Document:

MERRIMAN
CURHAN FORD GROUP, INC.

     

    INVESTORS’
RIGHTS AGREEMENT

     

    August
___, 2009

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    MERRIMAN
CURHAN FORD GROUP, INC.

    INVESTORS’
RIGHTS AGREEMENT

     

    This
Investors’ Rights Agreement (this “Agreement”) is made as of
August _, 2009, by and among Merriman Curhan Ford Group, Inc., a Delaware
corporation (the “Company”), and the persons and
entities listed on Exhibit A or
Exhibit B
hereto (each, an “Investor” and collectively,
the “Investors”).  Unless
otherwise defined herein, capitalized terms used in this Agreement have the
meanings ascribed to them in Section 1.

     

    RECITALS

     

    WHEREAS, the Investors are
parties to the Series D Preferred Stock Purchase Agreement of even date
herewith, among the Company and the Investors listed on the Schedule of
Investors thereto (the “Purchase Agreement”), or the
Settlement Agreement of even date herewith by and among the Company and the
parties listed on the signature pages thereto (the "Settlement Agreement") and it
is a condition to the Closing that the Investors and the Company execute and
deliver this Agreement.

     

    NOW, THEREFORE, in
consideration of the mutual promises and covenants set forth herein, and other
consideration, the receipt and adequacy of which is hereby acknowledged, the
parties hereto agree as follows:

     

    Section
1

    Definitions

     

    1.1          Certain Definitions.  As
used in this Agreement, the following terms shall have the meanings set forth
below:

     

    (a)           “Closing” shall mean the date
of the initial sale of shares of Series D Preferred Stock and Warrants pursuant
to the Purchase Agreement.

     

    (b)           “Commission” shall mean the
Securities and Exchange Commission or any other federal agency at the time
administering the Securities Act.

     

    (c)           “Common Stock” means the Common
Stock of the Company.

     

    (d)           “Conversion Shares” shall mean
shares of Common Stock issued upon conversion of the Shares.

     

    (e)           “Exchange Act” shall mean the
Securities Exchange Act of 1934, as amended, or any similar successor federal
statute and the rules and regulations thereunder, all as the same shall be in
effect from time to time.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (f)           “Holder” shall mean any
Investor or Settling Party who holds Registrable Securities and any holder of
Registrable Securities to whom the registration rights conferred by this
Agreement have been duly and validly transferred in accordance with Section 2.10 of this
Agreement.

     

    (g)           “Indemnified Party” shall have
the meaning set forth in Section 2.4(c)
hereto.

     

    (h)           “Indemnifying Party” shall have
the meaning set forth in Section 2.4(c)
hereto.

     

    (i)           “Investor Representative” shall
mean Ronald Chez, or his designee.

     

    (j)           “Investor Warrants” shall mean
the Warrants, the Merriman Warrants, the Registration Warrants and the Key Man
Warrants.

     

    (k)           “Major Holders” shall mean each
Holder who together with its Permitted Transferees owns at least 5,000,000
shares of Common Stock (calculated on an as converted or exercisable to common
stock basis, and subject to subsequent adjustments for stock splits, stock
dividends, reverse stock splits, and the like) resulting from its holding of
Shares, Conversion Shares, Investor Warrants or common stock issued as a result
of exercise of the Investor Warrants; provided that in determining whether the
New York Group is deemed to be a "Major Holder", the Shares, Conversion Shares,
Investor Warrants or common stock issued as a result of exercise the Investor
Warrants held by the other members of the New York Group and their respective
Permitted Transferees shall also be included in such
determination.  In providing any notice or exercising any right
reserved for Major Holders hereunder, Andrew Arno shall be the representative of
the New York Group and shall have the right to make decisions and execute
documents on behalf of all members of the New York Group.

     

    (l)           "New York Group" shall mean
Andrew Arno, Thomas Unterberg, Michael Marrus and Mark Green and affiliated
investors.

     

    (m)           “Purchase Agreement” shall have
the meaning set forth in the Recitals hereto.

     

    (n)           “Registrable Securities” shall
mean (i) shares of Common Stock issued or issuable pursuant to the
conversion of the Shares, the Warrants, the Merriman Warrants, Registration
Warrants and the Key Man Warrants or any other warrants issued by the Company to
an Investor; and (ii) any Common Stock issued as (or issuable upon the
conversion or exercise of any warrant, right or other security that is issued
as) a dividend or other distribution with respect to or in exchange for or in
replacement of the shares referenced in (i) above, or (iii) shares of
Common Stock issued or issuable pursuant to the exercise of the warrants issued
to the Settling Parties pursuant to the Settlement Agreement, subject to
adjustments in accordance with the terms hereof; provided, however, that
Registrable Securities shall not include any shares of Common Stock described in
clause (i), (ii), or (iii) above which have previously been registered or which
have been sold to the public either pursuant to a registration statement or
Rule 144, or which have been sold in a private transaction in which the
transferor’s rights under this Agreement are not validly assigned in accordance
with this Agreement.

    
      
         

      

      
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    (o)           The
terms “register,” “registered” and “registration” shall refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act and applicable rules and regulations
thereunder, and the declaration or ordering of the effectiveness of such
registration statement.

     

    (p)           “Registration Expenses” shall
mean all expenses incurred in effecting any registration pursuant to this
Agreement, including all registration, qualification, and filing fees, printing
expenses, escrow fees, fees and disbursements of counsel for the Company and the
reasonable fees of one special counsel for the Holders, blue sky fees and
expenses, and expenses of any regular or special audits incident to or required
by any such registration, but shall not include Selling Expenses, fees and
disbursements of other counsel for the Holders and the compensation of regular
employees of the Company, which shall be paid in any event by the
Company.

     

    (q)           “Restricted Securities” shall
mean any Registrable Securities required to bear the first legend set forth in
Section 2.8(c)
hereof.

     

    (r)           “Registration Statement” shall
mean Shelf Registration Statement as defined in Section 2.1(a) hereof or
Requested Registration Statement as defined in Section 2.2(a).

     

    (s)           “Rule 144” shall mean
Rule 144 as promulgated by the Commission under the Securities Act, as such
Rule may be amended from time to time, or any similar or analogous successor
rule that may be promulgated by the Commission.

     

    (t)           “Securities Act” shall mean the
Securities Act of 1933, as amended, or any similar successor federal statute and
the rules and regulations thereunder, all as the same shall be in effect from
time to time.

     

    (u)           “Selling Expenses” shall mean
all underwriting discounts, selling commissions and stock transfer taxes
applicable to the sale of Registrable Securities and fees and disbursements of
counsel for any Holder (other than the fees and disbursements of one special
counsel to the Holders included in Registration Expenses).

     

    (v)           “Settling Parties” shall
mean the parties
listed in Exhibit
B hereto, who are parties to the Settlement
Agreement.  Settling Parties shall be Holders under this Agreement and
shall have all the rights of a Holder under this Agreement.  The
warrants received by the Settling Parties under the Settlement Agreement shall
be Registrable Securities.  For the avoidance of doubt, the Settling
Parties shall be Investors under this Agreement.

     

    (w)           “Series D Preferred Stock”
shall mean the shares of Series D Convertible Preferred Stock of the Company
issued pursuant to the Purchase Agreement.

    
      
         

      

      
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    (x)           "Settlement Agreement" shall
have the meaning set forth in the Recitals.

     

    (y)           “Shares” shall mean the
Company’s Series D Preferred Stock.

     

    (z)           “Warrants” shall mean the
warrants issued to Investors pursuant to the Purchase Agreement.

