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Exhibit 10.14

EXECUTION COPY  

SEMCO ENERGY, INC.

$50,000,000 73/4% Senior Notes due 2013

PURCHASE AGREEMENT  

December 12,
2003 

CREDIT
SUISSE FIRST BOSTON LLC

Eleven Madison Avenue

New York, NY 10010-3629 

Ladies
and Gentlemen: 

        1.    Introductory.    SEMCO Energy, Inc., a Michigan corporation (the
"Company"), proposes, subject to the terms and conditions stated herein, to issue and sell to Credit Suisse First Boston LLC (the
"Purchaser") $50,000,000 in aggregate principal amount of its 73/4% Senior Notes due 2013 (the "Offered
Securities") to be issued under the indenture dated as of May 15, 2003 (the "Indenture"), between the Company and Fifth
Third Bank, a Michigan banking corporation, as trustee (the "Trustee"). The United States Securities Act of 1933 is herein referred to as the
"Securities Act." 

        The
Company has previously issued $150,000,000 in aggregate principal amount of its 73/4% Senior Notes due 2013 under the Indenture (the "May
Notes"). The May Notes are currently subject to an exchange
offer which, if not extended, will expire on December 18, 2003, pursuant to which the May Notes will be exchanged for new notes registered under the Securities Act (the
"May Exchange Notes"). The Offered Securities constitute an additional issuance of notes under the Indenture. The Offered Securities will be treated as
a single class of notes with the May Notes and upon exchange for the Exchange Securities (as defined below) will be treated as a single class of notes with the May Exchange Notes. 

        Holders
(including subsequent transferees) of the Offered Securities will have the registration rights set forth in the registration rights agreement (the
"Registration Rights Agreement"), to be dated the Closing Date (as defined below), pursuant to which the Company will agree to file with the Securities
and Exchange Commission (the "Commission") under the circumstances set forth therein, (i) a registration statement under the Securities Act (the
"Exchange Offer Registration Statement") relating to the Company's 73/4% Senior Notes due 2013 in a like aggregate principal amount as
the Offered Securities, identical in all material respects to the Offered Securities and registered under the Securities Act (the "Exchange
Securities"), to be offered in exchange for the Offered Securities (such offers to exchange being referred to as the "Exchange
Offer") and (ii) a shelf registration statement pursuant to Rule 415 under the Securities Act (the "Shelf Registration
Statement" and, together with the Exchange Offer Registration Statement, the "Registration Statements"). The Offered Securities
and the Exchange Securities are referred to collectively as the "Securities."

        The
Company hereby agrees with the Purchaser as follows: 

        2.    Representations and Warranties of the Company.    The Company represents and warrants to, and agrees with, the
Purchaser that: 

        (a)   A
preliminary offering circular and an offering circular relating to the Offered Securities to be offered by the Company have been prepared by the Company. Such
preliminary offering circular (the "Preliminary Offering Circular") and offering circular (the "Offering
Circular"), as supplemented as of the date of this Purchase Agreement (this "Agreement"), together with the information
incorporated by reference therein are hereinafter collectively referred to as the "Offering Document." On the date of this Agreement, the Offering
Document does not include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading. The preceding sentence does not apply to statements 

 

in
or omissions from the Offering Document based upon written information furnished to the Company by the Purchaser specifically for use therein, it being understood and agreed that the only such
information is that described as such in Section 7(b) hereof. The Company's Annual Report on Form 10-K most recently filed with the Commission and all subsequent reports
(collectively, the "Exchange Act Reports") that have been filed by the Company with the Commission or sent to shareholders pursuant to the Securities
Exchange Act of 1934 (the "Exchange Act"), when they were filed with the Commission, conformed in all material respects to the requirements of the
Exchange Act and the rules and regulations of the Commission thereunder. 

        (b)   The
Company has been duly incorporated and is an existing corporation in good standing under the laws of the State of Michigan, with power and authority (corporate and
other) to own its properties and conduct its business as described in the Offering Document. The Company is duly qualified to do business as a foreign corporation in good standing in all other
jurisdictions in which its ownership or lease of property or the conduct of its business requires such qualification, except to the extent the failure to so qualify or be in good standing would not
reasonably be expected to have a material adverse effect on the financial condition, business, properties or results of operations of the Company and its subsidiaries taken as a whole
("Material Adverse Effect"). 

        (c)   The
entities listed on Schedule A hereto are the only subsidiaries, direct or indirect, of the Company; each subsidiary of the Company has been duly incorporated
and is an existing corporation in good standing under the laws of the jurisdiction of its incorporation, with power and authority (corporate and other) to own its properties and conduct its business
as described in the Offering Document. Each subsidiary of the Company is duly qualified to do business as a foreign corporation in good standing in all other jurisdictions in which its ownership or
lease of property or the conduct of its business requires such qualification, except to the extent that the failure to so qualify or be in good standing would not reasonably be expected to have a
Material Adverse Effect; all of the issued and outstanding capital stock of each subsidiary of the Company has been duly authorized and validly issued and is fully paid and nonassessable; and the
capital stock of each subsidiary owned by the Company, directly or through subsidiaries, is owned free from liens, encumbrances and defects. 

        (d)   The
Indenture has been duly authorized, executed and delivered by the Company and conforms to the description thereof contained in the Offering Document; the Offered
Securities have been duly authorized by the Company and when the Offered Securities are executed and authenticated in accordance with the provisions of the Indenture and delivered and paid for
pursuant to this Agreement on the Closing Date, such Offered Securities will have been duly executed, authenticated, issued and delivered and will conform to the description thereof contained in the
Offering Document and, assuming due authorization, execution and authentication by the Trustee, the Indenture constitutes, and such Offered Securities will constitute, valid and legally binding
obligations of the Company, enforceable in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity principles. 

        (e)   No
consent, approval, authorization, or order of, or filing with, any governmental agency or body or any court is required for the consummation of the transactions
contemplated by this Agreement, the
Indenture and the Registration Rights Agreement in connection with the issuance and sale of the Offered Securities by the Company, except as may be required (i) under state securities law and
(ii) under federal securities laws with respect to the Company's obligations under the Registration Rights Agreement. 

        (f)    The
performance of the Indenture by the Company and the execution, delivery and performance by the Company of this Agreement and the Registration Rights Agreement, and
the issuance and sale of the Offered Securities and compliance with the terms and provisions thereof 

2

 

by
the Company will not result in a breach or violation of any of the terms and provisions of, or constitute a default under, any statute, any rule, regulation or order of any governmental agency or
body or any court, domestic or foreign, having jurisdiction over the Company or any subsidiary of the Company or any of their respective properties, or any agreement or instrument to which the Company
or any such subsidiary is a party or by which the Company or any such subsidiary is bound or to which any of the properties of the Company or any such subsidiary is subject (except for such breaches,
violations or defaults as would not reasonably be expected to have a material adverse effect on the financial condition, business, properties or results of operations of any subsidiary of the
Company), or the charter or by-laws of the Company or any such subsidiary, and the Company has full power and authority to authorize, issue and sell the Offered Securities as contemplated
by this Agreement. 

        (g)   This
Agreement has been duly authorized, executed and delivered by the Company. 

        (h)   Except
as disclosed in the Offering Document or as would not be reasonably expected to have a Material Adverse Effect, the Company and its subsidiaries have good and
marketable title to all real properties and all other properties and assets owned by them, in each case free from liens, encumbrances and defects that would affect the value thereof or interfere with
the use made or to be made thereof by them; and hold any leased real or personal property under valid and enforceable leases with no exceptions that would interfere with the use made or to be made
thereof by them. 

        (i)    The
Company and its subsidiaries possess adequate certificates, authorities or permits issued by appropriate governmental agencies or bodies necessary to conduct the
business now operated by them and have not received any notice of proceedings relating to the revocation or modification of any such certificate, authority or permit that, if determined adversely to
the Company or any of its subsidiaries, would individually or in the aggregate be reasonably expected to have a Material Adverse Effect. 

        (j)    No
labor dispute with the employees of the Company or any subsidiary exists or, to the knowledge of the Company, is imminent that would be reasonably expected to have a
Material Adverse Effect. 

        (k)   The
Company and its subsidiaries own, possess or can acquire on reasonable terms, adequate trademarks, trade names and other rights to inventions, know-how,
patents, copyrights, confidential information and other intellectual property (collectively, "intellectual property rights") necessary to conduct the
business now operated by them, or presently employed by them, and have not received any notice of infringement of, or conflict, with asserted rights of others with respect to any intellectual property
rights that, if determined adversely to the Company or any of its subsidiaries, would individually or in the aggregate have a Material Adverse Effect. 

        (l)    Except
as disclosed in the Offering Document, neither the Company nor any of its subsidiaries is in violation of any statute, any rule, regulation, decision or order of
any governmental agency or body or any court, domestic or foreign, relating to the use, disposal or release of hazardous or toxic substances or relating to the protection or restoration of the
environment or human exposure to hazardous or toxic substances (collectively, "environmental laws"), owns or operates any real property contaminated
with any substance that is subject to any environmental laws, is liable for any off-site disposal or contamination pursuant to any environmental laws, or is subject to any claim relating
to any environmental laws, which violation, contamination, liability or claim would individually or in the aggregate be reasonably expected to have a Material Adverse Effect; and the Company is not
aware of any pending investigation that might lead to such a claim. 

        (m)  Except
as disclosed in the Offering Document, there are no pending actions, suits or proceedings against or affecting the Company, any of its subsidiaries or any of
their respective properties that if determined adversely to the Company or any of its subsidiaries would individually 

3

 

or
in the aggregate be reasonably expected to have a Material Adverse Effect, or would materially and adversely affect the ability of the Company to perform its obligations under the Indenture, this
Agreement or the Registration Rights Agreement, or that would reasonably be expected to adversely effect the sale of the Offered Securities; and no such actions, suits or proceedings are threatened
or, to the Company's knowledge, contemplated. 

        (n)   The
financial statements included in the Offering Document present fairly the financial position of the Company and its consolidated subsidiaries as of the dates shown
and their results of operations and cash flows for the periods shown, and, except as otherwise disclosed in the Offering Document, such financial statements have been prepared in conformity with the
generally accepted accounting principles in the United States applied on a consistent basis. 

        (o)   Except
as disclosed in the Offering Document, since the date of the latest audited financial statements included in the Offering Document there has been no material
adverse change, nor any development or event involving a prospective material adverse change, in the financial condition, business, properties or results of operations of the Company and its
subsidiaries taken as a whole, and, except as disclosed in or contemplated by the Offering Document, there has been no dividend or distribution of any kind declared, paid or made by the Company on any
class of its capital stock. 

        (p)   The
Company is not an open-end investment company, unit investment trust or face-amount certificate company that is or is required to be
registered under Section 8 of the United States Investment Company Act of 1940 (the "Investment Company Act"); and the Company is not and, after
giving effect to the offering and sale of the Offered Securities and the application of the proceeds thereof as described in the Offering Document, will not be an "investment company" as defined in
the Investment Company Act. 

        (q)   No
securities of the same class (within the meaning of Rule 144A(d)(3) under the Securities Act) as the Offered Securities are listed on any national securities
exchange registered under Section 6 of the Exchange Act or quoted in a U.S. automated inter-dealer quotation system. 

        (r)   Assuming
the accuracy of the representations and warranties of the Purchaser contained in Section 4 hereof and its compliance with the agreements set forth
therein, and, assuming the accuracy of the representations deemed to be made in the Offering Circular by purchasers to whom the Purchaser initially resells the Offered Securities, the offer and sale
of the Offered Securities by the Company to the Purchaser and the initial resale of the Offered Securities by the Purchaser, in each case, in the manner contemplated by this Agreement will be exempt
from the registration requirements of the Securities Act pursuant to the exemption from registration under Section 4(2) thereof and Regulation S thereunder and it is not necessary to
qualify the Indenture under the United States Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"). 

        (s)   Neither
the Company, nor any of its affiliates, nor any person acting on its or their behalf (other than the Purchaser, as to whom the Company makes no representation)
(i) has, within the six-month period prior to the date hereof, offered or sold in the United States or to any U.S. person (as such terms are defined in Regulation S under the
Securities Act) the Offered Securities or any security of the same class or series as the Offered Securities (except the May Notes and the May Exchange Notes) or (ii) has offered or will offer
or sell the Offered Securities (A) in the United States by means of any form of general solicitation or general advertising within the meaning of Rule 502(c) under the Securities Act or
(B) with respect to any such securities sold in reliance on Rule 903 of Regulation S ("Regulation S") under the Securities
Act, by means of any directed selling efforts within the meaning of Rule 902(c) of Regulation S. The Company, its affiliates and any person acting on its or their behalf (other than the
Purchaser, as to whom the Company makes no representation) have complied and will comply with the offering restrictions requirement of Regulation S. The Company has not entered and will not
enter into any 

4

 

contractual
arrangement with respect to the distribution of the Offered Securities except for this Agreement. 

        (t)    The
Company is subject to Section 13 or 15(d) of the Exchange Act. 

        (u)   There
is no "substantial U.S. market interest" as defined in Rule 902(j) of Regulation S in the Company's debt securities. 

        (v)   On
the Closing Date, the Exchange Securities will have been duly authorized by the Company; and when the Exchange Securities are issued, executed and authenticated and
delivered in accordance with the terms of the Registration Rights Agreement and the Indenture, and assuming due authorization, execution and authentication by the Trustee, the Exchange Securities will
be the valid and legally binding obligations of the Company, enforceable in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar
laws of general applicability relating to or affecting creditors' rights and to general equity principles. 

        (w)  The
Registration Rights Agreement has been duly authorized by the Company and, on the Closing Date, will have been duly executed and delivered by the Company. When the
Registration Rights Agreement has been duly executed and delivered by the Company, and assuming due authorization, execution and delivery by the Purchaser, the Registration Rights Agreement will be a
valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar
laws of general applicability relating to or affecting creditors' rights and to general equity principles. On the Closing Date, the Registration Rights Agreement will conform as to legal matters to
the description thereof in the Offering Circular. 

        (x)   Neither
the Company nor any of its subsidiaries is in violation of its respective charter or by-laws or, except as would not reasonably be likely to result
in a Material Adverse Effect, in default in the performance of any obligation, agreement, covenant or condition contained in any indenture, loan agreement, mortgage, lease or other agreement or
instrument that is material to the Company and its subsidiaries, taken as a whole, to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries or
their respective property is bound. 

        (y)   Other
than the Registration Rights Agreement and the registration rights agreement relating to the May Notes and the Company's 71/8 Senior Notes due 2008
(the "2008 Notes"), there are no contracts, agreements or understandings between the Company and any person granting such person the right to require
the Company to file a registration statement under the Securities Act with respect to any securities of the Company or to require the Company to include such securities with the Securities
registered pursuant to any Registration Statement. 

        (z)   Neither
the Company nor any of its subsidiaries nor any agent thereof acting on the behalf of them has taken, and none of them will take, any action that might cause
this Agreement or the issuance or sale of the Offered Securities to violate Regulation U or Regulation X of the Board of Governors of the Federal Reserve System. Less than 25% of the
value of the assets of the Company subject to the negative covenants of the Indenture consist and will consist of "margin stock" within the meaning of Regulation U or Regulation X of the
Board of Governors of the Federal Reserve System at all relevant times, and none of the proceeds of the Offered Securities will be used, directly or indirectly, to make
loans to any person that will be secured by margin stock or will have the benefit of any arrangement restricting the disposition or pledge of margin stock. 

        (aa) Except
as disclosed in the Offering Document, neither Moody's Investors Service, Inc. nor Standard and Poor's Ratings Group (i) has imposed (or has
informed the Company that it is considering imposing) any condition (financial or otherwise) on the Company's retaining any rating 

5

 

assigned
to the Company, any securities of the Company or (ii) has indicated to the Company that it is considering (a) the downgrading, suspension, or withdrawal of, or any review for a
possible change that does not indicate the direction of the possible change in, any rating so assigned or (b) any change in the outlook for any rating of the Company or any securities of the
Company. 

        (bb) Except
as disclosed in the Offering Document, there are no contracts, agreements or understandings between the Company and any person that would give rise to a valid
claim against the Company or the Purchaser for a brokerage commission, finder's fee or other like payment in connection with the issuance and sale of the Offered Securities to the Purchaser, other
than as may be created under this Agreement. 

        (cc) The
Consent and Fourth Amendment to Credit Agreement, dated as of the date this Agreement, among the Company, Standard Federal Bank N.A. and the other banks signatory
thereto (the "Amended Credit Agreement") has been duly authorized, executed and delivered by the Company and, assuming due authorization, execution and
delivery by the other parties thereto, the Amended Credit Agreement is a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles. 

        (dd) The
Company is not and, after giving effect to the offering and sale of the Offered Securities and the application of the proceeds thereof as described in the Offering
Document, will not be subject to regulation as a "public-utility company," a "holding company," an "affiliate" of a "holding company" or a "subsidiary company" of a "holding company" as such terms are
defined under the Public Utility Holding Company Act, as amended. 

        (ee) The
industry-related and customer-related data under the captions "Offering Circular Summary" and "Business" in the Offering Document are based on or derived from
sources that the Company believes to be reliable. 

        (ff)  The
Offering Document contains all the information specified in, and meeting the requirements of, Rule 144A(d)(4) under the Securities Act. 

        (gg) The
Company and each of its subsidiaries carry, or are covered by, insurance in such amounts and covering such risks as is customary for companies engaged in similar
businesses in similar industries for the conduct of their respective businesses and the value of their respective properties. 

        (hh) No
relationship, direct or indirect, required to be described under Item 404 of Regulation S-K, exists between or among the Company on the one hand,
and the directors, officers or shareholders of the Company on the other hand, that is not described in the Offering Document. 

        (ii)   The
Company is in compliance in all material respects with all presently applicable provisions of ERISA; no "reportable event" (as defined in ERISA), has occurred with
respect to any "pension plan" (as defined in ERISA), for which the Company would have any material liability; the Company has not incurred and does not expect to incur material liability under
(i) Title IV of ERISA with respect to termination of, or withdrawal from, any "pension plan" or (ii) Sections 412 or 4971 of the Internal Revenue Code of 1986, as amended, including the
regulations and published interpretations thereunder (the "Code"); and each "pension plan" for which the Company would have any material liability that
is intended to be qualified under Section 401(a) of the Code is so qualified in all material respects and nothing has occurred, whether by action or by failure to act, that would cause the loss
of such qualification. 

        (jj)   Except
as disclosed in the Offering Document, the Company has filed all material federal, state and local income and franchise tax returns required to be filed through
the date hereof and has paid all taxes due thereon, except where the same may be contested in good faith by 

6

 

appropriate
proceedings, and no tax deficiency has been determined adversely to the Company or any of its subsidiaries that has had (nor does the Company have any knowledge of any tax deficiency that,
if determined adversely to the Company or any of its subsidiaries, would reasonably be expected to have) a Material Adverse Effect. 

        (kk) Since
December 31, 2002 through the date hereof, and except as may otherwise be disclosed or contemplated in the Offering Document, the Company has not
(i) issued or granted any securities, (ii) incurred any material liability or obligation, direct or contingent, other than liabilities and obligations that were incurred in the ordinary
course of business, (iii) entered into any transaction not in the ordinary course of business or (iv) declared or paid any dividend on its capital stock. 

        (ll)   The
Company (i) makes and keeps books and records that are accurate in all material respects and (ii) maintains internal accounting controls that provide
reasonable assurance that (A) transactions are executed in accordance with management's authorization, (B) transactions are recorded as necessary to permit preparation of its financial
statements and to maintain accountability for its assets, (C) access to its assets is permitted only in accordance with management's authorization and (D) the recorded accountability for
its assets is compared with existing assets at reasonable intervals. 

