(b)(2) 

(b)(4) 

(b)(4) 

SETTLEMENT AGREEMENT 

This Settlement Agreement ("this Agreement") dated effective as of September 8, 2009 

(the "Effective Date") is entered into by and between AEG Facilities, Inc.; Craig Leipold; DGB 

Investments, Inc.; Federal Deposit Insurance Corporation, as Receiver for Security Pacific Bank; 

· Heritage Bank of Commerce; Modem Bank, N.A.; and Valley Community Bank (each a 

"Claimant" and, collectively, "Claimants" and each Claimant that executes this Settlement· 

Agreement shall be referred to as a "Settling Claimant"), on the one hand, and D. Jonathan 

Merriman ("D. t Merriman"), Rob Ford ("Ford"), Merriman Curhan Ford Group, Inc. ("MCF") 

and Merriman Curhan Ford & Co., Inc. ("MCF Co."), collectively referred to as the "Merriman 

defendants," on the other hand. The .Settling Claimants and the Merriman defendants are 

collectiv~ly referred to herein as "the Parties." 

RECITALS OF FACT 

WHEREAS, MCF is a Delaware corporation whose shares are listed on the NASDAQ, 

whose subsidiary, MCF Co. is a broker-dealer regulated by Financial Industry Regulatory 

Authority ("FINRA") and the Securities and Exchange Commission ("SEC"). 

WHEREAS, D. Jonathan Merriman is one of the founders of MCF and currently serves 

as the Chief Executive Officer of MCF, and Rob Ford also is one of the founders of MCF and 

currently serves as the head ofMCF Services Group. 

WHEREAS, Claimants have asserted various claims for damages against the Merriman 

defendants arising out ofloans made by Claimants to William J. Del Biaggio III ("Del Biaggio") 

and/or Sand Hill Capital Partners III, LLC ("Sand Hill") totaling approximately $43.5 million 

(the "Claims"), as more particularly set forth in Schedule A to this Settlement Agreement. 

WHEREAS, the Merriman defendants deny liability for the Claims, but are willing to 

agree to resolve such Claims so as to eliminate "the risks, burdens and expenses of litigation. 

WHEREAS, XL Specialty Insurance Company ("XL") issued Management Liability and 

Company Reimbursement Policy No.I -- -- - - Ito MCF (the "Management Liability 

Policy"), and Federal Ios"7""p~mpiy ("FIC"), issued Financial Institutions Securities Dealer 

Blanket Bond, Policy No. to MCF Co. (the "Fidelity Policy"), which Management 

Liability Policy and Fide 1 y o icy may be available to provide indemnification and cover 

certain other costs ofthe Merriman defendants related to the Claims. 

WHEREAS, on or about January 14, 2009, MCF filed suit against XL (the "XL 

Insurance Litigation") seeking coverage for, inter alia, some of the Claims as well as MCF's 

defense fees and costs incurred in defending against some ofthe Claims and related matters. 

WHEREAS, XL has asserted that it has no obligation to provide a defense or 

indemnification to any party in connection with any aspect ofthe Claims. 

WHEREAS, the Claimants have made a demand for settlement of the Management 

Liability Policy, on which XL refused to pay out. 

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WHEREAS, the Merriman defendants and the Claimants desire to reach a global 

settlement of any and all claims of each Claimant on the tenns and conditions set forth herein, 

and preserve certain rights for the benefit ofthe Claimants. 

WHEREAS, concurrently with the execution of this Agreement by at least five or more 

Settling Claimants and the Merriman defendants, MCF Co. shall assign all of its rights under the 

Management Liability Policy and Fidelity Policy and any of the claims against XL and/or FIC 

arising out ofor relating to underlying civil claims and government investigations to MCF. 

AGREEMENT 

NOW, THEREFORE, in view ofthe foregoing, the Merriman defendants and the Settling 

Claimants hereby agree to the following: 

1. The Settlement Amount 

a. Initial Cash Payment. The Merriman defendants shall pay, and shall be 

jointly and severally liable to pay, to Settling Claimants within twelve (12) business days of the 

execution of this Agreement by the Merriman defendants and five or more Settling Claimants, a 

cash payment to each Settling Claimant in an amount equal to 10% of the value of that 

Claimant's Claim, as set forth in Schedule A (or, in th~ event that five or more, but less than all, 

ofthe Claimants execute this Agreement, in accordance with the Adjusted Settlement 

Percentages (as defined below)), up to an aggregate payment of $4,300,000 (the "Initial Cash 

Payment"). 

b. Payment oflnitial Insurance Litigation Proceeds. D. J. Merriman, Ford 

and MCF shall pay, and shall be jointly and severally liable to pay a further $10,000,000, which 

amount, however, shall be.paid only from the Initial Insurance Litigation Proceeds (as defined in 

Paragraph 2.b.(1) below), if any. Said proceeds shall be in addition to the Initial Cash Payment, 

and shall be paid to and divided proportionally amongst the Settling Claimants pursuant to the 

Settlement Percentage ofeach Claimant as set forth in Schedule A (or, in the event that five or 

more, but less than all, of the Claimants execute this Agreement, in accordance with the Adjusted 

