EX-10.1 Agreement and Plan Merger



 





Exhibit 10.1




AGREEMENT AND PLAN OF MERGER




by and among




STIFEL FINANCIAL CORP.




SF RB MERGER SUB, INC.




RYAN BECK HOLDINGS, INC.




and




BANKATLANTIC BANCORP, INC.




Dated January 8, 2007




 









 





AGREEMENT AND PLAN OF MERGER




     This AGREEMENT AND PLAN OF MERGER is entered into as of this 8th day of January,
2007, by and among Stifel Financial Corp., a Delaware corporation (“Parent”), SF RB Merger
Sub, Inc., a New Jersey corporation wholly owned by Parent (“Merger Sub”), Ryan Beck
Holdings, Inc., a New Jersey corporation (the “Company”), and BankAtlantic Bancorp, Inc., a
Florida corporation (“Bancorp”) (Parent, Merger Sub, the Company and Bancorp being each a
“Party” and together the “Parties”). Capitalized terms are defined in Article 1.



RECITALS




          A. The Parties desire to consummate the merger of Merger Sub and the Company.




          B. The Boards of Directors of the Company and Bancorp, the sole shareholder of the Company,
have each approved the Merger in accordance with the New Jersey Business Corporation Act (the
“NJBCA”) on the terms and conditions set forth herein.




          C. The Boards of Directors of Merger Sub and Parent have each approved the Merger in
accordance with the NJBCA and the Delaware General Business Corporation Law, respectively, on the
terms and conditions set forth herein.




          D. It is intended that the Merger qualify as a reorganization within the meaning of Section
368(a) of the Code.




          E. Contemporaneously with the execution and delivery of this Agreement, Parent and certain of
its shareholders are executing and delivering to Bancorp the Voting Agreement.




     NOW, THEREFORE, in consideration of the foregoing recitals and the mutual covenants,
representations, warranties, conditions, and agreements contained herein and in the Related
Agreements, and for other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and intending to be legally bound, the Parties agree as follows:



ARTICLE 1



DEFINITIONS




     The following terms shall have the meanings set forth below in this Article 1.



     1.1 “Acquisition Proposal” has the meaning set forth in Section 6.10.



     1.2 “Advisers Act” means the United States Investment Advisers Act of 1940, as amended, and
the rules and regulations promulgated thereunder by the SEC.



     1.3 “Affiliate” means with respect to any specified Person, any other Person that directly
or indirectly through one or more intermediaries, controls, is controlled by, or is



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under common
control with, such specified Person. If the Person referred to is a natural person, the term
“Affiliate” refers to any member of such Person’s immediate family. The term “control” (including,
with correlative meaning, the terms “controlled by” and “under common control with”) as used with
respect to any Person, means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such Person, whether through the ownership of
voting securities, by contract or otherwise.



     1.4 “Agreement” means this Agreement and Plan of Merger as executed on the date hereof and
as amended or supplemented in accordance with the terms hereof, including the Company Disclosure
Letter and all Schedules and Exhibits hereto.



     1.5 “Bancorp” has the meaning set forth in the introductory paragraph.



     1.6 “Base Production Amount” has the meaning set forth in Section 2.3(d)(i).



     1.7 “Assets” has the meaning set forth in Section 3.11.



     1.8 “Audited Financial Information” has the meaning set forth in Section 3.10(a).



     1.9 “Business” means the business conducted by the Company and its Subsidiaries on the date
hereof.



     1.10 “Business Day” means any day which is not a Saturday, Sunday or legal holiday in the
State of Missouri, United States of America.



     1.11 “Business Employee” means collectively the employees of the Company and its
Subsidiaries engaged in the Business on the date hereof and at any time prior to Closing.



     1.12 “Closing” means the consummation of the transactions contemplated by this Agreement, as provided for in
Section 2.1(b).



     1.13 “Closing Date” has the meaning set forth in Section 2.1(b).



     1.14 “Code” means the Internal Revenue Code of 1986, as amended from time to time.



     1.15 “Company” has the meaning set forth in the introductory paragraph hereof.



     1.16 “Company Benefit Plan” means each Plan to which Bancorp, the Company, any subsidiary
of the Company or any of their ERISA Affiliates, has any obligation with respect to the Business
Employees, or that is sponsored, maintained or contributed to or required to be contributed to by
Bancorp, the Company or any subsidiary of the Company with respect to the Business Employees, or
under which the Company or any of its subsidiaries has or may have any liability.



     1.17 “Company Capital Stock” has the meaning set forth in Section 3.20(a).



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     1.18 “Company Customer” means any Person to which the Company or any Subsidiary of the
Company provides investment advisory, investment subadvisory, wrap, brokerage, financial planning
or similar services pursuant to a Company Customer Contract.



     1.19 “Company Customer Contract” means each material Contract pursuant to which the Company
or any Subsidiary of the Company provides investment advisory, investment subadvisory, wrap,
brokerage, financial planning or related services to any Person.



     1.20 “Company Disclosure Letter” means the letter from the Company to Parent, dated the
date hereof and as may be amended or supplemented from time to time on or prior to Closing, of
exceptions to the representations and warranties made, and the listings of information provided, by
the Company pursuant to the terms and conditions hereof.



     1.21 “Company Financial Information” has the meaning set forth in Section 3.10(a).



     1.22 “Company Lease” means any lease, sublease or license, including any amendment with respect thereto, pursuant to
which the Company or any Subsidiary of the Company uses, leases, subleases, occupies or holds any
material Company Leased Real Property in connection with the Business.



     1.23 “Company Leased Real Property” means the real property leased, subleased, occupied
and/or licensed by the Company or any Subsidiary or Controlled Affiliate of the Company, as tenant,
subtenant or licensee in connection with the Business, together with, to the extent leased,
subleased, occupied and/or licensed in connection with the Business by the Company or any
Subsidiary or Controlled Affiliate of the Company, all buildings and other structures, facilities
or improvements currently located thereon, all fixtures thereto, and all easements, licenses,
rights and other appurtenances relating to the foregoing.



     1.24 “Company Licensed Intellectual Property” means the Intellectual Property used in the
Business that is not Company Owned Intellectual Property, excluding standard, commercially
available software licensed via “click-wrap” or “shrink-wrap” license agreements.



     1.25 “Company Owned Intellectual Property” means the Intellectual Property solely or
primarily related to the Business that is owned by the Company or any of the Subsidiaries of the
Company.



     1.26 “Company Qualified Plan” has the meaning set forth in Section 3.12(d).



     1.27 “Company Rights” has the meaning set forth in Section 2.5(a).



     1.28 “Company Stock” has the meaning set forth in Section 2.3(a).



     1.29 “Confidential Information” means any and all information not publicly available or
generally available to the industry, which relates to specific matters concerning (i) in the case
of the Company and its Subsidiaries and Controlled Affiliates, the Business of the



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Company and (ii)
in the case of Parent and its subsidiaries, the business conducted by Parent and its subsidiaries.



     1.30 “Consent” means any consent, approval, authorization, waiver, permit, license, grant,
agreement, exemption or order of, or registration, declaration or filing with, any Person,
including any
Governmental Authority, that is required in connection with (a) the execution and delivery by
Bancorp, the Company, Merger Sub and/or Parent of this Agreement or any Related Agreement or (b)
the consummation by Bancorp, Parent, Merger Sub and/or the Company of the transactions contemplated
hereby and thereby.



     1.31 “Contract” means any contract, agreement, understanding, lease, indenture, mortgage,
deed of trust, evidence of indebtedness, binding commitment or instrument or offer, written or
oral, to which the Company or any Subsidiary of the Company is a party or by which any of their
respective assets is bound.



     1.32 “Controlled Affiliate” of any Person means a Person that is directly or indirectly
controlled by such other Person.



     1.33 “Disclosing Party” has the meaning set forth in Section 6.1.



     1.34 “Earn-Out Accountant” has the meaning set forth in Section 2.3(d)(v).



     1.35 “Earn-Out Calculation” has the meaning set forth in Section 2.3(d)(iv).



     1.36 “Earn-Out Consideration” means the Private Client Contingent Payment Amount, the First
Investment Banking Contingent Payment Amount and the Second Investment Banking Contingent Payment
Amount.



     1.37 “Earn-Out Periods” means the PCCP Period and the IBCP Period.



     1.38 “Effective Time” has the meaning set forth in Section 2.1(c).



     1.39 “ERISA” means the Employee Retirement Income Security Act of 1974 and regulations promulgated thereunder,
as amended from time to time.



     1.40 “ERISA Affiliate” means with respect to any specified Person, any other Person that is
or has been treated as a single employer with such specified Person for purposes of Section 414 of
the Code.



     1.41 “Exchange Act” means the United States Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder by the SEC.



     1.42 “Filings” has the meaning set forth in Section 3.7(j).



     1.43 “First Investment Banking Contingent Payment Amount” means the Investment Banking
Contingent Payment Amount with respect to the one-year period ending on the first anniversary of
the Closing Date.



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     1.44 “GAAP” means the accounting principles generally accepted in the U.S., including as
set forth in the opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board, and applied consistently throughout the periods involved.



     1.45 “Governmental Authority” means any federal, national, supranational, state,
provincial, local, or similar government, governmental, regulatory or administrative authority,
agency or commission or any court, tribunal, or judicial or arbitral body, including the SEC and
any SRO within or outside the United States.



     1.46 “HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended,
or any successor thereto.



     1.47 “IBCP Period” has the meaning set forth in Section 2.3(d)(ii).



     1.48 “Income Tax” means any Tax imposed upon or measured by net income or gross income
(excluding any Tax based solely on gross receipts) including any interest, penalty, or additions
thereto, whether disputed or not.



     1.49 “Indebtedness” means, without duplication, (a) all indebtedness for borrowed money or
for the deferred purchase price of property or services (other than current trade liabilities
incurred in the Ordinary Course), whether or not evidenced by a writing, (b) any other indebtedness
that is evidenced by a note, bond, debenture, draft or similar instrument, (c) all obligations
under financing or capital leases, (d) all obligations in respect of acceptances issued or created,
(e) notes payable and drafts accepted representing extensions of credit, (f) all liabilities
secured by any Lien on any property other than liens relating to equipment leased by the Company or
any Subsidiary of the Company not constituting a capital lease, (g) letters of credit and any other
agreements relating to the borrowing of money or extension of credit and (h) any guarantee
(including by way of a “keep well” or other similar undertaking) of any of the foregoing
obligations.



     1.50 “Indemnified Losses” has the meaning set forth in Section 9.2.



     1.51 “Indemnified Party” has the meaning set forth in Section 9.4.



     1.52 “Indemnifying Party” has the meaning set forth in Section 9.4.



     1.53 “Initial Share Consideration” has the meaning set forth in Section 2.3(a).



     1.54 “Intellectual Property” means any of the following which is material to the Business:
all material patents, patent applications, trademarks, service marks and other indicia of origin,
trademark and service mark registrations and applications for registrations thereof, copyrights,
copyright registrations and applications for registration thereof, Internet domain names and
universal resource locators (URLs), trade secrets, inventions (whether or not patentable),
invention disclosures, moral and economic rights of authors and inventors (however denominated),
technical data, customer lists, corporate and business names, trade names, trade dress, brand
names, know-how, show-how, maskworks, formulae, methods (whether or not patentable), designs,
processes, procedures, technology, source codes, object



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codes, computer software programs,
databases, data collectors and other proprietary information or material of any type, whether
written or unwritten (and all good will associated with, and all derivatives, improvements and
refinements of, any of the foregoing).



     1.55 “Internal Controls” has the meaning set forth in Section 3.10(d).



     1.56 “Investment Banking Fees” all management and underwriting fees associated with capital
raising activities, including in connection with, among other things, public offerings and private
placements, as well as all advisory and placement fees, in each case generated by and allocated to
the Subject Investment Banker (i.e., 90% of the gross management fee paid to the Company and 90% of
the net underwriting fee paid to the Company) in a manner that gives consideration to the
contribution of such individuals with respect to the generation and earning of such fees, and is
otherwise generally consistent with the past practices of the Company with respect to the
recognition of these revenues within the Company’s investment banking group, in each case on a
basis net of gross commissions or referral fees and direct reasonable and documented transaction
costs payable in connection with such fees. The allocations of such fees to such Subject Investment
Bankers shall be made by Parent in good faith. Notwithstanding anything herein to the contrary,
with respect to Investment Banking Fees attributable to mutual stock (or thrift) conversions, 100%
of the amount of such fees shall constitute and be included in Investment Banking Fees for purposes
of this Agreement regardless of the source of such transaction.



     1.57 “IRS” means the United States Internal Revenue Service.



     1.58 “Investment Banking Contingent Payment Amount” has the meaning set forth in Section
2.3(d)(ii).



     1.59 “Investment Company Act” means the United States Investment Company Act of 1940, as
amended, and the rules and regulations promulgated thereunder by the SEC.



     1.60 “Knowledge” or “knowledge” means, with respect to Company, the actual
knowledge of the individuals set forth in Annex A hereto and, with respect to Parent, means
the actual knowledge of the individuals set forth in Annex B hereto, which in each case
shall be deemed to include the knowledge any such person would have had if he or she had made a
reasonable investigation and due inquiry of those persons that such individual would reasonably
expect to have actual knowledge of the
relevant subject matter. The words “know,” “knowing” and “known” shall be
construed accordingly.



     1.61 “Liability” or “Liabilities” means all debts, adverse claims, liabilities
and/or obligations, direct, indirect, absolute or contingent, whether accrued, vested or otherwise
and whether or not reflected or required to be reflected on the financial statements of a Person.



     1.62 “Lien” means any lien, security interest, mortgage, indenture, deed of trust, pledge,
charge, adverse claim, easement, restriction or other encumbrance.



     1.63 “Losses” has the meaning set forth in Section 9.2.



     1.64 “Material Adverse Effect” means:



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          (a) with respect to the Company, a material adverse effect on the assets, business, financial
condition or results of operations of the Business taken as a whole, but shall not be deemed to
include (i) any changes resulting from general economic, regulatory or political conditions, (ii)
circumstances that generally affect the industries in which the Company and its Subsidiaries
operate the investment management, brokerage and investment banking businesses, (iii) any changes
resulting from the announcement or pendency of the transactions provided for in this Agreement, or
(iv) force majeure events, disruptions of supplies or acts of terrorism, war or acts of God,
national or international political or social conditions, including the engagement by the United
States in hostilities, whether or not pursuant to the declaration of a national emergency or war;
and




          (b) with respect to Parent, a material adverse effect on the assets, business, financial
condition or results of operations of Parent’s and its subsidiaries’ businesses taken as a whole,
but shall not be deemed to include (i) any changes resulting from general economic, regulatory or
political conditions, (ii) circumstances that generally affect the industries in which Parent and
its subsidiaries operate, (iii) any changes resulting from the announcement or pendency of the
transactions provided for in this Agreement, or (iv) force majeure events, disruptions of supplies
or acts of terrorism, war or acts of God, national or international political or social conditions,
including the engagement by the United States in hostilities, whether or not pursuant to the
declaration of a national emergency or war.




     1.65 “Material Contract” has the meaning set forth in Section 3.16.



     1.66 “Merger” has the meaning set forth in Section 2.1(a).



     1.67 “Merger Consideration” means collectively, the Initial Share Consideration, the
Warrants, and the Earn-Out Consideration.



     1.68 “Merger Sub” has the meaning set forth in the introductory paragraph hereof.



     1.69 “NASD” means the National Association of Securities Dealers, Inc.



     1.70 “NJBCA” has the meaning set forth in Recital B.



     1.71 “Non-Competition Period” has the meaning set forth in Section 6.3(a).



     1.72 “Non-Income Taxes” means any Taxes other than Income Taxes including any interest,
penalties or additions thereto, whether or not disputed.



     1.73 “Non-Registered Fund” means any pooled investment vehicle that is not registered as an
investment company under the Investment Company Act.



     1.74 “Notice of Dispute” means a written notice delivered by Bancorp (on behalf of the
Shareholders) to Parent pursuant to Section 2.3(d)(v).



     1.75 “NYSE” has the meaning set forth in Section 5.6(e).



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     1.76 “Order” means an order, writ, injunction, or decree of any court or Governmental
Authority.



     1.77 “Ordinary Course” means, with respect to the Business, only the ordinary course of
commercial operations customarily engaged in by the Company consistent with prior practices. For
purposes hereof, Ordinary Course shall not include (a) any material violation or material default
under any applicable Requirement of Law or (b) any activity which the Company has expressly agreed
not to undertake pursuant to this Agreement.



     1.78 “Other Company Business Entities” has the meaning set forth in Section 3.2(c).



     1.79 “Other Recipients” means those holders of Company Rights entitled to any
portion of the Merger Consideration.



     1.80 “Parent” has the meaning set forth in the introductory paragraph hereof.



     1.81 “Parent Common Stock” means the common stock, par value $0.15 per share, of Parent.



     1.82 “Parent Disclosure Letter” means the letter from Parent to Bancorp, dated the date
hereof and as may be amended or supplemented from time to time on or prior to Closing, of
exceptions to the representations and warranties made, and the listings of information provided, by
Parent pursuant to the terms and conditions hereof.



     1.83 “Parent Indemnified Persons” has the meaning set forth in Section 9.2.



     1.84 “Parent SEC Documents” has the meaning set forth in Section 5.6(a).



     1.85 “Parent Shareholder Meeting” has the meaning set forth in Section 6.13.



     1.86 “Parent Shares” means the shares of Parent Common Stock to be delivered to the
Shareholders pursuant to Section 2.3(a) hereof.



     1.87 “Party” or “Parties” has the meaning set forth in the first paragraph hereof.



     1.88 “PBGC” means the Pension Benefit Guaranty Corporation.



     1.89 “PCCP Period” means the two-year period ending on the second anniversary of the
Effective Time.



     1.90 “Pension Plan” means an employee pension benefit plan (within the meaning of ERISA
Section 3(2)).



     1.91 “Permits” means all material licenses, registrations, franchises, permits,
certificates, approvals, accreditations, or other similar authorizations.



     1.92 “Permitted Liens” means, collectively, (a) Liens that are disclosed in the Company
Disclosure Letter or identified in the Company Financial Information, (b) liens for Taxes, fees,
levies, duties or other governmental charges of any kind which are not yet



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delinquent or are being
contested in good faith by appropriate proceedings, (c) liens for mechanics, materialmen, laborers,
employees, suppliers or similar liens arising by operation of law for amounts which are owed, but
not yet delinquent, (d) in the case of real property, any matters, restrictions, covenants,
conditions, limitations, rights, rights of way, encumbrances, encroachments, reservations,
easements, agreements and other matters of record, such state of facts of which an accurate survey
of the property would reveal and (e) other minor encumbrances in property that do not materially
impair the use of such property in the normal operation of the Business or the value of such
property for the purpose of such Business.



     1.93 “Person” means and shall include a natural person, a partnership, a corporation, a limited liability
company, an association, a joint stock company, a trust, a joint venture, an unincorporated
organization or a governmental entity (or any department, agency or political subdivision thereof)
and shall be construed broadly.



     1.94 “Plan” means any agreement, arrangement, plan, or policy, qualified or non-qualified,
whether or not considered legally binding and whether or not written, that involves any (a)
pension, retirement, profit sharing, savings, deferred compensation, stock option, stock purchase,
phantom stock, or incentive plan; (b) welfare or “fringe” benefits, including without limitation
vacation, holiday, severance, disability, medical, hospitalization, dental, life and other
insurance, tuition, company car, club dues, sick leave, maternity, paternity or family leave,
health care reimbursement, dependent care assistance, cafeteria plan, regular in-kind gifts or
other benefits; or (c) any employment, consulting, engagement, retainer or golden parachute
agreement or arrangement, including without limitation any “employee benefit plan” as defined in
ERISA Section 3(3), (together “Plans” and each item thereunder a “Plan”).



     1.95 “Post-Closing Periods” means all taxable periods commencing after the Effective Time
and the portion of any Straddle Period commencing after the Effective Time.



     1.96 “Pre-Closing Periods” means all taxable periods ending as of or prior to the Effective
Time and the portion of any Straddle Period ending as of the Effective Time.



     1.97 “Private Client Contingent Payment Amount” has the meaning set forth in Section
2.3(d)(i).



     1.98 “Production” means commissionable revenue for any given individual set forth on
Schedule 2.3(d).



     1.99 “Receiving Party” has the meaning set forth in Section 6.1.



     1.100 “Records” has the meaning set forth in Section 6.7.



     1.101 “Registered Investment Company” means any pooled investment vehicle that is registered or required to be registered as an
investment company under the Investment Company Act.



     1.102 “Reference Balance Sheet” has the meaning set forth in Section 3.10(a).



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     1.103 “Reference Income Statement” has the meaning set forth in Section 3.10(a).



     1.104 “Registration Rights Agreement” means the Registration Rights Agreement, between
Parent and Bancorp (on behalf of the Shareholders), substantially in the form attached as
Exhibit A hereto.



     1.105 “Related Agreements” means the Registration Rights Agreement, the Warrant and the
Voting Agreement.



     1.106 “Requirement of Law” means, with respect to any Person, any domestic or foreign
federal or state statute, law, ordinance, rule, administrative code, administrative interpretation,
regulation, order, consent, writ, injunction, directive, judgment, decree, policy, ordinance,
decision, guideline or other requirement of (or agreement with) any Governmental Authority
(including any memorandum of understanding or similar arrangement with any Governmental Authority),
in each case binding on that Person or its property or assets.



     1.107 “SEC” means the Securities and Exchange Commission.



     1.108 “Second Investment Banking Contingent Payment Amount” means the Investment Banking
Contingent Payment Amount with respect to the one-year period ending on the second anniversary of
the Closing Date.



     1.109 “Securities Act” means the United States Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder by the SEC.



     1.110 “Shareholder Indemnified Persons” has the meaning set forth in Section 9.3.



     1.111 “Shareholders” means, collectively, the holders of shares of Company Common Stock at
the Effective Time. After the Effective Time, the term “Shareholders” shall mean, collectively,
(i) the Shareholders of the Company at the Effective Time and (ii) the Other Recipients.



     1.112 “September 30, 2006 Financial Information” has the meaning set forth in Section
3.10(a).



     1.113 “SRO” means the NASD, the National Futures Association, each national securities
exchange in the United States and each other board or body, whether United States or foreign, that
is charged with the supervision or regulation of brokers, dealers, commodity pool operators,
commodity trading advisors, futures commission merchants, securities underwriting or trading, stock
exchanges, commodities exchanges, insurance companies or agents, investment companies or investment
advisers.



     1.114 “Straddle Period” has the meaning set forth in Section 6.4(d).



     1.115 “Subject Investment Bankers” has the meaning set forth in Section 2.3(d)(ii).



     1.116 “Subject Producers” has the meaning set forth in Section 2.3(d)(i).



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     1.117 “Subsidiaries Benefit Plans” has the meaning set forth in Section 3.12(a).



     1.118 “Subsidiary” means, with respect to any specified Person, any other Person of which
such specified Person (either alone or through or together with any other Subsidiary) owns,
directly or indirectly, a majority of the outstanding equity securities or securities carrying a
majority of the voting power in the election of the board of directors or other governing body of
such Person. Notwithstanding the foregoing, for purposes hereof, the Subsidiaries of the Company
shall be those entities set forth on Schedule A, each of which constitutes a
“significant subsidiary” under SEC Regulation S-X (measured as if the Company were required to file
periodic reports as a registrant with the SEC under the Exchange Act).



     1.119 “Substituted Cash Consideration” has the meaning set forth in Section 2.3(a).



     1.120 “Surviving Corporation” has the meaning set forth in Section 2.1(a).



     1.121 “Surviving Corporation Common Stock” has the meaning set forth in Section 2.2.



     1.122 “Tax Returns” means all reports, estimates, declarations, claims for refund,
information statements and returns relating to or required by Requirements of Law to be filed in
connection with any Taxes, and reports relating to Taxes payable by, pursuant to or in connection
with any Plans, including any amendment or supplement thereof. Any one of the foregoing Tax
Returns shall be referred to sometimes as a “Tax Return.”



     1.123 “Taxes” means all taxes, charges, fees, levies, or other like assessments, including
without limitation, all federal, possession, state, city, county and foreign (or governmental unit,
agency, or political subdivision of any of the foregoing) income, profits, employment (including
Social Security, unemployment insurance and employee income tax withholding), franchise, gross
receipts, sales, use, transfer, stamp, occupation, property, capital, severance, premium, windfall
profits, customs, duties, ad valorem, value added and excise taxes; PBGC premiums and any other
charges of any Governmental Authority of the same or similar nature, including any interest,
penalty or addition thereto, whether disputed or not and including any obligations to indemnify or
otherwise assume or succeed to the Tax liability of any other Person. Any one of the foregoing
Taxes shall be referred to sometimes as a “Tax.”



     1.124 “Territory” has the meaning set forth in Section 6.3(a).



     1.125 “Third Person” has the meaning set forth in Section 9.5.



     1.126 “Third Person Claim” has the meaning set forth in Section 9.5.



     1.127 “Treasury Regulations” means the rules and regulations under the Code issued by the
U.S. Department of Treasury.



     1.128 “Unaudited Financial Information” has the meaning set forth in Section 3.10(a).



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     1.129 “Voting Agreement” means that certain Voting Agreement, executed by Parent and Ronald
J. Kruszewski and certain other members of the Board of Directors of Parent who are also
shareholders of Parent and who collectively beneficially own approximately 25% of the outstanding
shares of capital stock of Parent on the date hereof, as the same may be amended from time to time.



     1.130 “Warrant” means, collectively, the five-year warrants to be issued by Parent to the
Shareholders of the Company as part of the Merger Consideration, in the form of Exhibit B
hereto.



ARTICLE 2



TERMS AND PLAN OF MERGER




     2.1 Merger and Effect of Merger.



          (a) Subject to the terms and conditions contained herein, at the Effective Time, Merger Sub
shall be merged (the “Merger”) with and into the Company in accordance with the
requirements of the NJBCA, whereupon the separate existence of the Company shall cease, and Merger
Sub shall be the surviving corporation of such Merger (the “Surviving Corporation”).




          (b) Subject to the provisions of Article 7 and Article 8, the closing of the Merger (the
“Closing”) shall take place in Miami, Florida at the offices of Stearns Weaver Miller
Weissler Alhadeff & Sitterson, P.A., 150 W. Flagler Street, Miami, Florida 33130 on February 15,
2007, or otherwise as soon as possible, but in any event no later than two (2) Business Days after
the date the last of the conditions set forth in Articles 7 and 8 (other than conditions that by
their nature are to be satisfied at the Closing, but subject to the satisfaction or, to the extent
permissible, waiver of those conditions at the Closing) has been satisfied or, to the extent
permissible, waived by the Party or Parties entitled to the benefit of such conditions, or at such
other place, at such other time or on such other date as Parent, on the one hand, and Bancorp and
the Company, on the other hand, may mutually agree (the date on which the Closing actually occurs
being herein referred to as the “Closing Date”).




          (c) Upon the Closing, the Company and Merger Sub shall file a certificate of merger with the
New Jersey Secretary of State and make all other filings or
recordings required by the NJBCA in connection with the Merger. The Merger shall become
effective at such time (the “Effective Time”) as the certificate of merger is duly filed
with the New Jersey Secretary of State.




          (d) From and after the Effective Time, the Surviving Corporation shall possess all the
properties, rights, powers, privileges and franchises and be subject to all of the obligations,
liabilities, restrictions and disabilities of the Company and Merger Sub, all as provided under the
NJBCA.




          (e) The Merger shall have the effects set forth in Section 14A:10-6 of the NJBCA.




12









 








     2.2 Conversion of Merger Sub Stock. Subject to the provisions of this Agreement, at
the Effective Time, all of the shares of capital stock of Merger Sub issued and outstanding
immediately prior to the Merger shall be converted, by virtue of the Merger and without any action
on the part of the holder thereof, into one validly issued, fully paid and nonassessable share of
the common stock of the Surviving Corporation (the “Surviving Corporation Common Stock”),
which share of the Surviving Corporation Common Stock shall be owned by Parent and which shall
constitute all of the issued and outstanding capital stock of the Surviving Corporation.



     2.3 Conversion of Company Stock. At the Effective Time, by virtue of the Merger and
without any action on the part of any holder thereof, shares of the capital stock of the Company
shall be treated as follows:



          (a) Subject to reduction pursuant to Section 2.5(c) hereof, each share of Common Stock, $0.001
par value per share, of the Company (the “Company Stock”) issued and outstanding
immediately prior to the Effective Time shall, by virtue of the Merger, automatically without any
action on the part of the holder thereof be converted into the right to receive, upon surrender of
the certificates representing each such share, if any, its pro rata portion of: (1) 2,531,278
shares of Parent Common Stock (the “Initial Share Consideration”), subject to reduction,
with such reduction to be represented by cash (the “Substituted Cash Consideration”) as
provided below; (2) (A) subject to receipt by Parent of the approval of Parent’s shareholders with
respect to the same, warrants to purchase an aggregate of 500,000 shares of Parent Common Stock at
an exercise price of $36.00 per share, pursuant to the Warrant, or (B) in the event such
shareholder approval is not obtained, cash in the amount of $20,000,000; and (3) the Earn-Out
Consideration, if any. Notwithstanding the foregoing, in the event that Parent shall not have
obtained shareholder approval of the issuance of the Warrant as described in Section 2.3(a)(2)(A)
above for any reason on or before June 30, 2007, Parent shall pay the $20,000,000 pursuant to
Section 2.3(a)(2)(B) within two (2) Business Days of such date, and Parent shall have no further
obligation to issue the Warrant or issue any shares of Parent Common Stock upon exercise thereof.
Parent shall substitute an amount of Substituted Cash Consideration in lieu of a portion of the
Initial Share Consideration, at a rate per substituted share equal to the greater of (i) the
average of the daily closing price of a share of Parent Common Stock for the ten
(10) consecutive Business Days ending on the day prior to the Closing Date and (ii) $36.00,
and the number of shares deliverable as Initial Share Consideration shall be correspondingly
reduced; provided, however, that such reduction shall only be permitted to the
extent of 150,000 shares of Parent Common Stock, subject to adjustment (up or down) as may be
necessary to cause the Initial Share Consideration to have a voting power equal to no more than
19.9% of the voting power of Parent Common Stock outstanding immediately prior to the issuance of
such stock, calculated in accordance with NYSE Rule 312.03(c). The Parties agree that the
Substituted Cash Consideration shall be (X) reduced on a dollar-for-dollar basis (on an after-tax
basis at the statutory federal tax rate) by an amount equal to the sum of (i) the amount required
pursuant to the last sentence of Section 6.5(c) hereof, not to exceed $799,866 in the aggregate and
(ii) the amount of the transaction expenses incurred and paid in connection with the transactions
contemplated hereunder, including, without limitation, (a) the portion of the HSR Act filing fee
referred to in Section 6.9 hereof required to be paid by the Company and (b) all transaction costs
and expensed incurred by or on behalf of the Company or Bancorp in connection with this Agreement
and the transactions




13









 







contemplated hereunder, including, without limitation, any fees and expenses
relating to any investment banker, broker, lawyer or accountant and (Y) increased by the amount of
cash received by the Company in respect of the exercise of any Company Rights by any holder thereof
prior to the Closing Date.