        (mm) Neither
the Company nor any of its subsidiaries, nor, to the Company's knowledge, any director, officer, agent, employee or other person acting on behalf of the Company
or any of its subsidiaries, has used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity; made any direct or indirect
unlawful payment to any foreign or domestic government official or employee from corporate funds; violated or is in violation of any provision of the Foreign Corrupt Practices Act of 1977; or made any
bribe, rebate, payoff, influence payment, kickback or other unlawful payment. 

        3.    Purchase, Sale and Delivery of Offered Securities.    On the basis of the representations, warranties and
agreements herein contained, but subject to the terms and conditions herein set forth, the Company agrees to sell to the Purchaser, and the Purchaser agrees to purchase from the Company, at a purchase
price of 102.165% of the principal amount thereof plus accrued interest from November 15, 2003 to the Closing Date (as hereinafter defined), all of the Offered Securities. 

        The
Company will deliver against payment of the purchase price the Offered Securities to be offered and sold by the Purchaser in reliance on Regulation S (the
"Regulation S Securities") in the form of two or more permanent global Securities in registered form without interest coupons (the
"Regulation S Global Securities") that will be deposited with the Trustee as custodian for The Depository Trust Company
("DTC") for the respective accounts of the DTC participants for Morgan Guaranty Trust Company of New York, Brussels office, as operator of the Euroclear
System ("Euroclear"), and Clearstream Banking, société anonyme ("Clearstream,
Luxembourg") and registered in the name of Cede & Co., as nominee for DTC. The Company will deliver against payment of the purchase price the Offered Securities to be
purchased by the Purchaser hereunder and to be offered and sold by the Purchaser in reliance on Rule 144A under the Securities Act (the "144A
Securities") in the form of two permanent global Securities in definitive form without interest coupons (the "Restricted Global
Securities") deposited with the Trustee as custodian for DTC and registered in the name of Cede & Co., as nominee for DTC. The Restricted Global Securities shall include
the legend regarding restrictions on transfer set forth under "Transfer Restrictions" in the Offering Document. Until the termination of the restricted period (as defined in Regulation S) with
respect to the offering of the Offered Securities, interests in the Regulation S Global Securities may only be held by the DTC participants for Euroclear and Clearstream, Luxembourg. Interests
in any permanent global Securities will be held only in book-entry form through Euroclear, Clearstream, Luxembourg or DTC, as the case may be, except in the limited circumstances described
in the Offering Document. 

7

 

        Payment
for the Regulation S Securities and the 144A Securities shall be made by the Purchaser in Federal (same day) funds by official check or checks or wire transfer to an
account at a bank acceptable to the Purchaser at 9:00 A.M. (New York time), on December 17, 2003, or at such other time not later than seven full business days thereafter as the
Purchaser and the Company determine, such time being herein referred to as the "Closing Date," against delivery to the Trustee as custodian for DTC of (i) the Regulation S Global
Securities representing all of the Regulation S Securities for the respective accounts of the DTC participants for Euroclear and Clearstream, Luxembourg and (ii) the Restricted Global
Securities representing all of the 144A Securities. Copies of the Regulation S Global Securities and the Restricted Global Securities will be made available for checking at the office of
Latham & Watkins LLP 885 Third Avenue, New York, New York 10022, at least 24 hours prior to the Closing Date. 

        4.    Representations by Purchaser; Resale by Purchaser.    

        (a)   The
Purchaser represents and warrants to the Company that it is an "accredited investor" within the meaning of Regulation D under the Securities Act. 

        (b)   The
Purchaser acknowledges that the Offered Securities have not been registered under the Securities Act and may not be offered or sold within the United States or to,
or for the account or benefit of, U.S. persons except in accordance with Regulation S or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the
Securities Act. The Purchaser represents and agrees that it has only offered and sold, and will only offer and sell the Offered Securities (i) as part of its distribution at any time and
(ii) otherwise until 40 days after the later of the commencement of the offering and the Closing Date, only in accordance with Rule 903 or Rule 144A under the Securities
Act ("Rule 144A"). Accordingly, neither the Purchaser nor its affiliates, nor any persons acting on its or their behalf, have engaged or will
engage in any directed selling efforts with respect to the Offered Securities, and the Purchaser, its affiliates and all persons acting on its or their behalf have complied and will comply with the
offering restrictions requirement of Regulation S. The Purchaser agrees that, at or prior to confirmation of sale of the Offered Securities, other than a sale pursuant to Rule 144A, the
Purchaser will have sent to each distributor, dealer or person receiving a selling concession, fee or other remuneration that purchases the Offered Securities from it during the restricted period a
confirmation or notice to substantially the following effect: 

"The
Securities covered hereby have not been registered under the U.S. Securities Act of 1933 (the "Securities Act") and may not be offered or sold within the United States or to, or for the account
or benefit of, U.S. persons (i) as part of their distribution at any time or (ii) otherwise until 40 days after the later of the date of the commencement of the offering and the
closing date, except in either case in accordance with Regulation S (or Rule 144A if available) under the Securities Act. Terms used above have the meanings given to them by
Regulation S." 

        Terms
used in this subsection (b) have the meanings given to them by Regulation S. 

        (c)   The
Purchaser agrees that it and each of its affiliates has not entered and will not enter into any contractual arrangement with respect to the distribution of the
Offered Securities except with the prior written consent of the Company. 

        (d)   The
Purchaser agrees that it and each of its affiliates will not offer or sell the Offered Securities in the United States by means of any form of general solicitation
or general advertising within the meaning of Rule 502(c) under the Securities Act, including, but not limited to (i) any advertisement, article, notice or other communication published
in any newspaper, magazine or similar media or broadcast over television or radio, or (ii) any seminar or meeting whose attendees have been invited by any general solicitation or general
advertising. The Purchaser agrees, with respect to resales made in reliance on Rule 144A of any of the Offered Securities, to deliver either with the confirmation of such resale or otherwise
prior to settlement of such resale a notice to the 

8

 

effect
that the resale of such Offered Securities has been made in reliance upon the exemption from the registration requirements of the Securities Act provided by Rule 144A. 

        (e)   The
Purchaser represents and agrees that (i) it has not offered or sold and prior to the date six months after the date of issue of the Offered Securities will
not offer or sell any Offered Securities to persons in the United Kingdom except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as
principal or agent) for the purposes of their businesses or otherwise in circumstances that have not resulted and will not result in an offer to the public in the United Kingdom within the meaning of
the Public Offers of Securities Regulations 1995; (ii) it has complied and will comply with all applicable provisions of the Financial Services Act 1986 with respect to anything done by it in
relation to the Offered Securities in, from or otherwise involving the United Kingdom; and (iii) it has only issued or passed on and will only issue or pass on in the United Kingdom any
document received by it in connection with the issue of the Offered Securities to a person who is of a kind described in Article 11(3) of the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) Order 1996 or is a person to whom such document may otherwise lawfully be issued or passed on. 

        5.    Certain Agreements of the Company.    The Company agrees with the Purchaser that: 

        (a)   The
Company will advise the Purchaser promptly of any proposal to amend or supplement the Offering Document and will not effect such amendment or supplementation without
the Purchaser's consent (it being understood that the filing of any documents with the Commission pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the completion of the
resale of the Offered Securities shall be deemed to be such an amendment or supplementation), such consent not to be unreasonably withheld. If, at any time prior to the completion of the resale of the
Offered Securities by the Purchaser, any event occurs as a result of which the Offering Document as then amended or supplemented would include an untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements therein, in the light of the circumstances under which they
were made, not misleading, or if it is necessary at any such time to amend or supplement the Offering Document to comply with any applicable law, the Company promptly will notify the Purchaser of such
event and promptly will prepare, at its own expense, an amendment or supplement that will correct such statement or omission or effect such compliance. Neither the Purchaser's consent to, nor the
Purchaser's delivery to offerees or investors of, any such amendment or supplement shall constitute a waiver of any of the conditions set forth in Section 6 hereof. 

        (b)   The
Company will furnish to the Purchaser copies of any preliminary offering circular, the Offering Document and all amendments and supplements to such documents, in
each case as soon as available and in such quantities as the Purchaser reasonably requests, and the Company will furnish to the Purchaser on the date hereof three copies of the Offering Document
signed by a duly authorized officer of the Company, one of which will include the independent accountants' reports therein manually signed by such independent accountants. So long as the Securities
are outstanding, at any time when the Company is not subject to Section 13 or 15(d) of the Exchange Act, the Company will promptly furnish or cause to be furnished to the Purchaser and, upon
request of holders and prospective purchasers of the Offered Securities, to such holders and purchasers, copies of the information required to be delivered to holders and prospective purchasers of the
Offered Securities pursuant to Rule 144A(d)(4) under the Securities Act (or any successor provision thereto) in order to permit compliance with Rule 144A in connection with resales by
such holders of the Offered Securities. The Company will pay the expenses of printing and distributing to the Purchaser all such documents. 

        (c)   The
Company will arrange for the qualification of the Offered Securities for sale and the determination of their eligibility for investment under the laws of such
jurisdictions in the United States and Canada as the Purchaser designates and will continue such qualifications in effect so 

9

 

long
as required for the resale of the Offered Securities by the Purchaser; provided that the Company will not be required to qualify as a foreign
corporation or to file a general consent to service of process in any such state. 

        (d)   So
long as the Securities remain outstanding, upon request, the Company will furnish to the Purchaser, as soon as practicable after the end of each fiscal year, a copy
of its annual report to shareholders for such year; and, upon request, the Company will furnish to the Purchaser (i) as soon as available, a copy of each report and any definitive proxy
statement of the Company filed with the Commission under the Exchange Act or mailed to shareholders, and (ii) from time to time, such other information concerning the Company as the Purchaser
may reasonably request. 

        (e)   During
the period of two years after the Closing Date, the Company will, upon request, furnish to the Purchaser and any holder of Offered Securities a copy of the
restrictions on transfer applicable to the Offered Securities. 

        (f)    During
the period of two years after the Closing Date, the Company will not, and will not permit any of its affiliates (as defined in Rule 144 under the
Securities Act) to, resell any of the Offered Securities that have been reacquired by any of them. 

        (g)   During
the period of two years after the Closing Date, the Company will not be or become, an open-end investment company, unit investment trust or
face-amount certificate company that is or is required to be registered under Section 8 of the Investment Company Act. 

        (h)   The
Company will pay all expenses incidental to the performance of its obligations under this Agreement, the Indenture and the Registration Rights Agreement, including
(i) the fees and expenses of the Trustee and its professional advisers; (ii) all expenses in connection with the execution, issue, authentication, packaging and initial delivery of the
Offered Securities and, as applicable, the Exchange Securities, the preparation and printing of this Agreement, the Registration Rights Agreement, the Offered Securities, the Indenture and the
Offering Document and any amendments and supplements thereto, and any other document relating to the issuance, offer, sale and delivery of the Offered Securities, and as applicable, the Exchange
Securities; (iii) the cost of qualifying the Offered Securities for trading in The PortalSM Market ("PORTAL") and any expenses
incidental thereto; (iv) the cost of any advertising approved by the Company in connection with the issue of the Offered Securities; (v) any expenses (including reasonable fees and
disbursements of counsel) incurred in connection with qualification of the Offered Securities or the Exchange Securities for sale under the laws of such jurisdictions in the United States and Canada
as the Purchaser designates and the printing of memoranda relating thereto; (vi) any fees charged by investment rating agencies for the rating of the Offered Securities or the Exchange
Securities; and (vii) any expenses incurred in distributing preliminary offering circulars and the Offering Document (including any amendments and supplements thereto) to the Purchaser. The
Company will also pay or reimburse the Purchaser (to the extent incurred by them) for (x) all reasonable out-of-pocket expenses of the Purchaser incurred in connection
with the issuance, sale, offer and delivery of the Offered Securities, including the fees and disbursements in an amount not to exceed $125,000 of Latham & Watkins LLP, who are serving as the
Purchaser's counsel in connection with the issuance, sale, offer and delivery of the Offered Securities (y) all reasonable travel expenses of the Purchaser and the Company's officers and
employees and (z) any other reasonable expenses of the Purchaser and the Company in connection with attending or hosting meetings with prospective purchasers of the Offered Securities from the
Purchaser. 

        (i)    In
connection with the offering, until the Purchaser shall have notified the Company, which notification shall be promptly provided upon the written request of the
Company, of the completion of the resale of the Offered Securities, neither the Company nor any of its affiliates has or will, either alone or with one or more other persons, bid for or purchase for
any account in which it or any of its affiliates has a beneficial interest any Offered Securities or attempt to induce any person to purchase any Offered Securities; and neither it nor any of its
affiliates will make 

10

 

bids
or purchases for the purpose of creating actual, or apparent, active trading in, or of raising the price of, the Offered Securities. 

        (j)    Until
the Closing Date, the Company will not offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, any United States dollar-denominated
debt securities issued or guaranteed by the Company and having a maturity of more than one year from the date of issue, or publicly disclose the intention to make any such offer, sale, contract,
pledge or disposition, without the prior written consent of the Purchaser. The Company will not at any time offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, any
securities under circumstances where such offer, sale, contract, pledge or disposition would cause the exemption afforded by Section 4(2) of the Securities Act or the safe harbor of
Regulation S thereunder to cease to be applicable to the offer and sale of the Offered Securities. 

        6.    Conditions of the Obligation of the Purchaser.    The obligation of the Purchaser to purchase and pay for the
Offered Securities will be subject to the accuracy of the representations and warranties on the part of the Company herein, to the accuracy of the statements of officers of the Company made pursuant
to the provisions hereof, to the performance by the Company of its obligations hereunder and to the following additional conditions precedent: 

        (a)   The
Purchaser shall have received a letter, addressed to the Purchaser, dated the date of this Agreement and as of the Closing Date, of PricewaterhouseCoopers LLP, in
each case, in form and substance satisfactory to the Purchaser concerning the financial information with respect to the Company set forth in the Offering Document. 

        (b)   Subsequent
to the execution and delivery of this Agreement, there shall not have occurred (i) any change, or any development or event involving a prospective
change, in the financial condition, business, properties or results of operations of the Company and its subsidiaries taken as one enterprise that, in the reasonable judgment of the Purchaser, is
material and adverse and makes it impractical or inadvisable to proceed with completion of the offering or the sale of and payment for the Offered Securities; (ii) except as disclosed in the
Offering Document, any downgrading in the rating of any debt securities of the Company by any "nationally recognized statistical rating organization" (as defined for purposes of Rule 436(g)
under the Securities Act), or any public announcement that any such organization has under surveillance or review its rating of any debt securities of the Company (other than an announcement with
positive implications of a possible upgrading, and no implication of a possible downgrading, of such rating) or any announcement that the Company has been placed on negative outlook; (iii) any
change in U.S. or international financial, political or economic conditions or currency exchange rates or exchange controls as would, in the reasonable judgment of the Purchaser, be likely to
prejudice materially the success of the proposed issue, sale or distribution of the Offered Securities, whether in the primary market or in respect of dealings in the secondary market; (iv) any
material suspension or material limitation of trading in securities generally on the New York Stock Exchange or any setting of minimum prices for trading on such exchange, or any material suspension
of trading of any securities of the Company on any exchange or in the over-the-counter market; (v) any banking moratorium declared by U.S. Federal or New York
authorities; (vi) any major disruption of settlements of securities or (vii) any attack on, outbreak or escalation of hostilities or act of terrorism involving the United States, any
declaration of war by Congress or any other national or international calamity or emergency if, in the reasonable judgment the Purchaser, the effect of any such attack, outbreak, escalation, act,
declaration, calamity or emergency makes it impractical or inadvisable to proceed with completion of the offering or the sale of and payment for the Offered Securities. 

11

  

        (c)   The
Purchaser shall have received an opinion, dated the Closing Date, of Gibson, Dunn & Crutcher LLP, special counsel for the Company, that: 

        (i)    The
Indenture constitutes the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms. 

        (ii)   The
Registration Rights Agreement constitutes the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms. 

        (iii)  The
Offered Securities, when executed and authenticated in accordance with the provisions of the Indenture and delivered to and paid for by the Purchaser in accordance
with the terms contained herein, will be legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their terms, and will be entitled to the benefits of
the Indenture and the Registration Rights Agreement. 

        (iv)  The
Company is not and, after giving effect to the offering and sale of the Offered Securities and the application of the proceeds thereof as described in the Offering
Document, will not be required to be registered as an "investment company" within the meaning of the Investment Company Act. 

        (v)   The
issuance and sale of the Offered Securities, the performance by the Company of the Indenture and the execution, delivery and performance by the Company of this
Agreement and the Registration Rights Agreement, do not and will not violate, or require any filing with, consent, authorization or approval of any governmental authority or regulatory body of the
State of New York or the United States of America under, any law, rule or regulation of the State of New York or the United States of America applicable to the Company that, in such counsel's
experience, is generally applicable to transactions in the nature of those contemplated by the Indenture, this Agreement and the Registration Rights Agreement, except for such filings, consents,
authorizations or approvals (i) as already have been obtained or (ii) that, if not made or obtained, would not have a material adverse effect on the Company and its subsidiaries taken as
a whole or expose the Purchaser to any liability. 

        (vi)  Assuming
the accuracy of the representations and warranties of the Company and the Purchaser and compliance by them with their agreements contained herein, no
registration of the Offered Securities under the Securities Act, and no qualification of the Indenture under the Trust Indenture Act, is required for the offer, sale and delivery of the Offered
Securities to the Purchaser on the date
hereof or the resales by the Purchaser in the manner contemplated by this Agreement and the Offering Document, it being understood that such counsel expresses no opinion as to any subsequent resale of
the Offered Securities. 

        (vii) The
statements contained in the Offering Document under the caption "Description of Other Indebtedness," insofar as such statements constitute a general summary of
provisions of documents referred to therein, are accurate in all material respects and fairly summarize the matters referred to therein. 

        (viii) The
statements under the caption "Material United States Federal Tax Considerations," insofar as such statements constitute matters of United States law, are accurate
in all material respects, subject to the qualifications and limitations set forth therein. 

        (ix)  As
issued and delivered pursuant to this Agreement, the Offered Securities are not of the same class (within the meaning of Rule 144A under the Securities Act)
as any securities of the Company or any of its subsidiaries that are listed on a national securities exchange registered under Section 6 of the Exchange Act or that are quoted in a United
States automated inter-dealer quotation system. 

12

 

        (x)   The
issuance and sale to and the resale by the Purchaser of the Offered Securities in accordance with the provisions of this Agreement and the application of the
proceeds thereof by the Company as described in the Offering Document do not and will not result in a violation of Regulations U or X of the Board of Governors of the Federal Reserve System. 

        (xi)  The
Indenture, the Offered Securities, the Purchase Agreement and the Registration Rights Agreement, insofar as each is described therein, conform in all material
respects with the descriptions thereof contained in the Offering Document. 

        In
addition, Gibson, Dunn & Crutcher LLP shall have participated in conferences with officers and other representatives of the Company, representatives of the independent auditors
for the Company and representatives of the Purchaser at which the contents of the Offering Document and related matters were discussed. Because the purpose of such counsel's professional engagement
was not to establish or confirm factual matters and because the scope of such counsel's examination of the affairs of the Company did not permit it to verify the accuracy, completeness or fairness of
the statements set forth in the Offering Document, except to the extent set forth in the following paragraph, Gibson, Dunn & Crutcher LLP is not passing upon and does not assume any
responsibility for the accuracy, completeness or fairness of the statements contained in the Offering Document. 