Settlement Percentages), and in the manner described in Paragraph 2.b.(I) below, which such 

amount shall be secured by and payable only from the Initial Insurance Litigation Proceeds 

( collectively with the Initial Cash Payment, the "Cash Payment"). For the avoidance ofdoubt, if 

there are no Initial Insurance Litigation Proceeds or if the Initial Insurance Litigation Proceeds 

are insufficient to fund the remaining $10,000,000, the Merriman defendants shall have no 

obligation to pay any portion of the remaining$ l0,000,000; it being understood that the Settling 

Claimants shall look solely to the Management Liability Policy and/or the Fidelity Policy and/or 

any litigation related thereto for recovery end payment ofthe remaining $10,000,000. 

c. Su1wlemental Cash Payment. Any Supplemental Insurance Litigation 

Proceeds, as defined in Paragraph 2.b.(2) below, shall be payable to the Settling Claimants in 

cash in the manner described in Paragraph 2.b.(2) below, to be divided proportionally amongst 

the Settling Claimants pursuant to the Settlement Percentage of each Claimant as set forth in 

Schedule A ( or, in the event that five or more, but less than all, of the Claimants. execute this 

Agreement, in accordance with the Adjusted Settlement Percentages). 

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d. Cash Payments and Issuance of Warrants When Less than All Claimants Settle. 

This Agreement shall be effective only after all of the Merriman defendants and at least five Claimants 

execute this Agreement on or before September 8, 2009. If, by the later ofSeptember 8, 2009 or 10 days 

after this Agreemen~ is fully executed by the parties, less than all ofthe Claimants have· executed this 

Agreement, then only the Settling Claimants, along with any other Claimant that has given written notice of 

its intention to participate in this Agreement upon proper authorization by its governing body, shall receive 

the Cash Payments set forth in Paragraphs I.a. and b. above and the Warrants set forth in Paragraph I.e. 

below, and the Settlement Percentage ofthe non-settling Claimants shall be allocated and distributed 

equally amongst the Settling Claimants and the Claimants that have given written notice of intent to 

participate in this Agreement and the Settlement Percentages shall be modified accordingly ("Adjusted 

Settlement Percentages"). If any Claimant gives notice of intent to participate in the settlement, but 

thereafter does not execute this Agreement within 30 days ofgiving such notice, then that Claimant shall be 

deemed a non-settling Claimant, and the Settlement Percentage of such Claimant shall be allocated and 

distributed equally amongst the Settling Claimants. 

e. Wai-rants. 

(1) Within twelve (12) business days ofthe execution ofthis Agreement by the 

Merriman defendants and five or more Settling Claimants, MCF shall issue Warrants to purchase an 

aggregate of 1,538,461 shares ofthe common stock of MCF to the Settling Claimants, to be divided 

proportionally amongst the Claimants pursuant to the Settlement Percentage of each Claimant as set forth 

in Schedule A (or, in the event that five or more, but less than all, ofthe Claimants execute this Agreement, 

in accordance with the Adjusted Settlement Percentages). Each Warrant will represent the right to 

purchase one share of common stock ofMCF ("Warrant Shares") and shall be in the form attached as 

Exhibit A. Each Settling Claimant and MCF shall execute that certain investor's Rights Agreement in the 

form attached hereto as Exhibit B (the "IRA"). 

(2) Further, to the extent that MCF and/or MCF Co. receive payments under 

Paragraphs 2(b)(l)(b) or (c), MCF shall issue Warrants, to be divided proportionally amongst the Settling 

Claimants pursuant to the Settlement Percentage of each Settling Claimant as set forth in Schedule A ( or, in 

the event that five or more, but less than all, ofthe Claimants execute this Agreement, 1n accordance with 

the Adjusted Settlement Percentages), as follows: 

(a) For payments received under Paragraph 2(b)(l)(b), a number of 

Warrants to purchase MCF common stock equal to the dollar amount of such payment divided by the 

exercise price of said Warrants, which such exercise price to be equal to the five day average ofthe closing 

price of the common stock ofMCF (such five days to start on the business day after the receipt ofthe 

aforementioned funds), and on such terms and conditions identical to the Warrants issued pursuant to 

Paragraph l(e)(l), with the exception that the exercise period of the Warrant shall be extended by the 

period of time from the Effective Date until the payment under Paragraph 2(b )( I )(b) is received by MCF, 

minus one year. 

(b) For payments received under Paragraph 2(b)(l}(c), a number of 

Warrants to purchase MCF common stock equal to one-third ofthe dollar amount of such payment divided 

by the exercise price of said Warrants (calculated in accordance with paragraph l(e)(2)(a) above), and on 

such terms and conditions identical to the Warrants issued pursuant to Paragraph l(e)(l), with the 

exception that the exercise period shall be extended by the period oftime from the Effective Date until the 

payment under Paragraph 2(b)(l)(c) is received by MCF, minus one year. 

(c) In no event, however, shall the Warrant exercise period for these 

two potential Warrants grants be less than the period provided for with respect to the Warrants issued 

pursuant to Paragraph l(e)(l). 

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·, .. , 

(d) Prior to the issuance of any Warrants issuable pursuant to this 

Paragraph l(e), any Settling Claimants may assign its right to receive Warrants to any other Settling 

Claimant. Notice ofsuch assignment shall be provided by a signed writing addressed to MCF, 

signed by both the assigning Claimant and the Claimant to whom the right to receive is assigned. 

