10-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2005

Commission file number: 001-31256

Clark, Inc.

(Exact name of Registrant as specified in its charter)

Delaware	52-2103926
(State of incorporation or organization)	(I.R.S. Employer Identification No.)
102 South Wynstone Park Drive
North Barrington, Illinois	60010
(Address of principal executive offices)	(Zip code)

(Registrant's telephone number) (847) 304-5800

Securities Registered Pursuant to Section 12(b) of the Act:

Title of Securities	Exchange on which Registered
Common Stock, par value $.01 per share Junior Participating Preferred Stock, Series A, Purchase Rights par value, $.01 per share	New York Stock Exchange

Securities Registered Pursuant to Section 12(g) of the Act:

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ¨No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.

Yes ¨No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes xNo ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2).

Yes xNo ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ¨No x

The aggregate market value of the voting common stock of the Registrant held by non-affiliates of the Registrant as of June 30, 2005 (based upon the closing price of $14.33 per share) was approximately $202.4 million.

As of December 31, 2005, the registrant had outstanding 17,509,321 shares of common stock.

DOCUMENTS INCORPORATED BY REFERENCE

The definitive proxy statement for the 2006 annual meeting is incorporated into Part III of this Form 10-K by reference.

TABLE OF CONTENTS

		PAGE
FORWARD-LOOKING STATEMENTS		3
	PART I
ITEM 1.	BUSINESS	4
ITEM 1A.	RISK FACTORS	10
ITEM 1B.	UNRESOLVED STAFF COMMENTS	15
ITEM 2.	PROPERTIES	15
ITEM 3.	LEGAL PROCEEDINGS	15
ITEM 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS	16
	PART II
ITEM 5.	MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES	16
ITEM 6.	SELECTED FINANCIAL DATA	17
ITEM 7.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	18
ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	32
ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	32
ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	32
ITEM 9A.	CONTROLS AND PROCEDURES	33
ITEM 9B.	OTHER INFORMATION	35
	PART III
ITEM 10.	DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT	35
ITEM 11.	EXECUTIVE COMPENSATION	35
ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	35
ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS	35
ITEM 14.	PRINCIPAL ACCOUNTANT FEES AND SERVICES	35
	PART IV
ITEM 15.	EXHIBITS AND FINANCIAL STATEMENT SCHEDULES	36
SIGNATURES		62

FORWARD-LOOKING STATEMENTS

This Form 10-K and the documents incorporated by reference in this Form 10-K may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements are identified by words such as "anticipate," "believe," "estimate," "expect," "intend," "predict," "project," and similar expressions. When we make forward-looking statements, we are basing them on our management's beliefs and assumptions, using information currently available to us. These forward-looking statements are subject to risks, uncertainties, and assumptions, including but not limited to, risks, uncertainties, and assumptions related to the following:

Ÿ   changes in tax laws;

Ÿ   other federal and state laws and regulations;

Ÿ   general economic conditions;

Ÿ   competitive factors and pricing pressures;

Ÿ   our dependence on services of key personnel;

Ÿ   our dependence on persistency of existing business;

Ÿ   our ability to achieve our earnings projections;

Ÿ   risks associated with acquisitions;

Ÿ   significant intangible assets;

Ÿ   our dependence on a select group of insurance companies;

Ÿ   supplemental compensation arrangements with certain insurance companies; and

Ÿ   our dependence on information processing systems and risk of errors or omissions.

If one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may vary materially from those anticipated. Any forward-looking statements you read in this Form 10-K or the documents incorporated herein by reference reflect our current views with respect to future events and are subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, growth strategy and liquidity. You should specifically consider the factors identified in this Form 10-K, including under the caption “Risk Factors,” or in the documents incorporated by reference in this Form 10-K, which could cause actual results to differ materially from those indicated by the forward-looking statements. In light of the foregoing risks and uncertainties, you should not unduly rely on such forward looking statements when deciding whether to buy, sell or hold any of our securities. We disclaim any intent or obligation to update or alter any of the forward-looking statements whether in response to new information, unforeseen events, changed circumstances or otherwise.

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PART I

ITEM 1. BUSINESS

Overview

Founded in 1967, Clark, Inc. is a national firm dedicated to helping companies keep their best people through integrated compensation, benefits, and funding solutions. We design, market, and administer compensation and benefit programs for companies supplementing and securing employee benefits and provide executive compensation and related consulting services to U.S. corporations, banks, and healthcare organizations. We have approximately 4,000 clients that use our customized programs to supplement and secure benefits for their executives, key employees and other professionals, and to offset the costs of employee benefit liabilities. Our clients also rely on our consultants to structure their compensation programs. We were one of the first organizations to offer business-owned and bank-owned life insurance programs.

A majority of our revenues result from commissions paid by insurance companies that underwrite the insurance policies used to finance our clients' benefit programs. As a result of a series of acquisitions, we have expanded our service offerings to become a value-added provider of a wide range of employee compensation and benefit consulting services. Our primary sources of revenue are: (1) commissions and other compensation paid by insurance companies issuing the policies underlying our benefit programs, (2) program design and administrative service fees paid by our clients, (3) executive compensation, benefit, and consulting fees, and (4) legislative liaison and related advisory services.

We are headquartered at 102 S. Wynstone Park Drive, North Barrington, Illinois 60010 and maintain offices nationwide. Our Internet address is www.clarkconsulting.com. We post, by means of a hyperlink to the SEC’s website, the following filings as soon as reasonably practicable after they are electronically filed with or furnished to the SEC: our annual report on Form 10-K, our quarterly reports on Form 10-Q, our current reports on Form 8-K and any amendments to those reports filed or furnished to the SEC. All such filings are on our web site and available free of charge. Information related to our corporate governance can also be found under “corporate governance” in the “investors” section of our website.

Our products and services

We provide executive compensation and benefit consulting services as well as evaluate, design, implement, and administer a diverse array of compensation and benefit programs for executives, key employees, and other professionals. Typically, in selling, designing, and implementing executive compensation and benefit programs, we:

·   evaluate a client's existing compensation and benefit programs and the effectiveness of those programs in meeting that client's organizational needs;

·   design or improve the compensation and benefit programs;

·   compare financing alternatives for the programs and present the financial strengths of each to the client;

·   arrange for the placement of the insurance coverage or other instruments which will finance the underlying programs; and

·   provide the enrollment, reporting, and ongoing administrative services associated with the programs.

Most of our benefit programs are financed by business-owned life insurance and other financial products. Business-owned life insurance refers to life insurance policies purchased and owned by a business on the lives of a select group of employees. The business pays the premiums on, and is the owner and beneficiary of, such policies. Business-owned life insurance programs are used primarily to offset a client's cost of providing executive benefits and to supplement and secure benefits for executives, key employees, and other professionals. The cash flow characteristics of business-owned life insurance policies are designed to closely match the long-term cash flow requirements of a client's employee benefit liabilities. Additionally, the cash value of the business-owned life insurance policies grows on a tax-deferred basis and the policies' death benefits are received tax free, providing an attractive return to the client.

We maintain strategic relationships with insurance companies such as AEGON, AXA, Great-West Life, Mass Mutual, New York Life, ING, Prudential, Clarica, and West Coast Life, in which both parties are committed to developing and delivering creative products with high client value. We work closely with clients to design customized products that meet the specific organizational needs of the client and with insurance companies to develop unique policy features and competitive pricing.

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Set forth below is a description of our principal benefit plan solutions, consulting services, financing products, and administrative services.

Benefit plan solutions

Deferred Income Plans. Deferred income plans allow executives to defer a portion of their current income on a tax-deferred basis. The deferred income, and earnings thereon, in a properly designed and administered deferred income plan grow on a tax-deferred basis until distributions are made to the executive, usually at retirement. Corporations often purchase life insurance to create an asset in order to offset the costs of the liability created by a deferred income plan. Deferred income plans can be structured in a variety of ways, including: traditional deferred income plans, which credit the deferred income amount with a fixed rate of interest and use fixed yield life insurance products to offset the costs of the company's liability, or variable deferred income plans, which credit the deferred income amount with interest based on bond or equity indices and use variable yield life insurance products to offset the costs of the corporation’s liability. In an effort to provide additional security for executives, many corporations will create a trust to hold the related insurance policies.

Supplemental Executive Retirement Plans. Supplemental executive retirement plans are specifically designed to supplement the dollar limitation on benefits paid from qualified pension plans. The maximum dollar amount of compensation that can be used to determine the pension benefits payable to an executive from a qualified plan was $210 thousand in 2005 ($220 thousand in 2006). Accordingly, non-qualified plans such as supplemental executive retirement plans, which are not subject to the same stringent rules, have increased in popularity. Many supplemental executive retirement plans are funded with the same insurance products and strategies used to fund deferred income plans.

Supplemental Offset Plans. Supplemental offset plans are designed to supplement an executive's retirement income by restoring benefits previously limited by legislative changes. Supplemental offset plans are funded with insurance policies using a technique commonly known as "split dollar." Ownership rights to an individual policy are shared between the corporation and the executive. The corporation and the executive share in the insurance policy's increasing cash value and death benefit. The corporation pays the premiums and recovers these expenditures from its share of the policy's proceeds. The executive's interest in such policy is targeted to equal the present value of the retirement benefits due at the time of such executive's retirement. Provisions under the Sarbanes-Oxley Act of 2002 have created uncertainty as to whether certain split dollar policies may be used with respect to certain executives. The split-dollar regulations from September 2003 and the Sarbanes-Oxley Act of 2002 have significantly reduced the amount of revenue generated from new split dollar arrangements and may further reduce revenue from existing split dollar arrangements.

Group Term Carve Out Plans. Currently, a corporation can provide its employees with a group term life insurance policy death benefit of up to $50 thousand on a tax-free basis. The cost of providing a death benefit in excess of $50 thousand is taxed to the employee as ordinary income. Group term carve out plans allow companies to provide portable coverage in a customized program of amounts greater than $50 thousand that are taxed at lower rates. The purpose of group term carve out plans is to provide a greater amount of insurance and post-retirement death benefit to the employee at a competitive overall cost.

Disability Income Plan. Many companies provide group disability income insurance for their employees. In many cases, these plans have limits that may not be sufficient to provide reasonable income replacement for executives in the event of a disability. Group disability insurance plans marketed by our Executive Benefits Practice and Healthcare Group supplement the group plans currently in place, and provide additional income for executives in the event of a disability.

ExecuFLEX Program. Our Healthcare Group provides a total compensation planning approach to the not-for-profit healthcare market through its “ExecuFLEX” program. The program includes a base level of benefits, such as medical, dental, vision, long-term disability, long-term care, and group term life insurance. In addition, participants are provided an allowance made up of company contributions and voluntary personal deferrals. The flex allowance is used to supplement base coverage and to add to the employees' retirement funding. The ExecuFLEX program is designed to provide maximum flexibility to the participants at a minimal cost to the organization. The success of ExecuFLEX has led us to offer the program to companies serviced by our other operating segments as well as additional market segments within the healthcare industry.

Consulting services

Pearl Meyer & Partners, one of the nation’s leading executive compensation consulting firms, serves board compensation committees as outside advisors and assists companies in the creation and implementation of compensation programs for executives, directors, and employees.

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In 2002, we formed our Human Capital Practice. The practice was formed by combining our Rewards and Performance Group and ten former partners and 74 support staff from Arthur Andersen LLP’s (“Andersen”) Human Capital Practice. The Human Capital Practice provided compensation benefits and human resources consulting services and products to major companies. As of October 1, 2003, we reorganized the executive compensation consulting practices. As part of this reorganization, some of the operations and employees of Human Capital Practice were transferred to Pearl Meyer & Partners. The remaining business of Human Capital Practice, in 2004, consisted of actuarial/retirement plan and investment advisory services. Effective January 1, 2005, the remaining Human Capital Practice was merged into the Executive Benefits Practice. We increased the size of our investment consulting group with the acquisition of Stratford Advisory Group in October, 2005.

With the acquisition of the Federal Policy Group (“FPG”) in 2002, we were able to expand our services to include a variety of legislative and regulatory strategic services. FPG develops and implements strategies to pursue legislative changes; anticipate and respond to proposed legislative initiatives; help shape administrative regulations and rulings; and raise the visibility of our clients through testimony before Congress and other avenues. Federal Policy Group clients include Fortune 500 companies, trade associations, and other businesses.

Our Healthcare Group and Banking Practice have developed compensation consulting programs in base salary, incentives, deferred compensation, and other compensation design plans. Approximately 50% of the Healthcare Group’s revenue is generated by consulting fees.

Financing products

Business-Owned Life Insurance.  Business-owned life insurance is life insurance purchased and owned by an employer on the lives of a group of its employees. The insurance is used to fund the cost of the employee benefit obligations of the employer. The insurance is typically held by the employer as a general asset and is not directly linked to the employee benefits.  Business-owned life insurance is marketed to mid-sized and large corporations and healthcare institutions.

Bank-Owned Life Insurance. When utilized by banks, business-owned life insurance (as discussed above) is referred to as bank-owned life insurance. We market these programs to large banks, as well as to regional and community banks.

Administrative services

As of December 31, 2005, we administered approximately 376 thousand policies for approximately 2,650 clients. As of the same date, the insurance policies underlying our employee benefit programs represented a total of approximately $182 billion of inforce insurance coverage.

The following table presents the number of clients, policies administered, and inforce coverage as of December 31, 2005:

	Executive Benefits Practice	Banking Practice	Healthcare Group	Total
Clients	350	2,000	300	2,650
Policies administered	77,000	285,000	14,000	376,000
Inforce coverage	$45 billion	$133 billion	$4 billion	$182 billion

We also provided consulting services to an additional 1,350 clients in 2005.

We generate fee-based revenues by providing administrative services to our clients. We approach administrative services with a strategy focused on servicing our clients' unique requirements and needs through customized, value-added services and intensive support in order to create brand and client loyalty and lower sensitivity to price.

We offer customized enrollment and administrative services for our employee benefit programs. In an effort to provide a high level of personalized services, each client is assigned an account team comprised of specialists who are responsible for servicing the needs of that client. The administrative services provided by each of our practices’ account specialists include coordinating and managing the enrollment process; distributing communication materials; monitoring financial, tax and regulatory changes; providing liability reports and periodic benefit statements to participants; performing annual reviews, and reporting the historical and projected cash flow and earnings impact of the plans. Actuarial, financial, and insurance experts support each practice’s account specialists. We enter into administrative agreements with many clients, in most cases for a term of five to ten years.

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Our business segments

In 2005, we operated through five operating segments: (1) Executive Benefits Practice, (2) Banking Practice, (3) Healthcare Group, (4) Pearl Meyer & Partners, and (5) Federal Policy Group. Through these five segments, we design, market, and administer compensation and benefit programs for companies supplementing and securing employee benefits and provide executive compensation and related consulting and legislative strategic services to U.S. corporations, banks, and healthcare organizations. Our five operating segments operate as independent and autonomous business units with a central corporate staff responsible for finance, strategic planning, human resources, and company-wide policies. Each segment has its own client base as well as its own marketing, administration, and management.

In August 2005, we announced our intent to combine our Executive Benefits Practice, Banking Practice, and Insurance Company Practice into one practice that will serve those markets. The new practice will be reported as a single reporting segment in our consolidated financial statements effective January 1, 2006. The purpose of this combination is to be able to leverage the expertise of our top producers across a wider customer base, and improve our level of client service by streamlining operations and sharing a broader set of best practices.

Executive Benefits Practice

The Executive Benefits Practice (“EBP”) focuses on the designing, marketing, implementation, administration, and sales of COLI to finance non-qualified benefit plans for companies of all sizes, including Fortune 1000 companies, which can benefit from our products and services. The large corporate marketplace in which EBP does business requires a significant degree of customization. EBP has struggled in recent years as a result of the United States legislative environment, which most directly affects this segment of our business.

Banking Practice

The Banking Practice (“BP”) offers compensation consulting, executive and director benefits programs, and bank-owned life insurance to the bank market. BP provides programs to approximately 2,100 banks, including 43 of the top 50 largest banks in the United States.  In addition to compensation and benefit programs, this group also performs incentive consulting and works with banks in the design of ownership succession programs.

Healthcare Group

The Healthcare Group (“HG”) employs a comprehensive benefits approach that encompasses a variety of insurance products, ranging from traditional life insurance policies to disability and long-term care coverage. The healthcare industry has experienced a great deal of contraction with changes in our national healthcare regulations and compensation structure.

Pearl Meyer & Partners

Pearl Meyer & Partners (“PM&P”) is focused predominantly on executive compensation consulting and retention programs for Fortune 1000 corporations. It is one of the largest executive compensation consulting organizations in the United States. Pearl Meyer and Steve Hall, president of Pearl Meyer & Partners, announced their resignations in late August 2005. Effective August 30, 2005, Joe Rich replaced Steve Hall as president of Pearl Meyer & Partners. Subsequently, several client facing professionals have also resigned. As a result of the voluntary resignations, there were seven involuntary terminations of certain Pearl Meyer & Partners’ employees in October. These developments are expected to reduce future revenue opportunities.

Federal Policy Group

Federal Policy Group (“FPG”) focuses on a variety of legislative and regulatory strategic services. FPG develops and implements strategies to pursue legislative changes; anticipates and responds to proposed legislative initiatives; helps shape administrative regulations and rulings; and raises the visibility of our clients through testimony before Congress and other avenues. FPG’s clients include Fortune 500 companies, trade associations, and other businesses.

Distribution

We market employee benefit programs and related administrative and consulting services through employee producers as well as through producers in independently operated sales offices located throughout the United States. As of December 31, 2005, we marketed our programs and services through 140 employees and 25 independent producers.

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Our independent producers enter into exclusive agency agreements with us to market programs and services on our behalf. Each agreement defines the duties of the producer to solicit and sell covered business in an exclusive geographic territory, the commission splits between the producer and us, and includes a confidentiality agreement and operating standards. We pay a substantial portion (usually from 50% to 65%) of the revenue generated by the independent producers as commissions. All of our independent producers are responsible for their own operating expenses. Most of our segments generate a significant portion of their sales revenue through employees and we bear the administrative expense of the employees in exchange for lower commission expense. Over the last several years, our sales force has shifted to more employees from independent producers.

Many of our products have a securities component and must be sold through a licensed broker/dealer. Clark Securities, Inc. (“CSI”) is used by our producers for distributing these securities-related products. CSI currently distributes insurance, annuities, and mutual funds for our products. CSI had 285 registered representatives at December 31, 2005, and is licensed to operate in all 50 states and the District of Columbia. By having our own broker/dealer, we are able to control costs and sensitive customer information more effectively than if we used an outside broker/dealer.

Our producers are supported by a design and analysis department in each insurance related segment. The primary responsibility of the design and analysis department is to design customized compensation and benefit programs that will effectively reduce the costs of a client's employee benefit and compensation liabilities. The design analyst works with the producer to identify the needs of a prospective client and investigates the availability and pricing of products that are compatible with that client's needs. Finally, the analyst develops the financial projections necessary to evaluate the benefit costs and cost recoveries for the prospective client, together with an analysis of financing alternatives to assist the client in making a decision.

We recognize the importance of attracting and retaining qualified, productive sales professionals. We actively recruit and develop new sales professionals in order to add to our distribution capacity. Further, our acquisition strategy focuses on retaining the productive sales professionals of the entity being acquired.

Marketing support

We have established marketing departments in each practice. Each marketing department's primary focus is to support the sales efforts of their operation through integrated marketing communications strategies. The marketing departments develop and track leads for consultants through various channels including advertising, public relations, trade shows, and direct mail. Additionally, the marketing function provides collateral materials, business communication, brand support, survey research and distribution. We distribute external newsletters and other program update pieces to clients and prospects throughout the year and sponsor conferences and meetings featuring our industry experts. Public relations and corporate marketing functions coordinate the publication of articles, white papers, and briefs written by our consultants and ensure that our representatives are positioned as thought leaders and industry experts in national, local, and industry trade publications. These efforts have made us a clear leader in the executive compensation and benefits consulting industry.

Our distribution strategy seeks to leverage our relationships within our organization and among our business partners. We establish relationships with carriers and professional service providers that provide opportunities for cross-utilization of services. We have also developed strategic relationships with several professional service firms that are used as a referral source for our consultants. In addition, we have advisory boards of current and former industry leaders familiar with our products and services who provide introductions to prospective clients. We believe these relationships assist our consultants in gaining access to the appropriate personnel of prospective clients and more effectively establish relationships based on a position of trust.

Industry background

Over the past twenty years, as the result of legislative change and increased competition for executive talent, compensation and benefit programs have become more sophisticated and complex. In turn, the financing of these programs has also become increasingly complex. Corporations and banks now commonly use life insurance to offset the costs of employee benefit liabilities and several large insurers have committed significant resources to develop business-owned life insurance products for use in this market. The industry has shifted toward the use of variable life insurance, which contains equity investment features to meet these needs.

At the same time, the corporations, banks, and healthcare organizations that use these services have become more sophisticated and demanding. Clients now regularly perform extensive due diligence on the firms providing their compensation and benefit programs. Issues related to reputation and technological capabilities are now central to their decision-making process. In addition, the client's expectation regarding the level of administrative services to be provided and technological capabilities of a provider has risen substantially. For example,  community banks have been cnsolidating since the early 1990's. This consolidation gave bank executives a greater appreciation and need for expertise regarding the impact of consolidation on their compensation and benefit programs. This developed into a stronger demand by the community banking industry for expert advice in addressing estate and continuity planning. In addition, healthcare organizations have been faced with growing challenges to attract and retain executives. The tax status of healthcare providers, many of whom are not-for-profit healthcare organizations, requires tailored compensation and benefits programs that comply with the various not-for-profit compensation and benefit rules.

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Our products and services have also historically been affected both positively and negatively by legislative change. For example, prior legislation has increased the attractiveness of non-qualified benefit plans for highly-paid executives by limiting the amount of tax-deductible contributions to traditional pension plans. In contrast, tax legislation was enacted in 1996 that disallowed interest deductions on policy loans and essentially eliminated a financing technique for corporations known as “leveraged corporate-owned life insurance.” Final Treasury regulations have changed the manner in which split dollar arrangements will be taxed.  The new treatment will be, in certain respects, less attractive than the historical tax treatment of split dollar arrangements. Additionally, provisions under the Sarbanes-Oxley Act of 2002 have created uncertainty as to whether certain split dollar policies may be used with respect to certain executives.

On October 22, 2004, President Bush signed into law H.R. 4520, the “American Jobs Creation Act of 2004,” which included provisions affecting deferred compensation arrangements for taxable and tax-exempt employers. The legislation created new Section 409A of the Internal Revenue Code which applies to voluntary deferred compensation arrangements, supplemental executive retirement plans, stock appreciation rights (“SARs”) and certain other arrangements which have the effect of deferring compensation. Section 409A generally applies to compensation deferrals made after December 31, 2004. Among other things, Section 409A modifies the times at which distributions are permitted from nonqualified deferred compensation arrangements and requires that elections to defer compensation be made earlier than historical practice for many plans. The Treasury Department and the IRS issued their initial guidance regarding Section 409A, Notice 2005-1, on December 20, 2004. This initial guidance provided for the transition to the new rules contained in Section 409A. Most existing deferred compensation programs will have to be modified in accordance with the new statute and regulations. In addition, comprehensive proposed Treasury Regulations addressing the applications of Section 409A were published in the Federal Register on October 4, 2005. These proposed regulations will become effective January 1, 2007. During the transition period, it is expected that plan sponsors will revise the structure of their current programs and formalize the changes into a compliant plan design by the end of 2006 in accordance with the deadline established by the proposed regulations. We believe that deferred compensation plans remain a valuable savings tool. However, because of the time and effort required by plan sponsors to come into compliance with the new rules and to communicate the required changes to participants, participant compensation deferrals may be reduced. As a result, our revenue from existing and new arrangements may be reduced during the transitional period. Beyond the transitional period, it is anticipated that participant deferrals will return to their prior level, although the long-term impact of the new rules remains uncertain at this time.

We believe that increasing product complexity, growing buyer sophistication, and the changing legislative landscape requires product development systems and personnel that are more sophisticated and cost intensive than most producers and producer groups are able to justify economically. We believe this will continue to drive consolidation in the industry as smaller firms respond in order to stay competitive.

Employees

As of December 31, 2005, we employed 931 people as follows:

Executive Benefits Practice	259
Banking Practice	307
Healthcare Group	194
Pearl Meyer & Partners	82
Federal Policy Group	11
Resource Center (Corporate) and Clark Securities, Inc.	78
Total	931

The majority of our employees have college degrees, with several holding advanced degrees in law, accounting, finance, business administration, or actuarial science. Professional development is a highly valued industry characteristic, and insurance and financial planning designations, such as Chartered Life Underwriter, Fellow of the Life Management Institute, Fellow of the Society of Actuaries and Certified Financial Planner, are held by a large number of our employees. We actively encourage continuing education for employees through expense reimbursement and reward plans. Due to the specialized nature of the business, we often recruit experienced persons from insurance companies, consulting firms, and related industries.

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Competition

The executive compensation and benefit consulting market is highly competitive as the margins from this type of work are high. We compete with consulting firms, brokers, third party administrators, producer groups, and insurance companies. A number of our competitors offer attractive alternative programs. The primary competitors of our Executive Benefits Practice include Mullin Consulting, TBG Financial, and Westport Worldwide. The primary competitors of our Banking Practice include Charon Planning, Benmark, and Northwestern Mutual Life. Additionally, the banking industry is consolidating, which may reduce the number of potential bank clients. Primary competitors of our Healthcare Group and Pearl Meyer & Partners include Sullivan & Cotter, Towers Perrin, Fred Cook, and Mercer Consulting Group.

We compete for clients on the basis of reputation, client service, program and product offerings, and the ability to tailor our products and administrative services to the specific needs of a client. We believe that we are in a superior competitive position in most of the meaningful aspects of our business because of our track record, name recognition, quality of our personnel, established relationships, industry focus and expertise, and specialization. We do not consider our direct competitors to be our greatest competitive threat. Rather, we believe that our most serious competitive threat will likely come from large, diversified financial services organizations that are willing to expend significant resources to enter our markets and from larger competitors that pursue an acquisition or consolidation strategy similar to ours.

Government regulation

State governments extensively regulate our life insurance activities. We sell our insurance products in all 50 states and the District of Columbia through licensed insurance producers. Insurance laws vary from state to state. Each state has broad powers over licensing, payment of commissions, business practices, policy forms, and premium rates. While we have not encountered regulatory problems in the past, we cannot assure you that we will always be in compliance with all applicable regulatory requirements of each state. Additionally, we cannot be sure if we, our producers, or the insurance carriers underwriting the policies will encounter regulatory problems in the future, including any potential sanctions or penalties for operating in a state without all required licenses.

While the federal government does not directly regulate the marketing of most insurance products, securities, including variable life insurance, are subject to federal securities laws. As a result, our producers and entities with which we have administrative service agreements related to selling those products must be registered with the National Association of Securities Dealers. We market these financial products through CSI, a wholly owned subsidiary and a registered broker/dealer. While we have not had any regulatory problems in the past related to these products, we cannot assure you that we or the producers through whom we sell, will be in compliance at all times with all applicable regulatory requirements of each state.

As a result of issues arising in connection with the marketing by certain companies in the property and casualty insurance, health insurance, and group life insurance markets, various states have adopted laws and regulations during 2005 that among other things, impose new disclosure obligations on us with respect to the insurance and other financial products we market. These new laws and regulations are, in part, a response to the recent amendment to the Producer Licensing Model Act by the National Association of Insurance Commissioners. Other states may respond in a similar fashion during 2006. Depending on the specific requirements of such laws, if any, which are actually adopted by the states where we market insurance, there could be an adverse impact on our revenues.

Most aspects of our business are subject to regulation by the U.S. Federal and State regulatory agencies and securities exchanges. Aspects of our public disclosure, corporate governance principles, and internal control environment are subject to the Sarbanes-Oxley Act of 2002 and related regulations and rules of the SEC and the New York Stock Exchange, Inc. (the “NYSE”).

ITEM 1A. RISK FACTORS

You should carefully consider the risks described below together with the other information contained in this 10-K before making a decision to invest in our common stock. The risks described below are not the only risks we face. Additional risks and uncertainties of which we are unaware or currently believe may be immaterial may also impair our business operations. If any of the following risks actually occur, our business, financial condition, and operating results could be adversely affected.

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Risks related to our industry

We are substantially dependent on revenue generated by the sale of business-owned life insurance policies. Changes in Federal tax laws and regulations could materially and adversely affect our renewal income and ability to gain new business.

Many of the compensation and benefit programs we design and implement for our clients are financed with business-owned life insurance. Business-owned life insurance programs have tax advantages associated with such products that are attractive to our current and prospective clients. Commission revenue from these products represented 66.6%, 69.1% and 72.4%, of our total revenues in 2005, 2004, and 2003, respectively.

Provisions under the Sarbanes-Oxley Act of 2002 have created uncertainty as to whether certain split dollar policies may be used with respect to certain executives. The split-dollar regulations from September 2003 and the Sarbanes-Oxley Act of 2002 have significantly reduced the amount of revenue generated from new split dollar arrangements and may further reduce revenue from existing split dollar arrangements in the near term.

On October 22, 2004, President Bush signed into law H.R. 4520, the “American Jobs Creation Act of 2004,” which included provisions affecting deferred compensation arrangements for taxable and tax-exempt employers. The legislation created new Section 409A of the Internal Revenue Code which applies to voluntary deferred compensation arrangements, supplemental executive retirement plans, stock appreciation rights (“SARs”) and certain other arrangements which have the effect of deferring compensation. Section 409A generally applies to compensation deferrals made after December 31, 2004. Among other things, Section 409A modifies the times at which distributions are permitted from nonqualified deferred compensation arrangements and requires that elections to defer compensation be made earlier than historical practice for many plans. The Treasury Department and the IRS issued their initial guidance regarding Section 409A, Notice 2005-1, on December 20, 2004. This initial guidance provided for the transition to the new rules contained in Section 409A. In addition, comprehensive proposed Treasury Regulations addressing the application of Section 409A were published in the Federal Register on October 4, 2005. These proposed regulations will become effective January 1, 2007. Most existing deferred compensation programs will have to be modified in accordance with the new rules. During the transition period, it is expected that plan sponsors will revise the structure of their current programs and formalize the changes into a compliant plan design by the end of 2006 in accordance with the deadline established by the proposed regulations. We believe that deferred compensation plans remain a valuable savings tool. However, because of the time and effort required by plan sponsors to come into compliance with the new rules and to communicate the required changes to participants, participant compensation deferrals may be reduced. As a result, our revenue from existing and new arrangements may be reduced during the transitional period. Beyond the transitional period, it is anticipated that participant deferrals will return to their prior level, although the long-term impact of the new rules remains uncertain at this time.

There have been several recent congressional proposals to change the federal tax laws with respect to business-owned life insurance. On September 17, 2003, the Senate Finance Committee approved legislation proposed by Sen. Jeff Bingaman (D-NM) that would tax the death benefits taxpayers receive from certain policies on the lives of former employees. Following an intensive lobbying effort by the insurance industry, the Finance Committee on February 2, 2004, reconsidered the business-owned life insurance provision it had previously approved and, in its place, approved legislation that generally would tax the death benefits taxpayers receive from policies on the lives of employees or former employees only in cases where the insured person had not consented to being covered or in the case of a former employee, where the insured was not among the company’s highly-compensated employees at the time of policy issuance. This same provision was reintroduced on January 31, 2005, by Senate Finance Committee Chairman Charles Grassley (R-IA) and Senator Max Baucus (D-MT) as part of the National Employee Savings and Trust Equity Guarantee Act (S. 219) and was included in the pension bill, the Pension Security and Transparency Act of 2005 (S.1783), approved by the Senate on November 16, 2005. We believe that this most recent proposal, if enacted, would not have a material adverse effect on our revenue from the sale of business-owned life insurance policies. However, if Congress were to adopt legislation broadly limiting the tax-free payment of death benefits on such policies or otherwise adversely affecting the tax treatment of the policies, future revenue from the sale of business-owned life insurance policies could materially decline.

On November 1, 2005, the President’s Advisory Panel on Federal Tax Reform released the conclusions of its study on ways to reform the federal tax system. Among the panel’s recommendations is a proposal to tax currently, in certain instances, the increase in value (“inside buildup”) of life insurance policies. The tax reform panel’s recommendations are not binding on the President and it is unknown whether the President would include any proposal relating to life insurance inside buildup in any tax reform plan he may advance. The panel’s recommendation regarding inside buildup would be a fundamental change in the longstanding tax treatment of life insurance and has already encountered significant opposition from the life insurance industry, calling into question the prospects for any such proposal in Congress. However, if any such proposal were enacted and applied to business-owned life insurance, it could have a material adverse effect on our revenue from the sale of such insurance.