        On
the basis of the foregoing, and except for the financial statements and schedules and the notes thereto, statistical information that is purported to have been provided on the
authority of an expert or public official and other information of an accounting or financial nature included therein as to which such counsel expresses no such belief, no facts came to the attention
of Gibson, Dunn & Crutcher LLP that led such counsel to believe that the Offering Document, as of its date and as of the Closing Date, contained or contains an untrue statement of a material
fact or omitted or omits to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. 

        (d)   The
Purchaser shall have received an opinion, dated the Closing Date, of Dickinson Wright, counsel for the Company, that: 

        (i)    The
Company has been duly incorporated and is an existing corporation in good standing under the laws of the State of Michigan, with corporate power and authority to own
its properties and conduct its business as described in the Offering Document; and based on the certificates of state officials, the Company is duly qualified to do business as a foreign corporation
in good standing in all other jurisdictions in which its ownership or lease of property or the conduct of its business requires such qualification. 

        (ii)   The
Indenture has been duly authorized, executed and delivered by the Company. 

        (iii)  The
Purchase Agreement and the Registration Rights Agreement have each been duly authorized, executed and delivered by the Company. 

        (iv)  The
Offered Securities have been duly authorized, executed, issued and delivered by the Company. 

        (v)   The
Exchange Securities have been duly authorized by the Company. 

        (vi)  There
are no pending actions, suits or proceedings against or affecting the Company, any of its subsidiaries or any of their respective properties that, if determined
adversely to the Company or any of its subsidiaries, would individually or in the aggregate have a Material Adverse Effect, or would materially and adversely affect the ability of the Company to
perform its obligations under the Indenture, the Purchase Agreement or the Registration Rights Agreement, or that are otherwise material in the context of the sale of the Offered Securities; and no
such actions, suits or proceedings are threatened or, to such counsel's knowledge, contemplated. 

13

 

        (vii) There
are no contracts, agreements or understandings between the Company and any person (other than the Registration Rights Agreement and the registration rights
agreement relating to the May Notes and the 2008 Notes) granting such person the right to require the Company to file a registration statement under the Securities Act with respect to any
securities of the Company owned by such person or to require the Company to include such securities with the Offered Securities registered pursuant to the Registration Rights Agreement or in any
securities being registered pursuant to any other registration statement filed by the Company under the Securities Act. 

        (viii) The
performance of the Indenture and the execution, delivery and performance of the Purchase Agreement and the Registration Rights Agreement and the issuance and sale
of the Offered Securities and compliance with the terms and provisions thereof will not result in a breach or violation of any of the terms and provisions of, or constitute a default under, any
statute, any rule, regulation or order of any governmental agency or body or any court having jurisdiction over the Company or any subsidiary of the Company or any of their properties, or any material
agreement or instrument to which the Company or any such subsidiary is a party or by which the Company or any such subsidiary is bound or to which any of the properties of the Company or any such
subsidiary is subject, or the charter or by-laws of the Company or any such subsidiary, and the Company has full power and authority to authorize, issue and sell the Offered Securities as
contemplated by the Purchase Agreement. 

        (e)   The
Purchaser shall have received from Latham & Watkins LLP, counsel for the Purchaser, such opinion or opinions, dated the Closing Date, with respect to the
validity of the Offered Securities, the exemption from registration for the offer and sale of the Offered Securities by the Company to the Purchaser and the resales by the Purchaser as contemplated
hereby and other related matters as the Purchaser may require, and the Company shall have furnished to such counsel such documents as they request for the purpose of enabling them to pass upon such
matters. 

        (f)    The
Purchaser shall have received an opinion, dated the Closing Date, of Loomis, Ewert, Parsley, Davis & Gotting, A Professional Corporation, special Michigan
regulatory counsel for the Company, that: 

        (i)    The
statements contained in the Offering Document under the captions "Business—Regulatory Matters—Michigan" and "Business—Regulatory
Matters—Environmental Matters," insofar as they describe the laws, rules, regulations and documents referred therein, are accurate in all material respects. 

        (g)   The
Purchaser shall have received an opinion, dated the Closing Date, of Ashburn & Mason, special Alaska regulatory counsel for the Company, that: 

        (i)    The
statements contained in the Offering Document under the caption "Business—Regulatory Matters—Alaska," insofar as they describe the laws,
rules, regulations and documents referred therein, are accurate in all material respects. 

        (h)   The
Purchaser shall have received an opinion, dated the Closing Date, of LeBoeuf, Lamb, Greene & MacRae, LLP, special federal regulatory counsel for the Company,
that: 

        (i)    The
Company is not, and after giving effect to, and solely as a result of, the offering and sale of the Offered Securities and the application of the proceeds thereof as
described in the Offering Document, will not, be required to register as a "holding company" under the Public Utility Holding Company Act of 1935
("PUHCA") and is not and will not be subject to regulation as a "holding company" or an "affiliate" or a "subsidiary company" of a "holding company"
required to register under PUCHA, as such terms are defined under PUHCA. 

14

 

        (ii)   The
statements contained in the Offering Document under the caption "Business—Regulatory Matters," insofar as they describe the absence of regulation by the
Federal Energy Regulatory Commission, are accurate in all material respects. 

        (iii)  The
statements contained in the Offering Document under the caption "Business—Regulatory Matters—Safety Regulations," insofar as they describe
the laws, rules and regulations described therein, are accurate in all material respects. 

        (i)    The
Purchaser shall have received a certificate, dated the Closing Date, of the President or any Vice President and a principal financial or accounting officer of the
Company in which such officers, to the best of their knowledge after reasonable investigation, shall state that the representations and warranties of the Company in this Agreement are true and
correct, that the Company has complied with all agreements and satisfied all conditions on its part to be performed or satisfied hereunder at or prior to the Closing Date, and that, subsequent to the
dates of the most recent financial statements in the Offering Document there has been no material adverse change, nor any development or event involving a prospective material adverse change, in the
financial condition, business, properties or results of operations of the Company and its subsidiaries taken as a whole except as set forth in or contemplated by the Offering Document or as described
in such certificate. 

        (j)    The
Purchaser shall have received an opinion, dated the Closing Date, of Mark Prendeville, general counsel of the Company, that: 

        (i)    The
statements contained in the Company's proxy statement, dated March 10, 2003, under the caption "Compensation of Executive Officers and
Directors—Employment and Related Agreements" and incorporated by reference in the Offering Document, insofar as they describe the documents referred therein, are accurate in all material
respects. 

        (ii)   The
statements contained in the Offering Document under the caption "Business—Gas Distribution Business—Gas Supply Agreements," insofar as they
describe the documents referred therein, are accurate in all material respects. 

        (iii)  The
statements contained in the Offering Document under the caption "Business—Legal Proceedings," insofar as they describe the complaint of Triad Energy
Resources Corp., et. al. v. NiSource Inc., et. al (filed March 18, 2003) (U.S. Dist. Ct., DC), are accurate in all material respects. 

        (k)   The
Purchaser shall have received the Registration Rights Agreement duly executed and delivered by the Company. 

        (l)    The
Purchaser shall have received a certificate, substantially in the form of Exhibit A hereto, dated the date of this Agreement, of the Vice President and
Controller of the Company. 

        (m)  The
Amended Credit Agreement shall have become effective prior to, or simultaneously with, the Closing Date, and the Purchaser shall have received documentation as it
reasonably deems necessary to evidence the effectiveness thereof. 

        The
Company will furnish the Purchaser with such conformed copies of such opinions, certificates, letters and documents as the Purchaser reasonably requests. 

        7.    Indemnification and Contribution.    (a) The Company will indemnify and hold harmless the Purchaser, its
partners, directors and officers and each person, if any, who controls the Purchaser within the meaning of Section 15 of the Securities Act, against any losses, claims, damages or liabilities,
joint or several, to which the Purchaser may become subject, under the Securities Act or the Exchange Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Offering Document, or any amendment or supplement thereto, or any related 

15

 

preliminary
offering circular or the Exchange Act Reports, or arise out of or are based upon the omission or alleged omission to state therein a material fact or necessary in order to make the
statements therein, in the light of the circumstances under which they were made, not misleading, including any losses, claims, damages or liabilities arising out of or based upon the Company's
failure to perform its obligations under Section 5(a) of this Agreement, and will reimburse the Purchaser for any legal or other expenses reasonably incurred by the Purchaser in connection with
investigating or defending any such loss, claim, damage, liability or action as such expenses are incurred; provided, however, that the Company will not
be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement in or omission or alleged
omission from any of such documents in reliance upon and in conformity with written information furnished to the Company by the Purchaser specifically for use therein, it being understood and agreed
that the only such information consists of the information described as such in subsection (b) below; provided further, however, with respect to any such untrue statement or alleged untrue
statement in or omission or alleged omission from the Preliminary Offering Circular, the indemnity agreement contained in this paragraph (a) shall not inure to the benefit of the Purchaser or
any affiliate, partner, director, officer or controlling person thereof to the extent that (i) a copy of the Offering Circular as then amended or supplemented was not sent or given to a person
to whom the Purchaser sold the Offered Securities at or prior to the written confirmation of the sale of such Offered Securities to such person and (ii) such loss, claim, damage or liability of
or with respect to the Purchaser or any affiliate, partner, director, officer or controlling person thereof arises out of or is based upon an untrue statement or alleged untrue statement in or
omission or alleged omission from such Preliminary Offering Circular that was corrected in the Offering Circular as then amended or supplemented, unless such failure to deliver the Offering Circular
as then amended or supplemented was a result of non-compliance by the Company with the provisions of Section 5(a), and so long as the Offering Circular and any amendment or
supplement thereto was provided by the Company to the Purchaser in the requisite quantity and on a timely basis to permit delivery on or prior to the written confirmation of the sale of such Offered
Securities. 

        (b)   The
Purchaser will indemnify and hold harmless the Company, its directors and officers and each person, if any, who controls the Company within the meaning of
Section 15 of the Securities Act, against any losses, claims, damages or liabilities to which the Company may become subject, under the Securities Act or the Exchange Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the
Offering Document, or any amendment or supplement thereto, or any related preliminary offering circular, or arise out of or are based upon the omission or the alleged omission to state therein a
material fact or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, in each case to the extent, but only to the extent,
that such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to the Company by the Purchaser
specifically for use therein, and will reimburse any legal or other expenses reasonably incurred by the Company in connection with investigating or defending any such loss, claim, damage, liability or
action as such expenses are incurred, it being understood and agreed that the only such information furnished by the Purchaser consists of the following information in the Offering Document furnished
on behalf of the Purchaser: under the caption "Plan of Distribution" in the third paragraph, the second sentence of the eighth paragraph, the ninth paragraph and the tenth paragraph;  provided, however,
that the Purchaser shall not be liable for any losses, claims, damages or liabilities arising out of or based upon the Company's
failure to perform its obligations under Section 5(a) of this Agreement. 

        (c)   Promptly
after receipt by an indemnified party under this Section of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof
is to be made against the indemnifying party under subsection (a) or (b) above, notify the indemnifying party of the 

16

 

commencement
thereof, but the omission so to notify the indemnifying party will not relieve it from any liability that it may have to any indemnified party otherwise than under subsection
(a) or (b) above. In case any such action is brought against any indemnified party and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such
indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party will not be liable to such indemnified party under this Section for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable costs of investigation. No indemnifying party shall, without the prior written consent of the indemnified party, effect
any settlement of any pending or threatened action in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party
unless such settlement includes (i) an unconditional release of such indemnified party from all liability on any claims that are the subject matter of such action and (ii) does not
include a statement as to or an admission of fault, culpability or failure to act by or on behalf of any indemnified party. 

        (d)   If
the indemnification provided for in this Section is unavailable or insufficient to hold harmless an indemnified party under subsection (a) or (b) above,
then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of the losses, claims, damages or liabilities referred to in subsection (a) or
(b) above (i) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and the Purchaser on the other from the offering of the
Offered Securities or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of the Company on the one hand and the Purchaser on the other in connection with the statements or omissions that resulted
in such losses, claims, damages or liabilities as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and the Purchaser on the other
shall be deemed to be in the same proportion as the total net proceeds from the offering (before deducting expenses) received by the Company bear to the total discounts and commissions received by the
Purchaser from the Company under this Agreement. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information supplied by the Company or the Purchaser and the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such untrue statement or omission. The amount paid by an indemnified party as a result of the losses, claims, damages or liabilities referred to in the first sentence of this
subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any action or claim that is the
subject of this subsection (d). Notwithstanding the provisions of this subsection (d), the Purchaser shall not be required to contribute any amount in excess of the amount by which the total
discounts, fees and commissions received by the Purchaser exceeds the amount of any damages that the Purchaser has otherwise been required to pay by reason of such untrue or alleged untrue statement
or omission or alleged omission. 

        (e)   The
obligations of the Company under this Section shall be in addition to any liability that the Company may otherwise have and shall extend, upon the same terms and
conditions, to each person, if any, who controls the Purchaser within the meaning of the Securities Act or the Exchange Act; and the obligations of the Purchaser under this Section shall be in
addition to any liability that the Purchaser may otherwise have and shall extend, upon the same terms and conditions, to each person, if any, who controls the Company within the meaning of the
Securities Act or the Exchange Act. 

17

 

        8.    Survival of Certain Representations and Obligations.    The respective indemnities, agreements, representations,
warranties and other statements of the Company or its officers and of the Purchaser set forth in or made pursuant to this Agreement will remain in full force and effect, regardless of any
investigation, or statement as to the results thereof, made by or on behalf of the Purchaser, the Company or any of their respective representatives, officers or directors or any controlling person,
and will survive delivery of and payment for the Offered Securities. If for any reason the purchase of the Offered Securities by the Purchaser is not consummated, the Company shall remain responsible
for the expenses to be paid or reimbursed by it pursuant to Section 5 hereof and the respective obligations of the Company and the Purchaser pursuant to Section 7 hereof shall remain in
effect. If the purchase of the Offered Securities by the Purchaser is not consummated for any reason other than solely because of the occurrence of any event specified in clause (iv), (v),
(vi) or (vii) of Section 6(b) hereof, the Company will reimburse the Purchaser for all out-of-pocket expenses
(including fees and disbursements of counsel) reasonably incurred by it in connection with the offering of the Offered Securities. 

        9.    Notices.    All communications hereunder will be in writing and, if sent to the Purchaser will be mailed,
delivered or facsimiled and confirmed to it at Credit Suisse First Boston LLC, Eleven Madison Avenue, New York, New York 10010-3629, Facsimile: (212) 325-8278,
Attention: Investment Banking Department—Transactions Advisory Group, or, if sent to the Company, will be mailed, delivered or facsimiled and confirmed to it at SEMCO Energy, Inc.,
28470 13 Mile Road, Suite 300, Farmington Hills, Michigan 48334, Telephone.: (248) 702-6282, Facsimile: (248) 702-6306, Attention: Mark Prendeville, Esq. 

        10.    Successors.    This Agreement will inure to the benefit of and be binding upon the parties hereto and their
respective successors and the controlling persons referred to in Section 7 hereof, and no other person will have any right or obligation hereunder, except that holders of Offered Securities
shall be entitled to enforce the agreements for their benefit contained in the second and third sentences of Section 5(b) hereof against the Company as if such holders were parties thereto. 

        11.    Counterparts.    This Agreement may be executed in any number of counterparts, each of which shall be deemed to
be an original, but all such counterparts shall together constitute one and the same Agreement. 

        12.    Applicable Law.    This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York without regard to principles of conflicts of laws. The Company hereby submits to the non-exclusive jurisdiction of the
Federal and state courts in the Borough of Manhattan in The City of New York in any suit or proceeding arising out of or relating to this Agreement or the transactions contemplated
hereby.

        [Signature
Pages Follow] 

18

   
        If the foregoing is in accordance with the Purchaser's understanding of our agreement, kindly sign and return to us one of the counterparts hereof, whereupon it will become a binding
agreement between the Company and the Purchaser in accordance with its terms. 

	 	 	Very truly yours,
	

 	
 	
SEMCO ENERGY, INC.
	

 	
 	
By:	

/s/  JOHN E. SCHNEIDER      
	 	 	 	
 Name:  John E. Schneider

Title:    Senior Vice President & CFO

19

 

The
foregoing Purchase Agreement

is hereby confirmed and accepted

as of the date first above written. 

	CREDIT SUISSE FIRST BOSTON LLC	 	 
	
By:	
 	

/s/  JOSEPH E. REECE      
 Name:  Joseph E. Reece

Title:    Managing Director	
 	

 	
 	

 

20

  

 
 

SCHEDULE A
  Subsidiaries    
    

SEMCO
Energy Ventures, Inc.

SEMCO Arkansas Pipeline Company

SEMCO Gas Storage Company

SEMCO Pipeline Company

Southeastern Development Company

Southeastern Financial Services, Inc.

Alaska Pipeline Company

NORSTAR Pipeline Company, Inc.

Aretech Information Services, Inc.

Hotflame Gas, Inc.

Sub-Surface Resources, Inc.

Flint Construction Company

Iowa Pipeline Associates, Inc.

K & B Construction, Inc.

Long's Underground Technologies, Inc.

Sub-Surface Construction Co. 

21

  

EXHIBIT A  

 
  SEMCO ENERGY, INC.
  
    CONTROLLER'S CERTIFICATE    
    

December 12,
2003 

        The
undersigned, Steve Warsinske, as Vice President and Controller of SEMCO Energy, Inc., a Michigan corporation (the "Company"),
does hereby certify to the best of his knowledge after reasonable investigation, pursuant to Section 6(l) of the Purchase Agreement, dated December 12, 2003, by and among the Company and
Credit Suisse First Boston LLC (the "Purchaser"), relating to $50,000,000 in aggregate principal amount of the Company's 73/4% Senior
Notes due 2013, as follows: 

        The
financial data identified by the Purchaser and referenced in the attached pages of the Company's offering circular dated December 12, 2003 (the
"Offering Circular"): 

	(i)
	where
identified by the tickmark legend            , agrees to the dollar amounts in the Company's audited consolidated financial statements for the years ended
December 31, 2001, 2000, 1999 and 1998 (the "AA Statements");

	(ii)
	where
identified by the tickmark legend            , to the extent such financial data cannot be compared directly to the AA Statements, agrees to the dollar and
other amounts in the Company's accounting records for the years ended December 31, 2001, 2000, 1999 and 1998; and

	(iii)
	where
identified by the tickmark legend            , agrees to the Company's accounting records for the three, nine and twelve months ended September 30,
2002 and 2003. 

        This
certificate is delivered to assist the Purchaser in conducting and documenting its investigation of the affairs of the Company in connection with the offering of securities covered
by the Offering Circular. 

[Signature Page Follows]

22

 

        IN
WITNESS WHEREOF, I have hereunto signed my name this 12th day of December 2003. 

	 
	 	 
	 

	 	 	

	 	 	Name:	Steve Warsinske
	 	 	Title:	Vice President and Controller

23

QuickLinks

SCHEDULE A Subsidiaries

SEMCO ENERGY, INC. CONTROLLER'S CERTIFICATEQuickLinks
 -- Click here to rapidly navigate through this document

 
 

Exhibit 4.1    
    

 
  ASSET PURCHASE AGREEMENT    
    

        THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made and
entered into on December 5, 2003, between and among MAIN STREET INSURANCE SERVICES, INC., a Georgia corporation (the
"Acquiror"), BANKS MONEYHAN INSURANCE AGENCY, INC., a Georgia corporation
("BMIA"), MONEYHAN INSURANCE AGENCY, INC., a Georgia corporation
("MIA") ("BMIA" and "MIA" sometimes individually
referred to herein as the "Agency" and are collectively referred to as herein as the "Agencies"), and  CHARLES N.
MONEYHAN, a Georgia resident ("Moneyhan"), R. DEAN
HAYES, a Georgia resident ("Hayes"), and JANETTE M. HATTEN, a Georgia resident
("Hatten") (Moneyhan, Hayes and Hatten are referred to collectively herein as the "Shareholders"). The
Acquiror, the Agencies and the Shareholders are sometimes referred to collectively herein as the "Parties", and sometimes referred to individually
herein as a "Party." 