     

    Section
2

    Registration
Rights

     

    2.1          Shelf
Registration.

     

    (a)           The
Company covenants and agrees with each Investor to make reasonable best efforts
to prepare and file, as soon as practicable, with the Commission a registration
statement covering the resale of the Registrable Securities issued at the
Closing under the Purchase Agreement and the Settlement Agreement for an
offering to be made on a continuous basis pursuant to Rule 415 (the “Shelf Registration
Statement”). The Shelf Registration Statement shall be on Form S-3 (or if
the Company is not eligible to use Form S-3 for the Shelf Registration
Statement, Form S-1) or such other form as the rules of the Commission may
prescribe. The Company shall use its reasonable best efforts to cause the
Registration Statement to be declared effective under the Securities Act (the
“Effective Date”) as
promptly as possible after the filing thereof, and to keep the Registration
Statement continuously effective under the Securities Act until the date which
is the earlier of when (i) all Registrable Securities have been sold; (ii) all
Registrable Securities may be sold immediately without registration under the
Securities Act and without volume restrictions pursuant to Rule 144, as
determined by the counsel to the Company pursuant to a written opinion letter to
such effect, addressed and acceptable to the Company’s transfer agent and the
affected Holders; or (iii) the date which is three years following the Effective
Date (provided, however, upon the request of any Major Holder, such date may be
extended by an additional three years).  The Company will make
commercially reasonable efforts to amend the Registration Statement to include
any Registrable Securities issuable under this Agreement which are not
outstanding on the date hereof, including the Merriman Warrants and Registration
Warrants which may be issued, or shares of Common Stock issuable pursuant to any
Merriman Warrants or Registration Warrants which may be issued, as promptly as
practicable after the issuance of such additional Registrable
Securities.

     

    2.2          Additional
Rights.  If, due to SEC requirements, (i) the Company is not
able to utilize Rule 415 for the Shelf Registration Statement, or (ii) is
allowed to utilize Rule 415 but for less than 80% of all of the Registrable
Securities outstanding at the time, or (iii) the Holders of a majority in
interest of the Registrable Securities advise the Company in writing that they
wish to withdraw the Shelf Registration Statement because of conditions to be
imposed upon them as a result of SEC review (either of the events in (i) or
(ii), an  “SEC
Event”), to the Holders shall have the additional rights provided in this
Section 2.2 and in Section 2.3 until such time
as a Shelf Registration Statement is effective which covers the Registrable
Securities.

    
      
         

      

      
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    (a)           Request for
Registration.  Subject to the conditions set forth in this
Section 2.2, if the
Company shall receive from any Major Holder a written request signed by such
Major Holder that the Company effect any registration with respect to all or a
part of the Registrable Securities (such request shall state the number of
shares of Registrable Securities to be disposed of by such Major
Holder)(“Initiating Holder”), the Company will:

     

    (i)           promptly
give written notice of the proposed registration to all other Holders;
and

     

    (ii)          as
soon as practicable and in any event within sixty (60) days of the receipt of
such request, file a registration statement (a “Requested Registration
Statement”) and use its commercially reasonable efforts to effect such
registration (including, without limitation, filing post-effective amendments,
appropriate qualifications under applicable blue sky or other state securities
laws, and appropriate compliance with the Securities Act) and to permit or
facilitate the sale and distribution of all or such portion of such Registrable
Securities as are specified in such request, together with all or such portion
of the Registrable Securities of any Holder or Holders joining in such request
as are specified in a written request received by the Company within twenty (20)
days after such written notice from the Company is mailed or delivered provided
that the aggregate amount of Registrable Securities Holders seek to sell in a
Requested Registration is expected to result in at least $1 million in gross
proceeds.

     

    (b)           Cutback
Due to SEC Review.  If the Company is advised by the SEC that not all
of the Registrable Securities which the Holders wish to register may be included
in a Requested Registration Statement, the securities to be included shall be
allocated as follows: (i) first, all securities being sold for the account of
the Company or any parties other than Holders shall be excluded; (ii) second, if
additional cutbacks are required, the securities to be included shall be
allocated pro rata among the Holders wishing to include their Registrable
Securities assuming the conversion or exercise of such Registrable
Securities.

     

    (c)           Limitations on Requested
Registration.  The Company shall not be obligated to effect, or
to take any action to effect, any such registration pursuant to this Section 2.2 if, within
twelve months of such written request, the Company has effected two (2) such
registrations pursuant to this Section 2.2 and such
registrations have been ordered or declared effective for a period of the
earlier of 30 business days or the date of final sale of all Registrable
Securities registered pursuant to the Requested Registration
Statement;

     

    (d)           Other
Shares.  The Requested Registration Statement filed pursuant to
the request of the Major Holder may, subject to the provisions of Section 2.2(b) and Section 2.2(e), include
securities of the Company being sold for the account of the
Company.

    (e)           Underwriting.  If
the Major Holder requesting registration under this Section 2.2 intend to
distribute the Registrable Securities covered by their request by means of an
underwriting, they shall so advise the Company as a part of their request made
pursuant to Section 2.2(a), and the
Company shall include such information in the written notice referred to in
Section 2.2(a).  In
such event, the right of any Holder to include such Holder’s Registrable
Securities in such registration shall be conditioned upon such Holder’s
participation in such underwriting and the inclusion of such Holder’s
Registrable Securities in the underwriting to the extent provided
herein.  If the Company shall request inclusion in any registration
pursuant to Section 2.2(a) of
securities being sold for its own account, the Major Holders shall, on behalf of
all Holders, offer to include such securities in the underwriting, and such
offer shall be conditioned upon the participation of the Company in such
underwriting and the inclusion of the Company’s securities.  The
Company shall (together with all Holders proposing to distribute their
securities through such underwriting) enter into an underwriting agreement in
customary form with the representative of the underwriter or underwriters
selected for such underwriting by the Company, which underwriters are reasonably
acceptable to a majority-in-interest of the initiating Holders, unless the
Company itself shall be the selected underwriter, in which case the consent of
the Holders shall not be required.

     

    
      
        
           

        

        
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    Notwithstanding
any other provision of this Section 2.2, if the
underwriters advise the Initiating Holders in writing that marketing factors
require a limitation on the number of shares to be underwritten, the number of
Registrable Securities and Company securities that may be so included shall be
allocated as follows: (i) first, among all Holders requesting to include
Registrable Securities in such Registration Statement based on the pro rata
percentage of Registrable Securities held by such Holders, assuming conversion
or exercise; (ii) second, to the Company, which the Company may allocate, at its
discretion, for its own account, or for the account of other holders or
employees of the Company.

     

    If a
person who has requested inclusion in such registration as provided above does
not agree to the terms of any such underwriting, such person shall be excluded
therefrom by written notice from the Company, the underwriter or the Major
Holders.  The securities so excluded shall also be withdrawn from
registration.  Any Registrable Securities or other securities excluded
or withdrawn from such underwriting shall also be withdrawn from such
registration.

     

    2.3          Company
Registration.

     

    (a)           If
the Company shall determine to register any of its securities either for its own
account or the account of a security holder or holders, other than a
registration relating solely to employee benefit plans, a registration relating
to the offer and sale of debt securities, a registration relating to a corporate
reorganization or other Rule 145 transaction, or a registration on any
registration form that does not permit secondary sales, the Company
will:

     

    (i)           promptly
give written notice of the proposed registration to all Holders;
and

     

    (ii)          use
its commercially reasonable efforts to include in such registration (and any
related qualification under blue sky laws or other compliance), except as set
forth in Section 2.3(b) below, and
in any underwriting involved therein, all of such Registrable Securities as are
specified in a written request or requests made by any Holder or Holders
received by the Company within ten (10) days after such written notice from the
Company is mailed or delivered.  Such written request may specify all
or a part of a Holder’s Registrable Securities.

    
      
         

      

      
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    (b)           Underwriting.  If
the registration of which the Company gives notice is for a registered public
offering involving an underwriting, the Company shall so advise the Holders as a
part of the written notice given pursuant to Section 2.3(a)(i).  In
such event, the right of any Holder to registration pursuant to this Section 2.3 shall be
conditioned upon such Holder’s participation in such underwriting and the
inclusion of such Holder’s Registrable Securities in the underwriting to the
extent provided herein.  All Holders proposing to distribute their
securities through such underwriting shall (together with the Company and the
Other Selling Stockholders of securities of the Company with registration rights
to participate therein distributing their securities through such underwriting)
enter into an underwriting agreement in customary form with the representative
of the underwriter or underwriters selected by the Company.

     

    2.4          Registration
Penalties

     

    (a)           The
“Registration Penalty
Date” shall mean (i) if no SEC Event has occurred, the date which is 200
days after the Closing if, unless due to the fault of an Investor, no Shelf
Registration Statement has been declared effective by such date; or (ii) If an
SEC Event has occurred, the date which is 150 days after any Request for
Registration if no Requested Registration Statement has been declared effective
by such date (unless due to the fault of an Investor or due to being
subsequently withdrawn by the Holders).

