Execution Version

EXHIBIT 10.1

AGREEMENT AND PLAN OF MERGER

BY AND AMONG

USI SERVICES CORPORATION,

KIBBLE & PRENTICE HOLDING COMPANY,

CERTAIN STOCKHOLDERS OF KIBBLE & PRENTICE HOLDING COMPANY

AND

JAMES J. DOUD, AS STOCKHOLDER REPRESENTATIVE

 

Dated October 18, 2006

SANF1\355490.6

TABLE OF CONTENTS

Page

ARTICLE 1

CERTAIN DEFINITIONS

1.1.

2004 Financial Statements  

1.2.

2005 Financial Statements  

1.3.

2006 Financial Statements  

1.4.

Accounts Receivable  

1.5.

Accumulated Funding Deficiency  

1.6.

Adjusted Current Assets  

1.7.

Adjusted Current Liabilities  

1.8.

Adjusted Working Capital  

1.9.

Adjustments  

1.10.

Affiliate  

1.11.

Agency Bill Policy  

1.12.

Aggregate Option Exercise Amount  

1.13.

Aggregate Warrant Exercise Amount  

1.14.

Agreement  

1.15.

Agreement to Preserve Goodwill  

1.16.

Articles of Merger  

1.17.

Books and Records  

1.18.

Business  

1.19.

Business Day  

1.20.

Calculated Interest Income Adjustment  

1.21.

Certificate  

1.22.

Change of Control  

1.23.

Claim  

1.24.

Claim Notice  

1.25.

Client Account  

1.26.

Closing  

1.27.

Closing Date  

1.28.

Code  

1.29.

Collateral Documents  

1.30.

Commercially Reasonable Efforts  

1.31.

Company  

1.32.

Computer Software  

1.33.

Confidentiality Letter  

1.34.

Consents  

1.35.

Contemplated Transactions  

1.36.

Contingent Commissions  

1.37.

Contracts  

1.38.

Copyrights  

1.39.

Cowles Note  

1.40.

Debt  

1.41.

Debt Adjustment  

1.42.

Default  

1.43.

Deferred Rent  

1.44.

Designated Auditor EDBS Statement  

1.45.

Designated Auditor EBITDA Statement  

1.46.

Direct Bill Policy  

1.47.

Dissenting Shares  

1.48.

Dissenting Stockholder  

1.49.

Earn-Out Merger Consideration  

1.50.

EBDITA  

1.51.

EBITDA Designated Auditor  

1.52.

EBITDA Statement  

1.53.

EDBS Designated Auditor  

1.54.

Effective Date  

1.55.

Effective Date Balance Sheet  

1.56.

Effective Date Debt Amount  

1.57.

Effective Date Working Capital  

1.58.

Employee Benefit Plan  

1.59.

Employees  

1.60.

Employment Agreements  

1.61.

Encumbrances  

1.62.

Environmental Claim  

1.63.

Environmental Laws  

1.64.

Equipment  

1.65.

ERISA  

1.66.

ERISA Affiliate  

1.67.

Escrow Agent  

1.68.

Escrow Agreement  

1.69.

Escrow Amount  

1.70.

Excess Short Tax Year Liability  

1.71.

Executive Employment Agreements  

1.72.

Expense Reduction Plan  

1.73.

Fiduciary  

1.74.

Financial Statements  

1.75.

First Measuring Period  

1.76.

GAAP  

1.77.

Governmental Consent  

1.78.

Governmental Entity  

1.79.

Hazardous Materials  

1.80.

HSR Act  

1.81.

Hurley  

1.82.

Indebtedness  

1.83.

Indemnified Party  

1.84.

Indemnifying Party  

1.85.

Indemnity Notice  

1.86.

Initial Merger Consideration  

1.87.

Initial Merger Consideration Base  

1.88.

Insurance Premium Assets  

1.89.

Insurance Premium Liability  

1.90.

Intellectual Property  

1.91.

IRS  

1.92.

K&P Common Shares  

1.93.

K&P Option Shares  

1.94.

K&P Preferred Shares  

1.95.

K&P Securities  

1.96.

K&P Stock Option Plan  

1.97.

K&P Stock Options  

1.98.

K&P Warrants  

1.99.

K&P Warrant Shares  

1.100.

Key Stockholders  

1.101.

Knowledge  

1.102.

Law  

1.103.

Lease  

1.104.

Leased Real Property  

1.105.

Leasehold Improvements and Fixtures  

1.106.

Legal Proceeding  

1.107.

Liabilities  

1.108.

Licenses  

1.109.

Loss Carryback Claim  

1.110.

Loss Carryback Refund  

1.111.

Losses  

1.112.

Low-Rated Carrier  

1.113.

Material Adverse Effect or Material Adverse Change  

1.114.

Material Contract  

1.115.

Measuring Periods  

1.116.

Merger  

1.117.

Merger Consideration  

1.118.

Merger Transaction Expenses  

1.119.

Multi Employer Plan  

1.120.

Operations Manager Agreements  

1.121.

Order  

1.122.

Organizational Documents  

1.123.

Outstanding K&P Securities  

1.124.

Parent  

1.125.

Parent Guaranty  

1.126.

Patents  

1.127.

PBGC  

1.128.

Per Share Initial Merger Consideration  

1.129.

Per Warrant Share Initial Merger Consideration  

1.130.

Permits  

1.131.

Permitted Encumbrances  

1.132.

Permitted Liabilities  

1.133.

Person  

1.134.

Post-Closing Tax Refund Adjustment  

1.135.

Prepaid Items  

1.136.

Prime Rate  

1.137.

Producer  

1.138.

Producer Employment Agreements  

1.139.

Producer Recruitment Plan  

1.140.

Prohibited Transaction  

1.141.

Property  

1.142.

Proprietary Information  

1.143.

Purchaser  

1.144.

Purchaser Constituent Corporation  

1.145.

Purchaser Indemnified Parties  

1.146.

Real Property  

1.147.

Real Property Leases  

1.148.

Registered Intellectual Property  

1.149.

Related Insurance Services  

1.150.

Related Party Agreements  

1.151.

Reportable Event  

1.152.

Required Consents  

1.153.

Restricted Period  

1.154.

Rights and Other Property  

1.155.

Schedules  

1.156.

Second Measuring Period  

1.157.

Securities  

1.158.

Securities Act  

1.159.

Securities Purchase Agreement  

1.160.

Section 11.7 Notice  

1.161.

Self-Insured Health Plan Costs  

1.162.

Stockholder  

1.163.

Short Year Tax Refund  

1.164.

Short Year Tax Returns  

1.165.

Short Year Tax Loss  

1.166.

Stockholders  

1.167.

Stockholder  

1.168.

Stockholder Indemnified Parties  

1.169.

Stockholder Loans  

1.170.

Stockholder Receivables  

1.171.

Stockholder Representative  

1.172.

Subsidiary  

1.173.

Survival Date  

1.174.

Surviving Corporation  

1.175.

Tail Coverages  

1.176.

Tax Benefit Rate  

1.177.

Tax Claim  

1.178.

Tax Returns  

1.179.

Taxes  

1.180.

Third Party  

1.181.

Threshold Amount  

1.182.

Trademarks  

1.183.

Unaudited Interim Statements  

1.184.

USI Companies  

1.185.

WBCA  

1.186.

Working Capital Adjustment  

1.187.

Year 1 Earn-Out Amount  

1.188.

Years 2 and 3 Earn-Out Amount  

ARTICLE 2

THE MERGER

2.1.

Delivery and Filing of Articles of Merger  

2.2.

Effective Date of the Merger  

2.3.

Organizational Documents, Officers and Board of Directors of Surviving
Corporation  

2.4.

Effect of Merger  

2.5.

Manner of Conversion  

2.6.

Merger Consideration  

2.7.

Initial Merger Consideration  

2.8.

Earn-Out Merger Consideration  

2.9.

Initial Merger Consideration Estimate and Payment at Closing  

2.10.

Deposit in Escrow  

2.11.

Post-Closing Determination of Initial Merger Consideration  

2.12.

Determination of Earn-Out Merger Consideration  

2.13.

Post-Closing Tax Credit Adjustment  

2.14.

Allocation of Merger Consideration  

2.15.

Payments to Stockholders  

2.16.

Dissenters’ Rights  

ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

3.1.

Organization, Power and Authority  

3.2.

Authorization  

3.3.

Capitalization of the Company  

3.4.

Subsidiaries  

3.5.

Conflict with other Instruments; Absence of Restrictions  

3.6.

Government and Third-Party Approvals  

3.7.

Title to Properties; Adequacy of Properties  

3.8.

Leasehold Improvements  

3.9.

Real Property  

3.10.

Accounts Receivable  

3.11.

Financial Statements  

3.12.

Absence of Undisclosed Liabilities  

3.13.

Affiliated Relationships  

3.14.

Permits and Approvals  

3.15.

Licenses  

3.16.

Compliance with Law  

3.17.

Legal Proceedings  

3.18.

Absence of Changes  

3.19.

Contracts, Leases, Etc  

3.20.

Client Accounts  

3.21.

Insurance  

3.22.

Business Practices  

3.23.

Licensing Arrangements, Joint Ventures, Etc  

3.24.

Intellectual Property  

3.25.

Transactions with Affiliates  

3.26.

Employee Relations  

3.27.

Environmental Laws  

3.28.

Brokers  

3.29.

Taxes and Tax Returns  

3.30.

Corporate Records  

3.31.

Powers of Attorney  

3.32.

Statements and Other Documents Not Misleading  

3.33.

Cooperation; Access to Books and Records  

3.34.

Stockholder Solicitations  

ARTICLE 4

REPRESENTATIONS AND WARRANTIES OF KEY STOCKHOLDERS

4.1.

Authorization  

4.2.

Title to Shares and Warrants  

4.3.

Legal Proceedings  

4.4.

Conflict with other Instruments; Absence of Restrictions  

4.5.

Government and Third-Party Approvals  

ARTICLE 5

REPRESENTATIONS AND WARRANTIES OF PURCHASER

5.1.

Organization  

5.2.

Authorization for Agreement  

5.3.

Legal Proceeding  

5.4.

Brokers or Finders  

5.5.

Acknowledgments  

5.6.

Conflict with other Instruments; Absence of Restrictions  

5.7.

Government and Third-Party Approvals  

ARTICLE 6

CERTAIN PRE-CLOSING COVENANTS AND OTHER MATTERS

6.1.

Conduct of Business  

6.2.

Notice of Certain Events  

6.3.

Unaudited Interim Statements  

6.4.

Cooperation; Access to Books and Records  

6.5.

Commercially Reasonable Efforts  

6.6.

Amendment of Schedules  

6.7.

Satisfaction of Stockholder Receivables  

6.8.

Company Liabilities  

6.9.

Tail Coverages  

6.10.

Employment Agreements  

6.11.

Regulatory Approvals  

ARTICLE 7

CONDITIONS PRECEDENT TO THE CLOSING

7.1.

Obligation of the Company and the Stockholders to Close  

7.2.

Obligation of the Purchaser to Close  

ARTICLE 8

CLOSING

8.1.

Closing  

8.2.

Deliveries at Closing  

8.3.

Expenses  

8.4.

Termination of Distribution Partners Agreements  

ARTICLE 9

CONFIDENTIALITY AND PRESERVATION OF GOODWILL

9.1.

Confidentiality  

9.2.

Preservation of Goodwill  

9.3.

Specific Enforcement  

ARTICLE 10

INDEMNIFICATION

10.1.

Survival  

10.2.

The Stockholders’ Indemnification  

10.3.

The Purchaser’s Indemnification  

10.4.

Payment; Procedure for Indemnification  

10.5.

Limitations of Indemnity  

10.6.

Stockholders’ Claims Against the Company  

10.7.

Insurance  

10.8.

Set-Off Against Earn-Out Merger Consideration  

10.9.

Characterization of Indemnity Payments  

ARTICLE 11

POST-CLOSING COVENANTS

11.1.

Tax Returns and Loss Carryback Claims  

11.2.

Maintenance of Books and Records of Purchaser  

11.3.

Public Announcements  

11.4.

Assistance in Defense  

11.5.

Further Cooperation  

11.6.

Future Acquisitions  

11.7.

Conduct of Business  

11.8.

Post-Closing Bonuses  

ARTICLE 12

TERMINATION

12.1.

Termination  

12.2.

Survival  

12.3.

Expenses if No Closing  

ARTICLE 13

MISCELLANEOUS

13.1.

Stockholder Representative  

13.2.

Notices  

13.3.

No Third Party Beneficiaries  

13.4.

Schedules and Exhibits  

13.5.

Expenses  

13.6.

Further Assurances  

13.7.

Entire Agreement; Amendment  

13.8.

Section and Paragraph Titles  

13.9.

Binding Effect  

13.10.

Counterparts  

13.11.

Severability  

13.12.

Governing Law  

13.13.

Waiver Of Jury Trial  

13.14.

No Tax Representations  

SANF1\355490.6

ATTACHMENTS, SCHEDULES AND EXHIBITS

Attachments

Attachment 2.6

Holdings of Stockholders

Attachment 2.7(a)

Sample Calculation of Adjustments

Attachment 2.8(a)

Sample Calculation of Earn-Out Merger Consideration

Attachment 2.8(c)(i)-1

New Producer Recruitment Plan

Attachment 2.8(c)(i)-2

Current Producers Eligible under New Producer Recruitment Plan

Attachment 3.11(f)

Sample Calculation of Company’s Trust Account Balance

Attachment 6.10-1

Producers Required to Sign Producer Employment Agreements

Attachment 6.10-2

Employees Required to Sign Operations Manager Agreements

Attachment 7.2(b)

Required Consents

Attachment 9.2

Other Individual Stockholders Signing Goodwill Agreements

Attachment 10.2

Additional Matters to be Treated as Indemnified Claims and Losses

Attachment 10.5

Additional Matters Excluded from Threshold Amount

Schedules

Schedule 3.1

Organization, Power and Authority
Schedule 3.3(a)

Holders of K&P Common Stock and K&P Stock Options
Schedule 3.3(c)

Encumbrances on K&P Shares

Schedule 3.4

Subsidiaries
Schedule 3.5

Conflict with other Instruments; Absence of Restrictions

Schedule 3.6

Government and Third-Party Approvals
Schedule 3.7

Title to Properties
Schedule 3.9

Real Property
Schedule 3.11

Financial Statements
Schedule 3.12

Undisclosed Liabilities
Schedule 3.13

Affiliated Relationships

Schedule 3.14

Permits and Approvals
Schedule 3.15(a)

Licenses

Schedule 3.15(b)

Registered Investment Adviser
Schedule 3.16(a)

Compliance with Law
Schedule 3.16(d)

Business Ethics Policy and Reports
Schedule 3.17

Legal Proceedings
Schedule 3.18

Absence of Changes
Schedule 3.19

Material Contracts
Schedule 3.20

Client Accounts

Schedule 3.21

Insurance
Schedule 3.22(a)

Captive Insurance Companies and Investments
Schedule 3.22(b)

Low-Rated Carrier Disclosure Exceptions
Schedule 3.22(c)

Service Center or Book Roll Arrangements
Schedule 3.22(d)

Captive Agency Relationships and Carrier Hiring Subsidies
Schedule 3.22(e)

Compensation Disclosure Exceptions
Schedule 3.23

Licensing Arrangements, Joint Ventures, Etc.
Schedule 3.24

Intellectual Property
Schedule 3.25-1

Reporting of Affiliate Transactions
Schedule 3.25-2

Transactions with Affiliates
Schedule 3.26.1(a-1)

Employees
Schedule 3.26.1(a-2)

Producers
Schedule 3.26.1(d)

Confidentiality and Non-Competition Agreements
Schedule 3.26.2(a)

Employee Benefit Plans
Schedule 3.26.2(c)

Non-Employees on Benefit Plans
Schedule 3.26.2(d)

Benefit Plans in which Retirees Participate
Schedule 3.29

Taxes and Tax Returns
Schedule 3.31

Powers of Attorney

Exhibits

Exhibit A

Form of Legal Opinion

Exhibit B-1

Form of Employment Agreement (Executive)

Exhibit B-2

Form of Employment Agreement (Producer)

Exhibit B-3

Form of Employment Agreement (Operations Manager)

Exhibit C

Form of Escrow Agreement

Exhibit D

Form of Parent Guaranty

Exhibit E-1

Form of Agreement to Preserve Goodwill (Key Individual Stockholders)

Exhibit E-2

Form of Agreement to Preserve Goodwill (Other Individual Stockholders)

Exhibit F

Form of Confidentiality Letter (Distribution Partners)

SANF1\355490.6

-ii-

AGREEMENT AND PLAN OF MERGER

THIS AGREEMENT AND PLAN OF MERGER (the “Agreement”) is made as of the 18th day
of October 2006, by and among USI SERVICES CORPORATION, a Delaware corporation
(the “Purchaser”), KIBBLE & PRENTICE HOLDING COMPANY, a Washington corporation
(the “Company”), and DISTRIBUTION PARTNERS INVESTMENT CAPITAL, L.P., a Delaware
Limited Partnership (“Distribution Partners”), ARLEN I. PRENTICE and THE ARLEN
I. PRENTICE LLC, a Washington limited liability company (the “Arlen Prentice
LLC” and, together with Arlen I. Prentice, “Arlen Prentice”), CHRISTOPHER J.
PRENTICE (“Chris Prentice”), DAVID F. ROSS (“David Ross”) and ELLEN R.M. BOYER,
(“Ellen Boyer”) (each of Distribution Partners, Arlen Prentice, Chris Prentice,
David Ross and Ellen Boyer, a “Key Stockholder” and together the “Key
Stockholders”), and JAMES J. DOUD, in the capacity of Stockholder
Representative.

WHEREAS, the respective Boards of Directors of the Purchaser and the Company
deem it advisable and in the best interests of each of them and their respective
stockholders that there be a merger pursuant to this Agreement of the Company
and an Affiliate of the Purchaser.

NOW, THEREFORE, IN CONSIDERATION of the foregoing and the mutual promises,
covenants and agreements contained herein, the parties, intending to be legally
bound, hereby agree as follows:

ARTICLE 1
CERTAIN DEFINITIONS

As used in this Agreement, the following terms shall have the meanings herein
specified, unless the context otherwise requires:

1.1.

2004 Financial Statements shall have the meaning assigned in Section 3.11.

1.2.

2005 Financial Statements shall have the meaning assigned in Section 3.11.

1.3.

2006 Financial Statements shall have the meaning assigned in Section 3.11.

1.4.

Accounts Receivable shall mean all of the Company’s trade accounts receivable,
and all notes receivable or evidences of Indebtedness payable to the Company
created or arising in respect of the sale of products, services or other
Property.

1.5.

Accumulated Funding Deficiency shall have the meaning assigned to it in ERISA.

1.6.

Adjusted Current Assets shall have the meaning assigned in Section 2.7(a).

1.7.

Adjusted Current Liabilities shall have the meaning assigned in Section 2.7(a).

1.8.

Adjusted Working Capital shall have the meaning assigned in Section 2.7(a).

1.9.

Adjustments shall have the meaning assigned in Section 2.7.

1.10.

Affiliate shall mean:  (i) any Person that directly or indirectly through one or
more intermediaries controls, is controlled by or under common control with the
Person specified; (ii) any director, officer or Subsidiary of the Person
specified; and (iii) any spouse, parent, child, sibling, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law of
the Person specified.  The term “control” (including, with correlative meaning,
the terms “controlled by” and “under common control with”), as used with respect
to any Person, shall mean the possession, directly or indirectly, of the power
to elect a majority of the board of directors (or other governing body) or to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise.
 In any event and without limiting the generality of the foregoing, any Person
owning 10% or more of the voting securities of another Person shall be deemed to
control that Person.

1.11.

Agency Bill Policy shall mean any insurance policy that is billed to the insured
by the Company.

1.12.

Aggregate Option Exercise Amount shall mean the aggregate amount payable upon
exercise of the K&P Stock Options exercised in connection with Closing.

1.13.

Aggregate Warrant Exercise Amount shall mean the sum of Two Million Six Hundred
Sixty Thousand Two Hundred Five and 20/100 Dollars ($2,660,205.20).

1.14.

Agreement shall mean this Agreement and Plan of Merger.

1.15.

Agreement to Preserve Goodwill shall mean agreements substantially in the form
attached hereto as Exhibit E-1 signed by the Key Stockholders other than
Distribution Partners, and substantially in the form attached hereto as
Exhibit E-2, signed by each of the Stockholders listed in Attachment 9.2.

1.16.

Articles of Merger shall mean the Articles of Merger with respect to the Merger
in a form specified by the Purchaser and reasonably acceptable to the Company.

1.17.

Books and Records shall mean all records, documents, lists and files, relating
to the Property or the Business, including, without limitation, executed
originals (or copies of executed originals when executed originals are not
available) of all Tax Returns, Contracts, purchase orders, sales orders, price
lists, lists of accounts, customers, suppliers, employees, contractors,
consultants and other personnel, shipping records, all product, business and
marketing plans, sales and product brochures and catalogs and other sales
literature and materials, historical sales and commissions data and all books,
ledgers, files, financial statements and other financial records (and related
workpapers and correspondence from accountants), minute books, deeds, title
policies, computer files, programs and retrieved programs, environmental studies
and plans and business records, whether in hard copy, electronic form or
otherwise.

1.18.

Business shall mean the business of the Company as conducted as of the Effective
Date.

1.19.

Business Day shall mean any calendar day which is not a Saturday, Sunday or
public holiday under the laws of the State of Washington.

1.20.

Calculated Interest Income Amount shall have the meaning set forth in
Section 2.8(c)(iii)(B).

1.21.

Certificate shall mean (i) any stock certificate representing a K&P Common Share
or K&P Preferred Share outstanding immediately prior to the Effective Date, (ii)
any K&P Warrant outstanding immediately prior to the Effective Date, or (iii)
any K&P Stock Option outstanding immediately prior to the Effective Date.

1.22.

Change of Control shall mean either:

(a)

A merger, consolidation, statutory or contractual share exchange, or sale of
stock to which the Company or any of its Affiliates or stockholders is a party
if, immediately following the transaction, the Company is no longer a direct or
indirect Subsidiary of Parent or of a Person which shall have acquired all or
substantially all of the stock or assets of Parent; or

(b)

A sale, disposition or other transfer (including by way of liquidation or
dissolution) not in the ordinary course of business (in one transaction or a
series of related transactions) of all or substantially all of the assets of the
Company if, immediately following the transaction, such assets are no longer
held by the Parent, by a direct or indirect Subsidiary of the Parent, or by a
Person which shall have acquired all or substantially all of the stock or assets
of Parent.

1.23.

Claim shall mean any written or oral demand, claim, complaint, suit, action,
cause of action, investigation, proceeding or notice by any Person alleging
actual or potential Liability for any Loss, or for any Default under any Law,
Contract, License, Permit, Order, Employee Benefit Plan, Organizational Document
or other instrument or agreement.  For the purposes of Article 10, “Claim” shall
include any Environmental Claim.

1.24.

Claim Notice shall have the meaning assigned in Section 10.4(b).

1.25.

Client Account shall mean the business account relationship including, without
limitation, any Person who or which is provided any Business of the Company as
of the Closing Date by the Company, regardless of whether such services are
provided by, or through the licenses of, the Company (or any of its agents).

1.26.

Closing shall mean the consummation of the Contemplated Transactions on the
Closing Date pursuant to Article 8.

1.27.

Closing Date shall have the meaning assigned in Section 8.1.

1.28.

Code shall mean the Internal Revenue Code of 1986 and the rules and regulations
promulgated thereunder, as amended and supplemented from time to time, or any
successors thereto.

1.29.

Collateral Documents shall mean the Employment Agreements, the Escrow Agreement,
the Parent Guaranty, the Agreements to Preserve Goodwill, the Confidentiality
Letter, the Schedules, filings by the Company or USI under the HSR Act that are
related to this Agreement, the Articles of Merger, the officer certificates
delivered at the Closing pursuant to Article 7, the terminations of Related
Party Agreements delivered at the Closing pursuant to Section 7.2(n) and, if
signed by a party to this Agreement, each Required Consent delivered at the
Closing pursuant to Article 7.

1.30.

Commercially Reasonable Efforts shall mean the efforts that a prudent business
Person desirous of achieving a result would use in similar circumstances to
achieve that result as expeditiously as possible, provided, however, that a
Person required to use Commercially Reasonable Efforts under this Agreement will
not be thereby required to take actions (a) that would result in a Material
Adverse Change in the benefits to such Person of this Agreement and the
Contemplated Transactions, (b) to dispose of or make any change to its business,
or (c) expend any funds, incur any other burden or take any other action the
cost of any of which would be materially greater than the potential benefit of
such action to the benefiting party.

1.31.

Company shall mean Kibble & Prentice Holding Company, a Washington corporation.

1.32.

Computer Software shall mean all computer applications software, owned or
licensed, whether for general business usage (e.g., accounting, word processing,
graphics, spreadsheet analysis, etc.) or specific, unique-to-the-business usage
(e.g., order processing, manufacturing, process control, design, shipping, etc.)
and all computer operating, security or programming software, owned or licensed.

1.33.

Confidentiality Letter shall mean an agreement substantially in the form
attached hereto as Exhibit F signed by Distribution Partners.

1.34.

Consents shall mean any consent, waiver, approval, authorization, certification
or exemption required from any Person or under any Contract or Law, as
applicable.

1.35.

Contemplated Transactions shall mean the Merger contemplated by this Agreement
and all of the transactions ancillary thereto which are referred to in this
Agreement.

1.36.

Contingent Commissions shall have the meaning assigned in Section 2.8(c)(iv).

1.37.

Contracts shall mean, with respect to any Person, all contracts, Leases,
agreements, instruments, Licenses, undertakings and other commitments, whether
written or oral to which such Person is, or such Person’s properties,
operations, business or assets are bound.

1.38.

Copyrights shall mean registered copyrights, copyright applications and
unregistered copyrights.

1.39.

Cowles Note shall have the meaning specified in Section 6.8(b).

1.40.

Debt shall have the meaning assigned in Section 2.7(b).

1.41.

Debt Adjustment shall have the meaning assigned in Section 2.7(b).

1.42.

Default shall mean, with respect to a Law, Contract, License, Permit, Order,
Employee Benefit Plan, Organizational Document or other instrument or agreement,
(a) a violation, breach or default, (b) the occurrence of an event which with
the passage of time or the giving of notice or both would constitute a
violation, breach or default, or (c) the occurrence of an event that (with or
without the passage of time or the giving of notice or both) would give rise to
a right of damages, specific performance, termination, renegotiation or
acceleration (including the acceleration of payment).

1.43.

Deferred Rent shall have the meaning assigned in Section 2.7(a)(iii).

1.44.

Designated Auditor EDBS Statement shall have the meaning assigned in
Section 2.11(a).

1.45.

Designated Auditor EBITDA Statement shall have the meaning assigned in
Section 2.12(a).

1.46.

Direct Bill Policy shall mean any policy of insurance that is billed to the
insured directly by the insurance carrier.

1.47.

Dissenting Shares shall have the meaning assigned in Section 2.16.

1.48.

Dissenting Stockholder shall have the meaning assigned in Section 2.16.

1.49.

Earn-Out Merger Consideration shall have the meaning assigned in Section 2.8.

1.50.

EBITDA shall have the meaning in Section 2.8(c).

1.51.

EBITDA Designated Auditor shall have the meaning assigned in Section 2.12(a).

1.52.

EBITDA Statement shall have the meaning assigned in Section 2.12(a).

1.53.

EDBS Designated Auditor shall have the meaning assigned in Section 2.11(a).

1.54.

Effective Date shall mean the time as of which the Merger becomes effective,
which shall be the close of business, Pacific Time, on the Closing Date.

1.55.

Effective Date Balance Sheet shall mean the unaudited balance sheet of the
Company as of the close of business on the day immediately prior to the
Effective Date.

1.56.

Effective Date Debt Amount shall have the meaning assigned in Section 2.7(b).

1.57.

Effective Date Working Capital shall have the meaning assigned in
Section 2.7(a).

1.58.

Employee Benefit Plan shall mean any deferred compensation, pension, profit
sharing, stock option, stock purchase, savings, group insurance or retirement
plan, and all vacation pay, severance pay, incentive compensation, consulting,
bonus and other employee benefit or fringe benefit plans or arrangements
maintained by either the Company or any ERISA Affiliate (including, without
limitation, health insurance, life insurance and other benefit plans maintained
for retirees) within the previous six (6) plan years or with respect to which
contributions are or were (within such six-year period) made or required to be
made by the Company or any ERISA Affiliate or with respect to which the Company
had any Liability.

1.59.

Employees shall mean each of the employees of the Company at any time prior to
Closing, including employees who are on paid leave of absence, military leave or
disability leave.

1.60.

Employment Agreements shall mean the Executive Employment Agreements, the
Producer Employment Agreements and the Operations Manager Agreements.

1.61.

Encumbrances shall mean, with respect to any asset, any security interests,
liens, encumbrances, pledges, mortgages, charges, claims, conditional or
installment sales Contracts, title retention Contracts, transferability
restrictions and other claims or burdens of any nature whatsoever attached to or
adversely affecting such asset.

1.62.

Environmental Claim shall mean any Claim or Loss with respect to any
Environmental Laws (including, without limitation, potential or actual Liability
for investigatory costs, cleanup costs, governmental response costs, natural
resources damages, property damages, personal injuries, or penalties).

1.63.

Environmental Laws shall mean all Laws relating to pollution or protection of
the environment (including, without limitation, ambient air, surface water,
groundwater, land, or surface or subsurface strata) including, without
limitation, Laws relating to emissions, discharges, releases or threatened
releases of pollutants, contaminants, chemicals, petroleum, or industrial, toxic
or hazardous substances or wastes into the environment and Laws relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of any of the foregoing including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
§ 9601 et. seq. (“CERCLA”), the Resource Conservation and Recovery Act, 42
U.S.C. § 6901 et. seq., and the rules and regulations promulgated under any of
the foregoing, all as amended and supplemented from time to time, and together
with any successors thereto.

1.64.

Equipment shall mean all of the subject entity’s furniture, fixtures, machinery,
equipment, motor vehicles, office equipment, computers, tools and replacement
parts, wherever located.

1.65.

ERISA shall mean the Employment Retirement Income Security Act of 1974 and the
rules and regulations promulgated thereunder, as amended and supplemented from
time to time, or any successors thereto.

1.66.

ERISA Affiliate shall mean any Person that is included with the Company in a
controlled group or affiliated service group under Sections 414(b), (c), (m) or
(o) of the Code.

1.67.

Escrow Agent shall have the meaning assigned in the Escrow Agreement.

1.68.

Escrow Agreement shall mean the Escrow Agreement attached hereto as Exhibit C.

1.69.

Escrow Amount shall have the meaning assigned in Section 2.10.

1.70.

Excess Short Tax Year Liability shall have the meaning assigned in
Section 11.1(a).

1.71.

Executive Employment Agreements shall mean employment agreements with each of
Arlen I. Prentice, Chris Prentice, Ellen Boyer and David Ross, each
substantially in the form of Exhibit B-1 attached hereto.

1.72.

Expense Reduction Plan shall have the meaning assigned in Section 2.8(c)(ii).

1.73.

Fiduciary shall have the meaning as defined in ERISA Section 3(21).

1.74.

Financial Statements shall have the meaning assigned in Section 3.11.

1.75.

First Measuring Period shall have the meaning assigned in Section 2.8(a).

1.76.

GAAP shall mean generally accepted accounting principles in the United States,
applied on a basis consistent with the Company’s past practices and preceding
years and throughout the periods involved.

1.77.

Governmental Consent shall mean any and all licenses, franchises, permits,
easements, rights, consents, Orders, approvals, variances, waivers, filings and
other authorizations with, of or from any Governmental Entity, including the
expiration of any periods of time under statutory and regulatory notice
provisions of the HSR Act, (a) necessary to consummate the Contemplated
Transactions in the manner contemplated hereby, or (b) otherwise relating to (i)
any Contract or other instrument with any Governmental Entity and to which the
subject Person, its subsidiaries or any of its stockholders is a party (or by
which any of their respective properties or assets is bound or affected), or
(ii) any Permit, including the transfer of any such Contract, Permit or other
instrument in accordance with the terms.

1.78.