        WHEREAS, the Agencies are engaged in the solicitation, sale, and servicing of various types of insurance products and related services
(the "Business"); and 

        WHEREAS, the respective Boards of Directors of the Acquiror and the Agencies, and the Shareholders, have approved the sale by the Agencies
to the Acquiror of all of the "Acquired Assets" (as that term is defined below), and the assumption by the Acquiror of the
"Assumed Liabilities" (as that term is defined below), pursuant to the terms set forth below; and 

        WHEREAS, the Shareholders desire to sell to the Acquiror all of the Shareholders' personal goodwill related to the Agencies and the
Business. 

        NOW, THEREFORE, in consideration of the premises and the mutual promises herein made, the Parties agree as follows: 

 
 

ARTICLE 1. KEY DEFINITIONS    
    

        "Acquired Assets" means all right, title and interest in and to all of the tangible and intangible assets used in
the Business conducted by the Agencies, other than the "Excluded Assets" (as that term is defined below). Without limitation, the Acquired Assets
include all of the following assets of the Agencies, as they exist on the Closing Date: 

        (a)   "Expirations" (as that term is defined below) and goodwill; 

        (b)   tangible
personal property, including furniture, fixtures and equipment; 

        (c)   "Intellectual Property" (as that term is defined below), including licenses and sublicenses granted and obtained with
respect thereto, and rights thereunder, remedies against infringements thereof and rights to protection of interests therein under the Laws of all Governments; 

        (d)   leases
and subleases of real and personal property, including but not limited to, the "Lease" (as that term is defined
below), and all of the Agencies' right, title, interest, powers, remedies, benefits, rents, options and privileges in, to and under such leases; 

        (e)   agreements,
contracts, indentures, mortgages, "Security Interests" (as that term is defined below), guarantees, other
similar arrangements, and rights thereunder; 

        (f)    prepaid
expenses and other prepayments, claims, deposits, return premiums and commissions, refunds, causes of action, chooses in action, restrictive covenants, rights of
recovery, rights of setoff and rights of recoupment [including any such item relating to the payment of "Taxes" (as that term is defined
below)]; 

        (g)   "Permits" (as that term is defined below); 

        (h)   telephone
numbers, yellow page advertising, websites and email addresses, books, records, ledgers, files, documents, correspondence, lists, creative materials,
advertising and promotional 

materials,
operational, billing and payable information, studies, reports and other printed or written materials; 

        (i)    copies
of computer documentation, computer files, computer disks, computer tapes and information stored on computer media used in connection with the operation of the
Business; 

        (j)    accounts
receivable, notes receivable and other receivables (including contingent commissions, direct bill commissions and production bonuses) (collectively, the
"Receivables"); and 

        (k)   cash
and cash equivalents on hand and in the bank; 

provided,
however, that the Acquired Assets shall not include those assets of the Agencies set forth on Schedule 1 attached hereto (collectively,
the "Excluded Assets"). 

        "Action" means any suit, proceeding, hearing, investigation, charge, complaint, claim, demand or notice. 

        "Affiliates" shall have the meaning set forth for such term in Rule 12b 2 of the regulations promulgated under the Securities
Exchange Act of 1934, as amended. 

        "Average Price" means $25.082 per share of Stock. 

        "Basis" means any past or present fact, situation, circumstance, status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act or transaction that forms or could form the basis for any specified consequence. 

        "Closing Date" means December 31, 2003 or such other date agreed upon by the parties. 

        "COBRA" means the requirements of Part 6 of Subtitle B of Title I of ERISA and Section 4980B of the Code and of any similar
state law. 

        "Code" means the Internal Revenue Code of 1986, as amended and as now or hereafter in effect. 

        "Earn-Out Period" means the 5-year period commencing on the January 1 immediately following the Closing
Date. 

        "EBITDA" means net earnings (as determined on a modified cash basis), plus interest expense, income tax expense, depreciation expense,
amortization expense, and any other non-cash charges deducted in calculating net earnings. 

        "Employee Benefit Plan" means any (i) non-qualified deferred compensation or retirement plan or arrangement,
(ii) qualified defined contribution retirement plan or arrangement which is an Employee Pension Benefit Plan, (iii) qualified defined benefit retirement plan or arrangement which is an
Employee Pension Benefit Plan, or (iv) Employee Welfare Benefit Plan or material fringe benefit or other retirement, bonus or incentive plan or program. 

        "Employee Pension Benefit Plan" has the meaning set forth in Section 3(2) of ERISA. 

        "Employee Welfare Benefit Plan" has the meaning set forth in Section 3(1) of ERISA. 

        "Environmental, Health and Safety Requirements" means all federal, state, local and foreign statutes, regulations, ordinances and other
provisions having the force or effect of law, all judicial and administrative orders and determinations, all contractual obligations and all common law concerning public health and safety, worker
health and safety, and pollution or protection of the environment, each as amended and as now or hereafter in effect. 

        "ERISA" means the Employee Retirement Income Security Act of 1974, as amended. 

        "ERISA Affiliate" means each entity which is treated as a single employer with the Agencies for purposes of Code Section 414. 

        "Expirations" means (i) all records of the Agencies consisting of (a) any insurance expiration lists and/or customer lists,
(b) copies of insurance policies issued through the Agencies to customers, and (c) any other records containing the dates of the insurance policies issued through the Agencies, the 

names
of the customers, the dates of the policies' expirations, the amounts of insurance, the amounts of the premiums, the properties covered, and the terms of all such insurance; (ii) all
agreements and contracts (including implied or quantum meruit contractual rights) with the Agencies' customers and other rights of the Agencies to provide its services to its customers in connection
with the operation of its Business, and all rights to and in connection with any activities commonly associated with such customer agreements and contract rights with customers; and (iii) all
files, correspondence, records and related proprietary information and material and other Intellectual Property which is necessary, helpful or related to the providing of such services described
above. 

        "Fiduciary" has the meaning set forth in Section 3(21) of ERISA. 

        "Governments" means any and all federal, state, local and foreign governments (and all agencies and instrumentalities thereof). 

        "Hazardous Materials" means any substance that has been designated by any Government whose requirements are applicable to the Agencies to
be radioactive, toxic, hazardous, or to otherwise pose potential danger to health or the environment, including, but not limited to, volatile organic compounds and all substances listed pursuant to
the federal Comprehensive Environmental Response, Compensation and Liability Act, the federal Resource Conservation Recovery Act, the federal Clean Air Act, the federal Water Pollution Control Act,
the Toxic Substance Control Act and the Occupational Safety and Health Act, as such acts are amended, and the regulations and publications promulgated pursuant to said acts, and "extremely hazardous
substances" (as said term is defined in Section 302 of the Emergency Planning and Community Right to Know Act of 1986, as amended). 

        "Intellectual Property" means (i) all inventions (whether patentable or unpatentable and whether or not reduced to practice), all
improvements thereto, and all patents, patent applications and patent disclosures, together with all reissuances, continuations, continuations in part, revisions, extensions and reexaminations
thereof, (ii) all trademarks, service marks, trade dress, logos, trade 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, (iii) all copyrightable works, all copyrights and all applications, registrations
and renewals in connection therewith, (iv) all "trade secrets" (as that term is defined in Section 10-1-761of the Official Code of Georgia Annotated) and
confidential business information (including ideas, research and development, know how, formulas, technical data, customer and supplier lists, pricing and cost information and business and marketing
plans and proposals), (v) all computer software (including data and related documentation), (vi) all other proprietary rights, and (vii) all copies and tangible embodiments of the
items described in (i)—(vi) above (in whatever form or medium). 

        "Knowledge" means actual knowledge after reasonable investigation, and includes constructive knowledge. 

        "Laws" means all laws (including constitutions, statutes, codes, regulations, rules, Permits, plans, injunctions, judgments, orders,
decrees, rulings and charges thereunder) of any and all Governments. 

        "Lease" means that certain real property lease by and between HMH Partnership, as the landlord, and the Agencies, as the tenant, dated
April 1, 2001, related to the property located at 3205 Salem Road, Conyers, Georgia 30013. 

        "Liability" means any liability (whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued
or unaccrued, whether liquidated or unliquidated, and whether due or to become due). 

        "Losses" means any and all direct or indirect demands, claims, payments, obligations, recoveries, deficiencies, fines, penalties,
interest, assessments, Actions, causes of action, suits, losses, diminution in the value of any of the Acquired Assets, compensatory, punitive, exemplary or consequential damages (including, without
limitation, lost income and profits and interruptions of business), Liabilities, costs and expenses (including, without limitation, interest, penalties and reasonable attorneys' fees and expenses),
whether accrued, absolute, contingent, known, unknown or otherwise. 

        "Material Adverse Effect" means a material adverse effect on the business, operations, affairs, prospects or condition (financial or
otherwise) of the Agencies or on its properties or assets taken as a whole. As used herein, Material Adverse Effect shall mean a negative impact on the Agencies or on its properties or assets equal to
or greater than $10,000.00. 

        "Multiemployer Plan" has the meaning set forth in Section 3(37) of ERISA. 

        "Ordinary Course of Business" means the ordinary course of business consistent with past custom and practice (including with respect to
quantity and frequency). 

        "PBGC" means the Pension Benefit Guaranty Corporation. 

        "Permits" means all franchises, certificates, licenses, permits, clearances, consents and other authorizations from Governments that are
necessary for (i) the continued ownership, maintenance and operation of the Business, as currently being operated and conducted, (ii) the continued operation, use and ownership of the
Acquired Assets, as currently being operated and used, and (iii) the servicing of the Expirations, as currently being serviced. 

        "Person" means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization or a Government. 

        "Prohibited Transaction" has the meaning set forth in Section 406 of ERISA and Section 4975 of the Code. 

        "Purchase Agreements" mean, collectively, this Agreement and all of the other agreements and documents to be entered into and signed in
connection herewith. 

        "Reportable Event" has the meaning set forth in Section 4043 of ERISA. 

        "Sale" means (a) a merger, combination, consolidation or similar business transaction involving the Acquiror, in which the
surviving entity is not the Acquiror or a shareholder or an Affiliate thereof, and in which none of the then current shareholders or Affiliates of the Acquiror, individually or as a group, are the
holders of any of the issued and outstanding securities of the surviving entity; (2) the sale by the Acquiror of substantially all of its assets to an acquiring entity which is not a
shareholder or an Affiliate of the Acquiror and in which none of the then current shareholders or Affiliates of the Acquiror, individually or as a group, are the holders of any of the issued and
outstanding securities of the acquiring entity; or (3) the sale by all of the then current shareholders of the Acquiror of all of the issued and outstanding capital stock of the Acquiror to an
acquiring entity which is not a shareholder or an Affiliate of Acquiror and in which none of the then current shareholders or Affiliates of the Acquiror, individually or as a group, are the holders of
any of the issued and outstanding securities of the acquiring entity. 

        "Securities Act" means the Securities Act of 1933, as amended and as now or hereafter in effect. 

        "Security
Interest" means any mortgage, pledge, lien, encumbrance, charge or other security interest, other than (i) mechanic's, materialmen's and similar liens, (ii) liens
for Taxes not yet due and payable or for Taxes that the taxpayer is contesting in good faith through appropriate proceedings, (iii) purchase money liens and liens securing rental payments under
capital lease arrangements, and (iv) other liens
arising in the Ordinary Course of Business and not incurred in connection with the borrowing of money. 

        "Stock" means the no par value common stock of the Acquiror's parent corporation, Main Street Banks, Inc. 

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

        "Tangible Net Worth" means the total assets of the applicable organization, less (1) the total liabilities of such organization,
(2) the intangible assets of the organization, and (3) any unbooked 

liabilities
of the organization (including without limitation, in the case of the Agencies, any contingent liability to Ken Andrews for the purchase of a book of business from him), calculated on a
modified cash basis. In calculating Tangible Net Worth of the Agencies as of the Closing Date, the Parties shall exclude from total assets any accounts receivable which are not collected within ninety
(90) days after the Closing Date. 

        "Tax" means any federal, state, local or foreign income, gross receipts, surplus lines, license, payroll, employment, excise, severance,
stamp, documentary, occupation, premium, windfall profits, environmental, customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real
property, personal property, sales, use, transfer, registration, value added, alternative or add on minimum, estimated or other tax of any kind whatsoever, including any interest, penalty or addition
thereto, whether disputed or not. 

        "Tax Return" means any return, declaration, report, claim for refund or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof. 

 
 

ARTICLE 2. BASIC TRANSACTION    
    

        2.1    Purchase and Sale of the Acquired Assets and the Shareholders' Personal
Goodwill.    On and subject to the terms and conditions of this Agreement, at the Closing (a) the Acquiror shall purchase from the Agencies, and the Agencies
shall sell, assign, transfer, convey and deliver to the Acquiror, all of the Acquired Assets, for the consideration specified below in this Article 2, free and clear of any and all Security
Interests, other than the Assumed Liabilities; and (b) the Acquiror shall purchase from the Shareholders, and the Shareholders shall sell, assign, transfer, convey and deliver to the Acquiror,
all of the Shareholders' personal goodwill related to the Agencies and the Business, for the consideration specified below in this Article 2, free and clear of any and all Security Interests. 

        2.2    Assumption of the Assumed Liabilities.    On and subject to the
terms and conditions of this Agreement, at the Closing the Acquiror shall assume and become responsible for all of those liabilities of the Agencies set forth on  Schedule 2 attached hereto
(collectively, the "Assumed Liabilities"). Except for the Assumed
Liabilities, nothing in this Agreement, or any other document, contract or agreement entered into in connection herewith shall in any way obligate the Acquiror for any Liabilities, obligations or
charges of the Agencies or of the Shareholders, including, but without limitation, any Liabilities attributable to Environmental, Health and Safety Requirements, Liabilities attributable to the
Agencies Employee Benefit Plans, or Liabilities or charges for the Agencies' Taxes, including but not limited to the Taxes or recording fees arising out of the sale or transfer of the Acquired Assets.
It is specifically understood and agreed to by the Parties that the Acquiror is not hereby assuming, and does not assume, any Liabilities, obligations or charges of the Agencies or of the
Shareholders, except for the Assumed Liabilities. All Liabilities other than the Assumed Liabilities shall remain exclusively those of the Agencies and the Shareholders, as applicable. 

        2.3    Purchase Price.    

        (a)   In
consideration for the sale and transfer of the Acquired Assets by the Agencies and the personal goodwill by the Shareholders to the Acquiror, on and subject to the
terms and conditions of this Agreement, the Acquiror shall convey (i) to BMIA shares of Stock having a cumulative Average Price equal to Five Million, One Hundred
Forty-Eight Thousand, Nine Hundred Sixty and 00/100 Dollars ($5,148,960.00) and to MIA shares of Stock having a cumulative Average Price equal to One
Million, Six Hundred Fifty-One Thousand Forty and 00/100 Dollars ($1,651,040.00)for a total of Six Million Eight Hundred Thousand and 00/100
Dollars ($6,800,000.00) (the "Base Purchase Price"), plus (ii) to designated Shareholders a potential cash
earn-out of up to an additional One Million Two Hundred Thousand and 00/100 Dollars ($1,200,000.00)the
("Earn-Out") (the Base Purchase Price and the Earn-Out are collectively referred to as the "Purchase
Price"). 

        (b)   The
Base Purchase Price shall be paid as follows: (i) at the Closing the Acquiror shall issue to BMIA Stock having a cumulative Average Price equal to  Four Million, Seven Hundred Seventy  

 Thousand, Three Hundred Sixty and 00/100 Dollars ($4,770,360) and to MIA Stock having a cumulative Average Price equal to One Million, Five Hundred
Twenty Nine Thousand six Hundred Forty and 00/100 Dollars ($1,529,640) for a total of Six Million Three Hundred Thousand and 00/100 Dollars
($6,300,000.00) (the "Initial Payment"); and (ii) the balance of the Base Purchase Price (the
"Escrow Shares") shall be paid pursuant to Section 2.4 below. 

        (c)   The
Earn-Out portion of the Purchase Price shall be calculated and paid pursuant to Article 3 below. 

        (d)   At
the Closing, the Stock will be in unregistered form, provided, however, Main Street Banks, Inc., will, at its expense, register the Stock by initiating a
Form S-3 registration process within two (2) business days after the Closing and will diligently pursue that registration process to its conclusion in as prompt a manner as
possible. 

        (e)   In
addition to the Purchase Price, and subject to insurance carrier determinations of "insurability," the Acquiror will obtain, at its expense, health insurance for
Moneyhan and his immediate family (as that term is defined by the provider of the health insurance), the scope and limits of such coverage to be substantially the same as that which Acquiror currently
offers its retired employees, for a period of five (5) years after the Closing Date. The Acquiror will also arrange for Moneyhan, at his option and expense, to continue such health insurance
coverage for up to an additional two (2) years after completion of such five (5) year period. 

        2.4    Post-Closing Adjustments to Purchase Price.    

        (a)   The
Purchase Price has been agreed to by the Parties hereto based upon the representations by the Agencies and the Shareholders that the Tangible Net Worth of the
Agencies as of the Closing Date (calculated in the same manner that the Tangible Net Worth was calculated in preparing the August 31, 2003 balance sheet of the Agencies) was at least  negative Four Hundred Ninety-Four
Thousand One Hundred Sixty-Four and 00/100 Dollars (-$494,164.00) (the
"Minimum Tangible Net Worth"). 

        (b)   As
promptly as practicable, but not later than ninety (90) days after the Closing Date, the Acquiror will cause to be prepared and delivered to the Agencies and
the Shareholders combined balance sheets for the Agencies as of the Closing Date (collectively the "Closing Balance Sheet"), and a certificate based on
such Closing Balance Sheet setting forth the Acquiror's calculation of the Tangible Net Worth of the Agencies. The Closing Balance Sheet shall fairly present the consolidated financial position of the
Agencies at the close of business on the Closing Date, prepared on a modified cash basis in accordance with general industry standards, applied on basis consistent with those used in the preparation
of the Most Recent Financial Statements (as defined below). The Closing Balance Sheet shall not include any premiums or other amounts payable or to be
payable to the Agencies for insurance policies having an effective date after the Closing Date. The Closing Balance Sheet shall be deemed final upon the earliest of (i) the date on which
Acquiror and the Shareholders jointly agree that such documents are final, (ii) the tenth (10th) day after delivery of such documents pursuant to this Section 2.4(b), if the Shareholders
have not delivered a notice to Acquiror expressing disagreement with such calculations and setting forth their calculations of such amount(s), or (iii) the date on which all disputes relating
to such statements and calculations between the parties are resolved in accordance with Section 2.4(c). If the Shareholders deliver a notice of disagreement pursuant to this
Section 2.4(b), such notice shall specify those items or amounts as to which they disagree, and they shall be deemed to have agreed with all other items and amounts contained in the Closing
Balance Sheet and the calculation of Tangible Net Worth delivered pursuant to Section 2.4(b) (except to the extent resolution of the items or amounts to which the Shareholders or Acquiror
express disagreement requires conforming changes to other items and amounts contained in the Closing Balance Sheet or the calculation of the Tangible Net Worth). 

