EXCHANGE AGREEMENT

Asset Exchange Agreement

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BROOKE CAPITAL CORPORATION | BROOKE CORPORATION | DELTA PLUS HOLDINGS, INC

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Title: EXCHANGE AGREEMENT
Governing Law: Kansas Date: 9/7/2007
Industry: Insurance (Miscellaneous) Law Firm: Kutak Rock;Polsinelli Shalton Sector: Financial

EXCHANGE AGREEMENT, Parties: brooke capital corporation , brooke corporation , delta plus holdings inc

Exhibit 2.2

EXECUTION COPY

EXCHANGE AGREEMENT

by and among

BROOKE CAPITAL CORPORATION,

DELTA PLUS HOLDINGS, INC.,

and

BROOKE CORPORATION

Dated as of August 31, 2007

TABLE OF CONTENTS


			Page
1.	EXCHANGE		2
	1.1.	The Exchange	2
	1.2.	[Reserved]	2
	1.3.	[Reserved]	2
	1.4.	Exchange Consideration	2
	1.5.	[Reserved]	3
	1.6.	Exemptions from Registration; Restrictions on Resale	3
	1.7.	[Reserved]	4
	1.8.	[Reserved]	4
	1.9.	Exchange of Certificates	4
	1.10.	No Fractional Shares	4
	1.11.	Market Stand-off Agreement	4
	1.12.	Further Action	5
2.	REPRESENTATIONS AND WARRANTIES OF PARENT AND COMPANY		5
	2.1.	Corporate	5
	2.2.	Authority	6
	2.3.	Capitalization	6
	2.4.	No Violation	6
	2.5.	Financial Statements	7
	2.6.	Absence of Undisclosed Liabilities or Encumbrances	7
	2.7.	Tax Matters	8
	2.8.	No Brokers or Finders	9
	2.9.	Disclosure	9
	2.10.	Purchase for Own Account	10
	2.11.	Absence of Certain Changes	10
	2.12.	No Litigation; Administrative Actions	12
	2.13.	Compliance With Laws	12
	2.14.	Title to and Condition of Properties	13
	2.15.	Contracts and Commitments	14
	2.16.	Labor Matters	15
	2.17.	Employee Benefit Plans	16
	2.18.	Intellectual Property	17
3.	REPRESENTATIONS AND WARRANTIES OF CAPITAL		17
	3.1.	Corporate	17
	3.2.	Authority	17
	3.3.	Capitalization	18
	3.4.	No Violation	18
	3.5.	Reports	18
	3.6.	Financial Statements	19
	3.7.	Absence of Undisclosed Liabilities	19
	3.8.	Tax Matters	20
	3.9.	No Brokers or Finders	20
	3.10.	Disclosure	21
	3.11.	Company Stock for Capital’s Own Account	21
	3.12.	[Reserved]	21
	3.13.	Absence of Certain Changes	21


	3.14.	No Litigation	22
	3.15.	Compliance With Laws	23
	3.16.	Title to and Condition of Properties	23
	3.17.	Contracts and Commitments	24
	3.18.	Labor Matters	25
	3.19.	Employee Benefit Plans	25
	3.20.	Intellectual Property	26
4.	COVENANTS		26
	4.1.	Conduct of the Business	26
	4.2.	Access to Information	28
	4.3.	Confidentiality	28
	4.4.	Public Disclosure	29
	4.5.	Regulatory and Other Authorizations; Form A	29
	4.6.	Further Assurances	29
	4.7.	No Solicitation by Parent or Company	30
	4.8.	No Solicitation by Capital	30
	4.9.	Non-Competition; Non-Solicitation	30
	4.10.	Indemnification of Officers and Directors	31
	4.11.	Company Name and Principal Office	32
5.	ADDITIONAL AGREEMENTS		32
	5.1.	Other Matters	32
	5.2.	Form 8-K	32
	5.3.	Required Information	33
	5.4.	No Securities Transactions	33
	5.5.	Registration and Listing	33
	5.6.	[Reserved]	33
	5.7.	[Reserved]	33
	5.8.	Litigation Support	34
6.	CONDITIONS PRECEDENT TO CAPITAL’S PERFORMANCE		34
	6.1.	Accuracy of Representations and Warranties of Parent and Company	34
	6.2.	Performance of Covenants of Parent and Company	34
	6.3.	No Governmental Order	34
	6.4.	[Reserved]	34
	6.5.	Corporate Approval	35
	6.6.	[Reserved]	35
	6.7.	Consents and Approvals	35
	6.8.	Absence of Litigation	35
	6.9.	Company Material Adverse Effect	35
	6.10.	Fairness Opinion	35
	6.11.	[Reserved]	35
	6.12.	Deliverables	35
	6.13.	Parent Capital Contribution	35
	6.14.	Approval	35
7.	CONDITIONS PRECEDENT TO COMPANY’S PERFORMANCE		35
	7.1.	Accuracy of Capital’s Representations and Warranties	35
	7.2.	Performance of Capital’s Covenants	36


	7.3.	No Governmental Order	36
	7.4.	Corporate Approval	36
	7.5.	Parent Payable	36
	7.6.	Absence of Litigation	36
	7.7.	Capital Material Adverse Effect	36
	7.8.	Capital’s Articles of Incorporation	36
	7.9.	Consents and Approvals	36
	7.10.	Payments	37
	7.11.	Deliverables	37
	7.12.	[Reserved]	37
	7.13.	Fairness Opinion	37
	7.14.	[Reserved]	37
	7.15.	Merger	37
8.	TERMINATION PRIOR TO CLOSING		37
	8.1.	Termination	37
	8.2.	Effect on Obligations	38
9.	THE CLOSING		38
	9.1.	Closing	38
	9.2.	Company’s Obligations	38
	9.3.	Capital’s Obligations	39
10.	INDEMNIFICATION		39
	10.1.	Survival of Representations and Warranties	39
	10.2.	Indemnification Obligations	40
	10.3.	Exclusive Remedy	41
11.	MISCELLANEOUS PROVISIONS		42
	11.1.	Entire Agreement	42
	11.2.	Governing Law	42
	11.3.	Schedules	42
	11.4.	Waiver and Amendment	42
	11.5.	Assignment	42
	11.6.	Successors and Assigns	42
	11.7.	No Third Party Beneficiaries	42
	11.8.	No Personal Liability	43
	11.9.	Notices	43
	11.10.	Severability	43
	11.11.	Counterparts	44
	11.12.	No Presumption	44
	11.13.	Facsimile Signatures	44
	11.14.	Fees and Expenses	44
12.	DEFINITIONS		45
	12.1.	Definitions	45
	12.2.	Cross-References	50
	12.3.	Interpretation	51

iii

EXCHANGE AGREEMENT

This EXCHANGE AGREEMENT (this “ Agreement ”) is made and entered into as of August 31, 2007 by and among BROOKE CAPITAL CORPORATION, a Kansas corporation (“ Capital ”), DELTA PLUS HOLDINGS, INC., a Missouri corporation (the “ Company ”), and BROOKE CORPORATION, a Kansas corporation and sole stockholder of the Company (“ Parent ”).

