Exhibit
    10.32  EXECUTION
    COPY  PURCHASE
    AND MERGER AGREEMENT  By
    and Among  ARNOLD
    HOLDINGS, LLC ARNOLD
    TRANSPORTATION HOLDINGS, INC. ARNOLD
    TRANSPORTATION SERVICES, INC. ATS
    ACQUISITION HOLDING CO. ATS
    MERGER CO. AND THE
    MEMBERS IDENTIFIED HEREIN  Dated
    as of October 21, 2004     TABLE
    OF CONTENTS
  ARTICLE
          I: DEFINITIONS
      1Section
          1.1: Definitions
      1ARTICLE
          II: PURCHASE AND SALE OF THE MEMBERSHIP UNITS; MERGER; CLOSING
      1Section
          2.1: Purchase and Sale of the Membership Units
      1Section
          2.2: Merger of the Holding Company and Merger Sub
      1Section
          2.3: Closing
      3ARTICLE
          III: CONDITIONS TO CLOSING
      3Section
        3.1: Conditions to the Obligations of Buyer, Merger Sub, the Holding Company,
        and the Members
      3Section
          3.2: Conditions to the Obligations of Buyer and Merger Sub
      4Section
          3.3: Conditions to the Obligations of the Holding Company and the Members
      5ARTICLE
          IV: REPRESENTATIONS AND WARRANTIES
      6Section
          4.1: Representations and Warranties Regarding the Acquired Companies
      6Section
          4.2: Representations and Warranties of the Members.
      18Section
          4.3: Representations and Warranties of Buyer and Merger Sub
      19ARTICLE
          V: CONTRACTS
      20Section
          5.1: Covenants of the Members and the Acquired Companies
      20Section
          5.2: Covenants of Buyer
      23Section
          5.3: Mutual Covenants
      24ARTICLE
          VI: OTHER AGREEMENTS
      25Section
          6.1: Certain Understanding
      25Section
          6.2: Post-Closing Merger.
      26ARTICLE
          VII: MISCELLANEOUS
      27Section
          7.1: Assignment
      27Section
          7.2: No Third-Party Beneficiaries
      27Section
          7.3: Termination
      27Section
          7.4: Survival of Representations, Warranties and Covenants
      28Section
          7.5: Expenses
      32Section
          7.6: Amendments
      33Section
          7.7: Intentionally Omitted
      33Section
          7.8: Notices
      33Section
          7.9: Consent to Jurisdiction
      35Section
          7.10: Severability
      35Section
          7.11: Interpretation
      35Section
          7.12: Waiver
      35Section
          7.13: Counterparts
      35Section
          7.14: Entire Agreement
      36Section
          7.15: Governing Law
      36EXHIBIT
          A:      PROMISSORY
          NOTEEXHIBIT
          B:      OPTION EXERCISE
          AGREEMENTEXHIBIT
          C:      RELEASEEXHIBIT D:    
        PLAN OF MERGER (DELAWARE POST-CLOSING MERGER)
  
  
  PURCHASE
    AND MERGER AGREEMENT
  
  This
    PURCHASE AND MERGER AGREEMENT (the Agreement) is made as of October
    21, 2004, among ARNOLD HOLDINGS, LLC, a Delaware limited liability company
    (the Holding Company), ARNOLD TRANSPORTATION HOLDINGS, INC., a
    Delaware corporation, a wholly-owned subsidiary of the Holding Company (Arnold
    Holdings), ARNOLD TRANSPORTATION SERVICES, INC., a Pennsylvania corporation,
    a wholly-owned subsidiary of Arnold Holdings (the Company, and
    together with Arnold Holdings and the Holding Company, the Acquired Companies),
    all members of the Holding Company as identified on the signature page hereto
    (the Members), ATS ACQUISITION HOLDING CO., a Delaware corporation
    (Buyer), and ATS MERGER CO., a Delaware company and wholly-owned
    subsidiary of Buyer (Merger Sub).
  BACKGROUND
  A.Buyer
    desires to purchase from certain of the Members certain membership interests
    of the Holding Company and subsequently to cause Merger Sub to merge with
    and into the Holding Company, upon the terms and subject to the conditions
    set forth herein.
  B.The
    Members and the Holding Company desire to effect the Contemplated Transactions
    (as defined below).
  C.The
    Buyer, Merger Sub, the Members and the Holding Company have duly adopted,
    approved and declared advisable this Agreement.
  TERMS
  In
    consideration of the foregoing and the mutual covenants and agreements herein
    contained and for other good and valuable consideration, the receipt and sufficiency
    of which hereby are acknowledged, and intending to be legally bound hereby,
    the parties hereto hereby agree as follows:
  ARTICLE
    I
  DEFINITIONS
  1.1.
      Definitions.(a)Certain
    Definitions. As used in this Agreement, the following
    terms shall have the following meanings:
  Affiliate
    shall have the meaning given to such term in Rule 12b-2 under the Securities
    Exchange Act of 1934, as amended and as in effect as of the date of this Agreement.
    In connection with the Company, the Holding Company, and Arnold Holdings,
    Affiliate shall specifically include, without limitation, Robert Knappe, Erik
    Samartino, Michael S. Walters, and the Private Equity Members.
  
  1
  
  
  Buyers
    Knowledge means Ray Harlin, Ryan Rogers, Billy
    Stewart, Lisa Pate, or Dennis Farnsworth is actually aware of such fact or
    matter.
  
  Buyer
    Materially Adverse Effect means any change,
    circumstance or effect that does have, or would reasonably be expected to
    have, a materially adverse effect on the business, financial condition or
    results of operations of Buyer or Merger Sub, or the ability of either to
    consummate the Contemplated Transactions, individually or together.
  Common
    Membership Units has the meaning set forth in
    the Operating Agreement.
  Contemplated
    Transactions means all of the transactions contemplated
    by this Agreement, including without limitation: (i) the Merger, (ii) the
    sale of the Purchased Interests, and (iii) the performance by the parties
    of their respective covenants and obligations under this Agreement.
  Contracts
    means all agreements, contracts, subcontracts, leases, promissory notes, bonds,
    mortgages, indentures, option agreements, warranties, purchase orders, licenses
    or sublicenses and similar arrangements or agreements (including all amendments
    thereto.)
  DGCL
    means the General Corporation Law of the State of Delaware, as amended from
    time to time.
  DLLCA
    means the Delaware Limited Liability Company Act, as amended from time to
    time.
  Encumbranceshall mean any charge, claim, community property interest,
    condition, equitable interest, lien, option, pledge, security interest, right
    of first refusal, or restriction of any kind, including any restriction on
    use, voting, transfer, receipt of income, or exercise of any other attribute
    of ownership.
  Environmental
    Claim means any demand, lawsuit, action, proceeding,
    arbitration, hearing, investigation, charge, complaint, claim, decree or order
    or notice filed or commenced against or threatened in writing against, with
    or to the Company by any Person alleging any potential liability (including,
    without limitation, potential liability for investigatory costs, cleanup costs,
    governmental response costs, natural resource damages, or penalties) arising
    out of or relating to (1) any Environmental Laws, or (2) the use,
    possession, generation, treatment, storage, recycling, transportation or disposal
    or arrangement for disposal or the Release of Hazardous Substances.
  Environmental
    Laws means Laws relating to the pollution or
    protection of the environment and all laws concerning employee health and
    safety, including Laws relating to emissions, discharges, releases, or threatened
    release of pollutants, contaminants, or chemical, industrial, hazardous, or
    toxic materials or wastes (including petroleum and any fraction or derivative
    thereof) into ambient air, surface water, ground water, or lands, or otherwise
    relating to the manufacture, processing, distribution, use, treatment, storage,
    disposal, transport, or hauling of such substances including, without limitation,
    the Comprehensive Environmental Response, Compensation and Liability Act of
    1980, as amended by the Superfund Amendments
  
  
  2
  
  and Reauthorization Act (CERCLA); the Resource Conservation and
    Recovery Act of 1976, as amended (RCRA); the Federal Water Pollution
    Control Act, as amended; the Federal Clean Air Act, as amended; the Toxic
    Substances Control Act, as amended; the Safe Drinking Water Act, as amended;
    the Pollution Control Act of 1990, as amended; and comparable state and local
    laws, all as in effect on the date hereof.
  Existing
    Debt means all debt identified on Schedule 1.1
    hereto, in the amounts specified in payoff letters delivered by the Acquired
    Companies to Buyer and stating the amount required to pay the debt in full
    at Closing; provided, however, that, as to that certain Subordinated Promissory
    Note dated January 23, 2003, executed by the Company and Arnold Holdings in
    favor of Roadway Corporation, no payoff letter will be delivered and the amount
    to be repaid by Buyer shall be as set forth on Schedule 1.1.
  Governmental
    Entity means any domestic, foreign or other
    court, government, administrative, regulatory, political, or other governmental
    agency, commission, authority, entity or instrumentality.
  Hazardous
    Substances means hazardous substances
    pursuant to CERCLA, hazardous waste pursuant to RCRA, toxic
    pollutants pursuant to the Federal Water Pollution Control Act, and
    friable asbestos, polychlorinated byphenyls and petroleum products.
  Law
    means any constitution, statute, judgment, law, ordinance, rule, or regulation
    promulgated by any Governmental Entity (including, without limitation, the
    following types: environmental, energy, safety, health, zoning, antidiscrimination,
    antitrust, employment, transportation, Tax, and employee benefit (including
    ERISA)).
  Legal
    Requirement means any federal, state, local,
    municipal, foreign, international, multinational, or other administrative
    order, constitution, law, ordinance, principle of common law, regulation,
    statute, or treaty.
  Liability
    means any and all debts, liabilities, obligations, and commitments, whether
    known or unknown, asserted or unasserted, fixed, absolute, or contingent,
    matured or unmatured, accrued or unaccrued, liquidated or unliquidated, due
    or to become due, whenever or however arising (including, without limitation,
    whether arising out of any contract or tort based on negligence, strict liability,
    or otherwise) and whether or not the same would be required by GAAP to be
    reflected as a liability in financial statements or disclosed in the notes
    thereto.
  Materially
    Adverse Effect means any change, circumstance
    or effect that does have, or would reasonably be expected to have, a materially
    adverse effect on the business, operations, condition (financial or otherwise),
    or results of operations of the Acquired Companies taken as a whole, or the
    ability of the Holding Company or the Members to consummate the Contemplated
    Transactions; provided, however, that Materially Adverse Effect shall exclude
    any adverse changes or conditions as and to the extent such changes or conditions
    relate to or result from general economic conditions or other conditions generally
    affecting the industry in which the Company competes. The Acquired Companies
    may, however, at their option, include in the Schedules of this Agreement
    items which would not have a Materially Adverse Effect within the meaning
    of the previous sentence in order to avoid any
  
  
  3
  
  misunderstanding, and such inclusion shall not be deemed to be an acknowledgement
    by the Company that such items would have a Materially Adverse Effect or further
    define the meaning of such term for the purpose of this Agreement.
  
  Membership
    Units means both Common Membership Units and
    Preferred Membership Units, without distinction as to class.
  Operating
    Agreement means the Second Amended and Restated
    Limited Liability Company Agreement of Arnold Holdings, LLC, dated as of January
    23, 2003
  Ordinary
    Course of Business means an action taken by
    a Person only if such action is consistent with the past practices (in both
    nature and magnitude) of such Person and is taken in the ordinary course of
    the normal day-to-day operations of such Person.
  Organizational
    Documents means (i) the articles or certificates
    of incorporation and the bylaws of a corporation; (ii) the partnership
    agreement and any statement of partnership of a general partnership; (iii) the
    limited partnership agreement and the certificate of limited partnership of
    a limited partnership; (iv) the certificate of formation and limited
    liability company agreement or similar document of a limited liability company;
    (v) any charter or similar document adopted or filed in connection with
    the creation, formation, or organization of a Person, and (vi) any amendment
    to any of the forgoing.
  Permits
    means all permits, licenses, franchises, and other approvals of Governmental
    Authorities including common and contract carrier and brokerage authority
    required to operate the Companys business.
  Person
    means a natural person, trust, company, firm, association, limited liability
    company, corporation or other business organization or Governmental Entity.
  Preferred
    Membership Units has the meaning set forth in
    the Operating Agreement.
  Private
    Equity Members means ING Furman Selz Investors
    III, L.P., ING Barings U.S. Leveraged Equity Plan LLC, ING Barings Global
    Leveraged Equity Plan Ltd., and James Dowling.
  Proceeding
    means any action, suit, litigation, investigation, hearing, notice of violation,
    order, claim, citation, charge, demand, complaint, review, or penalty assessment,
    in each case whether formal or informal, administrative, civil or criminal,
    at law or in equity, in each case in front of any Governmental Entity, as
    well as any arbitration, mediation, or other form of alternative dispute resolution.
  Release
    has the meaning set forth in CERCLA.
  Sellers
    Knowledge means Mike Walters, Mike Gregerson,
    Eric Samartino, Bob Knappe, Kurt Ankiewicz, Seth Wilson, Brian Friedman, or
    James Dowling is actually aware of such fact or matter.
  
  4
  
  Stock
    Purchase, Contribution, and Exchange Agreement
    shall mean that certain Stock Purchase, Contribution, and Exchange Agreement
    of even date herewith, by and among Buyer, Xpress Holdings, Inc., a Nevada
    corporation, and the individuals named therein as the Management Stockholders,
    as such agreement may be amended from time to time.
  
