CLARK/BARDES HOLDINGS INC, S-1/A, 1998-07-27

CLARK/BARDES HOLDINGS INC
S-1/A, 1998-07-27
LIFE INSURANCE

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 27, 1998.

REGISTRATION NO. 333-56799

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------

AMENDMENT NO. 1

FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------------

CLARK/BARDES HOLDINGS, INC.
(Exact name of registrant as specified in its charter)

<TABLE>
<S> <C> <C>
DELAWARE 6311 52-2103926
(State or other jurisdiction of (Primary standard industrial (I.R.S. Employer
Incorporation or organization) classification code number) Identification No.)
</TABLE>

---------------------

2121 SAN JACINTO, SUITE 2200
DALLAS, TEXAS 75201-7906
TELEPHONE: (214) 871-8717
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)

W.T. WAMBERG
CHAIRMAN OF THE BOARD
2121 SAN JACINTO, SUITE 2200
DALLAS, TEXAS 75201-7906
TELEPHONE: (214) 871-8717
(Name, address, including zip code, and telephone number, including area code,
of agent for service)

---------------------

Copies to:

<TABLE>
<S> <C>
TERRY M. SCHPOK, P.C. PHYLLIS G. KORFF, ESQ.
AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P. SUSAN J. SUTHERLAND, ESQ.
1700 PACIFIC AVENUE, SUITE 4100 SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
DALLAS, TEXAS 75201-4675 919 THIRD AVENUE
(214) 969-2800 NEW YORK, NEW YORK 10022-3897
(212) 735-3000
</TABLE>

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable after the Registration Statement becomes effective.

If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]

If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
- ---------------------

If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
- ---------------------

If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.

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<PAGE> 2

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.

SUBJECT TO COMPLETION, DATED JULY 27, 1998

PROSPECTUS

4,000,000 SHARES

CLARK BARDES LOGO
COMMON STOCK
------------------------------

All of the 4,000,000 shares of common stock, par value $0.01 per share (the
"Common Stock"), offered hereby (the "Offering") will be sold by Clark/Bardes
Holdings, Inc. ("CBH"). Prior to the Offering, there has been no public market
for CBH's Common Stock. It is currently anticipated that the initial public
offering price will be between $11.50 and $13.50 per share (the "Range"). For a
discussion of the factors to be considered in determining the initial public
offering price, see "Underwriting."

At CBH's request, the Underwriters have reserved up to 600,000 shares of
Common Stock for sale to the directors, officers, employees and designees of CBH
and its wholly owned subsidiary and have agreed to permit them to buy such
shares at the initial price to public. The number of shares of Common Stock
available for sale by CBH to the general public will be reduced to the extent
such persons purchase such reserved shares. Any reserved shares not so purchased
will be offered by the Underwriters to the general public at the initial price
to the public.

Application will be made for quotation of the Common Stock on the Nasdaq
National Market under the symbol "CLKB."

SEE "RISK FACTORS" BEGINNING ON PAGE 7 FOR CERTAIN CONSIDERATIONS RELEVANT
TO AN INVESTMENT IN THE COMMON STOCK.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
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UNDERWRITING
PRICE TO PUBLIC DISCOUNT(1) PROCEEDS TO CBH(2)
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<S> <C> <C> <C>
Per Share........................... $ $ $
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Total(3)............................ $ $ $
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</TABLE>

(1) CBH has agreed to indemnify the Underwriters against certain liabilities,
including liabilities under the Securities Act of 1933, as amended. See
"Underwriting."
(2) Before deducting expenses payable by CBH estimated at $750,000.

(3) W.T. Wamberg, CBH's chairman (the "Selling Stockholder"), has granted the
Underwriters a 30-day option to purchase up to 600,000 additional shares of
Common Stock on the same terms and conditions as set forth above, solely to
cover over-allotments, if any. If the option is exercised in full, the total
Price to Public will be $ and the total Underwriting Discount will
be $ . CBH will not receive any of the proceeds from the sale of
shares by Mr. Wamberg. See "Principal and Selling Stockholders" and
"Underwriting."

------------------------------
The shares of Common Stock are offered subject to prior sale, when, as and
if delivered to, and accepted by, the Underwriters and subject to certain other
conditions. The Underwriters reserve the right to withdraw, cancel or modify the
Offering and to reject orders in whole or in part. It is expected that delivery
of the shares of Common Stock will be made on or about , 1998, at the
offices of Bear, Stearns & Co. Inc., 245 Park Avenue, New York, New York 10167.
BEAR, STEARNS & CO. INC.
PIPER JAFFRAY INC.
CONNING & COMPANY

THE DATE OF THIS PROSPECTUS IS , 1998.
<PAGE> 3

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK,
INCLUDING OVER-ALLOTMENT, STABILIZING TRANSACTIONS, SYNDICATE SHORT COVERING
TRANSACTIONS AND THE IMPOSITION OF PENALTY BIDS. FOR A DESCRIPTION OF THESE
ACTIVITIES, SEE "UNDERWRITING."
<PAGE> 4

PROSPECTUS SUMMARY

The following is a summary of certain information contained herein and is
qualified in its entirety by, and should be read in conjunction with, the more
detailed information and financial statements, including the notes thereto,
contained elsewhere in this Prospectus. Clark/Bardes Holdings, Inc., a Delaware
corporation ("CBH"), and Clark/Bardes, Inc., a Delaware corporation and a wholly
owned subsidiary of CBH ("Clark/ Bardes"), were formed in June 1998 in
contemplation of the Offering and to effect the Merger (as defined below). As a
result of the Merger, Clark/Bardes became the successor corporation to
Clark/Bardes, Inc., a Texas corporation (the "Predecessor Company"). Unless the
context otherwise requires, all references in this Prospectus to the "Company"
mean CBH together with its wholly owned subsidiary Clark/Bardes and the
predecessor of Clark/Bardes, and all dates, periods or events prior to the
Merger refer to the Predecessor Company. Unless otherwise indicated, this
Prospectus and all pro forma financial and statistical information set forth
herein assumes the consummation of the Reorganization (as defined below) and no
exercise of the Underwriters' over-allotment option. For the convenience of the
reader, certain terms have been defined in the Glossary contained elsewhere in
this Prospectus, and any defined terms used herein and not otherwise defined
shall have the meanings given in the Glossary.

THE COMPANY

GENERAL

Since the inception of the Predecessor Company in 1967, Clark/Bardes, the
wholly owned operating subsidiary of CBH, has designed, marketed and
administered insurance-financed employee benefit programs to large corporations
and community, regional and money center banks. The Company's clients use these
sophisticated programs primarily to offset the costs of employee benefit
liabilities and to supplement and secure benefits for key executives. The
Company's revenue is earned primarily from (i) commissions paid to Clark/Bardes
by the insurance companies that underwrite the policies underlying the Company's
programs and (ii) fees paid by clients in connection with initial program design
and the ongoing administrative services provided by the Company. Such
commissions and fees are usually long-term and recurring and are typically paid
annually and extend over a period of ten years or more after a sale.

The Company has experienced rapid growth since December 31, 1995. Effective
September 1, 1997, the Predecessor Company acquired substantially all the
assets, the client list and the book of business of Bank Compensation
Strategies, Inc. ("BCS"), a Minnesota based company that designed, marketed and
administered insurance-financed employee benefit programs and related
compensation, salary and benefit plans for community and regional banks. Through
sales generated by a group of specialized independent producers and the
integration of the assets acquired from BCS, the Company had a customer base of
over 1,100 clients as of June 30, 1998. Additionally, the inforce insurance
coverage underlying the Company's programs has increased from approximately
$26.2 billion as of December 31, 1995 to approximately $47.0 billion as of
December 31, 1997 ($43.9 billion excluding BCS), representing a compound annual
growth rate of 33.9% (29.4% excluding BCS). Income from operations has grown
from $2.2 million for the year ended December 31, 1995 to $5.2 million ($4.3
million excluding BCS) for the year ended December 31, 1997, representing a
compound annual growth rate of 53.5% (39.5% excluding BCS).

Management believes additional growth opportunities exist and that
Clark/Bardes' industry reputation, comprehensive in-house expertise,
sophisticated administrative systems, quality producers and strong relationships
with insurance companies provide the Company with distinct competitive
advantages. The Company intends to increase its market share by combining these
strengths with its core competencies of (i) designing proprietary programs
customized to meet clients' needs, (ii) providing outstanding client service,
and (iii) responding quickly to develop new products and services brought about
by regulatory and legislative changes. In addition, management believes that
Clark/Bardes can be a leader in the consolidation of the highly fragmented
insurance-financed employee benefit industry by offering liquidity, proprietary
benefit and program designs, and administrative support to the owners of smaller
firms. Finally, management intends to leverage the Company's core competencies
by entering into related markets such as compensation consulting and outsourcing
of benefit plan administration services. Additional costs for acquisition
activity, which include

1
<PAGE> 5

both financial expenditures and a reallocation of human resources, will require
substantial cash, and will be financed through cash from operations as well as
future debt and equity offerings by the Company.

The Company has developed the high quality administrative capabilities
necessary to service the executive benefit and insurance programs marketed by
the Company. At June 30, 1998, the Company administered approximately 187,000
benefit and insurance records for over 1,100 clients. At such date, the
insurance policies underlying the Company's employee benefit programs
represented a total of $48.2 billion of inforce insurance coverage. Management
believes that its strong relationship with insurance companies is due to the
Company's history of placing high quality, high persistency policies.

As of July 24, 1998, the Company was represented by 36 producers in 32
independently operated sales offices located in 28 cities throughout the United
States. These producers and the Company's management are expected to own an
aggregate of at least 47.7% of the outstanding Common Stock after giving effect
to the Offering. See "Principal and Selling Stockholders."

INDUSTRY

Beginning in the early 1980s, corporations and banks began using life
insurance to offset the costs of employee benefit liabilities with greater
frequency than in the past. Since that time, several large insurers, including
CIGNA, General American, Great-West, Life Investors and Nationwide, have
committed significant resources to develop business-owned life insurance
products for use in the insurance-financed employee benefit industry.

The use of insurance to offset the costs of employee benefit liabilities
historically has been affected by legislative change, both positive and
negative. In the past, legislation has reduced the usefulness of traditional
pension plans for highly-paid executives which, in turn, has increased the
attractiveness of insurance-financed non-qualified benefit plans. On the other
hand, legislation has limited interest deductibility on policy loans and
restricted the use of business-owned life insurance to employees, officers,
directors and 20-percent owners. The insurance-financed employee benefit
industry will continue to be affected significantly by legislative change.
Consequently, the Company believes that the ability to respond quickly to
legislative initiatives is a competitive advantage which can be used to increase
market share.

The insurance-financed employee benefit industry is highly fragmented.
Management believes that many once dominant producers and producer groups have
not kept pace with the numerous changes affecting the industry, and are
currently faced with a decreasing market share and the inability to provide
adequate administrative support to existing clients. The Company believes that
those producers and producer groups who have not made the necessary and
substantial investment in administrative systems and personnel will continue to
experience difficulties in satisfying their clients' growing needs and demands
and in meeting complex regulatory requirements. Finally, the Company also
believes that the ever-changing legislative and economic environments require
product development systems and personnel that are more sophisticated and cost
intensive than most producers and producer groups are able to justify
economically. Given the highly fragmented nature of the industry, management
expects significant consolidation to occur in the future.

STRATEGY

The Company's goal is to enhance its role as a provider of innovative
benefit and insurance solutions to corporations and banks throughout the United
States. To accomplish this goal, the Company intends to focus on the following:

- Leverage Market Reputation. The Company plans to leverage its reputation
as an industry leader to expand current operations and to enter into
related businesses.

- Design Innovative Programs. The Company intends to use its expertise in
program development to create and market innovative, customized programs
in order to facilitate the Company's penetration of new markets and to
satisfy the financial needs of its clients in a changing regulatory and
economic environment.

2
<PAGE> 6

- Diversify Business. The Company plans to identify and enter into related
businesses in which its core competencies can be profitably employed.
Examples of related businesses include compensation consulting,
outsourcing of benefit plan administrative services and marketing to the
non-profit sector.

- Enhance Administrative Capabilities. The Company intends to continue
distinguishing itself from its competitors by enhancing its
administrative capabilities, providing high quality administrative
services and improving operating margins.

- Pursue Consolidating Acquisitions. The Company intends to take advantage
of the expected consolidation in the insurance-financed employee benefit
market and implement the Company's design, distribution and service model
on a wide-scale basis so as to increase market share, acquire producer
and management talent, enter into new markets and improve operating
margins through integration efficiencies.

Subsequent to the completion of the Offering, the Company intends to
consider the adoption of a combination of plans to encourage ownership of Common
Stock among its employees, producers and directors so as to further align their
interests with those of CBH's stockholders. Examples of such plans include a
commission reinvestment plan for producers, providing the opportunity for
employees to purchase Common Stock through the Company's 401(k) plan and
compensating the non-employee members of the Board of Directors with Common
Stock.

The principal executive office of the Company is located at 2121 San
Jacinto Street, Suite 2200, Dallas, Texas 75201-7906, and its telephone number
is (214) 871-8717.

THE OFFERING

Common Stock offered by CBH......... 4,000,000 Shares

Common Stock to be outstanding after
the Offering........................ 8,059,677 Shares

Use of Proceeds..................... For the payment of certain indebtedness
of the Company, extinguishment of
warrants, consummation of a pending
acquisition, purchase of renewal
revenues from Mr. Wamberg and The
Wamberg Organization and general
corporate purposes, including working
capital and possible future
acquisitions. See "Use of Proceeds,"
"The Reorganization," "Pending
Acquisition" and "Certain Relationships
and Related Transactions."

Proposed Nasdaq National Market
Symbol.............................. CLKB

FORWARD-LOOKING STATEMENTS

All statements other than statements of historical fact included in this
Prospectus, including without limitation statements under "Risk Factors,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business," regarding the Company's financial position, business
strategy and plans and objectives of management of the Company for future
operations, are forward-looking statements. When used in this Prospectus, words
such as "anticipate," "believe," "estimate," "expect," "intend" and similar
expressions, as they relate to the Company or its management, identify
forward-looking statements. Such forward-looking statements are based on the
beliefs of the Company's management as well as assumptions made by and
information currently available to the Company's management. Actual results
could differ materially from those contemplated by the forward-looking
statements as a result of certain factors, such as those disclosed under "Risk
Factors," including but not limited to difficulties associated with changes in
tax legislation, dependence on key producers, the Company's dependence on
persistency of existing business, credit risk related to renewal revenue,
acquisition risks, competitive factors and pricing pressures, dependence

3
<PAGE> 7

on certain insurance companies, changes in legal and regulatory requirements and
general economic conditions. Such statements reflect the current views of the
Company's management with respect to future events and are subject to these and
other risks, uncertainties and assumptions relating to the operations, results
of operations, growth strategy and liquidity of the Company. All subsequent
written and oral forward-looking statements attributable to the Company or
persons acting on its behalf are expressly qualified in their entirety by this
paragraph.

4
<PAGE> 8

SUMMARY HISTORICAL AND PRO FORMA FINANCIAL INFORMATION

The following table sets forth summary historical financial information and
summary pro forma financial information of the Predecessor Company for the
periods ended and as of the dates indicated. The summary historical financial
information of the Predecessor Company set forth below as of and for each of the
years ended December 31, 1993, 1994, 1995, 1996 and 1997 was derived from the
audited financial statements of the Predecessor Company. The summary historical
financial information of the Predecessor Company set forth below as of and for
the six month periods ended June 30, 1997 and 1998 was derived from the
Predecessor Company's unaudited financial statements which, in the opinion of
management, reflect all normal recurring adjustments necessary for the fair
presentation of such financial statements. The results of operations for the six
month period ended June 30, 1998 are not necessarily indicative of the
Predecessor Company's results of operations to be expected for the full year.

The summary unaudited pro forma financial information of the Predecessor
Company set forth below as of and for the year ended December 31, 1997 and the
six month period ended June 30, 1997 gives effect to the acquisition by the
Predecessor Company of the business and substantially all the assets of BCS as
if such acquisition had occurred as of the beginning of the period presented for
the statement of income and other financial information, and as of the last day
of the period presented for the balance sheet information. The unaudited pro
forma income tax expense of the Predecessor Company set forth below as of and
for the year ended December 31, 1997 and the six month period ended June 30,
1998 gives effect to the incurrence of income taxes as if the Predecessor
Company had been taxed as a C corporation as of the beginning of the period
presented for the statement of income and other financial information, and as of
the last day of the period presented for the balance sheet information. The
summary unaudited pro forma financial information of the Predecessor Company set
forth below does not purport to represent what the Predecessor Company's results
of operations would have been if the BCS acquisition had actually occurred as of
such dates or what such results will be for any future periods.

The following historical and pro forma information of the Predecessor
Company should be read in conjunction with information included elsewhere
herein, including the financial statements and notes thereto and "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------------------------------------------------
1993 1994(1) 1995 1996 1997(2) 1997
ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL PRO FORMA
---------- ---------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME INFORMATION:
Total revenue.................. --(3) --(3) $26,972,732 $33,243,155 $49,455,419 $ 62,264,393
Commission and fee expense..... --(3) --(3) 16,890,862 21,049,704 32,439,092 41,171,626
---------- ---------- ----------- ----------- ----------- ------------
Net revenue.................. $7,913,173 $7,343,507 10,081,870 12,193,451 17,016,327 21,092,767
General and administrative
expense...................... 6,919,933 7,236,896 7,868,997 8,554,420 11,506,335 14,966,605
Amortization of intangibles.... -- -- -- -- 294,630 883,890
---------- ---------- ----------- ----------- ----------- ------------
Income (loss) from
operations.................. 993,240 106,611 2,212,873 3,639,031 5,215,362 5,242,272
Interest and dividend income... 142,777 171,454 200,577 121,814 188,597 216,600
Interest expense............... (49,367) (29,396) (6,903) -- (1,111,995) (2,651,995)
Miscellaneous income
(expense).................... (1,169) (100,498) (86,292) (25,416) 1,925 1,925
---------- ---------- ----------- ----------- ----------- ------------
Total other income
(expense)................... 92,241 41,560 107,382 96,398 (921,473) (2,433,470)
---------- ---------- ----------- ----------- ----------- ------------
Income (loss) before taxes..... 1,085,481 148,171 2,320,255 3,735,429 4,293,889 2,808,802
Income taxes(5)................ 70,517 9,842 102,459 181,444 60,000 62,000
---------- ---------- ----------- ----------- ----------- ------------
Net income (loss)......... $1,014,964 $ 138,329 $ 2,217,796 $ 3,553,985 $ 4,233,889 $ 2,746,802
========== ========== =========== =========== =========== ============
PRO FORMA INCOME TAX
EXPENSE:(6).................... $ 1,700,000
===========
PER SHARE INFORMATION:
Basic earnings (loss) per
share........................ $ .17 $ .02 $ .39 $ .75 $ 1.03 $ .67
Diluted earnings (loss) per
share........................ .17 .02 .39 .75 .99 .64
Dividends per share............ -- .02 .29 .36 1.32 .74

<CAPTION>
SIX MONTHS ENDED JUNE 30,
-----------------------------------------
1997 1997 1998
ACTUAL PRO FORMA ACTUAL
----------- ----------- -----------
<S> <C> <C> <C>
STATEMENT OF INCOME INFORMATION:
Total revenue.................. $11,283,184 $20,633,005 $28,984,959
Commission and fee expense..... 7,273,519 13,908,713 18,203,681
----------- ----------- -----------
Net revenue.................. 4,009,665 6,724,292 10,781,278
General and administrative
expense...................... 4,615,101 6,614,571 8,399,696(4)
Amortization of intangibles.... -- 441,945 441,945
----------- ----------- -----------
Income (loss) from
operations.................. (605,436) (332,224) 1,939,637
Interest and dividend income... 68,117 108,917 167,624
Interest expense............... -- (1,155,000) (1,803,750)
Miscellaneous income
(expense).................... 146 146 (141)
----------- ----------- -----------
Total other income
(expense)................... 68,263 (1,045,937) (1,636,267)
----------- ----------- -----------
Income (loss) before taxes..... (537,173) (1,378,161) 303,370
Income taxes(5)................ -- 2,000 14,000
----------- ----------- -----------
Net income (loss)......... $ (537,173) $(1,380,161) $ 289,370
=========== =========== ===========
PRO FORMA INCOME TAX
EXPENSE:(6).................... $ 120,000
===========
PER SHARE INFORMATION:
Basic earnings (loss) per
share........................ $ (.12) $ (.30) $ .09
Diluted earnings (loss) per
share........................ (.12) (.30) .09
Dividends per share............ -- -- --
</TABLE>

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<PAGE> 9

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED DECEMBER 31, JUNE 30,
--------------------------------------------------------------------- -------------------------
1993 1994(1) 1995 1996 1997 1997 1998
ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL
---------- ---------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET INFORMATION:
Cash and cash
equivalents.............. $2,242,595 $3,022,964 $ 3,968,307 $ 4,881,584 $ 3,782,941 $ 2,002,037 $ 6,305,094
Total assets............... 10,294,798 7,152,186 9,886,651 8,525,454 36,901,890 4,806,135 35,559,778
Current portion of
long-term
debt..................... -- -- -- -- 4,325,000 -- 4,325,000
Long-term debt, excluding
current portion.......... -- -- -- -- 32,838,143 -- 31,388,143
Total liabilities.......... 4,222,603 1,991,611 4,099,197 4,714,055 42,581,510 1,409,316 40,646,653
Stockholders' equity
(deficit)................ 6,072,195 5,160,575 5,787,454 3,811,399 (5,679,620)(7) 3,396,819 (5,086,875)(7)
</TABLE>

- ---------------

(1) The results of operations in 1994 reflect estimated lost renewal commissions
and fees of approximately $1 million due to the cessation of operations and
subsequent rehabilitation of Confederation Life Insurance Company.

(2) Includes the results of operations attributable to the assets acquired from
BCS for the period beginning September 1, 1997 (the effective date of the
BCS acquisition) and ended December 31, 1997, and reflects the consummation
of such acquisition.

(3) For the period presented, the Predecessor Company reported net revenue only.
Therefore, total revenue and commission and fee expense amounts are not
available.

(4) During the six months ended June 30, 1998, the Company recognized $525,000
of compensation expense related to the restructuring of the stock grant to
Melvin G. Todd, the President and Chief Executive Officer of each of CBH and
Clark/Bardes, and $200,000 of compensation expense for consulting services
related to the start-up health care business. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations -- Entry into
New Business."

(5) Except as noted, income tax expense reflects the Predecessor Company's
liability for state taxes. No provision for federal income taxes has been
made because the Predecessor Company elected to be treated as an S
corporation for federal income tax purposes prior to the Merger.

(6) Income tax is stated on a pro forma basis as if the Company had been treated
as a C corporation and taxed at a 39.6% blended rate for federal and state
income tax purposes. Pro forma net income after giving effect to this
adjustment would be $2,593,889 for the year ended December 31, 1997 and
$183,370 for the six months ended June 30, 1998.

(7) Reflects the decrease in stockholders' equity resulting from repurchases of
2.6 million shares of common stock by the Predecessor Company for aggregate
consideration of approximately $14.0 million and distributions totaling $4.3
million to stockholders in 1997.

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<PAGE> 10

RISK FACTORS

The following factors, which may affect the Company's current position and
future prospects, should be considered carefully in addition to the other
information contained in this Prospectus before purchasing the Common Stock
offered hereby.

FEDERAL TAX LEGISLATION

Federal tax laws create certain advantages for the purchase of life
insurance products by individuals and corporations, and therefore the life
insurance products underlying the benefit programs marketed by the Company are
vulnerable to adverse changes in tax legislation. These life insurance products
offer certain advantages, including that (i) the cash value of life insurance
policies grows on a tax deferred basis until withdrawal and (ii) the death
benefits of life insurance policies are received tax-free. In addition, loans
can be made from insurance policies (other than modified endowment policies)
without the imposition of tax.

Amendments to the federal tax laws enacted in 1996 and 1997 have reduced
the advantages of certain purchases of business-owned life insurance. With
limited exceptions, the 1996 amendment eliminated the ability to deduct interest
on loans against the cash value of life insurance policies. In 1997, legislation
imposed an interest disallowance rule that applied to all business-owned life
insurance except for policies placed on employees, officers, directors and
20-percent owners. The effect of the 1997 legislation was to reduce otherwise
allowable interest deductions by a ratio of unborrowed cash value to all other
assets.

In February 1998, the Clinton administration proposed eliminating the
"employee, officer and director" exception to the interest disallowance rule as
a part of its budget proposal. If enacted, such proposal would significantly
reduce the attractiveness of business-owned life insurance to companies that
traditionally have high debt/equity ratios. Banks, due to the depositor/debtor
relationship with their depositors, would in particular be negatively affected
by the administration's proposal. To the extent that any tax law amendment is
made retroactive, banks and other clients of the Company may lose the economic
advantages of maintaining the policies underlying their benefit plans. This
could result in significant surrenders of policies from which the Company
currently derives commission and fee revenue. Although management believes that
the Clinton administration's proposal, which is being considered in the current
session of Congress, does not have widespread support in Congress, the Company
is unable to predict the extent to which these or other amendments to existing
laws will be adopted or the effect that any such amendments will have on the
Company's business.

No assurances can be given that the administration's proposal or other
adverse tax proposals will not be enacted in the future. If the Code were to be
amended to eliminate or reduce the tax-deferred status of the insurance programs
marketed by the Company, the market demand for such programs would be materially
adversely affected.

DEPENDENCE ON KEY PRODUCERS

During 1997, approximately 59.0% of the Company's total revenue was derived
from the marketing activities of five offices operated by producers of the
Company. The largest of these offices, The Wamberg Organization, accounted for
approximately 26.3% of the Company's total revenue. The offices operated by
Steven Cochlan, Malcolm Briggs, Glen Blackwood and George Blaha collectively
accounted for 32.7% of the Company's total revenue. The producers operating
these offices have entered into producer agreements which include
non-competition provisions for a period of time after termination of the
agreements. The producer agreements are terminable by the Company or the
producers with either 90 or 180 days' written notice depending on the individual
agreement. From time to time producer relationships have been terminated by the
Company or by a producer and there is no assurance that such agreements will not
be terminated at any time by the Company or by a producer in the future or that
the non-competition provisions will be enforced in litigation. See
"Business -- Distribution."

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POTENTIAL LACK OF PERSISTENCY

Companies purchase business-owned life insurance policies primarily to
offset the costs of employee benefit liabilities. These policies usually show
high persistency rates, in part because the policies contain early \termination
penalties and the tax laws typically provide unfavorable tax consequences to the
corporate policyholders if the policies are terminated early. The high
persistency rates are also due to the purpose of the underlying life insurance
policies which are not typically used to fund benefits for specific individuals,
but rather to offset the purchaser's employee benefit costs on an aggregate
basis. Therefore, each policy is usually held to maturity (i.e., the death of
the individual insured covered by such policy), regardless of whether the
insured remains employed by the plan sponsor. High persistency rates are
advantageous to the Company since the Company receives a substantial portion of
its revenue in the form of renewal commissions and fees. If the business
purchaser chooses to let a policy lapse, the Company does not receive any
renewal commissions and fees for insurance policy servicing after the policy
lapses. Although the Company has historically experienced high persistency
rates, there can be no assurance that these high persistency rates will continue
in the future. See "Business -- Persistency."

DEPENDENCE ON KEY PERSONNEL

The Company's performance is substantially dependent on the performance of
its executive officers and key employees. The Company is dependent on the
ability to retain and motivate high quality personnel, especially its
management, producers and program development teams. The loss of the services of
any of its key employees, particularly W.T. Wamberg, Chairman of the Board of
Directors, Melvin G. Todd, President and Chief Executive Officer, and Richard C.
Chapman, Executive Vice President of Clark/Bardes, could have a material adverse
effect on the Company's business, financial condition and operating results.
There can be no assurance that the Company will be successful in retaining its
key personnel. See "Business -- Competition," "-- Employees" and "Management."

CREDIT RISK RELATED TO RENEWAL REVENUE

The Company designs and markets employee benefit programs typically
financed by policies underwritten by insurance companies. The commissions
payable to the Company for the sale of the insurance policies underlying the
Company's programs are usually long term and recurring in nature, typically paid
annually and extending over a period of ten years or more after the sale. Since
the Company derives a substantial portion of its total revenue from renewal
revenue, any financial difficulties encountered by, or the insolvency of, an
insurance company from whom renewal revenue is due could cause the Company to
realize less than the full amount of the renewal revenue to which it is
entitled. The Company's inability to collect renewal revenue could have a
material adverse effect on the Company's business, financial condition and
results of operations.

ACQUISITION RISKS

The Company completed the BCS acquisition in September 1997 and intends to
pursue acquisitions of other complementary businesses. The Company is currently
negotiating an acquisition of the assets of Schoenke & Associates Corporation
and its affiliated companies. There can be no assurance, however, that the
Company will be able to consummate or successfully integrate the operations of
these or future acquisitions within its own operations. Future acquisitions may
require substantial financial expenditures which will need to be financed
through cash from operations as well as future debt and equity offerings by the
Company. In addition, acquisitions involve significant risks, including: (i) the
diversion of management's time and attention to the negotiation of the
acquisition and to the assimilation of the businesses acquired, (ii) the need to
modify financial and other systems and add management resources, (iii) the
potential liabilities of the acquired businesses, (iv) unforeseen difficulties
in the acquired operations, and (v) the possible adverse short-term effects on
the Company's business, financial condition and results of operations.
Additional costs for acquisition activity, which include both financial
expenditures and a reallocation of human resources, will require substantial
cash, and will be financed through cash from operations as well as future debt
and equity offerings by the Company. Furthermore, there can be no assurance that
any business acquired in the future will achieve acceptable levels of revenue
and profitability or otherwise perform as expected. Other than as

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<PAGE> 12

described elsewhere in this Prospectus, the Company has no other arrangements or
understandings with any party with respect to any future acquisition. The
Company, however, continues to monitor further potential acquisition
opportunities. See "Pending Acquisition" and "Business -- Acquisition Strategy."

ABILITY TO GROW AND EXPAND PRODUCTS AND SERVICES

The Company's growth strategy relies in part on its ability to increase its
share of the insurance-financed employee benefit market. The Company intends to
increase its market share by (i) growing its client base in existing product
lines through superior sales, marketing, technology and administration, (ii)
developing new related products and services and (iii) acquiring competitors and
related businesses. There can be no assurance that the Company will have the
financial, managerial, administrative, marketing or other resources necessary to
achieve these growth and acquisition objectives and to overcome difficulties
associated with growth. If the Company were to encounter difficulties in
implementing the growth, development or expansion of its products and services,
such difficulties could have a material adverse effect on the Company's
business, financial condition and results of operations.

In addition, the success of the Company depends in large part on its
ability to attract and retain highly skilled managerial, sales and marketing
personnel. The Company also believes it will need to hire additional technical
personnel to further enhance and develop its programs and services. Competition
for such personnel is intense, and should the Company be unable to hire the
necessary personnel, the development and sale of new or enhanced programs and
services would likely be delayed or prevented. There can be no assurance that
the Company will be able to attract, integrate and retain such highly skilled
personnel. See "Business -- Strategy" and "Management."

COMPETITION

The marketing, design and administration of insurance-financed employee
benefit programs is highly competitive. The Company and its producers compete
with a large number of insurance agents, life insurance brokers, third party
administrators, producer groups and insurance companies, a number of whom have
greater financial resources and can offer alternative programs. The Company's
direct competitors include Compensation Resource Group, Harris Crouch Long Scott
and Miller, Management Compensation Group, Newport Group, TBG Financial and The
Todd Organization. Furthermore, competition exists for producers and other
marketers of life insurance products who have demonstrated sales ability.
National banks, with their existing depositor bases for financial services
products, may pose increasing competition in the future to companies who sell
life insurance products, including the Company. Recent United States Supreme
Court decisions have expanded the authority of national banks to sell life
insurance products. See "Business -- Competition."

Clark/Bardes competes for clients on the basis of reputation, client
service, program and product offerings and the ability to tailor insurance
products and administrative services to the specific needs of a client. Although
certain competitors have access to proprietary programs and products unavailable
to the Company and others offer lower prices for administrative services,
management believes that the Company is in a superior competitive position in
most, if not all, of the meaningful aspects of its business. Management does not
consider its direct competitors to be its greatest competitive threat. Rather,
management believes that the Company's most serious competitive threat will
likely come either from large, diversified financial entities which are willing
to expend significant resources to gain market share or from the larger
competitors that pursue an acquisition or consolidation strategy similar to that
of the Company. See "Business -- Competition."

DEPENDENCE ON INSURANCE COMPANIES

The Company depends heavily on a small number of insurance companies to
underwrite the insurance policies underlying the programs the Company markets.
More specifically, the Company currently utilizes approximately 14 life
insurance companies to underwrite substantially all of the business-owned life
insurance policies underlying the Company's programs of which seven insurance
companies, CIGNA, General American, Great-West, Life Investors, Nationwide,
Phoenix Home Life and West Coast Life, accounted for

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<PAGE> 13

approximately 78.9% of the Company's first year commission revenue for the year
ended December 31, 1997. There is no assurance that these relationships will
continue in the future or that the Company will be able to develop relationships
with other insurance companies.

PRIOR SUBCHAPTER S STATUS

Since 1989, the Predecessor Company elected to be treated for federal
income tax purposes as an S corporation under Subchapter S of the Code and as an
S corporation for certain state income tax purposes under comparable state tax
laws. As a result, the Predecessor Company's historical earnings since 1989 have
been taxed directly to the Predecessor Company's stockholders, at their
individual federal and state income tax rates, rather than to the Predecessor
Company (except for certain state taxes). Further, the Predecessor Company was
required to comply with various Code provisions (or comparable state law
provisions) regarding restrictions on the issuance of classes of stock,
organizational structure, stock ownership and other matters in order to maintain
the Predecessor Company's status as an S corporation. In the event that the
Predecessor Company failed to comply with any of the applicable Code provisions
(or comparable state law provisions) required to maintain S corporation status,
the Predecessor Company would have been subject to corporate level tax and,
therefore, could be required to incur a tax liability with respect to net income
received by the Predecessor Company during any year in which it did not qualify
as an S corporation. The Predecessor Company believes that it qualified as an S
corporation since its election and, therefore, should not be subject to
corporate level income tax (except in certain states) for any period since it
filed its election. No assurance can be given that the Internal Revenue Service
would not challenge the Predecessor Company's S corporation treatment and that a
court would not sustain such challenge. If it were determined that the
Predecessor Company did not qualify as an S corporation, the imposition of
corporate income taxes on the Predecessor Company could have a material adverse
effect on the Company's business, financial condition and results of operations.
The Company is currently seeking to obtain from the Existing Stockholders an
agreement to indemnify the Company under certain circumstances in the event that
the Company is subject to corporate income tax liability for the Predecessor
Company's failure to qualify as an S corporation. Such indemnification
obligation will be limited to the net tax refund, if any, received by the
Existing Stockholders. No assurance can be given that each Existing Stockholder
will enter into such an agreement. See "The Reorganization -- Termination of S
Corporation Status."

ERRORS AND OMISSIONS

The Company markets, designs and administers sophisticated financial
products. Certain of the Company's employees provide accounting, legal,
actuarial and other professional services in connection with marketing,
designing and administering these programs. The Company's clients rely upon the
services and interpretations rendered by the employees of the Company. To the
extent any services or interpretations provided by the Company's employees prove
to be inaccurate, the Company may be liable for the damages, and such liability,
to the extent not covered by existing insurance, could have a material adverse
effect on the Company's business, financial condition and results of operations.

PROTECTION OF PROPRIETARY PROGRAMS AND SERVICES

The Company regards certain of its programs and services as proprietary.
The Company relies primarily on a combination of intellectual property laws,
confidentiality agreements and contractual provisions to protect its proprietary
rights. Trade secret and copyright laws afford the Company limited protection.
Despite the Company's efforts to protect its proprietary rights, unauthorized
parties may attempt to copy aspects of the programs or services marketed by the
Company or to obtain and use information that the Company regards as
proprietary. There can be no assurance that the obligation to maintain the
confidentiality of the Company's proprietary information will prevent disclosure
of such information or that the proprietary programs marketed by the Company
will not be independently developed by the Company's competitors.

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<PAGE> 14

GOVERNMENT REGULATION

The insurance-financed employee benefit market is subject to extensive
regulation by state governments. Clark/Bardes operates in all 50 states through
licenses held by Clark/Bardes or by its producers. In addition, the Company
markets its insurance-financed employee benefit programs in the states of Ohio,
Pennsylvania and Texas through entities licensed in those states for which the
Company provides almost all services by means of administrative service
agreements. In general, state insurance laws establish supervisory agencies with
broad administrative and supervisory powers related to such matters as granting
and revoking licenses, approving individuals and entities to whom commissions
can be paid, licensing insurance agents, transacting business, approving policy
forms and regulating premium rates for some lines of business. Licensing laws
applicable to insurance marketing activities and the receipt of commissions vary
by jurisdiction and are subject to interpretation as to the application of such
requirements to specific activities or transactions. While the Company has not
encountered regulatory problems in the past, no assurance can be given that the
Company would be deemed to be in compliance with all applicable licensing
requirements of each jurisdiction in which the Company operates or that
additional licenses would not be required of the Company or that the Company or
its producers will not encounter regulatory problems in the future, including
any potential sanctions or penalties for operating in a jurisdiction without all
required licenses. See "Business -- Government Regulation" and "-- Ancillary
Business Arrangements."

While the federal government does not directly regulate the marketing of
most insurance products, certain products, such as variable life insurance, must
be registered under the federal securities acts and therefore the producers and
the entities selling such products must be registered with the NASD. The Company
markets such insurance products through an entity registered as a broker-dealer
and for which the Company provides almost all services by means of an
administration and services agreement. The broker-dealer is owned by W.T.
Wamberg (68.2%) and Malcolm Briggs (31.8%). Messrs. Wamberg and Briggs are
stockholders of the Company and Mr. Wamberg is Chairman of the Company. While
the Company has not encountered regulatory problems in the past, no assurance
can be given that the Company or its producers will not encounter regulatory
problems in the future. See "Business -- Government Regulation," "--Ancillary
Business Relationships" and "Management."

FLUCTUATIONS IN OPERATING RESULTS

The Company may experience significant fluctuations in its results of
operations, in particular when such results are compared on a consecutive
quarterly basis. In particular, the Company recognizes a significant increase in
both first year and renewal revenue in the fourth quarter due to the seasonality
of program implementation. In general, results of operations may fluctuate as a
result of a number of factors, including the introduction of new or enhanced
programs and services by the Company or its competitors, client acceptance or
rejection of new programs and services, program development expenses, timing of
significant sales, demand for the Company's administrative services,
competitive, legislative and regulatory conditions in the insurance-financed
employee benefit industry and general economic conditions. Many of these factors
are beyond the Company's control.

The sales cycles for the Company's programs and services are lengthy
(generally between twelve to eighteen months), with first year revenue being
derived from a small number of large cases and subject to a number of factors
beyond the Company's control. For these and other reasons, the revenue of the
Company is difficult to forecast, and the Company believes that comparing its
consecutive quarterly results of operations is not necessarily meaningful or
indicative of the results that the Company may achieve for any subsequent
period. Thus, past operating results should not be considered a reliable
indicator of future performance. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."

COMPETING PROGRAMS AND PRODUCTS

The Company's commission income and persistency rates are affected by
certain general economic conditions and market factors such as changes in
interest rates and stock prices. Interest rate fluctuations may have a
significant effect on the sale and profitability of certain insurance-financed
employee benefit programs

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<PAGE> 15

marketed by the Company. For example, if interest rates rise, competing products
may become more attractive to potential purchasers of the programs marketed by
the Company. Further, a prolonged decrease in stock prices may have a
significant effect on the sale and profitability of the Company's programs that
are linked to stock market indices. Thus, economic conditions and other factors
may negatively affect the popularity or economic attractiveness of the programs
marketed by the Company. There can be no assurance that the Company will be able
to compete with alternative products if economic conditions and inflationary
increases make the programs marketed by the Company financially unattractive.

RELIANCE ON INFORMATION PROCESSING SYSTEMS

The Company's ability to provide administrative services depends on its
capacity to store, retrieve, process and manage significant databases and expand
and upgrade periodically its information processing capabilities. Interruption
or loss of the Company's 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 the Company's business, financial condition and results of
operations. Although the Company has disaster recovery procedures in place and
insurance to protect against such contingencies, there can be no assurance that
such insurance or services will continue to be available at reasonable prices,
cover all such losses or compensate the Company for the possible loss of clients
occurring during any period that the Company is unable to provide services. See
"Business -- Administrative Services" and "-- Technology and Administration."

YEAR 2000 ISSUES

There is significant uncertainty regarding the potential costs and effects
of the Year 2000 problem because computer systems that do not properly recognize
date sensitive information when the year changes to 2000 could generate
erroneous data or altogether fail. Based on previous and ongoing internal
reviews, the Company believes that the computer equipment and software used by
the Company will function properly with respect to dates in the Year 2000 and
thereafter. However, third parties that have relationships with the Company,
including insurance companies and clients, may experience significant Year 2000
issues. These issues may have a serious adverse effect on the operations of such
third parties, including a shut-down of operations for a period of time, which
may, in turn, have a material adverse effect on the Company's business,
financial condition and results of operations. The Company has requested
information from third parties addressing any potential Year 2000 issues with
such third parties; however, the Company is not able to determine the extent to
which such third parties, such as insurance companies and clients, may
experience Year 2000 issues. Any Year 2000 compliance problem of either the
Company or third parties that have relationships with the Company could have a
material adverse effect on the Company's business, results of operation and
financial condition.

CONCENTRATION OF STOCK OWNERSHIP

Upon completion of the Offering, Mr. Wamberg will own approximately 24.1%
of the outstanding Common Stock (16.6% if the Underwriters' over-allotment
option is exercised in full) assuming the exercise of all rights to acquire
shares of Common Stock. As a result, Mr. Wamberg will be able to exercise
significant influence over all matters requiring stockholder approval, including
the election of directors and approval of significant corporate transactions.
Such concentration of ownership may also have the effect of delaying, preventing
or deterring a change in control of the Company. See "Principal and Selling
Stockholders."

RELATIONSHIP WITH MR. WAMBERG; CONFLICTS OF INTEREST

The Company has a contractual relationship with Mr. Wamberg, the Chairman
of the Board of CBH and Clark/Bardes, under a Principal Office Agreement
pursuant to which The Wamberg Organization markets, on behalf of the Company,
life insurance and administrative and consulting services, and the Company
furnishes to The Wamberg Organization marketing materials and concepts, program
design ideas, selected life insurance products, specimen plan documents and
administrative services. The Wamberg Organization, which

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<PAGE> 16

is controlled by Mr. Wamberg, accounted for approximately 26.3% of the Company's
total revenue in 1997. Pursuant to the terms of the Principal Office Agreement,
the Company paid approximately $7.8 million and $3.2 million to The Wamberg
Organization in 1997 and for the six months ended June 30, 1998, respectively,
for commissions and fees earned. In July 1998, the Predecessor Company, Mr.
Wamberg and The Wamberg Organization entered into an agreement which provides
for, among other things, a purchase of the renewal revenues due to Mr. Wamberg
and The Wamberg Organization in exchange for a cash payment of approximately
$7.4 million. In addition, the Company reimbursed Mr. Wamberg up to an aggregate
of $100,000 per calendar year for expenses incurred by Mr. Wamberg in his
capacity as the Chairman of each of CBH and Clark/Bardes. The interests of the
Company, on the one hand, and Mr. Wamberg and The Wamberg Organization, on the
other hand, may differ with respect to contractual agreements or other
transactions between the Company and Mr. Wamberg and The Wamberg Organization
resulting in certain conflicts of interest of Mr. Wamberg. See "Certain
Relationships and Related Transactions" and "Management -- Compensation of
Directors."

BENEFITS OF THE OFFERING TO THE EXISTING STOCKHOLDERS

Mr. Wamberg and the other current holders of Common Stock and options to
purchase Common Stock will benefit from the Offering in that a public market
will be created for their stock in the Company. The 1,938,518 shares of Common
Stock that will be owned by Mr. Wamberg after the Offering (1,338,518 shares of
Common Stock if the Underwriters' over-allotment option is exercised in full),
which were acquired at a cost of approximately $7.2 million (an average per
share price of $3.73), will have a value of approximately $24.2 million
(approximately $16.7 million if the Underwriters' over-allotment option is
exercised in full), assuming a market price equal to an assumed public offering
price of $12.50 (the midpoint of the Range). Mr. Wamberg will also realize a
substantial profit on any shares he sells in the Offering as a result of any
exercise of the Underwriters' over-allotment option. See "Principal and Selling
Stockholders."

ABSENCE OF PRIOR PUBLIC MARKET; DETERMINATION OF INITIAL PUBLIC OFFERING PRICE

Prior to the Offering, there has been no public market for the Common
Stock. Although the Company will apply to have the Common Stock approved for
quotation on the Nasdaq National Market, there can be no assurance that an
active public market will develop for the Common Stock or that the Common Stock
will trade in the public market subsequent to the Offering at or above the
initial public offering price. If no active public market for the Common Stock
develops, the trading price and liquidity of the Common Stock will be materially
and adversely affected. The initial public offering price will be determined by
negotiations among the Company and the Underwriters and may not be indicative of
the trading price for the Common Stock after the Offering.

VOLATILITY OF TRADING PRICE

The trading price of the Common Stock could fluctuate significantly in
response to variations in the Company's operating results, changes in earnings
estimates by securities analysts, changes in the Company's business and changes
in general market or economic conditions. In addition, in recent years the stock
market has experienced significant price and volume fluctuations. Such market
fluctuations could have a material adverse effect on the trading price of the
Common Stock.

SUBSTANTIAL DILUTION

Based on an offering price of $12.50 per share (the midpoint of the Range),
purchasers of Common Stock in the Offering will experience immediate and
substantial dilution in the net tangible book value of their shares. As of June
30, 1998, each share of Common Stock had a pro forma net tangible book value of
($5.90) after giving effect to the conversion of the 8.5% Convertible
Subordinates Notes into 813,559 shares of Common Stock at $5.90 per share. After
the Offering, the Stockholder Distribution Amount and the Reorganization, each
share of Common Stock will have a pro forma net tangible book value of $1.50 and
the pro forma dilution to purchasers of Common Stock in the Offering will be
$11.00 per share. See "Dilution."

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POSSIBLE DILUTIVE EFFECT OF ISSUANCE OF ADDITIONAL SHARES

After the Offering, the Company will have an aggregate of 9,740,323 shares
of Common Stock authorized but unissued and not reserved for specific purposes.
All of such shares may be issued without any action or approval by the Company's
stockholders. Management intends to pursue actively acquisitions of competitors
and related businesses and may issue shares of Common Stock in connection with
these acquisitions. In addition, 200,000 shares of Common Stock are reserved
under the Company's Employee Stock Purchase Plan (the "Stock Purchase Plan").
Further, the Company has reserved 2.0 million shares of Common Stock under the
Company's Stock Option Plan, as amended (the "Stock Option Plan"). As of the
date of the Offering, the Company has granted options exercisable for 690,853
shares of Common Stock. Any shares issued in connection with future
acquisitions, exercise of stock options or otherwise would further dilute the
percentage ownership of the Company held by the investors who purchase shares in
the Offering. See "Management -- Stock Option Plan," "-- Employee Stock Purchase
Plan" and "Description of Capital Stock."

SHARES ELIGIBLE FOR FUTURE SALE

Sales of a substantial number of shares of Common Stock in the open market
after the Offering, or the perception that such sales could occur, could
adversely affect the trading price of the Common Stock. Immediately after the
Offering, Mr. Wamberg will hold 1,938,518 shares, representing 24.1% of the
outstanding shares of Common Stock (16.6% if the Underwriters' over-allotment
option is exercised in full) and other principal stockholders will hold
1,123,702 shares, representing 13.0% of the outstanding shares of Common Stock.
See "Principal and Selling Stockholders." A decision by Mr. Wamberg or the other
stockholders to sell shares of Common Stock could adversely affect the trading
price of the Common Stock. Upon consummation of the Offering, the Company will
have 8,059,677 shares of Common Stock outstanding. Of these shares, all shares
sold in the Offering (other than shares, if any, purchased by affiliates of the
Company) will be freely tradable. Of the remaining 4,059,677 shares, 1,580,513
shares will be freely transferable and 2,479,164 shares will be "restricted
securities" as that term is defined in Rule 144 under the Securities Act ("Rule
144"). The executive officers, directors and principal stockholders of the
Company, including Mr. Wamberg, have agreed that, subject to certain
limitations, for a period of 180 days following the date of this Prospectus,
they will not, without the prior written consent of Bear, Stearns & Co. Inc.,
offer, sell or grant any option to purchase or otherwise dispose of Common Stock
or any securities convertible into or exchangeable for Common Stock. Two hundred
thousand shares of Common Stock are reserved under the Stock Purchase Plan, and
2.0 million shares of Common Stock have been reserved for issuance under the
Stock Option Plan, 690,853 of which are issuable upon exercise of options
granted at the date of this Prospectus, including options to purchase 199,163
shares exercisable as of the date of this Prospectus or that will become
exercisable within 60 days after the date of this Prospectus. The Company plans
to register on Form S-8 under the Securities Act the offering and sale of Common
Stock issuable under the Stock Option Plan and the Stock Purchase Plan. See
"Management -- Stock Option Plan," "-- Employee Stock Purchase Plan" and "Shares
Eligible For Future Sale."

ANTI-TAKEOVER CONSIDERATIONS

Certain provisions of CBH's Certificate of Incorporation (the "Certificate
of Incorporation"), CBH's Bylaws (the "Bylaws") and the Delaware General
Corporation Law ("DGCL") may have the effect of discouraging unsolicited
proposals for the acquisition of CBH. Pursuant to the Certificate of
Incorporation, CBH may issue shares of preferred stock in the future without
stockholder approval and upon such terms and conditions, and having such rights,
privileges and preferences, as the Board of Directors may determine. The rights
of the holders of Common Stock will be subject to, and may be adversely affected
by, any such preferred stock. The issuance of preferred stock, while providing
desirable flexibility in connection with possible acquisitions, financings and
other corporate transactions, could have the effect of discouraging a third
party's acquisition of a majority of the Common Stock. CBH has no present plans
to issue any shares of preferred stock. In addition, CBH has adopted a
stockholder rights plan that could further discourage attempts to acquire
control of CBH. CBH's Bylaws provide that stockholders are entitled to call a
special meeting only by a vote of holders of at least 66 2/3% of the total votes
eligible to be cast by holders of Common Stock. In

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<PAGE> 18

addition, the ability of the stockholders to consent in writing to the taking of
any action in lieu of a meeting is denied. Any changes to provisions of the
Certificate of Incorporation must be approved by a majority of the Board of
Directors and, in certain cases, thereafter must be approved by a vote of
holders of at least 66 2/3% of the total votes eligible to be cast by holders of
Common Stock. The Bylaws may be amended or repealed by the affirmative vote of a
majority of the directors or the affirmative vote of the holders of at least
66 2/3% of the votes eligible to be cast by holders of Common Stock with respect
to such amendment or repeal. In addition, the DGCL restricts certain business
combinations and provides that directors serving on staggered boards of
directors may be removed only for cause unless the certificate of incorporation
otherwise provides. Finally, the Bylaws provide that directors can be removed
only for cause by a vote of holders of at least 66 2/3% of the total votes
eligible to be cast by holders of Common Stock. See "Description of Capital
Stock -- Anti-Takeover Considerations" and "-- Preferred Stock."

ABSENCE OF DIVIDENDS

Following the Offering, CBH intends to retain any future earnings to fund
growth and does not anticipate paying any cash dividends in the foreseeable
future. See "Dividend Policy."

THE REORGANIZATION

OVERVIEW

CBH and Clark/Bardes were formed in June 1998 in contemplation of the
Offering and in order to effect the Merger. CBH was formed to be a holding
company of Clark/Bardes and is not engaged in any business. Clark/Bardes was
formed to be the operating company of CBH and is the successor corporation to
Clark/ Bardes, Inc., a Texas corporation formed in 1967.

In connection with the Offering, each of CBH, Clark/Bardes and the
Predecessor Company entered into a reorganization agreement (the "Reorganization
Agreement") which provides for a two step merger resulting in the Predecessor
Company merging with and into Clark/Bardes (the "Merger") with each stockholder
of the Predecessor Company (the "Existing Stockholders") receiving one-half of
one share of Common Stock for each share of Predecessor Company common stock
held by such Existing Stockholder and contemplates a series of transactions,
including (i) a restructuring of Clark/Bardes' 10.5% Senior Secured Notes due
August 2002 and 11.0% Second Priority Senior Secured Notes due August 2004 (such
notes are collectively referred to as the "Restructured Notes"), (ii) the
conversion of Clark/Bardes' 8.5% Convertible Subordinated Notes due September
2007 into 813,559 shares of Common Stock, (iii) an extinguishment by the Company
of warrants representing the right to purchase 1,525,424 shares of common stock
of the Predecessor Company (such warrants are collectively referred to as the
"Warrants"), (iv) a purchase of renewal revenue due to Mr. Wamberg and The
Wamberg Organization, (v) the incorporation of a Texas entity formed for the
purpose of marketing certain insurance products within the state of Texas, and
(vi) the termination of certain agreements (all the foregoing transactions,
including the Merger, are collectively referred to as the "Reorganization"). The
Merger, which will be consummated prior to the consummation of the Offering,
will be treated for accounting purposes as a reorganization of entities under
common control utilizing historical cost which is similar to pooling of
interests. The Merger should qualify as a "reorganization" under Section 368(a)
of the Code. Accordingly, the Company should generally recognize no gain for
federal income tax purposes pursuant to the Merger. The Company's counsel will
render a tax opinion to that effect. See "Dilution" and "Certain Relationships
and Related Transactions."

TERMINATION OF S CORPORATION STATUS

15
<PAGE> 19

consummation of the Merger, Clark/Bardes became subject to federal and state
income taxation as a C corporation. At that time, Clark/Bardes recorded a
deferred tax liability on its balance sheet, the amount of which depended upon
timing differences between tax and book accounting. If the Predecessor Company's
S corporation status had terminated as of December 31, 1997, the amount of the
deferred tax liability would have been approximately $1.2 million. See
"Capitalization."

In connection with the termination of the Predecessor Company's S
corporation status, the board of directors of the Predecessor Company declared a
dividend to the stockholders of record on July 31, 1998 in an amount equal to
$3.2 million, or $1.00 per share (the "Stockholder Distribution Amount"). The
Stockholder Distribution Amount may be (i) decreased if the amount of the
Predecessor Company's previously earned and undistributed taxable income
immediately prior to the consummation of the Merger (such amount, the "AAA
Amount") is less than the Stockholder Distribution Amount or (ii) increased if
the Stockholder Distribution Amount is less than 42.6% of the taxable income for
the period beginning January 1, 1998 and ending on the date the Merger is
consummated. The Company anticipates that the Stockholder Distribution Amount
will be paid prior to the Merger.

In connection with the Merger, CBH, Clark/Bardes and the Predecessor
Company are currently seeking to obtain from the Existing Stockholders a tax
indemnification agreement (the "Tax Agreement") relating to their respective
income tax liabilities. Because Clark/Bardes will be fully subject to corporate
income taxation after termination of the Predecessor Company's S corporation
status, any reallocation of income and deductions between the period during
which the Predecessor Company was treated as an S corporation and the period
during which Clark/Bardes will be subject to corporate income taxation may
increase the taxable income of one party while decreasing that of another party.
Accordingly, the Tax Agreement is intended to ensure that taxes are borne either
by Clark/Bardes or the Existing Stockholders to the extent that such parties
received the related income. The Tax Agreement will generally provide that, if
an adjustment is made to the taxable income of Clark/Bardes for a year in which
the Predecessor Company was treated as an S corporation, each party will
indemnify the other against any increase in the indemnified party's income tax
liability, including interest and penalties, with respect to such tax year to
the extent such increase results in a related decrease in the income tax
liability, including interest and penalties, of the indemnifying party (whether
with respect to the year of the adjustment or over future years). The Tax
Agreement will also provide that the Existing Stockholders will indemnify CBH,
Clark/Bardes and the Predecessor Company for any income tax liability incurred
as a result of a determination that the Predecessor Company did not qualify as
an S corporation. Such indemnification obligation will be limited to the net tax
refund, if any, received by the Existing Stockholders.

Clark/Bardes will also indemnify the Existing Stockholders for all taxes
imposed upon them as the result of an indemnification payment under the Tax
Agreement. Any payment made by Clark/Bardes to the Existing Stockholders
pursuant to the Tax Agreement may be considered by the Internal Revenue Service
or state taxing authorities to be non-deductible by Clark/Bardes for income tax
purposes. No assurance can be given that each Existing Stockholder will enter
into the Tax Agreement, in which case neither such Existing Stockholder nor
Clark/Bardes shall be subject to the indemnification obligations under the Tax
Agreement relating to such Existing Stockholder. None of the parties'
obligations under the Tax Agreement will be secured, and, therefore, there can
be no assurance that Clark/Bardes or the Existing Stockholders will have funds
available to make any payments which may become due under the Tax Agreement.

16
<PAGE> 20

PENDING ACQUISITION

On May 29, 1998, the Predecessor Company entered into a letter of intent
with Schoenke & Associates Corporation, Schoenke & Associates Securities
Corporation, Schoenke & Associates of Hawaii, L.P. (collectively, the "Schoenke
Companies") and Raymond F. Schoenke, Jr., which provides for, among other
things, (i) the acquisition by Clark/Bardes of the businesses and substantially
all of the assets of the Schoenke Companies, (ii) the execution of a
non-competition agreement by each of Mr. Schoenke and the Schoenke Companies,
and (iii) the Schoenke Companies' agreement to deal exclusively with
Clark/Bardes (such transactions, the "Pending Acquisition"). The purchase price
of the Pending Acquisition, which is subject to change based on Clark/Bardes'
due diligence review, is $17.0 million, of which $1.5 million was paid as a
secured refundable deposit and $15.5 million is payable in cash at the closing
of the Pending Acquisition. The consummation of the Pending Acquisition is
subject to numerous conditions, including the consummation of the Offering, the
approval of Clark/Bardes' board of directors, obtaining all requisite regulatory
approvals and the satisfactory completion of Clark/Bardes' due diligence review.
The consummation of the Pending Acquisition must occur on or prior to October 1,
1998. The letter of intent expressly allows the Predecessor Company to enter
into and consummate the Merger. Management believes that the consummation of the
Pending Acquisition is probable. The Pending Acquisition will be accounted for
using the purchase method.

USE OF PROCEEDS

The net proceeds to CBH from the sale of 4,000,000 shares of Common Stock
offered by CBH will be approximately $45.8 million at an assumed public offering
price of $12.50 per share (the midpoint of the Range), after deducting estimated
underwriting discounts and commissions and estimated offering expenses payable
by CBH. CBH intends to apply the proceeds as follows: (i) approximately $1.0
million in partial payment of Clark/Bardes' 8.5% Medium Term Notes due September
2001; (ii) approximately $6.5 million to extinguish the Warrants; (iii)
approximately $15.5 million to consummate the Pending Acquisition; (iv)
approximately $7.4 million for the purchase of renewal revenue due to Mr.
Wamberg and The Wamberg Organization; and (v) approximately $15.4 million for
general corporate purposes, including working capital and possible future
acquisitions. See "The Reorganization," "Pending Acquisition" and "Certain
Relationships and Related Transactions." Pending such uses, CBH intends to
invest the net proceeds of the Offering in short-term, investment grade,
interest bearing securities.

Mr. Wamberg has granted the Underwriters an over-allotment option to
purchase 600,000 shares of Common Stock. CBH will not receive any proceeds from
the exercise of the over-allotment option. The net proceeds to be received by
Mr. Wamberg, if the over-allotment option is exercised in full, will be
approximately $7.0 million (assuming the midpoint of the Range) after deducting
underwriting discounts and commissions payable by Mr. Wamberg. See "Principal
and Selling Stockholders."

DIVIDEND POLICY

Following the Offering, CBH intends to retain any future earnings to fund
growth and does not anticipate paying any cash dividends in the foreseeable
future. Any future determination as to CBH's dividend policy will be made at the
discretion of the Board of Directors and will depend on a number of factors,
including restrictions on distributions imposed by the Restructured Notes and
the DGCL, future earnings, capital requirements, financial condition and future
prospects of the Company and such other factors as the Board of Directors may
deem relevant. See "Description of Capital Stock" and "Management's Discussion
and Analysis of Financial Condition and Results of Operation -- Liquidity and
Capital Resources."

17
<PAGE> 21

DILUTION

The pro forma net tangible consolidated book value of CBH as of June 30,
1998 was $(23,933,742), or $(5.90) per share. "Pro forma net tangible book value
per share" represents the amount of total assets less total liabilities and
intangible assets after the 8.5% Convertible Subordinated Notes are converted
into 813,559 shares of Common Stock at $5.90 per share divided by the number of
shares of Common Stock then outstanding. Without taking into account any other
changes in pro forma net tangible book value after June 30, 1998, other than to
give pro forma effect to (i) the payment of the Stockholder Distribution Amount,
(ii) the Reorganization and (iii) the receipt by CBH of the estimated net
proceeds from the sale of the shares of Common Stock offered hereby at an
assumed public offering price of $12.50 per share (the midpoint of the Range),
the pro forma net tangible book value of CBH as of June 30, 1998 would have been
$12,082,360, or $1.50 per share. This represents an immediate increase of pro
forma net tangible book value of $7.40 per share to the Existing Stockholders
and an immediate dilution of $11.00 per share to new investors at the assumed
initial public offering price. The following table illustrates this per share
dilution:

<TABLE>
<S> <C> <C>
Assumed initial public offering price....................... $12.50
Net tangible book value as of June 30, 1998............... (5.90)
Decrease due to payment of Stockholder Distribution
Amount................................................. (.79)
Increase due to Reorganization and Offering............... 8.19
------
Pro forma net tangible book value after the Offering........ 1.50
------
Dilution to new investors................................... $11.00
======
</TABLE>

The following table summarizes, on a pro forma basis as of June 30, 1998
after giving effect to the Reorganization and the restructuring of a grant of
Common Stock to Mr. Todd, (see "Certain Relationships and Related
Transactions -- Restructuring of the Grant of Stock to Melvin Todd") the
difference between the Existing Stockholders and the investors with respect to
the number of shares issued by CBH and owned by them, the total consideration
received for those shares and the average price paid per share before deduction
of the estimated underwriting discounts and commissions and offering expenses
payable by CBH:

<TABLE>
<CAPTION>
SHARES OF COMMON TOTAL
STOCK ACQUIRED CONSIDERATION AVERAGE
------------------- --------------------- PRICE PER
NUMBER PERCENT AMOUNT PERCENT SHARE
--------- ------- ----------- ------- ---------
<S> <C> <C> <C> <C> <C>
Existing Stockholders.............. 4,059,677 50.4% $10,163,631 16.9% $ 2.50
New Investors...................... 4,000,000 49.6 50,000,000 83.1 12.50
--------- ----- ----------- ----- ------
Total.................... 8,059,677 100.0% $60,163,631 100.0% $ 7.46
========= ===== =========== ===== ======
</TABLE>

The computations in the table set forth above assume no exercise of
outstanding stock options. On the date of this Prospectus, there were 690,853
shares of Common Stock subject to options previously granted at a weighted
average exercise price of $9.74 per share. Any shares issued in connection with
acquisitions, exercise of stock options or otherwise would further dilute the
percentage ownership of the Company held by the investors who purchase shares in
the Offering. See "Management -- Stock Option Plan" and "-- Employee Stock
Purchase Plan."

18
<PAGE> 22

CAPITALIZATION

The following table sets forth (i) the capitalization of the Predecessor
Company as of June 30, 1998, and (ii) the pro forma consolidated capitalization
of CBH as of such date, as adjusted to give effect to: (a) the sale by CBH of
4,000,000 shares of Common Stock pursuant to the Offering at an assumed public
offering price of $12.50 per share (the midpoint of the Range), after deducting
the estimated underwriting discount and estimated offering expenses payable by
CBH; (b) the application of the estimated net proceeds therefrom; (c) the
Reorganization; and (d) the payment of the Stockholder Distribution Amount.

<TABLE>
<CAPTION>
JUNE 30, 1998
-----------------------------
PREDECESSOR PRO FORMA CBH
COMPANY AS ADJUSTED
------------ -------------
<S> <C> <C>
Current portion of long-term debt........................... $ 4,325,000 $ 3,991,667(1)

8.5% Medium Term Notes due September 2001................. 4,275,000 3,608,333(1)
10.5% Senior Secured Notes due August 2002................ 10,150,000 10,150,000
11.0% Second Priority Senior Secured Notes due August
2004................................................... 8,900,000 8,900,000
8.5% Convertible Subordinated Notes due September 2007.... 4,800,000 --(2)
AAA Distribution Notes due November 2007.................. 3,263,143 3,263,143
------------ -----------
Long-term debt, excluding current portion................... 31,388,143 25,921,476
Stockholders' equity:
Common Stock ($.01 par value, 20,000,000 shares
authorized, 5,983,248 shares issued and outstanding and
9,983,248 shares issued and outstanding, as
adjusted(3))........................................... 5,463,631 99,832(6)
Paid-in capital........................................... -- 44,757,945(4)(6)
Retained earnings......................................... 3,378,044 --(5)
Treasury stock (2,737,130 shares, at cost, and 1,923,571
shares, at cost, as adjusted).......................... (13,928,550) (9,128,550)(2)
------------ -----------
Total stockholders' equity (deficit).............. (5,086,875) 35,729,227
------------ -----------
Total capitalization.............................. $ 30,626,268 $65,642,370
============ ===========
</TABLE>

- ---------------

(1) Represents the use of proceeds for the prepayment of $1.0 million aggregate
principal amount of Clark/Bardes 8.5% Medium Term Notes due September 2001.
The prepayment is assumed to be applied equally to remaining principal
payments.

(2) The 8.5% Convertible Subordinated Notes due September 2007 may be prepaid at
any time at the option of Clark/Bardes. Clark/Bardes intends to provide BCS,
the holder of such notes, with the required notice of prepayment immediately
after the consummation of the Offering. BCS will then have the right to
convert the notes into 813,559 shares of Common Stock at $5.90 per share.
Management anticipates that all such notes will be converted into shares of
Common Stock.

(3) Excludes 200,000 shares of Common Stock reserved under the Stock Purchase
Plan, and 2.0 million shares reserved for issuance under the Stock Option
Plan, pursuant to which options covering 690,853 shares of Common Stock are
granted but unexercised at a weighted average exercise price of $9.74 per
share as of the date of this Prospectus.

(4) Represents the payment to be made in consideration of extinguishing the
Warrants assuming the mid-point of the Range.

(5) Represents the payment of the Stockholder Distribution Amount and the
reclassification of remaining undistributed earnings to paid-in capital.

(6) Represents the assumed net proceeds of the Offering after deducting
underwriting discount and estimated expenses of the Offering.

19
<PAGE> 23

SELECTED HISTORICAL AND PRO FORMA FINANCIAL INFORMATION

The following table sets forth selected historical financial information and
selected pro forma financial information of the Predecessor Company for the
periods ended and as of the dates indicated. The selected historical financial
information of the Predecessor Company set forth below as of and for each of the
five years ended December 31, 1993, 1994, 1995, 1996 and 1997 was derived from
the audited financial statements of the Predecessor Company. The selected
historical financial information of the Predecessor Company set forth below as
of and for the six month periods ended June 30, 1997 and 1998 was derived from
the Predecessor Company's unaudited financial statements which, in the opinion
of management, reflect all normal recurring adjustments necessary for the fair
presentation of such financial statements. The results of operations for the six
month period ended June 30, 1998 are not necessarily indicative of the
Predecessor Company's results of operations to be expected for the full year.

The selected unaudited pro forma financial information of the Predecessor
Company set forth below as of and for the year ended December 31, 1997 and the
six month period ended June 30, 1997 gives effect to the acquisition by the
Predecessor Company of the business and substantially all the assets of BCS as
if such acquisition had occurred as of the beginning of the period presented for
the statement of income and other financial information, and as of the last day
of the period presented for the balance sheet information. The unaudited pro
forma income tax expense of the Predecessor Company set forth below as of and
for the year ended December 31, 1997 and the six month period ended June 30,
1998 gives effect to the incurrence of income taxes as if the Predecessor
Company had been taxed as a C corporation as of the beginning of the period
presented for the statement of income and other financial information, and as of
the last day of the period presented for the balance sheet information. The
selected unaudited pro forma financial information of the Predecessor Company
set forth below does not purport to represent what the Predecessor Company's
results of operations would have been if the BCS acquisition had actually
occurred as of such dates or what such results will be for any future periods.

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------------------------------------------------
1993 1994(1) 1995 1996 1997 1997
ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL PRO FORMA
----------- ----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME INFORMATION:
Total revenue..................... --(3) --(3) $26,972,732 $33,243,155 $49,455,419 $62,264,393
Commission and fee expense........ --(3) --(3) 16,890,862 21,049,704 32,439,092 41,171,626
----------- ----------- ----------- ----------- ----------- ------------
Net revenue..................... $ 7,913,173 $ 7,343,507 10,081,870 12,193,451 17,016,327 21,092,767
General and administrative
expense......................... 6,919,933 7,236,896 7,868,997 8,554,420 11,506,335 14,966,605
Amortization of intangibles....... -- -- -- -- 294,630 883,890
----------- ----------- ----------- ----------- ----------- ------------
Income (loss) from operations... 993,240 106,611 2,212,873 3,639,031 5,215,362 5,242,272
Interest and dividend income...... 142,777 171,454 200,577 121,814 188,597 216,600
Interest expense.................. (49,367) (29,396) (6,903) -- (1,111,995) (2,651,995)
Miscellaneous income (expense).... (1,169) (100,498) (86,292) (25,416) 1,925 1,925
----------- ----------- ----------- ----------- ----------- ------------
Total other income (expense).... 92,241 41,560 107,382 96,398 (921,473) (2,433,470)
----------- ----------- ----------- ----------- ----------- ------------
Income (loss) before taxes........ 1,085,481 148,171 2,320,255 3,735,429 4,293,889 2,808,802
Income taxes(5)................... 70,517 9,842 102,459 181,444 60,000 62,000
----------- ----------- ----------- ----------- ----------- ------------
Net income (loss)............ $ 1,014,964 $ 138,329 $ 2,217,796 $ 3,553,985 $ 4,233,889 $ 2,746,802
=========== =========== =========== =========== =========== ============
PRO FORMA INCOME TAX EXPENSE:(6)... $ 1,700,000(6)
===========
PER SHARE INFORMATION:
Basic earnings (loss) per share... $ .17 $ .02 $ .39 $ .75 $ 1.03 $ .67
Diluted earnings (loss) per
share........................... .17 .02 .39 .75 .99 .64
Dividends per share............... $ -- $ .02 $ .29 $ .36 $ 1.32 $ .74
BALANCE SHEET INFORMATION:
Cash and cash equivalents......... $ 2,242,595 $ 3,022,964 $ 3,968,307 $ 4,881,584 $ 3,782,941
Total assets...................... 10,294,798 7,152,186 9,886,651 8,525,454 36,901,890
Current portion of long-term
debt............................ -- -- -- -- 4,325,000
Long-term debt, excluding current
portion......................... -- -- -- -- 32,838,143
Total liabilities................. 4,222,603 1,991,611 4,099,197 4,714,055 42,581,510
Stockholders' equity (deficit).... 6,072,195 5,160,575 5,787,454 3,811,399 (5,679,620)(7)

<CAPTION>
SIX MONTHS ENDED JUNE 30,
---------------------------------------
1997 1997 1998
ACTUAL PRO FORMA ACTUAL
----------- ----------- -----------
<S> <C> <C> <C>
STATEMENT OF INCOME INFORMATION:
Total revenue..................... $11,283,184 $20,633,005 $28,984,959
Commission and fee expense........ 7,273,519 13,908,713 18,203,681
----------- ----------- -----------
Net revenue..................... 4,009,665 6,724,292 10,781,278
General and administrative
expense......................... 4,615,101 6,614,571 8,399,696(4)
Amortization of intangibles....... -- 441,945 441,945
----------- ----------- -----------
Income (loss) from operations... (605,436) (332,224) 1,939,637
Interest and dividend income...... 68,117 108,917 167,624
Interest expense.................. -- (1,155,000) (1,803,750)
Miscellaneous income (expense).... 146 146 (141)
----------- ----------- -----------
Total other income (expense).... 68,263 (1,045,937) (1,636,267)
----------- ----------- -----------
Income (loss) before taxes........ (537,173) (1,378,161) 303,370
Income taxes(5)................... -- 2,000 14,000
----------- ----------- -----------
Net income (loss)............ $ (537,173) $(1,380,161) $ 289,370
=========== =========== ===========
PRO FORMA INCOME TAX EXPENSE:(6)... $ 120,000(6)
===========
PER SHARE INFORMATION:
Basic earnings (loss) per share... $ (.12) $ (.30) $ .09
Diluted earnings (loss) per
share........................... (.12) (.30) .09
Dividends per share............... $ -- $ -- $ --
BALANCE SHEET INFORMATION:
Cash and cash equivalents......... $ 2,002,037 $ 6,305,094
Total assets...................... 4,806,135 35,559,778
Current portion of long-term
debt............................ -- 4,325,000
Long-term debt, excluding current
portion......................... -- 31,388,143
Total liabilities................. 1,409,316 40,646,653
Stockholders' equity (deficit).... 3,396,819 (5,086,875)(7)
</TABLE>

- ---------------

(3) For the period presented, the Predecessor Company reported net revenue only.
Therefore, total revenue and commission and fee expense amounts are not
available.