RECITALS

A. Parent owns all of the issued and outstanding shares of common stock, par value $1.00 per share (“ Company Stock ”), of the Company. Parent and Capital have determined that a business combination between the Company and Capital, to be effected by a exchange described in Section 1.1 below (the “ Exchange ”) by Parent of all of its right, title and interest in the Company Stock to Capital in exchange for the issuance of Capital Stock (as further described in Section 1.1 below), upon the terms and subject to the conditions set forth herein, is advisable and in the best interests of their respective companies and stockholders, and presents an opportunity for the companies to achieve long-term strategic and financial benefits.

B. The board of directors of Capital unanimously (i) has determined that the Exchange is fair to, and in the best interests of, Capital and its shareholders and (ii) has approved and declared the advisability of entering into this Agreement. The board of directors of Parent unanimously (i) has determined that the Exchange is fair to, and in the best interests of, Parent and its shareholders and (ii) has approved and declared the advisability of entering into this Agreement.

C. At the Closing of the Exchange, Parent will transfer and contribute the Company Stock to Capital in accordance with the terms hereof. As a result of the Exchange, Parent will (i) own (combined with Parent’s previous ownership) more than 80% of the outstanding common stock of Capital, on a fully diluted basis; and (ii) “control” Capital as defined in and within the meaning of Section 368(c) of the Internal Revenue Code of 1986, as amended (the “Code).

D. The parties hereto intend that the Exchange qualify for income tax purposes as a tax-free exchange pursuant to Section 351 of the Code.

E. Certain capitalized terms used in this Agreement are defined in Section 12 below.

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing recitals and the respective covenants, agreements, representations and warranties contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties, intending to be legally bound, agree as follows:

1.	EXCHANGE

1.1.

The Exchange. Upon the terms and subject to the conditions set forth herein and the applicable provisions of the MGCL and the KGCL, and on the basis of the representations, warranties, covenants and agreements contained herein, on the Closing Date, Parent shall contribute the Company Stock to Capital.

1.2.

[Reserved].

1.3.

[Reserved].

1.4.

Exchange Consideration.

(a)

The initial consideration to be paid by Capital to Parent, as the sole holder of capital stock of the Company as of immediately prior to the Closing Date, in the Exchange (the “ Initial Exchange Consideration ”) shall be the number of shares of common stock of Capital, $0.01 par value per share (the “ Capital Stock ”) equal to the Closing Payment.

(b)

In addition to Initial Exchange Consideration, Capital shall pay to Parent, if earned, additional payments of Capital Stock based upon Company’s Net Income as follows:

(i)

Subject to the Company’s achievement of Net Income of at least $600,000 for the 12 month period ended December 31, 2007 (“ First Earnout Period ”), the Exchange Consideration shall include an additional 100,000 shares of Capital Stock (“ First Earnout Shares ”).

(ii)

In addition to the First Earnout Shares, subject to the Company’s achievement of Net Income of at least $900,000 for the First Earnout Period, the Exchange Consideration shall include an additional 25,000 shares of Capital Stock (“ First Earnout Bonus Shares ”).

(iii)

Subject to the Company’s achievement of Net Income of at least $1,600,000 for the 12 month period ended December 31, 2008 (“ Second Earnout Period ”), the Exchange Consideration shall include an additional 100,000 shares of Capital Stock (“ Second Earnout Shares ”).

(iv)

In addition to the Second Earnout Shares, subject to the Company’s achievement of Net Income of at least $2,400,000 for the Second Earnout Period, the Exchange Consideration shall include an additional 25,000 shares of Capital Stock (“ Second Earnout Bonus Shares ”).

(c)

The Exchange Consideration shall also be subject to equitable adjustment in the event of any stock split, stock dividend, reverse stock split, or other change in the number of shares of Capital Stock outstanding. For purposes hereof, “ Exchange Consideration ” means the Initial Exchange Consideration and the First Earnout Shares, the First Earnout Bonus Shares, the Second Earnout Shares and the Second Earnout Bonus Shares (collectively, the “ Earnout Shares ”).

(d)

As soon as practicable and in any event within 90 days after end of the First or Second Earnout Period, as the case may be, Capital shall provide to Parent a statement of the Net Income of Company for the Earnout Period (each an “ Earnout Statement ”), as reported in Capital’s Form 10-Q filing with the SEC for the end of such Earnout Period and as reviewed by Capital’s independent auditors. Capital shall provide to Parent and its representatives copies of such records and work papers created in connection with preparation of the Earnout Statement as are reasonably requested to support such Earnout Statement. Parent and its representatives shall have the right to inspect Capital and Company’s books and records during business hours.

(e)

Upon receipt of such Earnout Statement, Parent shall be entitled to object to the calculation of Net Income by delivery to Capital of a notice of objections thereto (a “ Notice of Objection ”), in reasonable detail describing the nature of the disagreement asserted. If Parent fails to deliver a Notice of Objection to Capital within twenty (20) days following receipt of the Earnout Statement, the determination of Net Income by Capital as set forth in the Earnout Statement shall be final and binding on the parties hereto. If Parent and Capital are unable to reconcile their differences in writing within twenty (20) days after a Notice of Objection is delivered by Parent, independent accountants shall be selected by Parent and Capital (“ Independent Accountants ”) and the items in dispute shall be submitted to the Independent Accountants within ten (10) days thereafter. The determination of Independent Accountants shall be set forth in writing and shall be conclusive and binding upon the parties, and the fees, costs and expenses of such Independent Accountants shall be paid by the non-prevailing party. The Independent Accountants shall consider only the items in dispute and shall be instructed to act within thirty (30) days (or such longer period as Parent and Capital may agree) to resolve all items in dispute. If Parent in its discretion gives written notification of its acceptance of an Earnout Statement prior to the end of such 30-day period, such Earnout Statement shall thereupon become binding, final and conclusive upon all the parties hereto.