          (b) From and after the Effective Time, each certificate or book entry theretofore evidencing
one or more shares of Company Stock shall no longer evidence Company Stock, but shall evidence only
the right to receive, in exchange therefor, the Merger Consideration (subject to the conditions
herein).




          (c) All Company capital stock held in the treasury of the Company immediately prior to the
Effective Time shall be canceled and no Parent capital stock, cash or other consideration of any
kind shall be delivered in exchange therefor under this Agreement.




          (d) Earn-Out Consideration.





          (i) Private Client Contingent Payment Amount. In addition to the Initial Share
Consideration (as well as any Substituted Cash Consideration) and Warrants issuable
hereunder, during the PCCP Period, Parent shall pay to the Shareholders their respective
pro rata portions of any Private Client Contingent Payment Amount (as defined below), if
any, payable pursuant to the provisions hereof up to a maximum of Forty Million Dollars
($40,000,000). The Private Client Contingent Payment Amount, if any, shall be paid to the
Shareholders within ten (10) days following the agreement by Parent and Bancorp of such
amount (or in the event of any dispute with respect to such amount, the final determination
thereof by the Earn-Out Accountant). The Private Client Contingent Payment Amount shall be
based on the aggregate Production “credited to the grid” for the individuals set forth on
Schedule 2.3(d)(i) hereof (the “Subject Producers”) during the PCCP Period.
Specifically, the Shareholders shall receive their respective pro rata portions of the
amount (the “Private Client Contingent Payment Amount”), if any, equal to (x)
thirty percent (30%) of (y) the amount by which the aggregate Production “credited to the
grid” for the Subject Producers during the PCCP Period, as finally determined in
accordance with this Section 2.3(d)(i), exceeds the base production amount set forth
on such Schedule 2.3(d)(i) (the “Base Production Amount”);
provided, however, in no event shall the Private Client Contingent Payment
Amount exceed $40,000,000. The amount of Production credited to the Subject Producers
pursuant to this Section shall be on a producer-by- producer basis, giving consideration to
the relative contributions of individuals and generally consistent with the allocations
used for compensation credit for the Subject Producers and other Parent investment
professionals, all determined in good faith by Parent.




          In the event Parent causes any Subject Producer to be terminated other than for
“cause” (as such term is generally used in Parent’s forgivable note program) during the
PCCP Period, then the Base Production Amount shall be reduced by an amount equal to (1) the
Production related to such Subject Producer for the entire PCCP Period as set forth on
Schedule 2.3(d)(i) multiplied by (2) a fraction with a numerator equal to the
number of months remaining in the PCCP



14









 







Period (excluding the month of termination) at the
time of such termination and a denominator of 24. No adjustment to the Base Production
Amount shall be made if a Subject Producer has been terminated for cause or if the Subject
Producer terminates his or her employment, in either case prior to the expiration of the
PCCP Period. In the event any Subject Producer’s employment is terminated with or without
cause, Parent shall provide Bancorp with prompt written notice (but in no event later than
ten (10) Business Days after any such termination) describing the facts and circumstances
regarding such termination. In the event the employment of any Subject Producer is
terminated without cause, then as part of the foregoing notice, Parent shall also provide
Bancorp with a calculation of the appropriate adjustment to be made to the Base Production
Amount in accordance with the provisions set forth herein. Parent and its subsidiaries
(including the Company after the Closing) shall afford the Subject Producers treatment that
is at least as favorable as the treatment generally afforded Parent’s broker/dealers.
Additionally, Parent and its subsidiaries (including the Company after the Closing) shall
not take any action which has the effect of shifting commissions or other amounts payable
to the Subject Producers based on the Production of such Subject Producers to other forms
of compensation.




          (ii) Investment Banking Contingent Payment. In addition to the Initial Share
Consideration (as well as any Substituted Cash Consideration), Warrants issuable hereunder
and the Private Client Contingent Payment Amount, during the IBCP Period (as defined below)
Parent shall pay to the Shareholders their respective pro rata portions of any Investment
Banking Contingent Payment Amount (as defined below) within ten (10) days following the
agreement by Parent and Bancorp of such amount (or in the event of any dispute with respect
to such amount, the final determination thereof by the Earn-Out Accountant). The
Investment Banking Contingent Payment Amount shall be based on the aggregate Investment
Banking Fees attributable to the individuals set forth on Schedule 2.3(d)(ii)
hereof (the “Subject Investment Bankers”). Specifically, the Shareholders shall
receive for each of the twelve month periods immediately preceding the first and second
anniversary of Effective Time (collectively, the “IBCP Period”) their respective
pro rata portions of an amount equal to (x) twenty five percent (25%) of (y) the amount, if
any, by
which the aggregate Investment Banking Fees attributable to the Subject Investment
Bankers actually received by Parent and its subsidiaries (including the Company and its
subsidiaries) during each such twelve-month period of the IBCP Period, as finally
determined in accordance with this Section 2.3(d)(ii), exceeds Twenty Five Million Dollars
($25,000,000) (the “Investment Banking Contingent Payment Amount”). Parent agrees
to act in good faith to equitably allocate to the appropriate periods any transactions
generating Investment Banking Fees that are expected to close immediately following the end
of any such IBCP Period and which were otherwise scheduled to close prior to the end of
such IBCP Period.




          (iii) Parent may elect to pay any of the Earn-Out Consideration, if any, in cash or in
shares of Parent Common Stock, or in a combination thereof. Any shares of Parent Common
Stock so delivered in satisfaction thereof shall be valued as follows: the average of the
daily closing price of a share of Parent Common Stock



15









 







for the 10 consecutive Business Days
ending on the day prior to the last day of any applicable Earn-Out Period.




          (iv) Not later than forty-five (45) days after the end of the PCCP Period and each of
the IBCP Periods, Parent shall cause to be prepared and delivered to Bancorp (on behalf of
the Shareholders) for such periods a certificate of a senior financial officer of Parent
setting forth a calculation, in reasonable detail, of the Private Client Contingent Payment
Amount, the First Investment Banking Contingent Payment Amount and/or the Second Investment
Banking Contingent Payment Amount, as applicable, for such periods (each, an “Earn-Out
Calculation”). Parent shall provide, and shall use its best efforts to cause its
advisers to provide, Bancorp and its respective advisers reasonable access to such books,
records and personnel of the Company and Parent relating to the operation of the Business
after the Closing Date (including the work papers of the Parent, the Company and their
respective subsidiaries and of their respective accountants, but in each case solely
relating to the preparation of the Earn-Out Calculation) to the extent necessary to enable
Bancorp and its advisers to review and confirm the Production and Investment Banking Fees,
as the case may be, the Earn-Out Calculation and all such calculations based thereon.




          (v) Within thirty (30) days following its receipt of (i) the applicable Earn-Out
Calculation; and (ii) all such other documents and other reasonably requested backup
information necessary or appropriate for Bancorp to analyze and review the applicable
Earn-Out Calculation for each such applicable Earn-Out Period, Bancorp shall deliver to
Parent either (i) its agreement as to the calculation of the applicable Earn-Out
Consideration as set forth therein, (ii) a Notice of Dispute, specifying in reasonable
detail the nature of its dispute of the calculation of the Earn-Out Consideration as set
forth therein, or (iii) if insufficient information has been provided to Bancorp, in
Bancorp’s reasonable determination, to confirm the Earn-Out Calculation, a statement to
that effect. If Bancorp delivers a notice under (iii) above, Parent shall cause the prompt
delivery to Bancorp of such requested documentation reasonably requested by Bancorp, after
which Bancorp shall have thirty (30) days to either agree with the relevant Earn-Out
Calculation or deliver a Notice of Dispute. During the 30-day period after the delivery of
a Notice
of Dispute to Parent delivered under (ii) above, Parent and Bancorp shall attempt in
good faith to resolve any such dispute and finally determine the Earn-Out Consideration
payable for any such Earn-Out Period. If at the end of such 30-day period, Parent and
Bancorp have failed to reach agreement with respect to such dispute, the matter shall be
submitted to an accountant at a nationally recognized public accounting firm that is not
the principal independent auditor for either Parent or Bancorp and is otherwise neutral and
impartial; provided, however, that if Parent and Bancorp are unable to
select such an accountant within 45 days after delivery of a Notice of Dispute to Parent,
either party may request the American Arbitration Association to appoint, within 20
Business Days from the date of such request, an independent public accountant with
significant relevant experience and that is not the principal independent auditor for
either Bancorp or Parent. The accountant so selected shall be referred to herein as the
“Earn-Out Accountant.” The Earn-Out Accountant shall act as an arbitrator to
resolve the disputed portions of the



16









 







calculation of the Earn-Out Consideration for the
applicable Earn-Out Period in accordance with the terms and conditions of this Agreement
and shall be given an opportunity to review all relevant information necessary or
appropriate to resolve any disputed matter. The Earn-Out Accountant shall deliver to
Bancorp and Parent, as promptly as practicable after its appointment, a written report
setting forth the resolution of each disputed matter and its determination of the Earn-Out
Consideration set forth in such Earn-Out Calculation as determined in accordance with the
terms of this Agreement. Such report shall be final and binding upon the Parties to the
fullest extent permitted under applicable law and may be enforced in any court having
jurisdiction. Each of Parent and the Shareholders shall bear all the fees and costs
incurred by it in connection with this arbitration, except that in the event the Earn-Out
Accountant is required to resolve any dispute between the Parties relating to any Earn-Out
Calculation, all fees and expenses relating to the work performed by the Earn-Out
Accountant, as well as the reasonable legal fees of Parent and the Shareholders, shall be
borne by Parent and the Shareholders in inverse proportion as they may prevail on the
matters resolved by the Earn-Out Accountant, which proportionate allocation will also be
determined by the Earn-Out Accountant and be included in the Earn-Out Accountant’s written
report.




          (vi) On the second Business Day after (x) the date Parent and Bancorp agree to the
calculation of the Earn-Out Consideration set forth in the Earn-Out Calculation for each
Earn-Out Period or (y) if Parent and Bancorp (on behalf of the Shareholders) are unable to
agree on any such calculation of Earn-Out Consideration, the date that Parent and Bancorp
receive notice from the Earn-Out Accountant of the final determination of the amount(s)
being so disputed, the Earn-Out Consideration shall be paid by Parent to the Shareholders,
pursuant to the provisions of Section 2.3(d)(iii).



     2.4 Manner of Exchange of Stock.



          (a) As of the Effective Time, the stock transfer books of the Company shall be closed and no
transfer of certificates representing Company Stock outstanding at the Effective Time shall
thereafter be made. Parent shall be the agent for surrender and exchange of shares of Company
Stock (the “Exchange Agent”).




          (b) At the Effective Time, each Shareholder, upon surrender for cancellation to the Exchange
Agent of all certificate(s) representing the outstanding shares of Company Stock held by such
Shareholder shall be entitled to receive the Merger Consideration which such Shareholder has the
right to receive in respect of the shares of Company Stock formerly evidenced by such certificate
in accordance with Section 2.3.




          (c) Notwithstanding anything to the contrary in this Agreement, no fractional shares of Parent
Common Stock will be issued. Parent shall aggregate the shares of Parent Common Stock issuable to
Shareholders, and, if following such aggregation, any Shareholder would be entitled to receive a
fractional share of Parent Common Stock but for this Section, such Shareholder will, in lieu of
such fractional share and after surrender of such Shareholder’s certificate or certificates of
Company Stock, be entitled to receive an amount in cash equal to the greater of (i) $36.00 and (ii)
the average of the daily closing price




17









 







of a share of Parent Common Stock for the ten (10)
consecutive Business Days ending on the day prior to the Closing Date, multiplied by the fraction
of the share of Parent Common Stock to which such Shareholder would otherwise be entitled.




          (d) If between the date of this Agreement and the Effective Time the outstanding shares of
Parent Common Stock shall have been changed into a different number of shares or a different class,
by reason of any stock dividend, stock split, reclassification, recapitalization, combination or
exchange of shares, the Initial Share Consideration (and the $36.00 share price floor for the
Substituted Cash Consideration (in Section 2.3(a) and the fractional share calculation (in Section
2.4(c)) shall be appropriately and equitably adjusted to reflect such stock dividend, stock split,
reclassification, recapitalization, combination or exchange of shares. In addition, if between the
date of this Agreement and later of (i) the Effective Time and (ii) the date the Warrant is issued,
the outstanding shares of Parent Common Stock shall have been changed into a different number of
shares or a different class, by reason of any stock dividend, stock split, reclassification,
recapitalization, combination or exchange of shares or other similar action, the number of shares
issuable pursuant to the Warrant and the exercise price thereof shall be appropriately and
equitably adjusted to reflect such stock dividend, stock split, reclassification, recapitalization,
combination or exchange of shares or other similar action.




     2.5 Company Options.



          (a) Listed in the attached Section 3.20 of the Company Disclosure Letter are all of
the outstanding, and unexpired options and contractual rights to purchase and acquire shares of
Company Stock (collectively, the “Company Rights”) as of the date hereof. All Company
Rights that have not been exercised immediately prior to the Effective Time shall be canceled and
the holders of such Company Rights shall only be entitled to receive the consideration provided in
accordance with Section 2.5(c) hereof.




          (b) Prior to the Effective Time, the Company shall make any amendments to the terms of such
Company Rights that are deemed necessary or appropriate, if any, to give effect to the transactions
contemplated by this Agreement, as determined in good faith by the Company’s Board of Directors.




          (c) At the Effective Time, in exchange for the termination and cancellation of any and all
Company Rights outstanding immediately prior to the Closing Date, the holders of Company Rights
shall, without any action on the part of the holders thereof, be entitled to receive such portion
of the Merger Consideration, if any and to the extent, set forth on Schedule 2.5(c) (which
schedule shall be delivered to Parent at least two (2) Business Days prior to the Closing Date) at
which time all such Company Rights shall terminate and be of no further force and effect;
provided that such consideration shall not increase the Merger Consideration payable by
Parent in connection with the transactions contemplated hereby. To the extent any such individuals
are to receive any Earn-Out Consideration, solely or otherwise, Bancorp, on behalf of the
Shareholders, shall enter into such agreements with such individuals prior to the Closing Date as
it deems necessary or appropriate, if any, to give effect to the same. Notwithstanding anything
herein to the contrary, in no event shall Parent be required to take any action that would violate
Section 409A of the Code by virtue of making such payments to holders of Company Rights.




18









 








     2.6 Articles of Incorporation and Bylaws of the Surviving Corporation. At and after the
Effective Time, the Certificate of Incorporation of Merger Sub, a copy of which is attached as
Exhibit C hereto shall be the Certificate of Incorporation of the Surviving Corporation,
except that Article One shall be amended to read as follows: “The name of the corporation is “Ryan
Beck Holdings, Inc.” and to include such other changes set forth on Exhibit C-1 (subject to
any subsequent amendment). At and after the Effective Time, the Bylaws of Merger Sub in effect at
the Effective Time shall be the Bylaws of the Surviving Corporation, except that they shall be
amended to reflect that the name of the corporation shall be Ryan Beck Holdings, Inc. (subject to
any subsequent amendment, provided that no such amendment shall terminate or modify in any
adverse manner the provisions relating to the indemnification and exculpation of directors and
officers of the Company and its subsidiaries to the fullest extent permitted by law).



     2.7 Directors and Officers of Surviving Corporation. The Directors of Merger Sub at the
Effective Time shall be the directors of the Surviving Corporation and the officers of Merger Sub
at the Effective Time shall be appointed by Parent, with Ben Plotkin serving as Chairman and Chief
Executive Officer of the Surviving Corporation.



     2.8 Observer Status on the Parent Board of Directors. For so long as Bancorp owns 10% or
more of the outstanding shares of Parent Common Stock, at Bancorp’s request, one individual
designated by Bancorp shall receive notice of and have the right to attend each and every meeting
of Parent’s Board of Directors and to receive all information provided to Parent’s Directors;
provided, however, that Parent reserves the right, subject to advance written
notice to Bancorp, to exclude such observer from access to any material or meeting portion thereof
if Parent believes upon the advice of counsel that such exclusion is reasonably necessary to
preserve the attorney-client privilege, to protect highly confidential proprietary information or
for other similarly appropriate reasons; provided further, however, that notwithstanding the
foregoing, Parent shall provide such observer with all such information that Parent determines, on
advice of counsel, would
not cause or constitute a breach of such attorney-client privilege. If so requested by Parent,
Bancorp will enter into an observer rights letter with Parent on reasonable and customary terms.



     2.9 Additional Actions. If, at any time after the Effective Time, Parent or the Surviving
Corporation shall reasonably determine that any deeds, bills of sale, assignments, assurances or
any other actions or things are necessary or desirable to vest, perfect or confirm of record or
otherwise in Parent or the Surviving Corporation its right, title or interest in, to or under any
of the rights, properties or assets of Merger Sub or the Company or otherwise to carry out this
Agreement, the officers and directors of Parent or the Surviving Corporation, as the case may be,
shall be authorized to execute and deliver, in the name and on behalf of Merger Sub, Parent or the
Company, as the case may be, all such deeds, bills of sale, assignments and assurances and to take
and do, in the name and on behalf of Merger Sub, Parent or the Company, as the case may be, all
such other actions and things as may be reasonably necessary or desirable to vest, perfect or
confirm any and all right, title and interest in, to and under such rights, properties or assets in
the Surviving Corporation consistent with the terms of this Agreement.



19









 





ARTICLE 3



REPRESENTATIONS AND WARRANTIES OF THE COMPANY




          The Company hereby makes the following representations and warranties to Parent as of the date
hereof and as of the Closing.




     3.1 Organization and Good Standing. The Company is a corporation duly organized, validly
existing and in good standing under the laws of New Jersey with full power and authority to own,
operate and lease its assets and to carry on its business as currently conducted. The Company is
duly qualified to do business and is in good standing (where applicable) as a foreign corporation
in each jurisdiction where the ownership, operation or leasing of its assets or the conduct of its
business as currently conducted requires such qualification, except for those jurisdictions where
the failure to be so qualified or to be in good standing, individually or in the aggregate, would
not reasonably be expected to have a Material Adverse Effect. The Company has made available to
Parent true and complete copies of its certificate of incorporation and bylaws.



     3.2 Subsidiaries; Other Interests.



          (a) Section 3.2(a) of the Company Disclosure Letter sets forth the name, jurisdiction
of organization or incorporation of each Subsidiary. Each Subsidiary of the Company is a legal
entity duly organized, validly existing and in good standing under the laws of its jurisdiction of
organization with full power and authority to carry on its business as it is now being conducted
and to own, operate and lease its properties and assets. Each Subsidiary is duly qualified or
licensed to do business and is in good standing in every jurisdiction in which the conduct of its
business, or the ownership or lease of its properties,
require it to be so qualified or licensed. All of the outstanding shares of the capital stock
or other securities of each such Subsidiary are owned by the Company or a wholly-owned Subsidiary
of the Company, are duly authorized, validly issued, fully paid and nonassessable, and have been
issued in compliance with all applicable Requirements of Law.




          (b) Section 3.2(b) of the Company Disclosure Letter sets forth a true and complete
list of any material interest or investment in (whether equity or debt) any corporation,
partnership, limited liability company, joint venture, business, trust or other Person owned,
directly or indirectly, by any Subsidiary, other than (i) interests or investments held by any such
Subsidiary for the account of clients as of the date hereof and Liens on interests or investments
securing Indebtedness of such clients or (ii) securities, interests and investments maintained by
the Company and its Subsidiaries in the Ordinary Course.




          (c) The Subsidiaries shall be those entities set forth on Schedule A hereto. No
representations herein are materially misleading or materially incomplete, or otherwise inaccurate
or untrue in any material respect, by reason of excluding the other subsidiaries and/or Controlled
Affiliates of the Company (the “Other Company Business Entities”). Schedule A-1
sets forth the name, jurisdiction of organization or incorporation of each of such Other Company
Business Entities.




     3.3 Authorization; Binding Obligations. The Company and each of its Subsidiaries that is
party to any Related Agreement has all necessary power and authority to make, execute and deliver
this Agreement and the Related Agreements to which they are a party and to perform all of the
obligations to be performed by any of them hereunder and thereunder. The making, execution,
delivery and performance by the Company of this



20









 







Agreement and the Related Agreements and the
consummation by it of the transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action on the part of the Company. This Agreement has been
and, as of the Closing Date, the Related Agreements will be, duly and validly executed and
delivered by the Company, and assuming the due authorization, execution and delivery by Parent,
each of this Agreement and the Related Agreements will constitute the valid, legal and binding
obligation of the Company, enforceable against it in accordance with its terms, except as the
enforceability hereof may be limited by bankruptcy, insolvency, moratorium or other similar
Requirements of Law, now or hereafter in effect, relating to or affecting the rights of creditors
generally and the availability of specific remedies may be limited by legal and equitable
principles of general applicability.



     3.4 No Conflicts.



          (a) Except as set forth in Section 3.4 of the Company Disclosure Letter, the
execution, delivery and performance by the Company of this Agreement and each of the Related
Agreements to which it is a party, and the fulfillment of and compliance with the respective terms
hereof and thereof by the Company, do not and will not (a) conflict with or result in a breach of
the terms, conditions or provisions of, (b) constitute a default or event of default under (whether
with or without due notice, the passage of time or both), (c) result
in the creation of any Lien upon the shares of Company Stock to, (d) give any third party the
right to modify, terminate or accelerate any obligation under, (e) result in a violation of, or (f)
require any Consent or other action by, notice to, or filing with, any third party or Governmental
Authority pursuant to, the charter or bylaws of the Company, or any applicable Requirements of Law
or Material Contract to which the Company, or its properties or the shares of Company Stock are
subject except for such conflicts, violations, Liens, contraventions, cancellations, defaults or
Consents, the failure of which to obtain or violation of which will not individually or in the
aggregate reasonably be expected to have a Material Adverse Effect.




     3.5 Approvals. There are no notices, reports or other filings required to be made by the
Company or any of the Subsidiaries with, or Consents required to be obtained by the Company or any
of the Subsidiaries from, any Governmental Authority or other third party in order for Bancorp, the
Company and the Subsidiaries to execute, deliver or perform this Agreement and the Related
Agreements and to consummate the transactions contemplated hereby and thereby, except (a) as set
forth in Section 3.5 of the Company Disclosure Letter, (b) Consents as may be required
under the HSR Act filings, (c) Consents as may be required by the NASD, or (d) where the failure to
make such notices, reports or other filings or the failure to obtain such Consents, individually or
in the aggregate, would not reasonably be expected to (i) prevent, impair or delay the consummation
of the transactions contemplated by this Agreement and the Related Agreements, or (ii) have or
cause a Material Adverse Effect.



     3.6 Litigation. Except as set forth on Section 3.6 of the Company Disclosure
Letter there is no investigation, action, suit, proceeding, claim, arbitration or other
litigation pending or, to the Knowledge of the Company, threatened, nor to the Knowledge of the
Company has any event occurred or circumstance exist that may give rise to or serve as a basis for
the commencement of any of the same, against or affecting the Company or any of



21









 







its Subsidiaries or
the Business (including any claim involving a Company Customer Contract or a Company Customer or
any Company Leased Real Property) that, individually or in the aggregate, (a) as of the date of
this Agreement, involves a claim against, or is reasonably likely to result in a liability of, the
Business in excess of $100,000 net of existing reserves and after application of available
insurance proceeds, if any, provided that multiple claims or causes of action arising out
of a single circumstance or a collection of circumstances based on the same related set of facts
shall be deemed to be a single claim or cause of action for purposes of this determination; (b)
would reasonably be expected to have a Material Adverse Effect; or (c) would affect the legality,
validity or enforceability of this Agreement or any Related Agreement or prevent or materially
impair or delay the consummation of the transactions contemplated hereby or thereby. There are no
judgments, injunctions, writs, orders or decrees of any Governmental Authority binding or, to the
Knowledge of the Company, threatened to be imposed upon any Subsidiary that would (A) be binding
upon Parent or its subsidiaries (other than the Company and its Subsidiaries) following
consummation of such transactions contemplated by this Agreement and the Related Agreements and
which would reasonably be expected to have a Material Adverse Effect on the Parent and its
subsidiaries (taken as a whole) or their businesses following Closing on an
aggregate basis, or (B) individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.



     3.7 Compliance with Requirements of Law, Regulatory Matters. Except as set forth on
Section 3.7 of the Company Disclosure Letter:



          (a) The Company and each Subsidiary is, and since January 1, 2004 the Business has been
operated, in compliance in all material respects with all material Requirements of Law. Except as
would not, individually or in the aggregate, reasonably be expected to have a Material Adverse
Effect, since January 1, 2004, neither Bancorp, the Company, nor any Subsidiary has received any
written, or, to the Knowledge of the Company, oral notice from (and otherwise does not have any
Knowledge of) any Governmental Authority that alleges any noncompliance (or that the Company or any
Subsidiary is under any investigation by any such Governmental Authority for such alleged
noncompliance) with any Requirement of Law relating to the Business.




          (b) (i) The Company’s Subsidiaries hold all Permits that are required in order to conduct the
Business in the manner presently conducted under and pursuant to all Requirements of Law in all
material respects; (ii) all such Permits are in full force and effect and are not subject to any
suspension, cancellation, modification, revocation or any proceedings or investigations related
thereto, and, to the Knowledge of the Company, no such suspension, cancellation, modification,
revocation, proceeding or investigation is threatened, nor do facts exist which would reasonably
form the basis for any such suspension, cancellation, modification, revocation, proceeding or
investigation that, individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect; and (iii) no Subsidiary is in default, and no condition exists that with
notice or lapse of time or otherwise would constitute a default, under any such Permit that,
individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect.




22









 








          (c) The Business is not subject to or bound by any Requirement of Law other than Requirements
of Law imposed on similarly situated broker-dealers, that restricts the Business or relates to its
capital adequacy, credit policies or management.




          (d) Each Subsidiary identified in Section 3.7(d) of the Company Disclosure Letter that
is required to be registered by the Advisers Act, is duly registered as an investment adviser under
the Advisers Act. Each such Subsidiary that is required to be is registered, licensed or qualified
as an investment adviser in each state or any other jurisdiction where the conduct of its business
required such registration, licensing or qualification, is so registered, licensed or qualified
except where the failure to be so registered, licensed or qualified, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect. To the extent that
any Subsidiary relies on any statutory or regulatory exemption to avoid registration as an
investment adviser with any Governmental Authority, such Subsidiary has taken all actions required
pursuant to the Requirements of Law to claim and maintain such exemption, except where the failure
to claim or maintain such exemption, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect. A correct and complete list of each such current
registration, license or qualification is set forth in Section 3.7(d) of the Company Disclosure
 Letter. Except as set forth on Section 3.7(d) of the Company Disclosure
Letter, no Subsidiary (i) is or has been an “investment adviser” within the meaning of the
Advisers Act or any other applicable Requirements of Law or (ii) to the Knowledge of the Company,
is subject to any material liability by reason of any failure to be so registered, licensed or
qualified.




          (e) Each Subsidiary that is required to be registered under the Exchange Act, is duly
registered as a broker-dealer under the Exchange Act, except where the failure to be so registered,
individually or in the aggregate, would not reasonably be expected to have a Material Adverse
Effect. Each such Subsidiary that is required to be is registered, licensed or qualified as a
broker-dealer in each state or any other jurisdiction where the conduct of its business required
such registration, licensing or qualification, is so registered, licensed or qualified except where
the failure to be so registered, licensed or qualified, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect. To the extent that any Subsidiary relies
on any statutory or regulatory exemption to avoid registration as a broker-dealer with any
Governmental Authority, such Subsidiary has taken all actions required pursuant to the Requirements
of Law to claim and maintain such exemption, except where the failure to claim or maintain such
exemption, individually or in the aggregate, would not reasonably be expected to have a Material
Adverse Effect. A correct and complete list of each such current registration, license or
qualification is set forth in Section 3.7(e) of the Company Disclosure Letter. Except as
set forth on Section 3.7(e) of the Company Disclosure Letter, no Subsidiary (i) is or has
been a “broker” or “dealer”, or is or has been required to be registered as a “broker” or “dealer”,
within the meaning of the Exchange Act or any other applicable Requirements of Law or (ii) to the
Knowledge of the Company, is subject to any material liability or disability by reason of any
failure to be so registered, licensed or qualified.




          (f) None of the Subsidiaries is or has been (i) a commodity pool operator, futures commission
merchant, commodity trading advisor, trust company, real estate broker, introducing broker,
insurance company, insurance broker, insurance agent or




23









 







transfer agent within the meaning of any
Requirement of Law or (ii) required to be registered, licensed or qualified as a commodity pool
operator, futures commission merchant, commodity trading advisor, trust company, real estate
broker, introducing broker, insurance company, insurance broker, insurance agent, transfer agent or
in any other capacity under any Requirement of Law.




          (g) None of the Subsidiaries of the Company nor any “affiliated person” (as defined in the
Investment Company Act) of any of them is ineligible or disqualified pursuant to Section 9(a) or
9(b) of the Investment Company Act to serve as an investment adviser (or in any other capacity
contemplated in the Investment Company Act) to any Registered Investment Company for which it
currently serves as investment adviser, nor is there any proceeding or investigation pending or, to
the Knowledge of the Company, threatened, by, any Governmental Authority, which would reasonably be
expected to result in any such ineligibility or disqualification. None of the Subsidiaries of the
Company nor any person “associated” (as defined in the Advisers Act) with any of them is ineligible
or disqualified pursuant to Section 203 of the Advisers Act to serve as a registered investment
adviser or person “associated” (as defined in the Advisers Act) with a registered investment
adviser, nor is there any proceeding or investigation pending or, to the Knowledge of the
Company, threatened, by, any Governmental Authority, which would reasonably be expected to
result in any such ineligibility or disqualification. None of the Subsidiaries of the Company nor
any of their “associated persons of a broker or dealer” are ineligible or disqualified pursuant to
Section 15, Section 15B or Section 15C of the Exchange Act to serve as a broker-dealer or as an
“associated person of a broker or dealer” (as defined in the Exchange Act), nor is there any
proceeding or investigation pending or, to the Knowledge of the Company, threatened, by, any
Governmental Authority, which would reasonably be expected to result in any such ineligibility or
disqualification.




          (h) The officers and employees of the Subsidiaries who are required to be licensed or
registered for the activities conducted by them in respect of the Business are, and at all times
since January 1, 2004 have been, duly licensed or registered in each state or jurisdiction in
which, and with each Governmental Authority with whom, such licensing or registration is so
required except where the failure to be so licensed would not have or cause a Material Adverse
Effect. Each such registration or license is in full force and effect, except where the failure to
be so licensed or registered, individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect. To the Knowledge of the Company, none of the officers or employees
of any Subsidiary is or, since January 1, 2004, has been subject to any material disciplinary or
other material regulatory compliance action or material complaint by a Governmental Authority.