        (c)   If
the Shareholders shall deliver a notice of disagreement pursuant to Section 2.4(b), the Shareholders and Acquiror shall, during the thirty (30) days
following such delivery (the "Discussion Period"), use their reasonable efforts to reach agreement on the disputed items or amounts (the 

"Disputed Amounts"). If at the conclusion of the Discussion Period the Shareholders and Acquiror are unable to reach such agreement, they shall promptly
thereafter submit such matter to an independent accountant agreed upon by the parties for determination. In making such determination, such independent accountant shall act as an expert and not an
arbitrator and shall consider only the disputed amounts, solely in accordance with the terms of this Agreement. Such independent accountant shall deliver to the Shareholders and Acquiror, as promptly
as practicable, a report setting forth such determination. Such report shall be final and binding upon the Shareholders and Acquiror. The cost of such review and report shall be borne by the
non-prevailing party as determined by such independent accountant. In the event that agreement is not reached as to an independent accountant within thirty (30) days after the
expiration of the Discussion Period, the determination as to the Disputed Amounts shall be made, and shall be binding on all parties, by the majority vote of a board of three (3) accountants,
the Acquiror appointing one (1) accountant, the Shareholders appointing one (1) accountant, and the two (2) appointed accountants appointing the third (3rd) accountant. If the two
(2) appointed accountants fail to appoint the third (3rd) accountant within twenty (20) days of their appointment, the appointment of the third (3rd) accountant shall be made by the
American Arbitration Association in accordance with its rules then obtaining. The Acquiror and the Shareholders shall each be responsible for the fees and costs charged by the accountant selected by
them and for one-half (1/2) of the fees and costs of the third accountant. After all three accountants have been appointed, they shall have no more than sixty
(60) days to make a determination regarding the Disputed Amounts. 

        (d)   The
Shareholders and Acquiror agree that they will, and will cause their respective independent accountants to, cooperate and assist in the preparation of the Closing
Balance Sheet and the calculation of Tangible Net Worth (including the identification of any possible disputed amounts) and in the conduct of the reviews referred to in this Section 2.4,
including, without limitation, making available, to the extent necessary, relevant books, records, working papers, analyses and schedules, and permitting representatives of the parties to consult with
the respective employees, auditors, actuaries, attorneys and agents of the Agencies and Acquiror. 

        (e)   If
Tangible Net Worth is less than the Minimum Tangible Net Worth, the Acquiror shall remove from the Escrow Shares Stock having a cumulative Average Price equal to the
amount of the shortfall and promptly remit the balance of the Escrow Shares to the Agencies in the same pro rata amounts as the Initial Payment. If the shortfall is greater than the cumulative Average
Price of all of the Escrow Shares, the Acquiror shall retain all of the Escrow Shares and the Agencies shall keep the Initial Payment. 

        2.5    Fractional.    Notwithstanding any other provision of this
Agreement, if the Agencies would otherwise have been entitled to receive a fraction of a share of Stock in lieu thereof, the Agencies shall receive cash (without interest) in an amount equal to such
fractional part of a share of Stock. No such holder will be entitled to dividends, voting rights, or any other rights as a shareholder in respect of any fractional shares. 

        2.6    The Closing.    The closing of the transactions contemplated by
this Agreement (the "Closing") is to take place at the offices of Main Street Bank, 1109 Floyd Street, Covington, Georgia 30014, commencing at
10:00 a.m.. local time on January 9, 2004. Notwithstanding any provision of this Agreement or any of the other Purchase Agreements to the contrary, (a) all representations and
warranties of the Parties set forth in this Agreement shall be deemed to have been made at 10:00 a.m. local time on the Closing Date, and (b), except as provided in (a) above, the
Closing shall be deemed to have occurred and to be effective for all business, accounting, financial, tax, legal and other purposes as of 12:01 a.m. on the day after the Closing Date. 

        2.7    Allocation of Purchase Price.    The Parties agree to allocate
the Purchase Price (and all other capitalizable costs) among the Acquired Assets for all purposes (including financial, accounting, and tax purposes) and Shareholders personal goodwill in accordance
with the allocation schedule attached hereto as Schedule 4. 

 
 

ARTICLE 3. EARN-OUT PROVISIONS    
    

        3.1    Potential Earn-Out Amount.    As described in
Article 2 above, during the Earn-Out Period, and subject to the terms of the Employment Agreements as contemplated in Section 8.8 below, Hatten, Hayes, and such other
individuals designated by them shall be entitled to receive the Earn-Out in accordance with the terms set forth below. 

        3.2    Annual Participants.    In absence of any agreement by Hayes
and Hatten to the contrary, Hayes shall be entitled to receive two-thirds (2/3) of all Earn-Out payments and Hatten shall be entitled to receive
one-third (1/3) of all such payments. On or before the first day of each calendar year of the Earn-Out Period, Hatten and Hayes shall designate to the Acquiror
in writing those persons in addition to themselves, if any, who will be eligible to receive a portion of the Earn-Out payment for the upcoming year and the percentage of the total payment
each person is to receive. In the absence of any agreement by Hayes and Hatten to the contrary, any payments made to other persons shall be made pro rata out of their respective shares of the
Earn- Out payment for the year in question. In the event any of the participants (other than Hatten or Hayes) shall leave Acquiror's employ during such year, Hatten and Hayes shall be
entitled to reapportion the payment allocation for such year, in such manner as they may see fit (subject to any agreements in place with the departing participant). 

        3.3    Target Annual Payment.    Each year during the
Earn-Out Period, the target annual payment (the "Target Annual Payment") will be equal to (1) the percentage of the Earn-Out Period which will be complete as of the last
day of such calendar year (i.e,, in year 1 - 20%, year 2 - 40%), times (2) One Million Two Hundred Thousand Dollars ($1,200,000), less
(3) the total Earn-Out payments which have been previously made. This formula is designed such that, in the event the participants fail to receive the full Target Payment for a
given year during the Earn-Out Period (other than the last year), they can recoup that unreceived amount in the event they fully satisfy either of the above performance criteria in a
subsequent year of the Earn-Out Period. 

        3.4    Annual Payment Calculation.    In the event either of the two
performance criteria described in Section 3.5 below are met, the participants will be entitled to receive the full Target Annual Payment for such year.    In the event neither of
the performance criteria are met, the Acquiror shall determine under which criteria the participants would receive the largest payment, and that is the amount that will be paid to the participants. In
the event of a Change of Control (as defined in the Employment Agreements referenced in Section 8.6 below), the participants will be entitled to cumulative, annual minimum Earn-Out
payments equal to (1) in the year of the Change of Control, $240,000 times the percentage of the calendar year remaining after the Change of Control (i.e, if the Change of Control occurs on
February 1, the participants will receive a minimum Earn-Out payment of $240,000 × (365-31)/365 =$219,616.84); and (2) in the remaining
years of the Earn-Out Period, $240,000.
Payment of any sums due to the participants will be made within sixty (60) days after the end of the calendar year for which such sums are owed to the participants. 

        3.5    Earn-Out Performance Criteria.    

        (a)   Acquired Asset Test.    The participants will be entitled to receive the full Target Annual Payment if the
cumulative gross revenues received by the Acquiror that are properly allocable to the Acquired Assets to date during the Earn-Out Period meet or exceed the amount specified in  Schedule 5. If the
total revenues received are less than such amount, the Earn-Out payment will be determined by subtracting from the
Target Annual Payment the product of (1) 2.56 times (2) the amount of the shortfall. Acquiror shall assign a separate code, use a separate accounting system, or utilize some other method
to properly identify and segregate the Acquired Assets and to properly identify revenues generated by those assets. 

        (b)   Total Operations Test.    The participants will be entitled to receive the full Target Annual Payment if the
cumulative EBITDA for all of the Acquiror's insurance-related business activities (including the Acquired Assets) for the Earn-Out Period to-date meets or exceeds the
applicable Target EBITDA specified in Schedule 6. If such activities show a cumulative EBITDA for the Earn-Out Period
to-date of less than the applicable minimum EBITDA specified in Schedule 6, the participants 

will
not be entitled to an Earn-Out payment for such year. In the event such activities show a cumulative EBITDA for the Earn-Out Period to-date between the Minimum
EBITDA and the Target EBITDA, the Earn-Out payment will be calculated by multiplying the Target Annual Payment times the applicable percentage specified in  Schedule 6. 

        3.6    Inclusion in Purchase Price.    As prescribed in
Article 2 above, the parties agree that, to the extent allowed by law, any Earn-Out payments received by Hatten or Hayes will be deemed to be part of the Purchase Price. 

 
 

ARTICLE 4. REPRESENTATIONS AND WARRANTIES
  OF THE AGENCIES AND THE SHAREHOLDERS    
    

        The Agencies and the Shareholders jointly and severally represent and warrant to the Acquiror that the statements contained in this Article 4 are correct
and complete as of the date hereof and as of the Closing, except as set forth in the disclosure schedule accompanying this Agreement (the "Disclosure
Schedule"). The Disclosure Schedule will be arranged in sections corresponding to the lettered and numbered sections contained in this Article 4. 

        4.1    Organization of the Agencies.    Each Agency is a corporation
duly organized, validly existing, and in good standing under the laws of the State of Georgia. Each Agency conducts business in the other states set forth in  Section 4.1 of the Disclosure Schedule
and is properly qualified to do so under the laws of each such other state. Neither Agency conducts
business in any other state, and its failure to be qualified to do business in any other state will not have a Material Adverse Effect. 

        4.2    Authorizations.    Each Agency has full power and authority
(including full corporate power and authority) to execute and deliver the Purchase Agreement and each of the agreements related thereto to which the Agencies are a party, and to perform their
obligations thereunder. Without limiting the generality of the foregoing, the Board of Directors of each Agency has duly authorized the execution, delivery and performance of the Purchase Agreement,
and each of the agreements related thereto, to which the Agencies are a party, by such Agency. Each Shareholder has full power and authority to execute and deliver the Purchase Agreement and each of
the agreements related thereto to which the Shareholder is a party, and to perform such Shareholder's obligations thereunder. The Purchase Agreement, and each of the agreements related thereto,
constitutes the valid and legally binding obligation of the Agencies and the Shareholders, enforceable in accordance with its terms and conditions, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors' rights generally, or by the exercise of judicial discretion in accordance with general equitable principles. 

        4.3    Noncontravention.    Neither the execution and the delivery of
the Purchase Agreement by the Agencies and the Shareholders, nor the consummation by the Agencies and the Shareholders of the transactions contemplated thereby, will (i) violate any Law, rule,
injunction, judgment, order, decree, stipulation, ruling, charge or other restriction of any Government or court to which the Agencies or the Shareholders are subject, or any provision of the charter
or bylaws of the Agencies, or (ii) except as set forth in Section 4.3 of the Disclosure Schedule, conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any Person the right to accelerate, terminate, modify or cancel, or require any notice under, any agreement, contract, lease,
Permit, instrument or other arrangement to which the Agencies or the Shareholders are a party, or by which the Agencies or the Shareholders are bound or to which the Acquired Assets or any other
assets of the Agencies or the Shareholders are subject (or result in the imposition of any Security Interest upon the Acquired Assets or any other assets of the Agencies or the Shareholders). Except
as otherwise described in this Agreement, and except as set forth in Section 4.3 of the Disclosure Schedule, the Agencies do not need to give any
notice to, make any filing with, or obtain any authorization, consent or approval of any Government in order for the Parties to consummate the transactions contemplated by this Agreement. 

        4.4    Title to the Stock.    The Shareholders own good and marketable
record title to, and all beneficial interest in, all of the shares of issued and outstanding capital stock of the Agencies, free and 

clear
of all Security Interests. No other Person has any option, warrant or other right to acquire any shares of the capital stock of the Agencies, or any securities convertible into any such shares. 

        4.5    Title to the Assets.    The Agencies have good and marketable
title to, or a valid leasehold interest in, the Acquired Assets and all of the other properties and assets used by them, located on its premises, or shown on the October 31, 2003, balance sheet
contained within the Most Recent Financial Statements (the "Most Recent Balance Sheet") or acquired after the date thereof, free and clear of all
Security Interests, other than those set forth on the Most Recent Balance Sheet and Section 4.5 of the Disclosure Schedule. The Acquired Assets constitute all of the assets necessary to conduct
the Business as conducted by the Agencies. 

        4.6    Subsidiaries.    The Agencies have no Subsidiaries. 

        4.7    Financial Statements; Net Commissions and Fees; Tangible Net
Worth.    Attached hereto as Exhibit B are the following financial statements (collectively, the
"Financial Statements"): (i) audited financial statements, including a balance sheet, income statement and a statement of cash flows as of and
for the fiscal years ended December 31, 2002, December 31, 2001 and December 31, 2000 for the Agencies; and (ii) unaudited financial statements, including a balance sheet,
an income statement and a statement of cash flows (the "Most Recent Financial Statements") as of and for the eleven (11) month period ended
November 30, 2003 (the "Most Recent Fiscal Month End") for the Agencies. The Financial Statements (including the notes thereto) were prepared on
a modified cash basis applied on a consistent basis throughout the periods covered thereby (and the Agencies and the Shareholders are not aware of any material modifications that should be made to
those statements in order for them to be correct and complete in all material respects, and are consistent with the books and records of the Agencies (which books and records are correct and complete
in all material respects). The Financial Statements and Most Recent Financial Statements do not include any premiums or other amounts payable or to be payable to Agencies for insurance policies having
an effective date after the date of such statements. No material portion of the revenues reflected on the Financial Statements are owned or controlled by an insurance agent or broker other than the
Agencies. 

        4.8    Events Subsequent to the Most Recent Fiscal Month End.    Since
the Most Recent Fiscal Month End, there has not been any adverse change in the Business, financial condition, operations, results of operations or future prospects of the Agencies. Without limiting
the generality of the foregoing, since that date: (i) neither Agency has sold, leased, transferred, pledged or assigned any of their assets, tangible or intangible, other than for a fair
consideration in the Ordinary Course of Business; (ii) neither Agency has entered into (or issued), accelerated, terminated, modified or canceled any agreement, contract, lease, note, bond,
debt security or license either involving more than $5,000 or outside the Ordinary Course of Business; (iii) neither Agency has made any capital expenditure (or series of related capital
expenditures) either involving more than $5,000 or outside the Ordinary Course of Business; (iv) neither Agency has delayed or postponed the payment of accounts payable and other Liabilities
outside the Ordinary Course of Business; (v) neither Agency has canceled, compromised, waived or released any right or claim (or series of related rights and claims) either involving more than
$5,000 or outside the Ordinary Course of Business; (vi) neither Agency has issued, sold, disposed of or granted any options, warrants or other rights to purchase any of its capital stock, or
declared, set aside or paid any dividend or made any distribution with respect to its capital stock (whether in cash or in kind), or redeemed, purchased or otherwise acquired any of its capital stock;
(vii) neither Agency has experienced any damage, destruction or loss (whether or not covered by insurance) to its assets; (viii) neither Agency has suffered the discontinuance or
threatened discontinuance of any Business relationships with any insurance carriers or other suppliers of the Agencies, or, other than in the Ordinary Course of Business, with any policyholders or
other customers of the Agencies; (ix) neither Agency has made any loan to, or entered into any other transaction with, any of their directors, officers or employees outside the Ordinary Course
of Business; (x) neither Agency has (1) entered into any employment or consulting contract or collective bargaining agreement, written or oral, or modified the terms of any existing such
contract or agreement; (2) granted any increase in the base compensation of any of its directors, officers or employees (or made any other change in employment terms for such persons) outside
the Ordinary Course of Business; or (3) adopted, amended, modified or terminated 

any
Employee Benefit Plan; (xi) there has not been any other occurrence, event, incident, action, failure to act or transaction outside the Ordinary Course of Business involving either Agency;
and (xii) neither Agency has committed to any of the foregoing described in (i)—(xi) above. 

        4.9    Undisclosed Liabilities.    Except as set forth on  Section 4.9 of the Disclosure Schedule, neither Agency has any Liability (and there is no Basis for any present or future Action against the
Agencies giving rise to any Liability), except for (i) Liabilities set forth on the face of the Most Recent Balance Sheet, (ii) Liabilities which have arisen after the Most Recent Fiscal
Month End in the Ordinary Course of Business (none of which results from, arises out of, relates to, is in the nature of or was caused by any breach of contract, breach of warranty, tort or
infringement or violation of law), and (iii) Liabilities consisting of legal and accounting fees and expenses incurred in connection with the consummation of this transaction. 

        4.10    Legal Compliance.    Each of the Agencies, their predecessors
and Affiliates have complied with all applicable Laws, except where the failure to so comply would not have a Material Adverse Effect; and no Action has been filed or commenced against any of them
alleging any failure so to comply. The Shareholders and the directors, officers and management employees of the Agencies have no Knowledge of any Basis which could result in (i) any failure by
the Acquiror (based upon its acquisition of the Acquired Assets) or its Affiliates to comply after the Closing with any and all applicable Laws of
any Governments, or (ii) any Action being filed or commenced after the Closing against the Acquiror or any of its Affiliates alleging any failure to so comply. 

        4.11    Tax Matters.    Each Agency has filed all Tax Returns it has
been required to file. Except as set forth in Section 4.11 of the Disclosure Schedule, all such Tax Returns were correct and complete in all
material respects. Except as set forth in Section 4.11 of the Disclosure Schedule, all Taxes owed by the Agencies (whether or not shown on any
Tax Return) have been paid. The Agencies are not currently the beneficiary of any extension of time within which to file any Tax Return. No claim has ever been made by any Government in a jurisdiction
where the Agencies do not file Tax Returns that they are or may be subject to taxation by that jurisdiction. The Agencies have withheld and paid all Taxes required to have been withheld and paid in
connection with amounts paid or owing to any employee, independent contractor, creditor, Shareholders or other third party. The Shareholders and the directors and officers (and employees responsible
for Tax matters) of the Agencies do not expect any authority to assess any additional Taxes for any period for which Tax Returns have been filed, except as set forth on  Section 4.11 of the
Disclosure Schedule. Except as set forth in Section 4.11 of the
Disclosure Schedule, there is no dispute or claim concerning any Tax Liability of the Agencies either (i) claimed or raised by any Government or (ii) as to which the Shareholders or any
of the directors or officers (or employees responsible for Tax matters) of the Agencies have Knowledge based upon personal contact with any agent of such Government.  Section 4.11 of the Disclosure
Schedule lists all income Tax Returns filed with respect to the Agencies for taxable periods ended on or after
December 31, 2002, indicates those Tax Returns that have been audited, and indicates those Tax Returns that currently are the subject of audit. The Agencies have delivered to the Acquiror
correct and complete copies of all federal and state income Tax Returns, examination reports, and statements of deficiencies assessed against or agreed to by the Agencies since December 31,
1999. The unpaid Taxes of the Agencies (1) did not, as of the Most Recent Fiscal Month End, exceed the reserve for Tax Liability (rather than any reserve for deferred Taxes established to
reflect timing differences between book and tax income) set forth on the face of the Most Recent Balance Sheet, and (2) do not exceed that reserve as adjusted for the passage of time through
the Closing in accordance with the past custom and practice of the Agencies in filing its Tax Returns, except as set forth on Section 4.11 of the
Disclosure Schedule. The Agencies have not waived any statute of limitations in respect of Taxes or agreed to any extension of time with respect to a Tax assessment or deficiency. The Agencies have
not made any payments of the type described in Section 280G of the Code. 