  Stockholders
    Agreement shall mean that certain Stockholders
    Agreement of even date herewith, by and among Buyer, Xpress Holdings, Inc.,
    a Nevada corporation, and the individuals named therein as the Management
    Stockholders, as such agreement may be amended from time to time.
  (b)Other
    Definitions. The following defined terms shall have
    the meaning set forth in the referenced Section:
  
  Term
      As
          Defined on PageAcquired
          Companies
      1Affiliate
      1Agreement
      1Arnold
          Holdings
      1Audited
          Financial Statements
      15Balance
          Sheet
      15Balance
          Sheet Date
      15Basic
          Representation Survival Period
      34Benefit
          Plans
      22Buyer
      1Buyer
          Indemnified Parties
      35Buyer
          Materially Adverse Effect
      2Buyers
          Knowledge
      2Cap
      37CERCLA
      3Closing
      10Closing
          Date
      10Code
      18Common
          Membership Units
      2Company
      1Confidentiality
          Agreement
      29Contemplated
          Transactions
      2Contracts
      2Cost
          Calculation
      9Covenant
          Survival Period
      34Damage
          Threshold
      37Damages
      35Debt
          Financing Commitments
      26Delaware
          Post-Closing Merger
      33DGCL
      2DLLCA
      2
  5
  
  
  Effective
          Time
      8Encumbrance
      2Environmental
          Claim
      2Environmental
          Laws
      2Equity
          Financing Commitment
      26ERISA
      22Excess
          Amount
      9Existing
          Debt
      3Extended
          Representation Survival Period
      34Financial
          Statements
      15GAAP
      16General
          Survival Period
      34Governmental
          Entity
      3Group
      22Hazardous
          Substances
      3Holding
          Company
      1HSR
          Act
      10Indemnified
          Parties
      36Indemnifying
          Party
      36Knowledge
      4Law
      3Leased
          Real Property
      19Legal
          Requirement
      3Liability
      3Material
          Contract
      20Materially
          Adverse Effect
      3Members
      1Membership
          Units
      4Merger
      7Merger
          Consideration
      8Merger
          Sub
      1Operating
          Agreement
      4Option
          Exercise Agreements
      11Ordinary
          Course of Business
      4Organizational
          Documents
      4Owned
          Real Property
      19Permits
      4Permitted
          Encumbrances
      18Person
      4Preferred
          Membership Units
      4Private
          Equity Members
      4Proceeding
      4Promissory
          Notes
      7Purchased
          Units
      7RCRA
      3Real
          Property
      19
  6
  
  
  Real
          Property Documents
      19Real
          Property Leases
      19Release
      4Seller
          Indemnified Parties
      35Stock
          Purchase, Contribution, and Exchange Agreement
      5Stockholders
          Agreement
      5Survival
          Periods
      34Surviving
          Company
      7Tax
      18Tax
          Return
      18Third
          Party Claim
      36Transaction
          Costs
      9Unaudited
          Financial Statements
      15USX
      26Walk-Away
          Breach
      32WARN
          Act
      30
  7
  
  
  ARTICLE
    II
  PURCHASE
    AND SALE OF THE MEMBERSHIP UNITS; MERGER; CLOSING
  
  2.1.
      Purchase
          and Sale of the Membership Units.(a)Purchase
    and Sale. Immediately prior to the Merger (as defined
    in Section 2.2) and pursuant to the terms and subject to the conditions of
    this Agreement, at the Closing referred to below, the Private Equity Members
    shall sell, transfer and deliver to Merger Sub, and Merger Sub shall purchase
    from the Private Equity Members an aggregate 101,858 Preferred Membership
    Units (the Purchased Units), such Preferred Membership Units to
    be sold by the Private Equity Members in the amounts set forth opposite their
    respective names onSchedule 2.1(b)hereto.
  (b)Promissory
    Note. In exchange for the Purchased Interests, Merger
    Sub shall deliver to each Private Equity Member a promissory note (the Promissory
    Notes) in the principal amount set forth opposite the name of such Private
    Equity Member onSchedule 2.1(b)hereto, with such note to be substantially in the form set forth on Exhibit
    A hereto.
  2.2.
      Merger
          of the Holding Company and Merger Sub.(a)The
    Merger. On and subject to the terms and conditions
    of this Agreement and in accordance with the DGCL, Merger Sub will merge with
    and into the Holding Company at the Effective Time (the Merger).
    Following the Merger, the separate existence of Merger Sub shall cease, and
    the Holding Company shall be the company surviving the Merger (the Surviving
    Company) and shall be a subsidiary of Buyer.
  (b)
      Effect
          of Merger.(i)General.On the Closing Date, the parties shall cause the Merger
    to be consummated by filing a certificate of merger with the Secretary of
    State of the State of Delaware. The Merger shall become effective at the time
    (the Effective Time) the certificate of merger is duly filed with
    the Secretary of State of the State of Delaware by the Holding Company
    and Merger Sub or at such later date and time as may be specified in
    the certificate of merger by mutual agreement of the Holding Company,
    Buyer, and Merger Sub. The Merger shall have the effect set forth in
    the DGCL. Without limiting the generality of the foregoing, and subject thereto,
    at the Effective Time, all of the assets, properties, rights, privileges,
    immunities, powers, and franchises of the Holding Company and Merger Sub
    shall vest in the Surviving Company, and all debts, liabilities, duties, and
    obligations of the Holding Company and Merger Sub shall become the
    debts, liabilities, duties and obligations of the Surviving Company. The Surviving
    Company may, at any time after the Effective Time, take any action (including
    executing and delivering any document) in the name and on behalf of either
    the Holding Company or Merger Sub in order to carry out and effectuate
    the Merger contemplated by this Agreement.
  (ii)Certificate
    of Formation.The certificate of formation of the
    Surviving Company shall be the certificate of formation of the Holding Company
    in effect as of
  
  
  
  the
    Effective Time until otherwise amended in accordance with the DLLCA or the
    Surviving Companys Organizational Documents.
  (iii)Limited
    Liability Company Agreement.The limited liability
    company agreement of the Surviving Company shall be the limited liability
    company agreement of the Holding Company in effect as of the Effective Time
    until otherwise amended in accordance with the DLLCA and the Surviving Companys
    Organizational Documents.
  (iv)Officers.Until their successors are duly elected or appointed
    and qualified in accordance with the DLLCA, the officers of the Surviving
    Company from and after the Effective Time shall be the officers of the Holding
    Company as of the Effective Time.
  (v)
      Conversion
          of the Holding Company Membership Units.(A)By
    virtue of the Merger, each of the Holding Company Membership Units owned
    by the Members (excluding any interest owned by Buyer or Merger Sub at
    the Effective Time) outstanding immediately prior to the Effective Time shall
    automatically be redeemed and canceled and shall cease to exist, and each
    holder of a certificate representing any such Holding Company Membership Units
    shall cease to have any rights with respect thereto, except the right to receive
    an amount equal to Forty-Nine and 09/100 Dollars ($49.09) (the Merger
    Consideration), less any adjustment under Section 2.2(b)(vi) for each
    issued and outstanding Membership Unit of the Holding Company upon surrender
    of such certificate, duly endorsed or accompanied by instruments of transfer
    satisfactory to Buyer. The Merger Consideration shall be paid in cash by cashiers
    check or by wire transfer of immediately available funds to accounts designated
    by the Members in writing at least two (2) business days prior to Closing.
  (B)Each
    of the Holding Company Membership Units owned by Buyer or Merger Sub,
    in each case immediately prior to the Effective Time, shall be canceled and
    extinguished without any conversion thereof and no payment or distribution
    shall be made with respect thereto.
  (vi)Adjustments
    to Merger Consideration.All legal, investment banking,
    and other professional, advisory, and other transaction-related expenses of
    the Acquired Companies and the Members incurred during the six-month period
    prior to Closing in connection with all efforts to prepare the Acquired Companies
    for possible sale and engage in the sale process, including but not limited
    to the expenses incurred in connection with or resulting from the Closing
    of the Contemplated Transactions, and which are paid by the Acquired Companies
    at or prior to Closing (the Transaction Costs) shall be the liability
    and obligation of the Company (and not the Members); provided that to the
    extent that any such Transaction Costs exceed the lesser of (i) five
    hundred thousand dollars ($500,000) or (ii) fifty percent (50%)
    of the Transaction Costs, then such excess (the Excess Amount)
    shall reduce the Merger Consideration in the manner described below in this
    subsection (vi). At least two (2) business days prior to Closing, the Company
    will deliver to the Buyer the total amount of Transaction Costs that will
    be paid by the Company at or prior to the Closing and a calculation of the
    Excess Amount (the Cost Calculation). The Merger Consideration
    will be adjusted downward to the extent that the Excess Amount is a positive
    number as described in the next sentence.
  
  
  C-2
  
  aggregate amount of Merger Consideration that is payable to each Member pursuant
    to Section 2.2(b)(v) hereof shall be reduced by an amount equal to the Excess
    Amount multiplied by the percentage set forth opposite such Members
    name onSchedule 7.4hereto.
    Any legal, investment banking, and other professional, advisory, and other
    transaction-related expenses of the Acquired Companies and the Members incurred
    by the Company after the Closing or any Transaction Costs which are not reflected
    in the Cost Calculation shall be the responsibility and obligation of the
    Members and not the Acquired Companies. The Members agree that any liabilities
    and obligations that result from the application of the previous sentence
    will be paid by each Member on a pro rata basis in accordance with the percentages
    set forth onSchedule 7.4hereto.
  (vii)Conversion
    of Stock of Merger Sub.By virtue of the Merger, at
    and as of the Effective Time, each of Merger Subs shares of common stock
    issued and outstanding immediately prior to the Effective Time shall be converted
    automatically into and become one validly issued, fully paid and non-assessable
    Membership Unit of the Surviving Company and shall thereafter constitute all
    of the issued and outstanding Membership Units of the Surviving Company. Each
    common stock certificate of Merger Sub evidencing ownership of any interest
    of Merger Sub shall, after the Effective Time, evidence ownership of such
    Membership Units of the Surviving Company.
  (viii)Closing
    of Transfer Books. At the Effective Time, the Membership
    Unit transfer books of the Holding Company shall be closed with respect to
    Membership Units of the Holding Company issued and outstanding immediately
    prior to the Effective Time, and no further transfer of such interest shall
    thereafter be made on such transfer books; provided, that for all purposes
    of this Agreement, the transfer set forth in Section 2.1 herein shall occur
    immediately prior to the Effective Time.
  
  2.3.Closing.
    Unless this Agreement shall have been terminated and the Contemplated Transactions
    abandoned pursuant to Section 7.3, the closing of the purchase and sale
    of the Purchased Interests and of the Merger (the Closing) will
    take place on the date two business days after the satisfaction of the conditions
    set forth in Article III (other than those conditions that are to be
    satisfied at Closing), at the offices of Dechert LLP, 4000 Bell
    Atlantic Tower, 1717 Arch Street, Philadelphia, Pennsylvania, unless
    another date, time or place is agreed to in writing by the parties hereto
    (the Closing Date).
  ARTICLE
    III
  CONDITIONS
    TO CLOSING
  3.1.Conditions
    to the Obligations of Buyer, Merger Sub, the Holding Company, and the Members.
    The respective obligations of Buyer, Merger Sub, the Holding Company, and
    the Members to effect the purchase and sale of the Purchased Interests of
    the Holding Company and the Merger shall be subject to the satisfaction or
    waiver by Buyer, Merger Sub, the Holding Company, and the Members (where permissible)
    at or prior to the Closing Date of the following conditions:
  (a)No
    Order; Legality. No injunction, order or decree of
    any court or administrative agency of competent jurisdiction shall be in effect
    as of the Closing Date which restrains or prohibits the Contemplated Transactions
    herein, and no Law shall be in effect that makes the Contemplated Transactions
    hereby illegal.
  
  
  C-3
  
  (b)Antitrust
    Waiting Periods. Any applicable waiting period under
    the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and
    the regulations promulgated thereunder (the HSR Act) shall have
    expired or terminated.
  (c)Other
    Agreements. Each of the Members who is named as a
    Management Stockholder in the Stock Purchase, Contribution, and Exchange Agreement
    shall have performed all of his, her, or its covenants and obligations thereunder
    (other than those covenants and obligations that are waived by Buyer and Xpress
    Holdings, Inc.), subject only to the condition subsequent that the Merger
    under this Agreement shall occur.
  3.2.Conditions
    to the Obligations of Buyer and Merger Sub. The obligation
    of Buyer and Merger Sub (where applicable) to purchase and pay for the Purchased
    Interests and effectuate the Merger shall be subject to the satisfaction or
    waiver by Buyer (where permissible) at or prior to the Closing Date of the
    following additional conditions:
  (a)Representations
    and Warranties. All of the representations and warranties
    of the Acquired Companies and the Members made in this Agreement must be true
    and correct as of the Closing Date, as though made on and as of the Closing
    Date (except those representations and warranties that address matters only
    as of a particular date which shall be true and correct as of that date) except
    for (A) changes provided for in this Agreement and (B) breaches
    or inaccuracies of representations or warranties (other than representations
    and warranties in Sections 4.1(d) and 4.1(g)) that do not, individually or
    in the aggregate, have a Materially Adverse Effect.
  (b)Certificates.
    Each of the Acquired Companies and the Members shall have delivered to Buyer
    a certificate signed by a duly authorized representative (or in the case of
    individual Members, by such Member) affirming that its representations and
    warranties made in this Agreement are true and correct as of the Closing Date,
    as though made on and as of the Closing Date (except those representations
    and warranties that address matters only as of a particular date which shall
    be true and correct as of that date) except for (A) changes provided
    for in this Agreement and (B) breaches or inaccuracies of representations
    or warranties (other than representations and warranties in Sections 4.1(d)
    and 4.1(g)) that do not, individually or in the aggregate, have a Materially
    Adverse Effect.
  (c)Agreements
    and Covenants. Each of the Acquired Companies and
    the Members shall have performed or complied in all material respects with
    their respective agreements and covenants contained in this Agreement required
    to be performed or complied with by them on or prior to the Closing Date and
    shall have delivered to Buyer a certificate duly executed by each to that
    effect. The Holding Company and the Members and the Company shall have executed
    and delivered each document reasonably requested by Buyer pursuant to this
    Agreement.
  
  
  C-4
  
  (d)Qualifications.
    All authorizations, approvals, consents, and permits, from the Governmental
    Entities and other third parties set forth onSchedule 3.2(c)shall be duly obtained and effective as of the Closing.
  (e)No
    Proceedings. Since the date of this Agreement, there
    must not have been commenced or threatened against Buyer, or against any Person
    affiliated with Buyer, any Proceeding (a) involving any challenge to,
    or seeking damages or other relief in connection with, any of the Contemplated
    Transactions, or (b) that may have the effect of preventing, delaying,
    making illegal, or otherwise interfering with any of the Contemplated Transactions.
  (f)Closing
    of Financing Commitments. Buyer and Merger Sub shall
    have obtained all of the financing specified in the Debt Financing Commitments
    in order to consummate the Merger, to pay the Existing Debt, and to fund the
    working capital needs of the Surviving Company and its Subsidiaries after
    the Closing on terms and conditions substantially in accordance with the Debt
    Financing Commitments or from alternative sources on terms and conditions
    substantially equivalent to the terms and conditions in the Debt Financing
    Commitments.
  (g)No
    Materially Adverse Effect. From the date hereof, no
    Materially Adverse Effect shall have occurred, and no event shall have occurred
    or circumstance come into existence that reasonably would be expected to result
    in such a Materially Adverse Effect.
  (h)Options.
    Each holder of an option to acquire Membership Units in Holding Company shall
    have executed an Option Exercise Agreement substantially in the form of Exhibit
    B hereto (the Option Exercise Agreements).
  