     

    (b)           For
each 30-calendar day period following the Registration Penalty Date in which
there is not an effective registration statement covering the Registrable
Securities, the Company shall pay to the Investors pro-rata, in proportion to
the number of shares of Series D Preferred Stock purchased by such Investor
pursuant to the Purchase Agreement, five year warrants to purchase 150,000
shares of the Company’s Common Stock at $0.65 per share, on terms identical to
those issued to the Investors under the Purchase Agreement (the “Registration Warrants”), as
liquidated damages and not as a penalty, subject to an overall limit of
liquidated damages in the aggregate of 900,000 Registration
Warrants.  The liquidated damages pursuant to the terms hereof shall
apply on a daily pro-rata basis for any portion of a month prior to securing an
effective Registration Statement.  The foregoing shall in no way limit
any equitable remedies available to Investors for failure to secure an effective
Registration Statement by the Registration Penalty Date.  Investors
shall also be able to pursue monetary damages for failure to secure an effective
Registration Statement by the Registration Penalty Date but only if such failure
is due to the willful or deliberate action or inaction of the Company in breach
of the covenants contained herein.  Except as provided for in the
preceding sentence, each Investor agrees that the liquidated damages provided
for in this section shall be its sole remedy for the failure to secure an
effective Registration Statement for any Registrable Securities on a timely
basis.

    2.5          Expenses of
Registration.  All Registration Expenses incurred in connection with
registrations pursuant to Sections 2.1, 2.2 and 2.3
hereof shall be borne by the Company; provided, however, that the
Company shall not be required to pay for any expenses of any registration
proceeding begun pursuant to Section 2.1 if the
registration request is subsequently withdrawn at the request of the Holders of
a majority of the Registrable Securities to be registered (in which case all
participating Holders shall bear such expenses pro rata among each other based
on the number of Registrable Securities held), unless such withdrawal is based
upon a Material Adverse Effect (as defined in the Purchase Agreement) or other
material adverse information that the Company had not publicly disclosed in a
report filed with the Commission prior to such request.  All Selling
Expenses relating to securities registered on behalf of the Holders shall be
borne by the holders of securities included in such registration pro rata among
each other on the basis of the number of Registrable Securities or other
securities so registered (or otherwise as they so agree).

     

    
      
        
           

        

        
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    (a)           Registration
Procedures.  In the case of each registration affected by the Company
pursuant to Section 2, the Company
will keep each Holder advised in writing as to the initiation of each
registration and as to the completion thereof.  At its expense, the
Company will, as expeditiously as reasonably possible:  Prepare and
file with the Commission the Registration Statement (including all required
exhibits) such amendments and supplements to such registration statement and the
prospectus used in connection with such registration statement as may be
necessary to comply with the provisions of the Securities Act with respect to
the disposition of all securities covered by such registration statement for the
period set forth in section 2.1(a) above, and, to the extent reasonably
practicable, not less than five business days prior to the filing of any such
amendment or supplement, furnish to Investor Representative on behalf of the
Investors copies of all such documents proposed to be filed and give reasonable
consideration to the inclusion in such documents of comments made by Investor
Representative (provided, however, that the Company shall include in any such
documents any comments necessary to correct any material misstatement or
omission regarding a Holder);

     

    (b)           Furnish
such number of prospectuses, including any preliminary prospectuses, and other
documents incident thereto, including any amendment of or supplement to the
prospectus and such other documents, as a Holder from time to time may
reasonably request to facilitate disposition of the Registrable
Securities;

     

    (c)           Use
its reasonable best efforts to register and qualify the securities covered by
such registration statement under such other securities or Blue Sky laws of such
jurisdictions as shall be reasonably requested by the Holders and to keep such
registration or qualification in effect so long as the registration statement
remains in effect; provided that the
Company shall not be required in connection therewith or as a condition thereto
to qualify to do business or to file a general consent to service of process in
any such states or jurisdictions.

     

    (d)           Enter
customary agreements and take such other actions as are reasonably required in
order to facilitate the disposition of such Registrable Securities, including,
if the method of distribution of Registrable Securities is by means of an
underwritten offering, using commercially reasonable efforts to, (i) participate
in and make documents available for the reasonable and customary due diligence
review of underwriters during normal business hours, on reasonable advance
notice and without undue burden or hardship on the Company, (ii) cause the chief
executive officer and chief financial officer to be available at reasonable
dates and times to participate in "road show" presentations and/or investor
conference calls to market the Registrable Securities during normal business
hours, on reasonable advance notice and without undue burden or hardship on the
Company, (iii) negotiate and execute an underwriting agreement in customary form
with the managing underwriter(s) of such offering and such other documents
reasonably required under the terms of such underwriting arrangements, including
using commercially reasonable efforts to procure a customary legal opinion and
auditor "comfort" letters. The Holders selling Registrable Securities shall also
enter into and perform their obligations under such underwriting
agreement.

    
      
         

      

      
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    (e)           Notify
each Holder of Registrable Securities covered by such registration statement at
any time when a prospectus relating thereto is required to be delivered under
the Securities Act of the happening of any event as a result of which the
prospectus included in such registration statement, as then in effect, includes
an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading or incomplete in light of the circumstances then existing, and,
promptly following such notification, promptly prepare and furnish to such
Holder a reasonable number of copies of a supplement to or an amendment of such
prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such shares, such prospectus shall not include an 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 not misleading or incomplete
in light of the circumstances then existing;

     

    (f)           Provide
a transfer agent and registrar for all Registrable Securities registered
pursuant to such registration statement and a CUSIP number for all such
Registrable Securities, in each case not later than the Effective
Date;

     

    (g)           Cause
all such Registrable Securities registered pursuant hereunder to be listed on
each securities exchange and/or trading system on which similar securities
issued by the Company are then listed;

     

    (h)           Give
notice to the Holders as promptly as reasonably practicable:  (i) when
any registration statement filed pursuant to this Section 2 or any amendment to
such registration statement has been filed with the Commission and when such
registration statement or any post-effective amendment to such registration
statement has become effective; (ii) of any request by the Commission for
amendments or supplements to any registration statement (or any information
incorporated by reference in, or exhibits to, such registration statement) filed
pursuant to this Section 2 or for additional information; (iii) of the issuance
by the Commission of any stop order suspending the effectiveness of any
registration statement filed pursuant to this Section 2 or the initiation of any
proceedings for that purpose (and the Company agrees to use commercially
reasonable efforts to prevent the issuance or obtain the withdrawal of any order
suspending the effectiveness of any such registration statement at the earliest
possible time);  (iv) of the receipt by the Company or its legal
counsel of any notification with respect to the suspension of the qualification
of the Common Stock for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; and

     

    (i)           Use
commercially reasonable efforts to procure the cooperation of the Company's
transfer agent in settling any offering or sale of Registrable Securities,
including with respect to the transfer of physical stock certificates into
book-entry form in accordance with any procedures reasonably requested by the
Holders or the managing underwriter(s). In connection therewith, if reasonably
required by the Company's transfer agent, the Company shall promptly after the
effectiveness of the registration statement cause an opinion of counsel as to
the effectiveness of the registration statement to be delivered to and
maintained with its transfer agent, together with any other authorizations,
certificates and directions required by the transfer agent which authorize and
direct the transfer agent to issue such Registrable Securities without legend
upon sale by the holder of such shares of Registrable Securities under the
registration statement.

    
      
         

      

      
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    2.6          Indemnification.