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Our business is subject to fluctuations in interest rates, stock prices and general economic conditions.

General economic conditions and market factors, such as changes in interest rates and stock prices, can affect our commission and fee income and the extent to which clients keep their policies inforce year after year. Equity returns and interest rates can have a significant effect on the sale and profitability of many employee benefit programs whether they are financed by life insurance or other financial instruments. For example, if interest rates increase, competing products could become attractive to potential purchasers of the programs we market. When interest rates are at historically low levels, our fixed income products become less attractive to potential purchasers. Further, a prolonged decrease in stock prices can have an effect on the sale and profitability of our clients’ programs that are linked to stock market indices. We cannot guarantee that we will be able to compete with alternative products if these market forces make our clients' programs unattractive.

We are subject to regulation at the state level.

State governments extensively regulate life insurance activities. We sell our insurance products in all 50 states through licensed insurance producers operating as independent agents as well as through our employees. States have broad powers over licensing, payments of commissions, business practices, policy forms, and premium rates. Insurance laws related to licensing, marketing activities, and the receipt of commissions varies from state to state. While we have not encountered significant regulatory problems in the past, we cannot assure you that we, or the producers through whom we sell, will be in compliance at all times with all applicable regulatory requirements of each state.

As a result of issues arising in connection with the marketing by certain companies in the property and casualty insurance, health insurance, and group life insurance markets, various states have adopted laws and regulations during 2005 that, among other things, impose new disclosure obligations on us with respect to the insurance and other financial products we market. These new laws and regulations are, in part, a response to the recent amendment to the Producer Licensing Model Act by the National Association of Insurance Commissioners. Other states may respond in similar fashion during 2006. Depending on the specific requirements of such laws, if any, which are actually adopted by the states where we market insurance, there could be an adverse impact on our revenues.

We have entered into a number of supplemental compensation arrangements with certain of the insurance carriers whose products we sell. The industry-wide usage of supplemental compensation arrangements between distributors and insurance carriers has come under scrutiny from regulatory and law enforcement authorities. For example, the Attorney General of the State of New York has commenced an investigation of certain practices in the insurance industry. While we believe that our arrangements are in each case appropriate and consistent with applicable law, there exists uncertainty as to whether regulatory authorities or industry participants will seek to alter many practices in the industry, including the terms under supplementary compensation arrangements between distributors and insurance companies. Any changes to such practices or terms could have a material adverse effect on our business, financial condition, and results of operations.

Risks related to our company

We face strong competition.

Our business is highly competitive. We compete with consulting firms, insurance brokers, third party administrators, producer groups, and insurance companies. A number of our competitors offer attractive alternative programs. The direct competitors of our Executive Benefits Practice include Mullin Consulting, TBG Financial, and Westport Worldwide. The competitors of our Banking Practice include Charon Planning, Benmark, and Northwestern Mutual Life. Additionally, the banking industry is consolidating, which may reduce the number of potential bank clients. Primary competitors of our Healthcare Group and Pearl Meyer & Partners include Sullivan & Cotter, Towers Perrin, Fred Cook, and Mercer Consulting Group.

We may also face competition from large, diversified financial services firms willing and able to expend the resources to enter our markets and from large direct competitors that choose to pursue an acquisition or consolidation strategy similar to ours.

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Our business depends on the renewal commissions we generate from the life insurance policies underlying our clients' compensation and benefit programs.

We derive a substantial portion of our revenue from the renewal commissions we earn on the business-owned life insurance policies and other financial instruments that underlie our clients' compensation and benefit programs. We earn these annual commissions so long as the underlying policies remain in existence. If a client chooses to cancel a policy, we will stop receiving any renewal commissions and fees on that policy. In addition, if a client delays or reduces the annual premiums it pays on the underlying policy due to a flexible premium structure or financial difficulties, our renewal commissions will be correspondingly delayed or reduced.

Our quarterly operating results vary dramatically.

Our operating results fluctuate considerably from quarter to quarter. We have experienced, and may continue to experience, large concentrations of revenue in the first and fourth quarters. Our operating results may be affected by a number of factors including: a significant portion of the funding for our bank-owned life insurance products occurs in the fourth calendar quarter, many deferred compensation plans marketed by our Executive Benefits Practice are financed in the first calendar quarter; and the timing of significant sales can have a material impact on our quarterly operating results.

Our revenue is difficult to forecast, and we believe that comparing our consecutive quarterly results of operations is not meaningful, nor does it indicate what results we will achieve for any subsequent period. In our business, past operating results are not consistently reliable indicators of future performance. Significant downward fluctuations in our quarterly operating results could result in a sharp decline in the trading price of our common stock. See further discussion about the quarterly operating results in Note 23, “Interim Financial Data (Unaudited)” to the Consolidated Financial Statements, which appear under Item 15 “Exhibits and Financial Statement Schedules.”

We are dependent on our management team.

Our performance depends largely on the performance of our executive officers and key employees. It is important to us to keep and motivate high quality personnel, especially our management, consultants, and program development teams. The loss of the services of any key employees could have a material adverse effect on our business, financial condition, and operating results. We cannot assure you that we will be successful in retaining our key personnel.

We may not be able to successfully implement our acquisition strategy or integrate the businesses we acquire.

Since September 1997, we have completed 29 acquisitions. At any point in time, we may also be considering several other potential acquisitions. Future acquisitions may require substantial expenditures that will be financed through cash from operations, or bank debt as well as future debt and/or equity offerings. We cannot assure you that funds will be available from banks or through the capital markets or that they will be available on terms acceptable to us. If funds are not available, we may be unable to fully implement our acquisition strategy.

Acquisitions involve numerous risks, including the diversion of our management's time and attention to the negotiation of the transaction and to the integration of the businesses acquired, the possible need to modify financial and other systems and add management resources, the potential loss of employees of the acquired businesses, the risks of entering new markets with which we have limited experience, and unforeseen difficulties in the acquired operations. An acquisition may not produce the revenue and profits we expect. Thus, an acquisition that fails to meet our expectations could have a material adverse effect on our business, financial condition, and operating results.

A substantial portion of our total assets are represented by intangible assets.

When we acquire a company, we normally acquire few tangible assets. Therefore, substantially the entire purchase price for the acquisition is allocated to intangible assets. The three primary components of our intangible assets are inforce revenue, goodwill, and non-compete agreements. The amount of purchase price allocated to inforce revenue is determined by discounting the cash flow of future commissions adjusted for expected persistency, mortality, and associated costs. The persistency of our inforce business is influenced by many factors outside of our control, and we cannot be sure that the value we have allocated will ultimately be realized. Non-compete agreements are amortized over the period of the agreements and other identifiable intangibles are amortized over their useful lives. The balance of the purchase price not allocated to identifiable intangible assets is classified as goodwill.

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If any component of our inforce revenue should become unrealizable, this could have a material adverse effect on our business, financial condition, and operating results. We cannot assure you that all of our inforce revenue will be realizable or that accounting regulatory bodies will not impose different amortization methods.

A majority of our commission revenue is derived from policies written by a limited number of insurance companies.

We depend on a select group of insurance companies to underwrite the insurance policies underlying the programs we sell. During 2005, 32 life insurance companies underwrote substantially all of the insurance policies underlying our clients' programs. Seven of these companies accounted for approximately 30.6% of our first year commission revenue in 2005, 55.3% in 2004, and 55.7% in 2003. If our relationship with any of these insurance companies, or their financial condition, were to significantly change for any reason, we could experience a disruption in our ability to provide products and services to our clients. Although we believe such disruption would only be short-term and that we would not experience any difficulties in securing replacement relationships with similar insurance companies, any long-term delays in doing so could affect our ability to provide competitive financing alternatives to our clients.

Major stockholders have the ability to influence stockholder action.

AEGON, Dimensional Fund Advisors, and Century Management owned approximately 13.1%, 9.1%, and 8.6% respectively, of our outstanding common stock as of December 31, 2005. Tom Wamberg, our Chairman and Chief Executive Officer, owned approximately 8.1% of our outstanding common stock as of December 31, 2005. As a result, these stockholders are able to exercise significant influence over all matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions. This concentration of ownership may also have the effect of delaying, preventing, or deterring a change in control that may otherwise be beneficial to stockholders.

We are subject to litigation which may have a negative impact on our business and reputation.

From time to time, we are subject to lawsuits and other claims, which are being handled and defended in the ordinary course of business. While we are unable to predict the outcome of these matters, we do not believe, based upon currently available facts, that the ultimate resolution of any of such pending matters will have a material adverse effect on our overall financial condition, results of operations, or cash flows. However, adverse developments could negatively impact earnings in a particular future period. See Item 3, “Legal Proceedings.”

Errors or omissions in the services we provide our clients may result in liabilities which could have a material adverse effect on our business and reputation.

We market, design, and administer sophisticated financial products and we provide actuarial and other professional services in connection with marketing, designing, and administering these programs. Our clients rely upon the services and interpretations rendered by our employees. To the extent any services or interpretations provided by our employees prove to be inaccurate, we may be liable for the damages, and such liability, to the extent not covered by existing insurance, could have a material adverse effect on our business, financial condition, and results of operations.

We are dependent on our information processing systems.

Our ability to provide administrative services depends on our capacity to store, retrieve, process, and manage significant databases and expand and upgrade periodically our information processing capabilities. Interruption or loss of our information processing capabilities through loss of stored data, breakdown, or malfunctioning of computer equipment and software systems, telecommunications failure, or damage caused by fire, tornadoes, lightning, electrical power outage, or other disruption could have a material adverse effect on our business, financial condition, and results of operations. Although we have disaster recovery procedures in place and insurance to protect against such contingencies, we cannot assure you that such insurance or services will continue to be available at reasonable prices, cover all such losses or compensate us for the possible loss of clients occurring during any period that we are unable to provide services.

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Risks related to our common stock

The issuance of additional common stock may dilute other stockholders.

As of December 31, 2005, we had an aggregate of 18,349,401 shares of common stock authorized but unissued and not reserved for specific purposes. We may issue all of these shares without any action or approval by our stockholders. As of December 31, 2005, we had an aggregate of 2,703,791 unissued shares reserved for issuance under our employee and director incentive plans. We intend to continue to actively pursue acquisitions of competitors and related businesses and may issue shares of common stock in connection with those acquisitions. Any shares issued in connection with our acquisitions, the exercise of stock options, or otherwise, would dilute the percentage ownership held by existing stockholders.

Existing stockholders can sell a substantial number of their shares in the public market which could depress our stock price.

Sales of a substantial number of shares of our common stock in the open market, or the perception that such sales could occur, could adversely affect the trading price of our common stock. Mr. Wamberg held 1,411,680 shares as of December 31, 2005, representing approximately 8.1% of the outstanding shares of common stock. Institutional investors (that individually hold in excess of 5% of our outstanding shares) cumulatively represent 7,281,833 shares or approximately 41.6% of the outstanding shares of common stock. Mr. Wamberg had entered into a previously disclosed share sale program pursuant to Rule 10b5-1 under the Securities Exchange Act of 1934 that involves the sale of our shares that Mr. Wamberg had held in excess of one year. The plan expired by its term in September 2005. Any sales of our common stock by Mr. Wamberg or the other principal stockholders could adversely affect the trading price of our common stock.

Delaware law and our charter documents could prevent an unsolicited takeover.

Delaware law, as well as provisions of our certificate of incorporation and bylaws, could discourage unsolicited proposals to acquire us, even though such a proposal may be beneficial to stockholders. These provisions include a board of directors classified into three classes of directors with the directors of each class having staggered, three-year terms, our board's authority to issue shares of preferred stock without stockholder approval, and Delaware law restrictions on many business combinations and prohibitions on removing directors serving on a staggered board for any reason other than "for cause."

In addition, we have adopted a stockholder rights plan that could further discourage attempts to acquire control of us. These provisions of our certificate of incorporation, bylaws, and Delaware law could discourage tender offers or other transactions that might otherwise result in your receiving a premium over the market price for our common stock.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None

ITEM 2.PROPERTIES

As of December 31, 2005, we operated in the following leased offices throughout the United States:

Practice	Number of Offices		Square Footage
Executive Benefits Practice		10		148,853
Banking Practice		13		84,032
Healthcare Group		2		77,533
Pearl Meyer & Partners		3		45,243
Federal Policy Group		1		4,832
Resource Center		1		17,783
Total		30		378,276

ITEM 3. LEGAL PROCEEDINGS

From time to time, we are involved in various claims and lawsuits incidental to our business, including claims and lawsuits alleging breaches of contractual obligations under agreements with our employee consultants and independent producers.

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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted during the fourth quarter of the fiscal year covered by this Form 10-K to a vote of our security holders, through the solicitation of proxies or otherwise.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES

Effective June 9, 2003, our common stock began trading on the New York Stock Exchange under the symbol “CLK.” From March 7, 2002 through June 8, 2003, our common stock was traded on the New York Stock Exchange under the symbol “CBC.” Prior to that, our common stock was traded on the NASDAQ National Market under the symbol “CLKB.”

The following table sets forth, for the periods indicated, the high and low closing prices for our common stock, as reported on the New York Stock Exchange for the two most recent fiscal years.

	High		Low
Year ended December 31, 2004:
First Quarter	$	20.70	$	16.47
Second Quarter		20.30		16.51
Third Quarter		18.83		12.41
Fourth Quarter		16.65		12.91
Year ended December 31, 2005:
First Quarter	$	18.31	$	12.19
Second Quarter		17.05		12.80
Third Quarter		16.83		13.79
Fourth Quarter		16.63		12.67

The closing price of our common stock on February 15, 2006, as reported on the New York Stock Exchange, was $11.92 per share. As of February 15, 2006, we had 17,535,128 outstanding shares of common stock. As of January 31, 2006, we had approximately 410 stockholders of record, which does not include shares held in securities position listings.

Dividend Policy

On February 1, 2006, the Board of Directors authorized us to pay a dividend of $0.06 per share (approximately $1.1 million) to all stockholders of record as of March 1, 2006, payable on April 1, 2006.

We paid a dividend of $0.06 per common share on April 1, July 1, October 1, 2005, and January 1, 2006 to stockholders of record as of March 1, June 1, September 1, and December 1, 2005, respectively. We intend to pay a similar dividend each quarter, assuming we have adequate capital availability, that we continue to be permitted to pay dividends under our senior credit facility, and that cash dividends continue to be in the best interests of our stockholders and us. We can provide no assurance that we will pay cash dividends for any future period or that our current cash dividend will remain at the current level.

Equity Compensation Plan Information

Information regarding our equity compensation plans, including both stockholder approved plans and non-stockholder approved plans, is set forth in the section entitled “Executive Compensation - Equity Compensation Plan Information” in our Proxy Statement, to be filed within 120 days after our fiscal year end of December 31, 2005, which information is incorporated herein by reference.

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Issuer Purchases of Equity Securities

The following table sets forth information in connection with purchases made by, or on behalf of, us or any affiliated purchaser of ours, of shares of our common stock during the quarterly period ended December 31, 2005.

Period	Total Number of Shares Purchased(1)(2)	Average Price Paid per Share	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or  Programs(2)
October 1, 2005 through October 31, 2005	100,000	$15.87	100,000	$14.0 million
November 1, 2005 through November 30, 2005	-		-	$14.0 million
December 1, 2005 through December 31, 2005	-		-	$14.0 million

(1)   In January 2003, our Board of Directors authorized the purchase of up to 400 thousand shares of our common stock to, among other things, fulfill our obligations under our Employee Stock Purchase Plan. The Employee Stock Purchase Plan consisted of two semi-annual offerings of common stock beginning on each January 1 and July 1 in each of the years 2003 and 2004 and terminating on June 30 and December 31 of each such year. For each of the years 2005 and 2006, the Employee Stock Purchase Plan will consist of four quarterly offerings of common stock beginning on the first day of January, April, July and October and terminating on March 31, June 30, September 30, and December 31 of each such year. The maximum number of shares issued in any of the semi-annual and quarterly offerings is 50 thousand and 25 thousand, respectively.

(2)   On January 25, 2005, our Board of Directors authorized us to expand our existing stock repurchase program to a total of $15 million of our outstanding common stock, from the previously authorized level of $10 million. On May 27, 2005, our Board of Directors authorized us to repurchase up to $35 million of our common stock, an increase of $20 million from the previously authorized level of $15 million. On August 1, 2005, we executed an agreement with a broker-dealer to repurchase shares of our stock in the market pursuant to SEC rule 10b5-1. On October 31, 2005, we terminated the August 1, 2005 agreement.

ITEM 6. SELECTED FINANCIAL DATA

(Dollars in thousands except share and per share amounts)

The following historical information should be read in conjunction with information included elsewhere herein, including the consolidated financial statements, the notes thereto, and Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations.” The results of operations presented below are not necessarily indicative of the results of operations that may be achieved in the future.

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	2005(1)(6)		2004(8)		2003(2)(3)		2002(4)		2001(5)(7)
Consolidated Statements of Income Total Revenue	$	273,806	$	315,582	$	325,929	$	278,586	$	236,884
OperatingExpenses
Commissions and fees		53,024		74,292		88,615		90,273		84,002
Other operating expenses		183,693		188,352		192,836		154,600		121,331
OperatingIncome	$	37,089	$	52,938	$	44,478	$	33,713	$	31,551
Net Income	$	10,609	$	18,160	$	12,682	$	17,328	$	16,012
Basic Earnings per Common Share	$	0.59	$	0.98	$	0.69	$	1.03	$	1.22
Diluted Earnings per Common Share	$	0.58	$	0.97	$	0.68	$	0.99	$	1.18
Total Assets	$	674,513	$	701,293	$	699,303	$	734,675	$	269,931
Long-Term Debt	$	285,294	$	309,622	$	335,968	$	396,038	$	6,079
Cash Dividends Declared per Common Share	$	0.24		-		-		-		-

(1)	Includes the results of operations subsequent to the date of acquisition of the following:
	BancPlan LLC as of May 3, 2005
	Stratford Advisory Group, Inc. as of October 4, 2005
	MedEx as of December 29, 2005
(2)	Includes the results of operations subsequent to the date of acquisition of the following:
	Executive Benefits Solutions LLC as of September 30, 2003
	Blackwood Planning Corporation as of October 7, 2003
(3)	In 2003, we received $1.5 million from the favorable settlement of a lawsuit and we incurred operating expense of $7.5 million in connection with the reorganization of the Human Capital Practice.
(4)	Includes the results of operations subsequent to the date of acquisition of the following:
	Federal Policy Group as of February 25, 2002
	Hilgenberg and Associates as of April 25, 2002
	Comiskey Kaufman as of April 26, 2002
	LongMiller & Associates, LLC as of November 26, 2002
(5)	Includes the results of operations subsequent to the date of acquisition of the following:
	Rich Florin/Solutions, Inc. (f.d.b.a. Executive Alliance) as of March 12, 2001
	Partners First as of March 23, 2001
	Management Science Associates, Inc. as of July 24, 2001
	Lyons Compensation & Benefits, LLC as of August 31, 2001
	Coates Kenney as of December 26, 2001
(6)	In 2005, we received $1.6 million of net life insurance proceeds following the death of an executive in the Healthcare Group.
(7)	In 2001, we incurred operating expense of $2.1 million in connection with the write-down of assets acquired from Insurance Alliances Group.
(8)	In 2004, we incurred other expense of $1.5 million associated with a prospective securitization financing that was terminated.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(Tables shown in thousands of dollars, except per share amounts)

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements, the notes thereto, and other information appearing elsewhere in this Form 10-K.

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Overview

We design, market, and administer compensation and benefit programs for companies supplementing and securing employee benefits and provide executive compensation and related consulting services to U.S. corporations, banks, and healthcare organizations. A majority of our revenues result from commissions paid by insurance companies that underwrite the insurance policies used to finance our clients’ benefit programs. Most of our clients’ benefit programs are financed by business-owned life insurance and other financial products. We pay commissions to employees and independent producers based upon a percentage of our commission revenue. We work closely with clients to design customized products that meet the specific organizational needs of the client and with insurance companies to develop unique policy features and competitive pricing.

A significant portion of our growth has been acquisition related. Business-owned life insurance programs have tax advantages associated with the products that are attractive to our clients. A portion of our product offerings are interest rate sensitive. Changes in tax and legislative laws can have an affect on our business. We have been expanding our compensation consulting practices to diversify our product offerings. The largest component of our general and administrative expenses is salary and other employee related costs.

Recent Developments

Clark Benson, LLC

On January 27, 2006, we announced the formation of Clark Benson, LLC (“Clark Benson”), a limited liability company and a subsidiary of Clark Consulting, Inc. Clark Benson will concentrate on financial planning, wealth transfer, and employee benefits and will be headed by James M. Benson. Mr. Benson has a 25% ownership stake in Clark Benson and acquisition and working capital will be provided by Clark Consulting. Our intention is that Clark Benson will pursue its business plan through a combination of acquisitions of, or affiliations with, existing entities engaged in this type of business. While it is not possible to predict how many acquisitions or affiliations Clark Benson will complete in 2006 that will generate revenue, it is expected that 2006 start up costs of $2 million to $3 million will be incurred.

Additional Board Members

On February 1, 2006, James M. Benson was appointed to our Board of Directors. Mr. Benson fills a recently created Class III Board seat. Mr. Benson will be eligible for re-election as a Class III director at the Company’s 2007 Annual Meeting of Stockholders. The Board of Directors does not plan to appoint Mr. Benson to serve on any committees of the Board of Directors since Mr. Benson is not an independent director.

On January 18, 2006, Robert E. Long, Jr., was appointed to our Board of Directors. Mr. Long fills a recently created Class II Board seat. Mr. Long will be eligible for re-election as a Class II director at the Company’s 2006 Annual Meeting of Stockholders. The Board of Directors does not plan to appoint Mr. Long to serve on any committees of the Board of Directors since Mr. Long is not an independent director.

Proxy Disclosure

On January 27, 2006, the Securities and Exchange Commission released a proposal that would revamp the current disclosure requirements for executive compensation, related-party transactions, director independence, and other corporate governance matters. The purpose of the proposal is to provide shareholders with more comprehensive information on how a company compensates its directors and certain executive officers. It is anticipated that these requirements may become effective for the 2007 proxy season. If these proposed rules are enacted, it may lead to more engagements for the Pearl Meyer & Partners practice.

Supplemental Compensation Agreement Amendment

On February 27, 2006, we amended a supplemental compensation agreement with one of our insurance carriers. The contract has been extended from September 30, 2008 through September 30, 2011. In exchange for a longer term arrangement, the percentage used to calculate future payments based on our inforce block of business was reduced. We expect that revenue based on our inforce block of business will be approximately $1 million less in 2006 when compared to 2005. However, there are additional opportunities to earn revenue should we meet certain production targets for new business.

Yield Curve

In 2005, the flattening yield curve proved challenging to our sales force for closing new insurance cases in the Banking market. In early 2006, the yield curve has become inverted which makes our existing fixed rate insurance products even less attractive.

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Critical Accounting Policies

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Securities and Exchange Commission (“SEC”) has defined a company’s most critical accounting policies as those that are most important to the portrayal of its financial condition and the results of operations, and which require us to make difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. Although we believe that our estimates and assumptions are reasonable, they are based upon information available when they are made. Actual results may differ significantly from these estimates under different assumptions and conditions.

Revenue Sources and Recognition

Our operating segments derive revenue primarily from:

·   commissions and other compensation paid by insurance companies issuing the policies underlying our client’s benefit programs;

·   program design and administrative service fees paid by our clients;

·   executive compensation and benefit related consulting fees; and

·   fees for legislative liaison and related advisory services.

Our commission revenue is typically recurring, paid annually, and extends for a period of twenty years or more after the sale. Commissions are paid by insurance companies and vary by policy and by program and represent percentage of the premium or the cash surrender value of the insurance policies underlying the program.

First Year Commissions and Consulting Fees. First year commissions and consulting fees are derived from three principal sources: (a) the commission we earn when the client first purchases the policies, which revenue is recognized at the time the application is substantially completed, the client is contractually committed to purchase the insurance policies and the premiums are paid (which is the effective date of the insurance policy) by the client, to the insurance company or, in certain instances, when cash is received; (b) fees for the services related to the enrollment and initial administration of the benefit programs and underlying policies; and (c) consulting fees.

Our first year commission revenue is frequently subject to chargeback, which means that insurance companies retain the right to recover commissions paid in the event policies prematurely terminate. The chargeback schedules differ by product and usually apply to first year commission only.

A typical chargeback schedule, based on a percent of first year commission, is as follows:

Year 1	100%
Year 2 and 3	50%
Year 4	25%
Year 5 and beyond	0%

Given the homogenous nature of such cases and historical information about chargebacks, we believe we are able to accurately estimate the revenue earned. We currently maintain a chargeback allowance, which is monitored on a quarterly basis for adequacy. The chargeback allowance is calculated based on the average percentage rate of the last two years of chargebacks multiplied by the first year revenue for the trailing twelve months.

Consulting fee revenue consists of fees charged for services we perform in advising our clients on their executive compensation programs and related consulting services, retirement, benefit, people strategy, compensation surveys, and fees from legislative and regulatory policy matters. These fees are generally based on a rate per hour arrangement or a fixed monthly fee and are earned when the service is rendered.

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Renewal Commission Revenue and Related Fees. Renewal revenue is recognized on the date that the renewal premium is due or paid by the client to the insurance company depending on whether a policy is considered fixed or variable. Fixed renewal policies have predictable set premium amounts. Revenue on these policies is recognized on the premium due date. Variable renewal policy premiums can be based upon such items as value of underlying investments in the policy, cash surrender value of the policy, or mutual fund values. In some cases, we are able to obtain information directly from the carriers allowing us to reasonably and reliably estimate the expected renewal premiums. Revenue is recognized based upon these estimates at a policy’s renewal date. For those policies where we are unable to obtain information to reasonably estimate the expected renewal premiums, revenue is not recognized until the confirmation has been received from the insurance carrier that the client’s premium payment has been received. We are notified in advance if a client plans to surrender, so adjustments in subsequent periods due to cancellations are infrequent and minor. Revenue associated with policies to be surrendered is not recognized.

Administrative service fee revenue consists of fees we charge our clients for the administration of their benefit programs and is earned when services are rendered. These revenues are mainly included in our renewal commissions and related fees line on our consolidated statements of income.

Supplemental Compensation Arrangements. A portion of our revenue is derived from certain supplemental compensation arrangements with insurance carriers. These arrangements generate additional revenue with respect to primarily existing and, to a lesser extent, new blocks of business. Payments under such arrangements are typically based on the cash value (or fair value) of our existing in-force business with these carriers at specified dates of measurement and, to a much lesser extent, based on the value of new business generated. We realized approximately $11.1 million, $11.3 million and $10.3 million in revenue under such arrangements for the years ended December 31, 2005, 2004, and 2003, respectively.

We record revenue on a gross basis when we:

·   act as the principal in the transaction by helping clients select the right product or service;

·   take responsibility for the acceptability of the products and services;

·   provide services through employees and exclusive independent producers;

·   have latitude in establishing the price the customer will pay;

·   have discretion in carrier selection with multiple carriers;

·   have chargeback and credit risk; and/or

·   are viewed by the client as the administrator of the program once the product is sold.

We record revenue on a net basis when we provide a lead on a case (in the capacity of a finder) and another company has control of the case and bears the credit risk (i.e., working directly with a client to determine the product and design of the plan).

Intangible Assets

Our intangible assets represent the excess costs of acquired businesses over the fair values of the tangible net assets associated with an acquisition. Our intangible assets consist of the net present value of future cash flows from policies inforce at the acquisition date, non-compete agreements with the former owners, other identifiable intangibles, and goodwill. Non-compete agreements are amortized over the period of the agreements and all other identifiable intangibles are amortized over their useful lives.

The net present value of inforce revenue is typically amortized between 20 and 30 years (the expected average policy duration). The determination of the amortization schedule involves making certain assumptions related to persistency, expenses, and discount rates that are used in the calculation of the carrying value of inforce revenue. If any of these assumptions change or actual experience differs materially from the assumptions used, it could affect the carrying value of the inforce revenue.

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We are required to assess potential impairments of long-lived assets in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 144, Accounting for Impairment of Long-Lived Assets, if events or changes in circumstances indicate that the carrying amount of a long-lived asset may not be recoverable. In assessing the recoverability of goodwill in accordance with SFAS No. 142, Goodwill and Other Intangible Assets, and the net present value of future cash flows from policies inforce, we must make assumptions regarding estimated future cash flows, mortality, lapse, and other factors to determine the fair value of the respective assets. If these estimates and related assumptions change in the future, we may be required to record impairment charges.

Income Taxes

Significant judgement is required in determining the provision for income taxes and related accruals, deferred tax assets and liabilities, and any valuation allowance recorded against the deferred tax assets. In the ordinary course of business, there are transactions and calculations where the ultimate tax outcome is uncertain. Additionally, our tax returns are subject to audit by federal and various state authorities. Although we believe our estimates are reasonable, no assurance can be given that the final tax outcome will not be materially different from that which is reflected in our historical income tax provisions and accruals. In assessing the realizability of deferred tax assets, we consider the likelihood that some portion or all of the deferred tax assets may not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which the temporary differences become deductible. We consider the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment.

Restructuring Costs

We make provisions for restructuring costs in accordance with SFAS No.146, Accounting for Costs Associated with Exit or Disposal Activities. To determine the amounts expensed in any period, we estimate the amounts we will receive in the future for subleasing office space that is no longer required for our existing operations. Should these estimates not reflect actual results in future periods, we adjust the provision through the income statement.

Year ended December 31, 2005 compared to year ended December 31, 2004

Financial Statement Overview.Our revenue for the year ended December 31, 2005 was $273.8 million, compared to $315.6 million for the year ended December 31, 2004, a decrease of 13.2%. Our net income for 2005 was $10.6 million, compared to $18.2 million in 2004. Diluted earnings per share for 2005 were $0.58, compared to $0.97 for 2004.

Revenue. Total revenues for the year ended December 31, 2005 were $273.8 million, a decrease of 13.2% from revenues of $315.6 million for the year ended December 31, 2004. First year commission revenues for the year ended December 31, 2005 were $74.0 million compared to $97.5 million for the year ended December 31, 2004. First year commission revenue for the year ended December 31, 2004 included $9.3 million for a single large case. Banking Practice’s first year commission revenue for the year ended December 31, 2005, was impacted by a soft market for BOLI products and the historically low long-term interest rate environment. On September 29, 2005, the Treasury Department issued initial guidance regarding changes to nonqualified deferred compensation plans necessitated by the American Jobs Creation Act, passed in October 2004. The delay in this guidance created uncertainty in regards to amending existing plans and delayed the implementation of new plans for both the Executive Benefits Practice and Banking Practice. First year revenue in 2005 included approximately $1.2 million from commissions received in connection with the exchange of policies related to our deferred compensation plans. Total revenue for the years ended December 31, 2005 and 2004, included approximately $11.1 million and $11.3 million, respectively, related to supplemental compensation arrangements. Renewal revenue for the year ended December 31, 2005, was $142.8 compared to $157.5 million for the year ended December 31, 2004. The decrease in renewal revenue was expected and is primarily a result of changes in contract renewal commission rates that carriers pay on certain products as the policies age at both the Executive Benefits Practice and Banking Practice. Consulting fees for Pearl Meyer & Partners and Federal Policy Group as a percentage of total revenue increased to 15.6% for the year ended December 31, 2005 compared to 14.6% in the year ended December 31, 2004. For the year ended December 31, 2005, executive compensation consulting services experienced an increase in demand over the prior year due to corporate focus on corporate governance and executive compensation.

Commission and fee expense. Commission and fee expense for the year ended December 31, 2005 was $53.0 million, or 19.4% of total revenue, compared to $74.3 million, or 23.5% of total revenue, for the year ended December 31, 2004. The percentage paid in commission expense declined primarily due to an increasing percentage of sales by employee consultants who have a lower commission rate than independent producers and the mix of revenues. Renewal revenues generally have lower commissions than first year revenues. In addition, supplemental compensation arrangements and consulting revenues typically have no related commission expense.

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General and administrative expense. General and administrative expense for the year ended December 31, 2005 was $161.0 million, or 58.8% of total revenue, compared to $164.3 million, or 52.1% of total revenue, for the year ended December 31, 2004. The decrease in general and administrative expenses was attributable to a decrease in bonus expense associated with weaker financial results in 2005 compared to 2004.

Amortization. Amortization expense decreased approximately $2.8 million to $15.4 million for the year ended December 31, 2005, from $18.2 million for the year ended December 31, 2004. The decline is based on the scheduled timing of amortization of our inforce revenue streams purchased in acquisitions.

Other income (expense). Other income for the year ended December 31, 2005 included $1.6 million of net life insurance proceeds following the death of an executive in our Healthcare Practice. This amount is not subject to taxation. The year ended December 31, 2004 results included a $1.5 million write-off of costs associated with a prospective securitization financing that was abandoned.