        4.12    Real Property.    Neither Agency owns any real property.  Section 4.12 of the Disclosure Schedule lists and describes briefly the Lease and all other real property leased or subleased to, or otherwise
used by each of the Agencies. The Agencies have delivered to the Acquiror correct and complete copies of the Lease and all other leases and subleases (as amended to date) required to be 

listed
in Section 4.12 of the Disclosure Schedule. With respect to the Lease and each such other lease and sublease, except as described to the
contrary in Section 4.12 of the Disclosure Schedule: (i) the lease or sublease is legal, valid, binding, enforceable and in full force and
effect; (ii) the lease or sublease will continue to be legal, valid, binding, enforceable and in full force and effect on identical terms following the consummation of the transactions
contemplated hereby; (iii) no party to the lease or sublease is in breach or default thereof, and no event has occurred which, with notice or lapse of time, would constitute a breach or default
thereof or permit termination, modification or acceleration thereunder; (iv) there are no disputes, oral agreements or forbearance programs in effect as to the lease or sublease, and no party
to the lease or sublease has repudiated any provision thereof; (v) with respect to each sublease, the representations and warranties set forth in subsections (i) through
(iv) above are true and correct with respect to the underlying lease; (vi) neither Agency has assigned, transferred, conveyed, mortgaged, deeded in trust or encumbered any interest in
the leasehold or subleasehold; (vii) to the Knowledge of the Agencies and the Shareholders, all facilities leased or subleased thereunder have received all approvals of all applicable
Governments (including Permits) required in connection with the operation thereof, and have been operated and maintained in accordance with applicable Laws; (viii) all facilities leased or
subleased thereunder are supplied with utilities and other services necessary for the operation of said facilities; (ix) to the Knowledge of the Agencies and the Shareholders, no Hazardous
Material has been present in, on or under such real property at any time prior to the Closing Date, including any land and the improvements, ground water and surface water thereof, except in
accordance with applicable Laws; and (x) to the Knowledge of the Agencies and the Shareholders, there are and have been no storage tanks located on or under such property. With respect to each
such property used by but not leased to or subleased to, the Agencies, Section 4.12 of the Disclosure Schedule states the nature and terms of the
relationship pursuant to which such property is used. 

        4.13    Intellectual Property.    

        (a)   The
Agencies own or have the right to use pursuant to license, sublicense, agreement or permission all Intellectual Property necessary or desirable for the operation of
the Business as presently conducted. Except as set forth in Section 4.13 of the Disclosure Schedule, each item of Intellectual Property owned or
used by the Agencies immediately prior to the Closing hereunder is freely assignable to the Acquiror, and will be owned or available for use by the Acquiror on identical terms and conditions
immediately subsequent to the Closing hereunder. 

        (b)   The
Agencies have not interfered with, infringed upon, misappropriated or otherwise come into conflict with any Intellectual Property rights of third parties, and
neither the Shareholders nor the Agencies have ever received any charge, complaint, claim, demand or notice alleging any such interference, infringement, misappropriation or violation (including any
claim that the Agencies must license or refrain from using any Intellectual Property rights of any third party). Furthermore, except as set forth in  Section 4.13 of the Disclosure Schedule, neither
the Agencies nor the Acquiror will interfere with, infringe upon, misappropriate or otherwise
come into conflict with, any Intellectual Property rights of third parties as a result of the Acquiror's continued operation of the Business as presently conducted. To the Knowledge of the Agencies
and the Shareholders, no third party has interfered with, infringed upon, misappropriated or otherwise come into conflict with any Intellectual Property rights of the Agencies. 

        4.14    Tangible Assets and Receivables.    The Agencies own, hold or
lease all buildings, vehicles, equipment, other tangible assets, Permits and agreements necessary for the conduct of the Business as presently conducted. Each such tangible asset is free from defects
(the existence of which would have a Material Adverse Effect), has been maintained in accordance with normal industry practice, is in good operating condition and repair (subject to normal wear and
tear), and is suitable for the purposes for which it is presently (and presently proposed to be) used. There are no defects in the assets of the Agencies which affect the plumbing, electrical, sewer,
heating, ventilation or air conditioning systems thereof, and which are likely to have a Material Adverse Effect. All Receivables are reflected properly on their books and records, are valid
receivables subject to no known setoffs or counterclaims, are current and are collectible in accordance with their terms at their recorded amounts, subject only to the 

reserve
for bad debts (if any) set forth on the face of the Most Recent Balance Sheet as adjusted for the passage of time through the Closing Date in accordance with the past custom and practice of
the Agencies. 

        4.15    Contracts.    Section 4.15
of the Disclosure Schedule lists (and, as to oral contracts, describes) all material oral and written contracts and other agreements to which the Agencies are a party. For purposes of this
Section 4.15, a contract or agreement is deemed to be "material" only if it belongs to any of the following categories: 

        (a)   any
agreement (or group of related agreements) for the lease of real or personal property to or from any Person providing for lease payments in excess of $5,000 per
annum; 

        (b)   any
agreement (or group of related agreements) for the purchase or sale of personal property, or for the furnishing or receipt of services, the performance of which will
extend over a period of more than one year, or involve consideration in excess of $5,000; 

        (c)   any
agreement (or group of related agreements) under which the Agencies have created, incurred, assumed or guaranteed any indebtedness for borrowed money, or any
capitalized lease obligation, in excess of $5,000 or under which the Agencies have imposed a Security Interest on any of its assets, tangible or intangible; 

        (d)   any
agreement concerning confidentiality or noncompetition; 

        (e)   any
agreement with the Shareholders and/or the Shareholders' Affiliates; 

        (f)    any
profit sharing, stock option, stock purchase, stock appreciation rights, deferred compensation, severance or other Employee Benefit Plan; 

        (g)   any
agreement for the employment of any individual on a full time, part time, consulting, or other basis providing annual compensation in excess of $25,000 or providing
severance benefits; 

        (h)   any
agreement under which the Agencies have advanced or loaned any amount to any of its directors, officers and employees outside the Ordinary Course of Business; 

        (i)    any
agreement under which the consequences of a default or termination could have a Material Adverse Effect; or 

        (j)    any
other agreement (or group of related agreements) the performance of which involves consideration in excess of $5,000. 

        The
Agencies have delivered to the Acquiror a correct and complete copy of each written contract and other agreement (as amended to date) required to be listed in  Section 4.15 of the Disclosure
Schedule. With respect to each such agreement: (i) the agreement is legal, valid, binding, enforceable and
in full force and effect; (ii) the agreement will continue to be legal, valid, binding, enforceable and in full force and effect on identical terms following the consummation of the
transactions contemplated hereby, [except for the agreements between the Agencies and the insurance companies whose products they sell, consent to the assignment of which to Acquiror has
not been obtained by Agencies]; (iii) no party thereto is in breach or default thereof, and no event has occurred which with notice or lapse of time would constitute a breach or
default thereof, or permit termination, modification or acceleration thereunder; and (iv) no party thereto has repudiated any provision of the agreement or threatened to terminate such
agreement. 

        4.16    Powers of Attorney.    There are no outstanding powers of
attorney executed by or on behalf of the Agencies. 

        4.17    Insurance.    Section 4.17
of the Disclosure Schedule lists each insurance policy (including policies providing property, casualty, liability and workers' compensation coverage and bond and surety arrangements) to which the
Agencies are a party, a named insured or otherwise the beneficiary of coverage, and includes the first page of the declaration evidencing each such policy. With respect to each such insurance policy:
(i) the policy is legal, valid, binding, enforceable and in full force and effect; (ii) the policy will continue to be legal, valid, binding, enforceable and in full force and effect on 

substantially
similar terms following the consummation of the transactions contemplated hereby; (iii) neither the Agencies nor, to the Knowledge of the Agencies and the Shareholders, any other
party to the policy is in breach or default thereof (including with respect to the payment of premiums or the giving of notices), and, to the Knowledge of the Agencies and the Shareholders, no event
has occurred which, with notice or the lapse of time, would constitute such a breach or default thereof, or would permit termination, modification or acceleration under the policy; and (iv) no
party to the policy has repudiated any provision thereof or threatened to terminate such policy. The Agencies have been covered during the past five (5) years by insurance in scope and amount
customary and reasonable in the opinion of the Agencies and the Shareholders for the Business and the other businesses in which they have engaged during the aforementioned period.  Section 4.17 of
the Disclosure Schedule describes any self insurance arrangements affecting the Agencies, as well as any pending claims with
respect to insurance coverage owned by the Agencies, including amounts held in reserve by the Agencies in connection with any such claim. 

        4.18    Litigation.    Section 4.18
of the Disclosure Schedule sets forth each instance in which either of the Agencies (i) is subject to any outstanding injunction, judgment, order, decree, ruling or charge or (ii) is a
party, or are threatened to be made a party, to any Action of, in or before any court, arbitrator or Government. None of such Actions could result in any adverse change in the Business, financial
condition, operations, results of operations or future prospects of the Agencies. The Shareholders and the directors and officers (and employees with responsibility for litigation matters) of the
Agencies have no reason to believe that any such Action may be brought or threatened against either Agency in the future. 

        4.19    Employees and Independent
Contractors.    Section 4.19 of the Disclosure Schedule contains a complete list of all employees and
independent contractors of the Agencies engaged in the conduct of the Business, and for each employee or independent contractor required to be listed on  Section 4.19 of the Disclosure Schedule, his
or her address, social security number, current annual base salary or hourly rate and years of
employment or engagement with the identified Agency. To the Knowledge of the Agencies and the Shareholders, no executive, key employee, group of employees, key independent contractor or group of
independent contractors has any plans to terminate employment or engagement with the Agencies (or with the Acquiror if the Acquiror employs or engages such Person). The Agencies are not a party to or
bound by any collective bargaining agreement, and has not experienced any strikes, grievances, claims of unfair labor practices or other collective bargaining disputes. The Agencies have not committed
any unfair labor practice or taken any action which would give rise to a
claim under any Law restricting discrimination in employment. The Shareholders and the directors and officers (and employees with responsibility for employment matters) of the Agencies have no
Knowledge of any organizational effort presently being made or threatened by or on behalf of any labor union with respect to employees of the Agencies. 

        4.20    Employee Benefits.    

        (a)   Section 4.20 of the Disclosure Schedule lists each Employee Benefit Plan that the Agencies maintain, to which the
Agencies contribute or have any obligation to contribute or with respect to which the Agencies have any Liability or potential Liability. 

        (b)   Each
such Employee Benefit Plan (and each related trust, insurance contract or fund) has been maintained, funded and administered in accordance with the terms of such
Employee Benefit Plan and complies in form and in operation in all respects with the applicable requirements of ERISA, the Code and all other applicable Laws. 

        (c)   All
required reports and descriptions (including annual reports (IRS Form 5500), summary annual reports and summary plan descriptions) have been timely filed
and/or distributed in accordance with the applicable requirements of ERISA and the Code with respect to each such Employee Benefit Plan. The requirements of COBRA have been met with respect to each
such Employee Benefit Plan which is an Employee Welfare Benefit Plan subject to COBRA. 

        (d)   All
contributions (including all employer contributions and employee salary reduction contributions) which are due have been made within the time period prescribed by
ERISA to each such Employee Benefit Plan which is an Employee Pension Benefit Plan, and all contributions for any period ending on or before the Closing Date which are not yet due have been made to
each such Employee Pension Benefit Plan or accrued in accordance with the past custom and practice of the Agencies. All premiums or other payments for all periods ending on or before the Closing Date
have been paid with respect to each such Employee Benefit Plan which is an Employee Welfare Benefit Plan. 

        (e)   Each
such Employee Benefit Plan which is intended to meet the requirements of a "qualified plan" under Section 401(a) of the Code has received a determination
from the Internal Revenue Service that such Employee Benefit Plan is so qualified, and nothing has occurred since the date of such determination that could adversely affect the qualified status of any
such Employee Benefit Plan. 

        (f)    The
Agencies do not maintain, does not contribute to, have no obligation to contribute to, and have no Liability or potential Liability with respect to, any Employee
Pension Benefit Plan. 

        (g)   The
Agencies have delivered to the Acquiror correct and complete copies of the plan documents and summary plan descriptions, the most recent determination letter
received from the Internal Revenue Service, the most recent annual report (IRS Form 5500, with all applicable attachments), and all related trust agreements, insurance contracts and other
funding arrangements which implement each such Employee Benefit Plan. 

        (h)   With
respect to each Employee Benefit Plan that either Agency and/or any ERISA Affiliate maintain, to which any of them contributes or has any obligation to contribute,
or with respect to which any of them has any Liability or potential Liability: (i) no such Employee Benefit Plan which is an Employee Pension Benefit Plan has been completely or partially
terminated or been the subject of a Reportable Event, and no Action by the PBGC to terminate any such Employee Pension Benefit Plan has been instituted or threatened; (ii) there have been no
Prohibited Transactions with respect to any such Employee Benefit Plan, and no Fiduciary has any Liability for breach of fiduciary duty or any other failure to act or comply in connection with the
administration or investment of the assets of any such Employee Benefit Plan; (iii) no Action with respect to the administration or the investment of the assets of any such Employee Benefit
Plan (other than routine claims for benefits) is pending or, to the best Knowledge of the Agencies and the Shareholders, threatened, and neither the Agencies nor the Shareholders have any Knowledge of
any Basis for any such Action; and (iv) the Agencies have not incurred, and neither the Agencies nor the Shareholders have any reason to expect that the Agencies will incur, any Liability to
the PBGC (other than with respect to PBGC premium payments not yet due) or otherwise under Title IV of ERISA (including any withdrawal liability as defined in Section 4201of ERISA) or under the
Code with respect to any such Employee Benefit Plan which is an Employee Pension Benefit Plan, or under COBRA with respect to any such Employee Benefit Plan which is an Employee Welfare Benefit Plan. 

        (i)    Neither
the Agencies nor any ERISA Affiliate contributes to, has any obligation to contribute to, or has any Liability (including withdrawal liability as defined in
Section 4201 of ERISA) under or with respect to any Multiemployer Plan. 

        (j)    The
Agencies do not maintain, contribute to or have any obligation to contribute to, and does not have any Liability or potential Liability with respect to, any Employee
Welfare Benefit Plan providing medical, health or life insurance or other welfare type benefits for current or future retired or terminated employees, their spouses or their dependents (other than in
accordance with COBRA). 

        4.21    Guaranties.    Except as set forth in  Section 4.21 of the Disclosure Schedule, the Agencies are not a guarantor or otherwise liable or responsible for any Liability of any other
Person. 

        4.22    Environmental, Health and Safety Matters.    To the Knowledge
of the Agencies and the Shareholders: 

        (a)   The
Agencies and their predecessors and Affiliates have complied with all Environmental, Health and Safety Requirements, and no Action has been filed or commenced
against any of them, or is threatened to be filed or commenced against any of them, alleging any failure so to comply. The Shareholders and the directors and officers (and employees with
responsibility for environmental matters) of the Agencies have no reason to believe that any such Action may be brought or threatened against the Agencies. 

        (b)   The
Agencies have no Liability for damage to any site, location or body of water (surface or subsurface), for any illness of or personal injury to any employee or other
individual, or for any other reason, under any Environmental, Health and Safety Requirements. 

        (c)   All
properties and equipment used in the Business of the Agencies, and their predecessors' and Affiliates' businesses, have been free of asbestos, PCBs, methylene
chloride, trichloroethylene, 1, 2-trans-dichloroethylene, dioxins, dibenzofurans, and all Hazardous Materials, except to the extent permitted by applicable law. 

        (d)   The
Agencies have not transported, stored, treated or disposed of, nor allowed or arranged for any third person to transport, store, treat or dispose of, (i) any
Hazardous Materials, or (ii) any other waste to or at any location designated for remedial action pursuant to the federal Comprehensive Environmental Response, Compensation and Liability Act,
as from time to time amended, or any similar Law assigning responsibility for the costs of investigating or remediating releases of contaminants into the environment. 

        4.23    Certain Business Relationships.    Neither the Shareholders
nor any of the Shareholders' Affiliates have been involved in any business arrangement or relationship with the Agencies within the past twelve (12) months which has caused or resulted in
increased gross revenues for the Agencies from the Business and which, if not continued subsequent to the Closing, will cause or result in decreased gross revenues for the Acquiror from the Business;
and except as set forth on Section 4.23 of the Disclosure Schedule, neither the Shareholders nor any of the Shareholders' Affiliates own or lease
any asset, tangible or intangible, which is used in the Business of the Agencies. Except as set forth on Section 4.23 of the Disclosure Schedule,
neither the Agencies nor the Shareholders own or have any interest in a Person (other than the Agencies) conducting any business substantially similar to the Business. 

        4.24    Permits.    The Agencies possess all Permits. Except as set
forth on Section 4.24 of the Disclosure Schedule, Section 4.24 of the Disclosure Schedule
sets forth all of the Permits and, for each Permit, accurately describes the expiration and/or renewal date thereof. Except as set forth on such  Section 4.24, each Permit is freely assignable to
the Acquiror, and consummation of the transactions contemplated hereby will not violate or
render void or terminate any such Permit. The Agencies are not in violation
of any of the Permits, and the Agencies have complied with all applicable covenants and conditions of each of the Permits. There is no Action, pending or threatened, concerning or relating to any of
the Permits. 

        4.25    Continuance of Business Relationships.    In the reasonable
opinion of the Agencies and the Shareholders, the Agencies have good working relationships in accordance with past practices with all insurance carriers and other suppliers, policyholders (including
those evidenced by the Expirations) and other customers, subcontractors, governmental regulators and other Persons with whom it conducts Business, and all such other Persons necessary or appropriate
for the normal operation of the Business. To the Knowledge of the Agencies and the Shareholders, the consummation of the transactions contemplated hereby will not result in any injury to or disruption
of any such relationships, and neither the Shareholders, nor the directors and officers of the Agencies, (i) have any Knowledge that the Acquiror will incur any costs or expenses in order to
continue such relationships as they had been maintained with the Agencies prior to the Closing, or (ii) have any Knowledge that any of such Persons described above currently intend to terminate
or materially alter such Business relationships after the 

Closing,
including, but not limited to, by failing or refusing to continue to allow the Acquiror, as successor to the Agencies, to market their insurance products and services, or by failing or
refusing to renew their existing policies evidenced by the Expirations through the Agencies. 

        4.26    Broker's Fees.    Except as set forth on  Section 4.26 of the Disclosure Schedule, neither the Agencies nor the Shareholders have any Liability or obligation to pay any fees or
commissions to any broker, finder or agent with respect to the transactions contemplated by this Agreement for which the Acquiror could become liable or obligated. 

        4.27    Ownership and Assignability of Expirations.    The Agencies
are the lawful owner of all of the Expirations, and all of such Expirations are free and clear of all Security Interests, including, but not limited to, financing arrangements (including receivables
financing), except for the inchoate security interests of the insurance companies whose products Agencies sell, as set forth in Section 4.5 of the Disclosure Schedule. There are no outstanding
rights of any kind to acquire from either the Agencies or the Shareholders, either separately or jointly, any interest whatsoever, whether current or future, in the Expirations, held by any Person
other than the Acquiror. All Expirations are freely assignable by the Agencies, and consummation of the transactions contemplated hereby will not constitute or result in a breach, violation or default
of any agreements relating to such Expirations, and such agreements and Expirations shall remain in full force and effect as if there had been no such consummation. The Agencies have from each of
their employees signed agreements (copies of which are attached as Section 4.27 of the Disclosure Schedule) confirming the Agencies' exclusive
ownership of all Expirations and limiting the ability of such employees to solicit business from the Agencies' customers. 

        4.28    Disclosure.    None of the representations, warranties or
other statements of the Agencies or the Shareholders in this Agreement (including without limitation this Article 4), the Disclosure Schedule,
the Financial Statements, or any document delivered by them in accordance with the terms hereof, contain or will contain any materially untrue or misleading statement or omits or will omit any
material fact necessary in order to make any such representation, warranty or statement, in light of the circumstances under which it is made, not misleading. 