(4) During the six months ended June 30, 1998, the Company recognized $525,000
of compensation expense related to the restructuring of the stock grant to
Mr. Todd and $200,000 of compensation expense for consulting services
related to the start-up health care business. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations -- Entry into
New Business."

20
<PAGE> 24

UNAUDITED PRO FORMA FINANCIAL INFORMATION

The following table sets forth unaudited pro forma financial information of
the Company for the periods ended and as of the dates indicated. The unaudited
pro forma financial information of the Company set forth below was derived from
the audited and unaudited financial statements of the Predecessor Company and
BCS, which are included elsewhere in this Prospectus.

The unaudited pro forma balance sheet has been prepared to give effect to
the Reorganization, the payment of the Stockholder Distribution Amount and the
Offering as though each had occurred as of June 30, 1998. The unaudited pro
forma statements of income have been prepared to give effect to (i) the payment
of the Stockholder Distribution Amount, (ii) the Reorganization, (iii) the
Offering, and (iv) for the year ended December 31, 1997, the BCS acquisition, as
if such transactions had occurred as of the beginning of each period presented.
The unaudited pro forma financial information of the Company set forth below is
based upon available information and certain assumptions that the Company
believes are reasonable. The unaudited pro forma financial information of the
Company set forth below does not purport to represent either what the Company's
financial position or results of operations actually would have been if the
transactions had actually occurred as of such dates or what such results will be
for any future periods.

The following pro forma information of the Company should be read in
conjunction with information included elsewhere herein, including, the financial
statements and notes thereto and "Management's Discussion and Analysis of
Financial Condition and Results of Operations."

21
<PAGE> 25

UNAUDITED PRO FORMA BALANCE SHEET
AS OF JUNE 30, 1998

ASSETS

<TABLE>
<CAPTION>
THE COMPANY
ADJUSTMENTS PRO FORMA
FOR THE ADJUSTED FOR
STOCKHOLDER THE STOCKHOLDER
DISTRIBUTION DISTRIBUTION ADJUSTMENTS THE COMPANY
PREDECESSOR AMOUNT AND THE AMOUNT AND THE FOR THE PRO FORMA
COMPANY REORGANIZATION REORGANIZATION OFFERING AS ADJUSTED
----------- -------------- --------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents............... $ 6,305,094 $ (1,000,000)(1)
(3,200,000)(2)
(6,533,898)(3)
(7,400,000)(4) $(11,828,804) $45,750,000(6) $33,921,196
Accounts and notes receivable:
Trade................................. 2,386,839 2,386,839 2,386,839
Affiliates............................ 284,787 284,787 284,787
Notes receivable...................... 388,871 388,871 388,871
------------ ------------ ------------ ----------- -----------
Total accounts and notes
receivable...................... 3,060,497 -- 3,060,497 -- 3,060,497
Other current assets...................... 231,310 231,310 231,310
Accrued interest receivable............... 68,674 68,674 68,674
------------ ------------ ------------ ----------- -----------
Total current assets.............. 9,665,575 (18,133,898) (8,468,323) 45,750,000 37,281,677
Equipment and leasehold improvements,
net..................................... 747,336 747,336 747,336
Intangible assets, net.................... 23,646,867 23,646,867 23,646,867
Deferred commission expense............... -- 7,400,000(4) 7,400,000 7,400,000
Deposit on Pending Acquisition............ 1,500,000 1,500,000 1,500,000
------------ ------------ ------------ ----------- -----------
Total assets...................... $ 35,559,778 $(10,733,898) $ 24,825,880 $45,750,000 $70,575,880
============ ============ ============ =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable........................ $ 820,927 $ 820,927 $ 820,927
Commissions and fees payable............ 1,864,102 1,864,102 1,864,102
Dividends payable....................... -- -- --
Accrued expenses and other
liabilities........................... 1,802,140 1,802,140 1,802,140
Accrued interest payable................ 446,341 446,341 446,341
Current portion of long-term debt....... 4,325,000 $ (333,333)(1) 3,991,667 3,991,667
------------ ------------ ------------ ----------- -----------
Total current liabilities......... 9,258,510 (333,333) 8,925,177 -- 8,925,177
Long-term debt, excluding current
portion................................. 31,388,143 (666,667)(1) --
(4,800,000)(5) 25,921,476 25,921,476
------------ ------------ ------------ ----------- -----------
Total liabilities................. 40,646,653 (5,800,000) 34,846,653 -- 34,846,653
Stockholders' equity (deficit):
Common Stock............................
Authorized shares -- 20,000,000; $0.01
par value; 5,983,248 issued and
outstanding shares and 9,983,248
issued and outstanding shares, as
adjusted............................ 5,463,631 (100,000)(3)
(5,303,799)(6) 59,832 40,000(7) 99,832
Paid-in capital......................... -- (6,433,898)(3)
5,303,799(6)
178,044(2) (952,055) 45,710,000(7) 44,757,945
Retained earnings....................... 3,378,044 (3,200,000)(2)
(178,044)(2) -- --
Less 2,737,130 shares in treasury, at
cost and 1,923,571 shares in treasury,
at cost, as adjusted.................. (13,928,550) 4,800,000(5) (9,128,550) (9,128,550)
------------ ------------ ------------ ----------- -----------
Total stockholders' equity
(deficit)....................... (5,086,875) (4,933,898) (10,020,773) 45,750,000 35,729,227
------------ ------------ ------------ ----------- -----------
Total liabilities and
stockholders' equity............ $ 35,559,778 $(10,733,898) $ 24,825,880 $45,750,000 $70,575,880
============ ============ ============ =========== ===========
</TABLE>

- ---------------

(1) Represents the use of proceeds for the prepayment of $1.0 million aggregate
principal amount of Clark/Bardes' 8.5% Medium Term Notes due September 2001.
The prepayment is assumed to be applied equally to remaining principal
payments.

(2) Represents the payment of the Stockholder Distribution Amount and the
reclassification of remaining undistributed earnings to paid-in capital.

(3) Represents the payment to be made in consideration of extinguishing the
Warrants assuming the mid-point of the Range.

(4) Represents the payment for the purchase of renewal revenue from Mr. Wamberg
and the Wamberg Organization.

(5) Represents Clark/Bardes' 8.5% Convertible Subordinated Notes due September
2007 which are assumed to be converted into 813,559 shares of Common Stock
at $5.90 per share.

(6) Represents the adjustment to record common stock at $0.01 par value.

(7) Represents the assumed net proceeds of the Offering after deducting
underwriting discount and estimated expenses of the Offering.

22
<PAGE> 26

UNAUDITED PRO FORMA STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1997

<TABLE>
<CAPTION>
PREDECESSOR ADJUSTMENTS
COMPANY BCS FOR THE BCS CLARK/BARDES
(HISTORICAL) (HISTORICAL) ACQUISITION PRO FORMA
------------ ------------ --------------- ------------
(A) (B) (C) (D)
=(A)+(B)+(C)

<S> <C> <C> <C> <C>
Total revenue........................... $49,455,419 $12,808,974 -- $62,264,393
Commission and fee expense.............. 32,439,092 8,732,534 -- 41,171,626
----------- ----------- --------------- -----------
Net revenue........................... 17,016,327 4,076,440 -- 21,092,767
General and administrative expense...... 11,506,335 3,460,270 -- 14,966,605
Amortization of intangibles............. 294,630 -- 589,260(1) 883,890
----------- ----------- --------------- -----------
Income (loss) from operations........... 5,215,362 616,170 (589,260) 5,242,272
Interest and dividend income............ 188,597 28,003 -- 216,600
Interest expense........................ (1,111,995) -- (1,540,000)(2) (2,651,995)
Miscellaneous income (expense).......... 1,925 -- -- 1,925
----------- ----------- --------------- -----------
Total other income (expense).......... (921,473) 28,003 (1,540,000) (2,433,470)
Income (loss) before taxes.............. 4,293,889 644,173 (2,129,260) 2,808,802
Income taxes............................ 60,000 -- 2,000 62,000
----------- ----------- --------------- -----------
Net income (loss)....................... $ 4,233,889 $ 644,173 $ (2,131,260) $ 2,746,802
=========== =========== =============== ===========
</TABLE>

- ---------------

(1) Amortization cost represents the pro forma cost associated with the BCS
acquisition for the period of January 1, 1997 to August 31, 1997.

(2) Interest expense represents the pro forma interest cost associated with the
BCS acquisition for the period of January 1, 1997 to August 31, 1997.

<TABLE>
<S> <C> <C>
$13.5 million X 10.5% X
Interest expense detail: 8/12 = $ 945,000
5.7 million X 8.5% X 8/12= 323,000
4.8 million X 8.5% X 8/12= 272,000
----------
Total pro forma interest = $1,540,000
==========
</TABLE>

23
<PAGE> 27

UNAUDITED PRO FORMA STATEMENT OF INCOME
FOR THE SIX MONTH PERIOD ENDED JUNE 30, 1998

<TABLE>
<CAPTION>
ADJUSTMENTS
FOR THE
STOCKHOLDER
DISTRIBUTION THE
PREDECESSOR AMOUNT, THE COMPANY
COMPANY REORGANIZATION AND PRO FORMA
(HISTORICAL) THE OFFERING AS ADJUSTED
------------ ------------------ -----------
<S> <C> <C> <C>
Total revenue.............................................. $28,984,959 $ -- $28,984,959
Commission and fee expense................................. 18,203,681 -- 18,203,681
----------- -------- -----------
Net revenue.............................................. 10,781,278 -- 10,781,278
General and administrative expense......................... 8,399,696 8,399,696
Amortization of intangibles................................ 441,945 -- 441,945
----------- -------- -----------
Income from operations..................................... 1,939,637 1,939,637
Interest and dividend income............................... 167,624 -- 167,624
Interest expense........................................... (1,803,750) 255,146(1) (1,548,604)
Miscellaneous income (expense)............................. (141) -- (141)
----------- -------- -----------
Total other income (expense)............................. (1,636,267) 255,146 (1,381,121)
Income before taxes........................................ 303,370 255,146 558,516
Income taxes............................................... 14,000 -- 14,000
----------- -------- -----------
Net income................................................. $ 289,370 $255,146 $ 544,516
=========== ======== ===========
</TABLE>

- ---------------

(1) Interest expense represents the pro forma cost savings associated with the
Restructured Notes.

<TABLE>
<S> <C> <C>
Interest Expense Savings Detail:
Senior Secured Notes --
$14,500,000 X 1/12 X (.105 -
Original balance.......... .08) = $ 30,208
After February 1998 $13,050,000 X 5/12 X (.105 -
principal payment....... .08) = 135,938
Second Priority Senior Secured $ 8,900,000 X 6/12 X (.110 -
Notes........................ .09) = 89,000
--------
$255,146
========
</TABLE>

24
<PAGE> 28

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of the Company's financial condition
and results of operations should be read in conjunction with "Selected
Historical and Pro Forma Financial Information" and the Company's financial
statements and notes thereto and other information appearing elsewhere in this
Prospectus. With the exception of historical information, certain of the matters
discussed in this Prospectus are forward-looking statements that involve risks
and uncertainties and actual results could differ materially from those
discussed. Words such as "anticipate," "believe," "estimate," "expect," "intend"
and similar expressions identify forward-looking statements. These
forward-looking statements reflect the Company's current views in respect of
future events in financial performance, but are subject to many uncertainties
and factors relating to the Company's operations and business environment that
may cause its actual results to differ materially from any future results
expressed or implied by such forward-looking statements.

GENERAL

RECENT ACQUISITION

Effective September 1, 1997, the Predecessor Company acquired substantially
all the assets, the client list and the book of business of BCS, a Minnesota
based company, for a total purchase price in cash equal to $24.0 million, plus
acquisition related expenses of $383,440. The Predecessor Company allocated the
purchase price as follows: approximately $10,000 to tangible assets, $1.2
million to two non-compete agreements with officers of BCS, $15.7 million to the
net present value of BCS's existing in-force revenue and book of business and
$7.5 million to goodwill.

BCS was engaged in the business of designing and marketing
insurance-financed employee benefit programs and related compensation, salary
and benefit plans and providing related services to financial institutions. The
Predecessor Company's primary objective in acquiring BCS's business and assets
was to expand the Predecessor Company's capabilities and client base from large
money center banks to the community and regional bank market. For the period
beginning September 1, 1997 (the effective date of the BCS acquisition) to
December 31, 1997, the assets acquired from BCS generated total revenue of $8.5
million, which represented 17.2% of the Predecessor Company's total revenue for
the year ended December 31, 1997.

ENTRY INTO NEW BUSINESS

In early 1998, the Company began using the consulting services of, and have
since entered into consulting agreements with, four new principals -- Scott
Cahill, Jim DeLay, Dan Rigby and Joe Thompson. These agreements provide for an
aggregate amount of $550,000 of fees to be paid by the Company in 1998 to these
new principals for their assistance to the Company in building the Clark/Bardes
Healthcare Compensation Group. This new division will focus its efforts on
executive compensation and benefit plans for large and medium-sized non-profit
healthcare facilities. Two hundred thousand dollars of the fee was expensed
during the first six months of 1998 related to services rendered through that
date and the balance will be expensed in the third and fourth quarters of 1998.

REVENUE AND EXPENSE

CBH, through its wholly owned operating subsidiary Clark/Bardes, derives
its revenue primarily from (i) commissions paid to Clark/Bardes by the insurance
companies that underwrite the policies underlying Clark/Bardes' programs and
(ii) fees paid by clients to Clark/Bardes in connection with program design and
25
<PAGE> 29

the administrative services provided by Clark/Bardes. Such revenue is usually
long term and recurring and is typically paid annually and extends over a period
of ten years or more after a sale. Commissions paid annually or quarterly by
insurance companies vary by policy and by program and usually represent a
percentage of initial or inforce premium or a percentage of the cash surrender
value of the insurance policies underlying the Company's program. Commissions
paid by insurance companies accounted for approximately 73.3% of the Company's
total revenue for the year ended December 31, 1997. Fees are paid to
Clark/Bardes by clients in consideration for the design and administration of
employee benefit plans and the insurance products underlying such plans. The
scope of these services and fees payable are negotiated on a client-by-client
basis. Fees accounted for approximately 26.7% of the Company's total revenue for
the year ended December 31, 1997.

The Company recognizes its revenue at the time the insurance premium is
paid by the client to the insurance company or the renewal premium is due to the
insurance company. After deducting the cost of servicing the benefit programs
and insurance policies, the Company retains approximately 31% of the remaining
revenue, with the producer receiving the balance.

The Company includes in total revenue first year revenue, renewal revenue
and other revenue.

- First Year Revenue. First year revenue is recognized by the Company at
the time the client is contractually committed to purchase the insurance
policies and the premiums are paid by the client to the insurance
company. First year revenue accounted for approximately 39.3% of the
Company's total revenue for the year ended December 31, 1997.

- Renewal Revenue. Renewal revenue is recognized by the Company on the date
that the renewal premium is due to the insurance company. Renewal revenue
in future periods, which is not recognized on the Company's balance sheet
(other than the $15.7 million capitalized in connection with the BCS
acquisition), is estimated by the Company to represent approximately
$169.3 million in total revenue over the next five years. However,
renewal revenue can be affected by policy surrenders or exchanges,
material contract changes, asset growth and case mortality rates. Over
the last five years, the Company has experienced a persistency rate of
approximately 98.0% of the inforce insurance underlying the Company's
programs. Historically, revenue persistency has tracked with insurance
policy persistency with the exception of Leveraged COLI business, which
was affected by adverse tax law changes, and business related to
Confederation Life Insurance Company, which was impacted by the cessation
of operations and subsequent rehabilitation of that company. In both
instances renewal revenue was adversely impacted even though insurance
policies remained in force. Renewal revenue accounted for approximately
57.5% of the Company's total revenue for the year ended December 31,
1997.

- Other Revenue. Other revenue consists of several miscellaneous sources of
revenue associated with the Company's operations. Other revenue was 3.2%
of the Company's total revenue for the year ended December 31, 1997.

Commission and fee expense comprises the portion of the total revenue paid
to the producer after deducting the cost of servicing policies and other direct
expenses related to sales. Commission and fee expense as a percentage of total
revenue was approximately 65.6% for the year ended December 31, 1997.

REORGANIZATION

In connection with the Offering, each of CBH, Clark/Bardes and the
Predecessor Company entered into the Reorganization Agreement which provides for
the Merger and contemplates a series of transactions, including (i) a
restructuring of the Restructured Notes, (ii) the conversion of Clark/Bardes'
8.5% Convertible Subordinated Notes due September 2007 into 813,559 shares of
Common Stock, (iii) the extinguishment by

26
<PAGE> 30

the Company of the Warrants, (iv) a purchase of renewal revenue due to Mr.
Wamberg and The Wamberg Organization, (v) the incorporation of a Texas entity
formed for the purpose of marketing certain insurance products within the state
of Texas, and (vi) the termination of certain agreements. The Merger, which will
be consummated prior to the consummation of the Offering, will be treated for
accounting purposes as a reorganization of entities under common control
utilizing historical cost which is similar to pooling of interests. The Merger
should qualify as a "reorganization" under Section 368(a) of the Code.
Accordingly, the Company should generally recognize no gain for federal income
tax purposes pursuant to the Merger. The Company's counsel will render a tax
opinion to that effect. See "Dilution" and "Certain Relationships and Related
Transactions."

TERMINATION OF S CORPORATION STATUS AND INCOME TAXES

In connection with the termination of the Predecessor Company's S
corporation status, the board of directors of the Predecessor Company declared a
dividend to the stockholders of record on July 31, 1998 in an amount equal to
$3.2 million, or $1.00 per share. The Stockholder Distribution Amount may be (i)
decreased if the AAA Amount is less than the Stockholder Distribution Amount or
(ii) increased if the Stockholder Distribution Amount is less than 42.6% of the
taxable income for the period beginning January 1, 1998 and ending on the date
the Merger is consummated. The Company anticipates that the Stockholder
Distribution Amount will be paid prior to the Merger.

In connection with the Merger, CBH, Clark/Bardes and the Predecessor
Company are currently seeking to enter into the Tax Agreement with the Existing
Stockholders. Because Clark/Bardes will be fully subject to corporate income
taxation after termination of the Predecessor Company's S corporation status,
any reallocation of income and deductions between the period during which the
Predecessor Company was treated as an S corporation and the period during which
Clark/Bardes will be subject to corporate income taxation may increase the
taxable income of one party while decreasing that of another party. Accordingly,
the Tax Agreement is intended to ensure that taxes are borne either by
Clark/Bardes or the Existing Stockholders to the extent that such parties
received the related income. The Tax Agreement will generally provide that, if
an adjustment is made to the taxable income of Clark/Bardes for a year in which
the Predecessor Company was treated as an S corporation, each party will
indemnify the other against any increase in the indemnified party's income tax
liability, including interest and penalties, with respect to such tax year to
the extent such increase results in a related decrease in the income tax
liability, including interest and penalties, of the indemnifying party (whether
with respect to the year of the adjustment or over future years). The Tax
Agreement will also provide that the Existing Stockholders will indemnify CBH,
Clark/Bardes and the Predecessor Company for any income tax liability incurred
as a result of a determination that the Predecessor Company did not qualify as
an S corporation. Such indemnification obligation will be limited to the net tax
refund, if any, received by the Existing Stockholders.

27
<PAGE> 31

relating to such Existing Stockholder. None of the parties' obligations under
the Tax Agreement will be secured, and, therefore, there can be no assurance
that Clark/Bardes or the Existing Stockholders will have funds available to make
any payments which may become due under the Tax Agreement.

QUARTERLY FLUCTUATIONS

The Company has experienced and expects to continue to experience
significant fluctuations in its results of operations, in particular when such
results are compared on a consecutive quarterly basis. Management believes these
quarterly fluctuations are attributable primarily to revenue variations since
operating expenses remain relatively constant throughout the year. Historically,
the Company recognizes a significant increase in both first year and renewal
revenue in the fourth quarter due to the seasonality of program implementation.
In general, results of operations may fluctuate as a result of a number of
factors, including the introduction of new or enhanced programs and services by
the Company or its competitors, client acceptance or rejection of new programs
and services, program development expenses, timing of significant sales, demand
for the Company's administrative services, competitive, legislative and
regulatory conditions in the insurance-financed employee benefit industry and
general economic conditions. In addition, the sales cycles for the Company's
programs and services are usually lengthy (generally between twelve to eighteen
months), with first year revenue being derived from a small number of large
cases.

The following table sets forth, on a quarterly basis, certain unaudited
statement of income information for the four quarters of each of 1996 and 1997
and the first two quarters of 1998. Such information is not necessarily
indicative of results for any full year or for any subsequent period.

<TABLE>
<CAPTION>
QUARTER ENDED
------------------------------------------------------------------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31, MARCH 31, JUNE 30, SEPTEMBER 30,
1996 1996 1996 1996 1997 1997 1997
---------- ---------- ------------- ------------ ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Total revenue........ $5,724,438 $7,041,337 $5,242,973 $15,234,407 $5,510,415 $5,772,769 $11,009,707
Commission and fee
expense............. 3,624,738 4,458,604 3,319,872 9,646,490 3,549,809 3,723,710 7,138,578
---------- ---------- ---------- ----------- ---------- ---------- -----------
Net revenue.......... 2,099,700 2,582,733 1,923,101 5,587,917 1,960,606 2,049,059 3,871,129
General and
administrative
expense............. 1,555,979 1,888,343 1,789,083 3,321,015 1,860,545 2,754,555 2,886,666
Income (loss) before
taxes............... 571,277 702,163 164,929 2,297,060 200,308 (737,481) 888,715
Basic earnings (loss)
per share(1)........ 0.12 0.15 0.04 0.45 0.05 (0.16) 0.20
Diluted earnings
(loss) per
share(1)............ 0.12 0.15 0.04 0.45 0.05 (0.16) 0.20

<CAPTION>
QUARTER ENDED
----------------------------------------
DECEMBER 31, MARCH 31, JUNE 30,
1997 1998 1998
------------ ----------- -----------
<S> <C> <C> <C>
Total revenue........ $27,162,528 $13,754,466 $15,230,493
Commission and fee
expense............. 18,026,995 9,132,248 9,071,433
----------- ----------- -----------
Net revenue.......... 9,135,533 4,622,218 6,159,060
General and
administrative
expense............. 4,004,569 3,370,853 5,028,843
Income (loss) before
taxes............... 3,942,347 185,176 118,194
Basic earnings (loss)
per share(1)........ 1.27 0.06 0.03
Diluted earnings
(loss) per
share(1)............ 1.03 0.06 0.03
</TABLE>

- ---------------

(1) Earnings per share reflects income before taxes less the Predecessor
Company's liability for state taxes, on a per-share basis. No provision for
federal income taxes has been made because the Predecessor Company elected
to be treated as an S corporation for federal income tax purposes prior to
the Merger.

RESULTS OF OPERATIONS

The following discussion compares the results of operations for the
Predecessor Company on a pro forma basis for the six month periods ended June
30, 1998 and 1997 as if the BCS acquisition had occurred on January 1, 1997, for
the Predecessor Company on a historical basis for the six month periods ended
June 30, 1998 and 1997, and for the Predecessor Company for the years ended
December 31, 1997, 1996 and 1995 on a historical basis. The discussion of
factors affecting the changes in, and the trends related to, the results of
operations for the historical comparison of the six month periods ended June 30,
1998 and 1997 has been omitted because such factors are discussed in the pro
forma comparison of such period.

Six Month Periods Ended June 30, 1998 and June 30, 1997--Pro Forma Comparison

The pro forma comparison of the results of operations for the six month
period ended June 30, 1998 and June 30, 1997 compares the actual results of
operations for the Predecessor Company for the six month period ended June 30,
1998 with the pro forma results of operations for the Predecessor Company for
the six month

28
<PAGE> 32

period ended June 30, 1997 after giving effect to the acquisition by the
Predecessor Company of the business and substantially all the assets of BCS as
if such acquisition had occurred on January 1, 1997. The pro forma financial
information of the Predecessor Company set forth below does not purport to
represent what the Predecessor Company's results of operations actually would
have been if the BCS acquisition had actually occurred on January 1, 1997.
Solely for purposes of comparing the results of operations for the six month
periods ended June 30, 1998 and 1997 on a pro forma basis and notwithstanding
the definitions used elsewhere in this Prospectus, Clark/Bardes means the
Predecessor Company as it existed during the six month period ended June 30,
1997, BCS means BCS as it existed during the six month period ended June 30,
1997 and the Company means the combined entity of Clark/Bardes and BCS as it
existed during the six month period ended June 30, 1998.

Total Revenue. Total revenue increased to $29.0 million for the six month
period ended June 30, 1998 as compared to $20.6 million for the six month period
ended June 30, 1997, representing an increase of 40.5%. This increase reflects
rapid revenue growth of both Clark/Bardes and BCS to $17.2 million and $11.8
million, respectively, for the six month period ended June 30, 1998 as compared
to $11.3 million and $9.3 million, respectively, for the six month period ended
June 30, 1997. These increases were attributable in part to the Company's
renewal revenue increasing to $12.1 million for the six month period ended June
30, 1998 as compared to $9.8 million for the six month period ended June 30,
1997, reflecting the Company's increasing amount of inforce business underlying
the Company's programs. The remaining revenue growth was due to an increase in
first year sales.

Commission and Fee Expense. Commission and fee expense increased to $18.2
million for the six month period ended June 30, 1998 as compared to $13.9
million for the six month period ended June 30, 1997, representing an increase
of 30.9%. Commission and fee expense as a percentage of total revenue decreased
to 62.8% for the six month period ended June 30, 1998 as compared to 67.4% for
the six month period ended June 30, 1997.

General and Administrative Expense. General and administrative expense
increased to $8.4 million for the six month period ended June 30, 1998 as
compared to $6.6 million for the six month period ended June 30, 1997,
representing an increase of 27.0%, well below the 40.5% increase in total
revenues. General and administrative expense as a percent of total revenue was
29.0% for the six month period ended June 30, 1998 as compared to 32.1% for the
six month period ended June 30, 1997. The improvement in general and
administrative expense as a percentage of total revenue was due primarily to the
elimination of certain expenses as a result of the BCS acquisition.

Amortization. Amortization expense equaled $441,945 for each of the six
month periods ended June 30, 1998 and 1997, reflecting the amortization of
intangible assets capitalized as a result of the BCS acquisition in September
1997.

Income (Loss) from Operations. Income from operations increased to $1.9
million in income for the six month period ended June 30, 1998 compared to a
$332,223 loss for the six month period ended June 30, 1997. Income from
operations as a percentage of total revenue ("Operating Margin") increased to
6.7% for the six month period ended June 30, 1998 as compared to (1.6)% for the
six month period ended June 30, 1997. The increase in income from operations was
due primarily to the increase of total revenue of $8.4 million as compared to an
increase in general and administrative expense of only $1.8 million.

Total Other Income (Expense). Other income and expense for the six month
period ended June 30, 1998 was $1.6 million in expense as compared to $1.0
million in expense for the six month period ended June 30, 1997. The amount for
the six month period ended June 30, 1998 included interest expense of $1.8
million as compared to interest expense of $1.2 million for the six month period
ended June 30, 1997. The interest expense was attributable to the incurrence of
debt associated with the repurchase of shares of common stock of the Predecessor
Company throughout the year and the BCS acquisition in September 1997.

Net Income (Loss). Net income increased to $289,370 for the six month
period ended June 30, 1998 compared to a net loss of $1.4 million for the six
month period ended June 30, 1997, reflecting the pro forma application of
amortization of intangible assets and interest expense to the six month period
ended June 30,

29
<PAGE> 33

1997 and the other factors discussed above. No provision for federal income
taxes was made for either period since the Company was an S corporation prior to
the Merger.

Six Month Periods Ended June 30, 1998 and June 30, 1997--Historical Comparison

The historical comparison of the results of operations for the six month
periods ended June 30, 1998 and June 30, 1997 compares the actual results of
operations for the Predecessor Company for such periods. The results of
operations for the six month period ended June 30, 1998 include the results of
operations associated with the assets purchased from BCS in September 1997,
while the results of operations for the six month period ended June 30, 1997
reflect the stand-alone historical results of operations for the Predecessor
Company without giving pro forma effect to the BCS acquisition.

Total Revenue. Total revenue increased to $29.0 million for the six month
period ended June 30, 1998 as compared to $11.3 million for the six month period
ended June 30, 1997.

Commission and Fee Expense. Commission and fee expense increased to $18.2
million for the six month period ended June 30, 1998 as compared to $7.3 million
for the six month period ended June 30, 1997.

General and Administrative Expense. General and administrative expense
increased to $8.4 million for the six month period ended June 30, 1998 as
compared to $4.6 million for the six month period ended June 30, 1997. General
and administrative expense as a percent of total revenue was 29.0% for the six
month period ended June 30, 1998 as compared to 40.9% for the six month period
ended June 30, 1997.

Amortization. Amortization expense was $441,945 for the six month period
ended June 30, 1998, reflecting the amortization of intangible assets
capitalized as a result of the BCS acquisition in September 1997. There was no
amortization expense for the six month period ended June 30, 1997.

Income (Loss) from Operations. Income from operations increased to $1.9
million for the six month period ended June 30, 1998 compared to a loss of
$605,436 for the six month period ended June 30, 1997. Operating Margin
increased to 6.7% for the six month period ended June 30, 1998 from (5.4)% for
the six month period ended June 30, 1997.

Total Other Income (Expense). Other income and expense for the six month
period ended June 30, 1998 was $(1.6) million as compared to $68,263 for the six
month period ended June 30, 1997. The primary factor contributing to this
decrease was $1.8 million of interest expense for the six month period ended
June 30, 1998. There was no interest expense for the six month period ended June
30, 1997. The interest expense was attributable to the incurrence of debt
associated with the repurchase of shares of common stock of the Predecessor
Company throughout the year and the BCS acquisition in September 1997.

Net Income (Loss). Net income increased to $289,370 for the six month
period ended June 30, 1998 compared to a net loss of $537,173 for the six month
period ended June 30, 1997. No provision for federal income taxes was made for
either period since the Predecessor Company was an S corporation prior to the
Merger.

Years Ended December 31, 1997 and 1996--Historical Comparison

Total Revenue. Total revenue increased to $49.5 million for the year ended
December 31, 1997 as compared to $33.2 million for the year ended December 31,
1996, representing an increase of 48.8%. $8.5 million of total revenue for the
year ended December 31, 1997 was associated with the assets acquired from BCS in
September 1997. The remaining increase was due to a growth in renewal revenue to
$23.4 million in 1997 from $21.9 million in 1996, and was also attributable to
an increase in first year sales. The increase in total revenue was accomplished
despite a decrease in the renewal revenue on Leveraged COLI business to $6.1
million for the year ended December 31, 1997 from $9.7 million for the year
ended December 31, 1996, representing a decrease of 37.1%. The Company expects
this trend in Leveraged COLI revenue to continue.

Commission and Fee Expense. Commission and fee expense increased to $32.4
million for the year ended December 31, 1997 as compared to $21.0 million for
the year ended December 31, 1996, representing
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<PAGE> 34

an increase of 54.1%. Commission and fee expense as a percentage of total
revenue increased to 65.6% for the year ended December 31, 1997 as compared to
63.3% for the year ended December 31, 1996. Of the $11.4 million increase in
commission and fee expense, $6.0 million was attributable to the assets acquired
from BCS in September 1997.

General and Administrative Expense. General and administrative expense
increased to $11.5 million for the year ended December 31, 1997 as compared to
$8.6 million for the year ended December 31, 1996, representing an increase of
34.5%. General and administrative expense as a percent of total revenue was
23.3% for the year ended December 31, 1997 as compared to 25.7% for the year
ended December 31, 1996. The improvement in general and administrative expense
as a percentage of total revenue was due primarily to the elimination of certain
expenses as a result of the BCS acquisition.

Amortization. Amortization expense was $294,630 for the year ended December
31, 1997, reflecting the amortization of intangible assets capitalized as a
result of the BCS acquisition in September 1997. There was no amortization
expense for the year ended December 31, 1996.

Income (Loss) from Operations. Income from operations increased to $5.2
million for the year ended December 31, 1997 compared to $3.6 million for the
year ended December 31, 1996, representing an increase of 43.3%. The increase in
income from operations was attributable primarily to the income associated with
the assets acquired from BCS in September 1997. Operating Margin decreased
slightly to 10.5% for the year ended December 31, 1997 from 10.9% for the year
ended December 31, 1996. This decrease in Operating Margin was due to
amortization expense of $294,630 incurred as a result of the BCS acquisition.

Total Other Income (Expense). Other income and expense for the year ended
December 31, 1997 was ($921,473) as compared to $96,398 for the year ended
December 31, 1996. The amount for the year ended December 31, 1997 included
interest expense of $1.1 million. There was no interest expense for the year
ended December 31, 1996. The increase in interest expense was attributable to
the incurrence of debt associated with the repurchase of shares of common stock
of the Predecessor Company throughout the year and the BCS acquisition in
September 1997.

Net Income (Loss). Net income increased to $4.2 million for the year ended
December 31, 1997 compared to $3.6 million for the year ended December 31, 1996,
representing an increase of 19.1%, reflecting the factors discussed above. No
provision for federal income taxes was made for either period since the
Predecessor Company was an S corporation prior to the Merger.

Years Ended December 31, 1996 and 1995--Historical Comparison

Total Revenue. Total revenue increased to $33.2 million for the year ended
December 31, 1996 as compared to $27.0 million for the year ended December 31,
1995, representing an increase of 23.2%. The increase in total revenue was due
primarily to an increase in renewal revenue to $21.9 million from $16.7 million,
an increase of 31.1% which reflected the increased amount of inforce business
underlying the Predecessor Company's programs. The remaining revenue growth was
due to an increase in first year sales. The increase in total revenue was
accomplished despite a decrease in the renewal revenue on Leveraged COLI
business to $9.7 million for the year ended December 31, 1996 from $11.3 million
for the year ended December 31, 1995, representing a decrease of 14.2%.

Commission and Fee Expense. Commission and fee expense increased to $21.0
million for the year ended December 31, 1996 as compared to $16.9 million for
the year ended December 31, 1995, representing an increase of 24.6%. Commission
and fee expense as a percentage of total revenue increased to 63.3% for the year
ended December 31, 1996 as compared to 62.6% for the year ended December 31,
1995.

General and Administrative Expense. General and administrative expense
increased to $8.6 million for the year ended December 31, 1996 as compared to
$7.9 million for the year ended December 31, 1995, representing an increase of
8.7%. General and administrative expense as a percent of total revenue was 25.7%
for the year ended December 31, 1996 as compared to 29.2% for the year ended
December 31, 1995. This improvement was primarily due to operating efficiencies
resulting from increased automation.

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<PAGE> 35

Income (Loss) from Operations. Income from operations increased to $3.6
million for the year ended December 31, 1996 compared to $2.2 million for the
year ended December 31, 1997, representing an increase of 64.4%. The increase in
income from operations was attributable primarily to the increased revenue and
to certain operating efficiencies. Operating Margin increased to 10.9% for the
year ended December 31, 1996 from 8.2% for the year ended December 31, 1995.

Total Other Income (Expense). Other income and expense for the year ended
December 31, 1996 was $96,398 as compared to $107,382 for the year ended
December 31, 1995.

Net Income (Loss). Net income increased to $3.6 million for the year ended
December 31, 1996 compared to $2.2 million for the year ended December 31, 1995,
representing an increase of 60.2%, reflecting the factors discussed above. No
provision for federal income taxes was made for either period since the
Predecessor Company was an S corporation prior to the Merger.

PENDING ACQUISITION

On May 29, 1998, the Predecessor Company entered into a letter of intent
with the Schoenke Companies and Mr. Schoenke, which provides for, among other
things, (i) the acquisition by Clark/Bardes of the businesses and substantially
all the assets of the Schoenke Companies, (ii) the execution of a
non-competition agreement by each of Mr. Schoenke and the Schoenke Companies,
and (iii) the Schoenke Companies' agreement to deal exclusively with
Clark/Bardes. The purchase price of the Pending Acquisition, which is subject to
change based on Clark/Bardes's due diligence review, is $17.0 million, of which
$1.5 million was paid as a secured refundable deposit and $15.5 million is
payable in cash at the closing of the Pending Acquisition. The consummation of
the Pending Acquisition is subject to numerous conditions, including the
consummation of the Offering, the approval of Clark/Bardes's board of directors,
obtaining all requisite regulatory approvals and the satisfactory completion of
Clark/Bardes's due diligence review. The consummation of the Pending Acquisition
must occur on or prior to October 1, 1998. The letter of intent expressly allows
the Predecessor Company to enter into and consummate the Merger. The operations
associated with the Pending Acquisition are anticipated to generate sufficient
cash flow to cover the costs relating to the integration of the purchased
company with Clark/Bardes. The Pending Acquisition will be accounted for using
the purchase method.

LIQUIDITY AND FINANCIAL RESOURCES

Sources of Cash. Historically, the Predecessor Company financed its
operations through internally generated funds and existing cash reserves. For
the years ended December 31, 1995, 1996 and 1997 and the six month period ended
June 30, 1998 the Predecessor Company produced net cash flow from operations of
$2.6 million, $4.3 million, $1.9 million and $5.7 million, respectively. The
large increase in net cash flow from operations for the six month period ended
June 30, 1998 was due largely to the collection of trade receivables, which
decreased by $5.3 million to $2.4 million. As of June 30, 1998 the Company had
cash and cash equivalents of $6.3 million, and total current assets of $9.7
million. As of June 30, 1998 and after giving effect to the Reorganization, the
payment of the Stockholder Distribution Amount and the Offering, the Company
would have had cash and cash equivalents equal to $33.9 million on a pro forma
basis. Pending the application of the net proceeds of the Offering, CBH intends
to invest such proceeds in short-term, investment grade, interest bearing
securities.

Uses of Cash. Capital expenditures and leasehold improvements amounted to
$303,260, $131,057 and $536,983 for the years ended December 31, 1995, 1996 and
1997, respectively. For the year ending December 31, 1998, the Company
anticipates spending approximately $850,000 on capital projects, including
furniture and equipment and upgrades to communication systems and management
information systems. Current liabilities at June 30, 1998 were $9.3 million,
including $4.3 million of current portion of long-term debt. As of June 30, 1998
and after giving effect to the Reorganization, the payment of the Stockholder
Distribution Amount and the Offering, the Company would have had indebtedness
outstanding equal to $29.9 million on a pro forma basis.

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<PAGE> 36

On July 31, 1998, the board of directors of the Predecessor Company
declared a dividend in an amount equal to the Stockholder Distribution Amount.
This dividend, in the amount of $3.2 million or $1.00 per share, will be paid
prior to the Merger and will be paid from existing cash reserves. The
Stockholder Distribution Amount may be (i) decreased if the AAA Amount is less
than the Stockholder Distribution Amount or (ii) increased if the Stockholder
Distribution Amount is less than 42.6% of the taxable income for the period
beginning January 1, 1998 and ending on the date the Merger is consummated.

In 1997, the Predecessor Company (i) acquired the business and
substantially all the assets of BCS and (ii) repurchased 2.6 million shares of
the Predecessor Company's common stock. The total cost of the BCS acquisition
was $24.0 million plus acquisition-related capital expense of $383,440. The
total cost of the share repurchases effected in 1997 was $11.7 million. To
effect such transactions, the Predecessor Company used $2.2 million of cash
reserves and issued an aggregate of $33.9 million of debt consisting of $14.5
million of 10.5% Senior Secured Notes due August 2002, $8.9 million of 11.0%
Second Priority Senior Secured Notes due August 2004, $5.7 million of 8.5%
Medium Term Notes due September 2001 and $4.8 million of 8.5% Convertible
Subordinated Notes due September 2007. The Predecessor Company entered into the
share repurchases because the holders of the shares offered such shares at
prices considered favorable by the Predecessor Company's Board of Directors. See
"Certain Relationships and Related Transactions -- Stock Purchase Agreements."

Credit Facilities. As of June 30, 1998, the Predecessor Company owed an
aggregate of $35.7 million under outstanding debt obligations. The Predecessor
Company's outstanding debt obligations as of June 30, 1998 included the
indebtedness incurred in connection with the BCS acquisition and the share
repurchases described above and $3.2 million of 8.5% AAA Distribution Notes due
November 2007. Upon the consummation of the Offering, Clark/Bardes will prepay
$1.0 million aggregate principal amount of the 8.5% Medium Term Notes due
September 2001. Further, Clark/Bardes anticipates that the 8.5% Convertible
Subordinated Notes due September 2007 will be converted into shares of Common
Stock after Clark/Bardes provides BCS, the holder of such notes, notice of
prepayment. Since January 1, 1998, cash flow from operations was more than
sufficient to cover scheduled principal and interest payments on existing
indebtedness as well as Clark/Bardes' working capital requirements.

In connection with the Reorganization, the Predecessor Company restructured
the Restructured Notes. The interest rates on the 10.5% Senior Secured Notes due
August 2002 and the 11.0% Second Priority Senior Secured Notes due August 2004
were reset to rates that were 2.5% and 3.5%, respectively, above the yield on
United States Treasury securities maturing two and five years, respectively,
from the date on which the interest rates were reset. The Restructured Notes may
be prepaid without penalty and are secured by a first priority security interest
in, among other things, all of Clark/Bardes' renewal commissions other than the
renewal commissions from BCS and the Pending Acquisition. Further, the Company
is subject to significant operational restrictions and financial covenants,
including a requirement that Clark/Bardes obtain a working capital credit
facility no later than March 31, 1999, a prohibition against certain payments, a
limitation on the payment of dividends, a limitation on the incurrence of
indebtedness and the maintenance of certain financial ratios.

The Company believes that its net cash flow from operations will provide
sufficient funds to service all of its debt obligations. This belief is based on
the predictability and magnitude of the Company's future revenue stream.
Specifically, renewal revenue in future periods, which is not reflected on the
Company's balance sheet (other than the $15.7 million capitalized in connection
with the BCS acquisition) is estimated by the Company to represent approximately
$169.3 million in total revenue over the next five years. However, renewal
revenue can be affected by policy surrenders or exchanges, material contract
changes, asset growth and case mortality rates.

Further expansion of the Company's business through acquisitions may
require the Company to incur additional indebtedness or issue equity securities.
There can be no assurance that additional debt (including the working capital
credit facility of at least $3.0 million that the Company is required to obtain
by the Restructured Notes) or equity will be available to the Company or, if
available, will be on terms acceptable to the Company.

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<PAGE> 37

As the Company's business grows, its working capital and capital
expenditures will also continue to increase. Management believes that net cash
flows from operations will be sufficient to finance the Company's working
capital and capital expenditures for the next twelve months. There can be no
assurance, however, that the net cash flows from operations will be sufficient
to meet the Company's anticipated requirements or that the Company will not
require additional debt or equity financing within this time frame.

YEAR 2000 COMPLIANCE

Based on previous and ongoing internal reviews, management believes that
the computer equipment and software used by the Company will function properly
with respect to dates in the Year 2000 and thereafter. However, significant
uncertainty exists concerning the potential costs and effects of the Year 2000
problem. Third parties that have relationships with the Company, including
insurance companies and clients, may experience significant operational
difficulties if their computer systems do not properly recognize date sensitive
information when the year changes to 2000. While these computer malfunction
issues may have a material adverse effect on the operations of such third
parties, which may, in turn, have a material adverse effect on the Company,
management presently believes that Year 2000 issues will not require the Company
to incur any material costs and do not pose significant operational problems for
the Company. The Company has requested information from third parties addressing
any potential year 2000 issues until such third parties; however, the Company is
not able to determine the extent to which such third parties, such as insurance
companies and clients, may experience Year 2000 issues. Any Year 2000 problem of
either the Company or third parties that have relationships with the Company
could have a material adverse effect on the Company's business, results of
operations and financial condition. The Company believes that to the extent that
any insurance companies which have a relationship with the Company are unable to
become Year 2000 compliant, the Company will be able to enter into relationships
with other insurance companies that are Year 2000 compliant.

INFLATION

Inflation has not had a material effect on the Predecessor Company's
results of operations. Certain of the Company's expenses, such as compensation,
benefits and capital equipment costs, are subject to normal inflationary
pressures. However, the majority of the Company's service and administrative
agreements with clients, which generate fee income, have a cost of living
adjustment tied to the consumer price index. Management believes that future
inflationary pressures will continue to be offset because as inflation increases
investment returns will also increase, resulting in higher cash values and
higher commission revenue.

RECENT ACCOUNTING PRONOUNCEMENTS

In February 1997, the Financial Accounting Standard Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings per
Share." This Statement specifies the computation, presentation and disclosure
requirements for earnings per share for entities with publicly-held common
stock. This Statement is effective for financial statements for both interim and
annual periods ending after December 15, 1997 and has been adopted by the
Company and is presented in the accompanying financial statements in
anticipation of the Offering.

As of January 1, 1998, the Company adopted SAFS No. 130 "Reporting
Comprehensive Income." Statement 130 establishes new rules for the reporting and
display of comprehensive income and its components. Statement 130 requires
unrealized gains or losses on available-for-sale securities and certain other
items, which prior to adoption were reported separately in shareholders' equity,
to be included in other comprehensive income. The adoption of this Statement had
no impact on the Company's net income or shareholders' equity. The Company has
no comprehensive income as defined by SFAS 130.

In June 1997, the FASB issued SFAS No. 131 "Disclosures About Segments of
an Enterprise and Related Information." This Statement requires public
enterprises to report selected information about operating segments in annual
and interim reports issued to shareholders. It is effective for financial
statements for fiscal years beginning after December 15, 1997, but it is not
required to be applied to interim financial statements in the initial year of
its application. The adoption of this Statement will have no impact on the
Company's financial condition or results of operations.

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BUSINESS

GENERAL

The Company has experienced rapid growth since December 31, 1995. Effective
September 1, 1997, the Predecessor Company acquired substantially all the
assets, the client list and the book of business of BCS, a Minnesota based
company that designed, marketed and administered insurance-financed employee
benefit programs and related compensation, salary and benefit plans for
community and regional banks. Through sales generated by a group of specialized
independent producers and the integration of the assets acquired from BCS, the
Company had a customer base of over 1,100 clients as of June 30, 1998.
Additionally, the inforce insurance coverage underlying the Company's programs
has increased from approximately $26.2 billion as of December 31, 1995 to
approximately $47.0 billion as of December 31, 1997 ($43.9 billion excluding
BCS) representing a compound annual growth rate of 33.9% (29.4% excluding BCS).
Income from operations has grown from $2.2 million for the year ended December
31, 1995 to $5.2 million ($4.3 million excluding BCS) for the year ended
December 31, 1997, representing a compound annual growth rate of 53.5% (39.5%
excluding BCS).

The Company has developed the high quality administrative capabilities
necessary to service these executive benefit and insurance programs marketed by
the Company. At June 30, 1998, the Company administered approximately 187,000
benefit and insurance records for over 1,100 clients. At such date, the
insurance policies underlying the Company's employee benefit programs
represented a total of $48.2 billion of inforce insurance coverage. Management
believes that its strong relationship with insurance companies is due to the
Company's history of placing high quality, high persistency policies.

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<PAGE> 39

INDUSTRY

STRATEGY

- Leverage Market Reputation. The Company plans to leverage its reputation
as an industry leader to expand current operations and to enter into
related businesses.

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<PAGE> 40

Subsequent to the completion of the Offering, the Company intends to
consider the adoption of a combination of plans to encourage ownership of Common
Stock among its employees, producers and directors so as to further align their
interests with those of CBH's stockholders. Examples of such plans include a
commission reinvestment plan for producers, providing the opportunity to
purchase Common Stock through the Company's 401(k) plan and compensating the
non-employee members of the Board of Directors with Common Stock.

ACQUISITION STRATEGY

The insurance-financed employee benefit industry is highly fragmented.
Management believes that significant opportunities exist to create a more
efficient design, distribution and service system for insurance-financed
employee benefit programs. The Company intends to take advantage of these
opportunities by pursuing acquisitions on a selected basis. Management
categorizes potential acquisition targets in two groups. The first group is
comprised of smaller, less sophisticated companies that have not made the
necessary investment in technology and personnel, and are finding it
increasingly difficult to compete with the larger, more-developed firms. The
second group is comprised of viable, sophisticated firms with a solid client
base that are owned by a small number of producers who are eager to affiliate
their firm with a more established organization.

Using the successful BCS acquisition as a model, management has established
guidelines for evaluating a potential acquisition target. The Company is focused
on identifying organizations that can increase the Company's market penetration,
retain quality producers after the consummation of the acquisition, create
cross-selling opportunities, provide significant opportunity for administrative
cost savings and be effected in a manner that is accretive to the Company's
earnings. Using these guidelines, the Company will evaluate a potential
acquisition target based on factors such as the operating results and financial
condition of the target business, its growth potential, the quality of its
management and producers and the expected return in relation to other
acquisition opportunities. As of June 30, 1998, management had identified
approximately 100 companies each with annual revenue in excess of $3.0 million
that are potentially attractive acquisition targets. Management believes that
the Company's leadership, size, industry expertise and reputation,
administrative systems and support and other long-term competitive advantages
provide the Company with a decided advantage in its pursuit to acquire selected
companies.

PROGRAMS AND PRODUCTS

Clark/Bardes designs and markets a diverse array of insurance-financed
employee benefit programs and provides comprehensive administrative services to
meet the needs of its clients. Business-owned life insurance refers to life
insurance policies purchased by a business that insure the lives of a number of
employees. The business pays the premiums on, and is the owner and beneficiary
of, such policies. Business-owned life insurance based programs are used
primarily to offset a client's cost of providing employee benefits and to
supplement and secure benefits for key executives. More specifically, the cash
flow characteristics of business-owned life insurance policies are designed to
match closely the long-term cash flow characteristics of a client's employee
benefit liabilities. Further, business-owned life insurance offers certain
advantages, including (i) the cash value of the policies grows on a tax deferred
basis until withdrawal and (ii) the policies' death benefits are received
tax-free. Finally, the tax deferred nature of the policies provides an
attractive return.

Currently, the Company derives a substantial majority of its total revenue
from the sale of insurance products used to fund the Company's proprietary
programs. The Company maintains relationships with insurance companies such as
CIGNA, General American, Great-West, Life Investors, Nationwide, Phoenix Home
Life and West Coast Life that are strategic in nature, with both parties
committed to developing and delivering creative products with high client value.
The Company, through its actuaries and legal, accounting and other
professionals, works closely with (i) clients to design custom products that
meet the unique organizational needs of such client and (ii) selected insurance
companies to develop unique policy features at competitive pricing.

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The Company has invested significant time and resources in cultivating
relationships with selected carriers, with certain relationships that are
considered strategic in nature. However, the Company does not consider its
future success to be dependent on any specific insurance carrier. Management
believes that there are over 50 top-tier insurance companies with the financial
strength and resources to effectively compete in the large-case market, and
several hundred carriers suitable for the Company's small-case business. The
Company has decided to limit the number of carriers with which it transacts
business in order to maximize its bargaining power and resource utilization.

The Company has entered into agreements with Great West and Nationwide that
require certain levels of production for the next five years. These agreements
were in partial consideration to extinguish the Warrants. See "The
Reorganization." The Company enters into agreements with the insurance carriers
which typically provide for the marketing of the insurance carrier's insurance
products by the Company, commission payment rates by insurance product,
licensing of software for product illustrations, mutual indemnification
provisions and short term termination provisions.

Clark/Bardes' overall approach to marketing and client service is
illustrated by the business-owned life insurance marketing process. First, the
Company performs the actuarial and insurable interest calculations necessary to
determine the amount of life insurance an organization needs to purchase. Then,
the Company helps to design a program to meet that particular company's unique
organizational needs. Next, Clark/Bardes arranges for the placement of the
insurance coverage underlying the Company-designed program with a financially
stable insurance company. Last, the Company provides the long-term
administrative services associated with the program and the underlying
business-owned life insurance policy.

The Company markets a wide variety of business-owned life insurance based
programs, including bank-owned life insurance, deferred income plans ("DIPs"),
supplemental executive retirement plans ("SERPs") and supplemental offset plans
("SOPs") and also markets group term carve out plans ("GTCO").

The following table sets forth the total revenue by product category for
the year ended December 31, 1997, and the amount of first year revenue by
product category for each of the years ended December 31, 1995, 1996 and 1997:

<TABLE>
<CAPTION>
TOTAL REVENUE FOR FIRST YEAR REVENUE FOR
THE YEAR ENDED THE YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1997
----------------- ----------------------
<S> <C> <C>
Bank-owned life insurance
Large case...................................... $16,180 $10,703
Small case...................................... 8,451 7,101
DIP and SERP...................................... 5,352 424
SOP............................................... 3,379 3,319
GTCO.............................................. 3,534 422
Discontinued products(1).......................... 10,427 367
Miscellaneous case revenue(2)..................... 2,132 180
------- -------
Total................................... $49,455 $22,516
======= =======
</TABLE>

- ---------------

(1) Includes renewal revenue from products used in existing plans which are no
longer marketed for new plans because of legislative changes.

(2) Includes revenue from miscellaneous programs and other revenue sources.

Bank-Owned Life Insurance. Bank-owned life insurance refers to
business-owned life insurance purchased by a bank. The Office of the Comptroller
of the Currency provides guidelines that tie the purchase of bank-owned life
insurance to the costs of offsetting employee benefits on an aggregate basis.
Clark/Bardes was the first organization to implement large case bank-owned life
insurance programs, which are designed for, and marketed to, banks with assets
in excess of $1.0 billion. As a result of the BCS acquisition, the Company now
markets small case bank-owned life insurance programs, which are used to offset
benefit costs for executives and directors of regional and community banks with
assets of less than $1.0 billion. The Company markets a

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<PAGE> 42

wide variety of bank-owned life insurance, including fixed yield policies
(general account policies), variable yield policies (separate account policies)
and a Protected Equity Plan(TM) (a hybrid policy which provides the minimum
return of a fixed yield policy with the upside potential of a variable yield
policy).

Deferred Income Plans. DIPs allow corporate executives to defer a portion
of their current income on a tax-deferred basis. The deferred income and
interest in a properly designed and administered DIP grows 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 DIP. DIPs can be structured in a variety
of ways, including "traditional" DIPs, 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, and "variable" DIPs, which credit
the deferred income amount with interest based on a bond or equity index and use
variable yield life insurance products to offset the costs of the Company's
liability. In an effort to provide additional security for executives,
corporations usually create a trust to hold the related insurance policies.

As of March 31, 1998, approximately 70.0% of the Fortune 1000 companies
offered some form of a DIP. Because DIPs provide executives with a method to
defer income at little or no cost to the corporation, management believes that
the demand for these plans will continue to rise, as corporations implement new
plans or expand the availability of existing plans.

Supplemental Executive Retirement Plans. SERPs are specifically designed to
supplement the dollar limitation on benefits paid from qualified pension plans.
The 1993 Omnibus Budget Reconciliation Act (the "OBRA") lowered the maximum
dollar amount of compensation that can be used to determine the pension benefits
payable to an executive from a qualified plan to $150,000. OBRA had significant
adverse effects on defined benefit, defined contribution and 401(k) plans. As a
result, non-qualified plans such as SERPs, which are not subject to the same
stringent rules, have increased in popularity. SERPs are funded with the same
insurance products and strategies used to fund DIPs. As of March 31, 1998,
approximately 60.0% of the Fortune 500 companies provided some form of SERP for
their executives.

Supplemental Offset Plans. SOPs are designed to supplement an executive's
income by restoring retirement benefits previously limited by legislative
changes. Using a technique commonly known as "split dollar," SOPs are funded
with insurance policies. 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 benefits. The
corporation pays the premiums, but 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.

Group Term Carve Out Plans. Currently, a corporation can provide its
employees with a group term life insurance policy death benefit of up to $50,000
on a tax-free basis. The cost of providing a death benefit in excess of $50,000
is currently taxed to the employee as ordinary income. GTCOs replace the taxable
portion of the group term life insurance plan with permanent life insurance.
GTCOs often provide a greater amount of insurance and post-retirement death
benefit to the employee at a competitive overall cost. The corporate plan
sponsor is not an owner or beneficiary of the permanent life insurance policies.

ADMINISTRATIVE SERVICES

Management believes that the Company is recognized as an industry leader in
providing high quality, unique services to its clients partly through the
application of internally developed technology. The Company approaches
administrative service opportunities with a differentiation strategy to generate
significant revenues and profits. The clients' unique requirements and needs are
served through customized, value-added services and intensive client support,
creating brand and client loyalty and resulting in lower sensitivity to price.
The Company further differentiates itself by employing a focused strategy for a
particular buyer group. For instance, Clark/Bardes services segments such as
banking with an insider's view of the industry which results in providing high
quality services customized to a client's needs while achieving lower costs.

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<PAGE> 43

Clark/Bardes offers customized enrollment and administrative services for
insurance-financed employee benefit programs, including business-owned life
insurance and non-qualified benefit plans. Due to the many complex requirements
of the administrative process, each client is assigned an account team comprised
of four account specialists who are responsible for servicing the needs of that
client. The administrative services provided by the Company's account
specialists include coordinating and managing the enrollment process,
distributing communication materials, monitoring financial, tax and regulatory
changes, providing accounting reports, performing annual reviews and reporting
historical and projected cash flow and earnings. The account specialists are
supported by the Company's in-house actuarial, legal, accounting and insurance
specialists.

CLARK/BARDES PLAN SERVICES

[FLOW CHART]

The Company builds its client base by fostering long-term client
relationships. To this end, the training and focus of each account team centers
on the Company's goal of delivering the highest quality program implementation
and administrative services in the industry. This benefits both the client,
through top professional support, and the producer, who can focus more closely
on the sales process. To further emphasize long-term client relationships, the
Company enters into administrative agreements with each client, in most cases
for a term of five to ten years. Finally, the Company's method of calculating
the revenue splits with its producers attempts to ensure the long-term viability
of its administrative services group. More specifically, the Company estimates
the administrative cost for the term of an administrative agreement. Thereafter,
the administrative costs are collected directly from the client or from the
producer's commission if no fees are charged to the client. The purpose of this
arrangement is to ensure that the revenue from new sales is not required to
subsidize the administrative costs of existing cases.

Management believes that the Company's commitment to providing high quality
client and administrative services is one of the primary reasons that the
Company has achieved the success it has enjoyed to date. The Company believes
that its continued focus on, and investment in, the personnel and technology
necessary to deliver this level of client service will bolster the Company's
reputation as an industry leader.

DISTRIBUTION

The Company markets its insurance-financed employee benefit programs and
related administrative services through a group of producers in independently
operated sales offices located throughout the United States. As of July 24,
1998, the Company was represented by 36 producers in 32 offices, with staffing
ranging in size from two persons to over 20 persons. The Company's producers are
expected to own an aggregate of at

40
<PAGE> 44

least 34.7% of the outstanding shares of Common Stock after giving effect to the
Offering. See "Principal and Selling Stockholders." Each producer is an
independent contractor and enters into an agency agreement with the Company to
market programs and services on behalf of the Company on an exclusive basis.
Each agency agreement defines the duties of the producer to solicit and sell
covered business and the revenue splits between the producer and the Company
(typically 69% to the producer and 31% to the Company) and includes a non-
solicitation clause (typically, three years by the Company and the producer with
respect to separate clients (as defined in the applicable agreement) and five
years by the producer with respect to joint clients), confidentiality agreement
and operating guidelines and standards. The agency agreements can be terminated
by either party with either 90 or 180 days written notice depending upon the
individual agreement. As an independent contractor, each producer is responsible
for its own selling expenses and overhead.

Other than The Wamberg Organization (which accounted for approximately 26%
of 1997 revenues), two producers accounted for approximately 15% and 11%,
respectively, of 1997 revenue and no other producers accounted for more than 10%
of 1997 revenue. The Company recognizes and seeks to expand its base of
producers so as to mitigate any dependency on a small number of producers for a
large portion of the Company's business. Clark/Bardes and its producers in turn
recognize the importance of attracting and retaining qualified, productive sales
professionals. To this end, the Company and its producers actively recruit and
develop new sales professionals in order to add distribution capacity for the
Company. Further, the Company's acquisition strategy focuses on retaining the
productive sales professionals of the entity being acquired.

EMPLOYEES

As of June 30, 1998, the Company employed approximately 145 persons, of
whom approximately 65 worked in administrative services, 22 worked in program
design, 19 worked in information systems and technical support, 10 worked in
accounting, 6 worked in marketing, and the remainder performed various executive
and administrative functions. The majority of the Company's employees have
college degrees, with several persons holding advanced degrees in law, business
administration or actuarial science. Professional development is a highly valued
industry characteristic, and insurance and financial planning designations such
as FSA, ASA, CLU, CEBS, ChFC, CFP, and FLMI are held by a large number of the
Company's employees. The Company actively encourages continuing education for
employees through expense reimbursement and reward plans. Due to the specialized
nature of the business, Clark/Bardes often recruits experienced persons from
insurance companies, consulting firms and related industries.

MARKETING SUPPORT

Clark/Bardes has made a substantial investment to establish a highly
qualified marketing department. The marketing department's primary focus is to
support the Company's sales efforts. To this end, the marketing department
develops and tracks sales leads for the producers, provides marketing materials
and research and performs the public relations function for the Company and its
producers. The marketing department, which includes a full time copywriter and
graphic artist, produces all the marketing materials used by the Company and its
producers. The Company, through its marketing department, distributes external
newsletters and other program update pieces to approximately 7,500 current and
prospective clients throughout the year and sponsors telephone conferences and
meetings featuring industry experts and nationally recognized speakers. Finally,
the marketing department coordinates the publication of articles written by
Clark/Bardes employees and producers and ensures that Company representatives
are quoted as information sources in major national publications. Management
believes that the efforts of the Company's marketing department have helped make
Clark/Bardes a readily identifiable leader in the insurance-financed employee
benefit industry.

PRODUCER SUPPORT

The Company's producers are supported by a design and analysis department.
The department's primary responsibility is to design a customized
insurance-financed employee benefit program that will effectively offset the
costs of a client's employee benefit liabilities. The design analyst works with
the producer to identify
41
<PAGE> 45

the needs of a prospective client. Next, the design analyst 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 alternatives to assist that client in making a
decision.

TECHNOLOGY AND ADMINISTRATION

The Company has made a significant investment in developing proprietary
financial modeling and administrative systems that support the unique
characteristics of insurance-financed employee benefit programs. Both systems
are generalized and parameter-driven in order to support the special processing
needs of a diverse client base. The Unix-based administrative system utilizes a
relational database that allows the Company to access easily client,
participant, policy and benefit information. In addition, a telephonic
application allows individual plan participants access 24 hours a day to account
balance and unit price information. In 1998, management plans to begin migrating
the administrative system to a client-server based environment in order to
reduce system development time and to allow the Company to respond more quickly
to changing market and client needs.

Local area networks link all of the Company's personal computers. Internet
mail is utilized to communicate with clients and the sales offices. Management
intends to continue to invest in technology and system development in order to
offer additional services to clients, support new markets, integrate acquired
operations, improve productivity and reduce costs. For example, the Company's
1998 capital budget contemplates implementing intranet and collaborative
workgroup tools to speed communications and to allow information to be easily
shared across the organization. Further, as the Company continues to grow
internally and by acquisitions, management intends to establish a wide area
network to facilitate communications across all locations.

The Company maintains a disaster recovery plan for its local area network
and Unix environments in order to minimize downtime in the event of a major
system failure. The local area network file servers and Unix database servers
are located in a physically secure area and all systems are password-protected
to ensure access is limited to authorized individuals.

PERSISTENCY

Over the last five years, the Company has experienced an average annual
persistency rate of approximately 98.0% of the inforce insurance underlying the
Company's programs. Historically, revenue persistency has tracked with insurance
policy persistency with the exception of Leveraged COLI business, which was
affected by adverse tax law changes, and business related to Confederation Life
Insurance Company, which was impacted by the cessation of operations and
subsequent rehabilitation of that company. In both instances renewal revenue was
adversely impacted even though insurance policies remained in force. The Company
believes that this high persistency rate is attributable to numerous factors.
The first factor relates to the underlying purpose of an insurance-financed
employee benefit program, which is to offset the costs of employee benefit
liabilities and provide long-term benefits to executives. An insurance policy is
not typically used to fund the benefits for a specific individual, but rather to
offset the costs of a client's employee benefit costs on an aggregate basis.
Therefore, the policy is usually held to maturity, regardless of whether any
particular individual insured remains with the client. Second, a client would
suffer unfavorable tax consequences upon the surrender of the underlying
business-owned life insurance policy. The cash value of the policy to the extent
it represents amounts beyond the cash premiums paid by the allowable charges
against the insurance account, or gain on insurance, is taxed immediately at
ordinary income rates upon surrender, and an additional penalty tax applies in
certain instances. A client often has the option of making a tax-free exchange
to another policy. Upon the exchange, however, the client would incur
substantial insurance company-related costs, such as premium taxes. These costs
are normally waived in the event a particular insurance company experiences a
significant reduction in its credit rating. Third, the Company's high
persistency rate is partially attributable to provisions in many interest rate
sensitive products that disallow a full-scale withdrawal or exchange. Finally,
Clark/Bardes has strategically committed resources to provide a high degree of
on-going

42
<PAGE> 46

client service. Management believes that the quality of the Company's services
enhances persistency by distinguishing the Company from its competitors.

COMPETITION

The marketing, design and administration of insurance-financed employee
benefit programs is highly competitive. The Company and its producers compete
with a large number of insurance agents, life insurance brokers, third party
administrators, producer groups and insurance companies. The Company's direct
competitors include Compensation Resource Group, Harris Crouch Long Scott and
Miller, Management Compensation Group, Newport Group, TBG Financial and The Todd
Organization. Furthermore, competition exists for producers and other marketers
of life insurance products who have demonstrated sales ability. National banks,
with their existing depositor bases for financial services products, may pose
increasing competition in the future to companies who sell life insurance
products, including the Company. Recent United States Supreme Court decisions
have expanded the authority of national banks to sell life insurance products.

GOVERNMENT REGULATION

The insurance-financed employee benefit market is subject to extensive
regulation by state governments. Clark/Bardes operates in all 50 states through
licenses held by Clark/Bardes or by its producers. In addition, the Company
markets its insurance-financed employee benefit programs in the states of Ohio,
Pennsylvania and Texas through entities licensed in those states for which the
Company provides almost all services by means of administrative service
agreements. In general, state insurance laws generally establish supervisory
agencies with broad administrative and supervisory powers related to such
matters as granting and revoking licenses, approving individuals and entities to
whom commissions can be paid, licensing insurance agents, transacting business,
approving policy forms and regulating premium rates for some lines of business.
Licensing laws applicable to insurance marketing activities and the receipt of
commissions vary by jurisdiction and are subject to interpretation as to the
application of such requirements to specific activities or transactions. While
the Company has not encountered regulatory problems in the past, no assurance
can be given that the Company would be deemed to be in compliance with all
applicable licensing requirements of each jurisdiction in which the Company
operates or that additional licenses would not be required of the Company or
that the Company or its producers will not encounter regulatory problems in the
future, including any potential sanctions or penalties for operating in a
jurisdiction without all required licenses. See "Risk Factors -- Governmental
Regulation."

While the federal government does not directly regulate the marketing of
most insurance products, certain products, such as variable life insurance, must
be registered under the federal securities acts and therefore the producers and
the entities selling such products must be registered with the NASD. The Company
markets such insurance products through an entity registered as a broker-dealer
and for which the Company provides almost all services by means of
administrative service agreements. Further, the Company is subject to various
federal laws and regulations affecting matters such as pensions, age and sex
discrimination, financial services, securities and taxation. In recent years,
the Office of the Comptroller of the Currency has issued a number of rulings
which have expanded the ability of banks to sell certain insurance products.
Further, the United States House of Representatives is currently considering the
Financial Services Act (H.R. 10), which would, among other things, eliminate
existing restrictions on the affiliation of insurance companies,
43
<PAGE> 47

banks and securities firms. Such legislation and other future federal or state
legislation, if enacted, could result in increased competition, as well as new
opportunities, for the Company. See "Risk Factors -- Governmental Regulation."

ANCILLARY BUSINESS ARRANGEMENTS

Because of various federal and state licensing restrictions, the Company
markets certain products registered with the SEC and its insurance-financed
employee benefit programs in the states of Ohio, Pennsylvania and Texas through
insurance agencies for which the Company provides almost all services by means
of an administration and services agreement (an "Administration and Services
Agreement"). Each of the insurance agencies, Clark/Bardes Securities, Inc., a
Texas corporation licensed as a broker/dealer, Clark/ Bardes Agency of Ohio,
Inc., an Ohio corporation, Clark/Bardes, Inc. of Pennsylvania, a Pennsylvania
corporation, and Clark/Bardes of Texas, Inc., a Texas corporation, provides the
entity through which the Company's producers sell certain products and conduct
business in such states. In exchange, each of the insurance agencies is a party
to an Administration and Services Agreement pursuant to which such insurance
agency pays the Company to furnish facilities, services, personnel and
assistance, including (i) performing all bookkeeping and accounting functions,
(ii) establishing and maintaining all records required by law and by generally
accepted accounting principles, (iii) furnishing all stationery, forms and
supplies, (iv) providing all necessary clerical and professional staff to
perform the above activities, (v) providing all computer hardware and software
capabilities and facilities, (vi) providing office space, furniture, fixtures,
equipment and supplies, (vii) assisting in the preparation of reports required
by governmental regulatory and supervisory authorities, and (viii) billing and
collection of all premiums. The charges and fees pursuant to the Administration
and Services Agreement are equal to the costs incurred by the Company in
providing the services, personnel and property, plus an additional amount equal
to a certain percentage of such cost. Each insurance agency is solely
responsible for its own activities as an insurance producer and for its
relationship with the producers or employees in the course and scope of their
activities performed on behalf of such agency. Clark/Bardes Securities, Inc.
paid the Company an aggregate of $250,000, $211,000 and $206,000 in 1995, 1996
and 1997, respectively. Clark/Bardes Agency of Ohio, Inc. paid the Company an
aggregate of $0, $0 and $155,000 in 1995, 1996 and 1997, respectively.
Clark/Bardes, Inc. of Pennsylvania paid the Company an aggregate of $66,019,
$27,400, and $86,800 in 1995, 1996 and 1997, respectively. Clark/Bardes of
Texas, Inc. has not conducted any operations to date, and hence no payments have
been made to the Company.