Governmental Entity shall mean any court, tribunal, arbitrator, authority,
agency, commission, official or other instrumentality of the government of the
United States or of any foreign country, any state or any political subdivision
of any such government (whether state, provincial, county, city, municipal or
otherwise).

1.79.

Hazardous Materials shall mean all explosive or regulated radioactive materials
or substances, hazardous or toxic substances, reactive, corrosive, carcinogenic,
flammable or hazardous pollutant or other substance, hazardous wastes or
chemicals, petroleum or petroleum distillates, natural gas or synthetic gas,
asbestos or asbestos containing materials and all other materials or chemicals
regulated pursuant to any Environmental Laws, including any “hazardous
substance” or “hazardous waste” as defined in Environmental Laws,  materials
listed in 49 C.F.R. §172.101, materials defined as hazardous pursuant to §
101(14) of CERCLA special nuclear or by-product material, as defined by the
Atomic Energy Act of 1954, 42 U.S.C.A. §3011 et seq. and the rules and
regulations promulgated thereunder.

1.80.

HSR Act shall mean §7A of the Clayton Act (Title II of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended) and the rules and regulations
promulgated thereunder.

1.81.

Hurley shall mean Hurley, Atkins & Stewart, Inc., a Washington corporation.

1.82.

Indebtedness of any Person shall mean all obligations of such Person (a) for
borrowed money, including related fees and expenses, (b) evidenced by notes,
bonds, debentures or similar instruments, (c) for the deferred purchase price of
goods or services (other than trade payables or accruals incurred in the
ordinary course of business), (d) under capital leases or (e) in the nature of
guarantees of the obligations described in clauses (a) through (d) above of any
other Person and, as it relates to the Company, shall include all indebtedness
related to Stockholder Loans and any amounts owed or to be distributed to any
Stockholder.

1.83.

Indemnified Party shall have the meaning set forth in Section 10.4(a).

1.84.

Indemnifying Party shall have the meaning set forth in Section 10.4(a).

1.85.

Indemnity Notice shall have the meaning set forth in Section 10.4(a).

1.86.

Initial Merger Consideration shall have the meaning assigned in Section 2.7.

1.87.

Initial Merger Consideration Base shall have the meaning assigned in
Section 2.7.

1.88.

Insurance Premium Assets shall mean all of the Company’s cash and Accounts
Receivable in each case related to insurance premiums and commissions, net of
allowances for doubtful premiums or commissions, less advance premiums included
in premium Accounts Receivable, all determined in accordance with GAAP.

1.89.

Insurance Premium Liability shall mean all of the Company’s accounts payable
related to insurance premiums, adjusted for customer deposits, all determined in
accordance with GAAP.

1.90.

Intellectual Property shall mean, collectively, (a) all inventions (whether
patentable or unpatentable and whether or not reduced to practice), all
improvements thereto, and all Patents, (b) all Trademarks, trade dress, logos,
trade names, fictitious names, brand names, brand marks, domain names and
corporate names, together with all translations, adaptations, derivations, and
combinations thereof and including all goodwill associated therewith, and all
applications, registrations, and renewals in connection therewith, (c) all
copyrightable works, all Copyrights, and all applications, registrations, and
renewals in connection therewith, (d) all mask works and all applications,
registrations, and renewals in connection therewith, (e) all trade secrets and
confidential business information (including ideas, research and development,
know-how, formulas, compositions, manufacturing and production processes and
techniques, technical data, designs, drawings, specifications, customer and
supplier lists, pricing and cost information, and business and marketing plans
and proposals), (f) all Computer Software (including, but not limited to data,
source codes, object codes, specifications and related documentation), (g) all
other proprietary rights, and (h) all copies and tangible embodiments thereof
(in whatever form or medium).

1.91.

IRS means the United States Internal Revenue Service.

1.92.

K&P Common Shares shall mean shares of common stock of the Company, including
the K&P Option Shares issued at or prior to Closing.

1.93.

K&P Option Shares shall mean shares of common stock of the Company issued at or
prior to Closing upon exercise of K&P Stock Options, and which are set forth on
Attachment 2.6.

1.94.

K&P Preferred Shares shall mean shares of preferred stock of the Company.

1.95.

K&P Securities shall mean the K&P Common Shares, the K&P Preferred Shares and
the K&P Warrants.

1.96.

K&P Stock Option Plan shall mean the Amended and Restated 2002 Stock Option Plan
of the Company, providing for the granting of options to employees of the
Company to purchase K&P Common Shares.

1.97.

K&P Stock Options shall mean the outstanding options to purchase K&P Common
Shares issued pursuant to the K&P Stock Option Plan.

1.98.

K&P Warrants shall mean the warrants for the purchase of shares of the common
stock of the Company held by Distribution Partners and listed in
Schedule 3.3(b), which warrants have exercise prices of $1.03, $1.52, $1.84 and
$2.20 as more particularly described in such Schedule.

1.99.

K&P Warrant Shares shall mean the shares of K&P common stock issuable upon the
exercise of the K&P Warrants.

1.100.

Key Stockholders shall have the meaning assigned in the introductory Section of
this Agreement.  References in this Agreement to the Key Stockholders shall mean
and include Distribution Partners in its status as the holder of the K&P
Warrants.

1.101.

Knowledge, and all variations thereof, shall mean with respect to any
representation, warranty or statement of any party in this Agreement that is
qualified by such party’s “Knowledge,” the actual knowledge of such party or, in
the case of an entity, the actual knowledge of any officer or director of such
entity; provided however, that the “Knowledge” of the Company shall mean the
Knowledge of Arlen Prentice, Chris Prentice, David Ross, Ellen Boyer, Kitty
Hudzinski, Jeff Kidwell, Todd McMahon, Scott Ofstead and Mark Vaughn.

1.102.

Law shall mean, with respect to any Person, any applicable law, statute, treaty,
ordinance, rule, regulation, Order, pronouncement having the effect of law, or
other requirement of any Governmental Entity, including, without limitation, the
Foreign Corrupt Practices Act of 1977, and those covering safety, health,
transportation, bribery, securities regulation, insurance, record keeping,
zoning, employment, tax, anti-discrimination, antitrust, wage and hour and price
and wage control matters, to which, in each of the foregoing cases, such Person
is, or any of such Person’s properties, operations, business or assets are,
bound or subject.  For purposes of Article 10, “Laws” shall include
Environmental Laws.

1.103.

Lease shall mean any lease, agreement (whether verbal or written) or tenancy for
property or assets, together with all subleases, amendments, extensions,
addenda, assignments, waivers and all other rights of use and/or occupancy, and
Contracts and documents relating to any of the foregoing.

1.104.

Leased Real Property shall mean the Real Property leased by the Company.

1.105.

Leasehold Improvements and Fixtures shall mean all of the leasehold
improvements, fixtures and appurtenances owned by the Company and attached to
the Leased Real Property.

1.106.

Legal Proceeding shall mean any Claim or any legal, administrative or other
similar proceeding by or before any Governmental Entity or arbitration or
alternative dispute resolution panel.

1.107.

Liabilities means any direct or indirect indebtedness, guaranty, endorsement,
claim, loss, damage, deficiency, cost, expense, obligation or responsibility,
fixed or unfixed, known or unknown, asserted or unasserted, choate or inchoate,
liquidated or unliquidated, secured or unsecured, except for Permitted
Liabilities.

1.108.

Licenses shall mean, with respect to any Person, all licenses, permits,
authorizations, approvals, registrations, franchises, rights, variances
(including zoning variances), easements, rights of way, and similar consents or
certificates granted or issued by any other Person, other than a Governmental
Entity, relating to the business of the subject Person.

1.109.

Loss Carryback Claim shall have the meaning assigned in Section 11.1(b).

1.110.

Loss Carryback Refund shall have the meaning assigned in Section 11.1(b).

1.111.

Losses shall mean, with respect to any event or circumstance, any and all
Liabilities (except Permitted Liabilities), Encumbrances (except those Permitted
Encumbrances, if any, which this Agreement expressly provides may exist as of
the Closing), penalties, fines, settlements, and causes of action (other than
ordinary wear and tear and depreciation) and reasonable attorneys’, experts’ and
accountants’ fees, expenses and disbursements and court costs in connection with
any of the foregoing incurred by a Person in connection with such event or
circumstance.  Any Losses incurred by the Company shall be deemed to result in
Losses to the Purchaser in the same amount of Losses incurred by the Company.

1.112.

Low-Rated Carrier shall have the meaning assigned in Section 3.22(b).

1.113.

Material Adverse Effect or Material Adverse Change shall mean, with respect to
any event or circumstance, an effect caused thereby or resulting change
therefrom that is or would be materially adverse as to, or in respect of, the
condition (financial or otherwise), business or results of operation of a
specified Person or Persons when taken as a whole, other than any effect or
change occurring as a result of (i) general economic or financial conditions or
(ii) conditions affecting such Person’s industry as a whole.

1.114.

Material Contract shall have the meaning assigned in Section 3.19(a).

1.115.

Measuring Periods shall mean the First Measuring Period and the Second Measuring
Period.

1.116.

Merger shall mean the merger of the Purchaser Constituent Corporation with and
into the Company pursuant to this Agreement and the applicable provisions of the
laws of the State of Washington.

1.117.

Merger Consideration shall have the meaning assigned in Section 2.6(a).  The
Merger Consideration and all other dollar amounts set forth in this Agreement
shall be in United States Dollars.

1.118.

Merger Transaction Expenses shall mean and include the following: (i) all of the
fees, costs and expenses of the Company or, to the extent the Company may be
liable therefor, any Stockholder in connection with the negotiation of this
Agreement and the Closing of the Contemplated Transactions, including, without
limitation, all legal, accounting and other professional fees of the Company in
connection with the negotiation of this Agreement and the Closing, and the fee
due to Hales & Company and James J. Doud by reason of the Contemplated
Transactions; (ii) all of the fees, costs and expenses paid or incurred either
prior to or following the Closing in connection with the determination, payment
and distribution of consideration to Stockholders, including, without
limitation, all legal, accounting and other professional fees paid or incurred
by reason of any Stockholder being a non-approving or dissenting shareholder,
together with any and all amounts determined to be due to any non-approving or
dissenting shareholder in excess of the amount that would have been due to such
Stockholder if the Stockholder had received the share of the Merger
Consideration herein provided; (iii) all of the out-of-pocket fees, costs and
expenses paid or incurred by the Company in connection with the solicitation of
approval by the Stockholders of this Agreement and the Contemplated Transactions
and other notices and solicitations to the Stockholders under this Agreement,
including, without limitation, those paid or incurred by reason of any Claim by
any Stockholder asserting any failure of compliance with the WBCA or any
applicable federal or state securities laws requirements or otherwise arising in
connection with the solicitations to Stockholders made pursuant to this
Agreement; and (iv) all of the out-of-pocket fees, costs and expenses paid or
incurred by the Company in connection with notices and solicitations to Option
Holders in connection with the exercise of the Options and otherwise in
connection with this Agreement and the Contemplated Transactions, including,
without limitation, the full amount of any employee or employer withholding
Taxes or other incidental expense arising from the exercise of the Options and
those out-of-pocket fees, costs and expenses paid or incurred by reason of any
Claim by any Options Holder asserting any failure of compliance with the WBCA or
any applicable federal or state securities laws requirements or otherwise
arising in connection with the notices and solicitations to Options Holders made
pursuant to this Agreement; provided however, that notwithstanding the
foregoing, Merger Transaction Expenses shall not be deemed  to include the
Expense Funds.

1.119.

Multi Employer Plan shall mean an Employee Benefit Plan described in
Section 4001(a)(3) of ERISA.

1.120.

Operations Manager Agreements  shall mean employment agreements with each
Employee of the Company listed on Attachment 6.10-2, each substantially in the
form of Exhibit B-3 attached hereto.

1.121.

Order shall mean any judgment, order, writ, decree, injunction, award, ruling or
other determination whatsoever of any Governmental Entity or any other entity or
body (including, without limitation, any arbitration or similar panel) whose
finding, ruling or holding is legally binding or is enforceable as a matter of
right (in any case, whether preliminary or final).

1.122.

Organizational Documents shall mean the articles or certificate of
incorporation, bylaws, operating agreement, certificate of partnership or other
governing or constituent documents of a Person.

1.123.

Outstanding K&P Securities shall mean collectively, as of the Closing, the
following:  (a) issued and outstanding K&P Common Shares, including the K&P
Option Shares; (b) issued and outstanding K&P Preferred Shares; and (c) the K&P
Warrant Shares.

1.124.

Parent shall mean USI Holdings Corporation, a Delaware corporation.

1.125.

Parent Guaranty shall mean the Guaranty attached hereto as Exhibit D.

1.126.

Patents shall mean all letters patent and pending applications for patents of
the United States and all countries foreign thereto, including regional patents,
certificates of invention and utility models, rights of license or otherwise to
or under letters patent, certificates of intention and utility models which have
been opened for public inspection and all reissues, divisions, continuations and
extensions thereof.

1.127.

PBGC shall mean the Pension Benefit Guaranty Corporation.

1.128.

Per Share Initial Merger Consideration shall mean a fraction: (a) the numerator
of which is the aggregate amount of the Initial Merger Consideration (without
any reduction for the Aggregate Warrant Exercise Amount or the Aggregate Option
Exercise Amount), and (b) the denominator of which is the aggregate number of
Outstanding K&P Securities.

1.129.

Per Warrant Share Initial Merger Consideration shall mean, with respect to each
K&P Warrant Share, the excess of (a) the Per Share Initial Merger Consideration
over (b) the per share exercise price of the K&P Warrant under which such K&P
Warrant Share was issuable, that is, $1.03, $1.52, $1.84 or $2.20, as
applicable.

1.130.

Permits shall mean all licenses, permits, certificates of authority,
authorizations, approvals, registrations, franchises, rights, Orders,
qualifications and similar rights or approvals granted or issued by any
Governmental Entity relating to either the Property or the Business of the
Company or both.

1.131.

Permitted Encumbrances shall mean those Encumbrances listed on Schedule 3.7.

1.132.

Permitted Liabilities shall mean trade payables, accrued employee expenses and
rent of the subject entity incurred in the ordinary course of business.

1.133.

Person shall mean any natural person, corporation, general partnership, limited
partnership, limited liability company, proprietorship, joint venture, trust,
association, union, entity, or other form of business organization or any
Governmental Entity whatsoever.

1.134.

Post-Closing Tax Refund Adjustment shall have the meaning assigned in
Section 2.13.

1.135.

Prepaid Items shall mean all of the Company’s prepaid expenses, including but
not limited to advances and deposits.

1.136.

Prime Rate means the highest prime rate (or base rate) reported, from time to
time, in the Money Rates column or section of The Wall Street Journal, as having
been the rate in effect for corporate loans at large U.S. money center
commercial banks (whether or not such rate has actually been charged by any such
bank) as of the first calendar day of such month for which such rate is
published.

1.137.

Producer shall have the meaning assigned in Section 3.26.1(a).

1.138.

Producer Employment Agreements shall mean employment agreements with each
Producer of the Company listed on Attachment 6.10-1, each substantially in the
form of Exhibit B-2 attached hereto.

1.139.

Producer Recruitment Plan shall have the meaning set forth in Section 2.8(c)(i).

1.140.

Prohibited Transaction shall have the meaning assigned to it in the Code and
ERISA.

1.141.

Property shall have the meaning set forth in Section 3.7.

1.142.

Proprietary Information shall mean (i) with respect to any party to this
Agreement or any Affiliate of such party, all financial, technical, commercial
or other information, including but not limited to information, materials,
documents, customer lists, financial reports, business plans and marketing data
that relate to the business, strategies or operations of the parties hereto,
disclosed or otherwise made available by such party or such Affiliate to another
party or affiliate (the “Recipient”) in connection with the transactions
contemplated by this Agreement and (ii) each of the terms, conditions and other
provisions contained in this Agreement and in the agreements or documents to be
delivered pursuant to this Agreement.  Notwithstanding the preceding sentence,
the definition of Proprietary Information shall not include any information that
(i) is in the public domain at the time of disclosure to the Recipient or
becomes part of the public domain after such disclosure through no fault of the
Recipient, (ii) is lawfully possessed in writing by the Recipient at the time of
disclosure to such Recipient, or (iii) is disclosed to a party by any Person
other than a party to this Agreement; provided, that the party to whom such
disclosure has been made does not have actual Knowledge that such Person is
prohibited from disclosing such information (either by reason of contractual, or
legal or fiduciary duty or obligation).  For the purposes hereof, public domain
shall not include disclosure of information, except as otherwise provided
herein, to any other person in connection with the transactions contemplated
hereby.

1.143.

Purchaser shall mean USI Services Corporation, a Delaware corporation.

1.144.

Purchaser Constituent Corporation shall mean Hurley or such other Affiliate of
the Purchaser as it may designate.

1.145.

Purchaser Indemnified Parties shall mean the Purchaser and the Parent and, upon
and following the Closing of the Contemplated Transactions, the Company, their
successors and assigns, and all of their directors, officers, employees,
Affiliates, agents, stockholders, and legal representatives, and each Person who
controls (within the meaning of the Securities Act) any of the foregoing.

1.146.

Real Property shall mean any real estate or interest therein, together with all
buildings, improvements, fixtures, easements, options to acquire real estate or
interest therein, rights to unpaid insurance proceeds in respect of Losses to
real estate, rights to unpaid condemnation awards and all other rights in or
appurtenant thereto.

1.147.

Real Property Leases shall have the meaning set forth in Section 3.9.

1.148.

Registered Intellectual Property shall mean Patents, patent rights, patent
applications, Trademarks, trademark applications, service marks, service mark
applications, trade names, domain names, logos, mask works and registered
Copyrights registered in the name of the Company.

1.149.

Related Insurance Services shall mean, without limitation, risk management and
loss control, analysis of loss exposures and designs, loss reserves and rate
reviews, performance of cash flow studies, administration of risk funding and
transfer techniques, captive company formation, self-insurance consulting,
reinsurance and excess stop loss (both specific and aggregate) placement,
management of insurance programs, human resources and benefit consulting,
providing of actuarial and administrative services for pension and benefit plans
(including, without limitation, employee benefit plans), financial services
including premium financing, compensation programs and employee communications,
processing dues and contributions for non-profit entities, third party
administration and the servicing, management and oversight of, and
responsibility for, clients and prospective clients.

1.150.

Related Party Agreements shall have the meaning assigned in Section 3.19.

1.151.

Reportable Event shall have the meaning assigned to it in ERISA.

1.152.

Required Consents shall mean any Consent required from any person or under any
Contract or Law, as applicable, including all Governmental and Third-Party
Consents listed on Schedule 3.6 attached hereto.

1.153.

Restricted Period shall mean the period for each Person listed in Attachment 9.2
specified as the Restricted Period for such Person.

1.154.

Rights and Other Property shall mean all of the Company’s assets not included in
the Accounts Receivable, cash, Equipment, Intellectual Property, inventory,
Leasehold Improvements and Fixtures and Prepaid Items, including, without
limitation, all of the following:  rights of offset, bank and mutual fund
accounts, safe deposit boxes, credits, claims against third parties for refunds,
causes of action, judgments, proceeds of insurance in respect of damage to or
destruction or loss of assets, going concern value, goodwill, rights in names
“Kibble & Prentice” or “K & P” or any variation thereof, contract rights,
warranties and licenses received from manufacturers and sellers of Equipment and
inventory, vendor and customer records, franchises, licenses, permits, consents,
approvals, certificates of public convenience, waivers and authorizations for
the operation of the Business, including, without limitation, those, if any,
relating to the importation and exportation of products and materials, technical
information, telephone numbers, Internet websites, e-mail addresses and other
electronic communication systems.

1.155.

Schedules shall mean each and all of the Schedules referred to in this
Agreement.

1.156.

Second Measuring Period shall have the meaning assigned in Section 2.8(b).

1.157.

Securities shall mean all shares of capital stock, options, warrants, notes,
bonds or other equity or debt securities which have ever been offered or sold by
the subject entity.

1.158.

Securities Act shall mean the Securities Act of 1933, or any successors thereto,
and the rules and regulations promulgated thereunder, as amended and
supplemented from time to time.

1.159.

Securities Purchase Agreement shall mean that certain securities purchase
agreement, originally dated January 31, 2002 and subsequently amended on July
11, 2005, by and among the Company and Distribution Partners.

1.160.

Section 11.7 Notice shall have the meaning assigned in Section 11.7.

1.161.

Self-Insured Health Plan Costs shall mean the full amount of all payments,
expenditures, costs and expenses paid or incurred at any time following the
Effective Date in respect of or in connection with the operation and
administration of the Company’s self-insured medical plan.

1.162.

Shareholder Agreement shall mean that certain Company Second Amended and
Restated Shareholder Agreement dated as of July 8, 2005.

1.163.

Short Year Tax Refund shall have the meaning assigned in Section 11.1(a).

1.164.

Short Year Tax Returns shall have the meaning assigned in Section 11.1(a).

1.165.

Short Year Tax Loss shall have the meaning assigned in Section 11.1(a).

1.166.

Stockholders shall mean the holders of record of the Company’s common stock and
preferred stock, including each Option Holder who becomes a holder of K&P Common
Shares in conjunction with or prior to the Merger.  References in this Agreement
to the Stockholders shall also mean and include Distribution Partners in its
status as the holder of the K&P Warrants.

1.167.

Stockholder Agreement shall mean that certain Amended and Restated Stockholder
Agreement dated July 11, 2005, by and among the Company and certain shareholders
of the Company.

1.168.

Stockholder Indemnified Parties shall mean the Stockholders and their respective
heirs, executors and personal administrators.

1.169.

Stockholder Loans shall have the meaning assigned in Section 3.25.

1.170.

Stockholder Receivables shall have the meaning assigned in Section 3.25.

1.171.

Stockholder Representative shall mean James J. Doud or his successor in such
capacity.

1.172.

Subsidiary means any entity with respect to which a specified Person (or a
Subsidiary thereof) owns a majority of the voting stock or otherwise has the
power to vote or direct the voting of sufficient securities to elect a majority
of the directors.

1.173.

Survival Date shall have the meaning set forth in Section 10.1.

1.174.

Surviving Corporation shall mean the Company as the surviving party in the
Merger.

1.175.

Tail Coverages shall mean so-called “tail” or extended reporting period coverage
under the E&O, D&O, EPL and fiduciary insurance policies of the Company.  Such
coverage shall be for a period of not less than two years following the
Effective Date and shall have policy limits and deductibles not less favorable
to the Company than those in effect prior to the Closing.  The Company and such
USI Company as the Purchaser may designate shall be co-brokers of record for the
Tail Coverages.

1.176.

Tax Benefit Rate shall equal thirty-four percent (34%).

1.177.

Tax Claim shall have the meaning set forth in Section 11.1(c)(vi).

1.178.

Tax Returns  shall mean all returns, reports, claims for refunds or other
information required or permitted to be supplied to or filed with any
Governmental Entity in connection with Taxes (including, without limitation,
information returns and declarations of estimated tax).

1.179.

Taxes shall mean (i) all taxes, charges, fees, levies or other assessments
including, without limitation, all net income, gross income, gross receipts,
sales, use, ad valorem, transfer, franchise, profits, payroll, employment,
social security, unemployment, excise, estimated, stamp, occupancy, occupation,
property or other similar taxes, including any interest or penalties thereon,
and additions to tax or additional amounts imposed by any federal, state, local
or foreign Governmental Entity, domestic or foreign (a “Taxing Authority”) or
(ii) all liability for the payment of any taxes, interest, penalty, addition to
tax or like additional amount resulting from the application of Treasury
Regulation § 1.1502-6 or comparable Law.

1.180.

Third Party shall mean any Person other than the Parent, the Purchaser, the
Company, the Stockholders, or an Affiliate of any of the foregoing.

1.181.

Threshold Amount shall have the meaning set forth in Section 10.5.

1.182.

Trademarks shall mean registered trademarks, registered service marks, trademark
and service mark applications, and unregistered trademarks and service marks.

1.183.

Unaudited Interim Statements shall have the meaning set forth in Section 3.11.

1.184.

USI Companies shall mean the Purchaser, the Parent and any of their Affiliates
or Subsidiaries, and any of their respective successors or assigns, whether now
existing or hereafter created or acquired, including the Company following the
Closing.

1.185.

WBCA means the Washington Business Corporation Act.

1.186.

Working Capital Adjustment shall have the meaning assigned in Section 2.7(a).

1.187.

Year 1 Earn-Out Amount shall have the meaning assigned in Section 2.8(a).

1.188.

Years 2 and 3 Earn-Out Amount shall have the meaning assigned in Section 2.8(b).

ARTICLE 2
THE MERGER

2.1.

Delivery and Filing of Articles of Merger.  On the Closing Date, the Constituent
Corporations will cause the Articles of Merger to be signed, verified and filed
with the Secretary of the State of Washington.

2.2.

Effective Date of the Merger.  At the Effective Date, the Purchaser Constituent
Corporation shall be merged with and into the Company in accordance with the
Articles of Merger, the separate existence of the Purchaser Constituent
Corporation shall cease and the Company shall be the surviving party in the
Merger.  The Merger will be effected in a single transaction.

2.3.

Organizational Documents, Officers and Board of Directors of Surviving
Corporation.  At the Effective Date:

(a)

the Articles of Incorporation of the Company, as the same may be amended at the
direction of the Purchaser in connection with the Merger, shall be the Articles
of Incorporation of the Surviving Corporation until amended as provided by law;

(b)

the By-laws of the Purchaser Constituent Corporation then in effect shall be the
By-laws of the Surviving Corporation, until duly amended;

(c)

the Board of Directors of the Surviving Corporation shall consist of one person,
who shall be Ernest J. Newborn, II.  The Board of Directors of the Surviving
Corporation shall hold office subject to the provisions of the laws of the State
of Washington and of the Organizational Documents of the Surviving Corporation;
and

(d)

the officers of the Surviving Corporation shall consist of the following
persons:  Arlen Prentice, as Chief Executive Officer; Chris Prentice, as
President, Ernest J. Newborn, II, as Secretary, Robert S. Schneider, as
Treasurer, and Ellen Boyer as Assistant Secretary and Assistant Treasurer.  Each
of such officers will serve, subject to the provisions of the Charter Documents
of the Surviving Corporation, until his or her successor is duly elected and
qualified.

2.4.

Effect of Merger.  At the Effective Date, the effect of the Merger shall be as
provided in the applicable provisions of the laws of the State of Washington.
 Except as set forth herein, at the Effective Date, the separate existence of
the Purchaser Constituent Corporation shall cease to exist and shall merge into
the Company, and title to all property owned by the Purchaser Constituent
Corporation shall vest in the Company without reversion or impairment.  At such
time, all of the Purchaser Constituent Corporation’s obligations, including
without limitation, contractual, tort, statutory and administrative obligations,
shall become obligations of the Company and any action or proceeding pending
against the Purchaser Constituent Corporation may be continued as if the Merger
had not occurred, or the Company may be substituted as a party to the action or
proceeding.  Any assumed business name registered by the Company pursuant to the
WBCA shall continue as an assumed business name of the Surviving Corporation.
 Upon the consummation of the Merger, the stockholders of the Purchaser
Constituent Corporation and Company shall be entitled to the rights provided in
this Agreement and the rights provided in the WBCA.

2.5.

Manner of Conversion.  Upon and as of the Effective Date:

(a)

All of the K&P Common Shares which are issued and outstanding immediately prior
to the Effective Date, by virtue of the Merger and without any action on the
part of the holders thereof, shall automatically be cancelled and converted into
the right to receive the share of the Merger Consideration set forth in
Section 2.6 below to be paid in accordance with this Article 2, subject to the
provisions of Section 2.10 relating to the Escrow Agreement;

(b)

All of the K&P Preferred Shares which are issued and outstanding immediately
prior to the Effective Date, by virtue of the Merger and without any action on
the part of the holders thereof, shall automatically be cancelled and converted
into the right to receive the share of the Merger Consideration set forth in
Section 2.6 below to be paid in accordance with this Article 2, subject to the
provisions of Section 2.10 relating to the Escrow Agreement;

(c)

The K&P Warrants, by virtue of the Merger and without any action on the part of
Distribution Partners, shall automatically be cancelled and converted into the
right to receive the share of the Merger Consideration set forth in Section 2.6
below to be paid in accordance with this Article 2, subject to the provisions of
Section 2.10 relating to the Escrow Agreement; and

(d)

Each share of Purchaser Constituent Corporation’s common stock issued and
outstanding immediately prior to the Effective Date, by virtue of the Merger and
without any action on the part of the holder thereof, automatically shall be
converted into one fully paid and non-assessable share of common stock of the
Surviving Corporation, the aggregate amount of which shall constitute all of the
issued and outstanding shares of capital stock of the Surviving Corporation
immediately after the Effective Date.

2.6.

Merger Consideration.

(a)

As full consideration for the Merger, the Purchaser shall pay to the
Stockholders, in accordance with Section 2.15 and otherwise in the manner set
forth in this Article and subject to the provisions set forth herein regarding
the Escrow Agreement and otherwise, an aggregate amount (the “Merger
Consideration”) equal to the sum of:  (i) the Initial Merger Consideration
determined as provided in Section 2.7 below and this Section, which Initial
Merger Consideration shall be allocated among the Stockholders as provided in
subsection (c) of this Section; (ii) the Earn-Out Merger Consideration
determined as provided in Section 2.8 below and allocated as provided in
subsection (e) of this Section; and (iii) the Post-Closing Tax Refund Adjustment
determined as provided in Section 2.13 below and allocated as provided in
subsection (e) of this Section.

(b)

At Closing, the Initial Merger Consideration shall be disbursed as follows:
 (i) $3,500,000 shall be deposited with the Escrow Agent in accordance with
Section 2.10; and (ii) the balance shall be paid to the Stockholder
Representative to be distributed to the Stockholders in accordance with the
terms of this Agreement, subject to the right of the Stockholder Representative
to retain $200,000 as Expense Funds in accordance with Section 13.1.

(c)

The Initial Merger Consideration shall be allocated among the Stockholders as
follows:  (i) to each holder of K&P Common Shares and K&P Preferred Shares,
there shall be allocated a portion of the Initial Merger Consideration equal to
the Per Share Initial Merger Consideration times the total number of K&P Common
Shares and K&P Preferred Shares held by such holder; and (ii) to Distribution
Partners (in addition to the amount allocated pursuant to clause (i) in respect
of its K&P Common Shares and K&P Preferred Shares), there shall be allocated a
portion of the Initial Merger Consideration equal to the excess of (A) the
product of Per Share Initial Merger Consideration times the total number of K&P
Warrant Shares, over (B) the Aggregate Warrant Exercise Amount.

(d)

For each K&P Common Share issued upon the exercise of a K&P Stock Option, the
amount of the Initial Merger Consideration payable to the holder thereof shall
be reduced by the amount of the exercise price due from such holder by reason of
the exercise of the K&P Stock Option, to the extent the holder shall not have
paid such amount to the Company prior to the Closing.  The Initial Merger
Consideration as otherwise determined in accordance with Section 2.7 shall be
reduced by the Aggregate Warrant Exercise Amount.

(e)

After the allocations and distributions of the Initial Merger Consideration made
as provided above in this Section, the Earn-Out Merger Consideration, the
Post-Closing Tax Refund Adjustment and all other allocations and payments to the
Stockholders shall be made pro rata among the Stockholders based on the relative
proportions set forth on Attachment 2.6.

(f)

Attachment 2.6 sets forth the Company’s estimates of the allocations and
distributions of the Initial Merger Consideration to be made pursuant to this
Section along with the proportionate interests of each of the Stockholders in
the Outstanding K&P Securities, and the Company shall deliver to the Purchaser
at Closing a revised Attachment 2.6 setting forth the actual amount of the
allocations and distributions to be made at Closing and the actual Outstanding
K&P Securities and such proportionate interests.

2.7.

Initial Merger Consideration.  The “Initial Merger Consideration” shall mean
Eighty-Three Million Dollars ($83,000,000) (the “Initial Merger Consideration
Base”) increased or reduced by the adjustment provided in subsection (a) of this
Section and reduced by the adjustment provided in subsection (b) of this Section
(such adjustments in subsections (a) and (b), the “Adjustments”).

