwise cause all Subject Shares that were outstanding on the record date for such meeting to be counted as present thereat for purposes of establishing a quorum, and (ii) vote (or cause to be voted), including by executing a written consent, the Subject Shares that were outstanding on the record date for such meeting in favor of the adoption and approval of the Merger, the Merger Agreement and all of the Transactions.

(b) The Stockholder hereby irrevocably grants to, and appoints, Parent and Sub, or any of them, and any individual designated in writing by any of them, and each of them individually, as the Stockholder’s proxy and attorney-in-fact (with full power of substitution), for and in the name, place and stead of the

Stockholder, to vote the Subject Shares of the Stockholder that are outstanding on the applicable date, or grant a consent or approval in respect of the Subject Shares of the Stockholder that are outstanding on the applicable date in a manner consistent with this Section 3. The Stockholder understands and acknowledges that Parent is entering into the Merger Agreement in reliance upon the Stockholder’s execution and delivery of this Agreement. The Stockholder hereby affirms that the irrevocable proxy and power of attorney set forth in this Section 3(b) is given in connection with the execution of the Merger Agreement, and that such irrevocable proxy and power of attorney is given to secure the performance of the duties of the Stockholder under Section 3 of this Agreement. The Stockholder hereby further affirms that the irrevocable proxy and power of attorney is coupled with an interest and may under no circumstances be revoked. The Stockholder hereby ratifies and confirms all that such irrevocable proxy and attorney-in-fact may lawfully do or cause to be done by virtue hereof. Such irrevocable proxy is executed and intended to be irrevocable in accordance with the provisions of Section 212(e) of the Delaware General Corporation Law. The irrevocable proxy and power of attorney granted hereunder shall automatically terminate upon the termination of both Section 3(a) and Section 3(c).

(c) At any meeting of stockholders of the Company or at any adjournment thereof or in any other circumstances upon which the Stockholder’s vote, consent or other approval is sought with respect to any of the matters described in (x), (y) or (z) below, the Stockholder shall: (i) when a meeting is held, appear at such meeting or otherwise cause all Subject Shares that were outstanding on the applicable record date to be counted as present thereat for purposes of establishing a quorum, and (ii) vote (or cause to be voted) the Subject Shares that were outstanding on the applicable record date against (x) any merger agreement or merger (other than the Merger Agreement and the Merger), consolidation, combination, sale or transfer of substantial assets, reorganization, recapitalization, dissolution, liquidation or winding up of or by the Company, (y) any Acquisition Proposal and (z) any amendment of the Company Certificate or the Company By-laws or other proposal or transaction involving the Company or any Company Subsidiary, which amendment or other proposal or transaction would in any manner impede, delay, frustrate, prevent or nullify the Merger or any provision of the Merger Agreement or any of the Transactions or change in any manner the voting rights of any class of the Company’s capital stock. The Stockholder shall not commit or agree to take any action inconsistent with the foregoing. The Stockholder agrees that, as a condition to the Transfer, whether by operation of law or otherwise, of legal or beneficial ownership of the Subject Shares by the Stockholder to any person or entity, the Stockholder shall obtain such person’s or entity’s agreement in writing to be bound by the terms of Section 3.

(d) Stockholder further agrees that, until the termination of this Agreement, Stockholder will not, and will not permit any entity under Stockholder’s control to, (i) solicit proxies or become a “participant” in a “solicitation” (as such terms are defined in Rule 14A under the Exchange Act) with respect to an Acquisition Proposal (as defined below), (ii) initiate a stockholders’ vote with respect to an Acquisition Proposal or (iii) become a member of a “group” (as such term is used in Section 13(d) of the Exchange Act) with respect to any voting securities of the Company with respect to an Acquisition Proposal.

(e) Other than pursuant to this Agreement, the Stockholder shall not directly or indirectly (A) sell, transfer, pledge, encumber, assign or otherwise dispose of (including by gift) (collectively, “Transfer”), or enter into any Contract, option or other arrangement (including any profit sharing arrangement) with respect to the Transfer of, any Subject Shares or Subject Options to any Person other than in accordance with the Merger or (B) grant any proxy, deposit any Subject Shares or Subject Options into any voting trust or enter into any other agreement or arrangement related to the voting of the Subject Shares or Subject Options, whether by proxy, voting agreement or otherwise, with respect to any Subject Shares or (C) commit or agree to take any of the foregoing actions.

(f) The Stockholder shall use its commercially reasonable best efforts to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate with the other parties in doing, all things necessary, proper or advisable to consummate and make effective, in the most expeditious manner practicable, the transactions contemplated by this Agreement. The Stockholder shall not issue any press release or make any other public statement with respect to the Merger, the Merger Agreement or any other

Transaction without the prior consent of Parent, except for public statements made in press releases issued by the Company to the extent permitted by the Merger Agreement or as may be required by applicable Law (including, without limitation, making filings required by Sections 13(d) and 16 of the Exchange Act).

(g) The Stockholder agrees to promptly notify Parent of the number of any Subject Shares acquired by the Stockholder after the date hereof.