        4.29    Investment Intention.    

        (a)   The
Agencies and the Shareholders hereby acknowledge that the shares of Stock delivered hereunder will not be registered under the Securities Act, or any state
securities act and the resale of such shares will therefore be subject to certain restrictions. The Agencies and the Shareholders further acknowledge that Acquiror's reliance upon exemptions under the
Securities Act and under any state's blue sky laws is based upon the Agencies' and Shareholders' representations, warranties and agreements contained in this Agreement. 

        (b)   The
Agencies and, subsequent to the liquidation of the Agencies, each Shareholder is acquiring the Stock for their own account, with the intention of holding the Stock,
with no present intention of dividing or allowing others to participate in this investment or of reselling or otherwise participating, directly or indirectly, in a distribution of the Stock, except as
permitted under the federal and state securities laws; and neither Agency nor any Shareholder shall make any sale, transfer or other disposition of the Stock without registration under the Securities
Act and any applicable state securities laws or unless exemptions from registration are available under those acts. 

        (c)   The
Agencies and the Shareholders are familiar with the business in which Acquiror will be engaged, and based upon their knowledge and experience in financial and
business matters, the Agencies and Shareholders are familiar with the investments of the sort which they are undertaking herein; the Agencies and Shareholders are fully aware of the problems and risks
involved in making an investment of this type and are capable of evaluating the merits and risks of this transaction. 

        (d)   The
Agencies and Shareholders have been represented by counsel and advisers, each of whom has been previously selected by the Agencies and Shareholders, as the Agencies
and Shareholders have found necessary to consult concerning this Agreement and the Stock to be issued pursuant to this Agreement. The Agencies and Shareholders and their advisers have been provided
with such financial and other information concerning Acquiror as the Agencies and Shareholders and their advisers have 

deemed
relevant with respect to the Agencies' and Shareholders' investment decisions relating to the Stock issued hereunder, and the Agencies and Shareholders and their advisers have had sufficient
and adequate time to review such information prior to making any investment decision regarding the Stock. 

        (e)   The
shares of Stock to be received by the Agencies and Shareholders were not offered to the Agencies or Shareholders by means of publicly disseminated advertisements or
sales literature, nor are the Agencies or Shareholders aware of any offers made to any other Persons by such means. 

 
 

ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF THE ACQUIROR    
    

        The Acquiror represents and warrants to the Agencies and the Shareholders that the statements contained in this Article 5 are correct and complete as of
the Closing Date, except as set forth in the Disclosure Schedule. The Disclosure Schedule will be arranged in sections corresponding to the lettered and numbered sections contained in this
Article 5. 

        5.1    Organization of the Acquiror.    The Acquiror is a corporation
duly organized, validly existing, and in good standing under the laws of the State of Georgia. 

        5.2    Authorization of Transaction.    The Acquiror has full power
and authority (including full corporate power and authority) to execute and deliver the Purchase Agreement and each of the agreements related thereto to which the Acquiror is a party, and to perform
its obligations thereunder. Without limiting the generality of the foregoing, the Board of Directors of the Acquiror has duly authorized the execution, delivery and performance of the Purchase
Agreement, and each of the agreements related thereto to which the Acquiror is a party, by the Acquiror. Without limiting the generality of the foregoing, the Board of Directors of Main Street
Banks, Inc. ("Main Street Banks"), has duly authorized the issuance of Stock in the amounts set forth in paragraph 2.3 above pursuant to
the terms and conditions of the Purchase Agreement, and each of the agreements related thereto to which the Acquiror is a party. The Purchase Agreement, and each of the agreements related thereto, to
which the Acquiror is a party, constitutes the valid and legally binding obligation of the Acquiror, enforceable in accordance with its terms and conditions, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors' rights generally, or by the exercise of judicial discretion in accordance with general equitable principles. 

        5.3    Noncontravention.    Neither the execution and the delivery of
the Purchase Agreement by the Acquiror, nor the consummation by the Acquiror of the transactions contemplated thereby, nor the issuance of Stock by Main Street Banks in the amount required by the
Purchase Agreement, will (i) violate any Law, rule, injunction, judgment, order, decree, stipulation, ruling, charge or other restriction of any Government or court to which the Acquiror or
Main Street Banks, is subject, or any provision of the charter or bylaws of the Acquiror or Main Street Banks, or (ii) conflict with, result in a breach of, constitute a default under, result
in the acceleration of, create in any Person the right to accelerate, terminate, modify or cancel, or require any notice under, any agreement, contract, lease, Permit, instrument or other arrangement
to which the Acquiror or Main Street Banks is a party, or by which the Acquiror or Main Street Banks is bound or to which the assets of the Acquiror or Main Street Banks are subject. Except as
otherwise described in this Agreement, the Acquiror and Main Street Banks do not need to give any notice to, make any filing with, or obtain any authorization, consent or
approval of any Government in order for the Parties to consummate the transactions contemplated by this Agreement. 

        5.4    Brokers' Fees.    The Acquiror has no Liability to pay any fees
or commissions to any broker, finder or agent with respect to the transactions contemplated by this Agreement for which the Agencies or the Shareholders could become liable or obligated. 

 
 

ARTICLE 6. COVENANTS OF AGENCIES PRIOR TO CLOSING    
    

        6.1    Access and Investigation.    Between the date of this Agreement
and the Closing, Agencies will (a) afford Acquiror and its representatives and advisors reasonable access to Agencies' personnel, properties, contracts, books and records, and other documents
and data, (b) furnish Acquiror and its 

representatives
and advisors with copies of all such contracts, books and records, and other existing documents and data as Acquiror may reasonably request, and (c) furnish Acquiror and
Acquiror's representatives and advisors with such additional financial, operating and other data and information as Acquiror may reasonably request. 

        6.2    Operation of the Businesses of the Agencies.    Except as
contemplated in the Agreement between the date of this Agreement and the Closing, each Agency will: 

        (a)   conduct
the business of such Agency in the same manner as conducted prior to the date of this Agreement, including but not limited to the payment of bonuses or other
compensation to its employees (including Shareholders); 

        (b)   use
its best efforts to preserve intact its current business organization, keep available the services of its current officers, employees and agents, and maintain the
relations and goodwill with insurance companies, suppliers, customers, clients, insureds, landlords, creditors, employees, agents and others having business relationships with such Agency; and 

        (c)   confer
with Acquiror concerning the status of the business, operations and finances of such Agency. 

        6.3    Approvals.    As promptly as practicable after the date of this
Agreement, Agencies will make all filings required to be made by them in order to consummate the transactions contemplated in this Agreement. Between the date of this Agreement and the Closing,
Agencies will reasonably cooperate with Acquiror with respect to all filings that Acquiror elects to make or is required to make in connection with the transactions contemplated in this Agreement. 

        6.4    Notification.    Between the date of this Agreement and the
Closing, each Agency will promptly notify Acquiror in writing if such Agency becomes aware of any fact or condition that causes or constitutes a breach of any of Agency's representations and
warranties as of the date of this Agreement, or if such Agency become aware of the occurrence after the date of this Agreement of any fact or condition that would (except as expressly contemplated by
this Agreement) cause or constitute a breach of any such representation or warranty had such representation or warranty been made as of the time of occurrence or discovery of such fact or condition.
During the same period, each Agency will promptly notify Acquiror of the occurrence of any breach of any covenant of Agencies in this Article 6 or of the occurrence of any event that may make
the satisfaction of the conditions in Article 7 impossible or unlikely. 

        6.5    No Negotiation.    Until such time, if any, as this Agreement
is terminated pursuant to Article 11, the Agencies and Shareholders will not directly or indirectly solicit, initiate, or encourage any inquiries or proposals from, discuss or negotiate with,
provide any non-public information to, or consider the merit of any unsolicited inquiries or proposals from, any Person (other than Acquiror) relating to any transaction involving the sale
of the business or assets (other than in the ordinary course of business) of any Agency, or any of the capital stock of either Agency, or any merger, consolidation, business combination, or similar
transaction involving either Agency. 

        6.6    Best Efforts.    Between the date of this Agreement and the
Closing, Agencies and Shareholders will use their best efforts to cause the conditions in Articles 7 and 8 to be satisfied. 

        6.7    Plan Termination.    Agencies and Shareholders will take all
actions reasonably requested by Acquiror, both before and after the Closing, to avoid any accrual after the Closing Date of any benefits under any benefit plan or program of Agencies, including,
without limitation, any liability relating to the termination of any plan. 

        6.8    Corporate Status.    Neither Agency will revoke its election to
be taxed as an S corporation within the meaning of Sections 1361 and 1362 of the Internal Revenue Code at any time prior to the Closing. 

        6.9    Affiliates.    At least ten (10) days prior to the
Closing, each Agency will deliver to Acquiror a written agreement signed by each Agency and each Shareholder providing that such person will not 

sell,
pledge, transfer, or otherwise dispose of the Stock held by such person except as contemplated by such written agreement or by this Agreement and will not sell, pledge, transfer or otherwise
dispose of the Stock to be received by such person upon consummation of the transaction except in compliance with applicable provisions of the Securities Act of 1933, and the rules and regulations
thereunder. 

        6.10    Errors and Omissions Insurance.    On or before the Closing,
the Agencies shall acquire and pay for, at their sole cost and expense, errors and omissions insurance coverage for a period of thirty-six (36) months after the Closing Date, with
coverage limits and deductible no less favorable than those on the errors and omissions insurance coverage currently maintained by the Agencies. 

 
 

ARTICLE 7. CONDITIONS PRECEDENT TO
  ACQUIRORS' OBLIGATION TO CLOSE    
    

        Acquiror's obligation to complete the purchase and the transactions contemplated in this Agreement is subject to the satisfaction, at or prior to the Closing, of
each of the following conditions (any of which may be waived by Acquiror, in whole or in part): 

        7.1    Accuracy of Representations.    

        (a)   All
of the Shareholders' and Agencies' representations and warranties in this Agreement (considered collectively), and each of these representations and warranties
(considered individually), (i) must have been accurate in all material respects as of the date of this Agreement; and (ii) must be accurate in all material respects as of the Closing as
if made on the Closing, without giving effect to any supplements to the Disclosure Schedule. Shareholders and Agencies shall deliver to Acquiror one or more certificates reasonably required by
Acquiror confirming the foregoing. 

        (b)   Notwithstanding
anything to the contrary in Sections 7.1(a), any changes to the Disclosure Schedule which result from actions taken by Agencies as required by the terms
of this Agreement or arising in the Ordinary Course of Business and which are not materially adverse to the Agencies and their business shall not effect Acquiror's obligation to close. 

        7.2    Agencies' Performance.    All of the covenants and obligations
that Agencies are required to perform or to comply with pursuant to this Agreement at or prior to the Closing (considered collectively), and each of these covenants and obligations (considered
individually), must have been duly performed and complied with in all material respects. 

        7.3    Consents.    Each of the consents identified in the Agencies
Disclosure Schedule as being required to be obtained prior to Closing must have been obtained and must be in full force and effect. 

        7.4    Additional Documents.    Each of the following documents must
have been delivered by Agencies: 

        (a)   from
each Agency and each Shareholder, an executed Sale of Business Restrictive Covenants Agreement as contemplated in Article 12 below; and 

        (b)   from
Hatten and Hayes, executed Employment Agreements as contemplated in Section 8.8 below. 

        (c)   from
the HMH Partnership, an executed Lease Agreement as contemplated in Section 8.9 below. 

        (d)   such
other documents as Acquiror may reasonably request for the purpose of (i) evidencing the satisfaction of any condition referred to in this Article 7,
or (ii) otherwise facilitating the consummation or performance of any of the contemplated transactions. 

        (e)   from
the Agencies' insurance carrier, proof of the errors and omissions coverage described in Section 6.10 above. 

        7.5    No Proceedings.    Since the date of this Agreement, there must
not have been commenced or threatened against Acquiror, or against any person affiliated with Acquiror, any proceeding (a) involving any challenge to, or seeking damages or other relief in
connection with, any of the 

contemplated
transactions, or (b) that may have the effect of preventing, delaying, making illegal, or otherwise interfering with any of the contemplated transactions. 

        7.6    No Claim Regarding Stock Ownership or Sales Proceeds.    There
must not have been made or threatened by any person any claim asserting that such person is the holder or the beneficial owner of, or has the right to acquire or to obtain beneficial ownership of, any
stock of, or any other voting, equity or ownership interest in either Agencies. 

        7.7    No Prohibition.    Neither the consummation nor the performance
of any of the contemplated transactions will, directly or indirectly (with or without notice or lapse of time), materially contravene, or conflict with, or result in a material violation of, or cause
Acquiror or any Person affiliated with Acquiror to suffer any material adverse consequence under, (a) any applicable legal requirement or order, or (b) any legal requirement or order
that has been published, introduced, or otherwise proposed by or before any governmental body. 

        7.8    Consents.    Acquiror shall have received all consents from the
Georgia Department of Banking and Finance, the Georgia Department of Insurance and any other governmental body which Acquiror reasonably deems appropriate to obtain by it to consummate the
contemplated transactions. 

 
 

ARTICLE 8. CONDITIONS PRECEDENT TO
  AGENCIES' OBLIGATION TO CLOSE    
    

        Agencies' and Shareholders' obligation to complete the sale and the transactions contemplated in this Agreement is subject to the satisfaction, at or prior to the
Closing, of each of the following conditions (any of which may be waived by Agencies and Shareholders, in whole or in part); 

        8.1    Accuracy of Representations.    All of Acquiror's
representations and warranties in this Agreement (considered collectively), and each of these representations and warranties (considered individually) must have been accurate in all material respects
as of the date of this Agreement, and must be accurate in all material respects as of the Closing, without giving effect to any supplements to the Disclosure Schedule. Acquiror shall provide to
Agencies and the Shareholders a certificate reasonably required by Agencies and the Shareholders confirming the foregoing. 

        8.2    Acquiror's Performance.    All of the covenants and obligations
that Acquiror is required to perform or to comply with pursuant to this Agreement at or prior to the Closing (considered collectively), and each of these covenants and obligations (considered
individually), must have been performed and complied with in all material respects. 

        8.3    Exchange Listing.    Prior to the Closing and to the extent
required by rules of the National Association of Securities Dealers ("NASD"), Acquiror shall list on the Nasdaq National Market the shares of Stock to be issued pursuant to this Agreement, and
Acquiror shall give all notices and make all filings with the NASD required in connection with the transactions contemplated herein. 

        8.4    No Prohibition.    Neither the consummation nor the performance
of any of the contemplated transactions will, directly or indirectly (with or without notice or lapse of time), materially contravene, or conflict with, or result in a material violation of, or cause
any Agency or Shareholder to suffer materially adverse consequence under, (a) any applicable legal requirement or order, or (b) any legal requirement or order that has been published,
introduced or otherwise proposed by or before any governmental body. 

        8.5    Additional Documents.    Acquiror shall deliver such other
documents as any Agency or Shareholder may reasonably request for the purpose of (i) evidencing the satisfaction of any condition referred to in this Article 8, or (ii) otherwise
facilitating the consummation or performance of any of the contemplated transactions. 

        8.6    Employment Agreements.    At the Closing, Hatten and Hayes
shall each enter into an Employment Agreement in the form attached hereto as Exhibit C. Such provisions and covenants are included in the Employment Agreements as a condition of and as part of
the consideration for the transactions contemplated in this Agreement. 

        8.7    Lease Agreements.    At the Closing, Acquiror, as tenant, and
the HMH Partnership, as landlord, shall enter into and deliver the Lease Agreement (the "Lease") in the form attached hereto as Exhibit D. 

 
 

ARTICLE 9. CLOSING DELIVERIES    
    

        9.1    Closing Deliveries by the Agencies and the Shareholders.    At
the Closing, the Agencies and the Shareholders are delivering the following certificates, instruments and documents to the Acquiror: 

        (a)   the
documents contemplated in Article 7 above, including without limitation the certificate(s) described in Section 7.1(a); 

        (b)   titles
for all titled Acquired Assets (if any); 

        (c)   bills
of sale and/or such other documents necessary to transfer title for the non-titled Acquired Assets; 

        (d)   a
certified copy of the resolutions of the Board of Directors of the Agencies unanimously authorizing and approving the Purchase Agreement and the consummation of the
transactions contemplated herein; 

        (e)   a
certificate of good standing issued by the Secretary of State of Georgia, and (unless waived by the Acquiror) certificates from the applicable Georgia Governments
evidencing that the Agencies have paid all of their income, withholding, and unemployment Taxes as of a date prior to the Closing that is satisfactory to the Acquiror; 

        (f)    copies
of all consents and/or waivers (in substantially the form previously approved by the Acquiror's counsel) necessary for the consummation of the transactions
contemplated hereunder and the other transactions contemplated hereby (unless waived by the Acquiror); 

        (g)   unless
waived by the Acquiror, UCC termination statements, vehicle lien releases and all other releases necessary in the Acquiror's opinion for the Agencies to deliver
the Acquired Assets to the Acquiror free and clear of all Security Interests (other than the Assumed Liabilities), duly signed by all third parties claiming such Security Interests in such Acquired
Assets; and 

        (h)   a
certificate executed on behalf of the Agencies by their Secretaries and Presidents certifying as to the incumbency of, and authenticating the signatures of, those
officers of the Agencies executing the Purchase Agreement and the documents related thereto on behalf of the Agencies. 

        9.2    Closing Deliveries by the Acquiror.    At the Closing, the
Acquiror shall deliver the following certificates, instruments and documents to the Agencies and the Shareholders: 

        (a)   the
documents contemplated in Article 8 above, including without limitation the certificate(s) described in Section 8.1(a); 

        (b)   a
certified copy of the resolutions of the Board of Directors of the Acquiror unanimously authorizing and approving the Purchase Agreement and the consummation of the
transactions contemplated by them; 

        (c)   a
certificate of existence issued by the Secretary of State of Georgia; and 

        (d)   a
certificate executed on behalf of the Acquiror by its Secretary and President certifying as to the incumbency of, and authenticating the signatures of, those
representatives of the Acquiror executing the Purchase Agreement and the documents related thereto on behalf of the Acquiror. 

        (e)   certificates
evidencing or other documentation showing the Stock specified in paragraph 2.3 above has been issued to the Agencies. 

 
 

ARTICLE 10. TAX RETURNS    
    

        The Agencies and the Shareholders shall prepare or cause to be prepared and timely file or cause to be timely filed all Tax Returns for the Agencies for all
periods ending on or after the Closing Date. With respect to the Agencies, for tax periods ending on or prior to the Closing Date, to the extent permitted by applicable law, the Shareholders shall
include any income, gain, loss, deduction or other tax items for such periods on Shareholders' Tax Returns. 

 
 

ARTICLE 11. TERMINATION    
    

        11.1    Termination Events.    This Agreement, may, by notice given
prior to or at the Closing, be terminated: 

        (a)   by
either Acquiror or Agencies if a material breach of any provision of this Agreement has been committed by the other party and such breach has not been waived; 

        (b)   (i) by
Acquiror if any of the conditions in Article 7 have not been satisfied as of the Closing or if satisfaction of such a condition is or becomes
impossible (other than through the failure of Acquiror to comply with its obligations under this Agreement) and Acquiror has not waived such condition on or
before the Closing; or (ii) by Agencies, if any of the conditions in Section 8 have not been satisfied as of the Closing or if satisfaction of such a condition is or becomes impossible
(other than through the failure of Agencies to comply with their obligations under this Agreement) and Agencies have not waived such condition on or before the Closing Date; 

        (c)   by
mutual consent of Acquiror and Agencies; or 

        (d)   by
either Acquiror or Agencies if the Closing has not occurred (other than through the failure of any party seeking to terminate this Agreement to comply fully with its
obligations under this Agreement) on or before January 31, 20043 or such later date as the parties may agree upon. 