Interest expense. Interest expense for the year ended December 31, 2005 was $22.0 million compared to $22.3 million for the year ended December 31, 2004. The decrease relates to lower borrowing levels in 2005 compared to 2004 partially offset by higher interest rates.

Income taxes. Income taxes for the year ended December 31, 2005 were $6.6 million, an effective tax rate of 38.5%, compared to $11.2 million, an effective tax rate of 38.2%, for the year ended December 31, 2004. The effective tax rate for the year ended December 31, 2005 is impacted by the $1.6 million of non-taxable life insurance proceeds received in the second quarter of 2005. There were net adjustments of approximately $380 thousand reducing income tax expense for the year ended December 31, 2004 reflecting favorable revisions to our state income tax rate as a result of implementation of several strategies aimed at reducing state income taxes.

Net income. Net income for the year ended December 31, 2005 was $10.6 million, or $0.58 per diluted common share, versus net income of $18.2 million, or $0.97 per diluted share, for the year ended December 31, 2004.

Year ended December 31, 2004 compared to year ended December 31, 2003

Financial Statement Overview.Our revenue for the year ended December 31, 2004 was $315.6 million, compared to $325.9 million for the year ended December 31, 2003, a decrease of 3.2%. Our net income for 2004 was $18.2 million, compared to $12.7 million in 2003. Diluted earnings per share for 2004 were $0.97, compared to $0.68 for 2003.

Revenue. Total revenues for the year ended December 31, 2004 were $315.6 million, a decrease of 3.2% from revenues of $325.9 million for the year ended December 31, 2003. First year commission revenues for the year ended December 31, 2004 were $97.5 million compared to $113.3 million for the year ended December 31, 2003. First year revenue of the Banking Practice was $19.5 million less for the year ended December 31, 2004 when compared to the year ended December 31, 2003 due to clients’ efforts in mid 2003 to lock in interest rates prior to anticipated interest rate reductions in late 2003. Revenue for the years ended December 31, 2004 and 2003 included approximately $11.3 million and $10.3 million, respectively, related to supplemental compensation arrangements with insurance carriers. Renewal revenue for the year ended December 31, 2004, was $157.5 compared to $159.1 million for the year ended December 31, 2003. The decrease in renewal revenue is primarily the result of over funding of certain corporate plans in 2004. Consulting fees for Pearl Meyer & Partners and Federal Policy Group as a percentage of total revenue increased to 14.6% for the year ended December 31, 2004 compared to 12.0% in the year ended December 31, 2003. For the year ended December 31, 2004, consulting services experienced an increase in demand over the prior year due to corporate focus on corporate governance and executive compensation.

Commission and fee expense. Commission and fee expense for the year ended December 31, 2004 was $74.3 million, or 23.5% of total revenue, compared to $88.6 million, or 27.2% of total revenue, for the year ended December 31, 2003. The amount paid in commission expense (both in dollar terms and as a percent of revenue) declined primarily due to an increasing percentage of sales by employee consultants who have a lower commission rate than independent producers. In the second half of 2003, Banking Practice acquired two of its former independent producer organizations. Some of the commission savings from sales by employees is spent in the form of increased operating expenses. Independent producers cover their operating expenses out of their commissions. Also impacting the commission percentage to revenue is the higher amounts of supplemental compensation arrangement revenues and consulting revenues that have no related commission expense.

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General and administrative expense. General and administrative expense for the year ended December 31, 2004 was $164.3 million, or 52.1% of total revenue, compared to $158.9 million, or 48.8% of total revenue, for the year ended December 31, 2003. The increase in general and administrative expenses was attributable to expenditures associated with Sarbanes-Oxley compliance ($1.6 million) and approximately $1.1 million of legal fees associated with the MacDonald litigation. The MacDonald litigation was settled with no cash being exchanged during the year ended December 31, 2004. Also contributing to the increase was approximately $6.9 million of additional bonus expense associated with the improved 2004 operating results versus 2003.

Amortization. Amortization expense decreased approximately $3.4 million to $18.2 million for the year ended December 31, 2004, from $21.6 million for the year ended December 31, 2003. For year ended December 31, 2003, there were costs of approximately $550 thousand relating to an adjustment to the purchase accounting for the LongMiller acquisition. The remaining decline is based on the scheduled timing of amortization of our inforce revenue streams purchased in acquisitions.

Other operating expenses. The year ended December 31, 2003 results included a $1.5 million favorable settlement of litigation that reduced operating expenses.

Human Capital Practice reorganization. In the fourth quarter of 2003, we reorganized our executive compensation consulting practices. As part of the reorganization, some of the operations and employees of the Human Capital Practice were transferred to the Pearl Meyer & Partners practice. In addition, several partners and staff members were terminated which resulted in exiting certain activities of the Human Capital Practice and creating unused leased office space in numerous cities. We recorded a charge of $7.5 million in the fourth quarter of 2003 relating to the reorganization, of which $3.3 million remained on the consolidated balance sheet as of December 31, 2004. During the year ended December 31, 2004, we recorded a net decrease to expense of approximately $200 thousand relating to the Human Capital Practice reorganization.

Other income (expense). Other income (expense) for the year ended December 31, 2004, includes a $1.5 million write-off of costs associated with a prospective securitization financing that was terminated in 2004.

Interest expense. Interest expense for the year ended December 31, 2004 was $22.3 million compared to $24.3 million for the year ended December 31, 2003. The decrease relates to lower borrowing levels in 2004 compared to 2003.

Income taxes. Income taxes for the year ended December 31, 2004 were $11.2 million, an effective tax rate of 38.2%, compared to $8.1 million, an effective tax rate of 38.9%, for the year ended December 31, 2003. There were net adjustments of approximately $380 thousand reducing income tax expense for the year ended December 31, 2004 reflecting favorable revisions to our state income tax rate as a result of implementation of several strategies aimed at reducing state income taxes.

Net income. Net income for the year ended December 31, 2004 was $18.2 million, or $0.97 per diluted common share, versus net income of $12.7 million, or $0.68 per diluted share, for the year ended December 31, 2003.

Acquisition Strategy

Our acquisition criteria focuses on the quality of management, future earnings, and the strategic fit with our company, as well as the growth potential of the target company. In several of our acquisitions, we also acquire the financial value embedded in a book of recurring renewal business that is expected to be realized for many years after the acquisition takes place. Historically, our future renewal revenue stream has been the source of collateral for our line of credit, which we frequently use for acquisitions. As we acquire more businesses that do not have this attribute, this may limit our future borrowing availability. We typically structure a majority of the purchase price in cash. We generally acquire little in the way of tangible assets, thus creating a substantial amount of intangible assets on our balance sheet. The companies we acquire are frequently privately owned and structured as subchapter S corporations and the acquisitions are usually effected through a purchase of assets with the income taxed directly to the stockholders of the target.

From time to time we are involved in negotiations relating to the acquisition of companies in our industry or related industries. Some of these negotiations could involve companies whose acquisition would be highly material to our results of operations and financial condition. In addition, we could incur substantial costs in connection with negotiating such transactions, even if the transactions are not completed.

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Human Capital Practice Reorganization

In the fourth quarter of 2003, we reorganized our executive compensation consulting practices. As part of the reorganization, some of the operations and employees of the Human Capital Practice were transferred to the Pearl Meyer & Partners Practice. In addition, four partners and six staff members were terminated which resulted in exiting certain activities of the practice and creating unused leased office space in numerous cities. We recorded a charge of $7.5 million in the fourth quarter of 2003 relating to the reorganization of which $2.7 million remains on the consolidated balance sheet as of December 31, 2005. The remaining business of the Human Capital Practice in 2004 consisted of actuarial/retirement plan and investment advisory services. Effective January 1, 2005, the Human Capital Practice was merged into the Executive Benefits Practice.

Supplemental Compensation Arrangements

A portion of our revenue is derived from certain supplemental compensation arrangements with insurance carriers. These arrangements generate additional revenue with respect to primarily existing and, to a lesser extent, new blocks of business. Payments under such arrangements are typically based on the cash value (or fair value) of our existing in-force business with these carriers at specified dates of measurement and, to a much lesser extent, based on the value of new business generated. We realized approximately $11.1 million, $11.3 million and $10.3 million in revenue under such arrangements for the twelve months ended December 31, 2005, 2004, and 2003, respectively. Future payment amounts would be negatively impacted by potential future surrenders of the inforce business or non-renewal of the agreements and positively impacted by asset growth of these contracts.

Segment Results

The following analysis depicts the results of each of our operating segments on a stand-alone basis. The practices are allocated a charge to cover centralized Resource Center expenditures in the areas of property and casualty insurance, human resources, marketing, and information technology.

Executive Benefits Practice

	Operating Results Year Ended December 31,
	2005			2004			2003
Total Revenue	$	59,126		$	81,477		$	78,528
Operating Expenses
Commissions and fees		18,372			29,250			29,406
Other operating expenses		41,332			44,898			57,864
Operating Income (Loss)	$	(578	)	$	7,329		$	(8,742	)
% of revenue		(1.0	)%		9.0	%		(11.1	)%

In August 2005, we announced our intent to combine our Executive Benefits Practice, Banking Practice, and Insurance Company Practice into one practice that will serve those markets. The new practice will be reported as a single reporting segment in our consolidated financial statements effective January 1, 2006. The purpose of this combination is to be able to leverage the expertise of our top producers across a wider customer base, and improve our level of client service by streamlining operations and sharing a broader set of best practices.

Total revenue for the year ended December 31, 2005 was $59.1 million compared to $81.5 million for the year ended December 31, 2004, a decrease of 27.4%. First year commission revenue for the year ended December 31, 2005 was $15.8 million compared to $26.2 million for the year ended December 31, 2004. On September 29, 2005, the Treasury Department issued initial guidance regarding changes to nonqualified deferred compensation plans necessitated by the American Jobs Creation Act, passed in October 2004. The delay in receiving guidance created uncertainty in regards to amending existing plans and delayed the implementation of new plans. Consulting revenue (included in first year revenue) decreased 14.2% due to a significant decline in the number of consultants. First year 2004 revenue for the year ended December 31, 2004 included $8.6 million for one large case. Renewal revenue for the year ended December 31, 2005 was $36.1 million compared to $46.5 million for the year ended December 31, 2004. The decrease in renewal revenue is primarily the result of the timing of premium payments from certain clients, some of which were delayed pending Treasury Department guidance mentioned above, and changes in contract renewal rates that carriers pay on certain cases as the policies age. Commission expense as a percentage of total revenue decreased to 31.1% for the year ended December 31, 2005, from 35.9% for the year ended December 31, 2004, due to the decreased revenue resulting in lower tiered payouts to producers. General and administrative expense for the year ended December 31, 2005 was $38.2 million compared to $41.1 million for the year ended December 31, 2004. The decrease is primarily a result of weaker financial results than 2004 generating less bonus expense.

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Total revenue for the year ended December 31, 2004 was $81.5 million compared to $78.5 million for the year ended December 31, 2003. First year commission revenue for the year ended December 31, 2004, was $26.2 million compared to $21.5 million for the year ended December 31, 2003. First year revenue for the year ended December 31, 2004 included $8.6 million for one large case. Renewal revenue for the year ended December 31, 2004, was $46.5 million compared to $48.2 million for the year ended December 31, 2003. The increase in first year revenues was partially offset by decreases in renewal revenues relating to the loss of three large clients ($2.3 million) and over funding of certain corporate plans. Commission expense as a percentage of total revenue declined to 35.9% for the year ended December 31, 2004, from 37.4% for the year ended December 31, 2003, due to the mix of sales by employee consultants who are paid a lower commission and the mix between first year versus renewal revenue. General and administrative expense for the year ended December 31, 2004, was lower than the year ended December 31, 2003, due mainly to lower headcount (272 for 2004 and 300 for 2003) and facility costs despite a charge of approximately $1.1 million for legal costs associated with the MacDonald settlement in June of 2004.

Banking Practice

	Operating Results Year Ended December 31,
	2005			2004			2003
Total Revenue	$	123,101		$	145,249		$	165,839
Operating Expenses
Commissions and fees		28,934			40,969			55,016
Other operating expenses		55,830			57,177			55,602
Operating Income	$	38,337		$	47,103		$	55,221
% of revenue		31.1	%		32.4	%		33.3	%

In August 2005, we announced our intent to combine our Executive Benefits Practice, Banking Practice, and Insurance Company Practice into one practice that will serve those markets. The new practice will be reported as a single reporting segment in our consolidated financial statements effective January 1, 2006. The purpose of this combination is to be able to leverage the expertise of our top producers across a wider customer base, and improve our level of client service by streamlining operations and sharing a broader set of best practices.

Total revenue decreased 15.2% to $123.1 million for the year ended December 31, 2005, from $145.2 million for the year ended December 31, 2004. First year revenues for the year ended December 31, 2005 were $28.8 million compared to $46.8 million for the year ended December 31, 2004. First year revenue was impacted by a soft market for BOLI products and the historically low long-term interest rate environment. On September 29, 2005, the Treasury Department issued initial guidance regarding changes to nonqualified deferred compensation plans necessitated by the American Jobs Creation Act, passed in October 2004. The delay in receiving guidance created uncertainty in regards to amending existing plans and delayed the implementation of new plans. Total revenue for the years ended December 31, 2005 and 2004 included approximately $6.2 million and $6.6 million, respectively, related to supplemental compensation arrangements. Renewal revenue for the years ended December 31, 2005 and 2004, was $94.3 million and $98.4 million, respectively. The decrease in renewal revenue is a result of the changes in contract renewal commission rates that carriers pay on certain products as policies age and the mix of products. Commission expense for the year ended December 31, 2005 was $28.9 million, or 23.5% of revenue, compared to $41.0 million, or 28.2% of revenue, for the year ended December 31, 2004. The commission expense as a percentage of revenue continues to decrease due to the lower first year revenue and significant reduction in independent producer commission expense. General and administrative expenses for the year ended December 31, 2005 was $45.4 million, compared to $44.9 million for the year ended December 31, 2004. These expenses increased primarily as a result of costs associated with the BancPlan acquisition in May of 2005. Amortization expense for the years ended December 31, 2005 and 2004 was $10.5 million and $12.3 million, respectively. The decrease is based on the timing of scheduled amortization of our acquired inforce revenue.

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Total revenue decreased 12.4% to $145.2 million for the year ended December 31, 2004, from $165.8 million for the year ended December 31, 2003. First year revenues for the year ended December 31, 2004 were impacted by a soft market for BOLI products, historically low interest rates, and sales force turnover that occurred in the second quarter of 2004. Total revenue for the years ended December 31, 2004 and 2003 included approximately $6.6 million and $4.7 million, respectively, related to supplemental compensation arrangements. Renewal revenue for the years ended December 31, 2004 and December 31, 2003, was $98.4 million and $99.5 million, respectively. Commission expense for the year ended December 31, 2004, was $41.0 million, or 28.2% of revenue, compared to $55.0 million, or 33.2% of revenue, for the same period in 2003. The commission expense as a percentage of revenue continues to decrease as a result of a higher percentage of first year revenue produced by employee consultants versus independent producers and the mix between first year revenues and renewal revenues. In addition, we do not pay commission expense on the revenue associated with the supplemental compensation arrangements. In the second half of 2003, Banking Practice acquired two of its former independent producer organizations. General and administrative expense for the year ended December 31, 2004, was $44.9 million, or 30.9% of revenue, compared to $40.4 million, or 24.3% of revenue, for the comparable period in 2003. We terminated seventeen Banking Practice employees, representing roughly 6% of the Practice’s employees, or 2% of our employees, in September of 2004. The actions resulted in $230 thousand of severance costs. The higher percentage of general and administrative expenses to revenue reflects increased operating expenses relating to former independent producers and the lower revenue base. Amortization expense for the year ended December 31, 2004 and 2003, was $12.3 million and $15.2 million, respectively. The decrease is based on the timing of scheduled amortization of our inforce revenue and a $550 thousand adjustment to the purchase accounting for the LongMiller acquisition in the third quarter of 2003.

 Healthcare Group

	Operating Results Year Ended December 31,
	2005			2004			2003
Total Revenue	$	38,048		$	35,684		$	36,100
Operating Expenses
Commissions and fees		4,862			4,073			4,193
Other operating expenses		28,729			27,197			27,060
Operating Income	$	4,457		$	4,414		$	4,847
% of revenue		11.7	%		12.4	%		13.4	%

Total revenue for the year ended December 31, 2005 was $38.0 million compared to $35.7 million for the year ended December 31, 2004. First year revenue for the year ended December 31, 2005, was $2.6 million higher than the prior year due to growth in consulting fee revenue from several services. Renewal revenue for the year ended December 31, 2005 was $10.1 million compared to $10.4 million for the year ended December 31, 2004. Commission expense for the year ended December 31, 2005 was $4.9 million compared to $4.1 million. The increase in commission expense is a result of increased marketing bonuses on higher revenue. General and administrative expenses for the year ended December 31, 2005 were $27.5 million compared to $25.7 million for the year ended December 31, 2004. The increase is due to a $445 thousand write off of obsolete software, additional expenses from higher consultant headcount and costs associated with performance based bonuses.

Healthcare Group revenues were slightly lower (1.2%) for the year ended December 31, 2004, compared to December 31, 2003. First year commission revenue for the year ended December 31, 2004, was lower by $3.3 million than December 31, 2003 due to a lower number of new implementation projects and lower add-on commissions as a result of split dollar regulations and clients electing to split consulting engagements from the company who sells the funding solution. However, consulting fee revenue (included in first year revenue) increased over December 31, 2003 by $1.7 million due to growth in several services. Renewal revenue for the year ended December 31, 2004 was approximately $10.4 million compared to $9.1 million for the year ended December 31, 2003. General and administrative expenses remained flat due to cost containment efforts.

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Pearl Meyer & Partners

	Operating Results Year Ended December 31,
	2005			2004			2003
Total Revenue	$	34,124		$	33,111		$	26,871
Operating Expenses		29,402			27,682			25,773
Operating Income	$	4,722		$	5,429		$	1,098
% of revenue		13.8	%		16.4	%		4.1	%

Pearl Meyer and Steve Hall, president of Pearl Meyer and Partners, announced their resignations in late August, 2005. Effective August 30, 2005, Joe Rich replaced Steve Hall as president of Pearl Meyer and Partners. Subsequently, several client facing professionals resigned. As a result of the voluntary resignations, there were seven involuntary terminations of certain Pearl Meyer and Partners’ employees in October, 2005. The costs associated with these terminations were approximately $200 thousand, which were recorded in the fourth quarter of 2005. Estimated annual cost savings related to the voluntary terminations are $3.4 million and $1.4 million for the involuntary terminations. As a result, 2006 revenues, operating expenses, and operating income are expected to be lower than 2005.

Consulting revenue increased 3.1% to $34.1 million for the year ended December 31, 2005, compared to $33.1 million for the year ended December 31, 2004. Practice performance through the first nine months of 2005 was improved over the same timeframe as 2004. Fourth quarter 2005 performance was weaker than fourth quarter 2004 due to the factors mentioned above. Operating expenses for the year ended December 31, 2005 were $29.4 million compared to $27.7 million for the year ended December 31, 2004. The increase is due to the additional expenses from higher headcounts during the first nine months of 2005 compared to first nine months of 2004.

Total consulting revenue increased 23.2% to $33.1 million for the year ended December 31, 2004, compared to $26.9 million for the year ended December 31, 2003. The practice continued to experience more sales activity as a result of additional engagements in its areas of expertise of corporate governance and executive compensation due, in part, to increased public scrutiny of these areas. Operating expenses were $27.7 million for the year ended December 31, 2004, compared to $25.8 million for the year ended December 31, 2003 reflecting higher headcount (97 in 2004 and 83 in 2003).

Federal Policy Group

	Operating Results Year Ended December 31,
	2005			2004			2003
Total Revenue	$	12,147		$	15,707		$	14,855
Operating Expenses		9,623			11,026			8,257
Operating Income	$	2,524		$	4,681		$	6,598
% of revenue		20.8	%		29.8	%		44.4	%

Revenue for the year ended December 31, 2005 was $12.1 million compared to $15.7 million for the year ended December 31, 2004 due to a lower number of clients in 2005. Results for the years ended December 31, 2005 and 2004, included approximately $1.7 million and $3.0 million of revenue, respectively, from success fees. Operating expenses for the year ended December 31, 2005 were $9.6 million compared to $11.0 million. The reduction in 2005 expense compared to 2004 is a result of lower success fees generating less bonus expense and $100 thousand of 2004 client expenses, which was billed back to the client and also included in revenue for 2004.

Revenue for the year ended December 31, 2004 was $15.7 million compared to $14.9 million for the year ended December 31, 2005. Results for the years ended December 31, 2004 and 2003, included approximately $3.0 million of revenue from success fees. Results for the year ended December 31, 2004 and 2003 included approximately $2.6 million and $1.6 million of revenue and approximately $551 thousand and $265 thousand of operating income, respectively, related to four employees hired during the second quarter of 2003.

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Liquidity and Capital Resources

Selected Measures of Liquidity and Capital Resources

	As of December 31,
	2005			2004
Cash and cash equivalents	$	5,077		$	23,199
Working capital (1)	$	(9,837	)	$	9,087
Current ratio — to one		0.85			1.12
Stockholders' equity per common share (2)	$	15.42		$	15.03
Debt to total capitalization (3)		53.1	%		54.2	%

(1) Includes restricted cash and current portion of debt associated with asset-backed non-recourse notes.

(2) Total stockholders' equity divided by actual shares outstanding at year-end.

(3) Current debt plus long-term debt divided by current debt plus long-term debt plus stockholders' equity.

As a company with historically strong operating cash flow, we believe we have little need to maintain substantial cash balances. To the extent we have net cash from operating activities, we use it to fund capital expenditures, and service existing debt. We expect large cash outlays, such as future acquisitions, will be financed primarily through externally available funds. However, we can offer no assurance such funds will be available and, if so, on terms acceptable to us.

Below is a table summarizing our cash flow:

	Year Ended December 31,
	2005			2004			2003
Cash flows from (used in):
Operating activities	$	39,153		$	61,183		$	74,613
Investing activities		(26,347	)		(13,992	)		(13,585	)
Financing activities		(30,928	)		(27,148	)		(72,138	)

Cash Flows from Operating Activities

Our cash flows from operating activities for the years ended December 31, 2005, 2004, and 2003 were as follows:

	Year Ended December 31,
	2005		2004		2003
Net income plus non-cash expenses	$	34,361	$	53,889	$	47,011
Changes in operating assets and liabilities		4,792		7,294		27,602
Cash flow from operating activities	$	39,153	$	61,183	$	74,613

Non-cash expenses include primarily depreciation of equipment and leasehold improvements, amortization of intangibles, and deferred tax expense. The 2005 increase in cash relating to changes in operating assets and liabilities relates primarily to the increased liability balances in our deferred compensation plans ($4.1 million).

Estimated Future Gross Renewal Revenue

In addition to our tangible balance sheet assets and liabilities, we have an on-going non-securitized renewal revenue stream, estimated to be $765.8 million, on a gross basis, over the next ten years. This on-going renewal revenue stream reflects current conditions and is not necessarily indicative of the revenue that may actually be achieved in the future and we cannot assure you that commissions under these policies will be received.

The following tables represent the estimated gross renewal revenue associated with the business-owned life insurance policies owned by our clients as of December 31, 2005. The projected gross revenues are not adjusted for mortality, lapse, or other factors that may impair realization, have not been discounted to reflect their net present value, and do not reflect the commission expense we must pay to consultants when we recognize the related revenue. We cannot assure you that commissions under these policies will be received. These projected gross revenues are based on the beliefs and assumptions of management and are not necessarily indicative of the revenue that may actually be realized in the future.

29

Non-securitized Gross Inforce Revenues. The following table represents the estimated gross inforce revenue associated with business-owned life insurance policies owned by our clients as of December 31, 2005, not including estimated securitized inforce revenues, which are set forth in a separate table.

	Executive Benefits Practice		Banking Practice		Healthcare Group		Total
2006	$	37,496	$	47,249	$	4,888	$	89,633
2007		35,193		45,124		4,694		85,011
2008		30,491		44,854		4,323		79,668
2009		28,128		43,479		3,946		75,553
2010		22,820		44,660		3,632		71,112
2011		21,624		46,224		3,246		71,094
2012		20,834		47,489		2,767		71,090
2013		21,430		48,983		2,209		72,622
2014		21,857		50,808		1,774		74,439
2015		21,989		52,260		1,363		75,612
Total December 31, 2005	$	261,862	$	471,130	$	32,842	$	765,834
Total December 31, 2004	$	295,745	$	456,198	$	38,694	$	790,637

The 10-year inforce revenues net of commission expense are $610.2 million as of December 31, 2005, as compared to $628.1 at December 31, 2004.

Securitized Gross Inforce Revenues. The following table represents the estimated gross renewal revenue associated with our securitized inforce bank-owned life insurance policies as of December 31, 2005. These revenue streams are restricted for the specific purpose of paying off our asset-backed notes which were issued in connection with the acquisition of LongMiller in November 2002.

	Banking Practice
2006	$	45,961
2007		48,454
2008		50,911
2009		52,590
2010		54,401
2011		55,718
2012		57,707
2013		60,017
2014		62,176
2015		64,210
Total December 31, 2005	$	552,145
Total December 31, 2004	$	556,910

The 10-year inforce revenue net of commission expense is $402.0 million and $403.0 million, as of December 31, 2005 and 2004, respectively.

Pearl Meyer & Partners and Federal Policy Group generate fee-based revenues and do not produce inforce revenues.

Cash Used in Investing Activities

During the year ended December 31, 2005, $20.1 million of cash was used for the acquisition of the businesses including contingent consideration payments to prior owners of businesses we acquired and $6.2 million of cash was used for the purchases of fixed assets.

A substantial portion of the purchase price used to fund acquisitions has historically been paid in cash. This is primarily due to our desire to avoid diluting our existing stockholders. We expect acquisitions to continue to be financed primarily from available credit lines and possible additional equity. However, we can offer no assurances such will be the case.

30

Cash Flows Used in Financing Activities

For the year ended December 31, 2005, approximately $30.9 million of cash was used for financing activities. We used approximately $19.2 million for the net repayment of borrowings, approximately $3.2 million for payment of dividends, and $13.9 million for the repurchase of our stock.

As of December 31, 2005, there was restricted cash of approximately $7.8 million, a decrease of $4.2 million from December 31, 2004, which will be used to pay down the asset-backed notes issued to finance the acquisition of LongMiller. This cash is not available for general corporate purposes, but is solely to service securitization indebtedness incurred to finance the acquisition of LongMiller.

On August 31, 2005, we added a participant bank to our senior credit facility ($10 million) and one of the existing participants increased their commitment ($7 million). As a result, the current amount available under this facility is $89 million. As of December 31, 2005, there was $2.3 million outstanding on the facility. Our assets are pledged to the bank group as part of the credit facility except for cash flows from commissions to be received upon the renewals of specified inforce policies acquired in connection with the acquisition of LongMiller. In September 2004, we amended our credit agreement to allow for potential stock repurchases and dividend payments. The remaining provisions of the agreement remained substantively the same. Our credit facility expires on December 31, 2006. We expect the credit facility to be renewed on substantially similar terms.

The restrictive covenants under the credit agreement provide for the maintenance of a minimum ratio of fixed charges, a maximum allowable leverage ratio, a minimum amount of net worth (stockholders’ equity), and a maximum ratio of debt to capitalization. We were in compliance with all restrictive covenants as of December 31, 2005.

We believe that our cash flow from operating activities will continue to provide sufficient funds to service our debt obligations. However, as our business grows, our working capital and capital expenditure requirements will also continue to increase. There can be no assurance that the net cash flow from operations will be sufficient to meet our anticipated cash flow requirements or that we will not require additional debt or equity financing in the future. We may issue stock to finance future acquisitions.

Off-Balance Sheet Arrangements and Other Contractual Obligations

We do not have any material off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on our financial condition, changes in financial condition, revenue or expenses, results of operations, liquidity, capital expenditures, or capital resources. Set forth below is a summary presentation of our contractual obligations as of December 31, 2005, which are expected to become due and payable during the periods specified.

Payments Due by Period

Contractual Obligations	Total		Less Than 1 Year		1-3 Years		3-5 Years		More Than 5 Years
Debt obligations	$	305,323	$	20,029	$	27,244	$	27,574	$	230,476
Operating lease obligations		42,558		10,386		17,504		9,923		4,745
Contingent considerations for acquisitions		11,803		4,203		4,600		600		2,400
Total	$	359,684	$	34,618	$	49,348	$	38,097	$	237,621

We expect to make significant cash outlays in future years for interest, taxes, and deferred compensation arrangements. However, due to their variable nature, no amounts for these items have been included in the table above.

Inflation

Inflation has not had a material effect on our results of operations. Certain of our expenses, such as compensation, benefits, and capital equipment costs, are subject to normal inflationary pressures. However, the majority of our service and administrative agreements with clients, which generate fee income, have a cost of living adjustment tied to the consumer price index.

31

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

At December 31, 2005, we had total outstanding indebtedness of $305.3 million, or approximately 131.6% of total market capitalization. Of our outstanding debt, $254.6 million was subject to an average fixed rate of 6.6% at December 31, 2005. Of our outstanding debt, $3.4 million was subject to fixed rates of 10.0% at December 31, 2005. The amount outstanding on our three pooled trust preferred debt issues is $45.0 million as of December 31, 2005 (average interest rate of 8.3% as of December 31, 2005).

On June 3, 2005 and February 25, 2005, we entered into interest rate swaps with a total non-amortizing notional value of $12 million and $10 million, respectively, to hedge our LIBOR-based debt. The terms of the interest rate swaps as of December 31, 2005 are as follows:

Effective Date	Maturity Date		Notional Amount at December 31, 2005		Fixed Rate to be Paid			Variable Rate to be Received		Fair Value as of December 31, 2005
June 3, 2005		December 31, 2009	$	12.0 million		4.05	%		LIBOR	$	314
February 25, 2005		December 31, 2009	$	10.0 million		4.31	%		LIBOR		160
May 18, 2004		March 31, 2009	$	7.0 million		4.44	%		LIBOR		65
January 7, 2003		December 31, 2007	$	11.2 million		2.85	%		LIBOR		231
Total			$	40.2 million						$	770

On November 15, 2005, we entered into an interest rate swap with an initial notional amount of $4.8 million and an effective date of January 1, 2006, which increases $1.4 million each calendar quarter until December 31, 2007, and then remains at $16 million. The quarterly increase in the notional amount of this interest rate swap exactly offsets the amortizing notional amount of the January 7, 2003 interest rate swap. The purpose of this swap is to hedge our remaining trust preferred LIBOR-based variable rate debt.

We have exposure to changing interest rates and, as discussed in Note 13 “Financial Instruments” to the consolidated financial statements, will engage in hedging activities, from time to time, to mitigate this risk. The interest rate swaps we have entered into are used to hedge our interest rate exposure on the LIBOR-based variable rate debt outstanding at December 31, 2005. Interest on the remaining $4.8 million of unhedged debt at December 31, 2005, bears interest at three-month LIBOR plus a weighted average of 400 basis points. At our current borrowing level, a 1% change in the interest rate will have an effect of approximately $48 thousand on interest expense on an annual basis.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Our financial statements are included under Part IV of this Form 10-K.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

32

ITEM 9A. CONTROLS AND PROCEDURES

Conclusion Regarding the Effectiveness of Controls and Procedures

Under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the Exchange Act). Based on this evaluation, our chief executive officer and our chief financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this annual report.

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f). Under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation under the framework in Internal Control - Integrated Framework, our management concluded that our internal control over financial reporting was effective as of December 31, 2005. We reviewed the results of management’s assessment with the Audit Committee of our Board of Directors.

Management’s assessment of the effectiveness of our internal control over financial reporting as of December 31, 2005 has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their attestation report, which is included on the following page.

33

Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting

To the Board of Directors and Stockholders

Clark, Inc.

We have audited management’s assessment, included in the accompanying Management’s Report on Internal Controls Over Financial Reporting, that Clark, Inc. and subsidiaries (the “Company”) maintained effective internal control over financial reporting as of December 31, 2005, based on criteria established in Internal Control—Integrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria).  The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting.  Our responsibility is to express an opinion on management’s assessment and an opinion on the effectiveness of the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.  Our audit included obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances.  We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.  A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, management’s assessment that the Company maintained effective internal control over financial reporting as of December 31, 2005, is fairly stated, in all material respects, based on the COSO criteria.  Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2005, based on the COSO criteria.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements as of and for the year ended December 31, 2005 of the Company and our report dated February 27, 2006 expressed an unqualified opinion thereon.