     

    (a)           The
Company will indemnify and hold harmless each Holder (including the Investor
Representative), each of its officers, directors, members, former members,
agents, partners, former partners, stockholders, representatives, affiliates,
legal counsel, and accountants and each person controlling such Holder within
the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act and the officers, directors agents and employees of such
controlling person (collectively, “Holder Indemnitees”), with respect to
any registration or qualification that has been effected pursuant to this Section 2, and each
underwriter, if any, and each person who controls within the meaning of
Section 15 of the Securities Act any underwriter, against all expenses,
claims, losses, damages, and liabilities (or actions, proceedings, or
settlements in respect thereof), joint or several, and including the fees
expenses and disbursements of attorneys and professionals, arising out of or
based on: (i) any untrue statement (or alleged untrue statement) of a
material fact contained or incorporated by reference in any registration
statement, preliminary or final prospectus, offering circular, or other document
(including any related registration statement, notification, or the like)
incident to any such registration or qualification, (ii) any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, or (iii) any
violation (or alleged violation) by the Company of the Securities Act, the
Exchange Act, any rule or regulation promulgated under the Securities Act or the
Exchange Act, any state securities laws or any rule or regulation thereunder
applicable to the Company and relating to action or inaction required of the
Company in connection with any offering covered by such registration or
qualification, and the Company will reimburse, as incurred, each such Holder
Indemnitees for any legal and any other expenses reasonably incurred in
connection with investigating and defending or settling any such claim, loss,
damage, liability, or action; provided that the
Company will not be liable in any such case to the extent that any such claim,
loss, damage, liability, or action arises out of or is based on any untrue
statement or omission based upon written information furnished to the Company by
such Holder, any of such Holder’s officers, directors, members, former members,
agents, partners, former partners, legal counsel or accountants, any person
controlling such Holder, such underwriter or any person who controls any such
underwriter and stated to be specifically for use therein for inclusion in such
registration statement, prospectus, offering circular or other document; and
provided further that the
indemnity agreement contained in this Section 2.6(a) shall not
apply to amounts paid in settlement of any such loss, claim, damage, liability,
or action if such settlement is effected without the consent of the Company
(which consent shall not be unreasonably withheld or delayed).

    
      
         

      

      
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    (b)           Each
Holder will, if Registrable Securities held by such Holder are included in the
securities as to which such registration or qualification is being effected,
severally, and not jointly, indemnify and hold harmless the Company, each of its
directors, officers, partners, legal counsel, and accountants and each
underwriter, if any, of the Company’s securities covered by such a registration
statement, each person who controls the Company or such underwriter within the
meaning of Section 15 of the Securities Act, each other such Holder, and
each of their officers, directors, members, agents and partners, and each person
controlling such Holder, against all claims, losses, damages and liabilities (or
actions in respect thereof) arising out of or based on: (i) any untrue
statement (or alleged untrue statement) of a material fact contained or
incorporated by reference in any such registration statement, prospectus,
offering circular, or other document, or (ii) any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse, as
incurred, the Company and such Holders, directors, officers, members, agents,
partners, legal counsel, and accountants, persons, underwriters, or control
persons for any legal or any other expenses reasonably incurred in connection
with investigating or defending any such claim, loss, damage, liability, or
action, in each case to the extent, but only to the extent, that such untrue
statement (or alleged untrue statement) or omission (or alleged omission) is
made in such registration statement, prospectus, offering circular, or other
document in reliance upon and in conformity with written information furnished
to the Company by such Holder and stated to be specifically for use therein;
provided that
the obligations of such Holder hereunder shall not apply to amounts paid in
settlement of any such claims, losses, damages, or liabilities (or actions in
respect thereof) if such settlement is effected without the consent of such
Holder (which consent shall not be unreasonably withheld or delayed); and provided further that in no
event shall any indemnity under this Section 2.6 exceed the
net proceeds received by such Holder from the offering or offerings that gives
rise to such indemnification obligation.

     

    (c)           Each
party entitled to indemnification under this Section 2.6 (the “Indemnified Party”) shall give notice to
the party required to provide indemnification (the “Indemnifying Party”) promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of such
claim or any litigation resulting therefrom; provided that counsel
for the Indemnifying Party, who shall conduct the defense of such claim or any
litigation resulting therefrom, shall be approved by the Indemnified Party
(whose approval shall not be unreasonably withheld or delayed), and the
Indemnified Party may participate in such defense at such party’s
expense;  provided further that an
Indemnified Party (together with all other Indemnified Parties that may be
represented without conflict by one counsel) shall have the right to retain its
own counsel, with the reasonable fees and expenses to be paid by the
Indemnifying Party, if representation of such Indemnified Party by the counsel
retained by the Indemnifying Party would be inappropriate due to actual or
potential conflicting interests between such Indemnified Party and any other
party represented by such counsel in such proceeding or should the Indemnifying
Party have failed to promptly assume the defense of such proceeding; and provided further that the
failure of any Indemnified Party to give notice as provided herein shall not
relieve the Indemnifying Party of its obligations under this Section 2.6, to the
extent such failure is not materially prejudicial.  No Indemnifying
Party, in the defense of any such claim or litigation, shall, except with the
consent of each Indemnified Party, consent to entry of any judgment or enter
into any settlement that does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such Indemnified Party of a release from
all liability in respect to such claim or litigation.  Each
Indemnified Party shall furnish such information regarding itself or the claim
in question as an Indemnifying Party may reasonably request in writing and as
shall be reasonably required in connection with defense of such claim and
litigation resulting therefrom.  All reasonable fees and expenses of
the Indemnified Party (including reasonable fees and expenses to the extent
incurred in connection with investigating or preparing to defend such proceeding
in a manner not inconsistent with this Section 2.6) shall be paid to
the Indemnified Party, as incurred, within ten business days of written notice
thereof to the Indemnifying Party (regardless of whether it is ultimately
determined that an Indemnified Party is not entitled to indemnification
hereunder; provided, that the Indemnifying Party may require such Indemnified
Party to undertake to reimburse all such fees and expenses to the extent it is
finally judicially determined that such Indemnified Party is not entitled to
indemnification hereunder).

    
      
         

      

      
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    (d)           If
the indemnification provided for in this Section 2.6 is held by a
court of competent jurisdiction to be unavailable to an Indemnified Party with
respect to any loss, liability, claim, damage, or expense referred to herein,
then the Indemnifying Party, in lieu of indemnifying such Indemnified Party
hereunder, shall contribute to the amount paid or payable by such Indemnified
Party as a result of such loss, liability, claim, damage, or expense in such
proportion as is appropriate to reflect the relative fault of the Indemnifying
Party on the one hand and of the Indemnified Party on the other in connection
with the statements or omissions that resulted in such loss, liability, claim,
damage, or expense as well as any other relevant equitable considerations; provided, however, that no
contribution by any Holder payable pursuant to this Section  2.6(d)
shall exceed the net proceeds from the offering received by such
Holder.  The relative fault of the Indemnifying Party and of the
Indemnified Party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
Indemnifying Party or by the Indemnified Party and the parties’ relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission.  The Company, the Investor Representative and
the Investors agree that it would not be just and equitable if contribution
pursuant  to this Section 2.6(d) were determined
by pro rata allocation or by any other method of allocation that does not take
account of the equitable considerations referred to in this Section 2.6(d).
Notwithstanding the foregoing, no Indemnified Party guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from an Indemnifying Party not guilty of such
fraudulent misrepresentation.

     

    (e)           Notwithstanding
the foregoing, to the extent that the provisions on indemnification and
contribution contained in the underwriting agreement entered into in connection
with the underwritten public offering are in conflict with the foregoing
provisions, the provisions in the underwriting agreement shall
control.

     

    (f)           The
obligations of the Company and the Holders under this Section 2.6 shall survive the
completion of any offering of Registrable Securities in a registration statement
under this Section 2,
the termination of this Agreement and otherwise.

     

    2.7          Information by Holder. 
As a condition to the obligations of the Company to register securities of a
Holder hereunder, each Holder of Registrable Securities shall furnish to the
Company such information regarding such Holder and the distribution proposed by
such Holder as the Company may reasonably request in writing and as shall be
reasonably required in connection with any registration or qualification
referred to in this Section 2.

    
      
         

      

      
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    2.8          Restrictions on
Transfer.