          (i) All material registrations (including Forms BD and ADV), reports, prospectuses, proxy
statements, statements of additional information, financial statements, sales literature,
statements, notices and other filings required to be filed with any Governmental Authority,
including all amendments or supplements to any of the above (the “Filings”) required to be
filed by the Company and each Subsidiary since January 1, 2004 related to the Business have been
filed in compliance in all material respects with all Requirements of Law and the information
contained therein was true and correct in all material respects.




24









 








          (j) Section 3.7(j) of the Company Disclosure Letter sets forth a complete list of all
securities exchanges, commodities exchanges, clearing corporations and similar organizations in
which any Subsidiary holds memberships or has been granted trading privileges.




          (k) Except for routine examinations conducted by any Governmental Authority in the regular
course of the Business, since January 1, 2004 (i) no Governmental Authority has initiated any
proceeding, investigation, examination, audit or review into the Business (a “Proceeding”)
and, to the Knowledge of the Company, no such Proceeding is ongoing, unresolved or threatened by
any Governmental Authority and (ii) none of the Company or its Subsidiaries has received any notice
or communication (A) of any unresolved violation or exception by any Governmental Authority with
respect to any report or statement by any Governmental Authority relating to any examination of any
of the Company or its Subsidiaries, (B) threatening to revoke or condition the continuation of any
Permit or (C) restricting or disqualifying their activities (except for restrictions generally
imposed by rule, regulation or administrative policy on similarly regulated Persons generally),
which would have or cause a Material Adverse Effect.




          (l) The Company has implemented one or more formal codes of ethics, insider trading policies,
personal trading policies and other material policies as may be required by Requirements of Law for
itself and its Subsidiaries and a complete and correct copy of each of such policies has been made
available to Parent to the Knowledge of the Company. Such codes of ethics, insider trading polices,
personal trading policies and other material policies comply in all material respects with
Requirements of Law. The policies of the Company and its Subsidiaries respecting the avoidance of
conflicts of interest are as set forth in the most recent policy manuals of the Company and its
Subsidiaries, which have been made available to Parent. Since January 1, 2004, there have been no
violations by any officer or investment professional of any of the Company and its Subsidiaries of
such code of ethics, insider trading polices and personal trading policies which would reasonably
be expected to have a Material Adverse Effect.




          (m) Each of the Company and its Subsidiaries has complied in all material respects with all
material Requirements of Laws regarding the privacy of Company Customers and have established and
complied in all material respects with policies and procedures in this regard reasonably designed
to ensure compliance with Requirements of Law.




          (n) Each of the Company and its Subsidiaries, to the extent required by Requirements of Law,
has a written anti-money laundering program and a written customer identification program in
compliance with Requirements of Law and has complied with the terms of such program in all material
respects.




     3.8 [Reserved].



     3.9 Registered Investment Companies; Non-Registered Funds. Except as set forth on
Section 3.9 of the Company Disclosure Letter, neither the Company nor any Subsidiary
serves, or at any time has served, as an investment adviser or sponsor to any Registered Investment
Company or Non-Registered Fund.



25









 





     3.10 Financial Statements.



          (a) (i) The audited balance sheets at December 31 in each of the years 2004 and 2005, and the
related audited statements of income, changes in shareholder equity and cash flows and notes
related thereto of the Company and its subsidiaries on a consolidated basis for each of the fiscal
years then ended (the “Audited Financial Information”), (ii) the unaudited consolidated
balance sheet of the Company and its subsidiaries at September 30, 2006 and related unaudited
statements of income, changes in shareholder equity and cash flows and notes related thereto of the
Company and its subsidiaries on a consolidated basis as of and for the nine-month period then ended
(the “September 30, 2006 Financial Information”), and (iii) an unaudited consolidated
balance sheet of the Company and its subsidiaries at November 30, 2006 (the “Reference Balance
Sheet” and together with the September 30, 2006 Financial Information, the “Unaudited 
Financial Information”) and related unaudited statements of income, changes in
shareholder equity and cash flows and notes related thereto of the Company and its subsidiaries as
of and for the eleven-month period then ended (the “Reference Income Statement”), including
in each case the notes thereto (such information in items (i), (ii) and (iii) collectively, the
“Company Financial Information”) have been delivered to Parent. The Reference Balance
Sheet is included as Exhibit 3.10(a) hereto. As of the date hereof, the Company has not
made or declared any dividends on the Company Stock since the date of the Reference Balance Sheet.




          (b) The Company Financial Information has been (i) derived from the books of account and other
financial records of the Business and (ii) prepared in accordance with GAAP consistently applied,
subject only to normal recurring year-end adjustments and the absence of notes for the Unaudited
Financial Information and except as otherwise expressly provided in the Company Financial
Information. The Company Financial Information fairly presents in all material respects the
consolidated financial position of the Company and its subsidiaries as of the respective dates
thereof and their consolidated results of operations and cash flows for the respective periods then
ended (subject, in the case of unaudited interim financial statements, to the absence of notes and
normal and recurring year-end audit adjustments).




          (c) The corporate minute books of the Company and its Subsidiaries that have been made
available to the Parent for inspection are complete and correct in all material respects. A true
and complete list of the incumbent directors and officers of the Company and each Subsidiary of the
Company attached as Section 3.10(c) of the Company Disclosure Letter.




          (d) The Company maintains in all material respects internal controls over financial reporting
(“Internal Controls”) to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance
with GAAP, including policies and procedures that (i) pertain to the maintenance of records that in
reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of
the Company and its consolidated Subsidiaries, (ii) provides reasonable assurance that transactions
are recorded as necessary to permit preparation of financial statements in accordance with GAAP,
and that receipts and expenditures of the Company and its consolidated Subsidiaries are being made
only in accordance with




26









 







authorizations of management and directors of the Company and its
consolidated Subsidiaries and (iii) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use or disposition of the assets of the Company and its
consolidated Subsidiaries that could have a material effect on the financial statements.




     3.11 Title; Sufficiency of Assets. Upon consummation of the transactions contemplated by
this Agreement and the Related Agreements, Parent or one or more of its subsidiaries and Controlled
Affiliates (including the Surviving Corporation), taken together, will own, possess, have a valid
license to, have a valid lease in or otherwise have the right to use all of the rights, properties
and assets necessary to conduct the Business in all material respects as currently conducted and as
the same will be conducted on the Closing Date, including all such assets reflected in the
Reference Balance Sheet or acquired since the date thereof (collectively, the “Assets”),
except for any failure to have such titles, interests or rights that, individually or in the
aggregate, has not had and would not reasonably be expected to have or result in a Material Adverse
Effect. The Company and its Subsidiaries have maintained in all material respects all tangible
Assets in good repair, working order and operating condition, subject only to ordinary wear and
tear.



     3.12 Employee Benefit Plans; Employee Matters.



          (a) Section 3.12(a)(i) of the Company Disclosure Letter lists each Company Benefit
Plan. Section 3.12(a)(ii) of the Company Disclosure Letter lists each Company Benefit Plan
that is sponsored, maintained or contributed to or required to be contributed to by the Company or
any of its Subsidiaries or in connection with which the Company or any of its Subsidiaries has or
may have any liability (the “Subsidiaries Benefit Plans”). Each Subsidiaries Benefit Plan
is in writing and the Company has made available to Parent a true and complete copy of each
Subsidiaries Benefit Plan and a true and complete copy of the following items (in each case, only
if applicable) (i) each trust or other funding arrangement, (ii) each summary plan description and
summary of material modifications, (iii) the three most recently filed annual reports on the IRS
Form 5500 for each such Subsidiaries Benefit Plan, including without limitation all schedules
thereto, all financial statements with attached opinions of independent accountants and all
actuarial reports, and (iv) the most recently received IRS determination letter for each such
Subsidiaries Benefit Plan. Neither the Company nor any of its Subsidiaries has any express or
implied commitment with respect to the Business to create, incur any liability with respect to or
cause to exist any other Plan or to modify, change or terminate any Subsidiaries Benefit Plan.




          (b) Each of the Subsidiaries Benefit Plans (i) is, and has always been, operated in accordance
in all material respects with all applicable provisions of ERISA, the Code, and all other
Requirements of Law and (ii) has in all material respects been administered, operated and managed
in accordance with its governing documents. No prohibited transactions (as defined in ERISA
Section 406 or Code Section 4975), except any as to which an exemption described in ERISA Section
408 applies, and no violations of ERISA Section 407 have occurred with respect to any Company
Benefit Plan. None of the rights of the Company or its Subsidiaries under the Subsidiaries’
Benefit Plans will be impaired in any material respect by the consummation of the transactions
contemplated by this Agreement, and all of the rights of the Company and its Subsidiaries
thereunder will be enforceable in all material respects at or after the Closing without the consent
or agreement




27









 







of any other party. Each Subsidiaries’ Benefit Plan (including any Plan covering
former employees and retirees of the Company or its Subsidiaries) may be amended or terminated by
the Company or other applicable sponsor of the Plan on or at any time after the Closing Date.




          (c) Except as disclosed in Section 3.12(c) of the Company Disclosure Letter, none of
Bancorp, the Company, the Subsidiaries of the Company nor any of their ERISA Affiliates has now or
at any time contributed to or been required to contribute to, sponsored, or maintained, or has any
liability with respect to, (i) a multiemployer plan (as
defined in ERISA Section 3(37) or 4001(a)(3)) or (ii) any Pension Plan which is subject to the
provisions of Title IV of ERISA. With respect to each Company Benefit Plan subject to the minimum
funding requirements of Code Section 412 and, if applicable, Title IV of ERISA: (i) as of the
Closing Date, all contributions or payments to or under such Plan required by law or by the terms
of such Plan or any contract or agreement or accrued through the Closing Date will have been made;
(ii) as of the Closing Date, all contributions required to be made under ERISA Section 302 and Code
Section 412 (whether or not waived) will have been made; (iii) there is no event or condition
existing that could be deemed a reportable event within the meaning of ERISA Section 4043 with
respect to which the 30 day notice requirement has not been waived (other than the transactions
contemplated by this Agreement) and no condition exists that would subject the Company to a penalty
under ERISA Section 4071; (v) as of the Closing Date, all required premium payments to the PBGC
have been made when due. Except as disclosed in Section 3.12(c) of the Company Disclosure
Letter, neither the Company nor any of the Subsidiaries is a party to any arrangement that has
resulted or would result in a payment that would not be fully deductible as a result of Code
Section 162(m) or Code Section 280G or any similar provision of law. None of Bancorp, the Company,
the Subsidiaries of the Company or any of their ERISA Affiliates has terminated or taken action to
terminate (in whole or in part) any employee benefit plans within the last three years that could
result in any material liability to the Company or the Subsidiaries of the Company.




          (d) The IRS has issued a favorable determination letter with respect to each of the Company
Benefit Plans that is intended to be qualified under Section 401(a) of the Code (a “Company
Qualified Plan”) to the effect that such plan is qualified under Section 401(a) of the Code and
that each trust established in connection with such Company Benefit Plan is exempt from United
States federal income taxation under Section 501(a) of the Code. No circumstances exist that would
adversely affect the qualified status of any Company Qualified Plan or that could be expected to
result in the revocation of the trust’s exemption from United States federal income taxation. Each
Company Qualified Plan is identified in Section 3.12(d) of the Company Disclosure Letter.




          (e) Each of the Company Benefit Plans that is a nonqualified deferred compensation arrangement
is listed in Section 3.12(e) of the Company Disclosure Letter, and each such arrangement
has been maintained, administered and operated in material compliance with Code Section 409A and
the regulations and guidance thereunder. No amounts under such arrangements are subject to
immediate inclusion in income or the additional taxes or penalties provided under Code Section
409A.




28









 








          (f) There are no pending or, to the Knowledge of the Company, threatened material claims
(other than claims for benefits in the ordinary course), lawsuits or arbitrations which have been
asserted or instituted against the Subsidiaries Benefit Plans, any fiduciaries thereof with respect
to their duties to the Subsidiaries Benefit Plans or the assets of any of the trusts under any of
the Subsidiaries Benefit Plans. Neither the Company nor any of its Subsidiaries has any liability
with respect to a Company Benefit Plan by virtue of its being a member of a controlled group with a
Person who has liability under the Code or ERISA.




          (g) To the Knowledge of the Company, no labor union, labor organization or group of employees
of any Subsidiary has made a pending demand for recognition or certification with respect to the
Business Employees, there are no representation or certification proceedings or petitions seeking a
representation proceeding with respect to the Business Employees presently pending or, to the
Knowledge of the Company, threatened to be brought or filed with the National Labor Relations Board
or any other labor relations tribunal or authority and there have been no such actions, events or
disputes since January 1, 2004. There are no strikes, organized work stoppages, organized
slowdowns, lockouts or other material labor disputes pending or, to the Knowledge of the Company,
threatened against or involving the Business Employees. No Subsidiary is a party to, bound by, or
in the process of negotiating a collective bargaining agreement or other agreement with a labor
union or labor organization covering any of the Business Employees.




          (h) Except as disclosed in Section 3.12(h) of the Company Disclosure Letter, the
consummation of the transactions contemplated by this Agreement will not (i) entitle any Business
Employee to separation, termination or severance pay, unemployment compensation or any other
similar-type benefit payment, (ii) result in the payment to any present or former employee,
officer, director or consultant of the Company or any of its Subsidiaries of any money or other
property, (iii) accelerate the time of payment or vesting, or increase the amount of compensation
due any such employee, or (iv) cause any amounts payable under the Company Benefit Plans to fail to
be deductible for United States federal income tax purposes by virtue of Section 280G of the Code.




          (i) Except to the extent required under ERISA Section 601 et. seq. and Code Section 4980B,
none of the Company Benefit Plans provides for or promises medical, disability or life insurance or
any other welfare benefits after retirement or other termination of employment to any current or
former employee, officer, director or consultant of the Company or its Subsidiaries.




          (j) To the Knowledge of the Company, the Subsidiaries are in compliance in all material
respects with all material Requirements of Law relating to the employment of labor, including,
without limitation, those related to wages, hours, immigration and naturalization, collective
bargaining and the payment and withholding of taxes and other sums as required by the appropriate
Governmental Authority. The Company and its Subsidiaries have paid in full to all Business
Employees or adequately accrued for all wages, salaries, commissions, bonuses, benefits and other
compensation due to or on behalf of such Business Employees and there is no claim with respect to
payment of wages, salary or overtime pay that has been asserted or is now pending or, to the
Knowledge of the Company, threatened before any Governmental Authority with respect to




29









 







any persons
currently or formerly employed by the Subsidiaries. Neither the Company nor any of its Subsidiaries
is a party to, or otherwise bound by, any consent decree with, or citation by, any Governmental
Authority relating to employees or employment practices with respect to the Business Employees.
Except as disclosed in Section 3.12(j) of the Company Disclosure Letter, there is no charge
of discrimination in employment or employment practices, including, without limitation, for reasons
of age, gender, race, religion or other legally protected category, which has been asserted or is
now pending or, to the Knowledge of the Company, threatened before the United States Equal
Employment Opportunity
Commission, or any other Governmental Authority in any jurisdiction in which any Subsidiary of
the Company has employed or employs any person.




          (k) All individuals who are performing or have performed consulting or other services for any
Subsidiary, whether as consultants, independent contractors, agents or otherwise, are or were
correctly classified by such Subsidiaries as either “independent contractors” or “employees,” as
the case may be, and, at the Closing, will qualify for such classification under all Requirements
of Law; there are no pending or, to the Knowledge of the Company, threatened claims against any
Subsidiary by or on behalf of any such individual relating to the classification of such
individual, or investigation, audit or other proceeding relating to such an individual or
individuals, by any Governmental Authority with respect to the classification of such individuals.




     3.13 Absence of Undisclosed Liabilities. None of the Company or any of the Subsidiaries is
subject to any claims, liabilities or obligations (whether known, unknown, absolute, accrued,
contingent or otherwise) and, to the Knowledge of the Company, there are no existing conditions,
situations or facts that could reasonably be expected to result in any such claim, obligation or
liability, except (a) as and to the extent disclosed on, or as to which a reserve has been
established on, the Reference Balance Sheet, (b) claims, obligations and liabilities that (i) are
incurred after the date of the Reference Balance Sheet in the Ordinary Course consistent with past
practice of Company or such Subsidiary, and (ii) individually or in the aggregate, would not
reasonably be expected to have or result in a Material Adverse Effect, or (c) as set forth on
Section 3.13 of the Company Disclosure Letter.



     3.14 Absence of Certain Changes. Except for the matters contemplated by this Agreement and
as set forth on Section 3.14 of the Company Disclosure Letter, since November 30, 2006, the
Business has been conducted in the Ordinary Course and (a) there has not been (i) any change in the
business, operations, properties, assets, condition (financial or otherwise) or results of the
Company and its Subsidiaries taken as a whole which would have or cause a Material Adverse Effect;
(ii) any damage, destruction or loss, whether or not covered by insurance, in an amount in excess
of $500,000, in existence as of the date of this Agreement; (iii) any acquisition or disposition by
the Company or any Subsidiary of any material asset or material property other than in the Ordinary
Course; (iv) any declaration, setting aside or payment of any dividend or any other distributions
in respect of the Company’s capital stock; (v) any material increase in compensation payable to or
to become payable by the Company or any Subsidiary to its respective directors, officers or
employees; (vi) any entry by the Company into any material transaction other than in the Ordinary
Course or as contemplated herein; or (vii) any change by the Company or any Subsidiary in
accounting principles or methods, nor (b) has the Company or any Subsidiary



30









 




(i) made, changed or
rescinded any Tax election, except as required by applicable Requirements of Law; (ii) changed any
annual Tax accounting period; (iii) changed any method of Tax accounting or filed any change in
accounting method, except as required by applicable Requirements of Law; (iv) settled any Tax claim
or assessment or surrender any right to claim a Tax refund; (v) failed to timely file any Tax
Return that relates in whole or in part to Company or any of its Subsidiaries; and (vi) waived
or extended the statute of limitations in respect of Taxes, other than the extension of the due
date of a Tax Return.




     3.15 Company Real Property.



          (a) No Subsidiary owns or ground leases any real property. Section 3.15(a) of the Company
Disclosure Letter sets forth a true and complete list of all Company Leased Real Property,
identifying each Company Lease and the identity of the lessee and lessor thereunder. Each
Subsidiary that is a party to a Company Lease has, or at the Closing will have, a good and valid
leasehold interest under each such Company Lease, free and clear of all Liens except Permitted
Liens. To the Knowledge of the Company, each Company Lease is in full force and effect. Except as
set forth on Section 3.15(a) of the Company Disclosure Letter, no Subsidiary that is a
party to a Company Lease is in material default of any of its obligations under such Company Lease
(and no event exists which upon the passage of time or the giving of notice would constitute a
material default by such Subsidiary thereunder). Except as set forth on Section 3.15(a) of the
Company Disclosure Letter, to the Knowledge of the Company, no counterparty to any Company
Lease is in material default of any of its obligations under the applicable Company Lease (and no
event exists which upon the passage of time or the giving of notice would constitute a material
default by such counterparty thereunder).




          (b) To the Knowledge of the Company, there are no condemnation proceedings or eminent domain
proceedings or sales or other dispositions in lieu of condemnation of any kind pending or
threatened with respect to any portion of the Company Leased Real Property.




          (c) Except as set forth in Section 3.15 of the Company Disclosure Letter, no
Subsidiary of the Company has subleased any of the Company Leased Real Property to any third party
or given any third party any license or other right to occupy any portion of the Company Leased
Real Property leased by such Subsidiary.




     3.16 Certain Contracts. Except as set forth on Section 3.16 of the Company Disclosure
Letter, neither the Company nor any Subsidiary is a party to or bound by any Contract,
arrangement, commitment or understanding (other than any Plan described elsewhere herein) (each a
“Material Contract”) (i) with respect to the employment of any directors, executive
officers, or key employees constituting an “executive officer” (as such term is defined under
Regulation S-K promulgated by the SEC under the Securities Act), as if the Company were required to
file periodic reports as a registrant with the SEC under the Exchange Act; (ii) which would
constitute a “material contract” (as such term is defined in Item 601(b)(10) of Regulation S-K
promulgated by the SEC under the Securities Act), as if the Company were required to file periodic
reports as a registrant with the SEC under the Exchange Act; (iii) which contains any material
non-competition or exclusivity provisions with respect to any business or geographic area in which
the Business is conducted or which



31









 







restricts the conduct of the Business; (iv) with or to a labor
union or guild (including any collective
bargaining agreement); (v) which would prohibit or materially delay the consummation of the
transactions contemplated by this Agreement; (vi) any Contract (including any so-called take-or-pay
or keep well agreements) under which (A) any Person has directly or indirectly guaranteed or
assumed Indebtedness, liabilities or obligations of the Company or any Subsidiary or (B) the
Company or any Subsidiary has directly or indirectly guaranteed Indebtedness, liabilities or
obligations of any Person in each case in excess of $1,000,000 or in the aggregate in excess of
$5,000,000 (vii) other than underwriting, dealing, advisory, investment management and distribution
Contracts entered into in the Ordinary Course or pursuant to the terms hereof, any Contract
providing for the indemnification of any Person (other than directors and officers of the Company
or any Subsidiary) with respect to liabilities, whether absolute, accrued, contingent or otherwise
that would be material to the Business; (viii) other than (A) forgivable loans made to Business
Employees in the Ordinary Course and not in excess of $17,500,000 in the aggregate and (B) margin
loans by the Company or any Subsidiary made in the Ordinary Course, any Contract under which the
Company or any Subsidiary has made or is obligated to make, directly or indirectly, any advance,
loan, extension of credit or other similar advances to any Person, in each case in excess of
$1,000,000 individually or $5,000,000 in the aggregate; (ix) any Contract to cap fees, share fees
or other payments, share expenses, waive fees or to reimburse or assume any or all fees or expenses
thereunder that would be material to the Business; (x) any Contract that provides for earn-outs or
other similar contingent obligations of the Company or any Subsidiary or any of its Controlled
Affiliates where such earn-outs or contingent obligations would be material to the Business; (xi)
any Contract which contains a “clawback” or similar undertaking requiring the reimbursement or
refund of any material amounts (whether performance based or otherwise) paid to the Company or any
Subsidiary. The Company has previously made available to Parent true and correct copies of all
employment, severance, deferred compensation and change-of-control agreements with executive
officers, key employees or material consultants to which the Company or any Subsidiary of the
Company is a party, all of which are listed on Section 3.16 of the Company Disclosure
Letter. Except as set forth on Section 3.16 of the Company Disclosure Letter, neither
the Company nor any Subsidiary has knowledge of, or has received notice of, any material breach of
any Material Contract by any of the other parties thereto. Except as set forth in Section 3.16
of the Company Disclosure Letter, neither the Company nor any Subsidiary is in material default
under any Material Contract to which it is a party, by which its respective assets, business, or
operations may be bound or effected, or under which it or its respective assets, business, or
operations receives benefits and, to the Knowledge of the Company, there has not occurred any event
that with the lapse of time or the giving of notice or both, would constitute such a material
default.



     3.17 Intellectual Property.



          (a) Section 3.17(a) of the Company Disclosure Letter sets forth, as of the date
hereof, a complete list of all Company Owned Intellectual Property that is the subject of an
application or registration. At the Closing, each Subsidiary will own its respective Company Owned
Intellectual Property, and at the Closing will have a valid right to use all Company Owned
Intellectual Property and Company Licensed Intellectual Property, free
and clear of all Liens, other than Permitted Liens, and no Subsidiary is in material breach of
any agreement for the provision or use of material Company Licensed Intellectual Property.




32









 








          (b) There is no material litigation pending or, to the Knowledge of the Company, threatened
against the Business that involves a claim (i) alleging that the operation of the Business
infringes, misappropriates, dilutes or otherwise violates a third party’s Intellectual Property
rights or (ii) challenging the ownership, use, validity, enforceability or registrability of any
Company Owned Intellectual Property or Company Licensed Intellectual Property. To the Knowledge of
the Company, the Business as currently conducted does not infringe, misappropriate, or otherwise
violate any third party’s Intellectual Property rights in any manner that would have or cause a
Material Adverse Effect. Neither the Company nor any Subsidiary has brought or, to the Knowledge of
the Company, threatened a claim against any third party (A) alleging infringement,
misappropriation, dilution or other violation of any material Company Owned Intellectual Property
or (B) challenging any such third party’s ownership or use of, or the validity, enforceability or
registrability of, such third party’s Intellectual Property, and, to the Knowledge of the Company,
there is no basis for a claim regarding any of the foregoing.




     3.18 Taxes. Except as disclosed in Section 3.18 of the Company Disclosure Letter:



          (a) Each of Company and its subsidiaries has filed, or caused to be filed, on a timely basis
all Tax Returns and such Tax Returns are true, correct and complete in all material respects.
Without limiting the foregoing, none of the Tax Returns contains any position that is, or would be,
subject to penalties under Section 6662 of the Code (or any corresponding provisions of state,
local or foreign Tax law). Each of the Company and its subsidiaries has not entered into any
“listed transactions” as defined in Treasury Regulation section 1.6011-4(b)(2), and each has
properly disclosed all reportable transactions as required by Treasury Regulation section 1.6011-4,
including filing Form 8886 with Tax Returns and with the Office of Tax Shelter Analysis.




          (b) None of Company or its subsidiaries has requested an extension of time within which to
file any Tax Return in respect of any taxable period for which such Tax Return has not since been
filed. There are no outstanding waivers or comparable consents regarding the application of the
statute of limitations with respect to a Tax assessment or deficiency or Tax Returns of the Company
or its subsidiaries.




          (c) All Taxes due and owing by the Company and its subsidiaries (whether or not reflected on
any Tax Return) have been timely and fully paid in all material respects. To the Knowledge of the
Company, there are no grounds for the assertion or assessment of additional Taxes against the
Company, its subsidiaries or their assets.




          (d) The Company and its subsidiaries have timely and properly withheld and paid all Taxes
required to have been withheld and paid in connection with any amounts paid or owing to any
employee, independent contractor, creditor, shareholder or other third party, including, but not
limited to, amounts required to be withheld under Sections 1441 and 1442 of the Code (or similar
provisions of state, local or foreign Law).




          (e) There are no Liens for Taxes (other than for current Taxes not yet due and payable) upon
any assets of the Company or its subsidiaries.




33









 








          (f) Except for the group of which Bancorp is presently a member, each of the Company and its
subsidiaries (i) is not and never has been a member of an “Affiliated Group” within the meaning of
Section 1504 of the Code and (ii) does not have any liability for the Taxes of any Person under
Treasury Regulation section 1.1502-6 (or similar provision of state, local or foreign Tax law) as a
transferee or successor, by contract or otherwise.




          (g) Neither the Company nor its subsidiaries are party to or bound by any Tax indemnity, Tax
sharing or Tax allocation agreement or arrangement.




          (h) No claim has ever been made by a Governmental Authority in a jurisdiction where the
Company and its subsidiaries do not file Tax Returns that Company or its subsidiaries are or may be
subject to taxation by that jurisdiction.




          (i) No federal, state, local or foreign Tax audits or administrative or judicial Tax
proceedings are pending or being conducted or to the Knowledge of the Company, threatened with
respect to the Company or its subsidiaries. Neither the Company nor any of its subsidiaries has
since January 1, 2001, received from any Governmental Authority (including jurisdictions where
Company and its subsidiaries have not filed a Tax Return) any (i) notice indicating an intent to
open an audit or other review; (ii) request for information related to Tax matters; or (iii) notice
or deficiency or proposed adjustment for any amount of Tax proposed, asserted, or assessed by any
Governmental Authority against the Company or any subsidiary.




          (j) Neither the Company nor any of its subsidiaries has or has had a permanent establishment
in any foreign country, as defined in any applicable Tax treaty or convention between the U.S. and
such foreign country.




          (k) Each of the Company and its subsidiaries is in compliance with the requirements of Section
482 of the Code and the Treasury Regulations thereunder as they apply to transfer pricing between
controlled entities, including the contemporaneous documentation requirements regarding transfer
pricing policies.




          (l) The Company and its subsidiaries will not be required to include any item of income in, or
exclude any item of deduction from, taxable income for any Tax period (or portion thereof) ending
after the Closing Date as a result of any (i) change in method of accounting for a taxable period
ending on or prior to the Closing Date; (ii) “closing agreement” as described in Section 7121 of
the Code (or any corresponding or similar provision of state, local or foreign Tax law) executed on
or prior to the Closing Date; (iii) installment sale or open transaction disposition made on or
prior to the Closing Date; or (iv) prepaid amount received on or prior to the Closing Date.




          (m) True, correct and complete copies of all income Tax Returns, Tax examination reports and
statements of deficiencies assessed against, or agreed to with respect to the Company and its
subsidiaries with respect to the last three years with the IRS or any other taxing authority have
been delivered to Parent.




34









 








     3.19 [Reserved].



     3.20 Company Capitalization.



          (a) As of the date hereof, the authorized capital stock of the Company consisted of 75,000,000
shares of common stock, par value $0.001 per share (the “Company Capital Stock”). As of
the date of this Agreement, (i) 24,375,000 shares of Company Stock were issued and outstanding, and
(ii) 2,437,500 shares of Company Stock were reserved for issuance (including shares underlying
outstanding stock options and other convertible securities of the Company) pursuant to the
incentive plans listed in Section 3.20(a) of the Company Disclosure Letter. Section
3.20(a) of the Company Disclosure Letter sets forth a list of each outstanding option or other
equity award, the exercise price, expiration date and the name of each option or equity award
holder.




          (b) As of the date of this Agreement, all of the issued and outstanding shares of Company
Capital Stock (i) are owned of record and beneficially, directly or indirectly, by Bancorp, free
and clear of all Liens, and (ii) have been duly authorized, validly issued and are fully paid and
non-assessable and were not issued in violation of any preemptive rights. Except as set forth in
Section 3.20 of the Company Disclosure Letter, there are no outstanding options, warrants,
convertible securities, “tag along” or “drag along” rights or other rights, agreements,
arrangements or commitments relating to the Company Capital Stock obligating the Company or any of
its Affiliates, at any time or upon the occurrence of certain events, to offer, issue, sell,
transfer, vote, redeem or otherwise dispose of or sell any shares of Company Capital Stock. Except
as set forth in Section 3.20 of the Company Disclosure Letter, none of the Company or any
of its Subsidiaries has (i) outstanding Indebtedness that could entitle or convey to any Person the
right to vote, or that is convertible into or exercisable for, Company Capital Stock or (ii)
outstanding options, warrants, convertible securities or other rights, agreements, arrangements or
commitments that entitle or convey to any Person the right to vote with Bancorp on any matter in
respect of the Company Capital Stock absent the exercise or conversion thereof. Except as set forth
on Section 3.20 of the Company Disclosure Letter, there are no voting trusts or other
agreements or understandings outstanding with respect to the Company Capital Stock. As of the
Effective Time, to the extent any of the Company Rights have not been exercised prior to the
Closing Date, all of the Company Rights shall have been cancelled and terminated, either for no
consideration or solely in exchange for the right to receive a portion of the Merger Consideration
as provided in Section 2.5 and set forth on Schedule 2.5(c), as the case may be.