(e) For those Warrants made available pursuant to Paragraph 

l(e)(2)(a) and l(e)(2)(b), such Warrants shall be made available within 12 business days after the 

fifth day used to calculate the five day average specified in those Paragraphs. 

2. Pursuit oflnsurance Litigation and Payment oflnsurance Proceeds. MCF, D. J. 

Merrii:pan and Ford (collectively, the "MCF Co-Defendants"), shall use their reasonable best efforts 

to obtain a recovery in the XL Insurance Litigation. The MCF Co-Defendants may also pursue, but 

shall not be required to pursue, recovery under the Fidelity Policy; but, upon the written demand by 

the Oversight Committee, shall assign any and all rights ofMCF and/or MCF Co. under the Fidelity 

Policy to the Settling Claimants and shall cooperate fully and completely with such Settling 

Claimants' prosecution of the Fidelity Insurance Litigation. The XL Insurance Litigation and any 

litigation necessary to obtain coverage for the Claims under the Fidelity Policy, as well as any 

insurance settlement negotiations related thereto, shall be referred to herein collectiveiy as the 

"Insurance Litigation." For purposes of this provision, "reasonable best efforts" shall include, 

among other things, that MCF shall pay reasonable and timely expenses of the XL Insurance 

Litigation, up to an aggregate of $200,000 ("Aggregate Legal Expenses"), ofwhich $100,000 shall 

be deposited within twelve (12) business days ofthe execution of this Agreement in the Client Trust 

Account of MCF Counsel (as hereinafter defined), with additional deposits in increments of 

$25,000 due from MCF any time the Client Trust Account falls below $50,000 until such time as 

MCF has deposited the Aggregate Legal Expenses. The MCF Co-Defendants shall cooperate fully 

and completely with the prosecution ofthe Insurance Litigation, including, but not limited to, 

making witnesses and documents available in pursuit ofthe Insurance Litigation, and directing its 

employees, officers and directors to perform such reasonable assistance as insurance counsel deems 

app~opriate to maximize any potential recovery. 

a. The MCF Co-Defendants shall retain legal counsel, and from time to time, 

the MCF Co-Defendants may associate additional legal counsel or substitute other legal counsel 

(collectively, "MCF Counsel"), to represent the MCF Co-Defendants in the XL Insurance Litigation 

on a contingent fee basis, subject to the approval ofthe Oversight Committee, described below. 

The tenns and conditions ofthe contingent fee agreement between the MCF Co-Defendants and 

MCF Counsel, and any amendments thereto (collectively, the "Contingent Fee Agreement") shall be 

subject to the approval ofthe Oversight Committee. 

b. The MCF Co-Defendants hereby assign a first priority security interest in, 

and shall distribute to, the $ettling Claimants the proceeds of the Insurance Litigation, whether 

received by settlement or judgment, in the manner and in the amounts described below: 

(1) . Initial Insurance Litigation Proceeds. 

"Initial Insurance Litigation Proceeds" is defined to include any and all proceeds of the 

Insurance Litigation up to and including the amounts necessary to pay the Settling Claimants the 

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full amount of the Cash Payments described in Paragraph I .a. and b. above. The Initial Insurance 

Litigation Proceeds shall be assigned and distributed in the manner and amounts set forth in this 

Paragraph 2.b.(l), until such time that the MCF Co-Defendants have paid the full Cash Payment 

described in Paragraph 1.b. above: 

(a) First, to MCF Counsel pursuant to the terms and conditions of 

the Contingent Fee Agreement; 

(b) Second, as to any amounts up to $2,500,000, then 95% to the 

Settling Claimants, to be divided proportionally amongst the Settling Claimants pursuant to the 

Settlement Percentage of each Settling Claimant as set forth in Schedule A, (or, in the event that 

five or more, but less than all, of the Claimants execute this Agreement, in accordance with the 

Adjusted Settlement Percentages), and the remaining.5% to MCF; 

(c) Third, as to any amounts in· excess of $2,500,000, up to and 

including $5,000,000, then 85% to the Settling Claimants, to be divided proportionally amongst the 

Settling Claimants pursuant to the Settlement Percentage of each Settling Claimant as set forth in 

Schedule A (or, in the event that five or more, but less than all, of the Claimants execute this 

Agreement, in accordance with the Adjusted Settlement Percentages), and the remaining 15% to 

MCF; and 

(d) Fourth, as to any amounts in excess of $5,000,000, then 75% 

to the Settling Claimants, to be divided proportionally amongst the Settling Claimants pursuant to 

the Settlement Percentage 6feach Claimant as set forth in Schedule A (or, in the event that five or 

more, but less than all, of the Claimants execute this Agreement, in accordance with the Adjusted 

Settlement Percentages), and the remaining 25% to MCF. 

(2) "Supplemental Insurance Litigation Proceeds" 

"Supplemental Insurance Litigation Proceeds" shall be defined to include any 

and all proceeds on the Insurance Litigation in excess of the Initial Insurance Litigation Proceeds. 