     

    (a)           The
holder of each certificate representing Registrable Securities by acceptance
thereof agrees to comply in all respects with the provisions of this Section 2.8.  Each
Holder agrees not to make any sale, assignment, transfer, pledge or other
disposition of all or any portion of the Restricted Securities, or any
beneficial interest therein, unless:

     

    (i)          
there is then in effect a registration statement under the Securities Act
covering such proposed disposition, and such disposition is made in accordance
with such registration statement or such Holder shall give prompt written notice
to the Company of such Holder’s intention to make such disposition and shall
furnish the Company with a detailed description of the manner and circumstances
of the proposed disposition and such disposition is being made pursuant to Rule
144; or

     

    (ii)          (A)
Such Holder shall give prompt written notice to the Company of such Holder’s
intention to make such disposition and shall furnish the Company with a detailed
description of the manner and circumstances of the proposed disposition, and, if
requested by the Company, such Holder shall furnish the Company, at its expense,
with an opinion of counsel to the effect that such disposition will not require
registration of such Restricted Securities under the Securities Act, whereupon
the holder of such Restricted Securities shall be entitled to transfer such
Restricted Securities in accordance with the terms of the notice delivered by
the Holder to the Company; and (B) the transferee thereof has agreed in writing
for the benefit of the Company to take and hold such Restricted Securities
subject to, and to be bound by, the terms and conditions set forth in this
Agreement, including this Section 2.8.

     

    (b)           Notwithstanding
the provisions of Section 2.8(a) above, no
such restriction shall apply to a transfer by a Holder that is (i) a
partnership transferring to its partners or former partners in accordance with
partnership interests or to any affiliated entity, (ii) a corporation
transferring to a wholly-owned subsidiary or a parent corporation that owns all
of the capital stock of the Holder, (iii) a limited liability company
transferring to its members or former members in accordance with their interest
in the limited liability company or to any affiliated entity, or (iv) an
individual transferring to the Holder’s family member or trust or other estate
planning entity for the benefit of an individual Holder or a member of his or
her immediate family, provided that the Holder has provided the Company with
notice of such transfer; provided that
in each case the transferee will agree in writing to be subject to the terms of
this Agreement to the same extent as if such transferee were an original Holder
hereunder (such persons, “Permitted
Transferees”).

     

    (c)           Each
certificate representing stock certificates which are Registrable Securities
shall (unless otherwise permitted by the provisions of this Agreement) be
stamped or otherwise imprinted with a legend substantially similar to the
following (in addition to any legend required under applicable state securities
laws):

    
      
         

      

      
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    THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE “ACT”), OR UNDER THE SECURITIES
LAWS OF ANY STATE. THESE SECURITIES MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED, PLEDGED OR HYPOTHECATED EXCEPT AS PERMITTED UNDER THE ACT AND
APPLICABLE STATE SECURITIES LAWS PURSUANT TO REGISTRATION OR AN EXEMPTION
THEREFROM. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL
SATISFACTORY TO THE ISSUER THAT SUCH OFFER, SALE OR TRANSFER, PLEDGE OR
HYPOTHECATION OTHERWISE COMPLIES WITH THE ACT AND ANY APPLICABLE STATE
SECURITIES LAWS.

    

    THE
SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO (1) RESTRICTIONS ON
TRANSFERABILITY AND RESALE, AND (2) VOTING RESTRICTIONS, AS SET FORTH IN AN
INVESTOR RIGHTS AGREEMENT, AMONG THE COMPANY AND THE ORIGINAL HOLDERS OF THESE
SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE
COMPANY.

    

    The
Holders consent to the Company making a notation on its records and giving
instructions to any transfer agent of the Restricted Securities in order to
implement the restrictions on transfer established in this Section 2.8.

     

    (d)           The
first legend referring to federal and state securities laws identified in Section 2.8(c) hereof
stamped on a certificate evidencing the Restricted Securities and the stock
transfer instructions and record notations with respect to such Restricted
Securities shall be removed and the Company shall promptly issue a certificate
without such legend to the holder of such Restricted Securities if (i) such
securities are registered under the Securities Act, or (ii) such holder
provides the Company with an opinion of counsel reasonably acceptable to the
Company to the effect that a public sale or transfer of such securities may be
made without registration under the Securities Act, or (iii) such holder
provides the Company with reasonable assurances, which may, at the option of the
Company, include an opinion of counsel satisfactory to the Company, that such
securities can be sold pursuant to Section (k) of Rule 144 under the
Securities Act.  It is agreed that the Company will not require
opinions of counsel for transactions made pursuant to Rule 144.

     

    2.9          Rule 144
Reporting.  With a view to making available the benefits of certain
rules and regulations of the Commission that may permit the sale of the
Restricted Securities to the public without registration, the Company agrees to
use its reasonable best efforts to:

     

    (a)           Make
and keep public information regarding the Company available as those terms are
understood and defined in Rule 144 under the Securities
Act;

    
      
         

      

      
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    (b)           File
with the Commission in a timely manner all reports and other documents required
of the Company under the Securities Act and the Exchange Act; and

     

    (c)           So
long as a Holder owns any Restricted Securities, furnish to the Holder forthwith
upon written request a written statement by the Company as to its compliance
with the reporting requirements of Rule 144, a copy of the most recent
annual or quarterly report of the Company, and such other reports and documents
so filed as a Holder may reasonably request in availing itself of any rule or
regulation of the Commission allowing a Holder to sell any such securities
without registration.

     

    2.10        Registration
Rights.  During the term of this Agreement, the Company shall
not grant or agree to grant, any rights to register securities under the
Securities Act to any other person without the consent of the Holders of a
majority of Registered Securities.

     

    2.11        Delay of Registration. 
No Holder shall have any right to take any action to restrain, enjoin, or
otherwise delay any registration as the result of any controversy that might
arise with respect to the interpretation or implementation of this Section 2.

     

    2.12        Transfer or Assignment of
Registration Rights.  The rights to cause the Company to register
securities granted to a Holder by the Company under this Section 2 may be
transferred or assigned by a Holder only to (a) a transferee or assignee of at
least 250,000 shares of Registrable Securities (as presently constituted and
subject to subsequent adjustments for stock splits, stock dividends, reverse
stock splits, and the like), or (b) its stockholders, partners, limited
partners, members, agents, affiliated entities, former partners or former
members (or their estates), subsidiaries or affiliates; provided that
(i) such transfer or assignment of Registrable Securities is effected in
accordance with the terms of Section 2.8 hereof,
(ii) the Company is given prompt written notice of said transfer or
assignment, stating the name and address of the transferee or assignee and
identifying the securities with respect to which such registration rights are
intended to be transferred or assigned and (iii) the transferee or assignee
of such rights assumes in writing the obligations of such Holder under this
Agreement.

     

    Section
3

    Voting

     

    3.1      
   Voting.  During the
term of this Agreement, each Holder of Shares agrees to vote all Shares in such
manner as may be necessary to elect (and maintain in office) as members of the
Company’s Board of Directors two (2) Chicago Designees (as defined below), one
(1) New York Designee (as defined below) and one Bergeron Designee (as defined
below) as the Preferred Directors.

    3.2          Designation of
Directors.  The two (2) Chicago designees to the Company’s Board of
Directors described above (each a “Chicago Designee”) shall be
designated by Ronald Chez, or his affiliates or designee (“Chicago
Investor”).  The one (1) New York designee to the Company’s
Board of Directors described above (the “New York Designee”, and
collectively with the Chicago Designees, the “Designees”) shall be designated by
Andrew Arno or his designee (“New York
Investor”).  The one (1) Bergeron designee to the Company’s
Board of Directors described above (the “Bergeron Designee”, and
collectively with the Chicago Designees and the New York Designee, the “Designees”) shall be
designated by Douglas G. Bergeron or his designee (“Bergeron”).  Each
Designee must be eligible under applicable law and regulations of Nasdaq and
FINRA to serve on the Board, provided however,
that the Designees shall not be required to be “independent” under Nasdaq
Listing Rules.

     

    
      
        
           

        

        
          15

          
            

          

        

        
           

        

      

    

     

    3.3          Current Designees.  As
of the date of this Agreement, the Designees shall be (i) Ronald Chez as one of
the Chicago Designees and (ii) Andrew Arno as the New York
Designee.  The other Chicago Designee shall be vacant until
subsequently designated by Chicago Investor.