     3.21 Affiliate Transactions.



          (a) Except for Contracts and arrangements (i) which are on customary arms-length terms, (ii)
in respect of services and products that are to be continued or provided pursuant to the Related
Agreements or (iii) as set forth on Section 3.21 of the Company Disclosure Letter which are
to be terminated on or prior to the Closing Date, neither the Company nor any Subsidiary is a party
to any Contract or arrangement with Bancorp or its Affiliates.




          (b) Except as set forth on Section 3.21 of the Company Disclosure Letter, to the
Knowledge of the Company, no director, officer or employee of the Company or any Subsidiary of the
Company: (i) owns, directly or indirectly, any economic or




35









 







ownership interest in (x) any property
or asset, real or personal, tangible or intangible, used in or held for use in connection with or
pertaining to the Business, (y) any Company Customer or (z) any supplier, lessor, lessee or
competitor of the Company or any Subsidiary, in each case of (x), (y) and (z) where such interest
would be material to the Business, taken as a whole, (ii) serves as a trustee, officer, director or
employee of any Person that is a supplier, lessor, lessee or competitor of the Company or any
Subsidiary of the Company or (iii) has received any loans from or is otherwise a debtor of, or made
any loans to or is otherwise a creditor of, the Company or any Subsidiary of the Company, where the
amount of any such loans would be material to the Company and its Subsidiaries, taken as a whole.




     (c) Except as set forth on Section 3.21(c) of the Company Disclosure Letter, neither
the Company nor any Subsidiary has any loan outstanding, has extended or maintained credit, or has
arranged for the extension of credit, to any director, officer or employee of any of them.



     3.22 [Reserved].



     3.23 Derivative Products. Except as set forth on Section 3.23 of the Company
Disclosure Letter or as reflected on the Company Financial Information, neither the Company nor
any Subsidiary of the Company is a party to any interest rate swaps, caps, floors, option
agreements, futures and forward Contracts and other similar risk management arrangements and
derivative financial instruments entered into for the account of the Company or any Subsidiary.



     3.24 Brokers. No broker, investment banker, financial advisor or other Person is entitled
to any broker’s, finder’s, financial advisor’s or similar fee or commission in connection with the
transactions contemplated by this Agreement and the Related Agreements based upon arrangements made
by or on behalf of the Company, Bancorp or the Subsidiaries, except those for which Bancorp will be
solely responsible.



     3.25 Insurance. The Company has at all times since January 1, 2004 maintained
insurance policies or been provided with coverage under Bancorp’s insurance policies including,
without
limitation, general comprehensive liability, unemployment and workers’ compensation coverage.
Section 3.25 of the Company Disclosure Letter sets forth the material insurance policies
maintained by the Company (or provided by Bancorp), together with the amount of coverage for each
policy, the premium due dates (solely with respect to those Company maintained policies) and the
dates of last payment and indicates which of such insurance policies are claims–made policies and
which of such policies are occurrence-based policies. To the Knowledge of the Company, the
policies evidence insurance in such amounts and against such risks and losses as are generally
maintained with respect to comparable companies and properties. All of such insurance policies
maintained by the Company and, to the Knowledge of the Company, all such insurance policies
maintained by Bancorp under which the Company receives coverage, are in full force and effect (with
respect to the applicable coverage periods), and the Company is not in default in any material
respect of any of its obligations under any of such insurance policies.



     3.26 Disclosure. No representation or warranty by the Company in this Agreement, the
Company Disclosure Letter, or any Exhibit or Schedule referred to herein or in any agreement to be
delivered hereunder, and no statement, certificate or other



36









 







information furnished to Parent by or
on behalf of the Company pursuant hereto or thereto, contains any untrue statement of a material
fact or any omission of a material fact necessary to make the respective statements contained
herein and therein, in the light of the circumstances under which the statements were made, not
misleading.



ARTICLE 4

REPRESENTATIONS AND WARRANTIES OF BANCORP




     Bancorp hereby makes the following representations and warranties to Parent as of the date
hereof and as of the Closing.



     4.1 Ownership. As of the date of this Agreement, Bancorp owns all of the issued and
outstanding shares of Company Stock free and clear of all Liens.



     4.2 Authorization; Binding Obligations. Bancorp has all necessary power and authority
to make, execute and deliver this Agreement and the Related Agreements to which it is a party and
to perform all of the obligations to be performed by it hereunder and thereunder. The making,
execution, delivery and performance by Bancorp of this Agreement and the Related Agreements, if
any, and the consummation by it of the transactions contemplated hereby and thereby have been duly
and validly authorized by all necessary corporate action on the part of Bancorp. This Agreement
has been and, as of the Closing Date, the Related Agreements, if any, will be, duly and validly
executed and delivered by Bancorp, and assuming the due authorization, execution and delivery by
Parent, Merger Sub and the Company, each of this Agreement and the Related Agreements will
constitute the valid, legal and binding obligation of Bancorp, enforceable against it in accordance
with its terms, except that the enforceability hereof may be limited by bankruptcy, insolvency,
moratorium or other similar Requirements of Law, now or hereafter in effect, relating to or
affecting the rights of creditors generally and the
availability of specific remedies may be limited by legal and equitable principles of general
applicability.



ARTICLE 5



REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB




     Parent and Merger Sub hereby make the following representations and warranties to the
Shareholders as of the date hereof and as of the Closing.



     5.1 Organization and Good Standing. Each of Parent, its material Subsidiaries (which are
set forth on Section 5.1 of the Parent Disclosure Letter) and Merger Sub is a legal entity
duly organized, validly existing and in good standing under the Requirements of Law of its
jurisdiction of organization with full power and authority to own, operate and lease its assets and
to carry on its business as currently conducted. Parent and each of its material Subsidiaries is
duly qualified to do business and is in good standing (where applicable) as a foreign corporation
in each jurisdiction where the ownership, operation or leasing of its assets or the conduct of its
business as currently conducted requires such qualification, except for those jurisdictions where
the failure to be so qualified or to be in good standing, individually or in the aggregate, would
not reasonably be expected to have a Material Adverse Effect.



37









 





     5.2 Authority; Binding Obligations. Each of Parent and Merger Sub has all necessary power
and authority to make, execute and deliver this Agreement and the Related Agreements to which it is
a party and to perform all of the obligations to be performed by it hereunder and thereunder. The
making, execution, delivery and performance by Parent and Merger Sub of this Agreement and the
Related Agreements and the consummation by them of the transactions contemplated hereby and thereby
have been duly and validly authorized by all necessary corporate action on the part of Parent and
each such Subsidiary. This Agreement has been and, as of the Closing Date, the Related Agreements
will be, duly and validly executed and delivered by Parent and Merger Sub, as the case may be, and
assuming the due authorization, execution and delivery by the Shareholders and the Company, each of
this Agreement and the Related Agreements will constitute the valid, legal and binding obligation
of Parent and Merger Sub, enforceable against each of them in accordance with its terms, except
that the enforceability hereof may be limited by bankruptcy, insolvency, moratorium or other
similar Requirements of Law, now or hereafter in effect, relating to or affecting the rights of
creditors generally and the availability of specific remedies may be limited by legal and equitable
principles of general applicability. Consummation of the transactions contemplated herein shall
not trigger or otherwise cause a breach under the terms of any shareholder rights plan or
arrangement of Parent currently in effect.



     5.3 Parent Stock. The Parent Shares and Warrants, and the Parent Shares issuable upon
exercise of the Warrants, and any additional Parent Shares that may become issuable in connection
with the payment by Parent of any Earn-Out Consideration under Section 2.3, when issued, sold and
delivered in accordance with the terms and for the
consideration set forth in this Agreement, will be validly issued, fully paid and
nonassessable, and will not be subject to any preemptive rights.



     5.4 Compliance with Securities Laws. Parent is acquiring the shares of Company Stock for
investment and not with a view to distribution thereof, and will not sell, offer for sale, pledge,
transfer or otherwise dispose of such shares or any interest therein except in compliance with the
Securities Act and any other applicable federal and states securities laws.



     5.5 Approvals. There are no notices, reports or other filings required to be made by
Parent or any of its Affiliates with, or Consents required to be obtained by Parent or any of its
Affiliates from, any Governmental Authority or other third party in order for Parent and its
applicable Subsidiaries to execute, deliver or perform this Agreement or the Related Agreements or
to consummate the transactions contemplated hereby and thereby, except (a) as set forth in
Section 5.5 of the Parent Disclosure Letter, (b) Consents as may be required under the HSR
Act, (c) Consents as may be required by the NASD, (d) approval of the shareholders of Parent with
respect to the issuance of the Warrants or (e) where the failure to make such notices, reports or
other filings or the failure to obtain such Consents, individually or in the aggregate, would not
reasonably be expected to (i) prevent, impair or delay the consummation of the transactions
contemplated by this Agreement and the Related Agreements or (ii) have or cause a Material Adverse
Effect.



     5.6 SEC Filings and Sarbanes-Oxley Act.



          (a) Parent has filed with or furnished to the SEC all reports, schedules, forms, statements,
prospectuses, registration statements and other documents required to be




38









 







filed or furnished by
Parent since December 31, 2004 (collectively, together with any exhibits and schedules thereto and
other information incorporated therein, the “Parent SEC Documents”).




          (b) As of its filing date, each Parent SEC Document complied, and each such Parent SEC
Document filed subsequent to the date of this Agreement will comply, as to form in all material
respects with the applicable requirements of the Securities Act, the Exchange Act and the
Sarbanes-Oxley Act and the rules and regulations promulgated thereunder, as the case may be.




          (c) As of its filing date (or, if amended or superseded by a filing prior to the date of this
Agreement, on the date of such subsequent filing), each Parent SEC Document filed pursuant to the
Securities Act and the Exchange Act did not, and each such Parent SEC Document filed subsequent to
the date of this Agreement will not, contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading and each such Parent SEC Document is true
and correct in all material respects. Parent is not aware of any facts or circumstances that would
make any previously
filed Parent SEC Document no longer true and correct in any material respect or would make any
statements made therein misleading in any material respect.




          (d) Each Parent SEC Document that is a registration statement, as amended or supplemented, if
applicable, filed pursuant to the Securities Act, as of the date such registration statement or
amendment became effective, did not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the statements therein
not misleading.




          (e) Parent is in compliance with, and has complied, in each case in all material respects with
(i) the applicable provisions of the Sarbanes-Oxley Act and (ii) the applicable listing and
corporate governance rules and regulations of the New York Stock Exchange (the “NYSE”).




          (f) Parent has established and maintains disclosure controls and procedures (as defined in
Rule 13a-15 under the Exchange Act). Such disclosure controls and procedures are designed to
ensure that material information relating to Parent, including its consolidated Subsidiaries, is
made known to Parent’s principal executive officer and its principal financial officer by others
within those entities, particularly during the periods in which the periodic reports required under
the Exchange Act are being prepared. Such disclosure controls and procedures are effective in
alerting in a timely manner Parent’s principal executive officer and principal financial officer to
material information required to be included in Parent’s periodic and current reports required
under the Exchange Act. Parent has not received any correspondence (written or, to its knowledge,
oral) from the SEC, other applicable Governmental Authority questioning the effectiveness of its
disclosure controls and procedures.




          (g) Parent and its Subsidiaries have established and maintained a system of internal control
over financial reporting (as defined in Rule 13a-15 under the Exchange Act) (“internal controls”).
Such internal controls are designed to provide reasonable




39









 







assurance regarding the reliability of
Parent’s financial reporting and the preparation of Parent’s financial statements for external
purposes in accordance with GAAP. Parent has disclosed, based on its most recent evaluation of
internal controls prior to the date of this Agreement, to Parent’s auditors and audit committee (x)
any significant deficiencies and material weaknesses in the design or operation of internal
controls which are reasonably likely to adversely affect Parent’s ability to record, process,
summarize and report financial information and (y) any fraud, whether or not material, that
involves management or other employees who have a significant role in Parent’s internal controls.
Parent has made available to Bancorp prior to the date of this Agreement a summary of any such
disclosures made by Parent’s management to Parent’s auditors and audit committee since December 31,
2004. Parent has not received any correspondence (written or oral) from the SEC or other
applicable Governmental Authority questioning the effectiveness of its disclosure controls and
procedures.




          (h) There are no outstanding loans or other extensions of credit in the form of a personal
loan (within the meaning of Section 402 of the Sarbanes-Oxley Act) made by Parent or any of its
Subsidiaries to any executive officer (as defined in Rule 3b-7
under the Exchange Act) or director of Parent. Parent has not, since the enactment of the
Sarbanes-Oxley Act, taken any action prohibited by Section 402 of the Sarbanes-Oxley Act.




          (i) Each of the principal executive officer and principal financial officer of Parent (or each
former principal executive officer and principal financial officer of Parent, as applicable) have
made all certifications required by Rule 13a-14 and 15d-14 under the Exchange Act and Sections 302
and 906 of the Sarbanes-Oxley Act and any related rules and regulations promulgated by the SEC and
the NYSE, and the statements contained in any such certifications are complete and correct. For
purposes of this Agreement, “principal executive officer” and “principal financial officer” shall
have the meanings given to such terms in the Sarbanes-Oxley Act.




          (j) Since December 31, 2004, there has been no transaction, or series of similar transactions,
agreements, arrangements or understandings, nor are there any proposed transactions as of the date
of this Agreement, or series of similar transactions, agreements, arrangements or understandings to
which Parent or any of its Subsidiaries was or is to be a party, that would be required to be
disclosed under Item 404 of Regulation S-K promulgated under the Securities Act.




     5.7 Financial Statements. The audited consolidated financial statements and unaudited
consolidated interim financial statements of Parent included or incorporated by reference in Parent
SEC Documents fairly present, in conformity with GAAP applied on a consistent basis (except as may
be indicated in the notes thereto), in all material respects the consolidated financial position of
Parent and its consolidated Subsidiaries as of the dates thereof and their consolidated results of
operations and cash flows for the periods then ended (subject, in the case of any unaudited interim
financial statements, to the absence of notes and normal and recurring year-end audit adjustments).



     5.8 Absence of Certain Changes. Except for the matters contemplated by this Agreement or
as otherwise disclosed in Parent’s SEC Documents, since September 30, 2006, the business of Parent
and its subsidiaries has been conducted in the ordinary course



40









 







consistent with past practices, and
there has not been (i) any change in the business, operations, properties, assets condition
(financial or otherwise) or results of the Parent and its subsidiaries taken as a whole which would
have or could reasonably be expected to have or cause, individually or in the aggregate, a Material
Adverse Effect; (ii) any disposition by Parent or any of its subsidiaries of any material asset or
material property other than in the ordinary course of business; (iii) any entry by the Parent or
any of its subsidiaries into any material transaction other than in the ordinary course or as
contemplated herein; or (iv) any change by Parent or any subsidiary in accounting principles or
methods.



     5.9 Absence of Undisclosed Liabilities. None of Parent or any of its subsidiaries is
subject to any claims, liabilities or obligations (whether known, unknown, absolute, accrued,
contingent or otherwise) and, to the Knowledge of Parent, there are no existing conditions,
situations or facts that could reasonably be expected to result in any such claim,
obligation or liability, except (i) liabilities or obligations disclosed and provided for in
the Parent SEC Documents, the financial statements included therein or in the notes thereto, (ii)
claims, liabilities or obligations incurred in the ordinary course of business consistent with past
practice since September 30, 2006 or (iii) claims, liabilities or obligations that would not
reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.



     5.10 Litigation. Except as disclosed in the Parent SEC Documents, (a) there is no
action, suit, investigation, arbitration, litigation or proceeding pending, or, to the Knowledge of
Parent, threatened nor to the Knowledge of Parent has any event occurred or circumstance exist that
may give rise to or serve as a basis for the commencement of any of the same, against or affecting,
Parent or any of its subsidiaries, that has had or would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect or that in any manner challenges or
seeks to prevent, enjoin, alter or materially delay the consummation of the transactions
contemplated hereby or in any Related Agreement, and (b) there is no judgment, decree, injunction,
rule or order of any arbitrator or Governmental Authority outstanding against, or, to the knowledge
of Parent, investigation by any Governmental Authority involving, Parent or any of its material
subsidiaries that would reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect or result in a material impairment in the ability of Parent to consummate
the transactions contemplated by this Agreement.



     5.11 Compliance with Applicable Laws; Regulatory Matters.



          (a) Parent and each of its material Subsidiaries is, and since January 1, 2004 the business of
Parent has been operated, in compliance in all material respects with all material Requirements of
Law. Except as would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect, since January 1, 2004, Parent has not received any written, or, to the
Knowledge of Parent, oral notice from (and otherwise does not have any Knowledge of) any
Governmental Authority that alleges any noncompliance (or that Parent is under any investigation by
any such Governmental Authority for such alleged noncompliance) with any Requirement of Law
relating to the business of Parent and its material subsidiaries.




          (b) (i) Parent and/or the subsidiaries of Parent hold all Permits that are required in order
to conduct the Parent’s business in the manner presently conducted under




41









 







and pursuant to all
Requirements of Law in all material respects; (ii) all such Permits are in full force and effect
and are not subject to any suspension, cancellation, modification, revocation or any proceedings or
investigations related thereto, and, to the knowledge of Parent, no such suspension, cancellation,
modification, revocation, proceeding or investigation is threatened, nor do facts exist which would
reasonably form the basis for any such suspension, cancellation, modification, revocation,
proceeding or investigation that, individually or in the aggregate, would reasonably be expected to
have a Material Adverse Effect; and (iii) no subsidiary of Parent is in default, and no condition
exists that with notice or lapse of time or otherwise would constitute a default, under any such
Permit that, individually or in the aggregate, would reasonably be expected to have a Parent
Material Adverse Effect.




          (c) Neither Parent nor the subsidiaries of Parent has received notice from any regulatory
agency or authority asserting noncompliance with any applicable Requirement of Law, regulation,
order or Permit which assertion has had or could have a Material Adverse Effect. There is no
material order of a Governmental Authority against Parent or any subsidiary of Parent outstanding
or threatened. Except for routine examinations by regulatory agencies and authorities, no
investigation by any regulatory authority with respect to Parent or any Subsidiary of Parent is
pending.




          (d) Parent and each subsidiary of Parent have filed all material reports and other material
filings required to be filed under the rules and regulations of all state and federal regulatory
agencies having jurisdiction over it.




          (e) Neither Parent nor any Subsidiary of Parent is a party to any cease and desist order,
written agreement or memorandum of understanding with, or a party to any commitment letter or
similar written undertaking to, or is subject to any order or directive by, or is a recipient of
any extraordinary supervisory letter from any regulatory agency or authority nor has it been
advised by any regulatory agency or authority that it is contemplating issuing or requesting (or is
considering the appropriateness of issuing or requesting) any such order, directive, written
agreement, memorandum of understanding, extraordinary supervisory letter, commitment letter or
similar written understanding.




          (f) The business of the Parent and its subsidiaries as currently conducted is not subject to
or bound by any Requirement of Law (other than Requirements of Law imposed on similarly situated
broker-dealers) that restricts the Parent’s or any subsidiary’s business or relates to its or their
capital adequacy, credit policies or its management of the Parent’s or any subsidiary’s business.




     5.12 Brokers. No broker, investment banker, financial advisor or other Person is entitled
to any broker’s, finder’s, financial advisor’s or similar fee or commission in connection with the
transactions contemplated by this Agreement and the Related Agreements based upon arrangements made
by or on behalf of Parent or its subsidiaries, except those for which Parent will be solely
responsible.



     5.13 Disclosure. No representation or warranty by Parent or Merger Sub in this
Agreement or any Exhibit or Schedule referred to herein or in any agreement to be delivered
hereunder, and no statement, certificate or other information furnished to the



42









 







Company or Bancorp
by or on behalf of Parent or Merger Sub pursuant hereto or thereto, contains any untrue statement
of a material fact or any omission of a material fact necessary to make the respective statements
contained herein and therein, in light of the circumstances under which the statements were made,
not misleading.



ARTICLE 6



ADDITIONAL COVENANTS OF THE PARTIES




     6.1 Confidentiality. In addition to the terms, provisions and covenants of the Confidentiality Agreement dated
October 2006, between Parent and the Company, which shall remain in full force and effect until
Closing, (i) Parent acknowledges that, in the course of its investigation of the Company, Parent
and its representatives have and will become aware of Confidential Information and documents of the
Company, and that its use of such Confidential Information and documents, or communication of such
Confidential Information to third parties, could be detrimental to the Company, and (ii) Bancorp
and the Company acknowledge that, in the course of its investigation of Parent, Bancorp and the
Company and their respective representatives have and will become aware of Confidential Information
and documents of Parent, and that its use of such Confidential Information and documents, or
communication of such Confidential Information to third parties, could be detrimental to Parent.
Each Party (a “Receiving Party”) covenants that prior to Closing all information and
documents concerning any other Party (a “Disclosing Party”) reviewed by a Receiving Party
or its representatives in connection with this Agreement or the transactions contemplated hereby
shall be maintained in confidence and shall not be disclosed or used by the Receiving Party or its
representatives without the Disclosing Party’s prior written consent, unless such information (i)
was, is now or becomes publicly available, (ii) is required to be disclosed pursuant to any
Requirement of Law, (iii) was disclosed to a Receiving Party by a third party not subject to any
duty of confidentiality to Bancorp or the Company, or Parent, as the case may be, or (iv) in the
case of Parent or Bancorp, required to be disclosed by the rules of a securities exchange on which
Parent or Bancorp may from time to time be listed or the SEC. In the event that a Receiving Party
or any of its representatives becomes legally compelled to disclose any such Confidential
Information or documents referred to in this Section 6.1, such Receiving Party shall, to the extent
reasonably practicable, provide the Disclosing Party with prompt written notice before such
disclosure, sufficient to enable the Disclosing Party either to seek a protective order, at their
expense, or another appropriate remedy preventing or prohibiting such disclosure or to waive
compliance with the provisions of this Section 6.1, or both. With respect to information and
documents related to the Receiving Party, at the Disclosing Party’s request, in the event that the
Closing shall not occur, or as soon as practicable following termination of this Agreement, (i) the
Receiving Party shall, and shall cause its representatives to, promptly destroy all Confidential
Information and documents concerning the Disclosing Party (including any copies thereof or extracts
therefrom); (ii) an officer of the Receiving Party shall certify to the Disclosing Party that such
destruction has occurred; and (iii) the Receiving Party shall and shall cause its representatives
to keep confidential and not use any such Confidential Information or documents unless required to
disclose such Confidential Information or documents pursuant to judicial order, regulation or
Requirements of Law.



43









 





     6.2 Conduct of Business Until Closing. Except as otherwise provided in this Agreement, or
as Parent may otherwise consent to (which consent shall not be unreasonably withheld), on and after
the date hereof and prior to the Closing Date, the Company shall:



          (a) not amend the organizational documents of the Company or any Subsidiary;




          (b) not effect any transactions relating to the disposition of any material part of the assets
of the Company, other than in the Ordinary Course;




          (c) (i) conduct the Business in the Ordinary Course, (ii) use commercially reasonable efforts
to preserve the Company’s current business organization and existing business relationships, (iii)
maintain the Company’s property in substantially the condition currently existing, normal wear and
tear excepted, and (iv) not intentionally take or fail to take any action outside the Ordinary
Course that would cause any of the representations and warranties set forth in Article III to be
untrue or incorrect in any material respect at any time on or after the date hereof and through the
Closing Date;




          (d) not make any distribution or declare, pay or set aside any dividend with respect to, or
split, combine, redeem, reclassify, purchase or otherwise acquire directly, or indirectly, any
equity interests or shares of capital stock of, or other equity or voting interest in, the Company
or any Subsidiary, or make any other changes in the capital structure of the Company or any
Subsidiary other than the issuance of shares of Company Stock in connection with the exercise of
Company Rights to acquire shares of Company Stock;




          (e) except as required by Requirements of Law or an existing Plan or Contract and except with
respect to the arrangements expressly contemplated to be implemented by the Company prior to the
Closing pursuant to Section 6.5 or Section 7.5 hereof, not (A) make or agree to make any material
increase in compensation, pension, or other fringe benefits or perquisites payable to any officer
or investment professional or other employee of the Company or any Subsidiary other than routine
wage or salary increases in the Ordinary Course (B) grant or agree to grant any severance or
termination pay or enter into any Contract to make or grant any severance or termination pay or pay
any bonus, other than those set forth on Section 6.2(e) of the Company Disclosure Letter,
(C) grant or agree to grant or accelerate the time of vesting or payment of any awards under a Plan
(including any equity rights to acquire any equity interests of the Company or any Subsidiary)
other than as required by Requirements of Law or in accordance with or to facilitate the
transactions contemplated by this Agreement (including the vesting of any Company Rights), or (D)
establish, adopt, amend, modify or terminate any Plan; provided, however, that the
foregoing shall not prohibit the Company from employing financial consultants in the Ordinary
Course;




          (f) neither (i) merge with or into, consolidate with or acquire all or substantially all of
the stock or assets of any other Person; (ii) enter into, materially amend or become subject to any
limited liability company agreement, joint venture, partnership, strategic alliance, shareholders’
agreement, co-marketing, co-promotion, joint development or similar arrangement, except in the
Ordinary Course; (iii) enter into, terminate or amend in




44









 







any material respect any material Contract
(except to the extent necessary to obtain any consents for transfer contemplated by this
Agreement); (iv) amend, breach, terminate or allow to lapse any material Permit relating to the
Business or the Subsidiaries, as applicable that would have or cause a Material Adverse Effect,
other than (A) amendments required by Requirements of Law or (B), any such action in the Ordinary
Course, or (v) except in the Ordinary Course, sell, lease or grant any option to sell or lease,
give a security interest in or otherwise create any Lien (other than a Permitted Lien) on any of the assets of the Company;




          (g) not make any individual commitment or agreement for capital expenditures in excess of
$400,000, or $1,000,000 in the aggregate, except as set forth on the capital budget set forth on
Section 6.2(g) of the Company Disclosure Letter;




          (h) not sell, license or transfer any Intellectual Property other than in the Ordinary Course;




          (i) not pay, discharge, settle or satisfy any material claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise) in excess of $150,000, other
than the payment, discharge or satisfaction, in the Ordinary Course or in accordance with their
terms, of liabilities reflected or reserved against in the Company Financial Information (or the
notes thereto), or not required by GAAP to be so reflected or reserved, or incurred since the date
of the Company Financial Information in the Ordinary Course, or waive any material benefits of, or
agree to modify any material confidentiality, standstill, non-solicitation or similar agreement to
which the Company is a party;




          (j) not incur, assume or guarantee (including by way of any agreement to “keep well” or of any
similar arrangement) or cancel or waive any claims under any Indebtedness or amend or modify the
terms relating to any such Indebtedness, except for any such incurrence, assumption or guarantee of
Indebtedness or amendment of the terms of such Indebtedness in the Ordinary Course;




          (k) not create, issue or sell, or grant any option or other right to subscribe, purchase or
redeem, any of its securities, provided that the foregoing shall not prohibit the Company
from issuing shares of Company stock in connection with the exercise of any Company Rights that
have otherwise been disclosed to Parent on Section 3.20 of the Company Disclosure Letter;




          (l) not change any material financial accounting principle, method or practice (including any
principles, methods or practices relating to the estimation of reserves or other liabilities),
other than changes required by GAAP or Requirements of Law or required to be implemented during
such period;




          (m) not enter into any binding agreement or arrangement with the IRS (or any similar Tax
authority), with respect to the Company, which relates to any period or periods after the Effective
Time, nor change any material Tax accounting method or practice;




45









 








          (n) use commercially reasonable efforts to comply in all material respects with all applicable
material Requirements of Law affecting or relating to the Company; and




          (o) not enter into any agreement (conditional or otherwise) to do any of the foregoing.




     6.3 Covenant Not To Compete.



          (a) Non-Compete. Bancorp acknowledges and agrees that the Business is conducted throughout
the U.S. (the “Territory”) and that the Company’s reputation and goodwill are an integral
part of its business success throughout the Territory. If Bancorp deprives Parent of the Company’s
goodwill or in any manner utilize its reputation and goodwill in competition with Parent, Parent
will be deprived of the benefits it has paid for pursuant to this Agreement. Accordingly, as an
inducement for Parent to enter into this Agreement, Bancorp agrees that for a period ending on the
second anniversary of the Closing Date (the “Non-Competition Period”), Bancorp shall not,
without Parent’s prior written consent, directly or indirectly, own a controlling interest in, or
manage or operate, any company, organization or business in the Territory, that is engaged in the
broker/dealer business; provided, however, the foregoing shall not prohibit Bancorp
from acquiring any thrift or bank that owns and operates a broker/dealer incidental to and
immaterial in amount relative to Bancorp’s core banking operations; provided,
further, that any such acquired broker/dealer business shall be subject to the
non-solicitation obligations set forth and described in Section 6.3(b) below; provided,
further, however, that in the event Bancorp is acquired by any third party, such
third party shall not be subject to the restrictions set forth in this Section 6.3(a) but shall be
subject to the non-solicitation provisions set forth in Section 6.3(b) below. In the event the
agreement in this Section 6.3 shall be determined by a court of competent jurisdiction to be
unenforceable by reason of its extending for too great a period of time or over too great a
geographical area or by reason of its being too extensive in any other respect, it shall be
interpreted to extend only over the maximum period of time for which it may be enforceable and/or
over the maximum geographical area as to which it may be enforceable and/or to the maximum extent
in all other respects as to which it may be enforceable, all as determined by such court in such
action.




          (b) No Solicitation. During the period beginning on the date of this Agreement and ending on
the second anniversary of the Closing Date, neither Bancorp nor any of its Controlled Affiliates
shall, directly or indirectly, hire, offer to hire or entice away (whether as an employee or
consultant) or in any other manner persuade or attempt to persuade any officer, employee or agent
of the broker-dealer business of Parent to discontinue his or her relationship with Parent or any
of its subsidiaries; provided, however, that this Section 6.3(b) shall not apply
(i) if such officer, employee or agent has been terminated by Parent, the Company or any of their
respective subsidiaries for any reason or (ii) if such officer, employee or agent is hired as a
result of a general solicitation for employment not specifically targeted to employees of Parent,
the Company or any of their respective subsidiaries engaged in the broker/dealer business.




          (c) Remedies. Bancorp acknowledges that a breach of the covenants contained in this Section
6.3 will cause irreparable damage to Parent, the exact amount of which will be difficult to
ascertain, and that the remedies at law for any such breach will be




46









 







inadequate. Accordingly,
Bancorp agrees that if it breaches the covenants contained in this Section 6.3, in addition to any
other remedy that may be available at law or in equity, Parent shall be entitled to specific
performance and injunctive relief, without posting bond or other security.




     6.4 Taxes.



          (a) All transfer, documentary, sales, use, stamp, registration and other such Taxes and all
conveyance fees, recording charges and other fees and charges (including any penalties and
interest) incurred in connection with consummation of the transactions contemplated by this
Agreement shall be paid by Bancorp when due, and Bancorp will, at its own expense, file all
necessary Tax Returns and other documentation with respect to all such Taxes, fees and charges, and
if required by Requirements of Law, Parent will, and will cause its Affiliates to, join in the
execution of any such Tax Returns and other documentation.