(h) The Stockholder hereby covenants and agrees that the Stockholder (a) except for any existing liens identified on Schedule A, has not entered into and shall not enter into any agreement that would restrict, limit or interfere with the performance of the Stockholder’s obligations hereunder and (b) shall not take any action that would reasonably be expected to make any of his, her or its representations or warranties contained herein untrue or incorrect or have the effect of preventing or disabling him, her or it from performing his, her or its obligations under this Agreement.

(i) Stockholder shall not enter into any agreement or commitment with any Person the effect of which would be inconsistent with or violative of any of the provisions and agreements contained in this Agreement.

SECTION 4. Termination. This Agreement shall terminate upon the earlier of (a) the Effective Time and (b) the termination of the Merger Agreement in accordance with its terms; provided that Sections 4 and 5 shall survive any termination of this Agreement pursuant to Section 4(b).

No party hereto shall be relieved from any liability for breach of this Agreement by reason of any such termination.

SECTION 5. Consent and Waiver; Termination of Existing Agreements. At the time Stockholder’s Subject Shares are voted pursuant to this Agreement in connection with the Merger, the Merger Agreement and the other Transactions, Stockholder shall be deemed to have given any consents or waivers that are reasonably required for the consummation of the Merger under the terms of any agreement or instrument to which Stockholder is a party or subject or in respect of any rights Stockholder may have in connection with the Merger or the other Transactions (whether such rights exist under any of the Company’s charter documents, or any contract to which the Company is a party or by which it is, or any of its assets are, bound under statutory or common law or otherwise). Without limiting the generality or effect of the foregoing, Stockholder hereby waives any and all rights to contest or object to the execution and delivery of the Merger Agreement, the Company’s board of directors’ actions in approving and recommending the Merger, the Merger Agreement and the Certificate of Merger, or to seek damages or other legal or equitable relief in connection therewith. From and after the Effective Time, Stockholder’s right to receive the consideration set forth in Article II of the Merger Agreement (including but not limited to Stockholder’s rights under the Exchange Agreement) on the terms and subject to the conditions set forth in the Merger Agreement and the Exchange Agreement shall constitute Stockholder’s sole and exclusive right against the Company and/or Parent in respect of Stockholder’s ownership of the Subject Shares and the Subject Options and his status as a stockholder of the Company or any agreement or instrument with the Company pertaining to the Subject Shares and the Subject Options or Stockholder’s status as a stockholder of the Company, in any case other than as set forth in the Merger Agreement or the Exchange Agreement.

(a) Stockholder shall, from time to time, execute and deliver, or cause to be executed and delivered, such additional or further consents, documents and other instruments as Parent may reasonably request, for the purpose of effectively carrying out the transactions contemplated by this Agreement. Without limiting the generality or effect of the foregoing or any other obligation of Stockholder hereunder, Stockholder hereby authorizes Parent to deliver a copy of this Agreement to the Company and hereby agrees that each of the Company and Parent may rely upon such delivery as conclusively evidencing the waivers of Stockholder referred to in Section 5.

(b) No person executing this Agreement who is or becomes during the term hereof a director or officer of the Company makes any agreement or understanding herein in his or her capacity as a director or officer of the Company. Stockholder is entering into this Agreement solely in his, her or its capacity as the record holder and beneficial owner of the Subject Shares and nothing herein shall limit or affect any actions taken by Stockholder in his or her capacity as an officer or director of the Company to the extent specifically permitted by the Merger Agreement.

(c) The Stockholder agrees that this Agreement and the obligations hereunder shall attach to the Subject Shares and shall be binding upon any person or entity to which legal or beneficial ownership of such Subject Shares shall pass, whether by operation of law or otherwise, including the Stockholder’s successors. In the event of any stock split, stock dividend, merger, reorganization, recapitalization or other change in the capital structure of the Company affecting the Common Shares, or the acquisition of additional Common Shares or other voting securities of the Company by the Stockholder (whether by purchase, conversion or otherwise), the number of Subject Shares listed on Schedule A set forth opposite the name of such Stockholder shall be adjusted appropriately and this Agreement and the obligations hereunder shall attach to any additional or decreased Common Shares or other voting securities of the Company issued to or acquired or disposed of by such Stockholder.

(a) Amendments. This Agreement may not be amended except by an instrument in writing signed by each of the parties hereto.

(b) Notice. All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally, mailed by first class mail, return receipt requested, sent by facsimile (with hard copy to follow by regular mail) or sent by overnight courier (providing proof of delivery) to Parent in accordance with Section 9.3 of the Merger Agreement and to the Stockholder at its address set forth on Schedule A hereto (or at such other address for a party as shall be specified by like notice).

(c) Interpretation. When a reference is made in this Agreement to Sections, such reference shall be to a Section to this Agreement unless otherwise indicated. 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. Wherever the words “include”, “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation”.