     

    3.4          Changes in Designees. 
From time to time during the term of this Agreement, Chicago Investor or New
York Investor may, in their sole discretion:

     

    (a)           notify
the Company in writing of an intention to remove from the Company’s Board of
Directors any then incumbent Designee who occupies a Board of Directors seat for
which Chicago Investor or New York Investor, respectively, are entitled to
choose the Designee; or

     

    (b)           notify
the Company in writing of an intention to select a new Designee for election to
a Board seat for which Chicago Investor or New York Investor, respectively, are
entitled to choose the Designee (whether to replace a prior Designee or to fill
a vacancy in such Board of Directors seat);

     

    In the
event of such an initiation of a removal or selection of a Designee under this
section, the Company shall take such actions as are necessary to facilitate such
removals or elections, including soliciting the votes of the appropriate
stockholders, and the Holders shall vote their Shares to
cause:  (y) the removal from the Company’s Board of Directors of
the Designee or Designees so designated for removal; and (z) the election
to the Company’s Board of Directors of any new Designee or Designees so
designated.  Notwithstanding the foregoing sentence, the Company shall
not be required to hold a special meeting of stockholders to replace a
Designee.

     

    3.5          The
rights to designate directors granted under this Section 3 shall terminate as
follows:

     

    (a)             with
respect to either the New York Investor or Bergeron, at such time as the total
number of Shares and Conversion Shares held by such investor is less than 50% of
the number purchased at the Closing by that investor; and

     

    (b)             with
respect to the Chicago Investor the right to one Chicago Designee shall
terminate at such time as the total number of Shares and Conversion Shares held
by the Chicago Investor is less than 50% of the number purchased at the Closing;
and the right the other Chicago Designee shall terminate at such time as the
total number of Shares and Conversion Shares held by the Chicago Investor is
less than 25% of the number purchased at the Closing.

    
      
         

      

      
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    Section
4

    Covenants of the
Company

     

    The
Company hereby covenants and agrees, as follows:

     

    4.1          Merriman
Warrants.  If D. Jonathan Merriman (“Merriman”) ceases to serve as
Chief Executive Officer of the Company prior to the third anniversary of the
date hereof, the Company will promptly issue a number of additional five year
warrants, pro rata to the then holders of Shares and Conversion Shares, equal to
the number of Warrants but not including any Registration Warrants (such
warrants, the “Merriman
Warrants”).  Other than issue and expiration date, the terms of
the Merriman Warrants shall be identical in all respects (including exercise
price) to the Warrants, and the Merriman Warrants and shares of Common Stock
resulting from exercise of the Merriman Warrants shall be Registrable
Securities.  Notwithstanding the foregoing, the Merriman Warrants
shall not be issued if

     

    (a)           Merriman
ceases to serve due to his death;

     

    (b)           Merriman
is terminated without Cause. "Cause" shall mean the happening of one or more of
the following events: (i) conviction of any felony or any crime involving moral
turpitude or dishonesty; (ii) participation in a fraud or act of dishonesty
against the Company; (iii) intentional, material violation of any contract
between the Company and Merriman or any statutory duty of Merriman to the
Company that is not corrected within thirty (30) days after written notice
thereof; or (iv) in the good faith judgment of the Company's Board of
Directors, which must include the affirmative vote of at least two of the
Preferred Directors, Merriman has engaged in misconduct or neglect of his
responsibilities as Chief Executive Officer of the Company; or conduct on
Merriman’s part that makes his continued employment prejudicial to the Company’s
best interests which conduct has not been cured within thirty (30) days after
written notice thereof; or

     

    (c)           Merriman
resigns for Good Reason. "Good Reason" shall mean (i) the failure of the Company
to pay or cause to be paid Merriman's base salary or annual bonus, as agreed
from time to time, (ii) any substantial and sustained unreasonable
diminution in Merriman's title, authority or responsibilities from those enjoyed
by Merriman at this time, or (iii) any relocation of Merriman's principal place
of employment by more than 50   miles from the Company's current
offices in San Francisco, CA, without Merriman's consent.

     

    4.2          Key Man Warrants. Until
the first to occur of the (x) 5th anniversary of this Agreement, or (y) the
Company reporting six (6) consecutive quarters of positive net earnings
(calculated in accordance with GAAP and as reported in the SEC Filings) the
Company will keep the “Life Insurance Policy” (as such term is defined in the
Purchase Agreement) in place.  If the Company fails to keep the Life
Insurance Policy in place, prior to the dates provided in the preceding
sentence, the Company will promptly issue an aggregate of 30,000 additional five
year warrants, pro rata to the then holders of Shares and Conversion Shares for
each full calendar quarter in which the Life Insurance Policy is not in place
(such warrants, the “Key
Man Warrants”).  Other
than issue and expiration date, the terms of the Key Man Warrants shall be
identical in all respects (including exercise price) to the Warrants, and the
Key Man Warrants and shares of Common Stock resulting from exercise of the Key
Man Warrants shall be Registrable Securities.

    
      
         

      

      
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    Section
5

    Right of First
Refusal

     

    5.1          Right of First Refusal to Major
Holders.  The Company hereby grants to each Major Holder and its
Permitted Transferees the right of first refusal to purchase its pro rata share
of New Securities (as defined in Section 5.1(a)) which the
Company may, from time to time, propose to sell and issue after the date of this
Agreement.  A Major Holder’s and its Permitted Transferees pro rata
share, for purposes of this right of first refusal, is equal to the ratio of (a)
the total number of shares of Common Stock owned by such Major Holder or
Permitted Transferee (assuming full conversion of the Shares and conversion or
exercise of all Investor Warrants) immediately prior to the issuance of New
Securities to (b) the total number of shares of Common Stock outstanding
immediately prior to the issuance of New Securities (assuming full conversion of
the Shares and conversion or exercise of all Investor Warrants).

     

    (a)           “New Securities” shall mean any
capital stock (including Common Stock and/or Shares) of the Company whether now
authorized or not, and rights, convertible securities, options or warrants to
purchase such capital stock, and securities of any type whatsoever that are, or
may become, exercisable or convertible into capital stock; provided that the
term “New Securities”
does not include:

     

    (i)           the
Shares and the Conversion Shares;

     

    (ii)        
 securities issued or issuable to officers, directors and employees of, or
consultants to, the Company pursuant to stock grants, option plans, purchase
plans or other employee stock incentive programs or arrangements approved by the
Board of Directors, or upon exercise of options or warrants granted to such
parties pursuant to any such plan or arrangement;

     

    (iii)         securities
issued pursuant to the conversion or exercise of any outstanding convertible or
exercisable securities as of the date of this Agreement;

     

    (iv)         securities
issued or issuable as a dividend or distribution on the Shares or pursuant to
any event for which adjustment is made pursuant to the Certificate of
Designation with respect to the Shares;

     

    (v)          securities
issued or issuable pursuant to the acquisition of another corporation by the
Company by merger, purchase of substantially all of the assets or other
reorganization or to a joint venture agreement, provided that such
issuances are approved by the Board of Directors, including at least one of the
Preferred Directors;

     

    (vi)         securities
issued or issuable to banks, equipment lessors or other financial institutions
pursuant to a commercial leasing or debt financing transaction that is not
effected primarily for capital raising and that is approved by the Board of
Directors, including at least one of the Preferred Directors;

    
      
         

      

      
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    (vii)       
securities issued or issuable in connection with collaboration, technology
license, marketing or other similar agreements or strategic partnerships
approved by the Board of Directors, including at least one of the Preferred
Directors; and

     

    (viii)       securities
issued to suppliers or third party service providers in connection with the
provision of goods or services pursuant to transactions approved by the Board of
Directors, including at least one of the Preferred Directors.

     

    (b)           In
the event the Company proposes to undertake an issuance of New Securities, it
shall give each Major Holder and its Permitted Transferees written notice of its
intention, describing the type and number of New Securities, and their price and
the general terms upon which the Company proposes to issue the
same.  Each Major Holder and its Permitted Transferees shall have ten
(10) days after any such notice is mailed or delivered (the “Election Period”) to agree to purchase
such Holder’s pro rata share of such New Securities for the price and upon the
terms specified in the notice by giving written notice to the Company, in
substantially the form attached hereto as Schedule 1, and
stating therein the quantity of New Securities to be purchased (each
participating Major Holder or Permitted Transferee, a “Participant”).  Each
Participant may allocate such New Securities among themselves and their
affiliates in their sole discretion.