  3.3.Conditions
    to the Obligations of the Holding Company and the Members.
    The obligation of the Private Equity Members to sell and deliver the Purchased
    Interests and of the Holding Company and the Members to effectuate the Merger
    shall be subject to the satisfaction or waiver by the Holding Company and
    the Members (where permissible) at or prior to the Closing Date of the following
    conditions:
  (a)Representations
    and Warranties. All of the representations and warranties
    of Buyer and Merger Sub made in this Agreement must be true and correct as
    of the Closing Date, as though made on and as of the Closing Date (except
    those representations and warranties that address matters only as of a particular
    date which shall be true and correct as of that date) except for (i) changes
    provided for in this Agreement and (ii) breaches or inaccuracies of representations
    or warranties (other than representations and warranties in Section 4.2(a))
    that do not, individually or in the aggregate, have a Buyer Materially Adverse
    Effect.
  (b)Certificates.
    Buyer shall have delivered to the Holding Company and the Members a certificate
    signed by duly authorized representatives of Buyer and Merger Sub affirming
    that the representations and warranties of Buyer and Merger Sub made in this
    Agreement are true and correct as of the Closing Date, as though made on and
    as of the Closing Date (except those representations and warranties that address
    matters only as of a particular date which shall be true and correct as of
    that date) except for (i) changes provided for in this Agreement and
    (ii) breaches or inaccuracies of representations or warranties (other
    than representations and warranties in Section 4.2(a)) that do not, individually
    or in the aggregate, have a Buyer Materially Adverse Effect.
  
  C-5
  (c)Agreements
    and Covenants. Buyer and Merger Sub shall have performed
    or complied in all material respects with all agreements and covenants contained
    in this Agreement required to be performed or complied with by Buyer and Merger
    Sub on or prior tothe Closing Date, and they shall have
    delivered to the Holding Company and the Members a certificate duly executed
    by each to that effect.
  (d)No
    Proceedings. Since the date of this Agreement, there
    must not have been commenced or threatened against the Holding Company or
    the Members, or against any Person affiliated with the Holding Company or
    the Members, any Proceeding (a) involving any challenge to, or seeking
    damages or other relief in connection with, any of the Contemplated Transactions,
    or (b) that may have the effect of preventing, delaying, making illegal,
    or otherwise interfering with any of the Contemplated Transactions.
  (e)Member
    Certificates. Mike Walters, Mike Gregerson, Eric Samartino,
    Bob Knappe, and Kurt Ankiewicz shall have executed and delivered certificates,
    in form satisfactory to the Private Equity Members, stating that they have
    reviewed the representations and warranties contained in Sections 4.1 and
    4.2 of this Agreement and affirming that those representations and warranties
    are true and correct in all material respects.
  
  (f)Terms
    of Financing Commitments. The agreements relating
    to the financing specified in the Debt Financing Commitments, or the agreements
    relating to the alternative sources of financing obtained on terms and conditions
    substantially equivalent to the terms and conditions in the Debt Financing
    Commitments, shall include provisions allowing for and shall not otherwise
    restrict or prohibit, following the Closing, the incurrence of sufficient
    debt financing (through the facilities described in the Debt Financing Commitments,
    alternative sources of financing, or otherwise) to permit the repayment the
    Promissory Notes in full in accordance with their terms at maturity, and such
    provisions shall be in a form reasonably satisfactory to the Members.
  
  (g)Existing
    Debt. The Existing Debt shall be paid in full by Buyer
    concurrently at Closing.
  
  ARTICLE
    IV
  REPRESENTATIONS
    AND WARRANTIES
  4.1.Representations
    and Warranties Regarding the Acquired Companies. The
    Members hereby represent and warrant to Buyer and Merger Sub as follows:
  (a)
      Organization
          and Standing of the Acquired Companies(i)The
    Company is a corporation duly organized, validly existing, and in good standing
    under the laws of the Commonwealth of Pennsylvania and Arnold Holdings is
    a corporation duly organized, validly existing, and in good standing under
    the laws of the State
  
  C-6
  
  of Delaware. Each of Arnold Holdings and the Company has all corporate power
    and corporate authority to own, lease or otherwise hold its properties and
    assets and to carry on its business as presently conducted, and is qualified
    or registered as and in good standing as a foreign corporation in all jurisdictions
    in which the character of the properties owned, operated or leased by it or
    the nature of its activities is such that qualification or registration by
    it as a foreign corporation is required by applicable law, except where the
    failure to be in good standing would not, individually or in the aggregate,
    have a Materially Adverse Effect. Each of Arnold Holdings and the Company
    has delivered to Buyer true and complete copies of its Organizational Documents.
  (ii)The
    Holding Company is a limited liability company duly organized, validly existing,
    and in good standing under the laws of the State of Delaware. The Holding
    Company has all power and authority to own, lease or otherwise hold its properties
    and assets and to carry on its businesses as presently conducted, and is qualified
    or registered and in good standing as a foreign limited liability company
    in all jurisdictions in which the character of the properties owned, operated
    or leased by the Holding Company or the nature of its activities is such that
    qualification or registration by the Holding Company as a foreign limited
    liability company is required by applicable law, except where the failure
    to be in good standing would not, individually or in the aggregate, have a
    Materially Adverse Effect. The Holding Company has delivered to Buyer true
    and complete copies of its Organizational Documents.
  (b)
      Authority.(i)Each
    of Arnold Holdings and the Company has all requisite corporate power and authority
    to enter into this Agreement and to consummate the Contemplated Transactions.
    All corporate acts and other proceedings required to be taken by each of Arnold
    Holdings and the Company to authorize the execution, delivery and performance
    of this Agreement and the consummation of the Contemplated Transactions have
    been duly and properly taken. This Agreement has been duly executed and delivered
    by the Company and Arnold Holdings, and upon the execution and delivery of
    this Agreement by them and by the other parties hereto, this Agreement will
    constitute the legal, valid and binding obligation of the Company and Arnold
    Holdings, enforceable against such parties in accordance with their respective
    terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization,
    moratorium, and other laws of general application affecting enforcement of
    creditors rights generally, and (ii) as limited by laws relating
    to the availability of specific performance, injunctive relief, or other equitable
    remedies.
  (ii)The
    Holding Company has all requisite power and authority to enter into this Agreement
    and to consummate the Contemplated Transactions. All acts and other proceedings
    required to be taken by the Holding Company to authorize the execution, delivery
    and performance of this Agreement and the consummation of the Contemplated
    Transactions have been duly and properly taken. This Agreement has been duly
    executed and delivered by the Holding Company, and upon execution and delivery
    by the Holding Company and the other parties hereto, this Agreement will constitute
    the legal, valid and binding obligation of the Holding Company enforceable
    against such parties in accordance with their respective terms, except (i) as
    limited by applicable bankruptcy, insolvency, reorganization, moratorium,
    and other laws of general application affecting enforcement of creditors
    rights generally, and (ii) as limited by laws relating to the availability
    of specific performance, injunctive relief, or other equitable remedies.
  
  
  C-7
  
  (c)
      No
          Conflict.(i)The
    execution, delivery and performance by the Acquired Companies of this Agreement
    and the consummation by them of the Contemplated Transactions will not (A) violate
    or conflict with the Organizational Documents of any Acquired Company,
    (B) assuming satisfaction of the requirements set forth
    in Section 4.1(c)(ii) below, violate any Law to which any Acquired Company
    is subject or violate or conflict with any Proceeding applicable to any of
    them, or (C) except as disclosed onSchedule 4.1(c)(i),
    violate, breach or constitute a default under or give rise to a right of termination,
    cancellation or acceleration of any right or obligation of any Acquired Company
    under, or result in the creation of an Encumbrance on any of the properties
    or assets of any Acquired Company pursuant to, any provision of any Contracts
    or other instrument binding upon such Acquired Company or any license, franchise,
    permit or other similar authorization held by such Acquired Company, except
    in the case of the foregoing clause (C) for any such violation, conflict,
    default, right, or Encumbrance which would not individually or in the aggregate
    have a Materially Adverse Effect.
  (ii)The
    execution, delivery and performance by the Acquired Companies of this Agreement
    and the consummation by of the Contemplated Transactions do not require any
    consent from, filing with or consent or approval of any Governmental Entity
    or any third party except for (A) the filing of a report under the HSR
    Act and the expiration of the applicable waiting period to the extent the
    HSR Act is applicable, (B) any consent or filing that Buyer is required
    to obtain or make disclosed onSchedule 4.1(c)(ii),
    and (C) consents and filings which, if not obtained or made, will not individually
    or in the aggregate have a Materially Adverse Effect.
  (d)
      Ownership
          Structure.(i)The
    authorized capital stock of the Company consists of 500 shares of common stock,
    of which 100 shares are validly issued and outstanding, fully paid and
    nonassessable and owned by Arnold Holdings, free and clear of all Encumbrances,
    except as set forth inSchedule 4.1(d)(i).
    There are no outstanding warrants, options, agreements, subscriptions, convertible
    or exchangeable interests or other commitments pursuant to which the Company
    is or may become obligated to issue any capital stock or any other interests
    convertible, exchangeable or exercisable for any such capital stock, and no
    equity interests of the Company are reserved for issuance for any purpose.
  (ii)The
    authorized capital stock of Arnold Holdings consists of 100 shares of Common
    Stock, of which 100 shares are validly issued and outstanding, fully paid
    and nonaccessable, and owned by the Holding Company, free and clear of all
    Encumbrances, except as set forth inSchedule 4.1(d)(ii).
    There are no outstanding warrants, options, agreements, subscriptions, convertible
    or exchangeable interests or other commitments pursuant to which the Arnold
    Holdings is or may become obligated to issue any capital stock or any other
    interests convertible, exchangeable or exercisable for any such capital stock,
    and no equity interests of the Arnold Holdings are reserved for issuance for
    any purpose.
  
  
  C-8
  
  (iii)The
    authorized Membership Units of the Holding Company consist of 5,000,000 Common
    Membership Units and 700,000 Preferred Membership Units, of which 200,000
    Common Membership Units and 700,000 Preferred Membership Units are validly
    issued and outstanding as of the date of this Agreement. Except as disclosed
    onSchedule 4.1(d)(iii),
    there are no outstanding warrants, options, agreements, subscriptions, convertible
    or exchangeable interests or other commitments pursuant to which the Holding
    Company is or may become obligated to issue any Membership Units of the Holding
    Companyor any other interests convertible, exchangeable
    or exercisable for any such Membership Units, and no equity interests of the
    Holding Company are reserved for issuance for any purpose.
  (e)Activities
    of Holding Company and Arnold Holdings. The only asset
    of the Holding Company is 100% of the capital stock of Arnold Holdings and
    the only asset of Arnold Holdings is 100% of the capital stock of the Company.
  (f)Subsidiaries;
    Ownership Interests. The Company does not have any
    subsidiaries and does not, directly or indirectly, beneficially own, or have
    any contract to acquire, any stock of, or any other equity or ownership interest
    in or have any debt investment or similar interest in any other corporation
    or business entity.
  (g)Financial
    Statements.Schedule 4.1(g)sets forth the audited balance sheets of the Company as of December 31,
    2003 (the Balance Sheet and December 31, 2003, being the Balance
    Sheet Date), and the related statements of income, retained earnings
    and cash flows of the Company for the year then ended, together with the notes
    to such financial statements (the Audited Financial Statements).Schedule 4.1(g)also sets
    forth the balance sheet of the Company as of September 11, 2004, and the related
    income statement of the Company for the year-to-date period then ended (the
    Unaudited Financial Statements and, together with the Audited
    Financial Statements, the Financial Statements). The Financial
    Statements have been prepared in accordance with the books and records of
    the Company. The Audited Financial Statements present fairly, in all material
    respects, the financial position of the Company as of December 31, 2003,
    and the results of operations, changes in stockholders equity, and cash
    flows of the Company for the years then ended, in conformity with generally
    accepted accounting principles (GAAP). The Unaudited Financial
    Statements present fairly, in all material respects, the financial position
    of the Company as of September 11, 2004 and the results of its operations
    and cash flows for the year-to-date period then ended, in conformity with
    GAAP except for (i) the absence of footnotes and other disclosures required
    in audited financial statements by GAAP and (ii) normal year end adjustments
    and reclassifications the aggregate effect of which is immaterial. No financial
    statements of any other Person are required by GAAP to be included in the
    financial statements.
  (h)Absence
    of Changes or Events. Except as set forth inSchedule 4.1(h)or any other Schedule to this Agreement, since the Balance Sheet Date the
    business of the Company has been conducted in the Ordinary Course of Business
    and there has not occurred any event or condition which, individually or in
    the aggregate, has had or would have a Materially Adverse Effect. Without
    limiting the generality of the foregoing since the Balance Sheet Date, except
    as set forth inSchedule 4.1(h)or reflected in the Unaudited Financial Statements, the Company has not:
  
  
  C-9
  
  (i)paid
    any dividends or other distributions in respect of any class of its capital
    stock, or made any payment to redeem, purchase or otherwise acquire, or call
    for redemption, any of such stock;
  (ii)merged
    or consolidated with or acquired the business of any other corporation or
    other business organization, or acquired any material property or material
    assets of any other Person;
  (iii)adopted
    or amended (other than to comply with applicable Laws) any Company Benefit
    Plan (as defined in Section 4.1(p)) or increased the compensation of
    any of its salaried employees except in the Ordinary Course of Business;
  (iv)entered
    into any agreement with the Holding Company, Arnold Holdings, and Member,
    or any Affiliate thereof, including, without limitation, any agreement to
    make advances or loans;
  (v)incurred
    any additional indebtedness for borrowed money or issued any debt securities
    or assumed, guaranteed or endorsed the obligations of any Person;
  (vi)sold,
    pledged, leased, licensed or disposed of any of its material assets except
    in the Ordinary Course of Business; or
  (vii)
      made
          any change in the nature of its business or operations.(i)Undisclosed
    Liabilities. As of the date of this Agreement, the
    Company does not (and, as of Closing, the Company will not) have any Liabilities
    except for (i) Liabilities disclosed, reflected or reserved against in
    the Financial Statements, (ii) Liabilities incurred after the date of
    such Financial Statements in the Ordinary Course of Business, (iii) the
    matters disclosed in or arising out of matters disclosed inSchedule 4.1(i)and the other Schedules to this Agreement or which are the subject of other
    representations and warranties set forth herein, (iv) Liabilities incurred
    in connection with this Agreement and the Contemplated Transactions, (v) Liabilities
    under any Contract (excluding liabilities resulting from any breach thereof
    or any breach of warranty, tort, or violation of Law relating thereto) with
    respect to Contracts which are disclosed onSchedule
    4.1(m), or are not required to be disclosed onSchedule
    4.1(m), or have been entered into after the date of
    this Agreement without violation of this Agreement, and (vi) other Liabilities
    which, individually and in the aggregate, do not have a Materially Adverse
    Effect.
  (j)
      Taxes.
          Except as disclosed inSchedule 4.1(j):(i)All
    material Tax Returns required to be filed by the Acquired Companies have been
    timely filed (after giving effect to any valid extensions of time in which
    to make such filings). All such Tax Returns are true, correct, and complete
    in all material respects. All material Taxes of the Acquired Companies required
    to be paid, whether or not shown as due on such Tax Returns, have been timely
    paid.
  