          (b) [reserved]




          (c) Other than the consolidated federal Income Tax Return of Bancorp of which the Company is a
member, the Company shall prepare, or cause to be prepared, and file, or cause to be filed, all Tax
Returns required to be filed by the Company and its subsidiaries for any taxable year or period
ending on or before the Closing Date that are due after the Closing Date. The Company shall be
responsible for payment of any Taxes shown due on such Tax Returns. Such Tax Returns shall be
prepared in a manner consistent with the prior practices of the Company and its subsidiaries,
except as required by any applicable Requirement of Law.




          (d) Parent shall prepare, or cause to be prepared, and file, or cause to be filed, all
non-federal Tax Returns pertaining to the Company and its subsidiaries for any taxable year or
period commencing prior to the Closing Date and ending after the Closing Date (a “Straddle
Period”). The Company shall be responsible for payment of any Taxes shown as due on such Tax
Returns.




          (e) Parent and Bancorp agree to furnish or cause to be furnished to each other, upon request,
as promptly as practical, such information (including reasonable access to books and records, Tax
Returns and Tax filings) and assistance as is reasonably necessary for the filing of any Tax
Return, the conduct of any Tax audit, and for the prosecution or defense of any claim, suit or
proceeding relating to any Tax matter. Parent and Bancorp shall cooperate with each other in the
conduct of any Tax audit or other Tax proceeding and each shall execute and deliver such powers of
attorney and other documents as are necessary to carry out the intent of this Section 6.4. Any Tax
audit or other Tax proceeding shall be deemed to be a Third Person Claim subject to the procedures
set forth in Article 9 of this Agreement.




          (f) The Company’s Reference Balance Sheet reflects as an asset an intercompany receivable
associated with federal Income Tax benefits allocable to the Company due from Bancorp in the amount
of approximately $3,150,000 as of November 30, 2006. Such intercompany receivable shall be
increased or decreased, as the case may be, by any taxable income or loss of the Company and its
subsidiaries with respect to any




47









 







Pre-Closing Period after November 30, 2006, multiplied by the
maximum federal statutory rate (it being understood that no adjustment shall be made in respect of
state income tax liabilities or benefits for such period). For purposes of determining such
increase or decrease, the taxable income or loss of the Company and its subsidiaries shall be
calculated on a separate, stand-alone basis, consistent with past practice. Bancorp shall pay to
Parent
no later than thirty (30) days after the Closing Date an amount equal to such intercompany
receivable as increased or decreased pursuant to this Section 6.4(f), and subject to subsequent
adjustment as follows. In the event a subsequent review of any Pre-Closing Period after November
30, 2006 results in an adjustment to such loss, deduction or credit of the Company and its
subsidiaries, Parent or Bancorp, as the case may be, shall reimburse the amount of such incremental
federal Income Tax to Parent or Bancorp, respectively, but in no event shall any adjustment be made
to the amount of the November 30, 2006 receivable in respect of any periods ending on or before
November 30, 2006. Other than as provided in this Section 6.4(f), after the Effective Time, the
Company and its subsidiaries will not be a party to, bound by or have any obligation under any Tax
sharing agreement, Tax indemnification agreement or similar contract or arrangement with Bancorp or
its Affiliates.




     6.5 Employees of the Company.



          (a) Plans to be Withdrawn from or Transferred by the Company. Bancorp hereby agrees that it
shall take or cause the Company to take all necessary action to cause the withdrawal of the Company
and its Subsidiaries, as participating employers, from all Company Benefit Plans in which Bancorp
is the plan sponsor, effective as of the Closing Date. Bancorp further agrees to take all
necessary action prior to Closing to withdraw from any Company Benefit Plan in which the Company or
any Subsidiary is the plan sponsor and Bancorp is a participating employer.




          (b) Retention Plans. Parent shall cause a retention plan to be established under which an
aggregate of up to approximately $42,000,000 may be awarded to eligible Business Employees as
determined by Parent.




          (c) Senior Management Agreements. Prior to the Closing Date, the Company shall cause the
change of control agreements and all other agreements and compensation arrangements between the
Company or any of its subsidiaries and the senior management officers identified on Schedule
6.5(c) to be terminated, and no further payments shall be made thereunder. Such terminations
shall be in form and substance reasonably acceptable to Parent and Bancorp. In satisfaction of all
amounts otherwise payable under such agreements as of the Closing, and in consideration of the
termination of such agreements, each such employee shall receive the consideration set forth next
to his or her name on Schedule 6.5(c) with respect to such employee and subject to such
other terms and conditions, including the time and manner of payment, as set forth in a separate
agreement between the parties, which shall be in form and substance reasonably acceptable to
Parent; provided, however, that the aggregate amount for all such employees will not exceed
the aggregate amount set forth on such schedule. The Substituted Cash Consideration payable
pursuant to Section 2.3 hereof shall be reduced on a dollar-for-dollar basis (on an after-tax basis
at the statutory tax rate) to the extent that the amounts set forth on Schedule 6.5(c)
exceed $7,000,000, but in no event shall any such reduction pursuant to this Section 6.5(c) exceed
$799,866 in the aggregate.




48









 








          (d) Severance Payments. Promptly following the execution and delivery of this Agreement,
Parent shall establish reasonable severance policy provisions to facilitate the transition of the
Company’s operations following Closing. In addition, the Company shall cause terminated employees
to receive their pro-rata vested portion of existing deferred
compensation grants in accordance with the Company’s plan. Notwithstanding the foregoing, in
no event shall Parent, Bancorp or the Company be required to take any action that would cause
deferred compensation to be immediately includible in income or subject to additional taxes or
penalties, or to otherwise violate, Section 409A of the Code.




          (e) Retiree Welfare Benefits. Except as required pursuant to any Requirement of Law, Section
6.5(f) hereof and Sections 601 through 608 of ERISA, the Company, its Subsidiaries and Parent shall
not have any obligation to provide welfare benefits to any former employees, officers, directors or
consultants of the Company or its Affiliates after the Closing Date.




          (f) COBRA. After the Closing Date, the Company shall be responsible for the continuation of
health plan coverage, in accordance with the requirements of COBRA and Sections 601 through 608 of
ERISA, for any employee of the Company or its Subsidiaries, or qualified beneficiary under a group
health plan of the Company, who, prior to the Effective Time, is receiving or is entitled to
receive COBRA benefits or who loses health coverage in connection with the transactions
contemplated in this Agreement.




          (g) No Third-Party Beneficiary. No provision of this Agreement, including without limitation
this Section 6.5, shall create any third-party beneficiary rights in any Person, including without
limitation employees or former employees (including any beneficiary or dependent thereof) of the
Company or Bancorp, unions or other representatives of such employees or former employees, or
trustees, administrators, participants, or beneficiaries of any Plan, and no provision of this
Agreement, including this Section 6.5, shall create such third-party beneficiary rights in any such
Person in respect of any benefits that may be provided, directly or indirectly, under any Plan,
including the currently existing Plan.




     6.6 Certain Waivers. Effective upon the Closing, Bancorp shall be deemed to have
irrevocably waived, released and discharged the Company, the Surviving Corporation and any of their
respective subsidiaries from any and all liabilities and obligations to it or him of any kind or
nature whatsoever, in its or his capacity as a shareholder, manager, member, officer or director of
the Company, in each case whether absolute or contingent, liquidated or unliquidated, known or
unknown, and whether arising under any agreement or understanding (other than under this Agreement
or any of the Related Agreements) or otherwise at law or equity, and Bancorp shall be deemed to
have agreed that it shall not seek to recover any amounts in connection therewith or thereunder
from any of the Company, the Surviving Corporation or their respective subsidiaries; provided
that the waivers contained in this Section 6.6 shall not apply to (i) claims arising under this
Agreement or any Related Agreement, (ii) any claims for which the facts or circumstances giving
rise to such claim first arise following the Closing Date, or (iii) any claims covered by directors
and officers insurance policies of the Company existing on the day prior to the Closing Date. In
furtherance of the foregoing, Bancorp shall be deemed to have agreed that it shall not make any
claim for indemnification against the Company or the Surviving Corporation or any of



49









 







their
respective subsidiaries solely by reason of the fact that Bancorp is or was a shareholder or any
employee of Bancorp who was a member, director, manager, officer, employee or agent of the Company
or any
individual is or was serving at the request of the Company or entity (whether such claim is for
judgments, damages, penalties, fines, costs, amounts paid in settlement, losses, expenses or
otherwise and whether such claim is pursuant to any statute, charter document, bylaw, agreement or
otherwise) with respect to any action, suit, proceeding, complaint, claim or demand brought against
Bancorp.



     6.7 Books and Records. From and after the Closing, subject to appropriate confidentiality
agreements, Parent shall provide Bancorp and its representatives with reasonable access, for any
reasonable purpose, including but not limited to (a) preparing Tax Returns, (b) defending any claim
in respect of which a notice of claim has been served on Bancorp, or (c) reviewing the books and
records to determine the amount due as Earn-Out Consideration as referred to in Section 2.3, during
normal business hours, to all relevant books and records, including, but not limited to, accounting
and Tax records, sales and purchase documents, notes, memoranda, and any other electronic or
written data (“Records”). Unless otherwise consented to in writing by Bancorp, Parent
shall not, for a period of 10 years following the date hereof or such longer period as retention
thereof is required by applicable Requirements of Law, destroy, alter or otherwise dispose of (or
allow the destruction, alteration or disposal of) any of the Records without first offering to
surrender such Records to Bancorp.



     6.8 Public Announcements. Bancorp, Parent and the Company shall consult with each other
before issuing any press release, making any other public statement or scheduling any press
conference or conference call with investors or analysts with respect to this Agreement or the
transactions contemplated hereby and, except as may be required by any Requirements of Law or any
listing agreement with or rule of any national securities exchange or association, shall not issue
any such press release, make any such other public statement or schedule any such press conference
or conference call before such consultation.



     6.9 Filings and Approvals. (a) Immediately following execution of this Agreement the
Parties shall proceed expeditiously and in good faith to make such filings, seek such approvals and
take all such other actions as may be reasonably necessary to satisfy the conditions to Closing,
including, without limitation, making any filings required to be made pursuant to the HSR Act and
filings to be made with the NASD, promptly, but in each case no later than January 16, 2007. In
connection with any filings made pursuant to the HSR Act, the Parties agree to elect to seek early
termination of the applicable waiting period. Any and all filing fees in respect of filings under
the HSR Act shall be split equally between Parent and Bancorp. Each Party shall consult with the
other Party with respect to the obtaining of all material Consents of all Governmental Authorities
necessary or advisable to consummate the transactions contemplated by this Agreement to the extent
reasonably practicable, and each Party shall keep the other Party apprised of the status of
material matters relating to completion of the transactions contemplated by this Agreement. Each
Party shall, upon request, furnish the other Party with all information concerning itself, its
subsidiaries, directors, officers and shareholders and such other matters as may be reasonably
necessary or advisable in
connection with any filing, notice or application made by or on behalf of such other Party or any
of its subsidiaries to any third party or Governmental Authority; provided,
however, in the event that information is required



50









 







regarding any individual person, such
information need not be provided to any other Party. The Company shall use commercially reasonable
efforts to obtain all necessary Consents required hereunder.



     (b) To the extent required under Parent’s Rights Agreement, dated July 30, 1996, as amended
(the “Rights Plan”), or applicable state law, and without limiting the standstill agreement
set forth in the Registration Rights Agreement, Parent’s Board of Directors shall take all actions
reasonably necessary to approve for all purposes the ownership by Bancorp, together with its
Affiliates and Associates, of Parent Common Stock representing 24.99% or less of the Voting Power
of Parent.



     6.10 Exclusivity. Bancorp and the Company will not and will not permit their respective
officers, directors, employees or other agents or representatives to, at any time prior to the
termination of this Agreement under Section 10.1, directly or indirectly, (i) take any action to
solicit, initiate or encourage the making of any Acquisition Proposal, or (ii) discuss or engage in
negotiations concerning any Acquisition Proposal with, or further disclose any non-public
information relating to the Business to, any Person in connection with an Acquisition Proposal, in
each case, other than Parent and its representatives. The term “Acquisition Proposal” as
used herein means any offer or proposal for the acquisition of the Company or the Business or any
portion thereof (other than in the Ordinary Course or with respect to obsolete equipment), whether
by way of merger, consolidation or statutory share exchange or the acquisition of shares of capital
stock, the acquisition of assets or similar transaction.



     6.11 Further Assurances; Cooperation. From and after the Closing, the Parties shall take
such acts and execute such documents and instruments as may be reasonably required to make
effective the transactions contemplated hereby. On or after the Closing Date, the Parties shall,
on request, cooperate with one another by furnishing any additional information, executing and
delivering any additional documents and instruments, including Contract assignments, and doing any
and all such other things as may be reasonably requested by the Parties or their counsel to
consummate or otherwise implement the transactions contemplated by this Agreement.



     6.12 Management of Surviving Corporation after Closing. Subject to the provisions of
Section 2.3(d) hereof, Parent shall conduct the private client business of the Surviving
Corporation throughout the PCCP Period, and the investment banking business of the Surviving
Corporation throughout the IBCP Period, in each case, in good faith exercising its reasonable
business judgment. Without limiting the generality of the foregoing, Parent shall not take, with
respect to the private client business of the Surviving Corporation, throughout the PCCP Period,
and with respect to the investment banking business of the Surviving Corporation, throughout the
IBCP Period, any action the primary intention of which is to reduce the Private Client Contingent
Payment Amount or the Investment Banking Contingent Payment Amount, respectively.



     6.13 Shareholder Meeting; Proxy Material. Parent shall cause a meeting of its
shareholders (the “Parent Shareholder Meeting”) to be duly called and held as soon as
reasonably practicable after the execution hereof for the purpose of voting on the approval of the
issuance of the Warrants pursuant to this Agreement and such other matters as may



51









 







be necessary to
consummate the transactions contemplated by this Agreement, provided that in the
alternative, Parent may cause such matters to be included in the matters to be voted on at Parent’s
annual meeting of shareholders in 2007, in lieu of holding a special meeting of shareholders,
provided that in no event shall such Parent Shareholder Meeting occur later than June 30,
2007. The Board of Directors of Parent shall recommend approval of the issuance of the Warrants
and such other matters by Parent’s shareholders. In connection with such meeting, Parent shall (i)
promptly prepare and file with the SEC, use its best efforts to respond to the SEC’s comments and
thereafter mail to its shareholders as promptly as practicable following SEC approval, the Proxy
Statement with respect to such Parent Shareholder Meeting and all other proxy materials required
for such meeting, (ii) use its reasonable best efforts to obtain Parent shareholder approval and
(iii) otherwise comply with all legal requirements applicable to such meeting.



     6.14 No Amendment of Merger Sub Articles or Bylaws. Except as otherwise required to
comply with applicable Requirements of Law, Merger Sub shall not, and Parent shall not cause Merger
Sub to, amend its articles of incorporation or bylaws to remove or adversely modify any provisions
relating to director and officer indemnification or exculpation.



     6.15 Notices of Certain Events. Each of Parent and the Company shall promptly notify
the other of:



          (a) any notice or other communication from any Person alleging that the consent of such Person
is or may be required in connection with the transactions contemplated by this Agreement;




          (b) any notice or other communication from any Governmental Authority in connection with the
transactions contemplated by this Agreement;




          (c) any actions, suits, claims, investigations or proceedings commenced or threatened against,
relating to or involving or otherwise affecting the Company or any of its Subsidiaries or Parent
and any of its Subsidiaries, as the case may be, that, if pending on the date of this Agreement,
would have been required to have been disclosed pursuant to any Section of Article 3 or Article 5
of this Agreement (as the case may be) or that relate to the consummation of the transactions
contemplated by this Agreement;




          (d) any material inaccuracy of any representation or warranty contained in this Agreement at
any time during the term of this Agreement that could reasonably be expected to cause the
conditions to closing set forth in Article 7 and Article 8 hereof not to be satisfied in any
material respect; and




          (e) any failure of a Party to materially comply with or materially satisfy any covenant,
condition or agreement to be complied with or satisfied by such Party hereunder; provided,
however, that the delivery of any notice pursuant to this Section shall
not limit or otherwise affect the remedies available hereunder to the Party receiving that
notice.




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     6.16 Stock Exchange Listing. Parent shall cause the shares of Parent Common Stock
issuable to the Shareholders hereunder to be approved for listing and listed on the NYSE, subject
to official notice of issuance, prior to the Closing Date. Parent shall cause, no later than the
date of issuance of the Warrants, the shares of Parent Common Stock issuable upon exercise of such
Warrants to be issued and delivered in accordance with Section 2.3 to be approved for listing and
listed on the NYSE.



     6.17 Bank Holding Company Act. So long as Bancorp owns 10% or more of the voting
securities of Parent, Parent shall take all steps within its reasonable control to ensure that
Bancorp is not deemed or considered a bank holding company subject to regulation under the Bank
Holding Company Act, provided that Parent shall have no liability if Bancorp does not
execute or perform the requirements of a “Crown X” agreement in the form required by the Federal
Reserve to the extent applicable to it. To the extent restricted by the Bank Holding Company Act,
Parent shall have no obligation under this Agreement or otherwise to issue to Bancorp a number of
shares of Parent Common Stock or other voting securities (including shares of Parent Common Stock
issuable pursuant to the Warrants and, if applicable, as the Earn-Out Consideration) which would
result in Bancorp holding in excess of 24.99% of the voting securities of Parent.



     6.18 Tax Free Treatment. For purposes of any and all Tax returns or other filings
required under the Code or other applicable Requirements of Law to be made following the Closing by
Parent, the Surviving Corporation, Bancorp or any of their respective Affiliates, any and all of
such Tax returns and other filings shall consistently treat the transactions contemplated hereunder
as a tax-free reorganization pursuant to the provisions of Section 368(a) of the Code and none of
Parent, the Surviving Corporation, Bancorp or any of their respective Affiliates shall take any
position contrary to the foregoing.



     6.19 Company Directives. Parent covenants and agrees with Bancorp that during the
period commencing on the date hereof and continuing until the Closing, none of Parent nor any of
its Affiliates shall, directly or indirectly, give any directive to any Business Employee to
change, alter or otherwise modify the Business or any compensation payable to any Business Employee
in any respect, in either case without the consent of Bancorp. Parent further agrees that neither
it nor any of its Affiliates shall enter into any agreement or arrangement with the Company or any
of its subsidiaries on or prior to the date hereof without the prior written consent of Bancorp.



     6.20 PCCP and IBCP Period Reports. Parent shall provide Bancorp with a preliminary,
non-binding written report every ninety (90) days during the PCCP Period and the IBCP Period,
respectively, setting forth (i) in the case of the PCCP Period, the estimated Production relating
to each Subject Producer during such period and the aggregate estimated Production and (ii) in the
case of the IBCP Period, the estimated amount of Investment Banking Fees earned during such period.



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ARTICLE 7



CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT AND MERGER SUB




     The obligation of Parent and Merger Sub to proceed with the Closing shall be subject to the
satisfaction, on or prior to the Closing Date, of each of the following conditions precedent, any
of which may be waived in whole or in part by Parent:



     7.1 Accuracy of Representations and Warranties and Performance of Obligations. All
representations and warranties made by the Company and Bancorp pursuant to this Agreement shall be
true and correct in all material respects, except for those representations and warranties that are
qualified as to materiality which shall be true and correct in all respects, on and as of the
Closing Date with the same effect as if such representations and warranties had been made on and as
of the Closing Date (other than representations or warranties that address matters only as of a
certain date, which shall be true and correct in all material respects as of such certain date),
except to the extent of any change expressly permitted by the terms of this Agreement or expressly
consented to in writing by Parent. The Company shall have performed or complied in all material
respects with all covenants, agreements and conditions contained in this Agreement required to be
performed or complied with at or prior to the Closing. Each of the Company and Bancorp shall
deliver to Parent at the Closing a certificate certifying that the conditions stated in this
Section 7.1 have been fulfilled by the Company or Bancorp, as the case may be.



     7.2 Consents and Approvals. All material filings with applicable Governmental Authorities
shall have been made and any necessary Consents required from such Governmental Authorities shall
have been obtained and shall be in full force and effect, except for such Consents and approvals
from Governmental Authorities, the failure of which to obtain would not constitute a violation of
any Requirement of Law or have or cause a Material Adverse Effect.



     7.3 No Litigation or Contrary Judgment. On the Closing Date, no valid Order, executive
order, stay, decree, judgment or injunction shall be in effect which prohibits or prevents the
consummation of the transactions contemplated by this Agreement.



     7.4 No Material Adverse Change. There shall not have occurred after the date hereof any
event that has had or reasonably would be expected to have a Material Adverse Effect with respect
to the Business.



     7.5 Certain Employee Matters. Neither the Company nor Parent shall have notice of any
previously undisclosed compensation agreements or arrangements with respect to such Business
Employees in excess of $1,000,000 in the aggregate; provided, however, that the
foregoing shall not be a condition to Closing if Bancorp agrees to a reduction of the Substituted
Cash Consideration equal to the full extent of such excess. Each of the agreements referred to in
Section 6.5(c) hereof shall remain in full force and effect. Parent
shall have received evidence reasonably satisfactory to it that the Company Rights shall be
cancelled and terminated effective as of Closing as provided in Section 2.5(c).



     7.6 Deliveries at Closing. At Closing, the Company, Bancorp or the Shareholders, as
appropriate, shall deliver or cause to be delivered to Parent:



          (a) certificates representing all the Shares, free and clear of all Liens;




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          (b) the Registration Rights Agreement, duly executed by the Shareholders who are a party
hereto;




          (c) from Day Pitney LLP, counsel to the Company, an opinion of such counsel, dated the Closing
Date, in form and substance reasonably acceptable to Parent, and from Stearns Weaver Miller
Weissler Alhadeff & Sitterson, P.A., counsel to the Bancorp, an opinion of such counsel, dated the
Closing Date, in form and substance reasonably acceptable to Parent;




          (d) the written resignation of each member of the Board of Directors and to the extent
requested by Parent, each officer of the Company and its Subsidiaries identified by Parent;




          (e) all consents and approvals from Governmental Authorities;




          (f) a certificate of good standing of the Company and its Subsidiaries, dated within five (5)
Business Days of the Closing Date, from the New Jersey Secretary of State;




          (g) all share transfer books, minute books and other corporate records of the Company and its
subsidiaries;




          (h) a copy, certified by the Secretary of the Company to be true, complete and correct as of
the Closing Date, of the articles or certificate of incorporation, bylaws and resolutions of the
shareholders and board of directors of the Company, authorizing and approving the transactions
contemplated hereby and the incumbency of certain officers;




          (i) a copy, certified by the Secretary of Bancorp to be true, complete and correct as of the
Closing Date, of the resolutions of the board of directors of Bancorp, authorizing and approving
the transactions contemplated hereby;




          (j) the certificate required to be delivered pursuant to Section 7.1;




          (k) such other customary documents, instruments or certificates as shall be reasonably
requested by Parent and as shall be consistent with the terms of this Agreement.




ARTICLE 8



CONDITIONS PRECEDENT TO OBLIGATIONS OF BANCORP AND THE COMPANY




     The obligation of the Company and Bancorp to proceed with the Closing shall be subject to the
satisfaction, on or prior to the Closing Date, of each of the following conditions precedent, any
of which may be waived in whole or in part by Bancorp:



     8.1 Accuracy of Representations and Warranties of Parent and Merger Sub and Performance of
Obligations. All representations and warranties made by Parent in this Agreement shall be true
and correct in all material respects, except for those representations



55









 







and warranties that are
qualified as to materiality which shall be true and correct in all respects, on and as of the
Closing Date with the same effect as if such representations and warranties had been made on and as
of the Closing Date (other than representations or warranties that address matters only as of a
certain date, which shall be true and correct in all material respects as of such certain date),
except to the extent of any change permitted by the terms of this Agreement or consented to by
Bancorp. Parent shall have performed or complied in all material respects with all covenants,
agreements and conditions contained in this Agreement on its part required to be performed or
complied with at or prior to the Closing. Parent shall deliver to Bancorp at the Closing a
certificate of an officer of Parent certifying that the conditions stated in this Section 8.1 have
been fulfilled.



     8.2 Consents and Approvals. All filings with Governmental Authorities shall have been made
and any necessary Consents required from such Governmental Authorities shall have been obtained and
shall be in full force and effect, except for such Consents and approvals of Governmental
Authorities, the failure of which to obtain would not constitute a violation of any Requirement of
Law or have or cause a Material Adverse Effect.



     8.3 NYSE Listing. The shares of Parent Common Stock to be issued as the Initial Share
Consideration shall have been approved for listing on the NYSE.



     8.4 No Litigation or Contrary Judgment. On the Closing Date, no valid Order, executive
order, stay decree, judgment or injunction shall be in effect which prohibits or prevents the
consummation of the transactions contemplated by this Agreement.



     8.5 No Material Adverse Change. There shall not have occurred after the date hereof any
event that has had or reasonably would be expected to have a Material Adverse Effect on the
business of the Parent and its operating subsidiaries, considered as a whole.



     8.6 Deliveries of Parent at Closing. At Closing Parent shall deliver, or cause to be delivered, to Bancorp (on behalf of the
Shareholders):



          (a) certificates evidencing the shares of Parent Common Stock to be issued at Closing pursuant
to Section 2.3(a) hereof, duly and validly issued by Parent;




          (b) the Warrants, duly executed by Parent; provided, however, that if the shareholders of
Parent have not approved the issuance of the Warrants prior to the Closing, then the Warrants shall
be delivered within two (2) Business Days following such shareholder approval;




          (c) by cash or wire transfer, the Substituted Cash Consideration described in Section 2.3, in
accordance with wire transfer instructions delivered to Parent by the recipients of such
Substituted Cash Consideration;




          (d) the Registration Rights Agreement, duly executed by Parent;




          (e) the certificate required to be delivered pursuant to Section 8.1;




          (f) a certificate of good standing of Parent, dated within five (5) Business Days of the
Closing Date, from the Delaware Secretary of State;




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          (g) an opinion of Bryan Cave LLP, in form and substance reasonably acceptable to Bancorp; and




          (h) such other customary documents, instruments or certificates as shall be reasonably
requested by Bancorp and as shall be consistent with the terms of this Agreement.




     8.7 Certificate. Parent and Merger Sub shall deliver to Bancorp and the Company a
certificate executed by the Secretary of each of Parent and Merger Sub certifying as of the Closing
Date (x) a true and correct copy of the Articles or Certificate of Incorporation, as applicable,
and bylaws of each of Parent and Merger Sub, (y) a true and correct copy of the resolutions of the
Boards of Directors of Parent and Merger Sub authorizing the execution, delivery and performance by
Parent and Merger Sub, as applicable, of this Agreement and the consummation of the transactions
contemplated hereunder and (z) incumbency matters.



ARTICLE 9



INDEMNIFICATION




     9.1 No Survival of Representations and Warranties.



          (a) All of the representations and warranties made by Parent and Merger Sub in this Agreement,
the Parent Disclosure Letter or in any certificates or documents
delivered hereunder, shall not survive the Closing Date and consummation of the transactions
contemplated hereby.




          (b) All of the representations and warranties made by Bancorp and the Company in this
Agreement, the Company Disclosure Letter or in any certificates or documents delivered hereunder,
shall not survive the Closing Date and consummation of the transactions contemplated hereby except
that the representations and warranties of Bancorp and the Company contained in (i) Section 3.20
(Company Capitalization) and Section 4.1 (Ownership) shall survive the Closing Date indefinitely
and not terminate, and (ii) Section 3.18 (Taxes) only insofar as the same relates to federal Taxes,
shall survive the Closing Date until the expiration of the applicable statute of limitation,
including any suspensions, tollings or extensions thereof; provided, however, that
any such expiration shall have no effect on any notice of claim made prior to such expiration with
respect to any breach of such representation or warranty occurring prior to such expiration and set
out in such notice of claim. No Parent Indemnified Party shall be entitled to indemnification for
breach of any such surviving representation and warranty unless a notice of claim of such breach
has been given to the Indemnifying Party within the period of survival of such representation and
warranty as set forth herein.




     9.2 Indemnification by the Shareholders. Subject to the terms and conditions of this
Article 9, including the limitations set forth in Section 9.6 below, among others, from and after
Closing, the Shareholders shall severally (and not jointly), based on each such Shareholder’s pro
rata portion of the Earn-Out Consideration payable to such Shareholder (but in no event shall
Bancorp’s pro rata portion of such Earn-Out Consideration be less than 95%), indemnify and hold
harmless Parent and its Affiliates (including, from and after the



57









 







Closing, the Company and its
Affiliates) and the shareholders, directors, officers, partners, employees, successors, assigns,
representatives and agents of each of them in their capacities as such (collectively, the
“Parent Indemnified Persons” and each a “Parent Indemnified Person”), from and
against, and the Shareholders shall not have, and shall have deemed to waive, any claim for
contribution or indemnity against any such Parent Indemnified Person with respect to, any and all
claims, losses, monetary damages, liabilities, fines, fees, penalties, expenses or costs
(collectively, “Losses”), plus reasonable attorneys’ fees and expenses, including court
costs and expert witness fees and costs, incurred in connection with Losses (in all,
“Indemnified Losses”) incurred or to be incurred by any of them resulting from or arising
out of:



          (a) the breach of the representations and warranties set forth in Section 3.20 (Company
Capitalization) and Section 4.1 (Ownership);




          (b) [Reserved]




          (c) the breach of any agreement or covenant of the Company or Bancorp contained in Sections
6.1, 6.3, 6.4(a), 6.5(a) and 6.8;




          (d) any claims of any third party for Losses (“Third Party Losses” and individually, a
“Third Party Loss”) attributable to disclosed or undisclosed liabilities that arise out of
the conduct or activities of the Business prior to the Closing Date but only to the
extent such Third Party Losses would have existed as of the Closing Date had they been
asserted by any such third parties as of such date (other than Third Party Losses relating to
federal Taxes, which shall be governed by Section 9.2A below); provided that for purposes
of this Section 9.2(d), any such Third Party Loss or Losses shall be, and the Shareholders shall
only be required to indemnify the Parent Indemnified Parties to the extent of the amount of any
such Third Party Loss or Losses, measured as of the Closing Date and at no point thereafter,
following (1) the application of any applicable insurance proceeds available to Parent, or its
subsidiaries (including the Surviving Corporation) with respect to such Indemnified Losses, less
the reasonable expenses incurred to obtain such proceeds, and (2) the application of any reserves
previously established and included in the Reference Balance Sheet, all in accordance with GAAP;
provided, further, however, that no claim may be asserted under this Section 9.2(d) and in
no event shall the Shareholders be responsible for the payment of any Third Party Loss relating to
any Tax Return filed or to be filed after the date hereof;




          (e) all material Contracts entered into by the Company or any Subsidiary (i) outside the
Ordinary Course or with Bancorp and its Affiliates and (ii) which were not disclosed to Parent or
otherwise reflected in the operations of the Business prior to the date hereof (other than
agreements with Affiliates of the Company which will terminate at the Closing); provided
that the foregoing shall not include any Contract or any other compensation arrangement
(written or oral) with any current or former Business Employee; and




          (f) transaction costs and expenses incurred by or on behalf of the Company or Bancorp in
connection with this Agreement and the transactions contemplated




58









 







hereby, including without
limitation, fees and expenses relating to any investment banker, broker, lawyer or accountant.