     

    (c)           In
the event the Major Holders and its Permitted Transferees fail to exercise the
right of first refusal, prior to the expiration of the Election Period, the
Company shall have sixty (60) days thereafter to sell or enter into an agreement
(pursuant to which the sale of New Securities covered thereby shall be closed,
if at all, within thirty (30) days from the date of said agreement) to sell that
portion of the New Securities with respect to which the Major Holders’ right of
first refusal set forth in this Section 5.1 was not
exercised, at a price and upon terms no more favorable to the purchasers thereof
than specified in the Company’s notice to Major Holders delivered pursuant to
Section 5.1(b).  In
the event the Company has not sold within such sixty (60) day period following
the Election Period, or closed within such thirty (30) day period following the
date of said agreement, the Company shall not thereafter issue or sell any New
Securities, without first again offering such New Securities to the Major
Holders and its Permitted Transferees in the manner provided in this Section 5.1.

     

    (d)           The
right of first refusal granted under this Section 5 shall expire at such
time as the total number of Shares and Conversion Shares outstanding is less
than 2,325,000.

    
      
         

      

      
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    Section
6

    Miscellaneous

     

    6.1          Amendment.  Except as
expressly provided herein, neither this Agreement nor any term hereof may be
amended, waived, discharged or terminated other than by a written instrument
referencing this Agreement and signed by the Company and the Holders holding a
majority of the Registrable Securities (calculated by assuming all Shares have
been converted to Conversion Shares as of the date of such amendment, waiver,
discharge or termination, and excluding any of such shares that have been sold
to the public or pursuant to Rule 144); provided that any
amendment or waiver that affects the rights or obligations of a Holder hereunder
in a different manner than other Holders shall require the written consent of
such Holder.  Any such amendment, waiver, discharge or termination
effected in accordance with this paragraph shall be binding upon each Holder and
each future holder of all such securities of Holder.  Subject to the
terms of this paragraph 5.1, each Holder acknowledges that by the operation of
this paragraph, the holders of a majority of the Registrable Securities
(excluding any of such shares that have been sold to the public or pursuant to
Rule 144) will have the right and power to diminish or eliminate all rights of
such Holder under this Agreement.

     

    6.2          Notices.  All notices
and other communications required or permitted hereunder shall be in writing and
shall be mailed by registered or certified mail, postage prepaid, sent by
facsimile or electronic mail or otherwise delivered by hand or by messenger
addressed:

     

    (a)           if
to an Investor, at the Investor’s address, facsimile number or electronic mail
address as shown in the Company’s records, as may be updated in accordance with
the provisions hereof;

     

    (b)           if
to any Holder, at such address, facsimile number or electronic mail address as
shown in the Company’s records, or, until any such holder so furnishes an
address, facsimile number or electronic mail address to the Company, then to and
at the address of the last holder of such shares for which the Company has
contact information in its records; or

     

    (c)           if
to the Company, one copy should be sent to Merriman Curhan Ford Group, Inc., 600
California Street, 9th Floor,
San Francisco, CA 94108, Attn: Chief Executive Officer, or at such other address
as the Company shall have furnished to the Investors, with a copy to Merriman
Curhan Ford Group, Inc., 600 California Street, 9th Floor,
San Francisco, CA 94108, Attn: Chief Compliance Officer.

     

    Each such
notice or other communication shall for all purposes of this Agreement be
treated as effective or having been given when delivered if delivered
personally, or, if sent by mail, at the earlier of its receipt or 3 business
days after the same has been deposited in a regularly maintained receptacle for
the deposit of the United States mail, addressed and mailed as aforesaid or, if
sent by facsimile, the business day following confirmation of facsimile transfer
or, if sent by electronic mail, the business day following confirmation of
delivery when directed to the electronic mail address provided pursuant hereto,
or, if sent by nationally recognized overnight delivery service, on the date
when delivered.

     

    6.3          Governing Law.  This
Agreement shall be governed in all respects by the internal laws of the State of
Delaware, without regard to principles of conflicts of law.

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    6.4          Successors and Assigns. 
Except as set forth herein (including, without limitation, Section 2.8), this
Agreement, and any and all rights, duties and obligations hereunder, shall not
be assigned or transferred, by any Investor without the prior written consent of
the Company.  Any attempt by an Investor without such permission to
assign or transfer any rights, duties or obligations that arise under this
Agreement shall be void.  Subject to the foregoing and except as
otherwise provided herein, the provisions of this Agreement shall inure to the
benefit of, and be binding upon, the successors, assigns, heirs, executors and
administrators of the parties hereto.

     

    6.5          Entire Agreement.  This
Agreement and the exhibits hereto constitute the full and entire understanding
and agreement between the parties with regard to the subjects
hereof.  

     

    6.6          Delays or Omissions. 
Except as expressly provided herein, no delay or omission to exercise any right,
power or remedy accruing to any party to this Agreement upon any breach or
default of any other party under this Agreement shall impair any such right,
power or remedy of such non-defaulting party, nor shall it be construed to be a
waiver of any such breach or default, or an acquiescence therein, or of or in
any similar breach or default thereafter occurring, nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
theretofore or thereafter occurring.  Any waiver, permit, consent or
approval of any kind or character on the part of any party of any breach or
default under this Agreement, or any waiver on the part of any party of any
provisions or conditions of this Agreement, must be in writing and shall be
effective only to the extent specifically set forth in such
writing.  All remedies, either under this Agreement or by law or
otherwise afforded to any party to this Agreement, shall be cumulative and not
alternative.

     

    6.7          Severability.  If any
provision of this Agreement becomes or is declared by a court of competent
jurisdiction to be illegal, unenforceable or void, portions of such provision,
or such provision in its entirety, to the extent necessary, shall be severed
from this Agreement, and such court will replace such illegal, void or
unenforceable provision of this Agreement with a valid and enforceable provision
that will achieve, to the extent possible, the same economic, business and other
purposes of the illegal, void or unenforceable provision.  The balance
of this Agreement shall be enforceable in accordance with its
terms.

     

    6.8          Titles and Subtitles. 
The titles and subtitles used in this Agreement are used for convenience only
and are not to be considered in construing or interpreting this
Agreement.  All references in this Agreement to sections, paragraphs
and exhibits shall, unless otherwise provided, refer to sections and paragraphs
hereof and exhibits attached hereto.

     

    6.9          Counterparts.  This
Agreement may be executed in any number of counterparts, each of which shall be
enforceable against the parties that execute such counterparts, and all of which
together shall constitute one instrument.

     

    6.10        Telecopy Execution and
Delivery.  A facsimile, telecopy or other reproduction of this
Agreement may be executed by one or more parties hereto and delivered by such
party by facsimile or any similar electronic transmission device pursuant to
which the signature of or on behalf of such party can be seen.  Such
execution and delivery shall be considered valid, binding and effective for all
purposes.  At the request of any party hereto, all parties hereto
agree to execute and deliver an original of this Agreement as well as any
facsimile, telecopy or other reproduction hereof.

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    6.11        Jurisdiction; Venue. 
With respect to any disputes arising out of or related to this Agreement, the
parties consent to the exclusive jurisdiction of, and venue in, the state courts
in the city of Chicago, and county of Cook, Illinois (or in the event of
exclusive federal jurisdiction, the courts of the Northern District of
Illinois).  EACH OF THE PARTIES KNOWINGLY, INTENTIONALLY AND
VOLUNTARILY WITH AND UPON THE ADVICE OF COMPETENT COUNSEL IRREVOCABLY WAIVES ANY
AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDINGS ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
THEREBY.  The Company agrees and acknowledges that any violation or
breach of its covenants, agreements and undertakings contained in this Agreement
or in the other Investment Agreements shall cause Investors and/or Holders
irreversible injury and, in addition to any other right or remedy available to a
party at law or in equity, an Investor or Holder shall be entitled to
enforcement by court injunction for specific performance of the obligations of
the other party hereunder (without the requirement of posting a
bond).  Notwithstanding the foregoing sentence, but subject to the
provisions of this Agreement, including Section 2.4(b), nothing herein
shall be construed as prohibiting a party from also pursuing any other rights,
remedies or defenses, for such breach or threatened breach, including receiving
damages and attorneys’ fees.  The election of any remedy shall not be
construed as a waiver on the part of any party of any rights such party might
otherwise have at law or in equity.  Said rights and remedies shall be
cumulative.