  
  C-10
  
  (ii)No
    Acquired Company has waived any statute of limitations in respect of the assessment
    and collection of Taxes or agreed to any extension of time with respect to
    a Tax assessment or deficiency, and no waiver or extension has been requested.
  (iii)No
    Acquired Company is currently the beneficiary of any extension of time within
    which to file any Tax Return except for extensions that may be incurred without
    penalty.
  (iv)No
    Acquired Company is a party to any Tax allocation or Tax sharing agreement.
  (v)There
    is no Tax deficiency outstanding, assessed or to Sellers Knowledge,
    proposed against any Acquired Company. No audit or other examination of any
    Tax Return of any Acquired Company is currently in progress. No taxing authority
    with respect to which an Acquired Company does not file Tax Returns has claimed
    that such Acquired Company is, or may be, subject to taxation by that jurisdiction.
  (vi)No
    Acquired Company, and no other person on behalf of any Acquired Company, has
    agreed to or is required to make any adjustments pursuant to Section 481(a)
    of the Code (as defined herein) or any similar provision of state, local or
    foreign law by reason of a change in accounting method (and no application
    is pending with any taxing authority with respect to an accounting method
    change).
  (vii)No
    Acquired Company is subject to any private letter ruling of the Internal Revenue
    Service or comparable rulings of any other taxing authority that would have
    continuing effect after the Closing.
  (viii)The
    Company and Arnold Holdings have filed federal income Tax Returns for all
    periods since the acquisition of the Companys common stock by Arnold
    Holdings. Neither the Company (except with respect to the group described
    in the preceding sentence) nor the Holding Company has been a member of an
    affiliated group of corporations (as that term is defined in Section 1504(a)(1)
    of the Code, or any similar provision of state, local, or foreign law), and
    neither the Company nor Arnold Holdings has liability for the Taxes of any
    person under Treasury Regulation § 1.1502-6 (or any similar provision
    of state, local, or foreign law), or as a transferee or successor, by contract,
    or otherwise.
  (ix)No
    Acquired Company has, in the last five years, been the distributing
    corporation or the controlled corporation in a transaction
    intended to be governed by Section 355(a) of the Code.
  (x)The
    Holding Company has been properly treated as a partnership for federal income
    tax purposes for all periods of its existence.
  As
    used herein Taxes
    and Tax means any
    federal, state, local and foreign income, capital gains, payroll, withholding,
    excise, sales, use, personal property, use, occupancy, fuel, business and
    occupation, mercantile, real estate, gross receipts, license, employment,
    severance, stamp, windfall profits, social security (or similar unemployment),
    disability, transfer, registration, value added, alternative, or add-on minimum,
    estimated, capital stock, or franchise
  
  
  C-11
  
  tax, or any other tax, custom, duty, governmental fee or other like assessment
    or charge of any kind whatsoever, together with any interest or penalty or
    additional amount imposed by any Governmental Entity. Tax
    Return means any return, report, schedule, notice,
    form or other document or information required to be filed with respect to
    any Tax (including any attached schedules), including, without limitation,
    any information return, claim for refund, amended return, return filed pursuant
    to an extension or declaration of estimated Tax. Code means the
    Internal Revenue Code of 1986, as amended.
  (k)
      Properties.(i)The
    Company has title to, or a valid and binding leasehold interest in, all of
    its real and personal properties and all of its assets (including the Real
    Property described below and those properties or assets reflected on the Balance
    Sheet or acquired in the Ordinary Course of Business by the Company since
    the Balance Sheet Date, except property sold or otherwise disposed of since
    the Balance Sheet Date), free and clear of all Encumbrances, except (A) those
    disclosed in the Financial Statements orSchedule 4.1(k),
    (B) leasehold interests and licenses granted by the Company to third
    parties as disclosed onSchedule 4.1(k),
    (C) Encumbrances that do not materially detract from the value of the
    real property subject thereto, or materially impair the operation of the Company
    or materially detract from its business, (D) any Encumbrances that are
    shown on any ALTA/ACSM Land Title Survey of the Owned Real Property previously
    delivered by the Holding Company to Buyer that are identified onSchedule 4.1(k)(E) Encumbrances imposed by operation of law (including without limitation
    mechanics, carriers, workmens, repairmens, landlords
    or other similar liens arising from or incurred in the Ordinary Course of
    Business and for which the underlying payments are not yet delinquent), (F)
    Encumbrances for taxes, assessments, or other governmental charges not yet
    delinquent, and (G) non-consensual Encumbrances incurred or deposits made
    in the Ordinary Course of Business in connection with workers compensation,
    unemployment insurance, and other types of social security ((A) through (G)
    being collectively referred to as the Permitted Encumbrances).
  (ii)Set
    forth onSchedule 4.1(k)is a list of each parcel of real property owned by the Company (the Owned
    Real Property).
  (iii)Set
    forth onSchedule 4.1(k)is a list of all leases (the Real Property Leases) for all real
    property leased by the Company as of the date hereof, other than drop lot
    leases for which the Company pays less than $20,000 in rent annually under
    the terms of the lease in effect as of the date hereof (the Leased Real
    Property and together with the Owned Real Property, the Real Property).
    The Company enjoys peaceful and undisturbed possession under such Real Property
    Leases sufficient for current use and operations.
  (iv)
      With
          respect to the Real Property, as applicable:(1)Regarding
    all documents that evidence, secure or otherwise relate to the Owned Real
    Property or, to Sellers Knowledge, the Leased Real Property (collectively,
    the Real Property Documents): (A) there is no material default
    thereunder by any of the parties thereto, nor has any event occurred which,
    with the passage of time or notice, or both, would constitute a material default
    thereunder or a violation of the terms (or permit the
  
  
  C-12
  
  termination)
    thereof; and (B) except as disclosed onSchedule 4.1(k),
    none of the transactions or documents required or contemplated by this Agreement
    will constitute or create a default or event of default thereunder (or permit
    the termination thereof or require third party approval or other action pursuant
    thereto, other than such defaults, events of default, terminations, approvals,
    or actions which, if not obtained or performed, will not individually or in
    the aggregate have a Materially Adverse Effect.);
  
  (2)Except
    as set forth onSchedule 4.1(k),
    the Company has not leased or sublet, as lessor or sublessor, and no third
    party is in possession of, or has the right of use of occupancy of any portion
    of, any of the Real Property, and neither the whole nor any portion of any
    tract of the Real Property has been condemned, requisitioned or otherwise
    taken by any Governmental Entity and, to Sellers
    Knowledge, no such condemnation, requisition or taking is threatened or contemplated;
  (3)No
    written notice of any increase in the assessed valuation of the Real Property,
    and no written notice of any contemplated special assessment, has been received
    by the Company or its Affiliates and, to Sellers Knowledge, there is
    no threatened special assessment pertaining to any of the Real Property; and
  (4)Except
    as set forth onSchedule 4.1(k),
    there are no Contracts to which the Company is a party, or by which any of
    the Real Property is bound, granting to any Person the right of use or occupancy
    of any portion of the Real Property.
  (5)The
    Real Property is not subject to any rights of way, building use restrictions,
    exceptions, variances, reservations, or limitations of any nature except for
    (A) the Permitted Encumbrances, (B) minor imperfections of title,
    if any, none of which materially detracts from the value or materially impairs
    the use of the property subject thereto, or materially impairs the operations
    of the Company, and (C) zoning laws or other land use restrictions that
    do not impair the present use of the property subject thereto.
  (6)All
    buildings, plants, and structures on the Owned Real Property are wholly within
    the boundaries and do not encroach upon the property of, or otherwise conflict
    with the property rights of, any other person.
  (l)Intellectual
    Property.Schedule 4.1(l)sets forth a list of all patents and patent applications, trademark and service
    mark registrations and applications for registration, copyright registrations
    and applications for registration, and domain name registrations of the Company.
    Except as set forth inSchedule 4.1(l),
    the Company has no Knowledge of any claim being asserted by any third party
    that the Company has infringed the intellectual property of such third party.
    Except as set forth inSchedule 4.1(l),
    the Company does not have any pending claim that a third party has infringed
    any intellectual property owned by the Company.
  (m)Contracts.Schedule 4.1(m)contains
    a list of all outstanding Material Contracts. For purposes of this Agreement,
    Material Contract means all Contracts of the following types to
    which any of the Acquired Companies is a party or by which any Acquired Company
    or any of its properties is bound as of the date hereof:
  (i)
      joint
          venture and limited partnership agreements;
  C-13
  
  (ii)mortgages,
    indentures, loan or credit agreements, security agreements and other agreements
    and instruments relating to the borrowing of money or extension of credit;
  (iii)agreements
    for the sale of goods or performance of services by or with any vendor (or
    any group of related vendors) that had aggregate payments exceeding $500,000
    or any of the Acquired Companys top ten (10) customers (or groups of
    related customers) in terms of revenue received by the Acquired Companies,
    in each case during the period year-to-date in 2004;
  (iv)lease
    agreements for machinery and equipment, motor vehicles, or furniture and office
    equipment or other personal property, excluding personal property such as
    photocopiers, fax machines, and other office equipment having lease payments
    of less than $10,000 annually;
  (v)agreements
    restricting in any manner the right of such Acquired Company to compete with
    any other Person, restricting the right of such Acquired Company to sell to
    or purchase from any other Person;
  (vi)agreements
    between such Acquired Company and any of its Affiliates;
  (vii)guaranties,
    performance, bid or completion bonds, surety and appeal bonds, return of money
    bonds, and surety or indemnification agreements;
  (viii)
      custom
          bonds and standby letters of credit;(ix)
      powers
          of attorney;(x)all
    noncompetition and/or nonsolicitation agreements restricting any Persons
    ability to compete with such Acquired Company and/or to solicit such Acquired
    Companys employees, independent contractors, customers, and/or clients;
  (xi)all
    agreements (other than agreements with respect to insurance and employee benefits,
    which are addressed in Sections 4.1(o) and 4.1(p), respectively) where the
    consequences of a breach or default thereunder, or the termination, expiration
    or cancellation thereof, would reasonably be expected to have a Materially
    Adverse Effect; and
  (xii)all
    employment, independent contractor, and consulting agreements.
  Such
    Acquired Company is not (with or without the lapse of time or the giving of
    notice, or both) in breach or default under any Material Contract and to Sellers
    Knowledge, no other party to any of the Material Contracts is (with or without
    the lapse of time or the giving of notice, or both) in breach or default thereunder,
    except for such breaches or defaults which would not, individually or in the
    aggregate, have a Materially Adverse Effect. All of the Contracts are in full
    force and effect, except for failures to be in full force and effect which
    would not, individually or in the aggregate, have a Materially Adverse Effect.
  
  
  C-14
  
  (n)Litigation;
    Decrees.Schedule 4.1(n)sets forth a list as of October 19, 2004, of all Proceedings pending or, to
    Sellers Knowledge, threatened against the Acquired Companies, or any
    of their properties, assets, operations or businesses seeking an injunction
    or any other equitable relief or in which the damages claimed against an Acquired
    Company exceed $100,000 (or, if no damages are specified, in which the damages
    reasonably would be expected to exceed $100,000). Since October 19, 2004,
    no Proceeding has been commenced or, to Sellers Knowledge, threatened
    against the Acquired Companies, or any of their properties, assets, operations
    or businesses other than Proceedings that would not have a Materially Adverse
    Effect. Except as disclosed onSchedule 4.1(n),
    there are no judgments, orders and decrees of any court or
    any Governmental Entity against any Acquired Company or any of its properties,
    assets, operations or businesses that have not been satisfied or resolved.
    The Acquired Companies are not in default under any judgment, order or decree.
  (o)Insurance.
    The Acquired Companies have delivered to Buyer copies of all insurance policies
    and all self insurance programs and arrangements relating to the business,
    assets and operations of the Acquired Companies in effect as of the date hereof,
    as well as any other insurance policy or self insurance program or arrangement
    relating to any policy period since January 23, 2003 under which one or more
    claims remain open. Except as set forth onSchedule 4.1(o),
    all such policies are in full force and effect, (i) all premiums due and payable
    thereon have been paid in full, (ii) the Acquired Companies have not received
    any written notice of cancellation, amendment or dispute as to coverage with
    respect to any such policies, and (iii) the Acquired Companies have given
    notice of all third-party claims to be insured or covered thereunder. Except
    as set forth onSchedule 4.1(o),
    as of the date of this Agreement, the Acquired Companies are not a party to,
    or bound by the terms of, any material surety or other bonds.
  (p)
      Benefit
          Plans.(i)Schedule 4.1(p)sets forth a list of all employee benefit plans (as defined in
    Section 3(3) of the Employee Retirement Income Security Act of 1974,
    as amended (ERISA), pension benefit plans, bonus, deferred compensation,
    stock or stock option plans or arrangements, contracts, or understandings,
    severance, change-in-control, profit-sharing, and other employee fringe benefit
    plans or arrangements, contracts, or understandings (whether qualified or
    unqualified, currently effective or terminated, written or unwritten) under
    which any employee or former employee of any Acquired Company has any present
    or future right to benefits, payments, or other rights or under which any
    Acquired Company has any liability for present or future payment of benefits
    or other amounts (the Benefit Plans).
  (ii)As
    applicable with respect to each Benefit Plan, the Acquired Companies have
    made available to Buyer copies of (A) each current Benefit Plan document,
    including any amendments, (B) any summary plan description provided under
    a Benefit Plan, and (C) the most recent Internal Revenue Service determination
    letter.
  (iii)
      Except
          as disclosed onSchedule 4.1(p):
  