(f)

In the event there is a Capital Change in Control prior to December 31, 2008, then and in such event, all of the Earnout Shares (less any Earnout Shares that have been paid previously) shall be paid to the Parent as Exchange Consideration irrespective of whether any of the earnout thresholds in subparts (i) through (iv) of Section 1.4(b) above are achieved.

(g)

In the event there is a Delta Change in Control prior to December 31, 2008, then and in such event, all of the Earnout Shares (less any Earnout Shares that have been paid previously) shall be paid to the Parent as Exchange Consideration irrespective of whether any of the earnout thresholds in subparts (i) through (iv) of Section 1.4(b) above are achieved.

1.5.

[Reserved].

1.6.

Exemptions from Registration; Restrictions on Resale. The parties intend that Capital Stock constituting the Closing Payment to be issued by Capital to Parent, and the Company Stock transferred to Capital by Parent in the Exchange, shall be exempt from the registration requirements of the Securities Act pursuant to Regulation D of the

Securities Act and the rules and regulations promulgated thereunder and from the applicable state securities laws and regulations. Neither the Company Stock nor Capital Stock will be registered under the Securities Act, or the securities laws of any state, and such shares cannot be transferred, hypothecated, sold or otherwise disposed of until: (i) a registration statement with respect to such securities is declared effective under the Securities Act, or (ii) an opinion of counsel, reasonably satisfactory to counsel for the affected party, that an exemption from the registration requirements of the Securities Act is available.

1.7.

[Reserved].

1.8.

[Reserved].

1.9.

Exchange of Certificates. Upon surrender of a Certificate for cancellation, together with a letter of transmittal, duly completed and validly executed in accordance with the instructions thereto, and such other documents as may reasonably be required by Capital, the holder of such Certificate shall be entitled to receive in exchange therefor an amount to which such holder is entitled pursuant to the Closing Payment and the Certificate so surrendered shall be canceled, or if there is more than one Certificate evidencing the Company Stock, then a pro rata portion of the Closing Payment determined by taking the number of shares of Company Stock reflected by any such Certificate divided by the aggregate number of shares of Company Stock and multiplying such quotient by the Closing Payment.

1.10.

No Fractional Shares. No certificates or scrip representing fractional shares of Capital Stock shall be issued upon the surrender for exchange of Certificates, and such fractional share interests will not entitle the owner thereof to vote or to any rights of a stockholder of the Company.

1.11.

Market Stand-off Agreement. Parent hereby agrees that it will not, without the prior written consent of Capital, during the period commencing on the Effective Time and for a period of one hundred eighty (180) days thereafter (“ Lockup Period ”) (i) lend; offer; pledge; sell; contract to sell; sell any option or contract to purchase; purchase any option or contract to sell; grant any option, right, or warrant to purchase; or otherwise transfer or dispose of, directly or indirectly, any shares of Capital Stock or any securities convertible into or exercisable or exchangeable (directly or indirectly) for the Capital Stock received hereunder or (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of such securities, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of Capital Stock or other securities, in cash, or otherwise. Notwithstanding the foregoing, the Parent shall be permitted to pledge shares of the Capital Stock so long as its lender which takes a security interest in such shares of Capital Stock agrees to be bound by the terms and conditions of this paragraph.

The Company agrees that during the Lockup Period it will, at its sole cost and expense, file the appropriate registration statement under the Securities Act of 1933 covering all of the Capital Stock received hereunder to be registered with the Securities and Exchange Commission.

1.12.

Further Action. If at any time after the Closing Date, any further action is necessary or desirable to carry out the purposes of this Agreement and to vest Capital with full right, title and possession to all assets, property, rights, privileges, powers and franchises of the Company, the directors and officers of Capital are fully authorized in the name of the Company or Capital or otherwise to take, and shall take, all such lawful and necessary action.

2.	REPRESENTATIONS AND WARRANTIES OF PARENT AND COMPANY

Parent and the Company, jointly and severally, make the following representations and warranties to Capital, subject to the exceptions set forth in the disclosure schedule attached hereto (the “ Disclosure Schedule ”).

2.1.

Corporate.

(a)

Organization. Each of Parent and the Company, and each of their respective Subsidiaries, is duly organized, validly existing and in good standing under the laws of the state of its organization.

(b)

Corporate Power. Each of the Company and its Subsidiaries has all requisite power and authority to own, operate and lease its properties and to carry on its business as and where such is now being conducted. Each of Parent and the Company has all requisite corporate power and authority to enter into this Agreement and the other documents and instruments to be executed and delivered by it pursuant hereto, to perform its obligations hereunder, and to carry out the transactions contemplated hereby and thereby.

(c)

Qualification. The Company and each of its Subsidiaries is duly licensed or qualified to do business as a foreign company, and is in good standing, in each jurisdiction wherein the character of the properties owned or leased by it, or the nature of its business, makes such licensing or qualification necessary, except for such jurisdictions in which the failure to be so qualified would not have a Company Material Adverse Effect and would not materially delay the Closing or materially and adversely affect the ability of the parties to consummate the transactions contemplated hereby or continue the ordinary course business operations of any such entity following Closing.

(d)

Ownership. Parent is the owner, beneficially and of record, of all of the issued and outstanding shares of common stock of the Company. The Company is the owner, beneficially or of record, directly or indirectly, of all of the issued and outstanding shares of common stock or equity interest of the following entities: Traders Insurance Connection, Inc., Traders Insurance Company, Professional Claims, Inc., and Christopher Joseph & Company (each a “Company Subsidiary” and collectively the “Company Subsidiaries”). The Company does not own any Subsidiaries other than the Company Subsidiaries.

2.2.

Authority . The execution, delivery and performance of this Agreement and the other documents and instruments to be executed and delivered by Parent and the Company pursuant hereto and the consummation of the transactions contemplated hereby and thereby have been duly authorized by all necessary parties (other than approval of the board of directors of the Company). No other or further act or proceeding on the part of Parent or the Company (other than approval of the board of directors of the Company) is necessary to authorize this Agreement or the other documents and instruments to be executed and delivered by Parent or the Company pursuant hereto or the consummation of the transactions contemplated hereby and thereby. This Agreement constitutes, and when executed and delivered, the other documents and instruments to be executed and delivered by Parent and the Company pursuant hereto will constitute, legal, valid and binding agreements of Parent and the Company, enforceable in accordance with their respective terms, except as such enforcement may be limited by bankruptcy, insolvency, reorganization, arrangement, moratorium or similar Laws relating to or limiting creditors’ rights generally or by equitable principles relating to enforceability.