PROPERTIES

The following table sets forth certain information with respect to the
principal facilities used in the Company's operations, both of which are leased:

<TABLE>
<CAPTION>
CURRENT MONTHLY APPROXIMATE LEASE
LOCATION LEASE RATE SQUARE FOOTAGE EXPIRATION DATE
-------- --------------- -------------- ---------------
<S> <C> <C> <C>
Dallas, Texas............................... $46,632 32,000 April 2002
Minneapolis, Minnesota...................... $31,120 15,000 August 2005
</TABLE>

The aggregate monthly lease rate for the properties listed above is
$77,752. The Company subleases approximately 2,300 square feet of its
Minneapolis, Minnesota office space at a monthly rate of $4,804. Management
believes that the Company's existing facilities are adequate to meet its office
space requirements for the foreseeable future.

ADVISORY BOARD

The Company has an advisory board whose primary functions are to offer
guidance to the Company's officers and directors and to provide specific
assistance and advice regarding potential acquisitions. Currently, the advisory
board is comprised of 28 members. While the Company has no obligation to accept
or take any actions recommended by the advisory board, management believes that
the advisory board, because of its members' broad range of experience and
interests, is a valuable source of knowledge from which the Company

44
<PAGE> 48

can draw. The advisory board meets at least once a year, and management consults
with individual members of the advisory board from time to time on an as-needed
basis.

LEGAL PROCEEDINGS

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 producers. Such claims include
pending claims by a former producer with BCS alleging misrepresentations by BCS
and related parties in connection with such former producer's agreement with BCS
and claiming damages in connection therewith. The Company does not believe that
these claims will have a material adverse effect on the Company's business,
financial condition and results of operations.

MANAGEMENT

EXECUTIVE OFFICERS, DIRECTORS AND KEY EMPLOYEES

The following table sets forth certain information as of June 30, 1998 with
respect to the executive officers, directors and key employees of CBH and
Clark/Bardes:

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
W.T. Wamberg.............................. 45 Chairman of the Board and Director of each
of CBH and Clark/Bardes
Lawrence H. Hendrickson................... 59 Vice Chairman and Director of each of CBH
and Clark/Bardes
Melvin G. Todd............................ 42 President, Chief Executive Officer and
Director of each of CBH and Clark/Bardes
Richard C. Chapman........................ 43 Executive Vice President of Clark/Bardes
Thomas M. Pyra............................ 46 Chief Financial Officer of each of CBH and
Clark/Bardes
James V. Meyer............................ 42 Senior Vice President of Clark/Bardes
James C. Bean............................. 45 Senior Vice President of Clark/Bardes
Larry R. Sluder........................... 51 Senior Vice President and Corporate Actuary
of Clark/Bardes
Keith L. Staudt........................... 47 Vice President, General Counsel and
Secretary of each of CBH and Clark/Bardes
Kathleen L. Cooper........................ 48 Vice President, Insurance Administrator of
Clark/Bardes
William J. Gallegos, Jr................... 38 Vice President, Client Services of
Clark/Bardes
Kurt J. Laning............................ 37 Vice President, Research and Development of
Clark/Bardes
Sue A. Leslie............................. 52 Vice President, Technical Services of
Clark/Bardes
Chris L. Parker........................... 33 Vice President, Design and Analysis of
Clark/Bardes
Ronald A. Roth............................ 40 Vice President, Marketing of Clark/Bardes
Randolph A. Pohlman....................... 55 Director of each of CBH and Clark/Bardes
L. William Seidman........................ 77 Director of each of CBH and Clark/Bardes
</TABLE>

45
<PAGE> 49

W.T. WAMBERG has served as the Chairman of the Board of Directors and a
Director of CBH since June 1998, and became the Chairman of the Board of
Directors and a Director of Clark/Bardes upon the consummation of the Merger.
Mr. Wamberg's term as a Director of CBH expires in January 2001. Mr. Wamberg
served as a Director of the Predecessor Company since 1988 and served as the
Chairman of the Board of the Predecessor Company from September 1996 until the
consummation of the Merger. Mr. Wamberg, who has been a producer for the Company
since 1976, is also President and CEO of The Wamberg Organization, Inc., an
independently operated sales office that markets the Company's products. Mr.
Wamberg graduated from Baldwin-Wallace College with a Bachelor of Arts degree in
finance. Mr. Wamberg was formerly President of the Association for Advanced Life
Underwriting.

LAWRENCE H. HENDRICKSON has served as the Vice Chairman of the Board of
Directors and Director of CBH since June 1998, and became the Vice Chairman of
the Board of Directors and a Director of Clark/ Bardes upon the consummation of
the Merger. Mr. Hendrickson's term as Director of CBH expires in January 2000.
From September 1996 until the consummation of the Merger, Mr. Hendrickson served
as the Vice Chairman of the Board of Directors and a Director of the Predecessor
Company. Mr. Hendrickson founded BCS in May 1982 and since that time and through
the date of the BCS acquisition served as its Chief Executive Officer. Prior to
founding BCS, Mr. Hendrickson was President of L.H. Hendrickson & Co., Inc.
providing investment and insurance solutions to small businesses and affluent
individuals since 1960. Mr. Hendrickson is a graduate of the University of
Minnesota with a Bachelor of Arts degree in business.

MELVIN G. TODD has served as a Director, Chief Executive Officer and
President of CBH since June 1998, and became a Director and the Chief Executive
Officer and President of Clark/Bardes upon the consummation of the Merger. Mr.
Todd's term as a Director of CBH expires in January 1999. From January 1993
until the consummation of the Merger, Mr. Todd served as a Director and the
Chief Executive Officer and President of the Predecessor Company. Prior to
joining the Predecessor Company, Mr. Todd served as a Vice President with The
Great-West Life Assurance Company. Mr. Todd graduated with honors from the
University of Manitoba with a Bachelor of Commerce degree. Mr. Todd is also an
active member of the American Academy of Actuaries and a Fellow of the Society
of Actuaries.

RICHARD C. CHAPMAN became an Executive Vice President of Clark/Bardes upon
the consummation of the Merger. Prior to the Merger, Mr. Chapman served as the
President and Chief Executive Officer of Bank Compensation Strategies Group, an
operating division of the Predecessor Company, since September 1997. Prior to
joining the Predecessor Company, Mr. Chapman was a producer for BCS since 1985,
served as President of BCS since January 1994 and as Chief Executive Officer
since September 1997. Prior to joining BCS, Mr. Chapman was an officer with
First Bank System, a regional bank holding company in Minneapolis, Minnesota.
Mr. Chapman graduated cum laude from Augustana College in Sioux Falls, S.D.,
with a double major in mathematics and business administration.

THOMAS M. PYRA became the Chief Financial Officer of CBH in June 1998 and
became the Chief Financial Officer of Clark/Bardes upon the consummation of the
Merger. Mr. Pyra served as the Chief Financial Officer for the Predecessor
Company from July 1998 until the consummation of the Merger. Prior to joining
the Predecessor Company, Mr. Pyra served as Vice President and Chief Financial
Officer of Geodesic Systems, L.L.C. from April 1997. Mr. Pyra served as Chief
Financial Officer for Recompute Corporation from October 1995 until January 1997
and served as Vice President and Controller of Intercraft Company from October
1992 until June 1995. Mr. Pyra received a Bachelor of Science degree in finance
and an MBA from DePaul University.

JAMES V. MEYER became Senior Vice President of Clark/Bardes upon the
consummation of the Merger and has served in the same capacity for Bank
Compensation Strategies Group, an operating division of the Predecessor Company,
since September 1997. Prior to joining the Predecessor Company, Mr. Meyer served
as Senior Vice President of BCS from November 1995 to December 1996 and as
Executive Vice President of BCS from January 1997 to August 1997. Prior to
joining BCS, Mr. Meyer served as a Vice President at Blanski Peter Kronlage &
Zoch, public accountants, from May 1987 to November 1995. Mr. Meyer graduated
from the University of St. Thomas with a Bachelor of Science degree in
Accounting, and from the American

46
<PAGE> 50

College with a Masters of Science in Financial Services. Mr. Meyer holds the
designations of Certified Public Accountant and Certified Financial Planner.

JAMES C. BEAN became the Senior Vice President of Clark/Bardes upon the
consummation of the Merger and served in the same capacity for Bank Compensation
Strategies Group, an operating division of the Predecessor Company, since
February 1998. From October 1990 to February 1998, Mr. Bean served as Senior
Vice President and Managing Principal of Mullin Consulting, an executive
benefits firm. Mr. Bean graduated from the University of Minnesota with a
Bachelor of Arts degree in Liberal Arts.

LARRY R. SLUDER became Senior Vice President and Corporate Actuary of
Clark/Bardes upon the consummation of the Merger and has served in the same
capacity for the Predecessor Company from February 1998 until the consummation
of the Merger. From August 1993 to February 1998, Mr. Sluder served as a Vice
President and Corporate Actuary of the Predecessor Company. Prior to joining the
Predecessor Company, Mr. Sluder served as a Consulting Actuary in the executive
benefits and compensation area for an actuarial consulting firm. Mr. Sluder
graduated from the University of North Carolina with a Bachelor of Science
degree in mathematics and continued with graduate studies at Wake Forest
University.

KEITH L. STAUDT has served as the Vice President, General Counsel and
Secretary of CBH since June 1998 and became the Vice President, General Counsel
and Secretary of Clark/Bardes upon the consummation of the Merger. Prior to June
1998, Mr. Staudt served the Predecessor Company as General Counsel since March
1995, as Vice President and General Counsel since 1997, and as Vice President,
General Counsel and Secretary since April 1997. From September 1986 to March
1995, Mr. Staudt served as Vice President of Marketing Services for Allianz Life
Insurance Company in Dallas, Texas. Mr. Staudt graduated from the University of
Iowa with a Bachelor of Arts degree in Anthropology and a Juris Doctor degree.

KATHLEEN L. COOPER became Vice President, Insurance Administrator of
Clark/Bardes upon the consummation of the Merger and has served in the same
capacity for Bank Compensation Strategies Group, an operating division of the
Predecessor Company, since September 1997. From November 1990 to September 1997,
Ms. Cooper served as a Vice President, Insurance Administrator, for BCS. Ms.
Cooper joined BCS at the time it was founded in 1982.

WILLIAM J. GALLEGOS, JR. became Vice President, Client Services of
Clark/Bardes upon the consummation of the Merger and has served in the same
capacity for the Predecessor Company since May 1993. From January 1987 to May
1993, Mr. Gallegos served the Predecessor Company in various client service
positions. Prior to joining the Predecessor Company in 1987, Mr. Gallegos held
accounting and financial analyst positions with Chevron and National Resource
Management. Mr. Gallegos graduated from Louisiana State University with a
Bachelor of Science degree in Business Administration and a Masters of Business
Administration from Louisiana Tech University.

KURT J. LANING became Vice President, Product Development of Clark/Bardes
upon the consummation of the Merger and has served in the same capacity for the
Predecessor Company since March 1998. From July 1996 to March 1998, Mr. Laning
served as an Actuarial Consultant for Laning Associates, an actuarial services
company, and from January 1995 to July 1996 served as Assistant Vice President,
Institutional Markets with The Great-West Life Assurance Company. From June 1991
to January 1995, Mr. Laning served as Executive Vice President and Actuary for
Bancsource Insurance Services, Inc. Mr. Laning graduated from the University of
Wisconsin with a Bachelor of Science degree in Actuarial Science.

SUE A. LESLIE became Vice President, Technical Services of Clark/Bardes
upon the consummation of the Merger and has served in the same capacity for the
Predecessor Company since April 1991. Prior to joining the Predecessor Company,
Ms. Leslie was a consultant for system implementations at Continuum, Inc. Ms.
Leslie has more than 25 years experience developing systems for financial
services applications. Ms. Leslie graduated with honors from the University of
Texas with a Bachelor of Arts degree in mathematics.

CHRIS L. PARKER became Vice President, Design and Analysis of Clark/Bardes
upon the consummation of the Merger and has served in the same or similar
capacities for the Predecessor Company since February 1994. From January 1987 to
January 1994, Mr. Parker served as Assistant Manager with The Great-West

47
<PAGE> 51

Life Assurance Company. Mr. Parker graduated from the University of Illinois
with a Bachelor of Science degree in Actuarial Science.

RONALD A. ROTH became Vice President, Marketing of Clark/Bardes upon the
consummation of the Merger and has served in the same capacity for the
Predecessor Company since March 1993. From May 1989 to March 1993, Mr. Roth was
Marketing Manager for The Great-West Life Assurance Company. Mr. Roth graduated
from the University of Colorado with a Bachelor of Arts degree in Economics.

RANDOLPH A. POHLMAN has served as a Director of CBH since June 1998 and
became a Director of Clark/ Bardes upon the consummation of the Merger. Mr.
Pohlman's current term as director expires in January 2001. Since February 1996
until the consummation of the Merger, Mr. Pohlman served as a member of the
Predecessor Company's Advisory Board. Since July 1995 Mr. Pohlman has served as
the Dean at the School of Business and Entrepreneurship at Nova Southeastern
University in Fort Lauderdale, Florida. From April 1990 to July 1995, Mr.
Pohlman served as Director of Human Resources World Wide for Koch Industries.
Mr. Pohlman graduated from Kansas State University with a Bachelor of Science
and Master of Science degrees in Business Administration and, in addition,
earned a Ph.D. in finance and organizational behavior from Oklahoma State
University.

L. WILLIAM SEIDMAN has served as a Director of CBH since June 1998 and
became a Director of Clark/ Bardes upon the consummation of the Merger. Mr.
Seidman's term as Director of CBH expires in January 2000. From September 1997
until the consummation of the Merger, Mr. Seidman served as a member of the
Predecessor Company's Advisory Board. Mr. Seidman is the chief commentator on
NBC cable network's CNBC and publisher of Bank Director magazine. From 1985 to
1991, Mr. Seidman served as the fourteenth chairman of the Federal Deposit
Insurance Corporation under Presidents Reagan and Bush. He became the first
chairman of the Resolution Trust Corporation in 1989 and served in that capacity
until 1991. Earlier, Mr. Seidman had served as President Reagan's co-chair of
the White House Conference on Productivity, President Ford's Assistant of
Economic Affairs and a member of the Arizona Governor's Commission on Interstate
Banking. The former dean of Arizona State's College of Business, Mr. Seidman
holds an A.B. from Dartmouth (Phi Beta Kappa), an LL.B. from Harvard Law School
and an M.B.A. (with honors) from the University of Michigan.

The directors will be divided as evenly as possible into three classes,
denominated Class I, Class II and Class III, with the terms of office of each
class expiring at the 1999, 2000 and 2001 annual meeting of stockholders,
respectively. After his initial term, each Director will serve for a term ending
following the third annual meeting following the annual meeting at which such
Director is elected and until his successor is elected an qualified, or until
his earlier death, resignation or removal. The directors in each class are as
follows: Class I--Mr. Todd, Class II--Mr. Hendrickson and Mr. Seidman, Class
III--Mr. Wamberg and Mr. Pohlman. All officers are appointed by, and serve at
the discretion of, the Board of Directors. CBH intends to add two more directors
after the Offering.

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<PAGE> 52

EXECUTIVE COMPENSATION

The following table sets forth the annual and long-term compensation with
respect to the Chief Executive Officer of the Company and the Company's four
most highly compensated executive officers in 1997 other than the Chief
Executive Officer for services rendered to the Predecessor Company.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION(1)(2) SECURITIES
------------------------------- UNDERLYING
YEAR SALARY($) BONUS($)(3) OPTIONS(#)
---- --------- ----------- ------------
<S> <C> <C> <C> <C>
Melvin G. Todd................................... 1997 $250,886 $225,007 70,833
President, Chief Executive Officer and Director 1996 250,008 200,006 --
1995 250,000 133,333 --
Richard C. Chapman(4)............................ 1997 84,191 75,000 --
Executive Vice President 1996 -- -- --
1995 -- -- --
Larry R. Sluder.................................. 1997 131,554 78,500 30,145
Senior Vice President and Corporate Actuary 1996 111,000 49,400 --
1995 105,000 28,000 --
Keith L. Staudt.................................. 1997 113,554 50,400 14,640
Vice President, General Counsel and Secretary 1996 102,750 20,550 --
1995 67,846 10,000 --
Sue A. Leslie.................................... 1997 105,000 47,250 16,667
Vice President, Technical Services 1996 100,000 40,000 --
1995 94,500 25,200 --
</TABLE>

- ---------------

(1) Does not include "Other Annual Compensation" because amounts of certain
perquisites and other noncash benefits provided by the Company did not
exceed the lesser of $50,000 or 10.0% of the total annual base salary and
bonus disclosed in this table for the respective officer.

(2) Clark/Bardes does not pay Mr. Wamberg for services other than as Chairman of
the Board and Director. Clark/Bardes pays commission splits to The Wamberg
Organization which in turn pays Mr. Wamberg's salary. See "Certain
Transactions -- Principal Office Agreement with W.T. Wamberg" and
"-- Compensation of Directors."

(3) Represents for the named executive officers incentive compensation under
employment agreements. See "Management -- Employment and Indemnification
Agreements."

(4) Represents compensation paid by the Predecessor Company for the four month
period ended December 31, 1997.

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<PAGE> 53

The following table sets forth certain information concerning the options
granted to the named executive officers during 1997:

OPTION GRANTS IN LAST YEAR

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE VALUE
------------------------------------------------------ AT ASSUMED ANNUAL RATES
NUMBER OF % OF TOTAL OF STOCK PRICE
SECURITIES OPTIONS GRANTED APPRECIATION
UNDERLYING TO EMPLOYEES EXERCISE FOR OPTION TERM(2)
OPTIONS IN PRICE EXPIRATION --------------------------
NAME GRANTED YEAR(1) PER SHARE DATE 5% 10%
---- ---------- --------------- --------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Melvin G. Todd............. 20,833 10.9 $4.80 3/5/07 $ 62,888 $159,372
50,000 26.2 $7.00 3/5/07 $220,113 $557,810
Richard C. Chapman......... -- -- -- -- -- --
-- -- -- -- -- --
Larry R. Sluder............ 5,145 2.7 $4.80 3/5/07 $ 15,531 $ 39,359
25,000 13.1 $7.00 3/5/07 $110,057 $278,905
Keith L. Staudt............ 2,140 1.1 $4.80 3/5/07 $ 6,460 $ 16,371
12,500 6.6 $7.00 3/5/07 $ 55,028 $139,452
Sue A. Leslie.............. 4,167 2.1 $4.80 3/5/07 $ 12,579 $ 31,877
12,500 6.6 $7.00 3/5/07 $ 55,028 $139,452
</TABLE>

- ---------------

(1) Options to purchase a total of 40,830 shares of common stock of the
Predecessor Company at an exercise price of $4.80 per share were granted in
1997, and options to purchase a total of 150,000 shares of common stock of
the Predecessor Company at an exercise price of $7.00 per share were granted
in 1997.

(2) In accordance with the rules of the SEC, the amounts shown on this table
represent hypothetical gains that could be achieved for the respective
options if exercised at the end of the option term. These gains are based on
the assumed rates of stock appreciation of 5% and 10% compounded annually
from the date the respective options were granted to their expiration date
and do not reflect the Company's estimates or projections of future Common
Stock prices. The gains shown are net of the option exercise price, but do
not include deductions for taxes or other expenses associated with the
exercise. Actual gains, if any, on stock option exercises will depend on the
future performance of the Common Stock, the option holder's continued
employment through the option period, and the date on which the options are
exercised.

The following table sets forth certain information concerning all
unexercised options held by the named executive officers as of December 31,
1997. For additional information and certain terms of options see
"Management -- Stock Option Plan." No options were exercised during 1997.

AGGREGATE OPTION EXERCISES IN LAST YEAR AND YEAR END OPTION VALUES

<TABLE>
<CAPTION>
VALUE OF UNEXERCISED IN
NUMBER OF UNEXERCISED THE MONEY OPTIONS AT
SHARES OPTIONS AT YEAR-END(#) YEAR-END(1)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Melvin G. Todd.............. -- -- 20,833 50,000 $160,414 $275,000
Richard C. Chapman.......... -- -- -- -- -- --
Larry R. Sluder............. -- -- 6,250 23,895 $ 34,375 $142,741
Keith L. Staudt............. -- -- 3,125 11,515 $ 17,187 $ 68,040
Sue A. Leslie............... -- -- 3,125 13,542 $ 17,187 $ 83,647
</TABLE>

- ---------------

(1) Value for "in-the-money" options represents the positive spread between the
respective exercise prices of outstanding options and an assumed initial
public offering price of $12.50 per share (the midpoint of the Range).

50
<PAGE> 54

COMMITTEES OF THE BOARD OF DIRECTORS

Upon the consummation of the Offering, the Board of Directors will
establish an audit committee (the "Audit Committee"), which will consist of
Messrs. Pohlman and Seidman, a compensation committee (the "Compensation
Committee"), which will consist of Messrs. Pohlman and Seidman, and an executive
committee (the "Executive Committee"), which will consist of Messrs. Wamberg,
Hendrickson and Todd.

The Audit Committee will review the scope and approach of the annual audit,
the annual financial statements of the Company and the auditors' report thereon
and the auditors' comments relative to the adequacy of the Company's system of
internal controls and accounting systems. The Audit Committee will also
recommend to the Board of Directors the appointment of independent public
accountants for the following year. The Audit Committee will consist of at least
two members, both of whom will be independent directors.

The Compensation Committee will review management compensation levels and
provide recommendations to the Board of Directors regarding salaries and other
compensation for the Company's executive officers, including bonuses and
incentive plans, and will administer the Stock Option Plan.

The Executive Committee will have the power and authority of the Board of
Directors to manage the affairs of the Company between meetings. The Executive
Committee will also regularly review significant corporate matters and recommend
action as appropriate to the Board of Directors.

COMPENSATION OF DIRECTORS

The members of the Board of Directors of each of CBH and Clark/Bardes who
are also employees receive no additional compensation for their services as a
director. Prior to the Offering, the Company reimbursed Mr. Wamberg and Mr.
Hendrickson up to an aggregate of $100,000 and $75,000, respectively, per
calendar year for expenses incurred on behalf of CBH and Clark/Bardes. The
Company anticipates adopting new policies regarding director compensation in the
near future.

EMPLOYEE BENEFIT AND RETIREMENT PLANS

The Company maintains a defined contribution plan for its employees that is
qualified under Section 401(k) of the Internal Revenue Code of 1986, as amended
(the "401(k) Plan"). Clark/Bardes matches 50.0% of the first 6.0% of salary that
an eligible participant contributes to the 401(k) Plan.

STOCK OPTION PLAN

A total of 2,000,000 shares of Common Stock has been reserved for issuance
pursuant to the Stock Option Plan. On the date of this Prospectus, there were
690,853 shares of Common Stock subject to options previously granted at a
weighted average exercise price of $9.74 per share. The Stock Option Plan was
initially adopted by the Predecessor Company in March 1997 and assumed, amended
and restated by CBH in July 1998 in connection with the Reorganization.
Subsequent to the amendment of the Stock Option Plan, an aggregate of 400,023
options were granted at the Offering price. The Stock Option Plan is
administered by the Board or the Compensation Committee, who have full authority
to determine the individuals to whom, and the time at which, the options may be
granted and the number of shares covered by each option. Both nonqualified stock
options and incentive stock options (as defined in the Code) may be granted
under the Stock Option Plan. The option price per share is determined by the
Compensation Committee but may not be less than fair market value for incentive
stock options. Options may be granted to officers, employees (including officers
who are also directors), non-employee directors or licensed insurance producers
of the Company or any of its subsidiaries. Incentive stock options are not
transferable or assignable by an optionee other than by will or the laws of
descent and distribution. Nonqualified stock options may be transferred to
certain permitted transferees to the extent permitted in the applicable
nonqualified stock option agreement granting any such nonqualified stock
options.

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<PAGE> 55

EMPLOYEE STOCK PURCHASE PLAN

In July 1998, the Board of Directors adopted the Stock Purchase Plan, under
which a total of 200,000 shares of Common Stock has been reserved for issuance.
The Board of Directors has appointed a committee to administer the Stock
Purchase Plan. Any employee who has been employed by the Company for 90 days is
eligible to participate in offerings under the Stock Purchase Plan.

The Stock Purchase Plan will be implemented by eight semi-annual offerings
of Common Stock beginning on each January 1 and July 1 in each of the years
1999, 2000, 2001 and 2002, and terminating on June 30 and December 31 of each
such year. The maximum number of shares issued in such years will be 50,000 in
1999, and 50,000 plus the number of unissued shares from prior offerings for
each of 2000, 2001 and 2002.

On the commencement date of each offering under the Stock Purchase Plan, a
participating employee will be deemed to have been granted an option to purchase
a maximum number of shares of Common Stock equal to: (i) the percentage of the
employee's base pay that such employee has elected to be withheld (not to exceed
10%), (ii) multiplied by such employee's base pay during the period of such
offering and (iii) divided by the lower of 85% of the closing market price of
the Common Stock on the applicable offering commencement date or 85% of the
closing market price of the Common Stock on the offering termination date.
Options held by a participant shall be exercisable only by that participant.

No employee may be granted options to participate in the Stock Purchase
Plan if, as a result of such grant, such employee would (i) own stock or hold
options to purchase stock possessing 5% or more of the total combined voting
power or value of all classes of stock of the Company or (ii) have rights to
purchase stock under all employee stock purchase plans of the Company that
accrue at a rate in excess of $25,000 in fair market value for any calendar
year.

Unless a participant gives written notice to the Company, such
participant's option for the purchase of Common Stock with payroll deductions
made during an offering shall be deemed to have been exercised automatically on
the offering termination date applicable to such offering, for the purchase of
the number of full shares of Common Stock that the accumulated payroll
deductions at that time will purchase at the applicable option price. A
participant may withdraw payroll deductions credited to his account under the
Stock Purchase Plan at any time.

KEY EXECUTIVE LIFE INSURANCE

The Company maintains and is the sole beneficiary of key man life insurance
policies on the lives of Mr. Wamberg, Mr. Hendrickson, Mr. Todd and Mr. Chapman
in the amounts of $11.0 million, $3.0 million and $2.0 million, respectively.
See "Risk Factors -- Dependence on Key Personnel."

52
<PAGE> 56

PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth the number and percentage of the outstanding
shares of Common Stock owned beneficially as of the date of this Prospectus by:
(i) each person or "group" (as that term is defined in Section 13(d)(3) of the
Exchange Act) known by the Company to beneficially own more than 5% of the
Common Stock, (ii) each director of the Company, (iii) each executive officer of
the Company and (iv) all directors and executive officers as a group.

<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
OF COMMON STOCK BENEFICIAL OWNERSHIP
PRIOR TO THE OF COMMON STOCK
OFFERING(1) AFTER THE OFFERING(1)
--------------------- ---------------------
NAME OF BENEFICIAL OWNER SHARES PERCENT SHARES PERCENT
------------------------ ---------- -------- ---------- --------
<S> <C> <C> <C> <C>
W.T. Wamberg(2)(3)(4)................................. 1,938,518 47.8% 1,938,518 24.1
Lawrence H. Hendrickson............................... 415,509 10.2% 415,509 5.2
Richard C. Chapman.................................... 304,152 7.5% 304,152 3.8
Melvin G. Todd(5)..................................... 235,774 5.7% 235,774 2.9
William J. Gallegos, Jr.(6)........................... 23,895 * 23,895 *
Sue A. Leslie(7)...................................... 30,833 * 30,833 *
Chris L. Parker(8).................................... 16,368 * 16,368 *
Ronald A. Roth(9)..................................... 27,913 * 27,913 *
Larry R. Sluder(10)................................... 37,723 * 37,723 *
Keith L. Staudt(11)................................... 23,202 * 23,202 *
Randolph A. Pohlman................................... 8,333 * 8,333 *
All directors and executive officers as a group (11
individuals)........................................ 3,062,220 72.1% 3,062,220 37.1%
</TABLE>

- ---------------

* Less than 1%

(1) In computing the number of shares of Common Stock beneficially owned by a
person, shares of Common Stock subject to options and warrants or
convertible debt held by that person that are currently exercisable or that
become exercisable within 60 days of the date of this Prospectus are deemed
outstanding for such person but are not deemed to be outstanding for
purposes of computing the ownership percentage for any other person.

(2) Mr. Wamberg has granted the Underwriters an over-allotment option to
purchase 600,000 shares of Common Stock exercisable at any time during the
30-day period after the date of this Prospectus. After giving effect to the
Offering and if the over-allotment is exercised in full, Mr. Wamberg would
own 1,338,518 shares of Common Stock representing 16.6% of the outstanding
shares of Common Stock.

(3) Mr. Wamberg intends to grant to certain employees of The Wamberg
Organization options to purchase an aggregate of 141,406 shares of Common
Stock at varying exercise prices per share. None of the options to be
granted to the employees of The Wamberg Organization are exercisable within
60 days and therefore Mr. Wamberg remains the beneficial owner of such
shares.

(4) Mr. Wamberg has agreed to purchase $1.2 million in aggregate principal
amount of the Clark/Bardes 8.5% Convertible Subordinated Notes due
September 2007 from BCS, an entity that is wholly owned by Messrs.
Hendrickson, Chapman and Walter Hilgenberg. These notes are convertible at
the election of Mr. Wamberg into 203,390 shares of Common Stock.

(5) Includes 70,833 shares of Common Stock issuable upon exercise of
outstanding stock options exercisable within 60 days of the date of this
Prospectus.

(6) Includes 14,573 shares of Common Stock issuable upon exercise of
outstanding stock options exercisable within 60 days of the date of this
Prospectus.

(7) Includes 16,667 shares of Common Stock issuable upon exercise of
outstanding stock options exercisable within 60 days of the date of this
Prospectus.

53
<PAGE> 57

(8) Includes 14,434 shares of Common Stock issuable upon exercise of
outstanding stock options exercisable within 60 days of the date of this
Prospectus.

(9) Includes 16,413 shares of Common Stock issuable upon exercise of
outstanding stock options exercisable within 60 days of the date of this
Prospectus.

(10) Includes 30,146 shares of Common Stock issuable upon exercise of
outstanding stock options exercisable within 60 days of the date of this
Prospectus.

(11) Includes 14,640 shares of Common Stock issuable upon exercise of
outstanding stock options exercisable within 60 days of the date of this
Prospectus.

54
<PAGE> 58

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

PRINCIPAL OFFICE AGREEMENT WITH W.T. WAMBERG

The Company and Mr. Wamberg are the parties to a Principal Office Agreement
dated July 29, 1993, pursuant to which The Wamberg Organization markets, on
behalf of the Company, life insurance and administrative and consulting
services, and the Company furnishes to The Wamberg Organization marketing
materials and concepts, program design ideas, selected life insurance products,
specimen plan documents and administrative services. Upon request, the Company
will provide to The Wamberg Organization life insurance and benefit plan
illustrations, technical support personnel and such other services as are
reasonably necessary for the sale of the Company's programs. The agreement can
be terminated by either party upon 90 days' written notice. The Wamberg
Organization's commissions range between 65.0% and 70.0% of total revenue
depending on the amount of total revenue generated from a case. Commissions and
fees payable to The Wamberg Organization are net of any of the Company's
administrative costs as determined by the Board of Directors. Pursuant to the
terms of the Principal Office Agreement, The Wamberg Organization was paid
$3,872,000, $4,964,000, and $7,792,000 in 1995, 1996 and 1997, respectively, for
commissions and fees earned. The terms and conditions of Mr. Wamberg's Principal
Office Agreement are similar in all material respects to the terms and
conditions of such agreements with other producers designated as principals.

PURCHASE OF RENEWAL REVENUE FROM W.T. WAMBERG AND THE WAMBERG ORGANIZATION

In July 1998, the Predecessor Company, Mr. Wamberg and The Wamberg
Organization entered into an agreement which provides for, among other things, a
purchase of the renewal revenue due under the Principal Office Agreement with
Mr. Wamberg in exchange for a cash payment of approximately $7.4 million. The
Company considered the opportunity to acquire the renewal revenue from Mr.
Wamberg to be consistent with the Company's overall strategy of acquiring
businesses when suitable opportunities arise. This transaction allows
Clark/Bardes to retain additional commission and fee revenue for the ten year
period following the consummation of the transaction. The additional revenue
equates to approximately 20.0% of the commission and fee revenue, net of
servicing costs, related to renewal revenue on Mr. Wamberg's and The Wamberg
Organization's inforce business as of December 31, 1998. No independent
valuation of the business to be acquired was performed. However, the transaction
is subject to the approval of a majority of the disinterested stockholders of
the Predecessor Company at a stockholders' meeting to be held on July 31, 1998.
This transaction will be effective as of December 31, 1998.

RESTRUCTURING OF THE GRANT OF STOCK TO MELVIN TODD

In June 1998, the Predecessor Company granted to Mr. Todd 52,500 shares of
the Predecessor Company's common stock effective July 1, 1998 if Mr. Todd is
employed as the Company's CEO at that time. In June 1998, this agreement was
altered to provide that if Mr. Todd is employed as CEO on July 1, 1998 he will
receive shares of Common Stock valued at $301,350 (approximately 24,108 shares
based on the mid-point of the Range), $223,650 in cash and a fully vested five
year option to purchase 30,523 shares of Common Stock exercisable at the initial
public offering price.

STOCK PURCHASE AGREEMENTS

On August 29, 1997, the Predecessor Company purchased from Henry J. Smith,
the retired former Chairman of the Board of Directors of the Predecessor
Company, 702,152 shares of the Predecessor Company's common stock, which
represented all of the shares of common stock owned by Mr. Smith. The shares
were purchased in connection with Mr. Smith's retirement from the Predecessor
Company. The purchase price equaled $4.80 per share for an aggregate of
$3,370,332 and consisted of the payment of cash in the amount of $3,033,290 and
the issuance of a Promissory Note in the principal amount of $337,042, which
amount has been paid in full.

On August 29, 1997, the Predecessor Company purchased an aggregate of
1,396,571 shares of the Predecessor Company's common stock, representing 75% of
the shares of common stock owned by a group of

55
<PAGE> 59

stockholders of the Predecessor Company consisting of Malcolm N. Briggs, Steven
J. Cochlan, G.F. Pendleton, III and Don R. Teasley. The purchase of the shares
was made in connection with obtaining the consent of such stockholders to
certain transactions such as the BCS acquisition. The purchase price equalled
$6.00 per share for an aggregate of $8,379,429 and consisted of the payment of
cash in the amount of $7,541,486 and the issuance of Subordinated Promissory
Notes in the aggregate principal amount of $837,943, which amount has been paid
in full. Each seller agreed to vote all shares of capital stock then owned, or
thereafter acquired, in the manner specified or directed by the board of
directors.

On November 14, 1997, the Predecessor Company purchased from Don Teasley an
aggregate of 52,242 shares of the Predecessor Company's common stock. The
purchase price equalled $4.20 per share for an aggregate of $219,414 and was
paid in cash. The purchase of such shares was made in connection with the
termination of Mr. Teasley's producer agreement with the Predecessor Company.

The Predecessor Company did not obtain any independent valuation with
respect to any of the above described stock purchases. In each case, the Board
of Directors of the Predecessor Company determined that the purchase price
offered by the holders of such shares was fair in relation to prior transactions
and the circumstances of each such purchase of shares.

PHANTOM STOCK AGREEMENT

The Predecessor Company entered into a Phantom Stock Agreement, dated
September 5, 1997, with Steven J. Cochlan, a producer of the Company. Under this
agreement, Mr. Cochlan is entitled to receive payments expressed in units (the
"Incentive Units") based upon certain levels of revenue received by the Company
on sales of certain products by Mr. Cochlan. Mr. Cochlan will be entitled to
receive payments for the value, if any, of the Incentive Units, beginning April
1, 2003 and every year thereafter until April 1, 2008. Management believes that
it is unlikely that Mr. Cochlan will be entitled to any payments under the
Phantom Stock Agreement based on the required revenue performance levels.

ANCILLARY BUSINESS ARRANGEMENTS

Because of various federal and state licensing restrictions, the Company
markets certain products registered with the SEC and its insurance-financed
employee benefit programs in the states of Ohio, Pennsylvania and Texas through
insurance agencies for which the Company provides almost all services pursuant
to an Administration and Services Agreement. Each of the insurance agencies,
Clark/Bardes Securities, Inc., a Texas corporation licensed as a broker/dealer,
Clark/Bardes Agency of Ohio, Inc., an Ohio corporation, Clark/Bardes, Inc. of
Pennsylvania, a Pennsylvania corporation, and Clark/Bardes of Texas, Inc., a
Texas corporation, provides the entity through which the Company's producers
sell certain products and conduct business in such states. In exchange, each of
the insurance agencies is a party to an Administration and Services Agreement
pursuant to which such insurance agency pays the Company to furnish facilities,
services, personnel and assistance, including (i) performing all bookkeeping and
accounting functions, (ii) establishing and maintaining all records required by
law and by generally accepted accounting principles, (iii) furnishing all
stationary, forms, and supplies, (iv) providing all necessary clerical and
professional staff to perform the above activities, (v) providing all computer
hardware and software capabilities and facilities, (vi) providing office space,
furniture, fixtures, equipment and supplies, (vii) assisting in the preparation
of reports required by governmental regulatory and supervisory authorities, and
(viii) billing and collection of all premiums. The charges and fees pursuant to
the Administration and Services Agreement are equal to the costs incurred by the
Company in providing the services, personnel and property, plus an additional
amount equal to a certain percentage of such cost. Each insurance agency is
solely responsible for its own activities as an insurance producer and for its
relationship with the producers or employees in the course and scope of their
activities performed on behalf of such agency. See "Business -- Ancillary
Business Arrangements."

56
<PAGE> 60

DESCRIPTION OF CAPITAL STOCK

As of the date of this Prospectus, the authorized capital stock of CBH
consists of 20,000,000 shares of Common Stock, par value $0.01 per share, of
which 8,059,677 shares will be outstanding immediately following the Offering,
and 1,000,000 shares of Preferred Stock, par value $0.01 per share (the
"Preferred Stock"), of which no shares will be outstanding immediately following
the Offering. The following summary of CBH's capital stock is qualified in its
entirety by reference to CBH's Certificate of Incorporation and its Bylaws.

COMMON STOCK

The holders of Common Stock are entitled to one vote for each share on all
matters voted upon by stockholders, including the election of directors, and do
not have cumulative voting rights. Subject to the rights of holders of any then
outstanding shares of Preferred Stock, the holders of the Common Stock are
entitled to such dividends as may be declared in the discretion of the Board of
Directors out of funds legally available therefor. Holders of Common Stock are
entitled to share ratably in the net assets of CBH upon liquidation after
payment or provision for all liabilities and any preferential liquidation rights
of the Preferred Stock then outstanding. The holders of Common Stock have no
preemptive rights to purchase shares of stock in CBH. The shares of Common Stock
are not subject to any redemption provisions and are not convertible into any
other securities of CBH. All outstanding shares of Common Stock are, and the
shares of Common Stock to be issued by CBH in the Offering will be, upon payment
therefor, fully paid and nonassessable. The rights, preferences and privileges
of holders of Common Stock will be subject to those of the holders of any shares
of Preferred Stock the Company may issue in the future. See "Risk
Factors -- Anti-Takeover Considerations"

PREFERRED STOCK

The Board of Directors may from time to time authorize the issuance of one
or more classes or series of Preferred Stock without stockholder approval.
Subject to the provisions of the Certificate of Incorporation and limitations
prescribed by law, the Board of Directors is authorized to adopt resolutions to
issue the shares, establish the number of shares, change the number of shares
constituting any series, and provide or change the voting powers, designations,
preferences and relative, participating, optional or other special rights,
qualifications, limitations or restrictions on shares of Preferred Stock,
including dividend rights (including whether dividends are cumulative), dividend
rates, terms of redemption (including sinking fund provisions), redemption
prices, conversion rights and liquidation preferences, in each case without any
action or vote by the stockholders. CBH has no current plans to issue any shares
of Preferred Stock of any class or series.

One of the effects of undesignated Preferred Stock may be to enable the
Board of Directors to discourage an attempt to obtain control of CBH by means of
a tender offer, proxy contest, merger or otherwise, and thereby protect CBH's
management. The issuance of Preferred Stock pursuant to the Board of Directors'
authority described above may adversely affect the rights of the holders of
Common Stock. For example, Preferred Stock issued by CBH may rank prior to the
Common Stock as to dividend rights, liquidation preference or both, may have
full or limited voting rights and may be convertible into shares of Common
Stock. Accordingly, the issuance of shares of Preferred Stock may discourage
bids for the Common Stock or may otherwise adversely affect the trading price of
the Common Stock. See "Risk Factors -- Anti-Takeover Considerations."

CERTAIN EFFECTS OF AUTHORIZED BUT UNISSUED STOCK

Upon completion of the Offering there will be 9,740,323 shares of Common
Stock (excluding an aggregate of 2.0 million shares reserved for issuance under
the Stock Option Plan and 200,000 shares reserved for issuance under the Stock
Purchase Plan) and 1,000,000 shares of Preferred Stock available for future
issuance without stockholder approval. These additional shares may be utilized
for a variety of corporate purposes, including to facilitate acquisitions or
future public offerings to raise additional capital. CBH does not

57
<PAGE> 61

currently have any plans to issue additional shares of Common Stock or Preferred
Stock (other than shares of Common Stock issuable under the Stock Option Plan
and the Stock Purchase Plan).

ANTI-TAKEOVER CONSIDERATIONS AND SPECIAL PROVISIONS OF THE CERTIFICATE OF
INCORPORATION, BYLAWS AND DELAWARE LAW

Certificate of Incorporation and Bylaws. A number of provisions of the
Certificate of Incorporation and Bylaws concern matters of corporate governance
and the rights of stockholders. Certain of these provisions, including those
which provide for the classification of the Board of Directors and which grant
the Board of Directors the ability to issue shares of Preferred Stock and to set
the voting rights, preferences and other terms thereof, may be deemed to have an
anti-takeover effect and may discourage takeover attempts not first approved by
the Board of Directors (including takeovers which certain stockholders may deem
to be in their best interests). To the extent takeover attempts are discouraged,
temporary fluctuations in the market price of the Common Stock, which may result
from actual or rumored takeover attempts, may be inhibited. Certain of these
provisions also could delay or frustrate the removal of incumbent directors or
the assumption of control by stockholders, even if such removal or assumption
would be beneficial to the stockholders of CBH. These provisions also could
discourage or make more difficult a merger, tender offer or proxy contest, even
if they could be favorable to the interests of stockholders, and could
potentially depress the market price of the Common Stock. The Board of Directors
believes that these provisions are appropriate to protect the interests of CBH
and its stockholders.

Classified Board of Directors. The Certificate of Incorporation provides
for a Board of Directors that is divided into three classes. The directors in
Class I hold office until the first annual meeting of stockholders following the
Offering, the directors in Class II hold office until the second annual meeting
of stockholders following the Offering, and the directors in Class III hold
office until the third annual meeting of stockholders following the Offering
(or, in each case, until their successors are duly elected and qualified or
until their earlier resignation, removal from office for cause or death), and,
after each such election, the directors in each such class will then serve in
succeeding terms of three years and until their successors are duly elected and
qualified. The classification system of electing directors may tend to
discourage a third party from making a tender offer or otherwise attempting to
obtain control of CBH and may maintain the incumbency of the Board of Directors,
as the classification of the Board of Directors and such other provisions
generally increase the difficulty of, or may delay, replacing a majority of the
directors. The Bylaws provide that directors may only be removed for cause by a
vote of holders of at least 66 2/3% of the total votes eligible to be cast by
holders of Common Stock. Vacancies and newly created directorships may only be
filled by a majority of the directors.

Meetings of Stockholders. The Bylaws provide that annual meetings of
stockholders shall be held at such hour on such day and at such place within or
without the State of Delaware as may be fixed by the Board of Directors. A
special meeting of the stockholders may be called only by the Chairman of the
Board, the President, the Board of Directors or by the written request by a vote
of holders of at least 66 2/3% of the total votes eligible to be cast by holders
of Common Stock.

Advance Notice Provisions. The Bylaws provide that nominations for
directors may not be made by stockholders at any annual or special meeting
thereof unless the stockholder intending to make a nomination notifies CBH of
its intention a specified number of days in advance of the meeting and furnishes
to CBH certain information regarding itself and the intended nominee. The Bylaws
also require a stockholder to provide to the Secretary of CBH advance notice of
business to be brought by such stockholder before any annual or special meeting
of stockholders as well as certain information regarding such stockholder and
others known to support such proposal and any material interest they may have in
the proposed business. These provisions could delay stockholder actions that are
favored by the holders of at least a majority of the outstanding stock of CBH
until the next stockholders' meeting.

No Stockholder Action by Written Consent. The Certificate of Incorporation
provides that any action required or permitted to be taken by the stockholders
of CBH at an annual or special meeting of stockholders must be effected at a
duly called meeting and may not be taken or effected by a written consent of
stockholders in lieu thereof.

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<PAGE> 62

Amendment of the Certificate of Incorporation and Bylaws. The Certificate
of Incorporation provides that an amendment thereof must first be approved by a
majority of the Board of Directors and (with certain exceptions) thereafter must
be approved by a vote of the holders of at least 66 2/3% of the total votes
eligible to be cast by holders of Common Stock with respect to such amendment or
repeal.

The Certificate of Incorporation and Bylaws provide that the Bylaws may be
amended or repealed by the Board of Directors or by the stockholders. Such
action by the Board of Directors requires the affirmative vote of a majority of
the directors then in office. Such action by the stockholders requires the
affirmative vote of the holders of at least 66 2/3% of the total votes eligible
to be cast by holders of Common Stock with respect to such amendment or repeal.

Delaware Statutory Business Combination Provision. CBH is subject to
Section 203 ("Section 203") of the DGCL, which, subject to certain exceptions,
prohibits a publicly held Delaware corporation from engaging in any business
combination with any interested stockholder for a period of three years
following the time that such stockholder became an interested stockholder,
unless: (i) prior to such time, the board of directors of the corporation
approved either the business combination or the transaction which resulted in
the stockholder becoming an interested stockholder; (ii) upon consummation of
the transaction which resulted in the stockholder becoming an interested
stockholder, the interested stockholder owned at least 85.0% of the voting stock
of the corporation outstanding at the time the transaction commenced, excluding
for purposes of determining the number of shares outstanding those shares owned
(x) by persons who are directors and also officers and (y) by employee stock
plans in which employee participants do not have the right to determine
confidentially whether shares held subject to the plan will be tendered in a
tender or exchange offer; or (iii) at or subsequent to such time, the business
combination is approved by the board of directors and authorized at an annual or
special meeting of stockholders, and not by written consent, by the affirmative
vote of at least two-thirds of the outstanding voting stock which is not owned
by the interested stockholder. The application of Section 203 may limit the
ability of stockholders to approve a transaction that they may deem to be in
their best interests.

Section 203 defines "business combination" to include: (i) any merger or
consolidation involving the corporation and the interested stockholder; (ii) any
sale, transfer, pledge or other disposition of 10% or more of the assets of the
corporation to or with the interested stockholder; (iii) subject to certain
exceptions, any transaction which results in the issuance or transfer by the
corporation of any stock of the corporation to the interested stockholder; (iv)
any transaction involving the corporation which has the effect of increasing the
proportionate share of the stock of any class or series of the corporation
beneficially owned by the interested stockholder; or (v) the receipt by the
interested stockholder of the benefit of any loans, advances, guarantees,
pledges or other financial benefits provided by or through the corporation.
Section 203 defines an "interested stockholder" as a person who, together with
affiliates and associates, owns (or within the prior three years did own) 15% or
more of the outstanding voting stock of the corporation. Section 203 would not
apply to transactions with Mr. Wamberg or his affiliates and associates because
Mr. Wamberg became an interested stockholder prior to the time that CBH became
subject to Section 203.

A corporation may, at its option, exclude itself from the coverage of
Section 203 by amending its certificate of incorporation or bylaws by action of
its stockholders to exempt itself from coverage, provided that, with certain
limited exceptions, such bylaw or charter amendment shall not become effective
until 12 months after the date it is adopted. Neither the Certificate of
Incorporation nor the Bylaws contains any such exclusion.

Stockholder Rights Plan

On July 10, 1998, the Board of Directors of CBH declared a dividend of one
preferred share purchase right (a "Right") for each outstanding share of Common
Stock of CBH. The dividend will be payable to stockholders of record on the date
of the consummation of the Merger (the "Record Date"). Each Right entitles the
registered holder to purchase from CBH one one-thousandth of a share of Junior
Participating Preferred Stock, Series A, par value $0.01 per share (the
"Preferred Shares"), of CBH at a price per one-thousandth of a Preferred Share
(the "Purchase Price") to be determined by the Board of Directors prior to

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<PAGE> 63

the Record Date. The description and terms of the Rights are set forth in a
Rights Agreement (the "Rights Agreement") between CBH and The Bank of New York,
as Rights Agent (the "Rights Agent"), a copy of which has been filed as an
exhibit to the Registration Statement of which this Prospectus is a part.

Initially, the Rights will be attached to all certificates representing
shares of Common Stock ("Common Shares") then outstanding, and no separate Right
Certificates will be distributed. The Rights will separate from the Common
Shares upon the earliest to occur of (i) the close of business 10 days following
a public announcement that a person or group of affiliated or associated persons
(an "Acquiring Person") has acquired beneficial ownership of 15% or more of the
outstanding Common Shares (or, if the tenth day after such Acquiring Person
acquires beneficial ownership of 15% or more of the outstanding Common Shares
occurs before the Record Date, the close of business on the Record Date), or
(ii) the close of business 10 business days (or such later date as may be
determined by action of the Board of Directors prior to such time as any person
or group of affiliated persons becomes an Acquiring Person) following the
commencement of, or announcement of an intention to make, a tender offer or
exchange offer within the meaning of Rule 14d-2(a) of the General Rules and
Regulations under the Exchange Act, the consummation of which would result in
the beneficial ownership by a person or group of 15% or more of the outstanding
Common Shares (the earlier of such dates being called the "Distribution Date").

The Rights Agreement provides that, until the Distribution Date (or earlier
redemption or expiration of the Rights), the Rights will be transferred with and
only with the Common Shares. Until the Distribution Date (or earlier redemption
or expiration of the Rights), new Common Share certificates issued after the
Record Date upon transfer or new issuance of Common Shares will contain a
notation incorporating the Rights Agreement by reference. Until the Distribution
Date (or earlier redemption or expiration of the Rights), the surrender for
transfer of any certificates for Common Shares outstanding as of the Record
Date, even without such notation or a copy of the summary of Rights being
attached thereto, will also constitute the transfer of the Rights associated
with the Common Shares represented by such certificate. As soon as practicable
following the Distribution Date, separate certificates evidencing the Rights
("Right Certificates") will be mailed to holders of record of the Common Shares
as of the close of business on the Distribution Date and such separate Right
Certificates alone will evidence the Rights. The Rights are not exercisable
until the Distribution Date. The Rights will expire on the date ten years after
the Record Date (the "Final Expiration Date"), unless the Rights are earlier
redeemed or exchanged by CBH, in each case, as described below.

The Purchase Price payable, and the number of Preferred Shares or other
securities or property issuable, upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Preferred
Shares, (ii) upon the grant to holders of the Preferred Shares of certain rights
or warrants to subscribe for or purchase Preferred Shares at a price, or
securities convertible into Preferred Shares with a conversion price, less than
the then current market price of the Preferred Shares or (iii) upon the
distribution to holders of the Preferred Shares of evidences of indebtedness or
assets (excluding regular periodic cash dividends paid out of earnings or
retained earnings or dividends payable in Preferred Shares) or of subscription
rights or warrants (other than those referred to above). The number of
outstanding Rights and the number of one one-thousandth of a Preferred Share
issuable upon exercise of each Right are also subject to adjustment in the event
of a stock split of the Common Shares or a stock dividend on the Common Shares
payable in Common Shares or subdivisions, consolidations or combinations of the
Common Shares occurring, in any such case, prior to the Distribution Date.

Preferred Shares purchasable upon exercise of the Rights will not be
redeemable. Each Preferred Share will be entitled to a minimum preferential
quarterly dividend payment of $10 per share but will be entitled to an aggregate
dividend of 1000 times the dividend declared per Common Share. In the event of
liquidation, the holders of the Preferred Shares will be entitled to a minimum
preferential liquidation payment of $1000 per share but will be entitled to an
aggregate payment of 1000 times the payment made per Common Share. Each
Preferred Share will have 1000 votes, voting together with the Common Shares.
Finally, in the event of any merger, consolidation or other transaction in which
Common Shares are exchanged, each Preferred Share will be entitled to receive
1000 times the amount received per Common Share. These rights are protected by
customary antidilution provisions. Because of the nature of the Preferred
Shares' dividend, liquidation and

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voting rights, the value of the one one-thousandth interest in a Preferred Share
purchasable upon exercise of each Right should approximate the value of one
Common Share.

In the event that CBH is acquired in a merger or other business combination
transaction or 50% or more of its consolidated assets or earning power are sold
after a person or group has become an Acquiring Person, proper provision will be
made so that each holder of a Right will thereafter have the right to receive,
upon the exercise thereof at the then current exercise price of the Right, that
number of shares of common stock of the acquiring company which at the time of
such transaction will have a market value of two times the exercise price of the
Right. In the event that any person or group of affiliated or associated persons
becomes an Acquiring Person, proper provision shall be made so that each holder
of a Right, other than Rights beneficially owned by the Acquiring Person (which
will thereafter be void), will thereafter have the right to receive upon
exercise that number of Common Shares having a market value of two times the
exercise price of the Right.

At any time after any person or group becomes an Acquiring Person and prior
to the acquisition by such person or group of 50% or more of the outstanding
Common Shares, the Board of Directors of CBH may exchange the Rights (other than
Rights owned by such person or group which will have become void), in whole or
in part, at an exchange ratio of one Common Share, or one one-thousandth of a
Preferred Share (or of a share of a class or series of CBH's preferred stock
having equivalent rights, preferences and privileges), per Right (subject to
adjustment).

With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional Preferred Shares will be issued (other than
fractions which are integral multiples of one one-thousandth of a Preferred
Share, which may, at the election of CBH, be evidenced by depositary receipts)
and in lieu thereof, an adjustment in cash will be made based on the market
price of the Preferred Shares on the last trading day prior to the date of
exercise.

At any time prior to the acquisition by a person or group of affiliated or
associated persons of beneficial ownership of 15% or more of the outstanding
Common Shares, the Board of Directors of CBH may redeem the Rights in whole, but
not in part, at a price of $0.01 per Right (the "Redemption Price"). The
redemption of the Rights may be made effective at such time on such basis with
such conditions as the Board of Directors in its sole discretion may establish.
Immediately upon any redemption of the Rights, the right to exercise the Rights
will terminate and the only right of the holders of Rights will be to receive
the Redemption Price.

The terms of the Rights may be amended by the Board of Directors of CBH
without the consent of the holders of the Rights, except that from and after
such time as any person or group of affiliated or associated persons becomes an
Acquiring Person no such amendment may adversely affect the interests of the
holders of the Rights. Until a Right is exercised, the holder thereof, as such,
will have no rights as a shareholder of CBH, including, without limitation, the
right to vote or to receive dividends.

Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of CBH, including without limitation, the right to vote
or to receive dividends. While the distribution of the Rights will not be
taxable to stockholders of CBH, stockholders may, depending upon the
circumstances, recognize taxable income should the Rights become exercisable or
upon the occurrence of certain events thereafter.

Each outstanding Common Share on the Record Date will receive one Right. As
long as the Rights are attached to the Common Shares, CBH will issue one Right
with each new Common Share so that all such shares will have attached rights.
CBH will reserve 20,000 Preferred Shares for issuance upon exercise of the
Rights.

The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire CBH on terms
not approved by CBH's Board of Directors, except pursuant to an offer
conditioned on a substantial number of Rights being acquired. The Rights should
not interfere with any merger or other business combination approved by the
Board of Directors since the Rights may be redeemed by CBH at the Redemption
Price prior to the time that a person or group has acquired beneficial ownership
of 15% or more of the Common Shares.

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<PAGE> 65

Indemnification and Limitation Of Liability. The Certificate of
Incorporation provides that a director shall not be liable to CBH or its
stockholders for monetary damages for breach of fiduciary duty as a director, to
the fullest extent permitted by the DGCL, as it now exists or may hereafter be
amended. The Certificate of Incorporation and the Bylaws also provide that CBH
shall indemnify any and all persons whom it shall have the power to indemnify,
including directors, officers and agents (as determined at the discretion of the
Board of Directors), against any and all expenses, liabilities or other matters,
to the fullest extent permitted by the DGCL. At the present time, there is no
pending litigation or proceeding involving any director, officer, employee or
agent of CBH in which indemnification will be required or permitted. CBH is not
aware of any threatened litigation or proceeding which may result in a claim for
such indemnification.

Preferred Stock. The Certificate of Incorporation permits CBH's Board of
Directors to issue Preferred Stock at any time without stockholder approval. See
"Description of Capital Stock -- Preferred Stock."

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Common Stock is The Bank of New
York.

SHARES ELIGIBLE FOR FUTURE SALE

Future sales of a substantial number of shares of Common Stock in the
public market could adversely affect trading prices prevailing from time to
time.

Upon completion of the Offering, CBH will have outstanding 8,059,677 shares
of Common Stock. The shares sold in the Offering will be freely tradeable
without restriction under the Securities Act, unless purchased by "affiliates"
of CBH as that term is defined in Rule 144, which is summarized below. Of the
remaining 4,059,677 shares, 1,580,513 shares are freely transferable and
2,479,164 shares are "restricted securities" as that term is defined in Rule 144
("Restricted Shares"). Restricted Shares may be sold in the public market only
if such sale is registered under the Securities Act or if such sale qualifies
for an exemption from registration, such as the one provided by Rule 144. Sales
of the Restricted Shares in the open market, or the availability of such shares
for sale, could adversely affect the trading price of the Common Stock.

In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated) who has beneficially owned Restricted Shares for at
least one year following the later of the date of the acquisition of such shares
from the issuer or an affiliate of the issuer would be entitled to sell within
any three-month period a number of shares that does not exceed the greater of:
(i) 1.0% of the number of shares of Common Stock then outstanding (approximately
80,597 shares immediately after the Offering) or (ii) the average weekly trading
volume of the Common Stock during the four calendar weeks preceding the filing
of a Form 144 with respect to such sale. Sales under Rule 144 are also subject
to certain manner of sale provisions and notice requirements and the
availability of current public information about the Company. Under Rule 144(k),
a person who is not deemed to have been an affiliate of the Company at any time
during the 90 days preceding a sale, and who has beneficially owned the shares
proposed to be sold for at least two years following the later of the date of
the acquisition of such shares from the issuer or an affiliate of the issuer, is
entitled to sell such shares without complying with the manner of sale, public
information, volume limitation or notice provisions of Rule 144.

CBH intends to file registration statements on Form S-8 under the
Securities Act covering the offering and sale of the 2,000,000 shares of Common
Stock reserved for issuance under the Stock Option Plan and the 200,000 shares
reserved for issuance under the Stock Purchase Plan. Accordingly, shares of
Common Stock issued upon exercise of options granted under the Stock Option Plan
or purchased with payroll deductions under the Stock Purchase Plan will be
available for sale in the open market, unless such shares are subject to certain
lock-up agreements. See "Underwriting."

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UNDERWRITING

The underwriters of the Offering named below (the "Underwriters"), for whom
Bear, Stearns & Co. Inc., Piper Jaffray Inc. and Conning & Company are acting as
representatives, have severally agreed with CBH, subject to the terms and
conditions of the Underwriting Agreement (the form of which has been filed as an
exhibit to the Registration Statement on Form S-1 of which this Prospectus is a
part), to purchase from CBH the aggregate number of Shares set forth opposite
their respective names below:

<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
----------- ---------
<S> <C>
Bear, Stearns & Co. Inc. ...................................
Piper Jaffray Inc. .........................................
Conning & Company...........................................

--------
Total.............................................
========
</TABLE>

The nature of the obligations of the Underwriters is such that all of the
Common Stock must be purchased if any is purchased. Those obligations are
subject, however, to various conditions, including the approval of certain
matters by counsel. CBH has agreed to indemnify the Underwriters against certain
liabilities, including under the Securities Act, and, where such indemnification
is unavailable, to contribute to payments that the Underwriters may be required
to make in respect of such liabilities.

CBH has been advised that the Underwriters propose to offer the Common
Stock directly to the public initially at the public offering price set forth on
the cover page of this Prospectus and to certain selected dealers at such price
less a concession not to exceed $ per share, that the Underwriters may
allow, and such selected dealers may reallow, a concession to certain other
dealers not to exceed $ per share, and that after the commencement of the
Offering, the public offering price and the concessions may be changed.

Mr. Wamberg has granted to the Underwriters an option to purchase in the
aggregate up to 600,000 additional shares of Common Stock solely to cover
over-allotments, if any. The option may be exercised in whole or in part at any
time within 30 days after the date of this Prospectus. To the extent the option
is exercised, the Underwriters will be severally committed, subject to certain
conditions, including the approval of certain matters by counsel, to purchase
the additional shares of Common Stock in proportion to their respective purchase
commitments as indicated in the preceding table.

CBH, its executive officers, directors and principal stockholders,
including Mr. Wamberg, have agreed that, subject to certain limited exceptions,
for a period of at least 180 days after the date of this Prospectus, without the
prior written consent of Bear, Stearns & Co. Inc., they will not, directly or
indirectly, offer or agree to sell, sell or otherwise dispose of any shares of
Common Stock (or securities convertible into, exchangeable for or evidencing the
right to purchase shares of Common Stock).

Prior to the Offering, there has been no public market for the Common
Stock. Consequently, the initial public offering price will be determined
through negotiations among CBH and the representatives of the Underwriters.
Among the factors to be considered in making such determination will be CBH's
financial and operating history and condition, its prospects and prospects for
the industry in which it does business, the management of CBH, prevailing equity
market conditions and the demand for securities considered comparable to those
of CBH.

In order to facilitate the Offering, certain persons participating in the
Offering may engage in transactions that stabilize, maintain or otherwise affect
the price of the Common Stock during and after the Offering. Specifically, the
Underwriters may over-allot or otherwise create a short position in the Common
Stock for
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their own account by selling more shares than have been sold to them by CBH. The
Underwriters may elect to cover any such short position by purchasing shares in
the open market or by exercising the over-allotment option granted to the
Underwriters. In addition, such persons may stabilize or maintain the price of
the Common Stock by bidding for or purchasing shares in the open market and may
impose penalty bids under which selling concessions allowed to syndicate members
or other broker-dealers participating in the Offering are reclaimed if shares
previously distributed in the Offering are repurchased in connection with
stabilization transactions or otherwise. The effect of these transactions may be
to stabilize or maintain the market price of the Common Stock at a level above
that which might otherwise prevail in the open market. The imposition of a
penalty bid may also affect the price of the Common Stock to the extent that it
discourages resales thereof. No representation is made as to the magnitude or
effect of any such stabilization or other transactions. Such transactions may be
effected on the Nasdaq National Market or otherwise and, if commenced, may be
discontinued at any time.

At CBH's request, the Underwriters have reserved up to 600,000 shares of
Common Stock for sale to the Company's directors, officers, employees and
designees and have agreed to permit them to buy such shares at the initial price
to public. The number of shares of Common Stock available for sale by CBH to the
general public will be reduced to the extent such purchasers purchase such
reserved shares. Any reserved shares not so purchased will be offered by the
Underwriters to the general public at the initial price to the public.

Certain of the Underwriters and their affiliates have from time to time
provided, and may continue to provide, investment banking services and general
financing and banking services to CBH and certain of its affiliates for which
such Underwriters or affiliates have received and will receive fees and
commissions.

LEGAL MATTERS

The validity of the shares of Common Stock offered hereby will be passed
upon for CBH by Akin, Gump, Strauss, Hauer & Feld, L.L.P., Dallas, Texas.
Certain matters will be passed upon for the Underwriters by Skadden, Arps,
Slate, Meagher & Flom LLP, New York, New York.

EXPERTS

The financial statements of the Predecessor Company at December 31, 1997
and for the year then ended appearing in this Prospectus and the Registration
Statement have been audited by Ernst & Young LLP, independent auditors, as set
forth in their report thereon appearing elsewhere herein, and are included in
reliance upon such report given upon the authority of such firms as experts in
accounting and auditing. The financial statements of the Predecessor Company at
December 31, 1996 and 1995, and for each of the two years in the period ended
December 31, 1996, appearing in this Prospectus and the Registration Statement
have been audited by Lane Gorman Trubitt, LLP ("Lane Gorman"), independent
auditors, as set forth in their report thereon appearing elsewhere herein, and
are included in reliance upon such report given upon the authority of such firms
as experts in accounting and auditing. The financial statements of Bank
Compensation Strategies, Inc. at December 31, 1996 and 1995, and for each of the
two years in the period ended December 31, 1996, appearing in this Prospectus
and the Registration Statement have been audited by McGladrey & Pullen LLP,
independent auditors, as set forth in their report therein appearing elsewhere
herein, and are included in reliance upon such report given upon the authority
of such firms as experts in accounting and auditing.

In June 1997, the Predecessor Company dismissed Lane Gorman and engaged
Ernst & Young LLP to be its independent auditors. The financial statements of
the Predecessor Company at December 31, 1996 and 1995, and for each of the two
years in the period ended December 31, 1996 did not contain an adverse opinion
or a disclaimer of opinion and were not qualified or modified as to audit scope
or accounting principles. In connection with the audits of the Predecessor
Company's financial statements at December 31, 1996 and 1995, and for each of
the two years in the period ended December 31, 1996, and subsequent interim
periods, there were no disagreements between the Predecessor Company and Lane
Gorman on any matter of accounting principles or practices, financial statement
disclosure or auditing scope or procedure that, if not

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resolved to the satisfaction of Lane Gorman, would have caused such firm to make
reference thereto. The Predecessor Company's decision to change to Ernst & Young
LLP was approved by the Board of Directors of the Predecessor Company.

AVAILABLE INFORMATION

CBH has filed with the SEC, a Registration Statement on Form S-1 (the
"Registration Statement") under the Securities Act with respect to the offering
and sale of Common Stock. This Prospectus does not contain all the information
set forth in the Registration Statement and the exhibits and schedules thereto.
For further information with respect to CBH and the Common Stock, reference is
made to the Registration Statement and to the exhibits and schedules filed
therewith. Statements contained in this Prospectus as to the contents of any
contract or other document referred to are not necessarily complete, and in each
instance reference is made to the copy of such contract or other document filed
as an exhibit to the Registration Statement, each such statement being qualified
in all respects by such reference. A copy of the Registration Statement may be
inspected and copied at the public reference facilities maintained by the SEC at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at its
following regional offices: Northwestern Atrium Center, 500 W. Madison Street,
Suite 1400, Chicago, Illinois 60621-2511; and 7 World Trade Center, 13th Floor,
New York, New York 10048. Copies of such material can be obtained at prescribed
rates from the Public Reference Section of the SEC at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, or at the SEC's Internet world wide web
site at http://www.sec.gov. The Company intends to distribute to the holders of
Common Stock annual reports containing consolidated statements audited by
independent accountants.

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GLOSSARY

"AAA Amount" has the meaning set forth in "The
Reorganization -- Termination of S Corporation Status."

"Acquiring Person" has the meaning set forth in "Description of Capital
Stock -- Anti-Takeover Considerations and Special Provisions of the Certificate
of Incorporation, Bylaws and Delaware Law."

"Actuary" means a person who performs the statistical and mathematical
calculations necessary to compute insurance risks and premiums.

"Administrative agreement" means an arrangement under which the sponsor of
a benefit plan pays a fee in exchange for administrative services provided by
the Company, an insurance company or a third-party administrator.

"Administration and Services Agreement" has the meaning set forth in
"Business -- Ancillary Business Arrangements."

"Audit Committee" has the meaning set forth in "Management -- Committees of
the Board of Directors."

"Beneficiary" means the person or party who is named by the owner of an
insurance policy to receive the policy benefit upon the occurrence of the event
against which the policy insured. Any person (relative, non-relative) or entity
(charity, corporation, trustee, partnership) can be named a beneficiary.

"Bank-owned life insurance" means business-owned life insurance purchased
by a bank. See "Business -- Programs and Products."

"BCS" means Bank Compensation Strategies, Inc., a Minnesota based company
whose assets were acquired by the Predecessor Company effective September 1,
1997.

"Board of Directors" has the meaning set forth in "Risk
Factors -- Anti-Takeover Considerations."

"Broker" means a sales agent who sells insurance products of more than one
insurance company.

"Business-owned life insurance" means life insurance policies purchased by
a business that insure the lives of a number of employees. The business pays the
premiums on, and is the owner and beneficiary of, such policies. Business-owned
life insurance is used primarily to offset a business' cost of providing
employee benefits and to supplement and secure benefits for key executives. The
cash values of the life insurance policies are usually listed as an asset on a
company's balance sheet. See "Business -- Programs and Products."

"Bylaws" has the meaning set forth in "Risk Factors -- Anti-Takeover
Considerations."

"Cash value" means the amount of money, before adjustments for factors such
as policy loans, that a policyholder will receive if a permanent life insurance
policy does not remain inforce until the insured's death. Also know as cash
surrender value.

"CBH" means Clark/Bardes Holdings, Inc., a Delaware corporation. CBH owns
all the issued and outstanding shares of capital stock of Clark/Bardes, Inc., a
Delaware corporation.

"Certificate of Incorporation" has the meaning set forth in "Risk
Factors -- Anti-Takeover Considerations."

"CIGNA" means Connecticut General Life Insurance Company, a wholly owned
subsidiary of CIGNA Corporation.

"Clark/Bardes" means Clark/Bardes, Inc., a Delaware corporation, and its
predecessors. All the issued and outstanding shares of capital stock of
Clark/Bardes, Inc. is owned by Clark/Bardes Holdings, Inc., a Delaware
corporation.

"Code" means the Internal Revenue Code of 1986, as amended.

"Common Stock" means the shares of common stock, par value $0.01 per share,
of CBH.
66
<PAGE> 70

"Company" means Clark/Bardes Holdings, Inc., a Delaware corporation,
together with its wholly owned subsidiary Clark/Bardes, Inc. and the predecessor
of such wholly owned subsidiary.

"Compensation Committee" has the meaning set forth in
"Management -- Committees of the Board of Directors."

"DIP" means deferred income plan. See "Business -- Programs and Plans."

"Distribution Date" has the meaning set forth in "Description of Capital
Stock -- Anti-Takeover Considerations and Special Provisions of the Certificate
of Incorporation, Bylaws and Delaware Law."

"Distribution system" means a method of providing products from an
insurance company to consumers.

"DGCL" has the meaning set forth in "Risk Factors -- Anti-Takeover
Considerations."

"Employee benefit plan" means a formal arrangement by which by an employer
provides for the economic and social welfare of its employees. Examples of
employee benefit plans include: (i) pension plans for retirement; (ii) group
life insurance; (iii) group health insurance for illness and accident; (iv)
group disability income insurance for the loss of income due to illness and
accident; (v) accidental death and dismemberment; and (vi) dental insurance,
eyeglass insurance, and legal expense insurance. These plans are established for
the reasons of morale, to reduce turnover, and for certain tax benefits.

"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended. ERISA is a federal law established to govern private pension plans,
including vesting requirements, funding mechanisms and general plan design and
descriptions.

"Executive Committee" has the meaning set forth in
"Management -- Committees of the Board of Directors."

"Existing Stockholders" has the meaning set forth in "The
Reorganization -- Overview."

"Final Expiration Date" has the meaning set forth in "Description of
Capital Stock -- Anti-Takeover Considerations and Special Provisions of the
Certificate of Incorporation, Bylaws and Delaware Law."

"401(k) Plan" has the meaning set forth in "Management -- Employee and
Retirement Plans."

"Funding mechanism" means a method by which a group insurance plan's claim
costs and administrative expenses are paid.

"General account product" means a life insurance product that is structured
with investments that are held within the insurance company's general account,
as opposed to a separate account. General account products are usually fixed
rate life insurance products with yields that are reset annually based upon the
investments within the general account.