     

    6.12        Further Assurances. 
Each party hereto agrees to execute and deliver, by the proper exercise of its
corporate, limited liability company, partnership or other powers, all such
other and additional instruments and documents and do all such other acts and
things as may be necessary to more fully effectuate this Agreement.

     

    6.13        Aggregation
of Stock.  All shares of Registrable Securities held or acquired by
affiliated entities or persons shall be aggregated together for the purpose of
determining the availability of any rights under this Agreement.

     

    6.14        Best
Efforts.  For the purposes of this Agreement, “best efforts” shall
not be interpreted to require the Company to undertake any activity that will
violate a state or federal statute, law, rule, order or
regulation.

     

    6.15        Attorneys’
Fees.  In the event that any suit or action is instituted to enforce any
provision in this Agreement, the prevailing party in such dispute shall be
entitled to recover from the losing party such reasonable fees and expenses of
attorneys and accountants, which shall include, without limitation, all fees,
costs and expenses of appeals.

     

    6.16        Construction. The headings of
this Agreement are for convenience of reference and shall not form part of, or
affect the interpretation of, this Agreement.  When used in this
Agreement, the word “including” means “including, without limitation”, and the
word “person” means any natural person, corporation, limited liability company,
trust, joint venture, association, company, governmental authority, or other
entity.

     

    [Remainder of Page Intentionally Left
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        22

        
          

        

      

      
        
        

      

    

     

    IN
WITNESS WHEREOF, the parties hereto have executed this Investors’ Rights
Agreement effective as of the day and year first above written.

    

      
        
          
            
              	 
      	
                      MERRIMAN CURHAN FORD
      GROUP,

                      INC., Delaware
      corporation

                    
	 	 
	 	 

            

          

        

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    IN
WITNESS WHEREOF, the parties hereto have executed this Investors’ Rights
Agreement effective as of the day and year first above written.

     

    
      
        
          
            	 
      	
                    INVESTORS:

                  
	 
      	 
      
	 
      	
                    By:

                  	 
      
	 
      	
                     By:

                  
	 
      	
                     
      Its:

                  

          

        

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT A

     

    INVESTORS

    

    
      
        	
                
                  Investor

                

              

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
B

    

    SETTLING
PARTIES

    

    
      
        	
                AEG Facilities,
      Inc.

              
	
                Craig
      Leipold

              
	
                DGB
      Investments, Inc.

              
	
                Federal
      Deposit Insurance Corporation, as Receiver for Security Pacific
      Bank

              
	
                Heritage
      Bank of Commerce

              
	
                Modern
      Bank, N.A.

              
	
                Valley
      Community Bank

              

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Schedule
1

    Form
of Notice

     

    NOTICE
AND WAIVER/ELECTION OF

    RIGHT
OF FIRST REFUSAL

    I
do hereby waive or exercise, as indicated below, my rights of first refusal
under the  Investors’ Rights Agreement dated as of _____________ (the
“Agreement”):

     

    1.           Waiver
of 10 Days’ Initial Notice Period in Which to Exercise Right of First
Offer:  (please check
only one)

    

    
      	
               
      

            	
              (   )

            	
              WAIVE
      in full, the 10-day notice period provided to exercise my right of first
      refusal granted under the
Agreement.

            

    

    

    
      	
               
      

            	
              (   )

            	
              DO
      NOT WAIVE the notice period described
above.

            

    

     

    2.           Issuance
and Sale of New Securities:  (please check only
one)

    

    
      	
               
      

            	
              (   )

            	
              WAIVE
      in full the right of first refusal granted under the Agreement with
      respect to the issuance of the New
Securities.

            

    

    

    
      	
               
      

            	
              (   )

            	
              ELECT
      TO PARTICIPATE in $__________ [PLEASE PROVIDE AMOUNT] in New Securities
      proposed to be issued by Merriman Curhan Ford Group, Inc., representing
      less than
      my pro rata portion of the aggregate of $x in New Securities being offered
      in the financing.

            

    

    

    
      	
               
      

            	
              (   )

            	
              ELECT
      TO PARTICIPATE in $__________ in New Securities proposed to be issued by
      Merriman Curhan Ford Group, Inc., representing my full pro rata portion of
      the aggregate of $x in New Securities being offered in the
      financing.

            

    

    

    
      	
               
      

            	
              (   )

            	
              ELECT
      TO PARTICIPATE in my full pro rata portion of the aggregate of $x in New
      Securities being made available in the financing and, to the
      extent available, the greater of (x) an additional $__________ [PLEASE
      PROVIDE AMOUNT] or (y) my pro rata portion of any remaining investment
      amount available in the event other Significant Holders do not exercise
      their full rights of first refusal with respect to the $x in New
      Securities being offered in the
financing.

            

    

     

    Date: ___________,
20__
               ______________________________________

    Signature
of Stockholder or Authorized

    Signatory
______________________________________

    Title, if
applicable

     

    This
is neither a commitment to purchase nor a commitment to issue the New Securities
described above.  Such issuance can only be made by way of definitive
documentation related to such issuance.  Merriman Curhan Ford Group,
Inc. will supply you with such definitive documentation upon request or if you
indicate that you would like to exercise your first offer rights in whole or in
part.Unassociated Document

     

    MERRIMAN
CURHAN FORD GROUP, INC.

    600
California Street

     9th
Floor

    San
Francisco, CA 94108

    

    August
27, 2009

    Ronald
Chez

    c/o Barry
Fischer

    Thompson
Coburn Fagel Haber

    55 E
Monroe Street

    37
Floor

    Chicago,
IL 60603

    

    

    Ladies
and Gentlemen:

    

    Reference is made to the Investors’
Rights Agreement of even date herewith (the “Agreement”), and terms otherwise
not defined in this letter agreement shall have the meanings set forth in the
Agreement.  The undersigned acknowledges that you, as an Investor,
have required the Company to execute this letter agreement as a condition of
purchasing Shares and Warrants in the Agreement.

    

    In consideration of the above, the
Company agrees to use its commercially reasonable best efforts to determine a
method of registering the Investor Warrants (in addition to the Common Stock
underlying the Investor Warrants), in coordination with you and your counsel,
and to effect any such registration in a manner reasonably acceptable to
you.  In addition, to reflect the fact that the Settling Parties would
also be participating in any distribution of Registration Warrants, the Company
agrees to use its commercially reasonable best efforts to cause Section 2.4(b)
of the Agreement to be amended to read as attached as Annex A.

    

    This letter agreement shall be deemed
part of the Agreement.

    

     

    
      	 
      	
              Sincerely,

            
	 
      	 
      
	 
      	
              MERRIMAN
      CURHAN FORD GROUP, INC.

            
	 
      	 
      
	 
      	 
      
	 
      	  
      
	 
      	
              D.
      Jonathan Merriman,

            
	 
      	
              Chief
      Executive Officer

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    ANNEX
I

    

    (b)           For
each 30-calendar day period following the Registration Penalty Date in which
there is not an effective registration statement covering the Registrable
Securities, the Company shall issue to each Investor pro-rata, in proportion to
the number of shares of Registrable Securities purchased by or issued to such
Investor pursuant to the Purchase Agreement and/or the Settlement Agreement, as
the case may be (or the number of shares of Registrable Securities into which
the securities purchased by or issued to such Investor pursuant to such
agreement), five year warrants to purchase an aggregate of 161,850 shares of the
Company’s Common Stock at $0.65 per share, on terms identical to those issued to
the Investors under the Purchase Agreement (the “Registration Warrants”), as
liquidated damages and not as a penalty, subject to an overall limit of
liquidated damages in the aggregate of 971,000 Registration
Warrants.  The liquidated damages pursuant to the terms hereof shall
apply on a daily pro-rata basis for any portion of a month prior to securing an
effective Registration Statement.  The foregoing shall in no way limit
any equitable remedies available to Investors for failure to secure an effective
Registration Statement by the Registration Penalty Date.  Investors
shall also be able to pursue monetary damages for failure to secure an effective
Registration Statement by the Registration Penalty Date but only if such failure
is due to the willful or deliberate action or inaction of the Company in breach
of the covenants contained herein.  Except as provided for in the
preceding sentence, each Investor agrees that the liquidated damages provided
for in this section shall be its sole remedy for the failure to secure an
effective Registration Statement for any Registrable Securities on a timely
basis.

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