Ernst & Young LLP

Chicago, Illinois

February 27, 2006

34

ITEM 9B. OTHER INFORMATION

On July 26, 2005, the Compensation Committee of the Board of Directors approved a Long Term Incentive Compensation Plan. The plan has two components: a Supplemental Executive Retirement Plan (“SERP”) and restricted stock awards. Annual contributions, as approved by the Board, will be made into a SERP account for each participant. The contributions began in 2005. On October 25, 2005, the Compensation Committee of the Board of Directors approved five participants in the plan. Each SERP contribution will be cliff-vested five years from the date of grant. Restricted stock is awarded based upon achievement of three-year performance targets for cumulative earnings per share for the period 2005 through 2007 and will cliff-vest effective December 31, 2007. Restricted stock awards for 2006 and 2007 will be made as determined by the Compensation Committee with cliff vesting effective December 31, 2007. For the year ended December 31, 2005, there is approximately $70 thousand of expense included in the consolidated statement of income associated with this plan.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information required by Item 10 regarding directors is incorporated by reference from the information under the captions “Election of Directors” and “Continuing Directors” in our definitive Proxy Statement for the 2006 Annual Meeting of the Stockholders (the “2006 Proxy Statement”). The information required by Item 10 regarding audit committee and audit committee financial expert disclosures are incorporated by reference from the information under the caption “Committees-Composition and Meetings of the Board of Directors-Audit Committee” in the 2006 Proxy Statement. Disclosure of delinquent filers pursuant to Item 405 of Regulation S-K will be contained in the 2006 Proxy Statement under the caption “Section 16(a) Beneficial Ownership Reporting Compliance.” The information required by Item 10 regarding executive officers will be contained in the 2006 Proxy Statement under the caption “Our Executive Officers.”

We have adopted a code of business conduct and ethics, entitled “Clark Consulting Code of Ethics and Business Conduct” (the “Code of Ethics”) as required by the listing standards of the New York Stock Exchange and the rules of the SEC. This Code applies to all of our directors, officers, and employees. We have also adopted a corporate governance policy (the “Governance Policy”) and a charter for each of our Audit Committee, Compensation Committee and our Nominating and Corporate Governance Committee (collectively, the “Committee Charters”). We have posted the Code of Ethics, the Governance Policy, and each of the Committee Charters on our website at www.clarkconsulting.com under “corporate governance” in the “investors” section of our website. We will post on our website any amendments to, or waivers from, our Code of Ethics applicable to any of our directors or executive officers. The foregoing information will also be available in print to any stockholder who requests such information.

ITEM 11. EXECUTIVE COMPENSATION

The information required by Item 11 is hereby incorporated by reference from our 2006 Proxy Statement under the captions “Summary Compensation Table,” “Option Grants in Last Fiscal Year,” “Aggregated Option Exercises and Year-End Values,” “Compensation of Directors,” “Executive Officer Employment Agreements,” “Compensation Committee Interlocks and Insider Participation,” “Report of the Compensation Committee” and “Performance Graph.”

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information required by Item 12 is hereby incorporated by reference from our 2006 Proxy Statement under the caption “Ownership of Common Stock by Certain Beneficial Owners and Management” and under the caption “Equity Compensation Plan Information.”

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by Item 13 is hereby incorporated by reference from our 2006 Proxy Statement under the caption “Certain Relationships and Related Transactions.”

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by Item 14 is hereby incorporated by reference from our 2006 Proxy Statement under the caption “Principal Accounting Firm Fees.”

35

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) The following documents are filed as part of this report:

(1) Financial Statements

Reports of Independent Registered Public Accounting Firms

Consolidated Balance Sheets as of December 31, 2005 and 2004

Consolidated Statements of Income for the years ended December 31, 2005, 2004, and 2003

Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2005, 2004, and 2003

Consolidated Statements of Cash Flows for the years ended December 31, 2005, 2004, and 2003

Notes to the Consolidated Financial Statements

(2) Financial Statement Schedules

None.

Schedules not listed above have been omitted because they are not required, are not applicable, are shown in the related financial statements or notes thereto or the amounts are immaterial.

(3) Exhibits

The information required by this Item 15(a)(3) is set forth in the Exhibit Index immediately following our notes to consolidated financial statements. The exhibits listed herein will be furnished upon written request to “Vice-President of Investor Relations” located at our corporate headquarters and payment of a reasonable fee that will be limited to our reasonable expense in furnishing such exhibits.

36

CLARK, INC. AND SUBSIDIARIES

INDEX TO FINANCIAL STATEMENTS

	Page
Reports of Independent Registered Public Accounting Firms	38
Consolidated Balance Sheets as of December 31, 2005 and 2004	40
Consolidated Statements of Income for the years ended December 31, 2005, 2004, and 2003	41
Consolidated Statements of Stockholders' Equity for the years ended December 31, 2005, 2004, and 2003	42
Consolidated Statements of Cash Flows for the years ended December 31, 2005, 2004, and 2003	43
Notes to Consolidated Financial Statements	44

37

Report of Independent Registered Public Accounting Firm on Financial Statements

To the Board of Directors and Stockholders

Clark, Inc.

We have audited the accompanying consolidated balance sheet of Clark, Inc. and subsidiaries (the “Company”) as of December 31, 2005, and the related consolidated statements of income, stockholders’ equity, and cash flows for the year then ended.  These financial statements are the responsibility of the Company’s management.  Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Clark, Inc. and subsidiaries as of December 31, 2005, and the consolidated results of their operations and their cash flows for the year then ended, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of the Company’s internal control over financial reporting as of December 31, 2005, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 27, 2006 expressed an unqualified opinion thereon.

Ernst & Young LLP

Chicago, Illinois

February 27, 2006

38

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

Clark, Inc.

North Barrington, Illinois

We have audited the accompanying consolidated balance sheet of Clark, Inc. and subsidiaries (the “Company”) as of December 31, 2004, and the related consolidated statements of income, stockholders’ equity, and cash flows for each of the two years in the period ended December 31, 2004.  These financial statements are the responsibility of the Company’s management.  Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Clark, Inc. and subsidiaries as of December 31, 2004, and the results of their operations and their cash flows for each of the two years in the period ended December 31, 2004, in conformity with accounting principles generally accepted in the United States of America.

DELOITTE & TOUCHE LLP

Chicago, Illinois

March 2, 2005

39

CLARK, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

As of December 31, 2005 and 2004

(Dollars in thousands except share and per share data)

	December 31,
	2005			2004
ASSETS
Current Assets Cash and cash equivalents	$	5,077		$	23,199
Restricted cash		7,799			12,020
Accounts and notes receivable, net		36,893			44,388
Prepaid income taxes		3,845			1,479
Deferred tax assets		-			782
Other current assets		3,527			2,445
Total Current Assets		57,141			84,313
Intangible Assets, net		582,544			584,246
Equipment and Leasehold Improvements, net		12,276			12,140
Cash Surrender Value of Life Insurance		11,336			8,111
Other Assets		11,216			12,483
Total Assets	$	674,513		$	701,293
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities Accounts payable	$	4,243		$	3,886
Accrued liabilities		40,051			54,145
Deferred revenue		2,469			2,268
Deferred tax liabilities		186			-
Recourse debt maturing within one year		3,730			1,295
Non-recourse debt maturing within one year		16,299			13,632
Total Current Liabilities		66,978			75,226
Trust Preferred Debt		45,000			45,000
Long-Term Recourse Debt		1,998			3,427
Long-Term Non-Recourse Debt		238,296			261,195
Deferred Tax Liabilities		33,022			24,752
Deferred Compensation		11,443			8,215
Other Non-Current Liabilities		7,758			9,292
Total Liabilities		404,495			427,107
Stockholders' Equity Preferred stock Authorized — 1,000,000 shares; $0.01 par value, none issued		-			-
Common stock Authorized — 40,000,000 shares; $0.01 par value issued — 18,892,516in 2005 and 18,796,792 in 2004		189			188
Paid in capital		195,531			193,849
Retained earnings		94,103			87,803
Other comprehensive income (loss)		383			(135	)
Deferred compensation, 181,418 shares in 2005 and 125,111 shares in 2004		2,746			1,898
Treasury stock, at cost, 1,383,195 shares in 2005 and 549,171 shares in 2004		(22,934	)		(9,417	)
Total Stockholders' Equity		270,018			274,186
Total Liabilities and Stockholders' Equity	$	674,513		$	701,293

See accompanying notes to consolidated financial statements.

40

CLARK, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

For the years ended December 31, 2005, 2004, and 2003

(Dollars in thousands except share and per share amounts)

	Year Ended December 31,
	2005			2004			2003
Revenue
First year commissions and consulting fees	$	123,894		$	151,988		$	160,503
Renewal commissions and related fees		142,832			157,480			159,082
Reimbursable expenses		7,080			6,114			6,344
Total Revenue		273,806			315,582			325,929
Operating Expenses
Commissions and fees		53,024			74,292			88,615
General and administrative		161,034			164,278			158,923
Reimbursable expenses		7,080			6,114			6,344
Amortization		15,407			18,158			21,579
Settlement of litigation		-			-			(1,500	)
Human Capital Practice reorganization		172			(198	)		7,490
Total Operating Expenses		236,717			262,644			281,451
Operating Income		37,089			52,938			44,478
Other Income (Expense), net		1,617			(1,499	)		302
Interest, net Income		523			262			281
Expense		(21,982	)		(22,319	)		(24,290	)
Total Interest, net		(21,459	)		(22,057	)		(24,009	)
Income before taxes		17,247			29,382			20,771
Income taxes		6,638			11,222			8,089
Net Income	$	10,609		$	18,160		$	12,682
Basic earnings per common share	$	0.59		$	0.98		$	0.69
Weighted average shares outstanding - Basic		18,107,163			18,542,232			18,338,963
Diluted earnings per common share	$	0.58		$	0.97		$	0.68
Weighted average shares outstanding - Diluted		18,222,014			18,805,518			18,740,934
Cash dividends:
Paid	$	0.18			-			-
Declared	$	0.24			-			-

See accompanying notes to consolidated financial statements.

41

CLARK, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

For the years ended December 31, 2005, 2004, and 2003

(Dollars in thousands except share amounts)

	Common Stock
	Shares			Amount		Paid in Capital			Retained Earnings			Treasury Stock			Deferred Compensation Stock		Other Comprehensive Income(Loss)			Total
Balance at January 1, 2003		18,060,518		$	181	$	185,339		$	56,961		$	(1,359	)	$	-	$	-		$	241,122
Issuance of common stock in connection with acquisitions		289,542			3		3,682			-			-			-		-			3,685
Non-employee compensation		-			-		330			-			-			-		-			330
Exercise of stock options - net ofredemptions and tax effect		164,218			2		2,059			-			(73	)		-		-			1,988
Issuance of stock to directors		925			-		15			-			-			-		-			15
Net activity related to employee stock purchase plan		-			-		(549	)		-			-			-		-			(549	)
Purchase of company stock		-			-		-			-			(760	)		-		-			(760	)
Change in value of interest rate swaps, netof tax		-			-		-			-			-			-		(245	)		(245	)
Net income		-			-		-			12,682			-			-		-			12,682
Total comprehensive income																					12,437
Balance at December 31, 2003		18,515,203			186		190,876			69,643			(2,192	)		-		(245	)		258,268
Issuance of common stock in connection with acquisitions		62,918			1		1,096			-			-			-		-			1,097
Deferred compensation stock		125,111			-		-			-			-			1,898		-			1,898
Exercise of stock options - net of redemptions and tax effect		153,500			1		1,687			-			-			-		-			1,688
Net activity related to employee stock purchase plan.		-			-		190			-			-			-		-			190
Purchase of company stock		(484,000	)		-		-			-			(7,225	)		-		-			(7,225	)
Change in value of interest rate swaps, net of tax		-			-		-			-			-			-		110			110
Net income		-			-		-			18,160			-			-		-			18,160
Total comprehensive income																					18,270
Balance at December 31, 2004		18,372,732			188		193,849			87,803			(9,417	)		1,898		(135	)		274,186
Issuance of common stock in connection with acquisitions		31,624			-		538			-			-			-		-			538
Employee benefit plans		151,983			1		1,144			-			419			848		-			2,412
Purchase of company stock		(865,600	)		-		-			-			(13,936	)		-		-			(13,936	)
Change in value of interest rate swaps,net of tax		-			-		-			-			-			-		518			518
Dividends declared		-			-		-			(4,309	)		-			-		-			(4,309	)
Net income		-			-		-			10,609			-			-		-			10,609
Total comprehensive income																					11,127
Balance at December 31, 2005		17,690,739		$	189	$	195,531		$	94,103		$	(22,934	)	$	2,746	$	383		$	270,018

See accompanying notes to consolidated financial statements.

42

CLARK, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the years ended December 31, 2005, 2004, and 2003

(Dollars in thousands)

	Year Ended December 31,
	2005			2004			2003
Operating Activities Net income	$	10,609		$	18,160		$	12,682
Adjustments to reconcile net income to cash
provided by operating activities
Depreciation and amortization		20,801			23,822			27,257
Write off of securitization financing costs		-			1,503			-
Non-employee stock compensation		-			-			345
Deferred taxes		2,240			10,159			6,131
Loss on disposal of assets		711			245			596
Changes in operating assets and liabilities (excluding the effects of acquisitions) Accounts receivable		7,495			3,090			18,002
Other current assets		(1,082	)		704			(305	)
Other assets		(1,188	)		(1,186	)		818
Accounts payable		357			(4,243	)		(334	)
Income taxes		4,204			1,452			322
Accrued liabilities		(9,027	)		2,936			(69	)
Deferred income		201			288			(369	)
Other non-current liabilities		(244	)		703			6,753
Deferred compensation		4,076			3,550			2,784
Net cash provided by operating activities		39,153			61,183			74,613
Investing Activities Purchase of businesses, net of cash acquired		(20,142	)		(9,227	)		(9,162	)
Purchases of equipment		(6,205	)		(4,765	)		(4,423	)
Cash used in investing activities		(26,347	)		(13,992	)		(13,585	)
Financing Activities Proceeds from borrowings		2,300			70,210			39,500
Repayment of borrowings		(21,526	)		(98,182	)		(105,692	)
Dividends paid		(3,232	)		-			-
Debt financing costs		-			(628	)		(1,413	)
Cash restricted for the repayment of non-recourse notes		4,221			6,946			(4,901	)
Employee benefit plans		1,245			1,730			368
Repurchase of company stock		(13,936	)		(7,224	)		-
Cash (used in) provided by financing activities		(30,928	)		(27,148	)		(72,138	)
Net Increase (Decrease) in Cash and Cash Equivalents		(18,122	)		20,043			(11,110	)
Cash and Cash Equivalents at Beginning of the Year		23,199			3,156			14,266
Cash and Cash Equivalents at End of the Year	$	5,077		$	23,199		$	3,156
Supplemental Disclosure for Cash Paid during the Period:
Interest paid	$	21,376		$	21,127		$	21,779
Income taxes, net of refunds		183		$	(389	)	$	1,354
Supplemental Non-Cash Information:
Fair value of common stock issued in connection with acquisitions and acquisition contingent payouts	$	539		$	1,096		$	3,685

See accompanying notes to consolidated financial statements.

43

CLARK, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Year ended December 31, 2005

(Tables shown in thousands of dollars, except share and per share amounts)

1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation — The consolidated financial statements include the accounts of Clark, Inc. (the “Company”) and its wholly-owned subsidiaries. Through the Company’s five operating segments, Executive Benefits Practice, Banking Practice, Healthcare Group, Pearl Meyer & Partners, and Federal Policy Group, the Company designs, markets, and administers compensation and benefit programs for companies supplementing and securing employee benefits and provides executive compensation and related consulting services to U.S. corporations, banks, and healthcare organizations. The Company assists its clients in using customized life insurance products to finance their long-term benefit liabilities. In addition, the Company owns Clark Securities, Inc. (“CSI”), a registered broker/dealer through which it sells all its securities products and receives related commissions. All significant intercompany amounts and transactions have been eliminated in the accompanying consolidated financial statements.

Use of Estimates— The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The Company bases its estimates on historical experience, actuarial and other valuations, and various other factors that are deemed to be reasonable under the circumstances, the results of which form the basis for making judgements about the carrying value of assets and liabilities that are not readily apparent from other sources. Some of these judgements can be subjective and complex and, consequently, actual results may differ from these estimates under different assumptions or conditions. While for any given assumption or estimate made by the Company’s management, there may be other assumptions and estimates that are reasonable, the Company believes that, given the current facts and circumstances, it is unlikely that applying any other such reasonable estimate or assumption would materially impact the financial statements. The Company uses estimates in its determination of allowances for accounts receivable and chargebacks, restructuring provisions, the net present value and amortization of inforce revenue acquired through acquisitions and various impairment analyses. Actual results could differ from those estimates.

Revenue Recognition— First year commissions are recognized as revenue in the amount due or paid by the carrier at the time the policy application is substantially completed, the initial premium payment is paid (which is the effective date of the insurance policy), and the insured party is contractually committed to purchase the insurance policy or, in certain instances, when cash is received. Fees for program design and placement are recognized in a manner consistent with commissions. Renewal revenue is recognized on the date that the renewal premium is due or paid by the client to the insurance company depending on whether a policy is considered fixed or variable. Fixed renewal policies have predictable set premium amounts. Revenue on these policies is recognized on the premium due date. Variable renewal policy premiums can be based upon such items as value of underlying investments in the policy, cash surrender value of the policy, or mutual fund values. In some cases, the Company is able to obtain information directly from the carriers allowing the Company to reasonably and reliably estimate the expected renewal premiums. Revenue is recognized based upon these estimates at a policy’s renewal date. For those policies where the Company is unable to obtain information to reasonably estimate the expected renewal premiums, revenue is not recognized until the confirmation has been received from the insurance carrier that the client’s premium payment has been received. The Company is notified in advance if a client plans to surrender, so adjustments in subsequent periods due to cancellations are infrequent and minor. Revenue associated with policies to be surrendered is not recognized. Given the homogenous nature of such cases and historical information about chargebacks, the Company is able to accurately estimate the revenue earned. The Company currently maintains a chargeback allowance, which is monitored on a quarterly basis for adequacy. Service fees are received annually on the policy anniversary date. Fees related to future services to be provided are recognized as the services are rendered. The majority of fees under these agreements are billed annually at the beginning of the service period. The revenue is recognized on a straight-line basis over the service period. The services expected to be performed for the client are outlined in the servicing agreements. Consulting fee revenue consists of fees charged for services the Company performs in advising its clients. These fees are generally based on a rate per hour arrangement or a fixed monthly fee and are earned when the services are rendered.

44

CLARK, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Commissions and Fee Expense— Commissions and fee expense comprise the portion of the total commission revenue that is earned by and paid to both employee and independent sales producers.

Advertising— Advertising and marketing costs are charged to segments when incurred. Total expenses for 2005, 2004, and 2003 were $3.5 million, $1.9 million, and $3.5 million, respectively.

Income Taxes— Income taxes are accounted for under the liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and operating loss carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled.

Cash and Cash Equivalents— The Company considers all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents. Cash in bank accounts, including restricted cash, aggregated approximately $12.9 million and $35.2 million at December 31, 2005 and 2004, respectively. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash and cash equivalents. At December 31, 2005 and 2004, the Company had restricted cash of $7.8 million and $12.0 million related to the asset-backed notes outstanding, respectively.

Stock-Based Compensation — The Company applies Accounting Principles Board (“APB”) Opinion No. 25, Accounting for Stock Issued to Employees, in accounting for its stock-based compensation plans for employees and directors as allowed under Statement of Financial Standards, SFAS No. 123, Accounting for Stock-Based Compensation as Amended by SFAS No. 148, Accounting for Stock-Based Compensation - Transition and Disclosure - An Amendment of FASB Statement No. 123, and provides the pro forma disclosures required by SFAS No. 123. The Company accounts for stock options granted to non-employees other than directors under the provisions of SFAS No. 123. The Company grants stock options at an exercise price equal to the quoted market price of its stock on the grant date. Since the stock options have no intrinsic value on the grant date, no compensation expense is recorded in connection with the stock option grants. Generally, stock options vest 25 percent on each anniversary of the grant date, are fully vested five years from the grant date and have a term of ten years. For purposes of calculating basic and diluted earnings per share, exercised stock options are considered outstanding. Under the treasury stock method, unexercised stock options with fair market values of the underlying stock greater than the stock options’ exercise prices are considered common stock equivalents for the purposes of calculating diluted earnings per share for periods when there are positive earnings and the incremental effect would be dilutive.

The pro forma information regarding net income and earnings per share, required by SFAS No. 123, has been determined as if the Company accounted for its stock-based compensation plans under the fair value method. The fair value of each option grant was estimated at the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions used for grants in 2005, 2004, and 2003, respectively:

	2005	2004	2003
Dividend yield	1.6%	None	None
Volatility	57.5%	57.9%	62.9%
Risk-free interest rates	3.8%	3.6%	5.2%
Expected life (years)	5	5	5

The estimated average fair values of options outstanding in 2005, 2004, and 2003 were $9.59, $8.24, and $8.22, respectively. Had compensation cost for the Company’s stock-based compensation plans been determined in accordance with SFAS No. 123, as amended by SFAS No. 148, Accounting for Stock-Based Compensation - Transition and Disclosure - An Amendment of FASB Statement No. 123, the Company’s net income and earnings per share would have been reduced to the pro forma amounts indicated below:

45

CLARK, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

	Year Ended December 31,
		2005		2004			2003
Net Income As reported	$	10,609	$	18,160		$	12,682
Add: stock-based employee compensation expense included in reported net income, net of related tax effect		-		-			206
Deduct: stock option compensation expense, net of tax		(709		(2,428	)		(1,799	)
Pro forma	$	9,900	$	15,732		$	11,089
Basic Earnings per Common Share
As reported	$	0.59	$	0.98		$	0.69
Pro forma	$	0.55	$	0.85		$	0.60
Diluted Earnings per Common Share
As reported	$	0.58	$	0.97		$	0.68
Pro forma	$	0.54	$	0.84		$	0.59

Hedging Transactions — The Company does not enter into derivative transactions except to mitigate interest rate risk.All derivative instruments are reported in the consolidated financial statements at fair value. Changes in the fair value of derivatives are recorded each period in earnings or other comprehensive income (loss), depending on whether the derivative is designated and effective as part of a hedged transaction, and on the type of hedge transaction. Gains or losses on derivative instruments reported in other comprehensive income (loss) are reclassified as earnings in the period in which earnings are affected by the underlying hedged item, and the ineffective portion of all hedges are recognized in earnings in the current period. In 2005, 2004 and 2003, the Company entered into interest rate swaps to match floating rate debt with fixed rate interest payments periodically for LIBOR-based debt.

Goodwill—The Company has identifiable intangible assets representing the excess costs of acquired businesses over the fair values of the tangible net assets associated with the acquisition. Goodwill is the excess cost of net assets associated with an acquisition. Goodwill is tested annually for impairment or whenever changes in circumstances indicate impairment might exist.

Other Identifiable Intangible Assets— The Company has identifiable intangible assets representing the excess costs of acquired businesses over the fair values of the tangible net assets associated with the acquisition. Non-compete agreements are amortized over the terms of the agreements. The net present value of inforce revenue is typically amortized between 20 and 30 years (the expected average policy duration). Annual amortization of net present value of inforce revenue is equal to the reduction in the present value of the adjusted revenue stream from the beginning of the year to the end of the year. Amortization expense related to identifiable intangible assets was $15.4 million in 2005, $18.2 million in 2004, and $21.6 million in 2003. The Company’s policy is to review intangible and other long-lived assets for impairment on an annual basis or whenever changes in circumstances indicate that an impairment might exist. When any indicators are present, the estimated undiscounted cash flows are compared to the carrying amount of the assets. If the undiscounted cash flows are less than the carrying amount, an impairment loss is recorded. Any write-downs are treated as permanent reductions in the carrying amount of the asset.

Equipment and Leasehold Improvements— Equipment and leasehold improvements are carried at cost less accumulated depreciation. Depreciation expense is provided in amounts sufficient to relate the cost of assets to operations over the estimated service lives using straight line and accelerated methods. The Company depreciates furniture, equipment, and computer software over periods of three to seven years, while leasehold improvements are amortized over the lease period. The Company capitalizes costs associated with software developed or obtained for internal use when both the preliminary project stage is completed and management has committed to funding the project. Thereafter, all direct costs are capitalized. Capitalization of costs ceases no later than the point at which the project is substantially complete and ready for its intended purpose.

Fair Value of Financial Instruments— The carrying amount of cash and cash equivalents, accounts and notes receivable, accounts payable, and other financial instruments approximate their fair values principally because of the short-term nature of these instruments. See Note 13 “Financial Instruments” for additional information on financial instruments.

46

CLARK, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Reclassifications— Certain 2004 and 2003 amounts have been reclassified to conform to 2005 presentation.

2. RECENT ACCOUNTING PRONOUNCEMENTS

In December 2004, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 123(R), Shared-Based Payment which supersedes Accounting Principle Board (“APB”) Opinion No. 25, Accounting for Stock Issued to Employees, and its related implementation guidance. SFAS No. 123(R) requires companies to recognize in the income statement the grant-date fair value of stock options and other equity-based compensation issued to employees. The requirements of SFAS 123(R) are effective as of the beginning of the first fiscal year beginning after June 15, 2005. The Company will be required to adopt the provisions of SFAS 123(R) as of January 1, 2006. Under FAS 123R, the Company must determine the appropriate fair value model to be used for valuing share-based payments, the amortization method for compensation cost, and the transition method to be used at date of adoption. The permitted transition methods include either modified-retrospective or modified-prospective adoption. Under the modified-retrospective option, prior periods may be restated either as of the beginning of the year of adoption or for all periods presented. The modified-prospective method requires that compensation expense be recorded for all unvested stock options at the beginning of the first quarter of adoption of FAS 123R, while the modified-retrospective methods would record compensation expense for all unvested stock options beginning with the first period presented. The Company plans to adopt SFAS No. 123 (R) using the modified-prospective method. Adoption of SFAS 123(R) will have no impact on the historical financial statements included in this Annual Report on Form 10-K. The impact of adoption of SFAS No. 123(R) cannot be predicted at this time because it will depend on levels of share-based payments granted in the future. However, had the Company adopted SFAS No. 123(R) in prior periods, the impact of that standard would have approximated the impact of SFAS No. 123(R) as described in the disclosure of pro forma net income and earnings per share in Note 1 to the consolidated financial statements.

3. ACQUISITIONS

Following is a description of the acquisitions made during 2005 and 2003. There were no acquisitions in 2004. The results of operations for each acquired entity have been included in the accompanying consolidated statements of income from the effective date of the respective acquisition.

2005 Acquisitions - In 2005, the Company acquired the following entities for an aggregate purchase price of approximately $10.1 million paid in cash and $1.1 million to be paid in 2008 (includes expenses paid).

·   BancPlan, LLC located in Red Wing, Minnesota, provides internet-based software products for consulting in the areas of strategic planning and board assessment for financial institutions, and is included in the Banking Practice segment. The purchase price was allocated to non-compete agreements (approximately $30 thousand) over a term of three years with the remaining purchase price (approximately $380 thousand) allocated to goodwill.

·   Stratford Advisory Group, Inc. located in Chicago, Illinois, is an institutional investment consulting firm, and is included in the Executive Benefits Practice segment. The purchase price was allocated to non-compete agreements (approximately $500 thousand) over a term of five years with the remaining purchase price (approximately $5.2 million) allocated to goodwill.

·   MedEx, located in Houston, Texas, provides medical stop loss insurance to employers with self-funded healthcare benefit programs, and is included in the Corporate segment. The purchase price was allocated to non-compete agreements (approximately $1 million) over a term of eight years with the remaining purchase price (approximately $4.1 million) allocated to goodwill.

The allocations of the purchase prices for the above acquisitions are preliminary, pending completion of a valuation. Upon completion of such valuations, the allocation of purchase prices will be finalized in accordance with SFAS No. 141, Business Combinations.

Additional consideration of $3.6 million in cash is payable to the previous owner of MedEx if certain objectives are met over the eight years following the acquisition. If earned, these payments will be accounted for as additional goodwill.

47

CLARK, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

2003 Acquisitions— In 2003, the Company acquired the following entities for an aggregate purchase price of $4.2 million paid in cash (includes expenses paid) and 44,298 shares of the Company’s common stock valued at $630 thousand:

·   Executive Benefit Solutions, LLC, located in Memphis, Tennessee, specializes in providing strategic compensation, benefit, and bank-owned life insurance portfolio consulting services to banks in the Northeast, and is included in the Company’s Banking Practice segment;

·   Blackwood Planning Corporation, located in West Palm Beach, Florida, specializes in providing strategic compensation, benefit, and bank-owned life insurance portfolio consulting services to banks in the Southeast, and is included in the Company’s Banking Practice segment; and

·   Inforce revenue from the president of one of the Company’s practices, related to policies sold when the employee was a consultant prior to his employment by the Company as practice president, and is included in the Executive Benefits Practice segment.

Additional consideration of $14.4 million in cash would be payable to previous owners of Executive Benefit Solutions and Blackwood Planning Corporation if certain objectives are met over the three and one-half years following the acquisition. If earned, these payments will be accounted for as additional goodwill. As of December 31, 2005, additional consideration of $11.9 million was earned of which $3.6 million remains accrued in “accrued liabilities” on the consolidated balance sheet.

The net present value of inforce revenue ($980 thousand) was assigned to the Executive Benefits Practice segment. Goodwill ($1.7 million) was assigned to the Banking Practice segment. The remaining purchase price for the Executive Benefit Solutions and Blackwood Planning Corporation acquisitions was allocated to non-compete agreements, which were assigned to the Banking Practice segment, and have terms of six years.

4. RESTRUCTURING

In the fourth quarter of 2003, the Company reorganized its executive compensation consulting practices and recorded a charge of $7.5 million in the fourth quarter of 2003 relating to the reorganization, of which, $2.7 million remains accrued on the consolidated balance sheet as of December 31, 2005. Effective January 1, 2005, the Human Capital Practice was merged into Executive Benefits Practice. The components of the $7.5 million charge included $1.1 million for costs associated with employee terminations, $5.1 million for exit costs relating to the expected remaining future cash outlays associated with leases on vacated facilities until lease terminations, bonuses of $1.0 million related to renegotiations of certain bonus agreements to new arrangements necessary to facilitate the reorganization, and $300 thousand for impairment of assets.

The Company will continue to evaluate the remaining restructuring reserve as plans are being executed. As a result, there may be adjustments to the reserve in future periods. A summary of the activity in the reserve account during the year ended December 31, 2005 is as follows:

	Reserve Balance January 1, 2005		Cash Payments			Adjustments		Reserve Balance December 31, 2005
Employee termination costs	$	325	$	-		$	-	$	325
Lease costs		2,946		(718	)		172		2,400
Total	$	3,271	$	(718	)	$	172	$	2,725

5. ACCOUNTS RECEIVABLE

Major categories of accounts receivable are as follows:

	As of December 31,
	2005			2004
Accounts receivable - trade	$	38,747		$	45,855
Accounts receivable allowance		(1,854	)		(1,467	)
	$	36,893		$	44,388

48

CLARK, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The rollforward of the accounts receivable allowance is as follows:

	As of December 31,
	2005			2004			2003
Beginning balance	$	(1,467	)	$	(1,296	)	$	(1,089	)
Write offs		661			805			999
Expense		(1,048	)		(976	)		(1,206	)
Ending balance	$	(1,854	)	$	(1,467	)	$	(1,296	)

As of December 31, 2005 and 2004, there were approximately $671 thousand and $2.6 million, respectively, of unbilled receivables included in accounts receivable on the consolidated balance sheets. These unbilled amounts, the majority of which relate to in-process consulting projects, are typically billed during the quarter immediately following the reporting period.