2.3.

Capitalization . The authorized capital stock of the Company consists of 30,000 shares of common stock, par value $1.00 per share, of which 1,000 shares are issued and outstanding and all of which are owned by the Parent. All of the outstanding shares of common stock of the Company have been duly authorized and are validly issued, fully paid and nonassessable and were issued in compliance with all applicable Laws. All of the outstanding shares of common stock or other equity ownership interests of each of the Company Subsidiaries have been duly authorized and are validly issued, fully paid and nonassessable and were issued in compliance with all applicable Laws. There are no outstanding subscription, option, warrant, call rights, preemptive rights or other agreements or commitments obligating the Company or any Company Subsidiary to issue, sell, deliver or transfer (including any rights of conversion or exchange under any outstanding security or other instrument) any economic, voting, ownership or any other type of interest or security in the Company or any Company Subsidiary.

2.4.

No Violation .

(a)

Neither the execution and delivery of this Agreement or the other documents and instruments to be executed and delivered by Parent and the Company pursuant hereto, nor the consummation by Parent and the Company of the transactions contemplated hereby and thereby (a) will violate any applicable Laws, (b) will require any authorization, consent, approval, exemption or other action by or notice to any Person or any Governmental Authority, except for applicable requirements, if any, of the Securities Act of 1933, as amended (the “ Securities Act ”), the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), state securities and “blue sky” Laws, and the rules and regulations thereunder, and the Department of Insurance, Financial Institutions and Professional Registration (“ DIFP ”) of the State of Missouri or (c) subject to obtaining the consents in respect of the Seller Agreement and the other consents referred to in Section 2.4 of the Disclosure Schedule, will violate or conflict with, or constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, or will result in the termination of, or accelerate the performance required by, or result in the creation of any Encumbrance upon any of the assets of the Company

under, any term or provision of the Organizational Documents of Parent or the Company or of any contract, commitment, understanding, arrangement, agreement or restriction of any kind or character to which Parent or the Company is a party or by which Parent or the Company or any of its assets or properties may be bound or affected, except, in the case of clause (c), for such violations, conflicts, breaches, losses, defaults, terminations, cancellations, accelerations or Encumbrances that, individually or in the aggregate, would not reasonably be expected to have a Company Material Adverse Effect.

(b)

The impact of the transactions contemplated in this Agreement, will not result in Company’s or any Company Subsidiary’s inability to operate its business after Closing in a manner consistent with such Company or Company Subsidiary’s respective past practice and ordinary course of business.

2.5.

Financial Statements . The Company has previously made available to Capital true and complete copies of the consolidated financial statements of the Company consisting of (a) balance sheets of the Company as of December 31, 2004, 2005, and 2006, and the related statements of income and cash flows for the years then ended (including the notes contained therein or annexed thereto), which financial statements have been reported on, and are accompanied by, the signed, unqualified opinions of independent auditors for the Company for such years, and (b) an unaudited consolidated balance sheet of the Company as of June 30, 2007 (the “ Recent Company Balance Sheet ”), and the related unaudited statements of income for the period then ended and for the corresponding period of the prior year (including the notes and schedules contained therein or annexed thereto). All of such financial statements (including all notes and schedules contained therein or annexed thereto) are true, complete and accurate, have been prepared in accordance with GAAP (except, in the case of unaudited statements, for the absence of footnote disclosure) applied on a consistent basis, have been prepared in accordance with the books and records of the Company, and fairly present, in accordance with GAAP, the assets, liabilities and financial position, the results of operations and cash flows of the Company as of the dates and for the years and periods indicated. The books of account and other financial records of the Company are in all material respects complete and correct and do not contain or reflect any material inaccuracies or discrepancies. Attached to Section 2.5of the Disclosure Schedule is a pro forma balance sheet of the Company as of the anticipated Closing Date (i.e., September 30, 2007).

2.6.

Absence of Undisclosed Liabilities or Encumbrances . Except as and to the extent specifically disclosed in Section 2.6 of the Disclosure Schedule or in the Recent Company Balance Sheet, neither the Company nor any Company Subsidiary (a) has any Liabilities other than commercial liabilities and obligations incurred since the date of the Recent Company Balance Sheet in the ordinary course of its or their respective businesses and consistent with its respective past practice and none of which has or will have, individually or in the aggregate, a Company Material Adverse Effect, (b) has assets subject to any Encumbrance other than (i) Encumbrances shown on the Recent Company Balance Sheet as securing specified liabilities or obligations, with respect to which no default (or event that, with notice or lapse of time or both, would constitute a default) exists, (ii) Encumbrances incurred in connection with the purchase of property or assets after the date of the Recent Company Balance Sheet (such Encumbrances being limited

to the property or assets so acquired), with respect to which no default (or event that, with notice or lapse of time or both, would constitute a default) exists, (iii) Encumbrances for current taxes not yet due, and (iv) with respect to any real property, (A) minor imperfections of title, if any, none of which is substantial in amount, materially detracts from the value or impairs the use of the property subject thereto, or impairs the operations of Company or any Company Subsidiary, and (B) zoning laws and other land use restrictions that do not impair the present or anticipated use of the property subject thereto. Except as and to the extent specifically disclosed in the Recent Company Balance Sheet, neither Parent nor the Company has Knowledge of any basis for the assertion against the Company or any Company Subsidiary of any Liability and there are no circumstances, conditions, happenings, events or arrangements, contractual or otherwise, which may give rise to Liabilities, except commercial liabilities and obligations incurred in the ordinary course of the Company’s or applicable Company Subsidiary’s respective business and consistent with its past practice. The Company does not have any Liabilities under the Seller Agreements with respect to the earnout provisions set forth therein.

2.7.

Tax Matters.

(a)

Provision For Taxes. The provision made for Taxes on the Recent Company Balance Sheet is sufficient for the payment of all Taxes (and any interest and penalties) and assessments, whether or not disputed at the date of the Recent Company Balance Sheet, and for all years and periods prior thereto. Since the date of the Recent Company Balance Sheet, neither the Company nor any Company Subsidiary has incurred any Taxes other than Taxes incurred in the ordinary course of its business consistent in type and amount with past practices of the Company or Company Subsidiary, as applicable.