(a)

Working Capital Adjustment.  The Initial Merger Consideration Base shall be
increased or reduced (the “Working Capital Adjustment”) by $1.00 for each $1.00
that the Company’s Adjusted Working Capital (as defined below), as reflected on
the Effective Date Balance Sheet, is greater or less than One Million Four
Hundred Thousand Dollars ($1,400,000) (the “Effective Date Working Capital”),
determined by reference to the definitions set forth below in this Section.
 Attachment 2.7(a) sets forth a sample calculation of Adjusted Working Capital
and the other Adjustments, provided that such sample is for illustrative
purposes only and, in the event of any inconsistency or conflict between such
example and the terms of this Agreement, this Agreement shall govern.

(i)

“Adjusted Working Capital” shall mean the Company’s Adjusted Current Assets less
its Adjusted Current Liabilities.

(ii)

“Adjusted Current Assets” shall mean current assets determined in accordance
with GAAP, upon and subject to the following:  (A) Adjusted Current Assets shall
include rental deposits; (B) Adjusted Current Assets shall include the cash
surrender value of employee life insurance, in the net amount realizable by the
Company as of the Effective Date, after payment of any related debt and
discharge of other associated obligations; (C) Adjusted Current Assets shall
include the carrying value as of the Effective Date of the Company’s investment
in M Financial Holdings Incorporated; (D) Adjusted Current Assets shall include
deferred tax assets as of the Effective Date to the extent the benefit thereof
is reasonably likely to be paid in cash to, or reduce a tax liability of, the
Purchaser within twelve months of the Effective Date (except that Adjusted
Current Assets shall not include any deferred tax assets relating to the
Deferred Rent or net operating losses); (E) Adjusted Current Assets shall not
include any amount in respect of any Stockholder Receivable or any other amount
due to the Company from any current or former employee, current or former
officer or other individual; (F) Adjusted Current Assets shall not include any
amount in respect of the Company’s net operating loss carryback receivable;
(H) Adjusted Current Assets shall include the amount of the Aggregate Warrant
Exercise Amount; and (I) Adjusted Current Assets shall include the amount of the
Aggregate Option Exercise Amount (but without duplication for any amounts
included in Adjusted Current Assets for sums due from the holders of K&P Stock
Options in respect of the exercise price of such options).

(iii)

“Adjusted Current Liabilities” shall mean current liabilities, determined in
accordance with GAAP, upon and subject to the following:  (A) Adjusted Current
Liabilities shall not include the current portion of the principal and interest
on long-term debt (or any other amounts included in Debt, as defined below);
(B) Adjusted Current Liabilities shall not include the current deferred rent
obligation owing in respect of the offices premises currently occupied by the
Company located at 601 Union Street, Seattle, Washington (the “Deferred Rent”);
(C) Adjusted Current Liabilities shall include the projected amount of the
Merger Transaction Expenses that remain unpaid as of the Effective Date;
(D) Adjusted Current Liabilities shall include the projected amount of the
Self-Insured Health Plan Costs; and (E) Adjusted Current Liabilities shall
include any unpaid premium amounts on the Tail Coverages.

(b)

Debt Adjustment.  The Initial Merger Consideration Base shall be reduced (the
“Debt Adjustment”) by $1.00 for each $1.00 of Debt (as defined below) reflected
on the Effective Date Balance Sheet (the “Effective Date Debt Amount”).  The
Company’s “Debt” shall mean the current portion of the principal and interest on
long-term debt, long-term debt, and all other liabilities of the Company,
including contingent liabilities and liabilities under deferred compensation and
other employee plans, determined in accordance with GAAP, excluding only the
Company’s Adjusted Current Liabilities as defined above, and provided that Debt
shall not include the amount of the Deferred Rent.  The Debt which the Company
is permitted to have as of the Closing is subject to the provisions of
Section 6.8.  The Debt Adjustment shall include the amount of the Cowles Note
(to the extent not included as an Adjusted Current Liability).

2.8.

Earn-Out Merger Consideration.  “Earn-Out Merger Consideration” shall mean the
sum of (1) the Year 1 Earn-Out Amount and (2) the Years 2 and 3 Earn-Out Amount,
determined by reference to the definitions and in the manner provided below in
this Section.  Attachment 2.8(a) sets forth a sample calculation of the Earn-Out
Merger Consideration, provided that such sample is for illustrative purposes
only and, in the event of any inconsistency or conflict between such example and
the terms of this Agreement, this Agreement shall govern.

(a)

The “Year 1 Earn-Out Amount” shall be determined by reference to EBITDA during
the period from January 1, 2007 through December 31, 2007 (the “First Measuring
Period”) and shall be in an amount equal to the product of (A) the amount, if
any, of EBITDA during the First Measuring Period in excess of Ten Million
Dollars ($10,000,000) multiplied by (B) three (3), provided that in no event
shall the Year 1 Earn-Out Amount exceed Seven Million Five Hundred Thousand
Dollars ($7,500,000).

(b)

The “Years 2 and 3 Earn-Out Amount” shall be determined by reference to EBITDA
during the period from January 1, 2008 through December 31, 2009 (the “Second
Measuring Period”) and shall be in an amount equal to the product of (A) the
amount, if any, of average annual EBITDA during the Second Measuring Period
(that is, the aggregate amount of EBITDA during the Second Measuring Period
divided by two (2)) in excess of Thirteen Million Five Hundred Thousand Dollars
($13,500,000) multiplied by (B) seven and one-half (7.5), provided that in no
event shall the aggregate amount of the Year 1 Earn-Out Amount plus the Years 2
and 3 Earn-Out Amount exceed Twenty-Two Million Five Hundred Thousand Dollars
($22,500,000).

(c)

For purposes of determining the amounts of the Earn-Out Merger Consideration,
“EBITDA” shall mean the combined net income of the Company and Hurley plus the
sum, on a combined basis and only to the extent such amounts are deducted from
the combined net revenues of the Company and Hurley in determining net income,
of (1) interest expense, (2) federal, state and local income taxes,
(3) depreciation of tangible assets, and (4) amortization of intangible assets,
all as determined in accordance with GAAP, upon and subject to the following:

(i)

Presentation Adjustments.  EBITDA shall be increased by the following amounts,
if and to the extent the same have been deducted in determining EBITDA: (A) the
business and occupation taxes imposed by the State of Washington upon the
operations of the Company and Hurley; (B) any compensation expense related to
the vesting of employee stock options or stock grants; and (C) expenses to the
extent provided under the New Producer Recruitment Plan set forth in
Attachment 2.8(c)(i)-1 (the “Producer Recruitment Plan”).  The producers of the
Company listed on Attachment 2.8(c)(i)-2, any producers added to such Attachment
as mutually agreed by the Company and the Purchaser prior to the Closing, and
any additional producers added in accordance with the Producer Recruitment Plan
shall, for purposes of determining EBITDA, be treated as new producers under the
Producer Recruitment Plan.  For purposes of determinations of EBITDA, the terms
of the Producer Recruitment Plan attached hereto shall govern, without regard to
the terms of any similar producer recruitment plan that may from time to time be
in place for the USI Companies.

(ii)

First-Year Transition Expenses.  EBITDA shall be increased by the following
amounts, if and to the extent the same have been deducted in determining EBITDA:
(A) the direct expenses attributable to the one-time system conversion
activities, name change, and office integration expenditures;  (B) the amount of
any added expense solely and directly attributable to compliance with Section
404 of the Sarbanes-Oxley Act of 2002, where the type and projected amount of
such expense has been identified by the Stockholder Representative in advance in
writing, as an expense to be excluded in calculating EBITDA, subject to the
Purchaser’s written approval, which shall not be unreasonably withheld; (C) if
and to the extent that any one or more of the expense reductions specified in
the Expense Reduction Plan are executed upon within ninety (90) days following
the Effective Date, EBITDA shall be determined by treating each expense
reduction so executed upon as having been in effect during the entirety of the
First Measuring Period.  For this purpose, “Expense Reduction Plan” shall mean a
plan for reductions in Company and Hurley expenses mutually agreed by the
Company and the Purchaser in writing by the Company and the Purchaser prior to
Closing, as the same may be amended by the Stockholder Representative and the
Purchaser thereafter, provided that no such amendment shall extend the ninety
(90) day period herein specified.

(iii)

Allocated Expenses.  EBITDA shall be adjusted by the following amounts: (A) If
and to the extent deducted in determining EBITDA, EBITDA shall be increased by
expenses attributable to national or regional management personnel and offices
of the Purchaser or any other USI Company; (B) if and to the extent the interest
income allocated to the Company and Hurley for any month of the period during
which EBITDA is being determined is less than or more than the “Calculated
Interest Income Amount”, then EBITDA will be adjusted to reflect the impact of
the Calculated Interest Income Amount, and for this purpose the “Calculated
Interest Income Amount” shall be the product of (1) the sum of $1,400,000 plus
the Company’s trust account balance as of the end of each month multiplied by
(2) the rate payable during such month on Columbia Government Reserves; (C) if
the Purchaser determines that a cost, which had been borne solely by the Company
either through the use of outside vendors or with Company employees, shall be
replaced with national and/or regional employees or programs, then the Purchaser
and the Stockholder Representative shall agree upon the annual adjustment, if
any, which will be included as an adjustment to EBITDA (it is anticipated that
the following changes to the Company’s operations may occur: expenses for
insurances coverages, telecommunications, and information technology); and
(D) the sum of $150,000 per annum (which represents a fixed adjustment agreed by
the parties with respect to certain employee benefit matters).

(iv)

Future EBITDA Adjustments.  EBITDA shall be increased by the following amounts,
if and to the extent the same have been deducted in determining EBITDA: (A) To
the extent the Company or Hurley cannot or does not accept profit sharing,
contingent, bonus, override, excess commissions or any other such similar
compensation (“Contingent Commissions”) that a carrier has tendered to the
Company or Hurley and such non-acceptance is made by reason of a policy or
practice of Parent or any Affiliate thereof in effect from time to time, annual
EBITDA (pro rated for shorter periods, as applicable) shall be increased by an
amount equal to the average annual Contingent Payments received by the Company
or Hurley over the twenty-four (24) month period ending on the date such policy
or practice limiting the acceptance of Contingent Payments becomes effective,
provided that the amount of any such increase shall take into account, and not
be made to the extent of, any compensation received in consideration of not
taking Contingent Commissions, in accordance with commission schedules of a
carrier, as negotiated with the carrier, or otherwise.  The provisions of this
Section shall apply only to non-acceptance by reason of a policy or practice of
Parent or any Affiliate thereof and shall not, in any circumstances, apply to
any cessation, discontinuance or suspension by any carrier of Contingent
Commissions, either voluntarily, to comply with Law or regulatory requirements,
or otherwise; (B) any Losses incurred by the Company to the extent any Purchaser
Indemnified Party or any Stockholder Indemnified Party has received cash
reimbursement pursuant to Sections 10.2 or 10.3 hereof; and (C) expenses, Losses
and Claims attributable to the operation by Hurley of its business prior to the
Effective Date for which an adequate accrual has not been made, including, but
not limited to: E&O claims and related deductibles not covered by insurance,
employment claims, claims arising in connection with licensing and/or tax
issues, inadequate Insurance Premium Liabilities, and the write-off or increase
in bad debt allowances of accounts receivable of Hurley.

(d)

With regard to any books of business, accounts or other business acquired by the
Company following the Closing, the results of the acquired business shall be
included in EBITDA to the extent and in the manner mutually agreed by the
Purchaser and the Stockholder Representative in writing prior to the
consummation of such acquisition.

(e)

To the extent not already distributed to the Stockholders, the full amount of
the Year 1 Earn-Out Amount plus the Years 2 and 3 Earn-Out Amount shall be
immediately due and payable upon a Change of Control with respect to the
Company, subject to the provisions of Section 10.8.

(f)

In no event shall the right of any Stockholder to receive any Earn-Out Merger
Consideration be assignable or transferable, other than by operation of law.

(g)

The Earn Out Merger Consideration will be treated in accordance with Section 483
of the Internal Revenue Code.

2.9.

Initial Merger Consideration Estimate and Payment at Closing.  For purposes of
determining the amount payable in respect of the Initial Merger Consideration
upon the Closing, the amount of the Adjustments to the Initial Merger
Consideration shall be calculated by reference to an estimated Effective Date
Balance Sheet mutually acceptable to the parties.  At the Closing, Purchaser
shall pay to the Stockholders in accordance with Section 2.15 such estimated
amount of the Initial Merger Consideration, in cash, subject to the escrow
provisions set forth below in Section 2.10, and subject to adjustment following
the Closing as set forth below in Section 2.11.

2.10.

Deposit in Escrow.  At Closing, there shall be delivered to the Escrow Agent
pursuant to the Escrow Agreement, to be held and disbursed upon and subject to
all of the terms and conditions set forth therein, cash in the amount of Three
Million Five Hundred Thousand Dollars ($3,500,000) (the “Escrow Amount”), and as
provided in Section 2.13, the Short Year Tax Refund and the Loss Carryback
Refund shall also be delivered to the Escrow Agent pursuant to the Escrow
Agreement, to be so held and disbursed (and the Escrow Amount shall thereafter
include the Short Year Tax Refund and the Loss Carryback Refund).  The sum of
$3,500,000 shall be deducted under Section 2.6(b) from the Initial Merger
Consideration due to the Stockholders upon Closing, excluding any consideration
attributable to any Dissenting Shares in respect of which no payment is required
to be made to the holder thereof at Closing.  At the request of the Stockholder
Representative upon or following the second anniversary of the Effective Date,
the Purchaser and the Stockholder Representative shall direct the Escrow Agent
to disburse the remainder of the Escrow Amount to the Stockholder
Representative, except as follows:  (a) there shall be disbursed to the
Purchaser and other Purchaser Indemnified Parties from the Escrow Amount, prior
to any disbursement to the Stockholder Representative, any and all amounts then
due pursuant to Article 10 in respect of any Claim or demand of a Third Party or
any Loss; and (b) with regard to any Claim or demand of a Third Party or any
Loss which has not been finally resolved or otherwise liquidated in amount upon
such anniversary, the amount claimed or demanded by a Third Party or, if no such
claim or demand has been made, the estimated maximum amount of such Claim, Loss
or demand, plus an additional amount equal to one and one-half times the
estimated amount of the attorneys’ fees and other costs and expenses of handling
the Claim, Loss or demand through final resolution, to the extent not already
included in amounts to be set aside for the Claim, Loss or demand, shall
continue to be held as the Escrow Amount upon and subject to the terms of the
Escrow Agreement.  At the request of the Stockholder Representative upon or
following the final resolution of any Claim, Loss or demand in respect of which
any amount has continued to be so held, the Purchaser and the Stockholder
Representative shall direct the Escrow Agent to disburse to the Stockholder
Representative for payment to the Stockholders in accordance with Section 2.15
the remaining amount so held, after disbursement to the Purchaser and other
Purchaser Indemnified Parties of the amounts due in respect thereof pursuant to
this Agreement, and subject to retention under the Escrow Agreement as provided
above for any other Claim, Loss or demand then remaining unresolved.

2.11.

Post-Closing Determination of Initial Merger Consideration.

(a)

Within ninety (90) days after the Closing Date, the Purchaser shall cause to be
prepared an Effective Date Balance Sheet of the Company and other financial
information relevant to the determination of the amounts of each and all of the
Adjustments and the resulting amount of the Initial Merger Consideration.  The
Purchaser shall deliver such Effective Date Balance Sheet and other information
to the Stockholder Representative.  The Stockholder Representative shall review
such submission and deliver to the Purchaser his or her response within thirty
(30) days of receipt thereof by written notice, either agreeing therewith, in
which case the Effective Date Balance Sheet and other information submitted by
the Purchaser shall be used to determine the Adjustments, or objecting thereto
by providing the Purchaser with a detailed statement describing the objections
of the Stockholder Representative.  In the event that the Stockholder
Representative objects to the submissions made by the Purchaser, the Purchaser
and the Stockholder Representative shall use reasonable efforts to resolve any
such objections. If no resolution is reached within thirty (30) days of the
Stockholder Representative’s delivery of notice to the Purchaser, then the
Purchaser and the Stockholder Representative shall choose a mutually acceptable
independent certified public accountant (the “EDBS Designated Auditor”) to
review the submission.  The EDBS Designated Auditor shall, after reviewing all
relevant matters and interviewing such parties as it deems appropriate, deliver
to the Purchaser and the Stockholder Representative a statement (the “Designated
Auditor EDBS Statement”) setting forth its determination of the amounts of the
Adjustments and the resulting Initial Merger Consideration, which shall be final
and binding upon all of the parties to this Agreement; provided that such
determination may be reviewed, corrected or set aside by a court of competent
jurisdiction but only upon a finding that the EDBS Designated Auditor committed
manifest error, and the prevailing party in any Legal Proceeding in which any
such determination is made shall be entitled to recover from the other party its
reasonable attorney’s fees, costs and expenses (with the estimated amount of the
attorney’s fees, costs and expenses for any such Legal Proceeding to be withheld
from any interim disbursement in respect of the calculations made pursuant to
this Section).  If the final calculations in the Designated Auditor EDBS
Statement are closer in dollar amount to the calculations provided in the
Purchaser’s statement than they are to the calculations set forth in the
Stockholder Representative’s notice, then the Stockholder Representative shall
bear the cost of engaging the EDBS Designated Auditor.  Otherwise, the cost of
engaging the EDBS Designated Auditor shall be borne by the Purchaser.

(b)

Within fifteen (15) days following the determination made pursuant to
subsection (a) above:

(i)

If the Initial Merger Consideration as so determined exceeds the estimated
amount thereof paid at the Closing, (A) the Purchaser and Stockholder
Representative shall direct the Escrow Agent to disburse to the Stockholder
Representative for payment to the Stockholders in accordance with Section 2.15
out of the Escrow Amount the amount of such excess up to One Million Dollars
($1,000,000), and (B) Purchaser shall pay to the Stockholder Representative for
payment to the Stockholders in accordance with Section 2.15 the amount of such
excess that exceeds the One Million Dollars ($1,000,000) paid out of the Escrow
Amount, all in accordance with Section 2.6; or

(ii)

If the Initial Merger Consideration as so determined is less than the estimated
amount thereof paid at the Closing, the Purchaser and the Stockholder
Representative shall direct the Escrow Agent to (A) disburse to the Purchaser
the full amount of the deficiency (including any amount in excess of
$1,000,000), and (B) disburse to the Stockholder Representative for payment to
the Stockholders in accordance with Section 2.15 the excess, if any, of One
Million Dollars ($1,000,000) over any such amount disbursed to the Purchaser
pursuant to subsection (A) above.

2.12.

Determination of Earn-Out Merger Consideration.

(a)

Within sixty (60) days after the end of each of the Measuring Periods, the
Purchaser shall deliver to the Stockholder Representative a detailed statement
of EBITDA for the Measuring Period, including relevant financial statements and
notes thereto (each, an “EBITDA Statement”), and the resulting amount of the
Year 1 Earn-Out Amount or the Years 2 and 3 Earn-Out Amount, as applicable.  The
Stockholder Representative shall review such submission and deliver to the
Purchaser his or her response within thirty (30) days of receipt thereof by
written notice, either agreeing therewith, in which case the EBITDA Statement
shall be used to determine the Year 1 Earn-Out Amount or the Years 2 and 3
Earn-Out Amount, as applicable, or objecting thereto by providing the Purchaser
with a detailed statement describing the objections of the Stockholder
Representative in reasonable detail.  In the event that the Stockholder
Representative objects to the EBITDA Statement, the Purchaser and the
Stockholder Representative shall use reasonable efforts to resolve any such
objections.  If no resolution is reached within thirty (30) days of the
Stockholder Representative’s delivery of notice to the Purchaser, then the
Purchaser and the Stockholder Representative shall choose a mutually acceptable
independent certified public accountant (the “EBITDA Designated Auditor”) to
review the EBITDA Statement.  The EBITDA Designated Auditor shall, after
reviewing all relevant matters and interviewing such parties as it deems
appropriate, deliver to the Purchaser and the Stockholder Representative a
statement (the “Designated Auditor EBITDA Statement”) setting forth its
determination of EBITDA and the resulting amount of the Earn-Out Merger
Consideration, which shall be final and binding upon all of the parties to this
Agreement; provided that such determination may be reviewed, corrected or set
aside by a court of competent jurisdiction but only upon a finding that the
EBITDA Designated Auditor committed manifest error, and the prevailing party in
any Legal Proceeding in which any such determination is made shall be entitled
to recover from the other party its reasonable attorney’s fees, costs and
expenses (with the estimated amount of the attorney’s fees, costs and expenses
for any such Legal Proceeding to be withheld from any interim disbursement in
respect of the calculations made pursuant to this Section).  If the final
calculations in the Designated Auditor EBITDA Statement are closer in dollar
amount to the calculations provided in the EBITDA Statement than they are to the
calculations set forth in the Stockholder Representative’s notice, then the
Stockholder Representative shall bear the cost of engaging the EBITDA Designated
Auditor.  Otherwise, the cost of engaging the EBITDA Designated Auditor shall be
borne by the Purchaser.

(b)

Subject to the set-off rights of the Purchaser provided pursuant to
Section 10.8, within fifteen (15) days following the determination of the Year 1
Earn-Out Amount or the Years 2 and 3 Earn-Out Amount, as applicable, pursuant to
subsection (a) above, the Purchaser shall pay to the Stockholder Representative
for payment to the Stockholders in accordance with Section 2.15 the amount
thereof, in accordance with Section 2.6.

2.13.

Post-Closing Tax Refund Adjustment.  Within thirty (30) days after receipt by
the Company of a cash income tax refund (or the application by the Parent of an
amount refundable to the Company in cash to reduce a tax liability of the
Parent) which is received in respect of the Company’s Short Year Tax Refund or
its Loss Carryback Refund (each as defined in Section 11.1), and provided any
such amounts are received by the Company (or so applied) prior to the second
anniversary of the Effective Date, Purchaser shall deposit any such amounts with
the Escrow Agent to be held and disbursed as part of the Escrow Amount in
accordance with the terms of the Escrow Agreement.  Should a cash income tax
refund be received in respect of the Company’s Short Year Tax Refund or its Loss
Carryback Refund (or should an amount refundable to the Company in cash be
applied to reduce a tax liability of the Parent) be received by the Company (or
so applied) after the second anniversary of the Effective Date, such amounts
shall be paid by Purchaser to the Stockholder Representative to be distributed
to the Stockholders in accordance with Section 2.6(e).

2.14.

Allocation of Merger Consideration .  The parties hereto agree that the Merger
Consideration shall for all purposes, including but not limited to Tax Returns,
be allocated as to Two Million Five Hundred Thousand Dollars ($2,500,000) to the
obligations under the Agreements to Preserve Goodwill and the Confidentiality
Letter delivered pursuant to Article 9, with the balance to be allocated to the
Merger.

2.15.

Payments to Stockholders .

(a)

In each instance in which this Agreement provides for the payment of any Merger
Consideration or other amount to the Stockholders, the Purchaser may, at its
option in its discretion, pay such amount in a single sum to the Stockholder
Representative in his or her name, notwithstanding anything to the contrary
contained in this Agreement, and the Stockholder Representative shall promptly
make allocations and payments to the Stockholders in accordance with the
provisions of this Section.  The Stockholder Representative shall perform and
cause to be performed all of his or her obligations pursuant to this Section at
the cost and expense of the Stockholders and solely in his or her capacity as
the Stockholder Representative (and not as an employee or other representative
of the Purchaser or the Company or by or through any employee or other
representative of the Company in his or her capacity as such).

(b)

In connection with notices and solicitations to Stockholders relating to this
Agreement, the Company may distribute to the Stockholders prior to Closing such
instructions and directions, including forms of letters of transmittal and other
documents, as the Company and the Stockholder Representative may determine to be
appropriate in connection with the surrender of K&P Securities and payments to
each Stockholder of amounts due under this Agreement.  Upon Closing, the Company
and the Stockholder Representative may accept surrendered Certificates
theretofore tendered by Stockholders and make such payments to Stockholders in
respect thereof as herein provided.  Following Closing, the Stockholder
Representative shall be solely responsible to administer, control and direct the
surrender of Certificates and the making of such payments and shall use
Commercially Reasonable Efforts to complete the distributions of the Initial
Merger Consideration within one hundred twenty (120) days following the Closing.

(c)

The surrender of certificates for K&P Securities and the making of payments to
Stockholders shall be made upon the following terms and conditions or in such
other manner as the Stockholder Representative may reasonably direct:

(i)

Upon surrender of any Certificate, together with a duly executed letter of
transmittal (or exercise agreement, in the case of K&P Options) in form and
substance reasonably satisfactory to the Stockholder Representative (which shall
be made available by the Company prior to the Closing to all holders of K&P
Securities), on or prior to the Closing Date to the Stockholder Representative,
the Stockholder Representative shall pay or cause to be paid to the holder of
each Certificate, in exchange for each K&P Preferred Share, K&P Common Share,
K&P Option Share or K&P Warrant Share evidenced thereby, without interest, the
Per Share Initial Merger Consideration (which in the case of each disbursement
to a holder of K&P Options Shares, shall be subject to the provisions of
Section 2.6(d)) or the Per Warrant Share Initial Merger Consideration, as
applicable, to which such holder is entitled pursuant to Attachment 2.6 and
Sections 2.5, 2.6 and 2.7.  At any time after the Effective Date, upon surrender
to the Stockholder Representative of any Certificates (other than Certificates
surrendered pursuant to the first sentence of this subsection (c)(i) and any K&P
Stock Options which were not exercised and expired as of the Effective Date),
together with such duly executed letter of transmittal, the Stockholder
Representative shall pay or cause to be paid to the holder of each such
Certificate, immediately thereafter in exchange therefor, without interest, the
Per Share Initial Merger Consideration (subject to Section 2.6(d)) or the Per
Warrant Share Initial Merger Consideration, as applicable, to which such holder
is entitled pursuant to Attachment 2.6 and Sections 2.5, 2.6 and/or 2.7.  Each
Certificate surrendered to the Stockholder Representative pursuant to this
Section shall be promptly delivered by the Stockholder Representative to the
Surviving Corporation and shall thereafter be promptly canceled by the Surviving
Corporation.  Holders of Certificates shall not be entitled to receive payment
hereunder until such holder’s applicable Certificates have been surrendered
pursuant to this Section (or, alternatively, such holder has complied with the
provisions of subsection(c)(ii) below) and after the Effective Date.  If payment
or delivery is to be made to a Person other than the Person in whose name a
Certificate so surrendered is registered, it shall be a condition of payment
that the Certificate so surrendered shall be properly endorsed or otherwise in
proper form for transfer, that the signatures on the Certificate or any related
stock power shall be properly guaranteed and that the Person requesting such
payment either pay any transfer or other Taxes required by reason of the payment
to a Person other than the registered holder of the Certificate so surrendered
or establish to the satisfaction of the Stockholder Representative that such Tax
has been paid or is not applicable.  Except as provided herein, all cash paid
upon surrender of the Certificates in accordance with this Section shall be
deemed to have been paid in satisfaction of all rights pertaining to the K&P
Securities represented thereby.

(ii)

In the event that any Certificate shall have been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the registered holder of such
lost, stolen or destroyed Certificate in form and substance acceptable to the
Stockholder Representative, and upon the providing of a customary undertaking to
indemnify Stockholder Representative and the Surviving Corporation from losses
relating to such lost, stolen or destroyed Certificate, the Stockholder
Representative will pay or cause to be paid the Merger Consideration and other
amounts hereunder due in respect of such lost, stolen or destroyed Certificate,
without interest, in the manner set forth in Sections 2.5, 2.6 and 2.7 and this
Section.

(iii)

If Certificates are not surrendered prior to the date that is three years after
the Effective Date (or such earlier date to the extent that any cash payable to
the holder of such Certificate would otherwise escheat to or become the property
of any Governmental Entity), unclaimed amounts (including interest thereon) of
Merger Consideration shall, to the extent permitted by applicable law, become
the property of the Surviving Corporation and may be commingled with the general
funds of the Surviving Corporation, free and clear of all claims or interest,
and the Stockholder Representative shall promptly pay any such amounts to the
Surviving Corporation.  Notwithstanding the foregoing, provided that any
Stockholders who have not theretofore complied with the provisions of this
Section shall thereafter look only to the Surviving Corporation (or, until such
time as any unclaimed amounts contemplated by the previous sentence have been
paid to the Surviving Corporation, to the Stockholder Representative) and, in
any event, only as general creditors thereof for payment for their claims in the
form and amounts to which such shareholders are entitled; provided that no party
hereto or the Surviving Corporation or the Stockholder Representative shall be
liable to a holder of any Certificate for cash delivered to a public official
pursuant to applicable abandoned property, escheat or similar laws upon the
lapse of the applicable time periods provided for therein.

(iv)

After the Effective Date, there shall be no transfers on the stock transfer
books of the Surviving Corporation of K&P Securities that were outstanding
immediately prior to the Effective Date.

2.16.

Dissenters’ Rights.  Each K&P Common Share issued and outstanding immediately
prior to the Effective Date held by Stockholders who shall have properly
exercised their dissenters’ rights with respect thereto under Chapter 23B.13 of
the WBCA (such shares of capital stock, collectively, the “Dissenting Shares”)
shall be canceled as of the Effective Date.  Notwithstanding Sections 2.5
through 2.13 hereof, each Dissenting Share shall not be converted into the right
to receive the applicable Merger Consideration pursuant to the Merger, but in
lieu thereof, each holder of any Dissenting Shares (a “Dissenting Stockholder”)
shall be entitled to receive payment of the fair value of such shares in
accordance with the provisions of Chapter 23B.13 of the WBCA; provided that each
Dissenting Share held by a Stockholder who (a) shall thereafter withdraw its,
his or her demand for payment of fair value with the consent of the Company or
(b) shall fail to perfect its, his or her right to such payment as provided in
such Chapter 23B.13 shall be deemed to be converted as of the Effective Date
into the right to receive the applicable Merger Consideration in the form such
holder otherwise would have been entitled to receive as a result of the Merger.
 The Company shall give the Purchaser written notice promptly (and in any event
prior to the Closing) of any demands received by the Company under Chapter
23B.13 of the WBCA prior to the Closing.  In the event that, following the
meeting of the Stockholders to approve the Merger, there are any K&P Securities
that are or may be Dissenting Shares: (a) prior to the Closing, the Company
shall make the estimate of the fair value described in, and prepare the
explanation and other materials contemplated by, Section 23B.13.25 of the WBCA;
and (b) upon the Closing, the Company shall send payment and in other respects
comply with the provisions of such Section.  Following the Closing, as to any
K&P Common Shares that may be Dissenting Shares, the Stockholder Representative
shall give and cause to be given to the Company, at the Stockholders’ expense,
appropriate direction and advice as to the manner in which all matters regarding
Dissenting Shares and Dissenting Stockholders are to be handled, in compliance
with the WBCA and other applicable Law.  Except with the prior written consent
of the Purchaser, the Company shall not prior to the Closing make any payment
with respect to, or settle or offer to settle or otherwise negotiate, any
demands under Chapter 23B.13 of the WBCA, in each case, unless required by
applicable law.  The applicable Merger Consideration otherwise payable in
consideration of Dissenting Shares shall be retained by the Purchaser, subject
to settlement of any such fair value payments hereunder with respect to the
Dissenting Shares, and shall not be paid to holders of Dissenting Shares or any
other Person except as directed by the Purchaser.

ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company hereby makes the representations and warranties set forth in this
Article 3 to the Purchaser.  For clarification purposes, the Company makes no
representation or warranty with respect to Hurley or its operations or with
respect to the operations following the Closing of the Surviving Corporation.

3.1.

Organization, Power and Authority.  The Company is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation.  The Company is duly authorized to conduct business and, where
applicable, is in good standing under the laws of each jurisdiction where such
qualification is required, except where the failure to so qualify would not have
a Material Adverse Effect.  All of such jurisdictions with respect to the
Company are listed on Schedule 3.1.  The Company has full corporate power and
corporate authority, and all material Permits and Consents from all Governmental
Entities, to carry on the businesses in which it is engaged and to own and use
the Property owned and used by it.  The Company has the power and authority to
own its Property and to carry on its Business as presently conducted or
contemplated.  The Company has the right, power, authority and capacity to enter
into this Agreement and any Collateral Documents and to perform its obligations
under any of the foregoing.  Correct and complete copies of the Articles of
Incorporation and Bylaws of the Company, as amended through the Closing Date,
have been delivered to the Purchaser.  The Company is not in violation of any
term of its respective Articles of Incorporation or Bylaws, as amended to the
Closing Date, or any Contract, Order, or Law applicable to it.  True and
complete listings of the officers and directors of the Company are set forth on
Schedule 3.1.

