**Exhibit 2.1**

 

**PURCHASEAGREEMENT**

** **

**BY ANDAMONG**

** **

**HARLEYSVILLENATIONAL BANK AND TRUST COMPANY,**

** **

**CORNERSTONEFINANCIAL CONSULTANTS, LTD.,**

** **

**CORNERSTONEINSTITUTIONAL INVESTORS, INC.,**

** **

**CORNERSTONEADVISORS ASSET MANAGEMENT, INC.,**

** **

**CORNERSTONEMANAGEMENT RESOURCES, INC.,**

** **

**JOHN R.YAISSLE,**

** **

**MALCOLML. COWEN, II,**

** **

**AND**

** **

**THOMASJ. SCALICI**

 

 

**DATEDAS OF NOVEMBER 15, 2005**

 

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**TABLEOF CONTENTS**

 
| ARTICLE 1. |   | CERTAIN DEFINITIONS                                                        | 2      |
|------------|--------|----------------------------------------------------------------------------|--------|
|       |   |                                                                       |   |
| 1.1.       |   | Definitions                                                                | 2      |
| 1.2.       |   | Rules of Construction                                                      | 9      |
|       |   |                                                                       |   |
| ARTICLE 2. |   | PURCHASE AND SALE OF THE CFC SHARES AND CII SHARES                         | 9      |
|       |   |                                                                       |   |
| ARTICLE 3. |   | PURCHASE AND SALE OF CAAM ASSETS; ASSUMPTION OF ASSUMED CAAM  LIABILITIES  | 9      |
|       |   |                                                                       |   |
| 3.1.       |   | Purchase and Sale of CAAM Assets                                           | 9      |
| 3.2.       |   | Retained Assets                                                            | 11     |
| 3.3.       |   | Liabilities to be Assumed                                                  | 11     |
| 3.4.       |   | Retained Liabilities                                                       | 11     |
|       |   |                                                                       |   |
| ARTICLE 4. |   | PURCHASE AND SALE OF CMR CONTRACTS; ASSUMPTION OF ASSUMED  CMR LIABILITIES | 12     |
|       |   |                                                                       |   |
| 4.1.       |   | Purchase and Sale of CMR Contracts                                         | 12     |
| 4.2.       |   | Retained CMR Assets                                                        | 12     |
| 4.3.       |   | Liabilities to be Assumed                                                  | 12     |
| 4.4.       |   | Retained CMR Liabilities                                                   | 12     |
|       |   |                                                                       |   |
| ARTICLE 5. |   | M GROUP RIGHTS                                                             | 13     |
|       |   |                                                                       |   |
| 5.1.       |   | M Financial Group Interest                                                 | 13     |
| 5.2.       |   | Access to M Financial Group; Amendment to Agreement                        | 13     |
| 5.3.       |   | Approval From M Financial Group                                            | 13     |
|       |   |                                                                       |   |
| ARTICLE 6. |   | OTHER EXCLUDED ASSETS                                                      | 13     |
|       |   |                                                                       |   |
| 6.1.       |   | Life Insurance Policies                                                    | 13     |
| 6.2.       |   | Personal Property of Selling Shareholders                                  | 14     |
|       |   |                                                                       |   |
| ARTICLE 7. |   | PURCHASE PRICE, ADJUSTMENTS, PAYMENT, CLOSING                              | 14     |
|       |   |                                                                       |   |
| 7.1.       |   | Purchase Price                                                             | 14     |
| 7.2.       |   | Purchase Price Adjustment                                                  | 14     |
| 7.3.       |   | Allocation of Purchase Price                                               | 15     |
| 7.4.       |   | Sales, Use, Transfer and Other Taxes                                       | 16     |
| 7.5.       |   | Earn-Out.                                                                  | 16     |
| 7.6.       |   | Closing                                                                    | 17     |
|       |   |                                                                       |   |
| ARTICLE 8. |   | REPRESENTATIONS AND WARRANTIES OF THE SELLING SHAREHOLDERS                 | 17     |
|       |   |                                                                       |   |
| 8.1.       |   | Capacity of Selling Shareholders                                           | 17     |

 

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| 8.2.       |   | Validity and Execution of Agreements                                           | 18     |
|------------|--------|--------------------------------------------------------------------------------|--------|
| 8.3.       |   | Ownership of Shares.                                                           | 18     |
| 8.4.       |   | No Conflicts                                                                   | 18     |
| 8.5.       |   | No Government Proceedings                                                      | 18     |
| 8.6.       |   | Governmental Consents                                                          | 19     |
|       |   |                                                                           |   |
| ARTICLE 9. |   | REPRESENTATIONS AND WARRANTIES OF CORNERSTONE AND OF THE  SELLING SHAREHOLDERS | 19     |
|       |   |                                                                           |   |
| 9.1.       |   | Capacity                                                                       | 19     |
| 9.2.       |   | Capitalization of CFC and CII; Title to the Shares.                            | 19     |
| 9.3.       |   | Validity and Execution of Agreement                                            | 19     |
| 9.4.       |   | Subsidiaries                                                                   | 20     |
| 9.5.       |   | No Conflict                                                                    | 20     |
| 9.6.       |   | Financial Statements                                                           | 20     |
| 9.7.       |   | Absence of Undisclosed Liabilities                                             | 20     |
| 9.8.       |   | Absence of Certain Changes or Events                                           | 20     |
| 9.9.       |   | Real Estate                                                                    | 21     |
| 9.10.      |   | Registrations                                                                  | 21     |
| 9.11.      |   | Accounts Receivable                                                            | 21     |
| 9.12.      |   | Litigation                                                                     | 21     |
| 9.13.      |   | Material Contracts                                                             | 21     |
| 9.14.      |   | ERISA.                                                                         | 22     |
| 9.15.      |   | Broker’s or Finder’s Fees                                            | 23     |
| 9.16.      |   | Insurance.                                                                     | 23     |
| 9.17.      |   | Tangible Property; Liens                                                       | 24     |
| 9.18.      |   | Intellectual Property                                                          | 24     |
| 9.19.      |   | Taxes                                                                          | 24     |
| 9.20.      |   | Compliance with Laws                                                           | 27     |
| 9.21.      |   | Investment Advisory Contracts; Clients.                                        | 27     |
| 9.22.      |   | Brokerage Accounts; Brokerage Clients                                          | 28     |
| 9.23.      |   | Investment Advisory Service Referral Arrangements                              | 28     |
| 9.24.      |   | Selected Dealer Agreements                                                     | 28     |
| 9.25.      |   | ERISA Clients.                                                                 | 28     |
| 9.26.      |   | Regulatory Compliance.                                                         | 29     |
| 9.27.      |   | Investment Adviser Registration                                                | 31     |
| 9.28.      |   | Investment Performance                                                         | 31     |
| 9.29.      |   | Execution and Brokerage Allocation Practices                                   | 31     |
| 9.30.      |   | Broker-Dealer Registration                                                     | 31     |
| 9.31.      |   | Insurance Agency Contracts.                                                    | 33     |
| 9.32.      |   | Governmental Consents                                                          | 34     |
| 9.33.      |   | Employees.                                                                     | 34     |
| 9.34.      |   | Bank Accounts                                                                  | 35     |
| 9.35.      |   | Transactions with Related Parties                                              | 35     |
| 9.36.      |   | No Indebtedness; Distributions                                                 | 35     |
| 9.37.      |   | M Financial Group                                                              | 35     |
| 9.38.      |   | Disclosure                                                                     | 36     |

 

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| ARTICLE 10. |   | REPRESENTATIONS AND WARRANTIES OF PURCHASER            | 36     |
|-------------|--------|--------------------------------------------------------|--------|
|        |   |                                                   |   |
| 10.1.       |   | Capacity of Purchaser                                  | 36     |
| 10.2.       |   | Validity and Execution of Agreement                    | 36     |
| 10.3.       |   | No Conflict                                            | 36     |
| 10.4.       |   | Governmental Consents                                  | 36     |
| 10.5.       |   | Broker’s or Finder’s Fees                    | 36     |
| 10.6.       |   | Litigation                                             | 36     |
|        |   |                                                   |   |
| ARTICLE 11. |   | COVENANTS FOR ACTION PRIOR TO THE CLOSING DATE         | 36     |
|        |   |                                                   |   |
| 11.1.       |   | Conduct of Cornerstone Business                        | 37     |
| 11.2.       |   | Access to Sellers; Prior Performance Data.             | 38     |
| 11.3.       |   | No Public Announcement                                 | 38     |
| 11.4.       |   | No Shopping                                            | 39     |
| 11.5.       |   | Contract Consents.                                     | 39     |
| 11.6.       |   | Insurance Agency Matters.                              | 39     |
| 11.7.       |   | M Group Rights                                         | 40     |
| 11.8.       |   | Debt.                                                  | 40     |
| 11.9.       |   | Duty to Advise the Seller Representative               | 40     |
| 11.10.      |   | Duty to Advise Purchaser                               | 40     |
| 11.11.      |   | Efforts and Further Assurances                         | 40     |
| 11.12.      |   | Interim Financial Statements                           | 41     |
| 11.13.      |   | Payment of Engagement Fees                             | 41     |
| 11.14.      |   | Employees                                              | 41     |
| 11.15.      |   | NASD and MSRB Filings and Approvals                    | 41     |
| 11.16.      |   | Employee Benefit Plans                                 | 42     |
|        |   |                                                   |   |
| ARTICLE 12. |   | COVENANTS FOR ACTIONS AFTER THE CLOSING DATE           | 42     |
|        |   |                                                   |   |
| 12.1.       |   | Further Assurances; Transition.                        | 42     |
| 12.2.       |   | Access to Books and Records; Record Retention.         | 42     |
| 12.3.       |   | Prior Performance                                      | 43     |
| 12.4.       |   | Change of Name                                         | 43     |
| 12.5.       |   | Incentive Plans                                        | 43     |
| 12.6.       |   | Regulatory Filings and Approvals                       | 43     |
| 12.7.       |   | COBRA                                                  | 43     |
| 12.8.       |   | Bank Accounts                                          | 44     |
| 12.9.       |   | Conduct of the Cornerstone Business After the Closing. | 44     |
|        |   |                                                   |   |
| ARTICLE 13. |   | CONDITIONS TO CLOSING                                  | 44     |
|        |   |                                                   |   |
| 13.1.       |   | Conditions to the Obligations of Parties               | 44     |
| 13.2.       |   | Conditions to the Obligation of the Sellers            | 45     |
| 13.3.       |   | Conditions to Obligation of Purchaser                  | 45     |
|        |   |                                                   |   |
| ARTICLE 14. |   | ADDITIONAL AGREEMENTS                                  | 50     |
|        |   |                                                   |   |
| 14.1.       |   | Non-competition.                                       | 50     |
| 14.2.       |   | Tax Matters.                                           | 51     |
| 14.3.       |   | Seller Representative                                  | 55     |

 

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| ARTICLE 15. |   | TERMINATION AND REMEDIES                                  | 55     |
|-------------|--------|-----------------------------------------------------------|--------|
|        |   |                                                      |   |
| 15.1.       |   | Termination                                               | 55     |
| 15.2.       |   | Remedies.                                                 | 56     |
|        |   |                                                      |   |
| ARTICLE 16. |   | INDEMNIFICATION                                           | 57     |
|        |   |                                                      |   |
| 16.1.       |   | Survival of Representations and Warranties.               | 57     |
| 16.2.       |   | Indemnification by CAAM, CMR and the Selling Shareholders | 57     |
| 16.3.       |   | Indemnification by Purchaser                              | 58     |
| 16.4.       |   | Assertion of Claims.                                      | 58     |
| 16.5.       |   | Limitations on Indemnification                            | 59     |
| 16.6.       |   | Set-Off                                                   | 60     |
|        |   |                                                      |   |
| ARTICLE 17. |   | GENERAL PROVISIONS                                        | 60     |
|        |   |                                                      |   |
| 17.1.       |   | Expenses                                                  | 60     |
| 17.2.       |   | Execution in Counterparts; Binding Effect                 | 60     |
| 17.3.       |   | Confidentiality                                           | 60     |
| 17.4.       |   | Governing Law                                             | 61     |
| 17.5.       |   | Dispute Resolution                                        | 61     |
| 17.6.       |   | Notices                                                   | 62     |
| 17.7.       |   | Titles and Headings                                       | 63     |
| 17.8.       |   | Successors and Assigns; Beneficiaries.                    | 63     |
| 17.9.       |   | Entire Agreement                                          | 63     |
| 17.10.      |   | Waivers and Amendments                                    | 64     |
| 17.11.      |   | Severability                                              | 64     |

 
| **EXHIBIT** | ** ** | **TITLE**                                                    |
|-------------|------------|--------------------------------------------------------------|
| A           |       | Disclosure  Schedule                                         |
| B           |       | Related  Agreements                                          |
| C           |       | Escrow  Agreement                                            |
| D           |       | Cornerstone  Form of Investment Advisory Agreement           |
| E           |       | Investment  Advisory Consent Letter                          |
| F           |       | Dealer  Agreement Consent Letter                             |
| G           |       | Employment  Agreement                                        |
| H           |       | Incentive  Pool Agreement                                    |
| I           |       | Confidential  Closing Letter Addendum dated January 13, 2006 |
|        |       |                                                         |

 

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THIS PURCHASE AGREEMENT(together with the Disclosure Schedule (as hereinafter defined) and all of theExhibits hereto, this “**Agreement**”), ismade and entered into as of this 15th day of November, 2005, by and amongHarleysville National Bank and Trust Company, a national banking association,or its designee(s) (“**Purchaser**”),Cornerstone Financial Consultants, Ltd., a Pennsylvania corporation (“**CFC**”), Cornerstone Institutional Investors, Inc., aPennsylvania corporation (“**CII**”),Cornerstone Advisors Asset Management, Inc., a Pennsylvania corporation (“**CAAM**”), Cornerstone Management Resources, Inc., a Pennsylvaniacorporation (“**CMR**,” and together with CFC, CIIand CAAM, “**Cornerstone**”), John R. Yaissle, anindividual with an address at 4221 Ravenswood Road, Allentown, PA 18103 (“**Yaissle**”), Malcolm L. Cowen, II, an individual with anaddress at 2801 Main St EXT, Bethlehem, PA 18107 (“**Cowen**”), and Thomas J. Scalici, anindividual with an address at 221 North 28th Street, Allentown, PA 18104 (“**Scalici**,” and together with Yaissle and Cowen, “**Selling Shareholders**”) (Cornerstone and SellingShareholders, collectively, “**Sellers**”)(Sellers, Purchaser, and the Seller Representative (as hereinafter defined),collectively, the “**Parties**”).

 

WHEREAS, CFC is in thebusiness of providing advice on business development and succession and estateplanning for privately held businesses and their owners having a net worth inexcess of $10 million (the “**CFC Business**”);and

 

WHEREAS, CII is in thebusiness of providing investment advisory services to institutional clients(including pension and profit sharing plans, foundations and endowments,corporations, hospitals, charitable organizations and public funds) andindividual clients (including natural persons, families, and personal trusts),targeting individuals and organizations with between $250,000 and $5 million ininvestable assets, and providing broker-dealer services with respect tosecurities, including municipal securities (the “**CII Business**”);and

 

WHEREAS, CAAM is in thebusiness of providing investment advisory services to institutional clients(including pension and profit sharing plans, foundations and endowments,corporations, hospitals, charitable organizations and public funds) andindividual clients (including natural persons, families, and personal trusts),targeting wealthy individuals and families having at least $5 million ininvestable assets and middle market institutions having at least $10 million ininvestable assets (“**CAAM Business**”);and

 

WHEREAS, CMR employs allemployees of Cornerstone used in the CFC Business, CII Business and CAAMBusiness (“**CMR Business**”); and

 

WHEREAS, Purchaser desiresto purchase and acquire from Selling Shareholders, and Selling Shareholdersdesire to sell and transfer to Purchaser, all of the presently issued andoutstanding shares of capital stock of CFC and CII, all on the terms and conditionsset forth in this Agreement; and

 

WHEREAS, Purchaser desiresto purchase and acquire from CAAM, and CAAM desires to sell and transfer toPurchaser, substantially all of the assets used in the CAAM Business, all onthe terms and conditions set forth in this Agreement; and

 

WHEREAS, Purchaser desiresto purchase and acquire from CMR, and CMR desires to sell and transfer toPurchaser, certain contracts to which CMR is a party, all on the terms andconditions set forth in this Agreement; and

 

WHEREAS, Purchaser desiresto obtain the benefits of being a member of M Financial Group (including therights to sell or distribute its proprietary insurance products) following theClosing, and the Parties seek to investigate with M Financial Group the variousalternative means of transferring such benefits to Purchaser as part of thetransactions contemplated by this Agreement; and

 

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WHEREAS, each Party hascontemporaneously with the execution of this Agreement, executed and deliveredcertain additional documents to one or more of the other Parties and causedother documents to be delivered to one or more of the other Parties.

 

In consideration of theforegoing and the mutual terms, conditions and other agreements set forthherein, intending to be legally bound, the Parties hereby agree as follows:

 

# **ARTICLE 1.**CERTAIN DEFINITIONS

# ** **

## 1.1.          Definitions.  As used in this Agreement, the followingterms shall have the meanings set forth below.

##  

“1940Act” means the Investment Company Act of 1940, as amended, and the rulesand regulations thereunder.

 

“401(k)Plan” has the meaning set forth in Section 11.16.

 

“AccountingArbitrator” has the meaning set forth in Section 7.2(c).

 

“ActualNet Worth” has the meaning set forth in Section 7.2(c).

 

“AdvisersAct” has the meaning set forth in Section 9.26, and includes the rules andregulations thereunder.

 

“AdvisoryContracts” has the meaning set forth in Section 9.21.

 

“AdvisoryReferral Agreements” has the meaning set forth in Section 9.23.

 

“Affiliate”of any specified Person shall mean any other Person directly or indirectlycontrolling or controlled by or under direct or indirect common control withsuch specified Person.

 

“AggregateNet Worth” has the meaning set forth in Section 7.2(a).

 

“Agreement”has the meaning set forth in the first paragraph of this Agreement.

 

“AssignedAnnual Billings” has the meaning set forth in Section 13.3(g)(iii).

 

“AssignedBillings Percentage” has the meaning set forth in Section 13.3(g)(iii).

 

“AssumedCAAM Liabilities” has the meaning set forth in Section 3.3.

 

“AssumedCMR Liabilities” has the meaning set forth in Section 4.3.

 

“Authority”and “Authorities” shall mean any governmental or quasi-governmentalauthority, whether executive, legislative, judicial, administrative orotherwise, or any combination thereof, including any federal, state, local orforeign government or governmental or quasi-governmental agency, board, body,branch, bureau, commission, corporation, court, department, instrumentality orother political unit or subdivision or any entity of any of the foregoing,whether domestic or foreign, including the SEC, NASD and MSRB.

 

“BaseAnnual Billings” has the meaning set forth in Section 13.3(g)(i).

 

2

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“BrokerageAgreements” has the meaning set forth in Section 9.22.

 

“BusinessDay” shall mean any day other than a Saturday or a Sunday or a day on whichbanks are authorized or required to be closed by law in Philadelphia,Pennsylvania.

 

“CAAM”has the meaning set forth in the first paragraph of this Agreement.

 

“CAAM/CMRAgreement” has the meaning set forth in Section 3.2(a).

 

“CAAMAssets” has the meaning set forth in Section 3.1.

 

“CAAMBusiness” has the meaning set forth in the fourth paragraph of thisAgreement.

 

“CAAMContracts” has the meaning set forth in Section 3.1(b).

 

“Certificates”has the meaning set forth in Section 13.3(d)(i).

 

“CFC”has the meaning set forth in the first paragraph of this Agreement.

 

“CFCBusiness” has the meaning set forth in the second paragraph of thisAgreement.

 

“CFCShareholders Agreement” has the meaning set forth in Section 8.3(a).

 

“CFCShares” shall mean all of the presently issued and outstanding shares ofcapital stock of CFC.

 

“CFCTermination Agreement” has the meaning set forth in Section 13.3(d)(v).

 

“CII”has the meaning set forth in the first paragraph of this Agreement.

 

“CIIAudited Financial Statements” has the meaning set forth in Section 9.6.

 

“CIIBusiness” has the meaning set forth in the third paragraph of thisAgreement.

 

“CIIShareholders Agreement” has the meaning set forth in Section 8.3(b).

 

“CIIShares” shall mean all of the presently issued and outstanding shares ofcapital stock of CII.

 

“CIITermination Agreement” has the meaing set forth in Section 13.3(d)(vi).

 

“Clients”has the meaning set forth in Section 9.21(a).

 

“Closing”has the meaning set forth in Section 7.6.

 

“ClosingDate” has the meaning set forth in Section 7.6.

 

“CMR”has the meaning set forth in the first paragraph of this Agreement.

 

“CMR/CFC/CIIAgreements” has the meaning set forth in Section 4.2.

 

“CMRBusiness” has the meaning set forth in the fifth paragraph of thisAgreement.

 

3

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“CMRContracts” has the meaning set forth in Section 4.1.(1)

 

“CMRRecords” has the meaning set forth in Section 4.1.

 

“CPR”has the meaning set forth in Section 17.5(b).

 

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

 

“ContinuingEmployees” has the meaning set forth in Section 11.14.

 

“Control”when used with respect to any specified Person means the power to direct themanagement and/or policies of such Person, directly or indirectly, whetherthrough the ownership of voting securities, by contract, or otherwise; and theterms “controlling” and “controlled” have meanings correlative to theforegoing.

 

“Cornerstone”has the meaning set forth in the first paragraph of this Agreement.

 

“CornerstoneBusiness” shall mean, collectively, the CFC Business, the CII Business, theCAAM Business and the CMR Business.

 

“CounterpartPlans” has the meaning set forth in Section 11.14(b).

 

“Cowen”has the meaning set forth in the first paragraph of this Agreement.

 

“DealerAgreements” has the meaning set forth in Section 9.24.

 

“Dealers”has the meaning set forth in Section 9.24.

 

“DisclosureSchedule” shall mean the letter of even date herewith from Sellers toPurchaser containing various disclosures with respect to the representationsand warranties of Sellers set forth in this Agreement, a copy of which isattached hereto as Exhibit A.

 

“Earn-Out”has the meaning set forth in Section 7.5(a).

 

“Earn-OutPeriod” has the meaning set forth in Section 7.5(a).

 

“Earn-OutStatement” has the meaning set forth in Section 7.5(b).

 

“EBITDA”has the meaning set forth in Schedule 7.5.

 

“EmployeeBenefit Plans” has the meaning set forth in Section 9.14(a).

 

“EnvironmentalLaw” means any applicable federal, state, local or foreign law relating toRegulated Substances (as herein defined) or otherwise relating to protection ofthe environment or natural resources, including the Clean Air Act, the CleanWater Act, the Resource Conservation and Recovery Act, the ComprehensiveEnvironmental Response, Compensation and Liability Act and Superfund AmendmentReauthorization Act (“CERCLA”), the Toxic Substances Control Act, theEmergency Planning and Community Right-to-Know Act, the Hazardous SubstancesTransportation Act, the Safe

 

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(1)                   Thislist will include existing restrictive covenant, non-solicitation andconfidentiality agreements in place with any employee of CMR.

 

4

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Drinking Water Act and the Solid WasteDisposal Act, the Occupational Safety & Health Act, and comparable state,local or foreign laws.

“ERISA”has the meaning set forth in Section 9.14(a).

 

“EscrowAgreement” has the meaning set forth in Section 7.1.

 

“EstimatedNet Worth” has the meaning set forth in Section 7.2(a).

 

“ExchangeAct” shall mean the Securities Exchange Act of 1934, as amended.

 

“FinancialStatements” has the meaning set forth in Section 9.6.

 

“Form8023” has the meaning set forth in Section 14.2(a)(ii).

 

“HNB”shall mean Harleysville National Bank and Trust Company, a national bankingassociation.

 

“IncentivePool Agreement” has the meaning set forth in Section 13.2(d)(v).

 

“IndemnifiedParty” has the meaning set forth in Section 16.4(a).

 

“IndemnifyingParty” has the meaning set forth in Section 16.4(a).

 

“InsuranceAgency Contracts” has the meaning set forth in Section 9.31(a).

 

“InsuranceClients” has the meaning set forth in Section 9.31(c).

 

“IntellectualProperty” shall mean all trade secrets and confidential businessinformation (including customer and client lists, ideas, market research,know-how, technical and/or financial data, pricing and cost information, andbusiness and marketing plans and proposals), trademarks, service marks, tradenames (including “Cornerstone,” “Cornerstone Advisors,” and “CornerstoneAdvisors Asset Management, Inc.”), and corporate names (including “CornerstoneAdvisors Asset Management, Inc.”), patents, copyrights, domain names (including“www.cornerstone-companies.com”), applications for registration of anyintellectual property, all computer software (including data and relateddocumentation), rights to all telephone numbers, websites (including any URLsrelated thereto), and all other proprietary methods, processes and products.

 

“InvestmentAdvisory Services” shall mean the rendering of any investment advisory,investment management and investment supervisory services in the United Statesto clients, both individual and institutional, which have been customarilyprovided by CFC, CII and CAAM, including (i) the giving of advice with respectto either the investment and/or reinvestment of assets or funds or the selectionof  investment management professionalsor firms, and (ii) financial planning for individuals and entities, such as thepreparation of financial plans and tax returns, the monitoring of investmentsand the performance of general consulting with respect to taxes, investments orother financial matters.

 

“Leases”has the meaning set forth in Section 9.9.

 

“Lien(s)”shall mean any lien, pledge, mortgage, security interest, lease, charge,option, right of first refusal, easement, servitude, transfer restriction underany shareholder or similar agreement, or any encumbrance.

 

5

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“Loss”or “Losses” has the meaning set forth in Section 16.2.

 

“MGroup ICP” has the meaning set forth in Section 5.1.

 

“MGroup Marketing Agreement” has the meaning set forth in Section 5.1.

 

“MGroup Stock” has the meaning set forth in Section 9.37.

 

“MGroup Stockholder” shall mean YMCS Limited Partnership.

 

“MaterialAdverse Effect” shall mean any change or effect that is materially adverseto the business, operations, properties (including intangible properties) orfinancial condition of any one or more of CFC, CII or CAAM, taken individuallyor as a whole or (ii) that would (or could reasonably be expected to with thepassage of time) materially impair the ability of any one or more of theSellers to perform its or his obligations hereunder.

 

“Mediator”has the meaning set forth in Section 17.5(b)

 

“MinimumAmount” has the meaning set forth in Section 16.5(a).

 

“MSRB”shall mean the Municipal Securities Rulemaking Board or any successor entity.

 

“NASD”shall mean the National Association of Securities Dealers, Inc. and NASDRegulation, Inc. or any successor entity.

 

“OCC”has the meaning set forth in Section 13.3(i)(ii).

 

“OriginalSchedule” has the meaning set forth in Section 13.3(g)(i).

 

“Parties”has the meaning set forth in the first paragraph of this Agreement.

 

“Person”shall mean any individual, sole proprietorship, partnership, joint venture,limited liability company, limited liability partnership, trust, estate,unincorporated organization, association, corporation, institution, or otherentity.

 

“PurchasePrice” has the meaning set forth in Section 7.1.

 

“PurchasePrice Adjustment” has the meaning set forth in Section 7.2.

 

“PurchasedItems” has the meaning set forth in Section 7.1.

 

“Purchaser”has the meaning set forth in the first paragraph of this Agreement.

 

“PurchaserCut-off Date” has the meaning set forth in Section 16.1(e).

 

“PurchaserGroup” has the meaning set forth in Section 16.2.

 

“PurchaserMinimum Amount” has the meaning set forth in Section 16.5(c).

 

“QPAMExemption” has the meaning set forth in Section 9.25(b).

 

“ReceivingEntity” means each entity into which any Purchased Items are placed.

 

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“Registrations”has the meaning set forth in Section 9.10.

 

“RegulatedSubstances” shall mean any flammable explosives, radioactive materials,hazardous materials, hazardous substances, hazardous wastes, extremelyhazardous waste, restricted hazardous waste, infectious waste, hazardous ortoxic substances, hazardous or toxic pollutant or related materials, asbestosor any material containing asbestos, or petroleum, or any other substance,mixture, waste compound, material, element, product, or matter as defined byany Federal, state or local environmental law, ordinance, rule, or regulation,including the Environmental Laws and in the regulations adopted andpublications promulgated pursuant thereto at any time; any oil, petroleum orpetroleum derived substance; any drilling fluids, produced waters and otherwastes associated with the exploration, development or production of crude oil,natural gas or geothermal resources; any flammable substances or explosives;any radioactive materials; asbestos in any form which is or could becomefriable; urea formaldehyde foam insulation; electrical equipment which containsany oil or dielectric fluid containing levels of polychlorinated biphenyls inexcess of fifty parts per million; pesticides; and any other chemical, materialor substance, exposure to which is prohibited, limited or regulated by anygovernmental authority as one that may or could pose a hazard to theenvironment or to the health and safety of the owners, occupants or any persons.