6. GOODWILL AND OTHER INTANGIBLE ASSETS

Changes in the carrying amount of goodwill between December 31, 2004 and December 31, 2005 by reporting units are as follows:

	Balance December 31, 2004		Acquired During Period		Earnouts/Other			Balance December 31, 2005
Executive Benefits Practice	$	21,855	$	5,233	$	343		$	27,431
Banking Practice		52,050		381		2,124			54,555
Healthcare Group		14,076		-		-			14,076
Management Science Associates		5,010		-		-			5,010
Pearl Meyer & Partners		36,981		-		-			36,981
Federal Policy Group		8,766		-		-			8,766
Corporate		30		4,090		(30	)		4,090
Total	$	138,768	$	9,704	$	2,437		$	150,909

Information regarding the Company’s other intangible assets follows:

	As of December 31, 2005							As of December 31, 2004
	Carrying Amount		Accumulated Amortization			Net		Carrying Amount		Accumulated Amortization			Net
Inforce revenue	$	500,555	$	(74,691	)	$	425,864	$	500,521	$	(60,877	)	$	439,644
Non-compete agreements		12,199		(6,428	)		5,771		10,669		(4,835	)		5,834
Total	$	512,754	$	(81,119	)	$	431,635	$	511,190	$	(65,712	)	$	445,478

For the past three years, the Company’s amortization of intangibles was comprised of the following:

	Year Ended December 31,
	2005		2004		2003
Present value of future cash flows from inforce revenue	$	13,814	$	16,572	$	19,971
Non-compete agreements		1,593		1,586		1,608
Total	$	15,407	$	18,158	$	21,579

49

CLARK, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The Company estimates that its amortization for 2006 through 2010 for all acquisitions consummated to date will be as follows:

	Inforce Revenue		Non-Compete Agreements		Total
2006	$	13,221	$	1,797	$	15,018
2007		12,858		1,772		14,630
2008		12,914		1,276		14,190
2009		12,987		351		13,338
2010		13,595		200		13,795

7. CONTINGENT CONSIDERATION

As a result of the Company’s acquisition program, it has approximately $11.8 million of contingent consideration potentially due to the former owners of its acquired entities, including $4.2 million that has been earned and is accrued on the consolidated balance sheet at December 31, 2005. If and when the acquired entities meet certain criteria negotiated at the time of the purchase these amounts are payable as additional consideration. A summary of the amounts payable if the criteria are met is as follows for acquisitions that were completed as of December 31, 2005:

Potential Amount Payable In	Cash
2006	$	4,203
2007		4,000
2008		-
2009		600
2010		600
2011 and later		2,400
	$	11,803

8. EQUIPMENT AND LEASEHOLD IMPROVEMENTS

Major classifications of equipment and leasehold improvements are as follows:

	As of December 31,
	2005			2004
Computer software, office furniture and equipment	$	24,234		$	22,957
Capitalized software		8,002			6,379
Leasehold improvements		4,068			3,377
		36,304			32,713
Accumulated depreciation and amortization		(24,028	)		(20,573	)
	$	12,276		$	12,140

Depreciation expense was $5.4 million, $5.7 million, and $5.7 million for 2005, 2004, and 2003, respectively.

9. ACCRUED LIABILITIES

Major categories of accrued liabilities are as follows:

	As of December 31,
	2005		2004
Bonuses payable	$	15,108	$	19,476
Commissions payable		5,680		8,727
Earnouts payable		4,213		10,400
Other		15,050		15,542
	$	40,051	$	54,145

50

CLARK, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

10. TAXES

Income tax expense from operations consists of the following components:

	Year Ended December 31,
	2005			2004		2003
Current:
Federal	$	(2,136	)	$	940	$	1,396
State and local		328			123		371
Deferred:
Federal		8,135			9,726		5,548
State and local		311			433		774
	$	6,638		$	11,222	$	8,089

Total income taxes incurred consists of the following components:

	Year Ended December 31,
	2005			2004			2003
Income tax expense from operations	$	6,638		$	11,222		$	8,089
Income tax expense (benefit) in equity from exercise of options		(333	)		(149	)		(356	)
Income tax expense (benefit) in equity from interest rate swaps		329			7			(63	)
Total income tax incurred	$	6,634		$	11,080		$	7,670

A reconciliation of the 2005, 2004, and 2003 income tax expense computed by applying the statutory rate to income before income taxes to the actual taxes is as follows:

	Year Ended December 31,
	2005			2004			2003
U.S. Federal statutory rate	$	6,036		$	10,284		$	7,062
State income tax - net of federal benefit		521			996			970
Tax liability adjustment and prior year taxes		210			116			(146	)
Non-taxable life insurance proceeds		(565	)		-			-
Other - net		436			(174	)		203
	$	6,638		$	11,222		$	8,089

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company's deferred tax liabilities and assets are as follows:

	As of December 31,
	2005			2004
Long-term: Intangible assets	$	(37,821	)	$	(28,776	)
Depreciation		(855	)		(1,328	)
Accrued liabilities		1,548			1,679
Reorganization costs		1,107			1,229
Deferred compensation		927			1,582
Net operating loss		2,414			1,023
Long-term net deferred tax liabilities before allowance		(32,680	)		(24,591	)
Valuation allowance		(342	)		(161	)
Total long-term net deferred tax liabilities	$	(33,022	)	$	(24,752	)
Current:
Accrued liabilities	$	1,122		$	1,347
Prepaid expenses		(1,308	)		(814	)
Net operating loss		-			249
Total current net deferred tax assets (liabilities)	$	(186	)	$	782

51

CLARK, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

In assessing the realizability of deferred tax assets, the Company considers the likelihood that some portion or all of the deferred tax assets may not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which the temporary differences become deductible. The Company considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based upon the projected future reversal of existing taxable temporary differences over the periods with respect to which the deferred tax assets are deductible, the Company believes it is more likely than not that it will realize the vast majority of the benefits of deductible differences. The Company has $3.7 million of federal net operating loss carry forwards, of which, $2.2 million expires in 2020 and $1.5 million which expires in 2025. However, the Company is uncertain if it will benefit from certain state net operating losses. Accordingly, a valuation allowance of $342 thousand and $161 thousand, respectively, were deemed necessary as of December 31, 2005 and 2004.

The Internal Revenue Service has audited the Company’s federal income tax returns through the year ended December 31, 2003.

11. LONG-TERM DEBT

	As of December 31,
	2005		2004
Revolving credit loan payable to banks	$	2,300	$	-
Notes payable to former stockholder of acquired business		3,428		4,722
Asset-backed notes		254,595		274,827
Trust preferred debt		45,000		45,000
		305,323		324,549
Less current maturities		20,029		14,927
	$	285,294	$	309,622

Securitization — In order to finance the November, 2002 acquisition of LongMiller, the Company entered into a $305 million securitization of a majority of the inforce revenues of LongMiller. In connection with the securitization transactions, CBC Insurance Revenue Securitization, LLC, a wholly owned subsidiary of the Company (“CBC IRS”), issued $305 million aggregate principal amount of notes secured by insurance commission streams (the “Securitized Notes”) in a private placement (the “Securitization Transaction”). CBC IRS purchased such insurance commission streams from LongMiller. CBC IRS is a special purpose company that holds certain rights to commissions and other compensation arising from the sale of bank-owned or company-owned life insurance policies. While CBC IRS is included in the Company’s consolidated financial statements and has elected to be treated as a disregarded entity for federal income tax purposes, it is a separate legal entity. The assets held by CBC IRS are legally owned by CBC IRS and are not available to creditors of the Company, LongMiller, or the Company’s other subsidiaries. The securitization is broken into four traunches, each rated by Standard & Poors. The traunches consist of the A-1 and A-2 class totaling approximately $167 million and each rated “AAA”, the B-class traunch of $108 million rated “A” and the C-class traunch of $30 million rated “BBB”. The weighted average interest cost over the 20-year life of the asset-backed notes is approximately seven percent. For the year ended December 31, 2005, the earnings before interest, taxes and amortization for CBC IRS was approximately $31.5 million, which is used to fulfill its obligation to the bondholders.. The securitization is treated as debt and is included in the Banking Practice segment, and is non-recourse to the Company. Assuming the securitized notes amortize as expected, the securitization will provide residual cash flow to the Company of approximately five percent for the securitized inforce revenue in the initial years, and the Company’s total residual interest would equal approximately 28 percent of the total securitized inforce revenue over the life of the notes. Such residual cash flow to the Company (both in any year and in total) may be less than expected (or none) depending on the actual insurance commission streams from the policies underlying the securitization. The note agreement requires cash flow from the assets securitizing the notes to be held in a separate account. As of December 31, 2005, there was restricted cash of $7.8 million related to such requirements.

As a result of the surrender of a number of insurance policies by a single customer of the Company in December 2004, the Company will cease receiving commissions and related payments in respect of such surrendered insurance policies. The amount of commissions and related payments included in the Securitization transaction will be directed solely to the payment of principal and interest on the notes and related administration fees and expenses associated with the Securitization until such time as the Reserve Account established as part of the Securitization is replenished.

52

CLARK, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Credit Facility — In November 2003, the Company amended and restated its December 28, 1999 Credit Agreement revising the amount available under the credit facility to $80.0 million for a three year period ending December 31, 2006. In December 2003, a new participant bank was added to the facility increasing the facility amount to $90 million. The credit facility amount was reduced dollar for dollar by $18.0 million of repayments in 2003 and 2004 on the term portion of the facility. In August 2005, the Company amended and restated its November 26, 2003 Credit Agreement Amendment to add a new participant bank and increase the commitment of another participant bank, increasing the facility amount to $89.0 million. The Company had $86.7 million available under its credit line at December 31, 2005. The credit facility expires on December 31, 2006. The Company expects the credit facility to be renewed on substantially similar terms. The Company’s assets are pledged to the bank group as part of the credit facility except for cash flows from commissions to be received upon the renewals of specified inforce policies acquired in connection with the acquisition of LongMiller. Interest on the revolver is based upon prime or LIBOR, plus a spread, at the Company’s option. Interest on the revolver is paid monthly for prime rate borrowings and at maturity of each LIBOR borrowing. The Company is obligated to pay a commitment fee based on the daily average of undrawn funds under the credit agreement. The fee is a minimum of .25% and a maximum of .60% based on the ratio of consolidated indebtedness to income before interest, taxes, depreciation and amortization for the most recent four quarters on a rolling quarterly basis.

The restrictive covenants under the credit facility provide for the maintenance of a minimum ratio of fixed charges, a maximum allowable leverage ratio, a minimum level of net worth (stockholders’ equity), and a maximum ratio of debt to capitalization. The Company was in compliance with all its restrictive covenants as of December 31, 2005. The Company’s restrictive covenants may limit its borrowing ability under its credit line.

Trust Preferred Debt — In 2003 and 2004, the Company raised approximately $45 million from its participation in three pooled trust preferred transactions, in which it issued long-term subordinated debt securities with a floating rate based on three month LIBOR plus a weighted average spread of 400 basis points (weighted average interest rate of 8.3% as of December 31, 2005). The Company used the net proceeds to pay down its credit facility. The pooled trust preferred debt principal is payable in one payment due in 30 years from the issuance date with interest paid quarterly.

Phynque, Inc. Notes — In connection with the purchase of Phynque, Inc. d/b/a Management Compensation Group/Healthcare, the Company issued an $8.7 million promissory note payable in thirty-two equal quarterly installments of principal and interest at 10%. A portion of the promissory note is guaranteed personally by the Company’s Chairman and Chief Executive Officer.

At December 31, 2005, future payments under all debt arrangements are as follows:

2006	$	20,029
2007		13,945
2008		13,299
2009		13,390
2010		14,184
2011 and thereafter		230,476
	$	305,323

12. STOCK REPURCHASE

On January 25, 2005, the Company’s Board of Directors authorized expansion of its existing stock repurchase program to a total of $15 million of its outstanding common stock, from the previously authorized level of $10 million. On May 27, 2005, the Company’s Board of Directors authorized expansion of its existing stock repurchase program to a total of $35 million of its common stock, from the previously authorized level of $15 million. During the years ended December 31, 2005 and 2004, the Company repurchased approximately 866 thousand shares for approximately $13.9 million and 484 thousand shares for approximately $7.2 million, respectively.

13. FINANCIAL INSTRUMENTS

Derivative Financial Instruments. The Company has used derivatives only for hedging purposes to mitigate interest rate risk. The following is a summary of the Company’s risk management strategies and the effect of these strategies on its consolidated financial statements.

53

CLARK, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Hedging Activities. The Company has limited transactions that fall under the accounting rules of SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended by SFAS No. 137, SFAS No. 138 and SFAS No. 149. From time to time, the Company uses financial instruments, including interest rate swap agreements, to manage exposure to interest rates. During 2005, 2004, and 2003, the Company entered into several interest rate swaps to hedge its LIBOR-based debt. These swaps have been designated as cash flow hedges. As such, the changes in the fair value of the interest rate swaps are recorded in other comprehensive income (“OCI”) for the effective portion of the hedge, while the ineffective portion is recorded immediately in earnings.  Amounts are reclassified from OCI to earnings as the interest rate swaps effect earnings.There have been no charges to earnings for ineffectiveness of interest rate hedges for the year ended December 31, 2005. The fair value of these interest rate swap agreements, based upon bank quotes, was an asset of approximately $770 thousand at December 31, 2005. The terms of these interest rate swaps are as follows (fair value in thousands):

Effective Date	Maturity Date		Notional Amount at December 31, 2005		Fixed Rate to be Paid			Variable Rate to be Received		Fair Value as of December 31, 2005
June 3, 2005		December 31, 2009	$	12.0 million		4.05	%		LIBOR	$	314
February 25, 2005		December 31, 2009	$	10.0 million		4.31	%		LIBOR		160
May 18, 2004		March 31, 2009	$	7.0 million		4.44	%		LIBOR		65
January 7, 2003		December 31, 2007	$	11.2 million		2.85	%		LIBOR		231
Total			$	40.2 million						$	770

The following methods and assumptions were used in estimating the fair value disclosures for financial instruments:

Long- and Short-Term Debt. The fair values of the long-term debt are estimated using discounted cash flow analysis, based on the Company’s current incremental borrowing rates for similar types of borrowing arrangements.

Interest Rate Swaps. The carrying amount of interest rate swaps is based upon confirmation from the counterparty.

The carrying amounts and fair values of the Company’s financial instruments at December 31, 2005 and 2004, are as follows:

	As of December 31,
	2005						2004
	Carrying Amount			Fair Value			Carrying Amount		Fair Value
Short-term debt	$	20,029		$	20,868		$	14,927	$	15,285
Long-term debt		285,294			290,968			309,622		309,772
Interest rate swaps		(770	)		(770	)		40		40

54

CLARK, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

14. EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per common share:

	Year Ended December 31,
	2005		2004		2003
Numerator for basic and diluted earnings per common share	$	10,609	$	18,160	$	12,682
Basic earnings per common share -
weighted average shares outstanding		18,107,163		18,542,232		18,338,963
Effect of dilutive securities:
Stock options		108,440		204,837		189,871
Contingent shares earned not issued		6,411		58,449		212,099
Diluted earnings per share - weighted average shares plus assumed conversions		18,222,014		18,805,518		18,740,934
Basic earnings per common share	$	0.59	$	0.98	$	0.69
Diluted earnings per common share	$	0.58	$	0.97	$	0.68

For the years ended December 31, 2005, 2004, and 2003 there are approximately 885 thousand, 959 thousand, and 868 thousand, respectively, of outstanding stock options which are not included in the computation of diluted earnings per share because the exercise prices of the options were greater than the average market prices of the Company’s common shares during the respective years. The range of exercise prices for these antidilutive stock options was between $15.51 and $27.49 at December 31, 2005, $16.63 and $27.49 at December 31, 2004, and $14.31 and $30.30 at December 31, 2003.

15. LIFE INSURANCE PROCEEDS

For the year ended December 31, 2005, the Company received $1.6 million of net life insurance proceeds following the death of an executive in the Healthcare Group. The proceeds are not subject to taxation. This amount is included in other income (expense), net, in the consolidated statement of income for the year ended December 31, 2005.

16. DIVIDENDS

On February 1, 2006, the Board of Directors authorized a dividend of $0.06 per share (approximately $1.1 million) to all stockholders of record as of March 1, 2006, payable on April 1, 2006.

During each of its 2005 quarterly Board of Directors meetings, the Board authorized the Company to pay a quarterly dividend of $0.06 per share (approximately $1.1 million). The dividends were paid on January 1, 2006, October 1, 2005, July 1, 2005, and April 1, 2005 to stockholders of record as of December 1, 2005, September 1, 2005, June 1, 2005, and March 1, 2005, respectively.

17. BENEFIT PLANS

Incentive Stock Option Plan. The Incentive Stock Option Plan provided certain employees options to purchase shares for $4.80 and $7.00 per share. 190,832 shares have been granted under this plan. No additional options may be granted under this program. The $4.80 and $7.00 options became fully vested at the date of the Initial Public Offering. The options expire ten years from the grant date and are voided within 90 days of the employee's termination or one year from date of death.

55

CLARK, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

1998 Stock Option Plan. In 1998, the Board of Directors approved a stock option plan providing for certain employees, directors, and independent producers to purchase shares for fair market value at the time the option is granted. The Plan is administered by the Compensation Committee of non-employee directors who have full discretion to determine participation, vesting, and term of the option at the time of the grant providing that no option may have a term greater than ten years from the date of grant. A total of 2,000,000 shares are reserved for issuance under this plan. However, option grants which have been forfeited or cancelled may be reissued. The vesting period of the stock options is generally between three and five years. As of December 31, 2005, 2,109,664 options have been granted under this program and a total of 773,790 shares of the Company’s common stock remain available for grant.

1998 Non-Employee Director Stock Option Plan. A total of 100,000 shares of the Company’s common stock have been reserved for issuance under its Non-Employee Director Plan, as amended by the Board of Directors in January 2000. However, option grants which have been forfeited or cancelled may be reissued. The Non-Employee Director Plan is administered by the compensation committee of the Board. Only nonqualified options may be granted and all of the Company’s non-employee directors participate in the plan. The plan provides for the automatic grant of stock options to purchase 10,000 shares of the Company’s common stock to each newly elected non-employee director on the first day of the month following their election. The plan also provides for the automatic grant of stock options to purchase 4,000 shares of the Company’s common stock to continuing non-employee directors on the first day of the month immediately following its annual stockholder meeting. The exercise price for stock options granted under the Non-Employee Director Plan is the fair market value of the Company’s common stock on the date of grant. The vesting period of the stock options is generally between one and three years. As of December 31, 2005, 98,110 options had been granted under the non-employee director plan and a total of 54,334 shares of the Company’ common stock remain available for grant.

2002 Stock Option Plan. On April 30, 2002, the Board of Directors approved the Clark, Inc. 2002 Stock Option Plan (the “2002 Plan”). A total of 500,000 shares of the Company’s common stock have been reserved for issuance under the 2002 Plan. However, option grants which have been forfeited or cancelled may be reissued. The exercise price for stock options granted under the 2002 Plan is the fair market value of the Company’s common stock on the date of grant. The vesting period of the stock options is generally between three and five years. No option may have a term greater than ten years from the date of the grant. As of December 31, 2005, 277,296 options had been granted under this plan and a total of 347,667 shares of the Company’s common stock remain available for grant.

2003 Stock Option Plan. On January 28, 2003, the Board of Directors approved the Clark, Inc. 2003 Stock Option Plan (the “2003 Plan”). A total of 2,000,000 shares of the Company’s common stock have been reserved for issuance under the 2003 Plan. However, option grants which have been forfeited or cancelled may be reissued. The exercise price for stock options granted under the 2003 Plan is the fair market value of the Company’s common stock on the date of grant. The vesting period of the stock options is generally between three and five years. No option may have a term greater than ten years from the date of the grant. As of December 31, 2005, 452,000 options had been granted under this plan and a total of 1,568,000 shares of the Company’s common stock remain available for grant.

56

CLARK, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The following table summarizes the combined status of all of the Company’s stock option plans:

	Options			Weighted Average Exercise Price
Outstanding at January 1, 2003	1,918,432			$15.94
Granted		300,000			14.33
Exercised		(167,998	)		10.17
Forfeited		(465,162	)		16.94
Outstanding at December 31, 2003		1,585,272			15.41
Granted		330,000			19.36
Exercised		(153,500	)		10.02
Forfeited		(323,636	)		20.39
Outstanding at December 31, 2004		1,438,136			17.02
Granted		182,000			15.03
Exercised		(64,100	)		11.02
Forfeited		(118,549	)		18.02
Outstanding at December 31, 2005		1,437,487			16.82
Exercisable at December 31, 2005		1,308,077
Exercisable at December 31, 2004		1,194,587
Exercisable at December 31, 2003		868,148

The following table summarizes the stock options outstanding and exercisable as of December 31, 2005:

Options Outstanding							Options-Exercisable
Range of Exercise Prices	Number Outstanding		Weighted Average Remaining Contractual Life (years)		Weighted Average Exercise Price		Number Exercisable		Weighted Average Exercise Price
$4.80 - $7.00		61,101		1.2	$	5.70		61,101	$	5.70
$9.00		95,916		2.0		9.00		95,916		9.00
$9.94 - $11.50		105,300		4.6		10.46		86,900		10.30
$11.60 - $14.40		193,200		7.6		13.70		98,612		13.30
$14.75 - $15.96		219,533		6.7		15.27		219,533		15.27
$16.65 - $18.13		138,102		5.7		17.17		138,102		17.17
$18.49 - $19.70		319,000		7.7		19.27		303,000		19.31
$20.30 - $22.90		100,335		7.2		21.72		99,913		21.72
$23.24 - $25.28		195,000		6.0		25.12		195,000		25.12
$27.49		10,000		6.3		27.49		10,000		27.49
		1,437,487						1,308,077

As of December 30, 2004, the Company had approximately 381 thousand unvested underwater (exercise price exceeds the current price) stock options. At the December 30, 2004 Board of Directors Compensation Committee meeting, the Compensation Committee approved fully vesting all underwater stock options ($15.85 or greater exercise price) as of December 30, 2004. No other modifications were made to the stock option plan except for the accelerated vesting. The Company decided to fully vest all underwater options, as there is no perceived value in these options to the employee, little retention ramifications, and to minimize the expense to the Company’s consolidated financial statements when it is required to adopt SFAS 123(R) as of January 1, 2006.

401(k) Savings Plan. The 401(k) Savings Plan is a defined contribution profit sharing plan, qualifying under Section 401(k) of the Internal Revenue Code, covering substantially all eligible employees. At the Company’s discretion, it may contribute up to 100% of an eligible participant's contributions to the Plan, up to a maximum of 3% of the participants’ salary. The Company’s contributions to the Plan were $2.1 million, $2.2 million, and $1.8 million for the years ended December 31, 2005, 2004, and 2003, respectively. Effective January 1, 2006, the Company amended its 401(k) Savings Plan and changed the company contribution. At the Company’s discretion, it may contribute up to 100% of an eligible participants’ contributions to the plan, on the first 3% of the participants’ salary and up to 50% on the next 2% of the participants’ salary.

Stock Purchase Plan. On January 28, 2003, the Board of Directors adopted the amended and restated Employee Stock Purchase Plan (“ESPP”), under which a total of 400 thousand shares of common stock have been reserved for issuance. Any employee who has been employed for 30 days is eligible to participate in offerings under the Stock Purchase Plan.

57

CLARK, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The Stock Purchase Plan consists of two semi-annual offerings of common stock beginning on each January 1 and July 1 in each of the years 2003 and 2004 and terminating on June 30 and December 31 such year. On September 16, 2004, the Board of Directors approved an amendment to the amended and restated Employee Stock Purchase Plan effective January 1, 2005. For each of the years 2005 and 2006, the ESPP will consist of four quarterly offerings of common stock beginning on the first day of January, April, July and October and terminating on March 31, June 30, September 30, and December 31 of each such year. The maximum number of shares for each offering period, which could be issued, is 50 thousand for 2003 and 50 thousand plus the number of unissued shares from prior offerings for each period in 2004. The maximum number of shares for each offering period will be 25 thousand plus the number of unissued shares from prior offerings for each period in 2005 and 2006. The price of the shares under each offering segment in 2003 and 2004 is 85% of the lower of the closing market price on the day before the offering period begins or on the day the offering period ends. The price of the shares under each offering segment in 2005 and 2006 is 85% of the closing market price on the day the offering period ends.

The Company has, for the expired periods prior to December 31, 2005, determined that it will purchase the requisite shares on the open market or utilize shares purchased through the Company’s stock repurchase program and has not issued any additional shares to fulfill this obligation. Future fulfillment under this Plan may be made through open market purchases or unissued shares, at the Company’s discretion.

During 2005, 2004, and 2003, the Company’s employees purchased 66 thousand, 62 thousand, and 90 thousand shares, respectively of common stock at an average cost to employees of $12.69, $14.36, and $10.16 per share, respectively. The Company’s open market purchases of shares for the employees were made at an average cost of $13.82 per share during 2003. No purchases were made by the Company in 2004 and 2005 specifically for the ESPP.

Deferred Compensation Plan. Effective September 17, 2004, the Clark Deferred Compensation Plan (“Plan”) was amended whereby participants can no longer reallocate deferrals out of the Plan’s Company stock fund. If a participant receives a distribution from the Plan, the portion of the distribution related to deferrals allocated to Company stock will be paid in Company stock. Prior to the amendment, participants were able to reallocate amounts in the Company’s stock fund into other investment options and received their distributions in cash. As a result of the amendment, approximately $1.8 million that had been classified as a long-term liability was reclassified into the equity section.

Key Executive Life Insurance. The Company maintains key man life insurance policies of $50.0 million on its Chairman and Chief Executive Officer and policies ranging from $1.0 million to $25.0 million on certain other key executives. As part of the Company’s Chairman and Chief Executive Officer’s employment agreement, it agrees to use the proceeds from the key man life insurance to purchase from the Chairman’s estate up to $20 million of common stock at the closing price on the last trading day immediately preceding his death.

18. COMMITMENTS

Leases— The Company conducts operations from leased office facilities. The Company expects that, in the normal course of business, leases that expire will be renewed or replaced by other leases; thus it is anticipated that future minimum lease commitments will not be materially less than the amount shown in the table below.

Rental expense for the years ended December 31, 2005, 2004, and, 2003 was $9.8 million, $9.4 million, and $16.7 million, respectively.

At December 31, 2005, approximate minimum rental commitments under all non-cancelable leases having terms in excess of a year are as follows:

2006	$	10,386
2007		9,656
2008		7,848
2009		5,598
2010		4,325
2011 and Thereafter		4,745
	$	42,558

58

CLARK, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

19. SUPPLEMENTAL COMPENSATION ARRANGEMENTS

Revenue from supplemental compensation arrangements is determined primarily based on the size of the existing block of business on specific measurement dates as outlined in the various agreements. In addition, certain arrangements provide for the potential of additional compensation for the Company based on the volume of insurance placed with certain carriers. The Company realized approximately $11.1 million, $11.3 million, and $10.3 million in revenue under such arrangements for the years ended December 31, 2005, 2004, and 2003, respectively. Potential surrenders will impact future revenues but not revenues that have been recorded in the Company’s financial statements.

20. SEGMENTS AND RELATED INFORMATION

The Company has five reportable segments:

·   Executive Benefits Practice - markets, designs, implements, administers, and finances non-qualified benefit plans for companies of all sizes, including Fortune 1000 companies, and provides compensation, benefit, investment advisory, and human resource consulting services.

·   Banking Practice - offers compensation consulting, executive and director benefit programs, and bank-owned life insurance to the bank market.

·   Healthcare Group - provides specialized compensation and benefit services for large and medium sized not-for-profit healthcare organizations.

·   Pearl Meyer & Partners - specializes in executive compensation and retention programs.

·   Federal Policy Group - provides legislative and regulatory strategic services.

The segment information as of, and for the year ended December 31, 2003, for the Pearl Meyer & Partners segment reflect the results of, and information related to, the Rewards and Performance Group and certain Human Capital Practice employees, who were transferred to Pearl Meyer & Partners as of October 1, 2003. The remaining Human Capital Practice was merged into Executive Benefits Practice as of January 1, 2005 and the segment information as of that date has been reclassified to reflect this transfer.

The five reportable segments operate as independent and autonomous business units with a corporate staff in North Barrington, Illinois responsible for finance, strategic planning, human resources, and company-wide policies. Each segment has its ownclientbase as well as its own marketing, administration, and management.

In August 2005, we announced our intent to combine our Executive Benefits Practice, Banking Practice, and Insurance Company Practice (included in Corporate/CSI segment for the year ended December 31, 2005) into one practice that will serve those markets. The new practice will be reported as a single reporting segment in our consolidated financial statements effective January 1, 2006. The purpose of this combination is to be able to leverage the expertise of our top producers across a wider customer base, and improve our level of client service by streamlining operations and sharing a broader set of best practices.

The Company has disclosed income from operations as the primary measure of segment earnings (loss). This is the measure of profitability used by the Company’s chief operating decision-maker and the most consistent with the presentation of profitability reported within the consolidated financial statements. The accounting policies of the business segment reports are the same as those described in Note 1, “Nature of Operations and Summary of Significant Accounting Policies.”

The Company evaluates performance and allocates resources based on operating income before income taxes, interest, amortization, and corporate administrative expenses.

59

CLARK, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Segment information for the years ended December 31, 2005, 2004 and 2003, is as follows:

	For the Year Ended December 31,
	2005			2004			2003
Revenues
Executive Benefits Practice	$	59,126		$	81,477		$	78,528
Banking Practice		123,101			145,249			165,839
Healthcare Group		38,048			35,684			36,100
Pearl Meyer & Partners		34,124			33,111			26,871
Federal Policy Group		12,147			15,707			14,855
Total segments — reported		266,546			311,228			322,193
Corporate/CSI		7,260			4,354			3,736
Total consolidated — reported	$	273,806		$	315,582		$	325,929
Operating Income (Loss) and Income Before Taxes Executive Benefits Practice	$	(578	)	$	7,329		$	(8,742	)
Banking Practice		38,337			47,103			55,221
Healthcare Group		4,457			4,414			4,847
Pearl Meyer & Partners		4,722			5,429			1,098
Federal Policy Group		2,524			4,681			6,598
Total segments — reported		49,462			68,956			59,022
Corporate/CSI		(12,373	)		(16,018	)		(14,544	)
Other income		1,617			(1,499	)		302
Interest — net		(21,459	)		(22,057	)		(24,009	)
Income before taxes	$	17,247		$	29,382		$	20,771
Depreciation and Amortization Executive Benefits Practice	$	4,478		$	4,712		$	5,462
Banking Practice		12,063			13,971			16,784
Healthcare Group		2,072			2,627			2,945
Pearl Meyer & Partners		519			637			679
Federal Policy Group		401			408			403
Total segments — reported		19,533			22,355			26,273
Corporate/CSI		1,268			1,467			984
Total consolidated — reported	$	20,801		$	23,822		$	27,257
Identifiable Assets Executive Benefits Practice	$	80,298		$	80,040		$	78,149
Banking Practice		471,211			487,784			509,370
Healthcare Group		30,336			31,032			32,996
Pearl Meyer & Partners		48,100			48,355			47,362
Federal Policy Group		10,891			12,018			11,893
Total segments — reported		640,836			659,229			679,770
Deferred tax assets		-			782			253
Corporate/CSI		33,678			41,282			19,280
Total consolidated — reported	$	674,513		$	701,293		$	699,303
Capital Expenditures Executive Benefits Practice	$	2,780		$	1,721		$	1,165
Banking Practice		1,032			1,355			1,595
Healthcare Group		659			658			539
Pearl Meyer & Partners		1,270			278			95
Federal Policy Group		-			6			44
Total segments — reported		5,741			4,018			3,438
Corporate/CSI		464			747			985
Total consolidated — reported	$	6,205		$	4,765		$	4,423

Geographic Information— Virtually all the Company’s revenue is derived from clients located in the United States.

Major Customers and Clients— The Company generated in excess of 25% of its revenue in 2005 from 37 clients, in 2004 from 29 clients and in 2003 from 37 clients. None of the clients individually accounted for more than 10% of consolidated revenue. Substantially all of the policies underlying the programs marketed by the Company are underwritten by 32 life insurance companies, of which seven accounted for approximately 30.6% of the Company’s first year revenue for the year ended December 31, 2005, 55.3% of its first year revenue for the year ended December 31, 2004, and 55.7% for the year ended December 31, 2003.

60

CLARK, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

21. RELATED PARTY TRANSACTIONS

The Company leases 17,783 square feet of office space and hangar space for the corporate aircraft from entities owned by the Company’s Chairman and Chief Executive Officer, Tom Wamberg. Base rent is approximately $449 thousand annually. The office space lease expires on February 21, 2009.

The Company employs Mr. Wamberg’s stepson, Chuck French. Chuck is a consultant with the Executive Benefits Practice and does not report directly to Mr. Wamberg. Mr. French’s compensation is based exclusively on his revenue production.  Jason French, Mr. Wamberg's stepson, was a consultant with Pearl Meyer & Partners.  He was employed with the Company through October 2005 and did not report directly to Mr. Wamberg.

During the years ended December 31, 2005, 2004 and 2003, the Company received payments of approximately $2.5 million in each year pursuant to an Administrative Services Agreement and Bonus Forfeiture Agreement with an affiliate of AUSA Holding, Inc., one of its principal stockholders.

In 2001, Mr. Wamberg invested $750 thousand in a company of which George Dalton, a member of the Company’s Board of Directors, is founder and majority stockholder.

The Company currently employs certain administrative staff who perform functions and services for Mr. Wamberg’s personal business, in addition to services for the Company. Mr. Wamberg reimburses the Company for the salary, benefits, and bonus for these individuals relating to their work on his personal business.

22. LITIGATION AND CONTINGENCIES

From time to time, the Company is involved in various claims and lawsuits incidental to its business, including claims and lawsuits alleging breaches of contractual obligations under agreements with its employee consultants and independent producers. The following is a summary of the current significant legal proceedings pending against the Company.