  C-15
  
  (A)Each
    Benefit Plan has been maintained, operated and administered in compliance
    with its terms and any related documents or agreements and the applicable
    provisions of ERISA, the Code and other Legal Requirements.
  (B)With
    respect to any Benefit Plan, no actions, suits or claims (other than routine
    claims for benefits in the ordinary course) or investigations by any Governmental
    Entity are pending or, to Sellers Knowledge, threatened.
  (C)The
    execution, delivery and performance by the Acquired Companies of this Agreement
    and the Contemplated Transactions will not constitute an event under any Benefit
    Plan that will result in any payment (whether as severance pay or otherwise),
    acceleration, vesting or increases in benefits with respect to any employee
    of any Acquired Company. The consummation of the Contemplated Transactions
    will not result in or satisfy a condition to the payment of compensation that
    would, in combination with any other payment, result in an excess parachute
    payment within the meaning of Section 280G(b) of the Code.
  (D)No
    Benefit Plan is a multi-employer or a defined benefit plan, and neither any
    Acquired Company nor any predecessor or ERISA Affiliate thereof has ever been
    a party to or sponsored a multi-employer or defined benefit plan.
  (E)No
    Acquired Company has been a member of a group of businesses under common control
    or business constituting a single employer (a Group), except a
    Group in which no member has been a party to a defined benefit plan, nor does
    any Acquired Company have any current or projected liability with respect
    to post-employment or post-retirement pension benefits for former or retired
    employees of such Acquired Company, ERISA Affiliates, or a member of a Group.
  (q)Compliance
    with Legal Requirements. Except as set forth inSchedule 4.1(q),
    the Acquired Companies and their properties, assets, and operations are in
    compliance with all Legal Requirements, and have been at all times since inception,
    except where noncompliance would not have a Materially Adverse Effect. Except
    as set forth onSchedule 4.1(q),
    since January 23, 2003, the Acquired Companies have not received any written
    communication from any Governmental Entity that alleges that any Acquired
    Company is in violation of any Legal Requirement, the substance of which communication
    has not been resolved. Except as set forth onSchedule 4.1(q),
    prior to January 23, 2003, the Acquired Companies have not received any written
    communication from any Governmental Entity that alleges that any Acquired
    Company is in violation of any Legal Requirement in any material respect,
    the substance of which communication has not been resolved. This Section 4.1(q)
    does not relate to employee benefits, environmental, or tax matters, which
    matters are covered in Sections 4.1(j), 4.1(p), and 4.1(r).
  (r)Environmental
    Matters. Except as disclosed onSchedule
    4.1(r)or as specifically disclosed in the environmental
    reports listed onSchedule 4.1(r):
  (i)Each
    of the Acquired Companies and the Members and, to Sellers Knowledge,
    any predecessors thereof are and have since January 23, 2003 been in compliance
    with all Environmental Laws except where such noncompliance would not individually
    or in the
  
  
  C-16
  
  aggregate
    have a Materially Adverse Effect. No Proceeding has been filed or commenced
    against the Company, any Affiliate, or, to Sellers Knowledge, any predecessor
    alleging any failure to comply with any Environmental Laws. Without limiting
    the generality of the preceding sentence, each of the Acquired Companies and,
    to Sellers Knowledge, any predecessors thereof has obtained and is and
    has since January 23, 2003 been in compliance with all of the terms and conditions
    of all Permits which are required under Environmental Laws, and has complied
    with all other limitations, restrictions, conditions, standards, prohibitions,
    requirements, obligations, schedules, and timetables which are contained in,
    all such Permits, except where the failure to have obtained such Permits or
    the noncompliance therewith would not individually or in the aggregate have
    a Materially Adverse Effect.
  
  (ii)The
    Acquired Companies have no Liability (and neither the Company, Arnold Holdings,
    the Holding Company, the Members nor any predecessor thereof has handled,
    disposed of, arranged for the disposal of, or exposed any employee or other
    individual to any Hazardous Substance in violation of any Environmental
    Law, or owned, operated, or used any property or facility in violation of
    any Environmental Law or in a manner that could reasonably be expected to
    form the basis for any present or future Proceeding against the Acquired Companies
    under Environmental Laws, or giving rise to any Liability under Environmental
    Laws) for damage under Environmental Laws to any site, location, or body of
    water (surface or subsurface), or for any illness of, or personal injury to,
    any employee or other individual, under any Environmental Law, except in each
    case where the same would not have a Materially Adverse Effect.
  (iii)Any
    fuel or other storage tanks located at properties owned or used by any Acquired
    Company in its business, including the Real Property referenced in Section
    4.1(k), comply in all respects with applicable Environmental Laws, do not
    leak, and are registered with the appropriate state agency (and all required
    actions in connection therewith have been taken) in the manner required under
    Environmental Laws, except where such noncompliance, leakage, or failure to
    so register or take required action would not have a Materially Adverse Effect,
    and no such tanks are scheduled for removal in the next five years.
  (iv)The
    Acquired Companies have delivered to Buyer and Merger Sub true and complete
    copies and results of any reports, studies, analyses, tests, or monitoring
    reports prepared by or for the Acquired Companies since January 23, 2003 or
    otherwise in their possession or control concerning the Acquired Companies
    or any property owned or used by the Acquired Companies concerning compliance
    with Environmental Laws.
  (v)This
    Section 4.1(r) contains the exclusive representations and warranties with
    respect to environmental matters, Environmental Laws, and Hazardous Substances
    under this Agreement.
  (s)Labor
    Matters. Except as set forth inSchedule
    4.1(s), the Acquired Companies are not and during
    the past five years have not been, a party to any pending or threatened dispute
    with, nor are they bound by any agreement with, any labor organization, including
    any collective bargaining or similar agreement, nor does any such agreement
    determine the terms and conditions of employment of any employee. There is
    no labor strike, labor unrest, dispute, slowdown, stoppage, or organizing
    activity pending or, to Sellers
  
  C-17
  
  Knowledge,
    threatened against or affecting the Acquired Companies. The Acquired Companies
    have not experienced any work stoppage, strike, slowdown, picketing, leafleting,
    or union organizational efforts since January 23, 2003.
  (t)Brokers.
    Except for Sagent Advisors LLC, neither the Company, Arnold Holdings,
    the Holding Company, nor the Members have retained any broker, finder or investment
    banking firm to act on their behalf in connection with the Contemplated Transactions
    and no other person is entitled to receive any brokerage commission, finders
    fee or other similar compensation in connection with the Contemplated Transactions.
  (u)Permits.
    Except as would not have a Materially Adverse Effect, (i) the Acquired Companies
    possess all Permits required to operate their business, (ii) such Permits
    are in full force and effect, any applications for renewal have been duly
    filed on a timely basis, (iii) no Proceeding is pending or threatened to revoke
    or limit any Permit, and (iv) each Acquired Company is operating in compliance
    with all Permits.
  
  (v)Employees;
    Independent Contractors. There are no agreements,
    plans, or policies which would give rise to any severance, termination, change-in-control,
    or other similar payment to any Acquired Companys employees as a result
    of the consummation of the Contemplated Transactions. Except as set forth
    inSchedule 4.1(v), the Acquired
    Companies have no employment agreements, written or oral, with employees.
    Each Acquired Company maintains files on all employee and independent contractor
    truck drivers. To Sellers Knowledge, each employee and independent contractor
    driver of the Acquired Companies meets all Department of Transportation requirements
    in all material respects, and all driver files contain all required materials
    in all material respects. A copy of the form of contract used for any independent
    contractor operators of rolling stock has been delivered to Buyer. All such
    contracts are terminable by the Acquired Companies upon not more than 30 days
    written notice. Since January 23, 2003, the Acquired Companies have taken
    no action in respect of their employees that would require notice or create
    Liability under the Worker Adjustment and Retraining Notification Act or similar
    state laws, and the Acquired Companies have no present plans to take such
    action.
  4.2.Representations
    and Warranties of the Members. Each Member hereby,
    severally and not jointly, represents and warrants to Buyer as follows:
  (a)Authority.
    Subject to the Operating Agreement, such Member has all requisite legal right,
    power, and authority to enter into this Agreement and to consummate the Contemplated
    Transactions. All acts and other proceedings required to be taken by such
    Member to authorize the execution, delivery, and performance of this Agreement
    and the consummation of the Contemplated Transactions have been duly and properly
    taken other than the board approval referenced in the Operating Agreement.
    This Agreement has been duly executed and delivered by such Member and constitutes
    the legal, valid, and binding obligation of such Member, enforceable against
    such Member in accordance with its terms.
  (b)No
    Conflict. The execution, delivery, and performance
    by such Member of this Agreement and the consummation by such Member of the
    Contemplated Transactions will not (i) violate or conflict with the Organizational
    Documents or any resolutions of such
  
  
  C-18
  
  Member,
    (ii) violate any provision of Law to which such Member is subject or
    violate or conflict with any Proceeding applicable to such Member. The execution,
    delivery, and performance by such Member of this Agreement and the consummation
    by such Member of the Contemplated Transactions does not require any consent
    from or filing with any Governmental Entity except for (A) any consent or
    filing that Buyer or Merger Sub is required to obtain or make, (B) any consent
    required under the Operating Agreement, and (C) consents and filings which,
    if not obtained or made, will not individually or in the aggregate have a
    Materially Adverse Effect.
  
  (c)Ownership
    of Membership Units. Such Member owns the outstanding
    Membership Units in the Holding Company specified as owned by such Member
    onSchedule 4.2(c)hereto,
    free and clear of any Encumbrances whatsoever, other than those imposed by
    the Operating Agreement.
  4.3.Representations
    and Warranties of Buyer and Merger Sub. Buyer and
    Merger Sub hereby jointly and severally represent and warrant to the Company,
    the Members, and the Holding Company as follows:
  (a)
      Organization,
          Authority.(i)Buyer
    is a corporation duly organized and validly existing under the laws of the
    State of Delaware. Buyer has all requisite power and authority to enter into
    this Agreement and to consummate the Contemplated Transactions. All acts and
    other proceedings required to be taken by Buyer to authorize the execution,
    delivery and performance of this Agreement and the consummation of the Contemplated
    Transactions have been duly and properly taken. This Agreement has been duly
    executed and delivered by Buyer and constitutes the legal, valid and binding
    obligation of Buyer, enforceable against Buyer in accordance with its terms.
  (ii)Merger
    Sub is a corporation duly organized and validly existing under the laws of
    the State of Delaware. Merger Sub has all requisite power and authority to
    enter into this Agreement and to consummate the Contemplated Transactions.
    All acts and other proceedings required to be taken by Merger Sub to authorize
    the execution, delivery and performance of this Agreement and the consummation
    of the Contemplated Transactions have been duly and properly taken. This Agreement
    has been duly executed and delivered by Merger Sub and constitutes the legal,
    valid and binding obligation of Merger Sub, enforceable against Merger Sub
    in accordance with its terms.
  (b)
      No
          Conflict.(i)The
    execution, delivery and performance by Buyer and Merger Sub of this Agreement
    and the consummation by Buyer and Merger Sub of the Contemplated Transactions
    will not (A) violate or conflict with the Organizational Documents or
    any resolutions of Buyer or Merger Sub, (B) assuming satisfaction of
    the requirements set forth in Section 4.2(b)(ii) below, violate any provision
    of Law to which Buyer or Merger Sub is subject or violate or conflict with
    any Proceeding applicable to Buyer or Merger Sub or (C) violate, breach
    or constitute a default under or give rise to a right of termination, cancellation
    or acceleration of any right or obligation of Buyer or Merger Sub under, or
    result in the creation of
  
  C-19
  
  a
    lien or encumbrance on any of the properties or assets of Buyer or Merger
    Sub pursuant to, any provision of any Contract or other instrument binding
    upon Buyer or Merger Sub or any license, franchise, permit or other similar
    authorization held by Buyer or Merger Sub, except in the case of the foregoing
    clause (C) for any such violation, conflict, default, right or lien which
    would not individually or in the aggregate have a Buyer Materially Adverse
    Effect.
  
  (ii)The
    execution, delivery and performance by Buyer and Merger Sub of this Agreement
    and the consummation by Buyer and Merger Sub of the Contemplated Transactions
    do not require any consent from, filing with or consent or approval of any
    Governmental Entity or any third party.
  (c)Financing.
    Buyer has furnished to the Acquired Companies and the Members correct and
    complete copies of executed, written commitment for debt financing from LaSalle
    Bank N.A. dated October 21, 2004 and an executed, written commitment for equipment
    financing from DaimlerChrysler Services North America LLC dated October 20,
    2004 (together, the Debt Financing Commitments) committing to
    provide Buyer and Merger Sub, subject to the terms and conditions contained
    therein, with all of the financing they will require in order to consummate
    the Merger, to pay in full the Existing Debt, and to fund the working capital
    needs of the Surviving Company and its Subsidiaries after
    the Closing. Buyer has paid to LaSalle Bank N.A. a fee of $125,000 in connection
    with its portion of the Debt Financing Commitments, and each of the Debt Financing
    Commitments is in full force and effect as of the date hereof. Buyer has delivered
    to the Acquired Companies and the Members correct and complete copies of an
    executed, written commitment from U.S. Xpress Enterprises, Inc. (USX),
    dated October 21, 2004 (the Equity Financing Commitment), pursuant
    to which USX has agreed, subject to the terms and conditions contained therein,
    to make an equity investment in Buyer in an aggregate amount of $6,215,775.80
    in connection with the Contemplated Transactions. The Equity Commitment Letter
    is in full force and effect as of the date hereof, and USX has, and will have
    at Closing, adequate cash sufficient to fund its commitment under such Equity
    Financing Commitment.
  (d)Litigation;
    Decrees. There are no lawsuits, claims, proceedings,
    investigations, injunctions, judgments, orders or decrees pending or, to Buyers
    Knowledge, threatened which challenge or seek to enjoin or delay this Agreement
    or the Contemplated Transactions or which would affect Buyers ability
    to perform its obligations under this Agreement or to consummate the Contemplated
    Transactions.
  (e)Brokers.
    Buyer has not retained any broker, finder or investment banking firm to act
    on their behalf in connection with the Contemplated Transactions and no other
    person is entitled to receive any brokerage commission, finders fee
    or other similar compensation in connection with the Contemplated Transactions.
  ARTICLE
    V
  COVENANTS
  5.1.Covenants
    of the Members and the Acquired Companies. The Members
    and the Acquired Companies covenant and agree as follows:
  