 

“Regulations”means the income tax regulations promulgated under the Code.

 

“RelatedAgreements” means those agreements described on Exhibit B attached heretoand any other document, instrument or certificate contemplated by or requiredin connection with this Agreement.

 

“RelatedPerson” shall mean (a) a Selling Shareholder or any former shareholder ofany of CFC, CII, CAAM or CMR; (b) the directors, officers and managers of CFC,CII, CAAM and CMR and any of their spouses, children and other linealdescendants and any other member of their immediate family, as defined in Rule16a-1 under the Exchange Act; (c) any corporation, partnership, jointventure or other entity or other enterprise owned or controlled by a SellingShareholder or any former shareholder of any of CFC, CII, CAAM and CMR or byany person in (b); and (d) any trust of which a Selling Shareholder or anyformer shareholder of any of CFC, CII, CAAM and CMR or any person in (b) is atrustee, grantor or beneficiary.

 

“RestrictedPeriod” has the meaning set forth in Section 14.1(b)(ii).

 

“RetainedCAAM Liabilities” has the meaning set forth in Section 3.4.

 

“RetainedCMR Assets” has the meaning set forth in Section 4.2.

 

“RetainedCMR Liabilities” has the meaning set forth in Section 4.4.

 

“RevisedSchedule” has the meaning set forth in Section 13.3(g)(ii).

 

“Scalici”has the meaning set forth in the first paragraph of this Agreement.

 

“SEC”shall mean the United States Securities and Exchange Commission.

 

“Section338 Election Forms” has the meaning set forth in Section 14.2(a)(ii).

 

“Section338 Elections” has the meaning set forth in Section 14.2(a)(ii).

 

7

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“Section338(g) Elections” has the meaning set forth in Section 14.2(a)(i)(C).

 

“Section338(g) Subelections” has the meaning set forth in Section 14.2(a)(i)(D).

 

“Section338(h)(10) Elections” has the meaning set forth in Section 14.2(a)(i)(A).

 

“Section338(h)(10) Subelections” has the meaning set forth in Section14.2(a)(i)(B).

 

“SecuritiesAct” shall mean the Securities Act of 1933, as amended.

 

“SellerCut-Off Date” has the meaning set forth in Section 16.1(c).

 

“SellerRepresentative” has the meaning set forth in Section 14.3(a).

 

“SellingShareholder Group” has the meaning set forth in Section 16.3.

 

“SellingShareholders” has the meaning set forth in the first paragraph of thisAgreement.

 

“Sellers”has the meaning set forth in the first paragraph of this Agreement.

 

“Shares”shall mean, collectively, the CFC Shares and the CII Shares.

 

“Tax”or “Taxes” shall mean any and all federal, state, local and foreign(whether imposed by a country or political subdivision or authority thereunder)taxes, assessments and other governmental charges, duties, impositions andliabilities relating to taxes, including taxes comprising, based upon ormeasured by gross receipts, income, profits, sales, use, occupation, valueadded, ad valorem, transfer, franchise, withholding, payroll, recapture,employment, excise, license, lease, service, service use, severance, stamp,premium, customs, duties and property taxes, or any other taxes, fiscal leviesor charges, all of the foregoing together with all interest, penalties andadditions imposed with respect to such amounts and any obligations under anyagreements or arrangements with any other Person with respect to such amountsand including any liability for taxes of a predecessor entity, and the term“Tax” means any one of the foregoing Taxes.

 

“TaxReturns” or “Returns” shall mean all returns, declarations, reports,estimates, information returns, statements and other documents relating toTaxes, and the term “Tax Return” or “Return” means any one of the foregoing TaxReturns.

 

“ThirdParty Claims” has the meaning set forth in Section 16.4(c).

 

“TrademarkAssignment” has the meaning set forth in Section 13.3(d)(xiii).

 

“UnauditedBalance Sheet” has the meaning set forth in Section 9.11.

 

“UnauditedFinancial Statements”****has themeaning set forth in Section 9.6.

 

“USGAAP” shall mean generally accepted accounting principles in the UnitedStates in effect from time to time.

 

“Waiverand Release” has the meaning set forth in Section 13.3(d)(iv).

 

“Yaissle”has the meaning set forth in the first paragraph of this Agreement.

 

8

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## 1.2.          Rulesof Construction.  The definitions inSection 1.1 shall apply equally to both the singular and plural forms ofthe terms defined.  Whenever the contextmay require, any pronoun shall include the corresponding masculine, feminineand neuter forms.  The words “include,”“includes” and “including” shall be deemed to be followed by the phrase “butnot limited to” or “without limitation.” The word “or” is disjunctive, but not necessarily exclusive.  All references herein to Articles, Sections,Exhibits and Schedules shall be deemed references to Articles and Sections of,and Exhibits and Schedules to, this Agreement unless the context shallotherwise require.  All Exhibits andSchedules attached to this Agreement shall be deemed incorporated herein byreference as if fully set forth herein. Words such as “herein,” “hereof,” “hereto,” “hereby” and “hereunder”refer to this Agreement and to the Schedules and Exhibits, taken as a whole.  Except as otherwise expressly providedherein:  (a) any reference in thisAgreement to any agreement shall mean such agreement as amended, restated,supplemented or otherwise modified from time to time; (b) any reference inthis Agreement to any law shall include corresponding provisions of any successorlaw and any regulations and rules promulgated pursuant to such law or suchsuccessor law; and (c) all terms of an accounting or financial natureshall be construed in accordance with US GAAP consistently applied, as ineffect from time to time.  Neither the captionsto Articles, Sections or subdivisions thereof nor the Table of Contents shallbe deemed to be a part of this Agreement.

##  

A Person will be deemed to have “knowledge”of a particular fact or other matters if he is actually aware of such fact orother matter or should have known of such fact or other matter given hisinvolvement in or authority over the referenced business.  For purposes of this Agreement, the phrases“knowledge of Sellers,” “to Sellers’ knowledge” or “to the best of Sellers’knowledge” shall refer to the knowledge (as defined above) of all officers anddirectors of CFC, CII, CAAM and CMR and other persons with substantialoperational or compliance responsibilities with any one or more of CFC, CII,CAAM and CMR.

 

# **ARTICLE 2.**PURCHASE AND SALE OF THE CFC SHARES AND CII SHARES

# ** **

On the terms and subject to the conditions of this Agreement, and inreliance upon the representations, warranties, covenants, and agreements of theParties contained herein, at the Closing, the Selling Shareholders shall sell,transfer, convey, assign, and deliver to Purchaser, and Purchaser shallpurchase and acquire from the Selling Shareholders, free and clear of allLiens, the CFC Shares and the CII Shares.

 

# **ARTICLE 3.**PURCHASE AND SALE OF CAAM ASSETS; ASSUMPTION OF ASSUMED CAAM LIABILITIES

# ** **

## 3.1.          Purchaseand Sale of CAAM Assets.  On theterms and subject to the conditions of this Agreement, and in reliance upon therepresentations, warranties, covenants and agreements of the Parties containedherein, at the Closing, CAAM shall sell, transfer, convey, assign and deliverto Purchaser, and Purchaser shall purchase and acquire from CAAM, all of thebusiness, property, and assets owned or held by CAAM which are used by it inconnection with the CAAM Business (including the business, property, and assetsidentified below in this Section 3.1) wherever located and whether or notreflected on the books of CAAM, both tangible and intangible, free and clear ofall Liens and all as the same shall exist on the Closing Date (collectively,the “**CAAM Assets**”).  The CAAM Assets shall include, but not belimited to, the following:

##  

### (a)           AdvisoryContracts.  All Advisory Contractsand all Advisory Referral Agreements of CAAM;

 

9

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### (b)          CAAMContracts.  All leases, contracts,agreements and commitments (other than Advisory Contracts and Advisory ReferralAgreements described in Section 3.1(a) above), whether in writing or orallyagreed to, which are specifically listed on Schedule 3.1(b) (collectively, the“**CAAM****Contracts**”).  All CAAM Contracts that require the consentof another party to be assigned are designated on Schedule 3.1(b), includingspecification of the parties who must consent to the assignment;

###  

### (c)           Licenses;Permits.  All of CAAM’s interest ingovernmental licenses, permits, registrations, approvals, certificates,consents, authorizations, and identification numbers, to the extenttransferable to Purchaser or temporarily usable by Purchaser, including thoselisted on Schedule 3.1(c), but excluding CAAM’s registration as an investmentadvisor under the Advisers Act;

###  

### (d)          Recordsand Files.  Originals and copies ofbooks, records and files of CAAM relating to the CAAM Business (excluding anycorporate minute and stock books) or any of the CAAM Assets, including clientprospect records and files, customer files, accounting records, compliancepolicies and procedures and correspondence regarding all regulatory matters;

###  

### (e)           Cash.  All cash on hand or in bank accounts and allcash equivalents or investments of any kind or nature owned by CAAM or relatedto the CAAM Business as of the Closing Date;

###  

### (f)           AccountsReceivable.  All rights to thecollection of money under the accounts receivable of the CAAM Business;

###  

### (g)          IntellectualProperty.  All Intellectual Propertyowned by CAAM (whether registered, unregistered, or at common law) and allrights of CAAM to use Intellectual Property in the CAAM Business pursuant tolicense, sublicense or other permission, including such Intellectual Propertylisted on Schedule 9.18 for CAAM;

###  

### (h)          Goodwill.  All other intangible property rights of CAAMassociated with the CAAM Business, including the goodwill of the CAAM Business;

###  

### (i)            Equipment.  All machinery, equipment (includingcomputers, other data processing equipment and software related thereto),vehicles, furniture, furnishings, office equipment, supplies and parts, andother items of tangible personal property owned by CAAM or used in connectionwith the CAAM Business, including those items listed on Schedule 9.17 for CAAMand any additions or replacements made between the date of this Agreement andthe Closing;

###  

### (j)            AdvertisingMaterials.  All advertising andmarketing plans, strategies and materials relating to the CAAM Business,including all catalogs, brochures and art work;

###  

### (k)           Warranties.  All express or implied warranties of any kindor nature of all third parties relating to the CAAM Assets, including allexpress written warranties, all implied warranties of merchantability, allexpress or implied warranties of title and all express or implied warranties offitness for a particular purpose;

###  

### (l)            InsurancePolicies.  All fidelity bonds orother insurance policies maintained or required to be maintained in connectionwith its business to the extent assignable; and

###  

### (m)          PrepaidExpenses.  All prepaid expenses anddeposits of CAAM relating to the CAAM Business, to the extent transferable toPurchaser.

 

10

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## 3.2.          RetainedAssets.  Notwithstanding the provisionsof Section 3.1, CAAM shall not sell, transfer, assign, convey or deliver toPurchaser, and Purchaser shall not purchase or accept from CAAM, the followingassets of CAAM:

##  

### (a)           CertainAdvisory Contracts and CAAM Contracts. All rights or entitlements of CAAM under and pursuant to (i) anyAdvisory Contract or CAAM Contract for which consent to transfer to Purchaseris required and not obtained prior to or at the Closing, subject to thepost-Closing covenants with regard to any such Advisory Contracts or CAAMContracts in Section 12.1(b), and (ii) all leases, contracts, agreements, andcommitments, whether in writing or orally agreed to, pertaining to CAAM or theCAAM Business that are not listed on Schedule 3.1(b) as a CAAM Contract(including that certain Management Reimbursement Agreement between CAAM and CMRas set forth in Schedule 9.13 (“**CAAM/CMR Agreement**”));and

###  

### (b)          Other.  The assets listed on Schedule 3.2(b).

###  

## 3.3.          Liabilitiesto be Assumed.  On the terms andsubject to the conditions of this Agreement and the consummation of thetransactions contemplated by this Agreement, on the Closing Date, Purchasershall assume and shall pay, discharge and perform when due only the liabilitiesand obligations of CAAM arising and accruing on and after the Closing Date inconnection with, and relating exclusively to, the operation of the CAAMBusiness and/or the CAAM Assets, under or with respect to the following(collectively, the “**Assumed CAAM Liabilities**”):

##  

### (a)           AdvisoryContracts of CAAM and CAAM Contracts referred to in Schedule 3.1(b) andreferenced therein as transferable or as requiring consent of any third partywhich is obtained on or before the Closing;

###  

### (b)          Tradepayables of CAAM which are set forth on Schedule 3.3(b) and which were incurredin the ordinary course of business on or before the Closing Date; and

###  

### (c)           Accruedliabilities of CAAM which are set forth on Schedule 3.3(c) and which wereincurred in the ordinary course of business on or before the Closing Date.

###  

## 3.4.          RetainedLiabilities.  CAAM and the SellingShareholders shall retain all obligations and responsibilities for any claims,debts, defaults, duties or liabilities of the CAAM Business, the CAAM Assets,the Selling Shareholders or of CAAM, whether known or unknown, contingent orfixed, not specifically assumed by Purchaser, or which Purchaser has notspecifically assumed under or with respect to this Agreement (collectively, the“**Retained CAAM Liabilities**”), including(i) all obligations and liabilities of CAAM arising, accruing or relating tothe CAAM Business or CAAM prior to the Closing Date, (ii) all obligations andliabilities of the CAAM Business, CAAM or the Selling Shareholders arisingunder any Environmental Law prior to the Closing Date; (iii) all Taxesconcerning CAAM, (iv) all obligations and liabilities with respect to thePersons providing services to CAAM, including any compensation, bonuses,incentives, severance, retention payments or benefits accruing to any suchPerson, except as expressly set forth in this Agreement, and (v) allobligations and liabilities of CAAM arising under the CAAM/CMR Agreement.  Purchaser shall have no obligation under thisAgreement, by operation of law or otherwise, to assume, pay or discharge any ofthe Retained CAAM Liabilities.  Followingthe Closing, CAAM and the Selling Shareholders agree to punctually pay, performand discharge when due all Retained CAAM Liabilities, except those beingcontested or denied by CAAM or the Selling Shareholders in good faith.

 

11

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# **ARTICLE 4.**PURCHASE AND SALE OF CMR CONTRACTS; ASSUMPTION OF ASSUMED CMR LIABILITIES

# ** **

## 4.1.          Purchaseand Sale of CMR Contracts.  On theterms and subject to the conditions of this Agreement, and in reliance upon therepresentations, warranties, covenants and agreements of the Parties containedherein, at the Closing, CMR shall transfer and assign to Purchaser, andPurchaser shall acquire from CMR, all contracts, agreements, and commitmentswhether in writing or orally agreed to, which are specifically listed onSchedule 4.1 (collectively, the “**CMR Contracts**”)and all originals and copies of all books, records and files of CMR relating tothe employees of CMR (“**CMR Records**”).  All CMR Contracts that require the consent ofanother party to be assigned are designated on Schedule 4.1 includingspecification of the parties who must consent to the assignment.

##  

## 4.2.          RetainedCMR Assets.  Notwithstanding anyother provision of this Agreement, and except for the CMR Contracts and CMRRecords, CMR shall not sell, transfer, assign, convey, or deliver to Purchaser,and Purchaser shall not purchase or accept from CMR, any of the businesses,properties, or assets owned by CMR nor any CMR Contract not referred to inSchedule 4.1 (including the CAAM/CMR Agreement and those certain ManagementReimbursement Agreements between CMR and each of CFC and CII as set forth inSchedule 9.13 (collectively, “**CMR/CFC/CII Agreements**”))or for which consent to transfer to Purchaser is required and not obtained priorto or at the Closing, subject to the post-Closing covenants with regard to anysuch CMR Contracts in Section 12.1(b) (collectively the “**Retained CMRAssets**”).

##  

## 4.3.          Liabilitiesto be Assumed.  On the terms andsubject to the conditions of this Agreement and the consummation of thetransactions contemplated by this Agreement, on the Closing Date, Purchasershall assume and shall pay, discharge and perform when due only the liabilitiesand obligations of CMR arising and accruing on and after the Closing Date inconnection with, and relating exclusively to the CMR Contracts (collectively,the “**Assumed CMR Liabilities**”).

##  

## 4.4.          RetainedCMR Liabilities.  CMR and the SellingShareholders shall retain all obligations and responsibilities for any claims,debts, defaults, duties, or liabilities of CMR or the Selling Shareholders,whether known or unknown, contingent or fixed, not specifically assumed byPurchaser, or which Purchaser has not specifically assumed under or withrespect to this Agreement (collectively, the “**Retained CMRLiabilities**”), including (i) all obligations and liabilities of CMRarising, accruing or relating to CMR prior to the Closing Date, (ii) allobligations and liabilities of CMR or the Selling Shareholders arising underany Environmental Law, (iii) all Taxes concerning CMR, (iv) all obligations andliabilities with respect to CMR’s employees, except as expressly set forth inthe Agreement, (v) all bonuses and incentive compensation and all deferredcompensation, severance, and retention payments due to any employee of CMRrelated to such obligations in existence on or before the Closing, regardlessof whether the employee is a Continuing Employee or not, including thoseobligations set forth in that certain Deferred Compensation Agreement, dated asof January 1, 2000, with Donna Wanamaker and that certain Deferred CompensationAgreement, dated as of March 1, 1995, with Yaissle, (vi) all liabilities andobligations of CMR relating to CMR’s 401(k) Plan, Savings and Profit SharingPlan, (vii) all liabilities and obligations under all other Employee BenefitPlans and other plan arrangements and agreements listed in Schedule 9.14, and(viii) all obligations and liabilities of CMR arising under the CMR/CFC/CIIAgreements.  Purchaser shall have no obligationunder this Agreement, by operation of law or otherwise, to assume, pay ordischarge any of the Retained CMR Liabilities. Following the Closing, CMR and the Selling Shareholders agree topunctually pay, perform and discharge when due all Retained CMR Liabilities,except those being contested or denied by CMR or the Selling Shareholders ingood faith.

 

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# **ARTICLE 5.**M GROUP RIGHTS

# ** **

## 5.1.          MFinancial Group Interest.  SellingShareholders believe that the relationship with M Financial Group is worthpreserving as part of the insurance business of Cornerstone being operated byPurchaser following the Closing, and the Parties seek to evaluate the variousoptions in continuing such relationship as part of the transactionscontemplated by this Agreement.  TheParties acknowledge, however, that Purchaser has not had any directconversations, and Sellers have had only preliminary general discussions(without naming the Purchaser), with M Financial Group about this Agreement andthe transactions contemplated herein (including those set forth in this Section5.1).  Therefore, following execution ofthis Agreement the Parties shall have the opportunity to approach M Financial Groupto evaluate various alternative transactions that would permit Purchaser toobtain the benefits of CFC (or any Affiliate or successor thereto) being amember of M Financial Group following the Closing, including obtaining (i) therights to sell or distribute the proprietary insurance products offered by theM Financial Group under that certain M Financial Group Marketing Agreement (**“M Group Marketing Agreement”**) and (ii) rights to receivecash distributions from the M Financial Group under that certain M GroupIncentive Compensation Plan (**“M Group ICP”**).  Nothing in this Section 5.1 shall beconstrued as limiting the ability of Purchaser or Sellers to discuss with MFinancial Group various alternative forms or structures of obtaining rights toparticipate in M Financial Group and entering into agreements related to sameas part of the transactions contemplated by this Agreement; provided, however,the Purchaser shall not pay additional purchase price to Sellers for obtainingany such benefits from M Financial Group.

##  

## 5.2.          Accessto M Financial Group; Amendment to Agreement.  From and after the execution and delivery ofthis Agreement to the Closing Date, the Sellers shall provide Purchaser withaccess to, and Purchaser shall be permitted to contact M Financial Group andany of its Affiliates ( to the extent M Financial Group will allow), withrespect to any matters pertaining to M Financial Group and the mattersdescribed in this Article 5.  Iffollowing such due diligence with M Financial Group, Purchaser and Sellers bothdetermine that this Agreement will need to be amended to modify the structureof the acquisition of CFC from a purchase of the capital stock of CFC to apurchase of substantially all of its assets or any similar modifications, thenthe Parties agree to negotiate the terms of an amendment to this Agreement(including any additional representations, warranties or covenants of theParties related to the existing and future relationships with M FinancialGroup) providing for such modifications and any other related revisions necessaryin connection therewith.

##  

## 5.3.          ApprovalFrom M Financial Group.  Sellers andPurchaser will cooperate to obtain the approval on or prior to Closing inwriting of M Financial Group of any transactions and related documentationarising from the discussion and negotiations described in this Article 5.  To the extent any such approval isconditioned on any terms that must be agreed to by Sellers or Purchaser oraffecting them in any way (including a condition that Purchaser enter into an MFinancial Group Third Party Ownership Agreement), any such terms or agreementsshall be acceptable to the respective Parties in their sole discretion.

##  

# **ARTICLE 6.**OTHER EXCLUDED ASSETS

# ** **

## 6.1.          LifeInsurance Policies.  Notwithstandinganything to the contrary set forth herein, Sellers shall not sell, transfer,assign, convey or deliver to Purchaser, and Purchaser shall not purchase oraccept from Sellers, the cash values of the life insurance policies listed onSchedule 6.1.  True, correct and completecopies of these policies have been provided to Purchaser.

 

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## 6.2.          PersonalProperty of Selling Shareholders. Notwithstanding anything to the contrary set forth herein, SellingShareholders and Sellers shall not transfer to Purchaser any personal propertyof the Selling Shareholders which is presently located in any property leasedby Cornerstone which is listed on Schedule 6.2.

##  

# **ARTICLE 7.**PURCHASE PRICE, ADJUSTMENTS, PAYMENT, CLOSING

# ** **

## 7.1.          PurchasePrice.  In consideration of the saleand transfer of the CFC Shares, CII Shares, CAAM Assets, CMR Contracts, CMRRecords, rights in M Financial Group and the restrictive covenants containedherein (collectively, the “**Purchased Items**”)as provided in Articles 2, 3, 4 and 5 and Section 14.1 of this Agreement,Purchaser shall, subject to adjustment pursuant to Section 7.2, pay thepurchase price (the “**Purchase Price**”)as follows:  (i) pay an aggregate amountequal to Fifteen Million Dollars ($15,000,000) (as adjusted pursuant to Section7.2 below) at Closing, which shall be paid to the Persons and in the amountsset forth in Schedule 7.1, (ii) following the Closing pay to the SellerRepresentative on behalf of Selling Shareholders and CAAM any amounts earnedunder the Earn-Out (if any) as additional purchase price in accordance with theterms set forth in Section 7.5, and (iii) assume the Assumed CAAMLiabilities and Assumed CMR Liabilities as set forth in Articles 3 and 4above.  At the Closing, Five HundredThousand Dollars ($500,000) of the Purchase Price shall be retained in anescrow account with a mutually satisfactory escrow agent for a period of one(1) year from the Closing Date (or such longer period as indemnification claimsremains unresolved) as security to Purchaser for any breach of anyrepresentation, warranty or covenants by CAAM, CMR or the Selling Shareholders,such escrow agreement to be in the form attached hereto as Exhibit C (the “**Escrow Agreement**”). The remainder of the Purchase Price payable under Section 7.1(i) shallbe paid at Closing by delivery of cash payable by wire transfer.  The Seller Representative shall providePurchaser with its designated bank account for the wire at least two (2)business Days prior to Closing.

##  

## 7.2.          PurchasePrice Adjustment.  The Purchase Priceshall be adjusted in accordance with the provisions of this Section 7.2 (“**Purchase Price Adjustment**”).

##  

### (a)           Atleast three (3) Business Days prior to the Closing Date, Seller Representativeshall deliver to Purchaser in writing a good faith estimate of the AggregateNet Worth (as defined below) as of the Closing Date (“**EstimatedNet Worth**”), setting forth his computation in reasonabledetail.  If Purchaser does not agree withsuch computation of the Estimated Net Worth, Purchaser shall so notify SellerRepresentative prior to Closing.  In suchevent, each party shall make available to the other such books and records asare relevant to such disagreement as are in possession of such party, and theParties shall work together in good faith to resolve such disagreement.  “**Aggregate Net Worth**”shall be defined herein as the sum of the net worth of each of CII, CFC andCAAM (only including the CAAM Assets and Assumed CAAM Liabilities), alldetermined as of the Closing Date in accordance with US GAAP.

###  

### (b)          ThePurchase Price will be adjusted at Closing as follows:

###  

#### (i)            IfEstimated Net Worth calculated by Seller Representative under Section 7.2(a) isless than Four Hundred Thousand Dollars ($400,000), the Purchase Price paid atClosing shall be decreased by the amount of such shortfall.

####  

#### (ii)           IfEstimated Net Worth calculated by Seller Representative under Section 7.2(a)exceeds Four Hundred Thousand Dollars ($400,000), the Purchase Price paid atClosing shall be increased by the amount of such excess.

 

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### (c)           Withinthirty (30) days following the Closing Date, Purchaser shall compute theAggregate Net Worth as of the Closing Date (“**Actual NetWorth**”) and shall deliver to Seller Representative a notice in writingwhich shall set forth Purchaser’s computation in reasonable detail.  If Seller Representative does not agree withsuch computation of the Actual Net Worth, Seller Representative shall so notifyPurchaser within thirty (30) days of Seller Representative’s receipt of noticefrom Purchaser.  In such event, eachparty shall make available to the other such books and records as are relevantto such disagreement and are in possession of such party, and a seniorexecutive of Purchaser and Seller Representative shall work together in goodfaith for thirty (30) days to resolve such disagreement.  If and only if any disagreement remainsunresolved after such thirty (30) day period, then the Actual Net Worth and theresultant Purchase Price Adjustment shall be determined by a regional ornational accounting firm of good reputation mutually acceptable to Purchaserand the Seller Representative (such firm appointed, the “**AccountingArbitrator**”).  The AccountingArbitrator shall have as terms of reference a written submission of Purchaserand Sellers within thirty (30) days after its appointment, and the AccountingArbitrator shall determine within sixty (60) days after its appointment theamount of the Actual Net Worth and the **r**esultingadjustment, if any, to the****Purchase PriceAdjustment within the conditions reflecting the intention of the Partiescontained in this Agreement.  Thedecision of the Accounting Arbitrator shall set forth the amount of the ActualNet Worth and the Purchase Price Adjustment to be paid to Purchaser or SellerRepresentative on behalf of Sellers, as the case may be, and will be binding onthe Parties without any right of dispute or appeal.  The fees and charges of the AccountingArbitrator for purposes of this Section 7.2(c) shall be borne equally by theSeller Representative (on behalf of Sellers) and the Purchaser.  It is understood that, in the event thedetermination of the Actual Net Worth and Purchase Price Adjustment shall besubmitted to arbitration in accordance with this Section 7.2(c), Purchasershall not be estopped from taking a position with respect to the determinationof Actual Net Worth that is different from that reflected in its initialcalculation of Actual Net Worth.

###  

### (d)          TheParties shall be required to cooperate with the Accounting Arbitrator and itsrepresentatives in the furtherance of its mission and shall arrange for it andits representatives to have access to their respective premises, employees andrecords so as to carry out its task, on reasonable notice and during workinghours.

###  

### (e)           Withintwo (2) Business Days following the determination of the Accounting Arbitratorunder Section 7.2(c), (i) if the Actual Net Worth determined by the AccountingArbitrator under Section 7.2(c) is less than the Estimated Net Worth determinedby Seller Representative under Section 7.2(a), Sellers shall pay to Purchaserthe difference between such amounts, and (ii) if the Actual Net Worthdetermined by the Accounting Arbitrator under Section 7.2(c) is more than theEstimated Net Worth determined by Seller Representative under Section 7.2(a),Purchaser shall pay to Seller Representative for the benefit of Sellers thedifference between such amounts.  ThePurchase Price Adjustment payment pursuant to this Section 7.2(e) shall be paidin immediately available funds.

###  

## 7.3.          Allocationof Purchase Price.  The PurchasePrice shall be allocated among the Purchased Items and, in the case of CII andCFC, the assets of such entities in accordance with the Section 338 Electionsapplicable thereto, as set forth on Schedule 7.3.  The Parties agree that such allocation isfair and equitable and was prepared using the allocation methods and principlesrequired by the Code and the Regulations. The Parties further agree to act in a manner consistent with suchallocation for all purposes, including the filing and preparation of allfederal, state and local tax returns filed by them subsequent to the ClosingDate, the preparation and filing of any forms or schedules with respect to thetransactions contemplated by this Agreement, and the determination by Sellersof taxable gain or loss of the Purchased Items (including any gain or lossresulting from the Section 338 Elections) and the determination by Purchaser ofits tax basis with respect to the Purchased Items and, with respect to CII andCFC, the adjusted basis of their assets as a result of the Section 338Elections.