"General American" means General American Life Insurance Company, an
indirect wholly owned subsidiary of General American Mutual Holding Company.

"Great-West" means The Great-West Life & Annuity Insurance Company.

"Group insurance policy" means an insurance policy that is issued to an
organization that is purchasing insurance coverage for a specific group of
people.

"GTCO" means group term carve out plan. See "Business -- Programs and
Plans."

"Inforce" means insurance policies that have not expired.

"Leveraged COLI" means leveraged corporate-owned life insurance. Leveraged
COLI is an insurance product that allows a policyholder to borrow against the
cash value of the policy and to deduct a portion of the interest expense.
Narrowly viewed, these borrowings minimize the cash investment in the policy
while the cash values continue to grow at the declared rate of interest. The
result is an increased or leveraged net yield to the policy. Leveraged COLI was
effectively eliminated by changes in the federal tax laws.

67
<PAGE> 71

"Life Investors" means Life Investors Insurance Company of America, a
member of the AEGON Insurance Group.

"Merger" has the meaning set forth in "The Reorganization -- Overview."

"NASD" means the National Association of Securities Dealers, Inc. which is
an organization of brokers and securities dealers in the over-the-counter market
operation under the auspices of the Securities and Exchange Commission. The
NASD's purpose is to enforce, on a self-regulation basis, the rules of the
Securities and Exchange Commission which are designed to protect investors
against fraud and market manipulation of stocks. Insurance agents selling
variable life insurance, variable annuities and mutual funds are required to be
licensed by the NASD.

"Nationwide" means Nationwide Life Insurance Company, a wholly owned
subsidiary of Nationwide Insurance Enterprise.

"OBRA" has the meaning set forth in "Business -- Programs and Products."

"OCC" means Office of the Comptroller of the Currency which was created as
a result of the National Currency Act of 1863 and the National Banking Act of
1964. The OCC is the prime regulator for all U.S. nationally chartered banks and
is the organization that performs examinations and rulings on the national
banks.

"Offering" means the offer of Common Stock made pursuant to the Prospectus.

"Operating Margin" has the meaning set forth in "Management's Discussion
and Analysis of Financial Condition and Results of Operations -- Results of
Operations."

"Pending Acquisition" has the meaning set forth in "Pending Acquisition."

"Pension plan" means an agreement under which an employer establishes an
employee benefit plan to provide its employees with a lifetime monthly income
benefit that begins at an individual employee's retirement. To qualify, an
employee must have met minimum age and service requirements. Benefit formulas
can be either the defined contribution pension (money purchase plan) or the
defined benefit plan.

"Persistency" means the maintenance of insurance policies inforce until
completion of the term for which the policy was written.

"Phoenix Home Life" means Phoenix Home Life Mutual Insurance Company.

"Plan administrator" means the person or entity responsible for all the
administrative functions of an employee benefit plan, including ensuring that an
employee benefit plan complies with ERISA's disclosure and reporting
requirements.

"Plan participant" means an employee who is covered by a private employee
benefit plan established by its employer.

"Plan sponsor" means an employer that establishes a private employee
benefit plan.

"Policy loan" means a loan, the amount of which is based on the cash value
of a life insurance policy. Usually, the policyholder does not have to repay the
loan until the policy matures or until the loan and any outstanding interest
equals the cash value.

"Predecessor Company" means Clark/Bardes, Inc., a Texas corporation. The
Predecessor Company was founded in 1967 and merged with and into Clark/Bardes,
Inc., a Delaware corporation, in connection with the Merger.

"Preferred shares" has the meaning set forth in "Description of Capital
Stock -- Anti-Takeover Considerations and Special Provisions of the Certificate
of Incorporation, Bylaws and Delaware Law."

"Purchase Price" has the meaning set forth in "Description of Capital
Stock -- Anti-Takeover Considerations and Special Provisions of the Certificate
of Incorporation, Bylaws and Delaware Law."

68
<PAGE> 72

"Premium" means the specified amount of money that an insurance company
receives in exchange for its promise to provide a policy benefit when a specific
loss occurs. Premiums are calculated by combining expectation of loss and
expense and profit loading.

"Producer" means an individual who has contracted with the Company to
market the Company's programs and services on an exclusive basis. Each producer
is an independent contractor and is designated by the Company as either a
principal, representative or associate depending upon such producer's sales
volume.

"Producer agreement" means an agreement which creates a legal relationship
by which one party -- the agent -- is authorized to perform certain acts for
another party -- the principal. In the case of Clark/Bardes, each producer is an
agent of the Company.

"Protected Equity Plan" ("PEP") means a hybrid form of business-owned life
insurance incorporating the features of annual fixed yield insurance and
variable yield insurance. PEP usually involves an investment participation in
the S&P 500 index. The PEP yield is guaranteed to the greater of a percentage
participation in the S&P 500 index annual increase with a set maximum ceiling
yield and a minimum set floor yield. Further, PEP offers the features of a
tax-free yield, a guaranteed minimum yield and a guarantee of principal and
liquidity. It is the first life insurance product to receive patent pending
protection.

"Qualified plan" means a private employee retirement plan established by a
plan sponsor that meets certain legal requirements and as a result receives
favorable tax treatment.

"Range" means the spread between the upper and lower values of initial
public offering prices which are anticipated or estimated for the Offering. It
is currently anticipated that the initial public offering price will be $12.50
per share, the midpoint of the Range of $11.50 and $13.50 per share.

"Record Date" has the meaning set forth in "Description of Capital
Stock -- Anti-Takeover Considerations and Special Provisions of the Certificate
of Incorporation, Bylaws and Delaware Law."

"Redemption Price" has the meaning set forth in "Description of Capital
Stock -- Anti-Takeover Considerations and Special Provisions of the Certificate
of Incorporation, Bylaws and Delaware Law."

"Registered product" means an investment product, such as an annuity or a
variable life insurance policy, which must be registered with the Securities and
Exchange Commission or a state securities commission before such product can be
offered or sold in a particular jurisdiction. If an investment product is not
exempt from the registration requirement, the product is called a nonexempt
security.

"Registration Statement" has the meaning set forth in "Available
Information."

"Reorganization" has the meaning set forth in "The
Reorganization -- Overview."

"Reorganization Agreement" has the meaning set forth in "The
Reorganization -- Overview."

"Restricted Shares" has the meaning set forth in "Shares Eligible for
Future Sale."

"Restructured Notes" has the meaning set forth in "The
Reorganization -- Overview."

"Right" has the meaning set forth in "Description of Capital
Stock -- Anti-Takeover Considerations and Special Provisions of the Certificate
of Incorporation, Bylaws and Delaware Law."

"Rights Agent" has the meaning set forth in "Description of Capital
Stock -- Anti-Takeover Considerations and Special Provisions of the Certificate
of Incorporation, Bylaws and Delaware Law."

"Rights Agreement" has the meaning set forth in "Description of Capital
Stock -- Anti-Takeover Considerations and Special Provisions of the Certificate
of Incorporation, Bylaws and Delaware Law."

"Rights Certificate" has the meaning set forth in "Description of Capital
Stock -- Anti-Takeover Considerations and Special Provisions of the Certificate
of Incorporation, Bylaws and Delaware Law."

"Rule 144" has the meaning set forth in "Shares Eligible for Future Sale."

"Sales office" means a field office that is established and maintained by a
producer.

"Schoenke Companies" has the meaning set forth in "Pending Acquisition."

69
<PAGE> 73

"SEC" mean the Securities and Exchange Commission, which is a federal
agency empowered to regulate and supervise the selling of securities, to prevent
unfair practices on security exchanges and over-the-counter markets and to
maintain fair and orderly markets for investors.

"Section 203" has the meaning set forth in "Description of Capital
Stock -- Anti-Takeover Considerations and Special Provisions of the Certificate
of Incorporation, Bylaws and Delaware Law."

"Separate account" means an investment account maintained separately from
an insurance company's general investment account that is established to manage
the funds placed in variable rate products. Variable rate products, such as
variable life insurance policies and variable annuity policies, have fluctuating
yields based upon the investments within the separate account.

"SERP" means supplemental executive retirement plan. See
"Business -- Programs and Plans."

"SOP" means supplemental offset plan. See "Business -- Programs and Plans."

"Split dollar life insurance" means an employee benefit plan under which
the employer and its employees split the cost, cash value and insurance coverage
of the life insurance policy. The employee usually pays a small amount of the
premium, typically tied to a one year term insurance cost, and the employer will
pay the remaining premium. The employer is usually entitled to the policy's cash
value and death proceeds in an amount equal to the sum of its premium payments.
The excess of the policy's cash value and death proceeds are payable to the
employee. Split dollar plans may exist solely as an additional employee benefit,
or may be used to offset employee benefit liabilities.

"Stock Option Plan" has the meaning set forth in "Risk Factors -- Possible
Dilutive Effect of Issuance of Additional Shares."

"Stock Purchase Plan" has the meaning set forth in "Risk
Factors -- Possible Dilutive Effect of Issuance of Additional Shares."

"Stock Transfer Agreement" has the meaning set forth in
"Business -- Ancillary Business Arrangements."

"Stockholder Distribution Amount" has the meaning set forth in "The
Reorganization -- Termination of S Corporation Status."

"Tax Agreement" has the meaning set forth in "The
Reorganization -- Termination of S Corporation Status."

"The Wamberg Organization" means The Wamberg Organization, Inc., an
Illinois corporation. W.T. Wamberg, the Chairman of the Board of CBH and
Clark/Bardes, owns all the issued and outstanding capital stock of The Wamberg
Organization.

"Third-party administrator" means an organization other than an insurance
company that provides administrative services to the plan sponsors of group
benefit plans.

"Underwriters" has the meaning set forth in "Underwriting."

"Underwriting" means the process of identifying and classifying the degree
of risk represented by a proposed insured.

"Variable life insurance" means an investment-oriented life insurance
policy that provides a return linked to an underlying portfolio of securities.
The portfolio is typically a group of mutual funds established by the insurance
company as a separate account, with the policyholder given some investment
discretion in choosing the mix of assets. Variable life insurance offers fixed
premiums and a minimum death benefit. Usually, the higher the total return on
the investment portfolio, the higher the death benefit or surrenders value of
the variable life policy.

"Warrants" has the meaning set forth in "The Reorganization -- Overview."

"West Coast Life" means West Coast Life Insurance Company, a wholly owned
subsidiary of Protective Life Insurance Company.

70
<PAGE> 74

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Clark/Bardes, Inc., Reports of Independent Auditors......... F-2
Clark/Bardes, Inc., Balance Sheets at December 31, 1996 and
1997 and at June 30, 1998 (unaudited)..................... F-4
Clark/Bardes, Inc., Statements of Income for the years ended
December 31, 1995, 1996 and 1997 and the six months ended
June 30, 1997 and 1998 (unaudited)........................ F-5
Clark/Bardes, Inc., Statements of Stockholders' Equity
(Deficit) for the years ended December 31, 1995, 1996 and
1997 and the six months ended June 30, 1998 (unaudited)... F-6
Clark/Bardes, Inc., Statements of Cash Flows for the years
ended December 31, 1995, 1996 and 1997 and the six months
ended June 30, 1997 and 1998 (unaudited).................. F-7
Notes to Clark/Bardes, Inc. Financial Statements............ F-8
Bank Compensation Strategies Group, Unaudited Balance Sheet
at August 31, 1997........................................ F-22
Bank Compensation Strategies Group, Unaudited Statement of
Income for the eight months ended August 31, 1997......... F-23
Bank Compensation Strategies Group, Unaudited Statement of
Shareholders' Equity for the eight months ended August 31,
1997...................................................... F-23
Bank Compensation Strategies Group, Unaudited Statement of
Cash Flows for the eight months ended August 31, 1997..... F-24
Bank Compensation Strategies Group, Footnote to Unaudited
Financial Statements...................................... F-25
Bank Compensation Strategies Group, Independent Auditor's
Report.................................................... F-26
Bank Compensation Strategies Group, Balance Sheets at
December 31, 1996 and 1995................................ F-27
Bank Compensation Strategies Group, Statements of Income for
the years ended December 31, 1996 and 1995................ F-28
Bank Compensation Strategies Group, Statements of
Stockholder's Equity for the years ended December 31, 1996
and 1995.................................................. F-29
Bank Compensation Strategies Group, Statements of Cash Flows
for the years ended December 31, 1996 and 1995............ F-30
Notes to Bank Compensation Strategies Group Financial
Statements................................................ F-31
</TABLE>

F-1
<PAGE> 75

REPORT OF INDEPENDENT AUDITORS

Board of Directors

Clark/Bardes, Inc. (the predecessor to Clark/Bardes Holdings, Inc.)

We have audited the balance sheet of Clark/Bardes, Inc. (the predecessor to
Clark/Bardes Holdings, Inc.) as of December 31, 1997, and the related statements
of income, stockholders' equity (deficit), 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 audit. The financial statements of Clark/Bardes, Inc.
for the years ended December 31, 1996 and 1995, were audited by other auditors
whose report dated February 7, 1997 expressed an unqualified opinion on those
statements.

We conducted our audit in accordance with generally accepted auditing
standards. 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 1997 financial statements referred to above present
fairly, in all material respects, the financial position of Clark/Bardes, Inc.
at December 31, 1997, and the results of its operations and its cash flows for
the year then ended in conformity with generally accepted accounting principles.

ERNST & YOUNG LLP
Dallas, Texas

February 18, 1998, except for
Note 15, as to which the

date is July 10, 1998

F-2
<PAGE> 76

REPORT OF INDEPENDENT AUDITORS

Board of Directors

Clark/Bardes, Inc. (the predecessor to Clark/Bardes Holdings, Inc.)

We have audited the accompanying balance sheets of Clark/Bardes, Inc. (the
predecessor to Clark/Bardes Holdings, Inc.) as of December 31, 1996, and the
related statements of income, stockholders' equity, and cash flows for each of
the two years 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 generally accepted auditing
standards. 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, the financial statements referred to above present fairly,
in all material respects, the financial position of Clark/Bardes, Inc. as of
December 31, 1996, and the results of its operations and its cash flows for each
of the two years then ended, in conformity with generally accepted accounting
principles.

Dallas, Texas
February 7, 1997

LANE GORMAN TRUBITT, L.L.P.

F-3
<PAGE> 77

CLARK/BARDES, INC.

BALANCE SHEETS

ASSETS

<TABLE>
<CAPTION>
DECEMBER 31, PRO FORMA AT
-------------------------- JUNE 30, JUNE 30,
1996 1997 1998 1998 - NOTE 15
----------- ------------ ------------ --------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents................................. $ 4,881,584 $ 3,782,941 $ 6,305,094 $ 3,105,094
Accounts and notes receivable:
Trade................................................... 2,667,751 7,720,444 2,386,839 2,386,839
Affiliates.............................................. 122,996 10,636 284,787 284,787
Notes receivable (related parties: $110,887, $205,658
and $120,466 at December 31, 1996 and 1997 and June
30, 1998, respectively)............................... 434,181 477,779 388,871 388,871
----------- ------------ ------------ ------------
Total accounts and notes receivable................. 3,224,928 8,208,859 3,060,497 3,060,497
Other current assets........................................ -- -- 231,310 231,310
Accrued interest receivable................................. 26,423 45,811 68,674 68,674
----------- ------------ ------------ ------------
Total current assets................................ 8,132,935 12,037,611 9,665,575 6,465,575
Equipment and leasehold improvements, net................... 376,850 715,854 747,336 747,336
Intangible assets:
Net present value of inforce revenue (net of accumulated
amortization of approximately $174,000 and $435,000 at
December 31, 1997 and June 30, 1998, respectively)...... -- 15,492,428 15,231,320 15,231,320
Goodwill (net of accumulated amortization of approximately
$63,000 and $156,000 at December 31, 1997 and June 30,
1998, respectively)..................................... -- 7,404,716 7,311,380 7,311,380
Non-compete agreements (net of accumulated amortization of
approximately $58,000 and $146,000 at December 31, 1997
and June 30, 1998, respectively)........................ -- 1,191,667 1,104,167 1,104,167
----------- ------------ ------------ ------------
-- 24,088,811 23,646,867 23,646,867
Deposit on acquisition...................................... -- -- 1,500,000 1,500,000
Other assets................................................ 15,669 59,614 -- --
----------- ------------ ------------ ------------
Total assets........................................ $ 8,525,454 $ 36,901,890 $ 35,559,778 $ 32,359,778
=========== ============ ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable.......................................... $ 312,612 $ 1,142,218 $ 820,927 $ 820,927
Commissions and fees payable.............................. 1,346,486 1,944,490 1,864,102 1,864,102
Dividends payable......................................... 1,720,967 333,915 -- --
Accrued expenses and other liabilities.................... 1,333,990 1,521,419 1,802,140 1,802,140
Accrued interest payable.................................. -- 476,325 446,341 446,341
Current portion of long-term debt (related parties:
$1,425,000 at December 31, 1997 and June 30, 1998)...... -- 4,325,000 4,325,000 4,325,000
----------- ------------ ------------ ------------
Total current liabilities........................... 4,714,055 9,743,367 9,258,510 9,258,510
Long-term debt (related parties: $12,338,144 at December 31,
1997 and June 30, 1998)................................... -- 32,838,143 31,388,143 31,388,143
----------- ------------ ------------ ------------
Total liabilities................................... 4,714,055 42,581,510 40,646,653 40,646,653
Stockholders' equity (deficit):
Common stock:
Authorized shares -- 20,000,000; no par value
Issued and outstanding shares -- 5,957,344, 5,959,140
and 5,983,248 at December 31, 1996, 1997 and June 30,
1998, respectively.................................... 5,053,663 5,162,281 5,463,631 5,641,675
Retained earnings......................................... 3,213,332 3,188,699 3,378,044 --
----------- ------------ ------------ ------------
8,266,995 8,350,980 8,841,675 5,641,675
Less 1,203,291, 2,737,130 and 2,737,130 shares of common
stock in treasury at December 31, 1996, 1997 and June 30,
1998, respectively, at cost (includes notes receivable
from related parties for common stock issued totaling $0,
$568,036 and $465,986 at December 31, 1996, 1997 and June
30, 1998, respectively)................................... (4,455,596) (14,030,600) (13,928,550) (13,928,550)
----------- ------------ ------------ ------------
Total stockholders' equity (deficit)................ 3,811,399 (5,679,620) (5,086,875) (8,286,875)
----------- ------------ ------------ ------------
Total liabilities and stockholders' equity.......... $ 8,525,454 $ 36,901,890 $ 35,559,778 $ 32,359,778
=========== ============ ============ ============
</TABLE>

See notes to financial statements.

F-4
<PAGE> 78

CLARK/BARDES, INC.

STATEMENTS OF INCOME

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
--------------------------------------- -------------------------
1995 1996 1997 1997 1998
----------- ----------- ----------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenue:
Commission and service fees.... $25,685,588 $32,353,355 $47,870,880 $11,105,362 $27,856,948
Other (related parties:
$1,264,967, $640,373,
$878,952, $50,000 and
$924,000 for the year ended
December 31, 1995, 1996,
1997 and the six months
ended June 30, 1997 and
1998)....................... 1,287,144 889,800 1,584,539 177,822 1,128,011
----------- ----------- ----------- ----------- -----------
Total revenue.......... 26,972,732 33,243,155 49,455,419 11,283,184 28,984,959
Commission and fee expense
(related parties: $11,931,499,
$16,257,515, $24,152,842,
$6,746,639, and $14,713,526 for
the year ended December 31,
1995, 1996, 1997 and the six
months ended June 30, 1997 and
1998).......................... 16,890,862 21,049,704 32,439,092 7,273,519 18,203,681
----------- ----------- ----------- ----------- -----------
10,081,870 12,193,451 17,016,327 4,009,665 10,781,278
General and administrative
expense........................ 7,868,997 8,554,420 11,506,335 4,615,101 8,399,696
Amortization of intangibles...... -- -- 294,630 -- 441,945
----------- ----------- ----------- ----------- -----------
Income (loss) from operations.... 2,212,873 3,639,031 5,215,362 (605,436) 1,939,637
Other income (expense):
Interest income................ 148,482 119,691 188,597 68,117 167,624
Dividend income................ 52,095 2,123 -- -- --
Interest expense............... (6,903) -- (1,111,995) -- (1,803,750)
Miscellaneous income
(expense)................... (86,292) (25,416) 1,925 146 (141)
----------- ----------- ----------- ----------- -----------
Total other income
(expense)............ 107,382 96,398 (921,473) 68,263 (1,636,267)
----------- ----------- ----------- ----------- -----------
Income (loss) before state
taxes.......................... 2,320,255 3,735,429 4,293,889 (537,173) 303,370
State taxes...................... 102,459 181,444 60,000 -- 14,000
----------- ----------- ----------- ----------- -----------
Net income (loss)................ $ 2,217,796 $ 3,553,985 $ 4,233,889 $ (537,173) $ 289,370
=========== =========== =========== =========== ===========
Dividends per share:............. $ .29 $ .36 $ 1.32 $ -- $ --
=========== =========== =========== =========== ===========
Earnings (loss) per share
(Historical):
Basic.......................... $ .39 $ .75 $ 1.03 $ (.12) $ .09
=========== =========== =========== =========== ===========
Diluted........................ $ .39 $ .75 $ .99 $ (.12) $ .09
=========== =========== =========== =========== ===========
Pro Forma Data (Unaudited) (Note
12):
Pro forma income tax expense... $ 1,700,000 $ 120,000
=========== ===========
Pro forma net income........... $ 2,593,889 $ 183,370
=========== ===========
Pro forma earnings per share:
Basic....................... $ .63 $ .06
=========== ===========
Diluted..................... $ .61 $ .06
=========== ===========
</TABLE>

See notes to financial statements.

F-5
<PAGE> 79

CLARK/BARDES, INC.

STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

<TABLE>
<CAPTION>
NET
UNREALIZED
LOSS ON COMMON STOCK
COMMON STOCK SECURITIES IN TREASURY
---------------------- RETAINED AVAILABLE -------------------------
SHARES AMOUNT EARNINGS FOR SALE SHARES AMOUNT TOTAL
--------- ---------- ---------- ---------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1995.......... 5,957,344 $5,053,663 $1,078,114 $(52,254) (229,737) $ (918,948) $ 5,160,575
Changes in net unrealized loss on
securities available for sale... -- -- -- 47,179 -- -- 47,179
Net income........................ -- -- 2,217,796 -- -- -- 2,217,796
Dividends......................... -- -- (1,638,096) -- -- -- (1,638,096)
--------- ---------- ---------- -------- ---------- ------------ ------------
Balance at December 31, 1995........ 5,957,344 5,053,663 1,657,814 (5,075) (229,737) (918,948) 5,787,454
Purchase of common stock for
treasury........................ -- -- -- -- (1,123,554) (4,136,648) (4,136,648)
Sale/Grant of treasury stock...... -- -- (277,500) -- 150,000 600,000 322,500
Changes in net unrealized loss on
securities available for sale... -- -- -- 5,075 -- -- 5,075
Net income........................ -- -- 3,553,985 -- -- -- 3,553,985
Dividends......................... -- -- (1,720,967) -- -- -- (1,720,967)
--------- ---------- ---------- -------- ---------- ------------ ------------
Balance at December 31, 1996........ 5,957,344 5,053,663 3,213,332 -- (1,203,291) (4,455,596) 3,811,399
Sale of common stock.............. 1,796 8,618 -- -- -- -- 8,618
Issuance of common stock
warrants........................ -- 100,000 -- -- -- -- 100,000
Purchase of common stock for
treasury........................ -- -- -- -- (2,567,650) (13,969,259) (13,969,259)
Notes receivable from related
parties for treasury stock
issued, net of distribution of
$606,280........................ -- -- -- -- 244,649 (568,036) (568,036)
Sale/Grant of treasury stock...... -- -- -- -- 789,162 4,962,291 4,962,291
Net income........................ -- -- 4,233,889 -- -- -- 4,233,889
Dividends......................... -- -- (4,258,522) -- -- -- (4,258,522)
--------- ---------- ---------- -------- ---------- ------------ ------------
Balance at December 31, 1997........ 5,959,140 5,162,281 3,188,699 -- (2,737,130) (14,030,600) (5,679,620)
Net income (unaudited)............ -- -- 289,370 -- -- -- 289,370
Issuance of common stock
(unaudited)..................... 24,108 301,350 -- -- -- -- 301,350
Dividends paid (unaudited)........ -- -- (100,025) -- -- -- (100,025)
Payments on notes receivable from
related parties for treasury
stock (unaudited)............... -- -- -- -- -- 102,050 102,050
--------- ---------- ---------- -------- ---------- ------------ ------------
Balance at June 30, 1998
(unaudited)....................... 5,983,248 $5,463,631 $3,378,044 $ -- (2,737,130) $(13,928,550) $ (5,086,875)
========= ========== ========== ======== ========== ============ ============
</TABLE>

See notes to financial statements.

F-6
<PAGE> 80

CLARK/BARDES, INC.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
---------------------------------------- -------------------------
1995 1996 1997 1997 1998
----------- ----------- ------------ ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss)................................ $ 2,217,796 $ 3,553,985 $ 4,233,889 $ (537,173) $ 289,370
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating
activities:
Depreciation and amortization.................. 182,143 187,577 492,609 71,956 578,316
(Gain) loss on disposition of assets........... 86,292 25,416 (1,925) -- 441
Provision for losses on notes receivable....... -- 78,000 -- -- --
Grant of treasury stock........................ -- 172,500 -- -- --
Change in assets and liabilities:
(Increase) decrease in accounts receivable... (1,115,137) 412,495 (4,940,333) 1,386,746 5,059,454
Increase in accrued interest receivable...... (15,328) (10,781) (19,388) (5,287) (22,863)
Increase in other assets..................... -- -- -- -- (10,143)
Increase (decrease) in accounts payable...... 91,560 101,773 829,606 13,576 (321,291)
Increase (decrease) in accrued expenses and
other liabilities.......................... 292,651 417,469 187,429 (864,997) 280,721
Increase (decrease) in accrued interest
payable.................................... -- -- 476,325 -- (29,984)
Increase (decrease) in commissions and
fees payable............................... 835,587 (628,747) 598,004 (732,351) (80,388)
----------- ----------- ------------ ----------- -----------
Net cash provided by (used in) operating
activities..................................... 2,575,564 4,309,687 1,856,216 (667,530) 5,743,633
INVESTING ACTIVITIES
Purchases of marketable securities available for
sale........................................... (253,131) (1,720) -- -- --
Purchase of business............................. -- (24,383,441) -- --
Deposit made for pending acquisition............. -- -- -- (500,000) (1,500,000)
Issuance of notes receivable..................... (768,710) (350,793) (135,000) (114,530) (330,000)
Payments received on notes receivable............ 444,726 574,072 91,402 102,607 418,908
Purchases of equipment and leasehold
improvements................................... (303,260) (131,057) (536,983) (91,953) (66,245)
Proceeds from sale of marketable securities...... -- 1,507,639 -- -- --
Other............................................ 462 (11,299) (42,020) (9,768) --
----------- ----------- ------------ ----------- -----------
Net cash provided by (used in) investing
activities..................................... (879,913) 1,586,842 (25,006,042) (613,644) (1,477,337)
FINANCING ACTIVITIES
Principal payments under capital lease
obligations.................................... (108,816) -- -- -- --
Principal payments on debt....................... -- -- -- -- (1,450,000)
Proceeds from issuance of debt................... -- -- 33,900,000 -- --
Proceeds from issuance of common stock and
warrants....................................... -- 150,000 108,618 8,618 301,350
Treasury stock issued for notes receivable....... -- -- (1,171,305) (335,983) --
Dividends paid................................... (641,492) (996,604) (1,779,162) (1,720,967) (433,940)
Purchase of common stock for treasury............ -- (4,136,648) (13,969,259) -- --
IPO related expenses paid and deferred........... -- -- -- -- (161,553)
Proceeds from sale of treasury stock............. -- -- 4,962,291 449,959 --
----------- ----------- ------------ ----------- -----------
Net cash provided by (used in) financing
activities..................................... (750,308) (4,983,252) 22,051,183 (1,598,373) (1,744,143)
----------- ----------- ------------ ----------- -----------
(Decrease) increase in cash...................... 945,343 913,277 (1,098,643) (2,879,547) 2,522,153
Cash and cash equivalents at beginning of
period......................................... 3,022,964 3,968,307 4,881,584 4,881,584 3,782,941
----------- ----------- ------------ ----------- -----------
Cash and cash equivalents at end of period....... $ 3,968,307 $ 4,881,584 $ 3,782,941 $2,002,037 $ 6,305,094
=========== =========== ============ =========== ===========
Supplemental disclosures of cash flow
information:
Interest paid.................................. $ 6,903 $ -- $ 635,670 $ -- $ 1,797,622
State income taxes paid........................ -- 102,459 181,965 -- 2,000
</TABLE>

See notes to financial statements.

F-7
<PAGE> 81

CLARK/BARDES, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 1996 AND 1997 AND JUNE 30, 1998 (UNAUDITED)

1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Clark/Bardes, Inc. (the predecessor corporation to Clark/Bardes, Inc., a
Delaware corporation, the wholly-owned subsidiary of Clark/Bardes Holdings, Inc.
(the Company)) (see Note 15) is a designer, marketer and administrator of
business-owned life insurance products to large corporations and bank-owned life
insurance to banks in the United States. The Company assists its clients in
using customized life insurance products to generate capital to finance
long-term benefit liabilities and to supplement and secure benefits for key
employees. In addition, the Company provides long-term administrative services
for executive benefits and insurance.

Basis of Presentation

The accompanying financial statements of the Company have been prepared in
conformity with generally accepted accounting principles (GAAP). Certain
reclassifications have been made to the prior years' financial statements to
conform to the current year presentation.

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

A summary of the significant accounting policies consistently applied in
the preparation of the accompanying financial statements follows.

Cash and Cash Equivalents

The Company considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents. The Company has cash
balances at two financial institutions in excess of the $100,000 limit insured
by the Federal Deposit Insurance Corporation. Uninsured cash in bank balances
aggregate to approximately $632,000, $384,300 and $998,219 at December 31, 1996,
1997, and June 30, 1998 (unaudited), 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.

Fair Value of Financial Instruments

The book values of cash, accounts and notes receivable, accounts payable,
commissions and fees payable and other financial instruments approximate their
fair values principally because of the short-term nature of these instruments.
The carrying value of the Company's long-term debt would not differ
significantly from its fair value.

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 the
straight-line method. The Company depreciates furniture and equipment over
periods of three to five years while leasehold improvements are amortized over
their useful lives.

Intangible Assets

The Company capitalized intangible assets as a result of the acquisition of
the assets and business of Bank Compensation Strategies Group (BCS) (see Note
2). Intangible assets consist of goodwill, the value of BCS' existing book of
business on the acquisition date and non-compete agreements with the former
owners of BCS. The amortization periods for the non-compete agreements are 5
years and 10 years while the in-force revenue
F-8
<PAGE> 82
CLARK/BARDES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

and goodwill will be amortized over 30 and 40 year periods, respectively, on a
straight-line basis. Amortization expense related to these amounts totaled
$294,630 during 1997 and $441,945 for the six months ended June 30, 1998
(unaudited), respectively. Management's policy, in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 121 - Accounting for the Impairment
of Long-Lived Assets, is to review intangible and other long-lived assets for
impairment whenever changes in circumstances indicate that an impairment might
exist. When one or more 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.
The impairment loss is measured by comparing the fair value of the assets with
their carrying amounts and any write-downs are treated as permanent reductions
in the carrying amount of the asset.

Revenue

First year commissions are recognized as revenue at the time the policy
application is completed, the premium is paid and the insured party is
contractually committed to purchase the insurance policy. Renewal commission
revenue is recognized when the insurance policy premium is due. The Company is
notified in advance if a client plans to surrender, so adjustments in subsequent
periods due to cancellations are not material. Revenue associated with policies
to be surrendered is not recognized. Cancellations or other adjustments are
accounted for in the period of cancellation, or in the period where an
adjustment is determined to be necessary and are not significant. 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 and fees for
program design and placement are recognized in a manner consistent with
commissions.

The Company generated in excess of 25% of its revenue in 1995 from 3
clients, in 1996 from 2 clients and in 1997 from 3 clients. Approximately 22%,
23%, 23%, 21% and 17% of the Company's commission and fee revenue for the years
ended 1995, 1996, and 1997 and for the six months ended June 30, 1997 and 1998,
respectively, was generated by The Wamberg Organization, which is wholly-owned
by the Company's Chairman. Substantially all of the policies underlying the
programs marketed by the Company are underwritten by 14 life insurance
companies, of which seven accounted for approximately 78.9% of the Company's
first-year commission revenue for the year ended December 31, 1997.

Commissions and Fee Expense

Commissions and fee expense comprise the portion of the total commission
revenue that is earned by and paid to agents.

Advertising

Advertising and marketing costs provided by third parties are charged to
operations when incurred. Total expenses for 1995, 1996, and 1997 were $52,395,
$55,352, and $70,299, respectively, and $10,606 and $130,721 for the six months
ended June 30, 1997 and 1998 (unaudited), respectively.

Stock Compensation

The Company adopted SFAS No. 123 - Accounting for Stock-Based Compensation
(SFAS 123) effective January 1, 1996. SFAS 123 establishes financial accounting
and reporting standards for stock-based compensation. The Company elected to
continue to account for stock-based compensation as prescribed by APB Opinion
No. 25 - Accounting for Stock Issued to Employees and to provide pro forma
disclosures in the Notes to Financial Statements of the effects of SFAS 123 on
net income and earnings per share (See Note 8). Equity issued to non-employees
is accounted for based on fair value in accordance with SFAS 123. There was no
effect on reported net income as a result of adopting SFAS 123.

F-9
<PAGE> 83
CLARK/BARDES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Earnings Per Share

In February 1997, the Financial Accounting Standard Board ("FASB") issued
SFAS No. 128 - Earnings Per Share. This Statement specifies the computation,
presentation and disclosure requirements for earnings per share for entities
with publicly-held common stock. This Statement is effective for financial
statements for both interim and annual periods ending after December 15, 1997
and has been adopted by the Company and is presented for all periods in the
accompanying financial statements in anticipation of the planned public offering
described in Note 15.

Comprehensive Income

As of January 1, 1998, the Company adopted SFAS 130 - Reporting
Comprehensive Income. Statement 130 establishes new rules for the reporting and
display of comprehensive income and its components. Statement 130 requires
unrealized gains or losses on available-for-sale securities and certain other
items, which prior to adoption were reported separately in shareholders' equity,
to be included in other comprehensive income. The adoption of this Statement had
no impact on the Company's net income or shareholders' equity. The Company has
no comprehensive income as defined by SFAS 130.

Segment Reporting

In June 1997, the FASB issued SFAS 131 - Disclosures About Segments of an
Enterprise and Related Information. This Statement requires public enterprises
to report selected information about operating segments in annual and interim
reports issued to shareholders. It is effective for financial statements for
fiscal years beginning after December 15, 1997, but it is not required to be
applied to interim financial statements in the initial year of its application.
The adoption of this Statement will have no impact on the Company's financial
condition or results of operations.

2. ACQUISITION OF BANK COMPENSATION STRATEGIES GROUP

On September 1, 1997 (the acquisition date), the Company acquired
substantially all of the assets, the client list and the book of business of
Bank Compensation Strategies Group (BCS), a Minneapolis, Minnesota based life
insurance agency engaged in the business of designing and marketing life
insurance policies and related compensation, salary and benefit plans and
providing related services to financial institutions. The Company accounted for
the acquisition as a purchase and has included the operating results of BCS
commencing from the acquisition date in the financial statements.

The purchase price of the acquisition was $24.0 million plus acquisition
related expenses of approximately $383,440. The purchase price was comprised of
$13.5 million in cash and two promissory notes in the principal amounts of $5.7
million and $4.8 million (see Note 6). The Company allocated approximately
$10,000 of the purchase price to tangible assets acquired and the remaining as
follows:

$1.2 million was allocated to two non-compete agreements with former
officers of BCS. The terms of the agreements are for five and ten years
which are the respective periods over which the intangible assets are being
amortized.

$15.7 million was allocated to the net present value of estimated cash
flows embedded in the existing in-force book of business. The net present
value of the existing in-force revenue was determined using a 10% discount
rate and a 2.75% annual lapse factor for the purchased book of business.
This intangible asset is being amortized over 30 years which approximates
the average policy duration. The Company expects to amortize approximately
$523,000 each year; approximately $174,000 was amortized in 1997.

The remaining $7.5 million was allocated to goodwill. This is being
amortized over a 40 year period. Management believes that the existing and
future revenue potential associated with the Bank Compensa-

F-10
<PAGE> 84
CLARK/BARDES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

tion Strategies' client base will have value to the Company well beyond the
forty-year amortization period based on new business prospects and the
long-term nature of the policies.

Management will periodically review these intangibles for impairment in
accordance with its policy (see note 1).

The unaudited pro forma information below presents the results of the
Company and BCS combined as if the acquisition had occurred at the beginning of
the respective period shown (excluding any effects of the transactions described
in Note 15):

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1996 1997
----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Pro Forma:
Revenues................................................. $48,491,000 $62,264,000
Net income............................................... $ 1,915,000 $ 2,747,000
Diluted earnings per share............................... $ 0.41 $ 0.64
</TABLE>

3. NOTES RECEIVABLE

Notes receivable consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
------------------- JUNE 30,
1996 1997 1998
-------- -------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Note receivable -- Related party; secured by first
year and renewal commissions; interest accrues at
prime plus 1%; due on demand...................... $ -- $ 75,000 $ --
Note receivable -- Secured by collateral assignment
of insurance commissions/compensation; due in full
plus interest at prime plus 2% on demand.......... 130,478 130,478 130,478
Note receivable -- Secured by collateral assignment
of insurance commissions/compensation; due in full
plus interest at prime plus 4% on demand.......... 270,816 219,643 215,927
Note receivable -- Related party; secured by renewal
commissions; interest accrues at 12%; due on
demand............................................ -- -- 30,000
Note receivable -- Related party; secured by renewal
commissions; due on demand; interest accrues at
12%. ............................................. -- 60,000 33,072
Note receivable -- Related party; secured by renewal
commissions; due on demand; interest accrues at
prime plus 2%..................................... 100,000 70,658 57,394
Notes receivable -- Related parties and employees;
unsecured; non-interest bearing. ................. 10,887 -- --
-------- -------- --------
512,181 555,779 466,871
Less allowance for uncollectible notes receivable... (78,000) (78,000) (78,000)
-------- -------- --------
$434,181 $477,779 $388,871
======== ======== ========
</TABLE>

The Company recorded interest income from related parties of $4,865, $690,
and $46,106 for the years ended December 31, 1995, 1996, and 1997, respectively,
and $0 and $38,051 for the six months ended June 30, 1997 and 1998 (unaudited),
respectively. The Company also has accrued interest receivable of $626, $12,664,
and $22,069 from related parties at December 31, 1996, 1997, and at June 30,
1998 (unaudited), respectively.

F-11
<PAGE> 85
CLARK/BARDES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

4. EQUIPMENT AND LEASEHOLD IMPROVEMENTS

Major classifications of equipment and leasehold improvements are as
follows:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------- JUNE 30,
1996 1997 1998
----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Office furniture and equipment............... $ 1,397,877 $ 2,133,005 $ 2,261,459
Leasehold improvements....................... 57,387 96,116 103,267
----------- ----------- -----------
1,455,264 2,229,121 2,364,726
Accumulated depreciation and amortization.... (1,078,414) (1,513,267) (1,617,390)
----------- ----------- -----------
$ 376,850 $ 715,854 $ 747,336
=========== =========== ===========
</TABLE>

5. TAXES

The Company has elected by consent of its shareholders to be taxed under
the provisions of subchapter S of the Internal Revenue Code. Under those
provisions, the Company does not pay Federal or state corporate income taxes on
its taxable income. Instead, the stockholders are liable for individual Federal
and state income tax on the Company's taxable income as determined under the
cash method of accounting. State taxes, as shown in the accompanying financial
statements, consists primarily of franchise taxes. At December 31, 1997 the net
tax bases of the Company's assets and liabilities was approximately $2.9 million
lower than the financial statement bases (See Note 15).

6. FINANCING ARRANGEMENTS

The current and long-term portions of debt consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------- JUNE 30,
1996 1997 1998
----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Senior Secured Notes (current portion -
$2,900,000)................................. $ -- $14,500,000 $13,050,000
Second Priority Senior Secured Notes.......... -- 8,900,000 8,900,000
Medium Term Notes - Related parties (current
portion -- $1,425,000)...................... -- 5,700,000 5,700,000
Convertible Subordinated Notes - Related
parties..................................... -- 4,800,000 4,800,000
AAA Distribution - Related parties............ -- 3,263,143 3,263,143
----------- ----------- -----------
$ -- $37,163,143 $35,713,143
=========== =========== ===========
</TABLE>

Senior Secured Notes. During 1997, the Company issued $14.5 million of
10.5% secured promissory notes maturing August 9, 2002; principal is payable
semi-annually beginning February 9, 1998 and interest is payable quarterly.
Interest expense was $473,667 and $693,583 and interest paid was $253,750 and
$723,188 for the year ended December 31, 1997 and for the six months ended June
30, 1998, respectively. The Company must comply with certain restrictive
covenants related to maintaining certain financial ratios, limitations on
payments and additional indebtedness, limitations on mergers and liens,
restrictions pertaining to the maintenance of material contracts, maintenance of
insurance, restrictions on distributions to shareholders, and limitations on
issuances of common stock; in addition, the Company must provide the lenders
with various financial reports.

Second Priority Senior Secured Notes. During 1997, the Company issued $8.9
million of 11% Second Priority Senior Secured Notes maturing in three equal
annual installments beginning August 9, 2002; interest is payable quarterly.
Interest expense was $304,577 and $489,500 and interest paid was $163,167 and
$489,500

F-12
<PAGE> 86
CLARK/BARDES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

for the year ended December 31, 1997 and for the six months ended June 30, 1998,
respectively. These notes possess identical restrictive covenants as the Senior
Secured Notes. In connection with the issuance of these notes, the Company
authorized the issuance of warrants evidencing rights to purchase 1,525,426
shares of the Company's no par value common stock at $5.90 per share subject to
terms, conditions and adjustments set forth in the warrant agreement, at any
time prior to August 9, 2004 (see Note 15). The warrants, whose fair value of
$100,000 was determined in connection with the entire transaction pursuant to
negotiations between the Company and the purchasers of warrants and is set forth
in the warrant agreement, have been accounted for as detachable stock purchase
warrants pursuant to APB 14. If the Company defaults in the payment of the
principal of the notes, the expiration date of the warrants is extended to
August 9, 2007. The common shares issuable upon the exercise of the warrants
must be reserved and kept available out of the authorized common stock.

Medium Term Notes. During 1997, in connection with the purchase of BCS, the
Company issued $5.7 million of Medium Term Notes maturing in four equal annual
installments of $1.425 million beginning August 15, 1998; interest is payable
quarterly at the corporate base rate of the First Bank of Minnesota which was
8.5% at December 31, 1997. Interest expense was $150,733 and $242,250 and
interest paid was $88,825 and $242,250 in 1997 and for the six months ended June
30, 1998, respectively. (See Note 15).

Convertible Subordinated Notes. During 1997, in connection with the
purchase of BCS, the Company issued $4.8 million of 8.5% Convertible
Subordinated Notes maturing in one installment on September 15, 2007; interest
is payable quarterly. Interest expense was $126,933 and $204,000 and interest
paid was $108,800 and $204,000 in 1997 and for the six months ended June 30,
1998, respectively. These notes are convertible into 813,559 shares of common
stock, at $5.90 per share. The conversion feature is available to the creditors
until these notes are paid in full by the Company. (See Note 15).

AAA Distribution. The Company made a special dividend distribution of
$3,866,412 to shareholders of record on November 15, 1997 in the form of notes
payable. The notes outstanding at December 31, 1997 of $3,263,144, mature
November 15, 2007 and interest accrues quarterly at 8.5%. Interest expense
incurred was $34,956 and $137,543 and interest paid was $0 and $138,684 in 1997
and for the six months ended June 30, 1998, respectively.

At December 31, 1997, future payments under all financing arrangements are
as follows:

<TABLE>
<S> <C>
1998........................................................ $ 4,325,000
1999........................................................ 4,325,000
2000........................................................ 4,325,000
2001........................................................ 4,325,000
2002........................................................ 5,867,000
Thereafter.................................................. 13,996,143
-----------
$37,163,143
===========
</TABLE>

7. STOCKHOLDERS' EQUITY

During 1997, the Company repurchased common stock from certain principals
and other stockholders. Under these agreements, 2,567,650 shares were
repurchased at prices ranging from $4.20 to $6.00 per share. These shares are
being held in treasury.

The Company approved a financing arrangement in 1997 which allows certain
key associates to purchase shares of common stock. During the year, pursuant to
this arrangement, the Company issued 174,653 shares of common stock at $4.80 per
share. The notes receivable under this arrangement are collateralized by the
shares sold. Amounts due to the Company at December 31, 1997 for stock purchases
were $465,588. Outstanding principal balances pay interest at 8.5% and mature in
2000 and 2003.

F-13
<PAGE> 87
CLARK/BARDES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

In 1995, the Company negotiated an agreement to redeem 204,211 shares of
common stock at a price of $4.50 per share in exchange for an agreement for
provision of administrative services on certain life insurance policies which
are administered by the Company on behalf of an affiliate. The shares were
redeemed on January 4, 1996.

A 1996 stock purchase agreement between the Company and a stockholder
provided for the purchase of 919,343 shares at a price of $3.50 per share, which
were redeemed on January 16, 1996.

The Board of Directors of the Company determined that a $4.50 per share
value in 1995 represented a fair value in light of all relevant circumstances
regarding share value including third party arms-length share transactions. The
Company employed a similar analysis in determining the price of $3.50 per share
as a fair value in January of 1996. The decline in price was due to the seller's
motivation to reduce his interest in the Company as part of an unwind strategy.

8. BENEFIT PLANS

Associate Stock Bonus/Stock Purchase Plan. The Associate Stock Bonus/Stock
Purchase Plan for selected associates of the Company provides to each
participant (i) a grant of 25,000 shares of stock and (ii) an option to purchase
another 25,000 shares at a fixed price of $2.00 per share, within three years
from the date the agreement is entered into if certain criteria under the terms
of the plan are satisfied, principally, that certain production levels are
attained. The fair value of the stock granted and options issued were determined
by the Board of Directors considering prior stock transactions and the
circumstances of each such purchase of shares. During 1997 and 1996, the Company
issued 50,000 shares and 150,000 shares, respectively, and has recorded
compensation expense of $190,000 and $172,500, respectively, in relation to the
stock grants and options. As of December 31, 1997, this Plan is no longer
available.

Incentive Stock Option Plan. The Incentive Stock Option Plan provides
certain employees options to purchase shares for $4.80 and $7.00 per share;
540,830 shares of common stock have been reserved for issuance under this plan
and 190,830 shares had been granted under this program at December 31, 1997. The
$7.00 options vest during the period from December 30, 1997 to March 1, 2000
while the $4.80 options vest during the period from March 1, 2000 to March 1,
2002. The options expire ten years from the grant date. In addition, the options
are voided within 90 days of the employee's termination or one year from the
date of death.

Under this plan, participants purchased stock at $4.80 per share and
receive a matching option with an exercise price of $4.80 per share in exchange
for a promissory note and a security agreement; during 1997, 69,997 shares were
issued under this program but none of the options were vested at December 31,
1997. Principal on the notes matures March 1, 2001, is due in four equal annual
installments beginning March 1, 1998 and accrues interest at the Wall Street
Journal Base corporate loan rate plus 1.5%. Total notes receivable outstanding
under this program are $102,448.

In addition to the Incentive Stock Option Plan, the Company granted stock
options to a consultant on April 2, 1997 for the purchase of 100,000 shares at
an exercise price of $4.80; no options were exercised during 1997 or vested at
December 31, 1997. The fair value of the common stock at the date of grant was
$4.80 as determined by the Company's Board of Directors and based on recent
stock transactions; accordingly no compensation expense has been recorded.

If the fair value of the stock compensation granted had been accounted for
under SFAS 123, the pro forma net income and diluted earnings per share for the
year ended December 31, 1997 would have been approximately $4,200,000 and $0.95
per share. The effect of options on 1996 net income was not significant and no
options were granted during the six month period ended June 30, 1998. For
purposes of pro forma disclosures, the estimated fair value of the options was
determined using the Black-Scholes pricing model using assumptions for the
expected life of the options (7.13 and 6.13 years), a risk-free interest rate of

F-14
<PAGE> 88
CLARK/BARDES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

approximately 5.8%, a volatility factor of 25% and no dividends. The effect on
net income of the stock compensation expense for the year presented above is
likely not representative of the effects on reported net income and earnings per
share for future years.

A summary of option activity is as follows:

<TABLE>
<CAPTION>
1995 1996 1997
-------------------------- --------------------------- --------------------------
WEIGHTED-AVERAGE WEIGHTED-AVERAGE WEIGHTED-AVERAGE
OPTIONS EXERCISE PRICE OPTIONS EXERCISE PRICE OPTIONS EXERCISE PRICE
------- ---------------- -------- ---------------- ------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding - beginning
of year............. -- $ -- -- $ -- 50,000 $ 1.00
Granted............... -- -- 200,000 1.75 290,830 5.93
Exercised............. -- -- (150,000) 2.00 (50,000) 1.00
Forfeited............. -- $ -- -- -- -- --
-------- -------
Outstanding - end of
year................ -- $ -- 50,000 $1.00 290,830 $ 5.93
======== =======
Exercisable at end of
year................ -- -- -- $ -- 45,833 $ 6.00
Weighted-average fair
value of options
granted during the
year................ $ -- $3.74 $4.80
</TABLE>

Exercise prices for options outstanding as of December 31, 1997 ranged from
$4.80 to $7.00. The weighted-average remaining contractual life of those options
is 9.7 years.

Phantom Stock Agreement. The Company entered into a Phantom Stock
Agreement, dated September 5, 1997 with a Principal of the Company. Under this
agreement, the Principal is entitled to receive an award expressed in units
("Incentive Units") based upon the level of revenue received by the Company on
certain sales generated by the Principal. The Principal will first be entitled
to receive payments for the value of his Incentive Units on April 1, 2003 and
every year thereafter until April 1, 2008. It is unlikely that the Principal
will be entitled to any payments under the Phantom Stock Agreement based on the
required revenue performance levels.

Savings Investment Plan. The Savings Investment Plan is a defined
contribution profit sharing Plan qualifying under Section 401(k) of the Internal
Revenue Code covering substantially all employees. At the Company's discretion,
the Company may contribute up to 50% of the first 6% of an eligible
participant's contributions to the Plan. Company contributions to the Plan were
$75,282, $84,121, and $108,293 for the years ended December 31, 1995, 1996, and
1997, respectively, and $57,001 and $111,819 for the six months ended June 30,
1997 and 1998 (unaudited), respectively.

Key Executive Life Insurance. The Company maintains and is the sole
beneficiary of key man life insurance policies of $11 million and $3 million on
its Chairman and Vice-Chairman, respectively, and policies ranging from $150,000
to $2 million on certain other key executives.

9. COMMITMENTS

Leases

The Company conducts operations from leased office facilities. Management
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 less than the amount shown for the year ended
December 31, 1997.

F-15
<PAGE> 89
CLARK/BARDES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Rental expense for the years ended December 31, 1995, 1996, and 1997 was
$442,266, $476,750, and $476,033, respectively, and $228,562 and $405,393 for
the six months ended June 30, 1997 and 1998 (unaudited), respectively.

At December 31, 1997, approximate minimum rental commitments under all
non-cancelable leases having terms in excess of a year are as follows:

10. RELATED PARTY TRANSACTIONS

The Company had accounts receivable of $122,996, $603,118, and $284,787,
accounts payable of $1,893, $5,277, and $61,679 and accrued expenses of
$996,460, $2,621,523, and $1,366,437 to related parties at December 31, 1996,
1997, and at June 30, 1998 (unaudited), respectively.

The Company has entered into compensation and employment agreements with
certain key employees. The agreements provide for an indefinite employment term,
compensation, stock bonuses, expense reimbursements and participation in benefit
plans and are subject to the employees' compliance with certain provisions. In
addition an executive will be granted 52,500 shares of common stock if certain
conditions are met. (See Note 15).

The Company and its Chairman, Mr. Wamberg, are the parties to a Principal
Office Agreement dated July 29, 1993, pursuant to which The Wamberg Organization
markets, on behalf of the Company, life insurance and administrative and
consulting services, and the Company furnishes to The Wamberg Organization
marketing materials and concepts, program design ideas, selected life insurance
products, specimen plan documents and administrative services. The agreement can
be terminated by either party upon 90 days' written notice. The Wamberg
Organization's commissions range between 65.0% and 70.0% of total revenue
depending on the amount of total revenue generated from a case. Commissions and
fees payable to The Wamberg Organization are net of any of the Company's
administrative costs as determined by the Board of Directors. Pursuant to the
terms of the Principal Office Agreement, the Wamberg Organization was paid,
approximately $3,872,000, $4,964,000, $7,792,000, $1,639,000 and $3,166,000 in
1995, 1996, 1997 and for the six months ended June 30, 1997 and 1998
(unaudited), respectively, for commissions and fees earned. The terms and
conditions of Mr. Wamberg's Principal Office Agreement are similar in all
material respects to the terms and conditions of such agreements with other
producers designated as principals.

The Company has transactions with affiliated entities. The Company provides
services for affiliates and is reimbursed for these services at the Company's
respective costs.

11. JOINT VENTURE

During 1994, the Company entered into an agreement to jointly develop,
implement, distribute and market certain products for the corporate owned life
insurance market. The Company's initial investment was minimal. The Company made
advances to the joint venture in 1994 totaling approximately $100,000, which
were expensed as incurred. The Company's participation is 50% and all of the
joint venture's net cash flow is distributed quarterly, as provided in the
agreement. Quarterly distributions to the Company by the joint venture have been
recorded as other revenues in the accompanying statements of income in the
amount of approximately $22,000, $46,000, and $310,000 in 1995, 1996, and 1997,
respectively, and $108,000 and $127,000 for the six months ended June 30, 1997
and 1998 (unaudited), respectively.

F-16
<PAGE> 90
CLARK/BARDES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

12. EARNINGS PER SHARE

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

<TABLE>
<CAPTION>
HISTORICAL
----------------------------------------------------------------
DECEMBER 31, JUNE 30,
------------------------------------ -------------------------
1995 1996 1997 1997 1998
---------- ---------- ---------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Numerator:
Net income (loss).......... $2,217,796 $3,553,985 $4,233,889 $ (537,173) $ 289,370
Effect of dilutive
securities:
Interest on convertible
debt (net of tax)....... -- -- 125,036 -- *
---------- ---------- ---------- ---------- ----------
Numerator for diluted
earnings per share......... $2,217,796 $3,553,985 $4,358,925 $ (537,173) $ 289,370
Denominator:
Denominator for basic
earnings per share --
weighted-average
shares.................. 5,727,607 4,709,252 4,119,387 4,544,299 3,222,143
Effect of dilutive
securities:
Stock options........... -- -- 7,277 * --
Convertible debt........ -- -- 271,929 -- *
---------- ---------- ---------- ---------- ----------
Denominator for diluted
earnings per share --
adjusted
weighted-average shares
and assumed
conversions............. 5,727,607 4,709,252 4,398,593 4,544,299 3,222,143
========== ========== ========== ========== ==========
Basic earnings per
share................. $ 0.39 $ 0.75 $ 1.03 $ (0.12) $ 0.09
========== ========== ========== ========== ==========
Diluted earnings per
share................. $ 0.39 $ 0.75 $ 0.99 $ (0.12) $ 0.09
========== ========== ========== ========== ==========
</TABLE>

- ---------------

* The effects of options and convertible debt have not been included as such
effects would be antidilutive.

The weighted average shares presented gives effect to the Merger described
in Note 15 and has been accounted for as a reverse stock split ( 1/2 share for 1
share).

F-17
<PAGE> 91
CLARK/BARDES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

The following table sets forth the computation of pro forma basic and
diluted earnings per share (unaudited), giving effect to the conversion from an
S corporation to a C corporation as described in Note 15:

<TABLE>
<CAPTION>
PRO FORMA
--------------------------
SIX MONTHS
YEAR ENDED ENDED
DECEMBER 31, JUNE 30,
1997 1998
------------ -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Numerator:
Numerator for basic earnings per share:
Net income -- historical.................................. $ 4,233,889 $ 289,370
Proforma adjustment:
State tax expense -- S Corporation........................ 60,000 14,000
Income tax expense -- C Corporation....................... (1,700,000) (120,000)
----------- ----------
Numerator for pro forma basic earnings per share............ 2,593,889 183,370
Effect of dilutive securities:
Interest on convertible debt (net of estimated C
Corporation tax)....................................... 76,680 *
----------- ----------
Numerator for pro forma diluted earnings per share.......... $ 2,670,569 $ 183,370
Denominator:
Denominator for basic earnings per share -- historical...... 4,119,387 3,222,143
Effect of dilutive securities:
Stock options............................................. 7,277 --
Convertible debt.......................................... 271,929 *
----------- ----------
Denominator for diluted earnings per share.................. 4,398,593 3,222,143
----------- ----------
Pro forma basic earnings per share.......................... $ 0.63 $ 0.06
=========== ==========
Pro forma diluted earnings per share........................ $ 0.61 $ 0.06
=========== ==========
</TABLE>

* The effects of convertible debt have not been included as such effects would
be antidilutive.

Pro forma earnings per share reflect net income as if the Company had been
a C corporation for the year ended December 31, 1997 and the six months ended
June 30, 1998 and income taxes have been computed on that basis. (See Note 15).

13. SIGNIFICANT RISKS AND UNCERTAINTIES

The United States Congress passed the Health Insurance Portability and
Accountability Act of 1996 (the "1996 Act"), which contained provisions on
interest deductions on loans under leveraged Corporate Owned Life Insurance
(COLI) policies. With limited exceptions under the 1996 Act, no deduction is
allowed for interest paid or accrued on any indebtedness with respect to COLI
policies. The major provisions of the 1996 Act include (a) grandfathering of
contracts issued prior to June 21, 1986 with an interest rate cap; (b) a key
person exemption with an interest rate cap; and (c) a three-year phase-out for
other leveraged COLI policies (those not within the pre-1986 or key person
exemptions) beginning in 1996. The Company receives a significant amount of
revenue from leveraged COLI policies. The Company projects that operations will
not be materially impacted in spite of the loss of leveraged COLI revenues,
because it has significantly diversified its products.

The Clinton Administration's 1999 budget proposal, issued in February 1998,
contains a provision that would subject all business-owned life insurance to the
interest disallowance rule by removing the employee exception. Although the
Company believes this to be an adverse market condition, it believes all of its
existing

F-18
<PAGE> 92
CLARK/BARDES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

business would be fully grandfathered in the event the proposal moves into the
legislative process. The Company believes, at the very least, a key person
exemption would be included in future legislation.

14. INTERIM FINANCIAL DATA (UNAUDITED)

<TABLE>
<CAPTION>
QUARTER
----------------------------------------
FIRST SECOND THIRD FOURTH TOTAL
----- ------ ------ ------ -----
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
Summary of Quarterly Results:
Revenue.......................................... 1997 $ 5.5 $ 5.8 $ 11.0 $27.1 $49.4
1996 5.7 7.0 5.3 15.2 33.2
1995 5.6 4.8 3.4 13.2 27.0
Pre-tax income (loss)............................ 1997 $ 0.2 $ (0.7) $ 0.9 $ 3.9 $ 4.3
1996 0.6 0.7 0.2 2.2 3.7
1995 0.5 0.0 (0.7) 2.5 2.3
Net income (loss)................................ 1997 $ 0.2 $ (0.7) $ 0.9 $ 3.8 $ 4.2
1996 0.6 0.7 0.2 2.1 3.6
1995 0.5 0.0 (0.7) 2.4 2.2
Basic earnings (loss) per share (historical)..... 1997 $0.05 $(0.16) $ 0.20 $1.27 $1.03
1996 0.12 0.15 0.04 0.45 0.75
1995 0.10 0.00 (0.12) 0.41 0.39
Diluted earnings (loss) per share (historical)... 1997 $0.05 $(0.16) $ 0.20 $1.03 $0.99
1996 0.12 0.15 0.04 0.45 0.75
1995 0.10 0.00 (0.12) 0.41 0.39
</TABLE>

15. SUBSEQUENT EVENTS

Planned Initial Public Offering

In June 1998, the Board of Directors authorized the registration of up to
$60,000,000 of common stock (plus up to an additional 15% of the offering amount
to cover overallotments), to be offered in a planned initial public offering of
such stock (the "Offering"). The net proceeds to the Company after deducting
estimated underwriting discounts and commissions and estimated offering expenses
are expected to be approximately $45.8 million (4,000,000 shares). The Company
intends to apply the net proceeds from this Offering as follows: a)
approximately $1.0 million in partial payment of the 8.5% Medium Term Notes, b)
approximately $6.5 million to extinguish warrants under the 11% Second Priority
Senior Secured Notes, c) approximately $15.5 million to consummate the pending
acquisition (see below), d) approximately $7.4 million to pay The Wamberg
Organization as consideration for the purchase of renewal revenue pursuant to
the purchase agreement (see below), and e) approximately $15.4 million for
general corporate purposes, including working capital and possible future
acquisitions.

Reorganization

In connection with the aforementioned planned Offering in June 1998,
Clark/Bardes Holdings, Inc. (CBH) and Clark/Bardes, Inc., a Delaware corporation
(Clark/Bardes), were formed. CBH was formed to be the holding company of
Clark/Bardes (the successor operating corporation to Clark/Bardes, Inc.) and is
not engaged in any business. Clark/Bardes was formed to be the operating company
of CBH. On July 10, 1998, the Company's Board of Directors approved a
reorganization agreement (the "Reorganization Agreement") between Clark/Bardes,
Inc. (the Predecessor Company) and Clark/Bardes (the Successor Company) which
provides for a two step merger resulting in the Predecessor Company merging with
and into with Clark/Bardes (the "Merger") resulting in each stockholder of the
Predecessor Company (the "Existing Stockholders") receiving one-half of one
share of common stock for each share of Predecessor Company common stock held by
such Existing Stockholder, and contemplates a series of transactions, including
(i) a restructuring of Clark/Bardes' 10.5% Senior Secured Notes due August 2002
and 11.0% Second Priority Senior Secured Notes due August 2004 (such notes are
collectively referred to as the "Restructured Notes"),

F-19
<PAGE> 93
CLARK/BARDES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(see below), (ii) the conversion of Clark/Bardes' $4.8 million aggregate
principal amount of 8.5% Convertible Subordinated Notes due September 2007 into
813,559 shares of common stock, at $5.90 per share (the fair value at the date
the notes were issued as determined by recent stock transactions), (iii) the
extinguishment by the Company of warrants representing the right to purchase
1,525,424 shares of common stock of the Predecessor Company, (iv) a purchase of
renewal revenue due to Mr. Wamberg and The Wamberg Organization under the
Principal Office Agreement between Clark/Bardes and Mr. Wamberg (see below), (v)
the incorporation of a Texas entity formed for the purpose of marketing certain
insurance products within the state of Texas, and (vi) the termination of
certain agreements between the Predecessor Company and each of its shareholders.
The Merger, which will be consummated prior to the consummation of the Offering,
will be treated for accounting purposes as a reorganization of entities under
common control utilizing historical cost which is similar to a pooling of
interests.

In connection with the aforementioned Merger, all share amounts in the
accompanying financial statements have been restated in a manner similar to a
reverse stock split to give effect to the Merger.

As discussed above, the Company intends to restructure its 10.5% and 11.0%
notes. Under the amended and restated note agreements, the interest rate on the
10.5% notes will be lowered to 2.5% above the yield on a U.S. Treasury security
maturing two years from the date on which the interest rate is reset. The
interest rate on the 11% notes will be reset to 3.5% above the yield on a U.S.
Treasury security maturing five years from the date on which the interest rate
is reset. The interest rate will be reset at least five days prior to the
effective date of the Company's Registration Statement.

The warrants to purchase 1,525,425 shares of common stock will be
extinguished by the payment of $6.5 million by the Company to the warrant
holders.

Purchase of Renewal Revenue from the Chairman

On July 10, 1998, the Board of Directors approved an agreement with Tom
Wamberg and The Wamberg Organization which provides for, among other things, a
purchase of the renewal revenue due under the Principal Office Agreement with
Mr. Wamberg (described in Note 10) in exchange for a cash payment of
approximately $7.4 million. This transaction allows the Company to retain
additional commission and fee revenue for a ten year period following the
consummation of the transaction. The additional revenue equates to approximately
20.0% of the commission and fee revenue, net of servicing costs, related to
renewal revenue on Mr. Wamberg's and The Wamberg Organization's inforce business
as of December 31, 1998. Upon consummation, the Company plans to record the
purchase of this future revenue stream as an asset in the amount of the
consideration given which will be amortized over the term of the Agreement.

Termination of S Corporation Status and Stockholder Distribution

Upon the consummation of the Reorganization described above, the Company
will cease to be taxed as an S corporation and will become subject to federal
and state income taxation as a C corporation. As an S corporation, the Company's
income, whether or not distributed, was taxed at the stockholder level for
federal and certain state tax purposes. At the effective date of change in tax
status, the Company will record deferred taxes on its balance sheet for the
difference between the tax bases and book bases of its assets and liabilities.
If the Company's S corporation status had terminated as of December 31, 1997,
the amount of the deferred tax liability and deferred tax expense would have
been approximately $1.2 million and net income would have been reduced
accordingly by this amount. Pro forma earnings per share (see Note 12) includes
the effects of this conversion. The Company and its existing stockholders also
entered into a tax indemnification agreement. Under the terms of the tax
indemnification agreement, additional tax liabilities resulting from the
reallocation of income and deductions between the period the Company was treated
as an S corporation and the period the Company will be subject to income
taxation will be borne either by the Company or the existing shareholders to the
extent that such parties received the related income.

F-20
<PAGE> 94
CLARK/BARDES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

In connection with the termination of the Predecessor Company's S
corporation status, on July 10, 1998 the Board of Directors of the Predecessor
Company declared a dividend to the stockholders of record on July 31, 1998 in an
amount equal to approximately $3.2 million, or approximately $1.00 per share
(the "Stockholder Distribution Amount"). The Stockholder Distribution Amount may
be (i) decreased if the amount of the Predecessor Company's previously earned
amount and undistributed taxable income immediately prior to the consummation of
the Merger (such amount, the "AAA Amount") is less than the Stockholder
Distribution Amount or (ii) increased if the Stockholder Distribution Amount is
less than 42.6% of the taxable income for the period beginning January 1, 1998
and ending on the date the Merger is consummated. The pro forma balance sheet at
June 30, 1998 reflects the pro forma effects of the payment of this $3.2 million
stockholder dividend. In addition, the remaining retained earnings after the
assumed distribution, have been reclassified to common stock which assumes a
constructive distribution to the owners of the Predecessor Company followed by a
contribution to capital. The Company anticipates that the Stockholder
Distribution Amount will be paid prior to the Merger.

Stock Grant Restructuring

The Company's President and CEO had an agreement whereby he would be
granted 52,500 shares of the Predecessor Company's common stock if he is
employed as the Company's CEO on July 1, 1998. As described above, this
agreement was amended in June 1998 to provide that he will receive shares of
common stock of CBH valued at $301,350 (estimated to be approximately 24,108
shares based on the mid-point of the range of the assumed initial offering
prices), $223,650 in cash and a fully vested five year option to purchase 30,523
shares of CBH common stock exercisable at the initial public offering price. The
Company has recorded compensation expense of $525,000 in its June 1998 financial
statements related to this transaction. The options have been accounted for in
accordance with the Company's policy on stock compensation (see Note 1).

Pending Acquisition

On May 29, 1998, the Predecessor Company entered into a letter of intent to
acquire the business and substantially all of the assets of an unrelated party.
The purchase price of the pending acquisition, which is subject to change, is
$17 million of which $1.5 million was paid as a secured refundable deposit and
$15.5 is payable in cash at the closing. The consummation of the acquisition is
subject to numerous conditions including consummation of the aforementioned
offering and obtaining regulatory approvals, among others. The consummation of
this pending acquisition must occur on or prior to October 1, 1998. Management
expects to account for this acquisition using the purchase method.

Stock Purchase and Stock Option Plans

On July 10, 1998, the Board of Directors adopted the Stock Purchase Plan,
under which a total of 200,000 shares of Common Stock has been reserved for
issuance. Any employee who has been employed by the Company for 90 days is
eligible to participate in offerings under the Stock Purchase Plan.

In addition, as approved by the Board of Directors on July 10, 1998, the
Company has reserved 2.0 million shares of Common Stock under the Company's
Stock Option Plan, as amended, and as of the date of the Offering expects to
grant approximately 400,000 additional options at the initial public offering
price. The existing options outstanding at the date of the initial public
offering under the prior plan became immediately vested, except for 100,000
options outstanding.

F-21
<PAGE> 95

BANK COMPENSATION STRATEGIES GROUP

BALANCE SHEET
AUGUST 31, 1997
UNAUDITED

ASSETS

<TABLE>
<S> <C>
Current Assets
Cash...................................................... $1,630,651
Accounts receivable:
Commissions............................................ 773,608
Related parties........................................ 40,022
Prepaid expenses.......................................... 30,544
----------
2,474,825
Furniture and Fixtures, less accumulated depreciation of
$302,362.................................................. 189,325
----------
$2,664,150
==========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities
Accounts payable.......................................... $ 368,369
Accrued expenses.......................................... 1,640,318
Amount payable under consulting agreement................. 361,598
Due to related parties.................................... 65,877
Earnest money deposit..................................... 500,000
----------
2,936,162
----------
Stockholders' Equity
Common stock, par value $0.01 per share; 1,000,000 shares
authorized; 10,000 shares issued and outstanding....... 100
Additional paid-in capital................................ 9,900
Accumulated deficit....................................... (282,012)
----------
(272,012)
----------
$2,664,150
==========
</TABLE>

F-22
<PAGE> 96

BANK COMPENSATION STRATEGIES GROUP

STATEMENT OF INCOME
EIGHT MONTHS ENDED AUGUST 31, 1997
UNAUDITED

<TABLE>
<S> <C>
Commissions earned.......................................... $12,808,974
Commissions expense......................................... 8,732,534
-----------
Net commission revenue.................................... 4,076,440
General and administrative expense.......................... 3,460,270
-----------
Operating income.......................................... 616,170
-----------
Nonoperating income:
Other income.............................................. 28,003
-----------
Net income........................................ $ 644,173
===========
Pro forma data (unaudited):
Pro forma income tax expense.............................. $ 270,000
===========
Pro forma net income...................................... $ 374,173
===========
</TABLE>

STATEMENT OF SHAREHOLDERS' EQUITY
EIGHT MONTHS ENDED AUGUST 31, 1997
UNAUDITED

<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL
--------------- PAID-IN RETAINED
SHARES AMOUNT CAPITAL EARNINGS TOTAL
------ ------ ---------- --------- ---------
<S> <C> <C> <C> <C> <C>
Balance December 31, 1996.................... 10,000 $100 $9,900 $ -- $ 10,000
Net income................................... -- -- -- 644,173 644,173
Distribution declared........................ -- -- -- (926,185) (926,185)
------ ---- ------ --------- ---------
Balance August 31, 1997...................... 10,000 $100 $9,900 $(282,012) $(272,012)
====== ==== ====== ========= =========
</TABLE>

F-23
<PAGE> 97

BANK COMPENSATION STRATEGIES GROUP

STATEMENT OF CASH FLOWS
EIGHT MONTHS ENDED AUGUST 31, 1997
UNAUDITED

<TABLE>
<S> <C>
Cash Flows From Operating Activities
Net income................................................ $ 644,173
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization.......................... 48,824
Changes in operating assets and liabilities:
Decrease in commissions and related-party
receivable.......................................... 403,360
Increase in prepaid expenses......................... (12,125)
Increase in accounts payable and accrued expenses.... 1,318,490
-----------
Net cash provided by operating activities......... 2,402,722
-----------
Cash Flows From Investing Activities
Purchases of furniture and fixtures....................... (106,315)
-----------
Net cash (used in) investing activities........... (106,315)
-----------
Cash Flows From Financing Activities
Principal payments on notes payable....................... (461,687)
Distributions paid to stockholders........................ (926,185)
-----------
Net cash used in financing activities............. (1,387,872)
-----------
Increase in cash and cash equivalents............. 908,535
Cash and Cash Equivalents
Beginning................................................. 722,116
-----------
Ending.................................................... $ 1,630,651
===========
</TABLE>

F-24
<PAGE> 98

BANK COMPENSATION STRATEGIES GROUP

FOOTNOTE TO UNAUDITED FINANCIAL STATEMENTS
EIGHT MONTHS ENDED AUGUST 31, 1997

The financial statements as of August 31, 1997 and for the eight months
then ended have been prepared by the Company without audit. In the opinion of
management, all adjustments (which include only normal recurring adjustments)
necessary to present fairly the financial position as of August 31, 1997 and the
results of operations and cash flows for the eight months ended August 31, 1997
have been made. Certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or eliminated.