  
  C-20
  
  (a)Access.
    From and after the date hereof, the Acquired Companies will (i) give
    Buyer and its authorized representatives, employees, counsel and accountants
    reasonable access to their officers, management, agents, books, records, offices
    and other facilities and properties during mutually agreeable business hours
    and (ii) furnish to Buyer and its authorized representatives such information
    concerning their business, properties, contracts, assets, liabilities, personnel
    and other aspects which is reasonably requested;provided,however, that any such access
    shall be granted at reasonable times during normal business hours and in such
    a manner as not to interfere to an unreasonable extent with normal business
    operations;provided,furtherthat Buyer and its authorized representatives shall not contact or hold discussions
    with customers, suppliers or non-management employees of the Company without
    the prior consent of the Company. Notwithstanding the foregoing, (i) the
    Acquired Companies are under no obligation to disclose to Buyer any information
    the disclosure of which is restricted by contract or applicable law or which
    would result in the waiver of any privileges, and (ii) granting such
    access does not include access to conduct any environmental sampling or testing
    without the Companys prior written consent, at the Companys sole
    discretion.
  (b)Ordinary
    Conduct. From and after the date hereof and prior
    to the Closing or earlier termination of this Agreement, and unless Buyer
    shall otherwise consent or agree in writing, which consent
    will not be unreasonably withheld or delayed, and except as contemplated by
    this Agreement or as disclosed onSchedule 5.1,
    each of the Acquired Companies will:
  (i)
      conduct
          its business in the Ordinary Course of Business;(ii)use
    its reasonable efforts to preserve its business organization intact and to
    preserve the goodwill of the suppliers, customers, employees, independent
    contractors, and others having business dealings with it;
  (iii)
      not
          amend its Organizational Documents;(iv)not
    issue any Membership Units, other membership interests or rights, warrants
    or options to acquire any such Membership Units or membership interests (including,
    without limitation, any phantom interest) or issue any interests convertible
    into such Membership Units or membership interests or convertible into interests
    in turn so convertible, or grant any options, warrants or rights to acquire
    any such convertible interests;
  (v)not
    split, subdivide, combine or reclassify, directly or indirectly, any of its
    Membership Units or membership interests;
  (vi)not
    declare or pay any dividend or other distribution on its Membership Units
    or membership interests or make any payment to redeem, purchase or otherwise
    acquire, or call for redemption, any of such Membership Units or membership
    interests;
  (vii)not
    merge or consolidate with or acquire the business of any other Person or acquire
    any material property or material assets of any other Person;
  (viii)not
    adopt or amend in any respect (other than to conform to the requirements of
    applicable Laws, including to preserve qualification under Section 401(2)
    of the
  
  C-21
  
  Code)
    any Company Benefit Plan, enter into or amend any employment or consulting
    agreement or arrangement with any present or former director, officer or salaried
    employee, nor increase the compensation or fringe benefits of any of its officers,
    directors, employees, or independent contractors;
  
  (ix)not
    enter into any agreement with the Holding Company, the Members, or any Affiliate,
    including, without limitation, any agreement to make advances or loans;
  (x)not
    sell, pledge, lease, license or dispose of any of its material assets;
  (xi)not
    make any capital expenditures exceeding $150,000 or incur any additional indebtedness
    for borrowed money or issue any debt securities or assume, guarantee or endorse
    the obligations of any Person which individually or in the aggregate would
    exceed $250,000, except as necessary to consummate the Contemplated Transactions;
  (xii)not
    enter into, amend or terminate any Contract except in the Ordinary Course
    of Business; and
  
  (xiii)
      not
          agree to do any of the foregoing.(c)No
    Negotiation. Until such time, if any, as this Agreement
    is terminated pursuant to Section 9, the Acquired Companies and the Members
    will not, and will cause each of their officers, directors, agents, and Affiliates
    not to, directly or indirectly solicit, initiate, or knowingly encourage any
    inquiries or proposals from, discuss or negotiate with, provide any non-public
    information to, or approve any unsolicited inquiries or proposals from, any
    Person (other than Buyer) relating to any transaction involving the sale of
    a material portion of the business or assets (other than in the Ordinary Course
    of Business) of any Acquired Company, or any of the capital stock, Membership
    Units, or other membership interests of any Acquired Company, or any merger,
    consolidation, business combination, or similar transaction involving any
    Acquired Company.
  (d)Action
    of Members. The Members agree not to transfer all
    or any portion of their Membership Units in the Holding Company prior to the
    Closing, except as contemplated by this Agreement, the Stock Purchase, Contribution,
    and Exchange Agreement, and the Exhibits hereto. Those Members holding options
    to purchase additional Membership Units in the Holding Company, including
    those options described onSchedule 4.1(d)(iii),
    shall exercise all of such options at or prior to the Closing by executing
    an Option Exercise Agreement, and such Members agree that, if not exercised
    prior to the Effective Time, such options shall expire and be of no further
    force or effect, notwithstanding anything to the contrary. Each Member has
    executed a release in the form substantially of attached Exhibit C and agrees
    that the Company will deliver such release to the Buyer at Closing. The Members,
    the Acquired Companies, the Buyer and Merger Sub hereby acknowledge and agree
    that each holder of an option that exercises his or her options pursuant to
    the Option Exercise Agreements shall, without any requirement to amend or
    modify this Agreement, become a party to this Agreement as a Member
    and shall be subject to all of the rights, restrictions, conditions and obligations
    applicable toMembers under this Agreement
  
  
  C-22
  
  (e)Covenants
    of Certain Members. Each Member who is named as a
    Management Stockholder in the Stock Purchase, Contribution, and Exchange Agreement
    hereby covenants to the Private Equity Members that (i) he, she, or it will
    perform and comply with all of his, hers, or its covenants and obligations
    thereunder and under this Agreement, (ii) he, she, or it will not take any
    actions that would cause or result in a breach or inaccuracy of any of his,
    her, or its representations and warranties thereunder and under this Agreement,
    (iii) he, she, or it will use its best efforts to ensure that the conditions
    thereunder and in this Agreement are satisfied in so far as such matters are
    in the reasonable control of such Person, and (iv) he, she, or it will not
    agree to terminate either the Stock Purchase, Contribution, and Exchange Agreement
    or the Stockholders Agreement.
  5.2.
      Covenants
          of Buyer. Buyer covenants and agrees as follows:(a)Confidentiality.
    Buyer acknowledges that it is subject to the terms of a confidentiality agreement
    dated June 2, 2004, between Buyer and the Company (the Confidentiality
    Agreement), the terms of which are incorporated herein by reference.
    The Confidentiality Agreement shall terminate (i) upon the Closing, or (ii)
    otherwise in accordance with its terms.
  (b)Post-Closing
    Information. After the Closing, Buyer shall make available
    and shall cause the Acquired Companies to make available to the Members and
    their accountants, agents and representatives any and all books, records,
    contracts and other information of the Acquired Companies existing on the
    Closing Date and transferred to Buyer requested by such Members in connection
    with any reasonable purpose, such as a tax examination or litigation involving
    such Members and requiring such information; provided, that any such Member
    requesting such information shall execute a confidentiality agreement in a
    form reasonably satisfactory to Buyer. Buyer will hold all of the books and
    records of the Acquired Companies existing on the Closing Date and transferred
    to Buyer and shall only destroy or dispose of any thereof in accordance with
    its then-existing document retention policies and as may be permitted by law;
    provided, that it shall not dispose of any corporate, financial, or tax records
    for a minimum of six (6) years.
  (c)Directors
    and Officers Indemnification. Buyer shall not
    permit the Acquired Companies to take any action that would reduce the limitation
    of liability and indemnification of directors, officers and other Persons
    contained in its Organizational Documents as of the date hereof. The provisions
    of this Section 5.2(c) are intended to be for the benefit of, and will
    be enforceable by, each Indemnified Party (as defined in Section 7.4(c))
    and his or her heirs and representatives.
  (d)Solicitations
    of Employees. If this Agreement is terminated for
    any reason and the Contemplated Transactions do not take place, Buyer agrees
    that, until December 2, 2005, without the prior written consent of the Company,
    Buyer shall not, directly or indirectly, in any individual, representative,
    or other capacity, hire, employ or engage, or solicit for employment or engagement
    (i) any Person who is now employed by the Company (or whose
  
  
  C-23
  
  activities
    are dedicated to the Company) in any executive or management level position
    or otherwise considered by the Company to be a key employee, and (b) any employee
    of the Company whom Buyer became aware of through its due diligence investigation
    hereunder; provided, however, that this restriction shall not apply to general
    solicitations of employment by newspaper, Internet, periodical, or other publication,
    not specifically directed at employees of the Company. If this Section 5.2(d)
    shall be adjudicated to be invalid or unenforceable, such provision shall
    be amended to reduce the time period or otherwise amended as is necessary
    to cause such provision to be valid or enforceable, and such amendment shall
    apply only with respect to the operation of this provision in the particular
    jurisdiction in which such adjudication is made.
  (e)WARN
    Act. Buyer hereby agrees to provide any required notice
    under the Workers Adjustment and Retraining Notification Act of 1988 (the
    WARN Act) and any other applicable law and to otherwise comply
    with any such statute with respect to any plant closing or mass
    layoff (as defined in the WARN Act) or similar event affecting any employees
    of the Company that occurs after the Closing.
  (f)Financing.
    Buyer and Merger Sub will use their reasonable best efforts to enter into
    definitive agreements to obtain the debt financing necessary to satisfy the
    conditions set forth in Section 3.3(f) on terms and conditions substantially
    in accordance with the Debt Financing Commitments. In the event any or all
    of the financing specified in the Debt Financing Commitments becomes unavailable
    for any reason, Buyer will use its reasonable best efforts to obtain replacement
    debt financing on substantially equivalent terms and conditions from alternative
    sources. At Closing, provided that all conditions to Closing have been met
    or waived, Buyer and Merger Sub covenant and agree to repay the Existing Debt.
  (g)Action
    of Buyer and Merger Sub. At Closing, Buyer and Merger
    Sub shall execute and deliver the release in the form substantially of attached
    Exhibit C. Buyer hereby covenants to the Members that (i) it will perform
    and comply with all of its covenants and obligations under the Stock Purchase,
    Contribution, and Exchange Agreement and under this Agreement, (ii) it will
    not take any actions that would cause or result in a breach or inaccuracy
    of any of its representations and warranties thereunder and under this Agreement,
    (iii) it will use its best efforts to ensure that the conditions thereunder
    and in this Agreement are satisfied in so far as such matters are in the reasonable
    control of such Person, and (iv) it will not agree to terminate either the
    Stock Purchase, Contribution, and Exchange Agreement or the Stockholders
    Agreement.
  5.3Mutual
    Covenants. Each of the Company, the Holding Company,
    and Buyer covenants and agrees as follows:
  (a)Consents
    and Approvals. Prior to the Closing, each of the Company
    and Buyer agrees to use its reasonable best efforts to obtain as soon as possible,
    and to file or cause to be filed all necessary documentation with the appropriate
    Governmental Entity or other third party as soon as practicable, to obtain
    as soon as possible, all consents, approvals, authorizations and waivers required
    by the Governmental Entities and third parties set forth onSchedule
    3.2(c)in order to consummate the Contemplated Transactions.
  
  
  C-24
  
  (b)Publicity.
    Prior to the Closing, no party (including any Affiliate of any party) shall
    issue any press release or other public announcement concerning the Contemplated
    Transactions without the prior consent of Buyer (in the case of a release
    or announcement by the Holding Company, the Members, the Company, or any of
    their Affiliates) or the Holding Company (in the case of a release or announcement
    by Buyer, Merger Sub, or any of their Affiliates), except as such release
    or announcement may be required by applicable law or rules or regulations
    of any securities exchange, quotation system, or similar regulatory body,
    in which case the party required to make the release or announcement shall
    allow Buyer or the Holding Company (as the case may be) reasonable time to
    comment on such release or announcement in advance of such issuance.
  (c)Further
    Assurances; Covenant to Satisfy Conditions. Subject
    to the terms and conditions of this Agreement, each party will, severally,
    use its reasonable best efforts to (i) ensure the conditions set forth
    in Article III are satisfied, insofar as such matters are within the
    reasonable control of such party, (ii) defend any lawsuits or other legal
    proceedings, whether judicial or administrative, challenging this Agreement
    or the performance of the obligations hereunder or thereunder, (iii) execute
    and deliver such instruments and take such actions as the other parties hereto
    may reasonably require in order to carry out the intent of this Agreement
    and (iv) prepare and make or cause to be made any required filings, submissions
    and notifications under the laws of any domestic or foreign jurisdiction to
    the extent that such filings are necessary to consummate the Contemplated
    Transactions in a manner consistent with applicable law.
  ARTICLE
    VI
  OTHER
    AGREEMENTS
  6.1.
      Certain
          Understandings.(a)In
    connection with its investigation of the Acquired Companies and all matters
    relating to the Contemplated Transactions, Buyer has relied upon the advice
    and opinions of its own agents, representatives, experts, consultants, employees
    and officers. Each of the parties hereto is sophisticated and was advised
    by experienced legal counsel and, to the extent it deemed necessary, other
    advisors in connection with this Agreement. Notwithstanding anything contained
    herein to the contrary, neither the Company, nor Arnold Holdings, nor the
    Holding Company, nor any Member makes any representation, warranty or covenant
    of any kind with respect to any projections, estimates or budgets heretofore
    delivered to or made available to Buyer of future revenues, expenses or expenditures,
    future results of operations (or any component thereof), future cash flows
    or future financial condition (or any component thereof) of the Company or
    the future business and operations of the Company.
  (b)Each
    of the parties hereto hereby acknowledges that (i) there are no representations
    or warranties by or on behalf of any party hereto or any of its respective
    Affiliates other than those expressly set forth in this Agreement (including
    the Schedules hereto), (ii) no party has relied in respect of this Agreement
    or the Contemplated Transactions upon any document or written or oral information
    previously furnished to or discovered by it or its representatives, other
    than this Agreement, the other documents referenced in this Agreement, the
    Schedules to this Agreement, and the other documents referenced in the Schedules
    to this
  
  C-25
  
  Agreement,
    and (iii) the parties respective rights and obligations with respect
    to this Agreement and the Contemplated Transactions will be solely as set
    forth in this Agreement and the other agreements delivered in connection with
    the Closing.
  