     9.2A Federal Tax Indemnity by Bancorp. Subject to the terms and conditions of this
Article 9, including the limitations set forth in Section 9.6 below, Bancorp shall indemnify and
hold harmless the Parent Indemnified Persons from and against any and all Indemnified Losses
incurred or to be incurred by any of them, resulting from or arising out of any liability of the
Company or its subsidiaries for its own federal Taxes or its Liability, if any (for example, by
reason of transferee Liability or application of Treasury Regulation Section 1.1502 6), for federal
Taxes of others, including, but not limited to, Bancorp or any Controlled Affiliate of Bancorp, or
damage or Indemnified Losses payable with respect to federal Taxes claimed or assessed against the
Company or its subsidiaries: (i) for any taxable period ending on or before the Effective Time or
as a result of the transactions contemplated hereunder or (ii) for any taxable period resulting
from a breach of any of the representations, warranties or covenants contained in Sections 3.18 or
6.4 hereof, but only insofar as the same relates to liability for the payment of federal Taxes in
each of such Sections.



     9.3 Indemnification by Parent. Subject to the terms and conditions of this Article 9,
including the limitations set forth in Section 9.6 below, Parent shall indemnify and hold harmless
each Shareholder and their respective heirs, legal representatives, assigns and agents (the
“Shareholder Indemnified  Persons”) from and against any and all Indemnified Losses incurred or to be incurred by any
of them, resulting from or arising out of:



          (a) the breach of any agreement or covenant of Parent or its Affiliates contained in Article 6
of this Agreement;




          (b) any Third Party Losses asserted against any Shareholder solely in such Person’s capacity
as a shareholder of the Company attributable to disclosed or undisclosed liabilities that arise out
of the conduct or activities of the Business after the Effective Time; provided that for
purposes of this Section 9.3(b), any such Third Party Loss or Losses shall be, and Parent shall
only be required to indemnify the Shareholder Indemnified Parties to the extent of the amount of
any such Third Party Loss or Losses, after the Closing Date and at no point before, following the
application of any available insurance proceeds available to any Shareholder Indemnified Party with
respect to such Indemnified Losses, less the reasonable expenses incurred to obtain such proceeds;




          (c) Liability of the Parent or its subsidiaries (exclusive of the Company and its
Subsidiaries) for Taxes for any taxable period ending on or before the Effective Time or for any
Taxes of Parent or its subsidiaries (including the Company and its subsidiaries) after the
Effective Time; and




          (d) transaction costs and expenses incurred by or on behalf of Parent in connection with this
Agreement and the transactions contemplated hereby, including without limitation, fees and expenses
relating to any investment banker, broker, lawyer or accountant.




59









 








     9.4 Notice of Claim. In the event that Parent seeks indemnification on behalf of a Parent
Indemnified Person, or Bancorp seeks indemnification on behalf of a Shareholder Indemnified Person,
such Party seeking indemnification (the “Indemnified Party”) shall give reasonably prompt
written notice to the indemnifying Party (the “Indemnifying Party”) specifying the facts
constituting the basis for such claim and the amount, to the extent known, of the claim asserted;
provided, however, that the right of a Person to be indemnified hereunder shall not
be adversely affected by a failure to give such notice unless, and then only to the extent that, an
Indemnifying Party is actually irrevocably and materially prejudiced thereby. Subject to the terms
hereof, the Indemnifying Party shall pay the amount of any valid claim not more than 10 days after
the Indemnified Party provides notice to the Indemnifying Party of such amount.



     9.5 Right to Contest Claims of Third Persons. If an Indemnified Party is entitled to
indemnification hereunder (notwithstanding the limitations contained in Section 9.6 hereof) because
of a claim asserted by any claimant (other than an indemnified person hereunder) (“Third
Person”), the Indemnified Party shall give the Indemnifying Party prompt notice thereof after
such assertion is actually known to the Indemnified Party; provided, however, that
the right of a Person to be indemnified hereunder in respect of claims made by a Third Person shall
not be adversely affected by a
failure to give such notice unless, and then only to the extent that, an Indemnifying Party is
actually irrevocably and materially prejudiced thereby. The Indemnifying Party shall have the
right, upon written notice to the Indemnified Party, and using counsel reasonably satisfactory to
the Indemnified Party, to control any such matter including the right to investigate, contest or
settle the claim alleged by such Third Person (a “Third Person Claim”), provided
that the Indemnifying Party has unconditionally acknowledged to the Indemnified Party in
writing of its obligation, subject to any and all limitations contained in this Article 9, to
indemnify the Indemnified Person or Indemnified Persons with respect to such Third Person Claim and
to discharge (and does in fact so discharge) any cost or expense arising out of such
investigation, contest or settlement. The Indemnified Party may thereafter participate in (but not
control) the defense of any such Third Person Claim with its own counsel at its own expense, unless
separate representation is necessary to avoid a conflict of interest, in which case such
representation shall be at the expense of the Indemnifying Party. Unless and until the
Indemnifying Party so acknowledges its obligation to indemnify, the Indemnified Party shall have
the right, at its option, to assume and control defense of the matter and to look to the
Indemnifying Party for the full amount of the reasonable costs of defense. The failure of the
Indemnifying Party to respond in writing to the aforesaid notice of the Indemnified Party with
respect to such Third Person Claim within 20 days after receipt thereof shall be deemed an
irrevocable election not to defend the same. If the Indemnifying Party does not so acknowledge its
obligation to indemnify and assume the defense of any such Third Person Claim, (a) the Indemnified
Party may defend against such claim using counsel of its choice, in such manner as it may
reasonably deem appropriate, including, but not limited to, settling such claim, after giving
notice of the same to the Indemnifying Party, on such terms as the Indemnified Party may reasonably
deem appropriate, and (b) the Indemnifying Party may participate in (but not control) the defense
of such action, with its own counsel at its own expense. If the Indemnifying Party thereafter
seeks to question the manner in which the Indemnified Party defended such Third Person Claim or the
amount or nature of any such settlement, the Indemnifying Party shall have the burden to prove by
clear and convincing evidence that the conduct of the Indemnified Party in the defense and/or



60









 







settlement of such Third Person Claim constituted gross negligence or willful misconduct. The
Parties shall make available to each other all relevant information in their possession relating to
any such Third Person Claim and shall cooperate in the defense thereof.



     9.6 Limitations on Indemnity.



          (a) Notwithstanding anything contained herein to the contrary, the Shareholders shall have no
obligation to indemnify the Parent Indemnified Persons in respect of Indemnified Losses until all
Indemnified Losses exceed $3,000,000 (after application of any reserves previously established and
included in the Reference Balance Sheet, all in accordance with GAAP) in the aggregate and then
only for those Indemnified Losses in excess of $3,000,000 (except for Indemnified Losses resulting
from or arising under Section 3.20 (Company Capitalization), Section 4.1 (Ownership) and Section 9.2A, as to which the foregoing $3,000,000 limitation shall not
apply). Additionally, no claim for indemnification may be asserted except to the extent that the
dollar value of such claim exceeds $100,000, provided that multiple claims or causes of
action arising from a single circumstance or a collection of circumstances based on or arising
out of the same related set of facts and circumstances shall be deemed to be aggregated as a single
claim for purposes of this determination. Additionally, notwithstanding anything contained herein
to the contrary, in no event shall the Shareholders be liable to or be required to indemnify any of
the Parent Indemnified Parties for any Indemnifiable Loss or Losses of any of the Parent
Indemnified Parties under Sections 9.2(c), (d) and (e) hereof that arise after the thirty (30)
month anniversary of the Closing Date at which time the obligations contained in such sections
shall terminate; provided, however, that any such expiration shall have no effect
on any notice of any specific claim made by any Parent Indemnified Persons occurring prior to any
such expiration set forth in such notice of claim.




          (b) In no event shall the Shareholders have any obligation to indemnify the Parent Indemnified
Persons in respect of Indemnified Losses (over and above the $3,000,000 limitation in Section
9.6(a)) in excess of $20,000,000 (except for Indemnified Losses resulting from or arising under
Section 3.20 (Company Capitalization), Section 4.1 (Ownership) and Section 9.2A, as to which the foregoing $20,000,000 limitation shall not apply).




          (c) In the event that any Indemnifiable Loss becomes payable to any Parent Indemnified Persons
by Bancorp pursuant to Section 9.2, such indemnification obligation may be satisfied by Bancorp by
payment of such obligation in cash or by delivery of shares of Parent Common Stock having a value
equal to such indemnification obligation. For purposes hereof, shares of Parent Common Stock shall
have a value equal to the closing price per share of Parent Common Stock as reported by the NYSE on
the Business Day immediately preceding the day on which such Indemnifiable Loss is finally
determined.




          (d) In the event that any Indemnifiable Loss becomes payable to any Parent Indemnified Persons
by any Shareholders other than Bancorp pursuant to Section 9.2, Parent shall have the right to
offset such Indemnifiable Losses against the pro rata portion of any Earn-Out Consideration that
would otherwise be payable to such other Shareholders, and Parent’s right to indemnification
against such other Shareholders shall be limited to such right of offset (and Bancorp shall have no
liability for such amounts). To the




61









 







extent such Earn-Out Consideration is payable in shares of
Parent Common Stock, the shares to be offset shall be valued as described in Section 9.6(c) hereof
with respect to Bancorp. In the event the aggregate pro rata portion of Indemnifiable Losses with respect
to any such other Shareholders exceeds the aggregate Earn-Out Consideration payable to such other
Shareholders, the amount of Indemnifiable Losses to which Parent is entitled to receive from
Bancorp shall be reduced by such excess.




     9.7 Indemnified Losses Covered by Insurance. To avoid any duplicative recovery by the
any Indemnified Parties, any such Indemnified Parties shall not be entitled to indemnification to
the extent of any available insurance proceeds for any such Loss or Losses (whether under the
Company’s, any subsidiary’s or Parent’s insurance policies), less the reasonable expenses incurred
to obtain such proceeds. Parent and Bancorp agree that any Indemnifying Party may pursue coverage
of any Indemnifiable Loss for the benefit of an Indemnified Party under all available insurance
policies, including control of any required litigation against an insurer. Any such Indemnified
Party shall use reasonable best efforts (but shall not be required to institute legal proceedings) to pursue insurance claims that may
reduce such Indemnified Losses.



     9.8. Characterization of Indemnity Payments. Any indemnification payments made pursuant to
this Agreement shall be considered, to the extent permissible under Requirements of Law, as
adjustments to the Merger Consideration for all Tax purposes.



     9.9. Fraud, Intentional Misrepresentation. Notwithstanding anything to the contrary
herein, in the event of any acts of fraud, the Parties shall have all remedies available at law or
in equity (including for tort) with respect to such fraud; provided, however, that
in the case of Bancorp, Bancorp’s Knowledge shall be deemed the actual knowledge of Alan B. Levan
and James White without regard to any requirement of due inquiry.



ARTICLE 10



TERMINATION




     10.1 Methods of Termination. This Agreement may be terminated at any time:



          (a) by mutual consent of Parent and Bancorp;




          (b) by (i) Parent or (ii) Bancorp, if the Closing has not occurred on or before March 1, 2007
(the “Termination Date”); provided that if any Party has breached or
defaulted with respect to its obligations under this Agreement on or before such date, such Party
may not terminate this Agreement pursuant to this Section 10.1(b), and each other Party to this
Agreement may at its option enforce its rights against such breaching or defaulting Party and seek
any remedies against such Party, in either case as provided hereunder or under applicable
Requirements of Law; provided further, however, that if the Closing has not
occurred by the Termination Date solely as a result of the breach of Parent of its covenant herein
with respect to obtaining approval of any applicable Governmental Authority, Parent may not
terminate this Agreement without the consent of Bancorp;




          (c) by Parent, prior to the Termination Date, if (i) any of the conditions specified in
Article 7 hereof becomes incapable of being satisfied or (ii) if after notice and twenty (20) days
opportunity to cure, the Company or Bancorp are otherwise in material




62









 







default under this Agreement
or if such material default is incapable of being cured; provided that the right to terminate this
Agreement under this Section 10.1(c) shall not be available to Parent if the nonfulfillment of the
conditions to Parent’s obligation to close set forth in Article 7 results from the breach by Parent
of any of its representations, warranties, covenants or obligations contained herein; or




          (d) by Bancorp on or prior to the Termination Date, if (i) any of the conditions specified in
Article 8 hereof becomes incapable of being satisfied or (ii) if, after notice and twenty (20) days
opportunity to cure, Parent is otherwise in material default under this Agreement or if such
material default is incapable of being cured; provided that the right to terminate this Agreement
under this Section 10.1(d) shall not be available to Bancorp if the nonfulfillment of the
conditions to Bancorp’s obligation to close set forth in Article 8 results from the breach by
Bancorp of any of its representations, warranties, covenants or obligations contained herein.




     10.2 Procedure Upon Termination. In the event of termination of this Agreement
pursuant to Section 10.1 above, and subject to the proviso contained in Section 10.1(b), this
Agreement shall terminate and the transactions contemplated hereunder shall not occur, without
further action by any of the parties hereto. If this Agreement is terminated as provided herein:



          (a) each Party shall either destroy or redeliver all documents and other material of any other
Party relating to the transactions contemplated hereby, whether obtained before or after the
execution hereof, to the Party furnishing the same;




          (b) all information received by any Party hereto with respect to the business of any other
Party (other than information which is a matter of public knowledge or which has heretofore been or
is hereafter published in any publication for public distribution or filed as public information
with any governmental authority) shall not at any time be used for the advantage of, or disclosed
to third parties by, such Party to the detriment of the Party furnishing such information.




     10.3 Effect of Termination. In the event of the termination of this Agreement as
provided in Section 10.1, this Agreement shall forthwith become void and there shall be no
liability of any Party hereto except (a) as set forth in Section 6.1 and this Section 10.3, and (b)
that nothing herein shall relieve any Party hereto from liability for any breach of this Agreement
and all rights and remedies arising as a result of such breach shall remain available to any
non-breaching Party. The provisions of this Section 10.3 shall survive any termination of this
Agreement.



ARTICLE 11



MISCELLANEOUS PROVISIONS




     11.1 Notice. All notices, requests, demands and other communications required or permitted
under this Agreement shall be in writing and shall be deemed to have been duly given (a) when
delivered in person, (b) by fax, receipt confirmed, (c) on the next Business Day when sent by
overnight courier, or (d) on the second succeeding Business Day when sent by registered or
certified mail (postage prepaid, return receipt requested), to the



63









 







respective Parties at the
following addresses (or at such other address for a Party as shall be specified by like notice):


If to Parent:



Stifel Financial Corp.

501 N. Broadway

St. Louis, Missouri 63102

Attention: Ronald J. Kruszewski, Chairman, President and CEO

Fax: (314) 342-2115


With copies to:


Bryan Cave LLP

One Metropolitan Square, Suite 3600

211 North Broadway

St. Louis, Missouri 63102

Attention: James L. Nouss, Jr.

                 Robert J. Endicott

Fax: (314) 259-2020



If to Bancorp:



BankAtlantic Bancorp

2100 Cypress Creek Road

Fort Lauderdale, Florida 33309

Telephone: (954) 940-5020

Fax: (954) 940-5050

Attn: Alan B. Levan, Chairman



With a copy to:



Stearns Weaver Miller Weissler Alhadeff & Sitterson, P.A.

150 W. Flagler Street

Miami, FL 33130

Telephone: (305) 789-3500

Fax: (305) 789-3395

Attn: Alison W. Miller




     11.2 Entire Agreement. This Agreement and the Schedules and Exhibits hereto embody the
entire agreement and understanding of the Parties hereto with respect to the subject matter hereof,
and supersede all prior and contemporaneous agreements and understandings relative to such subject
matter.



     11.3 Amendment and Modification. To the extent permitted by applicable Law, this Agreement
shall be amended, modified or supplemented only by a written agreement between Parent and Bancorp.



64









 





     11.4 Assignment; Binding Agreement. This Agreement and the various rights and obligations arising hereunder shall inure to the
benefit of and be binding upon the Parties hereto and their successors, and permitted assigns.
Neither this Agreement nor any of the rights, interests, or obligations hereunder shall be
transferred, delegated, or assigned (by operation of law or otherwise), by the Parties hereto
without the prior written consent of the other Parties, except that (i) Parent shall have the right
to transfer and assign any or all of its rights and obligations hereunder to any entity which at
the time of such transfer and assignment is controlled by Parent or by the Affiliates of Parent and
(ii) Bancorp shall have the right to assign its rights to receive payments, but not its
obligations, hereunder.



     11.5 Waiver of Compliance; Consents. Any failure of either Bancorp, on the one hand, or
Parent, on the other hand, to comply with any obligation, covenant, agreement or condition herein
may be waived by Parent, on the one hand, or Bancorp, on the other hand, only by a written
instrument signed by the Party granting such waiver, but such waiver or failure to insist upon
strict compliance with such obligation, covenant, agreement or condition shall not operate as a
waiver of, or estoppel with respect to, any subsequent or other failure. Whenever this Agreement
requires or permits consent by or on behalf of any Party hereto, such consent shall be given in
writing in a manner consistent with the requirements for a waiver of compliance as set forth in
this Section 11.5.



     11.6 Expenses. Except as otherwise provided for herein, all costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby shall be paid by the Party
incurring such costs or expenses.



     11.7 Counterparts. This Agreement may be executed in multiple counterparts, and on
separate counterparts, each of which shall be deemed an original, but all of which taken together
shall constitute one and the same instrument.



     11.8 Severability. Subject to the provisions set forth in Section 6.3(a) regarding
judicial modification of the covenant not to compete, if any other provision of this Agreement
shall be determined to be contrary to law and unenforceable by any court of law, all other
conditions and provisions of this Agreement shall nevertheless remain in full force and effect so
long as the economic or legal substance of the transactions contemplated hereby are not affected in
any manner materially adverse to any Party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the Parties shall negotiate in good
faith to modify this Agreement so as to effect the original intent of the Parties as closely as
possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled
to the extent possible.



     11.9 Governing Law. This Agreement shall in all respects be construed in accordance with and governed by the
substantive laws of the State of New Jersey, without reference to its choice of law rules.



     11.10 No Third Party Beneficiaries or Other Rights. Nothing contained herein, including,
without limitation, the provisions of Section 6.5 regarding employees of the Company, shall grant
to or create in any Person not a Party hereto, or any such Person’s dependents, heirs, successors
or assigns, any right to any benefits hereunder, and no such Person shall be entitled to sue any
Party to this Agreement with respect thereto. The



65









 







representations and warranties contained in this
Agreement are made for purposes of this Agreement only and shall not be construed to confer any
additional rights on the Parties under applicable state and federal securities laws.



     11.11 Waiver of Jury Trial. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY
CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH
PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT
OF OR RELATING TO THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY
CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION,
SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE
IMPLICATIONS OF THIS WAIVER, (iii) EACH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH PARTY
HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS IN THIS
SECTION 11.11.



     11.12 Company Disclosure Letter. The sections of the Company Disclosure Letter shall be
arranged in separate parts corresponding to the numbered and lettered sections, and except as
otherwise identified on such disclosure schedules or sections, the disclosure in any numbered or
lettered section shall be deemed to relate to and to qualify only the particular representation or
warranty set forth in the corresponding numbered or lettered section, and not any other
representation or warranty (unless an express and specific reference to any other schedules or
sections which clearly identifies the particular item being referred is set forth therein or unless
such item is clearly and unambiguously responsive on its face to another schedule or section).



     11.13 Headings; Interpretation. The article and section headings contained in this
Agreement are inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement. Each reference in this Agreement to an Article, Section,
Schedule or Exhibit, unless otherwise
indicated, shall mean an Article or a Section of this Agreement or a Schedule or Exhibit attached
to this Agreement, respectively. Unless the context of this Agreement otherwise requires, (i)
words of any gender include each other gender; (ii) words using the singular or plural number also
include the plural or singular number, respectively; (iii) the terms “hereof,”
“herein,” “hereby” and derivative or similar words refer to this entire Agreement;
(iv) the terms “include,” “includes,” “including,” and derivative or
similar words shall be construed to be followed by the phrase “without limitation”; and (v)
references herein to “days” are to consecutive calendar days unless Business Days are
specified. All accounting terms used herein and not expressly defined herein shall have the
meanings given to them under generally accepted accounting principles. The Parties have
participated substantially in the negotiation and drafting of this Agreement and agree that no
ambiguity herein should be construed against the draftsman.



66









 





     IN WITNESS WHEREOF, each of the Parties hereto has caused this Agreement to be executed as of
the date first above written.



	 	 	 	 	 	 	 
	 	 	STIFEL FINANCIAL CORP.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Ronald J. Kruszewski
 

	 	 
	 	 	Name: Ronald J. Kruszewski	 	 
	 	 	Title: President and Chief Executive
Officer	 	 
	 
	 	 	 	 	 	 
	 	 	SF RB MERGER SUB, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Ronald J. Kruszewski
 

	 	 
	 	 	Name: Ronald J. Kruszewski	 	 
	 	 	Title: President and Chief Executive
Officer	 	 
	 
	 	 	 	 	 	 
	 	 	RYAN BECK HOLDINGS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Ben A. Plotkin
 

	 	 
	 	 	Name: Ben A. Plotkin	 	 
	 	 	Title: Chief Executive Officer	 	 
	 
	 	 	 	 	 	 
	 	 	BANKATLANTIC BANCORP, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Alan B. Levan
 

	 	 
	 	 	Name: Alan B. Levan	 	 
	 	 	Title: Chairman of the Board of Directors	 	 






 









 






TABLE OF SCHEDULES AND EXHIBITS




Schedule




Exhibit A   Form of Registration Rights Agreement

Exhibit B   Form of Warrant

Exhibit C   Articles of Incorporation of Merger Sub





 










 





Exhibit A




REGISTRATION RIGHTS AGREEMENT




          THIS REGISTRATION RIGHTS AGREEMENT, dated as of [                    ], 2007, is entered into by and
between BankAtlantic Bancorp, Inc., a Florida corporation (“Bancorp”), on behalf of the
Other Recipients, and Stifel Financial Corp., a Delaware corporation (the “Company”).



          WHEREAS, the Company is party to an Agreement and Plan of Merger by and among Bancorp, SF RB
Merger Sub, Inc., a New Jersey corporation wholly owned by the Company (“Merger Sub”), Ryan
Beck Holdings, Inc., a New Jersey corporation (“Holdings”), and the Company, dated as of
January ___, 2007 (the “Merger Agreement”);



          WHEREAS, upon the merger of Holdings with and into Merger Sub, as contemplated under the
Merger Agreement (the “Closing”), the Company will issue to Bancorp and certain
optionholders as set forth in the Merger Agreement (the “Other Recipients”), and Bancorp
and the Other Recipients will beneficially own, (i) an aggregate of                      shares (the
“Shares”) of the Company’s common stock, par value 0.15 per share (the “Common
Stock”), and, subject to the approval of the Company’s shareholders, (ii) warrants to purchase
up to 500,000 shares of Common Stock at an exercise price of $36.00 per share (the
“Warrants”);



          WHEREAS, the Merger Agreement provides that, among other things, at or prior to the Closing,
the Company and Bancorp and the Other Recipients will enter into a registration rights agreement in
substantially the form of Exhibit A to the Merger Agreement; and



          WHEREAS, the parties to this Agreement desire to set forth the rights of Bancorp and the Other
Recipients and the obligations of the Company with respect to the registration of Registrable
Securities pursuant to the Securities Act;



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



          1. Definitions.



     As used in this Agreement, the following terms shall have the following meanings:



     “Affiliate” means, with respect to any Person, any other Person that directly, or
indirectly through one or more intermediaries, controls, is controlled by or is under common
control with, such specified Person; provided, however, that solely for purposes of this Agreement,
notwithstanding anything to the contrary set forth herein, neither the Company nor any of its
controlled Affiliates shall be deemed an Affiliate of Bancorp by virtue of the beneficial ownership
by Bancorp of the Company’s Common Stock.



     “Agreement” means this Registration Rights Agreement and any amendments hereto.



A-1









 





     “Blackout Period” has the meaning set forth in Section 2(a)(iv).



     “Board” means the Board of Directors of the Company.



     “Capital Stock” means, with respect to any Person at any time, any and all shares,
interests, participations or other equivalents (however designated, whether voting or non-voting)
of capital stock, partnership interests (whether general or limited) or equivalent ownership
interests in or issued by such Person.



     “Closing” has the meaning set forth in the recitals.



     “Closing Date” means the date on which the Closing occurs.



     “Common Stock” has the meaning set forth in the recitals.



     “Company” has the meaning set forth in the preamble and shall also include the
Company’s successors.



     “Company Notice” has the meaning set forth in Section 2(b)(i).



     “Damages” has the meaning set forth in Section 5(a)(i).



     “Director” means any member of the Board (other than any advisory, honorary or other
non-voting member of the Board).



     “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to
time.



     “Hedging Transaction” means any short sale (whether or not against the box) or any
purchase, sale or grant of any right (including, without limitation, any put or call option) with
respect to any security (other than a broad-based market basket or index) that includes, relates to
or derives any significant part of its value from the Common Stock.



     “Holder” or “Holders” means Bancorp and each of the Other Recipients that
receive Registrable Securities pursuant to the Merger Agreement.



     “Incidental Registration” means a registration required to be effected by the Company
pursuant to Section 2(b).



     “Incidental Registration Statement” means a registration statement of the Company, as
provided in Section 2(b), which covers any of the Registrable Securities on an appropriate form in
accordance with the Securities Act and all amendments and supplements to such registration
statement, including post-effective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and all material incorporated by reference therein.



     “Initial Shelf Registration” means the initial Shelf Registration Statement on Form
S-3 covering the sale of Registrable Securities, filed by the Company pursuant to Section 2(a)(i).



A-2









 





     “Initial Shelf Registration Target Effective Date” means the date that the Initial
Shelf Registration is declared effective by the SEC, but in no event later than the date that is
180 days following the Closing Date.



     “Merger Agreement” has the meaning set forth in the recitals.



     “NASD” means the National Association of Securities Dealers, Inc.



     “Other Recipients” has the meaning set forth in the recitals.



     “Person” means any individual, limited or general partnership, limited liability
company, corporation, trust, joint venture, association, joint stock company or unincorporated
organization.



     “Prospectus” means the prospectus included in a Registration Statement, including any
preliminary Prospectus, and any such Prospectus as amended or supplemented by any prospectus
supplement with respect to the terms of the offering of any portion of the Registrable Securities
and by all other amendments and supplements to such Prospectus, including post-effective
amendments, and in each case all material incorporated by reference therein.



     “Registrable Securities” means (a) the Shares, (b) the Warrant Shares if the Warrants
are issued, and (c) any securities issued or issuable with respect to the pay-out of any “Earn-Out
Consideration” (as defined and described in the Merger Agreement) or with respect to any Common
Stock referred to in the foregoing clauses (w) upon any conversion or exchange thereof, (x) by way
of stock dividend or stock split, (y) in connection with a combination of shares, recapitalization,
merger, consolidation or other reorganization or (z) otherwise, in all cases subject to Section
2(a)(iv). As to any particular Registrable Securities, once issued such securities shall cease to
be Registrable Securities when (A) a Registration Statement with respect to the sale of such
securities shall have become effective under the Securities Act and such securities shall have been
disposed of in accordance with such Registration Statement, (B) such securities shall have been
sold in reliance upon Rule 144, (C) such securities shall have been otherwise transferred, new
certificates for such securities not bearing a legend restricting further transfer shall have been
delivered by the Company and subsequent disposition of such securities shall not require
registration or qualification of such securities under the Securities Act or any similar state law
then in force, or (D) such securities shall have ceased to be outstanding.



     “Registration Expenses” means all expenses incident to the Company’s performance of or
compliance with this Agreement, including, without limitation, (i) all registration, listing,
qualification and filing fees (including NASD filing fees), (ii) fees and disbursements of counsel
for the Company, (iii) accounting fees, (iv) blue sky fees and expenses (including counsel fees in
connection with the preparation of a blue sky memorandum and legal investment survey and NASD
filings), and (v) all printing, distributing, mailing and delivery expenses for any Registration
Statement, any Prospectus, transmittal letters, securities certificates and other documents
relating to the performance of and compliance with this Agreement; provided, however, Registration
Expenses shall not include any Selling Expenses.



     “Registration Statement” means any registration statement of the Company, including a
Shelf Registration Statement, which covers the sale of any Registrable Securities by Holders, and
all amendments and supplements to any such Registration Statement, including post-effective



A-3









 







amendments, in each case including the Prospectus contained therein, all exhibits thereto and
all material incorporated by reference therein.



     “Representative” means Bancorp, acting on its own behalf and as agent and
representative of the Holders.



     “Required Registration” means the registrations required to be effected pursuant to
Section 2(a).



     “Required Registration Statement” means a Registration Statement which covers the sale
of Registrable Securities by Holders requested to be included therein pursuant to the provisions of
Section 2(a) on an appropriate form (in accordance with Section 4(a) hereof) pursuant to the
Securities Act, and which form shall be available for the sale of the Registrable Securities in
accordance with the intended method or methods of distribution thereof, and all amendments and
supplements to such Registration Statement, including post-effective amendments, in each case
including the Prospectus contained therein, all exhibits thereto and all material incorporated by
reference therein.



     “SEC” means the Securities and Exchange Commission.



     “Second Shelf Registration” means the second Shelf Registration Statement on Form S-3
covering the sale of one-third of the Registrable Securities filed by the Company pursuant to
Section 2(a)(ii).



     “Securities Act” means the Securities Act of 1933, as amended from time to time.



     “Selling Expenses” means underwriting discounts, selling commissions and stock
transfer taxes, if any, applicable to the Registrable Securities registered by the Holders.



     “Shares” has the meaning set forth in the recitals.



     “Shelf Registration Statement” means a registration statement pursuant to SEC Rule 415
under the Securities Act.



     “Significant Stockholder” means, at any time of determination, any Person other than
Bancorp and its Affiliates that beneficially owns 20 percent or more of the Total Voting Power of
the Voting Securities of the Company issued and outstanding at that time.



     “Subsidiary” means, with respect to any Person, any corporation or other organization,
whether incorporated or unincorporated, (i) of which such Person or any other Subsidiary of such
Person is a general partner (excluding partnerships the general partner interests of which held by
such Person or any Subsidiary of such Person do not have a majority of the voting or similar
interests in such partnership), or (ii) at least a majority of the securities or other interests of
which have by their terms ordinary voting power to elect a majority of the board of directors or
others performing similar functions with respect to such corporation or other organization directly
or indirectly owned or controlled by such Person or by any one or more of its Subsidiaries, or by
such Person and one or more of its Subsidiaries.