The Supplemental Insurance Litigation Proceeds shall be distributed 50% to the Settling Claimants 

pursuant to the Settlement Percentage of each Claimant as set forth in Schedule A (or, in the event 

that five or more, but less than all, of the Claimants execute this Agreement, in accordance with the 

·Adjusted Settlement Percentages), and the remaining 50% to MCF. 

c. MCF shall remain solely responsible for any amounts owing, as of the 

Effective Date, to any law firms, accountants, or other consultants who have represented MCF 

and/or MCF Co. in connection with, among other things, the Claims, claims against the 

Management Liability Policy or the Fidelity Policy, or negotiation of this Settlement Agreement. 

Under no circumstances shall proceeds of the Insurance Litigation be used to pay any of these 

liabilities.ofMCF, except out of amounts paidto MCF pursuant to Paragraph 2.b.(l) above. 

d. Insurance Litigation Oversight Committee. The MCF Co-Defendants shall 

form an insurance litigation oversight committee comprised oftwo members ofMCF management 

and of representatives ofno less than five Settling Claimants, and as to which each Settling 

Claimant 

SETTLEMENT AGREEMENT Page: 5 of28 

90084743.1 
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shall be entitled to participate (the "Oversight Committee"). The Parties acknowledge 

Claimants' common interest with the MCF Co-Defendants in the Insurance Litigation because, 

among other things, ofClaimants' security interest in the proceeds ofthe Insurance Litigation 

and, therefore, the Claimants are a necessary party to any attorney-client communication subject 

to the execution of a confidentiality agreement by each Settling Claimant that requires such 

Settling Claimant to preserve the confidences and work product related to the Parties' common 

interest in the Insurance Litigation. The Oversight Committee shall, upon reasonable notice and 

not more frequently than once every thirty (30) days, be given reasonable access to the work 

product and materials related to the Insurance Litigation provided to the MCF Co-Defendants by 

MCF Counsel so long as, in the judgment of MCF Counsel, Claimants continue to have a 

common interest with the MCF Co-Defendants in the litigation because ofClaimants' security 

interest in the proceeds ofthe Insurance Litigation. Therefore, the activities contemplated by this 

paragraph will not constitute a waiver of the attorney client privilege. Subject to such 

determination by MCF Counsel, the Oversight Committee shall also be entitled to participate in 

regularly scheduled meetings with MCF Counsel and shall be permitted to be kept promptly 

informed ofthe work of MCF Counsel to ensure that any and all actions in the MCF Litigation 

are diligently pursued. The Oversight Committee shall act by majority vote, and all parties shall 

abide by the majority vote ofthe Oversight Committee with respect to the prosecution or 

settlement of the Insurance Litigation. The Oversight Committee shall select one of its members 

to be the lead contact with MCF Counsel. For avoidance of doubt, it is the intention of the 

Parties that the Settling Claimants wiU not be clients ofretained contingency counsel. 

e. Security Interests and Financing Statement. In order to secure the 

payment and performance of the MCF Co-Defendants' obligations under this Agreement, the 

MCF Co-Defendants hereby grant a first priority security interest in favor ofthe Settling 

Claimants in (a) any and all proceeds of the Insurance Litigation and the Fidelity Policy up to the 

amount ofthe Claims, excepting any payments due to MCF Counsel under paragraph 2.b(I)(a); 

and (b) any and all accounts, contract rights, claims, chose in action, and commercial tort claims 

held by each ofthe MCF Co-Defendants against XL, including, but not.limited, to the Insurance 

Litigation and/or FIC with respect to the Fidelity Policy, excepting any payments due to MCF 

counsel under paragraph 2.b(l)(a). Upon execution of this Agreement, MCF shall provide a 

UCC-1 financing statement listing all of the Settling Claimants, which shall perfect the s~curity 

interests granted hereunder, and MCF shall cause its counsel to file and promptly forward 

receipted copies ofthe statement to Settling" Claimants at the time the MCF Co-Defendants make 

the Initial Cash Payment 

3. MCF Covenant Against More Favorable Settlements. Ifless than all 

Claimants execute this Agreement, then the Merriman defendants warrant and agree that they 

will not later settle with any such non settling Claimant on terms more favorable than provided 

for in this Settlement Agreement, unless the Merriman defendants first provide further 

consideration necessary to ensure that the Claimants entering into this Settlement Agreement 

obtain at least as favorable·tenns as any later settling Claimant. Failure of the Merriman 

defendants to provide such additional consideration shall be considered a material breach ofthis 

agreement, and each Claimant may elect, in its sole discretion, to rescind the agreement, or to 

enforce, jointly and severally against the Merriman defendants, the promise to provide additional 

consideration contained in this Paragraph. · 

SETTLEMENT AGREEMENT Page6 of28 

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4. - Intentionally deleted. 