 

15

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## 7.4.          Sales,Use, Transfer and Other Taxes. Purchaser shall be responsible for all sales, use, transfer and similarTaxes and recording and filing fees arising from the sale of the PurchasedItems to Purchaser.  Sellers shall beresponsible for all other Taxes resulting from the sale of the Purchased Itemsto Purchaser, including Taxes resulting from gain attributable to the Section338 Elections (and the deemed asset sales resulting therefrom), from thepurchase and sale of the assets of CAAM and Taxes with respect to covenants notto compete.

##  

## 7.5.          Earn-Out.

##  

### (a)           Overa period of five (5) years following the Closing, with such five (5) yearperiod commencing January 1, 2006 (the “**Earn-Out Period**”),Purchaser will pay the Seller Representative on behalf of the SellingShareholders and CAAM an earn-out (“**Earn-Out**”) ofup to Seven Million Dollars ($7,000,000) based upon the formula set forth onSchedule 7.5 attached hereto.

###  

### (b)           TheEarn-Out earned hereunder shall be paid annually to the Seller Representativeby Purchaser on or before March 15 of the year following the year for which theEarn-Out is due, or, if later, within 5 Business Days of a final determinationwith regard to a disagreement under 7.5(c) below.  On or before February 15 of each such year,Purchaser shall furnish to the Seller Representative a statement calculatingthe Earn-Out (“**Earn-Out Statement**”).

###  

### (c)           Inthe event that Seller Representative disagrees with such Earn-Out Statement,the Seller Representative shall notify Purchaser of such disagreement withreasonable details of the basis for such disagreement, within thirty (30) daysafter the Earn-Out Statement is delivered**.**  In such event, such disagreement will firstbe referred to a senior executive officer of Purchaser and the SellerRepresentative, who will endeavor in good faith to resolve any suchdisagreement within thirty (30) days after the commencement of suchdiscussions.  If and only if anydisagreement remains unresolved after such thirty (30) day period, then theEarn-Out shall be determined by an Accounting Arbitrator.  The Accounting Arbitrator shall have as termsof reference a written submission from Seller Representative and Purchaserwithin thirty (30) days after its appointment, and the Accounting Arbitratorshall determine within sixty (60) days after its appointment the amount of theEarn-Out and the resulting adjustment, if any, to the payment made by Purchaserin respect of such Earn-Out within the conditions reflecting the intention ofthe Parties contained in this Agreement. The decision of the Accounting Arbitrator shall set forth the amount ofthe Earn-Out to be paid to Purchaser or Seller Representative on behalf ofSelling Shareholders and CAAM, as the case may be, and will be binding on therelevant Parties without any right of dispute or appeal.  The fees and charges of the AccountingArbitrator for purposes of this Section 7.5(c) shall be borne equally by SellerRepresentative (on behalf of the Selling Shareholders and CAAM), andPurchaser.  It is understood that, in theevent the determination of the Earn-Out shall be submitted to arbitration in accordancewith this Section 7.5(c), neither Purchaser nor Seller Representative shall beestopped from taking a position with respect to the determination of Earn-Outthat is different from that reflected in the Earn-Out Statement.

###  

### (d)           TheParties (other than CMR) shall be required to cooperate with the AccountingArbitrator and its representatives in the furtherance of its mission and shallarrange for it and its representatives to have access to their premises,employees and records so as to carry out its task, on reasonable notice andduring working hours.

###  

### (e)           Withintwo (2) Business Days following the determination of the Accounting Arbitratorunder Section 7.5(c), (i) if the Earn-Out determined by the AccountingArbitrator under Section 7.5(c) is less than the Earn-Out determined byPurchaser under Section 7.5(b), the Selling Shareholders and CAAM shall pay toPurchaser the difference between such amounts, and (ii) if the Earn-Outdetermined by the Accounting Arbitrator under Section 7.5(c) is more than theEarn-Out determined by

 

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### Purchaser under Section 7.2(a), Purchaser shall pay to SellerRepresentative (on behalf of the Selling Shareholders and CAAM) the differencebetween such amounts.  The paymentspursuant to this Section 7.5(e) shall be paid in immediately available funds.

###  

### (f)            TheSelling Shareholders and CAAM shall not have the right to exercise their rightto contest an Earn-Out Statement under Section 7.5(c) more than once per anygiven calendar year, and the right to contest any such Earn-Out Statement underSection 7.5(c) shall expire if the Seller Representative fails to notifyPurchaser of any such disagreement within thirty (30) days after such Earn-OutStatement is delivered to the Seller Representative.

###  

### (g)           Notwithstandingthe foregoing in this Section 7.5, a Selling Shareholder’s and CAAM’s right tothe Earn-Out may vest immediately upon the happening of certain events asdescribed in such Selling Shareholder’s Employment Agreement, all in accordancewith the terms and conditions set forth in such Employment Agreement.

###  

### (h)           Ifthe Closing shall occur on any date after January 4, 2006, then the partiesagree to treat the transactions as being closed on January 4, 2006 for purposesof the Earn-Out.  In particular, theParties shall calculate the EBITDA (as modified below) of CII, CFC and CAAM forthe period between January 4, 2006 and the date the Closing takes place, andthis amount shall be promptly paid to Purchaser by the Sellers and, if receivedby Purchaser, shall be credited to EBITDA for 2006 as calculated in Schedule7.5 hereto.  Sellers agree not to makeany payments or receive any payments (e.g, cash checks) on behalf of CII, CFCor CAAM in 2006 on or prior to January 4, 2006. Solely for purposes of calculating EBITDA under this Section 7.5(h) andthe amount to be paid to Purchaser, interest, taxes, depreciation andamortization shall not be taken into account. The Parties will cooperate in good faith to carry out the intent to closeby January 4, 2006 or, if delayed, attempt to treat the transaction as if itclosed on January 4, 2006.

###  

## 7.6.          Closing.  The consummation of the purchase and sale ofthe Purchased Items in accordance with this Agreement (the “**Closing**”) shall commence at 10:00 a.m., local time, at thePhiladelphia offices of Stradley, Ronon, Stevens & Young, LLP on January 4,2006, or at such other time and place as Purchaser and Seller Representativeshall agree upon in writing.  The date ofthe Closing is referred to as the “**Closing Date**.”  The Parties shall deliver at the Closing suchdocuments, certificates of officers and other instruments as are set forth inArticle****13 hereof and as may reasonably berequired to effect the transfer by Sellers of the Purchased Items pursuant toand as contemplated by this Agreement. All events occurring at the Closing shall be deemed to occursimultaneously (with the concurrent payment of the Purchase Price due underSection 7.1(i), assumption of liabilities under Section 7.1(iii) and deliveryof the documents required to be delivered pursuant to Article 13).  If the Closing shall occur on any date afterJanuary 4, 2006, then the parties agree to treat the transactions as beingclosed on January 4, 2006 (and CII, CFC and CAAM were operated for the benefitof Purchaser) for accounting purposes and for purposes of the calculation ofthe Earn-Out (as further described above in Section 7.05(h)).

##  

# **ARTICLE 8.**REPRESENTATIONS AND WARRANTIES OF THE SELLING SHAREHOLDERS

# ** **

Each Selling Shareholderjointly and severally represents and warrants to Purchaser as follows:

 

## 8.1.          Capacityof Selling Shareholders.  EachSelling Shareholder has the legal capacity to enter into this Agreement and anyRelated Agreement to which he is a party and perform his obligations hereunderand thereunder.

 

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## 8.2.          Validityand Execution of Agreements.  ThisAgreement has been, and each of the Related Agreements to which each SellingShareholder is a party will be on or before Closing, duly executed anddelivered by each Selling Shareholder, and this Agreement constitutes, and anysuch related Agreements will constitute when executed and delivered, valid andbinding obligation of each Selling Shareholder enforceable against such SellingShareholder in accordance with its terms.

##  

## 8.3.          Ownershipof Shares.

##  

### (a)           CFCShares.  The CFC Shares listed onSchedule 8.3(a) opposite each Selling Shareholder’s name (i) are owned on thedate of this Agreement beneficially and of record by such Selling Shareholder,(ii) will be owned beneficially and of record immediately prior to the Closingby such Selling Shareholder, free and clear of any Liens, and (iii) constituteall of the shares of CFC Shares stock owned beneficially or of record by suchSelling Shareholder.  Except for thatcertain Shareholders Agreement dated as of January 1, 1996 by and amongCFC and the Selling Shareholders (the “**CFC Shareholders Agreement**”),no Selling Shareholder has granted to any Person any rights (including proxyrights) or options with respect to such Selling Shareholder’s CFC Shares, andno Selling Shareholder is a party to any voting trust or other agreement orunderstanding with respect to such CFC Shares. No Selling Shareholder has a claim against CFC or any of its officers,directors, or shareholders with respect to the issuance of any of the CFCShares.

###  

### (b)          CIIShares.  The CII Shares listed onSchedule 8.3(b) opposite each Selling Shareholder’s name (i) are owned on thedate of this Agreement beneficially and of record by such Selling Shareholder,(ii) will be owned beneficially and of record immediately prior to the ClosingDate by such Selling Shareholder, free and clear of any Liens, and (iii)constitute all of the shares of CII Shares stock owned beneficially or ofrecord by such Selling Shareholder. Except for that certain Shareholders Agreement dated as of June 1,1998 by and among CII and the Selling Shareholders (the “**CIIShareholders Agreement**”), no Selling Shareholder has granted to anyPerson any rights (including proxy rights) or options with respect to suchSelling Shareholder’s CII Shares, and no Selling Shareholder is a party to anyvoting trust or other agreement or understanding with respect to such CIIShares.  No Selling Shareholder has aclaim against CII or any of its officers, directors, or shareholders withrespect to the issuance of any of the CII Shares.

###  

## 8.4.          NoConflicts.  Except as set forth inSchedule 8.4, neither the execution and delivery of this Agreement or anyRelated Agreement to which each Selling Shareholder is a party, nor theperformance by each Selling Shareholder of the transactions contemplated hereinor therein, will (a) violate or constitute a default, or require notice and/orconsent under, any mortgage, indenture, deed of trust, lease, contract,agreement, license, registration or other instrument, statute, rule orregulation, or any order, judgment or ruling of any governmental authority towhich such Selling Shareholder is a party or by which such SellingShareholder’s property is bound or (b) result in the creation of any Lien uponthe CFC Shares or the CII Shares owned by such Selling Shareholder.

##  

## 8.5.          NoGovernment Proceedings.  No SellingShareholder has been the subject of any governmental proceeding, investigationor inquiry involving the SEC, NASD, MSRB or any other Authority havingjurisdiction over the business activities of such Selling Shareholder orCornerstone and, during the past ten years, has not been indicted or convictedof any felony.  No Selling Shareholderhas been the subject of any order, judgment, or decree of any court ofcompetent jurisdiction or Authority, permanently or temporarily enjoining himfrom, or otherwise limiting, the following activities:  (a) acting as an investment adviser,insurance agent, underwriter, broker or dealer in securities (includingmunicipal securities), or engaging in or continuing any conduct or practice inconnection with such activity, (b) engaging in any type of business practice,or (c) engaging in any activity in connection with the purchase or sale of anysecurity or in connection with any violation of federal or state securitieslaws.

 

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## 8.6.          GovernmentalConsents.  Except as disclosed inSchedule 8.6, the execution, delivery and performance of this Agreement by theSelling Shareholders does not require any consent from, action by or in respectof, or filing with, any court or governmental body, agency or official.

##  

# **ARTICLE 9.**REPRESENTATIONS AND WARRANTIES OF CORNERSTONE AND OF THE SELLING SHAREHOLDERS

# ** **

EachSelling Shareholder and each of CFC, CII, CAAM and CMR, jointly and severally,represent and warrant to Purchaser as follows:

 

## 9.1.          Capacity.  Each of CFC, CII, CAAM and CMR is acorporation duly organized, validly existing, and in good standing under thelaws of the Commonwealth of Pennsylvania. Each of CFC, CII, CAAM and CMR has all requisite corporate power to owneach of their respective properties and carry on each of their respective businessesas now being conducted and is duly qualified to do business in eachjurisdiction in which the nature of each of their respective businesses orproperties makes such qualification necessary, except where the failure to beso qualified would not, individually or in the aggregate, have a MaterialAdverse Effect.  The jurisdictions whereeach of CFC, CII, CAAM and CMR is so qualified are set forth in Schedule9.1.  Complete and correct copies of theArticles of Incorporation and By-Laws, each as amended to the date hereof, foreach of CFC, CII, CAAM and CMR have been made available to Purchaser.

##  

## 9.2.          Capitalizationof CFC and CII; Title to the Shares.

##  

### (a)           CFCShares.  The authorized capital stockof CFC consists of 10,000 shares, of which 2,000 shares are issued andoutstanding and will be outstanding as of Closing.  The CFC Shares have been validly issued, arefully paid and nonassessable, and have not been issued in violation of anypreemptive rights of stockholders.  Nooptions, warrants or other rights to acquire, sell or issue shares of capitalstock of CFC, whether upon conversion of other securities or otherwise, areoutstanding or have been previously issued.

###  

### (b)          CIIShares.  The authorized capital stockof CII consists of 1,000 shares, of which 100 shares are issued and outstandingand will be outstanding as of Closing. The CII Shares have been validly issued, are fully paid andnonassessable, and have not been issued in violation of any preemptive rights ofstockholders.  No options, warrants orother rights to acquire, sell or issue shares of capital stock of CII, whetherupon conversion of other securities or otherwise, are outstanding or have beenpreviously issued.

###  

## 9.3.          Validityand Execution of Agreement.  Theexecution and delivery of this Agreement and the Related Agreements to whicheach of CFC, CII, CAAM and CMR is a party by each of CFC, CII, CAAM and CMR andthe performance of the transactions herein and therein contemplated have beenduly and validly authorized by all necessary corporate action on the part ofeach of CFC, CII, CAAM and CMR.  Theboard of directors and shareholders of each of CFC, CII, CAAM and CMR has dulyadopted and approved this Agreement and the Related Agreements to which each ofthem is a party, and no further corporate action is required for this Agreementand the Related Agreements to which each of CFC, CII, CAAM and CMR is a partyto be enforceable against each of CFC, CII, CAAM and CMR.  This Agreement has been, and the RelatedAgreements to which each of CFC, CII, CAAM and CMR is a party will be on orbefore Closing, duly executed and delivered by each of them, and the Agreementsconstitute, and any such Related Agreements will constitute when executed anddelivered, valid and binding obligation of each of CFC, CII, CAAM and CMR,enforceable against each of them in accordance with their terms.

 

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## 9.4.          Subsidiaries.  None of the Cornerstone companies, eitherdirectly or indirectly, owns any equity interest of any Person other than thoseset forth in Schedule 9.4.

##  

## 9.5.          NoConflict.  Except as set forth inSchedule 9.5, neither the execution and delivery of this Agreement nor theperformance of the transactions contemplated herein by any of CFC, CII, CAAMand CMR will (i) violate or conflict with any of the provisions of the Articlesof Incorporation or By-laws of either of CFC, CII, CAAM or CMR; (ii) violate orconstitute a default, or require notice or consent, under any materialmortgage, indenture, deed of trust, lease, contract, agreement, license, orother instrument, or any order, judgment or ruling of any Authority, to whichany of CFC, CII, CAAM or CMR is a party or by which any of their respectiveproperties is bound; (iii) assuming the satisfaction of the requirements setforth in clause (iv) below, violate any provision of law applicable to any ofCFC, CII, CAAM or CMR; or (iv) except for requirements, if any, arising out ofany consents, actions and filings described in Section 9.32, require any consent,approval, filing or notice under any provision of law, statute, rule orregulation, applicable to any of CFC, CII, CAAM or CMR.

##  

## 9.6.          FinancialStatements.  Sellers previouslydelivered to Purchaser (a) audited balance sheets of CII as of December31, 2004 and the related statements of operations, statement of changes instockholder’s equity and statement of cash flows for the year then ended,including the notes thereto (collectively, the “**CII AuditedFinancial Statements**”), together with the report thereon ofCornerstone’s independent accountants, Parente Randolph, LLC, (b) theunaudited balance sheet of CFC and CAAM as of December 31, 2004 and the relatedunaudited statement of income, changes in retained earnings and supplementaryinformation for the year then ended, and (c) the unaudited balance sheet ofCII, CFC and CAAM as of June 30, 2005 and the related unaudited statement ofincome, changes in retained earnings and supplementary information for such sixmonth period ended (the items set forth in (b) and (c) hereof being referred toas the “**Unaudited Financial Statements**”).  The CII Audited Financial Statements and theUnaudited Financial Statements (collectively, the “**FinancialStatements**”) (i) were prepared from the books and records ofeach relevant entity and (ii) present fairly, in all material respects, thefinancial position of each such entity as of the respective dates specifiedtherein, and the results of operations, retained earnings and cash flows ofsuch entity for the respective periods then ended, in conformity with US GAAP.

##  

## 9.7.          Absenceof Undisclosed Liabilities.  Exceptas reflected elsewhere in this Agreement (including the accrued vacation andsick pay of employees reflected in Schedule 9.33(a)) or in the balance sheetsincluded in the Financial Statements, none of CFC, CII, CAAM or CMR has anyliabilities or obligations of any nature, whether absolute, accrued, contingentor otherwise, of a type and nature that would be required to be reported,reflected or reserved for in a balance sheet of Cornerstone prepared inaccordance with US GAAP (including, for purposes of this Section 9.7, anyfootnotes to such Financial Statements).

##  

## 9.8.          Absenceof Certain Changes or Events.  Exceptas set forth in Schedule 9.8, since December 31, 2004, each of CFC, CII, CAAMand CMR has operated its business only in the ordinary course and there has notbeen since June 30, 2005 (i) any change, event or development which has had orwould reasonably be expected to have, individually or in the aggregate, aMaterial Adverse Effect; (ii) except as contemplated by this Agreement, anysale, lease or mortgage of any of its properties or assets or the creation ofany Liens with respect thereto outside of the ordinary course of business;(iii) any increase, except as consistent with past practice, in the wages,salaries, compensation, pension or other benefits payable to any employee ofeach of CFC, CII, CAAM and CMR or to any consultant or independent contractor;or (iv) any change in accounting methods or in the maintenance or method ofpreparation of books and records.

 

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## 9.9.          RealEstate.  None of CFC, CII, CAAM orCMR owns any real property.  Schedule 9.9sets forth a summary description (including the parties thereto) of all leasesand agreements for real property in which Cornerstone is a party or its assetsare subject (“**Leases**”).  CMR does not lease any real property used bythe Cornerstone Business.

##  

## 9.10.        Registrations.  Except as set forth in Schedule 9.10, each ofCFC, CII, CAAM and CMR and their respective employees and agents have and willmaintain through Closing all registrations, licenses, permits and otherauthorizations (including having made all required notice filings), issued byor required from any Authority and necessary for each of the businesses of CFC,CII, CMR and CAAM, as presently conducted (and will have as of Closing all suchregistrations, licenses, permits and other authorizations necessary for thecontinued operation of the CFC Business and CII Business under new ownership insubstantially the same manner as it was conducted immediately prior to Closing)(“**Registrations**”).  Set forth in Schedule 9.10 is a list whichcontains all Registrations categorized by company.  Except as set forth in Schedule 9.10, each ofCFC, CII, CAAM and CMR and their respective employees and agents is incompliance with all Registrations and have not received any written notice ofviolation of any Registration, and none of such Registrations shall cease to remainin full force and effect following the Closing by reason of the transactionscontemplated by this Agreement.

##  

## 9.11.        AccountsReceivable.  Except as set forth inSchedule 9.11, (a) the accounts receivable reflected on the balance sheetincluded in the Unaudited Financial Statements (the “**UnauditedBalance Sheet**”) and the accounts receivable arising subsequent tosuch date, have arisen in the ordinary course of business for servicesperformed, and (b) subject to the terms and conditions set forth in any applicablecontracts and any reserves for items doubtful of collection as reflected on theUnaudited Balance Sheet, all of such accounts receivable are fully collectible(and not subject to any setoff or counterclaim) within 90 days of the ClosingDate.

##  

## 9.12.        Litigation.  Except as set forth in Schedule 9.12, thereis no lawsuit, or legal, administrative, or regulatory proceeding orinvestigation pending or, to the best of Sellers’ knowledge, threatened againstany of CFC, CII, CAAM or CMR or any of its directors, officers or employees(including the Selling Shareholders). There is no lawsuit or legal, administrative, or regulatory proceedingor investigation pending or, to the best of Sellers’ knowledge, threatened againstany of CFC, CII, CAAM or CMR or the Selling Shareholders which challenges thelegality of this Agreement or the transactions contemplated hereby.

##  

## 9.13.        MaterialContracts.  Except for (a) EmployeeBenefit Plans set forth in Schedule 9.14, (b) Leases for real property setforth on Schedule 9.9, (c) Advisory Contracts as set forth in Schedule9.21, (d) Brokerage Agreements as set forth in Schedule 9.22, (e) AdvisoryReferral Agreements as set forth in Schedule 9.23, (f) the Dealer Agreementsset forth in Schedule 9.24, and (g) Insurance Agency Contracts as set forth inSchedule 9.31, Schedule 9.13 sets forth, without duplication, all of thefollowing contracts to which each of CFC, CII, CAAM and CMR is a party or whichaffect the assets of any of CFC, CII, CAAM or CMR:  (i) contracts requiring aggregatepayments in any one year to or by any of CFC, CII, CAAM or CMR in excess of$20,000; (ii) contracts and other agreements containing covenants of any ofCFC, CII, CAAM or CMR or a Selling Shareholder or an employee of Cornerstonenot to compete in any line of business or with any Person in any geographicalarea or in any other manner; (iii) contracts and other agreements containingcovenants of any of CFC, CII, CAAM or CMR or a Selling Shareholder or anemployee of Cornerstone not to disclose confidential information of Cornerstoneor not to solicit clients and potential clients; (iv) contracts and otheragreements relating to the borrowing of money; (v) any guaranty issued by anyof CFC, CII, CAAM or CMR or any other arrangement under which any of CFC, CII,CAAM or CMR assumes any liability or obligation (including indebtedness) of anyother Person; (vi) any contract, agreement, arrangement or understanding notmade in the ordinary course of business and consistent with past practice;(vii) any

 

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## power of attorney granting any Person authority to executeagreements or otherwise act on behalf of any of CFC, CII, CAAM or CMR; (viii)any contract, agreement, arrangement or understanding granting to any Personthe right to use any property or property right of any of CFC, CII, CAAM orCMR; or (ix) any material contract, agreement, arrangement or understandingwith a Related Person.  Each Lease,Advisory Contract, Advisory Referral Agreement, Brokerage Agreement, DealerAgreement, Insurance Agency Contract, and contract listed in Schedule 9.13(true and complete copies of which have been delivered to Purchaser) is in fullforce and effect and constitutes a legal, valid and binding agreement,enforceable in accordance with its terms, of each of CFC, CII, CAAM, CMR and/ora Selling Shareholder, as applicable, and, to the knowledge of the Sellers, ofeach other party thereto.  Except as setforth in Schedule 9.13, no Seller is in default in any material respect of anyof its obligations under any Lease, Advisory Contract, Brokerage Agreement,Advisory Referral Agreement, Dealer Agreement, Insurance Agency Contract, orcontract listed in Schedule 9.13.  To thebest of Sellers’ knowledge, except as set forth in Schedule 9.13, no otherparty is in default in any material respect of any of its obligations under anyLease, Advisory Contract, Brokerage Agreement, Advisory Referral Agreement,Dealer Agreement, Insurance Agency Contract, or contract listed in Schedule9.13.  Except as set forth in Schedule9.13 and except with respect to any Advisory Contract, no consent of the otherparty to any contract listed in Schedule 9.13 or any Lease, BrokerageAgreement, Advisory Referral Agreement, Dealer Agreement or Insurance AgencyContract is required in connection with the transactions contemplated by thisAgreement or any Related Agreement.

##  

## 9.14.        ERISA.

##  

### (a)           Noneof CFC, CII, CAAM or CMR maintain or contribute to or have liability withrespect to any employee benefit plan, as defined in Section 3(3) of theEmployee Retirement Income Security Act of 1974, as amended (“**ERISA**”), other than the employee benefit plans listed inSchedule 9.14 (“**Employee Benefit Plans**”), none ofwhich is a multi-employer plan as described in Section 4001(a)(3) of ERISA or adefined benefit pension plan as defined in Section 3(2) of ERISA.  Other than as set forth in Schedule 9.14,there are no employment, collective bargaining or consulting agreements, severanceagreements or plans, employee pension or retirement plans, profit-sharingplans, savings plans, bonus, equity or deferred compensation plans (eitherfunded or unfunded) or any other compensation plans, programs or arrangementsproviding similar benefits to directors, officers, employees, shareholders, orretired employees of CFC, CII, CAAM or CMR. A true, accurate and complete copy of each such plan and the applicablesummary plan description, if any, has been provided to Purchaser.

###  

### (b)          Noprohibited transaction, as such term is defined in Section 406 of ERISA orSection 4975 of the Code, has occurred and continues uncorrected with respectto any Employee Benefit Plan and neither CFC, CII, CAAM nor CMR, nor any planset forth in Schedule 9.14 has or would be expected to have any liability underSection 406 of ERISA or Section 4975 of the Code.  No civil or criminal action brought pursuantto Part V, Title I of ERISA is pending or has been threatened against anyfiduciary of any such Employee Benefit Plan. Neither the Internal Revenue Service nor the Department of Labor iscurrently auditing or reviewing any Employee Benefit Plan and no Seller hasreceived notice, written or otherwise, of any impending audit or review of anysuch Employee Benefit Plan from the Internal Revenue Service or Department ofLabor.

###  

### (c)           Thereare no actions, suits or claims pending, other than routine claims forbenefits, brought or made by employees of CFC, CII, CAAM or CMR in the ordinarycourse with respect to the Employee Benefit Plans which, if determined adversely,would result in a Material Adverse Effect, and there are no such actions, suitsor claims threatened in writing, arising out of, or in connection with, theexistence, operation, maintenance or administration of the Employee BenefitPlans.

 

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### (d)          Neitherthe execution and delivery of this Agreement nor the consummation of thetransactions contemplated hereby constitutes a change in control or has or willaccelerate benefits under any Employee Benefit Plan or other agreement,arrangement or program, and none of CFC, CII, CAAM or CMR is a party to anyplan, program, arrangement or understanding or any that could result,separately or in the aggregate, in the payment (whether in connection with anytermination of employment or otherwise) of any “excess parachute payment”within the meaning of Section 280G of the Code with respect to a current orformer employee of, or current or former independent contractor to any of CFC,CII, CAAM or CMR.

###  

### (e)           NeitherCFC, CII, CAAM nor CMR, nor any entity that is treated as a single employerwith CFC, CII, CAAM or CMR under Sections 414(b) or (c) of the Code currentlymaintains or contributes to any plan that is subject to Title IV of ERISA, norhave they previously maintained or contributed to any such plan that hasresulted in any liability or potential liability to any of CFC, CII, CAAM orCMR under Title IV of ERISA.

###  

### (f)           Asof the Closing, all required contributions will have been made to each EmployeeBenefit Plan and other plan or arrangement set forth in Schedule 9.14, or willbe properly accrued for on CFC, CII or CAAM’s books and records.  Each of CFC, CII, CAAM and CMR has made allpayments and contributions (including employee salary reduction contributions)on a timely basis to each Employee Benefit Plan as required by the terms ofeach Plan and any applicable law or regulation.

###  

### (g)          NoParty would reasonably be expected to incur any liability or obligation for,under, with respect to or otherwise in connection with any plan, whichliability arises under ERISA or the Code by virtue of CFC, CII, CAAM or CMRbeing aggregated in a controlled group or affiliated service group with anyother entity for purposes of ERISA or the Code (including under Section 414(b),(c), (m) or (o) of the Code or Section 4001 of ERISA).

###  

## 9.15.        Broker’sor Finder’s Fees.  None of theSellers, nor any of their Affiliates, has authorized any Person to act as abroker, a finder or in any similar capacity in connection with the transactionscontemplated by this Agreement, other than WFG Capital Advisors LP**,**the fees and expenses of which shall be paid by theSelling Shareholders pursuant to Section 11.13.