(b)

Tax Returns Filed. All Tax Returns required to be filed by or on behalf of the Company, any Company Subsidiary or the Affiliated Group for each period for which the Company or Company Subsidiary was a member of the Affiliated Group, have been timely filed and when filed were true and correct in all material respects, and the Taxes due thereon were paid or are adequately accrued. Each of the Company and each Company Subsidiary has duly withheld and paid all Taxes that it is required to withhold and pay relating to salaries and other compensation heretofore paid to its employees.

(c)

Tax Audits. No Tax Returns of the Company, any Company Subsidiary or the Affiliated Group for each period for which the Company or any Company Subsidiary was a member of the Affiliated Group, have been audited by the Internal Revenue Service or any other Governmental Authority, and the Company, any Company Subsidiary or the Affiliated Group, as applicable, has not received from the Internal Revenue Service or any other Governmental Authority any notice of underpayment of Taxes or other deficiency which has not been paid nor any objection to any Tax Return filed by the Company, any Company Subsidiary or the Affiliated Group, as applicable, except where such deficiency, individually or in the aggregate, would not reasonably be expected to have a Company Adverse Effect. There are no outstanding agreements or waivers extending the statutory period of limitations applicable to any Tax Return of the Company, any Company Subsidiary or the Affiliated Group.

(d)

Consolidated Group. Neither the Company nor any Company Subsidiary has any Liability for Taxes of any Person under Treas. Reg. Section 1.1502-6 (or any similar provision of state, local or foreign Laws) other than other members of the Affiliated Group.

(e)

Other. Except as set forth in Section 2.7(e) of the Disclosure Schedule, the Company has not (i) applied for any tax ruling, (ii) filed an election under Section 338(g) or Section 338(h)(10) of the Code (nor has a deemed election under Section 338(e) of the Code occurred), (iv) made any payments, or been a party to an agreement (including this Agreement) that under any circumstances could obligate it to make payments that will not be deductible because of Section 280G of the Code, or (v) except for the current tax sharing agreement between Parent and the Company (a copy of which is attached to Section 2.7(e) of the Disclosure Schedule), been a party to any tax allocation or tax sharing agreement.

2.8.

No Brokers or Finders. No agent, broker, finder, investment or commercial banker or other Person, engaged by or acting on behalf of Parent or any of its Affiliates, or the Company or any of its Affiliates, in connection with the negotiation, execution or performance of this Agreement or the transactions contemplated herein, is or will be entitled to any broker’s or finder’s or similar fees or other commissions as a result of this Agreement or the transactions contemplated herein.

2.9.

Disclosure. No representation or warranty by Parent or the Company in this Agreement, nor any statement, certificate, schedule, document or exhibit hereto furnished or to be furnished by or on behalf of Parent or the Company pursuant to this Agreement or in connection with transactions contemplated hereby, contains or shall contain any untrue statement of material fact or omits or shall omit a material fact necessary to make the statements contained therein not misleading. All statements and information contained in any certificate, instrument, Disclosure Schedule or document delivered by or on behalf of Parent and/or the Company shall be deemed representations and warranties by Parent and Company under this Article 2. Without limiting the foregoing, the Company represents and warrants that the information relating to the Company supplied by the Company for inclusion in any report, registration statement or definitive Information Statement to be filed by Capital with the Securities and Exchange Commission (the “ SEC ”) will not, as of the date provided to Capital, contain any statement which is false or misleading with respect to any material fact, or omit to state any material fact required to be stated therein or necessary in order to make the statement therein not false or misleading. With respect to documents filed or to be filed with the SEC:

(a)

Each of Parent and Company has filed all reports, schedules, forms, statements and other documents required to be filed by it with the SEC since January 1, 2004, pursuant to Sections 13(a), 14 (a) and 15(d) of the Exchange Act (the “SEC Documents”).

(b)

As of its respective filing date, each SEC Document complied in all material respects with the requirements of the Exchange Act and the rules and regulations of the SEC promulgated thereunder applicable to such SEC Document, and did not contain any

untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. Except to the extent that information contained in any SEC Document has been revised or superseded by a later filed SEC Document, none of the SEC Documents contains any untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. Any and all financial statements included in the SEC Documents comply as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto, have been prepared in accordance with GAAP (except, in the case of unaudited statements, as permitted by the rules and regulations of the SEC) applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto) and fairly present the consolidated financial position of Parent, Company and its and their consolidated subsidiaries as of the dates thereof and the consolidated results of their operations and cash flows for the periods shown (subject, in the case of unaudited statements, to normal year-end audit adjustments).

2.10.

Purchase for Own Account. Capital Stock is being acquired by Parent for its own account and with no intention of distributing or reselling such shares or any part thereof in a transaction that would be in violation of the securities laws of the United States or any state, without prejudice. Parent is an “accredited investor” within the meaning of the Securities Act. Parent acknowledges that Capital has afforded Parent’s representatives and Parent’s advisors the opportunity to discuss an investment in Capital and ask questions of representatives of Capital concerning the terms and conditions of the acquisition of Capital Stock and such representatives have provided answers to all such questions. Parent and its advisors have examined or have had the opportunity to examine this Agreement and all information that Parent or any advisor deems to be material to an understanding of Capital, the proposed business of Capital, and the acquisition of Capital Stock. The nature and amount of the investment is suitable for Parent and consistent with its overall investment program and financial condition. Parent has carefully evaluated the merits and risks of an investment in Capital and has evaluated Parent’s financial resources and investment position, and Parent has decided that it is able to bear the economic risks of acquiring Capital Stock. Parent agrees to the imprinting of an appropriate restrictive legend on all certificates representing Capital Stock which legend shall be promptly removed upon effectiveness of the Registration Statement as contemplated by Section 5.5.

2.11.