5. Solvency. MCF warrants that it has reviewed its financial situation and that it 

currently is solvent within the meaning of 11 U.S.C. §§ 547(b)(3) and 548(a)(l)(B)(ii)(I) and 

California Civil Code Sections 3439.04(a)(2)(8) and 3439.05, and that it shall remain solvent 

following its payment to the Claimants of the Settlement Amount. Further, the Parties warrant 

that, in evaluating whether to execute this Agreement, they (a) have intended that the mutual 

promises, covenants, and obligations set forth constitute a contemporaneous exchange for new 

value given to the Merriman defendants, within the meaning of 11 U.S.C. § 547(c)(l); and (b) 

conclude that these mutual promises, covenants, and obligations do, in fact, constitute such a 

ce>ntemporaneous exchange. Further, the Parties warrant that the mutual promises, covenants, 

and obligations set forth herein are intended to and do, in fact, represent a reasonably equivalent 

exchange ofvalue that is not intended to hinder, delay, or defraud any entity to which any of the 

Merriman defendants are or became indebted, on or after the date of this transfer, all within the 

meaning of 11 U.S.C. § 548(a)(l) and California Civil Code Section 3439.04(a)(l). 

6. Bankruptcy. If, within 91 days of the Effective Date of this Agreement or any 

payment made under this Agreement, MCF or MCF Co. commences, or a third party 

commences, any case, proceeding, or other action under any law relating to bankruptcy, 

insolvency, reorganization, or relief ofdebtors (a) seeking to have any order for relief of the 

debts ofMCF or MCF Co., or seeking to adjudicate MCF or MCF Co. as bankrupt or insolvent; 

or (b) seeking appointment ofa receiver, trustee, custodian, or other similar official for MCF or 

MCF Co. or for all or any substantial part of the assets ofMCF or MCF Co., then the Merriman 

defendants agree as follows: 

a. The obligations of MCF and MCF Co. under this Agreement may not be 

avoided pursuant to 11 U.S.C. §§ 547 or 548, or California Civil Code Sections 3439 et. seq., 

and neither MCF nor MCF Co. shall argue or otherwise take the position in any such case, 

proceeding, or action that: (i) the obligations of the Merriman defendants under this Agreement 

may be avoided under 11 U.S.C. §§ 547 or 548, or California Civil Code Sections 3439 et. seq.; 

(ii) MCF or MCF Co. was insolvent at the time this Agreement was entered into, or became 

insolvent as a result of the Cash Payment made to the Claimants hereunder; or (iii) the mutual 

promises, covenants, and obligations set forth in this Agreement do not constitute a 

contemporaneous exchange for new value given to the Merriman defendants. 

b. If the Merriman defendants' obligations under this Agreement are avoided 

for any reason, including, but not limited to, through the exercise of a trustee's avoidance powers 

under the Bankruptcy Code, each of the Claimants, at their sole option, may rescind the releases 

in this Agreement, and bring any claim, action, or proceeding against any or all of the Merriman 

defendants for the claims that would otherwise be covered by the releases provided in Paragraph 

8 below. The Merriman defendants agree that (1) any such claims, actions, or proceedings 

brought by the Claimants shall not be subject to an "automatic stay" pursuant to 11 U.S.C. § 

362(a) or any other applicable injunction or stay as a result ofthe action, case, or proceeding 

described in the first clause of this Paragraph, and that the Merriman defendants hereby 

irrevocably and absolutely waive the automatic stay of 11 U.S.C. § 362(a) or any other 

applicable injunction or stay to the extent necessary to permit the Settling Claimants to enforce 

their rights, remedies and claims under this Agreement; and (2) that the Merriman defendants 

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shall not plead, argue, or otherwise raise any defenses under the theories of statute oflimitations, 

laches, estoppel, or similar theories, to any such claims, actions, or proceedings that are brought 

by the Claimants within 180 calendar days of written notification to the Merriman defendants 

that the releases herein have been rescinded pursuant to this Paragraph, except to the extent such 

defenses were available on the Effective Date of the Agreement. 

c. The Merriman defendants acknowledge that their agreements in this 

Paragraph are provided in exchange for valuable consideration provided in this Agreement. 

7. Dismissal of State Court Litigation. Each Claimant that has filed a suit against 

the Merriman defendants and/or the MCF Parties (as defined in Paragraph 8(a)(2)) in respect of 

its Claim, as more particularly described on Schedule A. shall execute a Dismissal ofthe State 

Court Litigation against the MCF Parties, ifany, without prejudice (the "State Court Dismissal"). 

Each Claimant shall deliver the State Court Dismissal to counsel for MCF within five (5) 

business days ofreceiving the Initial Cash Payment of the Settlement Amount described in 

Paragraph l .a. 

8. Mutual Release. For the purposes ofthis Mutual Release: 

a. Terms: 

(1) "Claimant Parties" means each Claimant and its directors, officers, 

employe·es, agents, affiliates, and professionals. 

(2) "MCF Parties" means the Merriman defendants, together with, in 

the case of MCF and MCF Co., each of its current directors, officers and employees. The MCF 

Parties do not include, however, David Scott Cacchione. 

(3) The "Subject Claims" means any and all claims of whatsoever type 

or nature that in any manner related to the matters identified in the Recitals or the relationship 

between the Claimant Parties and the MCF Parties existing on or before the Effective Date. The 

Subject Claims do not include the obligations of the Parties under this Agreement 

b. Releases: 

(l) The MCF Parties hereby release and forever discharge Claimant 

Parties from any and all Subject Claims. 