3.2.

Authorization.  The Company has the power and authority (corporate, partnership
or otherwise, as applicable) to enter into and perform this Agreement and the
Company has the power and authority (corporate, partnership or otherwise, as
applicable) to enter into and perform each of the Collateral Documents to which
it is a party and to consummate the Contemplated Transactions.  The execution,
delivery and performance by the Company of this Agreement and by the Company of
each of the Collateral Documents to which it is a party, and the consummation by
each of them of the Contemplated Transactions have been duly authorized by all
necessary action (corporate, partnership or otherwise, as applicable) on the
part of the Company.  This Agreement and each of the Collateral Documents to
which the Company is a party have been duly executed and delivered by the
Company and constitute legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms, except as such
enforcement may be limited by applicable bankruptcy, insolvency, moratorium or
similar Laws affecting the rights of creditors’ generally and general equity
principles (regardless of whether enforceability is considered a proceeding at
law or in equity).

3.3.

Capitalization of the Company.

(a)

As of the date of this Agreement, 11,798,143 K&P Common Shares are issued and
outstanding, and up to 1,525,900 K&P Common Shares may be issued upon the
exercise of the K&P Stock Options.  Schedule 3.3(a) sets forth a complete and
accurate list of the holders of record of the shares of K&P Common Stock issued
and outstanding as of the date of this Agreement, and Schedule 3.3(a) sets forth
a complete and accurate list of the holders of record of the K&P Stock Options
issued and outstanding as of the date of this Agreement.  Immediately prior to
the Merger, the number of issued and outstanding K&P Common Shares shall be as
set forth in the updated Attachment 2.6 delivered pursuant to Section 2.6, which
shall be held of record by the holders set forth in such Attachment.  Effective
prior to or upon the Merger, each and all of K&P Stock Options shall have been
exercised or terminated or otherwise of no further force or effect.

(b)

As of the date of this Agreement, and immediately prior to the Merger, (i) there
are and shall be 5,500,000 K&P Preferred Shares issued and outstanding, and
(ii) there are and shall be issued and outstanding K&P Warrants for the issuance
of 2,319,696 K&P Common Shares.  All of the K&P Preferred Shares and the K&P
Warrants as of the date hereof are, and immediately prior to the Merger shall
be, held of record by Distribution Partners.

(c)

Each and all of the K&P Common Shares, the K&P Preferred Shares, the K&P Stock
Options and the K&P Warrants issued and outstanding as of the date of this
Agreement, and each additional K&P Common Share issued prior to the Merger upon
exercise of any K&P Stock Option, has been or shall be validly issued, is or
shall be fully paid and nonassessable, and is not and shall not be otherwise
subject to any Encumbrances of which the Company has Knowledge, other than as
set forth in Schedule 3.3(c).  None of the K&P Common Shares, the K&P Preferred
Shares, the K&P Stock Options or the K&P Warrants has been or shall be issued in
violation of any preemptive or similar right.

(d)

As of the date of this Agreement, except for the K&P Common Shares and the K&P
Stock Options described in subsection (a) of this Section and the K&P Preferred
Shares and the K&P Warrants described in subsection (b) of this Section, the
Company has not issued any shares of capital stock or any warrants, options or
other rights, commitments, agreements or understandings to purchase or acquire
any shares of capital stock or other equity securities of the Company which then
remain outstanding.  Immediately prior to the Merger, except for the K&P Common
Shares described in subsection (a) of this Section, such K&P Common Shares as
may be issued upon the exercise of the K&P Stock Options, and the K&P Preferred
Shares and the K&P Warrants described in subsection (b) of this Section, the
Company shall not have issued any shares of capital stock or any warrants,
options or other rights, commitments, agreements or understandings to purchase
or acquire any shares of capital stock or other equity securities of the Company
which then remain outstanding.

(e)

There are as of the date of this Agreement no, and upon the Closing shall not be
any, outstanding debt securities of the Company convertible into equity
securities or otherwise containing equity provisions.  The Company does not and
shall not have any capital stock which is held in treasury or is otherwise
reserved for issuance, other than for the K&P Stock Options and the K&P Warrants
described above.

(f)

As of the date of this Agreement, other than pursuant to the Shareholder
Agreement, the Stockholder Agreement, the Securities Purchase Agreement or the
Company’s Articles of Incorporation, (i) there are no preemptive rights with
respect to the issuance or sale of the Company’s capital stock, (ii) there are
no voting trusts or other similar agreements or understandings to which the
Company or, to the Company’s Knowledge, any Stockholder is a party with respect
to the voting of capital stock of the Company, (iii) the Company has no
understandings or agreements with any of the Stockholders or any other Person
respecting the Company’s capital stock or other securities of the Company,
(iv) to the Company’s Knowledge, none of the Stockholders has entered into or
granted any outstanding warrants, options, commitments, agreements or
understandings with any Person (except for the Contemplated Transactions) to
sell, transfer or otherwise dispose of any shares of the Company’s capital stock
or its other Securities, including, without limitation, the K&P Securities,
(v) there are no restrictions on the transfer of any equity securities or other
ownership interest in the Company imposed by the Company, other than those
arising from federal and state securities Laws, and (vi) to the Company’s
Knowledge, there are no understandings or agreements respecting the ownership
interests of the Company.

(g)

Effective prior to or upon the Merger, (i) there shall be no preemptive rights
with respect to the issuance or sale of the Company’s capital stock, (ii) there
shall be no voting trusts or other similar agreements or understandings to which
the Company or any Stockholder is a party with respect to the voting of capital
stock of the Company, (iii) the Company shall have no understandings or
agreements with any of the Stockholders or any other Person respecting the
Company’s capital stock or other securities of the Company, (iv) none of the
Stockholders shall have entered into or granted any outstanding warrants,
options, commitments, agreements or understandings with any Person (except for
the Contemplated Transactions) to sell, transfer or otherwise dispose of any
shares of the Company’s capital stock or its other Securities, including,
without limitation, the K&P Securities, (v) there shall be no restrictions on
the transfer of any equity securities or other ownership interest in the
Company, other than those arising from federal and state securities Laws, and
(vi) there shall be no understandings or agreements respecting the ownership
interests of the Company.

(h)

All Securities of the Company were sold in compliance with all Laws and have
been exempt from registration pursuant to the registration provisions of the
Securities Act and applicable national or state securities laws, and no such
Securities were registered under any such act or Laws.

(i)

The K&P Common Shares issued upon the exercise of the K&P Stock Options
described above shall be issued in compliance with all Laws and shall be exempt
from registration pursuant to the registration provisions of the Securities Act
and applicable national or state securities laws, and no such K&P Common Shares
shall be registered under any such act or Laws.  Any and all purchases,
redemptions or other acquisitions by the Company of its Securities and those of
any of the Company’s subsidiaries or affiliates have been made in compliance
with all Laws, including applicable national and state securities laws.  In
connection with each such issuance, sale or acquisition, the Company made and
shall make all disclosures required by Law, and no private offering memorandum
or other information furnished or to be furnished (whether orally or in writing)
to any offeree or purchaser of such Securities contained or shall contain any
untrue statement of a material fact or omitted or shall omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading.

(j)

There are as of the date of this Agreement no, and immediately prior to the
Merger there shall not be any, outstanding or authorized stock appreciation,
phantom stock, profit participation or similar rights with respect to the
Company.

3.4.

Subsidiaries.  Except as set forth on Schedule 3.4, the Company has no direct or
indirect investments in, and the Company is not a party to any agreement,
commitment or understanding requiring the Company to purchase or acquire any
interest in, the equity of any Person, or debt securities convertible into such
securities or otherwise containing equity provisions.

3.5.

Conflict with other Instruments; Absence of Restrictions.  Except as set forth
in Schedule 3.5, the execution, delivery and performance of this Agreement and
each of the Collateral Documents, and the consummation of the Contemplated
Transactions, by the Company do not and will not:  (i) result in a Default, of
or under (A) any of the terms of the Organizational Documents of the Company,
(B) assuming the receipt of all Governmental Consents listed on Schedule 3.6,
any Law, Permit or Order applicable to or binding upon the Company, or (C)
assuming the receipt of all Required Consents, any Contracts, Permits or
Licenses to which the Company is a party or by which any of them are bound; (ii)
result in the creation or imposition of any Encumbrance upon any of the equity
interests of the Company or upon any of the assets or properties of the Company;
or (iii) assuming the receipt of all Required Consents, (A) result in the
termination, amendment or modification of, or give any party the right to
terminate, amend, modify, abandon, or refuse to perform any Contract, License or
Permit to which the Company is a party or by which any of its properties or
assets is bound, or (B) result in the acceleration or modification, or give any
party the right to accelerate or modify, the time within which, or the terms
under which, any duties or obligations are to be performed, or any rights or
benefits are to be received under any Contract, License or Permit to which the
Company is a party or by which any of its properties or assets is bound.

3.6.

Government and Third-Party Approvals.  Except for the filing under the HSR Act
made pursuant to Section 6.11 and as may be otherwise listed on Schedule 3.6, no
Governmental Consent or Consent of any Person (including any party to any
Contract with the Company) is required (i) for the execution, delivery and
performance by the Company of this Agreement or any of the Collateral Documents
to which any of them is a party, (ii) in connection with the consummation of the
Contemplated Transactions by the Company.

3.7.

Title to Properties; Adequacy of Properties.  The Company has good, valid and
marketable title to, or, in the case of leased properties and assets, valid
leasehold interests in, all of its tangible properties and assets, real,
personal and mixed, used or held for use in its Business (the “Property”), which
are, as of the date of this Agreement, free and clear of any and all
Encumbrances other than Permitted Encumbrances as specified in Schedule 3.7.
 The Property includes, but is not limited to, all of the Company’s Accounts
Receivable, cash, Equipment, Intellectual Property, Leased Real Property,
Leasehold Improvements and Fixtures, Prepaid Items, personal property leased by
the Company, and Rights and Other Property.  The tangible personal property
included in such Property (including Equipment) is in good working order and fit
for its intended use, reasonable wear and tear excepted.  The Property, taken as
a whole, is adequate to conduct the Business as conducted as of the date hereof
and as of the Closing Date.  Except as set forth on Schedule 3.7, no Property
used by the Company in connection with the Business (other than the Leased Real
Property) is held under any Lease or Encumbrance or is located other than in the
possession of the Company.  All of the Property is in the possession or under
control of the Company and consists of all of the assets that are incremental or
relating to, or used in connection with, the operation of the Business.  All of
the Real Property Leases, and all leases of personal property to which the
Company is a party, are valid and in effect and afford the Company peaceful and
undisturbed possession of the subject matter of the Lease.  All of the Property
is set forth in the 2006 Financial Statements, and there are no assets used in
the conduct of the Business other than such Property, except as set forth on
Schedule 3.7.

3.8.

Leasehold Improvements.  The Leasehold Improvements and Fixtures are, and from
the date hereof until the Closing Date will be, in good working order and fit
for their intended use.  The Leasehold Improvements and Fixtures include all of
the leasehold improvements, fixtures and appurtenances currently used by the
Company in operating the Company’s Business as currently conducted and as
proposed to be conducted.

3.9.

Real Property.  The Company does not own any Real Property and the Company is
not a party to any option, agreement or other document pursuant to which the
Company has the right or obligation to purchase or acquire title to or any
interest in any real property.  Schedule 3.9 attached hereto sets forth a true
and complete list of each Lease for Real Property executed by or binding upon
the Company, as lessor or lessee, sublessor or sublessee, landlord or tenant, or
assignor or assignee (the “Real Property Leases”), relating to, and a true and
complete description of, any Leased Real Property.  Each of the Real Property
Leases is legal, valid and binding and in full force and effect without any
Default thereof by the Company or, to the Knowledge of the Company, any other
party thereto and each of the Real Property Leases affords the Company peaceful
and undisturbed possession of the Leased Real Property which is the subject
matter of the applicable Real Property Lease.  The Leased Real Property
constitutes the only Real Property leased by the Company or otherwise used by
the Company in connection with the operation of the Business as currently
conducted and as proposed to be conducted.  Except as set forth in Schedule 3.9
attached hereto, there are no restrictions, prohibitions or limitations on the
ability to assign, transfer, pledge, hypothecate or otherwise convey or dispose
of the interest of the Company under the Real Property Leases.  Except for the
occupancy and use of the Leased Real Property by the Company, there are no
leases, tenancies, licenses or other rights of occupancy or use for any portion
of the Leased Real Property, and no person or entity other than the Company
occupies or uses any portion of the Leased Real Property.  True and complete
copies of the Real Property Leases have been delivered or made available to the
Purchaser prior to the date hereof.

3.10.

Accounts Receivable.  Except as may be reserved against on the Financial
Statements or the Unaudited Statements, each of the Accounts Receivable has
arisen or will arise solely in a bona fide transaction in the ordinary course of
business of the Company, constitutes or will constitute a valid claim in the
full amount thereof against the debtor charged therewith on the books of the
Company and is or will be fully collectible in the normal and ordinary course of
business (i.e., without resort to Legal Proceedings or assignment to a
collection agency) and is or will be enforceable in accordance with its terms.
 No account debtor has, or will have, any valid set-off, deduction or defense
with respect thereto, and no account debtor has asserted such set-off, deduction
or defense.  The prices charged to all clients in the creation of any Accounts
Receivable are consistent with that stated on client Contracts (whether oral or
written).

3.11.

Financial Statements.

(a)

Schedule 3.11 consists of the following, referred to collectively as the
“Financial Statements:”

(i)

the financial statements of the Company for the fiscal year ended May 31, 2004
(including a balance sheet and a statement of income and retained earnings)
(collectively, the “2004 Financial Statements”);

(ii)

the financial statements of the Company for the fiscal year ended May 31, 2005
(including a balance sheet and a statement of income and retained earnings)
(collectively, the “2005 Financial Statements); and

(iii)

the financial statements of the Company for the fiscal year ended May 31, 2006
(including a balance sheet and a statement of income and retained earnings)
(collectively, the “2006 Financial Statements).

(b)

The Financial Statements were prepared on a GAAP basis and fairly and accurately
present, in all material respects, the financial condition, the results of the
operations, and where applicable the cash flows and changes of financial
position, of the Company as at the respective dates thereof and for the periods
reported therein.

(c)

The Company maintains a system of internal accounting controls adequate to
ensure that the Company maintains no off-the-books accounts and that the
Company’s assets are used only in accordance with the Company’s management
directives.  Since May 31, 2005, neither the Company’s auditors nor the
Company’s board of directors or any committee thereof has been advised of:
(i) any material deficiencies in the design or operation of internal controls
which could reasonably be expected to have a Material Adverse Effect on the
Company’s ability to record, process, summarize and report financial data;
(ii) any fraud, whether or not material, that involves management or other
employees who have a role in the Company’s internal controls; or (iii) the
potential for any inclusion of any “going concern” qualification to any proposed
audit letter.  No material weaknesses in internal controls have been identified
by the Company or its auditors; and since May 31, 2005, there have been no
significant changes in internal controls or other factors that could reasonably
be expected to have a Material Adverse Effect on internal controls, including
any corrective actions with regard to significant deficiencies and material
weaknesses.

(d)

The Company has delivered to the Purchaser monthly financial statements of the
Company consisting of a balance sheet, income statement and statement of cash
flows (collectively, the “Unaudited Interim Statements”) for the quarter ended
August 31, 2006 and the month ended September 30, 2006, and the Company shall
deliver Unaudited Interim Statements for each calendar month thereafter ending
prior to the Closing, within ten Business Days after the end of the month and,
in any event, at least one Business Day prior to Closing.  Each such Unaudited
Interim Statements was and shall be prepared from the Books and Records of the
Company on a basis consistent with the accounting principles applicable to the
Financial Statements of the Company and presents and shall present fairly, in
all material respects, the financial position and results of operations and,
where applicable, the cash flows of the Company as of their respective dates and
for the respective periods covered thereby (subject, in the case of all such
Unaudited Interim Statements to normal year-end adjustments (none of which will
be material) and the lack of any footnote disclosures).

(e)

Working capital in the amount of One Million Four Hundred Thousand Dollars
($1,400,000) has been adequate to meet the usual and customary working capital
needs of the Company for its operation during the period of twelve (12) calendar
months most recently concluded prior to the date of this Agreement.

(f)

The Company is in compliance with the laws of the State of Washington regarding
the separation and accounting of premium trust funds set forth in Revised Code
of Washington Sections 48.17.480 and 48.17.600 and in Washington Administrative
Code Section 284-12-080 and all regulatory and other requirements of
Governmental Entities relating to trust accounts and insurance premium
liability.  As of the date of this Agreement and as of the Closing, the
Company’s Insurance Premium Assets are greater than the Company’s Insurance
Premium Liabilities.  A sample calculation of the Company’s trust account
balance is set forth in Attachment 3.11(f) hereto.

(g)

Without limiting the generality of Sections 3.11(b) and 3.11(d), the amount of
the Company’s liability under its self-insured medical plan recorded in the 2006
Financial Statements has been, and the amount thereof recorded in the Unaudited
Interim Statement for the month most recently ended prior to the Closing shall
be, determined in all respects in accordance with GAAP.

3.12.

Absence of Undisclosed Liabilities.  The Company does not have any Liabilities
(a) as of May 31, 2006, of a nature required to be disclosed, reflected or
reserved against in a balance sheet prepared in accordance with GAAP which were
not fully disclosed, reflected or reserved against on the balance sheet included
in the 2006 Financial Statements or which are not otherwise set forth in
Section (a) of Schedule 3.12 attached hereto, (b) as of September 30, 2006, of a
nature required to be disclosed, reflected or reserved against in a balance
sheet prepared in accordance with GAAP which were not fully disclosed, reflected
or reserved against on the balance sheet included in the Unaudited Interim
Statements for September, 2006 or which are not otherwise set forth in
Section (b) of Schedule 3.12 attached hereto; (c) as of the date of each of the
Unaudited Interim Statements provided to the Purchaser following the date of
this Agreement, of a nature required to be disclosed, reflected or reserved
against in a balance sheet prepared in accordance with GAAP which were not fully
disclosed, reflected or reserved against on the balance sheet included in such
Unaudited Interim Statements or which are not otherwise set forth in a
supplement to Schedule 3.12 delivered to the Purchaser therewith; or (d) which
were incurred since May 31, 2006, outside the ordinary course of business, other
than those Liabilities set forth in Section (d) of Schedule 3.12 attached hereto
(but none of which results from, arises out of, relates to, is in the nature of,
or was caused by (i) any Default under any Contract, License or Permit, (ii) any
Claim of infringement, (iii) any tort Claim or (iv) any violation of Law).

3.13.

Affiliated Relationships.  All services rendered and all goods sold by the
Company to any Stockholder or any Affiliate of the Company or any Stockholder
have been recorded in the Books and Records of the Company at their full value
as if they were transferred in arm’s length transactions.  Except as set forth
in Schedule 3.13, all services rendered and goods sold by any Stockholder or any
Affiliate of any Stockholder to the Company have been accounted for as if they
were transferred in arm’s length transactions.

3.14.

Permits and Approvals.  Schedule 3.14 contains a true and correct description of
all Permits issued in favor of the Company which are material to the operation
of the Business, all of which are in full force and effect, and the Business is
currently being operated in compliance, in all respects with the terms of each
of the foregoing.  The Company has not taken any action or failed to take any
action which could reasonably be expected to result in or enable, with or
without notice or lapse of time or both would result in or enable, the
revocation or termination of any of such Permits or the imposition of any
restrictions thereon.  No Legal Proceeding is pending or, to the Knowledge of
the Company, threatened to revoke, refuse to renew or modify any of the Permits.

3.15.

Licenses.

(a)

Except as set forth on Schedule 3.15(a), the Company and its officers and
employees hold and have made available to the Purchaser all insurance agent
and/or broker licenses and other licenses necessary for the Purchaser to operate
the Business of the Company as presently conducted and for such officers and
employees to sell or broker insurance or Related Insurance Services as presently
sold or brokered by the Company, except for those Licenses the absence of which
would not have a Material Adverse Effect on the Company.  Such licenses are in
good standing, and the Company has no Knowledge that any disciplinary proceeding
with respect to the Company or any of its officers or employees is pending
before any insurance department.  The Company has provided only those services
and undertaken only those activities for which it (and/or its employees) held,
as of the date the services were provided or the activities undertaken, all
necessary Licenses required under applicable Laws therefor, except for those
Licenses the absence of which would not have a Material Adverse Effect on the
Company.

(b)

With regard to all of the Company’s activities and operations as a Registered
Investment Adviser: (i) the Company maintains written investment advisor
policies and procedures and a written code of ethics, and the most recent annual
review thereof conducted pursuant to rule 206(4)-7 uncovered no material
deficiencies; (ii) the ADV Part I and II and solicitors referral agreements for
the Company is current and complete and accurately discloses the programs and
services offered, and is consistent with all regulatory requirements;
(iii) except as set forth on Schedule 3.15(b), the advisory contracts for
clients and sub-advisory agreements for the Company are current and complete and
accurately describe the programs and services offered; (iv) a change in control
of the Company will not automatically terminate any sub-advisory relationships
maintained by the Company; (v) the most recent Securities and Exchange
Commission examination of the Company was in November 1999, and there were no
findings or issues noted in the examination report, oral or written, which were
not addressed or to which the Company did not respond; (vi) the most recent M
Financial broker/dealer OSJ office examination of the Company was in September
2005, and there were no findings or issues noted in the examination report, oral
or written, which were required to be rectified; (vii) there are no open written
complaints or, to the Company’s Knowledge, no material oral complaints, nor are
there any open or arbitrations, lawsuits, or regulatory inquires or
investigations, involving any entities owned or controlled by the Company or its
employees that provide advisory, individual life insurance, and securities
brokerage services; (viii) there have been no written customer complaints or, to
the Company’s Knowledge, any material oral customer complaints received by the
Company pertaining to its advisory, individual life insurance, and securities
brokerage business during the past three years, other than as may be described
in Schedule 3.15(b); (ix) all marketing materials pertaining to advisory,
individual life insurance, or securities brokerage business currently approved
for use with the public have been approved by the appropriate person, filed with
appropriate regulatory body, where required, and meet the requirements of the
applicable regulatory body; and (x) Form U-4s for all registered persons do not
require a yes answer under item 14 – “Disclosure Questions”.  Schedule 3.15(b)
contains true and correct copies and descriptions of the following: (1) samples
of the Company’s investment advisory contracts, investment advisor policies and
procedures, code of ethics, ADV Part I and II, the last annual review report,
sub–advisory agreements, the last SEC examination and report and response, and
solicitor referral agreements; (2) all marketing materials pertaining to
advisory, individual life insurance, or securities brokerage business approved
for use with the public; (3) the last M Financial broker/dealer OSJ office
examination report and response; (4) each written complaint and, to the
Company’s Knowledge, a description of each material oral complaint received by
the Company pertaining to its advisory, individual life insurance and securities
brokerage business during the past three years; (5) approved outside business
activities of Registered Representatives; and (6) all the administrative
services contracts for the Retirement Planning business unit.

3.16.

Compliance with Law.

(a)

The Company has complied with every, and is not in violation of any, Law or
Order to which the Company is subject, except for those violations that have not
and will not result in a Material Adverse Effect on the Company.  The Company
has obtained, and has adhered to the requirements of, any License or Permit
necessary to the ownership of the Company’s assets or the operation of the
Business, except for those Licenses or Permits the absence of, or failure to
comply with, which would not have a Material Adverse Effect on the Company.
 Except as set forth on Schedule 3.16, the Company has not received, nor does it
have Knowledge of the issuance of, any notice from any Governmental Entity,
citizens group or other Third Party of any such violation or alleged violation
of any applicable Laws or Orders by any of them.  To the Knowledge of the
Company, there is no investigation relating to the Company or its business in
progress or contemplated by any Governmental Entity.

(b)

Without limiting the generality of subsection (a) of this Section, the Company
has not engaged in (i) price fixing, bid rigging or any other anticompetitive
activity or unfair business practice of the type described in Complaint, Index
No. 403342/2004, filed with the Supreme Court of the State of New York in the
County of New York on behalf of the People of the State of New York by Eliot
Spitzer against Marsh & McLennan Companies, Inc. and Marsh, Inc. on October 14,
2004; or (ii) any of the corrupt business practices or other conduct of the type
described in the Complaint filed August 31, 2005 in the Superior Court for the
Judicial District of Hartford, Connecticut on behalf of the State of Connecticut
by Richard Blumenthal, Attorney General, against Hilb Rogal & Hobbs Company
(HRH); provided, however, that with regard to the disclosure of commissions and
other compensation received by the Company, the representation and warranty set
forth in Section 3.22(e) (and not this subsection (b)) shall govern.

(c)

With reference to the matters which were the subject of the investigation of the
Office of the Insurance Commissioner of the State of Washington pursuant to its
letters dated November 10, 2004 and June 13, 2005, and without limiting the
generality of subsection (a) of this Section, the Company has not engaged in any
anticompetitive or unlawful activity or unfair business practice relating to
such matters or any other matters.  Such investigation has been closed and a
determination made by the Office of the Insurance Commissioner not to pursue any
action against the Company or any of its officers, employees or representatives.
 The Company has not received any written notice of any other or further
investigation of the Company or any of its officers, employees or
representatives by the Office of the Insurance Commissioner or by any other
Governmental Entity and, to the Knowledge of the Company, no such investigation
is under consideration or threatened or, by reason of facts or circumstances
Known to the Company, likely to be undertaken.

(d)

Without limiting the generality of subsection (a) of this Section, in connection
with the conduct of the Business, neither the Company nor its directors,
officers, employees or agents nor any Stockholder, has (i) directly or
indirectly given or agreed to give any illegal gift, contribution, payment or
similar benefit to any supplier, customer, governmental official or employee or
other person who was, is or may be in a position to help or hinder the Company
(or assist in connection with any actual or proposed transaction) or made or
agreed to make any illegal contribution, or reimbursed any illegal political
gift or contribution made by any other person, to any candidate for federal,
state, local or foreign public office (x) which might subject the Company,
Purchaser or the Business to any damage or penalty in any civil, criminal or
governmental litigation or proceeding or (y) the non-continuation of which has
had or could reasonably be expected to have material adverse impact to the
Business or (ii) established or maintained any unrecorded fund or asset or made
any false entries on any books or records for any purpose.  Set forth on
Schedule 3.16(d) is a copy of the Company’s current business ethics policy and
all reports that have been submitted by employees pursuant to such policy since
January 1, 2001.

3.17.

Legal Proceedings.

(a)

Except as set forth on Schedule 3.17, there is no Order, Claim or other Legal
Proceeding, pending against or threatened against or affecting, the Company that
(i) relates to or affects the shares of capital stock of the Company, the
Business or the Property of the Company, or (ii) could reasonably be expected,
individually or in the aggregate, to (A) have a Material Adverse Effect on the
Company or its Businesses, (B) impair the ability of the Company to perform its
obligations under this Agreement or any of the Collateral Documents or (C)
prevent the consummation of any of the Contemplated Transactions, or (iii)
questions the validity of this Agreement or any of the Collateral Documents,
which, in the case of all of the foregoing, are either covered or not covered
fully by insurance.

(b)

There is no Order, Claim or other Legal Proceeding outstanding against the
Company having or which in the future, insofar as reasonably can be foreseen,
could have any of the effects described in clause (ii) of Section 3.17(a) above.

(c)

The Company does not have Knowledge of any currently existing events, facts or
circumstances which could reasonably be expected to form the basis for any
Order, Claim or other Legal Proceeding which, insofar as reasonably can be
foreseen, could have any of the effects described in clause (ii) of
Section 3.17(a) above.

3.18.

Absence of Changes.  

(a)

Except as set forth on Schedule 3.18, since May 31, 2006, (a) there has been no
event or condition which had (or is reasonably likely to result in) a Material
Adverse Effect on the Company, (b) the Company has in all material respects
conducted its Business in the ordinary course consistent with past practices and
has not taken any action which, if taken after the date hereof, would violate
this Agreement, and (c) there has not been any (i) declaration, setting aside or
payment of any dividend or other distribution with respect to the capital stock
of the Company, or any redemption, repurchase or other reacquisition of any of
the capital stock of the Company, (ii) change by the Company in accounting
principles, practices or methods (other than as described on Schedule 3.11),
(iii) issuance or sale of any capital stock or other securities by the Company
of any kind, (iv) increase in the compensation of any director or officer, or
grant of any general salary or benefits increase to employees other than in the
ordinary course of business consistent with past practices, (v) incurrence of
any Liabilities, except in the ordinary course of business as conducted on that
date, (vi) cancellation or termination by any customer generating Twenty-Five
Thousand Dollars ($25,000) or more in revenue to the Company or by any carrier,
or the receipt of any notice of intent or desire to make any such cancellation
or termination, or (vii) split, combination or reclassification of any capital
stock or other securities of the Company.

(b)

Except as set forth on Schedule 3.18, since May 31, 2006, the Company (i) has
operated the Business in the ordinary course consistent with past practices,
(ii) has not caused, suffered or permitted any of the events, facts or
circumstances described in Section 3.18 to occur (except as otherwise expressly
permitted by this Agreement), and (iii) with respect to the Business and the
Company, has:

(i)

not acquired or agreed to acquire (i) by merging or consolidating with, or by
purchasing any of the equity interests of or a substantial portion of the assets
of, or by any other manner, any business or any corporation, partnership, joint
venture, association or other business organization or division thereof, or (ii)
any assets that are material, individually or in the aggregate, to the Company,
except purchases of assets in the ordinary course of business consistent with
past practice and capital expenditures permitted by clause (iii) below;

(ii)

not made any dividends or distributions, whether in cash, stock or property, to
the Stockholders or any other Person;

(iii)

not (a) incurred any Indebtedness involving borrowed money in excess of Fifty
Thousand Dollars ($50,000), including (x) guaranteeing any such Indebtedness of
another Person, (y) issuing or selling any debt securities or warrants or other
rights to acquire any debt securities of the Company, or (z) guaranteeing any
debt securities of another Person, or (b) made any loans, advances or capital
contributions to, or investments in, any other Person, other than in the
ordinary course of business consistent with past practices;

(iv)

not made or agreed to make any capital expenditures which in the aggregate are
in excess of One Hundred Thousand Dollars ($100,000);

(v)

not changed a corporate name or permitted the use thereof by any other Person;

(vi)

not (a) caused, suffered or permitted the termination of any Employee Benefit
Plan, (b) permitted any Prohibited Transaction involving any Employee Benefit
Plan, (c) failed to pay to any Employee Benefit Plan any contribution which they
are obligated to pay under the terms of such Employee Benefit Plan, whether or
not such failure to pay would result in an Accumulated Funding Deficiency or
d) allowed or suffered to exist any occurrence of a Reportable Event or any
other event or condition, which presents a material risk of termination by the
PBGC of any Employee Benefit Plan;

(vii)

not entered into any new, or amended or otherwise altered any existing, Employee
Benefit Plan other than in the ordinary course of business;

(viii)

not, except in the ordinary course of business consistent with past practices,
(a) removed any fixtures, Equipment or personal property from any of the Leased
Real Property; (b) entered into any Contract which would be required to be
disclosed on Schedule 3.18 attached hereto; (c) sold, discounted or otherwise
disposed of any Accounts Receivable (except by collection in the ordinary course
of business); (d) canceled or compromised any Indebtedness or Claim, or waived
or released any rights of material value or (v) changed, modified or altered the
return policy for merchandise sold by any of the Company;

(ix)

not (a) made a material change in the character of its Business or in the
properties or assets of any of the Company, or entered into any new business or
relocated any of its facilities or acquired any additional operations or
business; and (b) not terminated, discontinued, closed or disposed of any
facility or business operation;

(x)

(a) paid when due all Taxes lawfully levied or assessed against the Company
before any penalty or interest accrued on any unpaid portion thereof and filed
all Tax Returns when due (including applicable extensions); and (b) not made or
changed any Tax elections or settled any audit or examination relating to Taxes
without the prior approval of the Purchaser;

(xi)

used Commercially Reasonable Efforts to maintain the facilities, assets and
properties of the Company in good operating repair, order and condition,
reasonable wear and tear and loss by casualty to the extent covered by insurance
excepted, and notified the Purchaser immediately upon any loss of, damage to, or
destruction of any of the facilities, assets or properties of the Company,
whether or not covered by insurance;

(xii)

maintained in full force and effect insurance coverage of the types and in the
amounts set forth in Schedule 3.21 attached hereto;

(xiii)

as of the Closing, advised the Purchaser in writing, during the period beginning
upon the date of this Agreement and continuing through the Closing, of the
commencement of any Legal Proceedings against the Company of the type and nature
which would be required to be disclosed on Schedule 3.17 attached hereto or any
threatened commencement of any such Legal Proceedings of which the Company shall
have had Knowledge, and of any developments or changes in any pending or
threatened such Legal Proceedings;

(xiv)

used Commercially Reasonable Efforts to maintain in full force and effect each,
and not caused or permitted to occur any Default under any, Contract, License or
Permit required to be listed in any Schedule to this Agreement and paid all
accounts payable in the ordinary course of its business consistent with past
practices;

(xv)

not caused or permitted to occur a violation, in any material respect, of any
Laws applicable to the Company; and

(xvi)

not caused, suffered or permitted the creation or attachment of any Encumbrance
on any of the assets of the Company.