A-4









 





     “Suspension Period” has the meaning set forth in Section 2(d).



     “Subsidiary Holder” means, with respect to Bancorp, each Subsidiary of Bancorp that is
a Holder.



     “Third Shelf Registration” means the third Shelf Registration Statement on Form S-3
covering the sale of one-third of the Registrable Securities filed by the Company pursuant to
Section 2(a)(iii).



     “Total Voting Power” means the total number of votes entitled to be cast by the
holders of the outstanding shares of Capital Stock and any other securities entitled, in the
ordinary course, to vote on matters put before the holders of shares of the Company’s Capital Stock
generally.



     “Underwriter” has the meaning set forth in Section 5(a).



     “Underwritten Offering” means a sale of securities of the Company to an Underwriter or
Underwriters for reoffering to the public.



     “Voting Securities” means, at any time, shares of any class of Capital Stock or other
securities or interests of a Person which are then entitled to vote generally, and not solely upon
the occurrence and during the continuation of certain specified events, in the election of
directors or Persons performing similar functions with respect to such Person, and any securities
convertible into or exercisable or exchangeable at the option of the holder thereof for such shares
of Capital Stock.



     “Warrant Shares” means the shares of Common Stock issuable upon the exercise of the
Warrants, if issued by the Company.



     “Warrants” has the meaning set forth in the recitals.



     “WKSI” means a well-known seasoned issuer as defined in Rule 405 under the Securities
Act.



          2. Registration Under the Securities Act.



          (a) Shelf Registration.



          (i) Filing of Initial Shelf Registration Statement. The Company will, as soon as
practicable (but in no event later than one hundred twenty (120) days after the Closing Date), file
an Initial Shelf Registration registering the sale of (i) one-third of the Registrable Securities
held by Bancorp and (ii) all of the Registrable Securities held by the Other Recipients. The
Company thereafter shall use commercially reasonable efforts to cause the Initial Shelf
Registration to become effective as soon as practicable following such filing, provided that
notwithstanding anything to the contrary in this Agreement, the Company shall have no obligation to
have such Initial Shelf Registration declared effective until one hundred eighty (180) days after
the Closing Date. The Company shall use commercially reasonable efforts to maintain the
effectiveness of the Initial Shelf Registration until the termination of the registration rights
provisions under this Agreement.



A-5









 





          (ii) Second Shelf Registration. The Company will file a Second Shelf Registration (or
file a post-effective amendment to the Initial Shelf Registration) covering the sale of an
additional one-third of the Registrable Securities not less than sixty (60) days prior to the first
anniversary of the Initial Shelf Registration Target Effective Date. The Company thereafter shall
use commercially reasonable efforts to cause the Second Shelf Registration to become effective as
soon as practicable following such filing, but in no event shall the Company be obligated to have
such Second Shelf Registration declared effective until the first anniversary of the Initial Shelf
Registration Target Effective Date. The Company shall use commercially reasonable efforts to
maintain the effectiveness of the Second Shelf Registration until the termination of the
registration rights provisions under this Agreement.



          (iii) Third Shelf Registration. The Company will file a Third Shelf Registration (or
file a post-effective amendment to the Initial Shelf Registration or to the Second Shelf
Registration, if applicable) covering the sale of the final one-third of the Registrable Securities
not less than sixty (60) days prior to the second anniversary of the Initial Shelf Registration
Target Effective Date. The Company thereafter shall use commercially reasonable efforts to cause
the Third Shelf Registration to become effective as soon as practicable following such filing, but
in no event shall the Company be obligated to have such Third Shelf Registration declared effective
until the second anniversary of the Initial Shelf Registration Target Effective Date. The Company
shall use commercially reasonable efforts to maintain the effectiveness of the Third Shelf
Registration until the termination of these registration rights provisions under this Agreement.



          (iv) Blackout Period. Notwithstanding the foregoing, the Company upon notice to
Bancorp may delay the filing or the effectiveness of any Shelf Registration Statement (a
“Blackout Period”) for so long as the CEO of the Company determines in good faith in
consultation with counsel that such registration would require the disclosure of information not
otherwise then required by law to be publicly disclosed, the disclosure of which would be
materially adverse to the Company; provided, however, that the duration of any Blackout Period
shall not exceed sixty (60) days, and that the aggregate number of days included in all Blackout
Periods during any consecutive twelve (12) months shall not exceed one hundred eighty (180) days.



          (b) Incidental Registration.



          (i) Right to Include Registrable Securities. If at any time the Company proposes to
register any Common Stock under the Securities Act (other than any registration of public sales or
distributions solely by and for the account of the Company of securities issued (x) pursuant to any
employee benefit or similar plan, including employee stock and stock option plans, or any dividend
reinvestment plan or (y) in any acquisition by the Company), either in connection with a primary
offering for cash for the account of the Company or a secondary offering or a combination thereof,
the Company will, each time it intends to effect such a registration, give written notice to all
Holders of Registrable Securities at least fifteen (15) business days prior to the anticipated
filing date of a Registration Statement with the SEC pertaining thereto, informing such Holders of
its intent to file such Registration Statement and of the Holders’ rights to request the
registration of the Registrable Securities held by the Holders under this Section 2(b) (the
“Company Notice”); provided, that if in the reasonable opinion of the Company such fifteen
(15) business day period would materially interfere with the ability of the Company to effect a
registration and issue and sell securities pursuant to such registration, such period may be
reduced to a period of not less than ten (10) business days as reasonably determined by the
Company. Upon the written request of any



A-6









 







Holder made within seven (7) business days after any such Company Notice is given (which
request shall specify the Registrable Securities intended to be disposed of by such Holder and,
unless the applicable registration is intended to effect a primary offering of shares of Common
Stock for cash for the account of the Company, the intended method of distribution thereof), the
Company will use its commercially reasonable efforts to effect the registration under the
Securities Act of all Registrable Securities which the Company has been so requested to register by
such Holders to the extent required to permit the disposition (in accordance with the intended
methods of distribution thereof) of the Registrable Securities so requested to be registered,
including, if necessary, by filing with the SEC a post-effective amendment or a supplement to the
Incidental Registration Statement or the related Prospectus or any document incorporated therein by
reference or by filing any other required document or otherwise supplementing or amending the
Incidental Registration Statement, if required by the rules, regulations or instructions applicable
to the registration form used by the Company for such Incidental Registration Statement by the
Securities Act, any state securities or blue sky laws, or any rules and regulations thereunder;
provided, however, that if, at any time after giving written notice of its intention to register
any securities and prior to the effective date of the Incidental Registration Statement filed in
connection with such registration, the Company shall determine for any reason not to register or to
delay registration of such securities, the Company may, at its election, give written notice of
such determination to each Holder of Registrable Securities and, thereupon, (A) in the case of a
determination not to register, the Company shall be relieved of its obligation (other than as set
forth in Section 2(a) hereof) to register any Registrable Securities in connection with such
registration (but not from its obligation to pay the Registration Expenses incurred in connection
therewith) and (B) in the case of a determination to delay such registration, the Company shall be
permitted to delay registration of any Registrable Securities requested to be included in such
Incidental Registration Statement for the same period as the delay in registering such other
securities.



          The registration rights granted pursuant to the provisions of this Section 2(b) shall be in
addition to the registration rights granted pursuant to the other provisions of this Section 2, and
no registration effected under this Section 2(b) shall relieve the Company of its obligations to
effect a Required Registration under Section 2(a), other than as set forth in Section 2(a)(iv).



          (ii) Priority in Incidental Registrations. If a registration pursuant to this Section
2(b) involves an Underwritten Offering of the securities so being registered, whether or not for
sale for the account of the Company, and the sole Underwriter or the lead managing Underwriter, as
the case may be, of such Underwritten Offering shall advise the Company in writing (with a copy to
each Holder of Registrable Securities requesting registration) on or before the date that is five
(5) days prior to the date then scheduled for such offering that, in its opinion, the amount of
securities (including Registrable Securities) requested to be included in such registration exceeds
the amount which can be reasonably expected to be sold in (or during the time of) such offering
without adversely affecting the success of the distribution of the securities being offered, then
the Company will include in such registration, first, all the securities desired to be sold by the
Company pursuant to such Registration Statement without reference to the incidental registration
rights of any holder (including Holders), and second, the amount of other securities (including
Registrable Securities) requested to be included in such registration that the Company is so
advised can be sold in (or during the time of) such offering, allocated, if necessary, pro rata
among the holders (including the Holders) thereof requesting such registration on the basis of the
percentage of the securities (including Registrable Securities) beneficially owned at the time that
each holder (including Holders) requesting inclusion of their securities desires to register in
such registration; provided, however, that



A-7









 







in the event the Company determines, by virtue of this paragraph, not to include in any such
registration all of the Registrable Securities of any Holder requested to be included in such
registration, such Holder may, upon written notice to the Company given within three (3) days of
the time such Holder first is notified of such matter, reduce the amount of Registrable Securities
it desires to have included in such registration, whereupon only the Registrable Securities, if
any, it desires to have included will be so included and the amount of Registrable Securities which
each Holder is entitled to include in such registration shall be re-calculated utilizing the
reduced total number of Registrable Securities to be included in such registration such that the
reduction of the amount of Registrable Securities which any Holder is entitled to include in such
registration is reduced on a pro-rata basis.



          (c) Expenses. The Company agrees to pay all Registration Expenses in connection with
each registration effected in accordance with this Section 2. All Selling Expenses relating to
securities registered on behalf of the Holders shall be borne by the Holders of shares of Common
Stock included in such registration, other selling stockholders and the Company pro rata on the
basis of the percentage of shares of Common Stock so registered by each such party, except that the
Company need not contribute to fees and disbursements of counsel for the Holders and other selling
stockholders.



          (d) Effective Registration Statement; Suspension. A Registration Statement pursuant
to Section 2(a) will not be deemed to have become effective (and the related registration will not
be deemed to have been effected or requested) unless it has been declared effective by the SEC
prior to a request by the Holders of a majority of the Registrable Securities included in such
registration that such Registration Statement be withdrawn; provided, however, that if, after it
has been declared effective, the offering of any Registrable Securities pursuant to such
Registration Statement is interfered with by any stop order, injunction or other order or
requirement of the SEC or any other governmental agency or court, such Registration Statement will
be deemed not to have become effective and the related registration will not be deemed to have been
effected or requested pursuant to this Agreement.



          Any period during which the Company fails to keep any Required Registration Statement
effective and usable for resale of Registrable Securities shall be referred to as a “Suspension
Period.” A Suspension Period shall (a) commence on and include the earlier of the date that (i)
the Company gives notice or (ii) the Company or a Holder is advised by counsel or the SEC, in
either case, that a Required Registration Statement is no longer effective or usable for resale of
Registrable Securities and (b) end on and include the date when each Holder of Registrable
Securities covered by such Required Registration Statement either receives copies of the
supplemented or amended Prospectus contemplated by Section 4(j) or is advised in writing by the
Company (having a reasonable basis to so advise) that the use of the Prospectus may be resumed. In
the event of one or more Suspension Periods, the applicable time period for keeping the
Registration Statement effective referenced in the last sentence of each of Section 2(a)(i),
Section 2(a)(ii), and Section 2(a)(iii) shall be extended by the number of days included in each
Suspension Period, and, in the event any Suspension Period occurs sooner than thirty (30) days
after the end of the previous Suspension Period or thirty (30) days after the initial effectiveness
of any Required Registration Statement, none of the days between such Suspension Periods (as the
case may be) or prior to such Suspension Period shall be included in computing such applicable time
period.



A-8









 





          (e) Equal Future Rights. Should the Company grant any new registration rights to any
Significant Stockholder other than any Holder, or amend or modify the registration rights of any
Holder or other Significant Stockholder in such a way to make such registration rights more
favorable to one Holder or Significant Stockholder than to another Holder, the registration rights
granted under this Agreement shall be automatically amended so as to be not less favorable to any
Holder than those granted to such Significant Stockholder or other Holder.



          3. Lock-Up of Holders; Hedging Transactions. Notwithstanding anything to the contrary
herein, Bancorp agrees that it will not (a) sell, other than in any private sale(s) of shares of
Common Stock, or (b) enter into any Hedging Transaction relating to the Common Stock, including any
Hedging Transaction or other transaction which is designed to or reasonably expected to lead to or
result in a disposition even if the securities would be disposed of by someone other than Bancorp,
in either case with respect to: (i) any Registrable Securities that are Common Stock prior to the
180th day after the Closing Date, (ii) more than one-third of Bancorp’s Registrable Securities that
are Common Stock prior to the date which is the first anniversary of the 180th day after the
Closing Date or (iii) more than two-thirds of Bancorp’s shares of Registrable Securities that are
Common Stock prior to the date which is the second anniversary of the 180th day after the Closing
Date.



          4. Registration Procedures.



          In connection with the obligations of the Company pursuant to Section 2, the Company shall use
its commercially reasonable efforts to effect or cause to be effected the registration of the
Registrable Securities under the Securities Act to permit the sale of such Registrable Securities
by the Holders in accordance with their intended method of distribution, and the Company shall:



          (a) (i) prepare and file a Registration Statement with the SEC which (x) shall be on Form S-3
(or any successor to such form), (y) shall be available for the sale or exchange of the Registrable
Securities in accordance with the intended method or methods of distribution by the selling Holders
thereof and (z) shall comply as to form with the requirements of the applicable form and include
all financial statements required by the SEC to be filed therewith, (ii) unless such Registration
Statement is automatically effective upon filing with the SEC, use its commercially reasonable
efforts to cause such Registration Statement to become effective and remain effective in accordance
with Section 2, (iii) if the Company is eligible as a WKSI as of the applicable time, utilize the
automatic shelf registration process under Rule 415 and Rule 462 under the Securities Act, (iv) not
take any action that would cause a Registration Statement to contain a material misstatement or
omission or to be not effective and usable for resale of Registrable Securities during the period
that such Registration Statement is required to be effective and usable, (v) use its commercially
reasonable efforts to cause each Registration Statement and the related Prospectus and any
amendment or supplement thereto, as of the effective date of such Registration Statement, amendment
or supplement to comply in all material respects with any requirements of the Securities Act and
the rules and regulations of the SEC and (vi) cause each Registration Statement and the related
Prospectus and any amendment or supplement thereto not to contain any untrue statement of a
material fact required to be stated therein or necessary to make the statements therein not
misleading during the period that such Registration Statement is required to be effective and
usable;



A-9









 





          (b) subject to paragraph (j) of this Section 4, prepare and file with the SEC such amendments
and post-effective amendments to each such Registration Statement, as may be necessary to keep such
Registration Statement effective for the applicable period; cause each such Prospectus to be
supplemented by any required prospectus supplement, and as so supplemented to be filed pursuant to
Rule 424 under the Securities Act; and comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by each Registration Statement during the
applicable period in accordance with the intended method or methods of distribution by the selling
Holders thereof, as set forth in such registration statement;



          (c) in any underwritten Incidental Registration, furnish to each Holder of Registrable
Securities and to each Underwriter of an Underwritten Offering of Registrable Securities, if any,
without charge, as many copies of each Prospectus, including each preliminary Prospectus, and any
amendment or supplement thereto and such other documents as such Holder or Underwriter may
reasonably request in order to facilitate the public sale or other disposition of the Registrable
Securities; the Company hereby consents to the use of the Prospectus, including each preliminary
Prospectus, by each Holder of Registrable Securities and each Underwriter of an Underwritten
Offering of Registrable Securities covered by the Prospectus or the preliminary Prospectus (and
Holders hereby agreeing not to make a broad public dissemination of a form of preliminary
Prospectus which is designed to be a “quiet filing” without the Company’s consent, such consent to
not be withheld unreasonably);



          (d) (i) use its commercially reasonable efforts to register or qualify the sale of the
Registrable Securities, no later than the time the applicable Registration Statement is declared
effective by the SEC, under all applicable state securities or blue sky laws of such jurisdictions
as each Underwriter, if any, or any Holder of Registrable Securities covered by a Registration
Statement, shall reasonably request; (ii) use its commercially reasonable efforts to keep each such
registration or qualification effective during the period such Registration Statement is required
to be kept effective; and (iii) do any and all other acts and things which may be reasonably
necessary or advisable to enable each such Underwriter, if any, and Holder to consummate the
disposition in each such jurisdiction of such Registrable Securities owned by such Underwriter or
Holder; provided, however, that the Company shall not be obligated to qualify as a foreign
corporation or as a dealer in securities in any jurisdiction in which it is not so qualified or to
consent to be subject to general service of process (other than service of process in connection
with such registration or qualification or any sale of Registrable Securities in connection
therewith) in any such jurisdiction;



          (e) notify each Holder of Registrable Securities promptly, and, if requested by such Holder,
confirm such advice in writing, (i) when a Registration Statement has become effective and when any
post-effective amendments and supplements thereto become effective, (ii) of the issuance by the SEC
or any state securities authority of any stop order, injunction or other order or requirement
suspending the effectiveness of a Registration Statement or the initiation of any proceedings for
that purpose, (iii) if, between the effective date of a Registration Statement and the closing of
any sale of securities covered thereby pursuant to any agreement to which the Company is a party,
the representations and warranties of the Company contained in such agreement cease to be true and
correct in all material respects or if the Company receives any notification with respect to the
suspension of the qualification of the Registrable Securities for sale in any jurisdiction or the
initiation of any proceeding for such purpose and (iv) of the happening of any event during the
period a Registration Statement is effective as a result of which such Registration Statement or
the



A-10









 







related Prospectus contains any untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the statements therein not
misleading;



          (f) in any underwritten Incidental Registration, furnish counsel for each such Underwriter, if
any, and for the Holders of Registrable Securities copies of any request by the SEC or any state
securities authority for amendments or supplements to a Registration Statement and Prospectus or
for additional information;



          (g) use its commercially reasonable efforts to obtain the withdrawal of any order suspending
the effectiveness of a Registration Statement at the earliest possible time;



          (h) in any underwritten Incidental Registration, upon request, furnish to the sole Underwriter
or lead managing Underwriter of an Underwritten Offering of Registrable Securities, if any, without
charge, at least one signed copy of each Registration Statement and any post-effective amendment
thereto, including financial statements and schedules, all documents incorporated therein by
reference and all exhibits; and furnish to each Holder of Registrable Securities, without charge,
at least one conformed copy of each Registration Statement and any post-effective amendment thereto
(without documents incorporated therein by reference or exhibits thereto, unless requested);



          (i) cooperate with the selling Holders of Registrable Securities and the sole Underwriter or
lead managing Underwriter of an Underwritten Offering of Registrable Securities, if any, to
facilitate the timely preparation and delivery of certificates representing Registrable Securities
to be sold and not bearing any restrictive legends; and enable such Registrable Securities to be in
such denominations (consistent with the provisions of the governing documents thereof) and
registered in such names as the selling Holders or the sole Underwriter or lead managing
Underwriter of an Underwritten Offering of Registrable Securities, if any, may reasonably request
at least three (3) business days prior to any sale of Registrable Securities;



          (j) upon the occurrence of any event contemplated by paragraph (e)(iv) of this Section, use
its commercially reasonable efforts to prepare a supplement or post-effective amendment to a
Registration Statement or the related Prospectus, or any document incorporated therein by
reference, or file any other required document so that, as thereafter delivered to the purchasers
of the Registrable Securities, such Prospectus will not contain any untrue statement of a material
fact, or omit to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made, not misleading;



          (k) cause all Registrable Securities to be listed on the New York Stock Exchange and any
securities exchange on which securities of the same class issued by the Company are then so
qualified or listed if so requested by the Representative or if so requested by the Underwriter or
Underwriters of an Underwritten Offering of Registrable Securities, if any;



          (l) otherwise use its commercially reasonable efforts to comply with all applicable rules and
regulations of the SEC, including making available to its security holders an earnings statement
covering at least twelve (12) months which shall satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder; and



          (m) cooperate and assist in any filings required to be made with the NASD.



A-11









 





          Each selling Holder of Registrable Securities as to which any registration is being effected
pursuant to this Agreement agrees, as a condition to the registration obligations with respect to
such Holder provided herein, to furnish to the Company such information regarding such Holder
required to be included in the Registration Statement, the ownership of Registrable Securities by
such Holder and the proposed distribution by such Holder of such Registrable Securities as the
Company may from time to time reasonably request in writing.



          Each Holder agrees that, upon receipt of any notice from the Company of the happening of any
event of the kind described in paragraph (e)(iv) of this Section, such Holder will forthwith
discontinue disposition of Registrable Securities pursuant to the affected Registration Statement
until such Holder’s receipt of the copies of the supplemented or amended Prospectus contemplated by
paragraph (j) of this Section and, if so directed by the Company, such Holder will deliver to the
Company (at the expense of the Company), all copies in its possession, other than permanent file
copies then in such Holder’s possession, of the Prospectus covering such Registrable Securities
which was current at the time of receipt of such notice.



          5. Indemnification; Contribution.



          (a) Indemnification by the Company. The Company agrees to indemnify and hold harmless
each Person who participates as an underwriter (any such Person being an “Underwriter”),
each Holder and their respective partners, directors, officers and employees and each Person, if
any, who controls any Holder or Underwriter within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act as follows:



          (i) against any and all losses, liabilities, claims, damages, judgments and reasonable
expenses (“Damages”) whatsoever, to which any such Person becomes subject, arising out of
any untrue statement or alleged untrue statement of a material fact contained in any Registration
Statement pursuant to which Registrable Securities were registered under the Securities Act,
including all documents incorporated therein by reference, or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to make the statements
therein not misleading or arising out of any untrue statement or alleged untrue statement of a
material fact contained in any Prospectus, including all documents incorporated therein by
reference, or any “issuer free writing prospectus” (as defined in Securities Act Rule 433), or the
omission or alleged omission therefrom of a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not misleading;



          (ii) against any and all Damages whatsoever, to which any such Person becomes subject, to the
extent of the aggregate amount paid in settlement of any litigation, investigation or proceeding by
any governmental agency or body, commenced or threatened, or of any other claim whatsoever based
upon any such untrue statement or omission, or any such alleged untrue statement or omission, if
such settlement is effected with the written consent of the Company; and



          (iii) against any and all reasonable expense whatsoever, to which any such Person becomes
subject (including fees and disbursements of counsel), incurred in investigating, preparing or
defending against any litigation, investigation or proceeding by any governmental agency or body,
commenced or threatened, in each case whether or not such Person is a party, or any claim
whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement
or omission, to the extent that any such expense is not paid under subparagraph (i) or (ii) above;



A-12









 







provided, however, that this indemnity agreement does not apply to any Holder or Underwriter with
respect to any Damages to the extent (i) arising out of any untrue statement or alleged untrue
statement of a material fact contained in any Prospectus, or the omission or alleged omission
therefrom of a material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, in any such case made in reliance upon
and in conformity with written information furnished to the Company by such Holder or Underwriter
expressly for use in a Registration Statement (or any amendment thereto) or any Prospectus (or any
amendment or supplement thereto) or (ii) arising out of or based upon offers or sales effected
directly by such Holder or Underwriter “by means of” (as defined in Securities Act Rule 159A) a
“free writing prospectus” (as defined in Securities Act Rule 405) that was not issued by or
authorized in writing by the Company. In addition to the foregoing, the Company shall indemnify
each Holder and its respective partners, directors, officers and employees and each Person, if any,
who controls any Holder within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act to the extent the indemnification provided by the Company to any Underwriter in
connection with a Registration exceeds the indemnity provided hereunder.



          (b) Indemnification by Holders. Bancorp, for itself and jointly and severally for and
on behalf of each of its Subsidiary Holders that may be a selling Holder hereunder, agrees to
indemnify and hold harmless the Company, and each Underwriter, and each of their respective
partners, directors, officers and employees (including each officer of the Company who signed the
Registration Statement), and each Person, if any, who controls the Company or any Underwriter
within the meaning of Section 15 of the Securities Act, against any and all Damages described in
the indemnity contained in paragraph (a) of this Section (provided that any settlement of the type
described therein is effected with the written consent of such selling Holder), as incurred, but
only (i) with respect to untrue statements or alleged untrue statements of a material fact
contained in any Prospectus or the omission or alleged omission therefrom of a material fact
necessary to make the statements therein, in light of the circumstances under which they were made,
not misleading, in any such case made in reliance upon and in conformity with written information
furnished to the Company by Bancorp or any Subsidiary Holder that may be a selling Holder hereunder
expressly for use in such Registration Statement (or any amendment thereto) or such Prospectus (or
any amendment or supplement thereto) or (ii) that arises out of or is based upon offers or sales by
such selling Holder “by means of” (as defined in Securities Act Rule 159A) a “free writing
prospectus” (as defined in Securities Act Rule 405) that was not issued by or authorized in writing
by the Company. Notwithstanding the foregoing, in no event shall Bancorp or any Subsidiary Holder
be liable under this Section 5(b) for any Damages in excess of the net proceeds realized by Bancorp
or such Subsidiary Holder in the sale of Registrable Securities to which such Damages relate or for
any Damages resulting from any untrue statements or alleged untrue statements of a material fact
based on information provided by a Holder other than Bancorp or any Bancorp Subsidiary Holder.



          (c) Conduct of Indemnification Proceedings. Each indemnified party or parties shall
give reasonably prompt notice to each indemnifying party or parties of any action or proceeding
commenced against it in respect of which indemnity may be sought hereunder, but any failure to give
such notice shall not relieve the indemnifying party or parties to any obligation that it or they
may have under this indemnity agreement, except to the extent that the indemnifying party is
materially prejudiced by such failure to give notice. If the indemnifying party or parties so
elects within a reasonable time after receipt of such notice, the indemnifying party or parties may
assume the defense of such action or proceeding at such indemnifying party’s or parties’ expense
with counsel chosen by the indemnifying party or parties and approved by the indemnified party



A-13









 







defendant in such action or proceeding, which approval shall not be unreasonably withheld;
provided, however, that, if such indemnified party or parties determines in good faith that a
conflict of interest exists and that therefore it is advisable for such indemnified party or
parties to be represented by separate counsel or that, upon advice of counsel, there may be legal
defenses available to it or them which are different from or in addition to those available to the
indemnifying party, then the indemnifying party or parties shall not be entitled to assume such
defense and the indemnified party or parties shall be entitled to separate counsel (limited in each
jurisdiction to one counsel for all Underwriters and another counsel for all other indemnified
parties under this Agreement) at the indemnifying party’s or parties’ expense. If an indemnifying
party or parties is not so entitled to assume the defense of such action or does not assume such
defense, after having received the notice referred to in the first sentence of this paragraph, the
indemnifying party or parties will pay the reasonable fees and expenses of counsel for the
indemnified party or parties (limited in each jurisdiction to one counsel for all Underwriters and
another counsel for all other indemnified parties under this Agreement). No indemnifying party or
parties will be liable for any settlement effected without the written consent of such indemnifying
party or parties, which consent shall not be unreasonably withheld. If an indemnifying party is
entitled to assume, and assumes, the defense of such action or proceeding in accordance with this
paragraph, such indemnifying party or parties shall not, except as otherwise provided in this
subsection (c), be liable for any fees and expenses of counsel for the indemnified parties incurred
thereafter in connection with such action or proceeding.



          (d) Contribution. (i) In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in this Section is for any reason held
to be unenforceable by the indemnified parties although applicable in accordance with its terms in
respect of any losses, liabilities, claims, damages, judgments and expenses suffered by an
indemnified party referred to therein, each applicable indemnifying party, in lieu of indemnifying
such indemnified party, shall contribute to the amount paid or payable by such indemnified party as
a result of such losses, liabilities, claims, damages, judgments and expenses in such proportion as
is appropriate to reflect the relative fault of the Company on the one hand and of the liable
selling Holders (including, in each case, that of their respective officers, directors, employees
and agents) on the other, in connection with the statements or omissions which resulted in such
losses, liabilities, claims, damages, judgments or expenses, as well as any other relevant
equitable considerations. The relative fault of the Company on the one hand and of the liable
selling Holders (including, in each case, that of their respective officers, directors, employees
and agents) on the other, shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company, on the one hand, or by or on behalf
of the selling Holders, on the other, and the parties’ relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission. The amount paid or
payable by a party as a result of the losses, liabilities, claims, damages, judgments and expenses
referred to above shall be deemed to include, subject to the limitations set forth in paragraph (c)
of this Section, any legal or other fees or expenses reasonably incurred by such party in
connection with investigating or defending any action or claim.



          (ii) The Company and each Holder agree that it would not be just and equitable if contribution
pursuant to this paragraph (d) were determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations referred to in sub-paragraph
(i) above. Notwithstanding the provisions of this paragraph (d), in the case of



A-14









 







distributions to the public, an indemnifying Holder shall not be required to contribute any
amount in excess of the amount by which (A) the total price at which the Registrable Securities
sold by such indemnifying Holder and distributed to the public were offered to the public exceeds
(B) the amount of any damages which such indemnifying Holder has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent misrepresentation.



          (iii) For purposes of this Section, each Person, if any, who controls a Holder or an
Underwriter within the meaning of Section 15 of the Securities Act (and their respective partners,
directors, officers and employees) shall have the same rights to contribution as such Holder or
Underwriter; and each director of the Company, each officer of the Company who signed the
Registration Statement and each Person, if any, who controls the Company within the meaning of
Section 15 of the Securities Act, shall have the same rights to contribution as the Company.



          6. Standstill.



          Bancorp agrees that from and after the date of this Agreement, until the later to occur of (1)
the date on which the Registrable Securities that are Common Stock beneficially owned by Bancorp
and its Affiliates ceases to constitute greater than 5% of the issued and outstanding shares of
Common Stock (after giving effect to the conversion by Bancorp and its Affiliates of any Warrants
owned, directly or indirectly, by such Persons) and (2) the tenth anniversary of the Closing Date,
it will not, and it will cause its Affiliates not to, without the prior written consent of the
Company:




     (a) acquire, offer or propose to acquire, or agree to acquire, directly or indirectly,
whether through market purchases, tender or exchange offer or otherwise, record or
beneficial ownership of, or the right to vote, more than 19.9% of the outstanding Voting
Securities or outstanding Capital Stock of the Company or direct or indirect rights to
acquire more than 19.9% of the outstanding Voting Securities of the Company or any
Subsidiary thereof, or of any successor to or Person in control of the Company, or any
assets of the Company or any Subsidiary or division thereof or of any such successor or
controlling Person, provided that in the event the Company elects to satisfy any contingent
payment rights in the Merger Agreement by a cash payment, Bancorp may purchase additional shares not to exceed 24.9% of the outstanding Voting Securities or outstanding Capital Stock
of the Company;




     (b) make or in any way participate, directly or indirectly, in any “solicitation” of
“proxies” to vote (as such terms are used in the rules of the SEC), or seek to advise or
influence any Person with respect to the voting of, any Voting Securities of the Company;




     (c) other than as contemplated by the Merger Agreement, propose or seek to effect a
merger, consolidation, recapitalization, reorganization, restructuring, sale, lease,
exchange or other disposition of all or substantially all of the assets of or other business
combination involving, or a tender or exchange offer for securities of, the Company or any
of its Subsidiaries or any material portion of the Company’s or such Subsidiary’s business
or assets or any other type of transaction that would result in a change in control of the
Company;



A-15









 






     (d) other than as contemplated by the Merger Agreement, make any public announcement
with respect to, or submit a proposal for or offer of (with or without conditions), any
extraordinary transaction involving the Company or any of its securities or assets;




     (e) except as provided in the Merger Agreement, seek to exercise any control or
influence over the management of the Company or the Board or any of the businesses,
operations or policies of the Company;




     (f) form, join or in any way participate in a “group” as defined in Regulation 13D-G
under the Exchange Act, in connection with any of the foregoing; or




     (g) request the Company, directly or indirectly, to amend or waive any provision of
this Section 6.