Independent Sales Producers’ Disputes

In March 2004, two of the Company’s independent sales producers exercised their termination rights under their agreement(s) with the Company. Included in the Company’s consolidated balance sheets is a receivable of approximately $1.4 million from these two producers and a related salesperson with respect to certain chargeback commissions to be repaid to the Company from the surrender of policies in 2003. Upon termination, the producers disputed the chargeback and asserted other miscellaneous claims. The producers entered into an arbitration agreement with the Company, dated May 23, 2005, in order to resolve the dispute regarding chargebacks with an arbitration hearing scheduled for early 2006. While it is not possible to predict with certainty the outcome of the disputes, the Company does not believe resolution will have a material adverse effect on its financial position or results of operations.

23. INTERIM FINANCIAL DATA (UNAUDITED)

The following table presents a summary of key revenue and expense statistics for the most recent eight calendar quarters. This information is not necessarily indicative of results for any full year or for any subsequent period.

	QUARTER ENDED
	Dec. 2005			Sept. 2005			June 2005			Mar. 2005			Dec. 2004			Sept. 2004			June 2004			Mar. 2004
TotalRevenue	$	77,506		$	60,906		$	68,446		$	66,948		$	93,690		$	66,692		$	70,549		$	84,651
% of annual		28.3	%		22.2	%		25.0	%		24.5	%		29.7	%		21.1	%		22.4	%		26.8	%
Total Operating Expenses		60,698			55,329			60,955			59,735			71,346			58,474			62,513			70,311
OperatingIncome	$	16,808		$	5,577		$	7,491		$	7,213		$	22,344		$	8,218		$	8,036		$	14,340
% of revenue		21.7	%		9.2	%		10.9	%		10.8	%		23.8	%		12.3	%		11.4	%		16.9	%
Net Income	$	6,478		$	157		$	2,872		$	1,102		$	10,575		$	1,509		$	1,661		$	4,415
Basic Earnings per common share	$	0.37		$	0.01		$	0.16		$	0.06		$	0.57		$	0.08		$	0.09		$	0.24
Diluted Earnings per common share	$	0.37		$	0.01		$	0.16		$	0.06		$	0.57		$	0.08		$	0.09		$	0.23

61

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

CLARK, INC.

By:/s/ TOM WAMBERG

Tom Wamberg

Chief Executive Officer

Date: February 27, 2006

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

/s/ TOM WAMBERG	Chairman of the Board,	February 27, 2006
Tom Wamberg	Chief Executive Officer and Director
/s/ JEFFREY W. LEMAJEUR	Chief Financial Officer and	February 27, 2006
Jeffrey W. Lemajeur	Chief Accounting Officer
/s/ THOMAS M. PYRA	President, Chief Operating Officer and	February 27, 2006
Thomas M. Pyra	Director
/s/ RANDOLPH A. POHLMAN	Director	February 27, 2006
Randolph A. Pohlman
/s/ L. WILLIAM SEIDMAN	Director	February 27, 2006
L. William Seidman
/s/ GEORGE D. DALTON	Director	February 27, 2006
George D. Dalton
/s/ KENNETH A. GUENTHER	Director	February 27, 2006
Kenneth A. Guenther
/s/ RICHARD C. LAPPIN	Director	February 27, 2006
Richard C. Lappin
/s/ ROBERT E. LONG, JR.	Director	February 27, 2006
Robert E. Long, Jr.
/s/ JAMES M. BENSON	Director	February 27, 2006
James M. Benson

62

EXHIBIT INDEX

Exhibit No.	Description
2.1	Reorganization Agreement, dated as of July 30, 1998, by and among Clark/Bardes Holdings, Inc., Clark/Bardes, Inc. and the Predecessor Company (Incorporated herein by reference to Exhibit 2.1 of our Registration Statement on Form S-1, File No. 333-56799 filed with the SEC on July 12, 1998).
2.2	Asset Purchase Agreement, dated April l5, 1999, by and among Clark/Bardes, Inc., Clark/Bardes Holdings, Inc., Phynque, Inc., and certain stockholders of Phynque, Inc. (Incorporated herein by reference to Exhibit 2.1 of our Current Report on Form 8-K, File No. 000-24769, filed with the SEC on April 20, 1999).
2.3	Stock Purchase Agreement, dated June 21, 2000 by and among Clark/Bardes, Inc. and Clark/Bardes Holdings, Inc. as Purchasers and Pearl Meyer, Diane Posnak, Steven E. Hall, Rhonda C. Edelman, Claude E. Johnston and David E. Swinford as Stockholders (Incorporated herein by reference to Exhibit 2.1 of our Current Report on Form 8-K, File No. 000-24769, filed with the SEC on July 5, 2000).
2.4	Agreement of Merger and Plan of Reorganization, dated September 6, 2000, by and among Clark/Bardes Holdings, Inc., and Clark/Bardes Acquisition, Inc., and Compensation Resource Group, Inc. and William L. MacDonald, Sr. (Incorporated herein by reference to Exhibit 2.1 of our Current Report on Form 8-K, File No. 000-24769, filed with the SEC on September 11, 2000).
2.5	Asset Purchase Agreement, dated March 12, 2001, by and among Clark/Bardes, Inc., Clark/Bardes Holdings, Inc., Rich, Florin/Solutions, Inc., Rich, Florin/Solutions Trust and certain stockholders of Rich, Florin/Solutions, Inc. (Incorporated herein by reference to Exhibit 2.8 of our Registration Statement on Form S-3, File No. 333-72232, filed with the SEC on November 2, 2001).
2.6	Asset Purchase Agreement, dated August 31, 2001, by and among Clark/Bardes Consulting, Inc., Clark/Bardes, Inc., Lyons Compensation & Benefits, LLC, and certain stockholders of Lyons Compensation & Benefits, LLC (Incorporated herein by reference to Exhibit 29 of our Registration Statement on Form S-3, File No. 333-72232, filed with the SEC on November 2, 2001).
2.7	Membership Interests Purchase Agreement regarding FTPG LLC, dated February 25, 2002, by and among Clark/Bardes, Inc., Clark/Bardes Consulting, Inc. and Pricewaterhouse Coopers LLP, Kenneth J. Kies, Patrick J. Raffaniello and FTPG LLC. (Incorporated herein by reference to Exhibit 2.10 of our Annual Report on Form 10-K, File No. 001-31256, filed with the SEC on March 27, 2002).
3.1	Certificate of Incorporation of Clark/Bardes, Inc. (Incorporated herein by reference to Exhibit 3.1 of our Registration Statement on Form S-1, File No. 333-56799, filed with the SEC on July 12, 1998).
3.2	Certificate of Amendment of Certificate of Incorporation of Clark/Bardes, Inc. (Incorporated herein by reference to Exhibit 3.3 to Amendment No.1 of our Registration Statement on Form S-1, File No. 333-56799), filed with the SEC on July 27, 1998).
3.3	Certificate of Amendment of Certificate of Incorporation of Clark/Bardes, Inc. (Incorporated herein by reference to Exhibit 5 of our Registration Statement on Form 8-A, filed with the SEC on February 28, 2002).
3.4	Bylaws of Clark/Bardes, Inc. (Incorporated herein by reference to Exhibit 3.2 of our Registration Statement on Form S-1, File No. 333-56799, filed with the SEC on July 12, 1998).
3.5	Certificate of Designation (Incorporated herein by reference to Exhibit 3.4 of our Registration Statement on Form S-1, File No. 333-56799, filed with the SEC on July 12, 1998).
3.6	Certification of Amendment of the Certification of Incorporation of Clark/Bardes, Inc. (Incorporated herein by reference to Exhibit 3.6 of our Quarterly report on Form10-Q, File No. 001-31256, filed with the SEC on August 14, 2002).
4.1	Specimen Certificate for shares of common stock, par value $.01 per share, of Clark/ Bardes Holdings, Inc. (Incorporated herein by reference to Exhibit 4.1 to Amendment No. 1 to our Registration Statement on Form S-1, File No. 333-56799, filed with the SEC on July 27, 1998).
4.2	Rights Agreement, dated as of July 10, 1998, by and between Clark/Bardes Holdings, Inc. and The Bank of New York (Incorporated herein by reference to Exhibit 4.4 of our Quarterly Report on Form 10-Q, File No. 000-24769, filed with the SEC on November 16, 1998).
10.1	Clark/Bardes, Inc. 1998 Stock Option Plan (Incorporated herein by reference to Exhibit 10.1 of our Registration Statement on Form S-1, File No. 333-56799, filed with the SEC on July 12, 1998).
10.2	Clark/Bardes Consulting, Inc. Execu-FLEX Benefit Plan, restated effective as of June 1, 2001(Incorporated herein by reference to Exhibit 10.2 of our Annual Report on Form 10-K, File No. 001-31256, filed with the SEC on March 27, 2002).
	(a)	Amendment No. 1 to Clark/Bardes Consulting, Inc. Execu-FLEX Benefit Plan, effective as of January 1, 2002, (Incorporated herein by reference to Exhibit 10.2 of our Annual Report on Form 10-K, File No. 001-31256, filed with the SEC on March 27, 2002).
.
10.3	Administration and Services Agreement, by and between Clark/Bardes, Inc. and Clark/Bardes Securities, Inc. (Incorporated herein by reference to Exhibit 10.3 of our Registration Statement on Form S-1, File No. 333-56799, filed with the SEC on July 12, 1998).
10.4	Administration and Services Agreement, by and between Clark/Bardes, Inc. and Clark/Bardes, Inc. of Pennsylvania (Incorporated herein by reference to Exhibit 10.4 of our Registration Statement on Form S-1, File No. 333-56799, filed with the SEC on July 12, 1998).
10.5	Letter of Agreement, dated July 24, 1998, to Great-West, Life Investors and Nationwide (Incorporated herein by reference to Exhibit 10.34 of our Registration Statement on Form S-1, File No. 333-56799, filed with the SEC on July 12, 1998).
10.6	Tax Indemnity Agreement by and between Clark/Bardes Holdings, Inc., Clark/ Bardes, Inc. and certain former stockholders of the Predecessor Company (Incorporated herein by reference to Exhibit 10.28 of our Registration Statement on Form S-1, File No. 333-56799, filed with the SEC on July 12, 1998).
10.7	Lease Agreement, dated April 24, 1998, by and between Northland Center Limited Partnership and Clark/Bardes, Inc. (Incorporated herein by reference to Exhibit 10.16 of our Registration Statement on Form S-1, File No. 333-56799, filed with the SEC on July 12, 1998).
10.8	Sublease Agreement, dated as of September 1, 1999, between Clark/Bardes, Inc. and The Wamberg Organization (Incorporated herein by reference to Exhibit 10.49 of our Quarterly Report on Form 10-Q, File No. 000-24769, filed with the SEC on November 12, 1999).
10.9	Amended and Restated Employee Stock Purchase Plan (Incorporated herein by reference to Exhibit 10.9 of our Annual Report on Form 10-K, File No. 001-31256, filed with the SEC on March 2, 2005).
10.10	1998 Non-Employee Director Stock Option Plan (Incorporated herein by reference to Exhibit 4.7 of our Registration Statement on Form S-8, File No. 333-68163, filed with the SEC on December 1, 1998).
10.11	Form of Clark/Bardes, Inc. 401(k) Savings Plan (Incorporated herein by reference to Exhibit 4.3 of our Registration Statement on Form S-8, File No. 333-68982, filed with the SEC on September 5, 2001).
10.12	Employment Agreement dated February 1, 2004, by and between Clark, Inc. and Thomas M. Pyra. (Incorporated herein by reference to Exhibit 10.1 of our Quarterly Report on Form 10-Q, File No. 001-31256, filed with the SEC on May 10, 2004).
	(a)	Amendment, dated April 26, 2005, to the Employment Agreement by and between Clark, Inc. and Thomas M. Pyra.*
10.13	Employment Agreement, dated as of September 1, 1999, by and between Clark/Bardes Holdings, Inc. and W.T. Wamberg (Incorporated herein by reference to Exhibit 10.48 of our Quarterly Report on Form 10-Q, File No. 000-24769, filed with the SEC on November 12, 1999).
	(a)	First Amendment, dated March 6, 2002, to the Employment Agreement by and between Clark/Bardes Holdings, Inc. and W.T. Wamberg (Incorporated herein by reference to Exhibit 10.15 of our Annual Report on Form 10-K, File No. 001-31256, filed with the SEC on March 27, 2002).
	(b)	Second Amendment, dated May 1, 2003, to the Employment Agreement by and between Clark/Bardes Holdings, Inc., Clark/Bardes Consulting, Inc. and W.T. Wamberg (Incorporated herein by reference to Exhibit 10.1(b) of our Quarterly Report on Form 10-Q, File No. 001-31256, filed with the SEC on November 13, 2003).
	(c)	Third Amendment, dated October 1, 2003, to the Employment Agreement by and between Clark/Bardes Holdings, Inc., Clark/Bardes Consulting, Inc. and W.T. Wamberg (Incorporated herein by reference to Exhibit 10.1(c) of our Quarterly Report on Form 10-Q, File No. 001-31256, filed with the SEC on November 13, 2003).
10.14	Employment Agreement dated as of July 1, 2004 by and between Clark, Inc. and James C. Bean. (Incorporated herein by reference to Exhibit 10.1 of our Quarterly Report on Form 10-Q, File No. 001-31256, filed with the SEC on August 5, 2004).
10.15	Second Amended and Restated Credit Agreement, dated as of November 26, 2003 among Clark, Inc. as Borrower, Bank One Texas, NA, as Administrative Agent, Certain Financial Institutions as Lenders, and Bank One Capital Markets, Inc. as Lead Arranger and Sole Book Runner(Incorporated herein by reference to Exhibit 10.16 of our Annual Report on Form 10-K, File No. 001-31256, filed with the SEC on March 2, 2005).
	(a)	Amendment to Second Amended and Restated Credit Agreement, dated August 29,2005, among Clark, Inc. as Borrower, Chase Bank, NA as Syndicate Leader and Administrative Agent and Other Financial Institutions as Lenders.*
10.16	Clark/Bardes, Inc. 2002 Stock Option Plan (Incorporated herein by reference to Exhibit 10.1 of our Quarterly Report on Form 10-Q, File No. 001-31256, filed with the SEC on August 14, 2002).
10.17	Membership Interest Purchase Agreement, dated as of September 25, 2002, by and among Clark/Bardes, Inc., Clark/Bardes Consulting, Inc., Long, Miller & Associates, LLC and certain other parties named therein (Incorporated herein by reference to Exhibit 2.1 of our Quarterly Report on Form 10-Q, File No. 001-31256, filed with the SEC on November 14, 2002).
10.18	Bonus Forfeiture Agreement, dated as of September 25, 2002, among Life Investors Insurance Company of America, Transamerica Life Insurance Company and Clark/Bardes Consulting, Inc. (Incorporated herein by reference to Exhibit 10.1 of our Quarterly Report on Form 10-Q, File No. 001-31256, filed with the SEC on November 14, 2002).
10.19	Administrative Services Agreement, dated as of September 25, 2002, among Life Investors Insurance Company of America, Transamerica Life Insurance Company and Clark/Bardes Consulting, Inc. (Incorporated herein by reference to Exhibit 10.2 of our Quarterly Report on Form 10-Q, File No. 001-31256, filed with the SEC on November 14, 2002).
10.20	Sale and Servicing Agreement, dated as of October 1, 2002, by and among CBC Insurance Revenue Securitization, LLC, Long, Miller & Associates, LLC, Clark/Bardes Consulting, Inc., BNY Midwest Trust Company and BNY Asset Solutions LLC (Incorporated herein by reference to Exhibit 10.23 of our Annual Report on Form 10-K, File No. 001-31256, filed with the SEC on March 27, 2003).
10.21	Indenture, dated as of October 1, 2002, by and among CBC Insurance Revenue Securitization, LLC and BNY Midwest Trust Company (Incorporated herein by reference to Exhibit 10.24 of our Annual Report on Form 10-K, File No. 001-31256, filed with the SEC on March 27, 2003).
10.22	Employment Agreement, dated July 16, 2004, between Clark, Inc. and Jeffrey W. Lemajeur (Incorporated herein by reference to Exhibit 10.2 of our Quarterly Report on Form 10-Q, File No. 001-31256, filed with the SEC on August 5, 2004).
10.23	Employment Agreement, dated March 21, 2003, between Clark/Bardes, Inc. and Leslie N. Brockhurst (Incorporated herein by reference to Exhibit 10.24 of our Annual Report on Form 10-K, File No. 001-31256, filed with the SEC on March 2, 2005).
10.24	Form of Non-Qualified Stock Option Agreement - 2002 Stock Option Plan (Incorporated herein by reference to Exhibit 10.1 of our Current Report on Form 8-K, File No. 001-31256, filed with the SEC on January 31, 2005).
10.25	Form of Non-Qualified Stock Option Agreement - 2003 Stock Option Plan (Incorporated herein by reference to Exhibit 10.2 of our Current Report on Form 8-K, File No. 001-31256, filed with the SEC on January 31, 2005).
10.26	Form of Incentive Stock Option Agreement - 2003 Stock Option Plan (Incorporated herein by reference to Exhibit 10.3 of our Current Report on Form 8-K, File No. 001-31256, filed with the SEC on January 31, 2005).
10.27	Limited Liability Company Agreement of Clark Benson, LLC (Incorporated herein by reference to Exhibit 10.1 of our Current Report on Form 8-K, File No. 001-31256, filed with the SEC on January 27, 2006).
10.28	Employment Agreement, dated January 26, 2006 between Clark, Inc., Clark Consulting Inc., Clark Benson LLC and James M. Benson (Incorporated herein by reference to Exhibit 10.2 of our Current Report on Form 8-K, File No. 001-31256, filed with the SEC on January 27, 2006).
10.29	Supplemental Executive Retirement Plan of the Clark, Inc. Long Term Incentive Compensation Plan.*
10.30	Clark, Inc. Performance Share Award Agreement.*
16.1	Letter of Deloitte & Touche LLP, dated June 16, 2005, to the Securities and Exchange Commission (Incorporated herein by reference to Exhibit 16.1 of our Current Report on Form 8-K, File No. 001-31256, filed with the SEC on June 17, 2005).
21.1	Subsidiaries of the Registrant*
23.1	Consent of Ernst & Young LLP*
23.2	Consent of Deloitte and Touche LLP*
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
32.1	Certification of Chief Executive Offer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

_______________

*filed herewith

EX-10.12(A)

Exhibit 10.12(a)

FIRST AMENDMENT TO EMPLOYMENT AGREEMENT

This Agreement (the “Amendment”) is a First Amendment to the Employment Agreement dated January 1, 2004 (the “Agreement”) by and between Thomas M. Pyra (the “Employee”) and Clark Consulting, Inc. (the “Company”) which the parties have made and entered into and effective as of the 26th day of April, 2005.

Introduction

WHEREAS, the Employee and the Company are parties to the Agreement pursuant to which the Company offered employment to the Employee and the Employee accepted such offer of employment on the terms set forth in the Agreement;

WHEREAS, the Company and the Employee have mutually agreed on certain changes in the Employee’s title, the definition of the Company and compensation following a Change in Control;

NOW, THERFORE, BE IT RESOLVED, in consideration of the mutual covenants set forth herein, the Company and the Employee hereby agree as follows:

Terms of Amendment

1.   Effective April 26, 2005, the Employee shall serve as the President and Chief Operating Officer of the Company and of Clark, Inc., the parent of the Company. The Employee will continue to report to the Chief Executive Officer of the Company.

2.   The Company, for purposes of Section 10(f) of the Agreement, shall include Clark Consulting, Inc. and Clark, Inc..

3.   Section 11(f) of the Agreement shall be amended by adding the following subsection (iii):

(iii)In the event that the sum of all payments or benefits made or provided to, or that may be made or provided to, the Employee under this Agreement and under all other plans, programs and arrangements of the Company (the “Aggregate Payment”) is determined to constitute a Parachute Payment, as such term is defined in Section 280G(b)(2) of the Internal Revenue Code, the Company shall pay to the Employee at the time specified below, an additional amount (the “Additional 4999 Payment”) which, after the imposition of all income and excise taxes thereon, is equal to the excise tax imposed by Section 4999 of the Internal Revenue Code (the “Excise Tax”) on the Aggregate Payment. For purposes of determining the amount of the Additional 4999 Payment, the Employee shall be deemed to pay federal income taxes at the Employee’s highest marginal rate of federal income taxation in the calendar year in which the Additional 4999 Payment is to be made and state and local income taxes at the Employee’s highest marginal rate of taxation in the state and locality of the Employee’s residence on the date on which the Excise Tax is determined, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes. The determination of whether the Aggregate Payment constitutes a Parachute Payment and, if so, the amount to be paid to the Employee and the time of payment pursuant to this Section 11(f)(iii) shall be made by the Company’s tax preparer, legal counsel or certified public accounting firm, selected at the sole discretion of the Company with such costs incurred for the performance of the calculation of the Additional 4999 Payment to be paid for by the Company. The Additional 4999 Payment shall be paid to the Employee within thirty (30) days following the date the Company has calculated the Additional 4999 Payment, and, if applicable, within thirty (30) days of any determination that the Excise Tax is greater or less than initially calculated. Notwithstanding the foregoing, in the event that the amount of the Employee’s Excise Tax liability is subsequently determined to be greater than the Excise Tax liability with respect to which the Additional 4999 Payment to the Employee under this Section 11(f)(iii) has been made, the Company shall pay to the Employee an additional amount (and any interest and penalties thereon) at the time and in the amount determined by the Company. In the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder, the Employee shall repay to the Company at the time that the amount of such reduction in Excise Tax is finally determined the portion of the Additional 4999 Payment attributable to such reduction (plus the portion of the Additional 4999 Payment attributable to the Excise Tax and federal and state and local income tax imposed on the Additional 4999 Payment being repaid by the Employee) plus interest on the amount of such repayment from the date the Additional 4999 Payment was initially made to the date of repayment at the rate provided in Section 1274(b)(2)(B) of the Internal Revenue Code The Employee and the Company shall cooperate with each other in connection with any proceeding or claim relating to the existence or amount of liability for the Excise Tax and all reasonable expenses incurred by the Employee in connection therewith shall be paid by the Company promptly upon notice of demand from the Employee.

3. This Amendment shall be attached to and form a part of the Agreement between the Employee and the Company. Except as modified by the Amendment, the Agreement shall remain in full force and effect without modification. This Amendment may be executed in one or more counterparts, all of which taken together shall constitute one and the same instrument.

IN WITNESS WHEREOF, THOMAS M. PYRA AND CLARK CONSULTING, INC. HAVE DULY ACKNOWLEDGED THIS AMENDMENT TO THE EMPLOYMENT AGREEMENT DATED JANUARY 1, 2004, AS AMENDED, AND ACKNOWLEDGE THAT EACH PARTY HAS READ, UNDERSTANDS AND ACCEPTS THE CONTENTS OF THIS AMENDMENT, AND THAT EACH PARTY HAS EXECUTED THIS AMENDMENT EFFECTIVE AS OF THE DATE FIRST WRITTEN ABOVE.

THOMAS M. PYRA        /s/ Thomas M. Pyra   Date:  April 28, 2005 CLARK, INC.        /s/ Tom Wamberg   By: Tom Wamberg   Its: Chief Executive Officer   Date:  April 27, 2005  

EX-10.15(A)

Exhibit 10.15(a)

SECOND MODIFICATION AGREEMENT

This Second Modification Agreement (this “Amendment”) is executed as of August 29, 2005, by and among CLARK CONSULTING, INC., a Delaware corporation (“Borrower”), JP Morgan Chase Bank, NA, a national banking association (successor-in-interest by merger to Bank One, NA) (“Agent”), as administrative agent for itself and such other entities from time to time designated as “Lenders” under the Loan Agreement (herein defined) (the “Lenders”) and such Lenders .

W I T N E S S E T H:

WHEREAS, Borrower, Agent and Lenders entered into that certain Second Amended and Restated Credit Agreement, dated as of November 26, 2003, pursuant to which Lenders agreed to make available to Borrower a credit facility (as heretofore or hereafter amended, the “Loan Agreement”) (each capitalized term used herein, but not otherwise defined shall have the same meaning given to it in the Loan Agreement); and

WHEREAS, Borrower, Agent and Lenders entered into that certain First Modification Agreement, dated as of November 12, 2004, pursuant to which the parties amended certain provisions contained in the Loan Agreement; and

WHEREAS, Borrower, Agent and Lenders desire to increase the credit facility evidenced by the Loan Agreement by the addition of Charter One Bank, N.A. as a Lender (the “New Lender”) and amend the Loan Agreement as more particularly set forth herein; and

NOW, THEREFORE, in consideration of the covenants, conditions and agreements hereinafter set forth, and for other good and valuable consideration, the receipt and adequacy of which are all hereby acknowledged, Borrower, Agent and the Lenders hereby covenant and agree as follows:

ARTICLE I - FACILITY INCREASE

Section 1.1.New Lender. By its execution of this Agreement, New Lender is hereby added to the Loan Agreement as a Lender, and (i) confirms that it has received a copy of the Loan Agreement and the other Loan Documents, together with copies of any financial statements requested by New Lender and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Agreement, (ii) agrees that it will, independently and without reliance upon the Agent or any other Lender and based on such documents and information at it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents, (iii) appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers under the Loan Documents as are delegated to the Agent by the terms thereof, together with such powers as are reasonably incidental thereto, (iv) confirms that the execution and delivery of this Agreement by New Lender is duly authorized, (v) assumes all obligations of a Lender under the Loan Agreement and the other Loan Documents and agrees that it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender, (vi) confirms that its payment instructions and notice instructions are as set forth in the attached Schedule 1, (vii) confirms that none of the funds, monies, assets or other consideration being used to make the purchase and assumption hereunder are “plan assets” as defined under ERISA and that its rights, benefits and interests in and under the Loan Documents will not be “plan assets” under ERISA, and (viii) if applicable, agrees to provide the forms prescribed by the Internal Revenue Service of the United States certifying that New Lender is entitled to receive payments under the Loan Documents without deduction or withholding of any United States federal income taxes.

Section 1.2.Commitments; Notes. As of the date of this Amendment, the Commitments of the Lenders are as set forth on the amended Commitment Schedule attached hereto and Borrower shall execute promissory notes, in the forms attached as Exhibit E-2 to the Loan Agreement, in favor of the Lenders in the respective amounts set forth on the Commitment Schedule. New Lender shall fund its Pro Rata Share of the outstanding amount of the Loans to Agent, who shall distribute such funds to the other Lenders to reflect the new Commitments as evidenced hereby.

Section 1.3.Representations and Warranties. Borrower hereby represents and warrants to Agent and to Lenders that (i) all representations and warranties made by Borrower in the Loan Agreement as of the date thereof are true and correct as of the date hereof, as if such representations and warranties were recited herein in their entirety and (ii) Borrower is not in default of any covenant or agreement contained in the Loan Agreement.

Section 1.4.Facility Fee. In consideration of the commitment of the New Lender, Borrower agrees to pay to New Lender a facility commitment fee in the amount of $10,000, which amendment fee is intended as reasonable compensation for the commitment of the New Lender hereunder, and for no other purpose.

ARTICLE II - MISCELLANEOUS

Section 2.1.Conditions Precedent. As conditions precedent to closing this Amendment (i) Borrower, Agent, each Lender and Guarantor, shall have executed and delivered to Agent this Agreement, (ii) Borrower shall have paid to New Lender the facility commitment fee provided for in Section 1.4 above.

Section 2.2.Continuing Effect. Except as modified and amended hereby, the Loan Agreement and other Loan Documents are and shall remain in full force and effect in accordance with their terms.

Section 2.3.Binding Agreement. This Amendment shall be binding upon, and shall inure to the benefit of, the parties’ respective representatives, successors and assigns.

Section 2.4.Nonwaiver of Events of Default. Neither this Amendment nor any other document executed in connection herewith constitutes or shall be deemed (a) a waiver of, or consent by Agent or any Lender to, any default or event of default which may exist or hereafter occur under any of the Loan Documents, (b) a waiver by Agent or any Lender of any of Borrower’s obligations under the Loan Documents, or (c) a waiver by Agent or any Lender of any rights, offsets, claims, or other causes of action that Lender may have against Borrower.

Section 2.5.No Defenses. Borrower, by its execution of this Amendment, hereby declares that to its knowledge, it has no set-offs, counterclaims, defenses or other causes of action against Agent or any Lender arising out of the Loan Documents, any documents mentioned herein or otherwise.

Section 2.6.Payment of Expenses. Borrower agrees to pay to Agent the reasonable attorneys’ fees and expenses of Agent’s counsel and other expenses incurred by Agent in connection with this Amendment.

Section 2.7.Counterparts. This Amendment may be executed in several counterparts, all of which are identical, each of which shall be deemed an original, and all of which counterparts together shall constitute one and the same instrument, it being understood and agreed that the signature pages may be detached from one or more of such counterparts and combined with the signature pages from any other counterpart in order that one or more fully executed originals may be assembled.

Section 2.8.Choice of Law. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF ILLINOIS, EXCEPT TO THE EXTENT FEDERAL LAWS PREEMPT THE LAWS OF THE STATE OF ILLINOIS.

Section 2.9.Entire Agreement. This Amendment, together with the other Loan Documents, contain the entire agreements between the parties relating to the subject matter hereof and thereof. This Amendment and the other Loan Documents may be amended, revised, waived, discharged, released or terminated only by a written instrument or instruments, executed by the party against which enforcement of the amendment, revision, waiver, discharge, release or termination is asserted. Any alleged amendment, revision, waiver, discharge, release or termination which is not so documented shall not be effective as to any party.

THIS AMENDMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES RELATED TO THE SUBJECT MATTER HEREIN CONTAINED AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

IN WITNESS WHEREOF, this Amendment is executed effective as of the date first written above.

BORROWER:

CLARK CONSULTING, INC., a Delaware corporation

By:  /s/ Thomas M. Pyra

      Print Name:  Thomas M. Pyra

      Title:  President

102 S. Wynstone Park Drive, Suite 200

N. Barrington, Illinois 60010

Attention:W. T. Wamberg, Tom Pyra

and Jeff Lemajeur

Telephone: (847) 304-5800

FAX: (847) 304-5878

AGENT:

JP Morgan Chase Bank, NA, a national banking association, as Agent

      By:  /s/ J. Patrick Brockette

Print Name: J. Patrick Brockette

Title: Senior Vice President

1717 Main Street; Third Floor

Dallas, Texas 75201

Attention: Pat Brockette

Telephone: (214) 290-2453

FAX: (214) 290-2305

LENDERS:

      JPMorgan Chase Bank, NA, a national banking association

 
      By:  /s/ J. Patrick Brockette

      Print Name:J. Patrick Brockette

      Title:Senior Vice President

1717 Main Street; Third Floor

Dallas, Texas 75201

Attention: Pat Brockette

Telephone: (214) 290-2453

FAX: (214) 290-2305

LASALLE BANK NATIONAL ASSOCIATION,

a national banking association (f/k/a LaSalle National Bank)

By:  /s/ Brandon S. Allison

Print Name:  Brandon S. Allison

Title:  Assistant Vice President

135 South LaSalle Street, Suite 209

Chicago, Illinois 60603

Attention: Brandon S. Allison

Telephone: (312) 904-6324

FAX: (312) 904-6189

THE FROST NATIONAL BANK, a national banking association

By:  /s/ Stephanie Stove

Print Name:  Stephanie Stove

Title:  Vice President

2727 N. Harwood, 10^th Floor

Dallas, Texas 75201

Attn: Chris Holder

Telephone: (214) 515-4960

FAX: (214) 515-4955

MB FINANCIAL BANK, N.A., a national banking association

By:  /s/ Maureen Janes

Print Name:  Maureen Janes

Title:  First Vice President

6111 N. River Rd.

Rosemont, IL 60018

Attn: Maureen Janes

Telephone: (847) 653-1952

FAX: (847) 653-0083

FIFTH THIRD BANK-CHICAGO

By:  /s/ Robert D. Curtis

Print Name:  Robert D. Curtis

Title:  Vice President

Fifth Third Bank-Chicago

1701 Golf Road

Tower 1 MD GRLM9G

Rolling Meadows, IL 60008

Attn: Bob Curtis, Vice President

Telephone: 847 354-7356

FAX: 847 354-7310

CHARTER ONE BANK, N.A.

By:  /s/ Bernardo Lacayo

Print Name:  Bernardo Lacayo

Title:  Senior Vice President

Charter One Bank, N.a.