Pro forma data in the Statement of Income reflects tax expense and net
income as if Bank Compensation Strategies Group had been a C Corporation rather
than an S Corporation for federal income tax purposes for the eight months ended
August 31, 1997.

The results of operations for the eight months ended August 31, 1997 are
not necessarily indicative of the results to be expected for any future interim
period or for the year ending December 31, 1997.

F-25
<PAGE> 99

INDEPENDENT AUDITOR'S REPORT

To the Board of Directors
Bank Compensation Strategies Group
Bloomington, Minnesota

We have audited the accompanying balance sheets of Bank Compensation
Strategies Group as of December 31, 1996 and 1995, and the related statements of
income, stockholders' equity, and cash flows for the years 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.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Bank Compensation Strategies
Group as of December 31, 1996 and 1995, and the results of its operations and
its cash flows for the years then ended, in conformity with generally accepted
accounting principles.

McGLADREY & PULLEN, LLP

St. Paul, Minnesota
February 18, 1997

F-26
<PAGE> 100

BANK COMPENSATION STRATEGIES GROUP

BALANCE SHEETS
DECEMBER 31, 1996 AND 1995

ASSETS

<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Current Assets
Cash and cash equivalents (Note 3)........................ $ 722,114 $ 165,195
Accounts receivable:
Commissions............................................ 1,324,431 694,605
Related parties (Note 4)............................... 3,002 68,964
Prepaid expenses.......................................... 18,419 8,047
---------- ----------
2,067,966 936,811
Furniture and Fixtures, less accumulated depreciation
1996 -- $253,836; 1995 -- $197,474........................ 131,837 114,253
---------- ----------
$2,199,803 $1,051,064
========== ==========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities
Notes payable to stockholders (Note 2).................... $ 461,687 $ 279,599
Accounts payable.......................................... 488,134 222,931
Accrued expenses:
Compensation........................................... 956,452 309,695
Other.................................................. 190,365 105,599
Due to related parties (Note 4)........................... 93,165 123,240
---------- ----------
$2,189,803 $1,041,064
---------- ----------
Commitments, Contingencies, and Credit Risk (Notes 3, 5, and
6)
Stockholders' Equity (Notes 5 and 6)
Common stock. par value $0.01 per share; 1,000,000 shares
authorized; 10,000 shares issued and outstanding.......... 100 100
Additional paid-in capital................................ 9,900 9,900
---------- ----------
10,000 10,000
---------- ----------
$2,199,803 $1,051,064
========== ==========
</TABLE>

See Notes to Financial Statements.

F-27
<PAGE> 101

BANK COMPENSATION STRATEGIES GROUP

STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1996 AND 1995

<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Commissions earned (Note 3)................................. $15,248,629 $11,293,822
Commissions expense......................................... 10,183,581 7,107,506
----------- -----------
Net commission revenue.................................... 5,065,048 4,186,316
General and administrative expense (Notes 4 and 5).......... 3,535,573 2,897,264
----------- -----------
Operating income.......................................... 1,529,475 1,289,052
Nonoperating income (expense):
Interest income........................................... 29,567 22,372
Interest expense.......................................... -- (4,688)
Other expense, net........................................ (2,119) (2,137)
----------- -----------
Net income........................................ $ 1,556,923 $ 1,304,599
=========== ===========
</TABLE>

See Notes to Financial Statements.

F-28
<PAGE> 102

BANK COMPENSATION STRATEGIES GROUP

STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1996 AND 1995

<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL
--------------- PAID-IN RETAINED
SHARES AMOUNT CAPITAL EARNINGS TOTAL
------ ------ ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Balance December 31, 1994............... 10,000 $100 $9,900 $ -- $ 10,000
Net income............................ -- -- -- 1,304,599 1,304,599
Distributions declared................ -- -- -- (1,304,599) (1,304,599)
------ ---- ------ ----------- -----------
Balance, December 31, 1995.............. 10,000 100 9,900 -- 10,000
Net income............................ -- -- -- 1,556,923 1,556,923
Distributions declared................ -- -- -- (1,556,923) (1,556,923)
------ ---- ------ ----------- -----------
Balance December 31, 1996............... 10,000 $100 $9,900 $ -- $ 10,000
====== ==== ====== =========== ===========
</TABLE>

See Notes to Financial Statements.

F-29
<PAGE> 103

BANK COMPENSATION STRATEGIES GROUP

STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1996 AND 1995

<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Cash Flows From Operating Activities
Net Income................................................ $ 1,556,923 $ 1,304,599
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization.......................... 56,362 49,957
Changes in operating assets and liabilities:
Increase in commissions and related-party
receivable.......................................... (563,864) (259,018)
Increase in prepaid expenses......................... (10,372) (4,641)
Increase in accounts payable and accrued expenses.... 996,726 40,766
Increase (decrease) in due to related parties........ (30,075) 19,306
Decrease in deferred compensation.................... -- (69,678)
----------- -----------
Net cash provided by operating activities......... 2,005,700 1,081,291
----------- -----------
Cash Flows From Investing Activities
Purchases of furniture and fixtures....................... (73,946) (62,565)
Decrease in cash value of life insurance.................. -- 63,661
----------- -----------
Net cash provided by (used in) investing
activities...................................... (73,946) 1,096
----------- -----------
Cash Flows From Financing Activities
Principal payments on notes payable....................... (279,599) (468,474)
Distributions paid to stockholders........................ (1,095,236) (1,025,000)
----------- -----------
Net cash used in financing activities............. (1,374,835) (1,493,474)
----------- -----------
Increase (decrease) in cash and cash
equivalents..................................... 556,919 (411,087)
Cash and Cash Equivalents
Beginning................................................. 165,195 576,282
----------- -----------
Ending.................................................... $ 722,114 $ 165,195
=========== ===========
Supplemental Schedule of Noncash Financing Activities
Distributions to stockholders in the form of notes payable
(Note 2)............................................... $ 461,687 $ 279,599
=========== ===========
</TABLE>

See Notes to Financial Statements.

F-30
<PAGE> 104

BANK COMPENSATION STRATEGIES GROUP

NOTES TO FINANCIAL STATEMENTS

1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

Nature of business: Bank Compensation Strategies Group (Company) is engaged
in the business of designing and marketing insurance-funded executive
compensation plans in the banking industry. The Company also provides
administrative support for those plans once in place.

Basis of financial statement presentation and accounting estimates: The
financial statements have been prepared in conformity with generally accepted
accounting principles. In preparing the financial statements, management is
required to make estimates and assumptions that affect the reported amounts of
assets and liabilities as of the date of the balance sheet and revenues and
expenses for the period. Actual results could differ from those estimates.

Fair value of financial instruments: The book value of cash, accounts
receivable, accounts payable, and other financial instruments approximate their
fair value principally because of the short-term nature of these instruments.
The carrying value of the Company's Notes payable would not differ significantly
from its fair value.

Cash, cash equivalents, and cash flows: For purposes of reporting cash
flows, cash and cash equivalents includes cash on hand and in banks and money
market funds.

Depreciation: Depreciation is provided using the straight-line method over
two to five years.

Income tax status: The Company, with the consent of its stockholders, has
elected to be taxed under sections of the federal and state income tax laws (S
Corporation), which provide that, in lieu of corporation income taxes, the
stockholders separately account for their pro rata shares of the Company's
income, deductions, losses, and credits. Therefore, these statements do not
include any provision for corporate income taxes.

Commissions: Commissions on new compensation plans are recognized as
revenue upon successful completion of the individual plans. This occurs when the
banking organization implementing the plan transfers funds to the insurance
company for the purchase of a life insurance contract. Revenue is recognized on
plan renewals on the anniversary dates of the life insurance contract. The
Company is only required to recognize a liability upon the cancellation of an
insurance contract if it occurs within the first year of the contract.

Salary reduction 401(k) plan: The Company sponsors a 401(k) plan which
covers substantially all the employees who are eligible as to age and length of
service. A participant may elect to make contributions of up to 5 percent of the
participant's annual compensation. The Company makes matching contributions of
25 percent of each participant's contribution. The participants may elect to
make additional contributions up to 10 percent of their annual compensation
without matching contributions by the Company.

Distributions: Because of its S Corporation election, the liability for
federal and state taxes on the Company's income rests with its stockholders. The
Company has in the past and intends in the future to make distributions to fund
the stockholders' income tax obligations applicable to the aforementioned
federal and state taxes.

2. NOTES PAYABLE TO STOCKHOLDERS

The Company has noninterest-bearing unsecured notes payable to stockholders
of $461,687 and $279,599 at December 31, 1996 and 1995, respectively.

3. COMMITMENTS, CONTINGENCIES, AND CREDIT RISK

Lease commitments: The Company leases its facility under a noncancelable
four-year operating lease which is personally guaranteed by the majority
stockholder. Included in the minimum lease payments is the
F-31
<PAGE> 105
BANK COMPENSATION STRATEGIES GROUP

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Company's pro rata share of estimated real estate taxes and operating expenses,
which are subject to change each year based on the actual amount of these
expenses. Future minimum rental payments on the lease are as follows:

<TABLE>
<S> <C>
Years ending December 31:
1997...................................................... $157,500
1998...................................................... 65,600
--------
$223,100
========
</TABLE>

Rent expense for the years ended December 31, 1996 and 1995 approximated
$133,000 and $121,000. respectively.

Financial instruments with concentrations of credit risk:

Concentration over insured limits: The nature of the Company's business
requires that it maintain amounts due from banks which, at times, may exceed
federally insured limits. The Company has not experienced any losses in such
accounts.

The executive compensation plans sold by the Company are underwritten
primarily by five insurance companies. Substantially all of the commission
revenues earned and receivables due are from these companies.

4. RELATED-PARTY TRANSACTIONS

The Company has various transactions with stockholders and LHH & Co., a
financial planning company owned by the son of the Company's chairman.

Amounts due to and from related parties at December 31, 1996, are
summarized as follows:

<TABLE>
<CAPTION>
DUE FROM DUE TO
-------- -------
<S> <C> <C>
LHH & Co.................................................... $3,002 $
Stockholders................................................ -- 93,165
------ -------
$3,002 $93,165
====== =======
</TABLE>

Transactions with LHH & Co. include the payment by LHH & Co, to the Company
of annual rent in the approximate amount of $11,000 and the payment by the
Company to LHH & Co, of consulting fees of approximately $36,000 per year. In
addition, the Company paid commissions to LHH & Co. in the amounts of $127,301
and $239,549 for 1995 and 1996, respectively. Management believes that the
allocation of rent to LHH & Co. based upon actual rental costs of the Company is
reasonable.

Transactions with stockholders consist of advances from stockholders for
cash flow purposes following year end S Corporation distributions.

5. INCOME AND APPRECIATION RIGHTS AGREEMENT AND STOCK PURCHASE AGREEMENT

In 1991, the Company entered into an agreement with an individual which
granted certain income and appreciation rights to this individual in exchange
for his continued service to the Company. This agreement is cancelable by either
party at any time. The income and appreciation rights for this individual became
vested as of January 1, 1996, and expense of $77,848. attributable to 1996, was
recorded.

F-32
<PAGE> 106
BANK COMPENSATION STRATEGIES GROUP

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

6. STOCK OPTION AND BONUS AGREEMENT

On January 1, 1994 the Company, Lawrence H. Hendrickson, the Company's
majority shareholder ("Hendrickson") and Richard C. Chapman, the Company's
president ("Chapman"), entered into a combination stock option and bonus
agreement (the 'Agreement"). Pursuant to the Agreement, Hendrickson granted to
Chapman the option to acquire from Hendrickson up to 500 shares per year (on a
cumulative basis) over a 12 year period at a price of $750 per share which the
Board determined was not less than the fair value of the shares on January 1,
1994. The Agreement also provided that Hendrickson could require Chapman to
acquire all of the remaining shares of Hendrickson in the event that the
exercise of any option would reduce Hendrickson's interest below 51%. In
addition, the Agreement provides that in the event Chapman desires to sell his
shares, Hendrickson has a right of first refusal to repurchase the shares. The
Agreement also provides for annual bonuses and distributions to Chapman totaling
an aggregate of 50 percent of Company earnings in excess of $750,000.

In 1995 and in 1996, the Agreement was amended. As a result of the
amendment, the bonus amount paid to Chapman under the Agreement was lowered and
the difference was paid to Hendrickson. In return Hendrickson agreed to lower
the price paid by Chapman for the purchase of shares, so that, on an after tax
basis, the decrease in consideration paid for the purchase of shares
substantially equaled the bonus paid to Hendrickson. In total, both the
aggregate amount of cash bonuses paid by the Company and the total number of
shares covered by the option granted by Hendrickson to Chapman (400 and 600
shares in 1995 and 1996, respectively) in any year were unchanged. The Company
accounted for the 1995 and 1996 option exercises under the original fixed plan
accounting from 1994, since the amendments did not substantively change the
aggregate consideration paid by Chapman or the costs expensed by the Company.
Compensation expense recorded in connection with the bonus plan amounted to
$514,077 in 1996 and $354,878 in 1995.

F-33
<PAGE> 107

------------------------------------------------------
------------------------------------------------------

NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN
OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE COMMON
STOCK IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT
THERE HAS NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR IN
THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.

------------------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary..................... 1
Risk Factors........................... 7
The Reorganization..................... 15
Pending Acquisition.................... 17
Use of Proceeds........................ 17
Dividend Policy........................ 17
Dilution............................... 18
Capitalization......................... 19
Selected Historical and Pro Forma
Financial Information................ 20
Unaudited Pro Forma Financial
Information.......................... 21
Management's Discussion and Analysis of
Financial Condition and Results of
Operations........................... 25
Business............................... 35
Management............................. 45
Principal and Selling Stockholders..... 53
Certain Relationships and Related
Transactions......................... 55
Description of Capital Stock........... 57
Shares Eligible for Future Sale........ 62
Underwriting........................... 63
Legal Matters.......................... 64
Experts................................ 64
Available Information.................. 65
Glossary............................... 66
Financial Statements................... F-1
</TABLE>

UNTIL , 1998 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT PARTICIPATING
IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS DELIVERY
REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS
WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.

------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------

4,000,000 SHARES

CLARK BARDES LOGO
COMMON STOCK
------------------------------
PROSPECTUS
------------------------------
BEAR, STEARNS & CO. INC.

PIPER JAFFRAY INC.

CONNING & COMPANY
, 1998

------------------------------------------------------
------------------------------------------------------
<PAGE> 108

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The estimated expenses in connection with the issuance and distribution of
the securities being registered, other than underwriting discounts and
commissions are set forth in the following table. The Company will pay all
expenses of issuance and distribution. Each amount, except for the SEC, Nasdaq
National Market and NASD fees, is estimated.

<TABLE>
<S> <C>
SEC registration fees....................................... $16,962
NASD filing fees............................................ $ 6,250
Nasdaq National Market application and initial listing
fee....................................................... $ *
Transfer agent's and registrar's fees and expenses.......... $ *
Printing and engraving expenses............................. $ *
Legal fees and expenses..................................... $ *
Accounting fees and expenses................................ $ *
Blue sky fees and expenses.................................. $ *
Miscellaneous............................................... $ *
-------
Total............................................. $ *
=======
</TABLE>

- ---------------

* To be filed by amendment.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

CBH's Certificate of Incorporation provides that CBH shall, to the fullest
extent permitted by Section 145 of the DGCL, as amended from time to time,
indemnify all persons whom it may indemnify pursuant thereto.

Section 145 of the DGCL permits a corporation, under specified
circumstances, to indemnify its directors, officers, employees or agents against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlements actually and reasonably incurred by them in connection with any
action, suit or proceeding brought by third parties by reason of the fact that
they were or are directors, officers, employees or agents of the corporation, if
such directors, officers, employees or agents acted in good faith and in a
manner they reasonably believed to be in or not opposed to the best interests of
the corporation and, with respect to any criminal action or proceeding, had no
reason to believe their conduct was unlawful. In a derivative action, i.e., one
by or in the right of the corporation, indemnification may be made only for
expenses actually and reasonably incurred by directors, officers, employees or
agents in connection with the defense or settlement of an action or suit, and
only with respect to a matter as to which they shall have acted in good faith
and in a manner they reasonably believed to be in or not opposed to the best
interests of the corporation, except that no indemnification shall be made if
such person shall have been adjudged liable to the corporation, unless and only
to the extent that the court in which the action or suit was brought shall
determine upon application that the defendant directors, officers, employees or
agents are fairly and reasonably entitled to indemnity for such expenses despite
such adjudication of liability.

CBH's Bylaws provide for indemnification by CBH of its directors, officers
and certain non-officer employees under certain circumstances against expenses
(including attorneys fees, judgments, fines and amounts paid in settlement)
reasonably incurred in connection with the defense or settlement of any
threatened, pending or completed legal proceeding in which any such person is
involved by reason of the fact that such person is or was an officer or employee
of CBH if such person acted in good faith and in a manner he or she reasonably
believed to be in or not opposed to the best interests of CBH, and, with respect
to criminal actions or proceedings, if such person had no reasonable cause to
believe his or her conduct was unlawful. CBH's Certificate of Incorporation also
provides that, to the fullest extent permitted by the DGCL, no

II-1
<PAGE> 109

director shall be personally liable to CBH or its stockholders for monetary
damages resulting from breaches of their fiduciary duty as directors.

Expenses for the defense of any action for which indemnification may be
available may be advanced by CBH under certain circumstances. The general effect
of the foregoing provisions may be to reduce the circumstances which an officer
or director may be required to bear the economic burden of the foregoing
liabilities and expenses. CBH's directors and officers will be covered by
liability insurance indemnifying them against damages arising out of certain
kinds of claims which might be made against them based on their negligent acts
or omissions while acting in their capacity as such.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

Since January 1995, the Predecessor Company issued and sold the following
unregistered securities:

(1) On November 17, 1997, the Predecessor Company issued 1.0 million
shares of common stock for $1.7 million. This issuance was exempt from
registration under Section 4(2) of the Securities Act.

(2) On March 5, 1997, the Predecessor Company granted options to
purchase an aggregate of 190,830 shares of common stock to employees and
officers of the Company under its Stock Option Plan. Options to purchase
40,830 and 150,000 shares of common stock were granted at an exercise price
of $4.80 per share and $7.00 per share respectively. These options vest
over a period of time following their respective dates of grant. These
issuances were exempt from registration under Section 4(2) of, and Rule 701
promulgated under, the Securities Act.

(3) On April 2, 1997, the Predecessor Company granted options to
purchase an aggregate of 100,000 shares of common stock to Mr. Pohlman at
an exercise price of $4.80 per share. These options vest over a period of
time following the date of grant. This issuance was exempt from
registration under Section 4(2) of, and Rule 701 promulgated under, the
Securities Act.

(4) On June 30, 1998, the Predecessor Company issued 301,350 shares of
common stock to Mr. Todd. These shares were issued in connection with the
restructuring of a grant of stock made at the time Mr. Todd was originally
employed. This issuance was exempt from registration under Section 4(2) of,
and Rule 701 promulgated under, the Securities Act.

(5) On July 10, 1998 the Predecessor Company granted options to
purchase an aggregate of 375,023 shares of common stock to 18 employees,
one director and four producers. Each option will be exercisable at the
initial public offering price of the Common Stock. This issuance was exempt
from registration under Section 4(2) of, and Rule 701 promulgated under,
the Securities Act.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibits

<TABLE>
<CAPTION>
EXHIBIT
NO. EXHIBITS
------- --------
<C> <S>
**1.1 -- Underwriting Agreement.
**2.1 -- Reorganization Agreement, by and among Clark/Bardes
Holdings, Inc., Clark/Bardes, Inc. and the Predecessor
Company.
*2.2 -- Letter of Intent, dated May 29, 1998, from Clark/Bardes,
Inc. and the Schoenke Companies.
*2.3 -- Asset Purchase Agreement, dated September 5, 1997, among
Clark/Bardes, Inc., Bank Compensation Strategies, Inc.,
et. al.
*3.1 -- Certificate of Incorporation of CBH.
*3.2 -- Bylaws of CBH.
3.3 -- Certificate of Amendment.
4.1 -- Specimen Certificate for shares of Common Stock of the
Company.
</TABLE>

II-2
<PAGE> 110

<TABLE>
<CAPTION>
EXHIBIT
NO. EXHIBITS
------- --------
<C> <S>
4.2 -- Form of Rights Agreement, dated July , 1998, by and
between Clark/Bardes Holdings, Inc. and The Bank of New
York.
**5 -- Form of Opinion of Akin, Gump, Strauss, Hauer & Feld,
L.L.P.
10.1 -- Form of Clark/Bardes Holdings, Inc. 1998 Stock Option
Agreement.
*10.2 -- Administration and Services Agreement, by and between
Clark/Bardes, Inc. and Clark/Bardes Agency of Ohio, Inc.
*10.3 -- Administration and Services Agreement, by and between
Clark/Bardes, Inc. and Clark/Bardes Securities, Inc.
*10.4 -- Administration and Services Agreement, by and between
Clark/Bardes, Inc. and Clark/Bardes, Inc. of
Pennsylvania.
*10.5 -- Principal Office Agreement, dated July 29, 1993, by and
between W.T. Wamberg and Clark/Bardes, Inc.
*10.6 -- Buy-Sell Agreement for Clark/Bardes Agency of Ohio, Inc.,
dated April 1996, by and between Clark/Bardes Securities,
Inc., Clark/Bardes Agency of Ohio, Inc. and Robert
Kelleher.
*10.7 -- Note and Warrant Purchase Agreement, dated September 8,
1997, by and between Clark/Bardes, Inc. and Great-West,
Life Investors and Nationwide.
*10.8 -- Note Agreement, dated September 8, 1997, by and between
Clark/Bardes, Inc., Great-West, Life Investors and
Nationwide.
*10.9 -- Form of Common Stock Purchase Warrant, dated September 8,
1997.
*10.10 -- Form of 11.00% Secured Priority Senior Secured Note Due
August 2004.
*10.11 -- Form of 10.50% Senior Secured Note Due August 2004.
*10.12 -- Convertible Subordinated Note, dated September 1997.
*10.13 -- Medium Term Note, dated September 1997.
*10.14 -- Stock Purchase Agreement, dated August 22, 1997, by and
among Clark/Bardes, Inc., Malcolm N. Briggs, Steven J.
Cochlan, G.F. Pendleton, and Don R. Teasley.
*10.15 -- Stock Purchase Agreement, dated August 1997, by and among
Clark/Bardes, Inc. and Henry J. Smith.
*10.16 -- Lease Agreement, dated April 24, 1998, by and between
Northland Center Limited Partnership and Clark/Bardes,
Inc.
*10.17 -- Lease Agreement, dated December 30, 1994, by and between
C-W#5, Ltd., and Clark/Bardes, Inc.
*10.18 -- Letter of Agreement to Purchase Warrants, dated June 11,
1998, to Nationwide.
*10.19 -- Letter of Agreement to Purchase Warrants, dated June 11,
1998 to Life Investors.
*10.20 -- Letter of Agreement to Purchase Warrants, dated June 11,
1998, to Great-West.
10.21 -- Phantom Stock Agreement, dated September 5, 1997, by and
between Clark/Bardes, Inc. and Steven J. Cochlan.
10.22 -- Employment Agreement, dated November 21, 1996, by and
between Clark/Bardes, Inc. and Kurt J. Laning.
10.23 -- Employment Agreement, dated March 28, 1995, by and
between Clark/Bardes, Inc. and Keith L. Staudt.
10.24 -- Employment Agreement, dated August 23, 1993, by and
between Clark/Bardes, Inc. and Larry Sluder.
</TABLE>

II-3
<PAGE> 111

<TABLE>
<CAPTION>
EXHIBIT
NO. EXHIBITS
------- --------
<C> <S>
10.25 -- Employment Agreement, dated March 7, 1993, by and between
Clark/Bardes, Inc. and Ronald A. Roth.
10.26 -- Employment Agreement, dated April 15, 1991, by and
between Clark/Bardes, Inc. and Sue A. Leslie.
10.27 -- Employment Agreement, dated June 9, 1993, by and between
Clark/Bardes, Inc. and William J. Gallegos.
10.28 -- Tax Indemnity Agreement by and between Clark/Bardes
Holdings, Inc., Clark/Bardes, Inc. and certain former
shareholders of the Predecessor Company.
10.29 -- Form of Employee Stock Purchase Plan.
10.30 -- Form of Employee Agreement, effective as of September 1,
1998, by and between Clark/Bardes, Inc. and Robert E.
Miller.
10.31 -- Form of Employee Agreement, effective as of July 1, 1998,
by and between Clark/Bardes, Inc. and Thomas M. Pyra.
10.32 -- Form of Employee Agreement, effective as of July 1, 1998,
by and between Clark/Bardes Holdings, Inc. and Melvin G.
Todd.
10.33 -- Form of Commission Transfer Agreement by and between W.T.
Wamberg, The Wamberg Organization, Inc. and Clark/Bardes,
Inc.
10.34 -- Letter of Agreement, dated July 24, 1998, to Great-West,
Life Investors and Nationwide.
16 -- Letter regarding Change in Certifying Accountant.
23.1 -- Consent of Ernst & Young LLP.
23.2 -- Consent of Lane Gorman Trubitt, L.L.P.
23.3 -- Consent of McGladrey & Pullen, LLP.
**23.4 -- Consent of Akin, Gump, Strauss, Hauer & Feld, L.L.P.
(included in its opinion filed as Exhibit 5 hereto).
*24 -- Power of Attorney (included on signature page of the
Registration Statement as initially filed).
27 -- Financial Information Schedule (included in SEC-filed
copy only).
</TABLE>

- ---------------

* Previously filed

** To be filed by amendment

(b) Financial Statement Schedules

None.

ITEM 17. UNDERTAKINGS

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers, and controlling persons of the
registrant pursuant to Item 14 herein, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.

II-4
<PAGE> 112

The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of Prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of Prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of the
registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of Prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

The undersigned registrant hereby undertakes to provide to the underwriter
at the closing specified in the underwriting agreements, certificates in such
denominations and registered in such names as required by the underwriter to
permit prompt delivery to each purchaser.

II-5
<PAGE> 113

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this Amendment to the Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Dallas, State of Texas, on July 27, 1998.

CLARK/BARDES HOLDINGS, INC.

By: /s/ MELVIN G. TODD

----------------------------------
Melvin G. Todd, President and
Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment to the Registration Statement has been signed by the following
persons in the capacities indicated on July 27, 1998:

<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>

/s/ W. T. WAMBERG Chairman of the Board and Director
- -----------------------------------------------------
W. T. Wamberg

/s/ MELVIN G. TODD President, Chief Executive Officer
- ----------------------------------------------------- (principal executive officer)
Melvin G. Todd and Director

/s/ THOMAS M. PYRA Chief Financial Officer
- ----------------------------------------------------- (principal accounting officer)
Thomas M. Pyra

/s/ LAWRENCE H. HENDRICKSON Director
- -----------------------------------------------------
Lawrence H. Hendrickson

/s/ RANDOLPH A. POHLMAN Director
- -----------------------------------------------------
Randolph A. Pohlman

Director
- -----------------------------------------------------
L. William Seidman

By: /s/ MELVIN G. TODD
-------------------------------------------------
Melvin G. Todd
Attorney-in-Fact
</TABLE>

II-6
<PAGE> 114

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NO. EXHIBITS
------- --------
<C> <S>

**1.1 -- Underwriting Agreement.
**2.1 -- Reorganization Agreement, by and among Clark/Bardes
Holdings, Inc., Clark/Bardes, Inc. and the Predecessor
Company.
*2.2 -- Letter of Intent, dated May 29, 1998, from Clark/Bardes,
Inc. and the Schoenke Companies.
*2.3 -- Asset Purchase Agreement, dated September 5, 1997, among
Clark/Bardes, Inc., Bank Compensation Strategies, Inc.,
et. al.
*3.1 -- Certificate of Incorporation of CBH.
*3.2 -- Bylaws of CBH.
3.3 -- Certificate of Amendment.
4.1 -- Specimen Certificate for shares of Common Stock of the
Company.
4.2 -- Form of Rights Agreement, dated July , 1998, by and
between Clark/Bardes Holdings, Inc. and The Bank of New
York.
**5 -- Form of Opinion of Akin, Gump, Strauss, Hauer & Feld,
L.L.P.
10.1 -- Form of Clark/Bardes Holdings, Inc. 1998 Stock Option
Agreement.
*10.2 -- Administration and Services Agreement, by and between
Clark/Bardes, Inc. and Clark/Bardes Agency of Ohio, Inc.
*10.3 -- Administration and Services Agreement, by and between
Clark/Bardes, Inc. and Clark/Bardes Securities, Inc.
*10.4 -- Administration and Services Agreement, by and between
Clark/Bardes, Inc. and Clark/Bardes, Inc. of
Pennsylvania.
*10.5 -- Principal Office Agreement, dated July 29, 1993, by and
between W.T. Wamberg and Clark/Bardes, Inc.
*10.6 -- Buy-Sell Agreement for Clark/Bardes Agency of Ohio, Inc.,
dated April 1996, by and between Clark/Bardes Securities,
Inc., Clark/Bardes Agency of Ohio, Inc. and Robert
Kelleher.
*10.7 -- Note and Warrant Purchase Agreement, dated September 8,
1997, by and between Clark/Bardes, Inc. and Great-West,
Life Investors and Nationwide.
*10.8 -- Note Agreement, dated September 8, 1997, by and between
Clark/Bardes, Inc., Great-West, Life Investors and
Nationwide.
*10.9 -- Form of Common Stock Purchase Warrant, dated September 8,
1997.
*10.10 -- Form of 11.00% Secured Priority Senior Secured Note Due
August 2004.
*10.11 -- Form of 10.50% Senior Secured Note Due August 2004.
*10.12 -- Convertible Subordinated Note, dated September 1997.
*10.13 -- Medium Term Note, dated September 1997.
*10.14 -- Stock Purchase Agreement, dated August 22, 1997, by and
among Clark/Bardes, Inc., Malcolm N. Briggs, Steven J.
Cochlan, G.F. Pendleton, and Don R. Teasley.
*10.15 -- Stock Purchase Agreement, dated August 1997, by and among
Clark/Bardes, Inc. and Henry J. Smith.
*10.16 -- Lease Agreement, dated April 24, 1998, by and between
Northland Center Limited Partnership and Clark/Bardes,
Inc.
</TABLE>

<PAGE> 115

<TABLE>
<CAPTION>
EXHIBIT
NO. EXHIBITS
------- --------
<C> <S>
*10.17 -- Lease Agreement, dated December 30, 1994, by and between
C-W#5, Ltd., and Clark/Bardes, Inc.
*10.18 -- Letter of Agreement to Purchase Warrants, dated June 11,
1998, to Nationwide.
*10.19 -- Letter of Agreement to Purchase Warrants, dated June 11,
1998 to Life Investors.
*10.20 -- Letter of Agreement to Purchase Warrants, dated June 11,
1998, to Great-West.
10.21 -- Phantom Stock Agreement, dated September 5, 1997, by and
between Clark/Bardes, Inc. and Steven J. Cochlan.
10.22 -- Employment Agreement, dated November 21, 1996, by and
between Clark/Bardes, Inc. and Kurt J. Laning.
10.23 -- Employment Agreement, dated March 28, 1995, by and
between Clark/Bardes, Inc. and Keith L. Staudt.
10.24 -- Employment Agreement, dated August 23, 1993, by and
between Clark/Bardes, Inc. and Larry Sluder.
10.25 -- Employment Agreement, dated March 7, 1993, by and between
Clark/Bardes, Inc. and Ronald A. Roth.
10.26 -- Employment Agreement, dated April 15, 1991, by and
between Clark/Bardes, Inc. and Sue A. Leslie.
10.27 -- Employment Agreement, dated June 9, 1993, by and between
Clark/Bardes, Inc. and William J. Gallegos.
10.28 -- Tax Indemnity Agreement by and between Clark/Bardes
Holdings, Inc., Clark/Bardes, Inc. and certain former
shareholders of the Predecessor Company.
10.29 -- Form of Employee Stock Purchase Plan.
10.30 -- Form of Employee Agreement, effective as of September 1,
1998, by and between Clark/Bardes, Inc. and Robert E.
Miller.
10.31 -- Form of Employee Agreement, effective as of July 1, 1998,
by and between Clark/Bardes, Inc. and Thomas M. Pyra.
10.32 -- Form of Employee Agreement, effective as of July 1, 1998,
by and between Clark/Bardes Holdings, Inc. and Melvin G.
Todd.
10.33 -- Form of Commission Transfer Agreement by and between W.T.
Wamberg, The Wamberg Organization, Inc. and Clark/Bardes,
Inc.
10.34 -- Letter of Agreement, dated July 24, 1998, to Great-West,
Life Investors and Nationwide.
16 -- Letter regarding Change in Certifying Accountant.
23.1 -- Consent of Ernst & Young LLP.
23.2 -- Consent of Lane Gorman Trubitt, L.L.P.
23.3 -- Consent of McGladrey & Pullen, LLP.
**23.4 -- Consent of Akin, Gump, Strauss, Hauer & Feld, L.L.P.
(included in its opinion filed as Exhibit 5 hereto).
*24 -- Power of Attorney (included on signature page of the
Registration Statement as initially filed).
27 -- Financial Information Schedule (included in SEC-filed
copy only).
</TABLE>

- ---------------

* Previously filed

** To be filed by amendment

<PAGE> 1
EXHIBIT 3.3

CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
OF
CLARK/BARDES ORGANIZATION, INC.

Pursuant to the provisions of Sections 241 and 103 of the Delaware General
Corporation Law ("DGCL"), CLARK/BARDES ORGANIZATION, INC. (the "Corporation")
hereby certifies as follows:

1. Article I of the Certificate of Incorporation shall be amended and
restated in its entirety, as of the date on which the original certificate of
incorporation became effective, as follows:

"The name of the Corporation is Clark/Bardes Holdings, Inc."

2. The Corporation has not received any payment for any of its stock.

3. This amendment has been duly adopted in accordance with Sections 241
and 103 of the DGCL.

[SIGNATURE PAGE FOLLOWS]
<PAGE> 2
THE UNDERSIGNED, being directors of the Corporation, hereby declare and
certify that this Certificate of Amendment to the Certificate of Incorporation
of the Corporation is his act and deed and the facts herein stated are true, and
accordingly has hereto set his hand this 12 day of June, 1998.

/s/ W.T. WAMBERG
---------------------------
W.T. Wamberg
Director

/s/ MELVIN G. TODD
---------------------------
Melvin G. Todd
Director

/s/ RANDOLPH POHLMAN
---------------------------
Randolph Pohlman
Director

<PAGE> 1

EXHIBIT 4.1

<TABLE>
<S> <C> <C> <C>
TEMPORARY CERTIFICATE: EXCHANGEABLE FOR DEFINITIVE ENGRAVED CERTIFICATE WHEN READY FOR DELIVERY.

NUMBER SHARES

[LOGO]
INCORPORATED UNDER THE LAWS COMMON STOCK
OF THE STATE OF DELAWARE PAR VALUE $0.01
CLARK/BARDES
HOLDINGS, INC.

THIS CERTIFICATE IS TRANSFERABLE CUSIP 180668 10 5
IN NEW YORK, NEW YORK SEE REVERSE FOR CERTAIN DEFINITIONS

This Certifies That

is the owner of

FULLY PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK OF

Clark Bardes Holdings, Inc., a Delaware corporation (the "Corporation"), transferable on the books of the Corporation by the holder
hereof in person or by a duly authorized attorney upon surrender of this certificate properly endorsed. This certificate is not
valid until countersigned by the Transfer Agent and registered by the Registrar.

Witness the facsimile seal of the Corporation and the facsimile signatures of its duly authorized Officers.

CERTIFICATE OF STOCK

Dated:

/s/ A. J. SHAMBERG

[SEAL]
Chairman Countersigned And Registered
Of The Board THE BANK OF NEW YORK

TRANSFER AGENT
AND REGISTRAR

/s/ THOMAS M. PYRA BY

Chief Financial Officer Authorized Signature

- ------------------------------------- --------------------------------------------------
AMERICAN BANK NOTE COMPANY PRODUCTION COORDINATOR: BELINDA BECK: 215-830-2198
680 BLAIR MILL ROAD PROOF OF JULY 14, 1998
HORSHAM, PA 19044 CLARK/BARDES HOLDINGS, INC.
(215) 657-3480 H 57356 FACE
- ------------------------------------- --------------------------------------------------
SALES: M. GARRETT: 214-823-2700 OPERATOR: hj/eg/JW/koshy
- ------------------------------------- --------------------------------------------------
/NET/BANKNOTE/HOME 11/C-4/CLARK 57356 REV. 3
- ------------------------------------- --------------------------------------------------
</TABLE>

<PAGE> 2
[CLARK/BARDES HOLDINGS, INC. LOGO]

THE CORPORATION WILL FURNISH WITHOUT CHARGE TO EACH STOCKHOLDER WHO SO
REQUESTS IN WRITING A STATEMENT OF THE POWERS, DESIGNATIONS, PREFERENCES AND
RELATIVE, PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS OF EACH CLASS OF STOCK
OR SERIES THEREOF AND THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF SUCH
PREFERENCES AND/OR RIGHTS. SUCH REQUEST MAY BE MADE TO THE SECRETARY OF THE
CORPORATION AT ITS PRINCIPAL PLACE OF BUSINESS.

This certificate also evidences and entitles the holder hereof to
certain rights as set forth in a Rights Agreement between Clark/Bardes Holdings,
Inc. and The Bank of New York, dated as of July , 1998 (the "Rights Agreement"),
the terms of which are hereby incorporated herein by reference and a copy of
which is on file at the principal executive offices of Clark/Bardes Holdings,
Inc. Under certain circumstances, as set forth in the Rights Agreement, such
Rights will be evidenced by separate certificates, and will no longer be
evidenced by this certificate. Clark/Bardes Holdings, Inc. will mail to the
holder of this certificate a copy of the Rights Agreement without charge after
receipt of a written request therefor. Under certain circumstances, as set forth
in the Rights Agreement, Rights issued to any Person who becomes an Acquiring
Person or any Affiliate or Associate thereof (as defined in the Rights
Agreement) whether currently held by or on behalf of such Person or by any
subsequent holder, may become null and void.

The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:

<TABLE>
<S> <C>
TEN COM - as tenants in common UNIF GIFT MIN ACT- _______________Custodian _____________
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right of survivorship under Uniform Gifts to Minors
and not as tenants in common Act ____________________
(State)
</TABLE>

Additional abbreviations may also be used though not in the above list.

For Value Received, __________________________________ hereby sell, assign and
transfer unto

PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- ----------------------------------------

- -------------------------------------------------------------------------------

- -------------------------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE OF ASSIGNEE)

Shares
- ----------------------------------------------------------------------
of Common Stock represented by the within certificate, and do hereby irrevocably
constitute and appoint

Attorney,
- ----------------------------------------------------------------------
to transfer the said stock on the books of the within-named Corporation, with
full power of substitution in the premises.

Dated X
------------------------------------- -------------------------------

NOTICE: THE SIGNATURE(S) TO THIS ASSIGNMENT
MUST CORRESPOND WITH THE NAME(S) AS WRITTEN
UPON THE FACE OF THE CERTIFICATE IN EVERY
PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT
OR ANY CHANGE WHATEVER. X
-------------------------------

ALL GUARANTEES MUST BE MADE BY A
FINANCIAL INSTITUTION (SUCH AS A
BANK OR BROKER) WHICH IS A
PARTICIPANT IN THE SECURITIES
TRANSFER AGENTS MEDALLION PROGRAM
("STAMP"), THE NEW YORK STOCK
EXCHANGE, INC. MEDALLION
SIGNATURE PROGRAM ("MSP"), OR THE
STOCK EXCHANGES MEDALLION PROGRAM
("SEMP") AND MUST NOT BE DATED.
GUARANTEES BY A NOTARY PUBLIC ARE
NOT ACCEPTABLE.

<TABLE>
<S> <C>
- --------------------------------------- ------------------------------------------------------
AMERICAN BANK NOTE COMPANY PRODUCTION COORDINATOR: BELINDA BECK: 215-830-2198
680 BLAIR MILL ROAD PROOF OF JULY 21, 1998
HORSHAM, PA 19044 CLARK/BARDES HOLDINGS, INC.
(215) 657-3480 H 57356 bk
- --------------------------------------- -------------------------------------------------------
SALES: M. GARRETT: 214-823-2700 OPERATOR: JW/JW/koshy/eg
- --------------------------------------- -------------------------------------------------------
/NET/BANKNOTE/HOME 11/ C-4 CLARK 57356 REV. 3
- --------------------------------------- -------------------------------------------------------
</TABLE>

<PAGE> 1

EXHIBIT 4.2

================================================================================

RIGHTS AGREEMENT

by and between

CLARK/BARDES HOLDINGS, INC.
(the "Company")

and

THE BANK OF NEW YORK
(the "Rights Agent")

Dated as of July ____, 1998

================================================================================
<PAGE> 2
TABLE OF CONTENTS

<TABLE>
<S> <C>
PRELIMINARY STATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
STATEMENT OF AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1. Certain Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2. Appointment of Rights Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 3. Issue of Rights Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 4. Form of Rights Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 5. Countersignature and Registration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 6. Transfer, Split Up, Combination and Exchange of Rights Certificates; Mutilated, Destroyed, Lost
or Stolen Rights Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights. . . . . . . . . . . . . . . . . . . . . 7
Section 8. Cancellation and Destruction of Rights Certificates. . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 9. Availability of Preferred Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 10. Preferred Shares Record Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 11. Adjustment of Purchase Price, Number of Shares or Number of Rights. . . . . . . . . . . . . . . . 10
Section 12. Certificate of Adjusted Purchase Price or Number of Shares. . . . . . . . . . . . . . . . . . . . 17
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power. . . . . . . . . . . . . . . . 17
Section 14. Fractional Rights and Fractional Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 15. Rights of Action. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 16. Agreement of Right Holders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 17. Rights Certificate Holder Not Deemed a Shareholder. . . . . . . . . . . . . . . . . . . . . . . . 21
Section 18. Concerning the Rights Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 19. Merger or Consolidation or Change of Name of Rights Agent. . . . . . . . . . . . . . . . . . . . . 21
</TABLE>

1
<PAGE> 3
<TABLE>
<S> <C> <C>
Section 20. Duties of Rights Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Section 21. Change of Rights Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Section 22. Issuance of New Rights Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Section 23. Redemption. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Section 24. Exchange. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Section 25. Notice of Certain Events. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

Section 26. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

Section 27. Supplements and Amendments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

Section 28. Successors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

Section 29. Determinations and Actions by the Board of Directors, etc. . . . . . . . . . . . . . . . . . . . . 28

Section 30. Benefits of this Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

Section 31. Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

Section 32. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

Section 33. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

Section 34. Descriptive Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

Exhibit A Form of Certificate of Designation of Series A Junior Participating Preferred Stock of Clark/Bardes
Holdings, Inc.

Exhibit B Form of Rights Certificate

Exhibit C Summary of Rights to Purchase Preferred Shares
</TABLE>

2
<PAGE> 4
RIGHTS AGREEMENT

THIS RIGHTS AGREEMENT (this "Agreement"), dated as of July ___, 1998,
is made and entered into by and between Clark/Bardes Holdings, Inc., a Delaware
corporation (the "Company"), and The Bank of New York (the "Rights Agent").

PRELIMINARY STATEMENT

On July ___, 1998 the Board of Directors of the Company has authorized
and declared a dividend of one preferred share purchase right (a "Right") for
each Common Share (as hereinafter defined) of the Company outstanding at the
close of business on July ____, 1998 (the "Record Date"), each Right
representing the right to purchase one one-thousandth of a Preferred Share (as
hereinafter defined), upon the terms and subject to the conditions herein set
forth, and has further authorized and directed the issuance of one Right with
respect to each Common Share that shall become outstanding between the Record
Date and the earliest of the Distribution Date, the Redemption Date and the
Final Expiration Date (as such terms are hereinafter defined).

STATEMENT OF AGREEMENT

NOW, THEREFORE, in consideration of the premises and the mutual
agreements, covenants, representations and warranties set forth in this
Agreement and for other good, valid and binding consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties, intending to be
legally bound, hereby agree as follows:

Section 1. Certain Definitions. For purposes of this Agreement,
the following terms have the meanings indicated:

(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates and Associates
(as such terms are hereinafter defined) of such Person, shall be the Beneficial
Owner (as such term is hereinafter defined) of 15% or more of the Common Shares
of the Company then outstanding, but shall not include the Company, any
Subsidiary (as such term is hereinafter defined) of the Company, any employee
benefit plan of the Company or any Subsidiary of the Company, or any entity
holding Common Shares for or pursuant to the terms of any such plan.
Notwithstanding the foregoing, no Person shall become an "Acquiring Person" as
the result of an acquisition of Common Shares by the Company which, by reducing
the number of shares outstanding, increases the proportionate number of shares
beneficially owned by such Person to 15% or more of the Common Shares of the
Company then outstanding; provided, however, that if a Person shall become the
Beneficial Owner of 15% or more of the Common Shares of the Company then
outstanding by reason of share purchases by the Company and shall, after such
share purchases by the Company, become the Beneficial Owner of any additional
Common Shares of the Company, then such Person shall be deemed to be an
"Acquiring Person". Notwithstanding the foregoing, if the Board of Directors of
the Company determines in good faith that a Person who would otherwise be an
"Acquiring Person", as defined pursuant to the foregoing provisions of this
paragraph (a), has become such

1
<PAGE> 5
inadvertently, and such Person divests as promptly as practicable a sufficient
number of Common Shares so that such Person would no longer be an "Acquiring
Person," as defined pursuant to the foregoing provisions of this paragraph (a),
then such Person shall not be deemed to be an "Acquiring Person" for any
purposes of this Agreement.

(b) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as in
effect on the date of this Agreement.

(i) which such Person or any of such Person's Affiliates
or Associates beneficially owns, directly or indirectly;

(ii) which such Person or any of such Person's Affiliates
or Associates has (A) the right to acquire (whether such right is
exercisable immediately or only after the passage of time) pursuant to
any agreement, arrangement or understanding (other than customary
agreements with and between underwriters and selling group members
with respect to a bona fide public offering of securities), or upon
the exercise of conversion rights, exchange rights, rights (other than
these Rights), warrants or options, or otherwise; provided, however,
that a Person shall not be deemed the Beneficial Owner of, or to
beneficially own, securities tendered pursuant to a tender or exchange
offer made by or on behalf of such Person or any of such Person's
Affiliates or Associates until such tendered securities are accepted
for purchase or exchange; or (B) the right to vote pursuant to any
agreement, arrangement or understanding; provided, however, that a
Person shall not be deemed the Beneficial Owner of, or to beneficially
own, any security if the agreement, arrangement or understanding to
vote such security (1) arises solely from a revocable proxy or consent
given to such Person in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the applicable
rules and regulations promulgated under the Exchange Act and (2) is
not also then reportable on Schedule 13D under the Exchange Act (or
any comparable or successor report); or

(iii) which are beneficially owned, directly or indirectly,
by any other Person with which such Person or any of such Person's
Affiliates or Associates has any agreement, arrangement or
understanding (other than customary agreements with and between
underwriters and selling group members with respect to a bona fide
public offering of securities) for the purpose of acquiring, holding,
voting (except to the extent contemplated by the proviso to Section
1(c)(ii)(B)) or disposing of any securities of the Company.

2
<PAGE> 6
Notwithstanding anything in this definition of Beneficial Ownership to
the contrary, the phrase "then outstanding," when used with reference to a
Person's Beneficial Ownership of securities of the Company, shall mean the
number of such securities then issued and outstanding together with the number
of such securities not then actually issued and outstanding which such Person
would be deemed to own beneficially hereunder.

(d) "Business Day" shall mean any day other than a Saturday, a
Sunday, or a day on which banking institutions in the State of Texas are
authorized or obligated by law or executive order to close.

(e) "Close of Business" on any given date shall mean 5:00 P.M.,
Dallas, Texas time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 P.M., Dallas, Texas time, on the next
succeeding Business Day.

(f) "Common Shares" when used with reference to the Company shall
mean the shares of common stock, par value $0.01 per share, of the Company.
"Common Shares" when used with reference to any Person other than the Company
shall mean the capital stock (or equity interest) with the greatest voting
power of such other Person or, if such other Person is a Subsidiary of another
Person, the Person or Persons which ultimately control such first-mentioned
Person.

(g) "Distribution Date" shall have the meaning set forth in
Section 3 hereof.

(h) "Final Expiration Date" shall have the meaning set forth in
Section 7 hereof.

(i) "Person" shall mean any individual, firm, corporation or other
entity, and shall include any successor (by merger or otherwise) of such
entity.

(j) "Preferred Shares" shall mean shares of Junior Participating
Preferred Stock, Series A, par value $0.01 per share, of the Company having the
rights and preferences set forth in the Form of Certificate of Amendment
attached to this Agreement as Exhibit A.

(k) "Redemption Date" shall have the meaning set forth in Section
7 hereof.

(l) "Section 11(a)(ii) Event" shall mean any event described in
Section 11(a)(ii) hereof.

(m) "Section 13 Event" shall mean any event described in clauses
(A), (B) or (C) of Section 13 hereof.

(n) "Shares Acquisition Date" shall mean the first date of public
announcement by the Company or an Acquiring Person that an Acquiring Person has
become such.

(o) "Subsidiary" of any Person shall mean any corporation or other
entity of which a majority of the voting power of the voting equity securities
or equity interest is owned, directly or indirectly, by such Person.

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<PAGE> 7
(p) "Trigger Event" shall mean any Section 11(a)(ii) Event and/or
Section 13 Event.

Section 2. Appointment of Rights Agent. The Company hereby
appoints the Rights Agent to act as agent for the Company and the holders of
the Rights (who, in accordance with Section 3 hereof, shall prior to the
Distribution Date also be the holders of the Common Shares) in accordance with
the terms and conditions hereof, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint such co-rights agents as
it may deem necessary or desirable.

Section 3. Issue of Rights Certificates.

(a) Until the earlier of (i) the close of business on the tenth
day after the Shares Acquisition (or, if the tenth day after the Share
Acquisition Date occurs before the Record Date, the close of business on the
Record Date), or (ii) the close of business on the tenth business day (or such
later date as may be determined by action of the Board of Directors prior to
such time as any Person becomes an Acquiring Person) after the date of the
commencement by any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or of any Subsidiary of the
Company or any entity holding Common Shares for or pursuant to the terms of any
such plan) of, or of the first public announcement of the intention of any
Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the Company or any entity
holding Common Shares for or pursuant to the terms of any such plan) to
commence, a tender or exchange offer within the meaning of Rule 14d-2(a) of the
General Rules and Regulations under the Securities Act, the consummation of
which would result in any Person becoming the Beneficial Owner of Common Shares
aggregating 15% or more of the then outstanding Common Shares (including any
such date which is after the date of this Agreement and prior to the issuance
of the Rights; the earlier of such dates being herein referred to as the
"Distribution Date"), (x) the Rights will be evidenced (subject to the
provisions of Section 3(b) hereof) by the certificates for Common Shares
registered in the names of the holders thereof (which certificates shall also
be deemed to be Rights Certificates) and not by separate Rights Certificates,
and (y) the right to receive Rights Certificates will be transferable only in
connection with the transfer of Common Shares. As soon as practicable after the
Distribution Date, the Company will prepare and execute, the Rights Agent will
countersign, and the Company will send or cause to be sent (and the Rights
Agent will, if requested, send) by first-class, insured, postage-prepaid mail,
to each record holder of Common Shares as of the close of business on the
Distribution Date, at the address of such holder shown on the records of the
Company, a Rights Certificate, in substantially the form of Exhibit B hereto (a
"Rights Certificate"), evidencing one Right for each Common Share so held. As
of the Distribution Date, the Rights will be evidenced solely by such Rights
Certificates.

(b) On the Record Date, or as soon as practicable thereafter, the
Company will send a copy of a Summary of Rights to Purchase Preferred Shares,
in substantially the form of Exhibit C hereto (the "Summary of Rights"), by
first- class, postage-prepaid mail, to each record holder of Common Shares as
of the close of business on the Record Date, at the address of such holder
shown on the records of the Company. With respect to certificates for Common
Shares outstanding as of the Record Date, until the Distribution Date, the
Rights will be evidenced by

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<PAGE> 8
such certificates registered in the names of the holders thereof together with
a copy of the Summary of Rights attached thereto. Until the Distribution Date
(or the earliest of the Redemption Date or the Final Expiration Date), the
surrender for transfer of any certificate for Common Shares outstanding on the
Record Date, with or without a copy of the Summary of Rights attached thereto,
shall also constitute the transfer of the Rights associated with the Common
Shares represented thereby.

(c) Certificates for Common Shares which become outstanding
(including, without limitation, reacquired Common Shares referred to in the
last sentence of this paragraph (c)) after the Record Date but prior to the
earliest of the Distribution Date, the Redemption Date or the Final Expiration
Date shall have impressed on, printed on, written on or otherwise affixed to
them the following legend:

This certificate also evidences and entitles the
holder hereof to certain rights as set forth in a Rights
Agreement between Clark/Bardes Holdings, Inc. and The Bank of
New York, dated as of July ___, 1998 (the "Rights Agreement"),
the terms of which are hereby incorporated herein by reference
and a copy of which is on file at the principal executive
offices of Clark/Bardes Holdings, Inc. Under certain
circumstances, as set forth in the Rights Agreement, such
Rights will be evidenced by separate certificates, and will no
longer be evidenced by this certificate. Clark/Bardes
Holdings, Inc. will mail to the holder of this certificate a
copy of the Rights Agreement without charge after receipt of a
written request therefor. Under certain circumstances, as set
forth in the Rights Agreement, Rights issued to any Person who
becomes an Acquiring Person or any Affiliate or Associate
thereof (as defined in the Rights Agreement) whether currently
held by or on behalf of such Person or by any subsequent
holder, may become null and void.

With respect to such certificates containing the foregoing legend, until the
earlier of (i) the Distribution Date, or (ii) the Final Expiration Date, the
Rights associated with the Common Shares represented by such certificates shall
be evidenced by such certificates alone, and the surrender for transfer of any
such certificate shall also constitute the transfer of the Rights associated
with the Common Shares represented thereby. In the event that the Company
purchases or acquires any Common Shares after the Record Date but prior to the
Distribution Date, any Rights associated with such Common Shares shall be
deemed canceled and retired so that the Company shall not be entitled to
exercise any Rights associated with the Common Shares which are no longer
outstanding.

Section 4. Form of Rights Certificates.

(a) The Rights Certificates (and the forms of election to purchase
Preferred Shares and of assignment to be printed on the reverse thereof) shall
be substantially the same as Exhibit

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<PAGE> 9
B hereto and may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Agreement,
or as may be required to comply with any applicable law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock
exchange on which the Rights may from time to time be listed, or to conform to
usage. Subject to the provisions of Section 11 and Section 22 hereof, the
Rights Certificates shall entitle the holders thereof to purchase such number
of one one-thousandth of a Preferred Share as shall be set forth therein at the
price per one one- thousandth of a Preferred Share set forth therein (the
"Purchase Price"), but the number of such one one-thousandth of a Preferred
Share and the Purchase Price shall be subject to adjustment as provided herein.

(b) Any Rights Certificate issued pursuant to Section 3(a) or
Section 22 hereof that represents Rights beneficially owned by: (i) an
Acquiring Person or any Associate or Affiliate of an Acquiring Person, (ii) a
transferee of an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee after the Acquiring Person becomes such, or (iii) a
transferee of an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee prior to or concurrently with the Acquiring Person
becoming such and receives such Rights pursuant to either (A) a transfer
(whether or not for consideration) from the Acquiring Person to holders of
equity interests in such Acquiring Person or to any person with whom such
Acquiring Person has any continuing agreement, arrangement or understanding
regarding the transferred Rights or (B) a transfer which the Board of Directors
of the Company has determined is part of a plan, arrangement or understanding
which has as a primary purpose or effect avoidance of Section 11(a)(ii) hereof,
and any Rights Certificate issued pursuant to Section 6 or Section 11 hereof
upon transfer, exchange, replacement or adjustment of any other Rights
Certificate referred to in this sentence, shall contain (to the extent
feasible) the following legend:

The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person
or an Affiliate or Associate of an Acquiring Person (as such terms are
defined in the Rights Agreement). Accordingly, this Rights
Certificate and the Rights represented hereby may become null and void
in the circumstances specified in Section 79(e) of such Agreement.

Section 5. Countersignature and Registration. The Rights
Certificates shall be executed on behalf of the Company by its Chairman of the
Board, its Chief Executive Officer, its President, any of its Vice Presidents,
or its Treasurer, either manually or by facsimile signature, shall have affixed
thereto the Company's seal or a facsimile thereof, and shall be attested by the
Secretary or an Assistant Secretary of the Company, either manually or by
facsimile signature. The Rights Certificates shall be manually countersigned by
the Rights Agent and shall not be valid for any purpose unless countersigned.
In case any officer of the Company who shall have signed any of the Rights
Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Rights Certificates, nevertheless, may be countersigned by the Rights
Agent and issued and delivered by the Company with the same force and effect as
though the person who signed such Rights Certificates had not ceased to be such
officer of the Company; and any

6
<PAGE> 10
Rights Certificate may be signed on behalf of the Company by any person who, at
the actual date of the execution of such Rights Certificate, shall be a proper
officer of the Company to sign such Rights Certificate, although at the date of
the execution of this Rights Agreement any such person was not such an officer.

Following the Distribution Date, the Rights Agent will keep or cause
to be kept, at its principal office, books for registration and transfer of the
Rights Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of the Rights Certificates, the number of
Rights evidenced on its face by each of the Rights Certificates and the date of
each of the Rights Certificates.

Section 6. Transfer, Split Up, Combination and Exchange of
Rights Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates.
Subject to the provisions of Section 4(b) and Section 14 hereof, at any time
after the close of business on the Distribution Date, and at or prior to the
close of business on the earlier of the Redemption Date or the Final Expiration
Date, any Rights Certificate or Rights Certificates (other than Rights
Certificates representing Rights that have become void pursuant to Section
11(a)(ii) hereof or that have been exchanged pursuant to Section 24 hereof) may
be transferred, split up, combined or exchanged for another Rights Certificate
or Rights Certificates, entitling the registered holder to purchase a like
number of one one-thousandth of a Preferred Share as the Rights Certificate or
Rights Certificates surrendered then entitled such holder to purchase. Any
registered holder desiring to transfer, split up, combine or exchange any
Rights Certificate or Rights Certificates shall make such request in writing
delivered to the Rights Agent, and shall surrender the Rights Certificate or
Rights Certificates to be transferred, split up, combined or exchanged at the
principal office of the Rights Agent. Thereupon the Rights Agent shall, subject
to Section 4(b) hereof, countersign and deliver to the person entitled thereto
a Rights Certificate or Rights Certificates, as the case may be, as so
requested. The Company may require payment of a sum sufficient to cover any tax
or governmental charge that may be imposed in connection with any transfer,
split up, combination or exchange of Rights Certificates.

Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation
of a Rights Certificate, and, in case of loss, theft or destruction, of
indemnity or security reasonably satisfactory to them, and, at the Company's
request, reimbursement to the Company and the Rights Agent of all reasonable
expenses incidental thereto, and upon surrender to the Rights Agent and
cancellation of the Rights Certificate if mutilated, the Company will make and
deliver a new Rights Certificate of like tenor to the Rights Agent for delivery
to the registered holder in lieu of the Rights Certificate so lost, stolen,
destroyed or mutilated.

Section 7. Exercise of Rights; Purchase Price; Expiration Date
of Rights.

(a) The registered holder of any Rights Certificate may exercise
the Rights evidenced thereby (except as otherwise provided herein) in whole or
in part at any time after the Distribution Date upon surrender of the Rights
Certificate, with the form of election to purchase on the reverse side thereof
duly executed, to the Rights Agent at the principal office of the Rights

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<PAGE> 11
Agent, together with payment of the Purchase Price for each one one-thousandth
of a Preferred Share as to which the Rights are exercised, at or prior to the
earliest of (i) the close of business on ________, 2008 (the "Final Expiration
Date"), (ii) the time at which the Rights are redeemed as provided in Section
23 hereof (the "Redemption Date"), or (iii) the time at which such Rights are
exchanged as provided in Section 24 hereof.

(b) The Purchase Price for each one one-thousandth of a Preferred
Share purchasable pursuant to the exercise of a Right shall initially be
$_______, and shall be subject to adjustment from time to time as provided in
Section 11 or 13 hereof and shall be payable in lawful money of the United
States of America in accordance with paragraph (c) below.

(c) Upon receipt of a Rights Certificate representing exercisable
Rights, with the form of election to purchase duly executed, accompanied by
payment of the Purchase Price for the shares to be purchased and an amount
equal to any applicable transfer tax required to be paid by the holder of such
Rights Certificate in accordance with Section 9 hereof by certified check,
cashier's check or money order payable to the order of the Company, the Rights
Agent shall thereupon promptly (i) (A) requisition from any transfer agent of
the Preferred Shares certificates for the number of Preferred Shares to be
purchased and the Company hereby irrevocably authorizes its transfer agent to
comply with all such requests, or (B) requisition from the depositary agent
depositary receipts representing such number of one one- thousandth of a
Preferred Share as are to be purchased (in which case certificates for the
Preferred Shares represented by such receipts shall be deposited by the
transfer agent with the depositary agent) and the Company hereby directs the
depositary agent to comply with such request, (ii) when appropriate,
requisition from the Company the amount of cash to be paid in lieu of issuance
of fractional shares in accordance with Section 14 hereof, (iii) after receipt
of such certificates or depositary receipts, cause the same to be delivered to
or upon the order of the registered holder of such Rights Certificate,
registered in such name or names as may be designated by such holder, and (iv)
when appropriate, after receipt, deliver such cash to or upon the order of the
registered holder of such Rights Certificate.

(d) In case the registered holder of any Rights Certificate shall
exercise less than all the Rights evidenced thereby, a new Rights Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be
issued by the Rights Agent to the registered holder of such Rights Certificate
or to his duly authorized assigns, subject to the provisions of Section 14
hereof.

(e) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder upon the occurrence of any purported
exercise as set forth in this Section 7 unless such registered holder shall
have (i) completed and signed the certificate contained in the form of election
to purchase set forth on the reverse side of the Rights Certificate surrendered
for such exercise, and (ii) provided such additional evidence of the identity
of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request.

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<PAGE> 12

Section 8. Cancellation and Destruction of Rights Certificates.
All Rights Certificates surrendered for the purpose of exercise, transfer,
split up, combination or exchange shall, if surrendered to the Company or to
any of its agents, be delivered to the Rights Agent for cancellation or in
canceled form, or, if surrendered to the Rights Agent, shall be canceled by it,
and no Rights Certificates shall be issued in lieu thereof except as expressly
permitted by any of the provisions of this Rights Agreement. The Company shall
deliver to the Rights Agent for cancellation and retirement, and the Rights
Agent shall so cancel and retire, any other Rights Certificate purchased or
acquired by the Company otherwise than upon the exercise thereof. The Rights
Agent shall deliver all canceled Rights Certificates to the Company, or shall,
at the written request of the Company, destroy such canceled Rights
Certificates, and in such case shall deliver a certificate of destruction
thereof to the Company.

Section 9. Availability of Preferred Shares.

(a) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued Preferred Shares
or any Preferred Shares held in its treasury, the number of Preferred Shares
that will be sufficient to permit the exercise in full of all outstanding Rights
in accordance with Section 7. The Company covenants and agrees that it will take
all such action as may be necessary to ensure that all Preferred Shares
delivered upon exercise of Rights shall, at the time of delivery of the
certificates for such Preferred Shares (subject to payment of the Purchase
Price), be duly and validly authorized and issued and fully paid and
nonassessable shares.

(b) So long as the shares of Preferred Stock (and, following the
occurrence of a Triggering Event, Common Stock and/or other securities) issuable
and deliverable upon the exercise of the Rights may be listed on any national
securities exchange, the Company shall use its best efforts to cause, from and
after such time as the Rights become exercisable, all shares reserved for such
issuance to be listed on such exchange upon official notice of issuance upon
such exercise.

(c) The Company shall use its best efforts to (i) file, as soon as
practicable following the earliest date after the first occurrence of a Section
11(a)(ii) Event on which the consideration to be delivered by the Company upon
exercise of the Rights has been determined in accordance with Section 11(a)(iii)
hereof, a registration statement under the Securities Act of 1933 (the "Act"),
with respect to the securities purchasable upon exercise of the Rights on an
appropriate form, (ii) cause such registration statement to become effective as
soon as practicable after such filing, and (iii) cause such registration
statement to remain effective (with a prospectus at all times meeting the
requirements of the Act) until the earlier of (A) the date as of which the
Rights are no longer exercisable for such securities, and (B) the date of the
expiration of the Rights. The Company will also take such action as may be
appropriate under, or to ensure compliance with, the securities or "blue sky"
laws of the various states in connection with the exercisability of the Rights.
The Company may temporarily suspend, for a period of time not to exceed (90)
days after the date set forth in clause (i) of the first sentence of this
Section 9(c), the exercisability of

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<PAGE> 13
the Rights in order to prepare and file such registration statement and permit
it to become effective. Upon any such suspension, the Company shall issue a
public announcement stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement at such time as the
suspension is no longer in effect. In addition, if the Company shall determine
that a registration statement is required following the Distribution Date, the
Company may temporarily suspend the exercisability of the Rights until such
time as a registration statement has been declared effective. Notwithstanding
any provision of this Agreement to the contrary, the Rights shall not be
exercisable in any jurisdiction if the requisite qualification in such
jurisdiction shall not have been obtained, the exercise thereof shall not be
permitted under applicable law or a registration statement shall not have been
declared effective.

(d) The Company further covenants and agrees that it will pay when
due and payable any and all federal and state transfer taxes and charges which
may be payable in respect of the issuance or delivery of the Rights
Certificates or of any Preferred Shares upon the exercise of Rights. The
Company shall not, however, be required to pay any transfer tax which may be
payable in respect of any transfer or delivery of Rights Certificates to a
person other than, or the issuance or delivery of certificates or depositary
receipts for the Preferred Shares in a name other than that of, the registered
holder of the Rights Certificate evidencing Rights surrendered for exercise or
to issue or to deliver any certificates or depositary receipts for Preferred
Shares upon the exercise of any Rights until any such tax shall have been paid
(any such tax being payable by the holder of such Rights Certificate at the
time of surrender) or until it has been established to the Company's reasonable
satisfaction that no such tax is due.

Section 10. Preferred Shares Record Date. Each person in whose
name any certificate for Preferred Shares is issued upon the exercise of Rights
shall for all purposes be deemed to have become the holder of record of the
Preferred Shares represented thereby on, and such certificate shall be dated,
the date upon which the Rights Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and any applicable transfer
taxes) was made; provided, however, that if the date of such surrender and
payment is a date upon which the Preferred Shares transfer books of the Company
are closed, such person shall be deemed to have become the record holder of
such shares on, and such certificate shall be dated, the next succeeding
Business Day on which the Preferred Shares transfer books of the Company are
open. Prior to the exercise of the Rights evidenced thereby, the holder of a
Rights Certificate shall not be entitled to any rights of a holder of Preferred
Shares for which the Rights shall be exercisable, including, without
limitation, the right to vote, to receive dividends or other distributions or
to exercise any preemptive rights, and shall not be entitled to receive any
notice of any proceedings of the Company, except as provided herein.

Section 11. Adjustment of Purchase Price, Number of Shares or Number
of Rights. The Purchase Price, the number of Preferred Shares covered by each
Right and the number of Rights outstanding are subject to adjustment from time
to time as provided in this Section 11.

(a) (i) In the event the Company shall at any time after the
date of this Agreement (A) declare a dividend on the Preferred Shares
payable in Preferred Shares, (B) subdivide the outstanding Preferred
Shares, (C) combine the outstanding Preferred

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<PAGE> 14
Shares into a smaller number of Preferred Shares, or (D) issue any
shares of its capital stock in a reclassification of the Preferred
Shares (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or
surviving corporation), except as otherwise provided in this Section
11(a)(ii), the Purchase Price in effect at the time of the record date
for such dividend or of the effective date of such subdivision,
combination or reclassification, and the number and kind of shares of
capital stock issuable on such date, shall be proportionately adjusted
so that the holder of any Right exercised after such time shall be
entitled to receive the aggregate number and kind of shares of capital
stock which, if such Right had been exercised immediately prior to such
date and at a time when the Preferred Shares transfer books of the
Company were open, he would have owned upon such exercise and been
entitled to receive by virtue of such dividend, subdivision,
combination or reclassification; provided, however, that in no event
shall the consideration to be paid upon the exercise of one Right be
less than the aggregate par value of the shares of capital stock of the
Company issuable upon exercise of one Right.

(ii) Subject to Section 24 and to the limitation set forth
in the next paragraph of this Agreement, in the event any Person
becomes an Acquiring Person, each holder of a Right shall thereafter
have a right to receive, upon exercise thereof at a price equal to the
then current Purchase Price multiplied by the number of one
one-thousandth of a Preferred Share for which a Right is then
exercisable, in accordance with the terms of this Agreement and in
lieu of Preferred Shares, such number of Common Shares of the Company
as shall equal the result obtained by (x) multiplying the then current
Purchase Price by the number of one one-thousandth of a Preferred
Share for which a Right is then exercisable and dividing that product
by (y) 50% of the then current per share market price of the Company's
Common Shares (determined pursuant to Section 11(d) hereof) on the
date of the occurrence of such event. In the event that any Person
shall become an Acquiring Person and the Rights shall then be
outstanding, the Company shall not take any action which would
eliminate or diminish the benefits intended to be afforded by the
Rights.

From and after the occurrence of such event, any Rights (A)
beneficially owned by any Acquiring Person or any Associate or
Affiliate of such Acquiring Person, (B) a transferee of an Acquiring
Person (of any such Associate or Affiliate) who becomes a transferee
after the Acquiring Person becomes such, or (C) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with the Acquiring Person becoming
such and receives such Rights pursuant to either (1) a transfer
(whether or not for consideration) from the Acquiring Person to
holders of equity interests in such Acquiring Person or to any Person
with whom the Acquiring Person has any continuing agreement,
arrangement or understanding regarding the transferred Rights or (2) a
transfer which the Board of Directors of the Company has determined is
part of a plan, arrangement or understanding which has as a primary
purpose or effect the avoidance of this Section 11(a)(ii), shall be
void and no holder of such Rights shall thereafter have any rights
whatsoever with respect to such rights, whether under provisions of
this Agreement or otherwise.