3.19.

Contracts, Leases, Etc.

(a)

Schedule 3.19(a) attached hereto sets forth a true and complete list of all
Contracts to which the Company is a party, or by which any of its Property is
bound, that fall into one or more of the following categories (each a “Material
Contract”):

(i)

agreement or commitment with any current or former stockholder, director, or
officer of the Company or any of its Affiliates other than in the ordinary
course of business or, in any event, involving the payment of more than Fifty
Thousand Dollars ($50,000) (“Related Party Agreements”);

(ii)

agreement, commitment or arrangement with any labor union or other
representative of Employees;

(iii)

agreement or commitment related to the Intellectual Property of the Company;

(iv)

written employment agreement with any Employee involving the payment of more
than Two Hundred Fifty Thousand Dollars ($250,000) per year individually, or any
severance agreement with any Employee that provides for salary continuation of
more than thirty (30) days from termination of employment or a payment upon
termination of employment in an amount greater than Twenty-Five Thousand Dollars
($25,000);

(v)

agreement or commitment for the performance of services by a Third Party which
involves One Hundred Thousand Dollars ($100,000) or more per year either in any
one case or in a series of related agreements or commitments and, in any such
case, is not cancelable on thirty (30) days notice or less without penalty;

(vi)

agreement (or group of related agreements) with any of the top ten (10)
insurance carriers for each of the Company’s operating divisions relating to the
provision of Company Business;

(vii)

Lease under which the Company is either lessor or lessee of personal property
requiring annual Lease payments (including rent and any other charges) in excess
of Fifty Thousand Dollars ($50,000), and any Lease under which the Company is
the lessor of Real Property;

(viii)

note, debenture, mortgage, pledge, charge, security agreement, bond, conditional
sale agreement, equipment trust agreement, letter of credit agreement, loan
agreement or other Contract or commitment for borrowing or lending of money
(including, without limitation, loans to or from current or former officers,
directors, stockholders or any members of the Company or any Affiliate of any of
the foregoing), agreement or arrangements for a line of credit or guarantee,
pledge or undertaking of the indebtedness of any other Person;

(ix)

Contract or series of related Contracts for any capital expenditure in excess of
Fifty Thousand Dollars ($50,000);

(x)

Contract limiting or restraining it from engaging or competing in any lines of
business with any Person;

(xi)

Contract involving ongoing obligations related to (i) the purchase or sale of
(A) the capital stock, partnership interests or other equity interests of, (B)
substantially all or a material portion of the assets of, or (C) a merger,
consolidation or joint venture with, another Person;

(xii)

License, franchise, distributorship or other similar agreement, including those
which relate in whole or in part to any Intellectual Property of the Company
(other than software licenses for non-customized, software programs used
internally by the Company that are generally available on standard terms which
involve annual aggregate expenditures of less than $25,000);

(xiii)

agreement with any Governmental Entity;

(xiv)

power of attorney granted by the Company in favor of any Person;

(xv)

Contract or series of related Contracts requiring payments or other
consideration by or from the Company in excess of Twenty-Five Thousand Dollars
($25,000) during the remainder of its term;

(xvi)

Contracts containing any Encumbrances on any of the K&P Securities or the
Property.

(b)

Each such Material Contract is valid and enforceable in accordance with its
terms; the Company and, to the Knowledge of the Company, except as set forth on
Schedule 3.19(b), the Third Parties thereto, are in compliance with the
provisions thereof; neither the Company nor, to the Knowledge of the Company,
any of the Third Parties thereto, is in Default in the performance, observance
or fulfillment of any obligation, covenant or condition contained therein; and,
no event has occurred which with or without the giving of notice or lapse of
time, or both, would constitute a Default thereunder by the Company or any other
party.

(c)

None of such Material Contracts contains any provisions which would cause the
Company to be liable to the other party thereto for any amount (or any increased
price for goods or services being provided by the other party thereto) as a
result of the consummation of the transactions contemplated hereby.  Except as
set forth on Schedule 3.19(c), none of such Material Contracts contains any
provisions which would cause the Company to be liable to the other party thereto
for any amount in excess of Twenty-five Thousand Dollars ($25,000) for a single
Material Contract, or Fifty Thousand Dollars ($50,000) in the aggregate for all
Material Contracts, in the event that following the Closing, the Company
terminates such Material Contract(s), so long as such termination does not
constitute a breach of such Material Contract(s) by the Company.

(d)

None of the terms or provisions of any of such Material Contracts include a
restriction on the Company’s ability to compete.

(e)

No party to any Material Contract (i) has provided any notice to the Company of
its intent to terminate, or withdraw its participation in, any such Material
Contract, (ii) has threatened to terminate, or withdraw from participation in,
any such Material Contract or (iii) is in Default under any provision thereof
and no event has occurred, whether with or without the passage of time or the
giving of notice, or both, that would constitute such Default.

(f)

Except as set forth on Schedule 3.6, no Consent of any Third Party to any
Material Contract is required in connection with the Contemplated Transactions.
  

(g)

The Company has delivered (or made available to the Purchaser for review) a true
and correct copy of each written Contract (excluding purchase orders) included
in the Material Contracts to the Purchaser prior to the Closing Date.

(h)

Except as set forth on Schedule 3.19(h), the execution, delivery and performance
of this Agreement and the Collateral Documents and the consummation of the
Contemplated Transactions will not (i) result in or give to any Person any right
of termination, non-renewal, cancellation, withdrawal, acceleration or
modification in or with respect to any Material Contract, (ii) result in or give
to any Person any additional rights or entitlement to increased, additional,
accelerated or guaranteed payments under any Material Contract or (iii) result
in the creation or imposition of any Liability upon the Company or any
Encumbrances upon any of the Property under the terms of any Material Contract.

3.20.

Client Accounts.  The Company has all legal right, title and interest in the
Client Accounts, free and clear of all Encumbrances, and the Company, its
officers and directors have no Knowledge of any Claim concerning any such right,
title or interest in the Client Accounts made by any other Person.  Except as
set forth on Schedule 3.20, no employee of the Company or any other Person has:
(a) any claim of an ownership, participation or other right or interest in any
book of business or other interest in or claim upon any Client Accounts or any
revenues therefrom or profits thereof; (b) any compensation, deferred
compensation, phantom stock, phantom ownership or other arrangement which
involves, or states any such Person’s rights in terms of, any interest in a book
of business or any Client Account or other business; or (c) any other
arrangement which describes or characterizes any rights or interests of any such
Person as vested or owned or subject to ownership or vesting.

3.21.

Insurance.

(a)

The Company has maintained in effect since January 1, 2001, and presently has in
effect, all errors and omissions insurance policies, and all other insurance
policies, required by Law and reasonably appropriate in connection with the
operation of the Business of the Company as presently conducted.  Schedule 3.21
lists each insurance policy (including, without limitation, policies providing
property, casualty, liability, errors and omissions, and workers compensation
coverage) to which the Company has been a party, the named insured, additional
insured or otherwise the beneficiary of coverage at any time within the three
(3) years preceding the Closing with respect to errors and omissions, and within
one (1) year preceding the Closing with respect to all other insurance policies.

(b)

The Company has delivered to the Purchaser a correct and complete copy of each
insurance policy listed on Schedule 3.21 and in effect immediately prior to the
Closing.  With respect to each such insurance policy (unless otherwise
specified):  (a) the errors and omissions policy, and, to the Knowledge of the
Company, each other policy, is legal, valid, binding, enforceable in accordance
with its terms, and in full force and effect in all respects and all premiums
due thereunder have been paid and no notice of cancellation or termination has
been received by the Company with respect to such policies; (b) to the Knowledge
of the Company, no other party to the policy is in material breach or Default
(including with respect to the payment of premiums or the giving of notices),
and no event has occurred which would permit termination, modification, or
acceleration, under the policy; and (c) to the Knowledge of the Company, no
other party to the policy has repudiated any provision thereof.  All of such
insurance shall be in effect through the Closing Date.

(c)

The Company has notified all applicable insurance companies that have issued the
policies listed on Schedule 3.21 of any and all potential incidents, events or
circumstances of which the Company has Knowledge that could reasonably give rise
to a covered claim under such policy.

3.22.

Business Practices.  

(a)

Except as described in Schedule 3.22(a), the Company does not own a captive
insurance company nor does it have any investment or other interest in any
Person that assumes or holds underwriting, retention or similar risks.  There is
no agreement between the Company and any insurance carrier or any other Person
that contemplates, or would cause the Company or such Person to be considered to
have assumed or undertaken, any such risk.

(b)

Except as described in Schedule 3.22(b), with respect to any insurance
contracts, coverages or other business that the Company has placed with
insurance carriers or other underwriters having an “AM Best” rating below “A-”
(“Low-Rated Carrier”) since January 1, 2004, the Company has, to the Knowledge
of the Company, (i) disclosed the AM Best rating of such Low-Rated Carrier to
the insured and (ii) received from each such insured a written acknowledgment of
such rating and a waiver from responsibility for any Liability or Losses in
connection with or resulting from the financial condition of such Low-Rated
Carrier.

(c)

Except as described in Schedule 3.22(c), the Company does not have, nor has it
ever had: (i) any “service center” arrangement with any carrier pursuant to
which the carrier has performed, directly or indirectly, the servicing of
policies placed by or through the Company; or (ii) any “book roll” arrangements
or other practices pursuant to which the business of a particular customer, or
of a group of customers, was placed to or through another carrier or broker
either without customer authorization or for a fee or other consideration not
disclosed in writing to customers, or any other similar arrangement or practice.

(d)

Except as described in Schedule 3.22(d), the Company does not have, nor has it
ever had: (i) any “captive agency” relationship with any carrier or any other
formal or informal arrangement pursuant to which the Company has sold only a
particular product or only the products of a particular carrier, whether to any
customer or group of customers, or in or to any region, or otherwise; or
(ii) any arrangement with any carrier pursuant to which the carrier has paid for
or underwritten any costs or expenses of hiring producers or in any other
manner, directly or indirectly, borne any expense or provided any compensation
to the Company in connection with the hiring of producers.

(e)

Except as described in Schedule 3.22(e), since March 31, 2005, the Company has
fully and adequately disclosed to each of its customers and each group of
customers the nature and extent of the compensation received by the Company,
directly or indirectly, from insurers, insurance intermediaries, or premium
finance companies or other businesses in consideration for placing business
with, or otherwise arranging business for, such businesses, including (but not
limited to) profit sharing, contingent, bonus, override, excess commissions or
any other such similar compensation.

3.23.

Licensing Arrangements, Joint Ventures, Etc.  Schedule 3.23 attached hereto
contains a list of all licensing arrangements (other than software licenses for
non-customized, software programs used internally by the Company that are
generally available on standard terms which involve annual aggregate
expenditures of less than $25,000), joint ventures and royalty and franchise
agreements which the Company has entered into and by which it is bound or will
be bound by as of the Closing.

3.24.

Intellectual Property.  

(a)

The Company has no Registered Intellectual Property whatsoever.

(b)

Excluding any licensed Computer Software, the Company exclusively owns or
otherwise has the right to use for any purpose without restriction all its
Intellectual Property, and has the right to bring actions for the infringement
or other violations of all Intellectual Property necessary for the operation of
the Business.  To the Company’s Knowledge, the Company has licenses in effect
for all Computer Software currently being used by it, to the full extent of the
number of employees and other authorized users thereof.

(c)

No Claim is pending or, to the Knowledge of the Company, threatened, and the
Company has not to its Knowledge received written notice to the effect that:
 (i) the Company infringes upon, misappropriates or conflicts with the asserted
rights of any other person or entity under any Intellectual Property; or (ii)
the Company’s interest in any Intellectual Property owned or licensed by the
Company, or which the Company otherwise has the right to use, is invalid or
unenforceable by the Company.

(d)

Except as set forth on Schedule 3.24, the Company has not granted or assigned to
any other person or entity any right to commit the Company to provide services
or products or in any other fashion to serve as a reseller, sales representative
or distributor of the Company or its services or products.

(e)

Schedule 3.24 hereto contains a complete and accurate list of all licenses,
sublicenses, consents and other agreements (whether written or otherwise)
pertaining to any Intellectual Property (excluding licenses to the Company as
licensee for non-customized, software programs used internally by the Company
that are generally available on standard terms which involve annual aggregate
expenditures of less than $25,000):  (i) by which the Company licenses or
otherwise authorizes a Third Party to use such Intellectual Property or (ii) by
which a Third Party licenses or otherwise authorizes the Company to use its
Intellectual Property.  Neither the Company nor any other party is in breach of
or default under any such license or other agreement and each such license and
other agreement is valid and in full force and effect.  No consents or approvals
are required from any Third Party to permit the Company to continue to use such
licenses, sublicenses, consents and other agreements (whether written or
otherwise) as a result of the Contemplated Transactions.

(f)

Except as set forth in Schedule 3.24 (and excluding any licenses not required to
be disclosed pursuant to subsection (e) of this Section), all Intellectual
Property developed by or for the Company was conceived, invented, reduced to
practice, reduced to tangible form, written or otherwise created solely by
either (i) employees of the Company acting within the scope of their employment,
or (ii) persons or entities who have executed a written assignment that
irrevocably assigns and transfers all right, title and interest in and to such
Intellectual Property (including the right to seek past and future damages with
respect to such Intellectual Property) to the Company, and the Company is the
sole and exclusive owner of such Intellectual Property.

(g)

Except as set forth in Schedule 3.24, the Company has not granted any license or
other right to use any Intellectual Property owned or licensed by the Company,
whether or not requiring the payment of royalties, and no third party has any
right to use any of the Company’s Intellectual Property.  To the Knowledge of
the Company, no person or entity is infringing upon any of the Company’s rights
to its Intellectual Property, and the operation of the Business does not
infringe, dilute, or otherwise violate the Intellectual Property rights of any
Third Party.  To the Knowledge of the Company, no Third Party has exercised any
rights to indemnification granted by the Company against infringement of
Intellectual Property rights.

3.25.

Transactions with Affiliates.  

(a)

Schedule 3.25-1, as delivered to the Purchaser upon the Closing, shall include
full and complete disclosures of all matters required to be reported and
disclosed under the Parent’s Code of Business Conduct regarding ownership or
other interests of the individuals listed in the definition of Knowledge set
forth in Article 1.  None of the matters reported or disclosed in such Schedule
shall, individually or in the aggregate, have a Material Adverse Effect on the
Company or the operation of its Business following the Closing as herein
contemplated.

(b)

As of the date of this Agreement and upon the Closing, there are and shall not
be in effect any Contracts between the Company and any current or former
director, officer, stockholder or employee of the Company or any Affiliate of
any such person (other than employment agreements otherwise disclosed pursuant
to this Agreement and customer contracts) except for those identified on
Schedule 3.25-2 hereto, a complete copy of each of which (including all
amendments) has been delivered to the Purchaser.  Except as set forth on
Schedule 3.25-2, the Company is not indebted to any Affiliate, Stockholder or
any Affiliate of a Stockholder (the “Stockholder Loans”), and Schedule 3.25-2
contains a complete list of all amounts owed to the Company by any Affiliate,
Stockholder or any Affiliate of a Stockholder (the “Stockholder Receivables”)
(other than pursuant to such employment agreements and customer contracts).  All
transactions required to be listed on Schedule 3.25-2 attached hereto have been
recorded in the Books and Records of the Company at their full value, as if they
were rendered in arms length transactions.

3.26.

Employee Relations.

3.26.1.

Labor Matters

(a)

The Company has heretofore delivered to the Purchaser complete and accurate
lists showing all officers, directors, consultants and Employees of the Company,
listing all Contracts with such officers, directors, consultants and Employees
and the rate of compensation (and the portions thereof attributable to salary,
bonus and other compensation, respectively) and any accrued sick leave and
accrued vacation of each such Person as of May 31, 2006 and as of September 30,
2006.  Except as set forth in Schedule 3.26.1, since May 31, 2006, there have
been no increases in the compensation payable or any special bonuses to any
officer, director, consultant, or Employee, except ordinary salary increases
implemented on a basis consistent with past practices which have been set forth
on Schedule 3.26.1(a).  No individuals retained by the Company as an independent
contractor or consultant would be reclassified by the IRS, the U.S. Department
of Labor or any other Governmental Entity as an employee of such Person for any
purpose whatsoever.  Each Employee of the Company principally involved in
production, solicitation or origination of Business (a “Producer”) is also
listed in Schedule 3.26.1(a-2).

(b)

The Company has complied and is in compliance with all Laws which relate to
wages, hours, discrimination in employment and collective bargaining, and the
Company is not liable for any arrears of wages, taxes or penalties for failure
to comply, in all material respects, with any of the foregoing.  There is no
Claim or Legal Proceeding against the Company (whether under federal, state or
local Law, under any employment Contract, or otherwise) brought or, to the
Knowledge of the Company, written threat or demand by any Employee on account of
or for:  (i) overtime pay, other than overtime pay for work done during the
current payroll period; (ii) wages or salary for any period other than the
current payroll period; (iii) any amount of vacation pay or pay in lieu of
vacation time, other than vacation time or pay in lieu thereof earned in or in
respect of the current fiscal year; or (iv) any violation of any Law relating to
minimum wages or maximum hours of work.  There is no Claim or Legal Proceeding
against the Company (whether under federal, state or local Law, under any
employment Contract, or otherwise) brought or, to the Knowledge of the Company,
threatened in writing by any Person (including any Governmental Entity) relating
to discrimination or occupational safety in employment or employment practices
(including the Occupational Safety and Health Act of 1970, as amended, The Fair
Labor Standards Act, as amended, Title VII of the Civil Rights Act of 1964, as
amended, or the Age Discrimination in Employment Act of 1967, as amended).

(c)

The Company is not and has never been bound by or subject to (and none of its
respective assets or properties is or has ever been bound by or subject to) any
arrangement with any labor organization.  No Employees of the Company are
represented by any labor organization or covered by any collective bargaining
agreement.  To the Knowledge of the Company, no campaign to establish such
representation is or has ever been in progress and there is no pending or, to
the best of the Company’s Knowledge, threatened, labor dispute involving the
Company and any group of its Employees.  The Company has not experienced any
labor interruptions over the past three years.  The Company considers its
relationship with its Employees to be good.

(d)

The Company has heretofore delivered to the Purchaser a complete and accurate
list showing that each Employee has signed, and there currently remains in
effect for the Employee, a confidentiality and non-solicitation agreement on one
of the forms attached to Schedule 3.26.1(d), with the particular form under
which the Employee is covered being as noted in such list.

3.26.2.

Employee Benefit Plans

(a)

Schedule 3.26.2(a) sets forth a complete and accurate list and description of
each Employee Benefit Plan.  With respect to each Employee Benefit Plan, the
Company has delivered or caused to be delivered to the Purchaser true and
complete copies of (i) the plan document, trust agreement and any other document
governing such Employee Benefit Plan, (ii) the summary plan description, (iii)
Form 5500 annual reports and attachments for the for the three (3) most recent
years for which the same have been filed, and (iv) the most recent IRS
determination letter, if any, for such Employee Benefit Plan.

(b)

1)

None of the Company or any of its ERISA Affiliates currently has any liability
to make any withdrawal liability payment to any Multi Employer Plan.

(i)

Each Employee Benefit Plan that provides medical benefits has been operated in
compliance with all material requirements of Sections 601 through 608 of ERISA
and either (i) Section 162(i)(2) and (k) of the Code and regulations thereunder
(prior to 1989) or (ii) Section 4980B of the Code and regulations thereunder
(after 1988), relating to the continuation of coverage under certain
circumstances in which coverage would otherwise cease.  

(ii)

 Except as set forth on Schedule 3.26.2(c), no Employee Benefit Plan maintained
by the Company provides post-retirement medical benefits, post-retirement death
benefits or other post-retirement welfare benefits.  

(iii)

All contributions to, and payments from, the Employee Benefit Plans which may
have been required to be made in accordance with the Employee Benefit Plans and,
when applicable, Section 302 of ERISA or Section 412 of the Code, have been
timely made.

(iv)

There have been no statements or communications made or materials provided to
any employee or former employee of the Company or its Affiliates (including any
member of an ERISA Affiliate or any employee, officer or director of any member
of an ERISA Affiliate) which provide for or could be construed as a contract or
promise by the Purchaser or any of its Affiliates to provide for any pension,
welfare, or other insurance-type benefits to any such employee or former
employee, whether before or after retirement.

(v)

Each Employee Benefit Plan complies in all material respects with all applicable
Laws, including, without limitation, ERISA, the Age Discrimination in Employment
Act, as amended, the Americans with Disabilities Act, the Family Medical Leave
Act, Title VII of the Civil Rights Act of 1964, as amended, and Title X of the
Consolidated Omnibus Budget Reconciliation Act of 1986, as amended.  No Employee
Benefit Plan is presently under audit by the IRS or the Department of Labor.

(vi)

There are no events, contingencies, Claims, Orders or Legal Proceedings that
could rise to the level of Liability with the IRS, the PBGC, the United States
Department of Labor, or any other Governmental Entity or Person on account of
any event or circumstances arising under any Employee Benefit Plan or a claim
for benefits under any such plan.

(vii)

Each Employee Benefit Plan that is an “Employee Pension Benefit Plan,” as such
term is defined in ERISA Section 3(2), meets the requirements of a “qualified
plan” under Code Section 401(a) and has received, within the last two (2) years,
a favorable determination letter from the Internal Revenue Service.

(viii)

The market value of the assets under each such Employee Pension Benefit Plan
equals or exceeds the present value of all vested and unvested liabilities
thereunder determined in accordance with PBGC methods, factors, and assumptions
applicable to an Employee Pension Benefit Plan terminating on the date of
determination.

(ix)

No such Employee Pension Benefit Plan has been completely or partially
terminated or been subject to a Reportable Event as to which notices would be
required to be filed with the PBGC.  No proceedings by the PBGC to terminate any
such Employee Pension Benefit Plan has been institute or threatened.

(x)

There have been no Prohibited Transactions with respect to any Employee Benefit
Plan.  No Fiduciary has any liability for breach of fiduciary duty or any other
failure to act or to comply in connection with the administration or investment
of the assets of any such Employee Benefit Plan.  No action, suit, proceeding,
hearing, or investigation with respect to the administration or the investment
of the assets of any such Employee Benefit Plan is pending or threatened.  The
Company does not have Knowledge of any basis for any such action, suit,
proceeding, hearing or investigation.

(xi)

Neither the Company nor its ERISA Affiliates contributes to, nor has ever been
required to contribute to, any Multi Employer Plan, or has any liability
(including withdrawal liability) under any Multi Employer Plan.

(b)

Other than as described in Schedule 3.26.2(c), there is no Person participating
or entitled to participate in any Employee Benefit Plan who is not a current,
bona fide employee of the Company, other than as required by and in accordance
with the Americans with Disabilities Act, the Family Medical Leave Act, and
Title X of the Consolidated Omnibus Budget Reconciliation Act of 1986, as
amended.

(c)

Other than as described in Schedule 3.26.2(d), the Company has no Employee
Benefit Plan in which any Person is entitled to participate following retirement
from employment with the Company.

1.1.2.

There are no events, contingencies, Claims, Orders or Legal Proceedings that
could rise to the level of Liability with the IRS, the Pension Benefit Guaranty
Corporation, the United States Department of Labor, or any other Governmental
Entity or Person on account of any event or circumstances arising under any
Employee Benefit Plan or a claim for benefits under any such plan.

1.2.

Environmental Laws.

(a)

The Company and the operation of the Business is and has been in compliance with
all applicable Environmental Laws.

(b)

There have occurred no, and there are no, events, conditions, circumstances,
activities, practices, incidents, or actions on the part of, or caused by, the
Company (or to the Knowledge of the Company, caused by a third party) that may
give rise to any common law or statutory liability, or otherwise form the basis
of any Claim, Legal Proceeding, Order or action involving or relating to the
Business or the Company, based upon or related to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling, or the
emission, discharge, release or threatened release into the environment, of any
pollutants, contaminants, chemicals, petroleum, or industrial, toxic or
Hazardous Materials.

1.3.

Brokers.  Other than Hales & Company and James J. Doud, no broker, investment
banker, financial advisor or other Person, is entitled to any broker’s,
finder’s, financial advisor’s or other similar fee or commission in connection
with the Contemplated Transactions based upon arrangements made by or on behalf
of the Company, any Key Stockholder, or any Person acting on their behalf.

1.4.

Taxes and Tax Returns.  

(a)

Except as set forth on Schedule 3.29, the Company, including any predecessors
thereof, has duly and timely filed all Tax Returns required to be filed by it on
or before the Closing Date (taking into account extensions) with any
Governmental Entity.  Each such Tax Return is true, accurate and complete.  The
Company, including any predecessors thereof, has timely paid in full all Taxes
for the period covered by each such Tax Return, whether or not shown on such Tax
Return.   All Taxes not yet due and payable have been withheld or reserved for
or, to the extent that they relate to periods on or prior to date of the most
recent Unaudited Interim Statements are reflected as a liability thereon.

(b)

The Company has complied with all Laws relating to the payment and withholding
of Taxes and information reporting and back-up (including, without limitation,
withholding of Taxes pursuant to Sections 1441 and 1442 of the Code, or similar
provisions under any foreign Laws) and has, within the time and in the manner
prescribed by Law, withheld from employee wages and paid over, in a timely
manner, to the proper Taxing Authorities all amounts required to be so withheld
and paid over under applicable Law.

(c)

No deficiency for any Taxes has been asserted or assessed against the Company
that has not been resolved and paid in full or fully reserved for and identified
on the Financial Statements and, to the Knowledge of the Company, no deficiency
for any Taxes has been proposed that has not been fully reserved for and
identified on the Financial Statements.  The Company has not received any
outstanding and unresolved notices from the IRS or any other Taxing Authority of
any proposed examination or of any proposed change in reported information
relating to the Company.  No Legal Proceeding or audit or similar foreign
proceedings is pending with regard to any of the Company’s Taxes or Tax Returns.
  No state of facts exists or has existed that would constitute grounds for the
assessment of Tax liability with respect to any period that has not been audited
by the IRS or any other Taxing Authority.  The Company has not received notice
of any claim by a Governmental Authority in a jurisdiction where the Company
does not file Returns that it is or may be subject to taxation by any
Governmental Authority.

(d)

There are no outstanding waivers, agreements or comparable consent s given by
the Company regarding the application of the statute of limitations for
assessment or collection with respect to any Taxes or Tax Returns r elating to
the Company nor, to the Knowledge of the Company, is any request for any such
waiver , agreement, or consent pending.

(e)

The Company has delivered or made available to the Purchaser copies of all
federal, state, local and foreign income or franchise Tax Returns filed by the
Company, examination reports, and statements of deficiencies assessed against or
agreed to by the Company for all years in which the statute of limitations
remains open for a Taxing authority to assess any Taxes and all supporting
work-papers for the above referenced Tax Returns.

(f)

None of the Property is required to be treated as owned by any other Person
pursuant to the “safe harbor lease” provisions of former Section 168(f)(8) of
the Code.

(g)

The Company is not a party to or bound by any tax allocation or sharing
agreement.  The Company (A) has not been a member of an affiliated group filing
a consolidated federal income Tax Return (other than a group the common parent
of which was the Company) or (B) does not have any liability for the Taxes of
any Person (other than any of the Company) under Reg. §1.1502-6 (or any similar
provision of state, local, or foreign law), as a transferee or successor, by
contract, or otherwise.

(h)

The Company does not have a permanent establishment located in any tax
jurisdiction other than the United States and is not liable for the payment of
Taxes levied by any such jurisdiction located outside the United States.  The
Company has not been a United States real property holding corporation within
the meaning of Section 897(c)(2) during the applicable period specified in
Section 897(c)(1)(A)(ii).  

(i)

The Company has not filed a consent pursuant to former Section 341(f) of the
Code or agreed to have former Section 341(f)(2) of the Code (as in effect for
taxable years beginning prior to January 1, 2003) apply to any disposition of
any asset owned by it.

(j)

The Company is not a party to any agreement, contract, arrangement, or plan that
has resulted or would result, separately or in the aggregate, in the payment of
any “excess parachute payment” within the meaning of Section 280G (or any
corresponding provision of state, local, or foreign Tax law).

(k)

The Company has not constituted either a “distributing corporation” or a
“controlled corporation” (within the meaning of Section 355(a)(1)(A) of the
Code) in a distribution of stock qualifying for tax-free treatment under
Section 355 of the Code.

(l)

Except as set forth on Schedule 3.29, the Company is not subject to any
adjustments under Section 481 of the Code, nor will the Company be subject to
any such Section 481 adjustments (or other income inclusion) as a result of the
transactions contemplated by this Agreement.

(m)

The Company has not engaged in any transaction that is, or is substantially
similar to, any of the types of transactions that the Internal Revenue Service
has determined to be a Tax avoidance transaction and identified by notice,
regulation or other form of published guidance as a reportable or listed
transaction, as set forth in Treasury Regulations Section 1.6011-4(b)(1) and
Section 1.6011-4(b)(2).

(n)

There has been no change of control of the Company for purposes of Section 382
of the Code within the last three taxable years nor have any Subsidiaries of a
consolidated group, of which the Company is or has been the common parent, been
sold within the last two taxable years.

1.5.

Corporate Records.  The Books and Records of the Company fairly record and
reflect all transactions material to the operations of the Company and its
Business.

1.6.

Powers of Attorney.  There are no outstanding powers of attorney executed on
behalf of the Company, except as set forth on Schedule 3.31.

1.7.

Statements and Other Documents Not Misleading.  Neither this Agreement,
including all Schedules and Exhibits, nor any other Collateral Document,
contains or will contain any untrue statement of any material fact or omits or
will omit to state any material fact required to be stated in order to make such
statement, document or other instrument not misleading.

1.8.

Cooperation; Access to Books and Records.  The Company will cooperate with the
Purchaser in connection with the Contemplated Transactions and shall afford to
the Purchaser and its agents, attorneys, accountants and other authorized
representatives, including engineers, financial advisers, current and
prospective lenders and debt underwriters, reasonable access to all of the
properties, assets, financial condition, operations, books, records, files,
correspondence, computer output, data, files, log books, technical and operating
manuals and other materials of the Company (including those in the possession or
control or its accountants, attorneys and any other Third Party), as the case
may be, for the purpose of permitting the Purchaser to make such due diligence
investigation and examination of the Business, assets, properties and Books and
Records of the Company as the Purchaser, in its discretion, shall deem to be
reasonably necessary or appropriate.  The Company will cause its counsel,
accountants and representatives, and each of the Company’s directors, officers
and employees, to cooperate fully with the employees and representatives of the
Purchaser in connection with such investigation, access and examination.  The
results of such investigation and examination shall not relieve any party from
his, her or its obligations with respect to the representations and warranties
made in this Agreement or reduce the Purchaser’s right to pursue such remedies
at Law or hereunder, as it would otherwise have in the absence of having
conducted such investigation.

1.9.