##  

## 9.16.        Insurance.

##  

### (a)           Schedule9.16 sets forth information relating to insurance of Cornerstone maintained inthe regular course of its business, and constitutes a true and correct list ofthe insurance policies currently maintained by Cornerstone, including adescription of the type of coverage, name of insurer, name of insured, term ofpolicy, limits of liability, deductibles, and annual premiums for the currentyear.  All such policies taken together,to the best of Seller’s knowledge, provide adequate insurance coverage for theassets and operations of Cornerstone for all risks normally insured against bya Person carrying on the same business as the Cornerstone Business.  All such policies taken together aresufficient for compliance with all applicable laws, Registrations and contractsto which any of CFC, CII, CAAM or CMR is a party or bound.

###  

### (b)          Sellershave provided to Purchaser a complete and correct copy of each policy reflectedin Schedule 9.16.  With respect to eachsuch insurance policy:  (i) the policy isin full force and effect; (ii) all premiums due thereon have been paid in atimely manner; and (iii) no written notice of cancellation or termination hasbeen received with respect to any such policy. Each of CFC, CII, CAAM and CMR has been covered during the past five (5)years by insurance in scope and amount which is comparable to the insurance setforth in Schedule 9.16.

 

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## 9.17.        TangibleProperty; Liens.  Schedule 9.17contains a complete and correct list of all the equipment, furniture, leaseholdimprovements, fixtures, and any related capitalized items, owned, leased orused in the CFC Business, CII Business and CAAM Business.  Schedule 9.17 includes for each item listed atrue and correct description of:  (i) theitem, (ii) ownership of the item, (iii) any outstanding debt relating tosuch item.  Each item of tangiblepersonal property is in satisfactory operating condition and repair, ordinarywear and tear excepted.  All leasedpersonal property is in the condition required of such property by the terms ofthe lease applicable thereto, both during the term of the lease and upon theexpiration thereof.  The equipment,furniture, leasehold improvements, fixtures and any related capitalized itemsset forth in Schedule 9.17 include all such property necessary to operate theCornerstone Business after the Closing in the same manner as it has beenoperated prior to Closing.  Neither theSelling Shareholders nor CMR own or lease any such personal property used bythe Cornerstone Business.  Except as setforth in Schedule 9.17, CFC, CII and CAAM is in possession of and has goodtitle to all of such property free and clear of all Liens except for(A) Liens for Taxes not yet delinquent; or (B) Liens of landlords,carriers, mechanics, materialmen and repairmen incurred in the ordinary courseof business for sums not yet delinquent. All of the assets of CFC, CII and CAAM set forth in Schedule 9.17 willbe owned by CFC, CII or CAAM or available for use by CFC, CII or CAAM under avalid lease, license or other agreement on the Closing Date, and all suchassets of CAAM will be transferred to Purchaser as of the Closing.

##  

## 9.18.        IntellectualProperty.  Set forth on Schedule 9.18is a list of all Intellectual Property owned by any Seller or used in theCornerstone Business, and the name of each Seller owning or using each suchitem of Intellectual Property.  EachSeller owning or using such item or items of Intellectual Property either hasall right, title and interest in or a valid and binding license to use.  No other intellectual property is used ornecessary in the conduct of the Cornerstone Business as currentlyconducted.  Except as disclosed inSchedule 9.18, (a) to the best of Seller’s knowledge, the applicable Seller hasthe exclusive right to use the Intellectual Property disclosed in Schedule9.18, (b) all registrations of, and applications by, a Seller to any Authorityin respect of such Intellectual Property are valid and in full force andeffect, and (c) none of a Seller’s Intellectual Property infringes on therights of any other Person, or to the knowledge of any one or more of theSellers, is being infringed by any other Person.  All of the assets of Sellers set forth inSchedule 9.18 (including all website content) will be, in the case of CFC andCII, owned by such Seller or available for use by such Seller under a validlease, license or other agreement on the Closing Date and, in the case of CAAM,owned by Purchaser or available for use by Purchaser under a valid lease,license or other agreement on the Closing Date.

##  

## 9.19.        Taxes.  Except as disclosed in Schedule 9.19:

##  

### (a)           Thereserves for Taxes of CFC, CII, CAAM and CMR, included in the December 31,2004 balance sheet for each such entity are, and on the Closing Date balancesheet for the each such entity will be, sufficient for the payment of all suchTaxes not theretofore paid (including taxes incurred but not yet due andpayable) whether asserted or unasserted, contingent or otherwise, and whetheror not disputed, for the period ended December 31, 2004, and on the Closing Date,respectively, and for all periods prior thereto.

###  

### (b)          Asof the time of filing, all Tax Returns required to be filed under any federal,state, local or foreign laws by or on behalf of each of CFC, CII, CAAM and CMRwere in all material respects (and, as to Tax Returns not filed as of the datehereof until the Closing Date, will be in all material respects) true, completeand correct and filed on a timely basis. Each of CFC, CII, CAAM and CMR, within the time and in the mannerprescribed by law, has paid (and until the Closing Date will pay within thetime and in the manner prescribed by law) all Taxes shown on such Tax Returnsas well as any other Taxes that may be due. To the knowledge of each Seller, all transactions which could give riseto an understatement of income Tax (within the meaning of Section 6662 of theCode or any corresponding

 

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### provision of state, local or foreign Tax law) were adequatelydisclosed or, with respect to Tax Returns filed after the date hereof but on orbefore the Closing Date, will be adequately disclosed on the Tax Returns.

###  

### (c)           Tothe knowledge of Sellers, no claim has ever been made by an Authority in ajurisdiction where any of CFC, CII, CAAM or CMR does not file tax returns thatany of them is or may be subject to taxation by that jurisdiction.

###  

### (d)          Eachof CFC, CII, CAAM and CMR has complied (and until the Closing Date will comply)in all material respects with all applicable laws, rules and regulationsrelating to the payment and withholding of Taxes and similar provisions underany foreign laws and, except as is not material, have, within the time and inthe manner prescribed by law, withheld from employee wages and paid over to theproper Authorities all amounts required to be so withheld and paid over underall applicable laws.

###  

### (e)           Noneof the Selling Shareholders is a “foreign person” (as that term is defined inSection 1445 of the Code) and each shall furnish to Purchaser on or before theClosing Date certification of such Selling Shareholder’s non-foreign status, asset forth in Treasury Regulation §1.1445-2(b).

###  

### (f)           Noneof CFC, CII, CAAM and CMR is a “United States real property holdingcorporation” (as that term is defined in Section 897(c)(2) of the Code and TreasuryRegulation § 1.897-2(b)) and shall, upon request, furnish to Purchaser on orbefore the Closing a certification of each of CFC, CII, CAAM and CMR’snon-United States real property interest status, as set forth in RegulationsSections 1.1445-2(c) and 1.897-2(h).

###  

### (g)          Noneof CFC, CII, CAAM and CMR has executed any waiver of any statute of limitationson or extended the period for the assessment or collection of any Tax.

###  

### (h)          Noassessments or deficiency for any Tax has been proposed, asserted or assessedagainst any of CFC, CII, CAAM or CMR with respect to taxable periods ended onor before the Closing Date which has not been resolved, paid in full or fullyreserved in accordance with US GAAP in the Financial Statements.

###  

### (i)            Noaudit or other examination of any Tax or Tax Return of any of CFC, CII, CAAM orCMR is presently in progress, nor has any of CFC, CII, CAAM or CMR beennotified in writing of, nor, to the knowledge of each Seller, has there been,any threat of or request for such an audit or other examination with respect toany taxable year of any of CFC, CII, CAAM or CMR ending on or prior to theClosing Date.  To the knowledge of eachSeller, each of CFC, CII, CAAM and CMR is not the subject of any current orthreatened criminal investigation, examination or proceeding relating to thefiling of Tax Returns or the payment of Taxes and none is contemplated.

###  

### (j)            Noneof CFC, CII, CAAM and CMR is a party to any Tax sharing, Tax allocation, Taxindemnity or similar agreement.  Thereare no Liens for Taxes (other than for current Taxes not yet due and payable)upon the assets of each of CFC, CII, CAAM and CMR.  None of CFC, CII, CAAM and CMR has ever beena member of an affiliated group of corporations, within the meaning of Section1504 of the Code, or a member of an affiliated, combined or unitary group forstate or local income Tax purposes.  Noneof CFC, CII, CAAM and CMR is required to include in income any adjustmentspursuant to Section 481(a) of the Code by reason of a voluntary change in accountingmethod initiated by such entity and no Seller has any knowledge that theInternal Revenue Service has proposed such adjustment in accounting method.

 

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### (k)           Noneof the transactions contemplated by this Agreement will be a factor causing anypayments made or to be made by any of CFC, CII, CAAM and CMR not to bedeductible (in whole or in part) pursuant to Sections 280G, 404 or 162(m) ofthe Code.

###  

### (l)            Fortaxable years commencing after December 31, 2000, no issue has arisen in anyexamination of Taxes of any of CFC, CII, CAAM or CMR by any Authority or otherPerson that if raised with respect to any other taxable year commencing afterDecember 31, 2000 not so examined would result in a Tax deficiency, if upheld.

###  

### (m)          Eachof CFC, CII, CAAM and CMR has made all payments of estimated Taxes required tobe made under Section 6655 of the Code and any comparable provision of state,local and foreign law.  None of CFC, CII,CAAM or CMR has disposed of property in a transaction presently being accountedfor under the installment method under Section 453 of the Code and anycomparable provision of state, local and foreign law.  None of the assets of CFC, CII, CAAM or CMRis property which any of CFC, CII, CAAM or CMR is required to treat as beingowned by any other Person pursuant to the so-called “safe harbor lease”provisions of former Section 168(f)(8) of the Code.  None of the assets of CFC, CII, CAAM or CMR,directly or indirectly, secures any debt the interest on which is tax exemptunder Section 103(a) of the Code.  Eachof CFC, CII, CAAM and CMR presently holds no assets for which an election underSection 108(b)(5) of the Code was made. None of the assets of CFC, CII, CAAM or CMR is “tax-exempt use property”within the meaning of Section 168(h) of the Code.  None of CFC, CII, CAAM or CMR is a party toany joint venture, partnership, or other arrangement or contract which could betreated as a partnership for federal income tax purposes.

###  

### (n)          Schedule9.19 identifies each federal, state and local Tax election which has been madeby each of CFC, CII, CAAM and CMR.  Thereare no rulings, requests for rulings or closing agreements with any Authoritywhich could affect the Taxes of any of CFC, CII, CAAM or CMR for any periodafter the Closing Date.  Each of CFC,CII, CAAM and CMR has not participated (and will not participate prior to theClosing Date) in or cooperated with an international boycott within the meaningof Section 999 of the Code.  Each of CFC,CII, CAAM and CMR has complied with all information reporting requirements of,and has maintained all required records and supporting information with respectto, Section 6038A of the Code and the regulations thereunder pertaining toinformation with respect to certain foreign-owned corporations.

###  

### (o)          Noneof CII, CFC, CAAM or CMR have engaged in any transaction that would constitutea “reportable transaction” within the meaning Code Section 6707A and/orRegulations Section 301.6011-4, nor has any such entity acted as a “materialadvisor” within the meaning of Code Section 6111(b).

###  

### (p)          Eachof CFC, CII and CAAM has in effect a valid election to be taxed as an Scorporation for federal income tax purposes and as a Pennsylvania S corporationfor Pennsylvania income tax purposes. Such elections will remain valid and in effect through the Closing Date(in accordance with Regulations Section 1.338(h)(10)-1(d)(3)).  In the case of CII and CAAM, the elections tobe taxed as an S corporation for federal income tax purposes and as aPennsylvania S corporation for Pennsylvania income tax purposes have been ineffect without interruption from the date of incorporation of each of CII andCAAM and neither CII or CAAM have any earnings and profits attributable to anyyear in which CII and CAAM did not have in effect a valid election to be taxedas an S corporation for federal income tax purposes.  In the case of CFC, the elections to be taxedas an S corporation for federal income tax purposes and as a Pennsylvania Scorporation for Pennsylvania income tax purposes have been in effect withoutinterruption from November 1, 1988. Neither CFC, CII or CAAM have any assets that, if disposed of, wouldresult in a “recognized built-in gain” within the meaning of Code Section1374(d)(3).

 

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### (q)          Neitherthe Sellers nor CFC, CII or CAAM has taken any action or engaged in anytransaction that would result in CFC, CII or CAAM being classified as otherthan an S corporation for federal income tax purposes or as a Pennsylvania Scorporation for Pennsylvania income tax purposes, for any period after the dateon which such elections were originally made.

###  

## 9.20.        Compliancewith Laws.  Except as set forth inSchedule 9.20, each Seller (i) is in compliance in all material respects withall, and not in violation of any laws or ordinances of any Authority, or anyorders, rules or regulations of any Authority to which it or its businesses,operations, assets or properties (including the use and occupancy thereof) aresubject, (ii) has not received any written claim that it is not in compliancewith, or that it is in violation of, any of such laws, ordinances, orders,rules or regulations of any Authority, (iii) has not failed to obtain anymaterial license, permit or authorization from any Authority reasonablynecessary to the ownership of its assets and properties or to the conduct ofits businesses, (iv) has not failed to adhere to all requirements of any suchlicense, permit or authorization from any Authority, and (v) is not subject toany cease-and-desist or other order issued by, or is a party to any writtenagreement, consent agreement or memorandum or understanding with, or is a partyto any commitment letter or similar undertaking to, or is subject to any orderor directive by, or is a recipient of any supervisory letter from or hasadopted any resolutions at the request of, any self-regulatory organization orother Authority, that restricts the conduct of the business of any Seller orthat in any manner is related to the business of Cornerstone and, to theknowledge of the Sellers, none of the Sellers is threatened with the impositionor receipt of any of the foregoing. Without limiting the generality of the foregoing, no Seller is engagedin any illegal activities nor is any Seller a party to any illegalarrangements, including any payments or transactions in violation of theForeign Corrupt Practices Act of 1977.

##  

## 9.21.        InvestmentAdvisory Contracts; Clients.

##  

### (a)           Schedule9.21 sets forth all of the contracts pursuant to which CFC, CII or CAAM provideInvestment Advisory Services (“**Advisory Contracts**”)to which any of them is a party, including the client number, the assets undermanagement and the payment terms thereof. Each Advisory Contract set forth on Schedule 9.21 provides for billingfor services thereunder either (i) on a quarterly basis, in advance, based onthe market value of total Client assets thereunder as of October 31, January31, April 30 and July 31 (the “**July 31 Clients**”)or (ii) on a quarterly basis, in arrears, based on the market value of totalClient assets thereunder as of September 30, December 31, March 31 and June 30(the “**June 30 Clients**”).  Schedule 9.21 shall be updated afterexecution of this Agreement to include the names and addresses of the clientswho have Advisory Contracts (“**Clients**”) asrequired by Section 11.2(d) and such names and addresses shall be included inSchedule 9.21 as of the Closing Date. Schedule 9.21 will also be updated to include the type of client, dateentered into, fee arrangements and any termination/assignment termsthereof.  The information set forth inSchedule 9.21 is true, correct, and complete. Each Client has entered into an Advisory Contract with CFC, CII or CAAMwith respect to each account owned by such Client in each case containing theterms and conditions of the form of agreement attached as Exhibit Dhereto.  Neither CII, CFC nor CAAMcurrently offers or is currently part of any wrap program, as defined in Rule204-3 under the Advisers Act.  Except forInvestment Advisory Services provided by a Selling Shareholder for his ownaccount or the account of his immediate family and that the Selling Shareholderis managing without a fee or any other remuneration, no Selling Shareholderprovides Investment Advisory Services to any Person other than on behalf ofCAAM, CII or CFC pursuant to an investment advisory or management agreementbetween CAAM, CII or CFC, as appropriate, and a customer or client thereof.

###  

### (b)           Exceptas set forth in Schedule 9.21, all assets under each Advisory Contract areaccruing fees and no Client has informed or otherwise communicated with anySeller that such Client

 

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### intends to terminate or modify in any material adverse wayits relationship with such Seller or adjust the fee schedule with respect toany Advisory Contract in a manner that would reduce the fees of such Seller inconnection with such Client relationship. Except as set forth in Schedule 9.21, none of the Advisory Contracts, orany other arrangements or understandings relating to rendering of InvestmentAdvisory Services by any Seller, contains any undertaking by such Seller to capfees or to reimburse or otherwise reduce any or all fees and charges payable byor with respect to any Client thereunder.

###  

### (c)           Tothe best of Sellers’ knowledge, no circumstances exist regarding therelationship between CII, CFC or CAAM, on the one hand, and any of theirrespective Clients or customers, on the other hand, that has had or couldreasonably be expected to have a Material Adverse Effect.  To the knowledge of the Sellers, there is noClient or customer of CII, CFC or CAAM whose investments or other activities,reputation or credit history, would reasonably be expected to cause Purchaseror any of its Affiliates any damages or impair the public reputation andstanding of Purchaser or any of its Affiliates.

###  

## 9.22.        BrokerageAccounts; Brokerage Clients. Schedule 9.22 sets forth a list of all agreements and contracts (“**Brokerage Agreements**”) pursuant to which any Seller is aparty and provides broker-dealer services to or for or on behalf of Clients orother customers with respect to any securities, including municipalsecurities.  No Seller maintains abrokerage account for or holds securities for any Client or other Person.

##  

## 9.23.        InvestmentAdvisory Service Referral Arrangements. Schedule 9.23 sets forth a list of all agreements, contracts andunderstandings (“**Advisory Referral Agreements**”)pursuant to which any Seller is a party and pursuant to which clients arereferred to or by any Seller by or to any other party in exchange for fees orcompensation of any type.  Sellers andany parties to the Advisory Referral Agreements are in compliance with respectto all federal and state laws and regulations relating to any such referralarrangements, including Rule 206(4)-3 under the Advisers Act and similar statelaws and regulations and the requirement that Seller receive and retain theclient’s signed and dated acknowledgment of receipt of the written disclosuresas required pursuant to Rules 206(4)-3 and 204-2(a)(15) under the Advisers Act.

##  

## 9.24.        SelectedDealer Agreements.  Schedule 9.24sets forth a list of all agreements and contracts (“**DealerAgreements**”) pursuant to which any Seller is a party and pursuant towhich any Seller receives compensation in connection with the purchase and saleof securities for or on behalf of Seller’s Clients or other customers,including front-end and back-end loads and service or “Rule 12b-1 fees” fromthe principal underwriters or distributors for registered investment companies(“**Dealers**”) or in connection with thesales and redemptions of such securities. Schedule 9.24 also sets forth the names and addresses of the partiesthereto, the date entered into, the fee arrangements, the amounts receivedunder such agreement during each of the past two fiscal years and thetermination/assignment provisions thereof.

##  

## 9.25.        ERISAClients.

##  

### (a)           Theaccounts of each client of the Sellers that is subject to ERISA have beenmanaged by the Sellers in material compliance with the applicable requirementsof ERISA, and the consummation of the transactions contemplated hereby willnot, by itself, result in a violation of ERISA or subject any Party to anyliability under ERISA or Section 4975 of the Code.  The accounts of each client that is anemployee benefit plan or retirement plan that is not subject to ERISA (such asIRAs, Keogh plans, governmental plans and church plans) have been managed bythe Sellers such that Sellers in the exercise of such management are inmaterial compliance with the applicable requirements of any and

 

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### all applicable federal, state, local and foreign laws whichgovern plan fiduciaries or which are otherwise similar to ERISA.

###  

### (b)          ProhibitedTransaction Class Exemption 84-14 issued by the U.S.  Department of Labor (the “**QPAM Exemption**”) is not unavailable with respect totransactions involving a Seller (i) by virtue of Part I(e) of the QPAMExemption or (ii) by virtue of Part I(g) of the QPAM Exemption.  Schedule 9.25(b) contains a true and completelist of all prohibited transaction individual exemptions, if any, obtained bySellers from the U.S. Department of Labor. Each Seller is not precluded from serving in a capacity described inSection 411(a)(1), (2) or (3) of ERISA by virtue of Section 411 of ERISA.  No Seller sponsors, nor has any Sellersponsored in the past, any master or prototype plans, individual retirementaccounts or similar retirement programs.

###  

### (c)           NoSeller has engaged in any prohibited transactions described in Section 406 ofERISA or Section 4975 of the Code involving the assets of clients’ accountssubject to ERISA or Section 4975 of the Code other than those that are exemptpursuant to a statutory, class or individual prohibited transaction exemption.

###  

### (d)          Exceptas set forth in Schedule 9.25(d), there are no actions, suits or claims pendingagainst a Seller or Sellers that allege that such Seller or Sellers hasbreached its fiduciary obligations under ERISA or applicable state, local orforeign law to a client’s account, and there are no such actions, suits orclaims threatened in writing, arising out of, or in connection with, themanagement of the assets of any such account.

###  

### (e)           NoSeller is currently under examination by the Internal Revenue Service or theDepartment of Labor in connection with the management of the assets of anyclient’s account that is subject to ERISA or Section 4975 of the Code.  No Seller has received notice, written orotherwise, of any pending examination by the Internal Revenue Service orDepartment of Labor regarding the management of the assets of any client’saccount.

###  

### (f)           Exceptas set forth in Schedule 9.25(f), no Seller has been found by a federal orstate court to have breached its fiduciary obligations to a client’s accountunder ERISA or under applicable state, local or foreign laws that govern planfiduciaries.  Except as set forth inSchedule 9.25(f), no Seller has been assessed any civil penalties by theDepartment of Labor under Section 502(l) of ERISA with respect to themanagement of the assets of any client’s account.

###  

### (g)          NoSeller has executed securities transactions and has received commissions onsuch transactions for clients subject to ERISA for which a Seller was afiduciary, as such term is defined in Section 3(21) of ERISA.

###  

### (h)          NoSeller has received sales commissions from an insurance company in connectionwith the sale of an insurance or annuity contract for clients subject to ERISAfor which a Seller was a fiduciary.

###  

### (i)            NoSeller has received Rule 12b-1 or similar fees in connection with the assets ofclients subject to ERISA in violation of the fiduciary or prohibitedtransaction rules of ERISA.

###  

## 9.26.        RegulatoryCompliance.

##  

### (a)          Each of CFC, CII and CAAM has adopteda formal code of ethics and a written policy regarding insider trading.  Such code of ethics and policy comply withSection 204A of the Investment Advisers Act of 1940, as amended (the “**Advisers Act**”) and Rule 204A-1 thereunder.  The

 

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### policies of Cornerstone with respectto avoiding conflicts of interest, or the conflicts of interest that exist, asthe case may be, are set forth in the most recent Forms ADV thereof (orincorporated by reference therein), as amended. In addition, each of CFC, CII and CAAM has adopted and implementedpolicies and procedures reasonably designed to prevent, detect and remedyviolations by CFC, CII or CAAM or their supervised persons of the Advisers Actand the rules and regulations thereunder, as contemplated by Rule 206(4)-7under the Advisers Act. To the knowledge of Sellers, there have been nomaterial violations or allegations of material violations of such policies andprocedures.  Full and complete copies ofall such policies and procedures have been provided to Purchaser.

###  

### (b)          NoSeller and no other person “associated” (as defined under the Advisers Act)with a Seller, has been convicted of any crime or is or has engaged in anyconduct that would be a basis for or is or has been subject to, or, to the bestof Sellers’ knowledge, threatened with, or is under investigation with respectto, any disqualification that would be a basis for denial, suspension or revocationof registration as an investment adviser under Section 203(e) of the AdvisersAct or Rule 206(4)-4(b) thereunder or for ineligibility to serve as anassociated person of an investment adviser or for ineligibility to serve as aninvestment adviser for an investment company under Section 9(a) of the 1940 Actor that could give rise to an affirmative answer to any of the questions inItem 11, Part I of Form ADV, and, to the knowledge of the Sellers, there is nobasis for, or proceeding or investigation that is reasonably likely to becomethe basis for, any such ineligibility, disqualification, denial, suspension orrevocation.

###  

### (c)           Eachof CFC, CII and CAAM has operated and is currently operating its investmentadvisory business in compliance in all material respects with the Advisers Actand any and all other applicable laws and regulations of any Authority,including the USA Patriot Act and the privacy and security provisions of theGramm-Leach Bliley Act of 1999.  None ofCFC, CII or CAAM has any Clients or customers with respect to which feespayable to CFC, CII or CAAM are based on performance or otherwise provide forcompensation on the basis of a share of capital gains or appreciation inrespect of the funds (or any portion thereof) of any Client or customer.  None of CFC, CII or CAAM provide InvestmentAdvisory Services to or through any entity that is or is required to beregistered as an investment company under the 1940 Act or would be required toso register but for Sections 3(c)(1) or 3(c)(7) of the 1940 Act.

###  

### (d)          Eachof CFC, CII and CAAM has prepared, filed, distributed and otherwise used alladvertisements, sales literature and marketing materials relating to itsinvestment advisory business in compliance with the rules, regulations and requirementsof any and all applicable Authorities, including the investment advisory,sub-advisory and portfolio management services that each of CFC, CII and CAAMhas provided clients.  None of CFC, CIIor CAAM has held itself out as complying with the performance presentationstandards of the CFA Institute (formerly the Association of InvestmentManagement and Research) or as being “AIMR” or “GIPs” compliant.

###  

### (e)           Inperforming its Investment Advisory Services to its clients, no Seller, nor anyof their respective employees or agents has taken any action(s) or performedany service(s) other than those services provided to clients by CII orregistered representatives of CII, that would require any Seller to beregulated by or registered under the broker-dealer rules or regulations of anyAuthority.  No Person, other than afull-time employee of CII, CFC or CAAM, renders Investment AdvisoryServices.  In addition, no Seller is a“commodity pool operator” or “commodity trading adviser” within the meaning ofthe Commodity Exchange Act.  None of theSellers or any of their officers or employees is required to be registered as acommodity trading adviser, a commodity pool operator, a futures commisionmerchant, an associated person, a counseling officer, a sales person or in anysimilar capacity with the SEC, the Commodity Futures Trading Commission, theNational Futures Association or the securities commission of any state or anyself-regulatory organization.

 

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### (f)           Noexemptive orders, “no-action” letters or similar exemptions or regulatoryrelief have been obtained, or are any such requests pending therefor, by orwith respect to Cornerstone or any Seller in connection with the business ofCornerstone relating to the provision of Investment Advisory Services to anyClient or customer by Cornerstone.

###  

## 9.27.        InvestmentAdviser Registration.  Each of CFC,CII and CAAM has been at all times since February 27, 1987, January 21, 1998and June 25, 1998, respectively, and is currently, duly registered as aninvestment adviser under the Advisers Act. Each of CFC, CII and CAAM is duly registered, licensed and qualified asan investment adviser, or has provided notice of operation as an investmentadviser, in all jurisdictions where such registration, licensing, qualificationor notice is required in order to conduct their business.  Each of CFC, CII and CAAM has delivered toPurchaser a true and complete copy of each of their respective currentlyeffective Form ADV, including Part I as filed with the SEC, and has provided toPurchaser all currently effective state, federal and foreign registrationforms.  Each of CFC, CII and CAAM hasalso provided to Purchaser all prior Form ADV filings made within the past fiveyears and all reports filed by each of CFC, CII and CAAM with the SEC under theAdvisers Act and the Exchange Act and the rules promulgated thereunder orotherwise and under similar state, federal and foreign statutes currentlyapplicable to each of CFC, CII and CAAM, including Forms 13D, 13F and 13G.  Each of CFC, CII and CAAM has also providedto Purchaser all correspondence between each of CFC, CII and CAAM and the SECand any state or foreign regulator within the last five years, and will provideto Purchaser such forms and reports as are filed from and after the date hereofand prior to the Closing Date.  Theinformation contained in such forms and reports was or will be true andcomplete in all material respects as of the time of filing and, except asindicated on a subsequent form or report filed before the Closing Date,continues to be true and complete in all material respects and were filedwithin the time frames required.  Each ofCFC, CII and CAAM is in compliance with all foreign, federal and state lawsrequiring registration, licensing, qualification or notice of operation as, aninvestment adviser and has currently effective notice filings in each of thejurisdictions listed in Schedule 9.27. Each such registration is in full force and effect except to the extentCFC, CII or CAAM, as applicable, is no longer subject to registration in anystate.

##  

## 9.28.        InvestmentPerformance.  Sellers have made orwill make available to Purchaser prior to Closing all quarterly investmentperformance information that Sellers delivered to any client since January 1,2001. All such performance information was prepared on a consistent basis inaccordance with applicable law.  Inaddition, Sellers have made or will make available to Purchaser prior toClosing the requisite documentation to support each Seller’s continued use ofsuch investment performance information as required by the rules of the SEC andthe CFA Institute.