          7. Miscellaneous.



          (a) Amendments and Waivers. This Agreement may be amended, and the Company may take
any action herein prohibited, or omit to perform any act herein required to be performed by it,
only if the Company shall have obtained the written consent to such amendment, action or omission
to act, of the holder or holders of a majority (by number of shares) of the Registrable Securities
at the time outstanding. Each holder of any Registrable Securities at such time or thereafter
outstanding shall be bound by any consent authorized by this Section 7(a), whether or not such
Registrable Securities shall have been marked to indicate such consent. No amendment, modification
or discharge of this Agreement, and no waiver hereunder, shall be valid or binding unless set forth
in writing. Any such waiver shall constitute a waiver only with respect to the specific matter
described in such writing and shall in no way impair the rights of the party or parties granting
such waiver in any other respect or at any other time.



          (b) Notices. All notices and other communications provided for or permitted hereunder
shall be made in writing by hand delivery, facsimile or any courier guaranteeing overnight delivery
(i) if to a Holder, at the most current address given by such Holder to the Company by means of a
notice given in accordance with the provisions of this paragraph (b), which address initially is,
with respect to Bancorp as of the date hereof, at BankAtlantic Bancorp, 2100 Cypress Creek Road,
Fort Lauderdale, Florida 33309, Attention: Alan B. Levan, Chairman facsimile number (954) 940-5050,
and thereafter at such other address, notice of which is given in accordance with the provisions of
this paragraph, with a copy to Stearns Weaver Miller Weissler Alhadeff & Sitterson, P.A., 150 W.
Flagler Street, Miami, Florida 33130, Attention: Alison W. Miller, facsimile number (305) 789-3395,
and with respect to any Person who becomes a Holder after the date hereof, the address of such
Holder in the stock or warrant records of the Company or (ii) if to the Company, at Stifel
Financial Corp., 501 N. Broadway, St. Louis, Missouri 63102, Attention: Ronald J. Kruszewski,
Chairman, President and CEO, facsimile number (314) 342-2115, and thereafter at such other
address, notice of which is given in accordance with the provisions of this paragraph (c), with a
copy to Bryan Cave LLP, One Metropolitan Square, Suite 3600, 211 North Broadway, St. Louis,
Missouri 63102, Attention: Robert J. Endicott, facsimile number (314) 259-2020. Notwithstanding
the foregoing, the Company shall not be obligated to provide any notice to any Holder which is not
a party to this Agreement except with respect to a Required Registration



A-16









 







Statement or Incidental Registration Statement which has been filed and pursuant to which such
Holder is identified as a selling stockholder.



          All such notices and communications shall be deemed to have been duly given at the time
delivered by hand, if personally delivered; when receipt is acknowledged, if faxed; and on the next
business day, if timely delivered to a courier guaranteeing overnight delivery.



          (c) Successors and Assigns. This Agreement shall inure to the benefit of and be
binding upon the successors, assigns and transferees of each of the parties without the need for an
express assignment. If any successor, assignee or transferee of any Holder shall acquire
Registrable Securities in any manner, whether by operation of law or otherwise, such Registrable
Securities shall be held subject to all of the terms of this Agreement, and by taking and holding
such Registrable Securities such Person shall conclusively be deemed to have agreed to be bound by
and to perform all of the terms and provisions of this Agreement and to receive the benefits
hereof. Notwithstanding the foregoing, nothing in this Section 7 is intended to enlarge the class
of Persons which are Holders, as defined in Section 1 of this Agreement, and thus entitled to the
rights granted hereunder. For purposes of this Agreement, “successor” for any entity other than a
natural person means a successor to such entity as a result of such entity’s merger, consolidation,
liquidation, dissolution, sale of substantially all of its assets or similar transaction.



          (d) Counterparts. This Agreement may be executed in two or more counterparts, each of
which, when so executed and delivered, shall be deemed to be an original, but all of which
counterparts, taken together, shall constitute one and the same instrument.



          (e) Descriptive Headings, Etc. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning of terms contained herein.
Unless the context of this Agreement otherwise requires: (1) words of gender shall be deemed to
include each other gender; (2) words using the singular or plural number shall also include the
plural or singular number, respectively; (3) the words “hereof,” “herein” and “hereunder” and words
of similar import when used in this Agreement shall refer to this Agreement as a whole and not to
any particular provision of this Agreement, and Article, Section and paragraph references are to
the Articles, Sections and paragraphs of this Agreement unless otherwise specified; (4) the word
“including” and words of similar import when used in this Agreement mean “including, without
limitation,” unless otherwise specified; (5) “or” is not exclusive; and (6) provisions apply to
successive events and transactions.



          (f) Severability. In the event that any one or more of the provisions, paragraphs,
words, clauses, phrases or sentences contained herein, or the application thereof in any
circumstances, is held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision, paragraph, word, clause, phrase or
sentence in every other respect and of the other remaining provisions, paragraphs, words, clauses,
phrases or sentences hereof shall not be in any way impaired, it being intended that all rights,
powers and privileges of the parties hereto shall be enforceable to the fullest extent permitted by
law.



          (g) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF DELAWARE (WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAW PRINCIPLES
THEREOF).



A-17









 





          (h) Specific Performance. The parties hereto acknowledge that there would be no
adequate remedy at law if any party fails to perform in any material respect any of its obligations
hereunder, and accordingly agree that each party, in addition to any other remedy to which it may
be entitled at law or in equity, shall be entitled to compel specific performance of the
obligations of any other party under this Agreement in accordance with the terms and conditions of
this Agreement in any court of the United States or any State thereof having jurisdiction.



          (i) Entire Agreement. This Agreement is intended by the parties as a final expression
of their agreement and, subject to the last sentence of this paragraph (i), is intended to be a
complete and exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein. This Agreement supersedes all prior agreements and
understandings between the Company, on the one hand, and the other parties to this Agreement, on
the other, with respect to the subject matter hereof. In case of any conflict between this
Agreement and the Merger Agreement, the terms and provisions of the Merger Agreement shall control.



[Remainder of Page Intentionally Left Blank; Signature Page Follows]




A-18









 







IN WITNESS WHEREOF, each of the undersigned has executed this Agreement or caused this Agreement to
be executed on its behalf as of the date first written above.




	 	 	 	 	 
	 	STIFEL FINANCIAL CORP.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	BANKATLANTIC BANCORP, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 




A-19









 





Exhibit B



THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER
ANY STATE SECURITIES LAWS, IN RELIANCE UPON EXEMPTIONS FROM REGISTRATION FOR NON-PUBLIC OFFERINGS.
THIS SECURITY MAY NOT BE SOLD OR TRANSFERRED UNLESS IT IS REGISTERED UNDER THE ACT AND UNDER
APPLICABLE STATE SECURITIES LAWS OR UNLESS THE ISSUER RECEIVES AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO IT THAT AN EXEMPTION FROM REGISTRATION IS AVAILABLE.




			
	 	 	 
	Issuance Date:                                         , 2007
	 	 Warrant No.:                                         






STIFEL FINANCIAL CORP.




WARRANT TO PURCHASE ___SHARES OF

COMMON STOCK, $0.15 PAR VALUE PER SHARE




     This is to certify that, for value received,                      (“Warrantholder”), is entitled to
purchase, subject to the provisions of this Warrant, from Stifel Financial Corp., a corporation
organized under the laws of Delaware (“Company”), at any time and from time to time after the
issuance date hereof (“Exercise Date”) but not later than 5:00 P.M., Eastern time, on                     ,
2012 [the fifth (5th) anniversary of such issuance date] (“Expiration Date”), ___
shares (“Warrant Shares”) of Common Stock, $0.15 par value (“Common Stock”), of the Company, at an
exercise price per share equal to $36.00 (the exercise price in effect from time to time hereafter
being herein called the “Exercise Price”). The number of Warrant Shares purchasable upon exercise
of this Warrant and the Exercise Price shall be subject to adjustment from time to time as
described herein.



     This Warrant is one of one or more Warrants of the same form and having the same terms as this
Warrant and has been issued pursuant to the terms of the Agreement and Plan of Merger dated January
___, 2007 (“Merger Agreement”) among the Company, SF RB Merger Sub, Inc., a New Jersey corporation
wholly owned by the Company, Ryan Beck Holdings, Inc., a New Jersey corporation, and BankAtlantic
Bancorp, Inc., a Florida corporation. Capitalized terms used herein and not defined shall have the
meaning specified in the Merger Agreement.



               1. Registration. The Company shall maintain books for the transfer and registration
of the Warrant. Upon the initial issuance of the Warrant, the Company shall issue and register the
Warrant in the name of the Warrantholder.



               2. Transfers. This Warrant and the Warrant Shares are subject to restrictions on
transfer set forth in his Warrant (and the rights hereunder) and may not be transferred or
assigned, in whole or in part (other than pursuant to an effective registration statement under the
Securities Act of 1933, as amended (the “Act”)), unless and until (i) the Warrantholder shall have
notified the Company of the proposed transfer or assignment and shall have furnished the Company
with a statement of the circumstances surrounding the proposed transfer and assignment and
assurance that the proposed transfer or assignment is in compliance with all applicable laws, and
(ii) if requested by the Company, at the expense of such Warrantholder or its transferee, the
Warrantholder shall have furnished to the Company an opinion of counsel, reasonably satisfactory to
the Company, to the effect that such transfer or assignment may be made



B-1









 







without registration under the Act. Subject to such restrictions, the Company shall transfer
this Warrant from time to time, upon the books to be maintained by the Company for that purpose,
upon surrender hereof for transfer properly endorsed or accompanied by appropriate instructions for
transfer. Upon any such transfer, a new Warrant shall be issued to the transferee and the
surrendered Warrant shall be canceled by the Company. References to Warrantholder or holder shall
include any such transferee.



               3. Exercise of Warrant.



     (a) Subject to the provisions hereof, the Warrantholder may exercise this Warrant in
whole or in part at any time upon surrender of the Warrant, together with delivery of the duly
executed Warrant exercise form attached hereto (the “Exercise Agreement”) and payment of the
Exercise Price for that number of Warrant Shares then being purchased, to the Company during
normal business hours on any business day at the Company’s principal executive offices (or
such other office or agency of the Company as it may designate by notice to the holder
hereof).



     (b) Payment made pursuant to clause (a) above may be made, at the option of the
Warrantholder: (x) by cash, money order, certified or bank cashier’s check or wire transfer,
(y) the surrender to the Company of securities of the Company having an aggregate Market Price
(as hereinafter defined) equal to the aggregate Exercise Price, or (z) the delivery of a
notice to the Company that the Warrantholder is exercising this Warrant by authorizing the
Company to reduce the number of shares of Common Stock issuable upon such exercise by the
number of shares having an aggregate Market Price equal to the aggregate Exercise Price.



     (c) The following terms shall have the following meanings:



          “Market Price” with respect to any security of the Company on any day means the average
of the daily Closing Prices of a share or unit of such security for the 30 consecutive
Business Days ending on the most recent Business Day for which a Closing Price is available;
provided, however, that in the event that, in the case of Common Stock, the Market Price is
determined during a period following the announcement by the Company of (A) a dividend or
distribution of Common Stock, or (B) any subdivision, combination or reclassification of
Common Stock and prior to the expiration of 20 Business Days after the ex-dividend date for
such dividend or distribution, or the record date for such subdivision, combination or
reclassification, then, and in each such case, the Market Price shall be appropriately
adjusted to reflect the current market price per share equivalent of Common Stock.



          “Closing Price” with respect to any security on any day means (a) if such security is
listed or admitted for trading on a national securities exchange, the reported last sales
price regular way or, if no such reported sale occurs on such day, the average of the closing
bid and asked prices regular way on such day, in each case as reported in the principal
consolidated transaction reporting system with respect to securities listed on the principal
national securities exchange on which such class of security is listed or admitted to trading,
or (b) if such security is not listed or admitted to trading on any national securities
exchange, the last quoted sales price, or, if not so quoted, the average of the high bid and
low asked prices in the over-the-counter market on such day as reported by the OTC Bulletin
Board Research Service, or, if such service is not available, by NASDAQ or any comparable
system then in use or, if not



B-2









 







so reported, as reported by any New York Stock Exchange member firm reasonably selected by the
Company for such purpose.



          “Business Day” shall mean (a) if any class of Common Stock is listed or admitted to trading on
a national securities exchange, a day on which such national securities exchange is open for
business or (b) if no class of Common Stock is so listed or admitted to trading, a day on which any
New York Stock Exchange member firm is open for business.



     (d) The Warrant Shares so purchased shall be deemed to be issued to the holder hereof, as
the record owner of such shares, as of the close of business on the date on which the Company
shall have received from the Warrantholder (i) this Warrant (or evidence of loss, theft or
destruction thereof and security or indemnity satisfactory to the Company), (ii) payment of
the Exercise Price and (iii) the completed Exercise Agreement. Certificates for the Warrant
Shares so purchased, representing the aggregate number of shares specified in the Exercise
Agreement, shall be delivered to the holder hereof or such holder’s designee within a
reasonable time, not exceeding five (5) business days, after this Warrant shall have been so
exercised. The certificates so delivered shall be in such denominations as may be requested
by the holder hereof and shall be registered in the name of such holder or such other name as
shall be designated by such holder. If this Warrant shall have been exercised only in part,
then, unless this Warrant has expired, the Company shall, at its expense, at the time of
delivery of such certificates, deliver a new Warrant to the Warrantholder representing the
number of shares with respect to which this Warrant shall not then have been exercised.



     (e) By acceptance of this Warrant, Warrantholder acknowledges that Warrantholder is
acquiring the Warrant for Warrantholder’s own account and not with a view to distribution or
resale. Upon exercise of this Warrant, Warrantholder will make a similar written
representation with respect to the shares to be received upon exercise unless, in the opinion
of counsel to the Company, such representation is not necessary or appropriate to assure
compliance with the registration provisions of the Act or any applicable state securities law.



               4. Compliance with the Securities Act of 1933. Neither this Warrant nor the shares of
Common Stock issued upon exercise hereof nor any other security issued or issuable upon exercise of
this Warrant may be offered or sold except as provided in this Warrant and in conformity with the
Act, and then only against receipt of an agreement of such person to whom such offer of sale is
made to comply with the provisions of this Section 4 with respect to any resale or other
disposition of such security. The Company may cause the legend set forth on the first page of this
Warrant to be set forth on each Warrant or a similar legend to be set forth on the Warrant Shares
or any other security issued or issuable upon exercise of this Warrant, unless counsel for the
Company is of the opinion as to any such security that such legend is unnecessary.



               5. Payment of Taxes. Subject to the provisions hereof, the Company will pay any and
all documentary stamp or other taxes attributable to the issuance of Warrant Shares; provided,
however, that the Company shall not be required to pay any tax or taxes which may be payable in
respect of any transfer involved in the issuance or delivery of any certificates for Warrant Shares
in a name other than that of the registered holder of this Warrant in respect of which such Warrant
Shares are issued. The holder shall be responsible for income taxes due under federal or state
law, if any such tax is due.



B-3









 





               6. Mutilated or Missing Warrants. In case this Warrant shall be mutilated, lost,
stolen, or destroyed, the Company shall issue in exchange and substitution of and upon cancellation
of the mutilated Warrant, or in lieu of and in substitution for the Warrant lost, stolen or
destroyed, a new Warrant of like tenor and for the purchase of a like number of Warrant Shares, but
only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or
destruction of the Warrant, and with respect to a lost, stolen or destroyed Warrant, reasonable
indemnity or bond with respect thereto, if reasonably requested by the Company.



               7. Reservation of Common Stock. The Company hereby represents and warrants that there
have been reserved, and the Company shall at all times keep reserved, out of the authorized and
unissued shares of Common Stock, a number of shares sufficient to provide for the exercise of the
rights of purchase represented by the Warrant in full (without regard to any restrictions on
beneficial ownership contained herein), and the transfer agent for the Common Stock, including
every subsequent transfer agent for the Common Stock or other shares of the Company’s capital stock
issuable upon the exercise of any right of purchase aforesaid (“Transfer Agent”), shall be
irrevocably authorized and directed at all times to reserve such number of authorized and unissued
shares of Common Stock as shall be requisite for such purpose. The Company represents and warrants
to the Warrantholder that all Warrant Shares issued upon exercise of the Warrant shall be, at the
time of issuance of and delivery of such Warrant Shares, duly authorized, validly issued, fully
paid and non-assessable shares of Common Stock of the Company.



               8. Adjustments. Subject and pursuant to the provisions of this Section 8, the
Exercise Price and number of Warrant Shares subject to this Warrant shall be subject to
adjustment from time to time as set forth hereinafter.



          (a) If the Company shall at any time or from time to time while the Warrant is
outstanding, pay a dividend or make a distribution on its Common Stock in shares of capital
stock, subdivide its outstanding shares of Common Stock into a greater number of shares or
combine its outstanding shares into a smaller number of shares, issue by reclassification of
its outstanding shares of Common Stock any shares of its capital stock (including any such
reclassification in connection with a consolidation or merger in which the Company is the
continuing corporation), then the number of Warrant Shares purchasable upon exercise of the
Warrant and the Exercise Price in effect immediately prior to the date upon which such change
shall become effective, shall be adjusted by the Company so that the Warrantholder thereafter
exercising the Warrant shall be entitled to receive the number of shares of Common Stock or
other capital stock which the Warrantholder would have received if the Warrant had been
exercised immediately prior to such event upon payment of an Exercise Price that has been
adjusted to reflect a fair allocation of the economics of such event to the Warrantholder.
Such adjustments shall be made successively whenever any event listed above shall occur.



          (b) If any capital reorganization, reclassification of the capital stock of the Company,
consolidation or merger of the Company with another corporation in which the Company is not
the survivor, or sale, transfer or other disposition of all or substantially all of the
Company’s assets to another corporation shall be effected, then, as a condition of such
reorganization, reclassification, consolidation, merger, sale, transfer or other disposition,
lawful and adequate provision shall be made whereby each Warrantholder shall thereafter have
the right to purchase and receive upon the basis and upon the terms and conditions herein
specified and in lieu of the Warrant Shares immediately theretofore issuable upon exercise of
the



B-4









 







Warrant, such shares of stock, securities or assets as would have been issuable or payable in
connection with such reorganization, reclassification, consolidation, merger, sale, transfer
or other disposition with respect to or in exchange for a number of Warrant Shares equal to
the number of Warrant Shares issuable upon exercise of the Warrant, had the Warrant been
exercised immediately prior to such reorganization, reclassification, consolidation, merger,
sale, transfer or other disposition, and in any such case appropriate provision shall be made
with respect to the rights and interests of each Warrantholder to the end that the provisions
hereof (including, without limitation, any provision for adjustment of the Exercise Price)
shall thereafter be applicable, as nearly equivalent as may be practicable in relation to any
shares of stock, securities or properties thereafter deliverable upon the exercise thereof.
The Company shall not effect any such consolidation, merger, sale, transfer or other
disposition unless prior to or simultaneously with the consummation thereof the successor
corporation (if other than the Company) resulting from such consolidation or merger, or the
corporation purchasing or otherwise acquiring such assets or other appropriate corporation or
entity shall assume the obligation to deliver to the holder of the Warrant such shares of
stock, securities or assets as, in accordance with the foregoing provisions, such holder may
be entitled to purchase and the other obligations under this Warrant. The provisions of this
paragraph (b) shall similarly apply to successive reorganizations, reclassifications,
consolidations, mergers, sales, transfers or other dispositions.



          (c) In case the Company shall fix a payment date for the making of a distribution to all
holders of Common Stock (including any such distribution made in connection with a
consolidation or merger in which the Company is the continuing corporation) of evidences of
indebtedness or assets (other than cash dividends or cash distributions payable out of
consolidated earnings or earned surplus or dividends or distributions referred to in Section
8(a)), or subscription rights or warrants, the Exercise Price to be in effect after such
payment date shall be determined by multiplying the Exercise Price in effect immediately prior
to such payment date by a fraction, the numerator of which shall be the total number of shares
of Common Stock outstanding multiplied by the Market Price per share of Common Stock (as
determined pursuant to Section 3), less the fair market value (as determined by the Company’s
Board of Directors in good faith) of said assets or evidences of indebtedness so distributed,
or of such subscription rights or warrants, and the denominator of which shall be the total
number of shares of Common Stock outstanding multiplied by such Market Price per share of
Common Stock. Such adjustment shall be made successively whenever such a payment date is
fixed.



          (d) An adjustment shall become effective immediately after the payment date in the case
of each dividend or distribution and immediately after the effective date of each other event
which requires an adjustment.



          (e) In the event that, as a result of an adjustment made pursuant to Section 8(a), the
holder of this Warrant shall become entitled to receive any shares of capital stock of the
Company other than shares of Common Stock, the number of such other shares so receivable upon
exercise of this Warrant shall be subject thereafter to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions with respect to the
Warrant Shares contained in this Warrant.



B-5









 





               9. Fractional Interest. The Company shall not be required to issue fractions of
Warrant Shares upon the exercise of the Warrant. If any fraction of a Warrant Share would, except
for the provisions of this Section, be issuable upon the exercise of the Warrant (or specified
portions thereof), the Company shall round such calculation to the nearest whole number and
disregard the fraction.



               10. Benefits. Nothing in this Warrant shall be construed to give any person, firm or
corporation (other than the Company and the Warrantholder) any legal or equitable right, remedy or
claim, it being agreed that this Warrant shall be for the sole and exclusive benefit of the Company
and the Warrantholder.



               11. Notices to Warrantholder. Upon the happening of any event requiring an adjustment
of the Exercise Price, the Company shall forthwith give written notice thereof to the Warrantholder
at the address appearing on the records of the Company, stating the adjusted Exercise Price and the
adjusted number of Warrant Shares resulting from such event and setting forth in reasonable detail
the method of calculation and the facts upon which such calculation is based. In the event of a
dispute with respect to any such calculation, the certificate of the Company’s independent
certified public accountants shall be conclusive evidence of the correctness of any computation
made, absent manifest error. Failure to give such notice to the Warrantholder or any defect
therein shall not affect the legality or validity of the subject adjustment.



               12. Identity of Transfer Agent. The Transfer Agent for the Common Stock is UMB Bank,
N.A. Forthwith upon the appointment of any subsequent transfer agent for the Common Stock or other
shares of the Company’s capital stock issuable upon the exercise of the rights of purchase
represented by the Warrant, the Company will fax to the Warrantholder a statement setting forth the
name and address of such transfer agent.



               13. Notices. Any notice pursuant hereto to be given or made by the Warrantholder to
or on the Company shall be sufficiently given or made if delivered personally or by facsimile or if
sent by an internationally recognized courier, addressed as follows:


Stifel Financial Corp.

501 N. Broadway

St. Louis, Missouri 63102

Fax: (314) 342-2115

Attention: Chief Financial Officer



or such other address as the Company may specify in writing by notice to the Warrantholder
complying as to delivery with the terms of this Section 13.



Any notice pursuant hereto to be given or made by the Company to or on the Warrantholder shall be
sufficiently given or made if personally delivered or if sent by an internationally recognized
courier service by overnight or two-day service, to the address set forth on the books of the
Company or, as to each of the Company and the Warrantholder, at such other address as shall be
designated by such party by written notice to the other party complying as to delivery with the
terms of this Section 13.




B-6









 








     All such notices, requests, demands, directions and other communications shall, when sent by
courier, be effective two (2) days after delivery to such courier as provided and addressed as
aforesaid. All faxes shall be effective upon receipt.



               14. Registration Rights. The holder of this Warrant is entitled to the benefit of
certain registration rights in respect of the Warrant Shares as provided in the Merger Agreement
and a Registration Rights Agreement between the parties hereto.



               15. Successors. All the covenants and provisions hereof by or for the benefit of the
Warrantholder shall bind and inure to the benefit of its respective successors and assigns
hereunder.



               16. Governing Law. This Warrant shall be deemed to be a contract made under the laws
of the State of Delaware, without giving effect to its conflict of law principles, and for all
purposes shall be construed in accordance with the laws of said State.



          WHEREOF, the Company has caused this Warrant to be duly executed as of the date first written
above.



	 	 	 	 	 
	 	STIFEL FINANCIAL CORP.

 	 
	 	By:  	 	 
	 	Name:  	 	 	 
	 	Title:  	 	 	 
	 




B-7









 








STIFEL FINANCIAL CORP.

WARRANT EXERCISE FORM




Stifel Financial Corp.

501 N. Broadway

St. Louis, Missouri 63102

Fax: (314) 342-2115

Attention: Chief Financial Officer





This undersigned hereby irrevocably elects to exercise the right of purchase represented by the
within Warrant for, and to purchase thereunder                                          shares of Common Stock (“Warrant
Shares”) provided for therein, and requests that certificates for the Warrant Shares be issued as
follows:



	 	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Address:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 





and, if the number of Warrant Shares shall not be all the Warrant Shares
purchasable upon exercise of the Warrant, that a new Warrant for the
balance of the Warrant Shares be issued.



Dated:                                        




Signature:                                                            




	 	 	 	 	 	 	 
	Print Name:	 	 	 	 
	 

	 	 	 	 	 	 
	Address:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 






B-8









 





Exhibit C




Form of Certificate of Incorporation for Merger Sub




CERTIFICATE OF INCORPORATION

OF

SF RB MERGER SUB, INC.




     The undersigned, being over the age of eighteen years, in order to form a corporation pursuant
to the provisions of the New Jersey Business Corporation Act, does hereby execute this Certificate
of Incorporation:



ARTICLE I

CORPORATE NAME




     The name of the corporation is SF RB Merger Sub, Inc.



ARTICLE II

CORPORATE PURPOSE




     The purpose for which the corporation is organized is to engage in any activity within the
purposes for which corporations may be organized under the New Jersey Business Corporation Act (the
“Act”).



ARTICLE III

CAPITAL STOCK




     The aggregate number of shares which the corporation shall have authority to issue is 1,000
shares of common stock with a par value of $0.01 per share.



ARTICLE IV

REGISTERED AGENT AND REGISTERED ADDRESS



     The address of the corporation’s initial registered office is 820 Bear Tavern Road, West Trenton,
New Jersey 08628, and the name of the corporation’s initial registered agent at such address is
Corporation Trust Company.




C-1









 








ARTICLE V

INITIAL BOARD OF DIRECTORS




     The number of directors constituting the first board is three (3), and the names and addresses
of the persons who are to serve as such directors are:



     David Minnick, 501 N. Broadway, St. Louis, Missouri 63102



     Neal Burkemper, 501 N. Broadway, St. Louis, Missouri 63102



     Jim Zemlyak, 501 N. Broadway, St. Louis, Missouri 63102



     The number of directors shall be governed by the by-laws of the corporation.



ARTICLE VI

INDEMNIFICATION




     1. Right to Indemnification. Each person who was or is made a party or is threatened
to be made a party to or is otherwise involved in any action, suit or proceeding, whether civil,
criminal, administrative or investigative (hereinafter a “proceeding”), by reason of the fact that
he or she is or was a director or an officer of the corporation (or any predecessor of the
corporation, including any proceeding which relates to events or activities involving a predecessor
corporation which took place prior to the formation of the corporation) or is or was serving at the
request of the corporation (or any predecessor of the corporation, including any proceeding which
relates to events or activities involving a predecessor corporation which took place prior to the
formation of the corporation) as a director, officer, employee or agent of another corporation or
of a partnership, joint venture, trust or other enterprise, including service with respect to an
employee benefit plan (hereinafter an “indemnitee”), shall be indemnified and held harmless by the
corporation to the fullest extent authorized by the New Jersey Business



C-2









 







Corporation Act, as such Act exists or may hereafter be amended (but, in the case of any such
amendment, only to the extent that such amendment permits the corporation to provide broader
indemnification rights than such Act permitted the corporation to provide prior to such amendment),
against all expense, liability and loss reasonably incurred or suffered by such indemnitees in
connection therewith. With respect to amounts paid in settlement, the settlement of a proceeding
must be approved by the corporation in advance for the indemnification obligations set forth herein
to bind the corporation.



     2. Non-Exclusivity of Right. The rights to indemnification conferred in this ARTICLE
VI shall not be exclusive of any other right which any person may have or hereafter acquire under
any statute by agreement, vote of stockholders or disinterested directors or otherwise.



     3. Insurance. The corporation may maintain insurance, at its expense, to protect
itself and any director, officer, employee or agent of the corporation or another corporation,
partnership, joint venture, trust or other enterprise against any expense, liability or loss,
whether or not the corporation would have the power to indemnify such person against such expense,
liability or loss under the New Jersey Business Corporation Act.



     4. Indemnification of Employees and Agents of the corporation. The corporation may,
to the extent authorized from time to time by the Board of Directors, grant rights to
indemnification and to the advancement of expenses to any employee or agent of the corporation (or
its predecessors) to the fullest extent of the provisions of this Article with respect to the
indemnification and advancement of expenses of directors and officers of the corporation. Any
decision by the corporation to utilize its authority hereunder shall not be binding upon the
corporation unless reduced to writing and signed by an authorized officer of the corporation.



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ARTICLE VII

EXCULPATION




     To the full extent from time to time permitted by law, no director or officer of the
corporation shall be personally liable to the corporation (or any predecessor of the corporation)
or to any of its shareholders for damages for breach of any duty owed to the corporation (or any
predecessor of the corporation) or its shareholders except for liability for any breach of duty
based upon an act or omission (a) in breach of such director’s or officer’s duty of loyalty to the
corporation or its shareholders, (b) not in good faith or involving a knowing violation of law or
(c) resulting in receipt by such director or officer of an improper personal benefit. Neither the
amendment or repeal of this Article, nor the adoption of any provision of this Certificate of
Incorporation inconsistent with this Article, shall eliminate or reduce the protection afforded by
this Article to a director or officer of the corporation in respect to any matter which occurred,
or any cause of action, suit or claim which but for this Article would have accrued or arisen,
prior to such amendment, repeal or adoption.



ARTICLE VIII

NAME AND ADDRESS OF THE INCORPORATOR




     The name and address of the incorporator is Barb Cavicchia, 211 N. Broadway, Suite 3600, St.
Louis, Missouri 63102-2750.



     IN WITNESS WHEREOF, the undersigned has executed this Certificate of Incorporation this 8th
day of January 2007.



     
               
                
               
               
              





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