(2) Effective upon execution of this agreement by each of the 

Merriman defendants, and payment to each Claimant ofthe Initial Cash Payment portion of the 

Settlement Amount, Claimant Parties shall release and forever discharge the MCF Parties from 

- any and.all Subject Claims; it being understood that in no event shall the Claimant Parties' 

release be construed to release and discharge claims such Claimants may have against third 

parti_es, including, but not limited to, claims.against Del Biaggio, Sand Hill and others. 

Each of the Parties has considered the possibility that he or it may not now fully lmow the 

number or magnitude of all the Subject Claims, which he or it bas or may have against the other 

party hereto, but nevertheless intends to assume the risk that he or it is releasing such unknown 

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claims, and agrees that this Mutual Release is a full and final release of any and all Subject 

Claims and/or Subject Claims, as the case may be, and expressly waives the benefits of Section 

1542 of the California Civil Code and all similar statutes, which Section provides: 

A general release does not extend to claims which the creditor does 

not know or suspect to exist in his or her favor at the time of 

executing the release, which iflmown by him or her must have 

materially affected his or ber settlement with the debtor. 

c. It is understood and agreed that this is a compromise settlement of 

disputed claims, and that this Mutual Release shall not be construed as an admission of liability 

by any ofthe Parties hereto. 

9. No Assignment. All Parties represent and warrant that each is the only person or 

entity who, to its knowledge, has any interest in any claims, causes of action, costs or demands 

herein released and that none ofsuch claims, causes of action, costs or demands, nor any part 

thereof, have been assigned, granted or transferred in any way to any person, persons, entity or 

entities. 

I0. Representation and Warranties. The Merriman defendants and each Settling 

· Claimant represents and warrants that (a) each has freely and voluntarily entered into this 

Settlement Agreement, (b) that no representations or promises of any kind other than as 

contained in this Settlement Agreement have been made by any party to induce them to enter 

into this Settlement Agreement, and (c) they have been fully advised by their attorneys 

concerning their rights and have further been advised by their attorneys as to the terms and 

effects of.this Settlement Agreement. Each Settling Claimant represents and warrants that 

Schedule A accurately reflects their respective alleged claim and the related case number. 

11. Interpretation. This Agreement is to be construed simply and fairly, and not 

strictly in favor of or against MCF, MCF Co., D. J. Merriman, Ford, or any Settling Claimant. · 

. This Agreement was prepared and negotiated jointly by the Parties. This Agreement may be 

modified or amended only in writing signed by all Parties. 

12. No Indemnification. Nothing in this Settlement Agreement shall be interpreted 

as a promise or an agreement _to indemnify. 

13. Governing Law. This Settlement Agreement shall be governed by the laws of 

the State of California without regard to California's choice of law analysis, except to the extent 

the laws of the United States are applicable. 

14. Attorneys• Fees. Each party shall be responsible for the payment ofhis or its 

own attorneys' fees and costs, and all of their expenses in connection with the matters referred to 

in this Settlement Agreement, provided however, that this paragraph shall not affect any 

obligations that may be owed to MCF counsel under a contingent fee agreement. Nevertheless, 

in any action or proceeding to enforce this Settlement Agreement, the prevailing party shall be 

entitled to his, her or its attorneys' fees and costs. 

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15. Sole and Only Agreement. The Parties hereby agree that this instrwnent (and its 

schedules) constitutes the sole and only agreement between the Parties with respect to the subject 

matter hereof and correctly sets forth the rights, duties and obligations of each to the other as of 

its date. The terms of this Settlement Agreement are contractual and not mere recitals. This 

Settlement Agreement is executed without reliance upon any representation by any person 

concerning the nature or extent ofinjuries or legal liability therefor, and the Parties hereto have 

carefully read and understand the contents of this Settlement Agreement and sign the same as 

their own free act. Any modification of this Agreement shall require the unanimous written 

consent ofall Claimants. 

16. Successors and Assigns. This Settlement Agreement shall inure to the benefit of 

and bind the successors, assigns, heirs, ex:ecutors and administrators of the Parties. 

17. Captions. The captions of this Settlement Agreement are for convenience only 

and are not a part of this Settlement Agreement and do not in any way limit or amplify the terms 

and provisions of this Settlement Agreement and shall have no effect on its interpretation. 

18. Counterparts. This Settlement Agreement may be executed in counterparts, by 

either an original signature or signature transmitted by facsimile transmission, pdf or other 

similar process and each copy so executed shall be deemed to be an original and all copies so 

executed shall constitute one and the same agreement. 

19. Notice. Any notice required or pennitted to 1:,e given by this Agreement shall be 

in writing and shall be deemed given (1) when delivered in person, (2) when dispatched by 

facsimile or electronic mail transfer (confirmed in writing by postage prepaid first class air mail 

simultaneously dispatched), (3) when sent by internationally-recognized overnight courier 

. service (with receipt co~firmed by such overnight courier service), or ( 4) when sent by registered 

or certified mail, to the other party at the address of such parties set forth below or at such other 

address as such party may from time to time specify in writing to the other party in accordance 

with this Paragraph 19. 

To Claimants: AEG Facilities, Inc. 

Attn: Ted Fikre and Dan Beckerman 

800 West Olympic Blvd, Suite 305, 

(b)(4),(b)(6) · / Le>, Aneeles, CA 90015 

With a copy to: Meryl Macklin, Esq. 