##  

## 9.29.        Executionand Brokerage Allocation Practices. Each of CFC, CII and CAAM’s execution and brokerage allocation practices(including soft dollar practices), with respect to all client accounts are, andhave been at all times since January 1, 2001, in material compliance with theprovisions of the Exchange Act, the Advisers Act and similar state laws, and therules and regulations under each and are set forth in the most recent Forms ADVthereof.  Except as set forth in Schedule9.29, when purchasing or selling for clients’ accounts securities which arenormally traded on a principal basis, each of CFC, CII and CAAM, at all timessince January 1, 2001, has dealt directly with dealers making a market in suchsecurities.

##  

## 9.30.        Broker-DealerRegistration.  (a)  CII is duly registered as a broker-dealerunder the Exchange Act, and under all applicable state, federal and foreignlaws relating to the activity of broker-dealers, including the rules andregulations of the SEC, the NASD and the MSRB. CII is currently a member in good standing with the NASD and the MSRBand will remain in good standing from the date of execution hereof until theClosing.  CII has delivered to Purchasera true and complete copy of its currently effective Form BD and Forms U-4, asfiled with the SEC and the NASD, and has provided to

 

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## Purchaser all other currently effective state, federal andforeign registration forms.  CII has alsoprovided to Purchaser all prior Forms BD and all reports filed by CII with theSEC, the NASD and the MSRB under the Exchange Act, the rules promulgatedthereunder, the rules and regulations of the NASD and the MSRB or otherwise andunder similar state, federal and foreign statutes currently applicable toCII.  CII has also provided to Purchaserall correspondence between CII and the SEC, the NASD, the MSRB and any state orforeign regulator within the last five years, and will provide to Purchasersuch forms and reports as are filed from and after the date hereof and prior tothe Closing Date.  The informationcontained in such forms and reports (including FOCUS reports, Forms U-4 andForms U-5) was or will be true and complete in all material respects as of thetime of filing and, except as indicated on a subsequent form or report filedbefore the Closing Date, continues to be true and complete in all material respects.  Each such registration and notice filing isin full force and effect except to the extent CII is no longer subject toregistration in any state.

##  

### (b)           CIIhas adopted all policies and procedures required to be adopted and implementedby it as a broker-dealer and municipal securities dealer under the Exchange Actand the rules thereunder, the rules of the NASD, the rules of the MSRB and anyother applicable federal or state laws, rules or regulations.  All such policies and procedures comply withapplicable provisions of such laws and regulations, including those related tosupervisory structure under NASD Conduct Rule 3010, MSRB Rule G-37, disasterrecovery plans, anti-money laundering, advertising, licensing, sales practices,supervision, books and records and continuing education.  Copies of all such policies and procedureshave been delivered to Purchaser. To the best of the knowledge of Sellers,there have been no material violations or allegations of material violations ofsuch policies or procedures.

###  

### (c)           NoSeller and no other person “associated” (as defined under the Exchange Act, therules thereunder and the rules of the NASD and the MSRB) with a Seller, hasbeen convicted of any crime or is or has been engaged in any conduct or is orhas been subject to any disqualification that would be a basis for denial,suspension or revocation of registration of a broker-dealer, municipalsecurities dealer or associated person of either under the Exchange Act,including Section 15(b) thereunder, the rules thereunder and the rules of theNASD and the MSRB and to the knowledge of the Sellers, there is no basis for,or proceeding or investigation that is reasonably likely to become the basisfor, any such disqualification, denial, suspension or revocation.

###  

### (d)          CIIhas operated and is currently operating its broker-dealer and municipalsecurities dealer business in compliance with the Exchange Act, the rulesthereunder and the rules of the NASD and the MSRB and any and all otherapplicable laws and regulations of any Authority, including the USA Patriot Actand the privacy and security provisions of the Gramm-Leach Bliley Act of1999.  CII and its “associated persons”do not hold any registrations, memberships or similar membership privilegeswith any national securities exchange, board of trade, commodities exchange,clearing corporation or association, securities dealers association or similarinstitutions other than the NASD and MSRB, and none of the Sellers, other thanCII, holds any registrations, memberships or similar membership privileges withany national securities exchange, board of trade, commodities exchange,clearing corporation or association, securities dealer association or similarinstitutions.  The Sellers have deliveredto Purchaser a true and complete copy of each agreement with respect to suchregistration, membership or privileges and each such agreement is a valid andbinding agreement of CII, enforceable in accordance with its terms.

###  

### (e)           CIIand each of its associated persons has the apporpriate number and type oflicences to conduct its business as it is currently being conducted and isintended to be conducted after the Closing. CII has provided to Purchaser any “restriction letter” from the NASD orother regulatory authority, or if CII does not have any such “restrictionletter,” CII has never been issued or been subject to such a restrictionletter.

 

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### (f)           Except as set forth on Schedule9.30(f), CII is currently in compliance with and will be at all times betweenthe execution of this Agreement and the Closing in compliance with, and hasbeen in compliance with, since January 1, 2000, its net capital requirementobligations under the Exchange Act and the rules of the NASD.

###  

### (g)          With respect to CII’s sales of securities ofregistered investment companies, CII has (i) complied with its obligationsunder Rule 10b-10 under the Exchange Act to send out all necessaryconfirmations; (ii) charged sales charges on shares of registered investmentcompanies in accordance with the rules of the SEC and the NASD and inaccordance with the then current published sales charge schedules set forth inthe prospectus and statement of additional information of the applicableinvestment company; (iii) given all of its clients who have purchased shares ofregistered, open-end management investment companies the benefit of anybreakpoints in sales loads to which such clients may be entitled; (iv) notengaged or been involved in any “late trading” or “market timing” of mutualfund shares, except to the extent that any market timing activities were donein strict conformance with the policies and procedures of the applicable investmentcompany as disclosed in its then current prospectus.

###  

## 9.31.        InsuranceAgency Contracts.

##  

### (a)           Withrespect to the agency contracts between CFC or CII, as applicable, and theinsurance companies with which it does business(all of which are listed and identified specifically on Schedule 9.31) (“**Insurance Agency Contracts**”), all such Insurance AgencyContracts which allow CFC or CII, as applicable, to sell and market itsinsurance products are valid and binding in accordance with their terms and,except as set forth on Schedule 9.31, are not subject to revocation,limitation, rescission or termination as a result of the change in controlwhich will occur in connection with the transactions contemplated under thisAgreement.  Such Insurance AgencyContracts will continue to be in fullforce and effect from and after the Closing Date according to their respectiveterms.

###  

### (b)          Eachemployee of Cornerstone responsible for selling, soliciting or placinginsurance for Cornerstone is duly licensed to act as an insurance agent,broker, or producer and is in good standing with each applicable Authority,including all applicable state insurance regulators.  Schedule 9.31(b) is a true, complete andaccurate list of each Authority with which each such employee is licensed toengage in such activities, and all such licenses are in good standing.

###  

### (c)           Schedule9.31(c) lists all of the insurance policies sold to existing clients andcustomers of CFC, CII and each employee of Cornerstone with respect to theinsurance activities of Cornerstone (collectively, the “**InsuranceClients**”) and the commissions which CFC, CII and/or each employeehas received in 2005 with respect to each such Insurance Client.  CFC, CII and/or each employee has theexclusive and unencumbered right to receive those commissions and, no consentof any other party is required with respect to those exclusive rights in connection with the transactions contemplatedby this Agreement.  To the knowledge ofSellers, no policies of insurance in force for which CFC, CII and/or anemployee of Cornerstone receives commissions or other remuneration will beterminated before the stated expiration date or will not be renewed uponexpiration.  Schedule 9.31(c) shall be updated after execution of this Agreement toinclude the names and addresses of the Insurance Clients as required by Section11.2(d) and such names and addresses shall be included in Schedule 9.31(c) asof the Closing Date.  The information setforth in Schedule 9.31(c) is true, correct, and complete.

###  

### (d)          NoPerson other than an employee of Cornerstone is or has been authorized orpermitted to place business on behalf of CFC or CII.  No binder of insurance or other proposal ofcoverage has been issued or sent to any Person by CFC or CII or on theirrespective behalves unless and

 

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### until the relevant risk has been properly bound and allbinders of insurance and proposals of coverage on the part of CFC or CII, as applicable, are complete and accurate inall material respects.

###  

### (e)           Schedule9.31(e) sets forth the policy of CFC and CII with respect to the commissionsbooked on their respective records, and no commissions have been booked exceptin accordance with that policy.  To theknowledge of Sellers, there are no facts or circumstances that might requirereversal of commissions booked or return of commissions already collected.

###  

### (f)           NeitherCFC, CII, nor any employee of Cornerstone has breached any duty owed to theInsurance Clients.  Neither CFC, CII, nor any employee ofCornerstone has paid insurance premiums, premium adjustments or other items onbehalf of an Insurance Client except with the authority of that InsuranceClient.

###  

### (g)          NeitherCFC, CII, nor any employee of Cornerstone has been party to the placement,directly or indirectly, of insurance that is (i) unlawful or (ii) a part of a fictitious or sham transaction.

###  

### (h)          Exceptas set forth on Schedule 9.31(h), there are no arrangements whereby any part ofany brokerage or commission payable toCFC, CII or any employee of Cornerstone by any insured is shared with theinsured or any other Person.

###  

### (i)            Tothe knowledge of Sellers, all insurance carriers with which business has beenplaced by CFC, CII and/or an employee ofCornerstone are paying claims in the normal course and without undue delay.

###  

## 9.32.        GovernmentalConsents.  Except as otherwisedisclosed in Schedule 9.32, the execution, delivery and performance of thisAgreement by each Seller does not require any consent from, action by or inrespect of, or filing with, any Authority.

##  

## 9.33.        Employees.

##  

### (a)           Schedule9.33(a) contains accurate and complete information as to names and rates ofcompensation (whether in the form of salaries, bonuses, commissions or othersupplemental compensation now or hereafter payable, including all employercontributions under CMR’s retirement, profit-sharing or other deferredcompensation plans) of all employees of CMR (grouped by categories as indicatedthereon) together with information as to any employment contracts, non-competitionagreements or severance arrangements (oral and written) with any suchemployees, any arrangements involving the indebtedness of such employees to anySeller and any arrangements involving the indebtedness of any Seller to suchemployees in any amount.  Schedule9.33(a) also contains accurate and complete information, as of the ClosingDate, of the vested and accrued vacation and sick pay (including the number ofdays accrued therefor) for such employees, in addition to the number ofvacation days per 12 month period to which each such employee is entitled.  CMR has paid all compensation (includingbonuses and commissions) due and owing to any employee, or has accrued suchcompensation on the Unaudited Financial Statements or will accrue such compensationon the financials statements of CFC, CII or CAAM as of the Closing used todetermine Aggregate Net Worth under Section 7.2.  Schedule 9.33(a) sets forth which personshave signed Cornerstone’s form of non-competition agreement or form of assignmentof commissions, copies of which are attached to Schedule 9.33(a).  No employee is currently bound by anon-competition agreement with a third party restricting such employee fromproviding investment advisory, brokerage or insurance services in general orwith regard to any client or potential client. All employees of the Cornerstone Business are employed by CMR and arenot employed by any other Seller.

 

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### (b)           There areno amounts owing to any former officers or employees of any of CFC, CII, CAAMor CMR (other than pursuant to the terms of any Employee Benefit Plan), andthere are no persons previously employed by any of CFC, CII, CAAM or CMR whonow have or may have a legal right to return to work or a legal right to bere-instated or re-engaged by any of CFC, CII, CAAM or CMR.  Except as set forth on Schedule 9.33(b),there are no claims pending or threatened by any employees against anySeller.  To each Seller’s knowledge, noneof the key employees listed on Schedule 9.33(b) intend to terminate his or heremployment with CMR or an Affiliate of CMR, as applicable, before or after theClosing.

###  

### (c)           To theknowledge of each Seller, no employee has been the subject of any governmentalproceeding, investigation or inquiry involving the SEC or any other Authorityhaving jurisdiction over the business activities of any employee or Cornerstoneand, during the past ten years, no employee has been indicted or convicted ofany felony.  To the knowledge of each Seller,no employee has been the subject of any order, judgment, or decree of any courtof competent jurisdiction, permanently or temporarily enjoining any employeefrom, or otherwise limiting, the following activities:  (i) acting as an investment adviser, underwriter,broker or dealer in securities, or engaging in or continuing any conduct orpractice in connection with such activity, (ii) engaging in any type ofbusiness practice, or (iii) engaging in any activity in connection with thepurchase or sale of any security or in connection with any violation ofsecurities laws.

###  

## 9.34.        BankAccounts.  Since January 1, 2004,there has been no change in the banking or safe deposit arrangements ofCornerstone and none of CFC, CII, CAAM nor CMR has granted any powers ofattorney.  A list of all bank accounts(including the name and address of each bank and bank account numbers), safedeposit boxes and powers of attorney of CFC, CII and CAAM and of all Personsauthorized to act with respect thereto is set forth in Schedule 9.34.

##  

## 9.35.        Transactionswith Related Parties.  Except as setforth in Schedule 9.35, (i) no Cornerstone company has any claim against andhas no indebtedness to any Related Person andno Related Person has any claim against or any indebtedness to any Cornerstonecompany, and (ii) no Related Person has engaged in, or has a contract to engagein any transaction with any Cornerstone company other than, in the case ofclause (i) above, with respect to compensation or reimbursement of expenses payable to such Related Person in the ordinarycourse of business consistent with past practice.  Set forth on Schedule 9.35 is a list of allinter-company debt.

##  

## 9.36.        NoIndebtedness; Distributions.  Exceptas set forth on Schedule 9.36, there are no material liabilities, debts, orobligations of, nor any claims against, CFC or CII, of any nature, absolute orcontingent, except as and to the extent reflected or reserved against on theFinancial Statements.

##  

## 9.37.        MFinancial Group.  The M GroupStockholder owns all of the capital stock of M Financial Group (**“M Group Stock”**) owned by any of the Sellers, directly orindirectly.  The Selling Shareholders ownall of the issued and outstanding limited partnership interests of the M GroupStockholder, and also own all of the issued and outstanding ownership interestsof the sole general partner of M Group Stockholder.  CFC has all necessary rights to distributeall M Financial Group products pursuant to the M Group Marketing Agreement andall rights to cash distributions from the M Financial Group under the M GroupICP.  All such rights, including allrights under the M Group Marketing Agreement and M Group ICP, are notcontingent or conditional upon any party having an ownership interest in thesecurities of M Financial Group.  No cashdividends on the M Group Stock to the M Group Stockholder have ever been paidor are contractually provided for, and to the knowledge of Sellers, no suchdividends are expected in the future.  Tothe knowledge of Sellers, M Financial Group is expected to continue to pay cashdividends in the same proportion and in the same manner as currently paidpursuant to the M Group Incentive Compensation Plan.

 

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## 9.38.        Disclosure.  Neither this Agreement (including theExhibits hereto and the Disclosure Schedule) nor the Related Agreementscontains any untrue statement of a material fact or omits to state a materialfact necessary to make the statements of each Seller contained herein ortherein not misleading.

##  

# **ARTICLE 10.**REPRESENTATIONS AND WARRANTIES OF PURCHASER

# ** **

Purchaser represents and warrants to the Selling Shareholders and CAAM,as follows:

 

## 10.1.        Capacityof Purchaser.  Purchaser is anational banking association duly organized, validly existing and in goodstanding under the laws of Pennsylvania****and has allrequisite power and authority to enter intothis Agreement and to perform its obligations hereunder.

##  

## 10.2.        Validityand Execution of Agreement.  Theexecution and delivery by Purchaser of this Agreement has been duly and validlyauthorized by all necessary action on the part of Purchaser.  This Agreement has been, and the RelatedAgreements to which it is a party will be on or before Closing, duly executedand delivered by Purchaser and, assuming due authorization, execution anddelivery by each of the Sellers of this Agreement, this Agreement constitutes,and any such Related Agreements will constitute when executed and delivered,valid and binding obligations of Purchaser, enforceable against Purchaser, inaccordance with their terms.

##  

## 10.3.        NoConflict.  Neither the execution anddelivery of this Agreement or the Related Agreements to which it is a party northe performance of the transactions contemplated herein or therein by Purchaser will (i) violate or conflict with any ofthe provisions of the Articles of Incorporation or By-laws of Purchaser; (ii)violate or constitute a default, or require notice and/or consent, under anymaterial mortgage, indenture, deed of trust, lease, contract, agreement,license or other instrument, or any order, judgment or ruling of any Authority,to which Purchaser is a party or by which any of its property is bound; (iii)assuming the satisfaction of the requirements set forth in clause (iv) below,violate any provision of law applicable to Purchaser; or (iv) except forrequirements, if any, arising out of any consents, actions and filingsdescribed in Schedule 10.4, require any consent, approval, filing or noticeunder any provision of law, statute, rule or regulation, applicable toPurchaser.

##  

## 10.4.        GovernmentalConsents.  Except as listed onSchedule 10.4, the execution, delivery andperformance of this Agreement by Purchaser does not require any consent from,action by or in respect of, or filing with, any Authority.

##  

## 10.5.        Broker’sor Finder’s Fees.  Neither Purchasernor any of its Affiliates have authorized any Person to act as their broker,finder or in any other similar capacity in connection with the transactionscontemplated by this Agreement, other than Griffin Financial Group, the feesand expenses of which shall be paid by Purchaser pursuant to Section 11.13.

##  

## 10.6.        Litigation.  There is no lawsuit or legal, administrativeor regulatory proceeding or investigation pending or, to the best of Purchaser’sknowledge, threatened against Purchaser which challenges the legality of thisAgreement or the transactions contemplated hereby.

##  

# **ARTICLE 11.**COVENANTS FOR ACTION PRIOR TO THE CLOSING DATE

# ** **

Purchaser, on the one hand, and Sellers, jointly and severally, on theother hand, covenant and agree to take the following actions between the datehereof and the Closing Date that are applicable to any such Party:

 

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## 11.1.        Conductof Cornerstone Business.  Except as otherwiseexpressly contemplated by this Agreement, pending the Closing, the SellingShareholders shall cause each of CFC, CII, CAAM and CMR to, and each of CFC,CII, CAAM and CMR, shall operate and carry on the Cornerstone Business only in the ordinary course consistent with pastpractices and, without limiting the generality of the foregoing, pending theClosing:

##  

### (a)           Preservationof Business.  Selling Shareholdersshall cause each of CFC, CII, CAAM and CMR to, and each of CFC, CII, CAAM andCMR shall, preserve the properties, assets and goodwill of the CornerstoneBusiness and use its or their reasonable best efforts to preserve theCornerstone Business intact, keep available the services of its presentemployees, maintain compliance with the net capital requirements applicable toCII and maintain its relationships with its clients, and shall not take anyaction preventing a Seller from doing the foregoing.

###  

### (b)           ProhibitedChanges.  Except as contemplated bythis Agreement, the Selling Shareholders shall cause each of CFC, CII, CAAM andCMR not to, and each of CFC, CII, CAAM and CMR shall not, take any of thefollowing actions without the prior written approval of Purchaser, to:

###  

#### (i)            Sell,consume or otherwise dispose of any assets material to any of CFC, CII, CAAM orCMR, except in the ordinary course of business consistent with past practices;

####  

#### (ii)           Enterinto any contract or commitment except in the ordinary course of businessconsistent with past practices;

####  

#### (iii)          Mortgage,pledge or subject to Liens any assets material to any of CFC, CII, CAAM or CMR;

####  

#### (iv)          Amendthe certificate of incorporation or by-laws of any of CFC, CII, CAAM or CMR;

####  

#### (v)           Issueany capital stock of any of CFC, CII, CAAM or CMR or make any change in theissued and outstanding capital stock of any of them; issue any warrant, optionor other right to purchase shares of the capital stock of any of them or anysecurity convertible into the capital stock of any of them; or redeem, purchaseor otherwise acquire any shares of the capital stock of any of them;

####  

#### (vi)          Declareany dividend on, or make any distribution with respect to, the capital stock ofany of CFC, CII or CAAM, except for cash dividends (for which Sellers shallprovide Purchaser with advance notice of the details thereof but for whichconsent is not required);

####  

#### (vii)         Assume,incur or guarantee any obligation or liability for borrowed money;

####  

#### (viii)        Cancel any debts owed to any of CFC, CII or CAAM, except forcompromises of trade debt in the ordinary course of business consistent withpast practice;

####  

#### (ix)           Makeany changes in the accounting methods, principles or practices of any of CFC,CII, CAAM or CMR;

####  

#### (x)            Makeany increase, except as contemplated by this Agreement, in the wages, salaries,compensation, pension or other benefitspayable to any employee;

 

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#### (xi)           Enterinto any transaction with any Related Person other than in the ordinary courseof business consistent with past practice and on terms no less favorable thancould be negotiated on an arm’s length basis;

####  

#### (xii)          Acquirecontrol or ownership of any other Person, or acquire control or ownership ofall or a substantial portion of the assets of any other Person, or merge,consolidate or otherwise combine with any other Person or enter into anyagreement providing for any of the foregoing;

####  

#### (xiii)         Collect or not collect any accounts receivable of theCornerstone Business or pay or not pay any trade payable of the CornerstoneBusiness outside of the ordinary course; or

####  

#### (xiv)        Agreeor commit to do any of the foregoing.

####  

## 11.2.        Accessto Sellers; Prior Performance Data.

##  

### (a)           Sellersshall afford to Purchaser and its representatives reasonable access duringnormal business hours to the offices, properties, business, financial and otherrecords of each of CFC, CII, CAAM and CMR and furnish to Purchaser suchadditional data and information as Purchaser and/or its representatives mayfrom time to time reasonably request concerning each of CFC, CII, CAAM and CMRand/or the Cornerstone Business in addition to the information sought ascontemplated under Sections 5.3 and 5.4 above, in order that Purchaser and itsrepresentatives may continue to conduct customary due diligence on the Sellersand the Cornerstone Business.

###  

### (b)           Sellers and, to theextent applicable, the Selling Shareholders, as applicable, shall deliver toPurchaser on the Closing Date all books and records necessary under applicablelaw to substantiate the use after the Closing Date of the prior performance ofthe Selling Shareholders and portfolio managers of each of CFC, CII and CAAM asdescribed in Section 12.3.

###  

### (c)           Withoutlimiting the generality of the foregoing, Sellers shall provide to Purchaser(i) access to all quarterly investment performance information that Sellersdelivered to any client since January 1, 2001, (ii) access to the requisitedocumentation to support each Seller’s continued use of such investmentperformance information as required by the rules of the SEC and the CFAInstitute, and (iii) information pertaining to all legal compliance programs ofSellers, and copies of all audits or reports on such programs.

###  

### (d)           Promptlyafter execution of this Agreement, Sellers shall provide Purchaser with a true,correct and complete list of all of the names and addresses of all Clients andInsurance Clients of the Cornerstone Business in the format provided for inSchedules 9.21 and 9.31(c), respectively.

###  

## 11.3.        NoPublic Announcement.  None of theParties nor their respective Affiliates shall make any public announcement ordisclosure concerning the transactions contemplated by this Agreement withoutthe prior written approval of the other Parties, except as required by law orany stock exchange regulation or as permitted by the next succeeding sentencesof this Section 11.3.  If any Party orany of their respective parent companies, as applicable, determines upon adviceof counsel that a public announcement or disclosure is required by applicablesecurities laws or regulations or stock exchange regulations, such Party maymake the announcement or disclosure provided it first consults with the otherParties hereto so that all Parties may coordinate concurrent publicannouncements and/or other disclosures. Sellers shall fully cooperate to insure Purchaser is able to make suchdisclosures in a timely manner.  Inaddition, the Parties shall jointly prepare a press release disclosing theexecution of this

 

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## Agreement and the sale of the Purchased Items to Purchaser,for release immediately after the execution of the Agreement and completion ofthe Closing on the Closing Date, respectively.

##  

## 11.4.        NoShopping.  Unless the Agreement hasbeen terminated pursuant to the provision of Article 15, none of the Sellers ortheir respective directors, officers, employees, advisors, agents,representatives and Affiliates, shall directly or indirectly, solicit, initiateor encourage the initiation of inquiries or proposals from, provideconfidential information to or participate in any discussions or negotiationswith, any Person (other than Purchaser and its Affiliates, and each of theirrespective officers, employees, representatives, advisors and agents)concerning any direct or indirect acquisition of CFC, CII, CAAM or CMR or businesscombination transaction involving CFC, CII, CAAM or CMR or their respectivecapital stock or assets.  Sellers willimmediately advise Purchaser of, and communicate to Purchaser the terms of, anysuch inquiry or proposal, any of the Sellers may receive.

##  

## 11.5.        Contract Consents.

##  

### (a)           Immediatelyupon execution of this Agreement, the Sellers shall cause CFC, CII and CAAM to,and CFC, CII and CAAM shall, send to each of their Investment Advisory ServicesClients a letter substantially in the form of Exhibit E.(2)

###  

### (b)           Immediatelyupon execution of this Agreement, the Sellers shall cause CII to, and CIIshall, send to each Dealer with which CII has entered into a Dealer Agreement aletter substantially in the form of Exhibit F.(3)

###  

### (c)           Immediatelyupon execution of this Agreement, the Sellers shall cause Cornerstone to, andCornerstone shall, proceed to obtain any other consents or approvals necessaryto assign any other agreements material to Cornerstone’s business which may be“assigned” or terminated as a result of the transactions contemplated herein.

###  

### (d)           In connection with the consents andapprovals described in Section 11.5(a) and 11.5(b), the Sellers shall causeCornerstone to, and Cornerstone shall (i) keep Purchaser informed of the statusand results of obtaining such consents and approvals, (ii) facilitatePurchaser’s communication with clients and such distributors regarding consents and approvals, and (iii) deliver toPurchaser copies of all notices sent to clients and applicable distributorspursuant to provisions of Sections 11.5(a) and 11.5(b).

###  

## 11.6.        InsuranceAgency Matters.

##  

### (a)           Assoon as reasonably practicable following the execution and delivery of thisAgreement, the Selling Shareholders shall cause CFC and CII to, and CFC and CIIshall, as applicable,

 

----

(2)                   This letter will be writtennotice of the pending sale of CFC, CII and CAAM to Purchaser, and the resultingassignment on the Closing Date of each Advisory Contract and shall request eachsuch Client’s written consent to the pending assignment of its respectiveAdvisory Contract(s) and to the agreement by such Client to continue itsbusiness relationship with Cornerstone following the Closing on the same termsand to the same extent as it exists on the date of this Agreement.

###  

(3)                   This letter will providenotice of the pending sale of CII  toPurchaser and the resulting assignment of such Dealer Agreement (at least as itrelates to fees received pursuant to Rule 12b-1 plans) and shall request thatthe consent to such assignment of each such Dealer Agreement be provided bysuch Dealer.  Such written notice willadvise each Dealer that CII will continue to provide services under such DealerAgreement  through a period ending at theClosing and if such Dealer continues to accept mutual fund sales, withoutobjection, during such period CII will assume that each such Dealer has impliedits consent to the assignment of its Dealer Agreement.

 

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### inform in writing the parties to the Insurance Agency Contractsof the transactions contemplated by this Agreement and shall request and shalluse their reasonable best efforts to obtain the written consent of such partiesto the change in control of CFC and CII, which consents shall be in form andsubstance satisfactory to Purchaser in its reasonable judgment.  If such consent is not received from any suchparty within twenty (20) days after the first notice is given, the SellingShareholders shall cause CFC and CII to, and CFC and CII shall, as applicable,promptly send a new notice requesting such written consent.

###  

### (b)           Assoon as reasonably practicable following the execution and delivery of thisAgreement, Sellers shall use their reasonable best efforts to make any and allnecessary filings with, and obtain such approvals, consents, licenses, orlicense amendments from, each applicable state insurance agency in respect ofthe insurance agency licensing of CFC and CII and the employees and anyconsultants or independent contractors who are licensed producers and with whomCFC or CII conducts business as may be required under applicable law tocontinue their respective activities as heretofore conducted.

###  

## 11.7.        MGroup Rights.  As soon as reasonablypracticable following the execution and delivery of this Agreement, Sellersshall use their best efforts to observe and comply with the provisions setforth in Article 5 in respect of the rights to M Financial Group and thetransfer thereof.  Selling Shareholdersshall not take any action or fail to take any action that would limit theability of Purchaser to receive the full benefits of the rights to M FinancialGroup as contemplated by Section 5 hereof.