(d) Severability. If any provision of this Agreement is held to be invalid or unenforceable for any reason, it shall be adjusted rather than voided, if possible, in order to achieve the intent of the parties hereto to the maximum extent possible. In any event, the invalidity or unenforceability of any provision of this Agreement in any jurisdiction shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of this Agreement, including that provision, in any other jurisdiction.

(e) Counterparts. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement. This Agreement shall become effective when signed by both Parent and Stockholder and delivered to each of them. Each party need not sign the same counterpart. Any counterpart may be executed by facsimile signature and such facsimile signature shall be deemed an original.

(f) Entire Agreement; No Third-Party Beneficiaries. This Agreement, the Exchange Agreement and the Merger Agreement constitute the entire agreement and supersede all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof. This Agreement is not intended to confer upon any Person other than the parties hereto any rights or remedies hereunder.

(g) Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware regardless of the laws that might otherwise govern under applicable principles of conflicts of law thereof.

(h) Assignment. Neither this Agreement nor any of the rights, interests or obligations under this Agreement shall be assigned, in whole or in part, by operation of law or otherwise, by Parent without the prior written consent of Stockholder or by Stockholder without the prior written consent of Parent, and any purported assignment without such consent shall be void; provided that notwithstanding the foregoing Parent may assign or transfer its rights, interests and obligations under this Agreement to any Person to which Parent assigns or transfers its rights, interests and obligation under the Merger Agreement in accordance with the Merger Agreement. Subject to the preceding sentences, this Agreement will be binding upon, inure to the benefit of, and be enforceable by, the parties and their respective successors and assigns.

(i) Remedies. No failure or delay by any party in exercising any right, power or privilege under this Agreement shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies provided herein shall be cumulative and not exclusive of any rights or remedies provided by law or in equity. Parent shall be entitled to recover its reasonable attorney’s fees and expenses in enforcing its rights under this Agreement.

(j) Waiver of Jury Trial. EACH OF THE PARTIES AGREES AND ACKNOWLEDGES THAT ANY CONTROVERSY THAT MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELOCATING TO THIS AGREEMENT, OR THE BREACH, TERMINATION OR VALIDITY OF THIS AGREEMENT.

(k) Specific Performance. Stockholder acknowledges and agrees that (a) the covenants, obligations and agreements of Stockholder contained in this Agreement relate to special, unique and extraordinary matters, (b) Parent is and will be relying on such covenants in connection with entering into the Merger Agreement and the performance of its obligations under the Merger Agreement and (c) a violation of any of the terms of such covenants, obligations or agreements will cause Parent irreparable injury for which adequate remedies are not available at law. Therefore, Stockholder agrees that Parent shall be entitled to an injunction, restraining order or such other equitable relief (without the requirement to post bond) as a court of competent jurisdiction may deem necessary or appropriate to restrain Stockholder from committing any violation of such covenants, obligations or agreements. These injunctive remedies are cumulative and in addition to any other rights and remedies Parent may have.

IN WITNESS WHEREOF, each party has duly executed this Agreement, all as of the date first written above.

This STOCKHOLDER VOTING AGREEMENT (this “Agreement”) dated as of December 20, 2010 between AH Holdings, Inc. (“Parent”), a Delaware corporation, and Jaime A. Olmo-Rivas (the “Stockholder”).

WHEREAS, Stockholder owns the number of Options to acquire Common Shares set forth opposite his, her or its name on Schedule A hereto (the “ Subject Options”)

WHEREAS, Stockholder and Parent are parties to that certain Exchange Agreement dated as of the date hereof (the “Exchange Agreement”); and

SECTION 1. Representations and Warranties of Stockholder. Stockholder hereby represents and warrants to Parent as of the date hereof as follows:

community property this Agreement constitutes a valid and binding agreement of the Stockholder’s spouse, enforceable against such spouse in accordance with its terms. No trust of which the Stockholder is a trustee requires the consent of any beneficiary to the execution and delivery of this Agreement or to the consummation of the transactions contemplated hereby. The Stockholder hereby acknowledges that it has received and reviewed a copy of the Merger Agreement.

(c) Reliance. The Stockholder understands and acknowledges that the Parent and Sub are entering into the Merger Agreement in reliance upon Stockholder’s execution and delivery of this Agreement.

SECTION 3. Covenants of Stockholder. Stockholder covenants and agrees as follows:

(g) The Stockholder agrees to promptly notify Parent of the number of any Subject Shares acquired by the Stockholder after the date hereof.

No party hereto shall be relieved from any liability for breach of this Agreement by reason of any such termination.

(a) Amendments. This Agreement may not be amended except by an instrument in writing signed by each of the parties hereto.

IN WITNESS WHEREOF, each party has duly executed this Agreement, all as of the date first written above.

This STOCKHOLDER VOTING AGREEMENT (this “Agreement”) dated as of December 20, 2010 between AH Holdings, Inc. (“Parent”), a Delaware corporation, and Jose Chapa Jr. (the “Stockholder”).

WHEREAS, Stockholder owns the number of Options to acquire Common Shares set forth opposite his, her or its name on Schedule A hereto (the “Subject Options”)