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<PAGE> 15

(iii) In the event that there shall not be sufficient
Common Shares issued but not outstanding or authorized but unissued to
permit the exercise in full of the Rights in accordance with the
foregoing subparagraph (ii), the Company shall (A) determine the value
of the Common Shares issuable upon the exercise of a Right (the
"Current Value"), and (B) with respect to each Right (subject to
Section 11(a)(ii) hereof), make adequate provision to substitute for
the Common Shares, upon the exercise of a Right and payment of the
applicable Purchase Price, (1) cash, (2) a reduction in the Purchase
Price, (3) Common Shares or other equity securities of the Company
(including, without limitation, shares, or units of shares, of
preferred stock, such as the Preferred Stock, which the Board has
deemed to have essentially the same value or economic rights as shares
of Common Shares (such shares of preferred stock being referred to as
"Common Shares Equivalents"), (4) debt securities of the Company, (5)
other assets, or (6) any combination of the foregoing, having an
aggregate value equal to the Current Value (less the amount of any
reduction in the Purchase Price), where such aggregate value has been
determined by the Board based upon the advice of a nationally
recognized investment banking firm selected by the Board; provided,
however, that if the Company shall not have made adequate provision to
deliver value pursuant to clause (B) above within 30 days following
the later of (x) the first occurrence of a Section 11(a)(ii) Event and
(y) the date on which the Company's right of redemption pursuant to
Section 23(a) expires (the later of (x) and (y) being referred to
herein as the "Section 11(a)(ii) Trigger Date"), then the Company
shall be obligated to deliver, upon the surrender for exercise of a
Right and without requiring payment of the Purchase Price, Common
Shares (to the extent available) and then, if necessary, cash, which
shares and/or cash have an aggregate value equal to the Spread. For
purposes of the preceding sentence, the term "spread" shall mean the
excess of (i) the Current Value over (ii) the Purchase Price. If the
Board determines in good faith that it is likely that sufficient
additional shares of Common Shares could be authorized for issuance
upon exercise in full of the Rights, the 30 day period set forth above
may be extended to the extent necessary, but not more than 90 days
after the Section 11(a)(ii) Trigger Date, in order that the Company
may seek shareholder approval for the authorization of such additional
shares (such 30 day period, as it may be extended, is herein called
the "Substitution Period"). To the extend that action is to be taken
pursuant to the first and/or third sentences of this Section
11(a)(iii), the Company (1) shall provide, subject to Section
11(a)(ii) hereof, that such action shall apply uniformly to all
outstanding Rights, and (2) may suspend the exercisability of the
Rights until the expiration of the Substitution Period in order to
seek such shareholder approval for such authorization of additional
shares and/or to decide the appropriate form of distribution to be
made pursuant to such first sentence and to determine the value
thereof. In the event of any such suspension, the Company shall issue
a public announcement stating that the exercisability of the Rights
has been temporarily suspended, as well as a public announcement at
such times the suspension is no longer in effect. For purposes of
this Section 11(a)(iii), the value of such Common Share shall be the
Current Market Price per share of the Common Share on the Section
11(a)(ii) Trigger Date and the per share or per unit value of any
Common Stock Equivalent shall be deemed to equal the Current Market
Price per share of the Common Share on such date.

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<PAGE> 16

(b) In case the Company shall fix a record date for the issuance
of rights, options or warrants to all holders of Preferred Shares entitling
them (for a period expiring within 45 calendar days after such record date) to
subscribe for or purchase Preferred Shares (or shares having the same rights,
privileges and preferences as the Preferred Shares ("equivalent preferred
shares")) or securities convertible into Preferred Shares or equivalent
preferred shares at a price per Preferred Share or equivalent preferred share
(or having a conversion price per share, if a security convertible into
Preferred Shares or equivalent preferred shares) less than the then current per
share market price of the Preferred Shares (as defined in Section 11(d)) on
such record date, the Purchase Price to be in effect after such record date
shall be determined by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, the numerator of which shall be the
number of Preferred Shares outstanding on such record date plus the number of
Preferred Shares which the aggregate offering price of the total number of
Preferred Shares and/or equivalent preferred shares so to be offered (and/or
the aggregate initial conversion price of the convertible securities so to be
offered) would purchase at such current market price and the denominator of
which shall be the number of Preferred Shares outstanding on such record date
plus the number of additional Preferred Shares and/or equivalent preferred
shares to be offered for subscription or purchase (or into which the
convertible securities so to be offered are initially convertible); provided,
however, that in no event shall the consideration to be paid upon the exercise
of one Right be less than the aggregate par value of the shares of capital
stock of the Company issuable upon exercise of one Right. In case such
subscription price may be paid in a consideration part or all of which shall be
in a form other than cash, the value of such consideration shall be as
determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent.
Preferred Shares owned by or held for the account of the Company shall not be
deemed outstanding for the purpose of any such computation. Such adjustment
shall be made successively whenever such a record date is fixed; and in the
event that such rights, options or warrants are not so issued, the Purchase
Price shall be adjusted to be the Purchase Price which would then be in effect
if such record date had not been fixed.

(c) In case the Company shall fix a record date for the making of
a distribution to all holders of the Preferred Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of
indebtedness or assets (other than a regular quarterly cash dividend or a
dividend payable in Preferred Shares) or subscription rights or warrants
(excluding those referred to in Section 11(b) hereof), the Purchase Price to be
in effect after such record date shall be determined by multiplying the
Purchase Price in effect immediately prior to such record date by a fraction,
the numerator of which shall be the then current per share market price of the
Preferred Shares on such record date, less the fair market value (as determined
in good faith by the Board of Directors of the Company, whose determination
shall be described in a statement filed with the Rights Agent) of the portion
of the assets or evidences of indebtedness so to be distributed or of such
subscription rights or warrants applicable to one Preferred Share and the
denominator of which shall be such current per share market price of the
Preferred Shares; provided, however, that in no event shall the consideration
to be paid upon the exercise of one Right be less than the aggregate par value
of the shares of capital stock of the Company to be issued upon exercise of one
Right. Such adjustments shall be made successively whenever such a

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<PAGE> 17
record date is fixed; and in the event that such distribution is not so made,
the Purchase Price shall again be adjusted to be the Purchase Price which would
then be in effect if such record date had not been fixed.

(d) (i) For the purpose of any computation hereunder, the
"current per share market price" of any security (a "Security" for the
purpose of this Section 11(d)(i)) on any date shall be deemed to be
the average of the daily closing prices per share of such Security for
the 30 consecutive Trading Days (as such term is hereinafter defined)
immediately prior to such date; provided, however, that in the event
that the current per share market price of the Security is determined
during a period following the announcement by the issuer of such
Security of (A) a dividend or distribution on such Security payable in
shares of such Security or securities convertible into such shares, or
(B) any subdivision, combination or reclassification of such Security
and prior to the expiration of 30 Trading Days after the ex-dividend
date for such dividend or distribution, or the record date for such
subdivision, combination or reclassification, then, and in each such
case, the current per share market price shall be appropriately
adjusted to reflect the current market price per share equivalent of
such Security. The closing price for each day shall be the last sale
price, regular way, or, in case no such sale takes place on such day,
the average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Security is not
listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities
exchange on which the Security is listed or admitted to trading or, if
the Security is not listed or admitted to trading on any national
securities exchange, the last quoted price or, if not so quoted, the
average of the high bid and low asked prices in the over-the-counter
market, as reported by the National Association of Securities Dealers,
Inc. Automated Quotations System ("NASDAQ") or such other system then
in use, or, if on any such date the Security is not quoted by any such
organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the
Security selected by the Board of Directors of the Company. The term
"Trading Day" shall mean a day on which the principal national
securities exchange on which the Security is listed or admitted to
trading is open for the transaction of business or, if the Security is
not listed or admitted to trading on any national securities exchange,
a Business Day.

(ii) For the purpose of any computation hereunder, the
"current per share market price" of the Preferred Shares shall be
determined in accordance with the method set forth in Section
11(d)(i). If the Preferred Shares are not publicly traded, the
"current per share market price" of the Preferred Shares shall be
conclusively deemed to be the current per share market price of the
Common Shares as determined pursuant to Section 11(d)(i)
(appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof), multiplied by
one thousand. If neither the Common Shares nor the Preferred Shares
are publicly held or so listed or traded, "current per share market
price" shall mean the fair value per share as determined in good faith
by

14
<PAGE> 18
the Board of Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent.

(e) No adjustment in the Purchase Price shall be required unless
such adjustment would require an increase or decrease of at least 1% in the
Purchase Price; provided, however, that any adjustments which by reason of this
Section 11(e) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations under this Section
11 shall be made to the nearest cent or to the nearest one one-millionth of a
Preferred Share or one ten-thousandth of any other share or security as the
case may be. Notwithstanding the first sentence of this Section 11(e), any
adjustment required by this Section 11 shall be made no later than the earlier
of (i) three years from the date of the transaction which requires such
adjustment or (ii) the date of the expiration of the right to exercise any
Rights.

(f) If as a result of an adjustment made pursuant to Section 11(a)
or Section 13 hereof, the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock of the Company other than
Preferred Shares, thereafter the number of such other shares so receivable upon
exercise of any Right shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions with
respect to the Preferred Shares contained in Section 11(a) through (c),
inclusive, and the provisions of Sections 7, 9, 10 and 13 with respect to the
Preferred Shares shall apply on like terms to any such other shares.

(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-thousandth of a
Preferred Share purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.

(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase Price as a
result of the calculations made in Sections 11(b) and (c), each Right
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of
one one-thousandth of a Preferred Share (calculated to the nearest one
one-millionth of a Preferred Share) obtained by (i) multiplying (x) the number
of one one-thousandth of a share covered by a Right immediately prior to this
adjustment by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price and (ii) dividing the product so obtained by
the Purchase Price in effect immediately after such adjustment of the Purchase
Price.

(i) The Company may elect on or after the date of any adjustment
of the Purchase Price to adjust the number of Rights, in substitution for any
adjustment in the number of one one-thousandth of a Preferred Share purchasable
upon the exercise of a Right. Each of the Rights outstanding after such
adjustment of the number of Rights shall be exercisable for the number of one
one-thousandth of a Preferred Share for which a Right was exercisable
immediately prior to such adjustment. Each Right held of record prior to such
adjustment of the number of Rights shall become that number of Rights
(calculated to the nearest one ten-thousandth) obtained by dividing the
Purchase Price in effect immediately prior to adjustment of the Purchase Price
by

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<PAGE> 19
the Purchase Price in effect immediately after adjustment of the Purchase
Price. The Company shall make a public announcement of its election to adjust
the number of Rights, indicating the record date for the adjustment, and, if
known at the time, the amount of the adjustment to be made. This record date
may be the date on which the Purchase Price is adjusted or any day thereafter,
but, if the Rights Certificates have been issued, shall be at least 10 days
later than the date of the public announcement. If Rights Certificates have
been issued, upon each adjustment of the number of Rights pursuant to this
Section 11(i), the Company shall, as promptly as practicable, cause to be
distributed to holders of record of Rights Certificates on such record date
Rights Certificates evidencing, subject to Section 14 hereof, the additional
Rights to which such holders shall be entitled as a result of such adjustment,
or, at the option of the Company, shall cause to be distributed to such holders
of record in substitution and replacement for the Rights Certificates held by
such holders prior to the date of adjustment, and upon surrender thereof, if
required by the Company, new Rights Certificates evidencing all the Rights to
which such holders shall be entitled after such adjustment. Rights Certificates
so to be distributed shall be issued, executed and countersigned in the manner
provided for herein and shall be registered in the names of the holders of
record of Rights Certificates on the record date specified in the public
announcement.

(j) Irrespective of any adjustment or change in the Purchase Price
or the number of one one-thousandth of a Preferred Share issuable upon the
exercise of the Rights, the Rights Certificates theretofore and thereafter
issued may continue to express the Purchase Price and the number of one
thousandth of a Preferred Share which were expressed in the initial Rights
Certificates issued hereunder.

(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below one one- thousandth of the then par value, if
any, of the Preferred Shares issuable upon exercise of the Rights, the Company
shall take any corporate action which may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue fully paid
and nonassessable Preferred Shares at such adjusted Purchase Price.

(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuing to the holder of any Right exercised after such record date
of the Preferred Shares and other capital stock or securities of the Company,
if any, issuable upon such exercise over and above the Preferred Shares and
other capital stock or securities of the Company, if any, issuable upon such
exercise on the basis of the Purchase Price in effect prior to such adjustment;
provided, however, that the Company shall deliver to such holder a due bill or
other appropriate instrument evidencing such holder's right to receive such
additional shares upon the occurrence of the event requiring such adjustment.

(m) Anything in this Section 11 to the contrary notwithstanding,
the Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that it in its sole discretion shall determine to be advisable in
order that any consolidation or subdivision of the Preferred Shares, issuance
wholly for cash of any Preferred Shares at less than the current market price,
issuance wholly for cash of

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<PAGE> 20
Preferred Shares or securities which by their terms are convertible into or
exchangeable for Preferred Shares, dividends on Preferred Shares payable in
Preferred Shares or issuance of rights, options or warrants referred to
hereinabove in Section 11(b), hereafter made by the Company to holders of its
Preferred Shares shall not be taxable to such shareholders.

(n) In the event that at any time after the date of this Agreement
and prior to the Distribution Date, the Company shall (i) declare or pay any
dividend on the Common Shares payable in Common Shares or (ii) effect a
subdivision, combination or consolidation of the Common Shares (by
reclassification or otherwise than by payment of dividends in Common Shares)
into a greater or lesser number of Common Shares, then in any such case (A) the
number of one one-thousandth of a Preferred Share purchasable after such event
upon proper exercise of each Right shall be determined by multiplying the
number of one one-thousandth of a Preferred Share so purchasable immediately
prior to such event by a fraction, the numerator of which is the number of
Common Shares outstanding immediately before such event and the denominator of
which is the number of Common Shares outstanding immediately after such event,
and (B) each Common Share outstanding immediately after such event shall have
issued with respect to it that number of Rights which each Common Share
outstanding immediately prior to such event had issued with respect to it. The
adjustments provided for in this Section 11(n) shall be made successively
whenever such a dividend is declared or paid or such a subdivision, combination
or consolidation is effected.

Section 12. Certificate of Adjusted Purchase Price or Number of
Shares. Whenever an adjustment is made as provided in Section 11 or 13 hereof,
the Company shall promptly (a) prepare a certificate setting forth such
adjustment, and a brief statement of the facts accounting for such adjustment,
(b) file with the Rights Agent and with each transfer agent for the Common
Shares or the Preferred Shares a copy of such certificate, and (c) mail a brief
summary thereof to each holder of a Rights Certificate in accordance with
Section 25 hereof. The Rights Agent shall be fully protected in relying on any
such certificate and/or any adjustment contained therein.

Section 13. Consolidation, Merger or Sale or Transfer of Assets
or Earning Power.

(a) In the event, directly or indirectly, at any time after a
Person has become an Acquiring Person, (i) the Company shall consolidate with,
or merge with and into, any other Person, (ii) any Person shall consolidate
with the Company, or merge with and into the Company and the Company shall be
the continuing or surviving corporation of such merger and, in connection with
such merger, all or part of the Common Shares shall be changed into or
exchanged for stock or other securities of any other Person (or the Company) or
cash or any other property, or (iii) the Company shall sell or otherwise
transfer (or one or more of its Subsidiaries shall sell or otherwise transfer),
in one or more transactions, assets or earning power aggregating 50% or more of
the assets or earning power of the Company and its Subsidiaries (taken as a
whole) to any other Person other than the Company or one or more of its
wholly-owned Subsidiaries, then, and in each such case, proper provision shall
be made so that (A) each holder of a Right (except as otherwise provided
herein) shall thereafter have the right to receive, upon the exercise thereof
at a price equal to the then current Purchase Price

17
<PAGE> 21
multiplied by the number of one one-thousandth of a Preferred Share for which a
Right is then exercisable, in accordance with the terms of this Agreement and
in lieu of Preferred Shares, such number of Common Shares of such other Person
(including the Company as successor thereto or as the surviving corporation) as
shall equal the result obtained by (1) multiplying the then current Purchase
Price by the number of one one-thousandth of a Preferred Share for which a
Right is then exercisable and dividing that product by (2) 50% of the then
current per share market price of the Common Shares of such other Person
(determined pursuant to Section 11(d) hereof) on the date of consummation of
such consolidation, merger, sale or transfer; (B) the issuer of such Common
Shares shall thereafter be liable for, and shall assume, by virtue of such
consolidation, merger, sale or transfer, all the obligations and duties of the
Company pursuant to this Agreement; (C) the term "Company" shall thereafter be
deemed to refer to such issuer; and (D) such issuer shall take such steps
(including, but not limited to, the reservation of a sufficient number of its
Common Shares in accordance with Section 9 hereof) in connection with such
consummation as may be necessary to assure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in relation to the
Common Shares thereafter deliverable upon the exercise of the Rights. The
Company shall not consummate any such consolidation, merger, sale or transfer
unless prior thereto the Company and such issuer shall have executed and
delivered to the Rights Agent a supplemental agreement so providing. The
Company shall not enter into any transaction of the kind referred to in this
Section 13 if at the time of such transaction there are any rights, warrants,
instruments or securities outstanding or any agreements or arrangements which,
as a result of the consummation of such transaction, would eliminate or
substantially diminish the benefits intended to be afforded by the Rights. The
provisions of this Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers.

(b) Notwithstanding anything in this Agreement to the contrary,
Section 13 shall not be applicable to a transaction described in subparagraphs
(x) and (y) of Section 13(a) if (i) such transaction is consummated with a
Person or Persons who acquired Common Shares pursuant to a tender offer or
exchange offer for all outstanding shares of Common Shares which complies with
the provisions of Section 11(a)(ii)(B) hereof (or a wholly owned subsidiary of
any such Person or Persons), (ii) the price per share of Common Shares offered
in such transaction is not less than the price per share of Common Shares paid
to all holders of Common Shares whose shares were purchased pursuant to such
tender offer or exchange offer and (iii) the form of consideration being
offered to the remaining holders of Common Shares pursuant to such transaction
is the same as the form of consideration paid pursuant to such tender offer or
exchange offer. Upon consummation of any such transaction contemplated by
this Section 13(b), all Rights hereunder shall expire.

Section 14. Fractional Rights and Fractional Shares.

(a) The Company shall not be required to issue fractions of Rights
or to distribute Rights Certificates which evidence fractional Rights. In lieu
of such fractional Rights, there shall be paid to the registered holders of the
Rights Certificates with regard to which such fractional Rights would otherwise
be issuable, an amount in cash equal to the same fraction of the current market
value of a whole Right. For the purposes of this Section 14(a), the current
market value of

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<PAGE> 22
a whole Right shall be the closing price of the Rights for the Trading Day
immediately prior to the date on which such fractional Rights would have been
otherwise issuable. The closing price for any day shall be the last sale price,
regular way, or, in case no such sale takes place on such day, the average of
the closing bid and asked prices, regular way, in either case as reported in
the principal consolidated transaction reporting system with respect to
securities listed or admitted to trading on the New York Stock Exchange or, if
the Rights are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal national securities
exchange on which the Rights are listed or admitted to trading or, if the
Rights are not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported by NASDAQ
or such other system then in use or, if on any such date the Rights are not
quoted by any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in the
Rights selected by the Board of Directors of the Company. If on any such date
no such market maker is making a market in the Rights, the fair value of the
Rights on such date as determined in good faith by the Board of Directors of
the Company shall be used. The Company shall promptly notify the Rights Agent
of any such determination of fair value.

(b) The Company shall not be required to issue fractions of
Preferred Shares (other than fractions which are integral multiples of one
one-thousandth of a Preferred Share) upon exercise of the Rights or to
distribute certificates which evidence fractional Preferred Shares (other than
fractions which are integral multiples of one one- thousandth of a Preferred
Share). Fractions of Preferred Shares in integral multiples of one
one-thousandth of a Preferred Share may, at the election of the Company, be
evidenced by depositary receipts, pursuant to an appropriate agreement between
the Company and a depositary selected by it; provided, that such agreement
shall provide that the holders of such depositary receipts shall have all the
rights, privileges and preferences to which they are entitled as beneficial
owners of the Preferred Shares represented by such depositary receipts. In lieu
of fractional Preferred Shares that are not integral multiples of one
one-thousandth of a Preferred Share, the Company shall pay to the registered
holders of Rights Certificates at the time such Rights are exercised as herein
provided an amount in cash equal to the same fraction of the current market
value of one Preferred Share. For the purposes of this Section 14(b), the
current market value of a Preferred Share shall be the closing price of a
Preferred Share (as determined pursuant to the second sentence of Section
11(d)(i) hereof) for the Trading Day immediately prior to the date of such
exercise.

(c) Following the occurrence of a Triggering Event, the Company
shall not be required to issue fractions of shares of Common Shares upon
exercise of the Rights or to distribute certificates which evidence fractional
shares of Common Shares. In lieu of fractional shares of Common Shares, the
Company may pay to the registered holders of Rights Certificates at the time
such Rights are exercised as herein provided an amount in cash equal to the
same fraction of the current market value of one (1) share of Common Shares.
For purposes of this Section 14(c), the current market value of one share of
Common Shares shall be the closing of one share of Common Shares (as determined
pursuant to Section 11(d)(i) hereof) for the Trading Day immediately prior to
the date of such exercise.

19
<PAGE> 23

(d) The holder of a Right by the acceptance of the Right expressly
waives his right to receive any fractional Rights or any fractional shares upon
exercise of a Right (except as provided above).

Section 15. Rights of Action. All rights of action in respect of
this Agreement, excepting the rights of action given to the Rights Agent under
Section 18 hereof, are vested in the respective registered holders of the
Rights Certificates (and, prior to the Distribution Date, the registered
holders of the Common Shares); and any registered holder of any Rights
Certificate (or, prior to the Distribution Date, of the Common Shares), without
the consent of the Rights Agent or of the holder of any other Rights
Certificate (or, prior to the Distribution Date, of the Common Shares), may, in
his own behalf and for his own benefit, enforce, and may institute and maintain
any suit, action or proceeding against the Company to enforce, or otherwise act
in respect of, his right to exercise the Rights evidenced by such Rights
Certificate in the manner provided in such Rights Certificate and in this
Agreement. Without limiting the foregoing or any remedies available to the
holders of Rights, it is specifically acknowledged that the holders of Rights
would not have an adequate remedy at law for any breach of this Agreement and
will be entitled to specific performance of the obligations under, and
injunctive relief against actual or threatened violations of the obligations of
any Person subject to, this Agreement.

Section 16. Agreement of Right Holders. Every holder of a Right,
by accepting the same, consents and agrees with the Company and the Rights
Agent and with every other holder of a Right that:

(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the Common Shares;

(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the principal office of the Rights Agent, duly endorsed or accompanied by a
proper instrument of transfer with the appropriate forms and certificates
executed; and

(c) the Company and the Rights Agent may deem and treat the person
in whose name the Rights Certificate (or, prior to the Distribution Date, the
associated Common Shares certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Rights Certificates or the associated Common Shares
certificate made by anyone other than the Company or the Rights Agent) for all
purposes whatsoever, and neither the Company nor the Rights Agent shall be
affected by any notice to the contrary.

(d) notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any holder
of a Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental

20
<PAGE> 24
authority, prohibiting or otherwise restraining performance of such obligation;
provided, however, the Company must use its best efforts to have any such
order, decree or ruling lifted or otherwise overturned as soon as possible.

Section 17. Rights Certificate Holder Not Deemed a Shareholder.
No holder, as such, of any Rights Certificate shall be entitled to vote,
receive dividends or be deemed for any purpose the holder of the Preferred
Shares or any other securities of the Company which may at any time be issuable
on the exercise of the Rights represented thereby, nor shall anything contained
herein or in any Rights Certificate be construed to confer upon the holder of
any Rights Certificate, as such, any of the rights of a shareholder of the
Company or any right to vote for the election of directors or upon any matter
submitted to shareholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings or other
actions affecting shareholders (except as provided in Section 25 hereof), or to
receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by such Rights Certificate shall have been exercised in
accordance with the provisions hereof.

Section 18. Concerning the Rights Agent. The Company agrees to
pay to the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred in the
administration and execution of this Agreement and the exercise and performance
of its duties hereunder. The Company also agrees to indemnify the Rights Agent
for, and to hold it harmless against, any loss, liability, or expense, incurred
without negligence, bad faith or willful misconduct on the part of the Rights
Agent, for anything done or omitted by the Rights Agent in connection with the
acceptance and administration of this Agreement, including the costs and
expenses of defending against any claim of liability in the premises.

The Rights Agent shall be protected and shall incur no liability for, or in
respect of any action taken, suffered or omitted by it in connection with, its
administration of this Agreement in reliance upon any Rights Certificate or
certificate for the Preferred Shares or Common Shares or for other securities of
the Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent, certificate,
statement, or other paper or document believed by it to be genuine and to be
signed, executed and, where necessary, verified or acknowledged, by the proper
person or persons, or otherwise upon the advice of counsel as set forth in
Section 20 hereof.

Section 19. Merger or Consolidation or Change of Name of Rights
Agent. Any corporation into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any corporation succeeding to the
stock transfer or corporate trust powers of the Rights Agent or any successor
Rights Agent, shall be the successor to the Rights Agent under this Agreement
without the execution or filing of any paper or any further act on the part of
any of the parties hereto; provided, that such corporation would be eligible
for appointment as a successor Rights Agent under the provisions of Section 21
hereof. In case at the time such successor Rights Agent

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<PAGE> 25
shall succeed to the agency created by this Agreement, any of the Rights
Certificates shall have been countersigned but not delivered, any such
successor Rights Agent may adopt the countersignature of the predecessor Rights
Agent and deliver such Rights Certificates so countersigned; and in case at
that time any of the Rights Certificates shall not have been countersigned, any
successor Rights Agent may countersign such Rights Certificates either in the
name of the predecessor Rights Agent or in the name of the successor Rights
Agent; and in all such cases such Rights Certificates shall have the full force
provided in the Rights Certificates and in this Agreement.

In case at any time the name of the Rights Agent shall be changed and
at such time any of the Rights Certificates shall have been countersigned but
not delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver Rights Certificates so countersigned; and in case at that time
any of the Rights Certificates shall not have been countersigned, the Rights
Agent may countersign such Rights Certificates either in its prior name or in
its changed name; and in all such cases such Rights Certificates shall have the
full force provided in the Rights Certificates and in this Agreement.

Section 20. Duties of Rights Agent. The Rights Agent undertakes
the duties and obligations imposed by this Agreement upon the following terms
and conditions, by all of which the Company and the holders of Rights
Certificates, by their acceptance thereof, shall be bound:

(a) The Rights Agent may consult with legal counsel (who may be
legal counsel for the Company), and the opinion of such counsel shall be full
and complete authorization and protection to the Rights Agent as to any action
taken or omitted by it in good faith and in accordance with such opinion.

(b) Whenever in the performance of its duties under this Agreement
the Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person and the
determination of "current market price") be proved or established by the
Company prior to taking or suffering any action hereunder, such fact or matter
(unless other evidence in respect thereof be herein specifically prescribed)
may be deemed to be conclusively proved and established by a certificate signed
by any one of the Chairman of the Board, the Chief Executive Officer, the
President, any Vice President, the Treasurer or the Secretary of the Company
and delivered to the Rights Agent; and such certificate shall be full
authorization to the Rights Agent for any action taken or suffered in good
faith by it under the provisions of this Agreement in reliance upon such
certificate.

(c) The Rights Agent shall be liable hereunder to the Company and
any other Person only for its own negligence, bad faith or willful misconduct.

(d) The Rights Agent shall not be liable for or by reason of any
of the statements of fact or recitals contained in this Agreement or in the
Rights Certificates (except its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and shall be deemed
to have been made by the Company only.

22
<PAGE> 26

(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery hereof
(except the due execution hereof by the Rights Agent) or in respect of the
validity or execution of any Rights Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Rights Certificate;
nor shall it be responsible for any change in the exercisability of the Rights
(including the Rights becoming void pursuant to Section 11(a)(ii) hereof) or
any adjustment in the terms of the Rights (including the manner, method or
amount thereof) provided for in Section 3, 11, 13, 23, or 24, or the
ascertaining of the existence of facts that would require any such change or
adjustment (except with respect to the exercise of Rights evidenced by Rights
Certificates after actual notice that such change or adjustment is required);
nor shall it by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any Preferred Shares to be
issued pursuant to this Agreement or any Rights Certificate or as to whether
any Preferred Shares will, when issued, be validly authorized and issued, fully
paid and nonassessable.

(f) The Company agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and delivered all
such further and other acts, instruments and assurances as may reasonably be
required by the Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Agreement.

(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman of the Board, the Chief Executive Officer, the President,
any Vice President, the Secretary, or the Treasurer of the Company, and to
apply to such officers for advice or instructions in connection with its
duties, and it shall not be liable for any action taken or suffered by it in
good faith in accordance with instructions of any such officer or for any delay
in acting while waiting for those instructions.

(h) The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were not
Rights Agent under this Agreement. Nothing herein shall preclude the Rights
Agent from acting in any other capacity for the Company or for any other legal
entity.

(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable
or accountable for any act, default, neglect or misconduct of any such
attorneys or agents or for any loss to the Company resulting from any such act,
default, neglect or misconduct, provided reasonable care was exercised in the
selection and continued employment thereof.

(j) No provision of this Agreement shall require the Rights Agent
to expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder or in the exercise of its rights
if there shall be reasonable grounds for believing that

23
<PAGE> 27
repayment of such funds or adequate indemnification against such risk or
liability is not reasonably assured to it.

Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Agreement upon 30 days' notice in writing mailed to the Company and to each
transfer agent of the Common Shares or Preferred Shares by registered or
certified mail, and to the holders of the Rights Certificates by first-class
mail. The Company may remove the Rights Agent or any successor Rights Agent
upon 30 days' notice in writing, mailed to the Rights Agent or successor Rights
Agent, as the case may be, and to each transfer agent of the Common Shares or
Preferred Shares by registered or certified mail, and to the holders of the
Rights Certificates by first-class mail. If the Rights Agent shall resign or be
removed or shall otherwise become incapable of acting, the Company shall
appoint a successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of 30 days after giving notice of such removal or
after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of a Rights
Certificate (who shall, with such notice, submit his Rights Certificate for
inspection by the Company), then the incumbent Rights Agent or the registered
holder of any Rights Certificate may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent. Any successor Rights
Agent, whether appointed by the Company or by such a court, shall be a
corporation organized and doing business under the laws of the United States or
of any state thereof, in good standing, which is authorized under such laws to
exercise corporate trust or stock transfer powers and is subject to supervision
or examination by federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least $50
million. After appointment, the successor Rights Agent shall be vested with the
same powers, rights, duties and responsibilities as if it had been originally
named as Rights Agent without further act or deed; but the predecessor Rights
Agent shall deliver and transfer to the successor Rights Agent any property at
the time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the
effective date of any such appointment the Company shall file notice thereof in
writing with the predecessor Rights Agent and each transfer agent of the Common
Shares or Preferred Shares, and mail a notice thereof in writing to the
registered holders of the Rights Certificates. Failure to appoint a successor
Rights Agent within the 30 day period or to give any notice provided for in
this Section 21, however, or any defect therein, shall not affect the legality
or validity of the resignation or removal of the Rights Agent or the
appointment of the successor Rights Agent, as the case may be.

Section 22. Issuance of New Rights Certificates. Notwithstanding
any of the provisions of this Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Rights Certificates evidencing Rights in
such form as may be approved by its Board of Directors to reflect any
adjustment or change in the Purchase Price and the number or kind or class of
shares or other securities or property purchasable under the Rights
Certificates made in accordance with the provisions of this Agreement. In
addition, in connection with the issuance or sale of Common Shares following
the Distribution Date and prior to the redemption or expiration of the Rights,
the Company (a) shall, with respect to Common Shares

24
<PAGE> 28
so issued or sold pursuant to the exercise of stock options or under any
employee plan or arrangement, granted or awarded as of the Distribution Date,
or upon the exercise, conversion or exchange of securities hereinafter issued
by the Company, and (b) may, in any other case, if deemed necessary or
appropriate by the Board of Directors of the Company, issue Rights Certificates
representing the appropriate number of Rights in connection with such issuance
or sale; provided, however, that (i) no such Rights Certificate shall be issued
if, and to the extent that, the Company shall be advised by counsel that such
issuance would create a significant risk of material adverse tax consequences
to the Company or the Person to whom such Rights Certificates would be issued,
and (ii) no such Rights Certificate shall be issued if, and to the extent that,
appropriate adjustment shall otherwise have been made in lieu of the issuance
thereof.

Section 23. Redemption.

(a) The Board of Directors of the Company may, at its option, at
any time prior to such time as any Person becomes an Acquiring Person, redeem
all but not less than all the then outstanding Rights at a redemption price of
$0.01 per Right, appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof (such
redemption price being hereinafter referred to as the "Redemption Price"). The
redemption of the Rights by the Board of Directors may be made effective at
such time, on such basis and with such conditions as the Board of Directors in
its sole discretion may establish.

(b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights pursuant to paragraph (a) of this
Section 23, and without any further action and without any notice, the right to
exercise the Rights will terminate and the only right thereafter of the holders
of Rights shall be to receive the Redemption Price. The Company shall promptly
give public notice of any such redemption; provided, however, that the failure
to give, or any defect in, any such notice shall not affect the validity of
such redemption. Within 10 days after such action of the Board of Directors
ordering the redemption of the Rights, the Company shall mail a notice of
redemption to all the holders of the then outstanding Rights at their last
addresses as they appear upon the registry books of the Rights Agent or, prior
to the Distribution Date, on the registry books of the transfer agent for the
Common Shares. Any notice which is mailed in the manner herein provided shall
be deemed given, whether or not the holder receives the notice. Each such
notice of redemption will state the method by which the payment of the
Redemption Price will be made. Neither the Company nor any of its Affiliates or
Associates may redeem, acquire or purchase for value any Rights at any time in
any manner other than that specifically set forth in this Section 23 or in
Section 24 hereof, and other than in connection with the purchase of Common
Shares prior to the Distribution Date.

Section 24. Exchange.

(a) The Board of Directors of the Company may, at its option, at
any time after any Person becomes an Acquiring Person, exchange all or part of
the then outstanding and exercisable Rights (which shall not include Rights
that have become void pursuant to the provisions of Section 11(a)(ii) hereof)
for Common Shares at an exchange ratio of one Common

<PAGE> 1

EXHIBIT 10.1

CLARK/BARDES HOLDINGS, INC.

1998 STOCK OPTION PLAN

1. Purpose. The Clark/Bardes Holdings, Inc. 1998 Stock Option Plan (the
"Plan") is intended to advance the interests of Clark/Bardes Holdings, Inc., a
Delaware corporation (the "Company"), and its stockholders, by encouraging and
enabling selected officers, directors, consultants, agents and employees, upon
whose judgment, initiative and effort the Company is largely dependent for the
successful conduct of its business, to acquire and retain a proprietary interest
in the Company by ownership of its stock. It is intended that options which may
qualify for treatment as "incentive stock options" under Section 422 (formerly
Section 422A) of the Internal Revenue Code of 1986, as amended, and all Treasury
Regulations promulgated thereunder (collectively, the "Code"), as well as
options which may not so qualify, may be granted under the Plan. This Plan is an
assumption by the Company, and an amendment and restatement, effective as of the
date specified in Paragraph 15 below, of the Clark/Bardes, Inc. Stock Option
Plan, adopted by the board of directors of Clark/Bardes, Inc. on March 5, 1997
(the "Prior Plan"). This Plan is being adopted by the Company as part of the
reorganization in which the Company was created and Clark/Bardes, Inc. was
merged into a wholly-owned subsidiary of the Company. Pursuant to this Plan and
written agreements entered into with the existing Optionees whose options were
granted under the Prior Plan, all outstanding and unexercised Options under the
Prior Plan ("Existing Options") have been (or will be) amended to become options
to purchase the appropriate number of shares of Company Stock at the appropriate
adjusted exercise price (under the principles described in Code Section 424(a))
and to make such Existing Options fully vested and exercisable. All Existing
Options shall be governed by the terms and provisions of the Prior

<PAGE> 2

Plan, except that (i) the Existing Options shall be amended as described in the
preceding sentence, (ii) the Committee, as defined herein, shall administer such
options and (iii) Paragraph 7 of the Plan shall apply in lieu of Paragraph 7 of
the Prior Plan.

2. Definitions.

(a) "Board" means the board of directors of the Company.

(b) "Committee" means the Board or a committee of the Board to whom its
authority to administer this Plan has been delegated. Any such committee shall
be composed of at least two individuals who shall qualify as "non-employee
directors" within the meaning of Rule 16b-3 promulgated under the Securities
Exchange Act of 1934.

(d) "Date of Exercise" means the date on which an Option is validly
exercised pursuant to the Plan.

(e) "Date of Grant" means the date on which an Option is granted under the
Plan, which will be the date the Committee takes the requisite action to grant
the Option, unless the Committee specifies a later date.

(f) "Fair Market Value" of the Company's Common Stock means, at any time
that the Common Stock is not publicly traded, the value of the Common Stock as
determined by the Committee, based on any reasonable valuation method; at any
time the Common Stock is traded on the NASDAQ over-the-counter market, the
closing interdealer bid quotation for the Common Stock (without retail mark-up,
mark-down or conversion) on such date; or at any time the Common Stock is traded
on a national

<PAGE> 3

securities exchange or the NASDAQ National Market System, the closing price of
such stock on such exchange or system on such date (or, in each case, if such
date is not a trading day, on the last trading day immediately preceding such
date). For options approved at such times as the Common Stock is not reported or
quoted by any such organization (including options approved prior to the initial
public stock offering of the Company), the fair market value of the shares of
Common Stock shall be the fair market value thereof determined in good faith by
the Committee. In addition to the above rules, Fair Market Value shall be
determined without regard to any restriction other than a restriction which, by
its terms, will never lapse.

(g) "Incentive Stock Option" means an option that qualifies as an incentive
stock option under all of the applicable requirements of the Code.

(h) "Incentive Stock Option Agreement" means the agreement between the
Company and the Optionee, in such form as may from time to time be adopted by
the Committee, under which the Optionee may purchase Common Stock pursuant to
the terms of an Incentive Stock Option granted under the Plan.

(i) "Non-Qualified Stock Option" means an option to purchase Common Stock
granted pursuant to the provisions of the Plan that does not qualify as an
Incentive Stock Option.

(j) "Non-Qualified Stock Option Agreement" means the agreement between the
Company and the Optionee, in such form as may from time to time be adopted by
the Committee, under which the Optionee may purchase Common Stock pursuant to
the terms of a Non-Qualified Stock Option granted under the Plan.

<PAGE> 4

(k) "Option" means an option granted under the Plan to purchase a share of
Common Stock.

(l) "Option Agreement" means a Non-Qualified Stock Option Agreement, or an
Incentive Stock Option Agreement.

(m) "Optionee" means a person to whom an Option, which has not expired, has
been granted under the Plan.

(n) "Participant" means any of those persons described in Paragraph 5
hereof who receive a grant of an Option.

(o) "Subsidiary" or "Subsidiaries" means a subsidiary corporation or
corporations of the Company as defined in Section 424(f) of the Code.

(p) "Successor" means the legal representative of the estate of a deceased
Optionee or the person or persons who acquire the right to exercise an Option by
bequest or inheritance or by reason of the death of an Optionee.

3. Administration and Interpretation of Plan. The Plan shall be
administered by the Committee. The Committee shall have full and final authority
in its discretion, subject to the provisions of the Plan: (i) to determine the
individuals to whom, and the time or times at which, Options shall be granted
and the number of shares of Common Stock covered by each Option; (ii) to
construe and interpret the Plan; and (iii) to make all other determinations and
take all other actions deemed necessary or advisable for the proper
administration of the Plan. All such actions and determinations by the Committee
shall be final and conclusively binding for all purposes and upon all persons.

4. Common Stock Subject to Options. The aggregate number of shares of the
Company's Common Stock which may be issued upon the exercise of Options granted
under

<PAGE> 5

the Plan shall not exceed 2,000,000, subject to adjustment by the Committee to
reflect, as deemed appropriate by the Board, any stock dividend, stock split,
reverse stock split, share combination, extraordinary cash dividend, warrants or
rights offerings to purchase Common Stock, exchange of shares, reorganization,
merger, recapitalization or the like, of or by the Company that affect the
Common Stock, such that an adjustment is necessary to maintain the benefits or
potential benefits intended to be provided under the Plan. The shares of Common
Stock to be issued upon the exercise of Options may be authorized but unissued
shares, shares issued and reacquired by the Company or shares bought on the open
market for the purposes of the Plan. In the event any Option shall, for any
reason, terminate or expire or be canceled or surrendered without having been
exercised in full, the shares subject to such Option, but not purchased
thereunder, shall again be available for Options to be granted under the Plan.

5. Participants. Options may be granted under the Plan to any person who is
an officer or other key employee (including officers and employees who are also
directors), non-employee directors or a licensed insurance producer of the
Company or any of its Subsidiaries (collectively, "Participants").

6. Terms and Conditions of Options. Any Option granted under the Plan shall
be evidenced by either an Incentive Stock Option Agreement or a Non-Qualified
Stock Option Agreement executed by the Company and the Optionee. Such Option
Agreement shall be subject to the following limitations and conditions:

(a) Option Price. The option price per share with respect to each
Option shall be determined by the Committee but in no instance shall the
option price for any Incentive Stock Option be less than 100% of the Fair
Market Value of a share of the Common Stock on the Date of Grant. However,
nothing contained herein shall prohibit

<PAGE> 6

the Committee, in its discretion, from canceling any outstanding options and
reissuing a new Option at a lower exercise price in the event that the Fair
Market Value per share of Common Stock at any time prior to the date of exercise
falls below the exercise price of any Option granted pursuant to the Plan.

(b) Payment of Option Price. Full payment for shares purchased upon
exercising an Option shall be made (i) in cash or by check, (ii) if so permitted
by the Company, by delivery of previously owned shares of Common Stock, (iii)
partly in cash or by check and partly in such stock or (iv) by delivery of the
equivalent thereof acceptable to the Company. The value of shares of Common
Stock delivered in connection with the payment of the option price shall be the
Fair Market Value of such shares on the Date of Exercise of the Option.

(d) Vesting. Options may vest either on the Date of Grant or according to
such vesting schedule or event as may be specified by the Committee. Neither an
Optionee nor his Successor shall have any of the rights of a stockholder of the
Company until the certificate or certificates evidencing the shares purchased
pursuant to the exercise of an Option are properly delivered to such Optionee or
his Successor.

(e) Exercise of an Option. Each Option shall be exercisable at any time,
and from time to time, and in no particular order if the Optionee holds more
than one Option, throughout a period commencing on or after the Date of Grant,
or vesting date as specified by the Committee, and ending upon the earliest of
the expiration, cancellation, surrender or termination of the Option; provided
however, that no Option shall be

<PAGE> 7

exercisable in whole or in part prior to the date of stockholder approval of the
Plan. Furthermore, the exercise of each Option shall be subject to the condition
that if at any time the Company shall determine in its discretion that the
satisfaction of withholding tax or other withholding liabilities, or that the
listing, registration, or qualification of any share otherwise deliverable upon
such exercise upon any securities exchange or under any state or federal law, or
that the report to, or consent or approval of, any regulatory body, is necessary
or desirable as a condition of, or in connection with, such exercise or the
delivery or purchase of shares pursuant thereto, then in any such event, such
exercise shall not be effective unless such withholding, listing, registration,
qualification, report, consent or approval shall have been effected or obtained
free of any conditions not acceptable to the Company. The Committee may provide
for the alternative exercise of an Option by surrendering the Option in exchange
for an amount of cash or shares of Common Stock equal in amount or value to the
product of (A) the number of shares of Common Stock subject to the Option (or
portion thereof) being exercised and (B) the excess, if any, of (i) the Fair
Market Value of a share of Common Stock on the date of exercise over (ii) the
exercise price of the Option being exercised. Any such alternative exercise of
an Incentive Stock Option shall be in accordance with the Code requirements for
tandem grants of incentive stock options and stock appreciation rights. If an
Option is exercised through a surrender, as described above, the shares of
Common Stock subject to such Option shall be subtracted from the number of
remaining shares available for issuance pursuant to the Plan.

(f) Nontransferability of Option. Except as may otherwise be provided in an
applicable Non-Qualified Stock Option Agreement, no Option shall be transferable
or

<PAGE> 8

assignable by an Optionee, voluntarily, or by operation of law, other than by
will or the laws of descent and distribution. Each Option shall be exercisable,
during the Optionee's lifetime, only by the Optionee. No Option or the shares
covered thereby shall be pledged or hypothecated in any way.

(g) Termination of Employment. Except as otherwise provided in an
applicable Option agreement, upon the termination of an Optionee's employment
with the Company or with any of its Subsidiaries for any reason other than
death, the Optionee's Options shall expire unless exercised prior to the date of
the expiration of such Options or within ninety (90) days after said termination
of employment, whichever occurs first. Neither the adoption of this Plan nor the
grant of an Option to an eligible person shall alter in any way the Company's or
the relevant Subsidiary's rights to terminate such person's employment or
directorship at any time with or without cause nor does it confer upon such
person any rights or privileges to continued employment, or any other rights and
privileges, except as specifically provided in the Plan.

(h) Death of Optionee. Except as otherwise provided in an applicable Option
Agreement, if an Optionee dies while in the employ of the Company or any
Subsidiary, his Option shall expire unless exercised (to the extent exercisable
immediately prior to Optionee's death) by his Successor prior to the date of
expiration of such Options or one (1) year from the date of the Optionee's
death, whichever occurs first.

(i) Ten Percent Stockholders. Notwithstanding anything herein to the
contrary, an Option which is intended to qualify as an Incentive Stock Option
may be granted hereunder to any Optionee who, immediately before such Option is
granted,

<PAGE> 9
beneficially owns, directly or indirectly, more than 10% of the total voting
power of all classes of stock of the Company only if both of the following
conditions are met:

(i) The option price per share shall be no less than 110% of the Fair
Market Value of a share of Common Stock on the Date of Grant; and

(ii) The expiration date of the Option shall be not more than five (5)
years from the Date of Grant.

(j) Aggregate Fair Market Value. Notwithstanding anything herein to the
contrary, with respect to an Option which is intended to qualify as an Incentive
Stock Option, the aggregate Fair Market Value (determined as of the time the
option is granted) of the Common Stock with respect to which Incentive Stock
Options are exercisable for the first time by an Optionee during any calendar
year (under all incentive stock option plans of the Company, and its parent and
Subsidiary corporations) shall not exceed $100,000.

(k) Other Terms. Each Incentive Stock Option Agreement or Non-Qualified
Stock Option Agreement, as the case may be, may contain such other provisions
(not inconsistent herewith) as the Committee in its discretion may determine,
including, without limitation:

(i) a provision conditioning the exercise of all or part of an Option
upon such matters as the Committee may deem appropriate (if any) such as
the passage of time, or the attainment of certain performance goals
appropriate to reflect the contribution of the Optionee to the performance
of the Company;

(ii) a provision giving the Committee the discretionary authority to
accelerate the exercisability of an Option in spite of any contrary
provision

<PAGE> 10

contained in an Option, under such circumstances as the Committee may
deem appropriate;

(iii) the manner in which an Option is to be exercised;

(iv) investment representations; and

(v) confidentiality, nondisclosure, noncompete and nonsolicitation
provisions.

7. Repurchase by the Company.

(a) Except as may otherwise be provided in any applicable Option Agreement
the Company shall have the right, exercisable within 60 days after the later of
(i) the date of Optionee's termination of employment with the Company or a
Subsidiary or termination of service as a director or consultant or (ii) the
date of the exercise by any person other than Optionee of the Option pursuant to
any provision of this Plan, to purchase any shares of Common Stock (or
securities into which any Common Stock has been converted) that were acquired
pursuant to the exercise of an Option under this Plan ("Option Shares"). To the
extent that an Optionee holds exercisable Options at the time of termination of
employment or termination of service as a director or consultant, the Company
may elect to purchase such exercisable Options in the same manner as the Option
Shares at a price equal to the Repurchase Price (as hereinafter defined) less
the exercise price of such exercisable Options.

(b) The Repurchase Price for the purchase of the Option Shares shall be
determined as follows:

(i) if the Common Stock has been registered pursuant to a registration
statement filed under the Securities Act of 1933, as amended, and the rules
and

<PAGE> 11

regulations of the Securities and Exchange Commission thereunder (the
"Act"), then the Repurchase Price per share shall be equal to the average
closing price per share of the Common Stock for the 30 days preceding the
date of termination of employment by the Company or a Subsidiary as
published in the Wall Street Journal; or

(ii) if the Common Stock has not been registered under the Act, then
the price shall be the book value per share of Common Stock as of the last
day of the month during which termination of employment with the Company or
a Subsidiary (or termination of service as a Director occurs) as determined
by the formula:

P = A-L
---
S

P = the purchase price (book value) per Option Share,

A = the total assets of the Company and its Subsidiaries (determined
pursuant to generally accepted accounting principles) shown on the
Company's balance sheet for the most recent fiscal year ended,

L = the total liabilities of the Company and its Subsidiaries
(determined pursuant to generally accepted accounting principles)
shown on the Company's balance sheet for the most recent fiscal
year ended,

S = the total number of shares of capital stock of the Company
outstanding on a fully diluted basis as shown on the Company's
balance sheet for the most recent fiscal year ended and as
adjusted for any capital transactions, dividends, or
reclassification of stock subsequent to such date.

(c) To the extent that the Company has the right to purchase Option Shares,
the Company may exercise such right by delivery (upon or within sixty days after
the later of Optionee's termination of employment with the Company or a
Subsidiary (or termination of

<PAGE> 12

employment with the Company or a Subsidiary (or termination of service
as a director or consultant) or exercise by a person other than Optionee
of the Option) of written notice to the Optionee (or such other person
exercising such Option) stating the full number of Option Shares that
the Company has elected to purchase, the purchase price per Option
Share, and the time of purchase (which time shall not be earlier than 5
days from the date of notice). At the time of purchase, the Optionee
shall deliver the certificate or certificates representing his Option
Shares to the Company at its offices and shall execute any stock powers
or other instruments as may be necessary to transfer full ownership of
the Option Shares to the Company. At the time of purchase, the Company
shall issue its own check within 60 days to the Optionee in an amount
equal to the aggregate purchase price for the Option Shares for which
the Company has exercised its right to purchase, less any amounts
required to be withheld under applicable laws. In the event of
Optionee's death or disability, the Company's right to purchase and the
manner of purchase shall apply with regard to the Optionee's estate,
beneficiary, administrator or personal representative.

8. No Entitlement or Disqualification. The grant of an Option shall not be
deemed either to entitle the Optionee to, or disqualify the Optionee from,
participation in any other grant of options under this Plan or any other stock
option plan of the Company.

9. Allotment of Shares. Subject to the other terms of this Plan, the
Committee shall, in its discretion, determine the number of Options to be
granted from time to time to a Participant.

10. Adjustments. The number of shares of Common Stock covered by each
outstanding Option granted under the Plan and the option price shall be adjusted
to reflect, as deemed appropriate by the Committee in its discretion, any stock
dividend, stock split, reverse

<PAGE> 13

stock split, share combination, exchange of shares, recapitalization, merger,
consolidation, separation, reorganization, liquidation or the like of or by the
Company. Decisions by the Committee as to what adjustments shall be made, and
the extent thereof, shall be final, binding and conclusive for all purposes and
upon all persons. The Committee shall also have discretion to provide, in an
Option Agreement or prior to exercise of an Option, for the assumption of any
Option granted hereunder or the substitution of other options to acquire stock
of another corporation in accordance with the principles of Code Section 424(a).

11. Designation of Incentive Stock Options. The Committee shall cause each
Option granted hereunder to be clearly designated in the agreement evidencing
such Option, at the time of grant, as to whether or not it is intended to
qualify as an Incentive Stock Option.

12. Notices. Whenever any notice is required or permitted hereunder, such
notice must be in writing and personally delivered or sent by mail. Any notice
required or permitted to be delivered hereunder shall be deemed to be delivered
on the date which it is personally delivered, or, whether actually received or
not, on the third business day after it is deposited in the United States mail,
certified or registered, postage prepaid, addressed to the person who is to
receive it at the address which such person has theretofore specified by written
notice delivered in accordance herewith. The Company or an Optionee may change,
at any time and from time to time, by written notice to the other, the address
which it or he had theretofore specified for receiving notices. Until changed in
accordance herewith, the Company and each Optionee shall specify as its and his
address for receiving notices the address set forth in the option agreement
pertaining to the shares to which such notice relates.

13. Amendment or Discontinuance. The Plan and any Option outstanding
hereunder may be amended or discontinued by the Board without the approval of
the stockholders of the

<PAGE> 14

Company, except that the Board may not, except as expressly provided in the
Plan, increase the aggregate number of shares which may be issued under Options
granted pursuant to the Plan, change the categories of persons who are
Participants in the Plan or materially increase the benefits which may accrue to
Participants under the Plan, without such approval.

14. Effect of the Plan. Neither the adoption of this Plan nor any action of
the Board or Committee shall be deemed to give any person any right to be
granted an option to purchase Common Stock of the Company or any of its
Subsidiaries, or any other rights except as may be evidenced by an Option
Agreement, or any amendment thereto, duly authorized by the Committee and
executed on behalf of the Company and then only to the extent and on the terms
and conditions expressly set forth therein.

15. Effective Date. This Plan shall be effective on the date of its
adoption by the Board (the "Effective Date"); provided, however, that the
stockholders of the Company must approve the Plan within twelve months of such
Board adoption. In the event such stockholder approval is not timely obtained,
any Options granted after the Effective Date shall be null and void.

16. Term. No option may be granted under this Plan after February 28, 2007.

IN WITNESS WHEREOF, upon authorization of the Board of Directors and the
Stockholders of the Company, the undersigned has caused the Clark/Bardes
Holdings, Inc. 1998 Stock Option Plan to be executed effective as of the ____
day of _______, 1998.

--------------------------------------
Melvin G. Todd
President and Chief Executive Officer

<PAGE> 1
EXHIBIT 10.21

PHANTOM STOCK AGREEMENT

THIS PHANTOM STOCK AGREEMENT (this "Agreement") made and entered into as
of the 5th day of September, 1997, by and between CLARK/BARDES, INC., a Texas
corporation (the "Company"), and STEVEN J. COCHLAN (the "Participant").

W I T N E S S E T H:

WHEREAS, the Company and the Participant, together with others, have
entered into a Stock Purchase Agreement of even date (the "Stock Purchase
Agreement") under which among other related transactions, certain shares of the
Company's Common Stock owned by the Participant (the "Shares") are to be
purchased by the Company at a closing as provided therein (the "Stock
Closing"); and

WHEREAS, as part of the Stock Purchase Agreement transaction, the Company
has agreed to provide the Participant certain incentive compensation based on
the value of the Company's Common Stock.

NOW, THEREFORE, for and in consideration of the above premises and of the
mutual covenants and promises contained herein, the parties hereto agree as
follows:

1. Purpose. The purpose of this Agreement is to promote the interests of
the Company by providing incentive compensation to the Participant based on the
value of the Company's Common Stock. This Agreement will enhance the Company's
ability to attract, retain and motivate such key personnel as the Participant
and will promote a closer identity of interests between the Participant and the
Company's stockholders.

2. Definitions.

(a) "Board of Directors" or "Board" means the Board of Directors of
the Company.

(b) "Common Stock" means the Common Stock, no par value per share,
of the Company.

(c) "Company" means Clark/Bardes, Inc. and any successors or assigns,
including but not limited to, any corporation or corporations with or into
which Clark/Bardes, Inc. may be consolidated or merged or any corporation which
purchases 50% or more of the outstanding Common Stock of the Company or which
purchases substantially all of the assets of the Company.

<PAGE> 2
(d) "Dollar Value of a Participant's Incentive Unit Account" as of a
given date shall be computed as the Value per share/Incentive Unit multiplied
by the number of all Incentive Units computed in accordance with Section 4
hereof as of such date.

(e) "Effective Date" means the date as determined pursuant to Section
18 hereof.

(f) "Fair Market Value" means the market value of the Common Stock
calculated on a per share basis, as determined by an independent appraisal firm,
investment banking firm, accounting firm or other organization which is
recognized for, and experienced in, valuing insurance agencies and brokers and
similar financial services firms (the "Independent Evaluator"), which is, in any
case, selected by the Company. In the event the Company proposes an Independent
Evaluator and the Participant cannot agree on that or any other proposed
Independent Evaluator within 30 days of the Company's proposal of such
Independent Evaluator to the Participant, the Participant and the Company shall
each hire an Independent Evaluator, at their own expense, within 15 days of such
date to perform an appraisal of the Company. The determination of the market
value by the Independent Evaluator shall be set forth within 45 days of the
engagement in a written opinion addressed to the Board of Directors and to the
Participant and shall be final, conclusive and binding upon the Company and the
Participant. In the event that the Company and the Participant hire two
Independent Evaluators, the market value shall be the average of the two values
established unless there is a difference of more than 10%, in which case the
Independent Evaluators shall select a third Independent Evaluator who shall
establish a market value within 30 days of such engagement and the Fair Market
Value price shall be the average of the two closest prices established by the
Independent Evaluators. In the event a third Independent Evaluator is hired, the
cost of such evaluation shall be split evenly between the Company and the
Participant.

(g) "Incentive Unit" means the award credited to the Participant
under this Agreement and expressed in numbers of units.

(h) "Principal Office Agreements" means that certain Principal Office
Agreement dated as of September 12, 1993, between the Company and the
Participant, as amended.

(i) "Principals" means any principal pursuant to the Principal Office
Agreement between the Company and any third party.

(j) "Qualifying Revenues" means cash received by the Company directly
resulting from compensation generated by the Participant through the

-2-
<PAGE> 3
SOP-FS Program less (i) the cost of the Company to perform any services or
deliver any products under the SOP-FS Program, (ii) any revenues received from
1997 sales to The Dow Chemical Company under the SOP-FS Program and any
add-ons, replacements or exchanges related thereto, (iii) any revenue received
by the Company under the SOP-FS Program which is owed to Citicorp Securities and
Principals or other third parties and (iv) any and all returns, refunds, charge
backs, rebates, discounts, credits or allowances of any nature related or
attributable to such Qualifying Revenues.

(k) "SOP-FS Program" means the case or revenue opportunities for the
Company arising under that certain Supplemental Offset Plan and Financing
Structure as jointly developed and marketed by Citicorp, Participant and CBI.

(l) "Subsidiary" means any entity in which the Company owns more than
50% of the issued and outstanding equity.

(m) "Total Disability" means the complete inability of the Participant,
due to injury or sickness, to perform any and every duty owed to the Company or
a Subsidiary for a period of six months.

(n) "Value per share/Incentive Unit" as of a given date means the Fair
Market Value per share of Common Stock of the Company at the close of the fiscal
year of the Company immediately preceding said date.

(o) "Year" means a fiscal year of the Company.

3. Administration. This Agreement shall be administered by the Board of
Directors of the Company in its sole discretion. Subject to the express
provisions of the terms hereof, the Board shall have sole and complete
authority to:

(i) determine all computations required under this Agreement in
good faith; and

(ii) interpret and construe this Agreement in good faith, and make
all determinations deemed necessary or advisable for the
administration of this Agreement.

4. Determination of Awards. The Participant shall be entitled to an
award of Incentive Units which shall be based on the following Schedule as to
the level of Qualifying Revenues on a cumulative basis received by the Company
measured as of the end of each fiscal quarter of the Company on any SOP-FS
sales from the Effective Date through December 31, 2007, which are generated by
the Participant in accordance herewith:

-3-

<PAGE> 4
<TABLE>
<CAPTION>
<S> <C>
CUMULATIVE UNITS OWED CUMULATIVE QUALIFYING
PARTICIPANT REVENUES OF COMPANY
- ------------------------------------------------------------------------
0 Less than $5,000,000
- ------------------------------------------------------------------------
200,000 $5,000,000 to $9,999,999.99
- ------------------------------------------------------------------------
400,000 $10,000,000 to $14,999,999.99
- ------------------------------------------------------------------------
600,000 $15,000,000 to $19,999,999.99
- ------------------------------------------------------------------------
800,000 $20,000,000 to $24,999,999.99
- ------------------------------------------------------------------------
1,000,000 $25,000,000 to $29,999,999.99
- ------------------------------------------------------------------------
1,200,000 $30,000,000 to $34,999,999.99
- ------------------------------------------------------------------------
1,400,000 $35,000,000 to $39,999,999.99
- ------------------------------------------------------------------------
1,500,000 $40,000,000 and over
- ------------------------------------------------------------------------
</TABLE>

The maximum number of Incentive Units which Participant is eligible to
receive hereunder is One Million Five Hundred Thousand Incentive Units. Upon the
consummation of an initial public offering of the Company's equity securities at
any time prior to a Payment Date (as defined in Section 7 below), each
outstanding Incentive Unit shall automatically convert into a share of Common
Stock.

5. INCENTIVE UNIT AMOUNTS. The Company shall record in an account with
respect to Participant, to be known as the Participant's Incentive Unit Account,
within a reasonable time after any award of Incentive Units, the number of
Incentive Units awarded to Participant and the date of such award.

6. ADJUSTMENT. On the occurrence of any of the following events, the
following adjustments shall be made:

(i) In case the number of outstanding shares of Common Stock of the
Company shall be increased by way of a stock dividend, stock
split, recapitalization, or other similar means, the number of
Incentive Units available to be awarded referred to in Section 4
of this Agreement and the number of Incentive Units theretofore
awarded under this Agreement shall be proportionately increased;
and

-4-
<PAGE> 5

(ii) In case the number of outstanding shares of Common Stock of the
Company shall be reduced by recapitalization or otherwise (other
than by purchase by the Company of outstanding shares) the number
of Incentive Units available to be awarded referred to in Section
4 of this Agreement and the number of Incentive Units theretofore
awarded under this Agreement shall be proportionately reduced.

7. Payment for Incentive Units. Except as otherwise provided in
paragraph 8 below, Participant shall receive payments for the accrued Dollar
Value of his Incentive Unit Account on April 1 of 2003, 2004, 2005, 2006, 2007
and 2008 (each, a "Payment Date"), with the Dollar Value determined as of the
immediately preceding December 31.

8. Final Computation and Payment of Incentive Unit Account. The Board of
Directors shall make a final computation in good faith of the Dollar Value of
the Participant's Incentive Unit Account as of a Payment Date. In no event
shall the Dollar Value of the Participant's Incentive Unit Account increase in
value after the occurrence of a Payment Date.

If the Participant's engagement with the Company or a Subsidiary is
terminated because of the Participant's death, the Company shall pay to the
Participant's designated beneficiary, or, in the absence of an effective
beneficiary designation, to his estate, the final Dollar Value of the
Participant's Incentive Unit Account, which Account shall be valued and paid at
the end of the then current fiscal year. If the Participant's relationship with
the Company pursuant to the Principal Office Agreement is terminated for any
reason, including Total Disability, the final Dollar Value of the Participant's
Incentive Unit Account shall be valued and paid to the Participant at the
end of the then current fiscal year. The Company shall have the option to pay
the final Dollar Value of the Participant's Incentive Unit Account in a lump
sum or in equal annual installments over a period of not more than four years.
If the Company elects to pay such amount in installments, the Company shall
also pay interest on the unpaid amount from time to time (payable annually with
each installment) at an annual rate equal to the prime rate announced from time
to time by Harris Bank, as published in The Wall Street Journal, Midwest
Edition, plus 1%.

9. Designation of Beneficiary. Participant may designate a beneficiary or
beneficiaries to receive any remaining amounts in his Incentive Unit Account in
the event of his death, and may change such designation from time to time, by
filing a written designation of beneficiaries with the Board of Directors on a
form to be prescribed by the Board, provided that no such designation shall be
effective unless so filed prior to the death of Participant. The Board may adopt
reasonable

- 5 -
<PAGE> 6
restrictions as to the number of beneficiaries and the types of interest which
may pass to beneficiaries.

10. Absence of Liability. No member of the Board of Directors or officer
of the Company or any Subsidiary shall be liable for any act or action
hereunder, whether of commission or omission, taken by any other member, or by
any officer, agent, or employee, or, except in circumstances involving his bad
faith, for anything done or omitted to be done by himself.

11. No Segregation of Cash or Shares. The Company shall not be required to
segregate or reserve any cash or any shares of Common Stock which may at any
time be represented by Incentive Unit awards under this Agreement. No interest
at any time shall be allowable or payable with respect to any Incentive Units
except as expressly provided herein.

12. No Rights as a Shareholder. Participant shall not have voting rights
or privileges of a shareholder of Common Stock, or be entitled to receive any
shares of Common Stock, by reason of an award of Incentive Units under this
Agreement.

13. Company Not Trustee. The Company shall not, by an provisions of this
Agreement be deemed to be a trustee of any property, and the liabilities of the
Company to Participant pursuant to this Agreement shall be those of a debtor
pursuant to such contract obligations as are created by this Agreement, and no
such obligation of the Company shall be deemed to be secured by any pledge or
other encumbrance on any property of the Company.

14. Assignment and Transfers. The rights and transfers of the Participant
under this Agreement may not be assigned, encumbered, pledged or transferred
except, in the event of the death of the Participant, to his designated
beneficiary, or, in the absence of an effective beneficiary designation, to his
estate. Any such attempted action shall be void and no such interest shall be
in any manner liable for or subject to debts, contracts, liabilities,
engagements or torts of the Participant. If the Participant shall become
bankrupt or shall attempt to assign, encumber, pledge or transfer any interest
in this Agreement, then the Board of Directors in its discretion may hold or
apply such interest or any part thereof to or for the benefit of the
Participant or his designated beneficiary, his spouse, children, blood
relatives, or other dependents, or any of them, in such manner and in such
proportions as the Board of Directors may consider proper.

15. Texas Law To Govern. All questions pertaining to the construction,
regulation, validity and effect of the provisions of this Agreement shall be
determined in accordance with the laws of the State of Texas.

- 6 -
<PAGE> 7
16. Withholding Tax. The Company shall have the right to deduct from any
cash payment made to the Participant, his designated beneficiary or his estate
any taxes required by law to be withheld with respect thereto.

17. Gender. Wherever from the context of this Agreement it appears
appropriate, each term shall in either the singular or plural shall include the
singular and the plural, and pronouns stated in either the masculine, the
feminine or the neuter gender shall include the masculine, feminine and neuter.

- 7 -
<PAGE> 8

18. Effective Date. This Agreement shall take effect upon the Stock
Closing.

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

CLARK/BARDES, INC.

By: /s/ Mel G. Todd /s/ Steven J. Cochlan
-------------------------- ---------------------------
Mel G. Todd Steven J. Cochlan
President and CEO

<PAGE> 1

EXHIBIT 10.22

EMPLOYMENT AGREEMENT

This agreement ("Agreement") entered into by and between Clark/Bardes,
Inc., ("the Company") and Kurt J. Laning ("the Employee").

WITNESSETH:

Whereas, the Company desires to retain the Employee's experience and
abilities in the business of the Company to serve as Product Actuary; and

Whereas, the Employee desires to enter into such arrangement with the
Company; and

Now, THEREFORE, in consideration of the mutual covenants and promises
contained herein, the Company and Employee agree and state as follows:

ARTICLE 1 - DUTIES

The Employee shall devote all of his time and energies to serving as
Product Actuary of the Company. The Employee, while serving as Product Actuary,
shall have the powers and duties generally ascribed to such offices and such
additional authority and duties as may from time to time be established by the
Board of Directors. The Employee shall report and be responsible to the Vice
President, Actuary of the Company.

ARTICLE 2 - TERM

This agreement shall begin December 1, 1996 and continue until
termination by either party upon 90 days written notice of the termination to
the other.

ARTICLE 3 - COMPENSATION

For the services rendered by Employee hereunder, the Employee shall be
entitled to the following compensation:

a) Salary. The Employee shall be paid an annual salary of $100,000 to
be paid semi-monthly in the usual payroll of the Company.

b) Bonus. Commencing with 1997, the Employee shall be eligible for an
annual bonus not to exceed 50% of annual salary. Such bonus shall be agreed
upon in writing and shall be based on calendar year sales and/or financial
results of Clark/Bardes, Inc. No bonus will be payable for 1996 results. The
bonus formula will be based on results for the year ended December 31 of each
year and any bonus amount due will be paid within 60 days only if the Employee
is employed by the Company as of December 31.

1
<PAGE> 2

ARTICLE 4 - NON-COMPETITION AND CONFIDENTIALITY

For a period of two years immediately following the termination of this
agreement, whether such termination is voluntary or involuntary, with or without
cause, Employee will not directly or indirectly call on, solicit, sell
insurance, or sell or perform insurance related services (except in behalf of an
Insurance Carrier who is not in competition with Clark/Bardes, Inc., or to a
competitive firm who already has a relationship with a Clark/Bardes client. Any
such relationship will be clearly documented in the exit agreement.) to (i) any
client of the Company at the time of such termination, or (ii) any former client
of the Company which ceased to be such during the 12 month period immediately
prior to such termination, as evidenced by the books and records of the Company.

During and after the term of this agreement, Employee shall not make
known or divulge to others or use for his own benefit the names and addresses of
clients, customers, prospects or any confidential information obtained during
the term of this agreement relating to the business, sales or clients of the
Company.

This provision shall not preclude the Employee from performing
insurance related services for any Clark/Bardes, Inc., client where such
services are required as part of an Employment Agreement of a competitive firm
and where such services do not directly involve the solicitation or selling of
insurance.

ARTICLE 5 - EMPLOYEE BENEFITS

The Employee will be entitled to participate in any hospitalization,
health, dental or sick leave plan; profit sharing plan; or other present or
future group employee benefit plan or program for which key executives are or
shall become eligible.

ARTICLE 6 - VACATION

The Employee will be entitled to vacation at the rate of four weeks per
year. Vacation will accrue by the same method and will be subject to the same
maximum accumulated vacation limit as pertains to all employees.

ARTICLE 7 - GENERAL PROVISIONS

Section 7.01 - Notices. Any notices to be given hereunder by either
party to the other may be by personal delivery in writing or by mail, registered
or certified, postage prepaid with return receipt requested.

Section 7.02 - Venue and Law Governing Agreement.

2
<PAGE> 3

THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUCTED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF TEXAS AND VENUE SHALL LIE IN DALLAS COUNTY, TEXAS,

Section 7.03 - Attorney's Fees and Costs. If any action at law or in
equity is necessary to enforce or interpret the terms of this agreement, the
prevailing party shall be entitled to reasonable attorney's fees, costs and
necessary disbursements in addition to any other relief to which he may be
entitled.

Section 7.04 - Amendment. This agreement may only be amended by the
written consent of the parties.

Section 7.05 - Entire Agreement. This agreement contains the entire
understanding between the parties hereto concerning the subject matter contained
herein. There are no representations, agreements, arrangements, or
understandings, oral or written, between or among the parties hereto, relating
to the subject matter of this agreement, which are not fully expressed herein.

EXECUTED on the day and year written below.

CLARK/BARDES, INC.

Dated: 11/20/96 By: /s/ MEL G. TODD
--------- ---------------------------------------------
Mel G. Todd
President and Chief Executive Officer

EMPLOYEE

Dated: 11/21/96 By: /s/ KURT J. LANING
--------- ----------------------------------------
Kurt J. Laning

<PAGE> 1

EXHIBIT 10.23

EMPLOYMENT AGREEMENT

This agreement ("Agreement") entered into by and between Clark/Bardes,
Inc., ("the Company") and Keith L. Staudt ("the Employee").

WITNESSETH:

Whereas, the Company desires to retain the Employee's experience and
abilities in the business of the Company to serve as Associate Counsel; and

Whereas, the Employee desires to enter into such arrangement with the
Company; and

Now, THEREFORE, in consideration of the mutual covenants and promises
contained herein, the Company and Employee agree and state as follows:

ARTICLE 1 - DUTIES

The Employee shall serve as Associate Counsel of the Company. The
Employee, while serving as Associate Counsel, shall have the powers and duties
generally ascribed to such offices and such additional authority and duties as
may from time to time be established by the Board of Directors. The Employee
shall report and be responsible to the Senior Vice President of the Company.

ARTICLE 2 - TERM

This agreement shall begin March 31, 1995 and continue until
termination by either party upon 90 days written notice of the termination to
the other.