Stockholder Solicitations.  The information included by the Company in all
solicitations and notices to Stockholders in connection with the Contemplated
Transactions, including (without limitation) each notice and solicitation
relating to the approval of the Merger and the dissenters’ rights of
Stockholders, shall not, on the date the notice or solicitation is or was sent
to the Stockholders or on the Effective Date, contain any statement that, at
such time, is false or misleading with respect to any material fact, or omit to
state any material fact necessary in order to make the statements made therein,
in light of the circumstances under which they are made, not false or
misleading, or omit to state any material fact necessary to correct any
statement in any earlier communication that has become false or misleading.
 Such notices and solicitations and all actions taken by or on behalf of the
Company or any of its officers, directors, employees or representatives in
connection therewith has complied and shall comply with the WBCA and applicable
federal and state securities laws requirements.  The Company shall have promptly
advised the Purchaser in writing if at any time prior to the Effective Date
either the Company or any of its officers, directors or employees or any of the
Key Stockholders shall obtain Knowledge of any facts that might make it
necessary or appropriate to amend or supplement the notices and solicitations in
order to make the statements contained or incorporated by reference therein not
misleading or to comply with applicable law.

ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF KEY STOCKHOLDERS

Each Key Stockholder hereby makes the following representations and warranties
to the Purchaser:

2.1.

Authorization.  The Key Stockholder has the full right, power, authority and
capacity to enter into and perform this Agreement and each of the Collateral
Documents to which the Key Stockholder is a party, and to consummate the
Contemplated Transactions.  This Agreement and each of the Collateral Documents
to which the Key Stockholder is a party have been duly executed and delivered by
the Key Stockholder, and constitute legal, valid and binding obligations of the
Key Stockholder, enforceable against the Key Stockholder in accordance with
their terms, except as such enforcement may be limited by applicable bankruptcy,
insolvency, moratorium or similar Laws affecting the rights of creditors
generally and general equity principles (regardless of whether enforceability is
considered a proceeding at law or in equity).

2.2.

Title to Shares and Warrants.

(a)

Each of Distribution Partners, Arlen Prentice, Chris Prentice, David Ross and
Ellen Boyer represents and warrants that such Key Stockholder has good and valid
title to all of the K&P Common Shares for which he, she or it is the holder of
record (as set forth in Schedule 3.3(a)), free and clear of all Encumbrances
except as disclosed in Schedule 3.3(c) (which Encumbrances shall be discharged
and released prior to or upon the Closing) other than as set forth herein and
restrictions under state and federal securities laws.

(b)

Each of Chris Prentice, David Ross and Ellen Boyer represents and warrants that
such Key Stockholder has good and valid title to all of the K&P Stock Options
for which he, she or it is the holder of record (as set forth in
Schedule 3.3(a)), free and clear of all Encumbrances other than as set forth in
restrictions under state and federal securities laws.

(c)

Distribution Partners represents and warrants that it has good and valid title
to all of the K&P Preferred Stock and all of the K&P Warrants for which it is
the holder of record (as specified in Section 3.3) free and clear of all
Encumbrances other than as set forth in restrictions under state and federal
securities laws.

(d)

Each Key Stockholder represents and warrants that such Key Stockholder has not
entered into or granted any outstanding warrants, options, commitments,
agreements or understandings with any Person (except for the Contemplated
Transactions) to sell, transfer or otherwise dispose of any shares of the
Company’s capital stock or other securities, including, without limitation, the
K&P Securities.

2.3.

Legal Proceedings.

(a)

There is no Legal Proceeding or Claim, pending against or, to the Key
Stockholder’s Knowledge, threatened against the Key Stockholder that (i) relates
to or affects any Securities of the Company held by the Key Stockholder, or
(ii) could reasonably be expected, individually or in the aggregate, to impair
the ability of the Key Stockholder to perform the Key Stockholder’s obligations
under this Agreement or any of the Collateral Documents to which the Key
Stockholder is a party or to prevent the consummation by the Key Stockholder of
any of the Contemplated Transactions, or (iii) questions the validity of this
Agreement or any of the Collateral Documents.

(b)

There is no Order outstanding against the Key Stockholder having or which in the
future, insofar as reasonably can be foreseen, could have any of the effects
described in clause (ii) of Section 4.3(a) above.

(c)

The Key Stockholder (excluding Distribution Partners) does not have Knowledge of
any currently existing events, facts or circumstances which could reasonably be
expected to form the basis for any Legal Proceeding or Order which, insofar as
reasonably can be foreseen, could have any of the effects described in clause
(ii) of Section 4.3(a) above.

2.4.

Conflict with other Instruments; Absence of Restrictions.  The execution,
delivery and performance of this Agreement and each of the Collateral Documents
to which the Key Stockholder is a party, and the consummation of the
Contemplated Transactions by the Key Stockholder, do not and will not:  (i)
result in a Default, of or under (A) in the case of Distribution Partners or the
Arlen Prentice LLC, any of the terms of the Organizational Documents of either
of them, (B) assuming the receipt of all Governmental Consents listed on
Schedule 3.7, any Law, Permit or Order applicable to or binding upon the Key
Stockholder, or (C) any Contracts, Permits or Licenses to which the Key
Stockholder is a party or by which the Key Stockholder is bound; or (ii) result
in the creation or imposition of any Encumbrance upon any of the Securities of
the Company held by the Key Stockholder.

2.5.

Government and Third-Party Approvals.  No Governmental Consent other than as
herein contemplated pursuant to the HSR Act is required (i) for the performance
by the Key Stockholder of this Agreement or any of the Collateral Documents, or
(ii) in connection with the consummation of the Contemplated Transactions that
involve the Key Stockholder.  No Consent of any Person (including any party to
any Contract with the Key Stockholder) is required (i) for the performance by
the Key Stockholder of this Agreement or any of the Collateral Documents, or
(ii) in connection with the consummation of the Contemplated Transactions that
involve the Key Stockholder, except where the failure to obtain such Consent
would not have a Material Adverse Effect.

ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF PURCHASER

The Purchaser hereby represents and warrants to the Stockholders and the Company
as follows:

3.1.

Organization.  Each of the Purchaser and the Purchaser Constituent Corporation
(i) is a corporation duly incorporated, validly existing and in good standing
under the laws of the state of its incorporation, (ii) has the power and
authority to own and operate its properties and assets and to transact its
business as currently conducted and (iii) is duly qualified and authorized to do
business and is in good standing in all jurisdictions where the failure to be
duly qualified, authorized and in good standing would have a Material Adverse
Effect upon its business, operations, results of operations, assets, liabilities
or condition (financial or otherwise).

3.2.

Authorization for Agreement.  Each of Purchaser and the Purchaser Constituent
Corporation has the power and authority (corporate, partnership or otherwise, as
applicable) to enter into and perform this Agreement, each of the Collateral
Documents to which it is a party, and to consummate the Contemplated
Transactions.  The execution, delivery and performance by the Purchaser of this
Agreement and each of the Collateral Documents to which it is a party, and the
consummation by each of it of the Contemplated Transactions have been duly
authorized by all necessary action (corporate, partnership or otherwise, as
applicable) on the part of the Purchaser and the Purchaser Constituent
Corporation.  This Agreement and each of the Collateral Documents to which the
Purchaser or the Purchaser Constituent Corporation is a party has been duly
executed and delivered by such party and constitutes a legal, valid and binding
obligation of such party, enforceable against such party in accordance with its
terms, except as such enforcement may be limited by applicable bankruptcy,
insolvency, moratorium or similar Laws affecting the rights of creditors’
generally and general equity principles (regardless of whether enforceability is
considered a proceeding at law or in equity).

3.3.

Legal Proceeding.  There is no Legal Proceeding or Order pending against or, to
the Knowledge of the Purchaser, threatened against or affecting, the Purchaser
or the Purchaser Constituent Corporation or any of their properties or otherwise
that could adversely affect or restrict the ability of the Purchaser or the
Purchaser Constituent Corporation to consummate fully the Contemplated
Transactions or that in any manner draws into question the validity of this
Agreement.  

3.4.

Brokers or Finders.  Neither the Purchaser nor the Purchaser Constituent
Corporation has engaged the services of any broker or finder with respect to the
transactions contemplated by this Agreement.

3.5.

Acknowledgments.  Subject to the representations, warranties and covenants of
the Company and the Key Stockholders expressly set forth in this Agreement and
in the Collateral Documents, Purchaser is relying solely on its own
investigation as to the business, affairs, condition (financial and otherwise),
prospects, properties, assets, liabilities, and obligations of the Company and
the Business, and Purchaser is assuming the risk that adverse physical, economic
or other conditions or circumstances may not have been revealed by such
investigation.  Purchaser acknowledges that any projections regarding the
Company or the Business presented at any time to Purchaser (a) were and are
based on various assumptions by management of the Company that may prove to be
incorrect, and that such assumptions are inherently subject to significant
economic and competitive uncertainties and contingencies, many of which are
beyond the control of the Company and its Affiliates and management and (b) were
based upon assumptions with respect to future business decisions that will be
subject to the control of Purchaser following the Closing.

3.6.

Conflict with other Instruments; Absence of Restrictions.  The execution,
delivery and performance of this Agreement and each of the Collateral Documents,
and the consummation of the Contemplated Transactions, do not and will not:  (i)
result in a Default, of or under (A) any of the terms of the Organizational
Documents of the Purchaser Constituent Corporation, or (B) any Law, Permit or
Order applicable to or binding upon the Purchaser Constituent Corporation; or
(ii) result in the creation or imposition of any Encumbrance upon any of the
Securities of the Purchaser Constituent Corporation.

3.7.

Government and Third-Party Approvals.  No Governmental Consent other than as
herein contemplated pursuant to the HSR Act is required (i) for the performance
by the Purchaser Constituent Corporation of this Agreement or any of the
Collateral Documents, or (ii) in connection with the consummation of the
Contemplated Transactions that involve the Purchaser Constituent Corporation.
 No Consent of any Person (including any party to any Contract with the
Purchaser Constituent Corporation) is required (i) for the performance by the
Purchaser Constituent Corporation of this Agreement or any of the Collateral
Documents, or (ii) in connection with the consummation of the Contemplated
Transactions that involve the Purchaser Constituent Corporation, except where
the failure to obtain such Consent would not have a Material Adverse Effect.

ARTICLE 4
CERTAIN PRE-CLOSING COVENANTS AND OTHER MATTERS

4.1.

Conduct of Business.  During the period from the date of this Agreement to the
Closing Date or earlier if this Agreement is terminated in accordance with its
terms, the Company (i) agrees to cause the Business to be conducted in the
ordinary course consistent with past practices, and (ii) with respect to the
Business and the Company will (except as otherwise expressly permitted by this
Agreement or as otherwise approved by the Purchaser):

(a)

not acquire or agree to acquire (i) by merging or consolidating with, or by
purchasing any of the equity interests of or a substantial portion of the assets
of, or by any other manner, any business or any corporation, partnership, joint
venture, association or other business organization or division thereof, or (ii)
any assets that are material, individually or in the aggregate, to the Company,
except purchases of assets in the ordinary course of business consistent with
past practice and capital expenditures permitted by clause (c) below;

(b)

not make any dividends or distributions in respect of any Securities of the
Company, whether in cash, stock or property, to any Stockholders or any other
Person, other than dividend distributions to Distribution Partners in respect of
the K&P Preferred Stock in accordance with the Company’s Articles of
Incorporation through the Effective Date;

(c)

not (i) incur any Indebtedness involving borrowed money in excess of Fifty
Thousand Dollars ($50,000), including (x) guaranteeing any such Indebtedness of
another Person, (y) issuing or selling any debt securities or warrants or other
rights to acquire any debt securities of the Company, or (z) guaranteeing any
debt securities of another Person, or (ii) make any loans, advances or capital
contributions to, or investments in, any other Person, other than in the
ordinary course of business consistent with past practices;

(d)

not make or agree to make any capital expenditures which in the aggregate are in
excess of One Hundred Thousand Dollars ($100,000);

(e)

not change a corporate name or permit the use thereof by any other Person;

(f)

not (i) cause, suffer or permit the termination of any Employee Benefit Plan
except as required by this Agreement, (ii) permit any Prohibited Transaction
involving any Employee Benefit Plan, (iii) fail to pay to any Employee Benefit
Plan any contribution which they are obligated to pay under the terms of such
Employee Benefit Plan, whether or not such failure to pay would result in an
Accumulated Funding Deficiency or (iv) allow or suffer to exist any occurrence
of a Reportable Event or any other event or condition, which presents a material
risk of termination by the PBGC of any Employee Benefit Plan;

(g)

not enter into any new, or amend or otherwise alter any existing, Employee
Benefit Plan;

(h)

not, except in the ordinary course of business consistent with past practices,
(i) remove any fixtures, Equipment or personal property from any of the Leased
Real Property; (ii) enter into any Contract which would be required to be
disclosed on Schedule 3.20.1 attached hereto; (iii) sell, discount or otherwise
dispose of any Accounts Receivable (except by collection in the ordinary course
of business); or (iv) cancel or compromise any Indebtedness or Claim, or waive
or release any rights of material value;

(i)

not (i) make a material change in the character of its Business or in the
properties or assets of the Company, or enter into any new business or relocate
any of their facilities or acquire any additional operations or business; and
(ii) not terminate, discontinue, close or dispose of any facility or business
operation;

(j)

pay when due all Taxes lawfully levied or assessed against the Company before
any penalty or interest accrues on any unpaid portion thereof and file all Tax
Returns when due (including applicable extensions); and (b) not make or change
any Tax elections or settle any audit or examination relating to Taxes;

(k)

use Commercially Reasonable Efforts to maintain the facilities, assets and
properties of the Company in good operating repair, order and condition,
reasonable wear and tear and loss by casualty to the extent covered by insurance
excepted, and notify the Purchaser promptly upon any loss of, damage to, or
destruction of any of the facilities, assets or properties of the Company having
a Material Adverse Effect on the Company, whether or not covered by insurance;

(l)

maintain in full force and effect insurance coverage of the types and in the
amounts set forth in Schedule 3.21 attached hereto;

(m)

promptly advise the Purchaser in writing of the commencement of, any threat to
commence of which the Company has Knowledge, and of any developments or changes
in any, pending or, to the Knowledge of the Company, threatened Legal
Proceedings against the Company or any Stockholder of the type and nature which
would be required to be disclosed on Schedule 3.17 attached hereto;

(n)

use Commercially Reasonable Efforts to maintain in full force and effect each,
and not cause or permit to occur any Default under any, Contract, License or
Permit required to be listed in any Schedule to this Agreement and, until the
Closing Date, pay all accounts payable in the ordinary course of its business
consistent with past practices;

(o)

not cause or permit to occur a violation, in any material respect, of any Laws
applicable to the Company;

(p)

not cause, suffer or permit the creation or attachment of any Encumbrance on any
of the assets of the Company;

(q)

use Commercially Reasonable Efforts to (i) preserve the business organizations
of each of the Company intact, (ii) keep available the services of each of
Employee, (iii) preserve the goodwill of the customers and others having
business relations with the Company and (iv) maintain the corporate existence of
the Company; and

(r)

use Commercially Reasonable Efforts to not take, suffer or permit any action, or
omit to take any action, that would render untrue any of the representations or
warranties of the Company set forth in this Agreement.

4.2.

Notice of Certain Events.

(a)

The Company covenants and agrees to provide the Purchaser with prompt notice of
(i) any event, fact or circumstance which is likely to have a Material Adverse
Effect on the Company, (ii) any representation or warranty made by the Company
in this Agreement which has become untrue or inaccurate or (iii) its failure to
comply with or satisfy any covenant, agreement or condition to be complied with
or satisfied under this Agreement, within the time frame set forth in this
Agreement; provided, however, that (A) as to any matter of which such notice is
given that relates to circumstances existing or matters occurring prior the date
of this Agreement which to the Knowledge of the Company should have been
disclosed pursuant hereto (but not as to circumstances arising or matters
occurring between the date hereof and the Closing), such matter shall be
excluded from the operation of the Threshold Amount; and (B) for purposes of
determining whether the conditions to the obligation of the Purchaser to close
pursuant to Section 7.2 shall have been satisfied, all matters disclosed in any
such notifications shall be disregarded.

(b)

The Purchaser covenants and agrees to provide the Company with prompt notice of
(i) any representation or warranty made by the Purchaser contained in this
Agreement which has become untrue or inaccurate or (ii) its failure by to comply
with or satisfy any covenant, agreement or condition to be complied with or
satisfied under this Agreement, within the time frame set forth in this
Agreement; provided, however, that (A) as to any matter of which such notice is
given that relates to circumstances existing or matters occurring prior the date
of this Agreement which to the Knowledge of the Purchaser should have been
disclosed pursuant hereto (but not as to circumstances arising or matters
occurring between the date hereof and the Closing), such matter shall be
excluded from the operation of the Threshold Amount; and (B) for purposes of
determining whether the conditions to the obligation of the Company and the
Stockholders to close pursuant to Section 7.1 shall have been satisfied, all
matters disclosed in any such notifications shall be disregarded.

4.3.

Unaudited Interim Statements.  The Company covenants and agrees to deliver to
the Purchaser Unaudited Interim Statements for each calendar month within ten
Business Days after the end of each month and, in any event, at least one
Business Day prior to Closing.

4.4.

Cooperation; Access to Books and Records.  The Company will cooperate generally
with the Purchaser in connection with the Contemplated Transactions.  Until the
Closing Date or earlier if this Agreement is terminated in accordance with its
terms, the Company shall afford to the Purchaser and its agents, attorneys,
accountants and other authorized representatives, including engineers, financial
advisers, current and prospective lenders and debt underwriters, reasonable
access to all of the properties, assets, financial condition, operations, books,
records, files, correspondence, computer output, data, files, log books,
technical and operating manuals and other materials of the Company (including
those in the possession or control of its accountants, attorneys and any other
Third Party), as the case may be, for the purpose of determining the compliance
of the Company with its obligations under this Agreement and facilitating the
consummation of the Contemplated Transactions.  Any such access shall be
conducted during regular business hours and upon reasonable prior notice under
the circumstances and will be conducted in a manner that will not materially
disrupt the operation of the Business.  The Company will cause its counsel,
accountants and representatives, and its directors, officers and employees, to
cooperate fully with the employees and representatives of the Purchaser in
connection with such access.

4.5.

Commercially Reasonable Efforts.  Upon the terms and subject to the conditions
set forth in this Agreement, the parties shall use their Commercially Reasonable
Efforts to take, or cause to be taken, all actions, and to do, or cause to be
done, and to assist and cooperate with the other parties in doing, all things
necessary, proper or advisable to consummate and make effective, in the most
expeditious manner practicable, the Closing, and the other Contemplated
Transactions, including (a) obtaining all Required Consents, (b) defending any
Legal Proceeding or Claims challenging this Agreement or the consummation of any
of the Contemplated Transactions, including, if the circumstances warrant,
seeking to have any stay or temporary restraining Order vacated or reversed, (c)
the removal of all Encumbrances from the Property on or prior to the Closing and
(d) the execution and delivery of any additional documents, agreements and
instruments necessary to consummate the Contemplated Transactions by, and to
fully carry out the purposes of, this Agreement.

4.6.

Amendment of Schedules.  Each party hereto agrees that, with respect to the
representations and warranties of such party contained in this Agreement, such
party shall have the continuing obligation until the Closing to supplement or
amend promptly any Schedules hereto with respect to any matter hereafter arising
or discovered which, if existing or known at the date of this Agreement, would
have been required to be set forth or described in such Schedules; provided,
however, that (i) as to any matter disclosed in any such supplement or amendment
that relates to circumstances existing or matters occurring prior to the date of
this Agreement which to the Knowledge of the party amending or supplementing the
Schedule should have been disclosed pursuant hereto (but not as to circumstances
arising or matters occurring between the date hereof and the Closing), such
matter shall be excluded from the operation of the Threshold Amount; and
(ii) for purposes of determining whether the conditions precedent of the parties
to close pursuant to Article 7 shall have been satisfied, all matters disclosed
in such supplements and amendments shall be disregarded.

4.7.

Satisfaction of Stockholder Receivables.  On or prior to the Closing Date, the
Company shall cause each and all of the Stockholder Receivables to be paid,
satisfied and discharged (including all interest and other charges accrued
thereon).

4.8.

Company Liabilities.

(a)

At or prior to the Closing, the Company shall pay and discharge the following:
 (i) any Indebtedness that is secured in whole or in part by any assets of the
Company or its Affiliates, other than as expressly provided in subsections (b)
and (c) of this Section; (ii) other Indebtedness of the Company to the extent
not specifically authorized pursuant to subsections (b) and (c) of this Section;
(iii) all accrued but unpaid dividends due to Distribution Partners in respect
of its K&P Preferred Stock under the Company’s Articles of Incorporation through
the Effective Date; and (iv) the Merger Transaction Expenses of Cooley Godward
Kronish LLP, Garvey Schubert Barer, and Preston Gates & Ellis through the
Effective Date.

(b)

With regard to the Note of the Company payable to Dale Cowles more particularly
described in Schedule 3.5 (the “Cowles Note”), the amount thereof remaining due
as of the Closing shall be shown on the Effective Date Balance Sheet.  Prior to
the Closing, the Company and the Purchaser shall enter into arrangements for the
Cowles Note to be paid in full by the Purchaser at Closing, including the
written release and discharge by the holder of the Cowles Note of all liens and
other security interests on any assets or stock of the Company which secure the
repayment thereof.

(c)

The Company shall not be required to pay and discharge prior to the Closing its
Indebtedness to the former shareholders of BGI, Inc., provided that such
Indebtedness is secured only by the accounts acquired from BGI, Inc. and not by
any other assets or stock of the Company.  Notwithstanding the provisions of
subsection (a)(ii) of this Section, the Company may, as of the Effective Date,
have the following Indebtedness:  (i) the Cowles Note; and (ii) an aggregate
amount of Indebtedness (including the Indebtedness to the former shareholders of
BGI, Inc. described above) not to exceed Five Hundred Thousand Dollars
($500,000.00)

4.9.

Tail Coverages.  Prior to the Closing, the Company shall obtain the Tail
Coverages.  The Company and such USI Company as the Purchaser may designate
shall be co-brokers of record for such insurance.

4.10.

Employment Agreements.  The Company and the Key Stockholders (other than
Distribution Partners) shall use diligent and Commercially Reasonable Efforts to
cause: (a) each Producer listed on Attachment 6.10-1 to execute and deliver
prior to or upon the Closing a Producer Employment Agreement and (b) each
Employee listed on Attachment 6.10-2 to execute and deliver prior to or upon the
Closing an Operations Manager Agreement.

4.11.

Regulatory Approvals.  The parties to this Agreement shall use all reasonable
efforts to file, as promptly as practicable after the date of this Agreement,
all notices, reports and other documents required to be filed by such party with
any Governmental Entity with respect to the Merger and the other transactions
contemplated by this Agreement, and to submit promptly any additional
information requested by any such Governmental Entity.  Without limiting the
generality of the foregoing, the Company and the Purchaser shall, prior to or
promptly after the date of this Agreement, prepare and file the notifications
required under the HSR Act in connection with the Merger.  The Company and the
Purchaser shall respond as promptly as practicable to (a) any inquiries or
requests received from the Federal Trade Commission or the Department of Justice
for additional information or documentations and (b) any inquiries or requests
received from any state attorney general or other Governmental Entity in
connection with antitrust or related matters.  Each of the Company and the
Purchaser shall (i) give the other party prompt notice of the commencement of
any Legal Proceeding by or before any Governmental Entity with respect to the
Merger or any of the other transactions contemplated by this Agreement,
(ii) keep the other party informed as to the status of any such Legal Proceeding
and (iii) promptly inform the other party of any communication to or from the
Federal Trade Commission, the Department of Justice or any other Governmental
Entity regarding the Merger.  The Company and the Purchaser will consult and
cooperate with one another, and will consider in good faith the views of one
another, in connection with any analysis, appearance, presentation, memorandum,
brief, argument, opinion or proposal made or submitted in connection with any
Legal Proceeding under or relating to the HSR Act or any other federal or state
antitrust or fair trade law.

ARTICLE 5
CONDITIONS PRECEDENT TO THE CLOSING

5.1.

Obligation of the Company and the Stockholders to Close.  The obligation of the
Company to consummate the Contemplated Transactions on the Closing Date shall be
subject to the satisfaction (or waiver by the Company and the Stockholder
Representative, in their sole and absolute discretion) of the following
conditions on or prior to the Closing Date:

(a)

Representations and Warranties; Covenants and Conditions. Each of the
representations and warranties of the Purchaser and the Purchaser Constituent
Corporation contained in this Agreement or in any Collateral Document, and the
information contained in any Schedules to Article 5 of this Agreement, and any
documents or instruments delivered at the Closing by the Purchaser or the
Purchaser Constituent Corporation shall have been true and correct when made and
shall be true and correct in all material respects on and as of the Closing Date
with the same force and effect as though such representations and warranties had
been made on and as of the Closing Date and, at the Closing, Purchaser and the
Purchaser Constituent Corporation shall have executed and delivered to the
Company and the Stockholders a certificate to that effect.  The Purchaser and
the Purchaser Constituent Corporation shall have each performed and complied in
all respects with each and every covenant, agreement and condition required by
this Agreement to be performed or satisfied by the Purchaser or the Purchaser
Constituent Corporation at or prior to the Closing Date and, at the Closing, the
Purchaser shall have executed and delivered to the Company and the Stockholders
a certificate to that effect.

(b)

Absence of Legal Proceedings.  There shall not be any Legal Proceedings
(including, without limitation, any Legal Proceeding arising under antitrust or
securities Laws) or Order to restrain or invalidate the Merger or the
Contemplated Transactions, and the Purchaser shall have executed and delivered
to the Company and the Stockholders a certificate to the effect that it has no
Knowledge that any such Legal Proceeding or Order is threatened.

(c)

Secretary’s Certificate. The Purchaser shall have delivered to the Company and
the Stockholders a certificate or certificates dated as of the Closing Date and
signed on its behalf by its Secretary to the effect that:  (i) (A) the
Organizational Documents of Hurley attached to the certificate are true and
complete, (B) the Organizational Documents of Hurley have been in full force and
effect in the form attached since the date of the adoption of the resolutions
referred to in clause (C) below and no amendment to such Organizational
Documents has occurred since the date of the last amendment annexed thereto, (C)
the resolutions of the board of directors of the Purchaser and of the
stockholder and board of directors of Hurley authorizing the actions taken in
connection with the Contemplated Transactions, were duly adopted at a duly
convened meeting thereof, at which a quorum was present and acting throughout or
by unanimous written consent, remain in full force and effect, and have not been
amended, rescinded or modified; (ii) the officers or other individuals executing
this Agreement and each of the Collateral Documents to which the Purchaser is a
party are incumbent officers or otherwise duly authorized to execute such
agreements and documents on behalf of the Purchaser and Hurley; and (iii) Hurley
is in good standing in all jurisdictions in which the failure to be in good
standing would have a Material Adverse Effect upon the Company.

(d)

Escrow Agreement.  The Purchaser shall have executed the Escrow Agreement
substantially in the form of Exhibit C attached hereto.

(e)

Employment Agreements.  The Company shall have entered into the Executive
Employment Agreements, each substantially in the form of Exhibit B-1 attached
hereto.

(f)

Approval of Stockholders.  The Company shall have received all required
resolutions or consents of the Stockholders authorizing and approving the
Contemplated Transactions.

(g)

Employee Agreements.  The Company shall have determined in its sole discretion
that an acceptable number of the following agreements have been executed and
delivered by the parties thereto: (i) Producer Employment Agreements
substantially in the form of Exhibit B-2 attached hereto with the Producers of
the Company listed on Attachment 6.10-1; (ii) Operations Manager Agreements
substantially in the form of Exhibit B-3 attached hereto with the Employees of
the Company listed on Attachment 6.10-2; (iii) Agreements to Preserve Goodwill
substantially in the form of Exhibit E-1 attached hereto signed by the Key
Stockholders other than Distribution Partners; and (iv) Agreements to Preserve
Goodwill substantially in the form of Exhibit E-2 attached hereto with the
persons listed in Attachment 9.2.

(h)

Other Documents.  The Company shall have received all of the documents,
agreements and instruments to be delivered to it in accordance with
Section 8.2.2 hereof and shall have been provided with such other documents as
it shall have reasonably requested from the Purchaser.

5.2.

Obligation of the Purchaser to Close.  The obligation of the Purchaser to
consummate the Contemplated Transactions on the Closing Date shall be subject to
the satisfaction or the waiver by the Purchaser, in its sole and absolute
discretion, of the following conditions on or prior to the Closing Date:

(a)

Representations and Warranties; Covenants and Conditions.  Each of the
representations and warranties of the Company and the Key Stockholders contained
in this Agreement or in any Collateral Document, and the information contained
in the Schedules to this Agreement provided by the Company or the Key
Stockholders, and any documents or instruments delivered at the Closing by the
Company or any of the Key Stockholders, shall have been true and correct when
made and shall be true and correct in all material respects on and as of the
Closing Date with the same force and effect as though such representations and
warranties had been made on and as of the Closing Date (disregarding for this
purpose any supplements to the Schedules which the Company may be permitted to
give pursuant to this Agreement).  The Company and each of the Key Stockholders
shall have each performed and complied in all respects with each and every
covenant, agreement and condition required by this Agreement to be performed or
satisfied by the Company and the Key Stockholder, as the case may be, at or
prior to the Closing Date and, at the Closing.  At the Closing, (i) the Company
shall have executed and delivered to the Purchaser a certificate to that effect
in respect of the representations, warranties and covenants of the Company and
the Key Stockholders other than Distribution Partners; and (ii) Distribution
Partners shall have executed and delivered to the Purchaser a certificate to
that effect in respect of the representations, warranties and covenants of
Distribution Partners.

(b)

Consents.  All proceedings, if any, and all Required Consents including, without
limitation, all Governmental Consents, set forth on Attachment 7.2(b) shall have
been taken or obtained.

(c)

Current Unaudited Interim Statements.  The Company shall have delivered to the
Purchaser the Unaudited Interim Statements for the calendar month most recently
concluded prior to the Closing Date, and shall have made available to Purchaser
any supporting documentation for such Unaudited Interim Statements.

(d)

Absence of Legal Proceedings.  There shall not be (i) any Legal Proceedings
(including, without limitation, any Legal Proceeding arising under antitrust or
securities Laws) or Order to restrain or invalidate the sale and purchase of the
K&P Securities or the Contemplated Transactions, and (ii) no Legal Proceedings
or Order shall be pending against the Company or any Stockholder, at law or in
equity, before any Governmental Entity federal or state court or governmental
commission or in arbitration or by or before any administrative agency, which,
in the case of (i) or (ii), could have a Material Adverse Effect on, or result
in a Material Adverse Change in, the Company or the Purchaser, and the Company
and the Key Stockholders shall have executed and delivered to the Purchaser a
certificate to the effect that none of them has any Knowledge that any such
Legal Proceeding or Order has been threatened.

(e)

No Material Adverse Changes.  No Material Adverse Change shall have occurred or
been threatened (and no condition, event or development shall have occurred or
been threatened involving a prospective Material Adverse Change) in the Company
between the date of this Agreement and the Closing Date.

(f)

Secretary’s Certificate.  The Company shall have delivered to the Purchaser a
certificate or certificates dated as of the Closing Date and signed on its
behalf by its Secretary to the effect that:  (i) (A) its Organizational
Documents attached to the certificate are true and complete, (B) its
Organizational Documents have been in full force and effect in the form attached
since the date of the adoption of the resolutions referred to in clause (C)
below and no amendment to such Organizational Documents has occurred since the
date of the last amendment annexed thereto, (C) the resolutions of the
Stockholders and the board of directors authorizing the actions taken in
connection with the Contemplated Transactions, were duly adopted at duly
convened meetings thereof, at each of which a quorum was present and acting
throughout or by written consent meeting the requirement of applicable law,
remain in full force and effect, and have not been amended, rescinded or
modified; (ii) the officers or other individuals executing this Agreement and
each of the Collateral Documents to which the Company is a party are incumbent
officers or otherwise duly authorized to execute such agreements and documents
on behalf of the Company and the specimen signatures on such certificate are
their genuine signatures; and (iii) the Company is in good standing in all
jurisdictions in which the failure to be in good standing would have a Material
Adverse Effect upon the Company.  The certificate referred to above in clause
(iii) shall attach subsistence certificates with respect to the Company
certified by the Secretaries of State or other appropriate officials, dated as
of a date not more than five days prior to the Closing Date, and certificates of
no tax liens with respect to the property and assets of the Company.  Such
certificate or certificates shall be in customary form and substance.