71 South Wacker Drive

Suite 2900

Chicago, IL 60603

Attn: Bernie Lacayo

Telephone: (312) 777-3484

FAX: (312) 777-3481

CONSENT OF GUARANTOR

The undersigned Guarantor hereby (a) acknowledges its consent to the changes effected by this Agreement, (b)  ratifies and confirms all terms and provisions of the Unlimited Guaranty dated January 15, 1999, (c) agrees that such Unlimited Guaranty is and shall remain in full force and effect with respect to the Loans, as increased and amended hereby, (d) acknowledges that there are no claims or offsets against, or defenses or counterclaims to, the terms and provisions of and the obligations created and evidenced by such Unlimited Guaranty, and (e) reaffirms all agreements and obligations under such Unlimited Guaranty with respect to the Loan Agreement, the Notes, the Loans and all other documents, instruments or agreements governing, securing or pertaining to the Loans, as the same may be modified and increased by this Agreement.

EXECUTED as of this 4th day of August, 2005.

GUARANTOR:

CLARK, INC., a Delaware corporation

By:  /s/ Thomas M. Pyra

Print Name:  Thomas M. Pyra

Title:  President

102 S. Wynstone Park Drive, Suite 200

N. Barrington, Illinois 60010

Attention:W. T. Wamberg, Tom Pyra

and Jeff Lemajeur

Telephone: (847) 304-5800

FAX: (847) 304-5878

Commitment Schedule

Lender	Revolving Commitment	Commitment Percentage
JP Morgan Chase Bank, N.A.	$26,401,650	29.663%
LaSalle Bank, National Association	16,001,000	17.978%
Fifth Third Bank - Chicago	15,000,000	16.853%
Frost National Bank	12,000,750	13.483%
Charter One Bank	10,000,000	11.235%
MB Financial Bank, N.A.	9,600,600	10.787%
Total:	$89,004,000	100.000%

Schedule 1

Information Regarding Charter One Bank, N.A.

Credit Contact:

Name: Bernie Lacayo_______               Telephone No.: (312) 777-3484

Fax No.: (312) 777-3481_                Telex No.: _______________

Answerback email:  blacayo@charteronebank.com

Key Operations Contacts:

PrimarySecondary

Booking Installation: Booking Installation:  

Name:   _Curtis Jones Name:   Kim Bowers

Telephone No.:  412.867.3832Telephone No.:  412.867.4046

Fax No.:  412.867.2619                    Fax No.:  412.867.2619

Telex No.: _______________   Telex No.:  ___________________

Answerback email: curtis.jones@citizensbank.comAnswerback email:  kim.bowers@citizensbank.com

Payment Information:

(Payment)Wire Funds to:

Citizens Bank

ABA# 036-076-150

Beneficiary: COB Parti Purchased

ACCT# 4500000134

Ref: Clark Consulting, INC.

Commitment fees:

Charter One Bank, N.A.

ABA 241070417

BENEFICIARY: Commercial Loan Operations

BENEFICIARY NUMBER: 45-00000096

SPECIAL INSTRUCTIONS: Credit GL #369520 RC# 8007600

Other Instructions:  Reference:  Clark Consulting, Inc.

3965584v.4

EX-21.1

Exhibit 21.1

LIST OF SUBSIDIARIES

The following is a list of the direct and indirect subsidiaries of Clark, Inc. as of December 31, 2005:

Subsidiary	Jurisdiction of Incorporation or Organization
Clark Consulting, Inc.	Delaware
Clark Reinsurance Company Limited	Cayman Islands
Clark/Bardes of Hawaii, LLC	Hawaii
Clark Securities, Inc.	California
Clark/Bardes of Bermuda, Ltd.	Bermuda
CRG Insurance Agency, Inc.	California
CBC Insurance Revenue Securitization LLC	Delaware
COLI Insurance Agency, Inc.	California
CRG Fiduciary Services, Inc.	California
ECB Insurance Agency, Inc.	California
Executive Benefit Services, Inc.	California
Clark Strategic Advisors, Inc.	Delaware
Medex, Inc.	Texas
Argos Advantage, Inc.	Texas

EX-23.1

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the following Registration Statements:

(1)Registration Statement (Form S-8 No. 333-68163) of Clark, Inc.,

(2)Registration Statement (Form S-8 No. 333-68982) of Clark, Inc.,

(3)Registration Statement (Form S-3 No. 333-46104) of Clark, Inc.,

(4)Registration Statement (Form S-8 No. 333-106538) of Clark, Inc., and

(5)Registration Statement (Form S-3 No. 333-72232) of Clark, Inc.

of our reports dated February 27, 2006, with respect to the consolidated financial statements of Clark, Inc., Clark, Inc. management's assessment of the effectiveness of internal control over financial reporting, and the effectiveness of internal control over financial reporting of Clark, Inc. included in this Annual Report (Form 10-K) of Clark, Inc. for the year ended December 31, 2005.

/s/ Ernst and Young LLP

Chicago, Illinois

February 27, 2006

EX-23.2

Exhibit 23.2

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Registration Statement No. 333-68163 of Clark, Inc. on Form S-8, in Registration Statement No. 333-68982 of Clark, Inc. on Form S-8, in Registration Statement No. 333-46104 of Clark, Inc. on Form S-3, in Registration Statement No. 333-106538 on Form S-8 and in Registration Statement No. 333-72232 of Clark, Inc. on Form S-3 of our report dated March 2, 2005, relating to the financial statements of Clark, Inc. as of December 31, 2004 and for each of the two years in the period ended December 31, 2004 appearing in the Annual Report on Form 10-K of Clark, Inc. for the year ended December 31, 2005.

/s/ Deloitte and Touche LLP

Chicago, Illinois

February 27, 2006

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Tom Wamberg, certify that:

1.   I have reviewed this Form 10-K of Clark, Inc.;

2.   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.   The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

b)   Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)   Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

d)   Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of the annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal controls over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

a)   All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b)   Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting.

Date: February 27, 2006   /s/ Tom Wamberg   Title:Chairman and Chief Executive Officer  

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Jeffrey W. Lemajeur, certify that:

1.   I have reviewed this Form 10-K of Clark, Inc.;

2.   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

  3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

  4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of the annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

  5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal controls over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting.

Date: February 27, 2006   /s/ Jeffrey W. Lemajeur   Title:Chief Financial Officer  

EX-32.1

Exhibit 32.1

The following certification is provided by the undersigned Chief Executive Officer and Chief Financial Officer of Clark, Inc. on the basis of such officers’ knowledge and belief for the sole purpose of complying with 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Certification

In connection with the accompanying Annual Report of Clark, Inc. (the “Company”) on Form 10-K for the year ended December 31, 2005 (the “Report”), I, Tom Wamberg, Chairman and Chief Executive Officer and I, Jeffrey W. Lemajeur, Chief Financial Officer, of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Tom Wamberg______

Name: Tom Wamberg

Title: Chairman and

Chief Executive Officer

Date: February 27, 2006

/s/ Jeffrey W. Lemajeur

Name: Jeffrey W. Lemajeur

Title: Chief Financial Officer

Date: February 27, 2006

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-10.29

Exhibit 10.29

Supplemental Executive Retirement Plan of the

Clark, Inc. Long Term Incentive Compensation Plan

Master Plan Document

Effective October 25, 2005

Copyright © 2006

By Clark Consulting, Inc.

All Rights Reserved

TABLE OF CONTENTS

		Page
ARTICLE 1	Definitions	1
ARTICLE 2	Selection, Enrollment, Eligibility	5
2.1	Selection by Committee	5
2.2	Enrollment and Eligibility Requirements; Commencement of Participation	5
ARTICLE 3	Company Contribution Amounts/ Vesting/Crediting/Taxes	6
3.1	Company Contribution Amount	6
3.2	Crediting of Amounts afterBenefit Distribution	6
3.3	Vesting	6
3.4	Crediting/Debiting of Company Contribution Accounts	7
3.5	FICA and Other Taxes	11
ARTICLE 4	Unforeseeable Emergencies	11
4.1	Unforeseeable Emergencies	11
ARTICLE 5	Retirement Benefit	12
5.1	Retirement Benefit	12
5.2	Payment of Retirement Benefit	12
ARTICLE 6	Termination Benefit	12
6.1	Termination Benefit	12
6.2	Payment of Termination Benefit	13
ARTICLE 7	Disability Benefit	13
7.1	Disability Benefit	13
7.2	Payment of Disability Benefit	13
ARTICLE 8	Death Benefit	14
8.1	Death Benefit	14
8.2	Payment of Death Benefit	14
ARTICLE 9	Beneficiary Designation	14
9.1	Beneficiary	14
9.2	Beneficiary Designation; Change; Spousal Consent	14
9.3	Acknowledgement	14
9.4	No Beneficiary Designation	14
9.5	Doubt as to Beneficiary	15
9.6	Discharge of Obligations	15
ARTICLE 10	Leave of Absence	15
10.1	Paid Leave of Absence	15
10.2	Unpaid Leave of Absence	15
ARTICLE 11	Termination of Plan, Amendment or Modification	15
11.1	Termination of Plan	15
11.2	Amendment	16
11.3	Plan Agreement	16
11.4	Effect of Payment	16
ARTICLE 12	Administration	16
12.1	Committee Duties	16
12.2	Administration Upon Change In Control	17
12.3	Agents	17
12.4	Binding Effect of Decisions	17
12.5	Indemnity of Committee	17
12.6	Employer Information	17
ARTICLE 13	Other Benefits and Agreements	18
13.1	Coordination with Other Benefits	18
ARTICLE 14	Claims Procedures	18
14.1	Presentation of Claim	18
14.2	Notification of Decision	19
14.3	Review of a Denied Claim	19
14.4	Decision on Review	19
14.5	Legal Action	19
ARTICLE 15	Trust	19
15.1	Establishment of the Trust	19
15.2	Interrelationship of the Plan and the Trust	20
15.3	Distributions From the Trust	20
ARTICLE 16	Miscellaneous	20
16.1	Status of Plan	20
16.2	Unsecured General Creditor	20
16.3	Employer’s Liability	20
16.4	Nonassignability	20
16.5	Not a Contract of Employment	21
16.6	Furnishing Information	21
16.7	Terms	21
16.8	Captions	21
16.9	Governing Law	21
16.10	Notice	21
16.11	Successors	22
16.12	Spouse’s Interest	22
16.13	Validity	22
16.14	Incompetent	22
16.15	Court Order	22
16.16	Distribution in the Event of Income Inclusion Under 409A	22
16.17	Deduction Limitation on Benefit Payment	23
16.18	Insurance	23

Supplemental Executive Retirement Plan of the

Clark, Inc. Long Term Incentive Compensation Plan

Master Plan Document

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN OF THE

CLARK, INC. LONG TERM INCENTIVE COMPENSATION PLAN

Effective October 25, 2005

Purpose

The Clark, Inc. Long Term Incentive Compensation Plan (“LTIC Plan”) is comprised of two components as follows: (i) a defined contribution Supplemental Executive Retirement Plan and (ii) a Restricted Stock Plan. The provisions pertaining to the Supplemental Executive Retirement Plan (“Plan”) of the LTIC Plan are contained in this document.

The purpose of this Plan is to provide specified benefits to a select group of management or highly compensated Employees who contribute materially to the continued growth, development and future business success of Clark, Inc., a Delaware corporation, and its subsidiaries, if any, that sponsor this Plan. This Plan shall be unfunded for tax purposes and for purposes of Title I of ERISA.

This Plan is intended to comply with all applicable law, including Code Section 409A and related Treasury guidance and Regulations, and shall be operated and interpreted in accordance with this intention. Consistent with the foregoing, and in order to transition the Plan to the requirements of Code Section 409A and related Treasury guidance and Regulations, the Committee has made available, or will make available, to Participants certain transition relief described more fully in Section 2.2(a) of this Plan.

ARTICLE 1

Definitions

For the purposes of the Plan, unless otherwise clearly apparent from the context, the following phrases or terms shall have the following indicated meanings:

1.1   “Annual Installment Method” shall be an annual installment payment over the number of years selected by the Participantin accordance with this Plan, calculated as follows: (i) for the first annual installment, the Participant’s vested Company Contribution Account shall be calculated as of the close of business on or aroundthe Participant’s Benefit Distribution Date, as determined by the Committee in its sole discretion,and (ii) for remaining annual installments, the Participant’s vested Company Contribution Account shall be calculated on every anniversary of such calculation date, as applicable. Each annual installment shall be calculated by multiplying this balance by a fraction, the numerator of which is one and the denominator of which is the remaining number of annual payments due the Participant. By way of example, if the Participant elects a ten (10) year Annual Installment Method for the Retirement Benefit, the first payment shall be 1/10 of the vested Company Contribution Account, calculated as described in this definition. The following year, the payment shall be 1/9 of the vested Company Contribution Account, calculated as described in this definition.

1.2   “Beneficiary” shall mean one or more persons, trusts, estates or other entities, designated in accordance with Article 9, that are entitled to receive benefits under this Plan upon the death of a Participant.

1

1.3   “Beneficiary Designation Form” shall mean the form established from time to time by the Committee that a Participant completes, signs and returns to the Committee to designate one or more Beneficiaries.

1.4   “Benefit Distribution Date” shall mean the date that triggers distribution of a Participant’s vested Company Contribution Account. A Participant’s Benefit Distribution Date shall be determined upon the occurrence of any one of the following:

(a)   If the Participant Retires, his or her Benefit Distribution Date shall be the last day of the six-month period immediately followingthe date on which the Participant Retires; provided, however, in the event the Participant changes his or her Retirement Benefit election in accordance with Section 5.2(b), his or her Benefit Distribution Date shall be postponed in accordance with Section 5.2(b); or

(b)   If the Participant experiences a Termination of Employment, his or her Benefit Distribution Date shall be the last day of the six-month period immediately following the date on which the Participant experiences a Termination of Employment; provided, however, in the event the Participant changes his or her Termination Benefit election in accordance with Section 6.2(b), his or her Benefit Distribution Date shall be postponed in accordance with Section 6.2(b); or

(c)   The date on which the Committee is provided with proof that is satisfactory to the Committee of the Participant’s death, if the Participant dies prior to the complete distribution of his or her vested Company Contribution Account; or

(d)   The date on which the Participant becomes Disabled.

1.5   “Board” shall mean the board of directors of the Company.

1.6   “Change in Control” shall mean any “change in control event” as defined in accordance with Code Section 409A and related Treasury guidance and Regulations.

1.7   “Claimant” shall have the meaning set forth in Section 14.1.

1.8   “Code” shall mean the Internal Revenue Code of 1986, as it may be amended from time to time.

1.9   “Committee” shall mean the committee described in Article 12.

1.10   “Company” shall mean Clark, Inc., a Delaware corporation, and any successor to all or substantially all of the Company’s assets or business.

1.11   “Company Contribution Account” shall mean (i) the sum of the Participant’s Company Contribution Amounts, plus (ii) amounts credited or debited to the Participant’s Company Contribution Account in accordance with this Plan, less (iii) all distributions made to the Participant or his or her Beneficiary pursuant to this Plan that relate to the Participant’s Company Contribution Account. The Company Contribution Account shall be a bookkeeping entry only and shall be utilized solely as a device for the measurement and determination of the amounts to be paid to a Participant, or his or her designated Beneficiary, pursuant to this Plan.

1.12   “Company Contribution Amount” shall mean, for any one Plan Year, the amount determined in accordance with Section 3.1.

1.13   “Death Benefit” shall mean the benefit set forth in Article 8.

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1.14   “Disability” or “Disabled” shall mean that a Participant is (i) unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (ii) by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than 3 months under an accident or health plan covering employees of the Participant’s Employer. For purposes of this Plan, a Participant shall be deemed Disabled if determined to be totally disabled by the Social Security Administration, or if determined to be disabled in accordance with the applicable disability insurance program of such Participant’s Employer, provided that the definition of “disability” applied under such disability insurance program complies with the requirements in the preceding sentence.

1.15   “Disability Benefit” shall mean the benefit set forth in Article 7.

1.16   “Election Form” shall mean the form, which may be in electronic format, established from time to time by the Committee that a Participant completes, signs and returns to the Committee to make an election under the Plan.

1.17   “Employee” shall mean a person who is an employee of any Employer.

1.18   “Employer(s)” shall mean the Company and/or any of its subsidiaries (now in existence or hereafter formed or acquired) that have been selected by the Board to participate in the Plan and have adopted the Plan as a sponsor.

1.19   “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as it may be amended from time to time.

1.20   “First Plan Year” shall mean the period beginning October 25, 2005 and ending December 31, 2005.

1.21   “LTIC Plan” shall mean the Clark, Inc. Long Term Incentive Compensation Plan, effective October 25, 2005.

1.22   “Participant” shall mean any Employee (i) who is selected to participate in the Plan, (ii) who submits an executed Plan Agreement, Election Form and Beneficiary Designation Form, which are accepted by the Committee, and (iii) whose Plan Agreement has not terminated.

1.23   “Plan” shall mean the Supplemental Executive Retirement Plan of the Clark, Inc. Long Term Incentive Compensation Plan, which shall be evidenced by this instrument and by each Plan Agreement, as they may be amended from time to time.

1.24   “Plan Agreement” shall mean a written agreement, as may be amended from time to time, which is entered into by and between an Employer and a Participant. Each Plan Agreement executed by a Participant and the Participant’s Employer shall provide for the entire benefit to which such Participant is entitled under the Plan; should there be more than one Plan Agreement, the Plan Agreement bearing the latest date of acceptance by the Employer shall supersede all previous Plan Agreements in their entirety and shall govern such entitlement. The terms of any Plan Agreement may be different for any Participant, and any Plan Agreement may provide additional benefits not set forth in the Plan or limit the benefits otherwise provided under the Plan; provided, however, that any such additional benefits or benefit limitations must be agreed to by both the Employer and the Participant.

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1.25   “Plan Year” shall, except for the First Plan Year, mean a period beginning on January 1 of each calendar year and continuing through December 31 of such calendar year.

1.26   “Retirement”, “Retire(s)” or “Retired” shall mean separation from service with all Employers for any reason other than death or Disability, as determined in accordance with Code Section 409A and related Treasury guidance and Regulations, on or after the attainment of age sixty-two (62).

1.27   “Retirement Benefit” shall mean the benefit set forth in Article 5.

1.28   “Stock” shall mean Clark, Inc. common stock or any other equity securities of the Company designated by the Committee.

1.29   “Terminate the Plan”, “Termination of the Plan” shall mean a determination by an Employer’s board of directors that (i) all of its Participants shall no longer be eligible to participate in the Plan and (ii) such Participants shall no longer be eligible to receive company contributions under this Plan.

1.30   “Termination Benefit” shall mean the benefit set forth in Article 6.

1.31   “Termination of Employment” shall mean the separation from service with all Employers, voluntarily or involun-tarily, for any reason other than Retirement, Disability or death, as determined in accordance with Code Section 409A and related Treasury guidance and Regulations.

1.32   “Trust” shall mean one or more trusts established by the Company in accordance with Article 15.

1.33   “Unforeseeable Emergency” shall mean a severe financial hardship of the Participant or his or her Beneficiary resulting from (i) an illness or accident of the Participant or Beneficiary, the Participant’s or Beneficiary’s spouse, or the Participant’s or Beneficiary’s dependent (as defined in Code Section 152(a)), (ii) a loss of the Participant’s or Beneficiary’s property due to casualty, or (iii) such other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant or the Participant’s Beneficiary, all as determined in the sole discretion of the Committee.

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ARTICLE 2

Selection, Enrollment, Eligibility

2.1   Selection by Committee. Participation in the Plan shall be limited to a select group of management or highly compensated Employees. From that group, the Committee shall select, in its sole discretion, those individuals who may actually participate in this Plan.

2.2   Enrollment and Eligibility Requirements; Commencement of Participation.

(a)   As a condition to participation, each selected Employee who is eligible to participate in the Plan shall complete, execute and return to the Committee a Plan Agreement, an Election Form and a Beneficiary Designation Form, prior to the first day of such Plan Year, or such other earlier deadline as may be established by the Committee in its sole discretion. In addition, the Committee shall establish from time to time such other enrollment requirements as it determines, in its sole discretion, are necessary.

Notwithstanding anything in this Plan to the contrary, the Committee may, as permitted by Code Section 409A and related Treasury guidance or Regulations, provide a limited period in which designated Participants may make this initial distribution election as to the form or timing in which Plan benefits will be paid, by submitting an Election Form on or before the deadline established by the Committee, which shall be no later than December 31, 2006. The Committee shall interpret all provisions relating to an election submitted in accordance with this Section in a manner that is consistent with Code Section 409A and related Treasury guidance or Regulations. If any such distribution election either (i) relates to payments that a Participant would otherwise receive in 2006, or (ii) would cause payments to be made in 2006, such election shall not be effective.

(b)   An Employee who first becomes eligible to participate in this Plan after the first day of a Plan Year must complete, execute and return to the Committee a Plan Agreement, an Election Form, and a Beneficiary Designation Form within thirty (30) days after he or she first becomes eligible to participate in the Plan, or within such other earlier deadline as may be established by the Committee, in its sole discretion, in order to participate for that Plan Year. In such event, such person’s participation in this Plan shall not commence earlier than the date determined by the Committee pursuant to Section 2.2(c).

(c)   Each selected Employee who is eligible to participate in the Plan shall commence participation in the Plan on the date that the Committee determines, in its sole discretion, that the Employee has met all enrollment requirements set forth in this Plan and required by the Committee, including returning all required documents to the Committee within the specified time period.

(d)   If an Employee fails to meet all requirements contained in this Section 2.2 within the period required, that Employee shall not be eligible to participate in the Plan during such Plan Year.

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ARTICLE 3

Company Contribution Amounts/

Vesting/Crediting/Taxes

3.1   Company Contribution Amount. For each Plan Year, an Employer may be required to credit amounts to a Participant’s Company Contribution Account (i) as addressed in employment or other agreements entered into between the Participant and the Employer and/or (ii) as specified and approved by the Committee pursuant to the LTIC Plan. The Company Contribution Amount described in this Section 3.1, if any, shall be credited on a date or dates prescribed by such agreements or a date or dates determined by the Committee, in its sole discretion.

3.2   Crediting of Amounts after Benefit Distribution. Notwithstanding any provision in this Plan to the contrary, should the complete distribution of a Participant’s vested Company Contribution Account occur prior to the date on which any portion of the Company Contribution Amount would otherwise be credited to the Participant’s Company Contribution Account, such amounts shall not be credited to the Participant’s Company Contribution Account, but shall be paid to the Participant in a manner determined by the Committee, in its sole discretion.

3.3   Vesting.

(a)   A Participant shall be vested in his or her Company Contribution Amount in accordance with the vesting schedule(s) set forth in his or her Plan Agreement, employment agreement or any other agreement entered into between the Participant and his or her Employer. If not addressed in such agreements or if related to any Company Contribution Amount approved by the Committee pursuant to the LTIC Plan, a Participant shall vest in his or her Company Contribution Amount in accordance with the schedule set forth below; provided, however, the Participant must remain in continuous service of the Employer as an Employee through the last day of each 5-year vesting period in order to receive vesting credit for the applicable Company Contribution Amount. A new vesting schedule shall apply to each Company Contribution Amount credited to the Participant’s Company Contribution Account.

Service Period Elapsed following Crediting of Company Contribution Amount	Vested Percentage
Less than 5 years	0%
5 years or more	100%

For purposes of applying the vesting provisions above, the Company Contribution Amount approved by the Committee pursuant to the LTIC Plan for 2005 will be deemed to have been credited to the Participant’s Company Contribution Account on January 1, 2005, and shall become vested on December 31, 2009 provided the Participant remains in continuous service through such date. Similarly, the Company Contribution Amount approved by the Committee pursuant to the LTIC Plan for 2006 will be deemed to have been credited to the Participant’s Company Contribution Account on February 1, 2006, and shall become vested on January 31, 2011, provided the Participant remains in continuous service through such date.

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(b)   Notwithstanding anything to the contrary contained in this Section 3.3, in the event of a Change in Control, or upon a Participant’s death while employed by an Employer or Disability, a Participant’s Company Contribution Account shall immediately become 100% vested (if it is not already vested in accordance with the above vesting schedule).In addition, subject to the terms set forth in Section 3.3(c), a Participant’s Company Contribution Account shall immediately become 100% vested upon a Participant’s Retirement.

(c)   Notwithstanding Section 3.3(b), if the Committee, in its sole discretion, determines that a Participant’s employment with the Company was terminated for “cause” (as defined in the Participant’s employment agreement), the Participant’s Company Contribution Account shall not become 100% vested (if it is not already vested in accordance with the vesting schedule in 3.3(a)) upon such Participant’s Retirement.

(d)   If a Participant has a tax gross-up provision under an employment agreement with respect to excise taxes imposed under Code Sections 280G or 4999, any such excise taxes relating to the vesting of a Participant’s Company Contribution Account in connection with a Change in Control shall be grossed-up in the same way as other compensation and benefits are grossed-up under the applicable employment agreement. If a Participant does not have an applicable tax gross-up provision, any excise taxes relating to the vesting of the Participant’s Company Contribution Account in connection with a Change in Control shall be fully grossed-up if the vesting of a Participant’s Company Contribution Account by itself results in “excess parachute payments” as defined in Code Section 280G.

3.4   Crediting/Debiting of Company Contribution Accounts. In accordance with, and subject to, the rules and procedures that are established from time to time by the Committee, in its sole discretion, amounts shall be credited or debited to a Participant’s Company Contribution Account in accordance with the following rules:

(a)   Measurement Funds. Subject to the restrictions found in Section 3.4(c) below, the Participant may elect one or more of the measurement funds selected by the Committee, in its sole discretion, which are based on certain mutual funds (the “Measurement Funds”), for the purpose of crediting or debiting additional amounts to his or her Company Contribution Account. As necessary, the Committee may, in its sole discretion, discontinue, substitute or add a Measurement Fund. Each such action will take effect as of the first day of the first calendar quarter that begins at least thirty (30) days after the day on which the Committee gives Participants advance written notice of such change.

(b)   Election of Measurement Funds. Subject to the restrictions found in Section 3.4(c) below, a Participant, in connection with his or her initial election in accordance with Section 2.2 above, shall elect, on the Election Form, one or more Measurement Fund(s) (as described in Section 3.4(a) above) to be used to determine the amounts to be credited or debited to his or her Company Contribution Account. If a Participant does not elect any of the Measurement Funds as described in the previous sentence, the Participant’s Company Contribution Account shall automatically be allocated into the money market Measurement Fund.

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For purposes of determining additional amounts to be credited to the Participant’s Company Contribution Account, the Company Contribution Amount approved by the Committee pursuant to the LTIC Plan for 2005 shall be deemed to have been credited to a Participant’s Company Contribution Account on December 31, 2005, and the Company Contribution Amount approved by the Committee pursuant to the LTIC Plan for 2006 shall be deemed to have been credited to a Participant’s Company Contribution Account on February 1, 2006. These contributions shall be deemed to be allocated to the money market Measurement Fund on such dates and deemed to remain in this fund until a reallocation election is made by the Participant in accordance with this Section.

Subject to the restrictions found in Section 3.4(c) below, the Participant may (but is not required to) elect, by submitting an Election Form to the Committee that is accepted by the Committee, to add or delete one or more Measurement Fund(s) to be used to determine the amounts to be credited or debited to his or her Company Contribution Account, or to change the portion of his or her Company Contribution Account allocated to each previously or newly elected Measurement Fund. If an election is made in accordance with the previous sentence, it shall apply as of the first business day deemed reasonably practicable by the Committee, in its sole discretion, and shall continue thereafter for each subsequent day in which the Participant participates in the Plan, unless changed in accordance with the previous sentence. Notwithstanding the foregoing, the Committee, in its sole discretion, may impose limitations on the frequency with which one or more of the Measurement Funds elected in accordance with this Section may be added or deleted by such Participant; furthermore, the Committee, in its sole discretion, may impose limitations on the frequency with which the Participant may change the portion of his or her Company Contribution Account allocated to each previously or newly elected Measurement Fund.

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(c)   Clark, Inc. Stock Unit Fund Measurement Fund.

(i)   A Participant may elect to allocate any portion of his or her new company contributions and/or re-allocate any portion of his or her Company Contribution Account to the Clark, Inc. Stock Unit Fund Measurement Fund. Notwithstanding the preceding sentence, the Committee may postpone any allocation or re-allocation that would otherwise be made in a period in which the Participant would be prohibited (by Company policy or otherwise) from acquiring equity securities of the Company until after such period has expired. However, a Participant may not re-allocate any portion of his or her Company Contribution Account from the Clark, Inc. Stock Unit Fund Measurement Fund to any other Measurement Fund. Amounts allocated to the Clark, Inc. Stock Unit Fund Measurement Fund shall only be distributable in actual shares of Stock, except that a fractional share, if any, shall be paid in cash.

(ii)   Any stock dividends, cash dividends or other non-cash dividends that would have been payable on the Stock credited to a Participant’s Company Contribution Account shall be credited to the Participant’s Company Contribution Account in the form of additional shares of Stock and shall automatically and irrevocably be deemed to be re-invested in the Clark, Inc. Stock Unit Fund Measurement Fund until such amounts are distributed to the Participant. The number of shares credited to the Participant for a particular stock dividend shall be equal to (a) the number of shares of Stock credited to the Participant’s Company Contribution Account as of the payment date for such dividend in respect of each share of Stock, multiplied by (b) the number of additional shares of Stock actually paid as a dividend in respect of each share of Stock. The number of shares credited to the Participant for a particular cash dividend or other non-cash dividend shall be equal to (a) the number of shares of Stock credited to the Participant’s Company Contribution Account as of the payment date for such dividend in respect of each share of Stock, multiplied by (b) the fair market value of the dividend, divided by (c) the “fair market value” of the Stock on the payment date for such dividend.

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(iii)   The value of a Participant’s Company Contribution Account that has been allocated to the Clark, Inc. Stock Unit Fund may be adjusted by the Committee, in its sole discretion, to prevent dilution or enlargement of a Participant’s rights in the event of any reorganization, reclassification, stock split, or other unusual corporate transaction or event which affects the value of the Stock.

(iv)   For purposes of this Section 3.4, the fair market value of the Stock shall be determined by the Committee in its sole discretion.

(d)   Proportionate Allocation. In making any election described in Section 3.4(b) above, the Participant shall specify on the Election Form, in increments of one percent (1%), the percentage of his or her Company Contribution Account or Measurement Fund, as applicable, to be allocated/reallocated.

(e)   Crediting or Debiting Method. The performance of each Measurement Fund (either positive or negative) will be determined on a daily basis based on the manner in which such Participant’s Company Contribution Account has been hypothetically allocated among the Measurement Funds by the Participant.

(f)   No Actual Investment. Notwithstanding any other provision of this Plan that may be interpreted to the contrary, the Measurement Funds are to be used for measurement purposes only, and a Participant’s election of any such Measurement Fund, the allocation of his or her Company Contribution Account thereto, the calculation of additional amounts and the crediting or debiting of such amounts to a Participant’s Company Contribution Account shallnot be considered or construed in any manner as an actual investment of his or her Company Contribution Account in any such Measurement Fund. In the event that the Company or the Trustee (as that term is defined in the Trust), in its own discretion, decides to invest funds in any or all of the investments on which the Measurement Funds are based, no Participant shall have any rights in or to such investments themselves. Without limiting the foregoing, a Participant’s Company Contribution Account shall at all times be a bookkeeping entry only and shall not represent any investment made on his or her behalf by the Company or the Trust; the Participant shall at all times remain an unsecured creditor of the Company.

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3.5   FICA and Other Taxes.

(a)   Company Contribution Account. When a Participant becomes vested in a portion of his or her Company Contribution Account, the Participant’s Employer(s) shall (i) withhold from cash compensation otherwise payable to the Participant that portion of the Participant’s share of FICA and other employment taxes on such Company Contribution Amount or (ii) reduce the vested portion of the Participant’s Company Contribution Account, as applicable, if necessary, to comply with this Section 3.5.

(b)   Distributions. The Participant’s Employer(s), or the trustee of the Trust, shall withhold from any payments made to a Participant under this Plan all Federal, state and local income, employment and other taxes required to be withheld by the Employer(s), or the trustee of the Trust, in connection with such payments, in amounts and in a manner to be determined in the sole discretion of the Employer(s) and the trustee of the Trust.

ARTICLE 4

Unforeseeable Emergencies

4.1   Unforeseeable Emergencies.

(a)   If the Participant experiences an Unforeseeable Emergency, the Participant may petition the Committee to receive a partial or full payout from the Plan, subject to the provisions set forth below.

(b)   The payout, if any, from the Plan shall not exceed the lesser of (i) the Participant’s vested Company Contribution Account, calculated as of the close of business on or around the date on which the amount becomes payable, as determined by the Committee in its sole discretion, or (ii) the amount necessary to satisfy the Unforeseeable Emergency, plus amounts necessary to pay Federal, state, or local income taxes or penalties reasonably anticipated as a result of the distribution. Notwithstanding the foregoing, a Participant may not receive a payout from the Plan to the extent that the Unforeseeable Emergency is or may be relieved (A) through reimbursement or compensation by insurance or otherwise or (B) by liquidation of the Participant’s assets, to the extent the liquidation of such assets would not itself cause severe financial hardship.