ARTICLE 3 - COMPENSATION

For the services rendered by Employee hereunder, the Employee shall be
entitled to the following compensation:

a) Salary. The Employee shall be paid an annual salary of $90,000 to be
paid semimonthly in the usual payroll of the Company.

b) Bonus. The Employee shall be eligible for an annual bonus not to
exceed 25% of annual salary. Such bonus shall be agreed upon in writing and
shall be based on calendar year sales and/or financial results of Clark/Bardes,
Inc. Any bonus payable for 1995 results will be adjusted to reflect less than
one year of service. The bonus formula will be based on results for the year
ended December 31 of each year and any bonus amount due will be paid within 60
days only if the Employee is employed by the Company as of December 31. The
bonus paid for 1995 results is guaranteed to be no less than $10,000.

<PAGE> 2

ARTICLE 4 - NON-COMPETITION AND CONFIDENTIALITY

ARTICLE 5 - EMPLOYEE BENEFITS

ARTICLE 6 - VACATION

The Employee will be entitled to vacation at the rate of three weeks
per year. Vacation will accrue by the same method and will be subject to the
same maximum accumulated vacation limit as pertains to all employees.

ARTICLE 7 - GENERAL PROVISIONS

Section 7.02 - Venue and Law Governing Agreement.

THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUCTED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF TEXAS AND VENUE SHALL LIE IN DALLAS COUNTY, TEXAS.

Section 7.03 - Attorney's Fees and Costs. If any action at law or in
equity is necessary

2
<PAGE> 3

to enforce or interpret the terms of this agreement, the prevailing party shall
be entitled to reasonable attorney's fees, costs and necessary disbursements in
addition to any other relief to which he may be entitled.

Section 7.04 - Amendment. This agreement may only be amended by the
written consent of the parties.

EXECUTED on the day and year written below.

CLARK/BARDES, INC.

Dated: 3/28/95 By: /s/ MEL G. TODD
--------- ---------------------------------------------
Mel G. Todd
President and Chief Executive Officer

EMPLOYEE

Dated: 3/21/95 By: /s/ KEITH L. STAUDT
--------- ----------------------------------------
Keith L. Staudt

<PAGE> 1
EXHIBIT 10.24

EMPLOYMENT AGREEMENT

This agreement ("Agreement") entered into by and between Clark/Bardes,
Inc., ("the Company") and Larry Sluder ("the Employee").

WITNESSETH:

Whereas, the Company desires to retain the Employee's experience and
abilities in the business of the Company to serve as Vice President and
Actuary; and

Whereas, the Employee desires to enter into such arrangement with the
Company; and

Now, THEREFORE, in consideration of the mutual covenants and promises
contained herein, the Company and Employee agree and state as follows:

ARTICLE 1 - DUTIES

The Employee shall serve as Vice President and Actuary of the Company.
The Employee, while serving as Vice President and Actuary, shall have the
powers and duties generally ascribed to such offices and such additional
authority and duties as may from time to time be established by the Board of
Directors. The Employee shall report and be responsible to the Executive Vice
President of the Company.

ARTICLE 2 - TERM

This agreement shall begin August 23, 1993 and continue until
termination by either party upon 90 days written notice of the termination to
the other.

ARTICLE 3 - COMPENSATION

For the services rendered by Employee hereunder, the Employee shall be
entitled to the following compensation:

a) Salary. The Employee shall be paid a semi-monthly salary of
$3,541.67 to be paid in the usual payroll of the Company.

b) Bonus. The Employee shall be eligible for an annual bonus not to
exceed 50% of annual salary. Such bonus shall be agreed upon in writing and
shall be based on calendar year sales and/or financial results of Clark/Bardes,
Inc. Any bonus payable for 1993 results will be adjusted to reflect less than
one year of service. The bonus formula will be based on results for the year
ended December 31 of each year and any bonus amount due will be paid within 60
days only if the Employee is employed by the Company as of December 31. The
bonus paid for 1993 results is guaranteed to be no less than $5,000.

1
<PAGE> 2
c) Relocation Allowance. Employee shall be paid a one-time lump sum of
$40,000 within 30 days of commencing employment to be applied to relocation
expenses. It is understood this allowance covers all expenses incurred by
employee including commuter travel, moving, housing, etc., during the interim
time before employee's family joins him as well as all expenses incurred by
employee related to his personal existing house sale and new housing.

ARTICLE 4 - NON-COMPETITION AND CONFIDENTIALITY

For a period of two years immediately following the termination of
this agreement, whether such termination is voluntary or involuntary, with or
without cause, Employee will not directly or indirectly call on, solicit, sell
insurance, or sell or perform insurance related services (except in behalf of
an Insurance Carrier who is not in competition with Clark/Bardes, Inc., or to a
competitive firm who already has a relationship with a Clark/Bardes client.
Any such relationship will be clearly documented in the exit agreement.) to (i)
any client of the Company at the time of such termination, or (ii) any former
client of the Company which ceased to be such during the 12 month period
immediately prior to such termination, as evidenced by the books and records of
the Company.

During and after the term of this agreement, Employee shall not make
known or divulge to others or use for his own benefit the names and addresses
of clients, customers, prospects or any confidential information obtained
during the term of this agreement relating to the business, sales or clients of
the Company.

ARTICLE 5 - EMPLOYEE BENEFITS

ARTICLE 6 - VACATION

ARTICLE 7 - GENERAL PROVISIONS

2
<PAGE> 3
Section 7.02 - Venue and Law Governing Agreement.

THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUCTED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF TEXAS AND VENUE SHALL LIE IN DALLAS COUNTY, TEXAS.

Section 7.04 - Amendment. This agreement may only be amended by the
written consent of the parties.

Section 7.05 - Entire Agreement. This agreement contains the entire
understanding between the parties hereto concerning the subject matter
contained herein. There are no representations, agreements, arrangements, or
understandings, oral or written, between or among the parties hereto, relating
to the subject matter of this agreement, which are not fully expressed herein.

EXECUTED on the day and year written below.

CLARK/BARDES, INC.

Dated: 8/23/93 By: /s/ MEL G. TODD
--------- -------------------------------------
Mel G. Todd
President and Chief Executive Officer

EMPLOYEE

Dated: 8/24/93 By: /s/ LARRY SLUDER
--------- -------------------------------------
Larry Sluder

<PAGE> 1
EXHIBIT 10.25

EMPLOYMENT AGREEMENT

This agreement ("Agreement") entered into by and between Clark/Bardes,
Inc. ("Company") and Ronald A. Roth ("Employee").

WITNESSETH:

Whereas, the Company desires to retain the Employee's experience and
abilities in the business of the Company; and with functional responsibilities
for: Marketing Support.

Whereas, the Employee desires to continue such arrangement with the
Company;

Now, therefore, in consideration of the mutual covenants and promises
contained herein, the Company and Employee agree and state as follows:

ARTICLE 1 - DUTIES

The Employee shall serve as Marketing Director of Clark/Bardes, Inc.

ARTICLE 2 - TERM

This agreement shall begin March 29th, 1993 and continue until
termination by either party upon 90 days written notice of the termination to
the other.

ARTICLE 3 - COMPENSATION

For the services rendered by Employee hereunder, the Employee shall be
entitled to the following compensation:

a) Salary. The Employee shall be paid an annual salary of $75,000
payable semi-monthly in the usual payroll of the Company.

b) Relocation Allowance. Employee shall be paid a one-time lump sum of
$25,000 within 30 days of the start of employment to be applied to relocation
expenses. It is understood this allowance covers all expenses incurred by
employee including commuter travel, moving, housing, etc., during the interim
time before employee's family joins him as well as all expenses incurred by
employee related to his personal existing house sale and new housing.

c) Bonus. The Employee shall be eligible for an annual bonus not to
exceed 50% of annual salary. Such bonus shall be agreed upon in writing and
shall be based on calendar year sales and/or financial results of Clark/Bardes,
Inc. Any bonus payable for 1993 results will be adjusted to reflect less than
one year of service. The bonus formula will be based on results for
<PAGE> 2
the year ended December 31 of each year and any bonus amount due will be paid
within 60 days only if the Employee is employed by the Company as of December
31. The bonus paid for 1993 results is guaranteed to be no less than $5,000.

ARTICLE 4 - NON-COMPETITION AND CONFIDENTIALITY

For a period of two years immediately following the termination of
this agreement, whether such termination is voluntary or involuntary, with or
without cause, Employee will not directly or indirectly call on, solicit, sell
insurance, or sell or perform insurance related services (except in behalf of
an Insurance Carrier who is not in competition with Clark/Bardes, Inc., or to a
competitive firm who already has a relationship with a Clark/Bardes client.
Any such relationship will be clearly documented in the exit agreement.) to (i)
any client of the Company at the time of such termination, or (ii) any former
client of the Company which ceased to be such during the 12 month period
immediately prior to such termination, as evidenced by the books and records of
the Company.

During and after the term of this agreement, Employee shall not make
known or divulge to others or use for his own benefit the names and addresses
of clients, customers, prospects or any confidential information obtained
during the term of this agreement relating to the business, sales or clients of
the Company.

ARTICLE 5 - EMPLOYEE BENEFITS

ARTICLE 6 - VACATION

ARTICLE 7 - GENERAL PROVISIONS

Section 7.01 - Notices. Any notices to be given hereunder by either
party to the other may be by personal delivery in writing or by mail,
registered or certified, postage prepaid with
<PAGE> 3
return receipt requested.

Section 7.02 - Venue and Law Governing Agreement.

THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUCTED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF TEXAS AND VENUE SHALL LIE IN DALLAS COUNTY, TEXAS.

Section 7.04 - Amendment. This agreement may only be amended by the
written consent of the parties.

Section 7.05 - Entire Agreement. This agreement contains the entire
understanding between the parties hereto concerning the subject matter
contained herein. There are no representations, agreements, arrangements, or
understandings, oral or written, between or among the parties hereto, relating
to the subject matter of this agreement, which are not fully expressed herein.

EXECUTED on the day and year written below.

CLARK/BARDES, INC.

Dated: 3/4/93 By: /s/ MEL G. TODD
-------- -------------------------------------
Mel G. Todd

EMPLOYEE

Dated: 3/7/93 By: /s/ RONALD A. ROTH
-------- -------------------------------------
Ronald A. Roth

<PAGE> 1
EXHIBIT 10.26

EMPLOYMENT AGREEMENT

This agreement ("Agreement") entered into by and between Clark/Bardes,
Inc. ("Company") and Sue A. Leslie ("Employee").

WITNESSETH:

Whereas, the Company desires to retain the Employee's experience and
abilities in the business of the Company; and with functional responsibilities
for: Applications software in support of insurance and benefits administration;
applications software in support of insurance and benefits illustrations; the
MIS Department; and implementation of insurance products on company systems.

Whereas, the Employee desires to accept such arrangement with the
Company;

Now, therefore, in consideration of the mutual covenants and promises
contained herein, the Company and Employee agree and state as follows:

ARTICLE 1 - DUTIES

The Employee shall serve as Vice President of Technical Services

ARTICLE 2 - TERM

This agreement shall begin April 29, 1991 and continue until
termination by either party upon 90 days written notice of the termination to
the other.

ARTICLE 3 - COMPENSATION

For the services rendered by Employee hereunder, the Employee shall be
entitled to the following compensation:

a) Salary. The Employee shall initially be paid an annual salary of
$85,000 payable semimonthly in the usual payroll of the Company.
<PAGE> 2
ARTICLE 4 - NON-COMPETITION AND CONFIDENTIALITY

For a period of three years immediately following the termination of
this agreement, whether such termination is voluntary or involuntary, with or
without cause, Employee will not directly or indirectly call on, solicit, sell
insurance, or sell or perform insurance related services to (i) any client of
the Company at the time of such termination, or (ii) any former client of the
Company which ceased to be such during the 12 month period immediately prior to
such termination, as evidenced by the books and records of the Company.

During and after the term of this agreement, Employee shall not make
known or divulge to others or use for his own benefit the names and addresses
of clients, customers, prospects or any confidential information obtained
during the term of this agreement relating to the business, sales or clients of
the Company.

ARTICLE 5 - EMPLOYEE BENEFITS

The Employee will be entitled to participate in any hospitalization
health, dental or sick leave plan; profit sharing plan; or other present or
future group employee benefit plan or program for which key executives are or
shall become eligible.

ARTICLE 6 - VACATION

The Employee will be entitled to vacation at the rate of four weeks per
year employed. Vacation will accrue by the same method and will be subject to
the same maximum accumulated vacation limit as pertains to all employees.

ARTICLE 7 - GENERAL PROVISIONS

Section 7.01 - Notices. Any notices to be given hereunder by either
party to the other may be by personal delivery in writing or by mail,
registered or certified, postage prepaid with return receipt requested.

Section 7.02 - Venue and Law Governing Agreement.

THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUCTED IN

2
<PAGE> 3
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND VENUE SHALL LIE IN DALLAS
COUNTY, TEXAS.

Section 7.04 - Amendment. This agreement may only be amended by the
written consent of the parties.

Section 7.05 - Entire Agreement. This agreement contains the entire
understanding between the parties hereto concerning the subject matter
contained herein. There are no representations, agreements, arrangements, or
understandings, oral or written, between or among the parties hereto, relating
to the subject matter of this agreement, which are not fully expressed herein.

EXECUTED on the day and year written below.

CLARK/BARDES, INC.

Dated: 4/12/91 By: /s/ JOHN E. WALKER
--------- -------------------------------------
John E. Walker
President

EMPLOYEE

Dated: 4/15/91 By: /s/ SUE A. LESLIE
--------- -------------------------------------
Sue A. Leslie

<PAGE> 1
EXHIBIT 10.27

EMPLOYMENT AGREEMENT

This agreement ("Agreement") entered into by and between Clark/Bardes,
Inc. ("Company") and William J. Gallegos ("Employee").

WITNESSETH:

Whereas, the Company desires to retain the Employee's experience and
abilities in the business of the Company; and with functional responsibilities
for: Client Service.

Whereas, the Employee desires to continue such arrangement with the Company;

Now, therefore, in consideration of the mutual covenants and promises
contained herein, the Company and Employee agree and state as follows:

ARTICLE 1 - DUTIES

The Employee shall serve as Vice President of Client Services.

ARTICLE 2 - TERM

This agreement shall begin May 12, 1993 and continue until termination
by either party upon 90 days written notice of the termination to the other.

ARTICLE 3 - COMPENSATION

For the services rendered by Employee hereunder, the Employee shall be
entitled to the following compensation:

a) Salary. The Employee shall be paid an annual salary of $70,000
payable semimonthly in the usual payroll of the Company.

b) Bonus. Employee shall be eligible to participate in a bonus
arrangement which can pay up to 25% of salary on an annual basis. Such bonus
program will be communicated in a separate written document.

ARTICLE 4 - NON-COMPETITION AND CONFIDENTIALITY

For a period of two years immediately following the termination of
this agreement, whether such termination is voluntary or involuntary, with or
without cause, Employee will not
<PAGE> 2
directly or indirectly call on, solicit, sell insurance, or sell or perform
insurance related services (except in behalf of an Insurance Carrier who is not
in competition with Clark/Bardes, Inc., or to a competitive firm who already
has a relationship with a Clark/Bardes client. Any such relationship will be
clearly documented in the exit agreement.) to (i) any client of the Company at
the time of such termination, or (ii) any former client of the Company which
ceased to be such during the 12 month period immediately prior to such
termination, as evidenced by the books and records of the Company.

During and after the term of this agreement, Employee shall not make
known or divulge to others or use for his own benefit the names and addresses
of clients, customers, prospects or any confidential information obtained
during the term of this agreement relating to the business, sales or clients of
the Company.

ARTICLE 5 - EMPLOYEE BENEFITS

ARTICLE 6 - VACATION

The Employee will be entitled to vacation at the rate of twenty-two
days per year. Vacation will accrue by the same method and will be subject to
the same maximum accumulated vacation limit as pertains to all employees.

ARTICLE 7 - GENERAL PROVISIONS

Section 7.01 - Notices. Any notices to be given hereunder by either
party to the other may be by personal delivery in writing or by mail,
registered or certified, postage prepaid with return receipt requested.

Section 7.02 - Venue and Law Governing Agreement.

THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUCTED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF TEXAS AND VENUE SHALL LIE IN DALLAS COUNTY, TEXAS.

Section 7.03 - Attorney's Fees and Costs. If any action at law or in
equity is necessary
<PAGE> 3
to enforce or interpret the terms of this agreement, the prevailing party shall
be entitled to reasonable attorney's fees, costs and necessary disbursements in
addition to any other relief to which he may be entitled.

Section 7.04 - Amendment. This agreement may only be amended by the
written consent of the parties.

Section 7.05 - Entire Agreement. This agreement contains the entire
understanding between the parties hereto concerning the subject matter
contained herein. There are no representations, agreements, arrangements, or
understandings, oral or written, between or among the parties hereto, relating
to the subject matter of this agreement, which are not fully expressed herein.

EXECUTED on the day and year written below.

CLARK/BARDES, INC.

Dated: 6/9/93 By: /s/ MEL G. TODD
-------- -------------------------------------
Mel G. Todd

EMPLOYEE

Dated: 6/9/93 By: /s/ WILLIAM J. GALLEGOS
-------- -------------------------------------
William J. Gallegos

<PAGE> 1
EXHIBIT 10.28

TAX INDEMNIFICATION AGREEMENT

This Tax Indemnification Agreement (this "AGREEMENT") is made this ___
day of ____________, 1998, by and among Clark/Bardes Holdings, Inc., a Delaware
corporation ("HOLDINGS"), Clark/Bardes, Inc., a Delaware Corporatoin ("CBI")
and each of the former shareholders of Clark/Bardes, Inc., a Texas corporation
(the "COMPANY"), (hereinafter referred to collectively as the "SHAREHOLDERS").

R E C I T A L S

A. The Company made an election to be treated as an S corporation
within the meaning of Section 1361 of the Internal Revenue Code of 1986, as
amended (the "CODE"), and corresponding provisions of state income tax law, for
the period commencing ______________, 19__, to the date of termination of such
election (the "S PERIOD").

B. CBI is a wholly-owned subsidiary of Holdings. Holdings
contemplates filing consolidated tax returns with CBI.

C. The Company will be merged with and into CBI and CBI will be the
surviving corporation upon the consummation of the merger (the
"REORGANIZATION"). Further, CBI will be a C corporation within the meaning of
Section 1361 of the Code and corresponding provisions of state income tax law
from and after the date of termination of the Company's S election.

D. Pursuant to Section 1362(e)(2) of the Code, the Company's income
or loss for all of 1998 will be pro rated among the days in 1998 for purposes
of allocating the Company's income for 1998 between (i) the period commencing
on January 1, 1998, and ending on the last day of the S Period, and (ii) the
balance of the year, provided that such allocation is not required under
Section 1362(e)(6)(D) of the Code to be based on a closing of the books.

E. The Board of Directors of the Company is expected to declare a
dividend, payable to shareholders of record as of the date preceding the day
that the Company's S election is revoked, in the amount described in Section
1(a).

A G R E E M E N T S

NOW, THEREFORE, in consideration of the premises and of the mutual
agreements contained herein, the parties hereto agree as follows:
<PAGE> 2
1. COVENANTS

(a) Subject to receipt by Holdings and CBI of this Agreement
executed by all the Shareholders, the Company shall distribute to the
Shareholders prior to the Reorganization cash in the amount equal to $3.2
million, or $1.00 per share (the "SHAREHOLDER DISTRIBUTION AMOUNT"). The
Shareholder Distribution Amount may be (i) decreased if the amount of the
Company's previously earned and undistributed taxable income immediately prior
to the consummation of the Reorganization (such amount the "AAA AMOUNT") is
less than the Shareholder Distribution Amount or (ii) increased if the
Shareholder Distribution Amount is less than 42.6% of the AAA Amount.

(b) CBI shall, as soon as practical following the end of 1998,
determine (i) the income or loss of CBI for 1998, (ii) the allocation of such
income or loss as between (A) the period commencing on January 1, 1998 and
ending on the last day of the S Period, and (B) the balance of 1998, using the
method prescribed by Section 1362(e) of the Code, and (iii) the balance, if
any, of the Company's accumulated adjustments account.

2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF SHAREHOLDERS. The Shareholders,
jointly and severally, represent, warrant and covenant to Holdings and CBI
that:

(a) The Shareholders have duly and timely filed, or will duly and
timely file, their personal income tax returns for each period with or within
which ends any taxable year of the Company included in the S period
("SHAREHOLDER TAX RETURNS").

(b) The Shareholders have duly included, or will duly include, in
their Shareholder Tax Returns their respective shares of the Company's items
of income gain, profit, loss, deduction and credit from all sources through and
including the last business day of the S Period (the "S CORPORATION TAXABLE
INCOME"). Each Shareholder agrees to pay any and all taxes attributable to his
or her allocable share of S Corporation Taxable Income.

(c) There are no audits, inquiries, investigations or examinations
relating to any of the Shareholder Tax Returns pending, and there are no claims
which have been asserted relating to any of the Shareholder Tax Returns which,
if determined adversely, would result in the assertion by the Internal Revenue
Service or any other state or local tax authority or agency of any income tax
("Tax") deficiency against Holdings.

(d) To the extent that the amount distributed to the Shareholders
pursuant to Section 1(a) above exceeds the amount of the Company's accumulated
adjustments account as determined pursuant to Section 1(b) above (but without
taking into account the distribution pursuant to Section 1(a) above), the
Shareholders shall promptly remit the difference to CBI.

<PAGE> 3
3. INDEMNIFICATIONS. Following the "POST TERMINATION TRANSITION PERIOD" as
defined in Section 1377(b)(1) of the Code:

(a) The Shareholders, jointly and severally, shall be responsible
for and shall indemnify and save and hold harmless Holdings and CBI from and
against all Tax, interest and penalties imposed on Holdings and CBI resulting
from a final determination of an adjustment to the Shareholders' taxable income
resulting in a decrease in the S Corporation Taxable Income and a corresponding
increase in the Company's taxable income (including any adjustment arising from
a final determination that the Company failed to qualify as a "small business
corporation" within the meaning of Section 1361(b) of the Code for any tax year
ending on or before the date of the Reorganization); provided, however, that
the maximum amount to be remitted by any Shareholder pursuant to this Section
3(a) shall not exceed the product of (a) such Shareholder's proportionate share
of the decrease in the S Corporation Taxable Income, multiplied by (b) such
Shareholder's marginal income tax rate in effect at the time of inclusion of
such Shareholder's proportionate share of the amount of the decrease in the S
Corporation Taxable Income.

(b) CBI shall indemnify and save and hold harmless each Shareholder
from and against all Tax, interest and penalties imposed on such Shareholder
resulting from a final determination of an adjustment to the Company's taxable
income resulting in a decrease in the Company's taxable income and a
corresponding increase in such Shareholder's S Corporation Taxable Income.
Further, CBI shall indemnify and hold harmless each Shareholder from and
against Tax incurred by such Shareholder resulting from the receipt of any
indemnification payments made to such Shareholder pursuant hereto.

(c) The Shareholders or CBI, as the case may be, shall make any
payment required under this Section 3 within thirty (30) days after receipt of
written notice from the other party that a payment is due by such party to the
appropriate taxing authority.

(d) If a Tax audit is commenced with respect to the S Period or any
Tax is claimed for which the Shareholders would be required to indemnify
Holdings or CBI, written notice thereof shall be given to the Shareholders as
promptly as practicable; provided, however, that the failure to give timely
notice shall not affect rights to indemnification hereunder except to the
extent that the Shareholders demonstrate actual damage caused by such failure.
After such notice, if the Shareholders shall acknowledge in writing to Holdings
and CBI that they are obligated under the terms of their indemnity hereunder in
connection with such audit or claim, then the Shareholders shall be entitled,
if they so elect, to take control of the defense and investigation of such
audit or claim and to employ and engage attorneys of their own choice to handle
and defend the same, at the Shareholders' cost, risk and expense provided that
the Shareholders and their counsel shall proceed with diligence and in good
faith with respect thereto. Holdings and CBI shall cooperate in all reasonable
respects with the Shareholders and such attorneys in the defense and
investigation of such audit or claim and any appeal arising therefrom, and
shall not enter into any agreement with any tax authority with respect to such
audit or claim without the prior consent of the Shareholders; provided,
however, that Holdings and CBI may, subject to the Shareholders' control of the
defense and investigation of such

3
<PAGE> 4
audit or claim, at its own cost, participate in the defense and investigation
of such audit or claim and any appeal arising therefrom.

4. NOTICE. All notices and other communications made in connection with this
Agreement shall be in writing and shall be deemed given when delivered
personally or sent by facsimile transmission to the numbers indicated below (if
physical confirmation of transmission is retained) or on the third succeeding
business day after being mailed by registered or certified mail, deposited in
the United States mail, postage prepaid, return receipt requested, to the
appropriate party at its or his address below or at such other address for such
party as shall be specified by written notice when in fact delivered pursuant
hereto:

If to Holdings or CBI, at:

Clark/Bardes Holdings, Inc.
2121 San Jacinto, Suite 2200
Dallas, Texas 75201-7906
Attention: General Counsel

If to a Shareholder, at such Shareholder's address set forth on the
Shareholder signature page hereto.

5. COUNTERPARTS. This Agreement may be executed in multiple counterparts, each
of which shall be deemed an original and each Shareholder may execute a
separate Shareholder Signature Page hereto.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
and year first above written.

HOLDINGS: CBI:

CLARK/BARDES HOLDINGS, INC. CLARK/BARDES, INC.

By: By:
------------------------------ --------------------------
Its: Its:
----------------------------- -------------------------

THE COMPANY

CLARK/BARDES, INC.

By:____________________________

Its:_____________________________

4
<PAGE> 5
SHAREHOLDER SIGNATURE PAGE
TO
TAX INDEMNIFICATION AGREEMENT

The undersigned shareholder of Clark/Bardes, Inc. has executed the
above Tax Indemnification Agreement as of the date first set forth above.

SHAREHOLDER NAME:
-----------------------------------------------

SHAREHOLDER SIGNATURE:
-----------------------------------------------

SHAREHOLDER ADDRESS:
-----------------------------------------------

-----------------------------------------------

<PAGE> 1
EXHIBIT 10.29

CLARK BARDES HOLDINGS, INC.

EMPLOYEE STOCK PURCHASE PLAN

ARTICLE I. PURPOSE

1.01 Purpose. The Clark Bardes Holdings, Inc. Employee Stock
Purchase Plan is intended to provide a method whereby employees of Clark Bardes
Holdings, Inc. and its subsidiary corporations (hereinafter referred to, unless
the context otherwise requires, as the "Company") will have an opportunity to
acquire a proprietary interest in the Company through the purchase of shares of
the Common Stock, par value $0.01 (the "Common Stock") of the Company. It is
the intention of the Company to have the Plan qualify as an "employee stock
purchase plan" under Section 423 of the Internal Revenue Code of 1986, as
amended (the "Code"). The provisions of the Plan shall be construed so as to
extend and limit participation in a manner consistent with the requirements of
that section of the Code.

ARTICLE II. DEFINITIONS

2.01 Base Pay. The term "base pay" shall mean regular straight-time
earnings excluding payments for overtime, shift premium, bonuses, severance pay
and other special payments, commissions and other marketing incentive payments.

2.02 Committee. The term "Committee" shall mean the individuals
described in Article XI.

2.03 Employee. The term "employee" means any person who is
customarily employed on a full-time or part-time basis by the Company or a
Subsidiary Corporation and is regularly scheduled to work more than 20 hours per
week.

2.04 Subsidiary. The term "Subsidiary Corporation" shall mean any
present or future corporation which (i) would be a "subsidiary corporation" of
Company as that term is defined in Section 424 of the Code and (ii) is
designated as a participating company in the Plan by the Committee.

ARTICLE III. ELIGIBILITY AND PARTICIPATION

3.01 Initial Eligibility. Any employee who shall have completed
ninety (90) days' employment and shall be employed by the Company on the date
his participation in the Plan is to become effective shall be eligible to
participate in offerings under the Plan which commence on or after such ninety
day period has concluded.

3.02 Leave of Absence. For purposes of participation in the Plan,
a person on leave of absence shall be deemed to be an employee for the first 90
days of such leave of absence and such employee's employment shall be deemed to
have terminated at the close of business on the 90th day of such leave of
absence unless such employee shall have returned to regular full-time or
part-time employment (as the case may be) prior to the close of business on
such 90th day.
<PAGE> 2
Termination by the Company of any employee's leave of absence, other than
termination of such leave of absence on return to full-time or part-time
employment, shall terminate an employee's employment for all purposes of the
Plan and shall terminate such employee's participation in the Plan and right to
exercise any option.

3.03 Restrictions in Participation. Notwithstanding any provisions
of the Plan to the contrary, no employee shall be granted an option to
participate in the Plan:

(a) if, immediately after the grant, such employee would
own stock, and/or hold outstanding options to purchase stock,
possessing 5% or more of the total combined voting power or value of
all classes of stock of the Company (for purposes of this paragraph,
the rules of Section 424(d) of the Code shall apply in determining
stock ownership of any employee); or

(b) which permits his rights to purchase stock under all
employee stock purchase plans of the Company to accrue at a rate which
exceeds $25,000 in fair market value of the stock (determined at the
time such option is granted) for each calendar year in which such
option is outstanding.

3.04 Commencement of Participation. An eligible employee may
become a participant by completing an authorization for a payroll deduction on
the form provided by the Company and filing it with the office of the Treasurer
of the Company on or before the date set therefor by the Committee, which date
shall be prior to the Offering Commencement Date for the Offering (as such
terms are defined below). Payroll deductions for a participant shall commence
on the applicable Offering Commencement Date when his authorization for a
payroll deduction becomes effective and shall end on the Offering Termination
Date of the Offering to which such authorization is applicable unless sooner
terminated by the participant as provided in Article VIII.

ARTICLE IV. OFFERINGS

4.01 Semi-Annual Offerings. The Plan will be implemented by eight
semi-annual offerings of the Company's Common Stock (the "Semi-Annual
Offerings") beginning on the 1st day of January and the first day of July in
each of the years 1999, 2000, 2001 and 2002, and terminating on June 30 and
December 31 of such year, respectively. The maximum number of shares issuable
for each Semi-Annual Offering shall be:

o From January 1, 1999 to June 30, 1999: 25,000 shares.

o From July 1, 1999 to December 31, 1999: 25,000 shares plus
unissued shares from the prior Offerings.

o From January 1, 2000 to June 30, 2000: 25,000 shares plus
unissued shares from the prior Offerings.

- 2 -
<PAGE> 3
o From July 1, 2000 to December 31, 2000: 25,000 shares plus
unissued shares from the prior Offerings.

o From January 1, 2001 to June 30, 2001: 25,000 shares plus
unissued shares from the prior Offerings.

o From July 1, 2001 to December 31, 2001: 25,000 shares plus
unissued shares from the prior Offerings.

o From January 1, 2002 to June 30, 2002: 25,000 shares plus
unissued shares from the prior Offerings.

o From July 1, 2002 to December 31, 2002: 25,000 shares plus
unissued shares from the prior Offerings.

4.02 Offering Dates. As used in the Plan, "Offering Commencement
Date" means the January 1 or July 1, as the case may be, on which the
particular Semi-Annual Offering begins and "Offering Termination Date" means
the December 31 or June 30 as the case may be, on which the particular
Semi-Annual Offering terminates. The Semi-Annual Offering is herein
collectively referred to as an "Offering."

ARTICLE V. PAYROLL DEDUCTIONS

5.01 Amount of Deduction. At the time a participant files his
authorization for payroll deduction, he shall elect to have deductions made
from his pay on each payday during the time he is a participant in an Offering
at the rate of 1, 2, 3, 4, 5, 6, 7, 8, 9 or 10% of his base pay in effect at
the Offering Commencement Date of such Offering. In the case of a part-time
hourly employee, such employee's base pay during the Offering shall be
determined by multiplying such employee's hourly rate of pay in effect on the
Offering Commencement Date by the number of regularly scheduled hours of work
for such employee during such Offering.

5.02 Participant's Account. All payroll deductions made for a
participant shall be credited to his account under the Plan. A participant may
not make any separate cash payment into such account except when on leave of
absence and then only as provided in Section 5.04.

5.03 Changes in Payroll Deductions. A participant may discontinue
his participation in the Plan as provided in Article VIII, but no other change
can be made during an Offering and, specifically, a participant may not alter
the amount of his payroll deductions for that Offering.

5.04 Leave of Absence. If a participant goes on a leave of
absence, such participant shall have the right to elect: (a) to withdraw the
balance in his or her account pursuant to Section 7.02, (b) to discontinue
contributions to the Plan but remain a participant in the Plan, or (c) remain a
participant in the Plan during such leave of absence, authorizing deductions to
be made from payments by the Company to the participant during such leave of
absence and undertaking to make cash payments to the Plan at the end of each
payroll period to the extent that amounts

- 3 -
<PAGE> 4
payable by the Company to such participant are insufficient to meet such
participant's authorized Plan deductions.

ARTICLE VI. GRANTING OF OPTION

6.01 Number of Option Shares. On the Commencement Date of each
Offering, a participating employee shall be deemed to have been granted an
option to purchase a maximum number of shares of stock of the Company equal to
an amount determined as follows: an amount equal to (i) that percentage of the
employee's base pay which he has elected to have withheld (but not in any case
in excess of 10%) multiplied by (ii) the employee's base pay during the period
of the Offering (iii) divided by the lower of (a) 85% of the fair market value
of a share of Common Stock on the applicable Offering Commencement Date or (b)
85% of the fair market value of a share of Common Stock on the applicable
Offering Termination Date as determined as provided in paragraphs (a) and (b )
of Section 6.02 below, as applicable. An employee's base pay during the period
of an Offering shall be determined by multiplying, in the case of a Semi-Annual
Offering, his normal weekly rate of pay (as in effect on the last day prior to
the Commencement Date of the particular offering) by 26 or the hourly rate by
1,040 provided that, in the case of a part-time hourly employee, the employee's
base pay during the period of an Offering shall be determined by multiplying
such employee's hourly rate by the number of regularly scheduled hours of work
for such employee during such Offering.

6.02 Option Price. The option price of each share of Common Stock
purchased with payroll deductions made during such Offering for a participant
therein shall be the lower of:

(a) 85% of the fair market value of a share of Common
Stock, as determined below, on the Offering Commencement Date or, if
applicable, the nearest prior trading day; or

(b) 85% of the fair market value of a share of Common
Stock on the Offering Termination Date or, if applicable, the nearest
prior trading day.

Fair market value shall be the closing price of the Common Stock on
the New York Stock Exchange or the NASDAQ National Market or any other national
exchange on which the Common Stock is traded. Provided, however, if the Common
Stock of the Company is not admitted to trading on any of the aforesaid dates
for which closing prices of the Common Stock are to be determined, then
reference shall be made to the fair market value of the Common Stock on that
date, as reasonably determined in good faith on such basis as shall be
established or specified for the purpose by the Committee.

ARTICLE VII. EXERCISE OF OPTION

7.01 Automatic Exercise. Unless a participant gives written notice
to the Company as hereinafter provided, his option for the purpose of stock
with payroll deductions made during any Offering will be deemed to have been
exercised automatically on the Offering Termination Date applicable to such
Offering, for the purchase of the number of full shares of stock which the
accumulated payroll deductions in his account at that time will purchase at the
applicable option

- 4 -
<PAGE> 5
price (but not in excess of the number of shares for which options have been
granted to the employee pursuant to Section 6.01), and any excess in his
account at that time will be returned to him.

7.02 Withdrawal of Account. By written notice to the Treasurer of
the Company, at any time prior to the Offering Termination Date applicable to
any Offering, a participant may, as further provided in Article VIII, elect to
withdraw all the accumulated payroll deductions in his account at such time.

7.03 Fractional Shares. Fractional shares will not be issued under
the Plan and any accumulated payroll deductions which would have been used to
purchase fractional shares will be returned to any employee promptly following
the termination of an Offering, without interest.

7.04 Transferability of Option. During a participant's lifetime,
options held by such participant shall be exercisable only by that participant.

7.05 Delivery of Stock. As promptly as practicable after the
Offering Termination Date of each Offering, the Company will deliver to each
participant, as appropriate, the stock purchased upon exercise of his option.

ARTICLE VIII. WITHDRAWAL

8.01 In General. As indicated in Section 7.02, a participant may
withdraw payroll deductions credited to his account under the Plan at any time
by giving written notice to the Treasurer of the Company. All of the
participant's payroll deductions credited to his account will be paid to him
promptly after receipt of his notice of withdrawal, and no further payroll
deductions will be made from his pay during such Offering. The Company may, at
its option, treat any attempt to borrow by an employee on the security of his
accumulated payroll deductions as an election, under Section 7.02, to withdraw
such deductions.

8.02 Effect on Subsequent Participation. A participant's
withdrawal from any Offering will not have any effect upon his eligibility to
participate in any succeeding Offering or in any similar plan which may
hereafter be adopted by the Company.

8.03 Termination of Employment. Upon termination of the
participant's employment for any reason, including retirement (but excluding
death while in the employ of the Company or continuation of a leave of absence
for a period beyond 90 days), the payroll deductions credited to his account
will be returned to him, or, in the case of his death subsequent to the
termination of his employment, to the person or persons entitled thereto under
Section 12.01.

8.04 Termination of Employment Due to Death. Upon termination of
the participant's employment because of his death, his beneficiary (as defined
in Section 12.01) shall have the right to elect, by written notice given to the
Treasurer of the Company prior to the earlier of the Offering Termination Date
or the expiration of a period of sixty (60) days commencing with the date of
the death of the participant, either:

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<PAGE> 6
(a) to withdraw all of the payroll deductions credited to
the participant's account under the Plan, or

(b) to exercise the participant's option for the purchase
of stock on the Offering Termination Date next following the date of
the participant's death for the purchase of the number of full shares
of stock which the accumulated payroll deductions in the participant's
account at the date of the participant's will purchase at the
applicable option price, and any excess in such account will be
returned to said beneficiary, without interest.

In the event that no such written notice of election shall be duly
received by the office of the Treasurer of the Company, the beneficiary shall
automatically be deemed to have elected, pursuant to paragraph (b), to exercise
the participant's option.

8.05 Leave of Absence. A participant on leave of absence shall,
subject to the election made by such participant, continue to participate in
the Plan so long as such participant is on continuous leave of absence. A
participant who has been on leave of absence for more than 90 days and who
therefore is not an employee for the purpose of the Plan shall not be entitled
to participate in any offering commencing after the 90th day of such leave of
absence. Notwithstanding any other provisions of the Plan, unless a
participant on leave of absence returns to regular full-time or part-time
employment with the Company at the earlier of: (a) the termination of such
leave of absence or (b) three months from the 90th day of such leave of
absence, such participant's participation in the Plan shall terminate on
whichever of such dates first occurs.

ARTICLE IX. INTEREST

9.01 Payment of Interest. No interest will be paid or allowed on
any money paid into the Plan or credited to the account of any participant
employee.

ARTICLE X. STOCK

10.01 Maximum Shares. The maximum number of shares which shall be
issued under the Plan, subject to adjustment upon changes in capitalization of
the Company as provided in Section 12.04 shall be 25,000 shares in each
Semi-Annual Offering plus in each Offering all unissued shares from prior
Offerings, whether offered or not, not to exceed 200,000 shares for all
Offerings. If the total number of shares for which options are exercised on
any Offering Termination Date in accordance with Article VI exceeds the maximum
number of shares for the applicable offering, the Company shall make a pro rata
allocation of the shares available for delivery and distribution in a nearly
uniform manner as shall be practicable and as it shall determine to be
equitable, and the balance of payroll deductions credited to the account of
each participant under the Plan shall be returned to him as promptly as
possible.

10.02 Participant's Interest in Option Stock. The participant will
have no interest in stock covered by his option until such option has been
exercised.

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<PAGE> 7
10.03 Registration of Stock. Stock to be delivered to a participant
under the Plan will be registered only in the name of the participant.

10.04 Restrictions on Exercise. The Board of Directors may, in its
discretion, require as conditions to the exercise of any option that the shares
of Common Stock reserved for issuance upon the exercise of the option shall
have been duly listed, upon official notice of issuance, upon a stock exchange,
and that either:

(a) a Registration Statement under the Securities Act of
1933, as amended, with respect to said shares shall be effective, or

(b) the participant shall have represented at the time of
purchase, in form and substance satisfactory to the Company, that it
is his intention to purchase the shares for investment and not for
resale or distribution.

ARTICLE XI. ADMINISTRATION

11.01 Appointment of Committee. The Board of Directors shall
appoint a committee (the "Committee") to administer the Plan, which shall
consist of no fewer that three members of the Board of Directors.

11.02 Authority of Committee. Subject to the express provisions of
the Plan, the Committee shall have plenary authority in its discretion to
interpret and construe any and all provisions of the Plan, to adopt rules and
regulations for administering the Plan, and to make all other determinations
deemed necessary or advisable for administering the Plan. The Committee's
determination on the foregoing matters shall be conclusive.

11.03 Rules Governing the Administration of the Committee. The
Board of Directors may from time to time appoint members of the Committee in
substitution for or in addition to members previously appointed and may fill
vacancies, however caused, in the Committee. The Committee may select one of
its members as its Chairman and shall hold its meetings at such times and
places as it shall deem advisable and may hold telephonic meetings. A majority
of its members shall constitute a quorum. All determinations of the Committee
shall be made by a majority of its members. The Committee may correct any
defect or omission or reconcile any inconsistency in the Plan, in the manner
and to the extent it shall deem desirable. Any decision or determination
reduced to writing and signed by a majority of the members of the Committee
shall be as fully effective as if it had been made by a majority vote at a
meeting duly called and held. The Committee may appoint a secretary and shall
make such rules and regulations for the conduct of its business as it shall
deem advisable.

ARTICLE XII. MISCELLANEOUS

12.01 Designation of Beneficiary. A participant may file a written
designation of a beneficiary who is to receive any stock and/or cash. Such
designation of beneficiary may be changed by the participant at any time by
written notice to the Treasurer of the Company. Upon the death of a
participant and upon receipt by the Company of proof of identity and existence
at

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<PAGE> 8
the participant's death of a beneficiary validly designated by him under the
Plan, the Company shall deliver such stock and/or cash to such beneficiary. In
the event of the death of a participant and in the absence of a beneficiary
validly designated under the Plan who is living at the time of such
participant's death, the company shall deliver such stock and/or cash to the
executor or administrator of the estate of the participant, or if no such
executor or administrator has been appointed (to the knowledge of the Company),
the Company, in its discretion, may deliver such stock and/or cash to the
spouse or to any one or more dependents of the participant as the Company may
designate. No beneficiary shall, prior to the death of the participant by whom
he has been designated, acquire any interest in the stock or cash credited to
the participant under the Plan.

12.02 Transferability. Neither payroll deductions credited to a
participant's account nor any rights with regard to the exercise of an option
or to receive stock under the Plan may be assigned, transferred, pledged, or
otherwise disposed of in any way by the participant other than by will or the
laws of descent and distribution. Any such attempted assignment, transfer,
pledge or other disposition shall be without effect, except that the Company
may treat such act as an election to withdraw funds in accordance with Section
7.02.

12.03 Use of Funds. All payroll deductions received or held by the
Company under this Plan may be used by the Company for any corporate purpose
and the Company shall not be obligated to segregate such payroll deductions.

12.04 Stock Subject to Plan. The stock purchasable under the Plan
shall be shares of authorized but unissued or reacquired Common Stock,
including shares of Common Stock purchased on the open market.

12.05 Adjustments Upon Changes in Capitalization.

(a) If, while any options are outstanding, the
outstanding shares of Common Stock of the Company have increased,
decreased, changed into, or been exchanged for a different number or
kind of shares or securities of the Company through reorganization,
merger, recapitalization, reclassification, stock split, reverse stock
split or similar transaction, appropriate and proportionate
adjustments may be made by the Committee in the number and/or kind of
shares which are subject to purchase under outstanding options and on
the option exercise price or prices applicable to such outstanding
options. In addition, in any such event, the number and/or kind of
shares which may be offered in the Offerings described in Article IV
hereof shall also be proportionately adjusted. No adjustments shall
be made for stock dividends. For the purposes of this paragraph, any
distribution of shares to shareholders in an amount aggregating 20% or
more of the outstanding shares shall be deemed a stock split and any
distributions of shares aggregating less than 20% of the outstanding
shares shall be deemed a stock dividend.

(b) Upon the dissolution or liquidation of the Company,
or upon a reorganization, merger or consolidation of the Company with
one or more corporations as a result of which the Company is not the
surviving corporation, or upon a sale of substantially all of the
property or stock of the Company to another corporation, the

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<PAGE> 9
holder of each option then outstanding under the Plan will thereafter
be entitled to receive at the next Offering Termination Date upon the
exercise of such option for each share as to which such option shall
be exercised, as nearly as reasonably may be determined, the cash,
securities and/or property which a holder of one share of the Common
Stock was entitled to receive upon and at the time of such
transaction. The Board of Directors shall take such steps in
connection with such transactions as the Board shall deem necessary to
assure that the provision of this Section 12.05 shall thereafter be
applicable, as nearly as reasonably may be determined, in relation to
the said cash, securities and/or property as to which such holder of
such option might thereafter be entitled to receive.

12.06 Amendment and Termination. The Board of Directors shall have
complete power and authority to terminate and amend the Plan; provided,
however, that the Board of Directors shall not, without the approval of the
stockholders of the Corporation (i) increase the maximum number of shares which
may be issued under any Offering (except pursuant to Section 12.05); (ii) amend
the requirements as to the class of employees eligible to purchase stock under
the Plan. No termination, modification, or amendment of the Plan may, without
the consent of an employee then having an option under the Plan to purchase
stock, adversely affect the rights of such employee under such option.

12.07 Effective Date. The Plan shall become effective as of January
1, 1999, subject to approval by the holders of the majority of the Common Stock
present and represented at a special or annual meeting of the shareholders held
on or before December 31, 1998. If the Plan is not so approved, the Plan shall
not become effective.

12.08 Plan Termination. Unless sooner terminated by the Board of
Directors, the Plan shall terminate upon the earliest of: (a) the last business
day in December 2002, (b) the date on which all shares available for issuance
under the Plan shall have been sold pursuant to purchase rights exercised under
the Plan, or (c) the date on which all purchase rights are exercised in
connection with a corporate transaction, pursuant to Section 12.05(b). No
further purchase rights shall be granted for or exercised, and no further
payroll deductions shall be collected, under the Plan following its
termination; however, any remaining administrative matters provided for herein
shall be carried out.

12.09 No Employment Rights. The Plan does not, directly or
indirectly, create any right for the benefit of any employee or class of
employees to purchase any shares under the Plan, or create in any employee or
class of employees any right with respect to continuation of employment by the
Company, and it shall not be deemed to interfere in any way with the Company's
right to terminate, or otherwise modify, an employee's employment at any time.

12.10 Effect of Plan. The provisions of the Plan shall, in
accordance with its terms, be binding upon, and inure to the benefit of, all
successors of each employee participating in the Plan, including, without
limitation, such employee's estate and the executors, administrators or
trustees thereof, heirs and legatees, and any receiver, trustee in bankruptcy
or representative of creditors of such employee.

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<PAGE> 10
12.11 Governing Law. The law of the State of Delaware will govern
all matters relating to his Plan except to the extent it is superseded by the
laws of the United States.

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<PAGE> 1
EXHIBIT 10.30

MILLER
EMPLOYMENT AGREEMENT

This Employment Agreement (this "Agreement"), is made and entered into
as of this ___ day of _______, 1998, to be effective as of September 1, 1998
(the "Effective Date"), by and between Clark/Bardes, Inc., a Delaware
corporation ("the Company"), and Robert E. Miller, a resident of Minnesota (the
"Employee").

W I T N E S S E T H:

WHEREAS, the Company is a corporation engaged in business in the State
of Texas and throughout the United States; and

WHEREAS, the Company desires to employ the Employee in the capacity of
Executive Vice President of the Company and President and Chief Executive
Officer of the Bank Compensation Consulting Division of the Company located in
Minneapolis, Minnesota, upon the terms and conditions hereinafter set forth; and

WHEREAS, the Employee is willing to enter into this Agreement with
respect to his employment and services upon the terms and conditions hereinafter
set forth.

NOW, THEREFORE, in consideration of the mutual covenants and
obligations contained herein, the Company hereby employs the Employee and the
Employee hereby accepts such employment upon the terms and conditions
hereinafter set forth:

1. Term of Employment. The term of employment under this Agreement
shall be for a period of three (3) years, commencing on the Effective Date and
terminating on June 30, 2001. Unless the Employee's employment is terminated or
notice of termination is given by one of the parties hereto prior to the
expiration of this Agreement, the Employee's employment shall automatically
continue for a period of ninety (90) days after the expiration of the term of
this Agreement and during such time the parties will attempt to negotiate the
terms and conditions for the Employee's continued employment and determine the
desirability of executing a new employment agreement.

2. Duties of the Employee. The Employee agrees that during the term of
this Agreement, he will devote his full professional and business-related time,
skills and best efforts to the business of the Company in the capacity of
Executive Vice President of the Company and President and Chief Executive
Officer of the Bank Compensation Consulting Division of the Company, or such
other capacity as the Company and the Employee may agree upon. If there are
major significant changes in the duties or responsibilities of the Employee
inconsistent with Employee's status and responsibilities that are not mutually
agreed upon, the Employee may terminate his employment within sixty (60) days of
any such change. In addition, the Employee shall devote all necessary time and
his best efforts in the performance of any other duties as may be assigned to
him from time to time by the Board of Directors of the Company including, but
not limited to, serving in similar capacities with parents, subsidiaries and
affiliates of the Company and serving on the Board of Directors of the Company
or any parent, subsidiary or affiliate of the Company if elected. The Company
may elect to cause any parent, subsidiary or

<PAGE> 2

affiliate to provide any of the compensation and benefits required to be
provided to Employee hereunder. The Employee shall devote his full professional
and business skills to the Company as his primary responsibility. The Employee
may engage in personal, passive investment activities provided such activities
do not interfere with the performance of his duties hereunder and violate the
noncompetition and nondisclosure provisions set forth herein.

3. Compensation.

(a) Base Salary. The Company shall pay the Employee an annual base
salary of Two Hundred Fifty Thousand Dollars ($250,000) per annum (or
fraction for portions of a year). Such base salary will be adjusted from
time to time in accordance with then current standard salary
administration guidelines of the Company. The Employee's salary shall be
subject to all appropriate federal and state withholding taxes and shall
be payable in accordance with the normal payroll procedures of the
Company.

(c) Stock Options. Employee shall be granted stock options for
shares of common stock of Employer (or the parent of the Company) pursuant
to the terms of a Stock Option Agreement granted under the Clark/Bardes,
Inc. 1998 Stock Option Plan, as amended, a copy of which has been provided
to Employee. The number of shares of common stock, exercise price and date
of grant for the stock options is set forth on Schedule 3(c) attached
hereto.

4. Fringe Benefits. The terms of this Agreement shall not foreclose the
Employee from participating with other employees of the Company in such fringe
benefits or incentive compensation plans as may be authorized and adopted from
time to time by the Company; provided, however, that the Employee must meet any
and all eligibility provisions required under said fringe benefits or incentive
compensation plans. The Employee may be granted such other fringe benefits or
perquisites as the Employee and the Company may from time to time agree upon.

5. Vacations. The Employee shall be entitled to the number of paid
vacation days in each calendar year as shall be determined by the Board of
Directors of the Company from time to time. In no event, however, shall the
Employee be entitled to less than four (4) weeks paid vacation during each
calendar year.

6. Reimbursement of Expenses. The Company recognizes that the Employee
will incur legitimate business expenses in the course of rendering services to
the Company hereunder. Accordingly, the Company shall reimburse the Employee,
upon presentation of receipts or other adequate documentation, for all necessary
and reasonable business expenses incurred by the Employee in the course of
rendering services to the Company under this Agreement.

2
<PAGE> 3

7. Working Facilities. The Employee shall be furnished an office,
administrative assistance and such other facilities and services suitable to his
position and adequate for the performance of his duties, which shall be
consistent with the policies of the Company.

8. Termination. The employment relationship between the Employee and
the Company created hereunder shall terminate before the expiration of the
stated term of this Agreement upon the occurrence of any one of the following
events:

(a) Death or Permanent Disability. The death or permanent disability
of the Employee. For the purpose of this Agreement, the "permanent
disability" of the Employee shall mean the Employee's inability, because
of his injury, illness, or other incapacity (physical or mental), to
perform the essential functions of the position contemplated herein, with
or without reasonable accommodation to the Employee with respect to such
injury, illness or other incapacity, for a continuous period of 150 days
or for 180 days out of a continuous period of 360 days. Such permanent
disability shall be deemed to have occurred on the 150th consecutive day
or on the 180th day within the specified period, whichever is applicable.

(b) Termination for Cause. The following events, which for purposes
of this Agreement shall constitute "cause" for termination:

(1) The willful breach by the Employee of any provision of
Sections 2, 11, 12, or 13 hereof (including but not limited to a
refusal to follow lawful directives of the Board of Directors of the
Company) after notice to the Employee of the particular details
thereof and a period of ten (10) days thereafter within which to
cure such breach and the failure of the Employee to cure such breach
within such ten (10) day period;

(2) Any act of fraud, misappropriation or embezzlement by the
Employee with respect to any aspect of the Company's business;

(3) The use of illegal drugs by the Employee during the term
of this Agreement that, in the determination of the Board of
Directors of the Company, substantially interferes with the
Employee's performance of his duties hereunder;

(4) Substantial failure of performance by the Employee that is
repeated or continued after thirty (30) days written notice to the
Employee of such failure and that is reasonably determined by the
Board of Directors of the Company to be materially injurious to the
business or interests of the Company and which failure is not cured
by the Employee within such thirty (30) day period; or

(5) Conviction of the Employee by a court of competent
jurisdiction of a felony or of a crime involving moral turpitude.

Any notice of discharge shall describe with reasonable specificity the
cause or causes for the termination of the Employee's employment, as well as the
effective date of the termination

3
<PAGE> 4

(which effective date may be the date of such notice). If the Company terminates
the Employee's employment for any of the reasons set forth above, the Company
shall have no further obligations hereunder from and after the effective date of
termination (other than as set forth below) and shall have all other rights and
remedies available under this Agreement or any other agreement and at law or in
equity.

(c) Termination by the Employee with Notice. The Employee may terminate
this Agreement without liability to the Company arising from the
resignation of the Employee upon ninety (90) days prior written notice to
the Company. The Company retains the right after proper notice of the
Employee's voluntary termination to require the Employee to cease his
employment immediately; provided, however, in such event, the Company
shall remain obligated to pay the Employee his salary during the ninety
(90) day notice period or the remaining term of this Agreement, whichever
is less. During such ninety (90) day notice period, which in no event
shall exceed the remaining term of this Agreement, the Employee shall
provide such consulting services to the Company as the Company may
reasonably request and shall assist the Company in training his successor
and generally preparing for an orderly transition.

(d) Termination by the Company with Notice. The Company may terminate
this Agreement at any time upon ninety (90) days prior written notice to
the Employee; provided, however, upon such notice the Employee shall not
be required to perform any services for the Company other than during the
ninety (90) day notice period immediately following the receipt of such
notice of termination. During such time period, the Employee shall assist
the Company in training his successor and generally preparing for an
orderly transition. If at the time the Company provides the Employee with
notice, as required by this Section 8(d), the remaining term of this
Agreement is less than ninety (90) days, the term of this Agreement shall
automatically be extended without further action by any party to the
extent necessary to give full effect to the ninety (90) day notice period
required herein.

9. Compensation Upon Termination.

(a) General. Unless otherwise provided for herein, upon the termination
of the Employee's employment under this Agreement before the expiration of
the stated term hereof for any reason, the Employee shall be entitled to
(i) the salary earned by him before the effective date of termination, as
provided in Section 3(a) hereof, prorated on the basis of the number of
full days of service rendered by the Employee during the year to the
effective date of termination, (ii) any accrued, but unpaid, vacation or
sick leave benefits, (iii) any authorized but unreimbursed business
expenses, and (iv) any accrued, but unpaid annual bonus which will be paid
in the year following the Employee's termination in accordance with the
Company's customary practices.

4
<PAGE> 5

Section 8(d) or 8(c), respectively, or (iii) for cause (as defined in
Section 8(b) hereof), then the Employee shall be entitled to receive as
severance compensation an amount equal to the salary (excluding bonuses)
that the Employee would have received for the greater of 90 days or the
remainder of the term of this Agreement, in either case, in accordance
with the regular payroll periods of the Company. The severance payment
provided for in this Section 9(b) shall be made to the Employee on the
effective date of the termination. If the Employee's employment hereunder
terminates because of the death of the Employee, all amounts that may be
due to him under the terms of this Agreement shall be paid to his
administrators, personal representatives, heirs and legatees, as may be
appropriate.

(c) Termination For Cause. If the employment relationship hereunder
is terminated by the Company for cause (as defined in Section 8(b)
hereof), the Employee shall not be entitled to any severance payment, but
shall be entitled to receive the compensation and other benefits provided
for in Section 9(a)(i), (ii) and (iii) above.

(d) Termination by the Company with Notice. If the employment
relationship is terminated by the Company pursuant to Section 8(d) hereof
(and not for cause or the permanent disability of the Employee), then the
Employee shall be entitled to receive his salary during the ninety (90)
day notice period together with a severance payment in an amount equal to
the salary that the Employee would have received for a period of one (1)
year after the effective date of the termination in accordance with the
regular payroll periods of the Company. This severance payment shall be
paid to the Employee on the effective date of his termination and shall be
in addition to the compensation and other benefits to be paid to the
Employee pursuant to Section 9(a) above.

(e) Termination by the Employee with Notice. If the employment
relationship is terminated by the Employee pursuant to the provisions of
Section 8(c) hereof, the Employee shall be entitled to receive his salary
during the ninety (90) day notice period (such notice period not to exceed
the remaining term of this Agreement) but he shall not receive or
otherwise be entitled to any severance compensation nor shall the Employee
be entitled to receive any accrued but unpaid bonus. The Employee shall,
however, be entitled to the compensation and other benefits provided for
in Section 9(a)(i),(ii) and (iii).

(f) Survival. The provisions of Sections 9, 11, 12, and 13 hereof shall
survive the termination of the employment relationship hereunder and this
Agreement to the extent necessary or reasonably appropriate to effect the
intent of the parties hereto as expressed in such provisions.

10. Other Agreements. This Agreement shall be separate and apart from, and
shall be deemed to alter the terms of, any executive compensation agreements,
deferred compensation agreements, bonus agreements, general employment benefit
plans, stock option plans and any other plans or agreements entered into between
the Employee and the Company pursuant to which the Employee has been granted
specific rights, benefits or options.

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<PAGE> 6

11. Noncompetition. The Employee agrees that, during his employment with
the Company and for a period of two (2) years from the date of termination of
his employment with the Company, he will not directly or indirectly engage in or
have any financial interest in any business which is in competition with the
business of the Company, its parent, any subsidiary or affiliate ("Prohibited
Activities"), including but not limited to, the businesses listed on Exhibit A
hereto, anywhere within the United States of America (the "Restricted Area").
For purposes of this Section 11, the Employee recognizes and agrees that the
Company conducts and will conduct business in the entire Restricted Area and
that the Employee will perform his duties for the Company within the entire
Restricted Area. The Employee shall be deemed to be engaged in and carrying on
the Prohibited Activities if he engages in the Prohibited Activities in any
capacity whatsoever, including, but not limited to, by or through a partnership
of which he is a general or limited partner or an employee engaged in such
activities, or by or through a corporation or association of which he owns five
percent (5%) or more of the stock or of which he is an officer, director,
employee, member, representative, joint venturer, independent contractor,
consultant or agent who is engaged in such activities. The Employee agrees that
during the two (2) year period described above, he will notify the Company of
the name and address of each company with whom he has accepted employment during
such period. Such notification shall be made in writing within five (5) days
after the Employee accepts any employment or new employment by certified mail,
return receipt requested.

12. Confidential Information. The Employee further agrees that, during his
employment with the Company and thereafter, he will keep confidential and not
divulge to anyone, disseminate or appropriate for his own benefit or the benefit
of another any confidential, operational, financial and proprietary information
known or obtained by the Employee, whether before or after the date hereof,
relating to the Company including, by way of example and not limitation, any and
all notes, analyses, compilations, studies, plans, records, reports, strategies,
forecasts, client lists, trade secrets, intellectual property agreements,
pricing policies, contracts, sales techniques, marketing brochures, budgets,
memoranda, financial statements, catalogues, books, manuals or other documents
which reflect such information (collectively, the "Confidential Information").
The Employee hereby acknowledges and agrees that this prohibition against
disclosure of Confidential Information is in addition to, and not in lieu of,
any rights or remedies that the Company may have available pursuant to the laws
of any jurisdiction or at common law or pursuant to any other agreement that the
Employee may have with the Company to prevent the disclosure of trade secrets or
intellectual property, and the enforcement by the Company of its rights and
remedies pursuant to this Agreement shall not be construed as a waiver of any
other rights or available remedies that it may possess in law or equity absent
this Agreement.

13. Nonsolicitation of Employees. The Employee covenants that, during his
employment with the Company and for a period of one (1) year from the date of
termination of his employment with the Company, he will not (i) directly or
indirectly induce or attempt to induce any employee of the Company to terminate
his or her employment, or (ii) without prior written consent of the Company,
offer employment either on behalf of himself or on behalf of any other
individual or entity to any employee of the Company or to any terminated
employee of the Company.

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<PAGE> 7

14. Property of the Company. The Employee acknowledges that from time to
time in the course of providing services pursuant to this Agreement he shall
have the opportunity to inspect and use certain property, both tangible and
intangible, of the Company and the Employee hereby agrees that such property
shall remain the exclusive property of the Company, and the Employee shall have
no right or proprietary interest in such property, whether tangible or
intangible, including, without limitation, the Employee's customer and supplier
lists, contract forms, books of account, computer programs and similar property.

15. Equitable Relief. The Employee acknowledges that the services to be
rendered by him are of a special, unique, unusual, extraordinary, and
intellectual character, which gives them a peculiar value, and the loss of which
cannot reasonably or adequately be compensated in damages in an action at law,
and that a breach by him of any of the provisions contained in this Agreement
will cause the Company irreparable injury and damage. The Employee further
acknowledges that he possesses unique skills, knowledge and ability and that
competition by him in violation of this Agreement or any other breach of the
provisions of this Agreement would be extremely detrimental to the Company. By
reason thereof, the Employee agrees that the Company shall be entitled, in
addition to any other remedies it may have under this Agreement or otherwise, to
injunctive and other equitable relief to prevent or curtail any breach of this
Agreement by him.

16. Successors Bound. This Agreement shall be binding upon the Company and
the Employee, their respective heirs, executors, administrators or successors in
interest, including without limitation, any corporation, partnership or other
entity acquiring control of the Company.

17. Severability and Reformation. The parties hereto intend all provisions
of this Agreement to be enforced to the fullest extent permitted by law. If,
however, any provision of this Agreement is held to be illegal, invalid, or
unenforceable under present or future law, such provision shall be fully
severable, and this Agreement shall be construed and enforced as if such
illegal, invalid, or unenforceable provision were never a part hereof, and the
remaining provisions shall remain in full force and effect and shall not be
affected by the illegal, invalid, or unenforceable provision or by its
severance.

18. Integrated Agreement. This Agreement constitutes the entire Agreement
between the parties hereto with regard to the subject matter hereof, and there
are no agreements, understandings, specific restrictions, warranties or
representations relating to said subject matter between the parties other than
those set forth herein or herein provided for.

19. Attorneys' Fees. If any action at law or in equity, including any
action for declaratory or injunctive relief, is brought to enforce or interpret
the provisions of this Agreement, the prevailing party shall be entitled to
recover reasonable attorneys' fees from the nonprevailing party, which fees may
be set by the court in the trial of such action, or may be enforced in a
separate action brought for that purpose, and which fees shall be in addition to
any other relief which may be awarded.

20. Notices. All notices and other communications required or permitted to
be given hereunder shall be in writing and shall be deemed to have been duly
given if delivered

7
<PAGE> 8

personally, mailed by certified mail (return receipt requested) or sent by
overnight delivery service, cable, telegram, facsimile transmission or telex to
the parties at the following addresses or at such other addresses as shall be
specified by the parties by like notice:

(a) If to the Company: Clark/Bardes, Inc.
2121 San Jacinto, Suite 2200
Dallas, Texas 75201
Attention: Mr. Keith Staudt
Facsimile No.: (214) 720-6050

(b) If to Employee: Robert E. Miller

------------------------

Notice so given shall, in the case of notice so given by mail, be deemed
to be given and received on the fourth calendar day after posting, in the case
of notice so given by overnight delivery service, on the date of actual delivery
and, in the case of notice so given by cable, telegram, facsimile transmission,
telex or personal delivery, on the date of actual transmission or, as the case
may be, personal delivery.

21. Further Actions. Whether or not specifically required under the terms
of this Agreement, each party hereto shall execute and deliver such documents
and take such further actions as shall be necessary in order for such party to
perform all of his or its obligations specified herein or reasonably implied
from the terms hereof.

22. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAW, AND NOT THE LAW OF CONFLICTS, OF THE STATE OF
TEXAS.

23. Assignment. This Agreement is personal to the Employee and may not be
assigned in any way by the Employee without the prior written consent of the
Company. This Agreement shall not be assignable or delegable by the Company,
other than to an affiliate of the Company, except if there is a change of
control of the Company, the Company may assign its rights and obligations
hereunder to the person, corporation, partnership or other entity that has
gained such control.

24. Counterparts. This Agreement may be executed in counterparts, each of
which will take effect as an original and all of which shall evidence one and
the same Agreement.

8
<PAGE> 9

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the Effective Date.

COMPANY:

Clark/Bardes, Inc.

By:
-----------------------------
Name:
---------------------------
Title:
--------------------------

EMPLOYEE:

--------------------------------
Robert E. Miller

9
<PAGE> 10

EXHIBIT A

PROHIBITED ACTIVITIES

Competitors of the Company include, but are not limited to, the following
companies and their affiliates:

Compensation Resource Group
Mullur Consulting
TBG Financial
The Benefits Group
Management Compensation Group
The Todd Organization
AYCO
The Newport Group
Harris, Long, Scott, Crouch & Miller
M Financial
The Partners Group
The Hemisphere Group
Aon
J&H Marsh McClellen
BenMark
Seth Koppis

<PAGE> 11

SCHEDULE 3(b)

ANNUAL BONUS

Robert E. Miller
Maximum Bonus: 100% of Base Salary

Minimum Bonus for first 12 months of employment: $75,000 paid in monthly
installments with regular payroll practices of Company.

Calculation of Bonus:

a. Up to 50% of base salary based on pre-determined goals determined by
Board.

b. Up to 10% of pre-tax operating income for the Bank Compensation
Consulting Division of the Company.

<PAGE> 12

SCHEDULE 3(c)

STOCK OPTIONS

Name of Optionee: Robert E. Miller

Number of Shares: 25,000 shares

Date of Grant: Later of IPO date or Effective Date of employment

Option Exercise Price: IPO price if Effective Date precedes IPO; Market
Price (as defined in Stock Option Plan) if
Effective Date follows IPO

Vesting: 1/3 per year commencing on Date of Grant.

Additional Provisions: Accelerated vesting and other terms as provided in
Stock Option Agreement.

Term: February 28, 2007 unless earlier termination
pursuant to Stock Option Agreement.

<PAGE> 1
EXHIBIT 10.31
PYRA

EMPLOYMENT AGREEMENT

This Employment Agreement (this "Agreement"), is made and entered into
as of this ___ day of _______, 1998, to be effective as of July 1, 1998 (the
"Effective Date"), by and between Clark/Bardes, Inc., a Texas corporation (the
"Company"), and Thomas M. Pyra, a resident of Texas (the "Employee").

W I T N E S S E T H:

WHEREAS, the Company is a corporation engaged in business in the State
of Texas and throughout the United States; and

WHEREAS, the Company desires to employ the Employee in the capacity of
Chief Financial Officer, upon the terms and conditions hereinafter set forth;
and

WHEREAS, the Employee is willing to enter into this Agreement with
respect to his employment and services upon the terms and conditions
hereinafter set forth.

1. Term of Employment. The term of employment under this
Agreement shall be for a period of three (3) years, commencing on the Effective
Date and terminating on June 30, 2001. Unless the Employee's employment is
terminated or notice of termination is given by one of the parties hereto prior
to the expiration of this Agreement, the Employee's employment shall
automatically continue for a period of ninety (90) days after the expiration of
the term of this Agreement and during such time the parties will attempt to
negotiate the terms and conditions for the Employee's continued employment and
determine the desirability of executing a new employment agreement.

2. Duties of the Employee. The Employee agrees that during the
term of this Agreement, he will devote his full professional and
business-related time, skills and best efforts to the businesses of the Company
in the capacity of Chief Financial Officer, or such other capacity as the
Company and the Employee may agree upon. If there are major significant
changes in the duties or responsibilities of the Employee inconsistent with
Employee's status and responsibilities that are not mutually agreed upon, the
Employee may terminate his employment within sixty (60) days of any such
change. In addition, the Employee shall devote all necessary time and his best
efforts in the performance of any other duties as may be assigned to him from
time to time by the Board of Directors of the Company including, but not
limited to, serving in similar capacities with parents, subsidiaries and
affiliates of the Company and serving on the Board of Directors of the Company
or any parent, subsidiary or affiliate of the Company if elected. The Employee
shall devote his full professional and business skills to the Company as
<PAGE> 2
his primary responsibility provided, however, that the Company acknowledges and
consents to Employee's reasonable winding down of activities involving Geodesic
Systems, Inc. through September 1998. The Company may elect to cause any
parent, subsidiary or affiliate to provide any of the compensation and benefits
required to be provided to Employee hereunder. Employee may reside in Austin,
Texas and the Company shall provide reasonable executive office accommodations
in Austin, Texas as may be approved by the Company; provided, however, that
Employee shall be available not less than five days per calendar month to
perform services in the Dallas, Texas office of the Company. The Employee may
engage in personal, passive investment activities provided such activities do
not interfere with the performance of his duties hereunder and violate the
noncompetition and nondisclosure provisions set forth herein.

3. Compensation.

(a) Base Salary. The Company shall pay the Employee an
annual base salary of Two Hundred Thousand Dollars ($200,000) per
annum (or fraction for portions of a year). Such base salary will be
adjusted from time to time in accordance with then current standard
salary administration guidelines of the Company. The Employee's
salary shall be subject to all appropriate federal and state
withholding taxes and shall be payable in accordance with the normal
payroll procedures of the Company.

(b) Annual Bonus. In addition to the salary set forth in
Section 3(a) hereof, the Employee shall receive a bonus each year
during the term of this Agreement in an amount as determined in
accordance with the 1998 Bonus Plan (prorated based on the actual
number of days of employment with the Company during 1998) attached as
Schedule 3(b) with respect to 1998 and thereafter Employee shall
participate in the 1999 Annual Bonus Plan of the Company.

(c) Stock Options. Employee shall be granted stock
options for shares of common stock of Employer (or of the parent
company of Employer) pursuant to the terms of a Stock Option Agreement
granted under the Clark Bardes, Inc. 1998 Stock Option Plan, as
amended, a copy of which has been provided to Employee (the
"Options"). The number of shares of common stock, exercise price and
date of grant for the Options is set forth on Schedule 3(c) attached
hereto.

4. Fringe Benefits. The terms of this Agreement shall not
foreclose the Employee from participating with other employees of the Company
in such fringe benefits or incentive compensation plans as may be authorized
and adopted from time to time by the Company; provided, however, that the
Employee must meet any and all eligibility provisions required under said
fringe benefits or incentive compensation plans. The Employee may be granted
such other fringe benefits or perquisites as the Employee and the Company may
from time to time agree upon.

5. Vacations. The Employee shall be entitled to the number of
paid vacation days in each calendar year as shall be determined by the Board of
Directors of the Company from time to

2
<PAGE> 3
time. In no event, however, shall the Employee be entitled to less than four
(4) weeks paid vacation during each calendar year.