  (c)As
    of the date of this Agreement, neither Buyer nor Merger Sub is consciously
    aware of any specific facts or circumstances which would result in a material
    breach of any representation or warranty of the Acquired Companies or the
    Members herein. No right to indemnification, payment of Damages, or other
    remedy hereunder shall exist with respect to a material breach of any representation
    or warranty of which Buyer or Merger Sub is consciously aware as of the date
    of this Agreement.
  (d)As
    of Closing, neither Buyer nor Merger Sub shall be consciously aware of any
    specific facts or circumstances which would result in a Walk-Away Breach (as
    defined below) of any representation or warranty of the Acquired Companies
    or the Members herein. Whether or not Closing occurs, no right to indemnification,
    payment of Damages, or other remedy hereunder shall exist with respect to
    a Walk-Away Breach of any representation or warranty of which Buyer or Merger
    Sub is consciously aware as of Closing; and the sole right and remedy of Buyer
    and its Affiliates if Buyer or Merger Sub is consciously aware of a Walk-Away
    Breach shall be to terminate this Agreement pursuant to Section 7.3(a)(iii)
    to the extent applicable.
  (e)For
    purposes of Sections 6.1(d) Walk-Away Breach means one or more
    material breaches of the representations and/or warranties in this Agreement
    that, individually or in the aggregate, the non-breaching party reasonably
    estimates as of Closing will give rise to aclaim
    for indemnification under Section 7.4 in excess of Two Million Five Hundred
    Thousand Dollars ($2,500,000).
  (f)All
    representations, warranties, covenants, and obligations in this Agreement,
    and any other certificate or document delivered pursuant to this Agreement
    will survive the Closing in accordance with Section 7.4(a) hereof. Except
    as provided in Sections 6.1(c) and 6.1(d), no right to indemnification, payment
    of Damages, or other remedy hereunder will be limited by reason of any investigation
    or audit conducted before or after the Closing or the knowledge of any party
    of any breach of a representation, warranty, covenant, or agreement by the
    other party at any time. The waiver of any condition based on the accuracy
    of any representation or warranty, or on the performance of or compliance
    with any covenant or litigation, will not affect the right to indemnification,
    payment of Damages, or other remedy based on such representations, warranties,
    covenants, and obligations, unless such waiver expressly waives such rights
    to indemnification, payment of Damages, or other remedies.
  6.2.Post-Closing
    Merger. Immediately following the Effective Time of
    the Merger, each of Buyer, the Surviving Company, and Arnold Holdings covenants
    and agrees to file, or cause to be filed, an additional certificate of merger
    with the Secretary of State of the State of Delaware, pursuant to which each
    of the Surviving Company and Arnold Holdings will be merged with and into
    the Company pursuant to the plan of merger attached hereto as Exhibit D (the
    Delaware Post-Closing Merger).
  
  
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  ARTICLE
    VII
  MISCELLANEOUS
  7.1.Assignment.
    This Agreement and the rights hereunder shall not be assignable or transferable
    by any party (including by sale of stock, operation of law in connection with
    a merger, or sale of substantially all the assets of Buyer) without the prior
    written consent of the other parties hereto. This Agreement shall inure to
    the benefit of, and be binding upon and enforceable against, the successors
    and permitted assigns of the respective parties hereto.
  7.2.No
    Third-Party Beneficiaries. Except as provided in Sections
    5.2(b) and 5.2(c), this Agreement is for the sole benefit of the parties hereto
    and their permitted assigns and nothing herein expressed or implied shall
    give or be construed to give to any person or entity, other than the parties
    hereto and such assigns, any legal or equitable rights hereunder.
  7.3.
      Termination.(a)Termination
    of Agreement. Any of the parties may terminate this
    Agreement as provided below:
  (i)The
    parties may terminate this Agreement by mutual written consent at any time
    prior to the Effective Time;
  (ii)This
    Agreement may be terminated by written notice given by Buyer to the Holding
    Company or by the Holding Company to Buyer (A) if the Contemplated Transactions
    shall violate any non-appealable final order, decree, or judgment of any court
    or Governmental Entity having competent jurisdiction, or (B) there shall be
    a Law that makes the Contemplated Transactions illegal or otherwise prohibited;
  (iii)Buyer
    and Merger Sub may terminate this Agreement by giving written notice to the
    Holding Company at any time prior to the Effective Time (A) in the event
    any Member or the Acquired Company has breached any representation, warranty,
    or covenant contained in this Agreement in any material respect, Buyer has
    notified the Holding Company of the breach, and the breach has continued without
    cure for a period of ten (10) days after the notice of breach or (B) if
    the Closing shall not have occurred on or before November 30, 2004 (unless
    the failure results primarily from Buyer or Merger Sub breaching any representation,
    warranty, or covenant contained in this Agreement); or
  (iv)The
    Holding Company may terminate this Agreement by giving written notice to Buyer
    at any time prior to the Effective Time (A) in the event Buyer or Merger
    Sub has breached any representation, warranty, or covenant contained in this
    Agreement in any material respect, the Holding Company has notified Buyer
    of the breach, and the breach has continued without cure for a period of ten
    (10) days after the notice of breach or (B) if the Closing shall not
    have occurred on or before November 30, 2004 (unless the failure results primarily
    from any Member or the Acquired Company breaching any representation, warranty,
    or covenant contained in this Agreement).
  (b)Effect
    of Termination. If any Party terminates this Agreement
    pursuant to Section 7.3(a) above, all rights and obligations of the Parties
    hereunder shall terminate without
  
  
  C-27
  
  any liability of any party to any other party (except for any liability of
    any party then in willful breach); provided, however, that the provisions
    of Sections 5.2(a), 5.2(d), 7.3(b), 7.5, 7.9, 7.10, 7.11, 7.14, and 7.15,
    and Section 7.4 solely in the event of a willful breach, shall remain in full
    force and effect.
  7.4.
      Survival
          of Representations, Warranties and Covenants.(a)Survival
    of Representations. The representations and warranties
    of the Company, the Holding Company, the Members, Buyer, and Merger Sub contained
    in this Agreement (including the Schedules attached hereto) except for Sections 4.1(j)
    and 4.1(r) and in the certificates delivered pursuant to Sections 3.2(a),
    3.2(b), 3.3(a) and 3.3(b) shall terminate on the one year anniversary of the
    Closing Date (the Basic Representation Survival Period). The representations
    and warranties of the Company set forth in Section 4.1(j) and 4.1(r)
    shall terminate on March 31, 2006, and the representations and warranties
    of the Members set forth in Section 4.2(c) shall survive until the five year
    anniversary of the Closing Date (the Extended Representation Survival
    Period together with the Basic Representation Survival Period, the General
    Representation Survival Period). The covenants of the Company, the Holding
    Company, the Members, Buyer, and Merger Sub to be performed prior to Closing
    pursuant to Sections 5.1(a) and 5.4(a) and (c)(i) of this Agreement shall
    terminate upon the Closing, and all of the other covenants of the Company
    and the Holding Company shall terminate on the one year anniversary of the
    Closing Date (as applicable, the Covenant Survival Period and,
    together with the Basic Representation Survival Period, the Extended Representation
    Survival Period, the General Representation Survival Period, the Survival
    Periods). The obligations to indemnify and hold harmless any Buyer Indemnified
    Party (as defined herein) or Seller Indemnified Party (as defined herein)
    under this Section 7.4 shall terminate when the applicable Survival Period
    terminates;provided,however,
    that such indemnification rights shall not terminate with respect to any item
    as to which Buyer Indemnified Party or Seller Indemnified Party, as applicable,
    shall have, before the expiration of the applicable Survival Period, previously
    made a claim by delivering a written notice (stating in reasonable detail
    the basis of such claim) to the Members or Buyer, as applicable; andprovided,further, that any such claim
    which solely involves the parties hereto shall be deemed to have been withdrawn
    and waived one year after being made, unless (A) court proceedings shall
    have been commenced with respect to such claim within such one year period,
    or (B) such claim shall have been waived or satisfied within such one
    year period; provided that if the facts regarding a necessary element of the
    claim (including Damages (defined herein) with respect thereto) are not reasonably
    determinable within such one-year period, such one-year period shall be extended
    until the expiration of ninety (90) days after such facts are reasonably
    determinable.
  (b)Indemnification
    by the Members. Subject to the other provisions of
    this Section 7.4, each Member, severally and not jointly, shall indemnify,
    save and hold harmless Buyer and its Affiliates and subsidiaries and their
    respective officers, directors, principals, attorneys and agents (the Buyer
    Indemnified Parties) from and against and will pay to the Buyer Indemnified
    Parties the amount of, any and all costs, losses, Taxes, liabilities, obligations,
    claims, damages, deficiencies, and expenses (whether or not arising out of
    third-party claims and including costs of environmental cleanup, remediation,
    containment, and the like), including interest, penalties, reasonable attorneys
    fees and all reasonable amounts paid in investigation, defense or settlement
    of any of the foregoing, in each case to the extent available and proven
  
  C-28
  
  under applicable law, but excluding lost profits, unforeseen or consequential
    damages, and punitive damages unless awarded to a third party in a third party
    claim (Damages), incurred as a result of or arising out of:
  (i)any
    breach of any representation or warranty made by such Member or any Acquired
    Company in this Agreement;
  (ii)any
    breach of any covenant or agreement made by any Acquired Company (prior to
    Closing) in this Agreement; or
  (iii)any
    breach of any covenant or agreement made by such Member in this Agreement.
  Notwithstanding
    anything to the contrary contained herein, subject to the limitations contained
    in Sections 7.4(e) and (f), each Member shall only be liable pursuant to this
    Section 7.4 with respect to the representations, warranties, covenants, and
    agreements that are made by such Member in this Agreement (and not with respect
    to any of the representations, warranties, covenants, and agreements that
    are made by any other Member under this Agreement). With respect to any indemnification
    obligation hereunder for which all Members are liable (including, without
    limitation, any indemnification for breach of any representation or warranty
    in Section 4.1, for which all Members shall be liable), each Member shall
    only be liable for its pro rata portion of any Damages payable under this
    Section 7.4 relating to such indemnification obligation, with such pro rata
    portion equal to the percentage set forth opposite the name of such Member
    onSchedule 7.4hereto. With
    respect to any indemnification obligation for which only one Member is liable
    (including, without limitation, any indemnification for breach of any representation
    or warranty of a Member in Section 4.2), such Member shall be liable for all
    Damages payable under this Section 7.4 relating to such indemnification obligation.
  
  (c)Indemnification
    by Buyer. Subject to the other provisions of this
    Section 7.4, Buyer shall indemnify, save and hold harmless the Members
    and the Acquired Companies and their Affiliates and their respective officers,
    directors, principals, attorneys and agents (the Seller Indemnified
    Parties and together with Buyer Indemnified Parties, the Indemnified
    Parties) from and against and will pay to the Seller Indemnified Parties
    the amount of, any and all Damages incurred as a result of or arising out
    of:
  (i)any
    breach of any representation made by Buyer or Merger Sub in this Agreement
    or in the certificates delivered pursuant to Section 3.3(a) and 3.3(b);
    and
  (ii)any
    breach of any covenant or agreement made by Buyer or Merger Sub or the Company
    (following the Closing) in this Agreement.
  (d)
      Defense
          of Third Party Claims.(i)In
    order for an Indemnified Party to be entitled to any indemnification provided
    for under Sections 7.4(b) or 7.4(c) of this Agreement in respect of,
    arising out of or involving a claim or demand made by any Person against the
    Indemnified Party (a Third Party Claim), such Indemnified Party
    must notify the party from whom indemnification is sought (the Indemnifying
    Party) in writing of the Third Party Claim within
  
  
  C-29
  
  five (5)
    business days after receipt by such Indemnified Party of written notice of
    the Third Party Claim;provided,however, that failure to give
    such notification shall not affect the indemnification provided hereunder
    except to the extent the Indemnifying Party shall have been prejudiced as
    a result of such failure (except that the Indemnifying Party shall not be
    liable for any expenses incurred during the period in which the Indemnified
    Party failed to give such notice). Thereafter, the Indemnified Party shall
    deliver to the Indemnifying Party, within five (5) business days after
    the Indemnified Partys receipt thereof, copies of all notices and documents
    (including court papers) received by the Indemnified Party relating to the
    Third Party Claim.
  
  (ii)If
    a Third Party Claim is made against an Indemnified Party, the Indemnifying
    Party will be entitled to participate in the defense thereof and, if it so
    chooses, assume and control the defense thereof with counsel selected by the
    Indemnifying Party;provided,however, that, if the Indemnifying
    Party assumes such defense, the Indemnified Party shall have the right to
    participate in, but not control, the defense thereof and to employ counsel,
    at its own expense, separate from the counsel employed by the Indemnifying
    Party. Should the Indemnifying Party elect to assume and control the defense
    of a Third Party Claim, the Indemnifying Party shall be entitled to settle,
    compromise or discharge such Third Party Claim.
  (iii)Whether
    or not the Indemnifying Party chooses to defend or prosecute any Third Party
    Claim, both parties hereto shall cooperate in the defense or prosecution thereof.
    Such cooperation shall include the retention and (upon the Indemnifying Partys
    written request) the provision to the Indemnifying Party of records and information
    which are reasonably relevant to such Third Party Claim, and making employees
    available on a mutually convenient basis to provide additional information
    and explanation of any material provided hereunder. The parties shall cooperate
    with each other in any notifications to insurers.
  (iv)Whether
    or not the Indemnifying Party shall have assumed the defense of a Third Party
    Claim, the Indemnified Party shall not admit any liability with respect to,
    or settle, compromise or discharge, such Third Party Claim without the Indemnifying
    Partys prior written consent.
  (e)Limitation
    on Claims. The maximum liability obligation of the
    Members, in the aggregate, to Buyer Indemnified Parties under Section 7.4(b)
    shall not exceed $5,000,000 (the Cap), and Buyer, on behalf of
    itself and the other Buyer Indemnified Parties agrees not to seek, and shall
    not be entitled to recover, any Damages or other payments under Section 7.4
    in excess of the Cap. The limitation in this Section 7.4(e) shall not apply
    in the case of fraud by any Member or Acquired Company, or in the case of
    an action regarding title to the Membership Units of the Holding Company.
  (f)Other
    Limitations. No Buyer Indemnified Parties shall be
    entitled to recover for any Damages pursuant to Section 7.4(b)(i) unless
    the aggregate amount of all Damages for which the Buyer Indemnified Parties
    would, but for this sentence, be entitled to receive indemnification pursuant
    to such Section 7.4(b)(i) exceeds $250,000 (the Damage Threshold),
    and then only for such Damages in excess of the Damage Threshold. The limitation
    in this Section 7.4(f) shall not apply in the case of fraud by any Member
    or Acquired Company, or in the case of an action regarding title to the Membership
    Units of the Holding Company.
  