Absence of Certain Changes . Except as and to the extent set forth in Section 2.11 of the Disclosure Schedule ,there has not been:

(a) Any Company Material Adverse Effect;

(b) Any loss, damage or destruction, whether covered by insurance or not, affecting the Company’s business or properties;

(c) Any increase in the compensation, salaries or wages payable or to become payable to any executive employee of the Company (except as and to the extent set forth in, any increase or change pursuant to any bonus, pension, profit sharing, retirement or other plan or commitment), or any bonus or other employee benefit granted, made or accrued to such executive, except for such increases, bonuses or benefits that are part of a regularly scheduled or previously negotiated increase, bonus or benefit;

(d) Any labor dispute or disturbance, other than routine individual grievances which are not material to the business, financial condition or results of operations of the Company;

(e) Except for the Exchange and related transactions contemplated by this Agreement, any commitment or transaction by the Company (including, without limitation, any borrowing or capital expenditure or change in or modification of the Parent Receivable or amount thereof) other than in the ordinary course of business consistent with past practice;

(f) Except as contemplated by this Agreement, (i) any declaration, setting aside, or payment of any dividend or any other distribution in respect of the Company’s capital stock; (ii) any redemption, purchase or other acquisition by the Company of any capital stock of the Company, or (iii) any security relating thereto; or any other payment to any stockholder of the Company;

(g) Any sale, lease or other transfer or disposition of any properties or assets of the Company, except for sales in the ordinary course of business;

(h) Any indebtedness for borrowed money incurred, assumed or guaranteed by the Company other than in the ordinary course of business consistent with past practice and in no event shall Company indebtedness exceed the sum of $605,803 plus the amount, if any, borrowed by Company in accordance with Section 5.9 of this Agreement;

(i) Any Encumbrance (other than Permitted Encumbrances) made on any of the properties or assets of the Company other than in the ordinary course of business consistent with past practice;

(j) Any entering into, amendment or termination by the Company of any Material Contract, or any waiver of material rights there under, other than in the ordinary course of business consistent with past practice;

(k) any loan or advance (other than advances to employees in the ordinary course of business for travel and entertainment in accordance with past practice) to any Person including, but not limited to, any officer, director or employee of the Company or any of its Affiliates;

(l) Any grant of credit to any customer on terms or in amounts materially more favorable than those which have been extended to such customer in the past, any other material change in the terms of any credit heretofore extended, or any other material change of the Company’s policies or practices with respect to the granting of credit; or

(m) Except for the Exchange and related transactions contemplated by this Agreement, to the Parent and Company’s Knowledge, any other event or condition not in the ordinary course of business of the Company or any Company Subsidiary.

2.12.

No Litigation; Administrative Actions .

(a)

Except as set forth in Section 2.12 of the Disclosure Schedule, there is no litigation pending or, to Parent and Company’s Knowledge, threatened against the Company, any Company Subsidiary, or any Company or Company Subsidiary director (in such capacity), business or any of its or their assets which, if adversely determined, could, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect. There is no proceeding currently pending or to Parent and Company’s Knowledge, any action threatened (including, without limitation, action to revoke any licenses or authorizations issued) by any entity regulating the sale of insurance in any state in which the Company or any Company Subsidiary is licensed or elsewhere. Furthermore, neither Parent nor Company has actual knowledge of the existence of any facts that may constitute the grounds for the suspension or revocation of any licenses or authorizations of Company or any Company Subsidiary issued by any entity regulating the sale of insurance.

(b)

There are no administrative orders or supervisory actions by state or federal regulatory authorities now in force or pending as of the date hereof which affect the Company or any Company Subsidiary. The Company and each Company Subsidiary has duly filed on a timely basis with the appropriate governmental agencies all reports which are or were due or are required to be filed by the Company or any Company Subsidiary with respect to all periods of time, and all interest, penalties, and charges due or to become due for all periods of time prior to closing have been paid in full or have been accrued for. There are no ongoing or pending complaints, examinations or investigations of Company or any Company Subsidiary by any regulatory authority.

2.13.

Compliance With Laws.

(a) Compliance . To the Company’s Knowledge, the Company is in compliance with all applicable Laws, including, without limitation, those applicable to discrimination in employment, trade practices, competition and pricing, zoning, building and sanitation, employment, retirement and labor relations, and Environmental Laws except where the failure to comply has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. The Company has not received notice of any violation or alleged violation of, and is subject to no Liability for past or continuing violation of, any Laws except where such violation has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. All material reports and returns required to be filed by the Company with any Governmental Authority have been filed, and were accurate and complete in all material respects when filed, except where the failure to file or be accurate and complete in all material respects has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

(b) Licenses and Permits . To the Company’s Knowledge, the Company has all licenses, permits, approvals, authorizations and consents of all Governmental Authorities and all certification required for the conduct of the business (as presently conducted and as proposed to be conducted), except where the failure to have such licenses, permits, approvals, authorizations and consents has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. To the Company’s Knowledge, the Company (including its operations, properties and assets) is and has been in compliance with all such permits and licenses, approvals, authorizations and consents, except where the failure to comply has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

(c) Environmental Matters . The applicable Laws relating to pollution or protection of the environment, including Laws relating to emissions, discharges, generation, storage, releases or threatened releases of pollutants, contaminants, chemicals or industrial, toxic, hazardous or petroleum or petroleum-based substances or wastes (“ Waste ”) into the environment (including, without limitation, ambient air, surface water, ground water, land surface or subsurface strata) or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Waste including, without limitation, the Clean Water Act, the Clean Air Act, the Resource Conservation and Recovery Act, the Toxic Substances Control Act and the Comprehensive Environmental Response Compensation Liability Act (“ CERCLA ”), as amended, and their state and local counterparts are herein collectively referred to as the “ Environmental Laws ”. To the Company’s Knowledge, the Company is in compliance in all material respects with all limitations, restrictions, conditions, standards, prohibitions, requirements, obligations, schedules and timetables contained in the Environmental Laws or contained in any regulations, code, plan, order, decree, judgment, injunction, notice or demand letter issued, entered, promulgated or approved thereunder.

(d) Traders. Traders is in compliance with: (i) all applicable insurance statutes and regulations concerning capital adequacy and statutory accounting and (ii), with respect to all Laws (other than all applicable insurance statutes and regulations concerning capital adequacy and statutory accounting), to the Company’s Knowledge, the Company is in compliance with all such Laws except where the failure to comply has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

2.14.

Title to and Condition of Properties.

(a) Tangible Property . The Company has good and marketable title to, or a valid leasehold interest in, all equipment, furniture and other tangible assets used in the ordinary course of its business and operations, free and clear of any Encumbrances other than Permitted Encumbrances. All of the assets, owned or leased by the Company are in good working order, ordinary wear and tear excepted, and suitable for the purposes for which they are being used.

(b) Real Property . Section 2.14(b) of the Disclosure Schedule sets forth all real property used or occupied by the Company, including a description of all land.