(g)

Company and Key Stockholder Certification.  The Company and each Key Stockholder
shall have delivered a written statement to the Purchaser certifying that the
Company or the Key Stockholder, as applicable, has no Knowledge of:  (i) any
misrepresentation, breach of any warranty or non-fulfillment of any covenant to
be performed by the Company and or any Key Stockholder under this Agreement or
any Collateral Document; or (ii) any pending or threatened Legal Proceeding or
Order arising out of any of the foregoing, other than as may be disclosed with
particularity in this Agreement, even though such Legal Proceeding or Order may
not be filed or become final until after the Closing Date.

(h)

Opinions of Counsel.  Opinions of counsel shall have been delivered to the
Purchaser, dated the Closing Date, by the following:  (i) Garvey Schubert Barer,
counsel for the Company, substantially in the form attached as Exhibit A hereto;
(ii) Cooley Godward Kronish LLP, counsel for Distribution Partners, that
Distribution Partners is a validly existing limited partnership and that the
execution of this Agreement and the Collateral Documents to which it is a party
have been duly authorized, executed and delivered by Distribution Partners; and
(iii) legal counsel for the Arlen Prentice LLC reasonably acceptable to the
Purchaser, that the Arlen Prentice LLC is a validly existing limited liability
company and that the execution of this Agreement and the Collateral Documents to
which it is a party have been duly authorized, executed and delivered by the
Arlen Prentice LLC.

(i)

Executive Employment Agreements.  The Company shall have entered into an
Executive Employment Agreement substantially in the form of Exhibit B-1 attached
hereto with each of Arlen I. Prentice, Chris Prentice, Ellen Boyer and David
Ross.

(j)

Employee Agreements.  The Purchaser shall have determined in its sole discretion
that an acceptable number of the following agreements have been executed and
delivered by the parties thereto: (i) Producer Employment Agreements
substantially in the form of Exhibit B-2 attached hereto with the Producers of
the Company listed on Attachment 6.10-1; (ii) Operations Manager Agreements
substantially in the form of Exhibit B-3 attached hereto with the Employees of
the Company listed on Attachment 6.10-2; (iii) Agreements to Preserve Goodwill
substantially in the form of Exhibit E-1 attached hereto signed by the Key
Stockholders other than Distribution Partners; and (iv) Agreements to Preserve
Goodwill substantially in the form of Exhibit E-2 attached hereto with the
persons listed in Attachment 9.2.

(k)

Approval of Stockholders.  The Company shall have delivered to the Purchaser
evidence of the adoption of resolutions of the Stockholders authorizing and
approving the Merger and Contemplated Transactions as required by law to
complete the Contemplated Transactions, with at least ninety percent (90%) of
the shares eligible to vote of each class of Securities of K&P having been voted
in favor of the Merger and the Contemplated Transactions.

(l)

Dissenting Shares.  The Company shall have delivered to the Purchaser evidence
that, as of the Effective Date, no more than five percent (5%) of the K&P Common
Shares are Dissenting Shares and that there are no dissenting K&P Preferred
Shares or K&P Warrants.

(m)

Repayment of Indebtedness.

(i)

On or prior to the Closing Date, each Stockholder and each Affiliate of the
Company or any Stockholder shall have repaid the Company in full all amounts
owing by such Stockholder or Affiliate to the Company (including the Stockholder
Receivables) (excluding the Indebtedness which Section 6.8(c) authorizes to
remain outstanding), and each Employee of the Company shall have likewise repaid
in full all amounts owing to the Company by such Employee.

(ii)

On or prior to the Closing Date, all notes or other Debt payable to the
Stockholders which are outstanding on the date hereof shall be paid in full,
excluding the Indebtedness which Section 6.8(c) authorizes to remain
outstanding.

(iii)

On or prior to the Closing Date, the Company shall have delivered to the
Purchaser from the holder of the Cowles Note the written release and discharge
in full by such holder of any and all liens and other security interests on any
assets or stock of the Company which secure the repayment thereof.

(n)

Termination of Certain Agreements.  The following agreements shall have expired
or been canceled or terminated:  the Shareholder Agreement and the Stockholder
Agreement.

(o)

Escrow Agreement.  The Stockholder Representative shall have executed the Escrow
Agreement substantially in the form of Exhibit C attached hereto.

(p)

Merger of 401(k) Plan.  The Company shall have taken such actions as the
Purchaser may require with regard to the merger of the Company’s 401(k) plan
into a plan of the Purchaser or one of its Affiliates.

(q)

Tail Coverages.  The Company shall have obtained the so-called “tail” or
extended reporting period coverages required under Section 6.9.

(r)

Other Documents.  The Purchaser shall have received all of the documents,
agreements and instruments to be delivered to it in accordance with
Section 8.2.1 hereof and shall have been provided with such other documents as
it shall have reasonably requested from the Company or any Stockholder.

ARTICLE 6
CLOSING

6.1.

Closing.  Subject to satisfaction or waiver of the conditions set forth in
Sections 7.1 and 7.2, Closing of the Contemplated Transactions shall take place
at 10:00 a.m., local time, on November 7, 2006 (the “Closing Date”), at the
offices of Garvey Schubert Barer, 1191 2nd Avenue, Suite 1800, Seattle,
Washington 98101 or such other place as is mutually agreed to in writing by the
parties hereto.    At or prior to the Closing, the parties shall take all
administrative actions necessary to prepare to effect the Merger.  On the
Closing Date, (i) the Articles of Merger shall be filed with the appropriate
state authorities so that the provisions thereof shall become effective and the
Merger shall thereby be effected on the Closing Date and (ii) all transactions
contemplated by this Agreement, including the conversion of the K&P Securities
shall be consummated.  All actions taken at Closing shall be deemed to have
occurred simultaneously, and shall be effective as of the dates and times
specified in this Agreement.

6.2.

Deliveries at Closing.  At the Closing:

6.2.1.

The Company and the Key Stockholders, to the extent applicable, will deliver to
the Purchaser:

(a)

Articles of Merger, properly executed by the Company and the Purchaser
Constituent Corporation, to be filed with the appropriate Governmental Entities,
to effect the Merger;

(b)

All of the Company’s Books and Records, including without limitation all minute
books, stock books, stock transfer ledgers, employment records, financial and
accounting records, and files;

(c)

All of the certificates the delivery of which are a condition to the obligation
of the Purchaser pursuant to Section 7.2;

(d)

The Unaudited Interim Statement of the Company described in Section 3.9 and the
additional information described in such Section;

(e)

All of the legal opinions the delivery of which are a condition to the
obligation of the Purchaser pursuant to Section 7.2;

(f)

The Escrow Agreement substantially in the form of Exhibit C attached hereto,
duly executed by the Stockholder Representative;

(g)

The Employment Agreements executed and delivered to the Company;

(h)

Evidence of termination of all Related Party Agreements, including but not
limited to those agreements the expiration, cancellation or termination of which
are a condition to the obligation of the Purchaser pursuant to Section 7.2;

(i)

Evidence of such actions as the Purchaser may require with regard to the merger
of Company’s 401(k) plan as provided in Section 7.2;

(j)

Evidence that the Company shall have obtained the Tail Coverages;

(k)

Certificate of good standing of the Company in Washington, certified by the
Secretary of State, dated as of a date not more than ten (10) days prior to the
Closing Date;

(l)

All other agreements, certificates, consents, approvals and documentary evidence
required to be delivered pursuant to the Stockholders’ obligations hereunder.

6.2.2.

The Purchaser will deliver to the Company or the Stockholder Representative:

(a)

The estimated amount of the Initial Merger Consideration determined in
accordance with Section 2.9;

(b)

The Escrow Agreement substantially in the form of Exhibit C attached hereto,
duly executed by the Purchaser.

(c)

The Parent Guaranty substantially in the form of Exhibit D attached hereto, duly
executed by the Parent.

(d)

Fully executed Employment Agreements between the Company and each of Arlen I.
Prentice, Chris Prentice, Ellen Boyer and David Ross substantially in the form
of Exhibit B-1 attached hereto;

(e)

All other agreements, certificates, consents, approvals and documentary evidence
required to be delivered pursuant to the Purchaser’s obligations hereunder.

6.3.

Expenses.  The Stockholders shall be responsible for (and the Purchaser may
recover pursuant to Claim Notice under Article 10) each and all of the
following: (a) Merger Transaction Expenses to the extent in excess of the amount
thereof reflected on the Effective Date Balance Sheet; (b) Self-Insured Health
Plan Costs to the extent in excess of the amount thereof reflected on the
Effective Date Balance Sheet; and (c) the amount of any Excess Short Tax Year
Liability.

6.4.

Termination of Distribution Partners Agreements.  Provided and on condition that
the Contemplated Transactions are consummated as herein provided, the Company
and Distribution Partners hereby agree that the Securities Purchase Agreement
and that certain Registration Rights Agreement, originally dated January 31,
2002, by and between Distribution Partners and the Company, shall be terminated
and of no further force and effect, effective immediately prior to the Merger.

ARTICLE 7
CONFIDENTIALITY AND PRESERVATION OF GOODWILL

7.1.

Confidentiality.  Each party hereto shall and shall cause its counsel,
accountants, financial advisors and lenders:  (a) to keep all Proprietary
Information confidential and not to disclose or reveal any Proprietary
Information to any Person other than its officers, directors, Affiliates,
employees, attorneys, accountants, other agents and representatives, including
financial advisors, current and prospective lenders and debt securities
underwriters who are participating in the evaluation of the Company and the
Contemplated Transactions or who otherwise need to know the Proprietary
Information for the purpose of evaluating the Company and/or the Contemplated
Transactions; and (b) not to use the Proprietary Information for any purpose
other than (i) in connection with the evaluation and/or consummation of the
Contemplated Transactions; (ii) to the extent necessary to obtain any of the
Required Consents listed on Schedule 3.6 or (iii) to enforce such party’s rights
and remedies under this Agreement.  The obligations of each party hereto under
this Section shall terminate two years from the date of this Agreement.
 Notwithstanding the foregoing provisions of this Section, the parties
acknowledge and agree that the confidentiality obligations of Distribution
Partners to the Purchaser shall not be governed by this Section, but shall be
governed by a separate Confidentiality Agreement, in substantially the form of
Exhibit F, the execution and delivery of which is a condition to the Purchaser’s
obligations hereunder.

7.2.

Preservation of Goodwill.  As a material inducement to the Purchaser’s
consummation of the Contemplated Transactions: (a) each of the Key Stockholders
other than Distribution Partners shall deliver to the Purchaser at the Closing
an Agreement to Preserve Goodwill substantially in the form of Exhibit E-1;
(b) each of the Persons listed in Attachment 9.2 shall deliver to the Purchaser
at the Closing an Agreement to Preserve Goodwill substantially in the form of
Exhibit E-2, for a Restricted Period of the length for such Person specified on
such Attachment; and (c) Distribution Partners shall deliver to the Purchaser at
the Closing a Confidentiality Letter substantially in the form of Exhibit F.
 The Company and the Key Stockholders (other than Distribution Partners) shall
use Commercially Reasonable Efforts to cause each and all of such agreements to
be delivered.

7.3.

Specific Enforcement.  Each Stockholder acknowledges that any breach or
threatened breach by it, him or her of any provision of this Article will cause
continuing and irreparable injury to the USI Companies for which monetary
damages would not be an adequate remedy.  Accordingly, the Purchaser and any of
the other USI Companies shall be entitled to seek injunctive relief from a court
of competent jurisdiction, including specific performance, with respect to any
such breach or threatened breach.  In connection therewith, no Stockholder
shall, in any Legal Proceeding to so enforce any provision of this Article,
assert the claim or defense that an adequate remedy at law exists or that
injunctive relief is not appropriate under the circumstances.  The rights and
remedies of the Purchaser and any of the other USI Companies set forth in this
Article are in addition to any other rights or remedies to which they may be
entitled, whether existing under this Agreement, at law or in equity, all of
which shall be cumulative.

ARTICLE 8
INDEMNIFICATION

8.1.

Survival.

(a)

Representations and Warranties.  Notwithstanding any investigation made by or on
behalf of Purchaser, the Company, its Subsidiaries or any of the Stockholders
prior to or after the Closing Date: (i) representations or warranties made by
any party which were both (A) not true when made and (B) were made by such party
with intent to defraud or mislead shall survive in accordance with the
applicable statute of limitations, (ii) representations or warranties contained
in Sections 3.2 (Authorization), 3.3 (Capitalization), clause (i) of 3.5
(Conflicts with Other Instruments), 3.29 (Taxes and Tax Returns), 3.34
(Shareholder Solicitation), 4.1 (Authorization), 4.2 (Title to Shares and
Warrants) and 5.2 (Purchaser Authorization) shall survive the Closing until
March 31, 2010, and (iii) all other representations and warranties made by any
party in this Agreement or in any Collateral Document shall survive the Closing
until the second anniversary thereof (each a “Survival Date”), and thereafter as
to any Claims or Losses set forth with reasonable specificity in an Indemnity
Notice or Claim Notice (as applicable and each as defined below) given prior to
the applicable Survival Date.

(b)

Covenants, Agreements.  All covenants and other agreements contained herein or
in any Collateral Document shall survive the Closing until March 31, 2010 and
thereafter as to any Claims or Losses set forth with reasonable specificity in
an Indemnity Notice or Claim Notice given prior to such date; provided, however,
that (i) the foregoing limitation as to survival shall not apply to any
obligations which, by the terms thereof, are to be performed following the end
of such period, including (without limitation) such obligations provided
pursuant to Sections 2.12, 2.15 and 9.1 and this Article; (ii) the covenants and
other agreements under each Employment Agreement, each Agreement to Preserve
Goodwill, the Escrow Agreement and the Confidentiality Letter shall survive in
accordance with the terms thereof and the statutes of limitation applicable
thereto.

8.2.

The Stockholders’ Indemnification.  Regardless of any investigation undertaken
or made by the Purchaser or any other Purchaser Indemnified Party, the
Stockholders (and the Company in the event this Agreement is terminated prior to
the Closing) hereby agree to indemnify, defend and hold harmless each and all of
the Purchaser Indemnified Parties from and against any and all Claims
(including, without limitation, Claims arising out of facts or circumstances
that have occurred on or prior to the Closing Date, even though such Claim may
not be filed or come to light until after the Closing Date) or Losses that may
be imposed upon, incurred by or asserted against any of them arising out of,
based upon or resulting from:  (a) any breach of a representation or warranty
set forth in Articles 3 and 4; (b) any other breach or non-fulfillment of any
covenant or agreement to be performed by the Stockholder Representative or the
Stockholders or to be performed, prior to or upon the Closing, by the Company
under this Agreement or any Collateral Document signed and delivered by the
Stockholder Representative, the Stockholders or the Company at Closing; (c) any
and all Merger Transaction Expenses (other than to the extent of the liability
shown on the Effective Date Balance Sheet), the Self-Insured Health Plan Costs
(other than to such extent), the Excess Short Tax Year Liability and any and all
other costs or expenses which this Agreement provides are to be paid or
discharged by the Company prior to the Closing or by any Stockholder at any
time; and (d) any of the matters identified in Attachment 10.2.  The
indemnification liability of the Stockholders hereunder shall be allocated among
the Stockholders pro rata based on the number of Outstanding K&P Securities.
 Notwithstanding anything contained herein to the contrary, the Stockholders
(and prior to Closing, the Company) shall not be liable under this Section 10.2
for Claims (including, without limitation, Claims arising out of facts or
circumstances that have occurred on or prior to the Closing Date, even though
such Claim may not be filed or come to light until after the Closing Date) or
Losses that may be imposed upon, incurred by or asserted against any Purchaser
Indemnified Party arising out of, based upon or resulting from Hurley or its
operations.

8.3.

The Purchaser’s Indemnification.  Regardless of any investigation undertaken or
made by the Company or the Stockholders, or any of their employees, agents or
representatives prior to the Closing Date, the Purchaser hereby agrees to
indemnify, defend and hold harmless the Stockholder Indemnified Parties, from
and against any and all Claims (including, without limitation, Claims arising
out of facts or circumstances that have occurred on or prior to the Closing
Date, even though such Claim may not be filed or come to light until after the
Closing Date) or Losses that may be imposed upon, incurred by or asserted
against any of them arising out of, based upon or resulting from:  (a) any
breach of a representation or warranty set forth in Article 5; (b) any breach or
non-fulfillment of any covenant or agreement to be performed by the Purchaser or
Purchaser Constituent Corporation under this Agreement or any Collateral
Document signed and delivered by the Purchaser or Purchaser Constituent
Corporation; (c) operation of the Company and the Business from and after the
Effective Date (but not to the extent of any Loss or Liability arising by reason
of a breach by the Company, the Stockholder Representative or any Stockholder of
any representation, warranty or covenant made in or pursuant to this Agreement
or any Collateral Document, or to the extent of any Third Party Claim arising by
reason of actions or conduct of any Stockholder following the Closing); and (d)
any Legal Proceeding or Order, arising out of any of the foregoing even though
such Legal Proceeding or Order may not be filed, become final, or come to light
until after the Closing Date.

8.4.

Payment; Procedure for Indemnification.

(a)

Claim or Loss.  In the event that the Person seeking indemnification under this
Article (the “Indemnified Party”) shall suffer a Claim or Loss, he, she or it
shall promptly, after obtaining Knowledge of the incurrence of any such
indemnifiable Claim or Loss, give a notice of intent to seek indemnity,
describing the Claim or Loss in reasonable detail (an “Indemnity Notice”) to the
party from whom indemnification under this Article is sought (the “Indemnifying
Party”).  The failure of any Indemnified Party to give the Indemnifying Party
the Indemnity Notice shall not release the Indemnifying Party of liability under
this Article, except (a) to the extent that the Indemnifying Party’s ability to
defend such Claim or Loss is materially prejudiced by the failure to give such
notice, (b) that the Indemnifying Party shall not be liable for Claims or Losses
incurred by the Indemnified Party that would not have been incurred but for the
delay in the delivery of, or failure to deliver, the Indemnity Notice and (c)
the Indemnified Party shall be responsible for any legal fees and expenses
incurred in connection with obtaining relief from a default judgment or other
interim ruling in connection with the Claim or Loss that was incurred as a
direct result of the failure to so notify.  For the purposes of the foregoing
sentence, if a default judgment in connection with a Claim or Loss is not set
aside, then the Indemnifying Party shall have been deemed to be materially
prejudiced.  Within twenty (20) days after the receipt by the Indemnifying Party
of the Indemnity Notice, the Indemnifying Party shall either (i) pay to the
Indemnified Party an amount equal to the indemnifiable Claim or Loss or (ii)
object to such claim, in which case the Indemnifying Party shall give written
notice to the Indemnified Party of such objection together with the reasons
therefor, it being understood that the failure of the Indemnifying Party to so
object shall preclude the Indemnifying Party from asserting any claim, defense
or counterclaim relating to the Indemnifying Party’s failure to pay any
indemnifiable Claim or Loss.  The Indemnifying Party’s objection shall not, in
and of itself, relieve the Indemnifying Party from its obligations under this
Article.  In the event that the parties are unable to resolve the subject of the
Indemnity Notice, the issue shall be resolved pursuant to the dispute resolution
mechanism governing this Agreement.  

(b)

Third Party Claim or Loss.

(i)

Notwithstanding anything set forth in subparagraph (a) above, in the event the
facts giving rise to the claim for indemnification under this Article shall
involve any action, or threatened Claim or demand by any Third Party, the
Indemnified Party shall, promptly after obtaining Knowledge of such Third Party
Claim or demand giving rise to the claim for indemnification, send written
notice of intent to seek indemnity, describing such action or Claim in
reasonable detail (a “Claim Notice”) to the Indemnifying Party.  The failure of
the Indemnified Party to give the Indemnifying Party the Claim Notice shall not
release the Indemnifying Party of Liability under this Article, except to the
extent that the Indemnifying Party’s ability to defend such Claim or Loss is
materially prejudiced by the failure to give such notice.  Subject to the last
sentence of this subparagraph (b) and except for claims resulting from, relating
to or arising out of provisions of Section 3.29 (Taxes and Tax Returns) and
those representations and warranties hereunder involving Client Accounts, the
Indemnifying Party shall be entitled to defend such action or Claim in the name
of the Indemnified Party at its own expense and through counsel of its own
choosing; provided, that if the applicable action or Claim is against, or if the
defendants in any such Legal Proceeding shall include, both the Indemnified
Party and the Indemnifying Party and the Indemnified Party reasonably concludes
that there are defenses available to it that are different or additional to
those available to the Indemnifying Party or if the interests of the Indemnified
Party may be reasonably deemed to conflict with those of the Indemnifying Party,
then the Indemnified Party shall have the right to select a single separate
counsel and to assume the Indemnified Party’s defense of such Claim or Legal
Proceeding, with the reasonable fees, expenses and disbursements of such counsel
to be reimbursed by the Indemnifying Party as incurred.  The Indemnifying Party
shall give the Indemnified Party notice in writing within five (5) days after
receiving the Claim Notice from the Indemnified Party in the event of Legal
Proceeding or otherwise of its intent to exercise its right to assume the
defense of such action or Claim.  If the Indemnified Party has received no such
notice within such time period or in the case of any claims resulting from,
relating to or arising out of provisions of Section 3.29 (Taxes and Tax Returns)
and those representations and warranties hereunder involving Client Accounts,
the Indemnified Party may take control of the defense of such action or Claim
but the Indemnifying Party shall pay the reasonable costs of such defense
incurred by the Indemnified Party (and all such costs shall be deemed to be
Losses for purposes of this Article).

(ii)

Whenever the Indemnifying Party is entitled to defend any Claim hereunder, the
Indemnified Party may elect, by notice in writing to the Indemnifying Party, to
continue to participate through its own counsel, at its expense, but the
Indemnifying Party shall have the right to control the defense of the Claim or
the Legal Proceeding; provided, that the Indemnifying Party retains counsel
reasonably satisfactory to the Indemnified Party and pursuant to an arrangement
satisfactory to the Indemnified Party; otherwise, the Indemnified Party shall
have the right to control the defense of the Claim or the Legal Proceeding.

(iii)

Notwithstanding any other provision contained in this Agreement, the party
controlling the defense of the Claim or the Legal Proceeding shall not settle
any such Claim or Legal Proceeding without the written consent of the other
party; provided, that if the Indemnified Party is controlling the defense of the
Claim or the Legal Proceeding and shall have, in good faith, negotiated a
settlement thereof, which proposed settlement contains terms that are reasonable
under the circumstances, then the Indemnifying Party shall not withhold or delay
the giving of such consent (and in the event the Indemnifying Party and
Indemnified Party are unable to agree as to whether the proposed settlement
terms are reasonable, the Indemnifying Party and Indemnified Party will resolve
such disagreement pursuant to the dispute resolution provisions of this
Agreement).  In the event that the Indemnifying Party is controlling the defense
of the Claim or the Legal Proceeding and shall have negotiated a settlement
thereof, which proposed settlement is substantively final and unconditional as
to the parties thereto (other than the consent of the Indemnified Party required
under this Section) and contains an unconditional release of the Indemnified
Party and does not include the taking of any actions by, or the imposition of
any restrictions on the part of, the Indemnified Party and the Indemnified Party
shall refuse to consent to such settlement, the liability of the Indemnifying
Party under this Article, upon the ultimate disposition of such Legal Proceeding
or Claim, shall be limited to the amount of the proposed settlement; provided,
however, that in the event the proposed settlement shall require that the
Indemnified Party make an admission of liability, a confession of judgment, or
shall contain any other non-financial obligation which, in the reasonable
judgment of the Indemnified Party, renders such settlement unacceptable, then
the Indemnified Party’s failure to consent shall not give rise to the limitation
of Indemnifying Party’s liability as provided for in this Section, and the
Indemnifying Party shall continue to be liable to the full extent of such Legal
Proceeding or Claim; and provided further, that notwithstanding any provision to
the contrary, no indemnifiable Claims or Losses with respect to Taxes shall be
settled without the prior written consent of the Purchaser.

8.5.

Limitations of Indemnity.

(a)

Neither the Stockholder Indemnified Parties, on the one hand, nor the Purchaser
Indemnified Parties, on the other hand, shall make a Claim for indemnifiable
Losses pursuant to Section 10.2(a) or Section 10.3(a), as the case may be,
unless the aggregate amount of such indemnifiable Losses for either Stockholder
Indemnified Parties or the Purchaser Indemnified Parties, as the case may be,
exceeds Three Hundred Thousand Dollars ($300,000) (the “Threshold Amount”), and
then shall only make a Claim for indemnifiable Losses to the extent such Losses
exceed the Threshold Amount.  Notwithstanding the foregoing, the Threshold
Amount shall not apply to breaches or inaccuracies of any representations and
warranties contained in Sections 3.2 (Authorization), 3.3 (Capitalization), 3.29
(Taxes and Tax Returns), 3.34 (Shareholder Solicitation), 4.1 (Authorization),
4.2 (Title to Shares and Warrants) and 5.2 (Purchaser Authorization), nor shall
the Threshold Amount apply in respect of the Merger Transaction Expenses, the
Self-Insured Health Plan Costs, the Excess Short Tax Year Liability or any of
the matters identified in Attachment 10.5.

(b)

Notwithstanding anything contained in this Article to the contrary, the
aggregate maximum monetary liability of the Stockholders or the Purchaser for
indemnifiable Losses under Sections 10.2(a) or 10.3(a), respectively, shall not
exceed the sum of the Escrow Amount (including the Short Year Tax Refund and the
Loss Carryback Refund included therein) and the Earn-Out Merger Consideration
(the “Cap”); provided, however, that the Cap shall be reduced dollar for dollar
to the extent that any portion of the Escrow Amount or the Earn-Out Merger
Consideration shall have been previously distributed to the Stockholders.

(c)

For purposes of calculating the amount of a Purchaser Indemnified Party’s Losses
incurred by a Purchaser Indemnified Party arising out of or resulting from any
breach of a representation, covenant or agreement, the references to a “Material
Adverse Effect” shall be disregarded.  The limitations on the assertion of
claims for indemnification (i.e., the Threshold Amount and the Cap) contained in
this Section shall not apply to, and shall not in any way limit the right of the
Purchaser to pursue, any rights, remedies or Claims based on fraud.

(d)

The indemnification rights and other remedies provided in this Article 10 shall
be the sole right and remedy of the Purchaser Indemnified Parties for Claims
against the Stockholders in respect of the breach or misrepresentation of the
representations and warranties set forth in Articles 3 and 4 and for all Claims
(whether such Claims are characterized, stated or made in contract, tort, strict
liability, rights of contribution or otherwise) that could have been made as
breaches or misrepresentations of such representations and warranties, with or
without the Material Adverse Effect, Knowledge or other qualifiers included in
any of the representations or warranties and notwithstanding the survival
periods or statutes of limitations with respect to any of the representations or
warranties; provided, however, that this subsection (d) shall not apply with
regard to any representations or warranties made pursuant to Articles 3 or 4
which were both (i) not true when made and (ii) were made with intent to defraud
or mislead.  In no event shall this subsection (d) be construed in any manner to
limit the right of the Purchaser or any other Purchaser Indemnified Party to
seek injunctive or other equitable relief to enforce the performance by the
Company, the Stockholder Representative or the Stockholders of their respective
obligations under this Agreement or any other Collateral Document.

(e)

Notwithstanding the limitations set forth in subsection (a) of this
Section 10.5, the Stockholder Representative may waive the Threshold Amount on
behalf of the Stockholders and elect for the Stockholders to indemnify the
Purchaser Indemnified Parties for all indemnifiable Losses pursuant to
Section 10.2(a), notwithstanding the fact that the aggregate amount of such
indemnifiable Losses for the Purchaser Indemnified Parties shall not have
exceeded the Threshold Amount.

8.6.

Stockholders’ Claims Against the Company.  No Stockholder shall be entitled to
seek or obtain contribution from, or indemnification by, the Company, under the
Company’s Organizational Documents, this Agreement, applicable corporate Laws or
other Laws or otherwise, in respect of amounts due from the Stockholders to the
Purchaser or any other Purchaser Indemnified Party under this Article or
otherwise under this Agreement, and each Stockholder will hold each of the
Purchaser Indemnified Parties harmless in respect of all such amounts and shall
not seek to join the Company in connection with any suit arising under this
Agreement.

8.7.

Insurance.  For purposes of determining an Indemnifying Party’s monetary
liability under this Article for any Loss or Claim, appropriate reductions shall
be made to reflect the net recovery pursuant to any insurance policy that may be
received by the Indemnified Party in respect of the Loss or Claim.  Each
Indemnified Party shall use Commercially Reasonable Efforts to collect amounts
available under insurance coverages and promptly and diligently pursue such
claims relating to any Loss or Claim for which it is seeking indemnification.

8.8.

Set-Off Against Earn-Out Merger Consideration.  In addition to the other rights
and remedies of the Purchaser in respect of the obligations of the Stockholders
under this Agreement, including but not limited to their obligations under this
Article and Article 2, the Purchaser shall have the right to set-off, withhold
and deduct, from payments of Earn-Out Merger Consideration specified pursuant to
Article 2 and other amounts due to the Stockholders hereunder, the full amount
of any payment due from the Stockholders or loss of the Purchaser or any of the
other Purchaser Indemnified Parties arising from the Stockholders’ failure to
perform their obligations and, with regard to any Claim or demand of a Third
Party or any Loss which has not been finally resolved or otherwise liquidated in
amount at the time the payment is due, the amount claimed or demanded by a Third
Party or, if no such claim or demand has been made, the estimated amount of the
maximum amount of the such Claim, Loss or demand, plus an additional amount
equal to one and one-half times the estimated amount of the attorneys’ fees and
other costs and expenses of handling the Claim, Loss or demand through final
resolution.  Upon the final resolution of any Claim, Loss or demand in respect
of which any amount has been so withheld, the amount withheld shall be promptly
paid to the Stockholders, after set-off by the Purchaser of the amounts due in
respect thereof pursuant to this Agreement, and subject to withholdings for any
other Claim, Loss or demand then remaining outstanding.  With regard to matters
in respect of which the Stockholders are required to provide indemnification
pursuant to this Article, the Purchaser Indemnified Parties shall have the
rights provided in this Section solely in respect of Claims, Losses or demands
in respect of the Purchaser or any other Purchaser Indemnified Party shall have
given written notice to the Stockholders on or prior to the applicable Survival
Date provided above in Section 10.1(a).  Any amount satisfied by set-off from
Earn-Out Merger Consideration as provided in this Section shall bear interest at
the Prime Rate, commencing thirty (30) days after the date that the Purchaser
Indemnified Party provides the Indemnity Notice to the Indemnifying Party
regarding the obligation in respect of which the indemnification payment is due,
and continuing until the date set-off is made.

8.9.

Characterization of Indemnity Payments.  Except as otherwise required by
applicable Law, any payment made pursuant to this Article shall be treated, for
Tax purposes, as an adjustment to the Merger Consideration.

ARTICLE 9
POST-CLOSING COVENANTS

9.1.

Tax Returns and Loss Carryback Claims.

(a)

Short Year Tax Return.  The Stockholder Representative shall prepare or cause to
be prepared and file or cause to be filed all Tax Returns for the Company for
all periods ending on or prior to the Closing Date which are filed after the
Closing Date (the “Short Year Tax Returns”).  The Short Year Tax Returns shall
be prepared on a basis consistent with past practice, except to the extent
required by applicable Law, and the Stockholder Representative shall timely pay
or cause to be timely paid all Taxes shown on such Tax Returns.  The Stockholder
Representative shall deliver each Short Year Tax Return, at least thirty (30)
days in advance of filing, to the Purchaser for review and shall provide to the
Purchaser such information as the Purchaser may reasonably request to confirm
prior to filing that the Short Year Tax Returns are prepared in adherence to
past practice and otherwise as required by this Agreement.  The Purchaser shall
cooperate with the Stockholder Representative in connection with the filing of
the Short Year Tax Returns for the short year prior to the Closing, and the
Stockholder Representative and his or her representatives shall be given access
to the Books and Records of the Company for such period as necessary and
appropriate in connection with the filing of such Tax Returns.  The Stockholder
Representative shall pay (or cause the Stockholders to pay) all of the Taxes due
pursuant to such Tax Returns and the accountants fees and all other fees, costs
and expenses relating to the preparation of such Tax Returns in excess of the
liabilities therefor shown on the Effective Date Balance Sheet (such excess, the
“Excess Short Tax Year Liability”).  In the event the Stockholder Representative
determines that there will be a taxable loss in one or more of the Short Year
Tax Returns (the “Short Year Tax Loss”), the Stockholder Representative shall
promptly apply for refunds of any estimated taxes already paid by the Company
with respect to the Short Year. Any cash income tax refund received by the
Company, including any interest accrued and paid by Taxing Authorities with
respect to such refund (together, the “Short Year Tax Refund”) shall be paid as
provided in Section 2.13.