6. Reimbursement of Expenses. The Company recognizes that the
Employee will incur legitimate business expenses in the course of rendering
services to the Company hereunder. Accordingly, the Company shall reimburse
the Employee, upon presentation of receipts or other adequate documentation,
for all necessary and reasonable business expenses incurred by the Employee in
the course of rendering services to the Company under this Agreement.

7. Working Facilities. The Employee shall be furnished an
office, administrative assistance and such other facilities and services
suitable to his position and adequate for the performance of his duties, which
shall be consistent with the policies of the Company.

8. Termination. The employment relationship between the Employee
and the Company created hereunder shall terminate before the expiration of the
stated term of this Agreement upon the occurrence of any one of the following
events:

(a) Death or Permanent Disability. The death or
permanent disability of the Employee. For the purpose of this
Agreement, the "permanent disability" of the Employee shall mean the
Employee's inability, because of his injury, illness, or other
incapacity (physical or mental), to perform the essential functions of
the position contemplated herein, with or without reasonable
accommodation to the Employee with respect to such injury, illness or
other incapacity, for a continuous period of 150 days or for 180 days
out of a continuous period of 360 days. Such permanent disability
shall be deemed to have occurred on the 150th consecutive day or on
the 180th day within the specified period, whichever is applicable.

(b) Termination for Cause. The following events, which
for purposes of this Agreement shall constitute "cause" for
termination:

(1) The willful breach by the Employee of any
provision of Sections 2, 11, 12, or 13 hereof (including but
not limited to a refusal to follow lawful directives of the
Board of Directors of the Company) after notice to the
Employee of the particular details thereof and a period of ten
(10) days thereafter within which to cure such breach and the
failure of the Employee to cure such breach within such ten
(10) day period;

(2) Any act of fraud, misappropriation or
embezzlement by the Employee with respect to any aspect of the
Company's business;

(3) The use of illegal drugs by the Employee
during the term of this Agreement that, in the determination
of the Board of Directors of the Company, substantially
interferes with the Employee's performance of his duties
hereunder;

3
<PAGE> 4
(4) Substantial failure of performance by the
Employee that is repeated or continued after thirty (30) days
written notice to the Employee of such failure and that is
reasonably determined by the Board of Directors of the Company
to be materially injurious to the business or interests of the
Company and which failure is not cured by the Employee within
such thirty (30) day period; or

(5) Conviction of the Employee by a court of
competent jurisdiction of a felony or of a crime involving
moral turpitude.

Any notice of discharge shall describe with reasonable specificity the
cause or causes for the termination of the Employee's employment, as well as
the effective date of the termination (which effective date may be the date of
such notice). If the Company terminates the Employee's employment for any of
the reasons set forth above, the Company shall have no further obligations
hereunder from and after the effective date of termination (other than as set
forth below) and shall have all other rights and remedies available under this
Agreement or any other agreement and at law or in equity.

(c) Termination by the Employee with Notice. The
Employee may terminate this Agreement without liability to the Company
arising from the resignation of the Employee upon ninety (90) days
prior written notice to the Company. The Company retains the right
after proper notice of the Employee's voluntary termination to require
the Employee to cease his employment immediately; provided, however,
in such event, the Company shall remain obligated to pay the Employee
his salary during the ninety (90) day notice period or the remaining
term of this Agreement, whichever is less. During such ninety (90)
day notice period, which in no event shall exceed the remaining term
of this Agreement, the Employee shall provide such consulting services
to the Company as the Company may reasonably request and shall assist
the Company in training his successor and generally preparing for an
orderly transition.

(d) Termination by the Company with Notice. The Company
may terminate this Agreement at any time upon ninety (90) days prior
written notice to the Employee; provided, however, upon such notice
the Employee shall not be required to perform any services for the
Company other than during the ninety (90) day period immediately
following the receipt of such notice of termination. During such time
period, the Employee shall assist the Company in training his
successor and generally preparing for an orderly transition. If at
the time the Company provides the Employee with notice, as required by
this Section 8(d), the remaining term of this Agreement is less than
ninety (90) days, the term of this Agreement shall automatically be
extended without further action by any party to the extent necessary
to give full effect to the ninety (90) day notice period required
herein.

4
<PAGE> 5
9. Compensation Upon Termination.

(a) General. Unless otherwise provided for herein, upon
the termination of the Employee's employment under this Agreement
before the expiration of the stated term hereof for any reason, the
Employee shall be entitled to (i) the salary earned by him before the
effective date of termination, as provided in Section 3(a) hereof,
prorated on the basis of the number of full days of service rendered
by the Employee during the year to the effective date of termination,
(ii) any accrued, but unpaid, vacation or sick leave benefits, (iii)
any authorized but unreimbursed business expenses, and (iv) any
accrued, but unpaid annual bonus which will be paid in the year
following the Employee's termination in accordance with the Company's
customary practices.

(b) Termination For Other Than Cause. If such
termination is the result of the discharge of the Employee by the
Company for any reason other than (i) his death or permanent
disability, (ii) by the Company or the Employee with notice pursuant
to Section 8(d) or 8(c), respectively, or (iii) for cause (as defined
in Section 8(b) hereof), then the Employee shall be entitled to
receive as severance compensation an amount equal to the salary
(excluding bonuses) that the Employee would have received for the
greater of 90 days or the remainder of the term of this Agreement, in
either case, in accordance with the regular payroll periods of the
Company. The severance payment provided for in this Section 9(b)
shall be made to the Employee on the effective date of the
termination. If the Employee's employment hereunder terminates
because of the death of the Employee, all amounts that may be due to
him under the terms of this Agreement shall be paid to his
administrators, personal representatives, heirs and legatees, as may
be appropriate.

(c) Termination For Cause. If the employment
relationship hereunder is terminated by the Company for cause (as
defined in Section 8(b) hereof), the Employee shall not be entitled to
any severance payment, but shall be entitled to receive the
compensation and other benefits provided for in Section 9(a)(i), (ii)
and (iii) above.

(d) Termination by the Company with Notice. If the
employment relationship is terminated by the Company pursuant to
Section 8(d) hereof (and not for cause or the permanent disability of
the Employee), then the Employee shall be entitled to receive his
salary during the ninety (90) day notice period together with a
severance payment in an amount equal to the salary that the Employee
would have received for a period of one (1) year after the effective
date of the termination in accordance with the regular payroll periods
of the Company. This severance payment shall be paid to the Employee
on the effective date of his termination and shall be in addition to
the compensation and other benefits to be paid to the Employee
pursuant to Section 9(a) above.

5
<PAGE> 6
(such notice period not to exceed the remaining term of this
Agreement) but he shall not receive or otherwise be entitled to any
severance compensation nor shall the Employee be entitled to receive
any accrued but unpaid bonus. The Employee shall, however, be
entitled to the compensation and other benefits provided for in
Section 9(a)(i),(ii) and (iii).

(f) Survival. The provisions of Sections 9, 11, 12, and
13 hereof shall survive the termination of the employment relationship
hereunder and this Agreement to the extent necessary or reasonably
appropriate to effect the intent of the parties hereto as expressed in
such provisions.

10. Other Agreements. This Agreement shall be separate and apart
from, and shall be deemed to alter the terms of, any executive compensation
agreements, deferred compensation agreements, bonus agreements, general
employment benefit plans, stock option plans and any other plans or agreements
entered into between the Employee and the Company pursuant to which the
Employee has been granted specific rights, benefits or options.

11. Noncompetition. The Employee agrees that, during his
employment with the Company and for a period of two (2) years from the date of
termination of his employment with the Company, he will not directly or
indirectly engage in or have any financial interest in any business which is in
competition with the business of the Company, its parent, any subsidiary or
affiliate ("Prohibited Activities"), including, but not limited to, the
businesses listed on Exhibit A hereto, anywhere within the United States of
America (the "Restricted Area"). For purposes of this Section 11, the Employee
recognizes and agrees that the Company conducts and will conduct business in
the entire Restricted Area and that the Employee will perform his duties for
the Company within the entire Restricted Area. The Employee shall be deemed to
be engaged in and carrying on the Prohibited Activities if he engages in the
Prohibited Activities in any capacity whatsoever, including, but not limited
to, by or through a partnership of which he is a general or limited partner or
an employee engaged in such activities, or by or through a corporation or
association of which he owns five percent (5%) or more of the stock or of which
he is an officer, director, employee, member, representative, joint venturer,
independent contractor, consultant or agent who is engaged in such activities.
The Employee agrees that during the two (2) year period described above, he
will notify the Company of the name and address of each company with whom he
has accepted employment during such period. Such notification shall be made in
writing within five (5) days after the Employee accepts any employment or new
employment by certified mail, return receipt requested.

6
<PAGE> 7
sales techniques, marketing brochures, budgets, memoranda, financial
statements, catalogues, books, manuals or other documents which reflect such
information (collectively, the "Confidential Information"). The Employee
hereby acknowledges and agrees that this prohibition against disclosure of
Confidential Information is in addition to, and not in lieu of, any rights or
remedies that the Company may have available pursuant to the laws of any
jurisdiction or at common law or pursuant to any other agreements that the
Employee may have with the Company to prevent the disclosure of trade secrets
or intellectual property, and the enforcement by the Company of its rights and
remedies pursuant to this Agreement shall not be construed as a waiver of any
other rights or available remedies that it may possess in law or equity absent
this Agreement.

13. Nonsolicitation of Employees. The Employee covenants that,
during his employment with the Company and for a period of one (1) year from
the date of termination of his employment with the Company, he will not (i)
directly or indirectly induce or attempt to induce any employee of the Company
to terminate his or her employment, or (ii) without prior written consent of
the Company, offer employment either on behalf of himself or on behalf of any
other individual or entity to any employee of the Company or to any terminated
employee of the Company.

14. Property of the Company. The Employee acknowledges that from
time to time in the course of providing services pursuant to this Agreement he
shall have the opportunity to inspect and use certain property, both tangible
and intangible, of the Company and the Employee hereby agrees that such
property shall remain the exclusive property of the Company, and the Employee
shall have no right or proprietary interest in such property, whether tangible
or intangible, including, without limitation, the Employee's customer and
supplier lists, contract forms, books of account, computer programs and similar
property.

15. Equitable Relief. The Employee acknowledges that the services
to be rendered by him are of a special, unique, unusual, extraordinary, and
intellectual character, which gives them a peculiar value, and the loss of
which cannot reasonably or adequately be compensated in damages in an action at
law, and that a breach by him of any of the provisions contained in this
Agreement will cause the Company irreparable injury and damage. The Employee
further acknowledges that he possesses unique skills, knowledge and ability and
that competition by him in violation of this Agreement or any other breach of
the provisions of this Agreement would be extremely detrimental to the Company.
By reason thereof, the Employee agrees that the Company shall be entitled, in
addition to any other remedies it may have under this Agreement or otherwise,
to injunctive and other equitable relief to prevent or curtail any breach of
this Agreement by him.

16. Successors Bound. This Agreement shall be binding upon the
Company and the Employee, their respective heirs, executors, administrators or
successors in interest, including without limitation, any corporation,
partnership or other entity acquiring control of the Company.

7
<PAGE> 8
17. Severability and Reformation. The parties hereto intend all
provisions of this Agreement to be enforced to the fullest extent permitted by
law. If, however, any provision of this Agreement is held to be illegal,
invalid, or unenforceable under present or future law, such provision shall be
fully severable, and this Agreement shall be construed and enforced as if such
illegal, invalid, or unenforceable provision were never a part hereof, and the
remaining provisions shall remain in full force and effect and shall not be
affected by the illegal, invalid, or unenforceable provision or by its
severance.

18. Integrated Agreement. This Agreement constitutes the entire
Agreement between the parties hereto with regard to the subject matter hereof,
and there are no agreements, understandings, specific restrictions, warranties
or representations relating to said subject matter between the parties other
than those set forth herein or herein provided for.

19. Attorneys' Fees. If any action at law or in equity, including
any action for declaratory or injunctive relief, is brought to enforce or
interpret the provisions of this Agreement, the prevailing party shall be
entitled to recover reasonable attorneys' fees from the nonprevailing party,
which fees may be set by the court in the trial of such action, or may be
enforced in a separate action brought for that purpose, and which fees shall be
in addition to any other relief which may be awarded.

20. Notices. All notices and other communications required or
permitted to be given hereunder shall be in writing and shall be deemed to have
been duly given if delivered personally, mailed by certified mail (return
receipt requested) or sent by overnight delivery service, cable, telegram,
facsimile transmission or telex to the parties at the following addresses or at
such other addresses as shall be specified by the parties by like notice:

(a) If to the Company: Clark/Bardes, Inc.
2121 San Jacinto, Suite 2200
Dallas, Texas 75201
Attention: Mr. Keith Staudt
Facsimile No.: (214) 720-6050

(b) If to Employee: Thomas M. Pyra
5904 Sir Ivor Cove
Austin, Texas 78746-2126

Notice so given shall, in the case of notice so given by mail, be
deemed to be given and received on the fourth calendar day after posting, in
the case of notice so given by overnight delivery service, on the date of
actual delivery and, in the case of notice so given by cable, telegram,
facsimile transmission, telex or personal delivery, on the date of actual
transmission or, as the case may be, personal delivery.

21. Further Actions. Whether or not specifically required under
the terms of this Agreement, each party hereto shall execute and deliver such
documents and take such further

8
<PAGE> 9
actions as shall be necessary in order for such party to perform all of his or
its obligations specified herein or reasonably implied from the terms hereof.

22. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAW, AND NOT THE LAW OF CONFLICTS, OF
THE STATE OF TEXAS.

23. Assignment. This Agreement is personal to the Employee and
may not be assigned in any way by the Employee without the prior written
consent of the Company. This Agreement shall not be assignable or delegable by
the Company, other than to an affiliate of the Company, except if there is a
change of control of the Company, the Company may assign its rights and
obligations hereunder to the person, corporation, partnership or other entity
that has gained such control.

24. Counterparts. This Agreement may be executed in counterparts,
each of which will take effect as an original and all of which shall evidence
one and the same Agreement.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the Effective Date.

COMPANY:

Clark/Bardes, Inc.

By:
----------------------------
Name:
--------------------------
Title:
-------------------------

EMPLOYEE:

-------------------------------
Thomas M. Pyra

9
<PAGE> 10
EXHIBIT A

PROHIBITED ACTIVITIES

Competitors of the Company include, but are not limited to, the following
companies and their affiliates:

<PAGE> 11
SCHEDULE 3(b)

ANNUAL BONUS

Thomas M. Pyra
Maximum Bonus 75% of Base Salary

Bonus amount to be based on formula to be determined by Board based on
net income and incremental 5 year net income.

<PAGE> 12
SCHEDULE 3(c)

STOCK OPTIONS

<TABLE>
<S> <C>
Name of Optionee: Thomas M. Pyra

Number of Shares: 50,000 shares

Date of Grant: IPO Date

Option Exercise Price: IPO Price

Vesting: 1/3 per year commencing on Date of Grant.

Additional Provisions: Accelerated vesting and other terms as provided
in Stock Option Agreement.

Term: February 28, 2007, unless earlier termination
pursuant to Stock Option Agreement.
</TABLE>

<PAGE> 1
EXHIBIT 10.32

TODD

EMPLOYMENT AGREEMENT

This Employment Agreement (this "Agreement"), is made and entered into
as of this ___ day of _______, 1998, to be effective as of July 1, 1998 (the
"Effective Date"), by and between Clark/Bardes Holdings, Inc., a Delaware
corporation ("the Company"), and Melvin G. Todd, a resident of Texas (the
"Employee").

W I T N E S S E T H:

WHEREAS, the Company is a corporation engaged in business in the State
of Texas and throughout the United States; and

WHEREAS, the Company desires to employ the Employee in the capacity of
President and Chief Executive Officer, upon the terms and conditions
hereinafter set forth; and

WHEREAS, the Employee is willing to enter into this Agreement with
respect to his employment and services upon the terms and conditions
hereinafter set forth.

1. Term of Employment. The term of employment under this
Agreement shall be for a period of three (3) years, commencing on the Effective
Date and terminating on June 30, 2001. Unless the Employee's employment is
terminated or notice of termination is given by one of the parties hereto prior
to the expiration of this Agreement, the Employee's employment shall
automatically continue for a period of ninety (90) days after the expiration of
the term of this Agreement and during such time the parties will attempt to
negotiate the terms and conditions for the Employee's continued employment and
determine the desirability of executing a new employment agreement.

2. Duties of the Employee. The Employee agrees that during the
term of this Agreement, he will devote his full professional and
business-related time, skills and best efforts to the businesses of the Company
in the capacity of President and Chief Executive Officer, or such other
capacity as the Company and the Employee may agree upon. If there are major
significant changes in the duties or responsibilities of the Employee
inconsistent with Employee's status and responsibilities that are not mutually
agreed upon, the Employee may terminate his employment within sixty (60) days
of any such change. In addition, the Employee shall devote all necessary time
and his best efforts in the performance of any other duties as may be assigned
to him from time to time by the Board of Directors of the Company including,
but not limited to, serving in similar capacities with parents, subsidiaries
and affiliates of the Company and on the Board of Directors of the Company or
any parent, subsidiary or affiliate of the Company if elected. The Company may
elect to cause any subsidiary or affiliate to provide any of the compensation
and benefits required to be provided to Employee hereunder. The Employee shall
devote his full professional and business skills to the Company as his primary
<PAGE> 2
responsibility. The Employee may engage in personal, passive investment
activities provided such activities do not interfere with the performance of
his duties hereunder and violate the noncompetition and nondisclosure
provisions set forth herein.

3. Compensation.

(a) Base Salary. The Company shall pay the Employee an
annual base salary of Two Hundred Fifty Thousand Dollars ($250,000)
per annum (or fraction for portions of a year). Such base salary will
be adjusted from time to time in accordance with then current standard
salary administration guidelines of the Company. The Employee's
salary shall be subject to all appropriate federal and state
withholding taxes and shall be payable in accordance with the normal
payroll procedures of the Company.

(b) Annual Bonus. In addition to the salary set forth in
Section 3(a) hereof, the Employee shall receive a bonus each year
during the term of this Agreement in an amount as determined in
accordance with the 1998 Bonus Plan with respect to 1998 and
thereafter Employee shall participate in the 1999 Annual Bonus Plan of
the Company.

4. Fringe Benefits. The terms of this Agreement shall not
foreclose the Employee from participating with other employees of the Company
in such fringe benefits or incentive compensation plans as may be authorized
and adopted from time to time by the Company; provided, however, that the
Employee must meet any and all eligibility provisions required under said
fringe benefits or incentive compensation plans. The Employee may be granted
such other fringe benefits or perquisites as the Employee and the Company may
from time to time agree upon.

5. Vacations. The Employee shall be entitled to the number of
paid vacation days in each calendar year as shall be determined by the Board of
Directors of the Company from time to time. In no event, however, shall the
Employee be entitled to less than four (4) weeks paid vacation during each
calendar year.

6. Reimbursement of Expenses. The Company recognizes that the
Employee will incur legitimate business expenses in the course of rendering
services to the Company hereunder. Accordingly, the Company shall reimburse
the Employee, upon presentation of receipts or other adequate documentation,
for all necessary and reasonable business expenses incurred by the Employee in
the course of rendering services to the Company under this Agreement.

7. Working Facilities. The Employee shall be furnished an
office, administrative assistance and such other facilities and services
suitable to his position and adequate for the performance of his duties, which
shall be consistent with the policies of the Company.

8. Termination. The employment relationship between the Employee
and the Company created hereunder shall terminate before the expiration of the
stated term of this Agreement upon the occurrence of any one of the following
events:

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<PAGE> 3
(a) Death or Permanent Disability. The death or
permanent disability of the Employee. For the purpose of this
Agreement, the "permanent disability" of the Employee shall mean the
Employee's inability, because of his injury, illness, or other
incapacity (physical or mental), to perform the essential functions of
the position contemplated herein, with or without reasonable
accommodation to the Employee with respect to such injury, illness or
other incapacity, for a continuous period of 150 days or for 180 days
out of a continuous period of 360 days. Such permanent disability
shall be deemed to have occurred on the 150th consecutive day or on
the 180th day within the specified period, whichever is applicable.

(b) Termination for Cause. The following events, which
for purposes of this Agreement shall constitute "cause" for
termination:

(1) The willful breach by the Employee of any
provision of Sections 2, 11, 12, or 13 hereof (including but
not limited to a refusal to follow lawful directives of the
Board of Directors of the Company) after notice to the
Employee of the particular details thereof and a period of ten
(10) days thereafter within which to cure such breach and the
failure of the Employee to cure such breach within such ten
(10) day period;

(2) Any act of fraud, misappropriation or
embezzlement by the Employee with respect to any aspect of the
Company's business;

(3) The use of illegal drugs by the Employee
during the term of this Agreement that, in the determination
of the Board of Directors of the Company, substantially
interferes with the Employee's performance of his duties
hereunder;

(4) Substantial failure of performance by the
Employee that is repeated or continued after thirty (30) days
written notice to the Employee of such failure and that is
reasonably determined by the Board of Directors of the Company
to be materially injurious to the business or interests of the
Company and which failure is not cured by the Employee within
such thirty (30) day period; or

(5) Conviction of the Employee by a court of
competent jurisdiction of a felony or of a crime involving
moral turpitude.

(c) Termination by the Employee with Notice. The
Employee may terminate this Agreement without liability to the Company
arising from the resignation of the

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<PAGE> 4
Employee upon ninety (90) days prior written notice to the Company.
The Company retains the right after proper notice of the Employee's
voluntary termination to require the Employee to cease his employment
immediately; provided, however, in such event, the Company shall
remain obligated to pay the Employee his salary during the ninety (90)
day notice period or the remaining term of this Agreement, whichever
is less. During such ninety (90) day notice period, which in no event
shall exceed the remaining term of this Agreement, the Employee shall
provide such consulting services to the Company as the Company may
reasonably request and shall assist the Company in training his
successor and generally preparing for an orderly transition.

(d) Termination by the Company with Notice. The Company
may terminate this Agreement at any time upon ninety (90) days prior
written notice to the Employee; provided, however, upon such notice
the Employee shall not be required to perform any services for the
Company other than during the ninety (90) day period immediately
following the receipt of such notice of termination. During such time
period, the Employee shall assist the Company in training his
successor and generally preparing for an orderly transition. If at
the time the Company provides the Employee with notice, as required by
this Section 8(d), the remaining term of this Agreement is less than
ninety (90) days, the term of this Agreement shall automatically be
extended without further action by any party to the extent necessary
to give full effect to the ninety (90) day notice period required
herein.

9. Compensation Upon Termination.

(a) General. Unless otherwise provided for herein, upon
the termination of the Employee's employment under this Agreement
before the expiration of the stated term hereof for any reason, the
Employee shall be entitled to (i) the salary earned by him before the
effective date of termination, as provided in Section 3(a) hereof,
prorated on the basis of the number of full days of service rendered
by the Employee during the year to the effective date of termination,
(ii) any accrued, but unpaid, vacation or sick leave benefits, (iii)
any authorized but unreimbursed business expenses, and (iv) any
accrued, but unpaid annual bonus which will be paid in the year
following the Employee's termination in accordance with the Company's
customary practices.

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<PAGE> 5
(c) Termination For Cause. If the employment
relationship hereunder is terminated by the Company for cause (as
defined in Section 8(b) hereof), the Employee shall not be entitled to
any severance payment, but shall be entitled to receive the
compensation and other benefits provided for in Section 9(a)(i), (ii)
and (iii) above.

(d) Termination by the Company with Notice. If the
employment relationship is terminated by the Company pursuant to
Section 8(d) hereof (and not for cause or the permanent disability of
the Employee), then the Employee shall be entitled to receive his
salary during the ninety (90) day notice period together with a
severance payment in an amount equal to the salary that the Employee
would have received for a period of one (1) year after the effective
date of the termination in accordance with the regular payroll periods
of the Company. This severance payment shall be in addition to the
compensation and other benefits to be paid to the Employee pursuant to
Section 9(a) above.

(e) Termination by the Employee with Notice. If the
employment relationship is terminated by the Employee pursuant to the
provisions of Section 8(c) hereof, the Employee shall be entitled to
receive his salary during the notice period (such notice period not to
exceed the remaining term of this Agreement) but he shall not receive
or otherwise be entitled to any severance compensation nor shall the
Employee be entitled to receive any accrued but unpaid bonus. The
Employee shall, however, be entitled to the compensation and other
benefits provided for in Section 9(a)(i),(ii) and (iii).

(f) Survival. The provisions of Sections 9, 11, 12, and
13 hereof shall survive the termination of the employment relationship
hereunder and this Agreement to the extent necessary or reasonably
appropriate to effect the intent of the parties hereto as expressed in
such provisions.

10. Other Agreements. This Agreement shall be separate and apart
from, and shall be deemed to alter the terms of, any executive compensation
agreements, deferred compensation agreements, bonus agreements, general
employment benefit plans, stock option plans and any other plans or agreements
entered into between the Employee and the Company pursuant to which the
Employee has been granted specific rights, benefits or options.

5
<PAGE> 6
and carrying on the Prohibited Activities if he engages in the Prohibited
Activities in any capacity whatsoever, including, but not limited to, by or
through a partnership of which he is a general or limited partner or an
employee engaged in such activities, or by or through a corporation or
association of which he owns five percent (5%) or more of the stock or of which
he is an officer, director, employee, member, representative, joint venturer,
independent contractor, consultant or agent who is engaged in such activities.
The Employee agrees that during the two (2) year period described above, he
will notify the Company of the name and address of each company with whom he
has accepted employment during such period. Such notification shall be made in
writing within five (5) days after the Employee accepts any employment or new
employment by certified mail, return receipt requested.

12. Confidential Information. The Employee further agrees that,
during his employment with the Company and thereafter, he will keep
confidential and not divulge to anyone, disseminate or appropriate for his own
benefit or the benefit of another any confidential, operational, financial and
proprietary information known or obtained by the Employee, whether before or
after the date hereof, relating to the Company including, by way of example and
not limitation, any and all notes, analyses, compilations, studies, plans,
records, reports, strategies, forecasts, client lists, trade secrets,
intellectual property agreements, pricing policies, contracts, sales
techniques, marketing brochures, budgets, memoranda, financial statements,
catalogues, books, manuals or other documents which reflect such information
(collectively, the "Confidential Information"). The Employee hereby
acknowledges and agrees that this prohibition against disclosure of
Confidential Information is in addition to, and not in lieu of, any rights or
remedies that the Company may have available pursuant to the laws of any
jurisdiction or at common law or pursuant to any other agreements that Employee
may have with the Company to prevent the disclosure of trade secrets or
intellectual property, and the enforcement by the Company of its rights and
remedies pursuant to this Agreement shall not be construed as a waiver of any
other rights or available remedies that it may possess in law or equity absent
this Agreement.

13. Nonsolicitation of Employees. The Employee covenants that,
during his employment with the Company and for a period of one (1) year from
the date of termination of his employment with the Company, he will not (i)
directly or indirectly induce or attempt to induce any employee of the Company
to terminate his or her employment, or (ii) without prior written consent of
the Company, offer employment either on behalf of himself or on behalf of any
other individual or entity to any employee of the Company or to any terminated
employee of the Company.

14. Property of the Company. The Employee acknowledges that from
time to time in the course of providing services pursuant to this Agreement he
shall have the opportunity to inspect and use certain property, both tangible
and intangible, of the Company and the Employee hereby agrees that such
property shall remain the exclusive property of the Company, and the Employee
shall have no right or proprietary interest in such property, whether tangible
or intangible, including, without limitation, the Employee's customer and
supplier lists, contract forms, books of account, computer programs and similar
property.

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<PAGE> 7
15. Equitable Relief. The Employee acknowledges that the services
to be rendered by him are of a special, unique, unusual, extraordinary, and
intellectual character, which gives them a peculiar value, and the loss of
which cannot reasonably or adequately be compensated in damages in an action at
law, and that a breach by him of any of the provisions contained in this
Agreement will cause the Company irreparable injury and damage. The Employee
further acknowledges that he possesses unique skills, knowledge and ability and
that competition by him in violation of this Agreement or any other breach of
the provisions of this Agreement would be extremely detrimental to the Company.
By reason thereof, the Employee agrees that the Company shall be entitled, in
addition to any other remedies it may have under this Agreement or otherwise,
to injunctive and other equitable relief to prevent or curtail any breach of
this Agreement by him.

16. "Change of Control". In the event (each such event, a "Change
of Control"): (1) 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 are sold to another corporation
or entity; or (2) 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, becomes the
owner of record or beneficially of securities of the Company that represent
thirty-three and one-third percent (33 1/3%) or more of the combined voting
power of the Company's then outstanding securities entitled to elect Directors;
or (3) the Board of Directors of the Company or a committee thereof makes a
determination in its reasonable judgment that a "Change of Control" of the
Company has taken place; the term during which this Agreement shall be
effective shall include the remaining term of this Agreement following the date
of the Change of Control plus two (2) years, and the Employee's compensation
for such period shall be based on the following formula, shall be subject to
the following conditions, and shall be in lieu of the compensation provided for
under Section 3 of this Agreement and in lieu of the compensation upon
termination provided for under Section 9 of this Agreement (except for Section
9(a), which shall still apply):

(a) The Employee shall be paid an annual salary for the
remaining term of this Agreement plus two (2) years consisting of one
hundred percent (100%) of the average amount of total cash
compensation (including annual bonuses paid pursuant to Section 3(b)
hereof), excluding payments made under tax benefit bonuses paid upon
the lapse of resale restrictions on common stock for certain officers,
paid to the Employee for the two (2) calendar years prior to the
Change of Control.

(b) The Employee shall be paid an annual amount for the
remaining term of this Agreement plus two (2) years in consideration
of the noncompetition covenant of Section 11 of this Agreement
consisting of fifty percent (50%) of the average amount of total cash
compensation (including annual bonuses paid pursuant to Section 3(b)
hereof), excluding payments made under tax benefit bonuses paid upon
the lapse or resale restrictions on common stock for certain officers,
paid to the Employee for the two (2) calendar years prior to the
Change of Control. Such annual amounts shall be paid quarterly in
advance.

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<PAGE> 8
(c) Notwithstanding any of the provisions of this
Agreement, the amount of all payments to be made pursuant to this
Section 16 after a Change of Control shall not exceed one dollar
($1.00) less than that amount that would cause any such payment to be
deemed a "parachute payment" as defined in Section 280G of the
Internal Revenue Code of 1986, as amended (the "Code"), and as Section
280G of the Code is then in effect at the time of such payment.

(d) Any payments made to the Employee following a Change
of Control that shall be disallowed, in whole or in part, as a
deductible expense to the Company for Federal income tax purposes by
the Internal Revenue Service on the basis that Section 280G of the
Code prohibits such deduction shall be reimbursed by the Employee to
the full extent of such disallowance within six (6) months after the
date of which the amount of such disallowance has been finally
determined and the Company has paid the deficiency with respect to
such disallowance. The Company shall legally defend any proposed
disallowance by the Internal Revenue Service and the amount required
to be reimbursed by the Employee shall be the amount determined by an
appropriate court in a final, nonappealable decision that is actually
disallowed as a deduction. In lieu of payment to the Company by the
Employee, the Company may, in its discretion, withhold amounts from
the Employee's future compensation payments until the amount owed to
the Company has been fully recovered. No such withholding shall occur
prior to the date on which the Employee would be required to make
reimbursement as provided herein.

(e) If the limitation set forth in this Section 16(c) may
at any time become applicable to the amounts otherwise due pursuant to
paragraphs (a) and (b) of Section 16, then the Company shall continue
to pay the Employee all amounts as provided under paragraphs (a) and
(b) of Section 16 until such time as cumulative payments equal the
aggregate amount as limited by paragraph (c), and the Employee may
terminate his employment relationship with the Company on three (3)
months notice at any time within the last twelve (12) months of the
time period during which the payments described in this Section 16(e)
will be paid without affecting his rights to receive such payments.

(f) The Company shall have no obligation to pay the
amounts set forth in paragraphs (a) and (b) of Section 16 as limited
by paragraph (c) if there is reasonable proof that the noncompetition
or Confidential Information provisions of Sections 11 and 12,
respectively, of this Agreement are being violated.

(g) In the event the employment relationship is
terminated for cause (pursuant to Section 8(b) hereof) following a
Change of Control, the Company shall not be obligated to make any
further payments of the compensation amounts provided for in this
Agreement, except as provided in Section 9(a) above. Notwithstanding
any other provision of this Agreement, except for paragraphs (e) and
(j) of this Section 16, which shall control in the event the Employee
terminates employment as provided in

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<PAGE> 9
paragraphs (e) and (j), in the event the Employee voluntarily
terminates employment following a Change of Control for other than
Good Reason, as defined hereinafter, compensation amounts set forth in
paragraphs (a) and (b) shall be payable only for a one (1) year period
following termination of employment.

"Good Reason" to terminate employment with the Company occurs
if: (1) duties are assigned that are materially inconsistent with
previous duties; (2) duties and responsibilities are substantially
reduced; (3) base compensation is reduced not as part of an across the
board reduction for all senior officers or executives; (4)
participation under compensation plans or arrangements generally made
available to persons at the Employee's level of responsibility at the
Company is denied; (5) a successor fails to assume this Agreement; or
(6) termination is made without compliance with prescribed procedures.

(h) In the event the Employee is involuntarily terminated
by the Company without cause, the Employee voluntarily terminates
employment for Good Reason or the employment relationship is
terminated by death or permanent disability of Employee, the Company's
obligation to pay the compensation amounts provided in this Section 16
shall survive termination of employment.

(i) In the event of termination of employment during the
pendency of a "Potential Change of Control", as hereinafter defined,
paragraphs (g) and (h) of this Section 16 shall apply as if an actual
Change of Control had taken place. A "Potential Change of Control"
shall be deemed to have occurred if: (1) the Company has entered into
an agreement or letter of intent the consummation of which would
result in a Change of Control; (2) any person publicly announces an
intention to take or to consider taking actions that, if consummated,
would constitute a Change of Control; or (3) the Board of Directors of
the Company or a committee thereof in its reasonable judgment makes a
determination that a Potential Change of Control for purposes of this
Agreement has occurred. A Potential Change of Control remains pending
for purposes of receiving payments under this Agreement until the
earlier of the occurrence of a Change of Control or a determination by
the Board of Directors or a committee thereof (at any time) that a
Change of Control is no longer reasonably expected to occur.

(j) Notwithstanding anything contained in this Agreement
to the contrary, the Employee and the Company, or the person,
corporation, partnership or other entity acquiring control of the
Company pursuant to this Section 16, with the concurrence of the Chief
Executive Officer and Compensation Committee of the Board of Directors
of the Company, may mutually agree that the Employee, with three (3)
months' notice, may terminate his employment and receive a lump sum
payment equal to the present value of remaining payments under this
Agreement discounted by the then current Treasury Bill rate for the
remaining term of this Agreement.

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<PAGE> 10
17. Successors Bound. This Agreement shall be binding upon the
Company and the Employee, their respective heirs, executors, administrators or
successors in interest, including without limitation, any corporation,
partnership or other entity acquiring control of the Company pursuant to
Section 16 hereof.

18. Severability and Reformation. The parties hereto intend all
provisions of this Agreement to be enforced to the fullest extent permitted by
law. If, however, any provision of this Agreement is held to be illegal,
invalid, or unenforceable under present or future law, such provision shall be
fully severable, and this Agreement shall be construed and enforced as if such
illegal, invalid, or unenforceable provision were never a part hereof, and the
remaining provisions shall remain in full force and effect and shall not be
affected by the illegal, invalid, or unenforceable provision or by its
severance.

19. Integrated Agreement. This Agreement constitutes the entire
Agreement between the parties hereto with regard to the subject matter hereof,
and there are no agreements, understandings, specific restrictions, warranties
or representations relating to said subject matter between the parties other
than those set forth herein or herein provided for.

20. Attorneys' Fees. If any action at law or in equity, including
any action for declaratory or injunctive relief, is brought to enforce or
interpret the provisions of this Agreement, the prevailing party shall be
entitled to recover reasonable attorneys' fees from the nonprevailing party,
which fees may be set by the court in the trial of such action, or may be
enforced in a separate action brought for that purpose, and which fees shall be
in addition to any other relief which may be awarded.

21. Notices. All notices and other communications required or
permitted to be given hereunder shall be in writing and shall be deemed to have
been duly given if delivered personally, mailed by certified mail (return
receipt requested) or sent by overnight delivery service, cable, telegram,
facsimile transmission or telex to the parties at the following addresses or at
such other addresses as shall be specified by the parties by like notice:

(a) If to the Company: Clark/Bardes, Inc.
2121 San Jacinto, Suite 2200
Dallas, Texas 75201
Attention: Mr. Keith Staudt
Facsimile No.: (214) 720-6050

(b) If to Employee: Melvin G. Todd
4607 Briar Oaks Circle
Dallas, Texas 75287

Notice so given shall, in the case of notice so given by mail, be
deemed to be given and received on the fourth calendar day after posting, in
the case of notice so given by overnight delivery service, on the date of
actual delivery and, in the case of notice so given by cable, telegram,
facsimile transmission, telex or personal delivery, on the date of actual
transmission or, as the case may be, personal delivery.

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<PAGE> 11
22. Further Actions. Whether or not specifically required under
the terms of this Agreement, each party hereto shall execute and deliver such
documents and take such further actions as shall be necessary in order for such
party to perform all of his or its obligations specified herein or reasonably
implied from the terms hereof.

23. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAW, AND NOT THE LAW OF CONFLICTS, OF
THE STATE OF TEXAS.

24. Assignment. This Agreement is personal to the Employee and
may not be assigned in any way by the Employee without the prior written
consent of the Company. This Agreement shall not be assignable or delegable by
the Company, other than to an affiliate of the Company, except if there is a
Change of Control as defined in Section 16, the Company may assign its rights
and obligations hereunder to the person, corporation, partnership or other
entity that has gained such control.

25. Counterparts. This Agreement may be executed in counterparts,
each of which will take effect as an original and all of which shall evidence
one and the same Agreement.

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<PAGE> 12
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the Effective Date.

COMPANY:

Clark/Bardes Holdings, Inc.
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------

EMPLOYEE:

-----------------------------------
Melvin G. Todd

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<PAGE> 13
EXHIBIT A

PROHIBITED ACTIVITIES

Competitors of the Company include, but are not limited to, the following
companies and their affiliates:

<PAGE> 14
SCHEDULE 3(b)

ANNUAL BONUS

[TO BE SUPPLIED]

<PAGE> 1

EXHIBIT 10.33

COMMISSION TRANSFER AGREEMENT

RELATING TO THE TRANSFER BY

W.T. WAMBERG AND THE WAMBERG ORGANIZATION, INC.

OF THE RIGHTS TO CERTAIN COMMISSIONS

TO CLARK/BARDES, INC.

Dated: December __, 1998
<PAGE> 2
COMMISSION TRANSFER AGREEMENT

COMMISSION TRANSFER AGREEMENT made as of December __, 1998 by and
between W.T. WAMBERG ("Principal"), THE WAMBERG ORGANIZATION, INC., an Illinois
corporation and wholly owned by Principal ("TWO"), and CLARK/BARDES, INC., a
Delaware corporation ("CBI").

W I T N E S S E T H:

WHEREAS, Principal is a shareholder in CBI and a successful insurance
producer who markets executive benefit and insurance plans to corporations and
not-for-profit organizations;

WHEREAS, Principal and CBI have entered into that certain Principal
Office Agreement on or about September 30, 1993 (the "Principal Office
Agreement") pursuant to which Principal has agreed to solicit, sell and
implement life insurance or consulting services and CBI has agreed to furnish
Principal marketing-materials, plan design ideas, selected life insurance
products and other services to assist Principal in the sales process;

WHEREAS, the Principal Office Agreement provides a procedure pursuant
to which each of CBI and Principal receive commissions and fees for services
performed thereunder;

WHEREAS, the Principal has assigned certain of these commissions to
TWO; and

WHEREAS, the Principal, TWO and CBI have agreed to reallocate how the
commissions and fees are paid to the Principal, TWO and CBI under the Principal
Office Agreement in exchange for the payment of $7,400,000 by CBI to TWO.

NOW, THEREFORE, in consideration of the premises, conditions and the
mutual covenants and agreements hereinafter set forth, the parties hereto agree
as follows:

1. Commissions to be Transferred. Subject to the terms and
conditions of this Agreement, Principal, TWO and CBI agree to modify the
Principal Office Agreement such that the commissions and fees related to
certain Covered Business (as such term is described in the Principal Office
Agreement) shall be modified as follows (the "Transferred Business"):

(a) Commissions and fees net of any CBI Administrative
Costs (as defined and determined pursuant to the Principal Office
Agreement) which results from the Transferred Business existing as of
December __, 1998 pursuant to the Principal Office Agreement and
listed on Exhibit A hereto (the "Transferred Commissions") shall be
divided between Principal and CBI such that 50% of the Transferred
Commissions is payable to CBI and 50% of the Transferred Commissions
is payable to the Principal, subject to the adjustments described
below.

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<PAGE> 3

(b) Upon receipt of the Transferred Commissions by CBI,
CBI shall pay the Principal 50% of such Transferred Commissions which
shall be distributed on a monthly basis in accordance with the terms
of the Principal Office Agreement. CBI shall keep 31% of such
Transferred Commissions for its own account and CBI shall set up a
reserve on the CBI Balance Sheet equal to 19% of such Transferred
Commissions to be distributed in accordance herewith (the "Commission
Account").

(c) Within fifteen (15) days following the end of each
month, CBI shall conduct an accounting to determine the balance of the
Commission Account. If the balance of the Commission Account is
greater than the amounts provided for on Exhibit B (the "Target
Amount") with respect to the applicable month, CBI will distribute 50%
of such excess to the Principal within thirty (30) days following the
end of such month. If the balance of the Commission Account is less
than the Target Amount (the difference referred to as the "Shortfall
Amount"), CBI shall transfer all such amounts in the Commission
Account to its own account within thirty (30) days following the end
of such month (the "Transfer Date") and be entitled to keep all such
amounts. In addition, CBI shall be entitled to receive all
Transferred Commissions from the Transfer Date through the date on
which CBI has received Transferred Commissions, otherwise payable to
Principal, equal to the Shortfall Amount ("Shortfall Commissions").
The Shortfall Commissions shall be in addition to any other
Transferred Commissions which CBI shall otherwise be entitled to
receive. If the balance of the Commission Account is equal to the
Target Amount, no adjustment will be made.

(d) Principal or TWO, as appropriate, and CBI agree to
advise the various insurance companies related to the Transferred
Business described on Exhibit A hereto to pay CBI directly all
Transferred Commissions. CBI shall be the receiving party with
respect to all such commissions and fees and will be responsible for
paying Principal its share of such commissions and fees in accordance
herewith.

(e) All commissions and fees not related to Transferred
Business shall be allocated among the parties pursuant to the
Principal Office Agreement. All other terms and provisions of the
Principal Office Agreement, other than the terms and provisions
amended pursuant hereto, shall apply to the Transferred Commissions
and the Transferred Business.

2. Purchase Price. The purchase price to be paid for the
transfer of the Transferred Commissions hereunder shall be $7,400,000 (the
"Purchase Price"). The Purchase Price shall be paid to TWO at the Closing by
certified or cashier's check or wire transfer of funds.

3. Closing. The closing of the transfer of the Transferred
Commissions pursuant to this Agreement (the "Closing") shall take place on
December __, 1998 at such time and place as shall be mutually agreed upon by
the parties (the "Closing Date").

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<PAGE> 4
4. Representations and Warranties of Principal. As of the date
hereof, and as of the Closing, Principal represents and warrants to CBI and TWO
as follows:

4.1 Capacity and Authority of Principal. Principal has
the power and authority to enter into and perform this Agreement and
the other documents and transactions contemplated hereby. This
Agreement and the other documents executed and delivered by Principal
pursuant hereto constitute the legal, valid and binding obligations of
Principal, enforceable in accordance with their respective terms.

4.2 No Conflict. Neither the execution, delivery or
performance of this Agreement and all other documents in connection
herewith nor the consummation of the transactions contemplated hereby
and thereby will violate or conflict with or constitute a breach of or
default under any contract, instrument, agreement, indenture, license,
law, order, regulation or judgment to which Principal is a party or by
which Principal or the Transferred Commissions may be bound or
affected. No authorization, consent or approval or any order of any
governmental or public authority or agency is required for the
execution, delivery or performance of this Agreement or the
consummation of the transactions contemplated hereby.

5. Representations and Warranties of TWO. As of the date hereof
and as of the Closing, TWO represents and warrants to Principal and CBI as
follows:

5.1 Organization, Standing and Authority of TWO. TWO is
a corporation duly organized, validly existing and in good standing
under the laws of Illinois, with the corporate power to execute and
deliver this Agreement and to carry out its obligations hereunder.
The execution, delivery and performance of this Agreement and all
other documents in connection herewith and the consummation of the
transactions contemplated hereby have been duly and validly authorized
by TWO's Board of Directors, and no other corporate proceedings on the
part of TWO are necessary to authorize this Agreement and the
transactions contemplated hereby. All requisite corporate action has
been taken to make them valid and binding upon TWO in accordance with
their respective terms. This Agreement and the other documents
executed and delivered by TWO pursuant hereto constitute legal, valid
and binding obligations of TWO, enforceable in accordance with their
respective terms.

5.2 No Conflict. Neither the execution, delivery or
performance of this Agreement and all other documents in connection
herewith nor the consummation of the transactions contemplated hereby
and thereby will violate or conflict with or constitute a breach of or
default under any contract, instrument, articles of incorporation,
by-law, agreement, indenture, license, law, order, regulation or
judgment to which TWO is a party or by which TWO or the Transferred
Commissions may be bound or affected. No authorization, consent or
approval or any order of any governmental or public authority or
agency is required for the execution, delivery or performance of this
Agreement or the consummation of the transactions contemplated hereby.

3
<PAGE> 5
6. Representations and Warranties of CBI. As of the date hereof
and as of the Closing, CBI represents and warrants to Principal and TWO as
follows:

6.1 Organization, Standing and Authority of CBI. CBI is
a corporation duly organized, validly existing and in good standing
under the laws of Delaware, with the corporate power to execute and
deliver this Agreement and to carry out its obligations hereunder.
The execution, delivery and performance of this Agreement and all
other documents in connection herewith and the consummation of the
transactions contemplated hereby have been duly and validly authorized
by CBI's Board of Directors, and no other corporate proceedings on the
part of CBI are necessary to authorize this Agreement and the
transactions contemplated hereby. All requisite corporate action has
been taken to make them valid and binding upon CBI in accordance with
their respective terms. This Agreement and the other documents
executed and delivered by CBI pursuant hereto constitute legal, valid
and binding obligations of CBI, enforceable in accordance with their
respective terms.

6.2 No Conflict. Neither the execution, delivery or
performance of this Agreement and all other documents in connection
herewith nor the consummation of the transactions contemplated hereby
and thereby will violate or conflict with or constitute a breach of or
default under any contract, instrument, articles of incorporation,
by-law, agreement, indenture, license, law, order, regulation or
judgment to which CBI is a party or by which CBI or the Transferred
Commissions may be bound or affected. No authorization, consent or
approval or any order of any governmental or public authority or
agency is required for the execution, delivery or performance of this
Agreement or the consummation of the transactions contemplated hereby.

7. Survival of Representations and Warranties; Indemnities.

7.1 Survival. All representations, warranties and
covenants made by a party herein or hereunder shall be deemed to be
relied upon by the other party regardless of any investigation made by
or on behalf of such party, and all statements made in any
certificate, list, schedule, exhibit or other document delivered
pursuant hereto prior to or at the Closing shall be deemed warranties
and representations made under this Agreement.

7.2 Term of Transferred Commissions. The term of this
Agreement shall expire on December ___, 2008 ( the "Termination
Date"). Upon the Termination Date, the allocation of commissions and
fees with respect to the Transferred Commissions shall revert to the
allocations provided for in the Principal Office Agreement and the
terms of this Agreement related to such allocations shall no longer be
applicable.

4
<PAGE> 6
8. Conditions to Obligations of CBI. CBI's obligation to
consummate the transactions contemplated by this Agreement is subject to the
following conditions for the exclusive benefit of CBI, to be fulfilled and/or
performed on or prior to the Closing:

8.1 Accuracy of Representations and Warranties. The
representations and warranties made by Principal and TWO in this
Agreement shall be true and correct in all respects on and as of the
Closing.

8.2 Completion of a IPO. CBI shall have successfully
completed its initial public offering.

9. Conditions to Obligations of Principal and TWO. The
obligations of Principal and TWO to consummate the transactions contemplated by
this Agreement are subject to the following conditions for the exclusive
benefit of Principal and TWO, to be fulfilled and/or performed on or prior to
the Closing:

9.1 Accuracy of Representations and Warranties. The
representations and warranties made by CBI in this Agreement shall be
true and correct in all respects on and as of the Closing.

10. Miscellaneous.

10.1 Notice. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed duly
given if delivered in person or by courier or if sent by certified or
registered mail, postage prepaid, to the following:

If to Principal or TWO:

Mr. W.T. Wamberg
c/o The Wamberg Organization
102 South Wynstone Park Drive
North Barrington, Illinois 60010
If to CBI:

Mel G. Todd
Clark/Bardes, Inc.
2121 San Jacinto Street, Suite 2200
Dallas, Texas 75201

or to such other address as any party may designate by written notice in the
aforesaid manner.

5
<PAGE> 7
10.2 Assignability. This Agreement shall not be
assignable by any of the parties hereto, without the other parties'
written consent. This Agreement shall inure to the benefit of and be
binding upon the respective successors and any permitted assigns of
CBI, Principal and TWO.

10.3 Governing Law. This Agreement shall be governed by
and construed in accordance with the internal laws of Texas.

10.4 Entire Agreement. This Agreement, the Exhibits
hereto, and other documents delivered or to be delivered pursuant to
this Agreement contain or will contain the entire agreement among the
parties hereto with respect to the transactions contemplated herein.

10.5 Waiver. Any failure of Principal and TWO or CBI to
comply with any obligation, covenant, agreement or condition herein
may be waived in writing by CBI (with respect to TWO and Principal)
and Principal (with respect to CBI), but such waiver or failure to
insist upon strict compliance with such obligation, covenant,
agreement or condition shall not operate as a waiver of, or estoppel
with respect to, any subsequent or other failure.

10.6 Amendment. This Agreement may be amended, modified,
or supplemented only by written agreement of the parties hereto.

10.7 Headings. The section and other headings contained
in this Agreement are for reference purposes only and shall not affect
the interpretation or meaning of this Agreement.

10.8 Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same Agreement.

10.9 Further Assurances. The parties will, from time to
time following the Closing, upon the reasonable request of the other
party, execute, acknowledge and deliver in proper form such further
instruments and perform such further acts as may be reasonably
necessary or desirable to give effect to the transactions contemplated
by this Agreement or any Exhibit hereto.

6
<PAGE> 8
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.

--------------------------------------------
W.T. Wamberg

THE WAMBERG ORGANIZATION, INC.

By:
----------------------------------------
Its: President

CLARK/BARDES, INC.

By:
----------------------------------------
Its: President

7
<PAGE> 9
EXHIBIT A

TRANSFERRED BUSINESS

8
<PAGE> 10
EXHIBIT B

TARGET AMOUNTS

<PAGE> 1
EXHIBIT 10.34

CLARK/BARDES, INC.
2121 San Jacinto Street
Suite 2200
Dallas, Texas 75201-7906

July 24, 1998

Great-West Life & Annuity Insurance Company
8515 East Orchard Road
3rd Floor, Tower 2
Englewood, Colorado 80111
Attn: Structured Finance Investments

Life Investors Insurance Company of America
c/o AEGON USA Investment Management, Inc.
4333 Edgewood Road N.E.
Cedar Rapids, Iowa 52499-5355
Attn: Director of Private Placements

Nationwide Life Insurance Company
One Nationwide Plaza (1-33-07)
Columbus, Ohio 43215-2220
Attn: Corporate Fixed-Income Securities

Ladies and Gentlemen:

We refer to the Note Agreement, dated as of September 8, 1997, between the
undersigned Clark/Bardes, Inc., a Texas corporation ("CBI-TEXAS"), and each of
you (as amended to date, the "SENIOR NOTE AGREEMENT"), and the Note and Warrant
Purchase Agreement, dated as of September 8, 1997, between CBI-Texas and each of
you (as amended to date, the "NOTE AND WARRANT PURCHASE AGREEMENT" and, together
with the Senior Note Agreement, the "AGREEMENTS"). We also refer to the letter
agreements, each dated as of June 11, 1998, between CBI-Texas and each of you,
respectively (the "WARRANT LETTERS"), pursuant to which you have agreed to sell,
and CBI-Texas has agreed to purchase, upon the terms and conditions set forth
therein, the Common Stock Purchase Warrants (the "WARRANTS") of CBI-Texas issued
to and held by you pursuant to the Note and Warrant Purchase Agreement.
Capitalized terms used but not defined in this letter are used with the meanings
given to such terms in the Agreements.

It is contemplated that Clark/Bardes, Inc., a Delaware corporation
("CBI-DELAWARE"), will become the successor by merger to CBI-Texas. CBI-Texas
prior to such merger, and CBI-Delaware after such merger, are each sometimes
referred to in this letter as the "COMPANY". As you are aware, Clark/Bardes
Holdings, Inc., a Delaware corporation ("CBH") which will own all of the
outstanding capital stock of the Company, has filed with the Securities and
Exchange Commission a Registration Statement on Form S-1 in connection with
the proposed initial public offering of common stock of CBH (the "IPO"). A copy
of the Registration Statement, in the form furnished to each of you, is
referred to in this letter as the "REGISTRATION STATEMENT".
<PAGE> 2
Great-West Life & Annuity Insurance Company
Life Investors Insurance Company of America
Nationwide Life Insurance Company
July 24, 1998
Page 2

Conditions. Your obligations under this letter are expressly conditioned
upon the satisfaction of each of the following conditions precedent (except that
in the case of the matters addressed in the first and second paragraphs of
Section 1 below, and in clauses (F), (K), (L), (M)(1) and (O) of Section VI
below, only conditions (e) and (f) must be satisfied since such matters are not
dependent upon the successful completion of the IPO):

(a) The IPO shall have been consummated not later than December 31,
1998;

(b) CBH shall have received net proceeds from the IPO (i.e., net of
underwriting discounts and commissions and net of expenses payable in
connection with the IPO) of at least $35,000,000;

(d) The Company contemporaneously shall have purchased the Warrants
from each of you as contemplated by the Warrant Letters;

(e) The Company, CBH and you shall have executed all documentation
that in your reasonable judgment is necessary or appropriate with respect to
the matters herein contemplated, and you shall have received such legal
opinions from counsel to the Company and CBH, and your special counsel, as you
may reasonably request in connection with the transaction herein contemplated;
and

(f) No Default or Event of Default shall exist under the Agreements,
both immediately prior to and immediately after giving effect to, the
transactions herein contemplated.

On the terms and subject to satisfaction of the conditions herein stated,
you and the Company agree to modify the Agreements, the Notes issued thereunder
and the Security Documents executed in connection therewith, as hereinafter set
forth. Except as necessary to accomplish the matters addressed herein, the
current provisions of the Agreements, the Notes and the Security Documents
shall not be modified.

I. Reorganization

CBH is and will remain a holding company with no operations of its own.
All operations will instead be conducted through the Company. In addition, a
Texas entity will be incorporated for the purpose of marketing certain
insurance products within the State of Texas. Although this entity will not be
a Subsidiary of the Company, it will be owned by a principal of the Company and
will be subject to a service and maintenance agreement substantially identical
to the other such agreements to which the Company is a party. The Company will
not have Subsidiaries, but will, instead, conduct all operations
<PAGE> 3
Great-West Life & Annuity Insurance Company
Life Investors Insurance Company of America
Nationwide Life Insurance Company
July 24, 1998
Page 3

itself or will, where state law requires, enter into similar service and
maintenance agreements with entities owned by a principal of the Company.

In connection with the transactions described in the preceding paragraph,
the Company's status as a Subchapter S corporation will terminate and the
Company will become subject to federal and state income taxation as a Subchapter
C corporation. In connection with the termination of its Subchapter S status,
the Company intends to declare a dividend to its stockholders of $3,200,000
($1.00 per share). The Company will enter into a tax agreement with existing
stockholders providing for certain reciprocal indemnifications arising out of
income tax adjustments as a result of the Company's change of its status to a
Subchapter C corporation (the "TAX AGREEMENT"). Under the Tax Agreement, the
Company would be entitled to indemnification from and would be required to
indemnify stockholders for certain potential income tax liabilities as described
at pages 14-15 and 25-26 of the Registration Statement.

The Shareholders' Agreement is to be terminated in connection with the IPO.
In this connection, the requirement of the final sentence of paragraph 5R of the
Agreements that life insurance be maintained by the Company to fund redemptions
of the Company's shares under the Shareholders' Agreement would be terminated.
The requirement that the Company maintain at least $15,000,000 of key man
insurance on the life of W.T. Wamberg, as required by paragraph 5R of the
Agreements, would be maintained, as would the requirement that such policies be
collaterally assigned to the Collateral Agent.

II. Interest Rates

The interest rate on the Company's 10.50% Senior Secured Notes due
August 9, 2002 (the "SENIOR SECURED NOTES") would be reset, at least five days
prior to the effective date of the Registration Statement, to a rate that is
2.50% above the yield on a U.S. Treasury security maturing two years from the
date on which the interest rate is reset. The interest rate on the Company's
11.00% Second Priority Senior Secured Notes due August 9, 2004 (the "SECOND
PRIORITY SENIOR SECURED NOTES" and, together with the Senior Secured Notes, the
"NOTES") would be reset at least five days prior to the effective date of the
Registration Statement, to a rate that is 3.50% above the yield on a U.S.
Treasury security maturing five years from the date on which the interest rate
is reset.

III. Prepayments

All prepayments of the principal amount of the Senior Secured Notes and the
Second Priority Senior Secured Notes required or permitted by paragraph 4 of the
Agreements would be permitted without the payment of a Yield Maintenance Amount.
<PAGE> 4
Great-West Life & Annuity Insurance Company
Life Investors Insurance Company of America
Nationwide Life Insurance Company
July 24, 1998
Page 4

IV. Collateral

The Senior Secured Notes, the Second Priority Senior Secured Notes and all
other obligations under the Agreements and related documents would be secured
by a first priority security interest in favor of the Collateral Agent in the
following collateral, including proceeds: All rights of the Company under
agreements relating to the payment to it of fees, commissions and other amounts
(including, without limitation, those payable under service and maintenance
agreements), whether now existing or hereafter arising and whether or not
earned by performance (including all renewals, and the commissions and fees to
be purchased from W.T. Wamberg as described in Section VI(J) below), together
with the proceeds thereof, except rights of the Company under agreements
relating to the payment of commissions and fees, and the proceeds thereof, (i)
in respect of renewal commissions and fees with respect to plans and policies
sold by (a) the BCS division of the Company prior to the date the IPO is
consummated or (b) the Schoenke Companies (as defined in Section V below) prior
to the acquisition by the Company of the Schoenke Companies (it being
understood that new plans and policies sold after the consummation of the IPO
by the BCS division of the Company and new plans and policies sold after the
acquisition of the Schoenke Companies by that portion of the Company's business
that formerly consisted of the Schoenke Companies shall both constitute a
portion of your security) and (ii) commissions, fees and the proceeds thereof
arising from businesses acquired after the consummation of the IPO, which shall
not constitute collateral. No junior or other liens would be permitted with
respect to the collateral for the Notes, other than liens securing certain
Indebtedness under a working capital revolving credit facility of the Company,
as described below in section VI(A). The excepted assets could be collateral
for other Indebtedness permitted by the Agreement. Renewals of plans and
policies will occur within the division or other segment of the Company in
which the original plan or policy was produced. The Company shall maintain a
system of accounting and books and records which will permit the ready
identification of collateral. The holders of the Notes would retain their
respective offset and "super-priority" rights with respect to commissions
payable by them and their affiliates. Appropriate arrangements to minimize
commingling, intercreditor issues and impediments to the enforcement of the
Noteholders' rights and remedies would be required. Collateral for the Notes
and related obligations would also include the collateral assignment of key man
life insurance described above in the first paragraph of Section I.

V. Acquisitions

Acquisitions could be made by the Company by asset purchase, merger or
consolidation, for cash, stock, seller notes or any combination of the
foregoing, so long as no Default or Event of Default would exist either
immediately prior to or after giving effect to the transaction. Paragraph
6(G)(2) of the Agreements would be replaced by the total Indebtedness to
consolidated capitalization test contemplated by Section VI(C) below. This
would require compliance, among other things, with the financial convenants set
forth in paragraphs 6A, 6C, 6D, 6E, and 6F. The acquisition of Schoenke &
Associates Corporation. Schoenke & Associates Securities Corporation and
Schoenke & Associates of Hawaii, L.P. (the "SCHOENKE

<PAGE> 5
Great-West Life & Annuity Insurance Company
Life Investors Insurance Company of America
Nationwide Life Insurance Company
July 24, 1998
Page 5

COMPANIES") would be permitted provided that the purchase price is paid
entirely with the proceeds from the IPO.

VI. Miscellaneous Provisions

(A) Working Capital Facility. The Company would be required to have
a working capital facility of not less than $3,000,000 and not more than
$15,000,000, which would be established no later than March 31, 1999. Up to
$3,000,000 of Indebtedness under the working capital facility would be
permitted to be secured by the collateral for the Notes, and the working
capital facility would be subject to the clean-up requirements of paragraph
6G(3) of the Agreements.

(B) Restricted Payments. The Company would be permitted to make
Restricted Payments (whether in the form of repurchases of treasury stock or
otherwise) while the Notes are outstanding in an aggregate amount not to
exceed the sum of $1,000,000, plus 20% of the Consolidated Net Income (minus
100% in the case of a loss) of the Company, determined on the basis of a
single accounting period commencing on the first day of the fiscal quarter
in which the IPO is consummated.

(C) Indebtedness Incurrence Limitation. The Agreements would be modified
to include a new covenant under which future Indebtedness of the Company
(whether assumed in connection with an acquisition, incurred in connection with
an acquisition or otherwise incurred under the working capital facility or some
other arrangement) would be subject to a total Indebtedness (including the
Notes) to consolidated capitalization incurrence ratio of not more than 0.50 to
1.00. Consolidated capitalization would consist of consolidated Indebtedness
and Consolidated Net Worth.

(D) Benefit Plans. The Company would be permitted to modify its
existing benefit plans to conform with the provisions of benefit plans of
entities that may be acquired in the future.

(E) Medium Term Note and Convertible Subordinated Notes. The Medium Term
Note in the original amount of $5,700,000 payable by the Company to Bank
Compensation Strategies, Inc. could be prepaid by up to $1,000,000 in
connection with the IPO. The amount of such prepayment would be applied to
installments of principal in direct order of maturity. The Medium Term Note
would remain secured by a first priority security interest in its existing
collateral. In order to cause the exercise of conversion rights thereunder,
the Company may offer to prepay the Convertible Subordinated Notes (and may
prepay the Convertible Subordinated Notes if such prepayment offer is in fact
accepted by the holders thereof); provided that any such prepayment offer must
be made no later than three days after consummation of the IPO.

(F) Employment Agreement; Stock Option Plan. The amendments to Mr.
Todd's employment agreement described at pages 14 and 51 of the Registration
Statement would be permitted, as would the
<PAGE> 6
Great-West Life & Annuity Insurance Company
Life Investors Insurance Company of America
Nationwide Life Insurance Company
July 24, 1998
Page 6

revision of the Company's stock option plan to provide for a total of 540,830
shares of common stock (1,081,660 prior to the 1:2 reverse stock split
preparatory to the IPO).

(G) Seller Financing. If an acquisition is financed in whole or in part
with financing provided by the seller, the seller financing Indebtedness must
have a final maturity date on or after September 1, 2002 and a weighted average
life to maturity greater than the weighted average life to maturity of the
Senior Secured Notes at the time of the acquisition.

(H) Interest Coverage Ratio. The interest coverage ratio covenant of
paragraph 6E of the Agreements would be reduced to 2.00 to 1.00 effective
December 31, 1999.

(I) Reporting; Inspection. The reporting requirements of paragraphs 5A
and 5C of the Agreements, which would apply to CBH and Subsidiaries, as well as
to the Company, would be reduced along the lines indicated in the attached
Exhibit A.

(J) Wamberg Commissions. Notwithstanding the provisions of paragraph 6S
of the Agreements, the Principal Office Agreement of W.T. Wamberg would be
amended to provide for a cash payment by the Company of approximately
$7,400,000 in return for a modification of the sharing of commissions and fee
revenues under certain plans so that the Company, after such revision, would
receive 50% and Mr. Wamberg 50% rather than the 31%/69% division now in effect.

(K) CBH Guaranty. CBH would provide an unconditional, irrevocable guaranty
of the Notes and other obligations under the Agreements and related documents.
The guaranty would also contain representations and warranties, and also
covenants, including the reporting requirements applicable to CBH, the total
Indebtedness to consolidated capitalization debt incurrence ratio described
above (with the consolidated figures to be for CBH and the Company), a
prohibition on the creation of Subsidiaries or the making of Investments except
through the Company, a requirement that at least 95% of the net proceeds of any
future equity issuance by CBH be contributed to the Company as equity capital,
various standard, non-financial covenants (e.g., maintenance of existence,
compliance with laws, payment of taxes, etc.), and a prohibition on the creation
of Liens with respect to stock of the Company.

(L) CBH Defaults. Events of Default in the Agreements would be modified
to include CBH (e.g., breach of guarantor covenants, misrepresentation by
guarantor, cross-default to the guarantor Indebtedness, guarantor bankruptcy,
etc.).

(M) Change in Control.

(1) Regardless of whether the IPO is consummated, the Change in
Control definition in the Agreements would be modified to refer to common stock
of CBH.

<PAGE> 7
Great-West Life & Annuity Insurance Company
Life Investors Insurance Company of America
Nationwide Life Insurance Company
July 24, 1998
Page 7

(2) The Change in Control provisions of the Agreements would be
modified to require that W.T. Wamberg and The Wamberg Organization, Inc., an
Illinois corporation, together own at all times at least 10% of the outstanding
and fully diluted common stock of CBH, with such amounts to be adjusted for
stock splits, reverse splits and the effects of dilution from acquisitions and
public offerings subsequent to the IPO.

(N) Stock Options. The Agreement would be modified to eliminate
restrictions on the granting of stock options.

(O) Charter and Bylaw Amendments. The amendments to the Company's
charter and bylaws described at pages 13 and 53-54 of the Registration
Statement would be permitted.

(P) Preferred Stock. CBH's charter would permit the issuance of
preferred stock.

Notwithstanding any provision of this letter or of the Warrant Letters,
the provisions of the Warrants (including without limitation, the antidilution
provisions thereof) will remain in full force and effect until the Warrants are
repurchased in accordance with the provisions of the Warrant Letters.

If you are in agreement with the foregoing, please sign in the space
provided below and fax a copy of this letter to the Company at (214) 871-7690,
Attention: Melvin G. Todd.

Very truly yours,

CLARK/BARDES, INC.

By: /s/ MEL TODD
-----------------------------
Name: MEL TODD
---------------------------
Title: PRESIDENT & CEO
--------------------------
<PAGE> 8
Great-West Life & Annuity Insurance Company
Life Investors Insurance Company of America
Nationwide Life Insurance Company
July 24, 1998
Page 8

ACCEPTED AND AGREED TO
THIS 24TH DAY OF JULY, 1998

GREAT-WEST LIFE & ANNUITY INSURANCE
COMPANY

By: /s/ ERNIE P. FRIESEN
--------------------------------
Name: Ernie P. Friesen
------------------------------
Title: Assistant Vice President
-----------------------------
Investments

By: /s/ A.R. PURCHASE
--------------------------------
Name: A.R. Purchase
------------------------------
Title: Vice President
-----------------------------
Investments

LIFE INVESTORS INSURANCE COMPANY OF
AMERICA

BY: /s/ DAVID R. HALFPAP
--------------------------------
NAME: David R. Halfpap
------------------------------
TITLE: Vice-President
-----------------------------

NATIONWIDE LIFE INSURANCE COMPANY

BY: /s/ MARK W. POEPPELMAN
--------------------------------
NAME: Mark W. Poeppelman
------------------------------
TITLE: Investment Officer
-----------------------------

<PAGE> 1

EXHIBIT 16

[LANE GORMAN TRUBITT, LLP LETTERHEAD]

June 12, 1998

Securities and Exchange Commission
450 Fifth Street N.W.
Washington, D.C. 20549

Gentlemen:

We have read the statements made by Clark/Bardes Holdings, Inc. (the
"Company"), which we understand will be filed with the Securities and Exchange
Commission, pursuant to Item 11(i) of Form S-1, as part of the Company's
registration statement on Form S-1. We agree with the statements concerning our
firm in such Form S-1.

/s/ LANE GORMAN TRUBITT, LLP
Lane Gorman Trubitt, LLP

<PAGE> 1

EXHIBIT 23.1

CONSENT OF INDEPENDENT AUDITORS

We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated February 18, 1998 (except for Note 15, as to which
the date is July 10, 1998), in Amendment No. 1 to the Registration Statement
(Form S-1 No. 333-56799) and related Prospectus of Clark/Bardes, Inc. (the
predecessor company to Clark/Bardes Holdings, Inc.) for the registration of
shares of its common stock.

/s/ ERNST & YOUNG LLP
------------------------------------
ERNST & YOUNG LLP

Dallas, Texas

July 27, 1998

<PAGE> 1

EXHIBIT 23.2

CONSENT OF LANE GORMAN TRUBITT, L.L.P.

We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated February 7, 1997, with respect to the financial
statements of Clark/Bardes, Inc. included in the Registration Statement (Form
S-1) of Clark/Bardes, Inc. for the registration of its Common Stock.

/s/ LANE GORMAN TREELITT, L.L.P.
------------------------------------
LANE GORMAN TREELITT, L.L.P.

Dallas, Texas

July 27, 1998

<PAGE> 1
EXHIBIT 23.3

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the use in Amendment No. 1 to Registration Statement No.
333-56799 on Form S-1 of our report dated February 18, 1997, related to the
financial statements of Bank Compensation Strategies Group as of December 31,
1996 and 1995, and for the years then ended. We also consent to the reference
to our Firm under the caption "Experts" in the Prospectus.

/s/ McGLADREY & PULLEN, LLP

McGLADREY & PULLEN, LLP

Minneapolis, Minnesota
July 27, 1998

<ARTICLE> 5

<S> <C> <C>
<PERIOD-TYPE> YEAR 6-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1998
<PERIOD-START> JAN-01-1997 JAN-01-1998
<PERIOD-END> DEC-31-1997 JUN-30-1998
<CASH> 3,782,941 6,305,094
<SECURITIES> 0 0
<RECEIVABLES> 8,286,859 3,138,497
<ALLOWANCES> 78,000 78,000
<INVENTORY> 0 0
<CURRENT-ASSETS> 12,037,611 9,665,575
<PP&E> 2,229,121 2,364,726
<DEPRECIATION> 1,513,267 1,617,390
<TOTAL-ASSETS> 36,901,890 35,559,778
<CURRENT-LIABILITIES> 9,743,367 9,258,510
<BONDS> 32,383,143 31,388,143
0 0
0 0
<COMMON> 5,162,281 5,463,631
<OTHER-SE> 3,188,699 3,378,044
<TOTAL-LIABILITY-AND-EQUITY> 36,901,890 35,559,778
<SALES> 0 0
<TOTAL-REVENUES> 49,455,419 28,984,959
<CGS> 0 0
<TOTAL-COSTS> 32,439,092 18,203,681
<OTHER-EXPENSES> 11,800,965 8,841,641
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 1,111,995 1,803,750
<INCOME-PRETAX> 4,293,889 303,370
<INCOME-TAX> 60,000 14,000
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 4,233,889 289,370
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0

</TABLE>