(c) Insurance . The Company has supplied to Capital a true, correct and complete list of all fire, theft, casualty, general liability, workers’ compensation, business interruption, environmental impairment, product liability, automobile and other insurance policies insuring the Company and of all life insurance policies maintained for any officers or employees of the Company, specifying the type of coverage, the amount of coverage, the premium, the deductible, the insurer and the expiration date of each such policy (collectively, the “ Company Insurance Policies ”). True, correct and complete copies of all of the Company Insurance Policies have been made available by the Company to Capital. The Company Insurance Policies are in full force and effect and are in amounts and of a nature which are adequate and customary for businesses similar to the business of the Company. All premiums due on the Company Insurance Policies or renewals thereof have been paid and there is no default under any of the Company Insurance Policies.

2.15.

Contracts and Commitments.

(a) Real Property Leases . Except as set forth in Section 2.15(a) of the Disclosure Schedule, neither the Company nor any Company Subsidiary has any lease of real property.

(b) Personal Property Leases . Except as set forth in Section 2.15(b) of the Disclosure Schedule, neither the Company nor any Company Subsidiary has any lease of personal property.

(c) Sales Commitments . Except as set forth in Section 2.15(c) of the Disclosure Schedule, neither the Company nor any Company Subsidiary has sales contracts or commitments to customers except those made in the ordinary course of business, at arm’s length, and no such contracts or commitments are for a sales price which would result in a loss to the Company or Company Subsidiary, as applicable, that is not reflected on Section 2.15(c) of the Disclosure Schedule.

(d) Contracts for Services . Except as set forth in Section 2.15(d) of the Disclosure Schedule, neither the Company nor any Company Subsidiary has any agreement, understanding, contract or commitment (written or oral) with any stockholder, officer, employee, agent, consultant that is not cancelable by the Company or Company Subsidiary on notice of not longer than 30 days without Liability, penalty or premium of any nature or kind whatsoever.

(e) Powers of Attorney . Except as set forth in Section 2.15(e) of the Disclosure Schedule, neither the Company nor any Company Subsidiary has given any power of attorney, which is currently in effect, to any Person for any purpose whatsoever.

(f) Collective Bargaining Agreements . Neither the Company nor any Company Subsidiary is a party to any collective bargaining agreements with any unions, guilds, shop committees or other collective bargaining groups.

(g) Loan Agreements . Except as set forth in Section 2.15(g) of the Disclosure Schedule, neither the Company nor any Company Subsidiary is obligated under any loan agreement, promissory note, letter of credit, or other evidence of indebtedness as a signatory, guarantor or otherwise.

(h) Guarantees . Except as set forth in Section 2.15(h) of the Disclosure Schedule, the Company nor any Company Subsidiary has guaranteed the payment or performance of any Person, agreed to indemnify any Person or act as a surety, or otherwise agreed to be contingently or secondarily liable for the obligations of any Person.

(i) Contracts Subject to Renegotiation . Neither the Company nor any Company Subsidiary is a party to any contract with any Governmental Authority which is subject to renegotiation.

(j) Other Material Contracts . Neither the Company nor any Company Subsidiary has any lease, license, contract or commitment of any nature involving consideration or other expenditure in excess of $250,000 , or which is otherwise individually material to the operations of the Company or Company Subsidiary, as applicable, except as set forth in Section 2.15(j) of the Disclosure Schedule, or except as would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

(k) No Default . To the Company’s Knowledge, neither the Company nor any Company Subsidiary is in default under any lease, contract or commitment, nor has any event or omission occurred which through the passage of time or the giving of notice, or both, would constitute a default thereunder or cause the acceleration of any of the Company’s or any Company Subsidiary’s obligations or result in the creation of any Encumbrance on any of the assets owned, used or occupied by the Company or any Company Subsidiary other than defaults which, have not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. To the Company’s Knowledge, no third party is in default under any lease, contract or commitment to which the Company or any Company Subsidiary is a party, nor has any event or omission occurred which, through the passage of time or the giving of notice, or both, would constitute a default thereunder or give rise to an automatic termination, or the right of discretionary termination, thereof, other than defaults which, have not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

2.16.

Labor Matters . Neither the Company nor any Company Subsidiary has experienced any labor disputes or any work stoppage due to labor disagreements with employees of the Company or any Company Subsidiary. Except to the extent set forth in Section 2.16 of the Disclosure Schedule, to the Company’s Knowledge, (a) the Company and each

Company Subsidiary is in compliance with all applicable Laws respecting employment and employment practices, terms and conditions of employment and wages and hours, and is not engaged in any unfair labor practice; (b) there is no unfair labor practice charge or complaint against the Company or any Company Subsidiary pending or threatened; (c) there is no labor strike, dispute, request for representation, slowdown or stoppage actually pending or threatened against or affecting the Company or any Company Subsidiary; (d) no question concerning representation has been raised or is threatened respecting the employees of the Company or any Company Subsidiary; (e) no grievance which might have a Company Material Adverse Effect, nor any arbitration proceeding arising out of or under collective bargaining agreements, is pending and no such claim therefore exists; and (f) there are no administrative charges or court complaints against the Company or any Company Subsidiary concerning alleged employment discrimination or other employment related matters pending or threatened before the U.S. Equal Employment Opportunity Commission or any other Governmental Authority.

2.17.

Employee Benefit Plans.

(a) Disclosure . The Company has supplied to Capital a complete list of all (i) incentive, bonus, commission, or deferred compensation or severance or termination pay plans, agreements or arrangements for the benefit of employees employed in the Company, (ii) pension, profit-sharing, stock purchase, stock option, group life insurance, hospitalization insurance, disability, retirement and all other employee benefit plans, agreements or arrangements, including but not limited to any “employee benefit plan” (as defined in Section 3(3) of ERISA), for the benefit of employees employed by the Company, or (iii) fringe benefit plans, agreements and arrangements for the benefit of employees employed by the Company (the items referred to in (i), (ii) and (iii) above are hereinafter referred to collectively as the “ Plans ”).

(b) Operation . Each of the Plans set forth in Section 2.17(a) that is an “employee pension benefit plan” (as such term is defined in Section 3(2) of ERISA), or an “employee welfare benefit plan” (as such term is defined in Section 3(1) of ERISA), has been operated in compliance with its written terms and the applicable provisions of ERISA and the Code, except where the failure to operate in compliance has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. To the extent applicable, the Company has heretofore made available to Capital complete copies of (i) each Plan, including all amendments thereto, and its related trust agreement, if any, and summary plan description, if any, and (ii) each collective bargaining agreement relating to each Plan.