##  

## 11.8.        Debt.

##  

### (a)           Priorto the Closing Date, each of Cowen and Scalici shall pay to CFC any and allunpaid principal, interest, and other fees and charges outstanding under thosecertain Notes dated January 1, 1996 described on Schedule 9.35 and any otherdebts owed to either CFC or CII.

###  

### (b)           Eachof CFC, CII and CAAM shall pay off all of their respective indebtedness priorto Closing.

###  

## 11.9.        Dutyto Advise the Seller Representative. In the event that, prior to Closing Purchaser becomes aware of any fact,circumstance or condition which supports the conclusion that any representationand warranty of Purchaser contained in Article 10 hereof was not true andcorrect in any material respect as of the date of execution of this Agreementor is not true in any material respect at any time thereafter, Purchaser shalladvise the Seller Representative of such fact, circumstance or condition priorto Closing, provided that such notification shall not be deemed to modify anyof the representations and warranties contained herein.

##  

## 11.10.      Duty to Advise Purchaser.  In the event that, prior to Closing,any Seller becomes aware of any fact, circumstance, or condition which supportsthe conclusion that any representation and warranty of any Selling Shareholdercontained in Article 8 or of the Sellers contained in Article 9****hereof was not true and correct as of the date of executionof this Agreement or is not true at any time thereafter, the Seller shalladvise Purchaser of such fact, circumstance or condition prior to Closing,provided that such notification shall not be deemed to modify any of therepresentations and warranties contained herein.

##  

## 11.11.      Efforts and Further Assurances.  Each Party shall use commercially reasonableefforts to effectuate the transactions contemplated hereby and to fulfill andcause to be fulfilled the conditions to Closing set forth in Article 13 of thisAgreement.  Each Party, at the reasonablerequest of the other Party, shall execute and deliver such other instrumentsand do and perform such other acts and things as may be

 

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## necessary or reasonably desirable for effecting completelythe consummation of the transactions contemplated hereby.

##  

## 11.12.      Interim Financial Statements.  Sellers have delivered to Purchaser unauditedbalance sheets of Cornerstone as of September 30, 2005 and the relatedstatement of operations and cash flows for the quarter then ended, includingnotes thereto.

##  

## 11.13.      Payment of Engagement Fees.  The Sellers will pay the fees and expenses ofWFG Capital Advisors LP incurred in connection with the transactionscontemplated by this Agreement and the Related Agreements.  In addition, Purchaser will pay the fees andexpenses of Griffin Financial Group incurred in connection with thetransactions contemplated by this Agreement and the Related Agreements.

##  

## 11.14.      Employees.  (a) Between the date hereof and the ClosingDate, Sellers shall (i) cooperate with Purchaser in permitting Purchaserthe opportunity prior to Closing to meet with the employees of Cornerstoneregarding employment, or othercontinuing contractual relationships with CFC, CII, Purchaser or any Affiliatesthereof, following the Closing, and (ii) not take any action to discouragetheir employment or other contractual relationships with such parties after theClosing.  Prior to or at Closing, thePurchaser shall offer employment to all employees of CMR listed on Schedule9.33(a) on similar compensation terms (i.e., salary, discretionary bonus and/orcommission, but excluding benefits) as set forth on such Schedule 9.33(a) as ofthe Closing.  Schedule 9.33(a) may beupdated prior to Closing solely to reflect increases in salary for 2006 and thebonuses paid for 2005 (which bonuses shall be determined consistent with pastpractices), subject to approval of such increases by Purchaser in accordancewith Section 11.1(b) hereof.  All suchemployees who accept the offer shall commence employment immediately followingthe Closing (“**Continuing Employees**”), and exceptas otherwise provided for in this Agreement, the Continuing Employees will beemployed on an at-will basis.  Inaddition, CMR will terminate all Continuing Employees as of the ClosingDate.  CMR shall remain liable for allcompensation (including severance and employee benefits) and any otherobligations to any employee of CMR who is not a Continuing Employee, and shallalso remain liable for all such liabilities for all employees of CMR for theperiod prior to Closing.

##  

### (b)           Purchaser shallarrange for each Continuing Employee to participate in employee benefit plans,programs and arrangements in which similarly-situated employees of Purchaserand its Affiliates participate (the “**Counterpart Plans**”),in accordance with the eligibility criteria thereof; provided that suchContinuing Employees shall receive full credit for years of service with CMRprior to the Closing Date for purposes of vesting and eligibility for whichsuch service was recognized under the Employee Benefit Plans, but ContinuingEmployees shall not receive credit for prior service with regard to calculatingbenefits under the Counterpart Plans. Purchaser or its Affiliates shall recognize the annual vacation time ofany Continuing Employee as of the Closing Date as set forth on Schedule 9.33(a)and continue to honor same to the extent that such Continuing Employee wouldonly be entitled to a lesser number of vacation days under Purchaser’s vacationpolicies.  In addition, CMR shall remain liable for its obligations under thatcertain Deferred Compensation Agreement, dated as of January 1, 2000,with Donna Wanamaker and that certain Deferred Compensation Agreement, dated asof March 1, 1995, with Yaissle.

###  

## 11.15.      NASD and MSRB Filings and Approvals.  Between the date hereof and the Closing Date,Sellers shall undertake to obtain all necessary approvals from the SEC, theNASD and the MSRB with respect to thesale of the CII Shares to Purchaser resulting in a change in control of CII,including compliance with NASD Membership and Registration Rule 1017. Sellers shall prepare any applications or other filings necessary forsuch approvals and provide a draft thereof to Purchaser in advance of filingsame with the appropriate Authority. Purchaser and its counsel shall have the opportunity to provide

 

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## comments on such applications prior toSellers’ filing same with the relevant Authority, and Purchaser shall cooperateand provide assistance to Sellers where appropriate in conection with thefiling and processing of such applications. Purchaser shall pay all filing fees related to seeking such approvals.

##  

## 11.16.      Employee Benefit Plans. On or before the Closing, CMR, by action of its Board of Directors,shall adopt a resolution to terminate the CMR 401(k) Savings and Profit SharingPlan (the “**401(k) Plan**”), contingent upon theClosing of the transactions contemplated herein.  CMR shall adopt, on or before Closing, allnecessary amendments, if any, to conform the 401(k) Plan to the currentlyapplicable requirements of Section 401(a) of the Code and the regulationsissued thereunder.  As soon as ispracticable after the Closing, CMR shall submit a determination application tothe Internal Revenue Service with respect to the termination of the 401(k)Plan.  Subject to CMR’s receipt of afavorable determination letter from the IRS regarding the termination of the401(k) Plan, Purchaser shall permit the Continuing Employees to make rolloversof distributions from the 401(k) Plan to a tax-qualified plan maintained by thePurchaser that covers the Continuing Employees. On or before Closing, CMR shall take all appropriate actions toterminate all of its other Employee Benefit Plans and shall notify employees,third-party administrators and insurance carriers of the termination of suchPlans and the termination of the 401(k) Plan.

##  

# **ARTICLE 12.**COVENANTS FOR ACTIONS AFTER THE CLOSING DATE

# ** **

In addition to their obligations provided elsewhere in this Agreement,Purchaser, on the one hand, and CAAM, CMR and the Selling Shareholders, on theother hand, covenant and agree to take the following actions after the ClosingDate that are applicable to any such Party:

 

## 12.1.        FurtherAssurances; Transition.

##  

### (a)           Eachparty shall cooperate with the other Parties and execute and deliver, or causeto be executed and delivered, all such other instruments, including instrumentsof conveyance, assignment and transfer, and take all such other actions as suchParty may reasonably be requested to take by any other Parties from time totime, consistent with the terms of this Agreement in order to effectuate theprovisions and purposes of this Agreement.

###  

### (b)           Followingthe Closing, CAAM, CMR and the Selling Shareholders shall use their bestefforts to help Purchaser in its transition to operating the CornerstoneBusiness.  Following the Closing, andwithout prejudice to the Purchaser’s rights hereunder, CAAM, CMR and theSelling Shareholders shall use their best efforts to obtain the consent toassignment of any contract for which consent was required and was not obtainedprior to Closing, including any such CAAM Contracts, CMR Contracts, AdvisoryContracts and Insurance Agency Contracts. Furthermore, each of the Parties agree to cooperate with each other inany reasonable arrangement to enable Cornerstone to perform its obligationsunder, and to provide Purchaser the benefit of, any such contracts.  Immediately upon receipt of the consent toassignment of any such contract, such contract shall immediately andautomatically be assigned to Purchaser.

###  

## 12.2.        Accessto Books and Records; Record Retention.

##  

### (a)           Fromand after the Closing Date, Purchaser shall cause CFC and CII to make its booksand records containing information with respect to periods prior to the ClosingDate available for inspection by representatives of the Selling Shareholders atany time during regular business hours and to permit the Selling Shareholdersto make such copies thereof, at the expense of the Selling Shareholders, assuch representatives may reasonably request. From and after the Closing Date, CAAM, CMR and the

 

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### Selling Shareholders shall make their books and recordscontaining information with respect to CAAM, CMR, CFC, and CII for the periodsprior to the Closing Date available for inspection by representatives ofPurchaser or its Affiliates at any time during regular business hours and topermit them to make such copies thereof, at their expense, as suchrepresentatives may reasonably request. From and after the Closing Date, the Selling Shareholders shall beprovided reasonable access to the products, programs and work product (including materials used forproposals to potential clients) of Purchaser’s Millennium Wealth ManagementDivision, and Purchaser shall also arrange meetings between the SellingShareholders and Purchaser’s key employees upon reasonable request of the SellingShareholders, including key employees of the Millennium Wealth ManagementDivision.

###  

### (b)           Forso long as may be required by law or governmental regulation, but in any eventnot less than (i) seven (7) years for Tax matters, and (ii) three (3) years forother matters, the Parties shall not destroy or give up possession of anyoriginal or final copy of any of their books and records (includingcomputerized records) relating to Sellers for the period prior to the ClosingDate, without first offering the other Parties hereto the opportunity, at theirexpense, to obtain such original or final copy or a copy thereof.

###  

## 12.3.        PriorPerformance.  Cornerstone, Purchaserand their respective Affiliates shall be authorized and entitled to use to theextent permitted by law any “prior performance” of any Seller or portfoliomanager, including any of their prior performance that Cornerstone may haveused during such Seller’s or portfolio manager’s tenure with Cornerstone andincluding any such prior performance which Cornerstone has claimed as its ownprior performance during the time from Cornerstone’s inception or commencementof operations of its investment advisory business through the Closing.  The Selling Shareholders agree to take allreasonable actions and to provide all reasonable assistance with the foregoingto the extent permitted by law.

##  

## 12.4.        Changeof Name.  Immediately following theClosing, CAAM shall change its name to a name dissimilar to “CornerstoneAdvisors Asset Management, Inc.” or any derivation thereof and shall file allrequisite documents with the appropriate regulatory authorities to effect same.

##  

## 12.5.        IncentivePlans.  During the Earn-Out Period,Selling Shareholders shall be eligible to participate in the stock and/orequity incentive plans of Harleysville National Corporation in any year inwhich the Annual EBITDA Target as reflected on Schedule 7.5 shall have beenachieved.

##  

## 12.6.        RegulatoryFilings and Approvals.  Promptly uponClosing, each of CFC, CII and CAAM shall (i) file all necessary amendments totheir registrations and notice filings with the Authorities to reflect thechange in ownership of CFC and CII, (ii) effect a transfer of all licenses andregistration of all associated persons and investment adviser representativesto CFC, CII and Purchaser as appropriate; (iii) cause any and all filings thatmay be necessary with respect to changes in affiliation of licensed producersof insurance products who are employees of CFC or CII or are consultants orindependent contractors who are licensed producers of insurance products andwith whom CFC or CII conducts business; and (iv) obtain such other regulatorylicenses, consents and approvals as may be required under applicable law tocontinue their respective activities as heretofore conducted and cannot, bytheir nature, be obtained prior to Closing. In addition, promptly after the ninety (90) day period after Closingexpires as set forth in Section 14.1(e), withdraw CAAM’s registration as aninvestment adviser;

##  

## 12.7.        COBRA.  On and after the Closing, Purchaser shall beresponsible for and maintain all liability for complying with the continuationcoverage requirements under Section 4980B of the Code and Sections 601-608 ofERISA and the regulations thereunder with respect to the “M&A qualifiedbeneficiaries,” as that term is defined in Treasury Regulation Section54.4980B, of CMR.

 

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## 12.8.        BankAccounts.  Promptly after Closing,Sellers shall take all necessary actions and cooperate with Purchaser to enablethe transfer of all bank accounts referenced in Schedule 9.34 to HNB bankaccounts.

##  

## 12.9.        Conductof the Cornerstone Business After the Closing.

##  

### (a)           CII,CFC and CAAM will operate as a component of the Millennium Wealth Managementdivision of Purchaser with each Selling Shareholder being the managing directorof the respective company that relates to his areas of expertise, as furtherdescribed and in accordance with the terms of their respective employmentagreements.  Each Selling Shareholderwill be responsible for the operations of his respective company.  After the Closing Date during the Earn-OutPeriod, Purchaser will retain the name “Cornerstone” with respect to each ofCII, CFC and CAAM, provided that it may append the “Cornerstone” name to the“Millennium” name in a manner to be determined by Purchaser after consultationwith the Selling Shareholders.   Afterthe Closing Date during the Earn-Out Period, Purchaser shall retain CII as aseparate broker dealer as long as economically justifiable for CII, CFC and theCAAM Business as a group, as determined by Purchaser and consented to by theSelling Shareholders (which consent shall not be unreasonably withheld ordelayed).

###  

### (b)           Ifduring the Earn-Out Period Purchaser assumes or takes control of administrativefunctions for any of CII, CFC or CAAM that are currently performed by one ofthe Sellers (e.g., payroll),  Purchaserwill not charge fees or allocate costs to such company that are more than thecurrent costs incurred by such company for such services (including anyallocated overhead costs). Notwithstanding the foregoing, the costs charged or allocated byPurchaser shall be subject to an annual adjustment as mutually agreed uponbased upon an annual review, including, for example, any adjustments requiredto reflect increased costs of providing such services due to a larger volume ofbusiness or number of employees for the relevant company.

###  

# **ARTICLE 13.**CONDITIONS TO CLOSING

# ** **

## 13.1.        Conditionsto the Obligations of Parties.  The obligations of the Parties to consummate thetransactions contemplated by this Agreement are subject to the satisfaction or, if permitted by applicable law, waiver by all Parties of the followingconditions on or prior to the Closing Date:

##  

### (a)           Absenceof Injunction and Litigation.  Noneof the Parties shall be subject to any injunction or temporary restrainingorder against consummation of the transactions contemplated by this Agreementor to any suit, action, or proceeding by any Authority or other Person whichchallenges the validity or legality, or seeks to restrain the consummation, ofany transaction contemplated by this Agreement or which seeks to limit orotherwise affect the acquisition of the Purchased Items hereby or Purchaser’sownership and operation of CFC, CII and the CAAM Business as contemplatedhereby.

###  

### (b)           Registrationof Investment Adviser.  Thedesignated Affiliate of Seller that will acquire the CAAM Assets must beregistered under the Advisers Act.

###  

### (c)           MGroup Rights.  Sellers and thePurchaser being satisfied in their sole discretion with the results of theiranalysis regarding the rights in M Financial Group being obtained by Purchaserand the rights to be obtained therefrom. The Parties also shall have obtained on or prior to Closing the approvalin writing of M Financial Group to the transactions and agreements that may beagreed upon as contemplated by the provisions of Article 5, and such agreementsshall be on such terms and conditions that are acceptable to the Parties in theirsole discretion.

 

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## 13.2.        Conditionsto the Obligation of the Sellers.  The obligation of Sellers to consummate the transactions contemplated by thisAgreement are subject to the satisfaction at or prior to the Closing of the following conditions, any one or more ofwhich may be waived in whole or in part by a Seller:

##  

### (a)           Accuracyof Representations and Warranties. The representations and warranties of Purchaser contained in thisAgreement shall have been true and correct in all respects when made and on andas of the Closing Date with respect to the Purchaser as if made by thePurchaser at the Closing (provided, that representations and warrantieswhich address matters only as of a certain date shall have been true andcorrect as of such certain date).

###  

### (b)           Performance.  Purchaser shall have in all material respectsperformed and complied with all agreements, obligations and covenants requiredto be performed or complied with by it on or prior to the Closing Date,including the covenants of Purchaser contained in Article 11 hereof.

###  

### (c)           PurchasePrice.  The portion of the PurchasePrice payable at Closing shall have been paid by Purchaser in accordance withArticle 7.

###  

### (d)           Deliveriesto Sellers.  Purchaser shall havedelivered to Sellers the following:

###  

#### (i)            Acertificate, dated the Closing Date, of an executive officer of Purchaserconfirming the matters set forth in Sections 13.2(a) and (b);

####  

#### (ii)           Acertificate, dated the Closing Date, of the Secretary or Assistant Secretary ofPurchaser certifying, among other things, that attached or appended to suchcertificate:  (A) is a true andcorrect copy of the articles of incorporation and by-laws of Purchaser, and allamendments thereto; (B) is a true copy of all corporate actions taken byit, including resolutions of its board of directors, authorizing theconsummation of the transactions contemplated by this Agreement and theexecution, delivery and performance of this Agreement and each of the RelatedAgreements to be delivered by Purchaser pursuant hereto; and (C) are the namesand signatures of its duly elected or appointed officers who are authorized toexecute and deliver this Agreement and the Related Agreements to whichPurchaser is a party;

####  

#### (iii)          Acertificate of good standing from the appropriate state agency, dated as of arecent date, certifying that Purchaser is subsisting in its jurisdiction ofincorporation;

####  

#### (iv)          Executionand delivery of an Employment Agreement, effective as of the Closing Date, witheach of Yaissle, Scalici and Cowen, substantially in the form set forth inExhibit G hereof; and

####  

#### (v)           Purchaserand the Selling Shareholders shall have entered into an Incentive CompensationPool Agreement (“**Incentive Pool Agreement**”),effective as of the Closing Date, providing for a five (5) year term wherein,annually, twenty-five percent (25%) of EBITDA in excess of the Annual EBITDATarget shown on Schedule 7.5 will be paid into a bonus pool to be allocated tothe employees of CII, CFC and the CAAM Business, such Incentive Pool Agreementto be in substantially the form attached hereto as Exhibit H.

####  

## 13.3.        Conditionsto Obligation of Purchaser.  The obligation of Purchaser to consummate thetransactions contemplated by this Agreement are subject to the satisfactionat or prior to the Closing of the followingconditions, any one or more of which may be waived in whole or in part byPurchaser:

 

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### (a)           Accuracyof Representations and Warranties. The representations and warranties of each of the Sellers contained inthis Agreement shall have been true and correct in all respects when made andon and as of the Closing Date as if made at the Closing (provided, thatrepresentations and warranties which address matters only as of a certain dateshall have been true and correct as of such certain date).

###  

### (b)           Performance.  Each Seller shall have in all materialrespects performed and complied with all agreements, obligations and covenantsrequired to be performed or complied with by each such Seller on or prior tothe Closing Date, including the covenants of each Seller contained in Article11 hereof.

###  

### (c)           NoMaterial Adverse Effect.  During theperiod from the date hereof to the Closing Date, there shall not have occurredany event which has resulted or could result in a Material Adverse Effect.

###  

### (d)           Deliveriesby Sellers.  Sellers shall havedelivered to Purchaser the following:

###  

#### (i)            Stockcertificates representing all of the Shares (the “**Certificates**”)together with one or more stock powers for such Certificates which have beenduly executed in blank by each Selling Shareholder in proper form for transfer,with appropriate transfer stamps, if any, affixed;

####  

#### (ii)           Theledgers, transfer books, and minute books of CFC and CII;

####  

#### (iii)          Theresignations, effective as of the Closing Date, of all of the officers andmembers of the Board of Directors of CFC and CII;

####  

#### (iv)          AWaiver and Release (“**Waiver and Release**”),effective as of the Closing Date, executed and delivered by each SellingShareholder in favor of CFC and CII, in form and substance reasonablysatisfactory to Purchaser, releasing any and all claims such SellingShareholder has or may have against CFC and CII for matters arising prior tothe Closing Date, including any claims under the CFC Shareholders Agreementand/or the CII Shareholders Agreement;

####  

#### (v)           ATermination Agreement of Shareholders Agreement (“**CFCTermination Agreement**”)****terminating,effective as of the Closing Date, the CFC Shareholders Agreement;

####  

#### (vi)          ATermination Agreement of Shareholders Agreement (“**CIITermination Agreement**”)****terminating,effective as of the Closing Date, the CII Shareholders Agreement;

####  

#### (vii)         TerminationAgreements of Management Reimbursement Agreements, each terminating the CMR/CFC/CIIAgreements;

####  

#### (viii)        Such bills of sale with covenants of warranty transferring atthe Closing the CAAM Assets and CMR Assets to Purchaser, and such other similarinstruments of conveyance, transfer and assignment as may be necessary underthe laws of the state in which such assets are located to convey to Purchasergood and marketable title to all personal property included in the CAAM Assetsand CMR Assets, in each case as provided in this Agreement;

####  

#### (ix)           Acertificate, dated the Closing Date, of an executive officer of each of CFC,CII, CAAM and CMR, confirming the matters set forth in Section 13.3(a) and(b);

 

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#### (x)            Acertificate, dated the Closing Date, of each Selling Shareholder confirming thematters set forth in Section 13.3(a) and (b);

####  

#### (xi)           Acertificate, dated the Closing Date, of the Secretary or Assistant Secretary ofeach of CFC, CII, CAAM and CMR certifying, among other things, that attached orappended to such certificate: (A) is a true and correct copy of its certificate of incorporationand bylaws or comparable charter documents, and all amendments thereto;(B) is a true copy of all corporate actions taken by it, includingresolutions of its board of directors or shareholders, as applicable,authorizing the consummation of the transactions contemplated by this Agreementand the execution, delivery and performance of this Agreement and each of theRelated Agreements to be delivered by each of CFC, CII, CAAM and CMR, asapplicable, pursuant hereto; and (C) are the names and signatures of its dulyelected or appointed officers who are authorized to execute and deliver thisAgreement and the Related Agreements to which Purchaser is a party;

####  

#### (xii)          Certificatesof good standing from the appropriate state agencies, dated as of a recentdate, certifying that each of CFC, CII, CAAM and CMR is in good standing in itsjurisdiction of incorporation and each of CFC, CII, CAAM and CMR is in goodstanding in each jurisdiction in which it is qualified to do business as aforeign corporation;

####  

#### (xiii)         Assignments of Intellectual Property in a form sufficientfor filing with the appropriate Authorities, including trademark assignmentsduly executed by the applicable Seller transferring to Purchaser the worldwiderights to the trademarks listed on Schedule 9.18 (the “**Trademark Assignment**”) and all rights to the domain namewww.cornerstone-companies.com and any derivations thereof;

####  

#### (xiv)        Executionand delivery of an Employment Agreement, effective as of the Closing Date, witheach of Yaissle, Scalici, and Cowen, substantially in the form set forth inExhibit G hereof;

####  

#### (xv)         Counselfor the Sellers shall have provided Purchaser with legal opinions covering thematters in Sections 8.1 to 8.6 and 9.1 to 9.5;

####  

#### (xvi)        Purchaserand the Selling Shareholders shall have entered into the Incentive PoolAgreement;

####  

#### (xvii)       CAAM and the Selling Shareholders shall have executed anddelivered to Purchaser the Escrow Agreement; and

####  

#### (xviii)      Such other certificates or documents as may be reasonablyrequired to convey the Purchased Items to Purchaser as provided herein.

####  

### (e)           BulkSales Compliance.  CAAM shall filewithin the applicable time limits, and provide Purchaser with a copy thereof,any documents that may be required by any state taxing authority in order torelieve Purchaser from any transferee liability or any obligation to withholdany portion of the Purchase Price, including any bulk sales notices requiredunder Pennsylvania law, and also provide Purchaser with a copy of any clearancecertificate or similar document(s) upon receipt of same (whether before orafter Closing).

###  

### (f)            DueDiligence.  Purchaser being satisfied(in its sole discretion) with the results of its due diligence being conductedin accordance with Section 11.2 above, including satisfaction with informationprocured in respect of the M Financial Group and the rights to be obtainedtherefrom.

 

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### (g)           AdvisoryContract Consents.

###  

#### (i)            CFC,CII and CAAM have prepared and delivered to Purchaser on or prior to the datehereof, Schedule 13.3(g) which includes a list of all Investment AdvisoryService June 30 Clients and all Investment Advisory Service July 31 Clients ofCFC, CII and CAAM (which constitute all of their Investment Advisory Clients)as of June 30, 2005 and July 31, 2005, respectively, showing for each suchClient and, as of that date, the Client’s name, account number, address, feearrangements (including whether the fee arrangements upon which the June 30,2005 billings or July 31, 2005 billings, as the case may be, are based varyfrom those set forth in the applicable Advisory Contract), assets undermanagement, and June 30, 2005 or July 31, 2005 quarterly billings, as the casemay be (“**Original Schedule**”).  Only assets under management which wereaccruing fees as of June 30, 2005 or July 31, 2005, as the case may be, shallbe included on the Original Schedule. The “**Base Annual Billings**” of CFC, CAAMand CII as of June 30, 2005 and July 31, 2005 for their June 30 Clients andtheir July 31 Clients, respectively, for purposes of this Section 13.3(g) shallequal the sum of such quarterly billing times four (4) and is $2,571,287.

####  

#### (ii)           Atthe Closing, CFC, CII and CAAM will deliver to Purchaser a revised Schedule13.3(g) (the “**Revised Schedule**”), certified tobe true and complete by an officer of each of CFC, CII and CAAM, as of theclose of business on the last Business Day before the Closing prepared asfollows:

####  

##### (A)          The Revised Scheduleshall include a list of only those Advisory Service Clients of CFC, CII andCAAM for whom, as of the date thereof, CII, CFC or CAAM had received writtenconsent to the assignment of or continuation of their Advisory Contract afterthe Closing as contemplated by Section 11.5 hereof and for whom CII, CFC orCAAM continues to provide Advisory Services. For each such Client, the Revised Schedule shall show, as of such date,the Client’s name, account number, address, fee arrangements, assets undermanagement as of a date within 10 calendar days prior to the Closing, and proforma annual billings calculated by (I) multiplying the assets under managementby the annual percentage fee applicable to such Client under its then currentAdvisory Contract or (II) annualizing the then current fixed fee payable underthe then current Advisory Contract, as the case may be.  Only assets under management which wereaccruing fees as of the last Business Day before the Closing shall be includedon the Revised Schedule.

#####  

##### (B)           Clients that haveentered into Advisory Contracts with CII, CFC or CAAM since the date of theOriginal Schedule and which have consented to the assignment of their AdvisoryContract shall be included in the Revised Schedule with their assets undermanagement by CII, CFC or CAAM as of a date within 10 calendar days prior tothe Closing included in such Revised Schedule.

#####  

##### (C)           If on or before theClosing, CII, CFC or CAAM has knowledge of any withdrawal of assets undermanagement for any Client since the date of the Revised Schedule or anyprospective withdrawal of assets under management for any Client, assets undermanagement for such Client on the Revised Schedule shall be reduced by thevalue of the assets withdrawn or proposed to be withdrawn.  If on or before the Closing, CII, CFC or CAAMhas knowledge of any Client’s intent to terminate its Advisory Contract withinone year of the Closing, such Client shall be excluded from the RevisedSchedule.

#####  

##### (D)          The pro forma annualbillings for each Client shall be calculated as described in (A) above, aftergiving effect to the adjustments made to assets under management pursuant tothe subparagraphs (A) to (C) above.

 

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The pro formaannual billings shown on this Revised Schedule are referred to as “**Assigned Annual Billings**.”

 

#### (iii)          AssignedAnnual Billings shall then be divided by Base Annual Billings, and theresulting percentage shall be determined to the nearest one-hundredth of apercent (the “**Assigned Billings Percentage**”).  The Assigned Billings Percentage shall be notless than 90%.

####  

### (h)           InsuranceAgency Consents. CFC and CII shall have obtained all necessary writtenconsents from the parties to the Insurance Agency Contracts constituting atleast ninety percent (90%) of the revenues derived by CFC and CII from suchInsurance Agency Contracts during the 12 month period ended June 30, 2005, andshall have obtained the necessary approvals, consents, licenses, or licenseamendments from, each applicable state insurance agency in respect of theinsurance agency licensing of CFC and CII and the employees, consultants andindependent contractors of the Cornerstone Business, as described in Section11.6.