Holme Roberts & Owen 

560 Mission St., 25th Fl 

(b)(4),(b)(6) San Francisco, CA 94105

I 

SETTLEMENT AGREEMENT Page 10of28 

900&4743.1 
Page 82 

With a copy to: 

With a copy to: 

With a copy to: 

(b)(4),(b)(6) 

(b)(4),(b)(6) 

With a copy to: 

(b)(4),(b)(6) 

(b)(4),(b)(6) 

Craig Leipold 

555 Main Street 

Suite 500 

Racine, WI 53403 

David Rosenbloom 

McDennott Will & Emery LLP 

224 W. Monroe, Suite 4400 

. Chicago, IL 60606 

DGB Investments, Inc. 

40 Fox Hill Road 

Woodside, CA 94062 

Michael H. Steinberg, Esq. 

Sullivan & Cromwell LLP 

1888 Century Park East, Suite 2100 

Los Angeles, CA 90067 

Federal Deposit Insurance Corporation, 

as Receiver for Security Pacific Bank 

Bob J. Rogers, Esq. 

1601 Bryan Street, Room 15068 

Dallas, TX 75201 

Andrew S. Pauly 

Greenwald, Pauly, Foster & Miller 

1299 Ocean Avenue, Suite 400 

Santa Monica, CA 90401 

Heritage Bank of Commerce 

150 Almaden Blvd. 

San Jose, CA 95113 

Attn: Mr. Michael Ong, Executive Vice 

President/Chief Risk Officer 

Fax[ /

I 

Richard A. Rogan, Esq. 

Jeffer, Mangels, Butler & Marmaro 

Two Embarcadero Center, 5th Floor #¥ranci=, CA 9T 

SETTLEMENT AGREEMENT Page 11 of28 

90084743.l 
Page 83 

With a copy to: 

(b)(4),(b)(6) 

With a copy to: 

To MCF, MCF Co., D.J. 

Merriman and/or Ford: 

With a copy to: 

Anthony Burke, President 

Modem Barne, N.A. 

667 Madison A venue 

New York, NY 10075 

Jonathan Weinberg 

Modern Bank, NA 

667 Madison A venue 

New York, NY 10075 

Daniel K. Slaughter 

Stein & Lubin LLP 

600 Montgomery Street, 14th Floor 

San Francisco, CA 941 11 

I 

Greg Hickel 

Executive Vice President 

Chief Credit Officer 

Valley Community Bank 

P.O. Box 1497 

Pleasanton, CA 94566 

Bruce E. Copeland 

Nixon Peabody LLP 

One Embarcadero Center 

18th Floor 

San Francisco, CA 94111-3600 

Peter Coleman, CFO & COO 

Merriman Curhan Ford 

600 California Street, 5th Floor 

San Francisco, CA 94108 

General Counsel 

Merriman Curhan Ford 

600 California Street, 5th Floor 

San Francisco, CA 94108 

Notice of change of address shall be given by written notice in the manner detailed in this 

Paragraph 19. . 

SETTLEMENT AGREEMENT · Page 12 of28 

90084743.1 
Page 84 

IN WITNESS WHEREOF, the Parties, by their duly authorized representatives, have 

~xecuted this Settlement Agreement as ofthe date first set forth above. 

t CLA[MANTS: ! 

(b)(6) 

Craig Leipold . 

DGB Investments, Inc. 

· Name: 

Its: 

Federal Deposit Insurance Corporation, as 

Receiver for Security Pacific Bank 

Name: 

Its: 

Heritage Bank of Commerce 

Name: 

Its: 

Modern Bank 

Name: 

Its: 

Valley Community Bank 

Name: 

Its; 

SETTLEMENT AGREEMENT Page 13of28 

goosmu · 
Page 85 

IN WITNESS. WHEREOF, the Parties, by th~ir duly authorized representatives, have 

executed this Settlement Agreement as of the date fim set forth above. 

(b)(6) 

,, 

-SETTLEMENT AGREEMENT 

9~Dl4242.I 

CLAIMANTS: 

AEG Facilities, Int:, 

I

Craig Lt!tpirl'd ..., V / 

DGB Investments, Inc. 

Name: 

Its:· 

Federal Deposit Insurance Coqr1>ration, as 

~eceiver·for Security Pacific Bank 

·Name, 

Its: 

Heritage Baek of Commerce 

Name: ;.

Its: 

Modero Bank 

Niune: 

Its: 

Valley Community Bank 

Name: 

Its: 

PIIIIC 13 of28 

I. 

r. 

J· 

l 

I 
Page 86 

IN WI1NESS WHEREOF, the Parties, by their duly authorized representatives, have 

executed this Settlement Agreement as of the date first set forth above. 

CLAIMANTS: 

AEG Facilities, Inc. 

Name: 

]ts: 

Craig Leipold 

(b)(6) 

Name: , 'f) i3_.e.f\..Dl'!-

lts: I f (e.;i i'it,-ct 

Federal Deposit Insurance Corporation, as 

Receiver for Security Pacific Bank 

Name: 

Its: 

Heritage Bank of Commerce 

Name: 

Its; 

Modem Bank 

Name: 

Its: 

Valley Community Bank 

Name: 

Its: 

SE'li'LEMENT AGREEMENT Page 13 of:ZS 

90084242.1 
---------------

Page 87... 