        11.2    Effect of Termination.    Each party's right of termination
under Section 11 is in addition to any other rights it may have under this Agreement or otherwise, and the exercise of a right of termination will not be an election of remedies. If this
Agreement is terminated pursuant to Section 11, all further obligations of the parties under this Agreement will terminate. 

 
 

ARTICLE 12. SHAREHOLDER COVENANTS    
    

        12.1    Noncompetition Agreements.    Contemporaneously herewith, each
of the Agencies and the Shareholders shall enter into, execute and deliver to the Acquiror an agreement, substantially in the form of Exhibit E
attached hereto (the "Noncompetition Agreements"), restricting each such Person's ability to compete with the Acquiror in the Business, and to solicit
the customers (including policyholders), suppliers (including insurance carriers) and employees of the Business, the Agencies and/or the Acquiror (i) in the case of the Agencies and Moneyhan,
for a period of five (5) years after the Closing Date and (b) in the case of Hayes and Hatten, for a period of two (2) years after the Closing Date; provided, however, that the
validity and enforceability of the Noncompetition Agreements shall be contingent on the closing of the sale transaction contemplated by this Agreement. 

        12.2    Use of Corporate Name.    The Shareholders acknowledge and
agree that the goodwill associated with the names of the Agencies will be a valuable asset for the Acquiror, for which the Shareholders will receive a direct benefit hereunder. The Shareholders agree
that they will not form a business engaged in the insurance brokerage industry which incorporates either or both names, and they will not provide services to a third party business engaged in
the insurance brokerage industry which incorporates either or both names for the applicable time period specified in Section 12.1 above 

 
 

ARTICLE 13. INDEMNIFICATION    
    

        13.1    Survival Period.    All representations, warranties,
agreements, covenants and obligations made or undertaken by the Agencies and the Shareholders in this Agreement are, whether specified as 

such
or not, the joint and several representations, warranties, agreements, covenants and obligations of the Agencies and the Shareholders, are material, have been relied upon by the Acquiror, shall
survive the Closing hereunder, and shall not merge in the performance of any obligation by any Party; and, as to the representations and warranties, shall terminate or expire on the second (2nd)
anniversary of the Closing, provided that such representations and warranties shall not terminate or expire, but shall continue, during the pendency of any Action brought in respect of such
representations and warranties prior to the termination or expiration of such two (2) year period. Notwithstanding the above, all representations and warranties made by the Agencies and the
Shareholders in this Agreement that in any manner relate to (i) Tax matters, (ii) environmental matters, (iii) title matters, (iv) employee benefits matters and
(v) Section 4.18 of this Agreement (collectively, the "Special Matters"), or any of the foregoing, shall terminate or expire only upon the
termination or expiration of all applicable statutes of limitation. All representations, warranties, agreements, covenants and obligations made or undertaken by the Acquiror in this Agreement shall
survive the Closing hereunder, and shall not merge in the performance of any obligation by any Party; and, as to the representations and warranties, shall terminate or expire on the second (2nd)
anniversary of the Closing, provided that such representations and warranties shall not terminate or expire, but shall continue, during the pendency of any Action brought in respect of such
representations and warranties prior to the termination or expiration of such two (2) year period. 

        13.2    Obligation of the Shareholders and the Agencies to
Indemnify.    Subject to the limitations contained in this Article 13, the Shareholders and the Agencies shall, jointly and severally, defend, indemnify and
hold the Acquiror and its shareholders, directors, officers, employees, counsel, agents, Affiliates and assigns (collectively, the "Acquiror
Indemnitees"), harmless from and against any and all Losses asserted against, imposed upon or incurred by the Acquiror Indemnitees, or any of them, by reason of or resulting
from, arising out of, based upon or otherwise in respect of: 

        (a)   any
inaccuracy in any representation or warranty made by the Agencies or the Shareholders in the Purchase Agreement, or in any agreement related thereto; 

        (b)   any
breach of any covenant or agreement made or to be performed by the Agencies or the Shareholders in or pursuant to the Purchase Agreement, or in or pursuant to any
agreement related thereto; 

        (c)   any
violation or alleged violation of any Environmental, Health and Safety Requirements that affects the Acquired Assets or the Agencies' Business, or the presence of
any Hazardous Materials on the Acquired Assets or any other assets of the Agencies, that occurred at any time prior to the Closing Date; 

        (d)   the
Parties' failure to comply with any of the bulk sales Laws and any other similar Laws in any applicable jurisdiction in respect of the transactions contemplated by
the Purchase Agreement, and any Action brought or levy made as a result thereof; 

        (e)   all
Taxes, if any, due from any Agency or Shareholder as a result of the consummation of the transactions contemplated by the Purchase Agreement, and all obligations of
any Agency or Shareholder to pay Taxes, if any, arising out of or related to any Tax Audit set forth on Schedule 4.11 of the Disclosure Schedule,
and all obligations to pay surplus lines Taxes with respect to any period prior to the Closing Date. 

        (f)    all
Shareholders payables, and all Tax Liabilities that may arise from time to time as a result of the forgiveness or reduction by the Shareholders of any of such
Shareholders payables; and/or 

        (g)   any
Liability of the Agencies or the Shareholders of any nature whatsoever, except for the Assumed Liabilities. 

        13.3    Obligation of the Acquiror to Indemnify.    Subject to the
limitations contained in this Article 13, the Acquiror shall defend, indemnify and hold the Agencies and the Shareholders, and their respective directors, officers, employees, counsel, agents,
Affiliates and assigns (collectively, the 

"Agencies Indemnitees"), harmless from and against any and all Losses asserted against, imposed upon or incurred by the Agencies Indemnitees, or any of
them, by reason of or resulting from, arising out of, based upon or otherwise in respect of: 

        (a)   any
inaccuracy in any representation or warranty made by the Acquiror in the Purchase Agreement, or in any agreement related thereto; 

        (b)   any
breach of any covenant or agreement made or to be performed by the Acquiror in or pursuant to the Purchase Agreement, or in or pursuant to any agreement related
thereto; 

        (c)   all
Taxes, if any, due from Acquiror as a result of the consummation of the transactions contemplated by the Purchase Agreement; and/or 

        (d)   any
Assumed Liability. 

        13.4    Matters Involving Third Parties.    

        (a)   If
any third party shall notify any Person that is entitled to seek indemnification pursuant to Sections 13.2 or 13.3 hereof (the "Indemnified
Party") with respect to any matter (a "Third Party Claim") which may give rise to a good faith claim for indemnification against
any other Person (the "Indemnifying Party") under this Article 13, then the Indemnified Party shall promptly notify the Indemnifying Party
thereof in writing; provided, however, that no delay on the part of the Indemnified Party in notifying the Indemnifying Party shall relieve the Indemnifying Party of any obligation hereunder unless
(and then solely to the extent) the Indemnifying Party is thereby prejudiced. 

        (b)   The
Indemnifying Party will have the right to defend the Indemnified Party against the Third Party Claim with counsel of its choice reasonably satisfactory to the
Indemnified Party so long as (i) the Indemnifying Party notifies the Indemnified Party in writing, within fifteen (15) days after the Indemnified Party has given the Indemnifying Party
notice of the Third Party Claim, that the Indemnifying Party will indemnify the Indemnified Party from and against all Losses the Indemnified Party may suffer resulting from, arising out of, relating
to, in the nature of or caused by the Third Party Claim; (ii) the Indemnifying Party provides the Indemnified Party with evidence reasonably acceptable to the Indemnified Party that the
Indemnifying Party has the financial resources to defend against the Third Party Claim and to fulfill its indemnification obligations hereunder; (iii) the Third Party Claim involves only money
damages and does not seek an injunction or other equitable relief; (iv) settlement of, or an adverse judgment with respect to, the Third Party Claim is not, in the good faith judgment of the
Indemnified Party, likely to establish a precedential custom or practice adverse to the continuing business interests of the Indemnified Party; and (v) the Indemnifying Party conducts the
defense of the Third Party Claim actively and diligently. 

        (c)   So
long as the Indemnifying Party is conducting the defense of the Third Party Claim: (i) the Indemnified Party may retain separate co counsel at its cost and
expense and participate in the defense of the Third Party Claim; (ii) the Indemnified Party will not consent to the entry of any judgment or enter into any settlement with respect to the Third
Party Claim without the prior written consent of the Indemnifying Party (not to be withheld unreasonably); and (iii) the Indemnifying Party will not consent to the entry of any judgment or
enter into any settlement with respect to the Third Party Claim without the prior written consent of the Indemnified Party (not to be withheld unreasonably). 

        (d)   In
the event any of the conditions in Section 13.4(b) above is or becomes unsatisfied: (i) the Indemnified Party shall give the Indemnifying Party written
notice of this fact and thereafter shall have the sole right to defend against, and consent to the entry of any judgment or enter into any settlement with respect to, the Third Party Claim in any
manner it reasonably may deem appropriate (and the Indemnified Party need not consult with, or obtain any consent from, the Indemnifying Party in connection therewith); (ii) the Indemnifying
Party will reimburse the Indemnified Party promptly and periodically for the costs of defending against the Third Party Claim (including reasonable attorneys' fees and expenses) that accrue after the
written notice referred to in (i) above has been given; and (iii) the Indemnifying Party will remain responsible for any and all Losses the Indemnified Party may 

suffer
resulting from, arising out of, relating to, in the nature of or caused by the Third Party Claim to the fullest extent provided in this Article 13. 

        13.5    Indemnification Payments.    An Indemnifying Party shall pay
to the Indemnified Party the full amount of any and all Losses (other than Losses resulting from a Third Party Claim) for which it is required to indemnify the Indemnified Party under this
Article 13, within ten (10) days after its receipt of notice thereof from the Indemnified Party; and the full amount of any and all Losses resulting from a Third Party Claim for which it
is required to indemnify the Indemnified Party under this Article 13, within ten (10) days after final settlement or adjudication thereof; and in each case, thereafter the amount of any
such Losses shall bear interest at the rate of interest publicly announced in Atlanta, Georgia from time to time by SunTrust Bank of Atlanta as its prime rate, plus four percent (4%) per annum (the
"Rate"). The Acquiror shall be entitled to offset from any and all payments otherwise due the Agencies or the Shareholders under the Purchase Agreements
(including, but not limited to, the Purchase Price or any compensation under the Noncompetition Agreements), the full amount of any and all Losses for which the Agencies and/or the Shareholders are
required to indemnify any Acquiror Indemnitee pursuant to Section 13.2 hereof, and the Acquiror shall not be liable for any amounts so offset. Notwithstanding the above, if any amount so offset
by the Acquiror is later determined by a final nonappealable judgment in a court of competent jurisdiction not to have constituted Losses for which the Agencies or the Shareholders were required to
indemnify any Acquiror Indemnitee pursuant to Section 13.2 hereof, then within ten (10) days after the date of such final judgment, the Acquiror shall reimburse the Agencies or the
Shareholders, as appropriate, for (a) the amount wrongfully offset from the payments due to the Agencies or the Shareholders, as appropriate, with interest accruing on the wrongfully offset
amount, from the date offset is made until the date such reimbursement is made, at the Rate, and (b) all reasonable attorneys' fees incurred by the Agencies and the Shareholders in seeking such
reimbursement. 

        13.6    Other Rights and Remedies Not Affected.    The indemnification
rights of the Parties and other Persons under this Article 13 are independent of and in addition to such other rights and remedies that the Parties and such other Persons may have at law or in
equity or otherwise for any misrepresentation, breach of warranty or failure to fulfill any agreement or covenant hereunder on the part of any Party hereto, including, without limitation, the right to
offset or to seek specific performance, rescission or restitution, none of which rights or remedies shall be adversely affected or diminished hereby. 

 
 

ARTICLE 14. MISCELLANEOUS    
    

        14.1    Notices.    All notices, requests, demands and other
communications required or permitted hereunder shall be in writing and shall be (i) delivered by hand, (ii) mailed by United States registered or certified mail, return receipt
requested, first class postage prepaid and properly addressed, or (iii) sent by national overnight courier service to the Parties or their permitted assignees at the addresses set forth
opposite the Parties' signatures hereto. All notices, requests, instructions or documents given to any Party in accordance with this Section 14.1 shall be deemed to have been given
(1) on the date of receipt if delivered by hand or overnight courier service, or (2) on the date five (5) business days after depositing with the United States Postal Service if
mailed by United States registered or certified mail, return receipt requested, first class postage prepaid and properly addressed. Any Party may change its or his address specified for notices herein
by designating a new address by notice in accordance with this Section 14.1. 

        14.2    Entire Agreement.    All Exhibits and Schedules (including the
Disclosure Schedule) referred to herein are intended to be, and hereby are, specifically incorporated into and made a part of this Agreement. This Agreement, the other Purchase Agreement and the
agreements evidenced by the Exhibits constitute the entire agreement among the Parties relating to the subject matter hereof and thereof, and supersede all prior and contemporaneous negotiations,
writings and agreements relating to the subject matter hereof and thereof. 

        14.3    Confidentiality.    Each Party hereto agrees that for a period
of five (5) years after the Closing Date, it shall not at any time divulge the existence and terms of the negotiations resulting in this 

Agreement,
or the terms and conditions of this Agreement, except to those of its attorneys, accountants, tax preparers and bankers who have a need to know such information, and except as agreed to by
all other Parties hereto or as otherwise required by applicable federal, state or local statutes or pursuant to subpoena or court order. 

        14.4    Bulk Sales Compliance.    The Parties hereby waive compliance
by the Agencies with the provisions of the bulk sales or bulk transfer Laws of the State of Georgia and of any other state, subject to the indemnification provisions in Section 5.2 hereof. 

        14.5    Modifications, Amendments and Waivers.    The Parties may, by
mutual written agreement and in no other manner, modify or amend the terms of this Agreement. The failure or delay of any Party at any
time or times to require the performance of any provision of this Agreement shall in no manner affect its right to enforce that provision. No single or partial waiver by any Party of any condition of
this Agreement, or of the breach of any term, agreement or covenant of, or of the inaccuracy of any representation or warranty in, this Agreement, whether by conduct or otherwise, in any one or more
instances shall be construed or deemed to be a further or continuing waiver of any such condition, breach or inaccuracy or a waiver of any other condition, breach or inaccuracy. 

        14.6    Successors and Assigns.    This Agreement shall be binding
upon and shall inure to the benefit of and be enforceable by the Parties, and their respective successors and permitted assigns. This Agreement may not be assigned by any Party without the prior
written consent of the other Parties, except that the Acquiror may assign this Agreement and its rights and obligations hereunder to one or more of its Affiliates, or to any of its lenders as
collateral security. 

        14.7    Governing Law.    This Agreement shall be controlled,
construed and enforced in accordance with the substantive Laws of the State of Georgia, without regard to any Laws related to choice or conflicts of laws. 

        14.8    Severability.    Should any one or more of the provisions of
this Agreement be determined to be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions hereof shall not in any way be adversely
affected or impaired thereby. The Parties shall endeavor in good faith to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as
practicable to that of the invalid, illegal or unenforceable provisions. 

        14.9    Attorneys' Fees and Expenses.    In any Action arising out of,
under or in connection with this Agreement in which one Party prevails over another Party, the reasonable attorneys' fees and expenses incurred by the prevailing Party in connection with such Action
shall be paid for or reimbursed by the opposing Party or Parties in such Action. 

        14.10    No Benefit to Others.    The representation, warranties,
covenants and agreements contained in this Agreement are for the sole benefit of the Parties and, in the case of Article 13 hereof, the other Indemnified Parties, and their respective heirs,
executors, administrators, legal representatives, successors and permitted assigns, and they shall not be construed as conferring any rights on any other Persons. 

        14.11    Construction.    Nothing in any Schedule (including the
Disclosure Schedule) attached hereto shall be deemed adequate to disclose an exception to a representation or warranty made herein unless the Schedule identifies the exception with particularity and
describes the relevant facts in detail (and in terms of Liabilities, quantifies the amount thereof with specificity). Without limiting the generality of the foregoing, the mere listing (or inclusion
of a copy) of a document or other item shall not be deemed adequate to disclose an exception to a representation or warranty made herein, unless the representation or warranty has to do with the
existence of the document or other item itself. The Parties intend that each representation, warranty and covenant contained herein shall have independent significance. If any Party has breached any
representation, warranty or covenant contained herein in any respect, the fact that there exists another representation, warranty or covenant relating to the same subject matter (regardless of the
relative levels of specificity) which the Party has not breached shall 

not
detract from or mitigate the fact that the Party is in breach of the first representation, warranty or covenant. 

        14.12    Expenses.    Except as otherwise provided herein, each of the
Parties will bear such Party's own costs and expenses (including legal fees and expenses) incurred in connection with this Agreement and the transactions contemplated hereby. 

        14.13    Further Assurances.    From time to time, at any Party's
request and without further consideration (unless the requesting Party is entitled to indemnity therefore as provided herein), the other Parties will execute and deliver to the requesting Party such
documents and take such other actions as such Party may reasonably request in order to consummate more effectively the transactions contemplated hereby. 

        IN WITNESS WHEREOF, the Parties have executed this Agreement effective as of the date first above written. 

(signatures
on following page) 

	 	 	 	 	SHAREHOLDERS:
	

Address:	
 	

1080 Kimbrough Hill Drive

Greensboro, Georgia 30042	
 	

By:	
 	

/s/  CHARLES N. MONEYHAN      

	 	 	 	 	Printed Name:	 	Charles N. Moneyhan
	

Address:	
 	

1573 Highway 213

Covington, Georgia 30014	
 	

By:	
 	

/s/  R. DEAN HAYES      

	 	 	 	 	Printed Name:	 	R. Dean Hayes
	

Address:	
 	

536 Thomaston Street

Barnesville, Georgia 30204	
 	

By:	
 	

/s/  JANETTE M. HATTEN      

	 	 	 	 	Printed Name:	 	Janette M. Hatten
	

 	
 	

 	
 	

BANKS, MONEYHAN INSURANCE AGENCY, INC.
	

Address:	
 	

3205 Salem Road

Conyers, Georgia 30013	
 	

By:	
 	

/s/  CHARLES N. MONEYHAN      

	 	 	 	 	Title:	 	President
	

 	
 	

 	
 	

MONEYHAN INSURANCE AGENCY, INC.
	

Address:	
 	

3205 Salem Road

Conyers, Georgia 30013	
 	

By:	
 	

/s/  CHARLES N. MONEYHAN      

	 	 	 	 	Title:	 	President
	

 	
 	

 	
 	

MAIN STREET INSURANCE SERVICES, INC.
	

Address:	
 	

216 South Broad Street

Monroe, Georgia 30655	
 	

By:	
 	

/s/  HUGH B. WILLIAMSON      

	 	 	 	 	Title:	 	CEO

QuickLinks

Exhibit 4.1

ASSET PURCHASE AGREEMENT

ARTICLE 1. KEY DEFINITIONS

ARTICLE 2. BASIC TRANSACTION

ARTICLE 3. EARN-OUT PROVISIONS

ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF THE AGENCIES AND THE SHAREHOLDERS

ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF THE ACQUIROR

ARTICLE 6. COVENANTS OF AGENCIES PRIOR TO CLOSING

ARTICLE 7. CONDITIONS PRECEDENT TO ACQUIRORS' OBLIGATION TO CLOSE

ARTICLE 8. CONDITIONS PRECEDENT TO AGENCIES' OBLIGATION TO CLOSE

ARTICLE 9. CLOSING DELIVERIES

ARTICLE 10. TAX RETURNS

ARTICLE 11. TERMINATION

ARTICLE 12. SHAREHOLDER COVENANTS

ARTICLE 13. INDEMNIFICATION

ARTICLE 14. MISCELLANEOUS

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