###  

### (i)            Bank Regulatory Consents.

###  

#### (i)            Allnecessary approvals shall have been obtained, and no objections or disapprovalsshall have been received, from the regulatory agencies having jurisdiction overHarleysville National Corporation, HNB and each Purchaser and Receiving Entityother than Harleysville National Corporation or HNB, in respect of thetransactions contemplated under this Agreement and the Related Agreements.

####  

#### (ii)           Allnecessary filings to qualify each Purchaser (if a subsidiary of HNB), CFC, CIIand each Receiving Entity (if a subsidiary of HNB), shall have been made, and eachsuch Purchaser and/or entity, as applicable, shall qualify, as of immediatelyafter Closing, as a “financial subsidiary” of HNB under applicable rules of theOffice of the Comptroller of the Currency (“**OCC**”).

####  

### (j)            [reserved]

###  

### (k)           OtherConsents.  Sellers shall haveobtained all necessary third party consents as listed on Schedule 13.3(k),including consents related to certain CAAM Contracts, CMR Contracts, the Leasesand Permits.  All consents, approval orwaivers required to be obtained by Sellers by the terms of this Agreement or tootherwise effect the transactions contemplated by this Agreement will, whenobtained as of the Closing, conform in all material respects to, and otherwisesatisfy in all material respects, all applicable laws and regulations.

###  

### (l)            NoDebt.  Each Selling Shareholder shallhave paid to CFC and CII any and all amounts owed by such Selling Shareholderto CFC and/or CII, as applicable, including the amounts required to be paidunder Section 11.8(a).

###  

### (m)          Employees.  Each employee of Cornerstone listed onSchedule 9.33(a) and any other persons who are licensed producers of insuranceproducts and with whom CFC or CII conducts business and who have previouslyexecuted assignments of commissions to CFC or CII, shall have executed and deliveredto Purchaser (i) a Non-Solicitation and Confidentiality Agreement in a formreasonably satisfactory to Purchaser, providing for, in substance, thenon-solicitation of employees, clients and prospective clients, andnon-disclosure of confidential information, of Purchaser and each of itsrespective Affiliates (including the Cornerstone companies); and (ii) anAssignment of Commissions Agreement in form reasonably satisfactory to Purchaser, providing for, in substance,the assignment by such employee to Purchaser or one of its Affiliates ofcommissions from sales of variable life insurance policies.

 

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### (n)           BoardApproval.  The Board of Directors ofPurchaser and Harleysville National Corporation shall have duly approved on orprior to Closing the consummation of the transactions contemplated by thisAgreement and the Related Agreements.

###  

# **ARTICLE 14.**ADDITIONAL AGREEMENTS

# ** **

## 14.1.        Non-competition.

##  

### (a)           TheParties acknowledge and agree that Purchaser’s present and future businessrelationships are of a nature that any statements made or actions taken byCAAM, CMR or the Selling Shareholders in violation of sub-section (b) belowwould cause irreparable harm to Purchaser.

###  

### (b)           (i)            By reason of Section 14.1(a), and inconsideration for the payment by Purchaser to CAAM, CMR and the SellingShareholders of the Purchase Price pursuant to this Agreement, CAAM, CMR andeach Selling Shareholder covenants and agrees that during the RestrictedPeriod, neither CAAM, CMR, nor any Selling Shareholder, nor any entityControlled by CAAM, CMR or any Selling Shareholder, shall directly orindirectly, whether for his or its own account or for the account of any otherPerson, (A) provide insurance agency services, Investment Advisory Services, orbroker-dealer services in Pennsylvania, New York, New Jersey, Delaware, Ohio,Maryland or West Virginia, (B) make any public or derogatory statements,or take any other actions that could interfere with (or are intended to interferewith) HNB, Harleysville National Corporation, Purchaser, CFC, CII or CAAM’s (orany of their Affiliate’s) relationships with any of their respective customersor clients, former customers or clients (meaning any Person who was a customeror client within the past six months of the date of determination) or potentialcustomers or clients (meaning any Person with whom CFC, CII or CAAM has engagedin substantive discussions within the past six months of the date ofdetermination), (C) contract with, accept business from, perform services for,or solicit any customers or clients, former customers or clients (as definedabove) or potential customers or clients (as defined above) of HNB,Harleysville National Corporation, Purchaser, CFC, CII or CAAM (or any of theirAffiliates); (D) hire, employ or enter into any other business relationship(including consultant) with, or recruit, solicit, induce or encourage, anyindividual who is employed by HNB, Harleysville National Corporation,Purchaser, CFC, CII, CAAM or CMR or any of their respective Affiliates at anytime since June 1, 2005 through the Restricted Period, to leave suchemployment, or to seek, obtain or accept employment or any other businessrelationship with any Person other than HNB, Harleysville National Corporation,Purchaser, CFC or CII or any of their Affiliates, (E) directly orindirectly in any way, invest in, finance, consult with, be employed orotherwise engaged by, assist or establish, any Person, or acquire any Person,which is in the business of providing insurance agency services, Investment Advisory Services, orbroker-dealer services when such Person operates (or seeks to operate) inPennsylvania, New York, New Jersey, Delaware, Ohio, Maryland or West Virginia;(F) be engaged, directly or indirectly, either for his own account or as agent,consultant, employee, partner, officer, director, proprietor, investor (exceptas an investor owning less than 1% of the stock of a publicly owned company) orotherwise, by any Person engaged in the banking (including bank and financialholding company) or financial services industry, or any other activity in whichHNC or any of its Affiliates are engaged, when such Person operates (or seeksto operate) in Pennsylvania, New York, New Jersey, Delaware, Ohio, Maryland orWest Virginia, or (G) provide financial or other assistance to any Person inthe banking (including bank and financial holding company) or financialservices industry, or any other activity in which HNC or any of its Affiliatesare engaged, when such Person operates (or seeks to operate) in Pennsylvania,New York, New Jersey, Delaware, Ohio, Maryland or West Virginia.  CAAM, CMR and the Selling Shareholders willuse their best efforts to ensure that all employees, consultants or agents ofany of CII, CFC, CMR or CAAM comply with the provisions of this Section 14.1.

 

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#### (ii)           The term“**Restricted Period**” shall mean theperiod beginning on the Closing Date and ending five (5) years after theClosing Date.  However, if such period orscope should be adjudged unreasonable in any judicial or other disputeresolution proceeding, then the period of time or scope shall be reduced by theextent deemed unreasonable, so that these covenants may be enforced during suchperiod and for such scope as are adjudged to be reasonable.  In the event that any Selling Shareholdershall be in violation of any of the covenants contained in this Section 14.1,then the period during which that covenant shall be operative with respect tosuch Selling Shareholder shall be extended for a period equal to the periodduring which that violation shall have occurred.

####  

### (c)           TheParties acknowledge and agree that any violation by CAAM, CMR or any SellingShareholder of the provisions of this Section 14.1 will cause irreparable harmto Purchaser, that the remedy at law for any such breach will be inadequate forPurchaser and, accordingly, Purchaser shall be entitled to apply for and obtaininjunctive relief in any court of competent jurisdiction to restrain the breachor threatened breach of, or otherwise to specifically enforce, any of suchprovisions.  Nothing herein containedshall be construed as prohibiting Purchaser from pursuing any other remedies availableto it for such breach or threatened breach.

###  

### (d)           Tothe extent that any provision of this Section 14.1 would be held to violateapplicable law or regulations or be unenforceable under applicable law orregulations, the provisions of this Section 14.1 shall nevertheless be appliedand enforced to the maximum extent (with respect to type of product or service,geographical extent, and period of restriction) permitted under applicable lawin order to achieve, to the greatest extent possible, its intended purpose.

###  

### (e)           Notwithstandingthe foregoing, solely with respect to Advisory Service Clients that did notconsent to the assignment of or continuation of the Advisory Contract after theClosing, CAAM and the Selling Shareholders may provide transition servicesnecessary to meet their fiduciary obligations to such Clients until suchClients have executed contacts with another advisor, but in no event shall suchservices be provided for more than ninety (90) days after Closing.

###  

### (f)            Theprovisions of this Section 14.1 are separate and distinct from the restrictivecovenant provisions that  may becontained in any Related Agreement, including the Employment Agreements withthe Selling Shareholders.

###  

## 14.2.        Tax Matters.

##  

### (a)           Section338 Elections and Related Matters.

###  

#### (i)            TheSelling Shareholders agree:

####  

##### (A)          to make a timelyjoint election with the Purchaser under Section 338(h)(10) of the Code withrespect to the purchase of the stock of CFC and CII, respectively (such jointelection under Section 338(h)(10) of the Code being referred to herein as the “**Section 338(h)(10) Elections**”), and

#####  

##### (B)           to make or cause tobe made any and all similar elections available under any applicable foreign,state or local law with respect to the purchase of the stock of the CFC andCII, respectively (such similar elections available under any applicableforeign, state or local law being collectively referred to herein as the “**Section 338(h)(10) Subelections**”).

#####  

The Purchaser agrees,

 

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##### (C)           to make an electionunder Section 338(g) of the Code and the applicable regulations under Section338 to the extent necessary to allow the Section 338(h)(10) Elections to bemade (such election under Section 338(g) of the Code and the applicableregulations under Section 338 being referred to herein as the “**Section 338(g) Elections**”), and

#####  

##### (D)          to make any and allsimilar elections available under any applicable foreign, state or local law,to the extent necessary to allow any Section 338(h)(10) Subelections to be made(such similar elections available under any applicable foreign, state or locallaw being collectively referred to herein as the “**Section 338(g) Subelections**”).

#####  

#### (ii)           Asrequested from time to time by the Purchaser (whether before, at or after theClosing), the Selling Shareholders shall assist the Purchaser in, and shallprovide the necessary information to the Purchaser in connection with, thepreparation of Internal Revenue Service Form 8023, Elections Under Section 338for Corporations Making Qualified Stock Purchases (“**Form 8023**”),and any comparable or related forms required under any applicable foreign,state or local law, and the required schedules or statements thereto(collectively, the “**Section 338 Election Forms**”),relating to the Section 338(h)(10) Elections, the Section 338(g) Elections, anySection 338(h)(10) Subelection and any Section 338(g) Subelection(collectively, the “**Section 338 Elections**”)and the information required to be filed with any Tax Authority as a result ofthe Section 338 Elections.  Without limitingthe generality of the preceding sentence and with respect to each Section 338Election Form delivered by the Purchaser to the Selling Shareholders, theSelling Shareholders shall, no later than thirty (30) days before the Section338 Elections (or any of them) are required to be filed (taking into accountany extensions), cause each such Section 338 Election Form requested by thePurchaser to be duly executed, and the Selling Shareholders shall deliver sameto the Purchaser.  If the Purchaser determinesthat any change is to be made in a Section 338 Election Form previouslyexecuted by the Selling Shareholders and delivered by the Selling Shareholdersto the Purchaser, then the Purchaser may prepare a new Section 338 ElectionForm and deliver such new Section 338 Election Form to the SellingShareholders, and the Selling Shareholders shall cause such Section 338Election Form to be duly executed and shall promptly deliver such executedSection 338 Election Form to Purchaser.

####  

#### (iii)          ThePurchaser shall file or cause to be filed Form 8023, and each of the Purchaserand Selling Shareholders shall take any and all actions necessary orappropriate to effect the timely filing of any other Section 338 Election Formsrequired to be filed for any applicable foreign, state or local Tax purposes.

####  

#### (iv)          ThePurchaser and the Selling Shareholders will:

####  

##### (A)          treat the Section 338Elections as valid,

#####  

##### (B)           not take any actioninconsistent with the treatment,

#####  

##### (C)           file, or cause to befiled, all Tax Returns affected by those filings in a manner consistent withthe Section 338 Elections (including attaching such Section 338 Election Formsand the schedules related thereto to the appropriate Tax Returns in the mannerprescribed by applicable regulations or other applicable law), and

#####  

#### (v)           TheSelling Shareholders shall be solely liable and responsible for the Taxesattributable to making the Section 338 Elections, including Taxes on the incomeor gain from the deemed sale of assets as a result of such Section 338Elections.

 

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### (b)           TheSelling Shareholders and the Purchaser agree to consent, and shall cause theCFC and CII to elect, pursuant to Subchapter S of the Code, to allocate Taxitems to each of CFC’s and CII’s S corporation short year and C corporationshort year pursuant to normal tax accounting rules (the “closing of the booksmethod”) rather than by the pro rata allocation method.  The Selling Shareholders and the Purchaseragree and shall cause the Company to take all necessary actions under the Codeand Treasury Regulations to cause such election and consents to be effectivefor federal income tax purposes.

###  

### (c)           Fromthe date of this Agreement through and after the Closing Date, SellingShareholders shall prepare, or cause to be prepared, in a manner consistentwith prior returns (except to the extent counsel for Seller determines there isno reasonable basis in law therefor), and shall file, or cause to be filed, anyTax Returns of CFC, CII and CAAM (including amendments thereto) for all taxableperiods that end on or before the Closing Date (and Purchaser shall do the samewith respect to CFC and CII for any taxable period ending after the ClosingDate).  Selling Shareholders shall pay,or cause to be paid when due and payable all Taxes with respect to CFC, CII andCAAM for the taxable period ending on the Closing Date.  The Tax Returns prepared and filed by theSelling Shareholders (referred to in the first sentence hereof) shall include,without limitation, the final federal, state and local S corporation income TaxReturns for CFC and CII.  The SellingShareholders shall deliver to the Purchaser for its review and comment notlater than thirty (30) days prior to the due date thereof any such TaxReturns.  In connection with the reviewof such final Tax returns, during normal business hours and upon reasonableprior notice, the Selling Shareholders shall provide to the Purchaser and theirtax advisors such access to all books and records, of CFC and CII as is necessaryto complete such review.  The partiesagree to mutually resolve in good faith any differences with respect to suchfinal returns.

###  

### (d)           Duringthe period from the date of this Agreement and continuing until the earlier ofthe termination of this Agreement pursuant to its terms and the Closing Date,neither CFC, CII nor CAAM shall make or change any material election in respectof Taxes, adopt or change any accounting method in respect of Taxes, enter intoany closing agreement, settle any claim or assessment in respect of Taxes(except settlements effected solely through payment of immaterial sums ofmoney), or consent to any extension or waiver of the limitation periodapplicable to any claim or assessment in respect of Taxes.

###  

### (e)           Inthe case of any taxable period that includes (but does not end on) the ClosingDate, the periodic Taxes of CFC, CII and CAAM that are not based on income orreceipts (e.g., property taxes) attributable to the pre-Closing Tax periodshall be equal to the amount of such Taxes attributable to the entire taxableperiod multiplied by a fraction, the numerator of which is the number of daysduring that period that are in a pre-Closing Tax period and the denominator ofwhich is the number of days in such taxable period; provided, however, that ifthe amount of periodic Taxes imposed for such taxable period reflects differentrates of tax imposed for different periods within such taxable period, theformula described in the preceding clause shall be applied separately withrespect to each such period within the taxable period.

###  

### (f)            Priorto the Closing Date, Selling Shareholders shall make available for Purchaser’sinspection, as reasonably requested, copies of those federal, state, county,local and foreign Tax Returns, reports and estimates for periods prior to theClosing Date for CFC, CII, CAAM and CMR to the extent not previously providedto Purchaser.

###  

### (g)           Afterthe Closing Date, Purchaser and the Selling Shareholders will provide eachother with such cooperation and information as either of them reasonably mayrequest of the other in filing any Tax Return, amended return, determining aliability for Taxes or participating in or conducting any audit or otherproceeding in respect of Taxes.  Withoutlimiting the scope of the foregoing, Purchaser and the Selling Shareholdershall each make available to the other, as reasonably requested, all

 

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### information, records or documents relating to federal, state,county, local or foreign Tax matters of CFC, CII and CAAM for all taxableperiods prior to or including the Closing Date and shall preserve all suchinformation, records and documents until the expiration of any applicable Taxstatute of limitations or extensions thereof.

###  

### (h)           Purchasershall promptly notify Seller Representative in writing upon receipt byPurchaser of notice of (i) any pending or threatened Tax audits or assessmentsof the CFC or CII which may affect the liability of the Selling Shareholdersfor Taxes under this Agreement.  SellerRepresentative shall have the sole right to participate with Purchaser in anyTax audit or administrative or court proceeding related to taxable periodsending on or before the Closing Date, and to employ counsel of its choice atits expense.  Purchaser agrees that itwill cooperate, and cause CFC and CII to cooperate, at the expense of theSelling Shareholder, fully with Seller Representative and their counsel in thedefense against any claim in any said proceeding.  Purchaser shall have the sole right torepresent the CFC and CII in any Tax audit or administrative or courtproceeding related to taxable periods ending after the Closing Date, and toemploy counsel of its choice at its expense. Seller Representative agrees to cooperate, at its expense, fully withPurchaser and its counsel in the defense against any claim in any saidproceeding.  Notwithstanding theforegoing, Seller Representative will not enter into any closing agreement (asdefined in Section 7121 of the Code, or any comparable provision of state,county, local or foreign law) which is binding on Purchaser for any taxableperiod ending after the Closing Date, without the prior written consent ofPurchaser, or enter into any closing agreement (as so defined) which is bindingon Purchaser for any taxable period ending on or before the Closing Date,without the prior written consent of Purchaser. Further, notwithstanding the foregoing, Selling Shareholders shall notagree to any settlement concerning Taxes for any taxable period ending on orbefore the Closing Date, which settlement may result in an increase in Taxes ofCFC or CII for any taxable period ending after the Closing Date, without theprior written consent of Purchaser, nor shall Purchaser agree to any settlementconcerning Taxes for any taxable period ending after the Closing Date which mayresult in an increase in Taxes of CFC or CII for any taxable period endingprior to or including the Closing Date, without the prior written consent ofSeller Representative.  Any consentrequired to be given under this Section may not be unreasonably withheld.

###  

After theClosing Date, Selling Shareholders and Purchaser shall consult in good faithduring the course of any audits or administrative or judicial proceedingspertaining to Taxes of, or which may affect, either CFC or CII for periodsending prior to or including the Closing Date. Such consultations shall include, but not be limited to, consultationsconcerning (i) preparation of a response to a 30-day letter for a United Statesfederal income tax audit together with any appellate conferences relatedthereto, (ii) any ongoing or future audits related to any period ending priorto or including the Closing Date and (iii) court proceedings with respect toany of the above.  Purchaser or SellerRepresentative, as the case may be, shall be made aware of any meetings andconferences related thereto and have the right (to the extent permissible bylaw) to have a representative present at those conferences.

 

### (i)            RefundClaims.

###  

#### (i)            SellingShareholders shall be entitled to any Tax refunds pertaining to the activitiesor income of CFC or CII (or equivalent benefit to Selling Shareholders througha reduction in Tax liability) for periods ending on or before the Closing Dateto the extent the benefit thereof has not been provided for on the Closing Datebalance sheet.

####  

#### (ii)           Theparties hereto acknowledge and agree that any tax loss or tax credit of CFC orCII, the economic benefit of which is realized in a period ending after theClosing Date, shall be for the account of Purchaser, and Purchaser shall not beobligated to pay any additional consideration to Seller Representativetherefor.  Without limiting thegenerality of the foregoing, this Section applies to

 

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#### any tax loss or credit generated in any period ending on,prior to or including the Closing Date, which may be carried forward andutilized on returns for any period ending after the Closing Date.

####  

### (j)            Exceptas otherwise provided in Sellers’ Schedules, there are no agreements orunderstanding whether labeled “tax-sharing” agreements or otherwise, wherebyCFC or CII may be required after the date hereof to make payments of or inrespect of Taxes to Sellers or any affiliate of Sellers, or any successorthereto.

###  

## 14.3.        SellerRepresentative

##  

### (a)           JohnR. Yaissle, in an individual capacity and not as a Selling Shareholder orSeller, shall be constituted andappointed as agent (“**Seller Representative**”)for and on behalf of the Sellers and the Seller Representative shall have theexclusive right, power and authority on their behalf, to: (a) resolve andsettle all claims and disputes relating to this Agreement and the EscrowAgreement, including claims and disputes over the Purchase Price Adjustmentunder Section 7.2 of this Agreement, the Earn-Out under Section 7.5 ofthis Agreement, claims for indemnification under Article 16 of this Agreementand the disbursement of the Escrow Funds (as such term is used and defined inthe Escrow Agreement); (b) give and receive notices under Section 17.6 of thisAgreement; (c) give and receive notices and communications under the EscrowAgreement to authorize delivery to Purchaser of property from the Escrow Fundin satisfaction of claims by Purchaser; (d) agree to, negotiate, enter intosettlements and compromises of, and demand, and represent all Sellers at anymediation or arbitration in connection with this Agreement or the EscrowAgreement and comply with orders of courts, mediation settlements, and arbitrationawards with respect to such claims; (e) take all other actions and exercise allother powers granted to the Seller Representative in this Agreement, includingany and all actions required or permitted to be taken by the SellerRepresentative under the Escrow Agreement; and (f) to take all actionsnecessary or appropriate in the judgment of the Seller Representative for theaccomplishment of the foregoing.  TheSeller Representative may be changed by the holders of a majority in interestof the Escrow Fund from time to time upon not less than ten (10) days’ priorwritten notice to Purchaser.  No bondshall be required of the Seller Representative, and the Seller Representativeshall receive no compensation for his services. Notices or communications to or from the Seller Representative shallconstitute notice to or from each of the Sellers.  Any resolution or settlement of any claims bythe Seller Representative shall be binding on each Seller who is a party to theclaim (i.e., settlement of an indemnification claim) or is otherwise affectedthereby (i.e., reaching agreement with Purchaser regarding any Purchase PriceAdjustment).

###  

### (b)           TheSeller Representative shall not be liable for any act done or omitted hereunderas Seller Representative while acting in good faith, and any act done oromitted pursuant to the advice of counsel shall be conclusive evidence of suchgood faith.  The Sellers shall jointlyand severally indemnify the Seller Representative and hold him harmless againstany loss, liability or expense incurred without gross negligence or bad faithon the part of the Seller Representative and arising out of or in connectionwith the acceptance or administration of his duties hereunder.

###  

# **ARTICLE 15.**TERMINATION AND REMEDIES

# ** **

## 15.1.        Termination.  Anything in this Agreement to the contrarynotwithstanding:

##  

### (a)           UpsetDate.  If the Closing shall not haveoccurred on or before 11:59 p.m., New York, New York time, on March 15, 2006,then, this Agreement may be terminated in its entirety (and not partially) atany time thereafter by Purchaser or any Seller, by notice provided to Purchaser (in the case of a termination by aSeller) or Seller Representative (in the case of a termination by Purchaser),provided

 

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### that the failure to consummate the Closing is not caused by abreach of this Agreement by the terminating Party.

###  

### (b)           LegalRestraint.  Purchaser or any Sellermay, by written notice to Purchaser (in the case of a termination by Seller) orSeller Representative (in the case of a termination by Purchaser), terminatethis Agreement if, on the date set forth in Section 15.1(a) hereof, there is ineffect a preliminary or permanent injunction enjoining all or any portion ofthe transactions contemplated by this Agreement, including the purchase of anyone or more of the Purchased Items by Purchaser.

###  

### (c)           MaterialAdverse Change.  Purchaser may terminate this Agreement by written notice to the SellerRepresentative on or before the date which is five Business Days after the dateon which Sellers deliver to Purchaser interim unaudited financial statements as of and for the quarter ended September 30, 2005 if such financial statements reflect any material adverse change in thefinancial condition or results of operations of CFC, CII or CAAM as compared totheir respective financial condition as reflected in the June 30, 2005Unaudited Financial Statements.

###  

### (d)           Purchaseron the one hand, and Sellers on the other hand, may terminate this Agreement(in its entirety and not partially) by notice to Purchaser (in the case of atermination by Seller) or Seller Representative (in the case of a terminationby Purchaser) if (i) in the case of a termination by Purchaser, any Sellershall breach any representation, warranty, and/or covenant contained herein, or(ii) in the case of a termination by Sellers, Purchaser shall breach anyrepresentation, warranty, and/or covenant contained herein, and the terminatingParty shall have provided the breaching party with notice of such breach andsuch breach is not cured within five (5) Business Days of the date of suchnotice (if capable of being cured).

###  

### (e)           MFinancial Group.  Sellers orPurchaser may terminate this Agreement in whole or in part in the event theParties shall have failed to reach agreement regarding, or failed to receiveapproval from, M Financial Group with regard to the rights to be obtained fromM Financial Group by Purchaser in connection with the transactions contemplatedby this Agreement.

###  

## 15.2.        Remedies.

##  

### (a)           SpecificPerformance.  If Purchaser, on theone hand, or Sellers, on the other hand, desire to proceed with the Closingdespite any failure or refusal of theParty or Parties in breach of this Agreement, the Party or Parties who desireto proceed shall have the right to pursue the remedy of specific performance.

###  

### (b)           Damages.  Subject to compliance with the terms ofSection 15.2(d) hereof, if the failure or refusal of Purchaser, on the onehand, or Sellers, on the other hand, toconsummate the Closing constitutes a breach of this Agreement, the other Partyterminating this Agreement pursuant to Section 15.1(a) hereof shall have theright to sue for direct damages and all reasonable out-of-pocket costs andexpenses theretofore suffered and sustained by such non-defaulting Party.  In no event shall any Party be liable to anyother Party for incidental, consequential or punitive damages, nor shall therebe double counting of any item of loss, expense, cost or offset.

###  

### (c)           Effectof Termination.  Except as set forthin Section 15.2(b) above, upon any proper termination of this Agreement by aParty pursuant to Sections 15.1(a) or 15.1(b)hereof, thereafter no Party will have any rights, duties, liabilities or obligationsof any kind or nature whatsoever against any other Party based upon either thisAgreement or the transactions contemplated hereby, except (i) in each case theobligations of each Party for its own expenses incurred in connection with thetransactions contemplated by this Agreement as provided in Section

 

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### 17.1, the obligations of each Party withrespect to confidentiality set forth in Section 17.3 hereof, and the provisionsof Sections 17.4 and 17.5 in the event of a dispute as to the propriety of suchtermination, and (ii) nothing in this Section shall relieve any Party for anybreach of its representations, warranties, covenants and agreements containedherein.

###  

### (d)           CurePeriod.  If any Party shall seek anyform of relief referred to in Sections 15.2(a) or 15.2(b) hereof, such Partyshall, as a condition to the right toseek such relief, afford any defaulting Party a five (5) Business Day period toeffect reasonable cure of such breach or default.

###  

# **ARTICLE 16.**INDEMNIFICATION

# ** **

## 16.1.        Survivalof Representations and Warranties.

##  

### (a)           The representations and warrantiesmade by the Selling Shareholders in Article 8 shall survive indefinitely.

###  

### (b)           The representations and warranties made by Sellers inSections 9.1, 9.2, 9.3, 9.4 and 9.5 shall survive indefinitely

###  

### (c)           Therepresentations and warranties made bySellers in Sections 9.6 through and including Section 9.38 shall survive untilthe second (2nd) anniversary of the Closing Date, except that therepresentations and warranties in Sections 9.14 and 9.19 shall survive for 60days after the expiration of the applicable statute of limitations (in eachcase, for purposes of this Article 16, the “**SellerCut-Off Date**”).

###  

### (d)           Notwithstandingany provision of this Agreement to the contrary, no claim for incorrectrepresentation or breach of warranty under this Agreement may be broughtagainst CAAM, CMR or the Selling Shareholders, and no mediation with respectthereto commenced, and CAAM, CMR and the Selling Shareholders shall have noobligation with respect thereto, unless, in the event that the Seller Cut-OffDate is applicable to such claim, written notice thereof specifying withreasonable particularity the incorrect representation or breach of warrantyclaimed shall have been delivered to the Seller Representative before theSeller Cut-Off Date relating to such representation and warranty.

###  

### (e)           Therepresentations and warranties made by Purchaser in Article 10 hereof shallsurvive until the second (2nd) anniversary of the Closing Date,except that the representations andwarranties in Sections 10.1 to 10.4 shall survive indefinitely (in each case,for purposes of this Article 16, the “**Purchaser Cut-Off Date**”).

###  

### (f)            Notwithstandingany provision of this Agreement to the contrary, no claim for incorrectrepresentation or breach of warranty under this Agreementmay be brought against Purchaser, and no mediation with respect theretocommenced, and Purchaser shall not have any obligation with respect thereto,unless, in the event that the Purchaser Cut-Off Date is applicable to suchclaim, written notice thereof specifying with particularity the incorrectrepresentation or breach of warranty claimed shall have been delivered toPurchaser before the Purchaser Cut-Off Date relating to such representation andwarranty.