(c)   If the Committee, in its sole discretion, approves a Participant’s petition for payout from the Plan, the Participant shall receive a payout from the Plan within sixty (60) days of the date of such approval.

(d)   Notwithstanding the foregoing, the Committee shall interpret all provisions relating to a payout under this Section 4.1 in a manner that is consistent with Code Section 409A and related Treasury guidance and Regulations.

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ARTICLE 5

Retirement Benefit

5.1   Retirement Benefit. A Participant who Retires shall receive, as a Retirement Benefit, his or her vested Company Contribution Account, calculated as of the close of business on or around the Participant’s Benefit Distribution Date, as determined by the Committee in its sole discretion.

5.2   Payment of Retirement Benefit.

(a)   A Participant, in connection with his or her commencement of participation in the Plan, shall elect on an Election Form to receive the Retirement Benefit in a lump sum or pursuant to an Annual Installment Method of up to fifteen (15) years. If a Participant does not make any election with respect to the payment of the Retirement Benefit, then such Participant shall be deemed to have elected to receive the Retirement Benefit in a lump sum.

(b)   A Participant may change the form of payment of the Retirement Benefit by submitting an Election Form to the Committee in accordance with the following criteria:

(i)   The election to modify the Retirement Benefit shall have no effect until at least twelve (12) months after the date on which the election is made; and

(ii)   The first Retirement Benefit payment shall be delayed at least five (5) years from the Participant’s originally scheduled Benefit Distribution Date described in Section 1.4(a).

For purposes of applying the requirements above, the right to receive the Retirement Benefit in installment payments shall be treated as the entitlement to a single payment. The Committee shall interpret all provisions relating to changing the Retirement Benefit election under this Section 5.2 in a manner that is consistent with Code Section 409A and related Treasury guidance or Regulations.

The Election Form most recently accepted by the Committee that has become effective shall govern the payout of the Retirement Benefit.

(c)   The lump sum payment shall be made, or installment payments shall commence, no later than sixty (60) days after the Participant’s Benefit Distribution Date. Remaining installments, if any, shall be paid no later than sixty (60) days after each anniversary of the Participant’s Benefit Distribution Date.

ARTICLE 6

Termination Benefit

6.1   Termination Benefit. A Participant who experiences a Termination of Employment shall receive, as a Termination Benefit, his or her vested Company Contribution Account, calculated as of the close of business on or around the Participant’s Benefit Distribution Date, as determined by the Committee in its sole discretion.

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6.2   Payment of Termination Benefit.

(a)   A Participant, in connection with his or her commencement of participation in the Plan, shall elect on an Election Form to receive the Termination Benefit in a lump sum or pursuant to an Annual Installment Method of up to five (5) years. If a Participant does not make any election with respect to the payment of the Termination Benefit, then such Participant shall be deemed to have elected to receive the Termination Benefit in a lump sum.

(b)   A Participant may change the form of payment of the Termination Benefit by submitting an Election Form to the Committee in accordance with the following criteria:

(i)   The election to modify the Termination Benefit shall have no effect until at least twelve (12) months after the date on which the election is made; and

(ii)   The first Termination Benefit payment is delayed at least five (5) years from the Participant’s originally scheduled Benefit Distribution Date described in Section 1.4(b).

For purposes of applying the requirements above, the right to receive the Termination Benefit in installment payments shall be treated as the entitlement to a single payment. The Committee shall interpret all provisions relating to changing the Termination Benefit election under this Section 6.2 in a manner that is consistent with Code Section 409A and related Treasury guidance or Regulations.

The Election Form most recently accepted by the Committee that has become effective shall govern the payout of the Termination Benefit.

(c)   The lump sum payment shall be made, or installment payments shall commence, no later than sixty (60) days after the Participant’s Benefit Distribution Date. Remaining installments, if any, shall be paid no later than sixty (60) days after each anniversary of the Participant’s Benefit Distribution Date.

ARTICLE 7

Disability Benefit

7.1   Disability Benefit. Upon a Participant’s Disability, the Participant shall receive a Disability Benefit, which shall be equal to the Participant’s vested Company Contribution Account, calculated as of the close of business on or around the Participant’s Benefit Distribution Date, as selected by the Committee in its sole discretion.

7.2   Payment of Disability Benefit.The Disability Benefit shall be paid to the Participant in a lump sum payment no later than sixty (60) days after the Participant’s Benefit Distribution Date.

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ARTICLE 8

Death Benefit

8.1   Death Benefit. The Participant’s Beneficiary(ies) shall receive a Death Benefit upon the Participant’s death which will be equal to the Participant’s vested Company Contribution Account, calculated as of the close of business on or around the Participant’s Benefit Distribution Date, as selected by the Committee in its sole discretion.

8.2   Payment of Death Benefit. The Death Benefit shall be paid to the Participant’s Beneficiary(ies) in a lump sum payment no later than sixty (60) days after the Participant’s Benefit Distribution Date.

ARTICLE 9

Beneficiary Designation

9.1   Beneficiary. Each Participant shall have the right, at any time, to designate his or her Beneficiary(ies) (both primary as well as contingent) to receive any benefits payable under the Plan to a beneficiary upon the death of a Participant. The Beneficiary designated under this Plan may be the same as or different from the Beneficiary designation under any other plan of an Employer in which the Participant participates.

9.2   Beneficiary Designation; Change; Spousal Consent. A Participant shall designate his or her Beneficiary by completing and signing the Beneficiary Designation Form, and returning it to the Committee or its designated agent. A Participant shall have the right to change a Beneficiary by completing, signing and otherwise complying with the terms of the Beneficiary Designation Form and the Committee’s rules and procedures, as in effect from time to time. If the Participant names someone other than his or her spouse as a Beneficiary, the Committee may, in its sole discretion, determine that spousal consent is required to be provided in a form designated by the Committee, executed by such Participant’s spouse and returned to the Committee. Upon the acceptance by the Committee of a new Beneficiary Designation Form, all Beneficiary designations previously filed shall be canceled. The Committee shall be entitled to rely on the last Beneficiary Designation Form filed by the Participant and accepted by the Committee prior to his or her death.

9.3   Acknowledgment. No designation or change in designation of a Beneficiary shall be effective until received and acknowledged in writing by the Committee or its designated agent.

9.4   No Beneficiary Designation. If a Participant fails to designate a Beneficiary as provided in Sections 9.1, 9.2 and 9.3 above or, if all designated Beneficiaries predecease the Participant or die prior to complete distribution of the Participant’s benefits, then the Participant’s designated Beneficiary shall be deemed to be his or her surviving spouse. If the Participant has no surviving spouse, the benefits remaining under the Plan to be paid to a Beneficiary shall be payable to the executor or personal representative of the Participant’s estate.

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9.5   Doubt as to Beneficiary. If the Committee has any doubt as to the proper Beneficiary to receive payments pursuant to this Plan, the Committee shall have the right, exercisable in its discretion, to cause the Participant’s Employer to withhold such payments until this matter is resolved to the Committee’s satisfaction.

9.6   Discharge of Obligations. The payment of benefits under the Plan to a Beneficiary shall fully and completely discharge all Employers and the Committee from all further obligations under this Plan with respect to the Participant, and that Participant’s Plan Agreement shall terminate upon such full payment of benefits.

ARTICLE 10

Leave of Absence

10.1   Paid Leave of Absence. If a Participant is authorized by the Participant’s Employer to take a paid leave of absence from the employment of the Employer, and such leave of absence does not constitute a separation from service, as determined by the Committee in accordance with Code Section 409A and related Treasury guidance and Regulations, the Participant shall continue to be considered eligible for the benefits provided in Articles 4, 5, 6, 7 or 8 in accordance with the provisions of those Articles.

10.2   Unpaid Leave of Absence. If a Participant is authorized by the Participant’s Employer to take an unpaid leave of absence from the employment of the Employer for any reason, and such leave of absence does not constitute a separation from service, as determined by the Committee in accordance with Code Section 409A and related Treasury guidance and Regulations, such Participant shall continue to be eligible for the benefits provided in Articles 4, 5, 6, 7 and 8 in accordance with the provisions of those Articles.

10.3   Leaves Resulting in Separation from Service. In the event that a Participant’s leave of absence from his or her Employer does constitute a separation from service, as determined by the Committee in accordance with Code Section 409A and related Treasury guidance and Regulations, the Participant’s vested Company Contribution Account shall be distributed to the Participant in accordance with Article 5 or 6 of this Plan, as applicable.

ARTICLE 11

Termination of Plan, Amendment or Modification

11.1   Termination of Plan. Although each Employer anticipates that it will continue the Plan for an indefinite period of time, there is no guarantee that any Employer will continue the Plan or will not terminate the Plan at any time in the future. Accordingly, each Employer reserves the right to Terminate the Plan. In the event of a Termination of the Plan, the Measurement Funds available to Participants following the Termination of the Plan shall be comparable in number and type to those Measurement Funds available to Participants in the Plan Year preceding the Plan Year in which the Termination of the Plan is effective. Following a Termination of the Plan, Participant Company Contribution Accounts shall remain in the Plan until the Participant becomes eligible for the benefits provided in Articles 4, 5, 6, 7 and 8 in accordance with the provisions of those Articles.The Termination of the Plan shall not adversely affect any Participant or Beneficiary who has become entitled to the payment of any benefits under the Plan as of the date of termination.

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Notwithstanding the foregoing, to the extent permissible under Code Section 409A and related Treasury guidance or Regulations, during the thirty (30) days preceding or within twelve (12) months following a Change in Control an Employer shall be permitted to (i) terminate the Plan by action of its board of directors, and (ii) distribute the vested Company Contribution Accounts to Participants in a lump sum no later than twelve (12) months after the Change in Control, provided that all other substantially similar arrangements sponsored by such Employer are also terminated and all balances in such arrangements are distributed within twelve (12) months of the termination of such arrangements.

11.2   Amendment.

(a)   Any Employer may, at any time, amend or modify the Plan in whole or in part with respect to that Employer. Notwithstanding the foregoing, (i) no amendment or modification shall be effective to decrease the value of a Participant’s vested Company Contribution Account in existence at the time the amendment or modification is made, and (ii) no amendment or modification of this Section 11.2 or Section 12.2 of the Plan shall be effective.

(b)   Notwithstanding any provision of the Plan to the contrary, in the event that the Company determines that any provision of the Plan may cause amounts deferred under the Plan to become immediately taxable to any Participant under Code Section 409A, and related Treasury guidance or Regulations, the Company may (i) adopt such amendments to the Plan and appropriate policies and procedures, including amendments and policies with retroactive effect, that the Company determines necessary or appropriate to preserve the intended tax treatment of the Plan benefits provided by the Plan and/or (ii) take such other actions as the Company determines necessary or appropriate to comply with the requirements of Code Section 409A, and related Treasury guidance or Regulations.

11.3   Plan Agreement. Despite the provisions of Sections 11.1 and 11.2 above, if a Participant’s Plan Agreement contains benefits or limitations that are not in this Plan document, the Employer may only amend or terminate such provisions with the written consent of the Participant.

11.4   Effect of Payment. The full payment of the Participant’s vested Company Contribution Account under Articles 4, 5, 6, 7 or 8 of the Plan shall completely discharge all obligations to a Participant and his or her designated Beneficiaries under this Plan, and the Participant’s Plan Agreement shall terminate.

ARTICLE 12

Administration

12.1   Committee Duties. Except as otherwise provided in this Article 12, this Plan shall be administered by a Committee, which shall consist of the Board, or such committee as the Board shall appoint. Members of the Committee may be Participants under this Plan. The Committee shall also have the discretion and authority to (i) make, amend, interpret, and enforce all appropriate rules and regulations for the administra-tion of this Plan, and (ii) decide or resolve any and all ques-tions, including benefit entitlement determinations and interpretations of this Plan, as may arise in connection with the Plan. Any individual serving on the Committee who is a Participant shall not vote or act on any matter relating solely to himself or herself. When making a determination or calculation, the Committee shall be entitled to rely on information furnished by a Participant or the Company.

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12.2   Administration Upon Change In Control. Within one hundred and twenty (120) days following a Change in Control, the individuals who comprised the Committee immediately prior to the Change in Control (whether or not such individuals are members of the Committee following the Change in Control) may, by written consent of the majority of such individuals, appoint an independent third party administrator (the “Administrator”) to perform any or all of the Committee’s duties described in Section 12.1 above, including without limitation, the power to determine any questions arising in connection with the administration or interpretation of the Plan, and the power to make benefit entitlement determinations. Upon and after the effective date of such appointment, (i) the Company must pay all reasonable administrative expenses and fees of the Administrator, and (ii) the Administrator may only be terminated with the written consent of the majority of Participants with a Company Contribution Account in the Plan as of the date of such proposed termination.

12.3   Agents. In the administration of this Plan, the Committee or the Administrator, as applicable, may, from time to time, employ agents and delegate to them such administrative duties as it sees fit (including acting through a duly appointed representative) and may from time to time consult with counsel.

12.4   Binding Effect of Decisions. The decision or action of the Committee or Administrator, as applicable, with respect to any question arising out of or in connection with the administration, interpretation and application of the Plan and the rules and regulations promulgated hereunder shall be final and conclusive and binding upon all persons having any interest in the Plan.

12.5   Indemnity of Committee. All Employers shall indemnify and hold harmless the members of the Committee, any Employee to whom the duties of the Committee may be delegated, and the Administrator against any and all claims, losses, damages, expenses or liabilities arising from any action or failure to act with respect to this Plan, except in the case of willful misconduct by the Committee, any of its members, any such Employee or the Administrator.

12.6   Employer Information. To enable the Committee and/or Administrator to perform its functions, the Company and each Employer shall supply full and timely information to the Committee and/or Administrator, as the case may be, on all matters relating to the Plan, the Trust, the Participants and their Beneficiaries, the Company Contribution Accounts of the Participants, the compensation of its Participants, the date and circum-stances of the Retirement, Disability, death or Termination of Employment of its Participants, and such other pertinent information as the Committee or Administrator may reasonably require.

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ARTICLE 13

Other Benefits and Agreements

13.1   Coordination with Other Benefits. The benefits provided for a Participant and Participant’s Beneficiary under the Plan are in addition to any other benefits available to such Participant under any other plan or program for employees of the Participant’s Employer. The Plan shall supplement and shall not supersede, modify or amend any other such plan or program except as may otherwise be expressly provided.

ARTICLE 14

Claims Procedures

14.1   Presentation of Claim. Any Participant or Beneficiary of a deceased Participant (such Participant or Beneficiary being referred to below as a “Claimant”) may deliver to the Committee a written claim for a determination with respect to the amounts distributable to such Claimant from the Plan. If such a claim relates to the contents of a notice received by the Claimant, the claim must be made within sixty (60) days after such notice was received by the Claimant. All other claims must be made within 180 days of the date on which the event that caused the claim to arise occurred. The claim must state with particularity the determination desired by the Claimant.

14.2   Notification of Decision. The Committee shall consider a Claimant’s claim within a reasonable time, but no later than ninety (90) days after receiving the claim. If the Committee determines that special circumstances require an extension of time for processing the claim, written notice of the extension shall be furnished to the Claimant prior to the termination of the initial ninety (90) day period. In no event shall such extension exceed a period of ninety (90) days from the end of the initial period. The extension notice shall indicate the special circumstances requiring an extension of time and the date by which the Committee expects to render the benefit determination. The Committee shall notify the Claimant in writing:

(a)   that the Claimant’s requested determination has been made, and that the claim has been allowed in full; or

(b)   that the Committee has reached a conclusion contrary, in whole or in part, to the Claimant’s requested determination, and such notice must set forth in a manner calculated to be understood by the Claimant:

(i)   the specific reason(s) for the denial of the claim, or any part of it;

(ii)   specific reference(s) to pertinent provisions of the Plan upon which such denial was based;

(iii)   a description of any additional material or information necessary for the Claimant to perfect the claim, and an explanation of why such material or information is necessary;

(iv)   an explanation of the claim review procedure set forth in Section 14.3 below; and

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(v)   a statement of the Claimant’s right to bring a civil action under ERISA Section 502(a) following an adverse benefit determination on review.

14.3   Review of a Denied Claim. On or before sixty (60) days after receiving a notice from the Committee that a claim has been denied, in whole or in part, a Claimant (or the Claimant’s duly authorized representative) may file with the Committee a written request for a review of the denial of the claim. The Claimant (or the Claimant’s duly authorized representative):

(a)   may, upon request and free of charge, have reasonable access to, and copies of, all documents, records and other information relevant (as defined in applicable ERISA regulations) to the claim for benefits;

(b)   may submit written comments or other documents; and/or

(c)   may request a hearing, which the Committee, in its sole discretion, may grant.

14.4   Decision on Review. The Committee shall render its decision on review promptly, and no later than sixty (60) days after the Committee receives the Claimant’s written request for a review of the denial of the claim. If the Committee determines that special circumstances require an extension of time for processing the claim, written notice of the extension shall be furnished to the Claimant prior to the termination of the initial sixty (60) day period. In no event shall such extension exceed a period of sixty (60) days from the end of the initial period. The extension notice shall indicate the special circumstances requiring an extension of time and the date by which the Committee expects to render the benefit determination. In rendering its decision, the Committee shall take into account all comments, documents, records and other information submitted by the Claimant relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination. The decision must be written in a manner calculated to be understood by the Claimant, and it must contain:

(a)   specific reasons for the decision;

(b)   specific reference(s) to the pertinent Plan provisions upon which the decision was based;

(c)   a statement that the Claimant is entitled to receive, upon request and free of charge, reasonable access to and copies of, all documents, records and other information relevant (as defined in applicable ERISA regulations) to the Claimant’s claim for benefits; and

(d)   a statement of the Claimant’s right to bring a civil action under ERISA Section 502(a).

14.5   Legal Action. A Claimant’s compliance with the foregoing provisions of this Article 14 is a mandatory prerequisite to a Claimant’s right to commence any legal action with respect to any claim for benefits under this Plan.

ARTICLE 15

Trust

15.1   Establishment of the Trust. In order to provide assets from which to fulfill the obligations of the Participants and their beneficiaries under the Plan, the Company may establish a trust by a trust agreement with a third party, the trustee, to which each Employer may, in its discretion, contribute cash or other property, including securities issued by the Company, to provide for the benefit payments under the Plan, (the “Trust”).

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15.2   Interrelationship of the Plan and the Trust. The provisions of the Plan and the Plan Agreement shall govern the rights of a Participant to receive distributions pursuant to the Plan. The provisions of the Trust shall govern the rights of the Employers, Participants and the creditors of the Employers to the assets transferred to the Trust. Each Employer shall at all times remain liable to carry out its obligations under the Plan.

15.3   Distributions From the Trust. Each Employer’s obligations under the Plan may be satisfied with Trust assets distributed pursuant to the terms of the Trust, and any such distribution shall reduce the Employer’s obligations under this Plan.

ARTICLE 16

Miscellaneous

16.1   Status of Plan. The Plan is intended to be a plan that is not qualified within the meaning of Code Section 401(a) and that “is unfunded and is maintained by an employer primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees” within the meaning of ERISA Sections 201(2), 301(a)(3) and 401(a)(1). The Plan shall be administered and interpreted (i) in a manner consistent with that intent, and (ii) in accordance with Code Section 409A and related Treasury guidance and Regulations.

16.2   Unsecured General Creditor. Participants and their Bene-ficiaries, heirs, successors and assigns shall have no legal or equitable rights, interests or claims in any property or assets of an Employer. For purposes of the payment of benefits under this Plan, any and all of an Employer’s assets shall be, and remain, the general, unpledged unrestricted assets of the Employer. An Employer’s obligation under the Plan shall be merely that of an unfunded and unsecured promise to pay money in the future.

16.3   Employer’s Liability. An Employer’s liability for the payment of benefits shall be defined only by the Plan and the Plan Agreement, as entered into between the Employer and a Participant. An Employer shall have no obliga-tion to a Participant under the Plan except as expressly provided in the Plan and his or her Plan Agreement.

16.4   Nonassignability. Neither a Participant nor any other person shall have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber, transfer, hypothecate, alienate or convey in advance of actual receipt, the amounts, if any, payable hereunder, or any part thereof, which are, and all rights to which are expressly declared to be, unassignable and non-transferable. No part of the amounts payable shall, prior to actual payment, be subject to seizure, attachment, garnishment or sequestration for the payment of any debts, judgments, alimony or separate maintenance owed by a Participant or any other person, be transferable by operation of law in the event of a Participant’s or any other person’s bankruptcy or insolvency or be transferable to a spouse as a result of a property settlement or otherwise.

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16.5   Not a Contract of Employment. The terms and conditions of this Plan shall not be deemed to constitute a contract of employment between any Employer and the Participant. Such employment is hereby acknowledged to be an “at will” employment relationship that can be terminated at any time for any reason, or no reason, with or without cause, and with or without notice, unless expressly provided in a written employment agreement. Nothing in this Plan shall be deemed to give a Participant the right to be retained in the service of any Employer, as an Employee, or to interfere with the right of any Employer to discipline or discharge the Participant at any time.

16.6   Furnishing Information. A Participant or his or her Beneficiary will cooperate with the Committee by furnishing any and all information requested by the Committee and take such other actions as may be requested in order to facilitate the administration of the Plan and the payments of benefits hereunder, including but not limited to taking such physical examinations as the Committee may deem necessary.

16.7   Terms. Whenever any words are used herein in the masculine, they shall be construed as though they were in the feminine in all cases where they would so apply; and whenever any words are used herein in the singular or in the plural, they shall be construed as though they were used in the plural or the singular, as the case may be, in all cases where they would so apply.

16.8   Captions. The captions of the articles, sections and paragraphs of this Plan are for convenience only and shall not control or affect the meaning or construction of any of its provisions.

16.9   Governing Law. Subject to ERISA, the provisions of this Plan shall be construed and interpreted according to the internal laws of the State of Illinois without regard to its conflicts of laws principles.

16.10   Notice. Any notice or filing required or permitted to be given to the Committee under this Plan shall be sufficient if in writing and hand-delivered, or sent by registered or certified mail, to the address below:

Clark, Inc.

Attn: Chris Mitchell, Vice President, Corporate Human Resources

102 South Wynstone Park Drive

North Barrington, Illinois 60010

Such notice shall be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark on the receipt for registration or certification.

Any notice or filing required or permitted to be given to a Participant under this Plan shall be sufficient if in writing and hand-delivered, or sent by mail, to the last known address of the Participant.

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16.11   Successors. The provisions of this Plan shall bind and inure to the benefit of the Participant’s Employer and its successors and assigns and the Participant and the Participant’s designated Beneficiaries.

16.12   Spouse’s Interest. The interest in the benefits hereunder of a spouse of a Participant who has predeceased the Participant shall automatically pass to the Participant and shall not be transferable by such spouse in any manner, including but not limited to such spouse’s will, nor shall such interest pass under the laws of intestate succession.

16.13   Validity. In case any provision of this Plan shall be illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining parts hereof, but this Plan shall be construed and enforced as if such illegal or invalid provision had never been inserted herein.

16.14   Incompetent. If the Committee determines in its discretion that a benefit under this Plan is to be paid to a minor, a person declared incompetent or to a person incapable of handling the disposition of that person’s property, the Committee may direct payment of such benefit to the guardian, legal representative or person having the care and custody of such minor, incompetent or incapable person. The Committee may require proof of minority, incompetence, incapacity or guardianship, as it may deem appropriate prior to distribution of the benefit. Any payment of a benefit shall be a payment for the account of the Participant and the Participant’s Beneficiary, as the case may be, and shall be a complete discharge of any liability under the Plan for such payment amount.

16.15   Court Order. The Committee is authorized to comply with any court order in any action in which the Plan or the Committee has been named as a party, including any action involving a determination of the rights or interests in a Participant’s benefits under the Plan. Notwithstanding the foregoing, the Committee shall interpret this provision in a manner that is consistent with Code Section 409A and other applicable tax law. In addition, if necessary to comply with a qualified domestic relations order, as defined in Code Section 414(p)(1)(B), pursuant to which a court has determined that a spouse or former spouse of a Participant has an interest in the Participant’s benefits under the Plan, the Committee, in its sole discretion, shall have the right to immediately distribute the spouse’s or former spouse’s interest in the Participant’s benefits under the Plan to such spouse or former spouse.

16.16   Distribution in the Event of Income Inclusion Under 409A. If any portion of a Participant’s Company Contribution Account under this Plan is required to be included in income by the Participant prior to receipt due to a failure of this Plan to meet the requirements of Code Section 409A and related Treasury guidance or Regulations, the Participant may petition the Committee or Administrator, as applicable, for a distribution of that portion of his or her Company Contribution Account that is required to be included in his or her income. Upon the grant of such a petition, which grant shall not be unreasonably withheld, the Participant’s Employer shall distribute to the Participant immediately available funds in an amount equal to the portion of his or her Company Contribution Account required to be included in income as a result of the failure of the Plan to meet the requirements of Code Section 409A and related Treasury guidance or Regulations, which amount shall not exceed the Participant’s unpaid vested Company Contribution Account under the Plan. If the petition is granted, such distribution shall be made within ninety (90) days of the date when the Participant’s petition is granted. Such a distribution shall affect and reduce the Participant’s benefits to be paid under this Plan.

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16.17   Deduction Limitation on Benefit Payments. If an Employer reasonably anticipates that the Employer’s deduction with respect to any distribution from this Plan would be limited or eliminated by application of Code Section 162(m), then to the extent deemed necessary by the Employer to ensure that the entire amount of any distribution from this Plan is deductible, the Employer may delay payment of any amount that would otherwise be distributed from this Plan. Any amounts for which distribution is delayed pursuant to this Section shall continue to be credited/debited with additional amounts in accordance with Section 3.4 above. The delayed amounts (and any amounts credited thereon) shall be distributed to the Participant (or his or her Beneficiary in the event of the Participant’s death) at the earliest date the Employer reasonably anticipates that the deduction of the payment of the amount will not be limited or eliminated by application of Code Section 162(m).

16.18   Insurance. The Employers, on their own behalf or on behalf of the trustee of the Trust, and, in their sole discretion, may apply for and procure insurance on the life of the Participant, in such amounts and in such forms as the Trust may choose. The Employers or the trustee of the Trust, as the case may be, shall be the sole owner and beneficiary of any such insurance. The Participant shall have no interest whatsoever in any such policy or policies, and at the request of the Employers shall submit to medical examinations and supply such information and execute such documents as may be required by the insurance company or companies to whom the Employers have applied for insurance.

IN WITNESS WHEREOF, the Company has signed this Plan document as of February 27, 2006.

“Company”

Clark, Inc., a Delaware corporation

By: /s/ Thomas M. Pyra

Title: President

EX-10.30

Exhibit 10.30

CLARK, INC.

PERFORMANCE SHARE AWARD AGREEMENT

THIS PERFORMANCE SHARE AWARD AGREEMENT (the “Agreement”) is made and entered into as of October 25, 2005, between Clark, Inc., a Delaware corporation (the “Company”), and __________________ (the “Employee”), an individual currently employed by the Company or one of its subsidiaries or affiliates.

1.Award of Performance Shares. The Company hereby awards to Employee _____________ Performance Shares (the “Target Number”) pursuant to the terms of the Clark, Inc. Incentive Compensation Plan. For the period January 1, 2005 through December 31, 2007 (the “Performance Period”), the number of shares awarded will be based on the achievement of a cumulative, fully diluted earnings per share (“EPS”) target during the Performance Period with such EPS target as determined by the Board of Directors as soon as reasonably practicable following grant of this award. The percentage of the Target Number of Performance Shares earned during the Performance Period will be determined by the Board of Directors based on the following table:

3 Year Performance As % of EPS Target	Percentage of Target Number Earned
<80%	25%
80% but less than 90%	30%
90% but less than 100%	40%
100% but less than 110%	50%
110% but less than 120%	150%
120% or more	200%

2.Vesting Schedule. Subject to Sections 1, 5 and 6 hereof, the Performance Shares shall vest 100% on December 31, 2007 (the “Vesting Date”).

3.Payment or Conversion of Performance Shares.

(a)Within 90 days following the Vesting Date, the Company shall deliver to Employee the number of shares of common stock of the Company (“Stock”) corresponding to the vested Performance Shares (as determined under Section 1 above). The Stock used for this purpose may come from the Company’s authorized but unissued shares, or from the Company’s treasury shares.

(b)At or about the time that shares of Stock corresponding to vested Performance Shares are delivered to Employee, the Company shall also deliver to Employee an amount in cash equal to the product of (i) the amount of dividends paid during the Performance Period on each share of Stock multiplied by (ii) the number of vested Performance Shares delivered to Employee.

4.Non-transferability. Except to the extent otherwise determined by the Company, no Performance Shares shall be assignable or otherwise transferable by Employee other than by will or by the laws of descent and distribution and, unless otherwise provided by the Company, during the life of Employee any elections with respect to Performance Shares may be made only by Employee or Employee’s guardian or legal representative.

5.Termination of Employment.

(a)Except to the extent provided in Section 6 hereof or any employment agreement or severance agreement between Employee and the Company or any of its subsidiaries or affiliates, the provisions of this Section 5 shall apply to unvested Performance Shares upon Employee’s termination of employment with the Company and all subsidiaries or affiliates of the Company (“Termination”) for any reason.

(b)In the event of Employee’s Termination before the end of the Performance Period by reason of death, disability, retirement or termination by the Company without “cause,” all Performance Shares shall become immediately vested at the maximum performance level (i.e., 200% of the Target Number), but only with respect to previously awarded shares during the Performance Period. “Disability” for this purpose means the Employee’s inability, due to physical or mental incapacity, to substantially perform his or her duties and responsibilities of employment for a period of 180 days in any consecutive nine-month period. “Cause” shall have the meaning set forth in the employment agreement applicable to Employee.

(c)Unless the Committee provides otherwise, in the event of Employee’s Termination during the Performance Period for any reason other than as provided in Section 5(b), all Performance Shares shall be canceled and forfeited.

6.Change in Control.

(a)In the event of a Change in Control on or prior to the end of the Performance Period, any outstanding Performance Shares shall become immediately vested at the maximum performance level (i.e., 200% of the Target Number). For purposes of this Agreement, a “Change in Control” shall be deemed to have occurred if (i) the Company becomes a subsidiary of another corporation or entity or is merged or consolidated into another corporation or entity or substantially all of the assets of the Company is sold to another person, corporation, partnership or other entity; or (ii) any person, corporation, partnership or other entity, either alone or in conjunction with its “affiliates,” as that term is defined in Rule 405 of the General Rules and Regulations under the Securities Act of 1933, as amended, or other group of persons, corporations, partnerships or other entities who are not “affiliates” but who are acting in concert, other than Employee or Employee’s family members or any person, organization or entity that is controlled by Employee or Employee’s family members, becomes the owner of record or beneficially of securities of the Company that represent 33 1/3% or more of the combined voting power of the Company’s then outstanding securities entitled to elect the Board of Directors of the Company; or (iii) the Board of Directors of the Company or a committee thereof makes a determination in its reasonable judgment that a “Change in Control” has taken place.

(b)If a Participant has a tax gross-up provision under an employment agreement with respect to excise taxes imposed under Code Sections 280G or 4999, any such excise taxes relating to the vesting of Performance Shares in connection with a Change in Control shall be grossed-up in the same way as other compensation and benefits are grossed-up under the applicable employment agreement. If a Participant does not have an applicable tax gross-up provision, any excise taxes relating to the vesting of Performance Shares in connection with a Change in Control shall be fully grossed-up if the vesting of the Performance Shares governed by this Agreement (together with the vesting of Performance Shares governed by any other performance share agreement, but without taking into account any other compensation or benefits payable to the Participant) by itself results in “excess parachute payments” as defined in Code Section 280G.

7.Withholding Tax. Employee may be subject to withholding taxes as a result of the vesting or settlement of Performance Shares. Employee shall pay to the Company in cash, promptly when the amount of such obligations become determinable, all applicable federal, state, local and foreign withholding taxes that result from such settlement. Notwithstanding the foregoing, the Company may determine to withhold shares of Stock to pay the amount of tax required to be withheld upon settlement of Performance Shares, unless Employee has otherwise provided for payment of withholding taxes. Any shares of Stock so withheld will be valued as of the date they are withheld. In no event will the value of shares withheld exceed the required federal, state, local and foreign withholding tax obligations as computed by the Company.

8.Administration. The Performance Shares awarded by this Agreement will be administered by the Committee, whose decisions and determinations will be final and binding. Participation is this program does not represent a guarantee of continued employment.

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

10.GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF ILLINOIS, WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES.

CLARK, INC.

By:

Name:

Title:

[Name of Employee]