(b)(6) 

IN WITNESS WHEREOF, the Parties, by their duly authorized representatives, have 

executed this Settlement Agreement as ofthe date first set forth above. 

CLAIMA,NTS: 

AEG Facilities, Inc. 

Name: 

Its: 

Craig Leipold 

DGB Investments, Inc. 

Name: 

Its: 

Federal Deposit Insurance Corporation, as 

· Securi acitic Bank 

Na 

Its: 

Heritage Bank of Commerce 

Name: 

Its: 

Modern Bank 

Name: 

Its: 

Valley Community Bank 

Name: 

Its: 

SETf"LEME~T AGREEMENT Page 13or28 

'l00847~l. l 
Page &B 

IN WIINESS WHEREOF, the Parties, by their duly authorized representatives, have 

executed tltls Settlement Agreement as ofthe date first set forth above. 

CLAIMANTS: 

AEG Facilities, Inc. 

Name: 

Its: 

Craig ~ipold 

DGB Investments, Inc. 

Name: 

Its: 

Federal Deposit Insurance Corporation, as 

Receiver for ~ecurlty Pacific Bank 

Name: 

(b)(6) 

i 

l 

I 

I 

Modem Bank 

. ~ 

Name: 

Its: 

Valley Community Bank 

Name: 

~ts: 

SETTLEMENT AGREEMENT Page 13of28 

9001422.I 
Page S-9 

IN .WITNESS WHEREOF, the Parties, by ·their duly authorized representatives, have 

executed this. Settlem:::nt Agreement as ofthe date first set forth above. 

CLAIMANTS: 

AEG Facilities, Inc. 

Name: . 

Its: 

Craig Leipold . 

DGB Investments, Inc. 

Name: 

Its: 

Federal Deposit Insurance Corporation, as 

Receiver for Security Pacific Bank 

-Name: 

Its: 

Heritage Bank ofCommerce 

Name:··· 

Its: 

Name: LEWI .GOVER.MAN 

Its: ~~ri..[_erek o.f-~_,uvaney Community Bank 

Name: 

Its; · · 

SEITLEM:ENT AGREEMENT 

90084242.1 
Page 90 

·.... . ·.. 

IN WITNESS WHEREOF, the Parties, by their duty authorized representatives, have 

executed this Settlement Agreement as_ ofthe date first set forth above. · 

CLAIMANTS: 

AE!} Facilities;" Inc. 

-Name: 

Its: 

Craig Leipold 

DGB Investments, Inc. 

Name: 

Its: 

Federal Deposit Insurance Corporation, as 

Receiver "foi: Security Pacific Bank 

Name: 

Its: 

Heritage Bank of Commerce 

Name: 

Its: 

Modern Bank 

Name; 

Its: 

(b)(6) (b)(6) Bank 

Name: t-, e- .:r.. //(C/.(t; c. 

Its: Ir'. 11.11. / Ceo 

SETTI,EMENT AGREEMENT P~ l3of28 

900114:14;!.J 

--- . ----~ 
Page 91 

----------· --- -------------· -------.,---•····---:···-------

MCF: 

:~mCMb.an For-.d Group, hie. (b)(6) 

I ·· 

Peter Coleman, its CFO & COO 

f'"' 

Tnnatban Merriman 

(b)(6) 

I~_---.---·_____JL ... 

: ob Ford· 

~ge )4of28 

SE'lT~_ENT AGREEM~ 

90084743.l 
Page 92 

MCFCo. 

(b)(6) 

!· 

Page IS of28 

SE1TL"EMENT AGREEMENT 

90014743.1 

·-·· _____ ...............~·-· ····· 
.. Page 93 

Value of 

Claim Original ciaim 

DGB 

INVESTMENTS, INC $3,000,000 

CRAIG LEIPOLD. $10,000,000 

HERITAGE BANK OF 

COMMERCE $4,327,073 

MODF.fjN BANK, .A $10,000,000 

VALLEY 

COMMUNITY BANK · $4,250,000 

AEG FACILITIES, 

INC. $7,000,000 

FDIC, ~s RECEIVER 

J_;OR ECURJTY $5,000,000 

ACIFICBANK 

. · TOTAL $43,577,073 

CHI99 5137401-6.0S7043.00l2 

Scb.edule A 

State Court Litigation 

Case No. 

(SANT~ CLARA SUPERIOR 

Co0RT 

1-08--""CV:JT3472 

(SANTA CLARA SUPERIOR 

Co0RT 

109-cv-TS0502 

(SANTA 0..ARA SUPERIOR 

Co0RT 

1-08--cv:n3746 

(SANTA CLARA SUfERIOR 

COUit! · 1-08.:cv:TI3894 

{SANT A CLARA SUPERIOR 

CO0RI 

1-08:CV:U4324 

(SANTA CLARA SUPERIOR 

COURT 

1-08:CV:U4297 

Los ANGc5bES SUPERIOR 

u0RJ 

SC'lJ'9!ITTI 

Settlement Percentage 

6.88% 

22.95% 

9.93% 

22.95% 

9.75% 

16.06% 

11.48%-

100% 

·i 

SETTLEMENT AGREEMENT Page 16 of28 

90084743.l