###  

## 16.2.        Indemnificationby CAAM, CMR and the Selling Shareholders. Except as otherwise limited by Section 16.1, CAAM, CMR and the SellingShareholders, jointly and severally, agree to indemnify, defend, and holdPurchaser, its Affiliates, and each of their respective directors, officers,employees, shareholders and agents (collectively, the “**PurchaserGroup**”), harmless from any and all

 

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## claims, losses, damages, liabilities, fines, penalties, costsand expenses (including reasonable attorneys fees) (hereinafter individually a“**Loss**” and collectively, “**Losses**”) suffered or incurred by any member of the PurchaserGroup (a) arising out of or resulting from any incorrect representation orbreach of warranty of any Seller contained in the Agreement, including Articles8 or 9, (b) arising out of or resulting from a breach of any covenant oragreement by a Seller contained in this Agreement, (c) any liability orobligation in respect of CAAM relating to any period prior to the Closing Dateto the extent such claims are not covered by insurance proceeds under insurancepolicies maintained by Sellers prior to the Closing Date, (d) the RetainedCAAM Liabilities, and (e) any liability or obligation of CMR relating to anyperiod prior to, on, or after the Closing Date, except with respect toliabilities and obligations arising after the Closing Date in respect of theCMR Contracts.

##  

## 16.3.        Indemnificationby Purchaser.  Except as otherwiselimited by Section 16.1, Purchaser agrees to indemnify, defend, and hold CAAM,CMR and the Selling Shareholders and each of their respective Affiliates, andeach of their respective directors, officers, employees, shareholders, andagents (collectively, the “**Selling Shareholder Group**”)harmless from any and all Losses suffered or incurred by the SellingShareholder Group (a) arising out of or resulting from any incorrectrepresentation or breach of warranty by Purchaser contained in Article 10, or(b) arising out of or resulting from the breach of any covenant or agreement byPurchaser contained in this Agreement.

##  

## 16.4.        Assertionof Claims.

##  

### (a)           AnyParty making a claim under this Article 16 is referred to as an “**Indemnified Party**” and each Party against whom such claimsare asserted under this Article 16 is referred to as an “**IndemnifyingParty**”.

###  

### (b)           AnIndemnified Party shall promptly give each Indemnifying Party written notice ofany matter which the Indemnified Partyhas determined has given or could giverise to a right of indemnification under this Article 16 stating the amount ofthe Loss, if known, and the method of computation thereof, all with reasonableparticularity; provided, however, that the failure of an Indemnified Party togive timely notice shall not affect the rights of such party to indemnificationhereunder except to the extent that an Indemnifying Party demonstrates actualdamage caused by such failure.

###  

### (c)           Theobligations and liabilities of theIndemnifying Party under this Article 16 with respect to Losses arising fromclaims of any third party (including claims by any governmental agency) thatare subject to the indemnification provided for in this Article 16 (“**Third Party Claims**”) shall be governed by and be contingentupon the additional terms and conditions set forth in this subsection (c).  If an Indemnified Party shall receive noticeof any Third Party Claim, the Indemnified Party shall give each IndemnifyingParty prompt written notice thereof and shall permit each Indemnifying Party,at its option, to participate in the defense of such Third Party Claim by thecounsel of their own choosing and at their own expense, such right toparticipate to include a right to receive from the Indemnified Party allrelevant documentation and a right to interview all relevant witnesses (subjectto the limitations contained in the next sentence).  If any Third Party Claim against anIndemnified Party is solely for money damages and will have no continuingeffect in any material respect on the Indemnified Party and the amount claimedby the third party in the Third Party Claim is not more than the limit on suchIndemnifying Party’s indemnity obligations contained in Section 16.5, then ifan Indemnifying Party acknowledges in writing the Indemnifying Party’sobligation to indemnify the Indemnified Party under this Article 16 against anysuch Losses that may result from its portion of the exposure of such ThirdParty Claim, then the Indemnifying**Party shall be entitled, at its option, to assumeand control the defense of such Third Party Claim at the expense and throughthe counsel of the Indemnifying Party’s choice, reasonably satisfactory to theIndemnified Party, if the Indemnifying Party gives timely written notice of

 

58

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### their intention to do so to the Indemnified Party.  The Indemnifying Party shall then permit suchIndemnified Party, at its option, to participate in the defense of such ThirdParty Claim by the counsel of its own choosing and at its own expense.  However, if such Indemnifying Party electsnot to defend against or is not entitled to so defend, pursuant to the thirdsentence of this subsection (c), such Third Party Claim, then such Indemnifying**Partyshall promptly so notify the Indemnified Party and such Indemnified Party shallthereupon have the right to assume and control the defense of its portion ofthe exposure of such Third Party Claim at the expense of such IndemnifyingParty and through the counsel of such Indemnified Party’s choice.  In respect of any Third Party Claim,regardless of which Party is conducting a defense thereof, the IndemnifiedParty shall cooperate with such Indemnifying**Party in such defense and make available to suchIndemnifying Party, at such Indemnifying Party’s expense, all pertinent records,materials and information**inits possession or under its control relating thereto as is reasonably requestedby such Indemnifying Party. Notwithstanding the foregoing, with respect to any Third Party Claim,the Indemnified Party may, at its own cost, participate in the investigation,trial and defense of such action, suit, claim, tax audit, proceeding, demand,assessment or enforcement action, and any appeal arising therefrom.  The Indemnified Party may not settle anyThird Party Claim without the written consent of each Indemnifying Party, whichconsent shall not be unreasonably withheld or delayed.

###  

### (d)           EachIndemnifying Party shall be subrogated to any and all defenses, claims orsetoffs which an Indemnified Party asserted or could have asserted against thethird party making a Third PartyClaim.  The Indemnified Party shallexecute and deliver to each Indemnifying Party such documents as may benecessary to establish by way of subrogation the ability and right of eachIndemnifying Party to assert such defenses, claims or setoffs against any thirdparty making a Third Party Claim.

###  

## 16.5.        Limitationson Indemnification.  Notwithstandinganything to the contrary contained in this Agreement, the obligations of theParties to provide indemnification under this Agreement shall be subject to thefollowing limitations:

##  

### (a)           Afterthe Closing, CAAM, CMR and the Selling Shareholders shall be liable to thePurchaser Group for the Losses covered by Section 16.2(a) to the extent, andonly to the extent, that the aggregate amount of Losses suffered by thePurchaser Group for which they are entitled to seek indemnification pursuant tothis Agreement exceed $125,000 in the aggregate (the “**MinimumAmount**”), in which event the Purchaser Group shall thereafter beentitled to seek indemnification for all such Losses (i.e., including thoseLosses incurred to achieve the Minimum Amount). Notwithstanding the foregoing, the Minimum Amount shall not apply to taxor employee benefits liabilities or any and all claims of Purchaser asserting aright to any part of the business, property or assets of the CornerstoneBusiness not listed on the Disclosure Schedule. CAAM, CMR and the Selling Shareholders shall be treated for purposes ofthis Section 16.5(a) as one Indemnifying Party such that valid claims againstthem shall be aggregated to meet the Minimum Amount.  In addition, this Section 16.5(a) will notapply to any breach of any of the Indemnifying Party’s representations andwarranties of which the Indemnifying Party had knowledge at any time prior tothe date on which such representation and warranty is made or any intentionalbreach by the Indemnifying Party of any covenant or obligation.

###  

### (b)           Themaximum aggregate liability of CAAM, CMR and the Selling Shareholders to thePurchaser Group for all Losses suffered by the Purchaser Group for which theyare entitled to seek indemnificationunder Section 16.2(a) shall be Eleven Million Dollars ($11,000,000.00), exceptthat this Section 16.5(b) shall not apply to Losses resulting from a breach ofany representation or warranty relating to Article 8, Sections 9.1-9.5, Taxes(including Section 9.19), employee benefit plans or arrangement (includingSection 9.14) or any breach of any of the Sellers’ representations andwarranties of which the Sellers had knowledge at any time prior to the date onwhich such representation and warranty is made or any intentional breach by anySeller, which such liability where Sellers had

 

59

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### knowledge or intentionally breached a representation orwarranty shall be capped at the Purchase Price actually paid to Sellers.

###  

### (c)           Afterthe Closing, Purchaser shall be liable to the Selling Shareholder Group for theLosses covered by Section 16.3(a) to theextent, and only to the extent, that the aggregate amount of Losses suffered bythe Selling Shareholder Group for which they are entitled to seekindemnification pursuant to this Agreement exceed $125,000 in the aggregate(the “**Purchaser Minimum Amount**”), in which eventthe Selling Shareholder Group shall thereafter be entitled to seekindemnification for all such Losses (i.e., including those Losses incurred toachieve the Purchaser Minimum Amount). In addition, this Section 16.5(c) will not apply to any breach of any ofthe Indemnifying Party’s representations and warranties of which theIndemnifying Party had knowledge at any time prior to the date on which suchrepresentation and warranty is made or any intentional breach by theIndemnifying Party of any covenant or obligation.

###  

### (d)           Themaximum aggregate liability of Purchaserto the Selling Shareholder Group for all Losses suffered by the SellingShareholder Group for which they are entitled to seek indemnification underSection 16.3(a) shall be Eleven Million Dollars ($11,000,000.00), except thatthis Section 16.5(d) shall not apply to Losses resulting from a breach of anyrepresentation or warranty relating to Sections 10.1-10.4 or any breach of any of the Purchaser’s representations andwarranties of which Purchaser had knowledge at any time prior to the date onwhich such representation and warranty is made or any intentional breach byPurchaser, which such liability where Purchaser had knowledge or intentionallybreached a representation or warranty shall be capped at the Purchase Priceactually paid to Sellers.

###  

## 16.6.        Set-Off.  Upon notice to the Seller Representative,specifying in reasonable detail the basis for such set-off, Purchaser mayset-off any amount to which it may be entitled under this Agreement (includingthis Article 16) against amounts otherwise payable by Purchaser pursuant to this Agreement first or any of theRelated Agreements second.  The exerciseof such right to set-off by Purchaser in good faith will not constitute abreach of this Agreement.

##  

# **ARTICLE 17.**GENERAL PROVISIONS

# ** **

## 17.1.        Expenses.  Except as otherwise set forth in thisAgreement, all fees, commissions and other expenses incurred by each Party inconnection with the negotiation of this Agreement and in preparing toconsummate the transactions contemplated hereby shall be borne by the Partyincurring such fee, commission or expense.

##  

## 17.2.        Executionin Counterparts; Binding Effect. This Agreement may be executed in one or more counterparts, each ofwhich shall be deemed an original copy and all of which together shall beconsidered one and the same agreement, and shall become a binding agreementwhen one or more counterparts have been signed by each Party and delivered tothe other Parties.

##  

## 17.3.        Confidentiality.  All information given by any Party hereto toany other Party shall be considered confidential and shall be used only for thepurposes intended unless (i) compelled to bedisclosed by judicial or administrative process (including in connection withobtaining the necessary approvals of this Agreement and the transactionscontemplated hereby of any Authorities) or by other requirements of law or (ii)disclosed in an action or proceedingbrought by a Party in pursuit of its rights or in the exercise of its remedieshereunder.  Without limiting theforegoing, confidential information shall include all documents and informationconcerning a Party or any of its Affiliates furnished by it to another Party orsuch other Party’s representatives in connection with this Agreement

 

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## or the transactions contemplated hereby,except to the extent that such documents or information can be shown to havebeen (a) previously known by the Party receiving such documents or informationor (b) in the public domain (either prior to or after the furnishing of suchdocuments or information hereunder) through no fault of such receiving Party; providedthat following the Closing the foregoing restrictions will not apply toPurchaser’s use of documents and information concerning Cornerstone.  The provisions ofthis Section 17.3 and of the confidentiality agreement referenced in thepreceding sentence shall remain in force and effect notwithstanding anytermination of this Agreement under Article 15 hereof.

##  

## 17.4.        GoverningLaw.  This Agreement shall begoverned by and construed and enforced in accordance with the laws of theCommonwealth of Pennsylvania, without giving effect to the choice of lawprovisions thereof, and by federal law to the extent it pre-empts Pennsylvanialaw.

##  

## 17.5.        DisputeResolution.  Any dispute arising outof or relating in any way to this Agreement or to the transactions contemplatedhereby, with the exception of applications for injunctive relief as provided inthis Agreement and disputes concerning the Purchase Price Adjustment****and Earn-Out,****shall beresolved as provided in this Section 17.5.

##  

### (a)           The dispute will first be referred to the Parties’respective senior management personnel, who will endeavor in good faith toresolve any such disputes within the limitsof their authority for a period not to exceed five (5) Business Days after that referral. If and only if any disputeremains unresolved after the Parties have followed the dispute resolution procedure set forth above,the matter will be resolved pursuant to Sections 17.5(b), (c), and (d) below.

###  

### (b)           Ifany dispute between or among the Parties has not been resolved pursuant toSection 17.5(a) above, the Partieswill endeavor to settle the dispute by mediation held in Philadelphia, Pennsylvania under the then-currentmodel procedure of the Center for Public Resources or its successor (“**CPR**”), to the extent such procedure does not conflictwith the provisions in this Section 17.5,for mediation of business disputes or, if such model procedure no longer exists, some other mutually agreeableprocedure. Within five (5) Business Days from the date that the Parties cease direct negotiations pursuant to Section17.5(a) above, Purchaser shall provide SellerRepresentative with a list of three (3) individuals then listed on CPR’s U.S.Regional Panel of Distinguished Neutrals forPhiladelphia, who are available during the time period contained inclause (c) below and who have no conflict of interest with respect to anyParty, and Seller Representative shall, within five (5) Business Days afterreceipt of such list, select one (1) of theneutrals from such list (the “**Mediator**”).Each Party will bear its own cost of mediation; provided, however, the costcharged by the Mediator will be borne equally by the Parties.

###  

### (c)           TheParties agree that any mediation proceeding (as well as any discussion pursuantto Section 17.5(a) above) willconstitute settlement negotiations for purposes of the federal and state rules of evidence and will be treated asnon-discoverable, confidential and privileged communication by the Parties and theMediator. No stenographic, visual or audio record will be made of anymediation proceedings or such discussions. Allconduct, statements, promises,offers and opinions made in the course of the mediation or such discussion byany Party, its agents, employees, representatives or other invitees andby the Mediator will not be discoverable nor admissible for any purposes in anylitigation or other proceeding involving the Parties and will not be disclosed to any thirdparty. The Parties agree that thismediation procedure will beobligatory. In the event that any Party refuses to adhere to themediation procedure set forth in this Section 17.5, any other Party maybring an action to seek enforcement of such obligation in the appropriate courtspecified in Section. 17.5(d); provided however, that if the non-initiatingParty refuses to adhere to such mediation procedure, theinitiating Party may proceed pursuant to Section 17.5(d) without firstseeking to compel mediation. The Parties’ efforts to reach a settlement of any dispute will continue until the conclusion of themediation proceeding. The mediation proceedingwill be concluded

 

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### when: (i) a written settlementagreement is executed by the Parties, or (ii)the Mediator concludes and informs the Parties in writing that further efforts to mediate the dispute would not beuseful, or (iii) the Parties agree in writing that an impasse has been reached. Notwithstanding the foregoing, any Party may withdrawfrom the mediation proceeding without liability thereforin the event such proceeding continues for more than thirty (30) days after the expiration of the five (5) Business Day periodafforded to Seller Representative to selectthe Mediator.

###  

### (d)           Ifany dispute has not been resolved pursuant to the foregoing, either Party can file a litigation complaint only as follows:(i) in cases where there is Federal jurisdiction, in****the Federal Court for the EasternDistrict of Pennsylvania located in Philadelphia, Pennsylvania and (ii) in all other cases, in the Court ofCommon Pleas in and for Philadelphia, Pennsylvania. Notwithstanding anything to the contrary containedin this Section 17.5, any Party may file a complaint in either such court (as the case maybe) to seek a preliminary injunction or other provisional judicialrelief, if in its sole discretion such action is necessary to avoid irreparabledamage or to preserve the status quo.

###  

## 17.6.        Notices.  Service of process, and any other notices orother communications required or permitted under this Agreement shall be givenin writing and delivered personally, sent by confirmed facsimile transmission,mailed first class or sent by overnight courier guaranteeing next-day delivery,addressed as follows:

##  

If to CII, CFC, CAAM or CMR

 

1802 Hamilton Street

Allentown, PA 18102

Telephone: (610) 437-1375

Facsimile:

Attention:  SellersRepresentative

 

with a copy (which shall not constitute notice)to:

 

Ronnie F. Hess, Esquire

Tallman, Hudders & Sorrentino, P.C.

1611 Pond Road, Suite 300

Allentown, PA  18104

Telephone:  (484) 765-2216

Facsimile:  (484) 765-2244

 

If to Purchaser:

 

Harleysville NationalCorporation

483 Main Street

Harleysville, PA  19438

Facsimile:  (215) 256-3065  

Attention: ChiefOperating Officer

 

62

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with a copy (which shall not constitute notice) to:

 

Stradley, Ronon, Stevens& Young LLPWoodland Falls Corporate Park

200 Lake Drive East,Suite 100

Cherry Hill, NJ  08002

Facsimile: 856-321-2415Attention:  Eric D. Schoenborn, Esquire

 

If to Yaissle, Scalici or Cowen:

 

To the address set forthin the first paragraph of this Agreement.

 

Service of process and any other notices or communications required orpermitted under this Agreement shall be deemed to have been received by theaddressee (i) on the date given, if delivered personally or sent by confirmedfacsimile transmission, (ii) ten days after the date of deposit, if mailed by firstclass mail and (iii) two days after delivery to a courier, if sent by overnightcourier guaranteeing next-day or two day delivery.  Any Party may change the person, address orfacsimile transmission number for service of process upon it or delivery ofnotices or other communications to it under this Agreement by delivering noticeof such change to the other Parties in accordance with this Section 17.6.

 

## 17.7.        Titlesand Headings.  Titles and headings toArticles and Sections herein, and the Table of Contents to this Agreement, areinserted for convenience of reference only and are not intended to be a part of or to affect the meaning or interpretation ofthis Agreement.

##  

## 17.8.        Successorsand Assigns; Beneficiaries.

##  

### (a)           NoParty shall be permitted to assign any rights or delegate any of theobligations created under this Agreement without prior written consent of theother Parties; provided, however, that Purchaser may assign its rightshereunder to any Affiliate of Purchaser without the prior written consent ofany other Party.

###  

### (b)           ThisAgreement shall inure to the benefit of, and be binding upon, the Parties andtheir respective successors, heirs, executors, legal representatives andpermitted assigns.

###  

### (c)           Otherthan with respect to Persons explicitly indemnified pursuant to Article 16 orthe preceding sentence, nothing in this Agreement shall confer upon any Personor entity not a Party to this Agreement, or the legal representatives of suchPerson or entity, any rights or remedies of any nature or kind whatsoever underor by reason of this Agreement.

###  

## 17.9.        EntireAgreement.  This Agreement representsthe entire agreement and understanding of the Parties with reference to thetransactions set forth herein, and no representations or warranties have been made in connection with thisAgreement or the transactions contemplated hereby other than those expressly set forth herein or in the Disclosure Schedule,certificates and other documents delivered in accordance herewith.  This Agreement supersedes all priornegotiations, discussions, correspondence, communications, understandings andagreements between the Parties relating to the subject matter of this Agreementand all prior drafts of this Agreement, all of which are merged into thisAgreement.  No prior drafts of thisAgreement and no words or phrases fromany such prior drafts shall be admissible into evidence in any proceedinginvolving this Agreement.

 

63

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## 17.10.      Waivers and Amendments. Each of the Seller Representative and Purchaser, may, but shall not beobligated to, by written notice to the other Parties (a) extend the time forthe performance of any of the obligations or other actions of the otherParties; (b) waive any inaccuracies in the representations or warranties of theother Parties contained in this Agreement; (c) waive compliance with any of thecovenants of the other Parties created under this Agreement; or (e) waivefulfillment of any of the conditions to itsown obligations under this Agreement. The waiver by any Party hereto of a breach of any provision of thisAgreement shall not operate or be construed as a waiver of any subsequentbreach, whether or not similar.  ThisAgreement may be amended, modified or supplemented only by a written instrumentexecuted by Purchaser, CFC, CII, CAAM, CMR and the Selling Shareholders.

##  

## 17.11.      Severability. This Agreement shall be deemed severable, and the invalidity orunenforceability of any term or provision hereof shall not affect the validityor enforceability of this Agreement or ofany other term or provision hereof..

 

64

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IN WITNESS WHEREOF, the Parties haveexecuted this Agreement, all as of the day and year first above written.

 
|    | HARLEYSVILLE NATIONAL BANK AND TRUST  COMPANY |
|---------|-----------------------------------------------|
|    |                                          |
|    |                                          |
| Attest: | /s/ Jo Ann M. Bynon                           |   | By: |  /s/ Gregg J. Wagner |   |
| Name:   | Jo Ann M. Bynon                               |   | Name: | Gregg. J. Wagner |   |
| Title:  |  Corporate Secretary                     |   | Title: | Executive Vice President |   |
|    |                                          |
|    |                                          |
|    | CORNERSTONE FINANCIAL CONSULTANTS,  LTD.      |
|    |                                          |
|    |                                          |
| Attest: | /s/ Malcolm L. Cowen, II                      |   | By: | /s/ J. R. Yaissle |   |
| Name:   | Malcolm L. Cowen, II                          |   | Name: | John R. Yaissle |   |
| Title:  | Secretary                                     |   | Title: | President |   |
|    |                                          |
|    |                                          |
|    | CORNERSTONE INSTITUTIONAL INVESTORS,  INC.    |
|    |                                          |
|    |                                          |
| Attest: | /s/ J. R. Yaissle                             |   | By: | /s/ Thomas J. Scalici |   |
| Name:   | John R. Yaissle                               |   | Name: | Thomas J. Scalici |   |
| Title:  | Vice President                                |   | Title: | CEO |   |
|    |                                          |
|    |                                          |
|    | CORNERSTONE ADVISORS ASSET  MANAGEMENT, INC.  |
|    |                                          |
|    |                                          |
| Attest: | /s/ J. R. Yaissle                             |   | By: | /s/ Malcolm L. Cowen, II |   |
| Name:   | John R. Yaissle                               |   | Name: | Malcolm L. Cowen, II |   |
| Title:  | Treasurer                                     |   | Title: | President |   |
|    |                                          |   |
|    |                                          |   |
|    | CORNERSTONE MANAGEMENT RESOURCES,  INC.       |
|    |                                          |
|    |                                          |
| Attest: | /s/ Malcolm L. Cowen, II                      |   | By: | /s/ J. R. Yaissle |   |
| Name:   | Malcolm L. Cowen, II                          |   | Name: | John R. Yaissle |   |
| Title:  | VP/Secretary                                  |   | Title: | President |   |
|         |                                               |  |  |  |  |  |  |  |  |  |  |

 
|   | /s/ J. R. Yaissle          |   |
|--------|----------------------------|--------|
|   |  JOHN R. YAISSLE      |
|   |                       |   |
|   | /s/ Malcolm L. Cowen, II   |   |
|   |  MALCOLM L. COWEN, II |   |
|   |                       |   |
|   | /a/ Thomas J. Scalici      |   |
|   |  THOMAS J. SCALICI    |   |

 

65

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**LIST OFSCHEDULES**

 
| Schedule 3.1(b) |   | CAAM Contracts                                              |
|-----------------|--------|-------------------------------------------------------------|
|            |   |                                                        |
| Schedule 3.1(c) |   | CAAM Licenses; Permits                                      |
|            |   |                                                        |
| Schedule 3.2(b) |   | Other CAAM Assets                                           |
|            |   |                                                        |
| Schedule 3.3(b) |   | CAAM Trade Payables                                         |
|            |   |                                                        |
| Schedule 3.3(c) |   | CAAM Accrued Liabilities                                    |
|            |   |                                                        |
| Schedule 4.1    |   | CMR Contracts                                               |
|            |   |                                                        |
| Schedule 6.1    |   | Excluded Life Insurance Policies                            |
|            |   |                                                        |
| Schedule 6.2    |   | Excluded Personal Property of Selling  Shareholders         |
|            |   |                                                        |
| Schedule 7.1    |   | Purchase Price                                              |
|            |   |                                                        |
| Schedule 7.3    |   | Allocation of Purchase Price                                |
|            |   |                                                        |
| Schedule 7.5    |   | Earn-Out                                                    |
|            |   |                                                        |
| Schedule 8.3(a) |   | CFC Shares                                                  |
|            |   |                                                        |
| Schedule 8.3(b) |   | CII Shares                                                  |
|            |   |                                                        |
| Schedule 8.4    |   | Conflicts                                                   |
|            |   |                                                        |
| Schedule 8.6    |   | Governmental Consents                                       |
|            |   |                                                        |
| Schedule 9.1    |   | Jurisdictions in which CFC, CII, CAAM an  CMR are Qualified |
|            |   |                                                        |
| Schedule 9.4    |   | Subsidiaries                                                |
|            |   |                                                        |
| Schedule 9.5    |   | Conflicts                                                   |
|            |   |                                                        |
| Schedule 9.8    |   | Certain Changes or Events                                   |
|            |   |                                                        |
| Schedule 9.9    |   | Description of Real Property Leases                         |
|            |   |                                                        |
| Schedule 9.10   |   | Registrations                                               |
|            |   |                                                        |
| Schedule 9.11   |   | Accounts Receivable                                         |
|            |   |                                                        |
| Schedule 9.12   |   | Litigation                                                  |
|            |   |                                                        |
| Schedule 9.13   |   | Material Contracts                                          |

 

----

 
| Schedule 9.14    |   | Employee Benefit Plans                                 |
|------------------|--------|--------------------------------------------------------|
|             |   |                                                   |
| Schedule 9.16    |   | Liability Insurance                                    |
|             |   |                                                   |
| Schedule 9.17    |   | Tangible Property                                      |
|             |   |                                                   |
| Schedule 9.18    |   | Intellectual Property                                  |
|             |   |                                                   |
| Schedule 9.19    |   | Tax Elections                                          |
|             |   |                                                   |
| Schedule 9.20    |   | Compliance with Laws                                   |
|             |   |                                                   |
| Schedule 9.21    |   | Advisory Contracts                                     |
|             |   |                                                   |
| Schedule 9.22    |   | Brokerage Agreements                                   |
|             |   |                                                   |
| Schedule 9.23    |   | Advisory Referral Arrangements                         |
|             |   |                                                   |
| Schedule 9.24    |   | Dealer Agreements                                      |
|             |   |                                                   |
| Schedule 9.25(b) |   | Individual Prohibited Transaction  Exemptions          |
|             |   |                                                   |
| Schedule 9.25(d) |   | Actions for Breach of Fiduciary Duty                   |
|             |   |                                                   |
| Schedule 9.25(f) |   | Fiduciary Violations                                   |
|             |   |                                                   |
| Schedule 9.27    |   | Investment Advisor Registration                        |
|             |   |                                                   |
| Schedule 9.29    |   | Execution and Brokerage Allocation  Practices          |
|             |   |                                                   |
| Schedule 9.30(f) |   | Compliance With Net Capital Requirement  Obligations   |
|             |   |                                                   |
| Schedule 9.31(a) |   | Insurance Agency Contracts                             |
|             |   |                                                   |
| Schedule 9.31(b) |   | List of Each Authority                                 |
|             |   |                                                   |
| Schedule 9.31(c) |   | Client Insurance Policies                              |
|             |   |                                                   |
| Schedule 9.31(e) |   | CFC-CII Commission Allocation Policy                   |
|             |   |                                                   |
| Schedule 9.31(h) |   | Commission Sharing Arrangements                        |
|             |   |                                                   |
| Schedule 9.32    |   | Governmental Consents                                  |
|             |   |                                                   |
| Schedule 9.33(a) |   | Employee List                                          |
|             |   |                                                   |
| Schedule 9.33(b) |   | Employee Claims Against Sellers; Pending  Terminations |
|             |   |                                                   |
| Schedule 9.34    |   | Bank Accounts                                          |

 

----

 
| Schedule 9.35         |   | Transactions with Related Parties |
|-----------------------|--------|-----------------------------------|
|                  |   |                              |
| Schedule 9.36         |   | No Indebtedness; Distributions    |
|                  |   |                              |
| Schedule 10.4         |   | Governmental Consents             |
|                  |   |                              |
| Schedule 13.3(g)      |   | Advisory Contract Consents        |
|                  |   |                              |
| Schedule 13.3(k) |   | Other Consents                    |

 

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