  
  C-30
  
  (g)Exclusive
    Remedy. After the Closing, the rights set forth in
    this Section 7.4 and in Section 7.5 shall be the Indemnified Parties
    sole and exclusive remedies with respect to any and all claims relating to
    this Agreement, the parties hereto, the events giving rise to this Agreement
    and the transactions provided for herein or contemplated hereby except in
    the case of fraud. Without limiting the generality or effect of the foregoing,
    as a material inducement to the other parties hereto entering into this Agreement,
    and in light of, among other factors, the acknowledgements contained in Section 6.1,
    the Indemnified Parties hereby waive, from and after the Closing, any claim
    or cause of action, known and unknown, foreseen and unforeseen, which they
    or any of their Affiliates may have against the other parties hereto, including
    without limitation under the common law or federal or state securities laws,
    trade regulation laws or other laws, by reason of this Agreement, the events
    giving rise to this Agreement and the transactions provided for herein or
    contemplated hereby or thereby, except for claims or causes of action brought
    under and subject to the terms and conditions of the provisions contained
    in this Section 7.4 or in the case of fraud.
  (h)Tax
    Treatment. Any indemnification payments under this
    Section 7.4 shall be treated, for Tax purposes, as adjustments to the
    Purchase Price.
  (i)Mitigation.
    Nothing provided in this Section 7.4 shall limit any duty of an Indemnified
    Party to mitigate Damages under applicable law.
  (j)
      Calculation
          of Damages.(i)To
    the extent that any claim for indemnification for Damages under this Section
    7.4 is covered by insurance held by the Indemnified Party, such Indemnified
    Party shall use its commercially reasonable efforts to seek recovery from
    the applicable insurer, provided that the Indemnifying Party agrees to reimburse
    the Indemnified Party for any reasonable out-of-pocket costs incurred by the
    Indemnified Party in connection with such recovery. Further, to the extent
    that any claim for indemnification for Damages under this Section 7.4 is covered
    by insurance held by the Indemnified Party, such Indemnified Party shall be
    entitled to indemnification pursuant to this Section 7.4 only with respect
    to the amount of the Damages that are in excess of (x) the cash proceeds received
    by such Indemnified Party pursuant to such insurance, minus (y) any increased
    insurance costs related thereto. If such Indemnified Party receives such net
    cash insurance proceeds prior to the time such claim is paid, then the amount
    payable by the Indemnifying Party pursuant to such claim shall be reduced
    by the amount of such proceeds. If such Indemnified Party receives such net
    cash insurance proceeds after such claim has been paid, then upon the receipt
    by the Indemnified Party of any net cash proceeds pursuant to such insurance
    up to the amount of Damages incurred by such Indemnified Party with respect
    to such claim, such Indemnified Party shall promptly repay any portion of
    such amount which was previously paid by the Indemnifying Party to such Indemnified
    Party in satisfaction of such claim.
  (ii)Any
    calculation of Damages for purposes of this Section 7.4 shall be reduced to
    take account of any Tax benefit (net of the Tax cost, if any) actually realized
    by the Indemnified Party as a result of any such Damages. Any payment hereunder
    shall initially be made without regard to this Section 7.4(j)(ii) and shall
    be
  
  C-31
  
  reduced to reflect any such net Tax benefit only after the Indemnified Party
    has actually realized such benefit. If such Indemnified Party actually realizes
    such net Tax benefit after such claim has been paid, then upon the actual
    realization by the Indemnified Party of such net Tax benefit up to the amount
    of Damages incurred by such Indemnified Party with respect to such claim,
    such Indemnified Party shall promptly repay any portion of such amount which
    was previously paid by the Indemnifying Party to such Indemnified Party in
    satisfaction of such claim. For purposes of this Section 7.4(j)(ii), the Indemnified
    Party shall be deemed to have actually realized a net Tax benefit
    to the extent that, and at such time as, the amount of Taxes required to be
    paid by the Indemnified Party is reduced below the amount of Taxes that it
    would have been required to pay but for deductibility of such Damages. The
    amount of any reduction hereunder shall be adjusted to reflect any final determination
    with respect to the Indemnified Partys liability for Taxes.
  (iii)Any
    calculation of Damages for purposes of this Section 7.4 shall be reduced to
    take account of any amounts actually recovered by the Indemnified Party pursuant
    to any indemnification by or under any indemnification agreements with any
    third party (net of any costs incurred to obtain such recovered amounts).
    If such Indemnified Party receives such net recovery prior to the time such
    claim is paid, then the amount payable by the Indemnifying Party pursuant
    to such claim shall be reduced by the amount of such net recovery. If such
    Indemnified Party receives such net recovery after such claim has been paid,
    then upon the receipt by the Indemnified Party of any net recovery up to the
    amount of Damages incurred by such Indemnified Party with respect to such
    claim, such Indemnified Party shall promptly repay any portion of such amount
    which was previously paid by the Indemnifying Party to such Indemnified Party
    in satisfaction of such claim.
  
  (iv)In
    the case of indemnification to which Buyer is entitled, any calculation of
    Damages for purposes of this Section 7.4 shall be reduced by the amount of
    any accrual or reserve on the Balance Sheet specifically related to the matter(s)
    for which indemnification is claimed.
  (v)The
    enumeration in Sections 7.4(j)(i) through 7.4(j)(iv) of factors that will
    affect the calculation of Damages hereunder is not exclusive and shall not
    limit the right of any Indemnified Party or Indemnifying Party to assert any
    other credit, offset, or other adjustment in calculating Damages and making
    a claim for indemnification hereunder.
  7.5.Expenses.
    Whether or not the Contemplated Transactions are consummated, all costs and
    expenses incurred in connection with this Agreement and the Contemplated Transactions
    shall be paid by the party incurring such costs or expenses, except as may
    otherwise be expressly provided in this Agreement, including, without limitation,
    in Section 2.2(b)(vi). Without limiting the generality of the foregoing,
    Buyer shall be responsible for all filing fees incurred in connection with
    any filing made pursuant to the HSR Act, and the Company shall be responsible
    for paying its legal, investment banking, and other professional, advisory,
    and other transaction-related expenses incurred in connection with all efforts
    to prepare the Acquired Companies for possible sale and engage in the sale
    process, including but not limited to the
  
  C-32
  
  expenses incurred in connection with or resulting from the Closing of, the
    Contemplated Transactions (including, without limitation, the expenses of
    Sagent Advisors LLC and the Companys legal counsel, Dechert LLP),
    subject to the provisions of Section 2.2(b)(vi).
  7.6.Amendments.
    No amendment to or modification of this Agreement shall be effective unless
    it shall be in writing and signed by each of the parties hereto.
  7.7.
      Intentionally
          Omitted.7.8.Notices.
    All notices and other communications hereunder shall be in writing and shall
    be deemed given (a) on the date of delivery if delivered personally;
    (b) on the date of transmission if sent via facsimile transmission to
    the facsimile number given below, and telephonic confirmation of receipt is
    obtained promptly after completion of transmission; (c) on the date after
    delivery to a reputable nationally recognized overnight courier service or
    (d) three days after being mailed by registered or certified mail (return
    receipt requested) to the parties at the following addresses (or at such other
    address for a party as shall be specified by like notice):
  (i)
      If
          to Buyer or Merger Sub (either before or after the Closing) or the Holding
          Company, Arnold Holdings, or the Company (after the Closing):c/o
    U.S. Xpress Enterprises, Inc.
  4080
    Jenkins Road
  Chattanooga,
    TN 37421
  Attention:
    Ray M. Harlin
  Facsimile:
    423-510-4003
  
  With
    a required copy to:
  Scudder
    Law Firm, P.C., L.L.O.
  411
    S. 13thStreet, Suite 200
  Lincoln,
    NE 68508
  Attention:
      Mark
          A. ScudderFacsimile:
      (402)
          435-4239(ii)
      If
          to the Holding Company, Arnold Holdings, or the Company (before the
          Closing), to:Arnold
    Transportation Services, Inc.
  9523
    Florida Mining Road
  Jacksonville,
    FL 32257
  Attention:
      Michael
          S. WaltersFacsimile:
      (904)
          260-0628With
    a required copy to:
  Arnold
    Transportation Services, Inc.
  c/o
    Jefferies Capital Partners
  520
    Madison Avenue, 12thFloor
  New
    York, NY 10022
  Attention:
      Brian
          FriedmanFacsimile:
      (212)
          692-9147
  C-33
  
  and
  Dechert
    LLP
  4000
    Bell Atlantic Tower
  1717
    Arch Street
  Philadelphia,
    PA 19103
  Attention:
      Carmen
          J. RomanoFacsimile:
      (215)
          994-2222
  (iii)
      If
          to the Private Equity Members:Jefferies
    Capital Partners
  520
    Madison Avenue, 12thFloor
  New
    York, NY 10022
  Attention:
      Brian
          FriedmanFacsimile:
      (212)
          692-9147
  With
    a required copy to:
  Dechert
    LLP
  4000
    Bell Atlantic Tower
  1717
    Arch Street
  Philadelphia,
    PA 19103
  Attention:
      Carmen
          J. RomanoFacsimile:
      (215)
          994-2222(iv)
      If
          to the other Members:c/o
    Arnold Transportation Services, Inc.
  9523
    Florida Mining Road
  Jacksonville,
    FL 32257
  Attention:
      Michael
          S. WaltersFacsimile:
      (904)
          260-0628With
    a required copy to:
  Hensley
    Kim & Edgington, LLC
  1660
    Lincoln, Suite 3050
  Denver,
    Colorado 80264
  Attention:
      Darren
          R. Hensley, Esq.Facsimile:
      (720)
          377-0777
  
  C-34
  
  Such
    addresses may be changed from time to time by means of a notice given in the
    manner provided in this Section 7.7 (provided that no such notice shall
    be effective until it is received by the other parties hereto).
  7.9.Consent
    to Jurisdiction. With respect to any action or claim
    arising out of or relating to this Agreement or the Contemplated Transactions,
    the parties hereto hereby expressly and irrevocably (i) agree and consent
    to be subject to the exclusive jurisdiction of the United States District
    Court located in the State of Delaware (and in the absence of Federal jurisdiction,
    the parties consent to be subject to the exclusive jurisdiction of the state
    courts located in the State of Delaware), (ii) agree not to bring any
    action related to this Agreement or the Contemplated Transactions in any other
    court (except to enforce the judgment of such courts), (iii) agree not
    to object to venue in such courts or to claim that such forum is inconvenient
    and (iv) agree that notice or the service of process in any proceeding
    shall be properly served or delivered if delivered in the manner contemplated
    by Section 7.7. Final judgment by such courts shall be conclusive and
    may be enforced in any manner permitted by law.
  7.10.Severability.
    If any provision of this Agreement or the application of any such provision
    to any person or circumstance shall be held invalid, illegal or unenforceable
    in any respect by a court of competent jurisdiction, such invalidity, illegality
    or unenforceability shall not affect any other provision hereof.
  
  7.11.Interpretation.
    All references to immediately available funds or dollar amounts contained
    in this Agreement shall mean United States dollars. All references to GAAP
    contained in this Agreement shall mean United States generally accepted accounting
    principles. 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. The parties acknowledge and agree that (i) each party and
    its legal counsel have reviewed the terms and provisions of this Agreement
    and have contributed to its drafting, (ii) the normal rule of construction,
    to the effect that any ambiguities are resolved against the drafting party,
    shall not be employed in the interpretation of it, and (iii) the terms
    and provisions of this Agreement shall be constructed fairly as to all parties
    hereto and not in favor of or against any party, regardless of which party
    was generally responsible for the preparation of this Agreement. Any fact
    or item that is disclosed in a Schedule or representation in such a way as
    to make apparent its relevance to the information called for by another Schedule
    or representation shall be deemed to have been disclosed in such other Schedule
    or representation.
  7.12.Waiver.
    Waiver of any term or condition of this Agreement by any party shall be effective
    if in writing and shall not be construed as a waiver of any subsequent breach
    or failure of the same term or condition, or a waiver of any other term of
    this Agreement. No failure or delay by any party in exercising any right,
    power or privilege hereunder 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.
  7.13.Counterparts.
    This Agreement may be executed in any number of counterparts, all of which
    shall be considered one and the same agreement, and shall become effective
    when
  
  C-35
  
  one
    or more such counterparts have been signed by each of the parties and delivered
    to the other parties.
  
  7.14.Entire
    Agreement. This Agreement, together with the Schedules
    and Exhibits hereto, contain the entire agreement and understanding between
    the parties hereto with respect to the subject matter hereof and supersede
    all prior and contemporaneous agreements, negotiations, correspondence, undertakings
    and understandings, oral or written, relating to such subject matter.
  7.15.Governing
    Law. This Agreement shall be governed by and construed
    in accordance with the internal laws of the State of Delaware applicable to
    agreements made and to be performed entirely within the State of Delaware,
    without regard to the conflicts of law principles thereof.
  
  C-36
  
  IN
    WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
    as of the date first written above.
  ARNOLD
    HOLDINGS, LLC
  By:/s/ Michael S. WaltersName:
    Michael S. Walters
  Title:President and C.E.O.
  ARNOLD
    TRANSPORTATION HOLDINGS, INC.
  By:/s/ Michael S. Walters
  Name:
    Michael S. Walters
  Title:President & C.E.O.ATS
    ACQUISITION HOLDING CO.
  By:/s/ Michael S. WaltersName:
    Michael S. Walters
  Title:
    Chief Executive Officer and President
  ATS
    MERGER CO.
  By:/s/ Ray HarlinName:
    Ray Harlin
  Title:
    Executive Vice President
  
  ARNOLD
    TRANSPORTATION SERVICES, INC.
  By:/s/ Michael S. WaltersName:
    Michael S. Walters
  Title:President & C.E.O.
  
  
  C-37
  
  Member
    Signature Page
  to
  Purchase
    and Merger Agreement
  dated
    October 21, 2004
  
  ING
    FURMAN SELZ INVESTORS III, L.P.
  By:/s/Brian FriedmanName:Brian FriedmanTitle:Managing Member
        of the Manager
  ING
    BARINGS U.S. LEVERAGED EQUITY PLAN LLC
  By:/s/Brian FriedmanName:Brian FriedmanTitle:Managing Member
        of the Manager
  ING
    BARINGS GLOBAL LEVERAGED EQUITY PLAN LTD.
  By:/s/Brian FriedmanName:Brian FriedmanTitle:Managing Member
        of the Manager
  JAMES
    DOWLING
  /s/
          James DowlingMICHAEL
    S. WALTERS
  /s/
          Michael S. WaltersROBERT
    KNAPPE
  /s/
          Robert KnappeKURT
    ANTKIEWICZ
  /s/
          Kurt AntkiewiczMICHAEL
    GREGERSON /s/ Michael Gregerson
  
  
  C-38