(b)

Loss Carryback Claims for Prior Years.  In the event there is a Short Year Tax
Loss, the Stockholder Representative shall prepare or cause to be prepared and
file or cause to be filed one or more amended Tax Returns or tax refund claims
(the “Loss Carryback Claim”) to apply the Short Year Tax Loss, as a net
operating loss, to the Company’s prior two tax years for the purpose of securing
a refund therefrom. Any cash income tax refund received by the Company,
including any applicable interest accrued and paid by Taxing Authorities with
respect to such refund (together, the “Loss Carryback Refund”) shall be paid in
accordance with Section 2.13.  The Purchaser shall cooperate with the
Stockholder Representative in connection with the filing of any Loss Carryback
Claim, and the Stockholder Representative and his or her representatives shall
be given access to the Books and Records of the Company for such period as
necessary and appropriate in connection with the filing any Tax Returns or other
forms necessary to file the Loss Carryback Claim.  The Stockholder
Representative shall pay (or cause the Stockholders to pay) all of the
accountants fees and all other fees, costs and expenses relating to the
preparation and filing of any Loss Carryback Claim in excess of the liabilities
therefor shown on the Effective Date Balance Sheet.

(c)

Purchaser’s Covenants Regarding Certain Tax Matters.  On or after the Closing
Date:

(i)

Purchaser will not cause or permit the Company or any affiliate of Purchaser to
make any election or deemed election under Code Section 338.

(ii)

If after the Effective Date, the Purchaser makes or causes the Company to make
or change any election related to Taxes, to amend any Tax Return or to take any
position on any Tax Return that results in any increased Taxes or reduction of
any Tax Benefit of the Company in respect of any Company taxable year ending on
or prior to the Closing Date, then Purchaser agrees that the Stockholders shall
have no liability for any Taxes to the extent resulting from any such action of
the Company, Purchaser or any affiliate of Purchaser, provided that the
foregoing is not intended and shall not be construed to limit the
representations and warranties of the Company set forth in Section 3.29 or the
indemnification obligations of the Stockholders set forth herein.

(iii)

If the Stockholder Representative makes or causes the Company to make or change
any election related to Taxes, to amend any Tax Return or to take any position
on any Tax Return that results in any increased Taxes or reduction of any Tax
Benefit of the Purchaser or the Company in respect of any Company taxable year
after the Closing Date, then the Stockholders agree that the Purchaser shall
have no liability for any Taxes to the extent resulting from any such action.

(iv)

No party to this Agreement shall take any action, or permit its Affiliates or
representatives to take any action, that may prevent the taxable year of the
Company from ending for federal and applicable state income tax purposes at the
end of the day on which the Closing occurs.  Purchaser shall not take any
action, or permit its Affiliates or representatives to take any action, that may
prevent any Loss Carryback Claim (including the waiver of any net operating loss
carryback related to the Loss Carryback Claim) or the filing of any Short Year
Tax Returns. The Short Year Tax Returns shall be prepared in accordance with
U.S. Treasury Regulations Section 1.1502-76 (or comparable provision of state
law); provided, however, that no election shall be made under paragraph
(b)(2)(ii)(D) thereof.

(v)

In the event any Short Year Tax Returns or any Loss Carryback Claim are subject
to audit by a Taxing Authority, Purchaser agrees that Stockholder Representative
shall be in charge of managing and overseeing the audit and shall be granted
access to Company information and workpapers to the extent reasonably necessary
for such task.  The Stockholder Representative shall keep the Purchaser fully
appraised of the audit and shall permit representatives of the Purchaser to
participate therein, and the Stockholder Representative shall provided to the
Purchaser for review the final audit workpapers before the audit is finalized.
 The responsibility of the Stockholder Representative and the Stockholders for
accountant's fees and all other fees, costs and expenses arising in respect of
the Short Year Tax Returns shall include (without limitation) all such fees,
costs and expenses related to any such audit.

(vi)

In the event any Tax Returns of the Company (other than a Short Year Tax Return
or Loss Carryback Claim) for a pre-Closing tax year are subject to audit,
review, notice of deficiency or collection action by a Taxing Authority (“Tax
Claim”), and Purchaser chooses to take control of the defense of such Tax Claim
in connection with the indemnification procedures of Section 10.4, Purchaser
agrees that it shall keep the Stockholder Representative fully appraised of the
Tax Claim and shall permit the Stockholder Representative (and its appointed
representatives) to participate therein, and Purchaser shall provide to the
Stockholder Representative for review any final documents or agreements related
to the resolution of such Tax Claim prior to the finalization of such claim.
 The responsibility of the Stockholder Representative and the Stockholders for
accountant's fees and all other fees, costs and expenses arising in respect of
such Tax Claim shall, to the extent deemed an indemnifiable Claim or Loss under
Section 10.4, include (without limitation) all fees, costs and expenses related
to any such audit.

9.2.

Maintenance of Books and Records of Purchaser.  For a period of five (5) years
following the Closing, the Purchaser agrees to permit the Stockholder
Representative to inspect and audit the Books and Records of the Company during
regular business hours and at no expense to the Purchaser or any other Purchaser
Indemnified Party in order for the Stockholder Representative to obtain
information relevant to the Contemplated Transactions or to Third Party claims
or Legal Proceedings which are the subject of indemnification by the
Stockholders under Article 10; provided, however, that the parties acknowledge
and agree that determinations pursuant to the provisions of Sections 2.11 and
2.12, once the same have been made as therein provided, shall be conclusive and
not subject to further review or audit. The Stockholder Representative will hold
all information provided to it pursuant to this Article (and any information
derived therefrom) in confidence to the same extent as required by Section 9.1
of this Agreement with respect to Proprietary Information.

9.3.

Public Announcements.  Neither the Company nor any Stockholder shall issue any
public report, statement, press release or similar item or make any other public
disclosure with respect to the substance of this Agreement prior to the
consultation with and approval of the Purchaser.  In addition, before the
Purchaser or the Company issues any public report, statement, press release or
similar item or make any other public disclosure with respect to the substance
of this Agreement, the Purchaser or the Company will consult with, and obtain
the approval of, the Stockholder Representative, provided that the Parent may
make any public disclosure it reasonably believes is required by Law or rule of
any stock exchange or self-regulatory agency to which the Parent is subject.

9.4.

Assistance in Defense.  In the event that, after the Closing Date, any of the
parties hereof shall require the participation of officers and employees
employed by each other (including the Stockholders) to aid in the investigation,
defense or prosecution of Legal Proceeding or Claims, and so long as there
exists no conflict of interest between the parties, each of them shall make such
officers and employees reasonably available to participate in such
investigation, defense or prosecution; provided, that the party requiring the
participation of such officers or employees shall pay all reasonable
out-of-pocket costs, charges and expenses arising from such participation.

9.5.

Further Cooperation.  From and after the Closing Date, each Stockholder shall
(i) assist and cooperate with the Purchaser and the Company in effecting the
orderly transfer of the Business to the Purchaser and the Company and/or its
Affiliate and (ii) execute and deliver such documents and take such other
actions as the Purchaser or the Company reasonably requests to fully consummate
the Contemplated Transactions.

9.6.

Future Acquisitions.  From and after the Closing Date through the end of the
Second Measuring Period, without the prior written consent of the Stockholder
Representative, which consent will not be unreasonably withheld, Purchaser, on
behalf of itself and its Affiliates, agrees that such Persons will not directly
or indirectly acquire a controlling interest in, or directly or indirectly
acquire all or substantially all the assets of, any insurance broker where both
(a) such insurance broker has aggregate annual revenues in excess of $5,000,000
and (b) thirty percent (30%) of the aggregate revenues of such insurance broker
(including its acquired Affiliates) are generated by its offices located in the
states of Washington, Idaho and Alaska.

9.7.

Conduct of Business.

(a)

(i)

From and after the Closing Date through the end of the Second Measuring Period,
except as may be approved by the Stockholder Representative, the Purchaser
covenants and agrees to:

(A)

Other than as approved by the Stockholder Representative, which approval shall
not be unreasonably withheld, not make or direct the making of changes to the
Company and the Business materially at variance with ordinary course pre-Closing
practices, subject to the qualifications set forth below in clause (ii) of this
subsection (a), so long as (1) such practices are in compliance with GAAP and
applicable Laws, including, but not limited to, the Sarbanes-Oxley Act of 2002
and all Laws, Securities Exchange Commission regulations, and other requirements
relating to the status of the Parent as a reporting company, and (2) EBITDA
during any of the 2007, 2008 or 2009 calendar years has been or is projected (on
the basis of the Parent’s regular quarterly projections) to be not less than
$12,500,000, $14,000,000 or $17,000,000, respectively,

(B)

Not terminate, discontinue, close or dispose of any Company business operation,

(C)

Not take any action, or refrain from taking any action, with a primary purpose
of adversely affecting the Company’s EBITDA and the Stockholders’ ability to
earn the Earn-Out Merger Consideration,

(D)

Not change or cause to be changed the business name used by the Company to be
other than “Kibble & Prentice, a USI Company,” “K&P, a USI Company” or a similar
variant thereof,

(E)

Not implement a system conversion prior to January 1, 2008, and

(F)

Not relocate the Company’s Seattle office from its current location.

(ii)

Notwithstanding the provisions of clause (i)(A) of this subsection (a) above:
 (A) Purchaser may implement, and Stockholder Representative approval shall not
be required for, (1) operating policies and procedures generally applicable to
other USI Companies, (2) changes in business practices consistent with those
contemplated by and described in the Expense Reduction Plan and (3) specific
directives of the board of directors of the Parent generally applicable to other
USI Companies involved in businesses similar to the Business.

(b)

The Stockholder Representative shall give the Purchaser written notice of any
respect in which the Stockholder Representative believes that any change made by
the Purchaser constitutes a breach of its obligations set forth in this Section
(each, a “Section 11.7 Notice”).  Any Section 11.7 Notice shall be given
promptly and in any event within ten (10) days following the date that the
Stockholder Representative shall have Knowledge that such change has been made
or, if earlier, the date upon which the Stockholder Representative shall have
been advised that such change will be made.  Any and each Section 11.7 Notice
shall describe with reasonable particularity each change asserted to be a breach
of this Section and the action or actions that the Stockholder Representative
requests be taken by the Purchaser to remedy such breach.

(c)

The Stockholder Representative and the Purchaser shall meet and confer in a good
faith effort to resolve the matters specified in a Section 11.7 Notice given by
the Stockholder Representative.  As to any such matter that the Stockholders
consider not to have been resolved by mutual agreement within ten (10) days
following the giving of the Section 11.7 Notice, the Stockholder Representative
shall arrange for a mediation of the matter before a single mediator in Seattle,
Washington conducted by the arbitration and mediation service known as JAMS, in
compliance with this Section and otherwise in accordance with the rules of JAMS.
 Such mediation shall be held as soon as practical and in any event within
thirty (30) days after the Section 11.7 Notice is given.

(d)

If the matter covered by a Section 11.7 Notice is not resolved by mutual
agreement or mediation within thirty (30) days after the Section 11.7 Notice is
given, the Stockholder Representative shall arrange for an expedited arbitration
by a single arbitrator in Seattle, Washington conducted by JAMS, in compliance
with this Section and otherwise in accordance with the streamlined commercial
arbitration rules of JAMS, without discovery but subject to the exchange of
information provisions of such rules.  Such arbitration shall be completed as
soon as practical and in any event within sixty (60) days after the Section 11.7
Notice is given.  The sole authority and jurisdiction of the arbitrator shall be
to determine whether the Purchaser has breached its obligations under this
Section and, if so, whether the action specified by the Stockholder
Representative as the remedy for such breach is an appropriate action to be
taken by the Purchaser.

(e)

The Purchaser shall work with the Stockholder Representative cooperatively and
in good faith in efforts to resolve matters covered by any Section 11.7 Notice.
 However, the Stockholder Representative, not the Purchaser, shall be
responsible to identify and pursue to resolution, though arbitration as provided
above if required, each claim under a Section 11.7 Notice that the Stockholders
desire be resolved.

(f)

The fees and expenses of JAMS and the mediator under any mediation conducted
under this Section shall be borne one-half by each party or in such other manner
as the parties may mutually agree.  The fees and expenses of JAMS and the
arbitrator under any arbitration conducted under this Section shall be borne
one-half by each party or in such other manner as the arbitrator may determine
to be appropriate.  Each party shall bear all its own legal fees and costs and
all other costs and expenses relating to the resolution of the matters described
in this Section.

(g)

The procedures specified in this Section for the determination of claims that
the Purchaser has acted in breach of its obligations set forth in this Section
shall be the sole and exclusive means of determination of whether the Purchaser
has committed such a breach, and such determination shall be binding upon the
parties, and not subject to review or redetermination, in any other legal
proceedings, including but not limited to any suit regarding the appropriate
remedies for such breach.  Without limitation of the provisions of
subsection (d) of this Section, the arbitrator shall not have jurisdiction or
authority to determine the amount of any resulting damages, to order injunctive
relief or otherwise to adjudicate any other matter arising under or relating to
this Agreement.

9.8.

Post-Closing Bonuses.  The Company shall make bonus payments to Employees in
respect of the seven (7) month period from June 1, 2006 through December 31,
2006, provided and to the extent that the proportionate amount of all such bonus
payments and all related compensation, withholding and other expenses
attributable to the five (5) month period through October 31, 2006 shall be
accrued and set forth on the Effective Date Balance Sheet.

ARTICLE 10
TERMINATION

10.1.

Termination.  This Agreement may be terminated prior to the Closing as follows:

(a)

at the election of the Purchaser, if any one or more of the conditions set forth
in Section 7.2 to its obligation to proceed with the Closing has not been
fulfilled prior to or upon the Closing Date, unless the failure to fulfill any
such conditions to the Closing results from the breach by the Purchaser of any
of its representations, warranties, covenants or agreements contained in this
Agreement;

(b)

at the election of the Company and the Stockholder Representative, if any one or
more of the conditions set forth in Section 7.1 to its, his or her obligation to
proceed with the Closing has not been fulfilled prior to or upon the Closing
Date, unless the failure to fulfill any such conditions to the Closing results
from the breach by the Company or the Stockholders of any of their respective
representations, warranties, covenants or agreements contained in this
Agreement;

(c)

at the election of the Purchaser, if any Stockholder or the Company has
materially breached any representation, warranty, covenant or agreement
contained in this Agreement (including the Schedules and Exhibits) or any
Collateral Document, which breach cannot be or is not cured by the earlier of
(i) fifteen (15) days following the Purchaser becoming aware of any such breach
and (ii) the Closing Date;

(d)

at the election of the Company or the Stockholder Representative, if the
Purchaser materially has breached any representation, warranty, covenant or
agreement contained in this Agreement (including the Schedules and Exhibits) or
any Collateral Document, which breach cannot be or is not cured by the earlier
of (i) fifteen (15) days following the Stockholder becoming aware of any such
breach and (ii) Closing Date;

(e)

at the election of the Purchaser, on the one hand, or the Company or the
Stockholder Representative, on the other hand, if a Legal Proceeding is
commenced or threatened by any Governmental Entity or other Person (other than
the Purchaser or any Stockholder) directed against the consummation of the
Closing and the Purchaser or the Company or the Stockholder Representative
reasonably and in good faith deems it impractical or inadvisable to proceed in
view of such Legal Proceeding or threat thereof, taking into account the
potential expense and delay likely to be involved;

(f)

at the election of any party hereto, if any Order permanently enjoining,
restraining or otherwise prohibiting the Closing is issued and shall have become
final and non-appealable;

(g)

at the election of the Purchaser or the Company, if the Closing has not occurred
on or before December 31, 2006; or

(h)

at any time on or prior to the Closing Date, by mutual written consent of the
Purchaser and the Company.

If this Agreement so terminates, it shall become null and void and have no
further force and effect, except as provided in Section 12.2.

10.2.

Survival.  If this Agreement is validly terminated pursuant to Section 12.1 and
the Contemplated Transactions are not consummated as described above, this
Agreement shall become void and of no further force and effect; provided,
however, that if the Purchaser terminates this Agreement pursuant to
Section 12.1(c) or if the Company or the Stockholder Representative terminates
this Agreement pursuant to Section 12.1(d), then the terminating party shall
have the right to pursue all of its legal remedies, whether at law or at equity,
for breach of contract and damages; provided further that if this Agreement is
validly terminated pursuant to Section 12.1 and the Contemplated Transactions
are not consummated as described above, the provisions of Section 12.3 relating
to responsibility for expenses shall survive.  No party hereto shall have any
liability to any other party in respect of a valid termination of this Agreement
pursuant to Section 12.2, except to the extent set forth above.

10.3.

Expenses if No Closing.  If the Closing does not occur and the transactions
contemplated hereby are not consummated, then, subject to the right of a
non-defaulting party to recover damages, costs and expenses from a defaulting
party pursuant to Section 12.2, all costs and expenses incurred in connection
with this Agreement shall be paid by the person incurring such expenses, i.e.,
by the Purchaser if incurred by Purchaser, by any Stockholder if incurred by the
Stockholder and by the Company if incurred by the Company, except as may
otherwise be agreed in writing.

ARTICLE 11
MISCELLANEOUS

11.1.

Stockholder Representative.

(a)

The Company hereby designates and appoints, and the resolutions of the
Stockholders approving the Merger and the Contemplated Transactions shall
approve the designation and appointment of, James J. Doud as the Stockholder
Representative with full power and authority to execute and deliver any
certificates or documents that are required to be delivered at Closing or
thereafter by the Stockholders, in the name and on behalf of the Stockholders,
or otherwise by the Stockholder Representative in such capacity as authorized or
contemplated by this Agreement, to act for and on behalf of the Stockholders in
connection with each of the post-Closing determinations made pursuant to
Article 2 of this Agreement, to act for and on behalf of the Stockholders in
connection with any and all indemnification and other matters arising pursuant
to Article 10, and in all other respects to act for and on behalf of the
Stockholders in connection with the Closing and post-Closing administration of
the Merger and the Contemplated Transactions.  The Stockholder Rep shall act
reasonably, in good faith and in the best interests of the Stockholders and
shall undertake to use reasonable efforts to consult with Arlen Prentice and
Distribution Partners in connection with actions taken pursuant to this
Agreement, and in any instance in which the Stockholder Representative receives
joint written directions from Arlen Prentice and Distribution Partners, the
Stockholder Representative will follow them.  Subject to the terms and
conditions of this Agreement, the Stockholder Representative shall have full
power and authority to act in all respects hereunder in his or her sole
discretion, as the sole, true and lawful agent, proxy and attorney-in-fact of
each of the Stockholders, with full power and authority to take all actions
contemplated by and exercise all rights to be taken in the name of and for and
on behalf of the Stockholders with respect to all matters to be performed or
otherwise undertaken by the Stockholder Representative under this Agreement and
Collateral Documents, including, but not limited to, (i) the right to execute
and deliver certificates, receipts, documents and papers that may be necessary
or deemed advisable by the Stockholder Representative to carry out the
transactions contemplated by this Agreement and Collateral Documents, including
to enter into extensions and amendments of this Agreement as appropriate to
facilitate the orderly consummation of the Contemplated Transactions, and
generally to act for and in the name and on behalf of the Stockholders with
respect to the Contemplated Transactions and the delivery of the shares of the
stock of the Company held by each of the Stockholders as fully as could each
Stockholder if personally present and acting and (ii) otherwise to take all
action that the Stockholder Representative may consider necessary or appropriate
in connection with the consummation of the Contemplated Transactions.  The
designation and appointment of the Stockholder Representative pursuant to this
Section has been made for the purpose of completing the Contemplated
Transactions, and it is therefore acknowledged and agreed that all power and
authority hereby conferred upon the Stockholder Representative is coupled with
an interest and is irrevocable and shall not be terminable by any acts of the
Stockholders or by operation of law or by occurrence of any event whatsoever,
including the death, incapacity, dissolution, liquidation, termination,
bankruptcy or insolvency of any Stockholder.

(b)

The Stockholder Representative shall not be entitled to any fee, commission or
other compensation for the performance of his or her services hereunder, except
that the Stockholder Representative shall be entitled to receive and retain from
the Expenses Funds a fee of $12,000 per year, payable semi-annually on April 30
and October 31.  The Stockholder Representative shall be entitled to the payment
by the Stockholders of all his or her expenses incurred as the Stockholder
Representative.  At the Closing, the Stockholder Representative shall retain
$200,000 (the “Expense Funds”) from amounts paid to the Stockholder
Representative for the Stockholders to be used by the Stockholder Representative
to pay expenses incurred by the Stockholder Representative in his or her
capacity as the Stockholder Representative, and in no event shall any payments
or reimbursements of any fees or other compensation or any costs or expenses be
paid to the Stockholder Representative out of the Escrow Account or by Purchaser
or the Company or any of their Affiliates (subject to the right of the
Stockholder Representative to retain such Expense Funds at the Closing).  Once
Stockholder Representative determines, in his or her sole discretion, that
Stockholder Representative will not incur any additional expenses in his or her
capacity as Stockholder Representative, then Stockholder Representative will
distribute to the Stockholders the remaining unused Expense Funds, if any, in
accordance with Sections 2.6(e) and 2.15.

(c)

In connection with this Agreement, the Contemplated Transactions, the Escrow
Agreement and any instrument, agreement or document relating hereto or thereto,
and in exercising or failing to exercise all or any of the powers conferred upon
the Stockholder Representative hereunder (i) the Stockholder Representative
shall incur no responsibility whatsoever to any Stockholder by reason of any
error in judgment or other act or omission performed or omitted hereunder or in
connection with the Escrow Agreement or any such other agreement, instrument or
document, excepting only responsibility for any act or failure to act which
represents willful misconduct or gross negligence, and (ii) the Stockholder
Representative shall be entitled to rely on the advice of counsel, public
accountants or other independent experts experienced in the matter at issue, and
any error in judgment or other act or omission of Stockholder Representative
pursuant to such advice shall in no event subject Stockholder Representative to
liability to any Stockholder.  Each Stockholder shall indemnify, pro rata based
upon such holder’s pro rata in accordance with Section 2.6, the Stockholder
Representative against all Losses of any nature whatsoever arising out of or in
connection with any Claim, investigation, challenge, action or proceeding or in
connection with any appeal thereof, relating to the acts or omissions of the
Stockholder Representative hereunder, or under the Escrow Agreement or
otherwise.  The foregoing indemnification shall not apply in the event of any
action or proceeding which finally adjudicates the liability of the Stockholder
Representative hereunder for his or her willful misconduct or gross negligence.
 In the event of any indemnification hereunder, upon written notice from the
Stockholder Representative to the Stockholders as to the existence of a
deficiency toward the payment of any such indemnification amount, each
Stockholder shall promptly deliver to the Stockholder Representative full
payment of his or her pro rata share of the amount of such deficiency in
accordance with proportions described in Section 2.6(e).

(d)

All of the indemnities, immunities and powers granted to the Stockholder
Representative under this Agreement shall survive the Effective Date and/or any
termination of this Agreement and/or the Escrow Agreement.

(e)

Upon and following the Closing, the Company and the Purchaser shall have the
right to rely upon all actions taken or omitted to be taken by the Stockholder
Representative pursuant to this Agreement, the Escrow Agreement or any other
agreement, instrument or document entered into in connection with this
Agreement, all of which actions or omissions by the Stockholder Representative
shall be legally binding upon the Stockholders.

(f)

The grant of authority provided for in this Section is coupled with an interest
and shall be irrevocable and survive the death, incompetency, bankruptcy or
liquidation of any Stockholder; and (ii) shall survive the consummation of the
Merger and the Contemplated Transactions.

(g)

Should the Stockholder Representative resign or be unable to serve, the
Stockholder Representative shall appoint a single substitute agent to take on
the responsibility of Stockholder Representative hereunder, whose appointment
shall be effective on the date of Stockholder Representative’s resignation or
incapacity.  In the event that the Stockholder Representative refuses or is
unable to serve and does not designate a substitute Stockholder Representative,
any one or more Stockholders who held, immediately prior to the Closing, K&P
Securities which represented or in respect of which were issuable an aggregate
of at least twenty-five percent (25%) of the Outstanding K&P Securities, may
petition the Superior Court of King County, Washington, for the appointment of a
substitute Stockholder Representative.

11.2.

Notices.  All notices, documents or other deliverables required to be given,
sent or delivered to any of the parties to this Agreement shall be in writing
and shall be deemed to have been sufficiently given, sent or delivered, subject
to the further provisions of this Section, for all purposes when presented
personally to such party or sent by certified or registered mail, return receipt
requested, with proper postage prepaid, or any United States national overnight
delivery service, with proper charges prepaid, or by facsimile transmission with
receipt confirmed by such party, to such party at its address set forth below:

(a)

If to the Company:

Kibble & Prentice Holding Company

601 Union Street, Suite 1000

Seattle, Washington 98101

Attn:  Ellen R.M. Boyer

Fax:  (206) 374-7819

with a copy to:

Garvey Schubert Barer

1191 Second Avenue, Suite 1800

Seattle, Washington 98101

Attn:  Bruce A. Robertson

Fax:  (206) 464-0125

and following the Closing with a copy to Purchaser at the addresses provided
below.

(b)

If to the Stockholders or the Stockholder Representative:

James J. Doud

8925 Lake Washington Blvd., N.E.

Medina, Washington  98039

Fax:  (425) 454-0204

and

Kibble & Prentice Holding Company

601 Union Street, Suite 1000

Seattle, Washington 98101

Attn:  Ellen R.M. Boyer

Fax:  (206) 374-7819

with a copy to:

Garvey Schubert Barer

1191 Second Avenue, Suite 1800

Seattle, Washington 98101

Attn:  Bruce A. Robertson

Fax:  (206) 464-0125

(c)

If to the Purchaser:

c/o USI Holdings Corporation  

555 Pleasantville Road, Suite 160 South

Briarcliff Manor, NY  10510

Attention:  President & CEO

Fax No.:  610-537-4506

with a copy to:

c/o USI Holdings Corporation  

555 Pleasantville Road, Suite 160 South

Briarcliff Manor, NY  10510

Attention:  General Counsel

Fax No.:  610-537-4506

with an additional copy to:

DLA Piper US LLP

153 Townsend Street, Suite 800

San Francisco, CA 94107

Attn:  Donald D. Archer, Esq.

Fax No.:  415-659-7315

Such notice shall be deemed to be received when delivered if delivered
personally, or the next Business Day after the date sent if sent by a United
States national overnight delivery service, or three (3) Business Days after the
date mailed by certified or registered mail.  Any notice of any change in such
address shall also be given in the manner set forth above.  Whenever the giving
of notice is required, the giving of such notice may be waived in writing by the
party entitled to receive such notice.

11.3.

No Third Party Beneficiaries.  Except as is otherwise expressly provided in this
Agreement, this Agreement is not intended to, and does not, create any rights in
or confer any benefits upon anyone other than the parties hereto.

11.4.

Schedules and Exhibits.  All schedules and exhibits attached to this Agreement
are incorporated by reference into this Agreement for all purposes.  Unless the
context otherwise requires, all references herein to “Schedule” or “Exhibit” are
references to the schedules and exhibits attached to this Agreement.

11.5.

Expenses.  Except as may otherwise be agreed in writing, the parties to this
Agreement shall pay their own expenses incident to the preparation, negotiation
and execution of this Agreement including, without limitation, all fees and
costs and expenses of their respective accountants and legal counsel; provided,
however, the Merger Transaction Expenses exceeding the amount reflected on the
Effective Date Balance Sheet (with the amount so reflected to be taken into
account in the determination of the Effective Date Working Capital) and not
otherwise paid prior to the Effective Date shall be the responsibility of the
Stockholders and not the Company or the Purchaser.

11.6.

Further Assurances.  The Company and the Stockholders on the one hand, and the
Purchaser on the other hand, shall, at their own respective expense, from time
to time upon the request of the other party, execute and deliver, or cause to be
executed and delivered, at such times as may reasonably be requested by such
other party, such other documents, certificates and instruments and take such
actions as such other party deem reasonably necessary to consummate more fully
the Contemplated Transactions.

11.7.

Entire Agreement; Amendment.  This Agreement, the Collateral Documents and any
other documents, instruments or other writings delivered or to be delivered
pursuant to this Agreement constitute the entire agreement among the parties
with respect to the subject matter of this Agreement and supersede all prior
agreements, understandings, and negotiations, whether written or oral, with
respect to the subject matter of this Agreement.  None of the terms and
provisions contained in this Agreement can be changed without a writing signed
by all parties hereto.

11.8.

Section and Paragraph Titles.  The Section and paragraph titles used in this
Agreement are for convenience only and are not intended to define or limit the
contents or substance of any such Section or paragraph.  Unless the context
otherwise requires, all references herein to “Section” or “Article” are
references to the Sections and articles of this Agreement.

11.9.

Binding Effect.  This Agreement shall be binding upon and inure to the benefit
of each of the parties to this Agreement and their respective heirs, personal
representatives, and successors and permitted assigns.  Neither the Company nor
the Stockholders shall have the right to assign this Agreement without the prior
written consent of the Purchaser; provided, however, that the Purchaser may
assign its rights and obligations under this Agreement prior to the Closing to
any direct or indirect Subsidiary of the Purchaser or Parent; provided further
that such assignment shall not relieve the Purchaser of any of its obligations
hereunder.

11.10.

Counterparts.  This Agreement may be executed in any number of counterparts,
including by means of facsimile, and each such counterpart shall be deemed to be
an original instrument, but all such counterparts together shall constitute one
and the same instrument.

11.11.

Severability.  Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions of this Agreement or such provision, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.

11.12.

GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE DOMESTIC LAWS OF THE STATE OF DELAWARE WITHOUT GIVING EFFECT TO ANY
CHOICE OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE OF DELAWARE OR
ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY
OTHER JURISDICTION OTHER THAN THE STATE OF DELAWARE.  

11.13.

WAIVER OF JURY TRIAL.  EACH OF THE COMPANY, THE PURCHASER AND THE STOCKHOLDERS
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ALL RIGHTS TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED UPON
CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
OF THE TRANSACTIONS CONTEMPLATED HEREBY.

11.14.

No Tax Representations.  Without affecting the parties’ obligations herein, no
party to this Agreement has made, or shall under any circumstances be considered
to have made, any representation or warranty as to the Tax consequences of the
Contemplated Transactions, either to any other party to this Agreement or to any
Stockholder or other Person, each of whom shall be responsible to engage
separate counsel with respect to such Tax consequences and shall assume its, his
or her own respective Tax liability, if any, arising out of this Agreement or
the consummation of the Contemplated Transactions.

[The remainder of this page intentionally left blank.]

SANF1\355490.6

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first written above.

USI SERVICES CORPORATION

By:

/s/ Ernest J. Newborn II

Name: Ernest J. Newborn II

Title:   Senior Vice President, General Counsel and Secretary

[Signatures continue on following page]

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KIBBLE & PRENTICE HOLDING COMPANY

By:

/s/ Arlene I. Prentice

Name:Arlene I. Prentice

Title: President and Chief Executive Officer

DISTRIBUTION PARTNERS INVESTMENT CAPITAL, L.P.

By:

Distribution Investors, LLC, its General Partner

By:/s/ Jeff Cappel

Name: Jeff Cappel

Title:   Managing Member

__/s/Arlen I Prentice ________________________

ARLEN I. PRENTICE

THE ARLEN I. PRENTICE LLC

By:

/s/ Arlene I. Prentice

Name: Arlene I. Prentice

Title:Authorized Member

_/s/ Christopher J. Prentice ___________________

CHRISTOPHER J. PRENTICE

_/s/ David F. Ross _________________________

DAVID F. ROSS

_/s/ Ellen R.M. Boyer ______________________

ELLEN R.M. BOYER

_/s/James J. Doud ___________________________

JAMES J. DOUD, as Stockholder Representative

S - 2