(c) Changes . Except as set forth in Section 2.17(c) of the Disclosure Schedule, to the Company’s Knowledge there are no agreed upon future increases of benefit levels for employees employed by the Company, and no increases in benefits have been committed to by the Company for the benefit of employees employed by the Company, except for increases that are part of regularly scheduled or previously negotiated increases. With respect to each Plan, full payment has been made of all amounts that the Company is required to have paid as contributions to such Plan under its terms or under the terms of any applicable collective bargaining agreement or ERISA.

(d) Claims . There are no pending or, to the Company’s Knowledge, threatened claims against any of the Plans or related trusts other than routine claims by participants and beneficiaries for benefits due and owing under such Plans.

2.18.

Intellectual Property . The Company owns or has the right to use, whether through licensing or otherwise, all Intellectual Property significant to the businesses of the Company in substantially the same manner as such businesses are conducted on the date hereof.

3.	REPRESENTATIONS AND WARRANTIES OF CAPITAL

Capital makes the following representations and warranties to Parent and the Company, subject to the exceptions set forth in the Disclosure Schedule. Representations and warranties by Capital shall be deemed to be representations and warranties with respect to Capital and its Subsidiaries, unless the context otherwise requires.

3.1.

Corporate.

(a)

Organization . Capital and each of its Subsidiaries is duly organized, validly existing and in good standing under the laws of the state of its organization.

(b)

Corporate Power . Capital and each of its Subsidiaries has all requisite power and authority to own, operate and lease its properties and to carry on its business as and where such is now being conducted. Capital has all requisite corporate power and authority to enter into this Agreement and the other documents and instruments to be executed and delivered by it pursuant hereto, to perform its obligations hereunder, and to carry out the transactions contemplated hereby and thereby.

(c)

Qualification . Capital and each of its Subsidiaries is duly licensed or qualified to do business as a foreign company, and is in good standing, in each jurisdiction wherein the character of the properties owned or leased by it, or the nature of its business, makes such licensing or qualification necessary, except for such jurisdictions in which the failure to be so qualified would not have an Capital Material Adverse Effect and would not materially delay the Closing or materially and adversely affect the ability of the parties to consummate the transactions contemplated hereby.

(d)

Subsidiaries . Capital owns, directly or indirectly, the Subsidiaries set forth in the Capital Reports. Each Subsidiary set forth in the Capital Reports is individually referred to herein as a “Capital Subsidiary” and all Capital-owned Subsidiaries set forth in the Capital Reports are collectively referred to herein as the “Capital Subsidiaries.”

(e)

Capital Stock . Upon issuance and delivery of Capital Stock pursuant to this Agreement, Capital Stock will be duly authorized and validly issued, fully paid and non-assessable.

3.2.

Authority . Subject to Capital Stockholder Approval, the execution, delivery and performance of this Agreement and the other documents and instruments to be executed and delivered by Capital pursuant hereto and the consummation of the transactions contemplated hereby and thereby have been duly authorized by all necessary parties.

Except for Capital Stockholder Approval, no other or further act or proceeding on the part of Capital is necessary to authorize this Agreement or the other documents and instruments to be executed and delivered by Capital pursuant hereto or the consummation of the transactions contemplated hereby and thereby. This Agreement constitutes, and when executed and delivered, the other documents and instruments to be executed and delivered by Capital pursuant hereto will constitute, legal, valid and binding agreements of Capital, enforceable in accordance with their respective terms, except as such enforcement may be limited by bankruptcy, insolvency, reorganization, arrangement, moratorium or similar Laws relating to or limiting creditors’ rights generally or by equitable principles relating to enforceability.

3.3.

Capitalization . The authorized capital stock of Capital consists of 25,000,000 shares of common stock, par value $0.01 per share, and 1,550,000 shares of preferred stock, par value $5.00 per share. As of the date of this Agreement, there are (i) 3,085,817 shares of Capital common stock issued and outstanding and (ii) no shares of Capital preferred stock issued and outstanding. All of the outstanding shares of common stock of Capital have been duly authorized and are validly issued, fully paid and nonassessable and were issued in compliance with all applicable Laws. Except as described in Capital Reports and the Merger Agreement, there are no outstanding subscription, option, warrant, call rights, preemptive rights or other agreements or commitments obligating Capital to issue, sell, deliver or transfer (including any rights of conversion or exchange under any outstanding security or other instrument) any economic, voting, ownership or any other type of interest or security in Capital.

3.4.

No Violation . Neither the execution and delivery of this Agreement or the other documents and instruments to be executed and delivered by Capital pursuant hereto, nor the consummation by Capital of the transactions contemplated hereby and thereby (a) will violate any applicable Laws, (b) will require any authorization, consent, approval, exemption or other action by or notice to any Person or any Governmental Authority, except for applicable requirements, if any, of the Securities Act, the Exchange Act, state securities and “blue sky” Laws, and the rules and regulations thereunder, and the DIFP, or (c) will violate or conflict with, or constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, or will result in the termination of, or accelerate the performance required by, or result in the creation of any Encumbrance upon any of the assets of Capital under, any term or provision of the Organizational Documents of Capital or of any contract, commitment, understanding, arrangement, agreement or restriction of any kind or character to which Capital is a party or by which Capital or any of its assets or properties may be bound or affected, except, in the case of clause (c), for such violations, conflicts, breaches, losses, defaults, terminations, cancellations, accelerations or Encumbrances that, individually or in the aggregate, would not reasonably be expected to have an Capital Material Adverse Effect.

3.5.

Reports. Capital has previously made available to the Parent and the Company a true, correct and complete copy of each (a) final registration statements, prospectus, report, schedule and definitive proxy or information statement filed since December 31, 2006 by Capital with the SEC pursuant to the Securities Act or the Exchange Act (collectively, the “ Capital Reports ”), (b) written communication between Capital and the SEC since

December 31, 2006, and (c) communication mailed by Capital to its stockholders since December 31, 2006, and no such registration statement, prospectus, report, schedule, proxy or information statement or communication as of its date of filing contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances in which they were made, not misleading. Since December 31, 2006, Capital has timely filed all Capital Reports and other documents required to be filed by it under the Securities Act and the Exchange Act, and, as of their respective dates, all Capital Reports complied in all material respects with the published rules and regulations of the SEC with respect thereto, including rules and regulations relating to the filing of exhibits thereto. No executive officer of Capital has failed in any respect to make the certifications required of him or her under Section 302 or 906 of the Sarbanes-Oxley Act of 2002 and no enforcement action has been initiated against Capital by the SEC relating to disclosures contained in any Capital Report.

3.6.

Financial Statements . Capital has previously made available to Parent and the Company true and complete copies of the combined financial statements of Capital consisting

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